All posts by telmain

What is an advance directive?

One thing people can be sure of in life is that we can’t ever be 100 percent sure of what will happen in life. We all have certain hopes and wishes for our futures, and many of us feel a better sense of peace knowing we have planned for it as best we can. An important area of concern that can contribute to that peace of mind is addressing how we wish to be treated if we are incapacitated in some way.

A legal document designed to help communicate a person’s wishes about medical treatment in the event he or she can’t make those decisions because of illness or injury is available. It is known as an advance health care directive. It is also referred to as a living will. Based on personal values, the directive sets out in writing someone’s treatment choices and preferences. It is prepared with professional advice and provided to your physicians, other health care providers, hospitals and family members.

The advance directive may specify that if a physician determines an illness is terminal, it is the signer’s request that all treatments other than those utilized for comfort be stopped. Alternatively, it can direct a health care provider to sustain life by whatever means possible. The same distinctions may be made if injury or other condition is irreversible in the opinion of doctors according to prevailing medical expertise, and treatment decisions for oneself or self-care are no longer possible.

Acceptable, particular treatments to be provided or not to be administered may be included. Physician input as to any additional specifications is helpful. If a separate Medical Power of Attorney doesn’t exist naming someone to make medical decisions on behalf of the signer, the advance directive may include this designation.

As with most other estate planning documents in Texas, the advance directive form is signed before witnesses and follows state guidelines regarding options and content. Advance health care directives are suggested for every adult’s protection, and will ensure to the extent possible that personal wishes are followed.

Source: Texas Government, “Texas Living Will Directive Form,” accessed May. 21, 2015

The risk of borrowing to pay property taxes

For those who own their own homes and land, one of the largest expenses is simply paying the property taxes. These may come due twice during the year, but they are sometimes just due once, or one payment will be significantly larger than the other. For those who are not paying a mortgage — the property taxes are usually rolled into escrow accounts in a mortgage — this could mean paying thousands out of pocket.

This is exactly what happened to one man, who owed right around $19,000 and had no way to pay that much himself. He then found a lender who would give him the money, and he thought his problems were solved. The lender paid the cost up front so that his real estate was safe.

The catch, though, was that the interest rate was huge, at 18 percent. If he just made the minimum payments for the next 10 years, as the loan was structured, it meant he’d pay around $25,000 in interest on top of the $19,000 that he owed. The interest was higher than the debt itself.

According to the Texas Consumer Credit Commissioner, these types of loans are becoming more and more common. In 2008, there were 12,078 of them, but 2013 saw a jump all the way up to 15,738.

For the lenders, there is little risk, as a foreclosure would mean they got their money back. The risk is all on the homeowners.

It’s very important to know what you have to pay for your real estate and to know all of the legal ramifications of taking out a loan to cover the costs.

Source: Houston Chronicle, “Sandberg: ‘Cooling off’ period would help loan customers — 10-day delay would allow consumers needing to pay property taxes a chance to seek alternatives,” Eric Sandberg, May. 13, 2015

Becoming a guardian

A legal guardian is someone who has been authorized by the courts to care for another individual, such as a child or elderly individual. For elderly individuals, a guardian is usually appointed when the elderly person becomes unable to make his or her own decisions or care for his or her health and well-being, as well as financial matters.

Incapacitated individuals who are married usually have their spouse appointed as their guardian, since they are the closest relative. If the individual is not married or their spouse is unable to be a guardian, the closest relative after is usually the next eligible person. However, if more than one relative exists of equal eligibility, the court will decide which is most qualified.

When there are no eligible family members, a court may appoint a guardianship program, a financial institution or a bank to care for the needs of the ward. In some instances, a state agency, such as the Texas Department of Protective and Regulatory Services could be appointed.

While courts attempt to put an incapacitated individual’s best interest first and foremost when appointing a guardian, it is much better if a guardian is selected by the individual before he or she becomes incapacitated. Individuals should consider having papers drawn up by an attorney to appoint a guardian of their own choice in preparation, just as they should consider having a will drawn up when they are young.

Those who are applying for guardianship should understand the responsibilities they are being assigned. Properly fulfilling a guardianship role is extremely important, and the legal jargon can be quite confusing. If you have been or will be appointed as a guardian, you may need to speak with an attorney to be clear about your role and duties. You may have to make substantial decisions on behalf of your ward and should be well prepared.

Not everyone can be assigned as a legal guardian. For instance, minors cannot be a guardian of another individual. Others who might disqualify include someone who owes a debt to the individual who would be his or her ward, a person who might have a lawsuit against the ward or a person who has shown bad conduct, as well as those convicted of certain crimes.

Source: Texas Guardianship Association, “Guardianship Qualification,” accessed May. 14, 2015

Heirs plan to return ‘stolen’ art

Families pass a number of items through the generations via estate processes. Common traditional assets passed on to heirs include money, investments, life insurance and real estate. Families might also pass on property such as vehicles or family heirlooms or keepsakes. In some cases, valuables such as jewelry or art are also part of an estate. But what happens if you find out that something you inherited was obtained via illicit means sometime in the past?

