Archive for the ‘Wills’ Category

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LegalZoom Faces Class Action Suit

June 25, 2010

Somebody once said that there is no such thing as bad publicity. In a nutshell, bad news is still good publicity, so long as they spell your name correctly. LegalZoom.com is back in the news again, and the company might disagree with the age-old marketing adage right now.

For those not familiar with the self-appointed titan of online lawyering, LegalZoom was founded in part by Robert Shapiro, who you should remember was a leading element of O.J. Simpson’s legal team several years ago. The company provides a litany of online legal services and boasts the ability to serve individuals who might otherwise not be able to afford the expense of an actual attorney. For the most part, the nine-year-old company’s services seem centered on a do-it-yourself approach, specializing in providing what are claimed to be “common” or “routine” documents – things like Wills and documents to form a business.

Now, the company is playing defense. A recent class action lawsuit has accused LegalZoom of unfair and deceptive business practices. The company is accused of leading customers to practice law without a license, assisting in the unauthorized practice of law, and using fraudulent business practices.

The chief plaintiff, Katherine Webster, has sued as the Executor of the Estate of Anthony Ferrantino, and as Trustee of the Anthony J. Ferrantino Living Trust. LegalZoom provided several document forms, including a trust, a will and a power of attorney. Per the company’s model, the customer essentially wrote the documents herself by answering several questions, while a computer created the documents based upon the answers. But the documents were flawed, the plaintiff claims, and those flaws cost the Estate severely.

LegalZoom is not the only company of its kind. It’s just the only one that uses a well-known attorney-founder as its spokesperson, lending security and credibility that some might claim is unjustified. The suit at hand will determine if LegalZoom in fact made misrepresentations, buried disclaimers and omitted relevant facts when courting customers through its advertising. It should be interesting to follow, and should at least serve as a cautionary tale for clients with real and often complex legal issues. Perhaps another adage may teach all of us a valuable lesson – you get what you pay for.

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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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Medical Research and the Ultimate Gift

May 5, 2010

In my experience, I have drafted Wills and other estate planning documents in literally all shapes and sizes. Many clients take a very traditional approach, leaving their estates to their surviving spouse, then to children, and so forth. Others take a less traditional approach, making specific gifts for the care of animal companions, philanthropic organizations or churches. On occasion, a client will ask me how to make arrangements for what I consider the “ultimate gift,” the donation of their body to the advancement of science.

While I could probably spend an entire entry waxing on the state of cryonics, Ted Williams and the likelihood of reviving a deceased (and frozen) loved one with future medical technology, I thought a more practical discussion of current medical donation opportunities might be more appropriate. Many Texans are already organ donors, and so the concept of donating an entire body to science is gaining the approval of some clients who desire for even their remains to provide some kind of legacy.

UT Southwestern Medical Center, as well as the Texas A&M Health Science Center, provide some excellent information related to body donation. Both require the completion of some very basic forms which are, of course, revocable. Each institution also outlines the procedure that occurs upon the death of the donee, as well as the requirements that must be met before a body is accepted. While the advice of an estate planning attorney should be sought in connection with the gift, it is not necessarily needed in all cases.

The body must be suitable for scientific or educational research. That is, it cannot be embalmed, and an excessive amount of time after death cannot have passed. Certain conditions, such as trauma or contagious diseases may also prevent acceptance. Generally speaking, the institutions retain the body for two years depending upon their needs. At the conclusion of the institution’s use, the body is cremated. The remains are either returned to the family for a nominal fee, or disposed of appropriately by the institution.

Of the clients that I’ve counseled concerning these matters, I typically tell them to insert the gift into their Will, but to take the steps now to ensure that it can be fulfilled. Practically speaking, it may be weeks or months after death before a Will is admitted or even discovered, negating any chance of fulfilling the donation. Moreover, your loved ones should be aware of your plans as soon as you make them, so that they can take the appropriate steps to see your donation through in a timely manner.

Much of what we plan for involves things and money – the tangible parts of our lives that we realize we cannot take with us. With some foresight and a small amount of planning, you can make a gift that some might argue has a bit nobler intentions – one that will benefit the advancement of medical and scientific learning.

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Five Things to Consider When Planning to Write your Will

March 30, 2010

1. Who Should Receive the Estate?

For some, the passage of property equally to their descendants is the norm. However, each family dynamic is different, and your estate plan should reflect the same standards and ideals that you act on today. Many clients like to include friends, charities and other organizations that they deem important and deserving. In the absence of a Will, your heirs will receive your Estate under a system designed by the legislature. A well-drafted Will is not so rigid, and can be tailored to fit your wishes precisely.

