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When Can You Use A Small Estate Affidavit In Texas?

Michell Bradie — Fri, 24 Feb 2012 00:47:45 +0000

Sometimes smaller estates can be probated through a Small Estate Affidavit. In order to do so, it must meet certain requirements, as discussed below.

There must be no Will. If the person that died left a Will, then this is not the right procedure to use.

The estate must be less than $50,000 in value (not including the value of the homestead or other exempt property.) So if the value of the estate is more than $50,000, excluding the homestead and other exempt property, then this is not the right procedure to use.

The only real property that can be transferred is the Homestead property. If there are any non-homestead properties, like other homes, lots, time shares, or royalty interests, then this is not the right procedure to use.

It requires that 30 days have passed since the date of death, and no petition for the estate has been filed or granted.

A Small Estate Affidavit requires two (2) disinterested witnesses to file a sworn affidavit affirming Heirship. Since there is no Will involved, the heirs-at-law will take their intestate share, just like with a Determination of Heirship.

The Affidavit must list all assets and liabilities, distributees under the laws of intestacy, and their relationship to the deceased.

The court does not have to grant the Small Estate Affidavit, even if all of the requirements are met. It is within the discretion of the Judge to sign the Order on the Small Estate Affidavit or not.

If the Judge signs the Order on the Small Estate Affidavit, it should be filed in the real property records where the homestead property is located in order to transfer the homestead property to the proper heirs. There is no deed prepared to transfer the real property. The Small Estate Affidavit states whom the heirs are, the percentage that they take under the laws of decent and distribution, and that is the information used to show the transfer of interest to those heirs.

A certified copy of the Small Estate Affidavit and Order can be ordered and used to have access to bank accounts or transfer vehicles and other property to the heirs-at-law.

If it is appropriate and all the requirements are met, a Small Estate Affidavit can be a more affordable way to handle the probate of someone’s small estate.

What Does A Community Property Interest In A Limited Liability Company (LLC) Get You?

Michell Bradie — Fri, 24 Feb 2012 00:32:09 +0000

A member’s interest in an LLC may be community property if that interest was acquired during marriage. However, the member’s right to participate in the management and conduct of the business entity is not community property.

What that means is that if a member in an LLC gets a divorce, the member’s spouse, if any, is only an assignee of the membership interest. The member’s spouse may be entitled to receive a portion of the economic benefit if there is a distribution, but will have no right of management and control of the business.

If a member in an LLC dies, then the member’s spouse, if any, and an heir, devisee, personal representative, or other successor of the member, may be an assignee of the membership interest. Again, the member’s spouse (or heir, devisee, personal representative, or other successor of the member) may be entitled to receive a portion of the economic benefit if there is a distribution, but will have no right of management and control.

Also, if the spouse of the member should die, their community interest in the LLC will only serve to transfer an assignment of the membership interest to a non-member heir, devisee, personal representative, or other successor of the member’s spouse. That non-member heir, devisee, personal representative, or other successor of the member’s spouse will have no right to participate in the management and conduct of the business.

This has no effect on the ability of the members of the LLC to prepare agreements for the purchase or sale of a membership interest at any time. Often times, buy/sell agreements are prepared to deal with the event of a member’s death or divorce.

So, the member’s interest in the LLC may be community property, but not the member’s right to participate in the management and control of that LLC.

Have You Had “The Talk”?

Michell Bradie — Mon, 30 Jan 2012 17:00:51 +0000

Okay, not that “talk”, but the other one; the one about what happens when you die or become incapacitated?

It is not a very fun discussion to have with your loved ones, but it is essential. It is particularly important if you want to make sure things are done the way that you want them. A checklist for your “talk” should include:

Last Will and Testament: (that you have one, and where to find it) – If you don’t have one, make one. It is required in order to pass what is in your estate to the people that you want, with as little expense as possible.

Medical Power of Attorney: (make sure that your Agents have a copy) – If you don’t have one, make one. It is required in order to allow someone to make medical decisions for you when you can’t make them yourself, and usually avoids the need for an expensive Guardianship of your Person.

Statutory Durable Power of Attorney for financial matters: (make sure that your Agents have a copy) – If you don’t have one, make one. It is required in order to allow someone to handle your financial matters for you, and usually avoids the need for an expensive Guardianship of your Estate.

