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The Conversations You’re Avoiding That Will Cost Your Family Thousands

Tue, 17 Feb 2026 14:46:33 GMT

Talking about wills, inheritances, long-term care, powers of attorney and other estate planning matters can feel pleasant. Because of that, many people put these discussions off. They often say they’ll wait until the time is right. Unfortunately for far too many people, the “right time” never comes. They ultimately end up waiting until it’s too late.

Parents are often afraid that talking to their children about who gets what when they’re gone will cause tension and hurt feelings. Adult children tend to fear that asking their aging parents about their final wishes will make them look greedy or seem as though they’re trying to speed up the process. As a result, they simply avoid the topic altogether.

Those conversations you’re evading can be far more costly than you might realize. Not having them can result in the destruction of family relationships and tearing down of legacies people spent decades building to pass on to their loved ones. You never known what tomorrow may have in store. If you don’t discuss those uncomfortable topics now, you may never get the chance.

Talking to Aging Parents About Estate Planning

Discussing estate planning with aging parents is one of the most difficult undertakings for families. You don’t want to overstep, and you certainly don’t want your parents to think you’re wishing for the worst. Moreover, you don’t really want to think about anything bad happening to the people who’ve protected and taken care of you your entire life.

At the same time, many parents hesitate to talk about topics like the transfer of their assets at death. Some worry that they’ll create rifts between their children. Others are a bit superstitious and worry that discussing their final wishes aloud will somehow bring on their death prematurely.

Whatever their fears or mental blocks may be, they try to change the subject. They may even completely shut down when their children start asking questions about wills, inheritances, funeral arrangements, and other difficult topics. Just as tough is deciding when and how to even bring up the topic with your loved ones.

How Much Will Avoiding Those Conversation Cost You?

Although those are uncomfortable conversations, they’re necessary. If your parents don’t have a clear plan in place, their oversight could cost you tens of thousands of dollars. Without a well-drafted will, probate costs can range from $10,000 to $50,000 dollars at minimum. Furthermore, the probate process can stretch on for months or even years if unanswered questions or fighting amongst family members are involved.

If your siblings and other relatives aren’t in agreement over inheritance shares or how your parents’ estate is handled after they pass, court costs and other costs of administration could end up being much higher. Families have lost hundreds of thousands simply because no one knew what mom and dad wanted. Additionally, these situations can result in the lifelong toll of emotional uncertainty and strained relationships.

How to Start the Conversation

If you’re struggling to approach your parents about estate planning, or they’re balking every time you try, it may help to start with simple questions like: “Dad, do you have a will?” “Mom, dad, do you have life insurance policies?” “Who’s your attorney?”

Questions like those may not give you a great deal of insight into your parents’ end-of-life plans, but they may be enough to break the ice. It’s likely best to approach the topic from the standpoint of protecting them and honoring their wishes rather than jumping directly into what you’ll inherit from them.

Important Questions to Ask

We’ve already touched on asking about a will. If they have wills, ask how long it has been since they updated them. Life changes like a divorce, the passing of an heir, the birth or adoption of new children or grandchildren, and the acquisition of new assets can render an older will outdated. It’s important to keep estate planning documents current so that they accurately reflect a person’s wishes. From there, several other questions need to be asked.

Where Are Your Important Documents?

You’d be surprised how many families have ended up in turmoil and financial strain because no one knew where mom and dad kept their wills, life insurance policies, house deeds, and bank account information. Encourage your parents to make a list of essential documents and where to find them for you. Their attorney will most likely have a list of them as well, which is a reason why knowing who’s handling their estate planning is essential.

Have You Thought About Long-Term Care?

Several long-term care options are currently available. Each one is designed to provide a different level of assistance, medical support, and independence. They can all be costly. Talk to your parents about their wishes on this matter. Find out if they already have a plan in place for covering the cost, whether it’s insurance, Medicare, a separate bank account, or a combination of those things.

What Are Your Final Wishes?

Final wishes are another common point of contention among families. Ask your parents whether they want to be buried or cremated. What type of ceremony or memorial service do they want? Have they already made their own funeral arrangements? If so, do they have them in writing so you can draw from them when the need arises? Knowing what they want ahead of time will save your family a great deal of uncertainty, stress, and money.

Discussing Estate Planning With Adult Children

If you’re like many people, thinking about your own death or the loss of your mental faculties isn’t easy. Talking to your children about those things is even more difficult. You may worry that telling them what they’ll inherit will give them a sense of entitlement or leave one of your children feeling slighted. Still, if you don’t talk to them, what you don’t say could likely cause even more problems.

You can’t expect your children to inherently know what your final wishes are. In some cases, parents can’t depend on their children to carry out their final wishes even if they’ve already expressed them verbally. Additionally, you can’t count on the courts to distribute your assets among your heirs in the way you would want.

If you don’t plan ahead and ensure everyone involved knows your wishes, your estate could be tied up in probate for months or even years. In the meantime, your family could be left struggling emotionally and financially. Court costs and other expenses of administering your estate may also eat into the financial security you intend to provide for your family after you’re gone.

With all of this in mind, having a clear, written, and legally binding plan in place is essential. An estate planning attorney in Texas can help you do just that. It’s equally crucial to be sure your family knows your plans and wishes. These measures can save your family endless grief and a great deal of money in several ways.

How Do You Talk to Adult Children About Inheritances?

Discussing inheritance is the most difficult aspect of estate planning for many parents, especially if they have more than one heir to consider. No doubt, you love all your children equally, and you want to leave each one their fair share of your assets at your death. In some cases, though, dividing everything equally isn’t practical or even possible.

Sometimes, it’s easier to speak with each heir individually. Then, you can gather everyone together for a group conversation. You don’t necessarily need to share exact dollar amounts if doing so makes you uncomfortable. You can start with a general overview. At some point, though, you may need to address the smaller details.

If you’re not dividing your assets equally among your loved ones, you may want to explain why. Consider keeping the discussion geared toward circumstances rather than moral character to prevent arguments.

Discussing your wishes regarding items with sentimental value is also important. Those belongings often cause more arguments among family than money. Explain to your children why one of them gets grandma’s hand-knitted afghan and collection of antique figurines while the other gets mom’s wedding ring and another gets dad’s classic car.

These things may cause hurt feelings initially but discussing them prior to your death can help prevent endless confusion and fighting when the time comes for your heirs to receive their inheritances. While you’re telling everyone who gets what, you might also discuss the meanings behind certain personal belongings and remind your children of their emotional connections to them. That alone can go a long way toward easing tension and putting a more positive light on the situation.

Other Points to Cover

Once you talk to your family about your final wishes regarding the division of your assets at your death, you’ll have the hardest part out of the way. Everything else may come much easier. At this point, you need to cover several other important factors with them.

Long-Term Care Plans

For one, be sure your children understand what you want to happen if you’re unable to make decisions about your living situation on your own. Do you want to stay at home for as long as possible, or move to a nursing home? Maybe you’d rather opt for a compromise between the two. If your children don’t know which you prefer, the decisions they make may not carry out your wishes and may eat into their eventual inheritances.

Imagine you want to move to a nursing home to ease the burden on your children and save money. If they don’t know your wishes in advance, they might feel guilty about taking you out of your home and choose in-home care for you instead. Depending on several factors, that can cost up to twice as much.

Additionally, if you already have plans in place to cover the costs of care, be sure your children understand that. Otherwise, they might end up paying for it out of their own pockets, which could cause them serious financial hardship.

Executor of Your Estate

You also need to tell your children who will handle administering your estate at your death. If you chose one of them, explain the reasons for your decision. In the event you want them to work together as executors, be sure you have a plan in place in your will for dividing responsibilities and how disputes should be resolved. Go over those points with your children as well.

Healthcare Power of Attorney and Medical Directives

Your children also need to know who will be responsible for making healthcare decisions on your behalf if you can’t, and what your wishes are in this respect. Don’t leave your children with the burden of making those decisions for you or fighting in court over who will bear that responsibility. Let them know in advance whether you want to be kept on life support if the need arises. Tell them whether you want to spend your final days at home or in hospice care.

Families have spent tens of thousands of dollars or more in court battling over decisions like those. Even worse, it can cost relationships. Making those decisions for yourself now while you are able and sharing them with your children can help avoid costly litigation in the future. Create a plan your loved ones can refer to when needed through documents like a Healthcare Power of Attorney and a Directive to Physicians, and there likely won’t be arguments over what should happen next.

Disposition of Your Remains

Talk to your family about your final wishes as well. Do you prefer to be cremated or buried? Do you prefer your body be donated for scientific study and research? What type of ceremony or memorial service do you want? When your children are grieving over losing you, making decisions like these can be incredibly painful, especially if they’re unsure what you would’ve been happy with.

There’s also a financial factor to consider. Funerals can cost anywhere from a few thousand dollars to tens of thousands. If you don’t want an elaborate affair, there’s no reason for your family to spend more than necessary.

If your family doesn’t know want you want, they may choose the most expensive casket and services out of guilt or a sense of obligation. One of your children may want to go all out, while another child may want to keep things more reserved and simpler. This is another element that can cause financial and emotional turmoil within families. It can easily be avoided if you express your wishes in advance through an Appointment of Agent for Disposition of Remains document.

Where to Find Your Important Documents

Finally, be sure your children know where your important documents like insurance policies, deeds, car titles, your will and other estate planning documents, and bank account information are stored. Many families have spent large amounts of time tearing houses apart searching for documents like these after losing their parents. They’ve also spent hours making phone calls trying to find out where they might be or who’s handling them, to no avail.

Create a list detailing your assets and where to find them, and store that list in a secure location, preferably in the same place you store your will and other estate planning documents. Also consider sharing a copy of that list with the person or persons who will serve as your executor. That’ll save your family a great deal of grief and frustration. It’ll also ensure they’re able to benefit from all the measures you’ve taken to build a secure future for them.

Navigating the Complexities of Blended Families

Blended families are growing ever more common. If you’re part of one, though, estate planning can be particularly tricky. You likely want to take care of your new spouse and perhaps your stepchildren, but you also want to protect your biological children’s inheritances. Of course, your blood relatives may not want your new spouse and stepchildren to get any of your estate. No matter how well you plan, someone is bound to be hurt or angry.

Even if everyone in your family gets along well, these factors can make for a minefield. Probate battles in blended families are among the most explosive and expensive the courts deal with. If you don’t have a clear, current, legally binding plan in place, your loved ones may not get what you intended for them to receive at your death. It’s not unheard of for new spouses and their children to end up with nothing, or for stepfamilies to take far more than what the family believes should be theirs.

Disinheritances

Disinheriting someone can cause a great deal of animosity. If you’ve decided to take someone out of your will, be sure to meet with an estate planning attorney to update it accordingly and tell your family about your decision. That will help ensure your wishes are carried out properly.

Also consider discussing your decision with the person who’s directly affected. Telling them they’re not going to receive what they might be expecting when you pass will be difficult, but they will find out eventually. It may be better to hear it from you now so they know what’s coming, than to find out during the probate of your will or from another family member.

Protecting Your Family’s Future

Discussing inheritances, your final wishes, and other end-of-life matters can certainly be awkward and even frightening. Far too many people put off these conversations until it’s too late to have them. None of us are guaranteed tomorrow, so it’s best to prepare now.

Work with an estate planning attorney to get a plan in place and cover all the bases. From there, be sure to talk to your family about your plans and wishes. Facing the challenge head on will save your family thousands of dollars and endless heartache in the long run.

Disclaimer:

Ruelas Andino Law, PLLC makes no claims as to the accuracy of the information contained within the external links in this blog article nor does it endorse any of the businesses contained in the links. Information contained in this blog is for informational purposes only and may not be construed as legal advice.

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5 Red Flags That a Will Might Be Challenged (And How to Prevent Will Contests)

Tue, 10 Feb 2026 20:26:43 GMT

A will can give you a voice even after death, helping to ensure ownership of your money and property passes to your intended beneficiaries. If you have minor or incapacitated children, a properly drafted will allows you to leave them an inheritance while protecting them and the assets you leave them. A will also gives you the power to choose someone you trust to oversee your estate and ensure your final wishes are carried out.

All things considered, creating a will enables you to continue taking care of your loved ones after you’re gone. Unfortunately, though, these legal documents aren’t always as ironclad as their creators hope they’ll be. If a person’s beneficiaries and other family members don’t agree with the terms of their will or feel that something surrounding the signing of the will wasn’t quite right, they can potentially challenge probate of the will in court.

When probate of a will is contested, it often leaves people waiting longer than necessary to receive their inheritances and causes serious tension among family members. Court costs and other expenses involved in the process can also detract from beneficiaries’ inheritances. A contest may even result in a will being invalidated altogether.

Five Common Issues That May Cause a Will to Be Challenged

Certain issues can make a will far more likely to be contested in probate court. Understanding these issues and how to prevent them is key to ensuring your final wishes are properly fulfilled Below are five of the most common red flags that a will might be challenged.

1) Lack of Testamentary Capacity

Lack of testamentary capacity is one of the most common claims people use to challenge probate of a will. When a person lacks testamentary capacity, it means the will maker wasn’t sufficiently cognizant of what he or she was doing at the time the will was signed. For a will to be legally binding, its creator, or testator, must:

Be aware that they’re signing a document which disposes of their property at their death
Understand that the will controls who receives their property when they die
Comprehend the nature and value of their assets
Know the people who would typically be expected to inherit their assets
Be capable of rationally deciding how their assets will be distributed

Several factors can bring a testator’s mental and cognitive capacity into question. One reason to contest a will is If the testator was taking medication known to interfere with mental clarity at the time the will was signed. A few examples of these types of medications are opioid painkillers, sedatives, and antipsychotics.

Another potentially serious red flag is if a testator was under a diagnosis of dementia at the time they signed their will. Even though dementia sufferers can have good and bad days, especially in the early stages, challengers may argue that the testator was mentally impaired when the will was signed. If a testator suffers from a mental disorder, such as schizophrenia , bipolar disorder, or depression, that can also be grounds for a claim that the testator lacks testamentary capacity.

2) Undue Influence

Another red flag that a will may be contested in probate court is the belief that its creator was unfairly pressured or manipulated when determining their will beneficiaries and inheritance shares. This is a common issue among the elderly. It also happens all too often to people who are grieving or at vulnerable life stages, such as when they’ve recently lost a close loved one or are isolated. Notably, it can be common among testators who depend on caregivers for their basic needs.

Unfortunately, there are plenty of people in the world willing to prey on the vulnerable for their own gain. Sadly, even close family members can be culprits. Certain developments like the following may be warning signs of undue influence.

Suddenly granting a caregiver a large inheritance
Unexpectedly creating a new will shortly after meeting a new romantic partner
Excluding close family members from a will without explanation
A person controlling or preventing family members’ access to a testator

These are typical signs that someone may be influencing a testator to change their will. In cases like these will contests are often based on the circumstances under which the will was created or altered and who participated in the process, more so than what was granted or changed. Proving undue influence typically requires establishing by a preponderance of the evidence that (1) the influencer influenced the testator, (2) the influencer’s influence overpowered the testator’s free will at the time the will was signed, and (3) as a result, the testator signed a will they otherwise wouldn’t have made.

3) Improper Execution

Improper execution is another common reason for contesting the probate of a will. Strict and sometimes complex laws apply to creating and finalizing wills, and those laws vary by state. If they’re not followed properly, a will can be left open to challenges and even invalidation.

Several issues fall into this category. Typical oversights include missing or incorrect witness signatures and failing to have a will properly notarized. Another common mistake that can lead to problems is allowing beneficiaries to sign a will as witnesses. This can cause a beneficiary to receive less than the testator intended, or to lose their inheritance entirely. Though details like these may seem minor, they can lead to major setbacks in the probate process.

4) Suspicious Timing

Timing can likewise bring about concerns regarding a will. This is particularly true when a person creates or changes a will shortly before their death or at a time when they’re more vulnerable. A will signed during a medical crisis, immediately before entering hospice care, or shortly after a traumatic event, for example, can be a significant red flag.

Questionable timing alone may not be enough to convince a probate judge or jury to render a will invalid. However, it can raise suspicions. It can be used as evidence, coupled with other red flags, to challenge a will.

5) Unnatural Disposition

Another warning sign is an unnatural disposition. This refers to when a will distributes assets in a way that doesn’t fall in line with what might reasonably be expected from a testator. For example, an unnatural disposition would include suddenly disinheriting a close family member, such as a spouse or a child, with no logical explanation.

An unnatural disposition may also involve leaving a significant inheritance to someone whom the testator has only known a short period of time or willing the majority of an estate to a caregiver instead of distributing it among close family members. It’s not altogether uncommon for testators to disinherit certain family or to leave inheritances to unexpected beneficiaries. Still, the circumstances under which it happens can cause suspicion.

Additional Reasons for Challenging a Will

While the previously mentioned red flags are common reasons for contesting a will, they’re not the only warning signs to watch out for. Several other issues may come into play as well.

Vague Language - Ambiguous language may lead to disputes over a testator’s true intentions and cause a will to be contested.
Missing Assets - Leaving assets out of a will can also raise suspicions, especially if those assets are extremely valuable.
Contradicting Prior Estate Plans - If a will contradicts a testator’s other estate planning documents or contains significant unexplained changes compared to previous versions of their will, these things may be cause for concern.
Suspicion of Forgery or Alteration - If there’s reason to believe a testator’s signature or parts of a will were forged or altered, the document can be challenged.

People have been known to make major changes to their wills at times. Using vague language and omitting assets may simply be innocent mistakes. In many cases, though, these issues can be reasons for families and the legal system to question a will’s validity. When they occur close in time or together with other red flags mentioned, they can certainly be grounds for contesting a will.

Tips for Preventing a Will From Being Contested

There are several measures you can take to protect your final wishes and reduce the risk of your will being contested after you pass away. One of the most important and effective ways is working with an attorney throughout the entire estate planning process. An attorney can help ensure your will complies with the applicable laws of your state and provide valuable guidance and assistance.

Particularly, an estate planning and probate attorney in Texas can help ensure your wishes are properly carried out and your loved ones receive the inheritances you leave them. They can also assist your family if probate issues arise when the time comes to distribute your assets. Additional measures may also make your will less likely to be challenged.

Plan Ahead

Regardless of your circumstances, it’s important to address estate planning and will creation as early as possible. You never know when an accident or illness may leave you incapable of handling your own affairs or lacking the testamentary capacity to make a will. Taking care of these important measures before negative circumstances occur is crucial.

Make Regular Updates

Updating your will regularly is equally essential. Doing so can help establish a pattern of consistency and eliminate the need for sudden major changes. Both of those factors can reduce the chances of drawing scrutiny during probate. They’ll also go a long way toward ensuring your loved ones get their fair shares of your estate.

Provide Clear Explanations

Another way to reduce the risks of your will being contested is to provide clear explanations for any changes you make to it. You don’t necessarily have to defend every estate planning decision you make, but explaining significant modifications can help. Those might include disinheriting a loved one, giving one beneficiary more assets than others, and granting significant inheritances to people outside of your immediate family.

Be Open With Your Beneficiaries

Talking to your beneficiaries about their inheritances can be uncomfortable. Many people completely avoid discussing this difficult subject. But that can leave a lot of unanswered questions and unpleasant surprises for your beneficiaries after you’re gone. It’s best to talk to your loved ones about your plans before the time comes to execute them so they have an idea of what to expect.

What Makes a Will Uncontestable?

Like many people, you may be wondering if there’s anything you can do to make your will uncontestable. In truth, there is always some risk that the people closest to you will challenge your will when the time comes to distribute your assets. However, there are things you can do to minimize that risk and make contesting your will far more difficult.

Adding A No-Contest Clause

Adding a no-contest clause, also called an in terrorem clause, in your will can discourage beneficiaries from challenging your will in probate. These clauses provide consequences for challenging your wishes, such as stating that anyone who contests the will and loses forfeits their inheritance.

Providing Proof of Testamentary Capacity

Medical or psychological evaluations, documentation from your attorney, and testimony from witnesses to the signing of your will can all serve as proof of your testamentary capacity. They can also serve as proof that you weren’t coerced into including certain beneficiaries or making changes to your will.

Keeping Consistent Records

Keeping consistent records of your estate planning process and the changes you make over time can also make your will less vulnerable to challenges. These records help establish that you put thought into your testamentary decisions and made them of your own volition.

It bears repeating that working with an attorney is critical in this respect. Having knowledgeable legal counsel to support you will reduce the risk of leaving details open for litigation. It will also ensure you cover all the important bases to reduce the chances of someone successfully contesting your wishes. Furthermore, it’ll safeguard you and your family against fraud if any wrongdoers try to make unauthorized changes to your will.

Protecting Your Will and Your Family’s Future

A will can help safeguard your assets, ensure your true wishes are carried out after you pass away, and secure your family’s financial future. Unfortunately, these documents can’t always provide total protection. If your will is contested, the process may keep your family’s inheritances tied up in probate, eat into the assets you intended to benefit them, and cause significant tension among your loved ones.

Doing everything you can to prevent challenges to your will after you’re gone can help reduce those risks. Though nothing can definitively make a will uncontestable, it’s certainly possible to minimize the chances of someone successfully keeping your testamentary wishes from being carried out. Working with an attorney throughout the process is key to ensuring you have a well-drafted will to protect your estate and your loved ones.

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5 Critical Legal Documents Every New Business Owner Needs (Beyond Just Articles of Incorporation)

Tue, 14 Oct 2025 22:00:53 GMT

Starting a new business can be an exciting experience. It’s a way to establish your place in the world and share your innovative ideas with the public. It’s also an opportunity to be your own boss and build a stable financial future. Those are only a few of the advantages of being an entrepreneur as long as you approach the venture in the right way.

Of course, as you’re building your business, you have a seemingly endless list of factors to think about. Deciding which products and services to offer customers and determining the best way to tailor them to consumers’ needs are certainly among the most important. Getting the funding you need to get your company off the ground is likely a consideration. Hiring the right employees to foster productivity, customer satisfaction, and growth is also crucial. But these aspects barely scratch the surface.

Looking at the Legal Side of Business Ownership

In the midst of the many elements new business owners need to think about, many overlook the importance of legal protection. In truth, quite a few admit that they don’t really understand the legal side of business ownership. With that being the case, far too many ultimately leave themselves vulnerable to any number of legal and financial problems.

Several legal documents are essential for businesses. Articles of incorporation are among them. They serve a range of purposes for companies, including formally and legally establishing business’s existence and defining its official purposes. These documents also state where businesses are located, who owns them, and other significant details.

Exploring Five Additional Essential Legal Documents for New Businesses

While articles of incorporation are must-haves for business, they’re only the beginning. To truly protect your business and yourself, you’ll need to go well beyond the basics. Not all companies’ needs are exactly the same, but the following five legal documents are among the most common and critical for new businesses. Hiring a business entity formation attorney in Texas to handle these documents will ensure you get all the protection they’re designed to provide.

1) Operating Agreements or Corporate Bylaws

First, let’s delve into operating agreements and corporate bylaws. While the former are generally for LLCs, the latter are for corporations. These are basically a company’s internal rule books, and each one has its own distinct features.

Operating agreements are contracts among owners of a business. They detail each owner’s responsibilities. They also cover each party’s percentage of ownership and the company’s management structure, decision-making processes, and other crucial points. They explain how losses will be allocated and how the business will be dissolved if the need arises as well.

