New Years Resolutions

 Take that trip. Finish that project. Get the promotion. Tell ___ how you really feel. 

Image by starline on Freepik

Whatever it is, its probably not your first resolution, but every year gets you closer to...your last. 

Here is an easy one- make sure your house is in order.  A couple points of advice that folks of all asset levels and life dynamics can use, this year, and every year

1.     Take an inventory of your stuff. Write it down.

2.     Figure out who you want to get your stuff if you were no longer around. 

3.     Find the simplest way to accomplish 1 and 2 above. 

4.     Talk to whomever you want to handle your business. 

5.     If you're not a lawyer, pay someone to help you with #3. 

That's it.  The pay part seems self serving, but its really just get good advice. Pay doesn't have to be a lot, but the free options out there end up hurting more than helping. You can change your own oil, sure. But you'll likely get dirty, waste a bunch of time, and there is a decent chance you will mess things up. Just pay for someone who knows how to do, and have the peace of mind its done right. 

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.

We have moved offices

If you've tried to find me, I've moved. Come see me at 717 N. Crockett St., Sherman, TX 75092. New phone is 903.964.0852. Same guy, different building

How much does this cost?

I get this question much more regularly now than 5 years ago. Thanks to the internet, we now have access to more information, and if you believe what you read, it SHOULD make things more transparent. Professional services are no different.  

What companies like LegalZoom (often a bane of my existence) have done is the same that companies like CarMax has tried to do for the car industry, or the TDAmeritrades of the finance world: "here are our fees and costs, beat that small business!"

So, how much do things really cost? This transparency is generally good for the consumer, but too much information I believe has made our society overly skeptical about just about every transaction. 

Cut to the chase- I can change my own oil. Probably. But I'd have to buy the equipment, slide under my car (or jack it up and risk getting crushed) get really messy, and then have the spent oil to dispose of properly.  How much does that cost? Likely way more than the dealership or the local shop will charge me, and what the time, energy, and emotional turmoil would add up to. The cost is not just dollars and cents. 

How much does a cavity cost? Or a root canal? Would just brushing and flossing have been cheaper? Yeah, probably. 

The same logic should go into any professional service. Take the most basic thing I do: a Will. 

You CAN do your own at home. If you get it right, its fine. Some really good resources out there to help you, too. 

But if you don't: 

$500 cost for the attorney ad litem to be appointed when you pass, because you had no will. 

~$300 additional time required for filings for your lawyer. 

? Loss of control over where you stuff goes, and who gets it

~$500-$2000 cost savings that having a will provides in options for probate. 

So, what is a will worth? Baseline, $500, in reality much more. Again, the cost is more than upfront dollars. 

The next common question is when to pursue a claim or not. These get a little tougher. 

Caller: "Hello, (lawyer person). My (relative) died, and he had money in the bank. I need to get it." 

Lawyer person: "Ok, how much was in the bank?" 

Caller: "Probably $1000"

Lawyer person: "Did they have a will?"

Caller: "No"

Analysis: We already know that the no will tax is $500. The filing fees for most types of probate are a minimum of $300, with additional required costs of another $200-$300. You're already under water there, and the lawyer person has not even been paid yet. Its a poor result, that could have been fixed with a beneficiary designation. What makes sense at this point? Just walk away. 

The same process goes into any lawsuit. A common one I see is when you have rental property, the tenants move out in the night and steal your kitchen appliances. They owe you $5k in rent and to replace the kitchen will be another $10k. Sue them! Right?!? Maybe not. 

First, you have to find them to sue them. Problem. Next, you're looking at several thousand dollars in filing fees, costs PLUS lawyer time to get a judgment.  All that may be for naught, if they don't own property (which they never do, seeing as they are renters) or have assets you can attach (again, slim). So what is the result? You were stolen from, paid $5k for a judgment that doesn't get you anymore money. Would have rather just done nothing? I think so. 

TAKE AWAY:

In any scenario, more information can be a powerful tool in decision making. When it comes to professional services, lawyers included, you really have to consider more than just money when determining if any course of action makes sense. Is price your main driver? You may lose out on customer service, and be prepared to only have your self to blame if things don't work out.  

US Supreme Court filings: a primer

Sorry I've been gone a while, but I've been busy.

In today's post, I'll walk you through a (very rudimentary) tutorial on the shakedown that is filing things in the US Supreme Court, as I had to teach myself this last month.

Question 1: Why?

-I don't know why, but if you are the Petitioner, good luck. Depending where you look, the odds to get your certiorari granted are less that 5%.  If you are on death row, keep fighting the good fight, assuming you're innocent. If you're trying to keep minorities from voting in North Carolina, then I guess you have to keep trying.  Either way, its a pain to file things in the supreme court, but let's proceed.

