Stop Inheritance Feuds Before They Start

Posted by on Apr 25, 2014 in Estate Planning, Uncategorized | 0 comments

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“THE LEGAL CORNER”

By Sam A. Moak

STOP INHERITANCE FEUDS BEFORE THEY START

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

Family members routinely fight over cash, stocks and other large assets after a relative dies. But some of the most bitter fights are over trinkets. More than half of lawsuits over inheritances involve items worth less than 10 percent of a person’s estate, according to an article on dailyfinance.com. That’s because they have emotional not financial value. One family fought over their mother’s passport, even though it had no financial worth.

 To avoid such fights, conversations should be started early. Either the older or the younger generation may initiate this talk, but the idea is to get an idea of who wants what. To assist in this you should make an inventory of your possessions to discuss with your attorney. Share the list with family members.

 It is also a good idea to have your property appraised. You can use the local appraisal district’s valuation for real estate, but understand it may not be accurate. Personal property items, other than automobiles, may be difficult to assign values to, so seek help. If there is a great disparity in value of items, then you might consider selling them. Cash is always easier to divide among heirs.

You know your family better than anyone else. If you know they do not see eye to eye, do not rely on them being able to work together to divide assets. You will have to divide them or give your executor the ability to do so. However, please make every effort not to burden your executor with refereeing family disputes.

You might consider including a list of personal property in your Will. However, be aware your Will becomes a public record and the whole world will be able to see the list. Talk to your attorney about alternatives to listing items in your Will.

The best way to avoid a fight or conflict is through careful planning, done way ahead of time. Do not put off until tomorrow what needs to be done today. Seek the guidance and advice of an attorney who handles estate planning. There is a good chance he or she will have experience with “sticky” matters and how to best avoid them.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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What are Nonprobate Assets?

Posted by on Apr 11, 2014 in Estate Planning | 0 comments

“THE LEGAL CORNER”

By Sam A. Moak

WHAT ARE NONPROBATE ASSETS

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

 One of the more common complaints about attorneys is their use of too much legalese. Unfortunately legalese is all too common in real estate and estate planning practice. This week I will try and clarify one of these areas.

Probate is the legal process of administering a deceased person’s Will or the estate of a person who dies without a Will. Remember, just because someone dies with a Will does not automatically mean they must go through the probate process. This depends on what type of property they owned at their death and how well their Will was drafted. If someone passed away and left a Will, be sure to check with an attorney skilled in this area to determine if there is a need to probate the Will.

Only property owned by the decedent at death can be disposed of by a Will. A Will cannot dispose of “nonprobate assets.” What are nonprobate assets ? They are assets which pass at death other than by Will or intestacy. The principal types of nonprobate assets include property passing by contract, property passing by survivorship, and property held in trust.

 Property passing by contract includes life insurance proceeds, IRAs and employee benefit plan proceeds, such as the proceeds payable under a pension, profit-sharing, or employee retirement plan. These assets pass outside the Will to the persons named by the decedent in the appropriate beneficiary designations. Thus, it is important to periodically review the beneficiary designations with respect to these types of assets and to update them as necessary.

 Property held by the decedent and another person as joint tenants with right of survivorship passes outside the Will directly to the survivor. Survivorship assets typically include certain types of bank accounts, certificates of deposit, stocks and bonds, and certain savings bonds issued by the United States Government, such as Series EE savings bonds. If these are not addressed when you prepare your Will, then all your careful estate planning could be for naught.

 Another category of property that passes outside of probate is property held in trust for the benefit of the decedent. The trust may have been created by the decedent during his or her lifetime for property management purposes or by someone else, such as a parent of the decedent. Trust assets pass under the terms of the trust rather than under the terms of the decedent’s Will.

 It is important to determine the extent of one’s nonprobate assets when planning the disposition of one’s property at death. If a substantial portion of the assets are nonprobate assets that do not pass under the Will, even a well-drafted Will may be insufficient to carry out the testator’s intent in disposing of his or her property. If you intend for life insurance proceeds, IRAs and employee benefit plan proceeds or bank accounts, certificates of deposit, stocks and bonds, and certain savings bonds to pass under your Will, these beneficiary and joint tenancy designations should be carefully examined. Therefore, be sure to provide your attorney with information regarding all of your possessions so that he may be sure to address them when discussing your Will.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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Business Start-Up Checklist

Posted by on Mar 14, 2014 in Business | 0 comments

“THE LEGAL CORNER”

By Sam A. Moak

BUSINESS START-UP CHECKLIST

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

 Both heart and mind must be working well if the owners of a new small business are to experience success. While it is only human nature, not to mention fun, to indulge one’s imagination about what a new business started from scratch could be like, would-be entrepreneurs need to engage in some cold, hard thinking and planning before taking the plunge. At the risk of pouring cold water on some of the anticipation and excitement, what follows is a guide for how to plan for and think through the many decisions that must be made well before you have that “Grand Opening” sign made.