Bylaws work in similar ways. They define corporations’ management and operating procedures. They lay out the roles of a company’s board of directors and their term limits. They likewise cover a business’s procedures for issuing and transferring shares, holding meetings, voting on various matters, removing board members, and certain other factors.

While operating agreements are not necessarily required in Texas, corporate bylaws are required by law. Regardless of whether they are required or not, these documents can help owners avoid potentially detrimental disagreements. If drafted properly, they can also protect you by limiting your personal liability for legal issues and financial hurdles. At the same time, they can give you a clear exit strategy if you need to leave the company.

Operating agreements and bylaws contain some of the same information as articles of incorporation. One of the main differences here is that articles of incorporation are public records while operating agreements and bylaws are internal documents. Though you’re likely to need both, your articles of incorporation primarily establish your company as an entity whereas your bylaws or operating agreement delve deeper into its structural, operational, and legal aspects.

2) Buy-Sell Agreements

If your business has more than one owner, a buy-sell agreement may be necessary. Sometimes referred to as succession planning, a buy-sell agreement dictates how ownership interests can be transferred. It also covers how an owner’s shares of the company will be redistributed in the event of their death, a permanent disability, or another occurrence that leaves them unable or unwilling to participate in the company.

Two main types of buy-sell agreements are commonly used: cross-purchase and entity-purchase agreements. With cross-purchase agreements, the remaining owners purchase the shares that are left behind. In entity-purchase agreements, the business itself purchases the shares in question. In many cases, business partners take out life insurance policies on each other to provide the funds to purchase a deceased owner’s shares.

A business’s buy-sell agreement should include the names of the owners, the portions of the company they own, and how buyouts should be funded. It should also include an up-to-date business valuation. The business valuation will be used to determine the value of each partner’s interest in the company.

Furthermore, a buy-sell agreement needs to explain the acceptable events that may trigger a buyout. Those may include, but aren’t limited to, a partner’s death, disability, or retirement. Tax and estate planning considerations and additional crucial points should also be covered in this legal business document.

Buy-sell agreements protect businesses in a few key ways. For one, they can prevent any disputes that might otherwise arise over who is allowed to buy a deceased or exiting partner’s shares and for how much. They can also prevent outsiders from buying that partner’s shares and taking over the business. These documents can help protect owners’ best interests and those of their family members and other beneficiaries.

3) Employment Agreements

Employment agreements are also vital legal documents for new businesses. They explain the terms of employment for your workers. Those might include their salaries, job responsibilities, work hours, and your grounds for termination. They can also cover paid time off, health insurance, retirement plans, and other benefits.

Employment agreements can be exceptionally valuable for businesses. They aid in preventing misunderstandings and disagreements about job duties, pay, and terminations. In doing so, they can thwart the potential legal problems that can come along with them. From a different perspective, they give employees added peace of mind by protecting them against unexpected changes in their terms of employment.

4) Independent Contractor Agreements

Not all employees are part of a company’s in-house team. You may need to hire outside contractors for certain services or projects. If so, independent contractor agreements will give you an array of benefits.

These legal documents are contracts between employers and outside parties that perform work for them. They clearly define the relationships between you and any contractors you hire. They also cover the types of work they’re expected to perform, payment terms, and who gets credit for their work among other details.

Independent contractor agreements can safeguard your company by stating in advance that you own any work the contractor completes for you. They also clearly define your expectations of contractors and what they can expect from you in return. That helps prevent costly legal disputes, losses from uncompleted projects, and many other potential issues. These legal documents can also help you avoid tax penalties and additional financial setbacks.

5) Intellectual Property Agreements

Finally, let’s discuss intellectual property agreements. Intellectual property includes your business’s intangible assets. Some examples here are your company name and logo, customer databases, trade secrets, and creative works to list a few possibilities. You might need intellectual property agreements between your co-owners, employees, contractors, and other people or organizations you do business with.

These critical legal documents ensure your inventions, ideas, and proprietary information can’t be used by unauthorized people for their own benefit. They’re also essential for licensing your intellectual property to others. They can allow you to profit from selling certain IP to companies or individuals without forcing you to give up your rights to them.

Without intellectual property agreements, an employee, contractor, or partner could share your ideas with competitors. Contractors may sell items they created for you to other companies, which might take away your competitive edge. In either of those scenarios, you’d have no solid foundation for taking legal action against them and protecting what’s rightfully yours without IP agreements in place.

Why Generic Legal Document Templates Aren’t the Answer

It’s no secret that a vast range of legal document templates are now available online. Many of them are free to download as needed. As such, you may be asking, “Why can’t I just download those free templates online instead of paying an attorney to handle them?” Actually, there are several reasons why it’s better to trust your business’s legal documents to an attorney rather than relying on general templates.

Overly General Language

Generic templates tend to be written in extremely general language. Sometimes, they include clauses that negate each other or even contradict certain laws and regulations that may apply to businesses. They’re often too vague to truly hold up in court, and they may be altogether unenforceable. It is not uncommon for these documents to cause more problems than they prevent.

Lacking Important Details

Templates you’ll find online are general documents that cover a variety of basic business needs. They don’t actually cover a company’s more specific needs, though. With that being the case, they’re bound to leave out certain clauses and stipulations that may be important. Those may seem like minute details on the surface, but they can leave your business vulnerable to countless risks.

No Customization

Generic templates aren’t customized to suit your business’s unique circumstances either. Each type of business is held to specific standards and regulations. On top of that, the laws that apply to different types of businesses can vary by state as well as other factors. General templates don’t take that into account. As mentioned, they’re generic documents with cookie-cutter information that just don’t cover a company’s specific needs.

Working With an Attorney to Protect Yourself and Your Business

Entrepreneurs have to keep countless details in mind and shoulder an endless list of responsibilities. If you’re like most business owners, legal matters may seem a bit intimidating. Ignoring them can leave you vulnerable to any number of risks, and inadvertently leaving out even seemingly minor details can cause major problems for your company.

Having the right legal business documents in place can protect you from costly and detrimental problems. Using generic downloadable templates for those documents may seem like an effective way to save time and money. In reality, though, they give business owners a false sense of security and can cause a range of unexpected problems in their own right.

Working with a business entity formation attorney will protect you and your company against those risks. An attorney will create legal documents that are specifically tailored to your distinct needs and circumstances. In doing so, they’ll ensure you’re fully covered against disputes, misunderstandings, and other potential problems. They’ll give you peace of mind as well as ongoing support as your needs grow and change.

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Estate Planning to Avoid Guardianship: Proactive Steps Every Family Should Take

Tue, 26 Aug 2025 18:37:50 GMT

It’s hard to imagine a situation where you’re not fully in charge of all your faculties, able to navigate everything that comes your way. But life is famous for throwing curve balls.

Without proper planning, your family could face the costly, time-consuming, and emotionally draining process of seeking guardianship through the Texas courts. The good news is that with the right estate planning documents in place, you can maintain control over your affairs and spare your loved ones from this difficult legal process.

Understanding the Guardianship Process in Texas

When someone becomes unable to make decisions about their personal care or finances, Texas law allows family members and other interested parties to petition the court for guardianship. This legal proceeding can result in a person’s rights being severely limited or stripped away, and decision-making authority being transferred to a court-appointed guardian. The process can take months, cost thousands of dollars, and create family conflict.

During guardianship proceedings, a judge must determine whether you're truly incapacitated. A medical professional will perform an examination of you to determine your ability to care for yourself and manage your own affairs and then complete a certificate detailing their assessment for the court. Medical professionals may also testify about your condition. The court will appoint an attorney ad litem to represent your interests in the guardianship proceeding. Court investigators may also visit your home and interview family members. Even after a person’s appointment as your guardian, the guardian must file annual reports or annual accounts with the court and seek permission for many decisions.

You can likely avoid this entire ordeal through proper estate planning.

The Power of Advance Directives

Advance directives serve as your voice when you cannot speak for yourself. These documents tell healthcare providers and family members exactly what medical treatments you want or don't want if you become unable to communicate your wishes.

In Texas, you can create several types of advance directives . A Directive to Physicians (Living Will) outlines your preferences for life-sustaining treatments. In this document you might specify that you don't want artificial nutrition if you're in a persistent vegetative state. Or, you could request all available treatments to extend your life.

An Out-of-Hospital Do-Not-Resuscitate Order prevents emergency medical personnel from performing CPR if you're found unconscious. This document requires a physician's signature and the signatures of two witnesses or a notary to be valid in Texas.

Mental Health Advance Directives let you make decisions about psychiatric treatment before a mental health crisis occurs. You can name preferred treatments, medications to avoid, and people you want involved in treatment decisions.

These directives eliminate guesswork for your family and medical team. Without them, loved ones may disagree about your care, leading to court intervention.

Durable Power of Attorney for Financial Matters

A Durable Power of Attorney might be the most important document you'll ever sign. This legal instrument allows someone you trust to handle your financial affairs if you become incapacitated. The word "durable" means it remains effective even after you lose mental capacity.

You can grant your agent, called an attorney-in-fact, the ability to do things like pay your bills, manage your investments, sell your property, and handle your insurance claims. They can also be granted the ability to apply for government benefits on your behalf and make decisions about your business interests.

Texas law requires specific language in a Durable Power of Attorney. The document must explicitly state that it remains effective during periods of incapacity. Without this language, the power of attorney becomes worthless exactly when you need it most.

You should choose your agent carefully. This person will have broad authority over your finances, so your agent should be someone you trust. You should also consider naming a successor agent in case your first choice cannot serve. Some people may choose to name co-agents who must act together for major decisions, however doing this may lead to disagreements and potential delays in your care.

Medical Power of Attorney and Medical Proxies

While advance directives cover specific medical situations, a Medical Power of Attorney gives an agent authority to make medical decisions on your behalf when you cannot make them for yourself. This person, called your healthcare agent, works with your doctors to determine the best course of treatment based on your values and previously expressed wishes.

Your healthcare agent can consent to or refuse medical treatments, choose healthcare providers, and access your medical records. They can also make decisions about where you receive care, whether at home, in a hospital, or at a specialized facility.

In Texas, you can combine your advance directives with your healthcare power of attorney in a single document. This comprehensive document covers both specific treatment preferences and general decision-making authority.

You should appoint someone as your healthcare agent who understands your values and isn't afraid to advocate for your wishes, even when facing pressure from medical professionals or family members. Your healthcare agent should live close enough to participate in medical consultations and visit you regularly.

Revocable Trusts for Comprehensive Protection

A Revocable Living Trust provides strong protection against guardianship proceedings. When you create this type of trust, you transfer ownership of your assets to the trust while often maintaining complete control as the trustee. Typically, you can buy, sell, and manage the trust assets just as you did when you owned them personally.

If you become incapacitated, your chosen successor trustee immediately takes over management of the trust assets without any court involvement. They can pay your bills, manage your investments, and handle all financial matters according to the instructions you provided in the trust document.

Revocable trusts work particularly well for managing real estate, investment accounts, and business interests. However, you must actually transfer your assets to the trust for it to provide protection. Assets that remain in your individual name may still require guardianship proceedings.

Many people worry about losing control when they create a trust. Remember that revocable trusts are very flexible. You can often modify the terms, change trustees, or even dissolve the trust entirely as long as you remain mentally competent.

Declaration of Guardian in the Event of Later Incapacity

Texas law allows you to nominate your preferred guardian in advance through a Declaration of Guardian in the Event of Later Incapacity. This document won't prevent guardianship proceedings, but it ensures the court appoints someone you trust as your guardian rather than leaving the decision to a judge who doesn't know your family dynamics.

Your declaration should name both a guardian of your person (to make healthcare and personal decisions) and a guardian of your estate (to handle financial matters). You can name the same person for both roles or choose different individuals based on their skills and availability.

Consider naming alternate guardians in case your first choice cannot serve. Also think about people you definitely don't want to serve as your guardian. Texas law allows you to disqualify potential guardians in your Declaration, which can prevent family conflicts and ensure your wishes are respected.

While this document provides some protection, it's far better to have comprehensive estate planning documents that eliminate the need for guardianship altogether.

Coordinating Your Estate Planning Documents

Effective estate planning requires coordination between all your documents. Your Medical Power of Attorney should complement your Advance Directives. Your Durable Financial Power of Attorney should work seamlessly with your Revocable Living Trust. All documents should reflect consistent values and decision-making preferences.

Review beneficiary designations on bank accounts, retirement accounts, life insurance policies, and other assets. These designations override instructions in wills and trusts, so they must align with your overall estate plan.

Consider creating a comprehensive personal care plan that goes beyond legal documents. This plan might include information about your daily routines, medication schedules, pet care instructions, and contact information for important people in your life.

Regular Review and Updates

Estate planning isn't a one-time event. Life changes require document updates to remain effective. Marriage, divorce, births, deaths, and significant changes in financial circumstances all trigger the need for estate plan revisions.

Texas periodically updates its laws regarding estate planning documents. What worked five years ago might not provide adequate protection today. Annual reviews with an experienced estate planning attorney ensure your documents remain current and effective.

Don't forget to inform your agents and family members about your estate planning documents. Keep original documents in a secure but accessible location. Consider providing copies to your healthcare providers and financial institutions.

The Cost of Procrastination

Creating comprehensive estate planning documents requires an initial investment of time and money, but the cost of procrastination is far greater. Guardianship proceedings in Texas typically cost between $3,000 and $10,000, not including ongoing court fees and guardian compensation.

More importantly, guardianship strips away your autonomy and privacy. Court files become public record. Judges who don't know you make decisions about your most personal affairs. Family relationships suffer under the stress of legal proceedings.

Taking Action Today

You don't need to wait until you're facing health challenges to create estate planning documents. Accidents and sudden illnesses can affect anyone at any age. The time to plan is while you're healthy and mentally sharp.

Start by consulting with a qualified Texas estate planning attorney who understands the nuances of state law and can recommend the best strategies for your situation. Every family's needs are different, and cookie-cutter documents downloaded from the internet rarely provide adequate protection.

Proactive steps, such as estate planning, give you peace of mind knowing that your wishes will be respected and your loved ones will be protected, no matter what challenges life brings your way. Estate planning gives you peace of mind knowing that your wishes will be respected and your loved ones will be protected, no matter what challenges life brings your way.

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The Hidden Costs of DIY Business Formation: When to Call an Attorney

Wed, 30 Jul 2025 16:40:37 GMT

Starting a new business is exhilarating. The entrepreneur has big dreams and wants their venture to succeed. Choosing the correct legal structure for the organization increases the odds of success. The choice of structure has far-reaching implications, which is why many people choose to work with a business formation attorney in Texas . How can they be of help?

Choosing a Business Entity

The business entity selected determines the company’s legal and operational landscape. Each option has advantages and considerations. The attorney works with the entrepreneur to ensure their selection aligns with their goals and vision.

Sole Proprietorship

A sole proprietorship is suitable for individuals who own and operate their businesses. The law considers the owner and the company as one entity. This type of business is easy to establish, and the owner retains control over all decisions. However, their assets are exposed to business-related risks, and they may struggle to raise capital.

Partnership

When two or more individuals manage and operate a business, this venture is referred to as a partnership. The terms of the arrangement are detailed in a partnership agreement. Partnerships are easy to establish and offer pass-through taxation, like a sole proprietorship. However, the owners are exposed to unlimited personal liability, and they may disagree on shared decisions, which can lead to workplace conflict and premature termination of the business venture if such decisions cannot be resolved.

Limited Partnership (LP)

Limited partnerships share many similarities with general partnerships. The key difference lies in the type of partners making up this entity. General partners oversee day-to-day operations, while limited partners provide the capital necessary to sustain the company's operations. Limited partners have liability protection, and general partners can raise capital as needed without giving up control. General partners, however, have unlimited personal liability.

Limited Liability Partnership (LLP)

Limited liability partnerships are another option entrepreneurs may consider. All partners receive limited liability protection, and this structure offers flexibility in taxation and management. The paperwork to form this partnership is more complex, and the partners will find it more challenging to raise capital, which may lead to the decision to create a corporation.

Corporations

Corporations are legal entities entirely separate from those who own them. This company can issue stock while shareholders own the business. The owners select a board of directors responsible for making decisions on behalf of the company. Shareholders have limited liability protection and can buy and sell shares to transfer ownership or raise capital. Profits are, however, subject to double taxation, and the corporation faces increased administrative and regulatory burdens.

Limited Liability Company (LLC)

Across the United States, the limited liability company is the most widely used business entity. Limited liability companies combine elements of sole proprietorships and corporations. They can be owned by one or more individuals. Owners, called members, the protections afforded corporations while enjoying the option of either pass-through taxation like a sole proprietorship (or partnership if multi-member) or to be taxed as a corporate entity. However, they may be limited in their ability to add additional members or raise capital. Additionally, because they can enjoy pass through taxation, it can be easy to treat the business as a sole proprietorship, reducing the protective status of the company in the event the company is sued.

When entrepreneurs research the business formations available, they often become overwhelmed. An entity formation attorney works with them to determine the legal implications of each business structure and the benefits. While an entrepreneur may make this decision independently to save money, they could find that doing so is a costly mistake. How can entity formation attorneys help entrepreneurs make the correct choice to avoid common pitfalls? What are these pitfalls?

Common Pitfalls

Mismanagement of Business

Many entrepreneurs fail to recognize the impact of liability on their personal assets. They must choose the correct business structure to minimize their liability while addressing operational risks. The structure selected must legally separate the owner from the business. Furthermore, the owner(s) need to keep their personal and business finances separate. Any co-mingling of the two can make piercing the corporate veil easy.

Long-term objectives should be considered when selecting a business structure. Entrepreneurs often look for the easiest option to save time and money. They pay for this mistake over time because they may struggle to raise capital in the future or manage operational complexities. The wrong structure could limit the company’s growth potential over time.

Insufficient Written Agreements

Contractual protections are necessary for successful business relationships. A well-drafted agreement reduces the risk of disputes and possible lawsuits. A clear and precise contract outlines the specific terms, liabilities, and limitations concisely and unambiguously. Business owners need written agreements with clients, suppliers, and partners, as handshake agreements aren’t legally enforceable. The attorney ensures the contracts contain clauses limiting the entrepreneur’s liability and specifies how disputes will be resolved, whether it be through mediation, arbitration, or in a court of law.

Every limited liability company or corporation needs bylaws that outline the internal rules and procedures governing its operations. Company or stakeholder agreements are also essential to ensure that all stakeholders understand their rights, responsibilities, and the organization's ownership structure. The attorney drafts comprehensive, legally sound documents tailored to the company's needs.

Improper Equity Structure

Improper equity structures can harm a business. Entrepreneurs should consult with a business formation attorney to ensure that the correct equity structure is selected. Common equity allows investors to have voting rights and influence company decisions. While this form of equity is needed to raise capital, an entrepreneur might find that the investors take the company in a direction they never intended. Preferred equity allows preferred shareholders to receive dividends before all other shareholders, providing a stable income stream. Nevertheless, they typically don’t have voting rights like common shareholders.

Convertible equity allows preferred shareholders to convert their holdings into common shares at a future date. Entrepreneurs must consider all options and ensure the proper equity structure is selected to obtain the right balance between ownership dilution and capital needs. A business formation attorney will help them evaluate all options to determine which best meets their needs.

Non-Compliance with Legal Requirements

Entrepreneurs must understand the importance of complying with state regulations. Failure to do so could lead to personal liability and costly penalties. Many entrepreneurs fail to recognize the nuances of compliance, which ultimately costs them. This problem is easily avoided by consulting with a business formation attorney.

The attorney ensures the company remains in compliance with all formation requirements. They provide information on state law regarding annual reports and taxes. Furthermore, they may recommend regular audits to detect problems early and correct them before the company is found to be non-compliant with local, state, and federal requirements. Finally, the attorney helps the business owner understand state and federal labor laws that apply to employees.

No Exit Plan

Entrepreneurs focus on launching their new ventures. Creating an exit plan is something most never stop to consider. Nobody knows what the future holds, however, and this plan ensures the stability of the company if an owner or shareholder is no longer able to fulfill their duties. The exit plan must be tailored to the specific needs of the owner(s) and their circumstances. This plan outlines the process for transferring ownership to ensure a seamless transition.

The Hidden Costs of DIY Business Formation

Every business is unique. It has goals and legal needs that must be considered when choosing a structure to function optimally while avoiding preventable legal issues. Entrepreneurs who decide to form a company without legal guidance often find they pay more over time because they opted for DIY business formation.

Preventable Legal Costs

Entrepreneurs focus on the present as they launch a new venture. They want to have ample cash flow when they open the doors to customers. To save the cash they have, they might choose to form the business without legal advice or use online forms to draft agreements and contracts. Unfortunately, the contracts and agreements don’t take into account the unique needs of the business.

Online documents are tailored for multiple business types across different jurisdictions. They often ignore Texas law and fail to include essential provisions and protections the business needs. Working with an attorney ensures that contracts and agreements are legally and validly executed in the state, thereby reducing the entrepreneur's risk of preventable legal disputes. Money is saved, as it isn’t tied up in attorney fees, court costs, and other expenses incurred in a lawsuit.

Wasted Time

Business owners often use the adage “time is money” when discussing operations. They want to spend their time engaging in activities that will grow their businesses. When they must handle a dispute or lawsuit, they aren’t devoting their time to those activities. Legal issues generate a high opportunity cost that could easily have been avoided by working with a business formation attorney rather than completing these tasks independently.

Reputational Damage

Improperly drafted legal documents and procedures can lead to disputes and harm to the company’s reputation. Well-drafted contracts protect the entrepreneur, their suppliers, vendors, and customers. Customers and business partners appreciate having well-drafted contracts that outline the terms and conditions of the agreement, as they know they are protected in the event of any issues.

When to Hire an Entity Formation Attorney?

Entrepreneurs may decide to handle all business formation steps independently and only hire an attorney if there is a problem. However, waiting until an issue arises isn’t wise. Consulting an attorney early in the formation process ensures there are no missteps as the entrepreneur navigates complex legal and regulatory landscapes. The attorney guides clients through each step of the process to ensure the best choices are made for the entrepreneur and the business based on their goals and circumstances.

The entrepreneur should also consult with this attorney when their business plans evolve. They may choose to bring on a partner, expand the business, or raise additional capital. The attorney guides them through the legal aspects of taking these steps to determine whether the chosen entity remains valid or if changes are necessary. The attorney is also available to assist if a legal dispute or compliance issue arises. They are familiar with the company and can resolve the matter more efficiently.

Choose an entity formation attorney carefully, as this partnership will hopefully last for decades to come. This individual should understand the nuances that make the business unique and provide customized advice that ensures the business owner complies with state and federal regulations. With the help of this legal professional, an entrepreneur can put their new venture on the path to success.

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Property Owner's Guide to Easements and Encroachments: Transactional Approaches

Mon, 07 Jul 2025 21:13:11 GMT

Property boundaries and rights of use can sometimes become complicated when dealing with easements and encroachments. Understanding these legal concepts and knowing how to address them through transactions rather than litigation can save you time, money, and stress.

Understanding Easements

What Is an Easement?

An easement is a legal right to use someone else's property for a specific purpose. Common examples include utility easements, right-of-way easements, and conservation easements. Easements create a non-possessory interest in the property, meaning the easement holder doesn't own the land but has certain rights to use it.