Step 1: Get Admitted

So your case is appealed to the USSCT, or you need to appeal a case up there. First things first, you have to be admitted to the Supreme Court bar! Ask around, and some say this is a vanity trip, and I might not disagree. However vane it may be, its $200 and this form to join the club. You also have to find some friends who are part of the club to endorse you. Special thanks to the Richardsons, and Roger Sanders for this endorsement. Mail it off, and they send you an email saying..."one more click and you are confirmed!"

This takes you to a third party framing site, which, after rejecting the several overpriced framing options for your new shiny supreme court bar certificate, you can confirm you actually want the certificate you already paid for as part of your $200 fee. I understand it, because, capitalism and all, but poor form, supreme court, poor form requiring me to click through ten screens of pretty frames just to get my certificate. I digress.

Step 2: Respond

If you are at this point, you probably know your case and have most of the content ready to go. As any 1L or appellate lawyer will tell you, you end up spending as much time formatting as writing. This part is awful. However, I found this template that, while advertising for another company's services, got the job done. But that is just the beginning.

Step 3: The Booklet

Within THE RULES of the Supreme Court, you find out the following:

Rule 33. Document Preparation: Booklet Format; 8 1/2­ by 11-Inch Paper Format 1. Booklet Format: (a) Except for a document expressly permitted by these Rules to be submitted on 81/2- by 11-inch paper, see, e. g., Rules 21, 22, and 39, every document filed with the Court shall be prepared in a 6 1/8- by 9 1/4-inch booklet format using a standard typesetting process (e. g., hot metal, photocomposition, or computer typesetting) to produce text printed in typographic (as opposed to typewriter) characters. The process used must produce a clear, black image on white paper. The text must be reproduced with a clarity that equals or exceeds the output of a laser printer.

What? I can't just do it online? NO, you can't, and you can't do it at home/the office unless you have a print shop. A 6 and 1/8 inch by 9 and 1/4 inch booklet, it turns out, you cannot just make in your own office printer. It gets better.

Your petition has to have a white cover. An opposition? It has to have an Orange cover. Yep, orange. A brief on the merits? Light Blue. After that, you have to file 40 of them with the court, and 3 with all parties. FORTY.

Can't I just outsource this? You bet you can. And the outsources will email you. And Email you. For a complete hands off with response, expect to pay several grand. Cheapest quote I found for just printing and delivery was $1500 I think, most were around $3k and up.

Instead, I called my good friend Ronnie at BnB solutions and he made my little orange books perfectly, and got them to DC on time. Under $200. Ronnie, I salute you.

Step 4: Sit back and wait. 


Now is the easy part, you sit back and hope the Clerks up there agree with whatever your position is, and stick your 40 colorful books in the good pile.


PRO TIP: Call the clerks. They are awesome, usually answer their phones, and will guide you through everything. If they don't answer, they actually call you back.

Conclusion:

If you have to file something in the US Supreme Court, don't fret. It can seem daunting, but as long as you take your time, you can get it done efficiently and cost effectively.

Beneficiary Designations, again.

I've written about beneficiary designations before, but they continue to be a source of conflict I'm seeing for clients. It's not just life insurance, either.

Think about your assets. Bank account, stock account, CD's, IRA's, 401k.  Probably, without thinking, when you set each of these up you had to fill out all sorts of questions. As I'm sitting here, I have no idea who I've named for all my account beneficiaries, and I do this for a living, so I'm guessing most of you do not either.

If truly you have never named anyone ever, then the rules are relatively simple. Whatever your assets are pass under your will, or under the laws of the state where you live if you have no will to your heirs. Unless, the contract for your account says differently. Want to cut out your no good kid? Policy might not let you. Really hate your spouse? Account contract might give it all to them. See why this is important?

Where it gets really sticky is if you try and change things, and something happens, and you don't get it done.

Example:

Wanda Worker has been with her company for 30 years, and has built up a large retirement with stock options that have vested.  She has two children, one who is in the pen for attempting to harm her pet parakeets, and another who is a nun working with disabled children. She fills out the form to change her beneficiary designation on her retirement account and her life insurance to her nun daughter, and on the way to the mailbox to send it off has a heart attack and dies.

Answer:

What happens? Per the usual, it depends.

If left alone, its distributed pursuant to the policy rules. If Wanda was married, usually goes all to the husband. If she was not, split between the kids. There are two different theories out there that could change the result, whoever. In Texas, for life insurance and in limited other circumstances, courts have held that if someone "substantially complied" with the rules to change, its good enough.  Other accounts or policies require "strict compliance" which means if its not done right, sorry.  The problem with the "substantial compliance" standard is it puts someone else in the position to determine another's wishes.

In our above example, at first glance, Wanda did everything she could do to change her beneficiary designation. It wasn't her fault that she had a heart attack, right? Well, why didn't Wanda do it the day, week, month...before? She went to the nail salon instead. Is that doing everything she possibly could have done?

