The reason people make a will is that they want to be certain who gets their stuff when they die. Pretty simple, right? Well, not exactly...
When we meet with clients to discuss their wills, we get a pretty good feel for how they think they want their assets to be distributed and, sometimes, which of their beneficiaries they worry about the most. Often, the husband or wife is the primary beneficiary and the kids are the alternate beneficiaries, and that's great. But what if your spouse dies before you do and there are three kids, and one of them dies before you as well? What happens to that kid's share? Does it go to the other two kids? What if by the time you die, there are grandkids? Do they get their deceased parent's share or not? What if those grandkids are all under the age of 18? Their money will go into the registry of the court until they're 18, then they'll get it with no strings attached. Do you want them to get everything right away? They'll spend it all within a year. What about putting a trust for minors in your will, so they can't get their hands on it until the age you specify? Great idea! Who's the trustee going to be? Well, no, it can't be their parent because they don't inherit unless their parent died before you did.
"Killing off the beneficiaries" is the process we use to start walking through these "what if" scenarios. If you're thinking about getting your estate plan in place, make sure your attorney has this kind of conversation with you.
- March 29th is National Vietnam Veterans Day. Those of us who grew up in the Vietnam era will never forget the nightly barrage of body counts, protests and vitriol reported by Huntley & Brinkley, Walter Cronkite, et al in the late '60s and early '70s. It was a dark time in our nation's history. But the men and women who served in Vietnam deserved better than the hatred and disrespect they received when they returned from the horrors of war.
My father and law partner, Lt Col (Ret) A.D. "Jake" Jacobson was one of those warriors. He served in the US Air Force for 24 years, rising from buck private (before the rank of Airman was used) to buck sergeant, selected for Officer Candidate School, was commissioned a Second Lieutenant, attended Radio Operator school, Navigator training and Undergraduate Pilot Training. He's one of a few Air Force officers entitled to wear three sets of wings. He retired as a Lieutenant Colonel in 1975.
Dad volunteered to go to Vietnam. As he explained to my mom, "This is what they've trained me for. I can't not go." Mom, ever loyal and supportive, understood. So while she stayed in Tucson, AZ with me (8th grade) and my sister (9th grade), Dad spent all of 1970 flying combat missions over Vietnam, Laos and Cambodia in an F-4 Phantom II. 134 combat missions. He got reassigned from Da Nang to 5th Air Force in Saigon after six months, but still went back regularly and flew combat missions. Five Air Medals, two Distinguished Flying Crosses, a Bronze Star. He made it home, though.
We picked him up at Tucson International Airport right before Christmas. He was wearing civilian clothes (I found out later it was required because of all the hostility Americans had been showing to their own warriors). He had a surprise for me: he'd bought a Honda 70 motorbike and had it shipped home as "motorcycle parts". We had a ball putting that thing together, and I rode the heck out of it for the next year and a half, until we PCS'd to Venezuela.
Dad has pretty much retired from the active practice of law. He got his bachelor's degree and went to law school after he retired from the Air Force and spent another whole career doing what he intended to do before taking a valiant 25-year detour into the Air Force. Vietnam changed him in some way. Still my dad, but different. War does that to people. Now we call it PTSD - mild, but present. He only completely lets his guard down in the company of other warriors - sometimes including me, the 30-year Colonel. He got to fly a P-51 on his 80th birthday, and I've quite literally never seen him happier than when he talked about it. I'm very proud of him. Dad - Happy Vietnam Veterans Day.
"Abuelo Wanted The House To Go To _______"
The West Side of San Antonio, Texas is full of little houses that have been in the family for generations. Most people in the family know who Abuelo and Abuela wanted the house to go to. Often, unfortunately, A&A never saw the need to make wills telling the world who gets the house, so there are many homes with deeds that are generations out of date, making it a nightmare to get them sold or transferred into the name of the true owner and greatly decreasing their value.
Your city probably has an area similar to our West Side. However, it’s not just these areas of modest means that sport untitled real estate: Let me make this as clear as possible: if you own real estate, you need an estate plan. Period.
So what’s an estate plan, you ask? Simply put, it’s some form of written, properly executed document that tells the world who gets your stuff, including real estate, when you die. Without it, your heirs will have to rely on laws and statutes to figure out who gets what, and that often ends up being vastly different that you intended.
Example: here in Texas, if you die without a will and you’re married, AND you’ve only been married to that spouse, AND all the kids are kids of that marriage, then your spouse gets all the community property. Sounds good, right? Well, what if the two of you were living in a house you owned as a single person before y'all got married? That’s not community property, it’s separate property. That means your children inherit the house, not your spouse. Your spouse can live in it until he or she dies or abandons it, but can never sell it. Add to that the fact that your spouse only gets half of your separate personal property, with your kids splitting the rest, and you (actually, your heirs) have a potential mess on their hands.