Directive to Physicians, also known as a Living Will: (if you have one, make sure they know where to find it) – This allows you to decide whether you do, or do not, want life support in the event that you have a terminal or irreversible condition. Often times, spouses are comfortable making that decision for one another, but do you want your adult child or children to have to make that decision for you? If not, you should prepare one, and discuss with loved ones what you would like in that situation.

Disposition of Remains: (if you have one, make sure they know where to find it) – This allows you to choose if you want to be buried or cremated so that you do not need permission from a surviving spouse or children.

Organ Donation: Just signing the back of your driver’s license is not enough. If you are in that rare 1% situation where you are brain dead and your organs are intact, the hospital is legally obligated to ask your family about donating your organs. Your license may not be available for family to look at. Also, your family can override your wishes to donate when you sign the back of your license, so please have that discussion with them while you are healthy, so that they fully understand how you feel, one way or the other.

Pre-Arranged Funeral Plans: (if you have one, make sure they know where to find it) – This is the contract with the funeral home, and usually requires that you provide the original, especially if it is an older funeral plan. They usually will not provide a refund, so if you do not use the plan that has been paid for, it will be wasted. This is also a very good way to make sure that your wishes are followed, and that your family will not feel pressured into doing more than you wanted.

If you need assistance with preparing your documents, please give us a call. We can help.

Documents For Divorce

Michell Bradie — Thu, 22 Dec 2011 18:54:40 +0000

If you, a friend, or a loved one is going through a divorce, what estate paperwork should you or they have?

The first document that should be prepared or updated is the Last Will and Testament. If a couple no longer wants to be married to each other, they probably do not want to leave their property to each other either.

If there is no Will, and you die before the divorce is final, your spouse may wind up owning all of your property. If you have minor children that may inherit under your estate, your spouse may wind up being the Trustee of the minor children’s trust and be in control of their money. If you already have a Will, you will likely want to change the beneficiaries, and may wish to name a non-spouse trustee for any minor children.

You should also update or prepare new medical and financial powers of attorney. This way you can name a non-spouse agent to make medical and financial decisions for you if you become incapable of making them yourself while the divorce is pending. Chances are that if they no longer wanted to be married to you, or you no longer want to be married to them, you probably do not want them making your medical or financial decisions either.

This leads us to the final and perhaps most important document you should consider preparing in the event you are going through a divorce. It is called a Declaration in Event of Guardianship.

Even if you have powers of attorney, your spouse could file a Guardianship to override any of your powers of attorney if you become incapacitated. Normally, your spouse would be the first person that the judge would name as your guardian. By preparing the Declaration in the Event of Guardianship, you can make sure that person that you are divorcing, or that is divorcing you, will never be named Guardian of your Person or Guardian of your Estate.

If you or a loved one is going through a divorce and has questions about their Will or other estate planning documents, please give our office a call.

When Do You Have Authority To Act As Agent Or Executor?

Michell Bradie — Mon, 31 Oct 2011 16:14:12 +0000

If you are listed as an Agent under a Power of Attorney, or an Executor in a Will, when do you have authority to act?

Powers of Attorney

Medical Power of Attorney:

For a Medical Power of Attorney, you only have authority to act when your “Principal” (the person making the Power of Attorney) is unable to make their own medical decisions. This would be the case if they are unconscious, under anesthesia or other medications that would not allow them to think clearly, suffering from dementia, or have some other mental impairment that would not allow them to be able to make reasonable medical decisions for themselves. If they have capacity, you have no authority. So, you can’t authorize the doctor to give them a shot or do surgery when they are fully capable of making their own decisions.

Statutory Durable Power of Attorney:

For a financial power of attorney, called a “Statutory Durable Power of Attorney”, your Principal can select to have the Power of Attorney effective immediately upon signing, or “springing”, meaning that it will only be effective upon their disability. If they choose to have it effective immediately upon signing, then their Agent (called an “attorney-in-fact”) may act with concurrent authority. That means that they can act with or without the consent of the Principal and while the Principal is fully capable of making their own decisions. This is often used when the Principal is going overseas, or needs to have the Agent transact business for them when they can’t be there, such as at a closing to buy or sell real property.

If the Principal elects to have the Statutory Durable Power of Attorney effective only upon their incapacity, or springing, then it usually requires that a doctor certify that the Principal no longer has sufficient cognitive ability to handle their own financial matters. Until there is that certification by the doctor, the Agent has NO authority to act on behalf of the Principal.