Types of Easements

Express Easements : Created by written agreement between parties
Implied Easements : Arise from the circumstances of property division
Easements by Necessity : Created when landlocked property requires access
Prescriptive Easements : Established through continuous use over time without permission

Discovering Easements on Your Property

Before purchasing property, it's essential to conduct thorough due diligence. Start by reviewing the title report carefully, as this document typically lists recorded easements affecting the property. Next, examine the property survey, which should show the location of any easements visually. Don't hesitate to request copies of all recorded easements from the seller or title company to understand their specific terms and limitations.

Additionally, consider getting a title insurance policy that specifically covers easements, as this can provide protection if undisclosed easements are discovered after purchase. Walking the property with the survey in hand can also help identify physical signs of easements such as utility markers, well-worn paths, or neighbor access points that might indicate established usage rights.

Transactional Management of Easements

Creating an Easement Agreement

When voluntarily creating an easement:

Clearly define the scope, location, and purpose
Specify maintenance responsibilities
Include a detailed description and/or survey of the easement’s location
Address duration (temporary or permanent)
Consider compensation terms
Use an attorney to draft the agreement
Record the easement with the county recorder's office

Negotiating Easement Terms

When an easement is requested on your property:

Research fair market compensation
Consider the impact on property value
Negotiate limitations on use (times, types of access)
Include termination conditions
Request indemnification against liability
Consider requesting reciprocal benefits

Terminating an Easement

While easements often run with the land, meaning they remain with the property permanently, there are several methods to terminate them when circumstances change. The most straightforward approach is obtaining a notarized written release from the easement holder, which should be properly recorded to clear the title.

Other common termination methods include:

Purchase of the easement rights : Negotiating a price to buy back the rights from the easement holder
Merger of properties : When the dominant and servient estates, come under common ownership
Abandonment : When the easement holder clearly demonstrates intent to permanently stop using the easement (requires strong evidence and varies by jurisdiction)

Additionally, easements can terminate through changed conditions that make the easement unnecessary or impossible to use. For example, if an easement provided access to a property that now has public road access, a court might find the easement by necessity has terminated.

For any easement termination, proper documentation and recording with the county recorder's office is essential to ensure clear title moving forward.

Understanding Encroachments

What Is an Encroachment?

An encroachment occurs when someone's structure, improvement, or other property partially extends onto your land without permission. Examples include fences or sheds built over property lines, overhanging roofs, or driveways that cross boundaries.

Discovering Encroachments

Get a professional survey of your property
Walk your property lines regularly
Review aerial photographs
Check existing surveys against visible structures

Transactional Solutions for Encroachments

1. Property Line Agreements

A property line agreement (also called a "lot line agreement" or "boundary line agreement") can formalize understandings about minor encroachments:

Acknowledge the encroachment exists
Grant permission for its continued existence
Set conditions for maintenance or eventual removal
Record the agreement with the county recorder’s office

2. Easement Agreements for Encroachments

Rather than removing an encroachment, you might:

Grant a limited easement allowing the encroachment
Receive compensation for the encroached area
Set a term limit or condition for termination
Require maintenance and liability insurance

3. Lot Line Adjustments

For permanent solutions:

Formally adjust the property boundary
Exchange property through a boundary line adjustment
Obtain a new survey showing the adjusted boundary
Record the adjustment with the county recorder’s office
May require the local planning department approval

4. Selling the Encroached Land

Consider:

Selling the portion of land with the encroachment
Establishing fair market value
Obtaining a new legal description
Recording a proper deed transfer with the county recorder’s office

5. License Agreements

For temporary encroachments:

Create a revocable license agreement
Specify that permission can be withdrawn
Include compensation terms
Address maintenance and liability

Financial Considerations

Valuing Easements and Encroachments

When negotiating compensation:

Consider the square footage affected
Assess the impact on property use and value
Factor in the duration of the agreement
Consider getting a professional appraisal
Research similar arrangements in your area

Tax Implications

Consult with a tax professional regarding:

Potential income from easement payments
Property tax adjustments after boundary changes
Possible charitable deductions for conservation easements
Basis adjustments after property transfers

Documentation and Recording

Always ensure proper documentation by:

Getting written agreements notarized
Recording documents with the county recorder
Updating property insurance to reflect changes
Maintaining copies of all documents in your records
Updating your property disclosure for future sales

When to Involve Professionals

Navigating easements and encroachments often requires specialized expertise to protect your property interests and ensure legally binding resolutions. While minor issues might be handled independently, complex situations typically warrant professional assistance.

Consider consulting the following professionals:

Real estate attorney: Essential for drafting or reviewing legal agreements related to property rights. An experienced real estate attorney in Texas can ensure your interests are protected and that documents will stand up to legal scrutiny.
Licensed surveyor: When boundary disputes arise or precise measurements are needed, a professional survey provides the factual foundation for resolving conflicts. Modern surveying technologies can identify encroachments with remarkable precision.

Property valuation is another critical area where professional input matters:

Real estate appraiser: Can determine how easements or encroachments affect your property value, which is crucial for negotiating fair compensation or adjusting purchase prices

For documentation and financial considerations, you may need:

Title company representative: To ensure proper recording of agreements and to update title records
Tax advisor: To navigate potential tax implications of property transfers, easement income, or conservation easement deductions

The cost of professional services should be weighed against the property value at stake and the complexity of the issue. In many cases, professional guidance early in the process can prevent costly mistakes and provide peace of mind during property transactions.

Disclosure Requirements When Selling

When selling property with easements or encroachments:

Disclose all known easements and encroachments
Provide copies of relevant agreements
Point out physical evidence of easements/encroachments
Consider ordering a new survey if uncertainties exist

While litigation is sometimes necessary, transactional approaches to easements and encroachments often result in faster, less expensive, and more amicable resolutions. Property owners should understand their options, document agreements carefully, and consult professionals when needed to protect their property interests.

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Estate Planning for Blended Families: Protecting Your Spouse and Your Children

Mon, 23 Jun 2025 19:26:26 GMT

Blended families are commonplace today. People often quote a Pew Research Center statistic that 16 percent of children live in blended families, but that figure is actually from a study done back in 2015. The current number may be significantly higher or lower. Regardless of the actual figure, estate planning is essential for families with children from prior relationships. The estate plan must ensure that everyone is cared for and minimize the risk of disputes, accidental disinheritance, and other issues.

How Estate Planning for Blended Families Differs From Estate Planning for a Nuclear Family

Blended families differ from nuclear families in that biological and stepchildren may be entitled to an inheritance from the estate. This can lead to clashing interests. The new spouse may be entitled to a portion of the estate, which can lead to uneven relationships. Biological children may feel they are shortchanged when the spouse receives their share.

There may be multiple children, stepchildren, and grandchildren expecting inheritances. Do they receive equal shares, or do the particular needs and ties of each person make unequal distributions more appropriate? How can a person navigate these challenges? Working with an estate planning attorney in Texas is critical to ensure a person’s goals for their blended family are accomplished.

A Basic Overview

Creating an estate plan is a similar process for both blended and nuclear families. The key difference is determining how each child will be accounted for in the plan. Furthermore, the spouses must decide who will serve as the guardian for each child if both parents die. They must determine the best fit for each child, taking into consideration the sibling relationships.

Additionally, assets and fund distribution must be covered. Spouses typically leave their estates to one another, but children from previous relationships cannot be ignored. One way to ensure they are cared for and receive a share of the estate is to create a trust for each child. This trust provides them with the desired inheritance from the deceased. However, other options are also available.

Estate Planning Options

When creating this plan, consider each family relationship. Certain estate planning options are commonly seen with blended families. Talk with an estate planning attorney to determine which option is best for the situation.

When a spouse dies, one option is that all assets may be placed in a family trust. The trustee of the trust, which may be the surviving spouse, then distributes the assets either based on the particular needs of each named beneficiary or in specific amounts at specific times, depending on how the trust is worded. Another option is to establish a marital trust, where all assets are managed by a trustee for the surviving spouse’s benefit. With this option, residual assets are usually designated for the children upon the passing of the surviving spouse. All children can be included in a marital trust.

Some couples decide outright ownership is the best option for their situation. All assets transfer to the surviving spouse under a will. No trust is established for the children. While this type of estate plan is easy to set up and implement, each spouse must trust the other to care for all children in the blended family.

Testamentary bequests allow a person to leave assets to each child in their will. Couples often hesitate to choose this option because they worry about hurting each other's feelings. However, this method is ideal when a person wants to give specific items to a certain child. The child inherits these items directly rather than through a trust. People often use immediate bequests to pass on sentimental items.

Creating the Plan

Once a person is aware of the options, the planning process begins. What must they consider when creating the plan? How can they reduce the risk of conflicts once they are gone? The following tips help ensure that everyone is on the same page and there are no surprises when the person passes away.

Clearly Define Goals

A person must identify what they want before moving forward with estate planning. They need to answer complex questions, such as how the spouse will be supported. This individual must determine what the biological children will inherit and whether anything will be left to the stepchildren. Clear goals are essential when creating the plan to ensure the person’s wishes are carried out with minimal disputes.

Open Communication

The person creating the estate plan must communicate their wishes to the family, including the spouse, biological children, and stepchildren. Doing so can minimize disputes and misunderstandings upon their passing. Family meetings or private conversations are effective if the decisions made are explained to the relevant parties. Many people avoid these conversations because they are uncomfortable, which can be a mistake. Have them now to prevent future disputes that could tear the family apart.

Beneficiary Designations

People should review their estate plans regularly and update them to reflect any changes in their life circumstances. When doing so, people must review all assets governed by beneficiary designations , as these designations override estate planning documents like a will. Furthermore, people should ensure they name contingent beneficiaries. If the primary beneficiary passes away before the estate plan is enacted, the assets will transfer to the named contingent beneficiary.

Short-Term and Long-Term Needs

People must account for both short-term and long-term needs in their estate plans. Family members often need access to funds immediately upon the loved one’s passing. The estate plan should guarantee they have these funds for regular expenses. A cash gift or trust with regular distributions is a way to make certain that they will.

Long-term expenses may be covered in several ways. However, many people choose to delay large disbursements for younger children. The individual determines when they should receive these funds. Often, the distribution is tied to a specific milestone in life, such as when a child graduates from college or reaches a certain age.

The Family Home

The family home holds both emotional and financial value, so people must consider this when determining how to handle it in their estate plan. Many couples want the surviving spouse to stay in the marital home after they pass and then to leave the home to the children when the surviving spouse dies. There are two ways to handle this.

A life estate allows the surviving spouse to remain in the home until their death or until they choose to move out. When they no longer reside in the house, title to the house passes to the children. A couple may choose this option when one party purchased the home outright prior to the marriage. They want their children to have the home they purchased rather than having it be split between the biological children and stepchildren.

Trust ownership is another option. The home is placed in a trust, and the terms of the trust dictate who can reside in the home and how it may be used. Furthermore, the trust terms outline the conditions under which the house may be sold or transferred.

State Laws

Every person creating an estate plan should consult an attorney, as state laws may dictate what is allowed. If the couple lives in a community property state, the surviving spouse is entitled to half of all community property assets the surviving spouse owned with the deceased spouse. A will cannot override this. However, if the couple has a prenuptial agreement, a probate court will consider this document when addressing any disputes. The surviving spouse will likely only be entitled to what was agreed upon in the prenuptial agreement.

Regular Updates

Children grow up, people change jobs, and life happens. A person must regularly review their estate plan and make changes as needed. A person might update their will while neglecting other estate planning documents. Review and update all components of the plan every three to five years. Furthermore, review and update the plan any time there is a significant life change, including the birth of a child, a divorce, or the death of a named beneficiary, executor, trustee, guardian, or agent. Documents to review and update include but are not limiting powers of attorney, healthcare directives, and guardianship designations.

Select an Executor Carefully

The person responsible for handling the administration of the estate can smooth the process and reduce family conflicts. Keep this in mind when selecting who to oversee the process. With blended families, selecting a neutral third party is often a good option. Doing so can help to ensure impartiality while avoiding biases. Another option is to choose co-executors from each side of the family. However, the co-executors must be able to work well together or problems and delays in administrating the estate will arise.

Blended Families and Estate Planning Issues

A lack of estate planning often results in assets not being distributed to the intended parties. Easily avoid this problem by creating an estate plan and reviewing it regularly. However, a traditional estate plan typically does not accomplish the goals of blended families.

Both parties might establish a traditional estate plan with a joint trust. When one party passes, the trust is divided into two sub-trusts. The deceased party’s sub-trust is distributed among all children of the blended family. However, the surviving spouse may then choose to leave their sub-trust only to their biological children, thereby excluding the children of the deceased spouse from that share. Many people establish a traditional estate plan with a revocable trust and their children end up in this unbalanced situation. An experienced estate planning attorney can help ensure this does not happen.

Spouses may want to consider not naming each other as trustees. Doing so can lead to issues between the surviving spouse and the stepchildren. Couples can avoid this by choosing a neutral third party to serve as the trustee. Again, an experienced attorney can help avoid these potential pitfalls.

Finally, when one spouse enters the marriage with significantly more assets, they want to ensure those assets are protected for the benefit of their biological children. The attorney can establish separate trusts to account for this goal. The assets acquired by the first spouse prior to the marriage will be held in one trust, the assets acquired by second spouse prior to the marriage will be maintained in a separate trust, and a third trust will be established for joint assets acquired during the marriage for fair distribution.

Proper estate planning to accomplish the goals of a blended family can be challenging. Work with an experienced attorney to ensure the process is handled correctly. Doing so will minimize disputes and other problems commonly seen in these situations. The attorney will help determine the best plan for the family’s unique situation.

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Common Title Defects and How to Resolve Them Before Closing

Wed, 30 Apr 2025 17:56:10 GMT

Buying or selling a property is one of the largest financial transactions a person undertakes. Title issues can complicate the real estate transaction, as these can negatively affect ownership rights or prevent an owner from selling a property. The closing may be delayed if title defects are present, or the buyer may face legal disputes and financial losses. Buyers must recognize this and take steps to identify and resolve title defects before finalizing the sale.

What is Title to a Property?

Title to a property is a legal document that declares an owner’s rights to real estate. In addition to naming the legal owner of a property, it outlines the rights to use, property boundaries, and any liens or claims against the real estate.

Title Defects

Title defects are a concern because they are legal issues. Any defect I title could delay or stop the property transfer from the seller to the buyer. Errors, liens, and fraud are three issues a buyer may encounter with a title. The buyer must confirm that they are resolved before closing. Any unresolved defects may result in legal disputes that arise after the purchase is complete.

Every person who buys or sells a property is not legally required to, but definitely should, work with a title company. A title company can conduct a title search to ensure that there are no defects with the title that could cause problems for the buyer or seller when completing the transaction.

Many people associate tax liens with title issues. However, there may be an error in the public records, or previous owners might have had a dispute that could lead to problems for the buyer. Any problem might delay the closing process or bring it to a complete halt.

The title search reveals any existing legal claims and liens against the property. The title insurer and title company will require that these issues be resolved prior to the closing of a real estate transaction so that the buyer can receive a clean title. A real estate attorney in Texas can help the buyer and/or the seller resolve these issues, enabling the transaction to proceed.

The buyer might also wish to invest in title insurance. This insurance protects them in the event that someone claims ownership of the property in the future. Understanding potential hurdles helps buyers prepare for any eventuality so the transaction moves smoothly from start to finish.

What are Common Title Issues?

Unresolved Liens

Unresolved liens can result in legal claims against properties. The title search confirms that there are no outstanding debts for which the property might be subject to. For instance, tax liens and mechanics’ liens against a property must be released before closing. Failure to resolve the liens could lead to a title defect and potentially subject the property to foreclosure. A title company or real estate attorney identifies and works to correct these issues, allowing the buyer to proceed with the sale.

Fraudulent Documents

Title companies and real estate attorneys must also be vigilant for illegal deeds and other falsified documents. A fraudulent transfer or forged signature can lead to problems for the future owner, so they must be resolved before ownership is transferred. While sellers typically buy a title policy to protect the seller in the event of a defect in title, buyers may also wish to invest in their own title insurance to protect against financial losses that could arise from fraudulent documents.

Fraudulent deeds include those executed by a minor, those that were obtained through duress, and deeds signed by those of unsound mind. Sadly, forged signatures and fraudulent conveyances are more common than many imagine, which is why the chain of title must be scrutinized and verified.

Chain of title documents trace property ownership over time. They identify all previous owners and transfers of ownership. Any error in this document can lead to significant title issues and disrupt the closing process. When the buyer and seller know of these issues, they can address them to avoid complications.

When reviewing the documents, the title company or real estate attorney confirms that all previous owners appear on the document. If an owner is missing, they or their family members may file a legal claim. The title search identifies and addresses these issues to avoid potential legal claims.

Legal Description

When a property's legal description is incorrect, it must be fixed before the transaction can proceed. This description outlines the property's location and boundaries. The error may not appear to be a significant issue, but it could lead to a future dispute over property boundary lines or issues with property surveys. The buyer must ensure the accuracy of this description before the sale is finalized. Title insurance can help prevent inaccuracies in the legal description by providing the buyer with piece of mind that what they are purchasing is, in fact, what they are getting. If there are any issues that arise, the title company and, in more complicated situations, a real estate attorney, can assist in fixing any errors in legal description which may arise.

The title company or real estate attorney also verify the accuracy of maps, check for conflicting surveys, and resolve any neighbor disputes related to land use. Easement agreements must be reviewed, and the buyer might want to request a survey to reduce the risk of boundary disputes and unidentified encroachments.

Recording Errors

Title documents are recorded with the county where the property is located. Any errors can create confusion. An example of a recording error is when a document is not properly recorded and fails to appear in public records, leading to problems for the current owner.

Misspelled names and minor typographical errors also create problems during the closing process. For example, when an owner’s name is misspelled, it can be challenging to determine the property owner’s legal rights. The title agent or real estate attorney ensures corrections are made so the document accurately lists the property owner. The closing date may be postponed until the error is corrected.

Another problem a buyer might encounter is a missing mortgage assignment. When a lender sells a mortgage, they must record the assignment in public records. If the lender fails to take this step, the title company might need to investigate who now holds the loan. Without this information, obtaining a clean title may be challenging.

Missing Heirs

Some property owners die without a clear will. Others have no heirs to inherit the estate. When they do, the property may go up for sale. The title company or real estate attorney will look for unknown heirs who may become known at a later date and file a claim against the property. They examine probate records and take due care when handling the transfer of property.

Identifying Title Errors

Buyers need to identify title errors early in the purchase process so they can be addressed before closing is delayed. The first step is to determine the errors, which can be done through title searches and property surveys, allowing for the correct action to be taken to resolve the matter. When an issue is found, contact a real estate attorney and the title company.

Seek Professional Help

Real estate attorneys advise clients on how to resolve these issues based on the specific circumstances of each case. The attorney provides information on the legal rights of the property owner. Title companies are often the ones who uncover these problems. They work with the client and the real estate attorney to correct the issues. The client may also consider purchasing title insurance for added protection against defects in title.

Correcting the Error

Correcting the error depends on the problem. The seller may need to settle tax liens before proceeding with the sale. The attorney and title company can contact the proper authorities to update public records or correct legal descriptions. They can also ensure that all documents accurately reflect the correct owner and property lines or have this information corrected.

The attorney may need to file a quiet title action or work with the courts to clarify accurate ownership of the property. They may need to record a lis pendens to let others know there is a legal action regarding the property that is pending or assist in settling a dispute regarding the property. When fraud is the issue, the attorney works to have a fraudulent deed voided, thereby reinstating valid ownership.

Communication

All parties must be informed of each step of the process. The buyer and seller must communicate directly or through their real estate agents to confirm everyone remains on the same page. Clear communication reduces the risk of a closing delay and misunderstandings that can lead to the sale being canceled.

Resolution Verification

The buyer should confirm with all parties that the matter has been resolved before closing. A final title search should be conducted right before closing to verify this is the case and no new problems have been identified. All public records should contain accurate information, all liens must be paid, and all legal descriptions must be correct. Verifying these things ensures a smooth and successful closing.

Buyers and sellers must identify and resolve title problems as early as possible, but before closing, to ensure the closing is successful. These issues can result in the transaction being delayed or canceled. Thorough title searches allow problems to be identified and addressed. Many buyers and sellers work with a real estate attorney to ensure that the sales process is conducted legally and in accordance with the terms the parties intended.

Buyers often assume the title company will handle these issues on their behalf. However, a title company does not represent the buyer and has no duty to ensure the buyer is protected. Rather, the buyer should consider consulting an attorney to ensure the transaction complies with all applicable state laws and that any disputes are resolved legally. Unless the buyer knows up front they he is buying a property with a defective title, no buyer wants a title with defects. Defects in title can be costly to an unsuspecting buyer. An experienced attorney ensures all problems are corrected before the transaction is finalized. With their help, a buyer has peace of mind knowing they won’t be purchasing a property that may not legally be theirs.

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Breaking Down Estoppel Certificates: Why They Matter in Real Estate Sales

Wed, 26 Mar 2025 15:19:17 GMT

In real estate transactions, creating peace of mind for potential buyers and protecting everyone who might be impacted by the sale of a property is crucial. Numerous measures are taken to cover those bases. Those can include unbiased property inspections, title reports, creating detailed purchase agreements, providing proof of funds letters, defining contingencies, and implementing contingency periods, to name a few. Full disclosure, transparency, and comprehensive documentation are essential.

In some cases, estoppel certificates are also required. Like other documents, they are important tools in protecting the best interests of everyone involved in real estate transactions. Estoppel certificates provide clarity and security, but they need to be completely accurate to properly serve their purposes. Below provides some valuable information on estoppel certificates which can prove helpful in your current or next real estate transaction. Whether you’re buying or selling a property, working with a real estate attorney in Texas will help you ensure these documents, as well as others included in the transaction process, are in order.

What Is an Estoppel Certificate, and What Is Its Purpose?

First, let’s take a basic look at what, exactly, an estoppel certificate is. In short, it’s a legal document used in commercial real estate transactions, such as those involving office buildings, retail spaces, warehouses, and apartment buildings and complexes. In some situations, these documents are required for the sale of single-family homes. That may be the case when selling a house that’s an occupied rental property or part of a homeowners’ association. Estoppel certificates cover the details of tenants’ lease agreements .

Property owners have estoppel certificates created to eventually forward to potential buyers. Though they can technically create them on their own, having an attorney do this for them is recommended. It helps to ensure no crucial details are left out and that the document is in full compliance with the law.

Once an estoppel certificate is drawn up, it’s sent to the property owner’s tenants for confirmation of its accuracy. Upon receiving the document, tenants should read it carefully. If they find inaccuracies or omissions regarding their lease agreements and other factors, they are encouraged to point them out. They can do so by making notes directly on the certificate, creating an addendum, or requesting that a new document be drawn up that includes the information they want to add.

After confirming that the estoppel certificate is correct, tenants sign it and return it to the property owner. From there, the owner sends it to the potential buyer. Its purpose is to provide a clear understanding of the revenue the property generates, tenants’ rights, and other essential information.

What Information Is Included in an Estoppel Certificate?