Estate planning can be as simple or complex as you want it to be, from a simple transfer-on-death deed (“TODD”) to a living trust. The degree of complexity depends on your circumstances. The point is this: when it comes to your family’s inheritance, doing nothing is almost always worse than doing something.
As always, the above is legal information based on Texas law (because I'm a Texas lawyer), not legal advice. Every case and jurisdiction is different, and you should consult an attorney if you have questions or concerns about your situation.
Senator Judith Zaffirini (D- Laredo) introduced Senate Bill 31 this week, which would make using a cell phone (actually, a "wireless communication device") to text while driving a statewide criminal offense. A number of municipalities already have ordinances prohibiting the practice, but Zaffirini's bill would standardize the offenses and penalties throughout the state.
As a municipal court judge, a city prosecutor and a city attorney (in three different jurisdictions), I'm all in favor of people not texting while driving. It's a dangerous and thoughtless practice (full disclosure - in which I have engaged on numerous occasions), and puts everyone around you in danger. The evidence and statistics are clear: texting while driving is at least as risky as drinking and driving. Don't do it.
Here's my question: as introduced, the bill deals with texting while driving as follows:
Transportation Code Section 545.4251(b). An operator commits an offense if the operator uses a portable wireless communication device to read, write, or send an electronic message while operating a motor vehicle unless the vehicle is stopped. (Emphasis mine)
The issue I have is with the last five words. Many of the ordinances banning texting while driving state that "stopped" excludes being stopped at a light or in heavy traffic - in other words, you have to be off of any public roadway and not moving. Sen. Zaffirini's bill does not. One of the things most drivers (I haven't taken a poll) get frustrated with is the person in front of you who doesn't move when the light turns green - sometimes for so long that you miss the light. What's that person doing? TEXTING OR POSTING ON FACEBOOK! YOU know it. I know it. Seems to me that Ms. Zaffirini's bill helps protect others from the texting driver, but does nothing to protect the driver (and others) from road rage committed by the angry people behind him or her. I call it a good start, but not enough to fully deal with the issue of distracted driving. What say you?
I got another call this week from a client who was trying to get me to convince him that investing with a friend-of-a-friend is a great idea. This time the pitch was, "I can get you into this deal for ten grand, but I need $4K by tomorrow. We can worry about the rest later." The product was a "franchise" opportunity and he promised to "get you the paperwork next week, but you gotta pay to play and time's a-wasting", or words to that effect.
There are too many ways this "deal" is wrong to really go into, but the first one is that federal law requires that anybody advertising franchise opportunities provide written materials at the first meeting. There's more to it than that, but you get the idea: franchise or not, "Pay me now and I'll get it to you next week" should ALWAYS be a red flag.
Another client is opening a new business and fronted a bunch of money for equipment which hasn't been delivered yet. In my client's defense, the guy was all smiles and promises when he was trying to get my client to buy. However, when the client asks the seller for a status, he gets anger and obfuscation (and no details on where the equipment is or how it's being delivered). People who get mad when you ask for details are also a red flag.
Some call it the still, small voice, others a nagging doubt, but what it often comes down to is your gut. Trust your gut. The adage, "If it seems too good to be true, it probably is" may be overstating things, but if it seems too good to be true AND THE DETAILS ARE FUZZY, run the other way.
*As always, the above is legal information, not legal advice, and you should consult with an attorney if you have questions because every case is different.
So, the latest client to be named executor in a will drafted using an online estate planning service comes into my office. Within a few minutes, I have to tell him the bad news: the will wasn't properly signed, which means we need to find the witnesses and have them come testify in court. More bad news: nobody knows who the witnesses were or where they are now. Even more bad news: because the will was so poorly drafted by his dad, who wasn't a lawyer and had no reason to know how to properly draft dispositive provisions (the part that says who gets what), it's going to be difficult to uphold if anybody complains about it.
"What can I do for you?"
"Well, I loaned my son $25,000.00 for a car and he refuses to pay me back."
"Okay...may I see the promissory note?"
"Oh, no, we're family! We don't need anything in writing."
"We're going into business together!"
"Really? That's exciting! Are you going to incorporate or be an LLC?"
"Oh, no, we don't need anything formal, it's fifty-fifty. We've been friends since the third grade, I trust him like a brother!"
And so have gone any number of initial phone calls and office conferences in my 32 years of law practice, both as an Air Force judge advocate and in private practice.
