Archive for the ‘Probate’ Category

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Temporary Guardianships: Perfect when they fit, Trouble when they don’t

July 6, 2010

In the past, this blog has identified many of the traditional elements of a guardianship matter, and has outlined many of the alternatives available under certain circumstances. Often, neither the traditional approach or the alternatives are a good fit. The situation might demand that action be taken quickly, particularly if the Proposed Ward and/or her property are at immediate risk.

Temporary guardianships and their procedural elements are frequently misunderstood, by clients and courts alike. In many cases, they are sought for the wrong reasons, or without adequate information, and they can sometimes do more harm than good. Today, temporary guardianships work very much like permanent guardianships. Their cornerstone differences are (a) a fast-tracked process, and (b) a temporary fix to what might be a permanent issue.

Under prior legislation, a temporary guardianship could be granted without notice to the Proposed Ward. I am consistently astonished by the continuing perception that this kind of procedure is still available in Texas. It is not. Many clients, attorneys and even judges apply the outdated procedure when they seek or grant an ex parte temporary guardianship, or one created before the Proposed Ward is ever even notified.

Today, the Probate Code is clear on the notice provisions of every temporary guardianship. When an application is filed, an attorney is appointed to represent the Proposed Ward. The Clerk issues specific notices and provides a copy of the application to every concerned party, including the appointed attorney. The Court sets a hearing date, generally within 10 days. If these steps are not followed, the Court cannot create a temporary guardianship. If it does, buckle up for the bumpy ride.

Temporary guardianships can be a wonderful tool when used appropriately. In a time when a hearing on a permanent guardianship might take weeks to coordinate, temporary guardianships get the ball rolling much faster. In true emergency situations, they can safeguard the Proposed Ward from imminent harm and even temporarily lock down the Proposed Ward’s estate if it is at risk. Used correctly, temporary guardianships can be true lifesavers. Sought for the wrong reasons, or created under repealed and rewritten laws, temporary guardianships can cause more trouble than they fix.

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Top Ten Reasons to Re-do Your Will

June 10, 2010

10. You lost your Will. – While it is not impossible to probate a lost Will in Texas, it is exponentially harder to accomplish than with a valid written will. I won’t go into all the gory details, but unless you can show exactly how it was lost, and exactly what it contained, you are in for a very uphill battle. A copy can get you part of the way, but it will not get you to the finish line. So stop looking for it, we both know you won’t find it, just go get yourself a new one.

9. You don’t like what your Will says. – Sort of obvious I know, but many people fail to realize that simply tearing up a Will and ignoring it will not always ensure that it does not find it’s way to probate court. (See #10 for an example.) Also crossing out provisions and penciling in new ones will not cut it. If you don’t like what the old one says, you must get a new one that revokes all former Wills.

8. You have moved states. – Probate laws vary from state to state so the Will you executed prior to moving to Texas may or may not be valid now that you are in God’s country. Don’t leave it to chance, get in and get a new Will.

7. You have aquired property that you want to leave to someone specific. – Did Christopher Walken recently visit you and hand you your great grandfather’s WWI watch? Again, we’ll skip the details but do you really want to ignore the, um, sacrifice that Mr. Walken made and not do something to ensure that watch goes to your son or grandson when you are gone? Do not trust that simply telling someone will get the job done. The only way to ensure it gets there is to put it in your Will as a specific bequest. Don’t rely on the fact that you will be able to have your own Pulp Fiction moment with junior as you pass down that uncomfortable hunk of metal. If that happens great, but you need a fall back plan in case you check out early. Put it in your Will.

6. You won the lottery. – Or inherited a ton of money. Or got a promotion. Or let’s just say you somehow “acquired” new found wealth (hey we’re not asking any questions). The point is you now need some tax planning and it’s more than likely that the Will you had when you were dirt poor won’t cut it. Why give more to the Government than absolutely necessary? Go get a new Will and make sure your new found wealth is not used to bail out any more billionaires.