Take away:


You simply cannot be too careful with this stuff. Tomorrow is too late. However, should you find yourself, a family member, or other involved in a situation like this, or where one family member is trying to take advantage of another, thankfully there are options to make it right.

For an example of a case that played out like this, see THIS CASE. Think the result is fair or unfair? Let me know. 

Be careful what you sign for...

We sign things all the time. Mostly credit card receipts, but if you have ever bought a car, a home, or signed for a package, you are also representing to the contracting world that, by signing the document, you accept the consequences therein.


For most things, this is fine. Sign your electronic name at the grocery store, sign for your fragile antique cuckoo clock you ordered off ebay. However, if you sign for something as part of your job, or in a business capacity, you need to be much more careful.

Scenario #1:

You are a manager for Big Box Store, who sell mature pokemon to the public. You negotiate a great contract with your supplier of pokemon eggs, Fantasy Farms, in part by not telling them who the eggs were for. You sign the contract only with YOUR NAME. Turns out, people stop caring about pokemon, and Big Box Store stops paying on the contract.

Fantasy Farms sues you for the contract. Who wins?

Weren't you just doing your job? Well, sorta. Texas courts look at a few things.

Who signed the contract? Well, you did. Not the company. You should have signed it, YOUR NAME, manager, Big Box Store. That would have protected you. But you wanted a deal, so you didn't.

Next, did you disclose you were an agent or officer of the company? No, obviously. Strike against you.

If I'm the judge, I'm probably finding that you are stuck paying the contract.

Scenario #2:

You and a buddy are starting your medical practice together. You set up your company (doctor's can have special "professional association" entities, think an LLC just for doctors) and you sign a lease. However, when you sign the lease, you signed it as "Doctor A and Doctor B."   Business dries up and you want to move out. You do, the landlord sues you individually for the remainder of the lease. Can they pierce your corporate entity?

Depends. Again, was it obvious you were signing for the company? Was that disclosed? Did the lease include specific provisions to hold you accountable? (READ YOUR LEASE.) Are your books and records in order, showing you observed the corporate formalities? This scenario is very avoidable if you are careful when you sign the contract. To see what not to do, read this case.

Rule:

The basic rule is if you sign for something as your name, its on you. If you are the president, manager, or back room clerk for Big Box store, sign YOUR NAME, CLERK, BIG BOX STORE. Else, its on you. The exceptions come if you disclosed who you work for, it was obvious, and if you are the owner/officer of a company, as long as you weren't trying to perpetuate fraud, you should be ok too. Key is disclosure.

This same logic applies for owners of a company, partners in a partnership, members in an LLC, etc. Don't give away your liability protection by signing something without your representative capacity, else your "corporate veil" could be pierced.

Take away:

We all wear many different hats. Individual, parent, spouse, mother, son, employee, owner, etc. Whatever hat you are wearing on any given transaction, make sure you disclose that hat, or you could get stuck wearing a hat you didn't intend.

Gun Trusts, ATF 41P update

Finally, at long last, we have some clarity on what and how the ATF will be regulating the use of "gun trusts" for purchase of National Firearms Act items.

On January 15, the final rules were published in the Federal Register, so we have 6 months to stay under the old rules until these become effective.

Why they changed things:

 "The goal of this final rule is to ensure that the identification and background check requirements apply equally to individuals, trusts, and legal entities. To lessen potential compliance burdens for the public and law enforcement, DOJ has revised the final rule to eliminate the requirement for a certification signed by a chief law enforcement officer (CLEO) and instead require CLEO notification. DOJ has also clarified that the term “responsible person” for a trust or legal entity includes those persons who have the power and authority to direct the management and policies of the trust or legal entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or entity. In the case of a trust, those with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for or on behalf of the trust."

What this means: 

1. No more CLEO signoff. This means as an individual purchaser, (no trust) you don't need the sheriff (nor his deputy, if you're Bob Marley).  Additionally, they removed the proposed threat of having everyone on a trust having to get the CLEO sign off. Copies of applications just get sent to the CLEO. This is a good move.

2. Fingerprints, passport photos, background checks for all "responsible persons." If  (more) background checks help reduce crime and prevent weapons from getting into the hands of those who should not have them, I'm all for it. I still won't believe the justification for this (trusts and entities were allegedly "exempt" from the background check requirements) is that a trust was a free pass for bad guys to get machine guns. Why does the application process take up to a year? I can't fathom a scenario that the ATF does not check the names of all parties listed on a trust, nor does any reputable dealer not check the purchasing individual. But such is life, and after mid June, all your named Trustees, and beneficiaries will likely need to have the new form (fingerprints and photo) to send off.

Take Away:  

As of right now, nothing changes. As of June, we are in a new regime. It will be a little easier if you purchase an NFA item as an individual, and a little more paperwork if you use a trust after that point. Again, the only way for multiple individuals to possess a "shared" item individually is to use the trust or other entity, so if that is your goal, the trust will still be the recommended path. Happy (quiet) shooting.