One Texas family is dealing with just such a question. The heirs of a World War II tank commander inherited three paintings. The paintings most recently hung in a room in the assisted living facility where the soldier’s widow was living. According to the family, the soldier himself won the paintings in a fair poker game. However, the man’s stepson said that he still considered that the paintings were stolen goods because of how they were originally obtained.

The paintings were part of a German museum collection. During the war, the museum workers hid the paintings in a salt mine. Most of the collection was preserved, but several paintings were looted or found their way home with American soldiers. According to reports, the three paintings inherited by this family, as well as two paintings inherited by others, are being returned to Germany.

While you probably don’t have a looted WWII art piece among items passed down to you through estate processes, it isn’t impossible that estates or inheritances could include stolen or questionable items. In some cases, there are laws governing how these items should be handled. In other cases, it’s a matter of doing what you feel is right. Understanding where those lines are, and managing estate processes from all angles appropriately, can reduce stress and legal issues when such situations arise.

Source: The New York Times, “Returning the Spoils of World War II, Taken by Americans,” May. 05, 2015

3 types of fiduciaries used in Texas

If you’re not sure what a fiduciary is and you’re thinking about doing some estate planning in Texas, it’s important to look into exactly what this term means and the different types that are used. At its root, a fiduciary is an entity that works for you during this process. It can be a person — this is very common — but it could also be a trust company or a bank. They all perform similar functions in distributing your wealth after you pass away.

The first type of fiduciary is a trustee, and this term can be used with all of the above examples — a bank, an individual or a trust company. The trustee is given your property or wealth and legally owns it, but the trustee is also obligated to do whatever is mandated by the trust. For example, an educational trust for your grandchildren may pay out money to cover their tuition, but nothing else.

The next type is known as an executor. This is similar to a trustee, but an executor will often be used when there is not a trust fund, and the executor is responsible for referring to the will and doing what the will instructs. For instance, the executor may inform the family members of what wealth and property has been left for them and then work to get it into their possession. Often, this all happens at one time, rather than utilizing the long-term distribution of a trust.

A personal representative is virtually identical to an executor; this is simply another term used to describe the same job. The personal representative may also need to sign certain legal documents.

Source: American Bar Association, “Guidelines for Individual Executors & Trustees,” accessed May. 04, 2015

What is the purpose of probate court?

You may have heard people whose loved ones have passed away state that they are waiting on their inheritance, but the “will is in probate.” What does that mean?

Probate is a court process for validating a will. A person may have created a handwritten will or a typed will; either way its legitimacy must be proved to be valid. Probate of a will must occur within a four-year time period from the time of death.

What happens in probate court? In court, verification that the will was executed properly per Texas’ requirements is performed. The deceased must have been at least 18 (unless lawfully married or serving in the military), have been “of sound mind,” not have been forced or deceived into writing the will and must have had intent to bequeath property or assets.

What is a self-proved will? A testator my incorporate into his or her will — or attach to it — an affidavit of a specific form that contains required statements to validate the will, and is signed by a notary public. A will that is just signed and notarized does not qualify as a self-proved will.

What if a will is not proven in the court? This would be a “denied probate.” It a will is found to not be credible, it would be as if there was never a will, and the decedent’s property or assets would go to his or her heirs in the same manner as it would without a will, which may not be the desire of the deceased.

Having a will that is executed properly is very important if you want your property bequeathed to your heirs in a specific way. The wording and validity of the will are both very important, or one or more of your heirs could contest the will, holding it up in probate court for months or even years. An estate attorney can ensure that all of the “i’s” are dotted and “t’s” crossed, giving you peace of mind.

Source: Texas Young Lawyers Association, “Texas Probate Passport,” accessed April. 30, 2015

Real estate transactions – not always a simple sale

It can be helpful to have a guide leading you through the process of a real estate transaction. In some cases, what might seem like a simple property transaction can become quite complex.

In Texas, title companies can handle closings. Some buyers and sellers have very simple home title transfers that a closing attorney handles well. In these transactions, there are clear titles and no financing issues to create stumbling blocks.

Real estate attorneys generally have experience handling more complex transactions and litigation involving land or financial disputes relating to real property. As noted on our real estate practice page, these can include boundary controversy, clouded title resolution, zoning issues, intricate purchase or sale agreements and landlord/tenant disputes. Commercial real estate transactions may involve multiple parties, each of whom brings to the negotiating table issues to be resolved.

Working ahead of the game to understand legal ramifications and plan for negotiation can minimize potential problems or contention among parties to the transaction. Common legalities that can arise during real estate transactions might include lien holder questions, tax issues, disputes regarding various property rights and creditor claims.

