Estate Planning Advice from Influencers

 We now live in a world that's 240 characters or 90 seconds or less of information and gratification. Facts sometimes matter, but more often its shock, awe, and something off the wall that gets "likes". 

I used to have to battle the "estate planner at Golden Corral" seminar where an elderly couple gets sold an overpriced "living trust" that is never completed but they paid thousand for a binder with a set of documents that normally they didn't need. Now its youtube and tiktok from some person in their parent's basement telling you how the tax code works. 

Old man rant over, but I'm getting a couple calls a week or a text/email with a link to some internet person who has the key to a magical trust where you don't have to pay taxes anymore and the government can't touch your money forever. 

These are not real. Sure, you can have a (insert random state) irrevocable/statutory trust with a (insert another random state) LLC inside a pumpkin on top of a rainbow. But what will you have at the end of the day? Something that cost you more than nothing, and not the thing you hoped for. 

Look, I try to stay on the cutting edge of this stuff. I don't want to pay taxes, and I don't want you to pay them either. Until a better solution comes, we are stuck. Let's minimize them and take advantage where we can, but there is simply not a magic solution that makes all your taxes go away. You will have to file and pay something, unless you have corresponding credits, deductions, or other offsets. Consider the cost of annual tax returns before you set up that new trust or LLC.

The basic rules still apply- limit your liability wherever you can. Have an entity structure that provides governance, rules, and succession if something goes south. Just please, before you go down a social media rabbit hole, consider the source, consider the cost, and analyze exactly what you are trying to accomplish. 

Real Estate Disclosures- And You

 I haven't posted in a while, say the last two years. Anything happen? How's everyone been? 

If you haven't watched the news, there is a lot to catch up on. First, the real estate markets are nuts. Everywhere. Especially in North Texas, where the city came to the burbs, who then fled to the country. Thanks to HGTV and Chip and Joanna, we have a million new house flippers, and wall street money has started to pour in. What can go wrong?

If you have ever sold a property, especially residential, you should be familiar with a seller's disclosure (see the standard TREC form here). Seems simple enough, do you have hot tub? Ceiling fan? Great! Check the box. Don't know an answer? BE HONEST, but you can say you don't know. 

Where it gets tricky are the bad things- termites, past damage, that time your garbage disposal overflowed into the kitchen...big deal? Did you talk about those? 

You better. I've had more cases based upon seller's disclosures in the past 2 years than the prior ten. Coincidence? Maybe. But here's the point-OVERDISCLOSE. 

Its gotten so bad, you have third party companies advertising extra insurance, at the cost of hundred or thousands, to cover you for a screw up. Piece of advice- like a "home warranty" (or a used car warranty that I'm sure you've never received a call about...) or a flat-fee promise of legal protection when you shoot someone with your licensed or constitutional-carry weapon, for 99% of you out there, ITS A BAD DEAL. 

I work with a lot of great realtors. You know who you are. I work with a lot of realtors, who don't do what they need to do for the level they are compensated. This one is easy. OVERDISCLOSE. 

Water come in during a big storm? DISCLOSE IT. Have a dream about a termite? Get an inspection, and DISCLOSE IT.  If someone wants your house, they are going to buy it. If you had a massive issue and you cover it up with fresh paint, you're going to get sued, and its not going to be worth it. 

Take away: This is seems basic, but selling your house doesn't have to be that complicated. List it, hire a realtor or DIY, and fill out the paperwork. Don't rely on the "as is" box on your contract-  you can still get sued if you don't tell the truth on the disclosures. 

Zoom law- Does it work?

Sorta. The new world order has come, and its hit the legal world as well. First, it was "let's get rid of paper."  That is generally a good thing, but I'm covered up in more paper that ever.  I do like not going to the courthouse every time I want to file something, but instead of paying a local college kid the county takes that money for the privilege.  

I guess that's a wash, but a net-positive for efficiency. 

Enter the pandemic, and now we can't be near each other. Technology has helped keep things going, and as some speculate, we may have just hit the new normal. 

The Good-

If you are not fighting anything, why drive an hour away, pay to park, and sit there when your part only takes 5 minutes? For most probate proceedings, scheduling conferences, etc., online hearings are excellent. You don't get yelled at for working while you wait, and you can dress like you're an anchorman, as no-one sees your bottom half (hopefully. We have all seen the horror stories and don't leave your camera or mic on when you go to the bathroom).  

For uncontested matters, I hope the online option is here to stay. 

The Bad-

Anything that's not friendly is borderline impossible online. Exhibits, reviewing documents, objections, reading the room...you just can't do it well. The Courts have tried, but its just not there yet, and obviously we can't have virtual jury trials without going full virtual reality, which we are not ready for either. 

If I'm asking some tough questions, and the bad person on the other side doesn't want to answer them... "sorry, I've got a bad internet connection...I can't see what you're talking about...I can't hear you..." and its just a clown show. 

The courtroom practice of law is a very intimate, personal, experience. You have to be there. And if you're a face on a screen, you're just not there. 