Generally, people don't intend to cheat each other (I could share some stories about exceptions to that rule, but that's another blog). However, things change, promises get forgotten, and relationships can be ruined if agreements involving money or business aren't put in writing and signed. There's a thing in most states called the "Statute of Frauds" (not statues of frogs), which has a long legal history and which states that certain agreements, to be enforceable, must be in writing. The most common of those agreements involve real property (land, houses, etc.) and agreements involving $500 or more. If these agreements aren't in writing, you will be hard-pressed to get a court to enforce them.
My suggestions are that 1) you don't loan money to family without a formal agreement (Dave Ramsey says you may as well consider it a gift); 2) You don't cosign a car loan for family (kids, maybe, but better to buy the car and let them pay you); and 3) you don't go into business with ANYBODY unless you have a detailed agreement in writing. Just like the adage that good fences make good neighbors, getting it in writing makes everybody more likely to live up to their promises - and if the person says, "Hey, don't you trust me?", assume that you can't.
Sounds silly, doesn't it? It's just a staple, after all. What does it matter if you remove it to make a copy?
Believe it or not, a number of probate cases have been turned on their heads because somebody took out the staples on an original will, presumably just to make a copy. Why? Because probate courts have ruled that an original will that has multiple staple holes in it is evidence that 1) the will has been tampered with (pages removed and replaced), or 2) the testator (person who signed the will) intended to revoke the will by taking it apart.
Staple holes aren't the only seemingly innocuous things that could invalidate a will, either: writing on an original will, especially if you've lined through a part and/or written something different in the margin, may well invalidate that will - again, because it is seen as a revocation of the original will and an attempt to make a new one without "the formalities of law". That's one of the reasons we always give the client a copy of every estate planning document we prepare - for making changes that don't invalidate the original.
There's nothing more frustrating for a probate attorney than having to tell the client that her husband's will won't be accepted for probate because he wrote on it. The differences in who gets your stuff between testate (with a will) and intestate (without one) in Texas can be significant. You paid good money for those estate planning documents, make sure you care for them properly.
Catchy title, eh? I know, I know, most business owners are more concerned about trying to make sure they can pay Christmas bonuses than about doing EOY scutwork. Here's a great reason to be concerned about getting your annual meeting minutes done: LIABILITY.
Whether you're an LLC, a corporation, a limited partnership or any other business entity that protects its investors, making sure you're doing the things that companies do is the best way to ensure that when you get sued, the plaintiff's attorney can't "pierce the corporate veil" and send the sheriff out to seize the Monet you have hanging in the bathroom. One of the most important things that companies do is to have documentation of the things that were done by the company that year.
Enter the annual meeting minutes (or a unanimous consent in lieu of annual meeting). This document is a record of things like:
At the Jacobson Law Firm, P.C., we send out reminders to our corporate clients that include a worksheet for getting their thoughts together to prepare for the annual meeting, or for having us prepare a Unanimous Consent in Lieu. Your attorney or CPA may do that as well. It's a helpful tool to make sure you have the documentation you need when you need it. Nobody might ever ask to see your corporate book, but if they do, these documents help protect you from liability. They also serve as a handy reference when you need to know who did what, when, how and why. Annual minutes - don't forget them in the year-end rush.
Since a lot of our practice involves estate planning, we prepare a lot of what are called "advance directives" - documents that authorize somebody else to make decisions for you if you can't. The least understood of these ADs is the directive to physicians, or "living will". A lot of people think that if you make a living will, the doctors at the ER won't treat you when you come in after a car accident, etc. This is no more true than thinking that if you make a will, you'll die the next day (I'm not kidding, people believe this stuff).
With a living will, you're making the decision ahead of time that you either do or don't want "heroic measures" used to resuscitate you IF:
A lot of people mistakenly believe that if they do a living will, their health care providers will stop treating them if they become critically ill. THIS IS NOT TRUE. Even if you've elected not to have heroic measures, your health care providers can't stop treating you until your treating physician AND ONE OTHER PHYSICIAN agree that:
Sound familiar? Yes, the docs have to determine the same things your living will says before they can write "DNR" (do not resuscitate) in your chart.
One other thing: the living will is what I call the most fragile legal document in Texas. Why? Because it can be revoked AT ANY TIME, in writing, orally, or by a gesture indicating the patient's intent to revoke. In other words, they could be leaning over to pull the plug, and if you summon up all your strength and let out an "Unnnngh!!", your living will is revoked.
Bottom line: choosing to execute a living will is a great service to your family because it clearly states your wishes ahead of time, but a living will is not an automatic death sentence.