5. You got a divorce. – Very few Wills are ambiguous when it comes to who is contemplated by the term “spouse.” If your Will was… well that may be why you got divorced in the first place, but I digress. If instead your Will lists your Ex by name, and you don’t want that person getting everything now that they left you heartbroken and penniless, get in and get a new Will. Don’t wait till you get remarried, you can always add that new spouse on later (or not, again we’re not here to judge you).

4. You have a new baby. – Congrats! If this is your first child then you really want to think about getting a Designation of Guardian drafted along with a Will now that you are parent. If this is not your first child, does your Will mention the other children by name? Does it divide your estate based on a percentage? Does it provide specific bequests to the kids? If so, you need an update. If this is a late-in-life addition to your family, you probably want to think about a trust since now you can’t guarantee you will be around to ensure they are fiscally sound through college. Just try and remember when you were 18, if someone had handed you even a modest share (say 30k) is there any doubt you would have been rolling around in a new Camaro? (Man I wish I still had that car… and that hair.)

3. Your Will is not Self-Proved. – Texas law makes it very, very simple to probate a Will, if you have a properly drafted Will. Just because a Will is valid does not mean it accomplishes everything to simplify probate. Don’t make your loved ones have to drag two people to Court to testify that you were of sound mind when you drafted your Will. Get up off the couch and go get a new Will drafted. And this time go to a real attorney, your brother-in-law does not count. (unless of course he’s a board certified estate planner).

2. Your Will does not provide for independent administration. – Just because your Will says “without bond” does NOT mean that you have appointed your executor to act independent of Court supervision. If your Will does not provide for independent administration your beneficiaries are going to be forced to either jump through hoops to avoid a dependent administration or else be stuck with a much more costly and time consuming dependent administration of your estate. Why would you do that to them when a new Will is just a phone call away? Seriously, give me one good reason. You’re better than that.

1. You don’t have a Will to re-do. God forbid, but if you still don’t have a valid written Will, get yourself to your nearest probate attorney and get it drafted. Do not pass Go, do not collect $200, just do it. NOW!

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‘Easy Rider’ Estate is in for a Bumpy Road

June 2, 2010

I am not usually one to fall into following tabloid or celebrity news, but a couple of stories from the past few days recently caught my eye and seemed appropriate to at least mention here. No, I won’t plug the paparazzi-style website that piqued my interest, but if you follow traditional news, you know that actor / film maker Dennis Hopper passed away last Saturday, after his battle with prostate cancer. Hopper was married five times over his life. The last one might really cost him.

Hopper and his fifth wife were in the process of divorcing one another. He filed in January of this year. Under a prenuptial agreement, Victoria Duffy would receive 25% of Hopper’s Estate, and $250,000 in life insurance proceeds. As a catch, the two had to be married and living together when he died.

That last part’s the trick. Over the last several months, various court rulings resulted in Duffy residing at Hopper’s property, but in a completely separate house. In fact, Duffy was previously ordered to remain at least 10 feet away from Hopper. Nonetheless, the wheels of justice turn slowly, and the two remained married when Hopper passed away, so Duffy is halfway home to a large payout.

Interestingly enough, the stories say that Duffy is not challenging Hopper’s Will. She’s just trying to make sure that her deal under the prenup stands. One of Hopper’s children seems set on making sure that never happens.

So the fight, and there will likely be a big one, now moves from the divorce court to the probate court. Whatever becomes of Hopper’s Estate will demonstrate that court’s application of laws related to prenuptial agreements, contracts and probate. And the results may well prompt other not-so-celebrity types to fully evaluate their own estate plans. We may not all be Hollywood A-listers, but whether the estate is $40,000 or $40 million, the stakes are high enough to engage in smart planning.

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This Week in Probate and Guardianship Appeals

January 8, 2010

Starting in 2010, Ford & Mathiason LLP will be writing a weekly entry covering newly released opinions by the Texas Courts of Appeals in the areas of Probate and Guardianship. Jason Brower, Associate in charge of the appellate section of Ford & Mathiason LLP, will be authoring these entries.