An important thing to remember when dealing with any real estate transaction — no matter how simple — is that a thorough understanding of anything you sign is critical. Real estate documents often contain complex language that can affect each party. Your signature might create a vulnerability in the future, particularly if you develop a legal concern with the property or intend to sell it later. By seeking a knowledgeable review of any contract, you can reduce the chances of problems in the future.

Why would a bank use a short sale?

A short sale may allow you to purchase a home for less than you would pay on the traditional market. To do so, you simply offer to buy out the loan for less than that loan is still worth. This often happens when the alternative is a foreclosure.

For instance, someone may purchase a house for $300,000, but then he or she may find that the home is not really affordable for a variety of reasons, such as unemployment and the loss of a career. As a result, that person may stop paying entirely and be threatened by the bank with a foreclosure.

You can then step in and tell the bank that you’d like to buy the house, but you’re only willing to pay $230,000. Banks will not always accept this but if they do, you get the home for $70,000 less than the previous owner, meaning you’ve gotten a tremendous deal. Though the process can be long, people in Texas are sometimes willing to wait it out for such significant savings.

So, why will the bank accept less than is owed? Quite simply, the bank is going to lose money with a foreclosure anyway. That process can be even longer, and every month without a payment is money lost. The bank then has to invest even more time and money in trying to sell the home, after putting a lot of time and money into foreclosing on it. The short sale is not ideal, but it’s often easier and more attractive to the lender, and it ensures that the home is sold again very quickly.

As noted, short sales are long and complex, so be sure you know what you must do from a legal perspective.

Source: Foreclosure.com, “Real Estate Short Sales,” accessed April. 20, 2015

Why you should do estate planning now

If you avoid estate planning or end-of-life planning because you think it is too complicated, think again. There are only two main areas to consider: property and assets, and health. An attorney can easily take care of the details for you. When you understand the necessity of planning ahead, you will want the peace of mind that comes along with having proper documents in order.

For instance, why should you have a will? A will is imperative in taking care of your family if something happens to you. It allows you to designate your assets however you want to your heirs, charities or other causes. You can also restrict how you want the inheritances used, such as protecting them from going to creditors of your beneficiaries. In addition, you can specify a guardian or caretaker for any dependent children. In the absence of a will, the state may end up deciding where your assets go or who gets what.

A living will, also known as an “advance health care directive,” and a health care or medical power of attorney should be a vital part of your estate planning. A living will allows you to specify what type of medical treatment you would like administered if you are in an end-of-life situation. A medical power of attorney allows a person to make medical decisions for you if you become unable to do so. This is often used by children to make decisions for aging parents, who may be deteriorating in cognitive abilities; however, young people should not discredit this type of document as disabling incidents, such as a traumatic brain injury, can occur at any age.

You should also have a durable general power of attorney. A durable power of attorney allows someone — whom you name — to manage your finances and assets in the event something happens to you, and you are unable to do so. For instance, if an accident occurs, and you are totally disabled, someone may need to access your checking account or assets to ensure your bills get paid. They may need to keep your business running or make funds available for your medical care or treatment. This person is held to specific standards under the law and is prohibited from using your assets for their own needs over yours.

Because life is unsure, you can’t afford to put estate planning off!

Source: The Huffington Post, “4 Estate Planning Documents Everybody Needs,” Steve Cook, April. 10, 2015

Reasons to set up a guardianship

There are countless important decisions that parents must make in the course of raising their children to adulthood. One of the most critical, however, is providing the best options for their care if something should happen to mom and dad. Choosing someone to look after them physically until they grow up and having that person or couple willingly agree to do so can give parents immeasurable reassurance. Naming the choice in a last will and testament may reenforce the chance that those wishes will be honored.

Financial considerations shouldn’t be discounted. Minor children need someone to manage money for their care and see to it that their inheritance, of whatever nature, is protected until they are old enough to manage their own finances and property.

Some people are born with limited mental capacity for a myriad of reasons. Reaching adulthood might not make a difference in their abilities. Others may suffer injury or illness that leaves them without the wherewithal to care for themselves as adults. A court may authorize an individual to act as a guardian. The guardian will provide the necessary physical assistance and financial management needed to care for the person.

These instances are some of the reasons to set up a guardianship. Texas law defines an incapacitated person as one who is mentally, physically or legally incompetent, and includes minor children. They may be judged so by a court based on incompetence, having an unsound mind or being a habitual drunkard. County court jurisdiction applies to petitions for guardianship, including appointing the guardians of minor children according to estates.

In certain circumstances, the court may appoint a guardian ad litem to represent the interests of a minor child or other incapacitated person during guardianship proceedings. For example, if a guardianship wasn’t specified in a will, and multiple individuals have stepped forward to assume the role, a guardian ad litem will safeguard the incapacitated person’s well-being as decisions are contemplated.

Source: FindLaw – Texas Statutes, “Chapter XIII: Guardianship,” accessed April. 09, 2015