Estoppel certificates contain an array of pertinent details about tenants’ lease agreements. They may vary by property type, lease arrangements, local laws and regulations, and other factors. In general, though, they include the following information:

Lease Start and End Dates
Rent Amounts
Utilities Included in Rent Amounts Versus Those That Are Tenants’ Responsibilities
Security Deposits
Modifications Made to the Original Lease
Pet Policies
Maintenance Responsibilities
Unresolved Maintenance Issues
End Lease Conditions
Eviction Policies
Tenant Disputes
Special Payment Arrangements
Parking Assignments
Unpaid Balances
Legal Claims
Landlord Defaults

Those are some of the details you might find in an estoppel certificate. In some cases, lease arrangements vary by tenant. If so, a different estoppel certificate will be needed for each tenant with each document containing information that’s specific to the tenant in question. Overall, the purpose of these documents is to help prospective buyers understand exactly what obligations and benefits they’ll be inheriting if they purchase a property.

What Do Estoppel Certificates Verify?

In light of the information they contain, estoppel certificates verify an array of significant points. They confirm that the current owner of a property doesn’t have any outstanding legal or financial obligations. They also give potential buyers peace of mind that such problems and responsibilities won’t fall on their shoulders if they purchase the property.

Estoppel certificates likewise verify several points for tenants. They guarantee that the rent amounts, rights, responsibilities, lease durations, and other factors covered in the document are correct. They also verify that tenants are up to date on their rent payments and that they have no open disputes with the landlord or vice versa.

Why Are Estoppel Certificates Important in Real Estate Transactions?

Other than helping prospective buyers know what they are purchasing and verifying information for tenants, estoppel certificates are important in real estate transactions for several reasons.

For Buyers

As noted, estoppel certificates give buyers peace of mind and protection by essentially showing them what they may be getting into when they purchase a commercial property. They can help prospects decide if a property is worth their investment and protect them if they decide to go through with the transaction. They may also protect buyers against any claims tenants have made against the current owner.

For Lenders

Additionally, lenders usually require estoppel certificates before providing loans for commercial properties. These documents give lenders a clear picture of a property’s profitability and reassurance that it’s a stable source of revenue. That, in turn, protects their investments and minimizes their risks. Prospective buyers may not be able to get funding to purchase a property without an estoppel certificate.

For Sellers

Furthermore, estoppel certificates give sellers a certain level of protection. Since tenants confirm the terms of their lease agreements in these documents, they can prevent future disputes and claims against sellers. That safeguards them against liabilities with tenants and buyers. Providing estoppel certificates for potential buyers and lenders can also improve the chances of a property selling.

For Tenants

Finally, estoppel certificates can give tenants added protection when the properties they are living or working in change hands. These documents ensure tenants’ rights are upheld and that their lease terms aren’t changed without their knowledge and consent. They can also help tenants get complaints, maintenance issues, and other problems resolved.

Potential Liability Issues With Estoppel Certificates

Though estoppel certificates are designed to protect everyone involved in the sale of a commercial property, they can also cause problems in some cases. If a property, tenants’ lease terms, or owners’ obligations are misrepresented, certain liability issues may arise. In those instances, they may negatively affect owners, buyers, and tenants rather than giving them added security.

Problems for Tenants

Several liability issues can come into play for tenants. When they sign an estoppel certificate, they are affirming that all the details included therein are correct. That means they are legally bound to abide by them.

For example, say the rent amount listed on the document is higher than what a tenant actually pays or some of their rights have been left out, or their responsibilities versus those of the owner or maintenance team have been misrepresented. In either scenario, if a tenant signs the document anyway, they may be held to the terms in the estoppel certificate rather than those in their actual lease. Having signed the document containing inaccurate information could render them unable to reverse their claims later on as well.

Issues for Buyers

Now, let’s look at the potential risks and liabilities for buyers. Buyers generally take for granted that the information provided in an estoppel certificate is complete and correct. If certain details are incorrect or left out, they may find themselves with more responsibilities and problems than they bargained for when they agreed to purchase the property in question. Though the buyer may be able to resolve those problems via legal disputes, that can be a lengthy and costly process.

Incorrect rent amounts and other details about a property’s revenue can also cause serious financial problems for buyers. If a property’s income, operating expenses, and other financial details are misrepresented in an estoppel certificate, that could certainly cause hardships for the buyer. Since the buyer based their purchasing decision, at least in part, on the information in the estoppel certificate, their cash flow and debts may not balance out the way they planned.

Issues for Sellers

Misinformation in an estoppel certificate can have negative implications for sellers as well. It can affect property values, which may cause sellers to get less than they expect from the sale of commercial properties. As is the case for buyers, it can lead to time-consuming and expensive legal disputes. If tenants refuse to sign estoppel certificates, they can cause delays or complications in the sales process.

Beyond those problems, estoppel certificates can bring to light issues tenants have with their landlords. That, in turn, may cause them to push the envelope, so to speak. They may decide to press those issues or refuse to sign their estoppel certificates until their demands are met. That, too, can bring about legal complications and potentially lead prospects to opt out of a purchase.

Fostering Effective Property Sales With Estoppel Certificates

In a nutshell, estoppel certificates are essential documents in commercial real estate transactions, and in some cases, residential transactions. They can provide several benefits for buyers, sellers, and tenants alike, but they can also create problems and liabilities. It’s important to be sure all information contained in these documents is complete and accurate. Having experienced legal counsel on your side can ensure those documents work for you rather than against you. Working with a real estate attorney protects the best interests of everyone involved in the sale of a property.

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Common Deal-Killers in Commercial Real Estate Transactions and How to Avoid Them

Wed, 05 Mar 2025 22:21:26 GMT

Buying commercial real estate can be a sound investment with numerous benefits. Commercial properties generally tend to appreciate, so they’re less likely to lose value over time. They can also generate higher returns than residential properties and certain other investments. Beyond the increasing value of the property itself, owning commercial real estate can bring you extra income from lease or rental contracts.

Investing in commercial properties likewise allows you to further diversify your portfolio and provides an added hedge against inflation. Several tax advantages come into play as well. Interest you pay on the property and money you invest in its upkeep may be tax deductible, which can help to offset your mortgage payments and other expenses. If the property happens to depreciate rather than gaining value, you may also be able to claim that loss on your tax returns.

Looking at the Potential Downsides of Buying Commercial Real Estate

All that being said, buying commercial real estate is a significant investment. It also comes with quite a few potential risks. Deciding which retail spaces, warehouses, apartment buildings, office spaces, and other commercial properties are worth your time and money and which ones are best left alone is a major undertaking in its own right. From there, securing funding, managing the property, keeping it occupied, and many other factors enter the mix.

Finding the right properties to invest in is the key to maximizing your returns. Understanding some of the common problems that may arise in commercial real estate transactions and how to avoid them will also reduce your risks and help you get the most out of your investment. Watch out for the following deal-killers in this realm, and keep in mind that partnering with an attorney who is experienced in transactional real estate law in Texas will help you bypass many of the typical pitfalls.

Exploring a Developing Problem in the World of Commercial Real Estate

Before delving into some of the typical hurdles you may encounter during a commercial real estate transaction, consider the importance of thinking carefully about the type of property you buy. Some are more stable and lucrative than others. For example, apartment complexes and manufacturing facilities typically gain value. In contrast, malls and other retail spaces are losing value due to the rise of online shopping. Funneling your money into malls and other retail spaces could result in losses instead of gains.

Certain types of commercial properties are particularly problematic at this point. What is a growing concern in commercial real estate right now? One of the most noteworthy is the viability of office spaces. Due to the ever-growing trend toward remote work , quite a few office spaces are now sitting vacant, and their owners are struggling to attract new tenants.

By extension, rental rates for those properties are on the decline. Even if owners are able to find occupants for those spaces, owners are still finding it difficult to generate the passive incomes they’re looking for. As a result, mortgage defaults are more prevalent. That’s placing increased pressure on lenders to recoup their losses which in turn makes them more reluctant to provide loans for office buildings.

On top of all that, the downturn in the use and value of office spaces is having a negative impact on surrounding companies and neighborhoods. For instance, restaurants and retail spaces near now-vacant office buildings are seeing less business and revenue because they’re getting less exposure. Some are being hit so hard that they’re forced to relocate or shut down. People who initially moved into nearby communities to be close to those office spaces and other businesses are moving elsewhere.

Along the way, the vacant office spaces and other affected properties are falling into disrepair. That, combined with declining economic potential, makes new businesses and residents less likely to move into the surrounding area. As a result of all those factors, property values are falling across the board.

That doesn’t necessarily mean you should avoid buying an office space. It just means that you need to have a plan in place if you do. You may need to consider repurposing the property, which could require a sizable investment. You may also face challenges in securing financing for the property.

Understanding Other Common Deal-Killers in Commercial Real Estate

Shifts like those affecting office spaces can certainly affect your returns on a commercial property without the right measures in place. They’re not the only problems to consider, though. Take a look at a few additional deal-killers in commercial real estate transactions.

Property Degradation

One potential deal-breaker in commercial real estate is property degradation. This may include electrical problems, plumbing issues, foundation damage, and many other factors. The more problems a property has, the more it’s going to cost you to bring it up to par.

Once you buy a property that’s in disrepair, you’re responsible for correcting all of its problems. If you don’t, you could face serious penalties, not the least of which are lofty fines and revocation of the permits the business needs to legally operate. In some cases, buildings that aren’t up to code are shut down, and those responsible may face jail time.

Sellers are advised to have commercial properties inspected before placing them on the market. They’re also required to make the results of those inspections available to potential buyers. Still, it is always recommended that you, as a prospective buyer, have your own in-depth professional inspection carried out before signing on the dotted line. Doing so can help you avoid unpleasant surprises after the fact.

If any problems are uncovered in your inspection, you have a couple of options. For one, you can agree to purchase the property on the contingency that the seller has those issues resolved. Alternatively, you can negotiate with the seller on the price of the property to offset the cost of repairs and take care of them yourself. In some cases, though, a property may be in such a state of decline that repairing it wouldn’t be worth the investment.

Title Issues

When buying commercial real estate, many people make the mistake of assuming that the property has a clear title and the seller has the legal authority to place it on the market. Unfortunately, that’s not always a given. Several issues can arise with the title to a property.

For instance, there may be disputes over ownership or rights to use the property. People who own surrounding properties may contest where the boundaries are. The property in question may have liens against it or unpaid taxes to contend with. Title forgeries are on the rise, so that’s certainly something to be aware of. Even clerical errors that occurred when the title was signed over to the current owner can cause serious problems for you during and after the transaction.

To avoid those issues and their repercussions, it is strongly advised to conduct a thorough title search before proceeding with the purchase. Title searches can provide a great deal of information on a property, including its rightful owners, judgements against it, tax obligations, easements, and many other details.

This is one of the many areas in which attorneys can be invaluable. While title companies typically conduct title searches, attorneys can assist in more effectively deciphering the information found in a title search. They can also help ensure that any problems with the title and ownership of a property are successfully resolved before you make a commitment. In addition to working with an attorney and performing a title search, it is also strongly advised that you purchase title insurance to protect you against unforeseen problems.

Unclear and Unreasonable Contract Terms

Be leery of unclear and unreasonable terms in your contract when purchasing a commercial property as well. Vague language in your contract can lead to misunderstandings. Ambiguous phrases and unrealistic expectations can leave you vulnerable to any number of legal and financial problems after the fact.

For example, say the contract states that the sale of the property is “contingent upon the buyer obtaining satisfactory financing at market rates.” Language such as this is extremely undefined. A more satisfactory arrangement could include specific details about the market rates, how much of the purchase price you’re expected to obtain financing for, how long you have to secure financing, what proof of financing you’re expected to provide, and under exactly which conditions you or the seller may terminate the agreement.

Another example would be a vague clause saying that the seller will deliver the property in satisfactory condition at closing. “Satisfactory condition” is open to interpretation, and a statement like that is likely to work out more in the seller’s favor than yours. Instead, the contract should specify what is considered satisfactory.

That could include no electrical malfunctions, plumbing leaks, damaged equipment, or code violations. Your contract should also detail which problems the seller is responsible for resolving and which ones fall on your shoulders. It should cover any discounts the seller agrees to apply to the purchase price of the property to mitigate the costs of the repairs you’re responsible for as well.

Don’t be afraid to ask for clarification on any points that are unclear and negotiate any terms that are unreasonable. Be sure the contract is revised accordingly and thoroughly reviewed by your attorney as well. Don’t leave anything to chance.

Protecting Yourself From Unnecessary Risks When Buying Commercial Properties

Buying commercial real estate can be an effective way to diversify your portfolio, generate passive income, and boost your net worth. Not all properties are worth your time, money, or effort, though. Some can drain your finances more so than bolstering your wealth.

Finding a commercial property that’s in perfect condition with no problems whatsoever is difficult, if not impossible. You can work around many issues or have them resolved before taking ownership of a property. Some require more of an investment than they’re worth, though. Besides that, if you’re not careful, you could set yourself up for serious problems after taking ownership of a property. Keep the points mentioned here in mind to avoid some of the common deal-killers and be sure to add an attorney to your arsenal to further protect yourself from unnecessary risks

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Estate Planning Meets Real Estate: Smart Strategies for Property Transfer

Tue, 14 Jan 2025 23:10:14 GMT

People typically want to leave behind something for their loved ones. For many, the memories and life lessons they pass along are their most valuable legacies. Of course, being able to provide for your loved ones financially is also important. No doubt, you want to be sure all the worldly possessions you’ve worked so hard to gain can benefit future generations of your family.

How you approach the process of providing for your heirs can make a world of difference in the financial aspect of your legacy. Planning well in advance is the key to success, and the benefits of having in-depth legal and financial advice can’t be overemphasized. Proper planning will protect you in the present and your loved ones in the future.

Exploring Asset Protection Strategies

Several asset protection strategies can be effective tools in the estate planning process. Setting aside money in retirement accounts like 401(k)s and IRAs is certainly a smart move. Those types of accounts can help you build wealth for your retirement years, and they’re generally protected against creditors. They offer certain tax advantages as well.

Still, that’s only a small part of the bigger picture. If you have assets beyond conventional retirement accounts, you’ll need to take extra measures to protect them for your own benefit and that of your heirs. Real estate is particularly vulnerable, and the estate planning laws surrounding it are complex. Without help from an experienced estate planning attorney in Texas, it can quickly become more of a liability than an asset.

Living Trusts Versus Wills for Property Transfer

Wills and living trusts are both important components of estate planning. Which one is best for you can depend on the size your estate, how you want your assets divided among your heirs, and many other factors. Take a look at some of the key points of each to better understand their differences.

Living Trusts

A living trust is a trust that is created and funded during your lifetime. It is an arrangement that can allow you, the grantor, to gift real estate and other assets to a trust while you are still alive. The assets you place into the living trust can then be administered for the benefit of your beneficiaries, the people you want to leave them to. With a living trust, you have a certain degree of control over the assets, depending on the type of trust created, such as who will receive the assets, how much they can receive, what triggers the trust to terminate, and so on. If the trust continues after you die, you can maintain a degree of control over your assets thus allowing you to ensure your loved ones are taken care of long after you die.

Every trust created and funded must have at least one trustee. This person, or persons, will be responsible for managing the assets that are held in trust and ensuring your instructions are carried out as outlined in the trust document. He or she will also handle taxes, investments, and other matters as required by the trust document.

Your trustee can be virtually anyone you choose. For most revocable trusts, you, as grantor, will likely appoint yourself to oversee the trust. In a fair number of situations, though, it may be best to appoint someone else. This person can be a trusted friend or family member. However, trusts can be a lot of responsibility so it may be wiser to name an attorney or financial institution as trustee. That will ensure the trust assets are handled impartially and appropriately.

Wills

A Will, on the other hand, is a legal document that dictates how your assets should be divided among your beneficiaries after your death. Beneficiaries can be your heirs, a business, a charity, or anyone else you want to give some or all of your assets to when you die. When drafting your Will, you’ll choose an executor for the Will, and that person will be tasked with collecting your assets, paying your debts and taxes, and making sure your wishes you outline in the document are followed upon your death. Unlike the trustee of a living trust, though, that person won’t be responsible for doing any of these things until after you die.

When you use a Will to transfer ownership of assets to your beneficiaries, you retain ownership of the assets you gift in your Will until your death. In contrast, creating a living trust requires you to transfer ownership of those assets to the trustee of the trust to be managed by the trustee until they’re ultimately passed along to beneficiaries named in the trust. Additionally, a Will cover some things a trust can’t. For example, you can appoint guardians for minor children in a Will but not in a trust.

What are the Benefits and Disadvantages of Wills and Living Trusts?

Both living trusts and Wills have their benefits. Among other things, a living trust can (1) give an heir access to their inheritance whenever the grantor chooses; (2) allow the grantor to restrict a creditors access to a beneficiary’s portion of the trust assets; (3) allow the grantor to control the grantor’s assets long after the grantor has died; and (4) allow grantors and their beneficiaries to forgo having to probate an estate to pass legal title to the assets.

On the other hand, a Will can (1) provide a greater degree over control over a person’s assets while they are still living because the person retains ownership over those assets; (2) allow the person to designate who a guardian over their children should be; (3) allow the person to set up a testamentary trust in their Will to plan for things like a beneficiary who is disabled, unable to manage a large inheritance, or many other reasons; and (4) are typically much less expensive than a trust to create and execute.

In contrast, both trusts and Wills do have their drawbacks. For instance, a living trust (1) can incur a much higher tax rate than if no trust existed; (2) may not protect against creditors if the living trust is not drafted properly; (3) is typically costly to create and can end up virtually useless if not properly maintained; and (4) still requires a Will to ensure that any assets that were not transferred into the living trust get placed into the trust upon the death of the grantor.

Additionally, a Will (1) does not allow assets to change hands until the testator’s death; (2) provides a person with less control over what happens to their assets when they die; (3) must go through the probate process before assets can be transferred to beneficiaries legally, which can take several months or, in some instances, even years; (4) requires minimal maintenance compared to a trust but does incur court costs which can be high; and (5) leaves assets vulnerable to creditors. If you owe creditors when you pass, they’ll be notified of your death and given a chance to make claims against your estate, which could deplete the inheritance you intend to leave to your beneficiaries.

Is a Will or Living Trust Best for You?

Wills and living trusts are recommended for different situations. Which one is best for you depends on your unique circumstances. Living trusts are typically most suitable for large, complex estates and those who simply want to avoid probate altogether and are willing to do the work to maintain the trust. Wills are generally best for smaller, simpler estate planning needs, and they allow you to lay out your wishes regarding more than just how your assets are divided among your heirs. In many instances, these estate planning tools are best used in tandem.

Though a Will and living trust are excellent methods for property transfer, there are several other methods which can effectively transfer real estate to your loved ones. Below is a discussion on several of these types of transfers. For more information on these transfers, it is best to seek the advice of an experienced estate planning attorney.

Gift Deed

Gift deeds are also an option for transferring real estate to loved ones. This entails deeding a property to one or more other persons. It works in much the same way as selling the property, but no money changes hands. With a gift deed, you won’t retain any rights to the property after transferring it to the beneficiary. As with any gift, though, a transfer done by gift deed can incur tax consequences. A tax professional should always be consulted before making such a transfer.

Revocable Transfer on Death Deed (TODD)

As the name indicates, a Transfer on Death Deed automatically transfers ownership of real estate to a beneficiary at the time of the then-current owner’s death. As is the case with a Will or a revocable living trust, a TODD can be changed at any time during a testator’s lifetime. And like a living trust, a TODD can be used to avoid the need to probate. To be effective, a TODD must be in writing, signed, notarized, and filed in the public records in the county in which the property is located.

With a TODD, you retain ownership and control of your property until your death. You can name multiple beneficiaries to pass the property along to if you wish. If a Will gives your property to someone other than a beneficiary listed in your Will, the TODD will control, meaning the beneficiary in a TODD gets the property over the beneficiary in your Will.

Per Texas law, TODDs only apply to real estate located within the state of Texas. Any real estate transferred by TODD remains vulnerable to creditors even after ownership changes hands. When real estate is passed along to beneficiaries via a TODD, the beneficiary takes subject to any encumbrance on the real estate, such as a mortgage or other lien, property taxes, easement, or right of way that may apply. However, a TODD is not subject to Medicaid Estate Recovery, which means Medicaid cannot come after the real estate for reimbursement after your death if you received certain applicable Medicaid assistance during your life.

Family Limited Partnership (FLP) and Limited Liability Company (LLC)

If the real estate you’d like to pass along to heirs is a business or other type of family-owned property, you can do so through a Family Limited Partnership. In this type of arrangement, you would be a general partner and a minority shareholder. That being said, you would maintain control over the business. Your children or other heirs would be majority shareholders but would have no management authority.

Structuring part of your estate as a Limited Liability Corporation can be beneficial as well. Transferring interests in an LLC to your heirs may be simpler than bequeathing individual properties and assets. Holding assets in an LLC may likewise offer more flexibility for dividing particularly complex estates among multiple beneficiaries.

FLPs and LLCs can provide a certain amount of protection against creditors. They may also reduce estate taxes and allow you to avoid gift taxes. Furthermore, you can distribute income from the included assets among shareholders as you like and gradually transfer more shares over time as you see fit. There are several tax and legal requirements to set up and maintain both types of entities. An attorney experienced in business formation working with the appropriate tax professionals can ensure that you structure and run each of these businesses successfully.

Joint Ownership Options and Implications in Estate Planning

If you want to further protect your spouse or other loved ones, as well as your assets, you may want to consider joint ownership options. Beware that some of the options listed below may not be available in Texas and not all of them are right for all situations. You should consult with an experienced estate planning attorney on which option may work for you.

Joint Tenancy with Right of Survivorship (JTWROS)

Joint Tenancy with Right of Survivorship allows multiple people to maintain ownership of a property at the same time. For example, if you and your spouse own your home together, JTWROS means that each of you own a 50% interest in your home as joint owners. When one of you dies, the deceased person’s 50% ownership interest in the home automatically transfers to the surviving spouse.

Most people assume that their spouse will automatically gain ownership of the home they live in together upon their passing. Unfortunately, Texas law requires JTWROS provisions to be specifically stated; they’re not simply granted. Therefore, many surviving spouses find that they did not automatically inherit their deceased spouses’ share in the home. Oftentimes these spouses do not learn this harsh lesson until they attempt to sell the home and find that they cannot do this without going through the probate process or attempting some other alternative process to transfer the property to them. Establishing JTWROS will protect your spouse, or anyone else you list as a joint owner, against uncertainty, disputes, and other issues that often arise after death.

JTWROS gives all owners equal ownership and rights to a property. It also allows heirs to bypass the probate process. Though it’s often used for jointly inhabited homes, it can also be used for investment properties, businesses, and other assets.

Tenancy in Common (TIC)

Another option is Tenancy in Common. This involves granting ownership of a property to more than one person, but it’s a bit different than JTWROS. With TIC, owners may have unequal shares of a property, and each owner can sell or transfer ownership of his or her share at will.

In a TIC agreement, when one owner passes, the surviving owners don’t automatically have survivorship rights. Instead, the deceased owner’s share becomes part of his or her estate and can be Willed to someone else. Tenancy in Common is often used for businesses and investment properties with unrelated owners rather than for family homes.