Estate of Pauline Moran Allen, Tyler Court of Appeals

This week’s entry comes to us from the 12th District Court of Appeals in Tyler. Dollie Weir appealed the trial court’s order which granted Leonard Allen’s motion for summary judgment. Two Issues were raised by Dollie, (1) that Leonard failed to present any summary judgment evidence to support his motion, and (2) that the thirteen writings, purported to be a codicil to Pauline Moran Allen’s Will, lacked testamentary intent.

Summary Judgment Evidence

The Will of Pauline Moran Allen was admitted to probate as a muniment of title on January 16, 2008. On April 2, 2006, Leonard filed a motion to amend the application and probate as a muniment of title thirteen writings purportedly signed by Pauline on December 27, 2002. Dollie filed a contest to Leonard’s motion, stating that the writings lacked testamentary intent. Leonard filed a motion for summary judgment, asserting that the thirteen writings were prepared, dated, and executed by Pauline, contained the signatures of the two witnesses, and complied with all the formalities of a will except for being entitled a will or codicil. However, he failed to attach any summary judgment evidence to his motion.

Dollie moved for both a no-evidence and a traditional summary judgment (attaching the 13 writings along with other summary judgment evidence) and asserted that the writings lacked the necessary testamentary intent to constitute a will or codicil. The trial court granted Leonard’s motion and denied both of Dollie’s motions. The court found that there was no genuine issue of material fact in Dollie’s contest, that no ambiguity existed with regard to the testamentary intent of Pauline in the codicils and that Leonard was entitled to have the codicils admitted to probate as a muniment of title.

The Court of Appeals agreed with the Trial Court on the basis that even though Leonard did not attach any summary judgment evidence in his motion, when both parties move for summary judgment, the trial court may consider the combined summary judgment evidence. Therefore, because Dollie had included all the evidence needed to establish Leonard’s motion, the granting of such motion was not in error.

Lack of Testamentary Intent

Dollie’s second issue revolved around her claim that the thirteen writings lacked testamentary intent. The Court of Appeals first noted that any writing introduced as a will or codicil must contain an explicit statement declaring that the writings are wills or codicils or that the property division will take place only after the decedent’s death. The Court then further noted that the intent of the testator must be ascertained from the language used within the four corners of the instrument offered for probate. Commonly called the “Four Corners Rule” this means that unless there is some ambiguity in the language of the instrument, outside evidence cannot be used to add or contradict the writing or show that the testator intended something different than what is on the instrument.

Leonard, in his motion for summary judgment, was in effect saying that these thirteen writings are unambiguous, executed with all requisite formalities of a codicil, and therefore no outside evidence of testamentary intent is needed or even allowed. Dollie disputed this however, and stated that none of the writings are referred to as wills or codicils, and contain no words evidencing that Pauline intended for these to dispose of her property only upon her death, and therefore lacked the requisite testamentary intent to be regarded as codicils.

The Court of appeals agreed with Dollie. They stated that nowhere in the writings did they find testamentary language, such as words of grant or devise, nor were there words from which a bequest could reasonably inferred. Because no amount of outside evidence could supply the absent testamentary intent, such writings were not a codicil. The trial court therefore erred in granting Leonard’s motion for summary judgment and the Court of Appeals reversed such judgment.

What does all of this mean for you? If you want to ensure proper disposal of your property upon your death, do not draft your own documents. Instead, call us today and schedule an appointment to discuss your estate planning needs.

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Alternatives to Guardianships for Minors: Section 867 Trusts

December 28, 2009

In many cases, the Court’s creation of a guardianship of the estate for an incapacitated individual or a minor may be inevitable. It may be the least restrictive option for the Court. However, many times I am approached by clients for whom there are lesser-restrictive and more efficient mechanisms or processes that can achieve many of the same goals.

When faced with the situation that a minor child is supposed to inherit some money from a parent or grandparent, the Courts cannot allow the minor to receive the property outright. Likewise, the law does not allow a parent to collect the money on their behalf without some formal procedure like a guardianship.