Why?

This may seem obvious, but you should know just what your reasons are for wanting to start a new business. If the motivations are weak, odds are the business will be a bust, but well-founded reasons can help a business persevere through good times and bad. Some common reasons for starting a new business include escaping the whole 9-to-5 routine (though it may be replaced by an 8-to-8 routine), answering to no one else, upgrading your standard of living, and being convinced that you can provide a needed product or service.

Why Me?

Let’s face it, not everyone is cut out to be a captain of industry, or even captain of a small business. Maybe you need not subject yourself to an intensive psychological and life-experiences evaluation, but be honest with yourself about whether you have the necessary characteristics, skills, and experience. A few examples give you the idea:

Can you make yourself pull the trigger on an important decision?

Do you see competition as exciting or just stress-inducing?

Are you willing and able to plan ahead?

Do you like interacting with people you don’t know?

Do you have the perseverance, not to mention the physical stamina and health, to put in long hours if that’s what is needed to make the business succeed?

Are you, and anyone else financially dependent on you, prepared to risk your savings in pursuit of the business dream if that’s what it takes?

Unless you are planning a one-man band of a business, are you comfortable with hiring, supervising, and possibly having to fire other people?

Are you reasonably well organized?

Do you know anything about the paperwork and legal side of running a business, such as payroll and accounting, the permits or licenses you will need, or the regulations and laws that may apply to the business?

Why This Business?

You may have the best motives and a skill set that would be the envy of any MBA graduate, but if there is no niche for your planned business, or, simply put, if not enough people will want to buy what you are selling, the new business will fail. The variables here include timing, location, and simply whether your business is feasible or practicable, so that you can be the one to fill that niche that you have first identified. Don’t make your business the equivalent of carrying coals to Newcastle.

In economic terms, you want to do some investigation to determine if there is some currently unmet demand for the product or service you want to supply. Then you want to meet that demand with a product or service that is competitive in quality, selection, price, and/or location. In short, learn as much as you can about the market you will be in. Learn who your customers will be and try to understand their needs and desires. Anticipate how your fledgling business will compare with any established competitors. What can you do in setting up and running the business to make sure you get your share of whatever market there is for your product or service?

How?

Turning the idea into bricks and mortar (literally or figuratively) involves a lot of decisions, some of which are best made only after getting professional advice. Still, you should acquire at least a layperson’s understanding of the pros, cons, and consequences of each decision.

Choose a name for the business that you find appealing, but also one that is informative for someone hearing it for the first time. Select the most appropriate business form, such as a sole proprietorship, a partnership, or a corporation. Investigate which local, state, and federal laws and regulations will apply to the business. This will run the gamut from laws of universal application (e.g., taxes) to laws specific to your business.

Make an unflinching and detailed examination of your financial picture. How much do you have now, how much will you need to start the business, and how much will you need to stay in business? Projecting cash flow into the future means taking into account such variables as seasonal trends in sales, the amount of cash taken out of the business for personal expenses, whether and when to expand the business, and the rate at which customers will pay off accounts if credit is extended to them.

Find a location for the business that is convenient for customers, appropriate in size and configuration, and zoned so as to allow your type of business. When you have settled on the product or service you will sell, calculate the inventory you should create and maintain and locate reliable suppliers.

Finally, if you go to all the trouble and expense involved in creating a small business, don’t forget to think about protecting against losing the business from such threats as fire, theft, robbery, vandalism, and liability for an accident. This means taking measures to provide security, but also arranging for the appropriate types and levels of insurance.

There are several excellent local resources to assist you with starting a business, the Small Business Development Center at Sam Houston State University, your local banker, financial advisor, CPA, the Chamber of Commerce, insurance agent and an attorney who is well versed in the formation of business entities.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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HOW TO AVOID A CONTESTED PROBATE

Posted by on Feb 21, 2014 in Elder Care Law, Estate Planning | 0 comments

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“THE LEGAL CORNER”

By Sam A. Moak

How to Avoid a Contested Probate

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

I, like many elder law attorneys, spend a large part of my practice engaged in preventive law. Preventive law is a law practice that seeks to anticipate and prevent legal problems and litigation. It is an approach found in several other areas of law besides elder law and estate planning. Many of us who practice elder law already use counseling techniques and many of the documents we prepare with the goal of avoiding litigation (such as an expensive trip to probate court or other legal or financial harm that might have been avoided with appropriate planning).

The conduct of an attorney would of course vary with the situation and depend on the unique circumstances of the case or conflict. With that said, there are some behaviors that would distinguish the peacemaking mindset, and which would be designed to obtain win-win outcomes. These include a willingness to (1) agree to stipulations as to facts and the admission of evidence along with other requests to hasten the proceeding; (2) accommodate requests from opposing party or counsel for schedule changes due to illness, family, or work responsibilities; and (3) avoid the “gotcha” strategy when a mistake is made by an opposing party or counsel; and (4) abstain from negative personal or otherwise disparaging comments. This list is not meant to be exclusive or exhaustive – the bottom line for all these “indicia” of the avoiding conflict mindset is that the attorney acting as a peacemaker is an erstwhile advocate for family or intergenerational healing and that this restorative approach can be consistent with the interests of the client.