Life Estate

Establishing a life estate via a life estate deed is yet another option for the transfer of real property. This is a legal arrangement in which one person owns and has the right to live in or use a property for the duration of his or her lifetime. When that person passes, ownership and the rights and responsibilities that go along with it are passed to someone else.

With a life estate, the original owner is known as the life tenant while the remainderman is the one who gains ownership after the life tenant’s death. Neither of the two can sell or transfer their interests in the property without the consent of the other unless the document specifically allows for this. Once ownership is passed to the remainderman, though, he or she may sell or transfer the property as long as doing so doesn’t conflict with any other estate planning measures. Finally, a properly drafted life estate deed can be used to avoid Medicaid Estate Recovery just like a TODD.

Family Vacation Home Succession Planning

Family vacation home succession planning tends to require unique considerations because of the emotional value of these properties and other factors. These properties are often left to multiple heirs, and their distinct needs should be factored into the equation. At the same time, details like heirs’ rights to use the property and maintenance responsibilities must be taken into account.

For family vacation properties, joint ownership options are often recommended. These properties can also be included in Wills and trusts though careful planning may be required to reduce conflicts and other issues. Many people choose to include vacation properties as part of an LLC or FLP due to the added flexibility and tax advantages of these types of arrangements.

Exploring the Tax Implications of Different Real Estate Transfer Methods

Each real estate transfer method comes with different tax implications. With a trust, the estate taxes are paid from the assets in the trust before beneficiaries receive their shares. From there, beneficiaries may be subject to taxes on their inheritances. Beneficiaries generally aren’t required to pay taxes on items Willed to them unless those assets bring in extra income after the fact. Those assets can be subject to estate taxes, though, depending on their value.

Gift taxes may apply to real estate given to loved ones via gift deeds. If you gift property to someone, you’ll be responsible for the gift taxes. Certain exemptions may apply depending on several factors. In some cases, estate taxes apply to jointly owned properties. Those taxes would become the responsibility of the estate or the surviving owner. With a life estate, capital gains and other taxes may apply when ownership is transferred from the life tenant to the remainderman.

Those are only a few of the tax-related points to consider. Tax laws regarding estates, inheritances, and property transfers are extremely complicated. Numerous factors come into play when determining just which taxes and exemptions may apply.

What Is the Most Common Method of Transferring Real Property in Estate Planning?

All the methods mentioned here are popular options for transferring real estate in estate planning. Revocable living trusts are one of the most commonly used. Creating a revocable living trust allows you to maintain control of your estate and use your assets as needed while you’re alive. It also gives you the option to make changes to the trust if you wish.

As mentioned, assets in trust bypass the probate process. That means your beneficiaries may have access to their inheritances more quickly after you pass. Though revocable trusts aren’t exempt from estate taxes and income taxes, proper tax planning can help you and your heirs mitigate the costs in some instances.

Medicaid Planning With Real Estate

Medicaid can be instrumental in protecting your assets for your loved ones. It bridges gaps left by Medicare or your private insurance and may cover the costs of long-term care and other medical needs. Those expenses can burn through the assets you want to leave behind for your loved ones. On the other end of that spectrum, though, your estate and financial status can affect your Medicaid eligibility.

In Texas, Medicaid imposes a $2,000 asset limit for individuals and a $3,000 limit for couples. Some assets, like retirement accounts, personal belongings, and one vehicle per household, are exempt from those limits. Real estate doesn’t fall into that category. Transferring real estate to loved ones using the previously mentioned options can protect your estate as well as your Medicaid eligibility.

Keep in mind that Medicaid has a five-year look-back period in place. It’s designed to prevent applicants from transferring their assets to others to qualify for benefits. As such, it’s important to take action well before applying for Medicaid. If you fail to do so, you could be subject to serious delays or penalties.

Protecting Your Assets and Your Loved Ones’ Futures

If you want to leave behind a legacy for your loved ones, doing so requires careful planning. The laws surrounding estate planning are intricate, and even a seemingly slight oversight could leave your estate vulnerable to creditors, taxes, and many other issues. With legal help and careful attention to detail, you can maximize your assets and protect them for your lifetime and your loved ones’ futures.

ABOUT THE AUTHOR

From Handshake to Partnership Agreement: Formalizing Business Relationships

Fri, 01 Nov 2024 14:09:05 GMT

Partnerships offer many benefits and remain among the most popular business structures today. Individuals pool their resources and strengths, increasing the likelihood of the venture's success. In addition, the partners share liability.

However, before any individual enters a partnership, they should consult with a business entity formation attorney in Texas and have a partnership agreement

drawn up. What are the benefits of a written partnership agreement? Why is this written agreement essential today?

The Importance of a Partnership Agreement

A partnership agreement is a legally binding contract that outlines each partner's roles and responsibilities. It includes critical elements to avoid common disputes and address unforeseen events. This document details what will happen if one partner cannot fulfill their duties and may override state laws that could harm the partners. A well-crafted partnership agreement helps minimize the risk of legal, tax, and liability issues.

The Handshake Agreement

Handshake agreements have existed for centuries and rely on the partners' integrity. While these agreements may be legally binding if they meet specific criteria, enforcing them may be challenging. Transactions have become more complex, and disputes are more commonplace, leading to the need for document-based agreements that offer protection against misunderstandings and fraud. Furthermore, globalization has brought about the need for documents that address different legal systems and cultural expectations. A formal agreement provides the structure and legal backing missing in a handshake agreement.

The handshake agreement lacks the detailed terms of a written contract, making it difficult to enforce. Furthermore, while the partners may agree on the terms of the deal, this handshake agreement doesn't provide a roadmap for executing the contract. Inefficiencies, missed deadlines, and other issues often arise following a handshake agreement. A written contract eliminates these concerns.

The Benefits of a Written Agreement

A well-drafted written agreement ensures there is no ambiguity in terms. It is also enforceable in a court of law and covers contingencies. When a written contract is in place, partners' expectations are aligned, and relationships are strengthened. It reduces the risk of a partner's reputation being harmed when they fail to abide by the terms of a handshake deal.

A written partnership contract is enforceable and, if well drafted, minimizes the risk of partners being drawn into a lengthy and costly legal battle. This document includes critical details to prevent misunderstandings or faulty memories and addresses leadership changes. A written agreement is essential in international partnerships, as differing legal systems and cultural misunderstandings can result in confusion and conflict.

Furthermore, specific industries have strict regulations regarding transactions. Transactions are considered valid with formal contracts and invalid without them. The written agreement does more than this, however.

A well-drafted partnership agreement outlines the responsibilities and expectations of partners. When this agreement is in place, everyone knows where they stand, so there are fewer misunderstandings. This document represents the due diligence of those named in the agreement, which potential investors appreciate. The investors understand their level of involvement in the partnership and what steps will be taken if problems arise.

Common Disputes and How Proper Formation Can Prevent Them

Disputes often arise in the business world. Handshake deals remain precarious because they are difficult to enforce in court, and the lack of detailed terms and conditions leaves partners vulnerable. One partner may exit the handshake agreement if they get a better deal, or cultural differences may lead to issues. One partner might see the handshake as a sealing of the agreement, while the other views it as a preliminary gesture.

A handshake deal's lack of clarity can lead to partners' different understandings. In addition, this agreement doesn't consider future changes that could occur, leading to conflicts. Fraud and misrepresentation are also concerns seen with handshake agreements. A written contract protects all partners from situations such as these.

Essential Elements to Include in a Partnership Agreement

The move from a handshake deal to a written partnership agreement is a significant undertaking. This document demonstrates the mutual understanding of all partners regarding their obligations and rights and is binding in a court of law. Every person entering a partnership agreement should require this document before progressing with the collaboration. Doing so will protect their interests while fostering trust. The contract outlines the boundaries of the business relationship.

Though the partnership agreement may be drafted by the partners themselves, the implications of a poorly drafted partnership agreement warrant the assistance of an attorney familiar with business entity formation and contract drafting. This attorney must thoroughly understand the legal framework used when drafting this the agreement. This knowledge and attention to detail ensures all elements are included to reduce the risk of future conflicts. What should be included in every partnership agreement?

Name of the Partnership

Partners must agree upon the name of the new venture. An attorney ensures this information appears in the document. Individuals may assume this information is common knowledge and omit it, which can lead to problems.

Parties Involved

A partnership document must name each individual or legal entity entering into the agreement. Again, this information may appear common sense as the partners sign the document. However, it needs to be included to ensure clarity.

Terms and Conditions

Each partner will have specific duties, rights, and obligations and contribute to the business. The document must outline these duties, rights, obligations, and contributions to prevent misunderstandings.

Percentage of Ownership and Division of Profit and Loss

Partners receive compensation for their contributions to the venture. This compensation is often tied to the individual's percentage of ownership which should be defined in the partnership agreement. While compensation is usually in the form of money, agreements can allow for contributions to be made in the form of services as well.

The agreement must also define each partner's consideration and how profits and losses will be allocated. Some partnerships share profits and liability equally among all partners, while others align profits and losses with percentage of ownership or degree of control over the business. This division of gains and losses must appear in the agreement to prevent conflicts and to create protections for those partners who are more silent in the business’s operations. The agreement should also outline when a partner or partners may withdraw profits.

Duration of the Agreement

Many partnerships begin with no anticipated end date. However, there are situations in which an agreement is created with a specified end date. The document must specify an end date or state the agreement will remain in effect for an unspecified period. It must also outline the partnership's start date, often when the last partner signs the deal.

Confidentiality

Every partnership agreement needs a section on confidentiality. This inclusion ensures sensitive information remains protected throughout the partnership. It also benefits the partners if the relationship ends, as the contract can outline the division or handling of the information when this happens.

Dispute Resolution

Decision-making challenges often lead to disputes between partners. The partnership agreement should outline the decision-making process to ensure checks and balances. In addition, it needs to provide information on dispute resolution and how this will be handled. A mediation clause remains a popular option to avoid court intervention. Of course, arbitration and court intervention may still be needed, but the agreement can define how these should be handled.

Representations and Warranties

Every agreement should include representations and warranties that each partner makes to the other partners of the agreement. Representations and warranties provide guarantees that each partner can rely on when entering into the partnership. For instance, each partner should represent that they have the required authority to sign on behalf of the partner either as an individual partner or as an agent for the entity partner. Or the partner should warrant that they are entering into the agreement freely and voluntarily and have had the chance to have an attorney review the agreement. There are many different representations and warranties that partnership agreements can include, and each partner should strongly consider which of these is important to the partnership.

Binding Power

Partners must agree on who will handle contractual agreements and take on debt. This authority is known as binding power . As these actions affect all partners, the contract must state how this process is handled.

Termination of the Partnership

Partners may elect to end their arrangement. The agreement should outline the steps and any conditions that must be met when doing so. Furthermore, the contract must provide information on what will happen if a partner dies. The document must detail the valuation process and any requirements for establishing a life insurance policy, if desired, where other partners are named beneficiaries.

Signatures

Every legal contract must have the signatures of all parties to show their consent and agreement to be bound by its terms. The document should state clearly that the signature shows the person willingly agreed to the terms and conditions.

An agreement that treats all partners fairly will outline the partners' mutual intentions while laying out their expectations. However, each agreement can differ based on the type of business and the parties involved. Robust partnership agreements anticipate and address potential problems so partners can focus on other matters and grow the organization.

A Final Word

Ultimately, when the details of a partnership are laid out on paper, they become more evident to all parties and provide the highest degree of protection while reducing litigation risk. And while it is not necessary to have an attorney draft the agreement, it is always strongly advised that each partner have their own attorney experienced in business entity formation and contract drafting review and advise them on the agreement so that the partnership gets off on the right foot! With the aide of a well-drafted partnership agreement, the partnership can navigate complex issues with confidence and integrity right from the beginning.

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ABOUT THE AUTHOR

Why Millennials Need Estate Planning Too: It's Not Just for Retirees

Tue, 17 Sep 2024 17:58:43 GMT

Estate planning often conjures images of retirees meticulously dividing their assets among heirs. But this perception is outdated and potentially harmful, especially for one of the largest and most influential generations in history: millennials. Born between 1981 and 1996, millennials now range from their late 20s to early 40s and represent a significant portion of the global population.

According to the Pew Research Center, as of 2022, there are approximately 72.8 million millennials in the United States alone, surpassing Baby Boomers as the nation's largest adult generation. Globally, millennials account for around 23% of the world's population, or about 1.8 billion people. These numbers underscore the importance of addressing estate planning for this substantial demographic.

Despite their significant presence, a survey by Caring.com found that only 26% of millennials have a will or other estate planning document. This stark statistic reveals a concerning gap in financial preparedness among a generation that's rapidly approaching its prime earning years.

Millennials are at a unique stage in life. Many are advancing in their careers, with the oldest members of the generation entering executive roles and accumulating significant wealth. The Federal Reserve reports that millennials now control over $9 trillion in assets, a number that's expected to grow dramatically in the coming decades as they inherit wealth from older generations.

Yet, estate planning isn't solely about wealth distribution after death. For millennials, it's about making crucial decisions for their future and protecting their assets and loved ones in an increasingly complex world. From digital assets and entrepreneurial ventures to non-traditional family structures and mounting student loan debt, millennials face a unique set of challenges that make estate planning not just important, but essential.

Here, we’ll explore why estate planning is crucial for millennials and how they can get started, debunking the myth that it's a concern only for the elderly or the wealthy. We'll delve into the specific aspects of estate planning that are particularly relevant to this generation, offering insights and practical advice for securing their futures and legacies.

As we navigate through topics like digital asset management, protecting growing wealth, planning for unexpected events, and addressing the unique financial challenges faced by millennials, it will become clear that estate planning is not a task to be postponed. It's a vital step in taking control of one's future now, regardless of age or wealth status.

Let's explore why millennials need to prioritize estate planning and how they can begin this important process. Have you ever wondered, what is the best age to start planning for an estate? The answer is, if you’re an adult you should start the estate planning process now.

The Millennial Misconception

Many millennials believe they're too young for estate planning. They're wrong. Estate planning isn't solely about distributing wealth after death. It's about making important decisions for your future and protecting your assets and loved ones. Millennials face unique challenges that make estate planning particularly important.

Digital Assets: A New Frontier

Millennials are digital natives. They have significant online presences and digital assets. These include:

Social media accounts
Cryptocurrency holdings
Online businesses
Digital art and NFTs

Traditional estate planning often overlooks these assets. Without proper planning, your digital legacy could be lost or fall into the wrong hands. Use an estate planning attorney to make provisions for digital assets. This ensures your online presence is managed according to your wishes after you're gone.

Protecting Your Growing Wealth

Contrary to popular belief, millennials are accumulating wealth. They're advancing in their careers and starting businesses. Some are receiving inheritances from older generations. As your assets grow, so does the need to protect them. Estate planning allows you to:

Designate beneficiaries for your assets
Minimize tax burdens on your estate
Protect your wealth from creditors
Ensure your assets are distributed according to your wishes

Don't wait until you're "wealthy enough" to start planning. The sooner you begin, the more protected your growing assets will be.

Planning for the Unexpected

Life is unpredictable. Accidents and illnesses can happen at any age. Estate planning isn't just about planning for your death; it's about planning for incapacity too. This includes:

Healthcare Directives: These specify your medical treatment preferences if you're unable to communicate them yourself.
Financial Power of Attorney: This designates someone to make financial and legal decisions on your behalf if you're incapacitated.
Medical Power of Attorney: This appoints a person to make medical decisions on your behalf if you're incapacitated.
Declaration of Guardian: If there is ever a guardianship proceeding for you, this communicates your preferences to the court regarding who you want to be your guardian.

Without these documents, your family may face difficult decisions and legal hurdles if you become incapacitated. Estate planning gives you control over these crucial choices.

Protecting Your Family

Many millennials are starting families. If you have children or are planning to, estate planning becomes even more critical. It allows you to:

Name legal guardians for your children in the event of your demise
Set up trusts to manage assets for your children's benefit
Ensure your children are financially provided for if something happens to you

Don't leave these important decisions to chance or to the courts. Take control through estate planning.

The Student Loan Factor

Millennials are burdened with unprecedented levels of student loan debt. This debt doesn't necessarily always disappear upon death. In some cases, depending on the type of loan, it can be passed on to co-signers or even spouses. Estate planning can help address this issue by:

Ensuring life insurance policies are in place to cover outstanding debts
Structuring assets to protect them from creditors
Planning for the tax implications of student loan forgiveness

Don't let your student loans become a burden for your loved ones after you're gone.

Pets: More Than Just Animals

For many millennials, pets are family. Traditional estate planning often overlooks these furry (or scaly) friends. Modern estate planning can include provisions for pet care, ensuring your beloved companions are cared for if something happens to you. This can involve:

Designating a caregiver for your pets
Setting aside funds for their care
Specifying your wishes for their future

Don't forget to include your pets in your estate planning considerations.

The Changing Face of Relationships

Millennials are redefining relationships. Many are choosing to cohabitate without marriage or are in same-sex partnerships. Traditional estate planning often fails to adequately protect unmarried partners. Without proper planning, your partner could be left with nothing if something happens to you. Estate planning allows you to:

Ensure your partner has rights to shared property
Designate your partner as a beneficiary on accounts and insurance policies
Give your partner legal authority to make decisions on your behalf if needed

Take control over what happens to your partner and your shared life.

Business Considerations

Many millennials are entrepreneurs or freelancers. If you own a business, even a small one, estate planning is crucial. It allows you to:

Plan for the succession or dissolution of your business
Protect your personal assets from business liabilities
Ensure your business partners or employees are taken care of

Don't let the business you've worked hard to build become a source of conflict or confusion for your loved ones.

The Digital Afterlife

In our increasingly digital world, estate planning must consider your online presence. This goes beyond just your digital assets. It includes:

Instructions for managing your social media accounts after death
Plans for your email accounts and digital communications
Provisions for accessing password-protected devices and accounts

Without proper planning, your digital legacy could be lost forever or fall into the wrong hands.

Philanthropy and Legacy

Millennials are known for their social consciousness. Many want to leave a positive impact on the world. Estate planning can help you continue your philanthropic efforts even after you're gone. This can involve:

Setting up charitable trusts
Designating charitable beneficiaries in your will
Creating a foundation to continue your philanthropic work

Estate planning allows you to leave a lasting legacy that aligns with your values.

The Cost of Procrastination

Many millennials put off estate planning due to perceived cost or complexity. But the cost of not having an estate plan can be far greater. Without proper planning:

The courts may decide who gets your assets
Your family may face hefty taxes and legal fees
Your wishes for medical care may not be followed
Guardianship over you children could be decided by the courts

The peace of mind that comes with proper estate planning is priceless.

Getting Started with Estate Planning

Estate planning doesn't have to be overwhelming. Here are some steps to get started:

Take inventory of your assets, including digital assets
Consider your goals and wishes
Research estate planning options
Consult with an estate planning attorney
Create necessary documents (will, trusts, healthcare directives, etc.)
Review and update your plan regularly

Remember, estate planning is not a one-time event. Your estate planning documents should be reviewed and updated as your life circumstances change.

Empowering Your Future

Estate planning isn't just for the wealthy or the elderly. It's a crucial step for millennials to protect their assets, their loved ones, and their futures. By taking control of your estate planning now, you're empowering yourself and ensuring your wishes are respected. Don't wait for tomorrow; start planning today. Your future self (and your loved ones) will thank you.

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ABOUT THE AUTHOR

Common Legal Mistakes Entrepreneurs Make (And How to Avoid Them)

Thu, 25 Jul 2024 19:42:55 GMT

Starting a business always comes with risks. According to the Small Business Association, only 50% of them survive their first five years.

While entrepreneurs can't help but take on some forms of risk, they don't have to include unnecessary legal liabilities. Thankfully, it's easier than ever to learn from others' mistakes.

What is a mistake that small business owners make? The biggest of them is trying to go it alone without enlisting the help of a lawyer. A business formation attorney can help clients navigate all aspects of starting a new business, from choosing a structure to drafting contracts.

Whether you’re thinking about starting a business, you are ready to set up and begin conducting business, or even if you’ve already opened for business, you can learn about typical legal mistakes entrepreneurs make and how to avoid them. Let's take a look at some of the most common.

1. Choosing the Wrong Business Structure

Business structure refers to the way a newly formed commercial entity organizes itself. Entrepreneurs risk taking on unlimited personal liability if they choose the wrong business structure. Entrepreneurs who don't establish business entities are generally considered sole proprietors or general partners.

Many entrepreneurs start out as sole proprietors, thinking that this makes them legitimate business entities. It is usually advised to avoid a sole proprietorship because the individual business owner assumes all debts and liabilities of the business personally. However, according to the Supreme Court ruling in Citizens United vs. FEC (CITE in footnote!!!!), creating a separate business entity lends it the rights and responsibilities of personhood. The business entity then takes on legal and financial liabilities instead of the person running it.

Entrepreneurs can also run into trouble if they choose the wrong business structure. For example, general partnerships make each person who joins together to form a business entity liable for their partner's mistakes. A limited partnership minimizes this issue.

To complicate matters further, the IRS taxes sole proprietorships, partnerships, and other business structures very differently. Choosing the correct business structure can help the entrepreneur minimize their tax liabilities and maximize their return on their investment. Additionally, federal and state laws dictate how to handle tax matters depending on the business structure and may even limit the number or type of investors a business venture may have.

2. Neglecting to Protect Intellectual Property

As with choosing a business structure, entrepreneurs may need to take steps to protect intellectual property immediately. They may need to trademark their brand names.

Trademarks give the holders exclusive rights to use brand names or anything that could be confusingly similar to them. If an entrepreneur neglects to file a trademark application at the appropriate time, they stand to lose a good deal of money.

For instance, people file hundreds, sometimes thousands, of trademark applications daily, and searching the database pulls up only exact matches. If it turns out someone already has the desired brand name trademarked or has an application pending, all of the money that went into branding, advertising, and product creation will be for naught, and new business owners could even find themselves on the wrong end of an intellectual property violation.

Copyright issues can also arise during the company's operations. Copyrights default to the creator of content, so unless they are transferred, companies don't get rights of ownership over logos, web content, ad material, recordings, and other intellectual property. It is advised to always use copyright assignments or work-for-hire agreements.

3. Failing to Create Clear Contracts and Agreements

Almost every business needs clear contracts and agreements in place before the business s formed and begins to business. If multiple people co-own the same business, the nature of the agreement between the people should be codified from the beginning to avoid potential litigation down the road. For limited liability companies (LLCs), these are called operating agreements (or company agreements), and they can cover things like how decisions are made, what duties members have to the company, who can vote, what happens when someone dies or becomes incapacitated, and much more.

Regardless of whether the business structure is a sole proprietorship, a corporation, or some variation in between, businesses should codify in a formal writing any contractual relationship regardless of whether the business contracts with an employee, a contractor, a vendor, or any other person or entity. Furthermore, businesses are strongly advised to ensure their contracts remain in compliance with their policies and procedures and with current federal and state laws.

By doing so, a business can further protect itself from unnecessary litigation from employees or other individuals with whom they conduct business internally or externally.

Keep in mind that contracts may contain inherently biased language, outdated law, or are otherwise deficient in fully outlining the nature and terms of the relationship they are meant to govern. This is especially true if the forms used come from sources such as AI or the internet. Too, AI generated forms and templates pulled from there inherently biased. It is generally wise to have them looked over by a business attorney prior to implementing them; the cost to do so up front could save you thousands in the long run.