Take, for example, a father’s $50,000.00 life insurance policy naming his minor child as the sole beneficiary. The surviving parent wants to collect the funds owed to the child so that they can be used for the ordinary expenses of raising the minor, or perhaps the funds will be tucked away for college. In either event, the mother wants to collect the funds, and the insurance company wants to pay them but cannot pay the minor child directly. As par for the course, the insurer usually demands that a guardianship be created. They don’t want to be liable to the child by delivering the funds to the mother without some kind of security that the mother will be accountable for the funds. Guardianship of the minor’s estate seems like the best choice, if not the only one. But is it?

As with most attorney answers – it depends. The mother could request that the Court appoint her as the Guardian of the minor’s Estate. But this choice often comes with some significant downside. The mother would need to post a bond for the policy proceeds, and the proceeds will be reduced by the fees and expenses of creating the guardianship. Moreover, the guardianship must be maintained, which means that additional expenses will be incurred annually until the child turns 18. Again, the proceeds would be reduced, sometimes significantly, over time. The overall process might be inefficient and challenging, if not impossible under certain circumstances.

One alternative available to the mother might be a trust created by the Court under Section 867 of the Texas Probate Code. Under this law, a financial institution, and sometimes a person, can be appointed by the Court to act as Trustee of a trust created by the Court for the benefit of the minor. The trust comes equipped with very specialized terms that permit the Trustee to collect the insurance proceeds and use them for the benefit of the minor until anywhere from the age of 18 to 25. Every year, the Trustee reports to the Court and accounts for the trust’s activities.

Often, such an alternative can be achieved relatively quickly and with significantly lower cost. The insurance company is happy to pay a bank or person who will be accountable for the funds, and the mother is happy that the funds will be available for the same purpose for which they were intended by the deceased father.

Sometimes, guardianship is not just the best choice, but the only one. But, alternatives such as the Section 867 Trusts are prime examples of the legislature working for our citizens to provide reasoned answers to questions and issues that affect more people every day. In the areas of guardianship and probate, there may be a number of achievable alternatives that provide the same, if not better, results for the client, at lower cost and with greater overall benefit.

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Non-Probate Assets

December 1, 2009

Every estate planning client is unique. There are simply far too many variables to boil effective estate planning down to a “one-size-fits-all” approach. Families and loved ones are diverse and dynamic, and assets vary immeasurably from one circumstance to the next. However, there are some common elements in most cases. The coordination of what are typically known as “non-probate assets” is one of those elements that comes up in the case of nearly every estate planning client that I counsel.

In a nutshell, “non-probate assets” are those assets that are specifically designed to pass to a designated beneficiary, or group of beneficiaries, at a future point. They can come in all sorts of shapes and sizes, and insurance policies represent a perfect example. John Doe purchases a $1 million insurance policy and names his wife, Jane, as the sole beneficiary. At John’s death, his insurer holds up their end of the contract and pays Jane once she informs them of John’s death and provides the necessary identification. Seems easy enough.

However, in many past cases, I have seen decedents’ Wills that attempt to direct who is entitled to certain “non-probate assets,” whether a life insurance policy, retirement account, or other such similar asset. Sometimes they identify the same beneficiary, and sometimes they do not. What if John Doe died leaving a Will that gave his life insurance policy to his girlfriend, and not to Jane, as the policy directed? And so many clients ask the obvious question: When they conflict, do the policy proceeds pass under the Will, or does the insurance policy control where the proceeds go?

The answer, which remains surprising to some, is that the provisions of the Will take a backseat to the provisions of the contract. With very little exception, the Texas Probate Code governs Wills, Trusts and other types of instruments. Insurance policies are not generally governed by the same law. Rather, they are contracts between the insured party and the insurer. When an event (John’s death,) triggers the obligation of the insurer (paying the proceeds to Jane,) the insurer’s obligation is to abide by the contract and pay the proceeds to Jane. Whether or not John left a Will is irrelevant to the insurance company. Similarly, his attempt to direct the proceeds to someone other than his designated beneficiary falls short.