With both types of Power of Attorney, the Agent only has authority to act on behalf of the Principal while the Principal is alive. Once the Principal dies, the powers of attorney no longer have force and effect. They die with the Principal.

Will

A Will, on the other hand, has no force and effect until after the person making the Will, called the “Testator”, dies. Just because a Will names you as an Executor, you have no authority until the Will has been admitted to probate and the court appoints you.

The Will needs to be filed for probate because no one knows if it is really a valid Will for sure until the court makes that determination. You also need to look at what is in the estate that needs to be transferred. This will determine if an administration is needed or not. If an administration is not needed, no one will be appointed as Executor. Assuming that an administration is needed, just because you have been named as Executor in someone’s Will, it doesn’t mean that you can be appointed. Some people that are disqualified to serve as Executors are people that have been convicted of a felony or crime involving moral turpitude, such as embezzlement. So if the court determines that it is a valid Will, that an administration is required, and determines that you are not disqualified from serving as an Executor, then you must take your Oath, and sometimes a bond might be required. Only then will the court issue Letters Testamentary, which are court orders that show you have authority to act on behalf of the estate.

Who Gets Your Retirement Accounts?

Michell Bradie — Mon, 26 Sep 2011 22:34:50 +0000

You might be surprised! Let’s look at the following examples.

Husband names wife as his beneficiary on his 401(k). Husband and wife divorce and the wife gives up any claim she has to the husband’s 401(k) in the divorce settlement. Husband never gets around to updating his beneficiary designation on the 401(k). Husband dies. Who takes? [The ex-wife!]

Husband and wife divorce and husband then changes his beneficiary designation on his 401(k) to his adult children. Husband marries wife 2, then dies a few years later. Who takes? [New wife 2!]

Why? Federal law governs 401(k) plans, so under Employee Retirement Income Security Act, or Erisa, if you are married, your spouse is presumed to be your beneficiary, regardless of whom you have listed on your beneficiary designation form. That means that if you are married, unless your spouse signs a waiver, or has consented to someone else being named as your beneficiary, they are presumed to be the beneficiary.

Under Erisa, if you are single, your beneficiary of your 401(k) on your death is presumed to be the person or persons named on your beneficiary designation form. So if you have named a prior spouse (now ex-spouse) as a beneficiary on your 401(k), and don’t get around to updating your beneficiary designations, they may receive a nice windfall upon your death, even if they waived the right to the money in a divorce.

How do you get around those problems with 401(k)s? Well, the most obvious thing would be to make sure that you properly update your beneficiary designations if you are single. If you are married and do not wish to leave your 401(k) to your spouse, see if they will sign a waiver or execute the consent to name someone else as a beneficiary.

Alternatively, you might consider cashing out or rolling over your 401(k) into an IRA when you change jobs or retire. State law controls IRAs; not federal law. If you are married and live in a community property state, you may not be able to gift your spouse’s community property interest in the IRA to your named beneficiary without their consent, but you may gift your share of the community estate. Also, with an IRA, if you later divorce, the law usually treats ex-spouses as if they have predeceased you, so your IRA will usually pass to your alternate beneficiaries or to your estate by default if no other beneficiaries are named.

That is why it is always important to review your beneficiary designations on your accounts at the same time as you periodically review your Will to see if everything is up to date.

Business Succession Planning – Who Can Write Checks?

Michell Bradie — Wed, 27 Jul 2011 21:05:48 +0000

Many of our clients have small businesses. Some may be the sole owner, or only have a few other people involved in their organization. So what happens if the principal person that is running the business suffers from some type of disability or dies? What happens to the business?

Planning ahead to make sure that employees and vendors can still be paid, that receivables can still be collected, and that work can still be done may mean the difference between the business staying in business, or closing the doors for good.

Who has access to the business checking account is just one part of business succession planning.

You may be able to set up personal accounts as “Payable on Death” accounts, or “Right of Survivorship” accounts, so that on your death you can make sure that someone has access to the funds on those accounts. But when you have a business conducted under a legal entity, like a Limited Liability Company (LLC) or a Corporation, just because a Member, Shareholder, Officer, or Director dies, doesn’t mean the entity dies. You cannot have a “Payable on Death” account for an LLC or a Corporation. That means that if you want to make sure that someone can access the funds in the account, they need to already be a signer on the account.

If you are incapacitated, you may have Powers of Attorney (medical and financial) that allow you to name an Agent to make medical and financial decisions for you, personally. However, those Powers of Attorney will not usually allow your Agent to act for you in your role as an officer or director of a business entity. Again, that means that if you want to make sure that someone can access the funds in the account when you are incapacitated, they need to already be a signer on the business account.