Similarly, business owners should only sign a contract with a new partner or client after having it reviewed by their attorney. There may be changes they should request to make sure the contract benefits them or at least protects their legal rights. Plus, business owners who need help understanding the jargon used to draft legal documents may accidentally find themselves in breach of their contract.

4. Misclassifying Employees as Independent Contractors

Uninformed entrepreneurs might hear stories about classifying everyone as independent contractors to avoid paying taxes and believe that this is a good strategy. It's not.

Misclassifying employees as independent contractors can be a costly mistake. Business owners who get caught performing this form of employment fraud aren't just liable for paying increased taxes and back pay, they may also face a range of additional financial consequences, from increased workers' compensation insurance premiums to higher taxes, fines, and lawsuits brought by their employees.

Misclassification of employees doesn't just hurt companies financially. Businesses that engage in this form of payroll fraud almost always suffer reputational damage and may have trouble finding not just competent workers but also new customers or clients in the future.

Remember that ignorance is no justification for committing a crime. Business owners who are genuinely unsure about who can be considered an independent contractor and who needs to be on the payroll as a part-time or full-time employee should consult a business attorney.

5. Overlooking Necessary Licenses and Permits

While the state of Texas doesn't require general business licenses, it's a mistake to think that means entrepreneurs can ignore licenses and permits entirely. In fact, businesses must obtain a certificate of formation from the Texas Secretary of State or county clerk's office. Specific business activities almost always require some sort of authorization at a local, state, or federal level.

Businesses that sell goods or services may need sales use and tax permits. Companies that expose people to hazards or require their employees to have extensive training may also need industry licenses or certifications. Additionally, various cities in Texas require general licenses to operate. Each city has its own rules and restrictions, so it is highly advised to check with these entities before you conduct business.

The general takeaway is that licensing and permitting are more complicated than most entrepreneurs realize. The consequences of failing to obtain relevant licenses and permits can include fines, injunctions, reputational damage, and lawsuits. In extreme situations, entrepreneurs operating without appropriate licenses could face arrest for fraud.

6. Commingling Personal and Business Funds

New business owners often begin by using their personal money to fund companies and may not think about opening separate commercial bank accounts. Entrepreneurs should always set up separate accounts regardless of how they plan to fund their businesses and should always ensure those funds are strictly used for legitimate business purposes.

After registering a business, any funds paid to the company must go to the company. Putting the money in a personal bank account is technically stealing since the law views registered business entities as separate from their owners. While this may not necessarily apply to a sole proprietor, it is still advised to separate personal and business funds into separate accounts. Doing so can it much easier for the sole proprietor to adapt if the business transitions from a sole proprietorship to another type of entity or tax structure down the road.

Commingling funds jeopardizes liability protection. If the business runs into trouble legally or financially, an entrepreneur who has been commingling funds could face trouble. They may become personally liable for business debts, or the business may become liable for its owner's debts.

Business owners can't just take money out of their business accounts whenever they want. Entrepreneurs can only use the money for business-related expenses and should maintain schedules for when they pay themselves. In most cases, it's worth hiring an accountant to manage this aspect of business ownership.

7. Relying on Accountants for Legal Advice

An accountant can help business owners with issues related to money, such as payroll and taxes. Don't ask the person for legal advice. Though most business accountants know a good deal about corporate legal issues surrounding their field, they are unlikely to understand the nuances of each situation.

Accountants may suggest different types of business entities from lawyers, for example. To an accountant, the most crucial factor may be tax advantages. At the same time, a business attorney sees the legal ramifications and understands the importance of considering other issues, such as liability protections.

Ideally, entrepreneurs should work with both business formation lawyers and business accountants as they establish new businesses and get them off the ground. Working with multiple relevant industry experts ensures that business owners get solid advice regarding everything from potential funding sources to risk tolerance, liability issues, and exit strategies.

When to Schedule a Consultation With a Business Attorney

Don't wait until a business is already up and running before scheduling your first consultation with a business attorney. Consulting a business attorney throughout the start-up process is vital to ensuring its success and protecting your legal and financial interests.

Business attorneys may also be good sources of information about other relevant industry professionals. Since entrepreneurs usually need everything from accountants to web designers, and all these industry professionals will expect to sign business agreements, hiring an attorney from the get go is a good way to begin networking while simultaneously protecting the developing company's interests.

Schedule a consultation as early on in the start-up process as possible to avoid falling prey to the pitfalls described above or any of the countless other legal issues that could come up.

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Guardian of the Estate vs. Guardian of the Person

Fri, 21 Jun 2024 23:33:41 GMT

When people hear the word guardian, they may think of a person they would appoint to care for their children if they can no longer do so. However, an adult may also need a guardian under certain circumstances.

A judge establishes a guardianship in Texas , a relationship in which a legal guardian is named for someone who cannot care for themselves. The court must declare the individual legally incapacitated before appointing a guardian. A guardianship differs from custody in several ways. Rarely will a guardian be named for a child.

The Definition of an Incapacitated Person

An incapacitated person is someone who cannot provide for themselves, care for their physical health, or manage their finances. This person might be a child. However, in most cases, it is an adult who is elderly or developmentally disabled. Their physical or mental condition prevents them from handling these tasks on their own. A guardian might also be named for a person who receives funds from a government agency.

The person who cannot handle these tasks is declared a ward of the appointed guardian, and the guardian must be willing to accept the legal duties and responsibilities that come with this designation. However, it is important to recognize that a disability does not immediately make a person incapacitated. In addition, a person may be either partially or fully incapacitated.

Types of Guardianship

An individual may serve as a guardian of the ward’s person or of the ward’s estate. Some guardians take on both roles at the same time. Others may only serve in these roles temporarily until the court determines who should take on this role permanently, or until the ward’s condition improves. What duties come with serving as a guardian of the person or the estate?

Guardian of the Person

Unless limited by the court, a person who takes on the role of guardian of the person will typically determine where the ward lives and consent to medical treatment on behalf of the ward. They may place the ward in a nursing home, group home, or other similar living arrangement if they believe it is in the ward’s best interests.

The guardian determines if and when the ward can travel and whether the ward can file for divorce. When an individual is a guardian of the person, they oversee non-financial tasks. They handle all personal matters related to the ward’s housing, education, medical care and daily living needs.

The court may declare the individual seeking a guardianship of a ward as either a full or limited guardian . Full guardianship gives this individual the right to make all non-financial decisions for the ward, much as a parent does with a child. However, the court can legally limit what the guardian may do, and this individual has a legal duty to always put the ward's best interests first.

If the court grants a limited guardianship, the individual will have less authority over the ward. The ward will retain the right to make certain decisions on their own, which may include whether to get married or vote.

Guardian of the Estate

When a person is named guardian of the estate, they must handle the ward’s financial matters. The court closely supervises any individual assigned to this role, as there is a high risk of abuse of their powers. Oftentimes, the court must approve decisions made by the guardian in advance. Though the guardian will not be personally liable for the ward’s debts, the court may hold the guardian accountable if they mismanage the ward’s funds.

The guardian of the estate may pay bills on behalf of the ward, determining which bills to pay when there aren’t enough funds to cover all obligations. They might invest funds or apply for government benefits on behalf of the ward. The guardian can act as the ward’s representative when signing contracts or filing a lawsuit for their charge. They may also buy or sell the ward’s property.

As with guardianship of the person, guardianship of the estate may be limited or full. Limited guardianship means the ward can still make some decisions independently, leaving other financial matters for the guardian to handle. With full guardianship of a ward’s estate, the person taking on this role makes all financial decisions for the ward.

Guardian of the Person and Estate

One person might serve as both guardian of a ward’s person and estate, taking on both roles simultaneously. However, they may have full or limited guardianship, similar to guardians who are serving in only one of these positions.

Temporary Guardianship

The court may appoint a temporary guardian until it appoints a permanent replacement. This step is taken when an emergency arises, and an incapacitated person needs immediate help. Temporary guardians typically only serve for 60 days unless the time period is extended by the court. When that period ends, either a permanent guardian is appointed, or the guardianship expires by law.

Determining Who Will Serve in This Role

Texas courts prioritize family relationships when choosing a guardian for a minor ward. Parents are the first to be considered when naming a guardian. If they cannot do so, the person named as guardian by the last surviving parent in either a Last Will & Testament or a Declaration of Guardian document is considered. Next in line for consideration as guardian is the nearest living adult relative of the child. The last option for the court’s consideration is a non-relative.

If the ward is an adult, the person they named in either a Last Will & Testament or a Declaration of Guardian document before becoming incapacitated is given priority consideration to be guardian. If this individual cannot serve, the spouse is given next priority consideration for this role. If there is no spouse or the spouse cannot serve, the nearest living adult relatives of the ward are given priority. Only when a designated individual, a spouse, or a relative cannot act as guardian will the court turn to a non-relative and ask that they serve as the adult ward’s guardian.

Who Cannot Serve as a Guardian?

A person must meet specific requirements before serving as a guardian in Texas. The individual must be 18 or older to be a guardian. They cannot be incapacitated or indebted to the ward. State law also says anyone involved in a legal dispute with a proposed ward cannot serve as this person’s guardian, and individuals who have committed certain crimes also cannot take on this responsibility. The court may also find a person to be unsuitable to serve as a guardian if there is any conflict of interest or other extenuating circumstances.

The Legal Responsibilities of a Guardian

Texas holds legal guardians to high standards. They have a duty of care for the ward. This individual must often post a bond, and must take an oath to fulfill their responsibilities. The bond protects the ward’s assets from financial losses caused by the guardian’s actions.

Once appointed as guardian, this individual must properly manage the ward’s estate assets and provide for their needs. When doing so, they must use the ward’s funds and resources, and they must be careful not to comingle the ward’s assets with their own. A guardian of a ward’s estate must file an annual account detailing all receipts and disbursements of the ward’s funds, and must file an inventory of the ward’s assets. In certain situations, the guardian must ask the court to approve their actions for the ward. A guardian of a ward’s person must file an annual report detailing the ward’s condition and well-being.

Designating a Guardian

A person may designate a guardian for themselves in a Last Will & Testament or in a Designation of Guardian in Advance of Need document. This designated individual steps in only if the person is later declared by a court to be incapacitated. Parents should also appoint a guardian for their minor children. Otherwise, the court will choose a guardian.

Alternatives to Guardianship

Texas offers alternatives to guardianship. A power of attorney is one way to avoid the need for a court to appoint a guardian. Individuals might also choose to establish trusts to administer their financial estates or handle their financial matters, and the Social Security Administration will allow another individual to accept government funds on behalf of a recipient as their representative payee. The same is true for a person receiving public benefits. In an emergency, a family member can often make decisions for a temporarily incapacitated person.

Becoming a Guardian

When an incapacitated individual needs a guardian, the person seeking to become their guardian must submit an Application for Guardianship to the court. This document is typically submitted to the court in the county where the incapacitated person lives. Documentation must accompany the Application that shows a medical doctor or psychologist has evaluated the individual and reached an opinion that the individual is incapacitated. This examination must have taken place within a specified time frame.

Most people looking to step in as a guardian work with an attorney to complete this process. Doing so helps ensure all steps are correctly completed to prevent delays. The potential ward must be personally served with notice of the guardianship case once the application and documentation have been submitted. Relatives and other interested parties must also receive notice that the guardianship application has been submitted.

The court will also appoint an attorney ad litem to represent the proposed ward named in the guardianship application. This attorney represents the ward in court, although the named person must often be present. During the court hearing for guardianship, the individual or their attorney may request a jury trial.

Before the court names a guardian, clear and convincing evidence must be presented that shows this individual is incapacitated and that it is in their best interests to have a guardian appointed. The applicant must also show the court that appointing a guardian will protect the rights and property of the ward.

Before taking this step, the court must determine whether the applicant filed the guardianship application in the correct jurisdiction. It must also ensure the person asking to be named guardian is qualified to take on this role, and that the proposed ward named in the application is totally or partially incapacitated and needs assistance managing their affairs. If the guardianship is granted, the court then determines whether it will be a full or limited guardianship and whether it applies to the ward’s person, the ward’s estate, or both.

If a person requests temporary or emergency guardianship, the process is similar. However, the hearing occurs within ten days of the application’s submission. At the hearing, the court either appoints a temporary guardian or dismisses the case. Emergency or temporary guardianships only last 60 days unless extended by the court, and usually by the end of this period the court determines whether a permanent guardian is needed. The temporary guardian must file a final account and an application to close the guardianship.

Serving as a guardian is not easy. Before taking on this role, a potential guardian must understand the duties and responsibilities that will be placed on them by the court. It is important to work with an attorney to handle the process correctly and to ensure the right person is appointed for this role. Those who do so will have peace of mind, knowing they made the right choice.

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Handling Debts and Creditors During Probate: What You Need to Know

Wed, 15 May 2024 20:11:36 GMT

Probate is the standard legal process for paying the debts of a deceased person, also known as a decedent, before distributing the remaining assets of the deceased person’s estate. Most estates must go through this process today, and the personal representative has a duty to pay any debts using estate funds. The person responsible for settling the estate must ensure they handle it properly. What should they know when doing so?

Which Estates Must Go Through Probate?

Typically, estates must go through probate in Texas to pay the deceased’s debts and transfer legal title to those persons receiving the estate’s assets. The court oversees the probate process to ensure the representative administers the estate in accordance with the law or a validly executed will admitted to probate. If the deceased person died having a validly executed will, the will should name a personal representative, also called an executor, to manage the deceased person’s estate. If, however, the deceased person did not have a validly executed will, then the court will appoint a personal representative called an administrator to manage the deceased person’s estate. Whether executor or administrator, this individual takes on the responsibility of protecting and distributing the deceased's assets and must also handle any debts and liabilities of the estate.

Opening Probate

The first step in the process is to file to open probate. In Texas, an attorney is generally required to file to open probate. Once the court appoints the personal representative, also known as the executor or administrator of the estate, they will then begin to carry out the administrative duties of this role typically with the assistance of their attorney. With proper estate planning in Weatherford, Texas , the probate process in Texas can be much simpler for the deceased’s loved ones and cheaper on the estate.

Determine the Estate’s Debts

Even before being appointed as personal representative, it is beneficial for the soon-to-be appointed personal representative to begin collecting documentation on the decedent’s debts. Sometimes this is not possible and one must wait until they are appointed to be able to collect the decedent’s debts. Regardless, before an appointed personal representative of the estate can take action, they need to know what they are dealing with. All outstanding debts will need to be identified and inventoried. A review of the decedent’s financial statements and bills for car or home loans, credit card debt, medical bills, and other financial obligations will aide in determining the estate’s debts.

Notify Creditors of the Deceased’s Passing

Regardless of whether there are known creditors of an estate, the first thing a personal administrator is required to do once they are appointed is publish written notice to creditors in an area newspaper.

For all creditors, Texas recognizes two types of creditors: secured creditors and unsecured creditors. Secured creditors are those creditors whose debt is secured by collateral, such as your home, car, stocks, etc. Unsecured creditors, however, are those creditors whose debt is not secured by any type of collateral. How a creditor is handled in an estate administration depends on which type of creditor they are.

If the debt is secured by collateral, then formal notice must be sent to those creditors within 60 days of the personal representative being appointed. This notice must meet Texas statutory requirements. A personal representative’s attorney should assist with this notice to ensure it is done properly and timely.

However, a personal administrator is not required to provide notice to unsecured creditors, or those creditors whose debt is not secured by collateral. According to section 308.054 of the Texas Statutes, “At any time before an estate administration is closed, a personal representative may give notice by a qualified delivery method to an unsecured creditor who has a claim for money against the estate.” It is always a good idea for the personal representative to speak with their attorney on whether to give notice to unsecured creditors. Proper planning regarding unsecured creditor notices can save the estate money.

The probate process is complex. Debt settlement and asset distribution are only part of the process but may take up a significant amount of the personal representative’s time.

Determine Which Claims Are Valid

Once a claim is sent to the personal representative, it falls on them to determine which claims are valid and how to handle each claim. Because the personal representative owes the estate a fiduciary duty, it is very important for the personal representative to correctly determine whether a claim is valid or invalid and, once determined, take the necessary next steps regarding the claim. The personal representative will want to work with their attorney to ensure they handle all claims properly and avoid breaching their fiduciary duty.

Prioritize and Pay the Debts

State law determines the order in which debts must be paid . In most cases, the estate will pay administrative expenses and funeral costs first. Once they have been settled, secured debts come next. Unpaid child support obligations must be satisfied before any State taxes, other than tax liens, are paid. Unsecured debt typically is paid last with any funds remaining in the decedent’s estate. When the estate cannot pay all valid debts, it becomes insolvent. The personal representative might be required to sell some assets to cover any remaining debt.

Maintain Detailed Records

The personal representative of the estate has to keep detailed records of all actions they take when settling the estate. These records need to outline how and why funds were paid from the estate. Detailed information about communications with the decedent’s creditors as well as any transactions that were completed on behalf of the estate should appear in the records. If a dispute arises regarding the settling of the estate, these documents can be used to explain the actions of the personal representative. In addition, they help prove the personal representative complied with all legal obligations.

Distribution of Assets

Once all valid debts are satisfied, the personal representative may begin distributing assets to the intended recipients. If a will was probated, this distribution must adhere to the wishes of the deceased as outlined in their will. When the deceased passes with no will, state law dictates how the assets are distributed.

Inheritance and Estate Taxes

Texas does not impose inheritance or estate taxes , so a personal representative will not need to worry about these when settling debts. The focus remains on creditor claims before asset distribution. Estate planning can ensure the process moves smoothly through the courts. Of course, the estate may have federal tax implications and it is always strongly advised to consult with a CPA.

Talk with an experienced estate planning attorney to begin drafting the documents needed during probate. Don’t leave the task of sorting out the estate to a loved one. They will be grieving and don’t need the additional burden of trying to determine what the decedent desired.

An attorney will ensure the necessary documents are in place and all beneficiaries are named along with the assets they are to be provided. A person can feel comfortable knowing they have done everything possible to ease the burden of loved ones when they pass by having a robust estate plan in place. Start the process of creating this plan today.

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Options to Avoid Probate in Texas

Tue, 09 Apr 2024 17:03:46 GMT

Avoiding Probate in Texas

Losing a loved one can be traumatic. It’s an emotional period, especially in the first few months. Those remaining will want to spend their time grieving and learning to live with the new reality. They don’t want to spend their time in court tackling the probate process.

In Texas, there are ways to avoid this. However, they do need to be set up ahead of time. Right now is a good time to think about estate planning regardless of your age. It’s never too early to get started. Plus, you can make adjustments to everything as necessary.

What is Probate?

To sum it up, probate is a public process through the court system used to collect a person’s assets, pay their debts, and distribute their property to their next of kin after a person passes. It’s a way of making sure the deceased loved one’s estate, both assets and debt, is dealt with after their death. Following a person’s death, the estate will need to be settled. Probate can be simple or complex, depending upon the person’s estate and whether that person has a well-maintained estate plan. Poorly maintained, or neglected estates, can lead to a complicated and contentious probate process. A well-drafted estate plan does need to be set up ahead of time, so it’s crucial to think about estate planning in Weatherford, TX . Proper planning can help you set up everything so your loved ones won’t have to worry about anything.

Does Every Will in Texas Go Through Probate?

Wills are generally set up to make the division of assets easier. It doesn’t circumvent the probate process. Probate helps determine if the will is valid. If it is, the assets are transferred according to the will. If the will is not valid, the estate is transferred to a person’s heirs at law according to State law. The only way to avoid going through probate is to facilitate the transfer of assets to a beneficiary using another method before your death such that the asset automatically passes to the loved one without the need to go through the probate process once you pass.

Reasons to Avoid Probate

Is it necessary to avoid probate? The probate process is there for a reason. It is designed to help distribute assets with or without a will. In very simple estates avoiding probate may not be that big of a deal. However, in many situations, probate can be a lengthy process. It’s often fraught with legal issues that must be handled carefully. There may be many reasons why you’d like to help your loved ones avoid probate. Avoiding it may be beneficial because of the following:

1. Avoid Going to Court

Grieving loved ones won’t want to deal with going to court. Court is just another interruption in their lives during a time that’s already emotional. When everything is done ahead of time, they won’t have to take time off work for court to deal with the legal system while they’re grieving.

2. Avoid Unnecessary Expenses

Hiring an attorney to probate the will, or a person’s estate if they have no will, can be costly. There may be several additional costs associated with probating a person’s estate required in order to fully deal with a loved one’s assets and debts. This can be another expense to deal with after a loved one’s death, but it can be avoided if the estate doesn’t need to go through probate.

3. Avoid Someone Contesting the Will

Estranged relatives, those who may not be beneficiaries of your estate, or those beneficiaries who feel they did not receive what they expected from your estate, for any reason can contest the will if it goes through probate. This means your assets are held until everything is figured out, is very costly to the estate, and the person contesting may receive assets you didn’t intend for them to have. By avoiding probate, you can dramatically reduce the risk that someone will challenge your will or the distribution of your estate and increase the chances your assets will be split the way you want.

4. Avoid Having Assets in Public Records

When an estate goes through probate, everything is a part of public records. To avoid this, it may be a good idea to use tactics to avoid probate. This way, the details of the estate can be kept private.

What Assets to Consider

All assets you hold at the time of your death are part of the estate. All of them will need to be distributed according to your wishes or through probate if you don’t have anything set up to prevent it. The various assets can include, but are not limited to, the following.

1. Bank Accounts

Bank accounts will need to pass to a loved one either as a beneficiary on the bank account or through the probate process. Retirement accounts and savings bonds fall under this category, too.

2. Real Estate

If you own a home, mineral interests, vacation property, or any other real estate, it will be a part of the estate.

3. Vehicles

Vehicles you own will go to your loved ones, too. This includes the vehicles you drive every day, ones you might be working on, classic cars, and other types of vehicles like RVs or ATVs.

4. Life Insurance

Life insurance will be set up with a beneficiary who can receive the funds when you die. It is a good idea to keep the life insurance policy updated to ensure the funds go to the person or persons you intend.

5. Investment Accounts

Investment accounts will need to be passed to a beneficiary. Just like a life insurance policy, you can add beneficiaries to these accounts to make sure these are handled appropriately and maintained regularly and the funds in these accounts are passed to those you name.

6. Other Assets

If you have any items of value, they will need to be handled ahead of time or through probate. Start thinking about other valuables you have and who you might want to receive them when you die.

Create a Living Trust

Trusts, in general, hold assets and control what happens to them. A living trust is a trust executed and funded while you are still living. If you are the initial trustee, you are tasked with managing and distributing the trust assets in accordance with the terms of the trust. Always make sure to designate a successor trustee after you. The successor trustee will be in charge of managing the trust after your death. The trustee distributes the assets according to your wishes or continues to manage the trust as needed. A well-maintained living trust can help keep assets out of your estate to prevent the need for probate.

Have Jointly-Owned Assets

Assets can be jointly owned by two people. If one of them dies, the other person gains complete ownership over it if a right of survivorship designation exists. This is common with deeds , vehicles, and other assets. Make sure someone else has partial ownership over the item so it will go to them if anything happens to you. This way, the item simply transfers to the remaining joint owner, or owners, rather than having to go through the probate process.