In future posts, look for some discussion of some circumstances where it may work to John’s advantage to coordinate his “non-probate assets” with his Will to achieve the result that he wanted. In the meantime, remember that “non-probate assets” are generally governed by the contract that creates them. Many clients neglect this side of their estate planning, as they are primarily focused on having a well-drafted Will in place. Review the beneficiary designations that you have made on your own “non-probate assets,” and you can be certain that your plan fits together to cover all of your intentions.

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Wall Street Journal Article Fails the Test

November 21, 2009

In the Wall Street Journal’s issue on November 12, 2009, Journal writer Jane Hodges offers a “Cranky Consumer” article in which she compares and contrasts various online programs to create a do-it-yourself Will. The article, entitled “Before It’s Too Late: A Test of Online Wills,” provides a review of how easy each program is to use, and it offers information on costs, services, and technical support for each of the programs reviewed. However, Ms. Hodges seems to fail her own “test.”

The laws related to Wills and trusts vary by state. What may constitute a valid Will in Texas may not be a valid Will in California. Likewise, because of the extreme differences in the probate laws across the various states, the most effective method of planning for your estate in some states may be the creation of a revocable living trust, while in other states the most effective method of handling your estate may involve a traditional Will. Likewise, depending on the overall assets owned by an individual or married couple, including certain tax provisions in a Will or Trust might be useful in saving significant amounts of taxes when one or the other of them dies.

Ms. Hodges article fails to provide a single warning or caution about any of the programs that she reviewed. She does not address whether or not the programs create documents that adhere to the specific laws of the state in which you live (most do not). While she does make passing mention of the fact that only one of the programs even mentioned future taxes, she does not attempt to caution her readers of the fact that this issue along could be significant. Likewise, while she seems to presume that a Revocable Trust is the appropriate method for planning for an estate, she does not point out that this may not be the best advice for each consumer. Most disturbingly, Ms. Hodges makes a cavalier reference to seeking the advice of an attorney, and she seems to suggest that an attorney’s advice is not necessary. However, she does tout the fact that one of the programs allows you to call into their hotline and ask questions.

In reality, do-it-yourself Wills are very often poorly drafted, and they frequently fail to properly conform to the laws of the specific state in which you live. As a result, it can be significantly more expensive to probate the Will at your death, or the Will may be completely invalid because it was not prepared properly. Additionally, the thought that you can call a hotline to have an attorney in California answer “general” questions regarding your Will is preposterous, unless you live in California. You should not accept legal advice from an attorney who is not properly licensed in the state in which you live. In fact, it violates the ethics rules of every state in the country for an attorney to express a legal opinion about laws in a state in which he is not licensed.

While Ms. Hodges’ article may have some value, she should have done a much better job to caution her readers as to the very significant pitfalls that can befall them by using an online Will program rather than seeking the advice of a competent lawyer.

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A Peer of Your Juries

November 11, 2009

An article concerning the probate of the Estate of local oil pioneer provides an interesting glimpse into the mind of potential jurors.

I recently ran across a Houston Chronicle article concerning the Estate of Alfred C. Glassell. It seems the daughter of the oil pioneer and cultural philanthropist has contested the probate of his will, on the grounds that he was unduly influenced. Her claim revolves around the allegation that local museums (i.e. their attorneys) convinced the elderly man to change his will and give more to charity (i.e. the museums) thereby leaving less for his heirs (i.e. the daughter).

What struck me was not the content of the article, Lord knows there’s nothing new in a beneficiary contesting a will in a multi-million dollar estate. No, what caught my eye was the comment section located below the on-line version of the article. I was curious to see how joe public views such a fight. The results were not too surprising.

Of the 70 comments, my unofficial count was 12 in favor of the daughter, and 30 against. I noticed the following terms used to describe the daughter: “greedy wench,” “trust fund baby,” “roaches,” “brain dead liberal,” and my personal favorite “money grubbing wannabe heiress.” One poster asked “being a millionaire isn’t enough?”

However, I was somewhat surprised by the number of those who questioned the “disproportionate share” and lamented on how all of the estate was going to be sucked up by the money hungry attorneys. In fact, I counted at least ten anti-lawyer comments. Funny, I can’t remember any lawyer ever filing a suit without a client, but then again, I’ve come to expect such comments in my line of work. Like they say, the problem with lawyer jokes is that lawyers think they’re funny and everyone else thinks their true.