 When elder law attorneys act as probate peacemakers or as elder/probate mediators, they bring their substantive knowledge of and familiarity with these preventive steps and techniques. This combination of substantive experience and the preventive approach to a problem or set of problems combine in a way that can help predict how a client and members of a family or another interested group might behave in the future. That can mean that an attorney serving as a peacemaker or as counsel to a disputing party can help ensure that the client has the benefit of strategic advice before future problems or troubles appear on the horizon. To the extent that a dispute is not definitively resolved by some process, or if related issues crop up, a peacemaker can be enlisted to draft an agreement that can guide the parties toward productive management of anticipated future disputes.

 If it is your desire that your final wishes be carried out without conflict or litigation, then you should seek the assistance of an attorney experienced in Probate, Estate Planning and Elder Law matters. He or she can guide you with regard to decisions and language that will make the transfer of your assets a peaceful experience instead of a stressful one.

If you have a question regarding Elder Law, Estate Planning, Living Trusts or Probate in the Huntsville area, please contact us at 936-295-6394 or visit our website. Call today and we will connect you with an experienced Elder Law and Probate Attorney. We can schedule you a face to face appointment to discuss your circumstances. If you have questions or are considering any aspect of your estate plan, probate, your health care directives, etc. we can help! Call us now at 936-295-6394 . We look forward to hearing from you and assisting you with any and all elder law and estate planning needs.

 Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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Learning From Celebrity Mistakes

Posted by on Feb 14, 2014 in Estate Planning | 0 comments

“THE LEGAL CORNER”

By Sam A. Moak 

Learning From Celebrity Mistakes

 The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstance.

 Normally, I would never tell anyone to look to a celebrity for guidance. However, in this instance perhaps we can learn from their mistakes. What do Princess Di, Marlon Brando, Heath Ledger, Jimi Hendrix and former Supreme Court Justice Warren Burger have in common? They all flubbed their estate planning, costing intended heirs money and/or grief.

 The mistakes these folks made run the gamut. Jimi Hendrix died without a Will, leaving his close brother Leon with nothing. Supreme Court Chief Justice Warren Burger wrote his own Will, which at 176 words left out basic tax clauses that could have saved $450,000.00 in estate taxes. Princess Di relied on a “letter of wishes” to give away belongings, and her godchildren got shortchanged.

 However, take Paul Walker, star of the Fast & Furious movies. Paul Walker’s Will was signed in August of 2001, when he was only 28 years old. This is the same year his first Fast & Furious movie was released. Walker is to be commended for preparing a Will and Trust at a young age, before he was a well known movie star. Far too many adults in this country wait until “someday” to prepare even a basic Will. No one should ever procrastinate with estate planning! Walker certainly didn’t plan to die in a car accident.

A Will is not a static instrument. To serve its purposes, it must keep current with life changes, including an individual’s financial circumstances, and with some external factors, such as tax laws. With the help of a professional, you should periodically review your Will, staying alert to new or different circumstances that might call for updates.

 While Walker gets kudos for planning ahead, he loses points for failing to update his estate planning documents before he died. His death was more than twelve years after he signed his Will. There are too many changes in life over the course of twelve years, especially when Walker’s net worth grew so much during that time, to rely on the same old documents. Perhaps Walker would not have wanted his young daughter to inherit his total wealth. Perhaps he would have wanted his girlfriend of 7 years, Jasmine Pilchard Gosnell, or his parents to have a portion of his large estate; or, perhaps there were charities he would have benefitted. What if Walker’s parents were not physically able to act as executor or guardian? These are all reasons to revisit and update estate planning documents.

 Letter of Instruction

Even the best-drafted Will is not likely to cover everything needed for a smooth disposition of your estate. To supplement the Will, consider executing a letter of instruction. It generally is not legally binding, but it can go a long way to expedite the process and provide information not to be found in the Will.

Some items appropriate for a letter of instruction include a list of bank, brokerage, and mutual fund accounts; directions on where to find important documents or personal property; user names, PIN numbers, and passwords necessary for access to electronic records; and contact information for legal and financial advisors. Be sure to list any life insurance policies, as beneficiaries will collect on those policies outside of the Will. Any advance plans for the funeral and burial also should be mentioned in the letter of instruction.

 Hiring an attorney to write your Will can help you ensure that the technical formalities of Texas law are followed and that your gifts are clear and easily understood. Spending a few dollars now will save your family and loved ones from spending more later. Not to mention the confusion and grief that will be avoided.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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