Take some time to think about and prepare a succession plan if you have a business.

If you have any questions, please give us a call.

I Have Never Met Some Of My Clients

Michell Bradie — Wed, 27 Jul 2011 21:03:17 +0000

As strange as it may seem, I have never met some of my clients face to face. The attorneys in our firm are licensed to practice law in the State of Texas, which means that we are able to help clients with their legal needs if they live anywhere in Texas, or if they claim Texas as their residence.

I have several clients that are presently stationed overseas, but they keep a house within the state, and intend to return here. Since they “intend to return” to the State of Texas, and have an address that they claim as their residence, even though they are currently living overseas, then Texas is the state of their residence.

We prefer to meet our clients in person, since that usually allows us to communicate more clearly with one another, and make sure that we understand exactly what they would like. However, that is not always practical.

As discussed, some of our clients are overseas and unable to meet in person. We also have clients that reside in small towns in Texas that really do not want other people in their town to know their business, which sometimes includes the attorneys working in that town. We also have clients that are family or friends of other local clients that want to prepare their documents, but don’t know anyone where they live, and would like to use someone that their family or friends trust. Some just live in rural areas where there are no attorneys, or because of a physical aliment are unable to come in to visit an attorney and are too far away for the attorney to visit.

When we are unable to meet our clients face to face, we can still communicate by telephone and email to help them prepare the documents that they need. Meeting face to face is always preferred, but the client’s needs can be met using other forms of communication.

June 2011 Newsletter

Michell Bradie — Wed, 29 Jun 2011 17:58:31 +0000

Do You Have An Emergency Plan?

Click here to view the newsletter.

Do You Have An Emergency Plan?

Michell Bradie — Wed, 29 Jun 2011 16:38:31 +0000

Recently we have heard of families and businesses forced to flee with short notice due to the threat of wildfires. Hurricane season is also upon us, so there is the possibility of future evacuations due to hurricanes. Every person and every business should have an emergency plan. Do you have yours?

If you are forced to flee on short notice, what should you take with you?

In addition to the food and clothing and medicines that you and your family and pets might need, you should also bring the paperwork and things that will help you get your life back in order after the emergency ends.

What important papers do you have? Unless you have your legal papers in a building that can’t burn down, flood, or get blown away (such as a bank vault), you should probably take your Wills, Medical Powers of Attorney, Statutory Durable Powers of Attorney (for financial matters), etc., with you. If someone dies, or is injured or incapacitated due to the emergency, these documents will be essential.

You should also bring your insurance information, or at least copies of the policy summaries that include your account number, contact information for the company, and policy limit information. That would include, but is not limited to, insurance information on your home, business, vehicles, health, disability, life, and long term care coverage. Contacting your insurance company as soon as possible will often move your claims along faster, and help you get your life back in order sooner. We also recommend that you take pictures of your property to show the condition before and after the disaster or accident. This can be very helpful in proving up the existence, condition and value of the item(s).

Are there personal or business electronics that are essential to keep in contact with the people that you need? If you are able to, you should probably grab your lap top and cell phones (and chargers too) so that you have some means of communication with loved ones and friends, as well as insurance companies and business associates. You may need to conduct on-line banking and bill pay if you will be evacuated for an extended period of time.

Often times in an emergency situation, internet and cellular service are not available. You should plan on a location to meet if the family is separated, and a specific person or point of contact that everyone should try to reach to let folks know where and how you are.

If you store important information on your computer, such as personal records, business information, or personal photos, make sure that you have some type of remote offsite backup of that data. Even if your computers are destroyed, your data will be safe and can be downloaded to a new computer. This is essential if you use your computers for business. The prices for offsite data backup have really come down, and it is cheap insurance for any emergency, even a hard drive crash!

You should make sure that you have a list of all family members’ prescription medications and the contact information for each of their doctors and pharmacies. You will need this information if prescriptions are lost or need to be refilled during an evacuation.

Some emergency plans may be very detailed. They may include escape routes, food or other personal packing lists, password information, etc. Talk with your family to develop the plan that works best for you.

What is important is that you have an emergency plan, so that if an emergency happens, you have a place to start and your family members or business associates will all be on the same page. It will help you deal with the emergency, and help you get your life back as best you can after the emergency ends.