Make Assets Payable on Death

Bank accounts and other liquid assets can be set up so that they’re automatically given to a loved one when you die. Setting them up to be payable on death means that they can be transferred immediately, so they don’t need to go through probate. To set this up, speak with the bank that holds the liquid asset and request the correct forms. The bank should be able to walk you through this process to ensure everything is set up properly according to their requirements. Make sure you periodically review your beneficiary designations so they are kept current.

Set Up Assets to Transfer on Death

Some assets are held through a title or deed, like a vehicle or house. These can’t be payable on death because they are not liquid assets. However, they can be set up to transfer on death to a person you choose. When something is set up to be transferred on death, the transfer is automatic, so your loved one will not have to go through probate for this.

Make Sure Everything is Set Up Properly

If you want to prevent your loved ones from having to go to court, start working on it now. Gather a list of all assets you have, from bank accounts to deeds or titles. Think about who you’d like to receive these when you pass. Then, speak with a lawyer about your estate. A lawyer can ensure you have everything set up properly to make it easier for your loved ones.

If you have any questions or concerns, a lawyer will be able to answer all of them. A lawyer will go over all of the options available, help you figure out what meets your individual needs, and get everything set up according to your plan. They can also work with you long-term, so if you need to update something later on, it can be done easily. They can advise you on how to keep track of everything and when you do pass, they can help your loved ones implement your final wishes.

Probate is available to help divide assets after a person’s death. Yet, it can be a complex and problematic process. It also will require your loved ones to go to court. Instead, if you’d like to avoid probate, there are many things you can do. It is possible to set up everything so that probate may not be necessary, and everything automatically transfers after your death. Speak with a lawyer today to learn more about all of your options and to find out what’s right for your situation.

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Real Estate Closings...Do I Need an Attorney?

Fri, 29 Mar 2024 18:36:21 GMT

Real estate comes with a high price tag. When you go to purchase property, saving money becomes a priority. You can do so by handling closing tasks on your own. Before deciding to go this route, learn whether doing so is legal in the state where the property is located.

Some states require a local real estate attorney to handle all closing duties. Texas is not one of those states. Often, buyers and sellers rely on their title company and escrow officer to ensure all paperwork is in order. Nevertheless, it never hurts to have an attorney review the documents. Why might this input be beneficial?

Expert Advice

Buying or selling a property is a life-altering decision, one that comes with a hefty price tag. Any mistakes could come with long-term financial consequences, ones the buyer or seller can avoid by using an attorney. They are familiar with all aspects of the real estate purchase process and can identify areas of concern so the buyer or seller may rectify them before completing the transaction. When is it wise to hire this professional?

Lien Concerns

A buyer or seller should always work with an attorney if there are liens on the property. These liens could hold up the transaction. Once the attorney sees they are present, they begin taking steps to have the liens removed so the sale proceeds smoothly. The attorney works with the title company to ensure all parties receive their monies. In addition, the attorney works to uncover hidden liens that could impact the sale.

Short Sales

Short sales come with extra rules and regulations. If any steps are missed, the sale might come to a halt. Avoid this by working with a real estate attorney. They have experience with these types of sales and walk clients through the complexities to ensure there are no delays in the completion of the transaction.

Joint Sales

Two or more individuals might choose to invest in a property together. Unlike married couples, each party has their interests when completing the transaction. Every partner in the transaction should work with an experienced real estate attorney to protect their interests rather than using one lawyer for all parties.

Property Auctions

Countless individuals believe they can get a good deal on a property at auction. However, buyers must take care when purchasing real estate using this method. In addition to many localities not allowing an inspection of the property before purchase, a buyer will find they have limited time to finance the purchase. Most localities require a large down payment on the auction date and payment in full within a matter of days. Often, the buyer must pay in full the following day.

Before purchasing property through an auction, a buyer should consult with a real estate attorney. The attorney can do a title search and more to uncover any potential problems with the property that could affect the new owner. This information is helpful when determining whether to proceed and how much to bid on the real estate.

Divorce Sales

Working with an attorney when going through a divorce is helpful. However, a divorce attorney might not be the best person to consult when it comes to discussions regarding property owned or purchased during the marriage. Having a real estate attorney at closing ensures each party receives fair treatment and the sale or transfer of the home is completed properly, so the former spouse with no financial interest in the property is free and clear of this property once the closing is finalized.

Property in Another State

A person might choose to buy a property in another state before ever physically stepping foot on the property. Doing so has become more common in real estate markets with limited supply and extreme demand. Buyers know they must act quickly or risk missing out on a property they want.

In this type of situation, having a real estate attorney at closing to represent the buyer is essential. Virtual closings have become commonplace in recent years, but this doesn’t mean they require less scrutiny than traditional closings. The attorney ensures nothing is overlooked, so the buyer has confidence in the transaction and that the property is now theirs with no concerns.

Properties with Structural Damage

No person wants to deal with buyer’s remorse after spending a large sum of money to purchase a property. When damage or defects are found within days or weeks of this purchase, remorse is expected. Work with a real estate attorney to ensure all damage and defects are reported before or during closing. Ask that the attorney put provisions in place to handle any damage and defects the seller should have reported. The buyer may need to sue for nondisclosure . Steps taken by the attorney during closing can make this process easier.

Estate Sales

When a person inherits a property, they probably aren’t thinking clearly. They are mourning the loss of a loved one and often don’t have the time or energy to deal with real estate matters. A real estate attorney becomes of great help during this period, as they oversee the transfer of ownership for the heir.

Pulling Out of a Deal

A buyer might find they need to pull out of a real estate deal . They might do so as structural damage was found by the inspector and the seller is not willing to pay for remediation work. At times, the buyer cannot obtain financing and needs to back out of the deal.

Regardless of why this step is necessary, the buyer needs legal representation at closing to handle these matters if they must back out of an agreement when the time comes to sign the closing documents. Hiring an attorney early in the process reduces the risk of needing to pay a lawyer for representation in a lawsuit filed by the seller when the deal does not go through.

Real Estate Attorney Fees

As the purchase or sale of real estate comes with multiple fees, a person might worry about the cost of hiring an attorney. Some attorneys charge a flat fee, while others charge by the hour. When speaking with different attorneys, learn which method each uses and how many hours they expect to spend working on the case. Having this information will help prevent unpleasant surprises as the process moves forward.

This fee comes on top of conventional closing fees paid by buyers and sellers. For example, sellers often pay closing costs for title insurance, prorated real estate taxes, and a transfer tax along with their agent’s commission. Buyers pay closing costs for the appraisal and inspection, the notary fee, and the mortgage origination fee, along with many others.

As with all closing costs, the real estate attorney’s fee may change as the process moves forward, depending on any issues that arise. Most closing costs can be negotiated as part of the deal. However, each party pays their attorney, so it falls on them to negotiate the fee of this professional if they will be part of the real estate closing.

Additional Professionals Involved in Real Estate Closings

A buyer or seller might decide they don’t need other real estate professionals at closing if they work with an attorney. However, each individual takes on different tasks. What other professionals are of help when completing a transaction of this type?

Real estate agents handle many tasks related to the sale of a property. They list the property and market it to prospective buyers. It falls on the agent to show the property to interested parties. Overall, their job is to facilitate all aspects of the sale or purchase while ensuring deadlines are met. A real estate broker carries out the same duties. The difference between a broker and an agent is a broker may work independently and have agents working under them.

Mortgage lenders typically require the property to be appraised and inspected to determine if there are potential issues. The appraiser determines the property’s fair market value, so the mortgage lender knows it can recoup its money if the buyer doesn’t make payments as agreed. The inspector examines the property to identify areas needing repair or replacement. The buyer can then negotiate to have these tasks completed or request a lower selling price to account for the cost of the repairs.

An agent of the selected title company underwrites the title insurance. This individual also transfers a clean title to the buyer. As the process moves forward, an escrow manager holds funds to ensure all parties receive the monies they are due when finalizing the transaction. This professional may work independently or be employed by the title company.

Never assume that an attorney present at the closing represents all parties. Every person needs legal representation at closing to represent their interests. Each lawyer looks out for the best interests of their cient. That is their job. Have someone in your corner at this meeting for peace of mind. When the transaction is complete, you will know you have done everything possible to protect yourself and your new asset. Hire a closing attorney today for this peace of mind.

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Do I Need a Lawyer to Start My Business?

Fri, 16 Feb 2024 22:38:33 GMT

According to Business News Daily, a person can start a business for as little as $100. However, doing so may not be wise. The Small Business Administration (SBA) says people should set aside $3,000 or more to start a micro business. If opening a home-based franchise, the SBA says $2,000 may be enough. One thing a person should pay attention to when taking this step is the benefits of working with an attorney. While this representation comes with a fee, the return on investment is priceless.

Many business owners only hire a local business attorney when facing a legal problem. Getting this help before an emergency is wise. The attorney may help you save money in the long run and will be of great help when answering questions you may struggle to find answers to elsewhere. What tasks might the attorney take on for clients?

Registering the Business

Business entities may take on several forms. Some men and women set up their business as a sole proprietorship. In this situation, the need for an attorney isn’t as great. Any person who starts a business in Texas, even those who will freelance, is considered a sole proprietor. This includes the personal trainer working out of their garage or the artist selling their wares at craft shows around the state.

A sole proprietor might feel they don’t need an attorney since they are not required to file creation documents with state officials or renew any documents. Too, the individual typically reports income from this business on their personal tax return. Nevertheless, this individual personally bears responsibility for any debts and obligations of the business. The lawyer can help them protect their assets if a legal issue involving the business arises.

Limited Liability Corporations and Partnerships

When an entrepreneur is looking to start a limited liability corporation (LLC) or partnership, they must take certain steps. First, the entrepreneur must register certain entities, such as an LLC, with state authorities. Additionally, the entrepreneur needs to create documents for this arrangement. The attorney greatly assists in ensuring these documents are drafted in accordance with the law and adequately defines the agreement between members or partners.

Registering the LLC might appear to be a simple task. However, the whole process of opening the business might be delayed if the entrepreneur misses even one step. The attorney ensures this does not happen. Besides assisting with the filing documents with the Secretary of State, the attorney can draft the articles of incorporation, the operating/company or partnership agreement, filing with the IRS if necessary, and drafting initial minutes for the entity. They also ensure that all fees are paid. These are only a few of several tasks the attorney might take on. Failing to complete the necessary steps for starting the business can delay business opening, create compliance issues, and can even cause problems between members and partners who are unsure about how the entity will be run.

Corporations

Corporations must complete several tasks as well when starting a new venture. Establishing a new corporation involves several of the same steps listed above for LLCs and partnerships, but also includes drafting bylaws and other documents related to the corporation, and the ownership structure is more complex. An experienced business attorney will walk the corporation owners through the different steps of the process to ensure nothing is overlooked. With their help, the owners can begin this new chapter knowing they are protected.

Choosing a Business Structure

With several options available today, knowing which business structure to use can be confusing. Working with CPAs and other tax professionals, Attorneys handle these matters regularly and help entrepreneurs determine which structure is best for the venture they are launching. Several factors play a role in which structure is best for the venture. These factors include the number of owners, the financing, and more. In addition, there are benefits and drawbacks to each structure when it comes to taxes, liability, and other elements.

Start-up Tasks That Don’t Require an Attorney

An entrepreneur does not need to work with a business attorney for every aspect of business start-up. For example, an attorney is not needed when developing a business plan, although a mentor might be of help throughout this process. The Small Business Administration has mentors available to assist the entrepreneur in creating their plan. In addition, entrepreneurs can handle tasks such as selecting a business name and applying for a tax ID number. They may wish to work with other professionals when completing these steps, but an attorney is not required.

Furthermore, the business owner can open a bank account and complete other financial tasks without an attorney’s help. And though an attorney can make things quicker and easier, a business owner also does not need an attorney to register the business or apply for a business license. Nevertheless, there are times when an attorney should be consulted, regardless of the business structure.

When to Hire a Business Attorney

A business owner should always consult with an attorney in certain situations. For example, a business owner should always consult with an attorney before they start their business venture. This will help the owner understand the process of starting up a business and how to do it properly, even if they don’t use the attorney’s services to actually start the business. Consulting an attorney ahead of time can save the business owner time and money in the long run.

When the business faces a lawsuit from a disgruntled employee or customer, the owner should talk with an attorney as soon as possible. An attorney can help the business owner understand how to navigate employee issues and assist in resolving customer disputes.

Work with an attorney when leasing or purchasing property for the business. The attorney ensures the paperwork is correct and the business owner is protected. In addition, they are of great help in protecting intellectual property that serves as a foundation of the business or will play a major role in business operations.

An attorney may also help with the paperwork involved in trademarking the company name, filing for patents, and copyrighting material. While an entrepreneur might find an online site offering the necessary forms, these sites often lack instructions regarding how to fill them out properly. Any mistakes could lead to delays in getting the trademark, patent, or copyright desired and can put the business at risk of someone else swooping in to steal the business owner’s idea or name. A business owner puts a lot of time and money into his/her business, and any delays can be disastrous. Working with an attorney reduces the risk of causing permanent damage to the business.

Before the doors of the new business open, the entrepreneur might wish to hire employees or create partnerships with other businesses. Working with an attorney to create contracts for these arrangements is wise. These contracts might include non-disclosure agreements, sales contracts, or independent contractor agreements, along with many others.

In addition, working with an attorney allows the business owner to focus on other tasks required before the company opens its doors to clients. The entrepreneur can handle tasks that demand their attention, knowing the attorney is taking care of legal matters. The help of this professional provides the entrepreneur with peace of mind, as they know things are getting done properly without them overseeing the different steps.

The goal of working with an attorney when starting a business is to reduce the need for their help in the future. The attorney works to reduce the risk of lawsuits and other legal action taken against the entrepreneur. While there are fees involved with using a lawyer’s services, they are typically less than what one would pay to defend themselves in a legal action. If money is of concern, talk with an attorney to see if a consultation arrangement may be set up.

What is a Consultation Agreement?

With a consultation agreement, the client does the legwork. When they feel they have completed their work, the attorney reviews this work to see if changes are needed. This is one way to save money while still benefiting from the knowledge and experience of a legal professional. Entrepreneurs might find this is the perfect way to get the business off the ground the right way.

As the business grows, the arrangement may change. Expect to need more legal advice in this situation. Thankfully, as there is already a relationship established with an experienced attorney, the entrepreneur knows exactly where to turn for help.

Once the Doors Open

The partnership between the entrepreneur and attorney should not end when the doors open on the business for the first time. While the entrepreneur probably won’t need to work with the attorney daily or weekly, they should check in quarterly. If a problem does arise, the attorney will already have a working knowledge of the business. This knowledge helps them resolve the matter in less time, as they won’t need to spend time learning about the company again. Some entrepreneurs think this step isn’t necessary, only to regret letting the relationship lapse when there is an issue they need an attorney for.

Is an Attorney Really Necessary After I Open the Doors?

Many entrepreneurs, as previously mentioned, don’t think they need a lawyer until a problem comes up. However, spouses never think they need a pre-nuptial agreement when they get married. They only learn how important this document is when it is necessary to divide each spouse’s assets in divorce or death. The same goes for entrepreneurs. A disgruntled former employee may sue an entrepreneur and try to take the whole business. Don’t let this happen. This is one of countless examples of why a relationship with an attorney is important.

Working with an attorney prevents many problems before they occur. The attorney puts things in place to minimize disagreements before they occur. If a conflict arises, the entrepreneur can turn to the attorney for a quick resolution before the matter escalates. When there is a situation where the entrepreneur is in the wrong, the attorney works to resolve the matter and make sure a similar situation doesn’t come up in the future.

Miscommunication can be disastrous in the workplace, particularly for entrepreneurs. Protect your hard work by consulting with an attorney. With their help, you can safeguard the business from most calamities. That is the most important thing.

An attorney is an important part of starting and running a successful business. Having a good working relationship with an attorney from the very beginning is a great way to reduce unnecessary costs and risks associated with any business venture.

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Why Do You Need a Guardianship Lawyer?

Fri, 12 Jan 2024 16:03:24 GMT

Guardianship is a temporary and/or permanent legal relationship that allows an adult to care for a child or an incapacitated adult. This step becomes necessary when a child’s parents cannot care for their needs or an adult can't handle their affairs. However, before a person chooses to seek guardianship of a child or incapacitated adult, they need to understand what doing so entails.

Why might a guardian be needed? When should this step be taken? The following guide will address these questions and more.

Why Might a Guardian Be Needed?

A guardian might take on one of two roles. They will either oversee the day-to-day care of another individual, or they could handle a person’s estate. The individual needing this help becomes a ward of the guardian. When would this type of arrangement be needed?

The Death or Incapacity of the Parents

When a child’s parents die or become incapacitated, the child still needs someone to provide for their daily needs. A guardian takes on this responsibility. The same holds true if a parent of an incapacitated adult who is also that adult’s guardian passes or becomes incapacitated themselves. Someone must take on the job of caring for this person’s basic needs and/or their finances.

In the instance of a child whose parent passes or becomes incapacitated, this step only becomes necessary when both parents pass or they both are incapacitated. If one parent passes or becomes incapacitated, the other parent remains the natural guardian. The court is not involved in this type of situation.

Additionally, parents can designate in a formal document who they would like to serve as the guardian for their child in the event they pass or become incapacitated. If the parents die or become incapacitated without naming a guardian, the court decides who will take on this role. Families often fight over who will get the child, which adds to the child’s stress of dealing with the incapacity or loss of their parents. For this reason, every parent should work with a local guardianship attorney to execute a formal document designating who should become guardian in the event either of these situations occurs. Doing so can prevent arguments over what should happen to the child if neither parent can care for them.

Mental Incompetence

Most guardians take on the guardianship role to handle the financial and medical affairs of an individual who has been determined to be mentally incompetent or incapacitated. The guardianship can become necessary when the incapacitated or incompetent person lacks a statutory power of attorney and/or medical power of attorney.

A person cannot simply request a court appoint them as guardian of another individual for any reason. They must show proof that this person cannot handle their affairs. Often, this proof comes in the form of medical documentation.

Furthermore, the court will appoint an attorney ad litem to represent the individual in a guardianship proceeding and may appoint a guardian ad litem to determine whether the individual cannot handle these tasks on their own and that a guardian is necessary. If a guardianship is created, it continues until the incapacitated or incompetent individual passes or the guardianship is no longer needed, as determined by the court in a later proceeding.

Diminished Capacity

Certain individuals can manage some of their affairs but not all. In situations such as this, a limited guardianship might be put into place. The court determines which areas the individual needs help with and which they can manage on their own, using information from a doctor, individuals close to the individual, and a guardian ad litem if appointed, to make this determination. When establishing guardianship, the court outlines what the ward will handle and what duties the guardian will take on.

This step is often taken when a person reaches adulthood but needs additional assistance in certain areas of life. However, other avenues should be explored before moving forward with petitioning the court. While this individual might not be capable of creating a medical or statutory power of attorney, they should be allowed to handle their affairs without interference wherever possible. Those looking to seek guardianship need to explore all options before moving forward with a legal petition.

Becoming the Guardian of a Child

A person cannot simply petition the court and ask to become the guardian of a child. Several steps make up the process of obtaining guardianship, particularly when the parents of the child are alive and well, but may lack the capacity to care for the child. Furthermore, any person wishing to take on this role must show that they are suitable for doing so. A person seeking guardianship of a child should contact an attorney to ensure they complete the process accurately to avoid any unnecessary delay in the child’s care.

Becoming the Guardian of an Incapacitated Person or Adult

Becoming the guardian of an adult requires more steps to be completed. Individuals seeking to do so should contact an attorney to assist them with the process. This step often becomes necessary when a person can no longer make their own medical decisions or is unable to function on an adult level. The attorney walks the person seeking guardianship through the process of filing the paperwork and providing proof of why a guardian is needed and will represent the person in the guardianship proceeding.

Providing the proof required to obtain a guardianship typically involves ensuring the individual qualifies as an incapacitated person under current state law. When they do, the court is more inclined to appoint a guardian. According to Texas state law, an incapacitated person is an individual who cannot provide for their basic needs, such as food or shelter. However, it also defines an incapacitated person as one who cannot manage their finances or care for their health. If an individual qualifies as an incapacitated person using this definition, a doctor must examine them and determine the extent and nature of this incapacity. Following this examination, the doctor will recommend whether a guardian is needed.

Once it has been determined a guardian is needed, the process moves forward. A person capable of taking on these duties must be selected. Furthermore, they must be willing to take on the care of another person, and the state will have eligibility requirements they must meet. Texas typically prefers for a family member to serve in this role.

However, the court might appoint a qualified third party, known as a private professional guardian, to take on this role. When the guardian has been named, they take on the job of making legal and welfare decisions for the incapacitated individual.

Choosing a Guardian

Parents of minor children or adults who wish to name a guardian to oversee their affairs if they become incapacitated need to choose a guardian carefully. Experts recommend choosing more than one individual to take on this role. Consider naming a primary guardian and contingency guardian if the primary guardian cannot fulfill the role.

However, never name someone as a guardian without receiving permission to do so. They may not feel comfortable taking on this responsibility. Doing so is difficult. Not only must they fulfill the physical needs of the person for whom they are guardian over, but they must also provide for them emotionally. Doing so can be challenging, particularly if they must take on this role following the loss of one or both of a child’s parents.

Furthermore, people should review and update the designation of guardian paperwork regularly. As a person’s circumstances change, they may find they cannot take on these duties. Reviewing and updating the paperwork allows the parents or individuals who may become incapacitated in the future to have more say over what happens when this day comes.

Registering the Guardianship

Every person serving as a guardian in Texas must register with the state’s Judicial Branch Certification Commission (JBCC). There is no cost for doing so, and the state offers one-time guardianship training. Texas law also requires you complete a criminal background check, also done through the JBCC. Guardianship registration through the JBCC does not need to be updated regularly. An attorney can help with the registration process to ensure you complete all paperwork correctly and the process moves forward promptly.

When Does the Guardianship End?

People might believe guardianship lasts until the child becomes an adult or the incapacitated adult can care for themselves again. The guardianship order often outlines when this relationship ends. For example, the order might provide a specific timeframe for the arrangement. It might also state the arrangement will end when a specific event occurs.

Events that might lead to the end of the arrangement include the death of either the guardian or their ward or the ward regains capacity. When a child reaches the legal age of maturity, the guardianship typically ends, and the same may hold true when all assets have been depleted. However, one or more parties might take the matter to court to terminate the arrangement. A judge will often do so if they determine the arrangement is no longer needed or no longer serves the ward’s best interests.

Is a Guardian Ad Litem the Same as a Guardian?

Many people confuse the terms guardian and guardian ad litem. While both individuals act as legal representatives for an individual, they take on different roles in the court system. A guardian takes on the duties outlined above. A guardian ad litem, in contrast, is a professional who investigates the need for a guardianship and provides his or her opinion to the court as to whether a guardianship is in the individual’s best interest. A guardian ad litem only does so for a specific legal matter. They do not handle the day-to-day care for the ward. That task falls to the guardian.

Obtaining guardianship over another individual, whether this individual is a minor child or an incapacitated adult, is not a step one should take lightly. If you are considering a petition to become a guardian, meet with an attorney. They will help you assess the benefits and drawbacks of doing so. After taking this step, if you wish to continue with the process, they guide you through doing so. This process is one you should never do on your own. Too much is at risk for you to do so.