Take away:

For most of the pandemic, I liked Zoom. All trials hit pause, it was a good reset, and you could still get some things done. Now that we are (hopefully) getting back to a more normal world, the lingering effects of online meetings are making things more complicated. Hopefully we can either get back to normal, or technology will catch up and get us closer to the real thing. 

 

Probate Movie Review: Knives Out

Warning, LIMITED spoilers. No real plot spoilers.

Maybe I'm late to the game, but I just saw this, so now you get my review.

When I first saw the preview for Knives Out, I thought it was Clue: Part 2.  It was not, but it might as well have been, and they even referenced Clue in the movie. Either way,  a spiritual sequel with James Bond, Captain America, Michael Myer's Mom, Zod/Nelson Van Alden, James Crockett..(and more) was worth a watch.

Anyway, it turned out to be a movie about probate. So here we are.

Well, rather predictably in hindsight, when a rich old man who is a benefactor to his family of leaches dies, the vultures will circle. When things don't go as planned...things get nasty.

What the movie got right:

1. Ways to Contest a Will: Undue influence, which means someone else overpowered they mind of the person making the will. Lack of capacity, which means they didn't know what they were doing, and there is a legal argument to say they were not in a state to execute complex legal documents, like a will. 
2. Renouncing inheritance: Yes, you can do that. Normally its just for tax reasons though. 
3. Slayer Statute: More common in life insurance, but same applies for wills and others if your state has it. You can't kill someone and then benefit from it. I think most folks would agree this is a fair rule. See the text here.
4. Reading of the Will: They do it in the movie (see picture), but even they say, this really never happens. I wish it would, it would make things more interesting. 

What the movie got wrong:

1. The Will itself: Shockingly, the old man changes his will! This he could do. However, the quick glimpse in the movie shows a one page letter looking document, without any witnesses. The movie is purportedly in Massachusetts, and Massachusetts requires wills to be witnessed Now, there is an exception, saying that if the will was valid somewhere else where it was written, it can be valid in Massachusetts, but the paper was typed, not handwritten (or holographic), so I'm not sure how it would have been valid anywhere. Kinda sloppy, Rian Johnson. 
2. The Aftermath of a Will that Disinherits Folks: In reality (and sometimes these make for great cinema), when a completely valid will goes off the rails and leaves the old man's money to someone who isn't the family, lawsuits happen. They usually settle, even if one side has all the good facts. If they don't, its expensive, and lawyers make a decent chunk of the pie. 

Takeaway: 

 Knives out was good. Not 97% on rotten tomatoes good, but definitely worth a watch.  I give it 74%, which is still really good, just not all time good.  They should have called John Grisham, or any probate lawyer, to clean up a few little wrinkles in the facts, but that doesn't mean the broad strokes weren't there. Like drama? Want to have your family feuding after your gone? You can do it on purpose, or you can prevent it. Knives out highlights just that. 

PS: I'm sure someone else somewhere has written about this, seeing as the movie has been out for a while.  I spent a couple minutes on google and only saw a cursory review, so I did my own. 

Guardianships, who, why, and a little update

Caller: "I need to get a guardianship"

Me:  "Can you tell me why?"

Caller: "Well, I need to get control of my _____"


Stop right there. That's not a why, because you haven't told me why that person needs a guardianship, why it would be in their best interest, and what else you have done to prevent the necessity of one.

That's ok, we can sort that out.

HARD TRUTH #1: You can't take a guardianship out on someone who has capacity, who doesn't want to consent to it.

Ex: "I have to get help for my (insert family member or friend). They are (insert risky behavior) and I'm worried they are going to end up in jail or worse."

Sadly, there is not a guardianship or other legal procedure to help someone who doesn't want to be helped, not unless they have a diagnosed medical issue or they have broken the law.

Ok, now that is out of the way, who is guardianship for? The Texas Estates Code dictates the rules for guardianships, and they are complex, as a guardianship is a harsh remedy to an underlying problem. Like a  power of attorney, you get to act on behalf of someone, financially or medically. Unlike a power of attorney, it requires a lawsuit, its really expensive, and it can potentially take away the ward's (the person whom the guardianship is taken) rights to make any decisions for themselves.

HARD TRUTH #2: Those who really need a guardianship can't always get one, and those who don't deserve them, sometimes get one. 

Ex: "I have a special needs child who just turned 18, and I need to have guardianship to help them apply for benefits. "

If you wait til after your child turns 18, this can be a pickle. PRO TIP- don't wait. Same example as above, a family member wishes to save another from themselves, but they won't agree. Can't do it.

The classic scenario is you have a pressing medical or business decision that requires a person's authority, but they do not have the capacity to grant that decision. Ok, you need a guardianship, what do you do?

You need a lawyer, a doctor's report, and sufficient information for all the ward's family members. The filing fee is higher than other proceedings, they court MUST appoint a neutral ad litem attorney (Add $1000+ to your costs), and then you have to get everyone served. If all the family and others agree, you can estimate costs at several thousand dollars. If someone fights or contests, triple it, and then some.

Once you have a guardian, there are strict requirements for accountings that must be met and add to the cost.

TAKE AWAY:  A guardianship can be a necessary evil, but they are difficult and expensive. If you need one, plan accordingly. If you don't, be thankful.