Either way, it should be interesting to see how the trial pans out, if these comments were any indication as to the bias of a potential jury pool, I would say the daughter is facing an uphill battle.

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Dying Without a Will in Texas: What Happens?

July 29, 2009

Part 3
By Jason Brower

Question: “Is it true that the state gets everything if I die without a Will?”

The final scenario is where a person dies without a spouse and without children. This is the most complex scenario with five possible divisions, which are better explained in the following bullet points:

1. If both parents survive the decedent, then his estate passes to his father and mother, in equal portions.

2. If only one parent survives the deceased, then his estate will be divided into two equal portions, one of which will pass to the surviving parent, and the other passes to the siblings of the deceased.

3. However, if the decedent had no siblings, then all of the separate property would pass to the sole surviving parent.

4. Conversely, if neither parent is alive, but there are surviving siblings, then the whole estate passes to the siblings of the deceased.

5. Finally, if there is no parent nor sibling alive at the time of death of the decedent, the inheritance is divided into two equal parts. One part is passed to the paternal kindred, and the other is passed to the maternal kindred, in the following course:

• to the grandfather and grandmother in equal portions if both are living.

• If only one grandparent is living then the estate is split into two equal parts and one part goes to the surviving grandparent and the other goes to the descendant or descendants of such deceased grandparent.

• If there is no surviving grandparent, then the whole of the estate goes to their descendants, and so on without end, passing in like manner to the nearest lineal ancestors and their descendants, but never to the state.

Like the provisions related to the division of separate property, the Probate Code also lays out the division of the community property of someone who dies intestate. Fortunately, the distribution scheme for community property is easier because community property, by definition, only exists if a spouse survives the decedent. Only three scenarios exist when someone dies intestate leaving community property: 1) no children or descendants, 2) children who are all children of the decedent and the surviving spouse, and 3) children or descendants who are not all descendants of the surviving spouse.
1. If the deceased had no children, then the entire community estate passes to the surviving spouse.

2. If the deceased had children, and all of such children were also the children of the surviving spouse, then the entire community estate passes to the surviving spouse.

3. And finally, if the deceased had children or descendants other than those of the surviving spouse, then the surviving spouse retains her one-half (½) share of the community property, and the decedent’s one-half (½) share of the community property is divided equally between the children or descendants of the deceased.

So, as you can see, Texas law makes it very clear that the court will find an heir and that heir will inherit your estate and your estate will not be turned over to the state for any reason. However, to ensure that your estate is divided the way you see fit, and to avoid a costly administration, it is always the best bet to ensure that you have a valid Texas Will.

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Dying Without a Will in Texas: What Happens?

July 15, 2009

Part 2
By Jason Brower

Question: “Is it true that the state gets everything if I die without a Will?”

Four basic scenarios illustrate the division of separate property upon someone’s death. In the first and most common scenario, a person dies with a spouse and children. In such case, the surviving spouse takes one-third of the personal property, (non land assets) and the remaining two-thirds of the personal property is divided equally among the child or children of the deceased. The surviving spouse of the decedent is also entitled to possession for life, of one-third of the land of the deceased, with that one-third going to the children or descendants upon that surviving spouses death.

In the second common scenario, someone dies without a spouse but is survived by each of the children born to him or her during life. In that scenario, all of the property is divided equally between the children. This scenario results in the easiest division of the decedent’s property.

In the third scenario, someone dies leaving a surviving spouse but does not leave any children or descendants. There, the spouse is entitled to all of the personal property and to one-half of the land of the Estate. The other half of the land would go to the father and mother of the deceased in equal portions. If only one parent survived the deceased, then that share of the land would be divided into two equal portions, one passing to the surviving parent, and the other passing to the siblings of the deceased. If there were no siblings, the entire share would pass to the parent. If no parent survived the deceased, and there were siblings, the entire share would pass to the siblings.

In the next installment, we will discuss the most complex scenario, what happens when a person dies without a spouse and without children.

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