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What You Should Know About Advanced Medical Directives

Mon, 11 Dec 2023 21:03:42 GMT

What You Should Know About Advanced Medical Directives In Texas

There are often times when it’s impossible for a person to make medical decisions on their own. When someone is incapacitated or very ill, they may not be able to let doctors know how they feel or what they’d like to happen. In these instances, an advanced medical directive can serve as their voice. It lets physicians and other medical personnel know exactly what the person wants for their care.

An advanced directive is a legal document established while someone is still able to make medical decisions. It dictates what should or should not be done if you are unable to communicate or incapacitated. Family members can make decisions for your care if you are unable to communicate that may not align with your interests. An advanced medical directive provides instructions for everyone to follow. These are free to create unless you’d like assistance from an attorney and will remain in effect until they are changed or revoked.

What Happens if You Don’t Have an Advanced Medical Directive?

Someone else can make medical decisions on your behalf if you are hospitalized and can’t advocate for yourself. Your spouse is the first in line to make decisions. Other relatives can make the decisions on your behalf if you aren’t married. The courts will decide in situations where there is a disagreement. The courts can also make a decision if you do not have anyone to make them for you.

An advanced medical directive allows you to choose who can make these decisions. Designating someone is important if you do not trust that your wishes will be followed otherwise. The directive can state who can make medical decisions that aren’t covered by it. It can also state what you would like to happen in certain situations. There are various types of medical directives to cover a variety of circumstances, and you’ll be able to be as specific as you’d like when creating it.

Types of Advanced Medical Directives

Numerous types of advanced medical directives exist, allowing you to specify the exact care you’d prefer in emergency situations or if you are no longer able to communicate your wishes with medical personnel. You may create more than one directive, depending on your situation and desires. The following are some of the types you may consider.

Medical Power of Attorney – This allows you to name a specific person as someone who can make medical decisions for you if you can’t make them on your own. It is only effective while you cannot make the decisions.
Do-Not-Resuscitate – This tells emergency medical providers that you do not want to be resuscitated and would like to be allowed to die. With a DNR , they can still stabilize you and provide care to reduce pain until you are transferred to a hospital or other facility. This one does need to be certified through a physician.
Directive to Physicians and Family – This specifies the medical care you’d like to receive or avoid if you have a terminal or irreversible medical condition.
Declaration of Mental Health Treatment – This can enable a court to determine if you are incapacitated and whether you consent to specific therapies or medications during that time. This one does expire after three years.

Is an Advanced Directive a Guarantee That What You Want Will Happen?

Advanced directives are recognized as legal documents. That is different from legally binding. There is no guarantee that the instructions will be followed. Physicians do try to respect directives whenever it is possible. There may be situations when they are unable to do so. When it is unclear what you may want, for instance, they may have to make decisions on your behalf. There are also instances when the healthcare provider may refuse to follow an advanced medical directive. This can happen if it goes against their policies or healthcare standards . The best way to handle this ahead of time is by talking to your family or anyone who may need to make decisions for you. Let them know what you may want if there is a medical emergency or you need treatment but can’t communicate.

How to Create an Advanced Medical Directive

Creating an advanced medical directive isn’t hard. It does require a lot of thought before getting started. Covering as much as possible in it allows you to minimize ambiguity. Provide as much information as possible for treating physicians to use in an emergency. Follow the steps below to make sure you have everything covered when you create the documents.

Think About What You Want – If you are unable to communicate, how would you like your medical care handled? Think about different situations that can happen. Consider whether you’d want to be resuscitated if it’s necessary to save your life. Know what you’d like to happen in other situations, too.
Talk to Your Physician – Schedule a visit with your physician to make sure you have as much information as possible about the options available to you and to get answers to any questions you may have about your medical care or future medical needs.
Choose Someone to Make Decisions – Select someone that you trust to make the right medical decisions for you if you’re unable to make them on your own. You will want to talk to them about anything they need to know to help make decisions.
Fill Out Documents – Fill out the documents for any advanced medical directives you would like or think you may need. You do not need to fill out one for each type if it may not apply to your life.
Share the Documents – Keep the originals, but provide copies to anyone who may need them. This can include family members, your physician, a lawyer, and others.
Talk to Loved Ones – Talk to your loved ones about your decisions and what care you’d like to receive. Even though it’s written in the advanced medical directives, those can’t cover any situation. By talking with loved ones, they can not only understand what you want but will know what to do if something happens that isn’t covered in a directive.
Update Documents as Needed – Don’t forget to update the documents as needed. If any of your decisions change or you’d like to make changes to who can make decisions on your behalf, update the documents right away and notify anyone involved.

Do You Need a Lawyer for an Advanced Medical Directive?

It is not required for anyone to hire a lawyer specifically to create an advanced medical directive. Often, medical directives are created while the person is planning for their estate in case anything happens to them. Working with a lawyer to create a will and other estate planning documents can be a great way to make sure your wishes are followed if you can’t communicate or you pass away. While you’re working with the local estate planning attorney , it’s a good idea to create the advanced medical directives that you may desire. They can keep a copy of the advanced medical directives in case they are needed in the future.

What to Do With the Directive

Keep the original copy of any advanced medical directives you create. It’s a good idea to provide copies to your physician so they can keep them in your file. These can be accessed as needed if you require medical care. It is also recommended to give a copy to your attorney if you have one and to the person you name in the documents as being able to make the medical decisions on your behalf. By providing copies where they may be needed, you can increase the chance that you will receive the care you desire if anything happens.

Revoking the Medical Directive

An advanced directive is free to create, and forms can be found online. It is a good idea to make sure you consult with an estate planning attorney to review the documents before signing so you fully understand what you are signing and how it can be revoked if needed. In most cases, you must be considered legally competent to create the advanced medical directive. However, this is not the case if you’d like to revoke it. It can be revoked at any time, in most cases, and you can change your mind with regard to your care. Speaking with an attorney can help you determine when it’s possible to revoke the directives and what will happen if it is revoked.

Taking charge of your medical care is vital. It allows you to make decisions that align with your wishes as well as your cultural, religious, and moral beliefs. If you’re worried about the decisions that could be made on your behalf if you are incapacitated or unable to communicate, an advanced medical directive may be the answer. They allow you to inform others of your wishes, giving you the opportunity to request the medical care you want if you can’t communicate at the time. Talk to an attorney about these and other estate planning documents today to make sure you have a voice in how your medical care will be handled.

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What Does a Texas Real Estate Lawyer Do?

Fri, 10 Nov 2023 21:25:33 GMT

Learn what all a Real Estate Lawyer does and why it's in your best interest to use one.

What Does a Texas Real Estate Lawyer Do?

Real estate is typically the biggest purchase a person makes in their life. They invest in their future with this purchase and want to make no mistakes as the transaction is carried out. A minor mistake can be costly, and a major one could devastate the person financially. A real estate attorney can help prevent this from happening.

Transactional real estate attorneys function to transfer property from sellers to buyers. They handle all tasks associated with this legal transfer, including document preparation and title research. The duties vary by the client, as a seller needs different tasks completed than a buyer or lender. Litigation real estate attorneys typically assist in resolving disputes involving real estate transactions. Regardless of whether transactional or litigation, state laws play a role in the duties of a real estate attorney, along with other factors.

What Does the Real Estate Attorney Do?

An attorney offering services in this area handles transactions or litigation involving real property, often referred to as real estate. This property comes with land and possibly one or more permanent structures already in place. In a large number of cases, the real property is the purchase of a home.

When buying or selling a home, the parties involved won’t need to appear in court. Instead, the real estate lawyer typically handles all matters in their office or another location of the parties’ choosing. The attorney prepares and/or reviews all the paperwork. This might include the sales contract, additional agreements made between the various parties, title documents, transfer papers, and more. The local real estate attorney might also appear at the closing, either in person or virtually.

The attorney may take on additional duties, depending on the client’s needs. For instance, the client may ask them to conduct a title search to verify there aren’t outstanding claims and liens against the property. This might also include supplying documentation regarding the transfer of funds between parties or assisting with this transfer as an independent party. The duties they assume depend in part on what the client desires. A real estate attorney can also help if a problem comes up during the sale or anytime thereafter.

Tasks a Real Estate Attorney Might Take On

A real estate attorney might take on several tasks. The following tasks are ones often requested by clients.

A real estate attorney conducts due diligence to protect the client’s interests and advises the client to ensure the transaction complies with state and federal rules and regulations.
The attorney might negotiate the deal on behalf of the client to get terms that are favorable to the client.
The attorney might draft the real estate contract or simply review a contract prior to its execution. Doing so ensures the document complies with all legal requirements.
The attorney might complete a title search to make certain the seller can legally transfer the property and there are no liens that could lead to issues in the future. This search ensures all property taxes are paid and there are no restrictions on land use.
Title insurance policies protect an owner when an issue is discovered after closing. The attorney might draft this policy or review existing policies to uncover exclusions and exceptions while ensuring the client remains protected.
The attorney may also prepare closing documents and make certain all are present and filed.
If any disputes or litigation result from the transaction, a litigation real estate attorney can represent the client and handles these matters.
Litigation real estate attorneys may be called on to represent clients in foreclosure actions or landlord-tenant matters.
Zoning and land use issues might arise with a property. The attorney can guide the client through getting these matters resolved.
If title disputes arise, such as a quiet title action , the attorney can assist the client in resolving these disputes.
A person might wish to have an attorney draft or review a lease or sublease to ensure the terms aren’t problematic.
Attorneys can also handle construction loans and contracts when requested along with closings. These matters are more complex than loans and contracts for residential purposes, so it is strongly advised that the buyer have an attorney assist in these transactions.
Working with an attorney when buying property in another state, conducting an estate sale, or selling as part of a divorce agreement, can ensure these are done correctly.
An attorney can assist in resolving issues that arise when one or more buildings on the property have structural issues or the property is in an area with known hazards, such as being in a flood plain.
An heir or executor of a property should work with a real estate attorney when selling a property once the owner passes.

Is a Real Estate Attorney Needed?

According to Realtor.com , Texas doesn’t require a real estate attorney when a person or entity is buying or selling property. As a result, many people choose to save their money. Doing so might not be a wise financial move. The attorney adds an extra layer of protection for the client if something goes wrong with the sale.

However, state law isn’t the only thing a person must consider when determining whether they need a real estate attorney. The mortgage lender might require an attorney to be involved in the transaction. When this is the case, the lender pays the attorney’s fees because it is the party being represented by the lawyer. Keep in mind that the attorney is working to protect their client’s best interests, so an attorney working for another party involved in the transaction won’t protect the parties that have not retained their services.

Any person who is looking to sell a property with or without the help of a real estate agent can benefit from working with an attorney who practices in this area. The attorney can draft all documents associated with the sale and review documents that others have drafted. In addition, they ensure the transaction is legal and incorporates all of the terms agreed to by the parties, so problems don’t arise in the future.

When buying a foreclosure or a purchasing a rent-to-own property, always work with a real estate attorney. These situations can be problematic. The attorney works to ensure all steps are carried out, so the transaction complies with all applicable rules and regulations.

When is an Attorney Not Needed?

A simple home purchase rarely calls for the services of a real estate attorney, although a person should hire one if this would give them peace of mind. Simple transactions can be completed with the help of a title company. Bringing an attorney in could make this simple transaction more complex than it needs to be.

Real Estate Attorney Fees

People often want to know how much they will pay to have a real estate attorney represent them in a transaction or litigation. There is no set answer to this, as many factors play a role in their fees. The services requested by the client play a major role in the cost, as does how the attorney handles billing. Some attorneys charge flat fees and bundle services. The client picks a bundle and knows how much the fee will be for those charges. The attorney may or may not allow the client to add services to the bundle as needed. Other attorneys charge an hourly fee.

Any fees charged by the attorney for real estate transactions are often included in the closing costs. Look at the loan estimate document to determine how much the fee will be. It is found under the “services you can shop for" portion of the document. This fee might change as a person can choose the attorney and the services they need this professional to provide.

Choosing a Real Estate Attorney

Most people first ask friends and family for recommendations when they need a real estate attorney. Real estate agents are another good resource when a person is looking for a professional of this type. However, once one or more names have been provided, it falls on the client to conduct research and ensure the professional has the qualifications they need and can provide the desired services.

Turn to the American Bar Association for recommendations. The directory may be used to find attorneys in Texas who work in real estate law. The American Bar Association may also direct a person to the Texas Bar Association.

Read online reviews of attorneys to learn more about each professional. These review sites often provide information about an attorney’s areas of practice, their fees, and more. Use this information to learn about their communication style, office staff, and more, as all could play a role in which attorney is selected to handle the matter.

Certain real estate attorneys only handle commercial transactions. They help individuals buy and sell commercial properties, work with clients in need of office space, or litigate issues involving commercial property. Others focus solely on residential housing. Still other attorneys take on both commercial and residential projects. A person in need of a real estate lawyer must ensure the professional they are considering handles similar tasks regularly to obtain the best representation in their legal matter.

Any person buying or selling property should consider working with a real estate lawyer. Doing so ensures the chances of something going wrong are minimized. Furthermore, having an attorney review all aspects of the transaction provides all parties with peace of mind, as they know all bases have been covered. If something does arise throughout the sale process, the attorney is there to help guide the client through the steps that need to be taken to resolve the matter. No price can be put on the guidance and expertise they bring in this situation.

If you have any questions regarding whether a real estate attorney would benefit you, give us a call.

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ABOUT THE AUTHOR

7 Reasons to Hire a Real Estate Attorney in Texas

Mon, 02 Oct 2023 23:01:53 GMT

Real estate makes an excellent investment, whether you're buying a family home for the first time or purchasing a commercial property to generate rental income. Real estate transactions are more complex than you might think, and many things can go wrong. One mistake can leave you in debt or even in a serious legal dispute.

While Texas real estate law does not require you to work with an attorney at closing, that's the best way to avoid expensive problems. You don't have to wait until you're facing litigation. Read on to find seven compelling reasons to hire a real estate attorney in Texas before anything goes wrong.

1. Representing Your Best Interests

Real estate agents earn commission on purchases. They maximize their income by making sales as quickly as possible, and that's not always conducive to a buyer or seller's needs. A real estate attorney, on the other hand, will work with you to represent your interests, resolve discrepancies, and ensure that whether you're buying a starter home or an expensive commercial property, your rights are protected.

2. Clarifying Complex Laws and Regulations

The laws and regulations involved in buying or selling real estate can get confusing. If you're struggling to understand the terminology used in legal documents or determining what your options are regarding issues like zoning, title transfers, or financing, you're not alone. The language used in legal documents is difficult to understand, and many people find negotiating prices and terms overwhelming.

Real estate attorneys know the ins and outs of relevant laws and regulations. They can explain the purchase process in a way you'll understand so you can make an informed decision. Without that help, you might find yourself with a property that doesn't meet your needs. You might wind up stuck with a home in a state of disrepair or a property zoned for residential use only when you want to open a commercial business.

3. Negotiating Better Terms

When most people think of real estate negotiations, they assume the primary concern will be pricing. In reality, other terms of the agreement are just as important. A home buyer may also want to negotiate:

● Home repairs

● Seller-paid closing costs

● Home Warranties

● Mortgage rates

● Lender fees

● Household fixtures

● And more

If you plan to buy a commercial property, there are even more details to consider. A real estate attorney can help you understand complex issues like liens, zoning restrictions, environmental reports, structural conditions, and other complications and negotiate on your behalf. With official legal representation, you'll deal with less stress and avoid expensive mistakes.

4. Drafting Contracts

Real estate agents typically use standard form agreements, which rarely cover all the complexities of real estate transactions. That may be fine if everything goes as planned, but what will happen if a seller backs out after accepting the offer or an inspection uncovers significant structural issues? Having an attorney review documents and tailor purchase agreements to the specific situation is the only way to avoid unnecessary complications.

If you plan on selling a piece of commercial or residential real estate, having an attorney draft the necessary documentation is just as important. Buyers may attempt to alter contracts in a way that gives them an unreasonable amount of leeway for backing out of the deal, to give just one example. Having an attorney draft option contracts avoids this potential issue, saving sellers weeks of active marketing time.

5. Reviewing Documents and Resolving Title Defects

The purchase agreement is only one of many legal documents related to the transfer of real estate. You'll also want to review the survey, title, and all other documents before signing on the dotted line to avoid unnecessary hassles after closing. The documentation on the property should include information about liens, easements, and other restrictions. You'll also want an attorney to review documentation regarding the results of the title search.

Unfortunately, issues with title defects aren't uncommon. They come up most frequently with older properties and often involve claims by other parties or unpaid debts. Something as simple as a missing signature can prevent the transaction from going through. A real estate attorney can help with identifying and resolving title defects, whether that means making sure the seller pays off an outstanding lien or identifying missing heirs.

6. Handling Closing Details

In most cases, an attorney will not be present at the real estate closing. Unless you have your own attorney, whoever is present will not owe you any fiduciary duty, meaning they won't have any obligation or incentive to ensure you won't be taken advantage of by the seller. In most cases, you won't even be able to get legal advice or assistance with addressing any kind of potential problem with the property. The only way to make sure your best interests are represented during this essential process is to hire your own attorney.

7. Providing Legal Representation

Sometimes people hire real estate attorneys not to facilitate the purchase of properties and ensure that their best interests are protected but to resolve disputes. These could include:

● Boundary issues

● Easement disputes

● Title challenges

● Ownership disputes

● Contract enforcement

● Construction defects

● Wrongful foreclosures

You might be surprised to learn that even homeowners' association (HOA) disputes could wind up in court. No matter what kind of problem you're facing, if it pertains to a residential or commercial property, a real estate attorney can provide legal advice and representation.

Schedule an Initial Consultation With a Real Estate Attorney

While Texas is not a state that requires you to hire a real estate attorney to buy or sell property, there are plenty of compelling reasons to do so. Whether you're planning on purchasing a home, placing a commercial property up for sale, or fighting a wrongful foreclosure, the first step is always the same. Schedule an initial consultation with a real estate attorney who can evaluate the details and help you determine the best way to move forward.

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ABOUT THE AUTHOR

A 10-Step Guide to Estate Planning in Texas

Mon, 02 Oct 2023 23:01:52 GMT

From a financial perspective, Texas has relatively forgiving laws regarding the bequeathal of assets, imposing no inheritance or estate taxes. Don't let that fool you into thinking it's not worth putting in the work to plan your estate, nor should you assume the process is always simple.

What Is Estate Planning?

Estate planning is about more than just drafting a last will and testament. The process encompasses all elements of end-of-life planning, from asset protection to advanced medical directives.

Effective estate planning helps to ensure that your wishes are respected following death or permanent incapacitation. The process typically requires drafting multiple documents assigning beneficiaries and fiduciaries and clarifying any potential points of conflict to avoid issues during probate.

Texas Estate Planning Checklist

To be clear, you'll need the help of an estate planning attorney to complete many of the steps necessary to protect your assets and ensure that your end-of-life decisions are respected. That said, you can start the process on your own, completing the earlier steps before consulting an attorney. If you find yourself at an impasse, though, don't hesitate to call for legal advice.

1. Inventory Your Tangible & Intangible Assets

The first step toward effectively planning an estate is to create a comprehensive list of all your assets. This list should go beyond the obvious to include not just real estate, valuable jewelry, and bank accounts, but also other tangible items such as high-value vehicles, electronics, art, collectibles, and other goods. You should also include documentation of non-physical assets like insurance policies and annuities.

2. Make a List of Your Debts

Once you have a comprehensive list of assets, it's time to document outstanding debts. This list should include mortgages and auto loans, credit cards, and any other open lines of credit or debts. Be sure to include account numbers and contact information for debt holders.

3. Identify Your Beneficiaries

Named beneficiaries are the people or entities designated to receive tangible or intangible assets, in this case, as part of an inheritance. You can designate beneficiaries for all financial assets, including insurance policies, bank accounts, retirement accounts, real property, and vehicles.

4. Meet With Your CPA or Financial Planner

Meeting with a financial planner at this stage can make it easier to review and optimize your earnings, consolidate accounts, and consider additional savings vehicles. If you want to take more advanced steps like setting up revocable or irrevocable trusts, it's best to consult any attorney well-versed in Texas probate law .

5. Define Your Estate Planning Goals

Everyone should take the time to define their estate planning goals, regardless of their life circumstances. Yours may include ensuring your property is passed on to your beneficiaries, avoiding family disputes, or providing financial security for loved ones.

6. Determine Who Your Fiduciaries Are

Fiduciaries are people who manage you, your money or your property. Yours might include:

● Guardian of your children

● Guardian of you

● Medical Power of Attorney

● Financial Power of Attorney

● Trustees

● Executors

These individuals are legally bound to manage you or your assets for your benefit, not theirs. However, you should still exercise caution in naming fiduciaries and choose people you trust to respect your wishes.

7. Meet With an Attorney to Develop an Estate Plan That Meets Your Goals

You can handle some aspects of estate planning yourself or with the help of a financial advisor. However, when it comes to developing and finalizing an estate plan and drafting legal documents, it’s strongly recommended to hire an attorney. Estate planning attorneys can help with:

● Establishing legal directives

● Drafting a last will and testament

● Naming a beneficiary in a Transfer On Death (TOD) deed

● Creating a living will

● Establishing medical directives

● Assigning powers of attorney (POA)

● Establishing a trust

● Forming a family limited partnership

● Understanding business entity and asset protection

Hiring an attorney to explain legal options and draft essential documents can offer protection against a contested probate process. Your beneficiaries will have an easier time proving the validity of any documents regarding the estate if they've been drafted by an attorney.

8. Execute Your Plan

Once you've completed the complex process of planning an estate, there's just one immediate step left. It's time to execute your plan, which might require you to:

● Sign documents

● Fund trusts

● Transfer assets

● Update beneficiary designations

Don't be afraid to ask for help from your attorney or financial planner. Estate planning is a complex field, and most people have questions. You should have a clear idea of how all end-of-life affairs will be handled before signing any documents or transferring money and other assets.

9. Periodic Review to Keep Current

The hardest part of estate planning is doing all the leg work during the initial process. Since the point of estate planning is to get everything in order before the end of your life, those plans can change. Plan to review your documents after any major event, but remember that your wishes can also change from year to year in the absence of marriages, divorces, and children being born. Most experts recommend a yearly review.

10. Sit Back and Relax, Your Affairs Are Now in Order!

Now that you have a plan in place for how your estate will be managed, you can rest easy knowing that everything is in order. Your assets will be protected and your wishes respected, regardless of what the future holds.

What Happens Without Estate Planning in Texas?

Without any estate planning, Texas law will assign heirs based on blood relationships. They will not include friends, unmarried significant others, stepchildren, or grandchildren with living parents. The probate process for those who die intestate is long and expensive since it requires substantial court involvement.

The Importance of Hiring an Attorney

The estate planning process is anything but simple. Even in a state like Texas that eschews inheritance taxes, it can take some extra work to keep your accounts and assets fully intact for any beneficiaries. To complicate matters further, an improperly drafted will can be ruled invalid during probate, generating unnecessary family conflict and jeopardizing your plans. Hiring an estate planning attorney will help you avoid all of those issues.

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