2. Who Will Manage the Estate?

With a well-drafted Will, the person of your choosing can administer your Estate largely free of supervision by a Court. They will gather up the assets of your Estate, pay any proper debts and distribute the remainder to your beneficiaries. When selecting the person to fill this role, it is wise to consider their age, ability to handle professional matters and their relationship to you and the beneficiaries that they will ultimately have to deal with. Their position is one of trust and confidence, and the task of picking the right person is as important as the tasks that they will be asked to carry out.

3. What if the Beneficiaries are Young or Incapacitated?

Estate planning focuses on contingencies – the “what ifs” of life. Some are more likely than others. What if my spouse dies before I do? What if our children are minors when I die? Good planning can provide good answers. Your Will might include provisions that nominate guardians for minor children. It might include trust provisions to ensure that property received by a minor is held and used for their benefit until they reach a specified age. Rarely can a contingency not be planned for when a well-counseled client sits down to execute an estate plan.

4. What Happens to the Non-Probate Assets?

Many of the largest assets in an Estate are not even technically part of the Estate. They pass to designated beneficiaries pursuant to an agreement with a life insurance company or a retirement plan administrator. The best estate plans harmonize these probate and non-probate assets. For example, where one child is provided for significantly by a life insurance policy, the Will may balance things out by favoring the other child a bit more with other assets. Many clients fail to update their beneficiary designations when they sit down to revise their Wills, but the decisions made in regard to these documents are as important as those that you will make when creating your Will.

5. What if the Beneficiaries are Unhappy with my Choices?

Estate disputes happen. In most cases that I have encountered, the seeds of Will Contests and beneficiary fights are sown long before the testator even dies. Clients know their families better than a lawyer, and some frank and open family discussions may avert situations like this. But well-drafted Wills typically go a step further to include provisions that discourage fighting among beneficiaries, just in case. Your estate plan should please you, and it should be executed in a manner that best protects the decisions that you have made concerning your legacy.

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Estate Planning Conversations

March 8, 2010

For a lot of people, death and their own fragile mortality is the last thing that they want to discuss with anyone – let alone loved ones. We know that we are not going to live forever, but pondering our inevitable demise can steal the sun right out of the day, and so we tend to focus on happier things. For the same reason, parents and children sometimes tend to avoid openly discussing Wills, Trusts and all of that legal business that will be left when someone dies.

Yesterday’s New York Times included a great article about those challenging conversations, and the benefit of having them well in advance. The centerpiece of the story is a lawyer in Seattle. He has two children and has been separated from his wife, but not divorced, for around 30 years. He also has a brain cancer, and did not have a Will. In his state, had he died without a Will, his estate would have passed to his wife. He wanted to avoid this and opened up candidly with one of his daughters, who learned of his intentions and helped him find a lawyer to put his plan down on paper.

It’s a nice story and yes, it’s good to know that you can open up to your children to discuss your estate planning. Many of our clients take the same path of least resistance. I’ve drafted countless Wills that leave a client’s estate to the surviving spouse and then equally to the children. But occasionally, depending on the facts, things get changed up. Perhaps the spouse only gets a lifetime interest in the home, and the children inherit everything else, except for the child who receives nothing. Neither the spouse nor the children have any idea about the client’s plan until the client dies and the Will surfaces. Talk about awkward.

Undoubtedly, the client had a perfect reason for putting that plan into effect. It all made sense and the principles behind the decisions were sound. But the principles and reasons were kept by the client. The client never sat down with the spouse or children to share. So the spouse sues – the prodigal child sues – everyone sues because nobody’s happy about that Will. Twelve months and tens of thousands of dollars later, the suits are settled.

I’m not willing to bet that a conversation between the client, the spouse and the kids could have avoided all of that, but it probably couldn’t hurt. So much litigation in our area stems from resentment and the fact that a spouse or child is treated differently in the client’s Will than someone else. The Times article includes the thoughts of some experts, who believe that a series of conversations about these kinds of delicate issues works best. I agree.

Sadly, if a family has some inner turmoil ahead of the client dying, you can usually expect that turmoil to break loose after the fact. I tend to believe that litigation is unavoidable in some cases. But the Times article does make an excellent point for those situations where all it takes is a few conversations with your loved ones to openly discuss your plans.

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The High Cost of Your Will

January 18, 2010

Each week, The Houston Chronicle runs a column entitled “State Your Case,” where local attorney Ron Lipman answers 4 or 5 questions from readers regarding various legal subjects. Recently, Lipman devoted the entire week’s column to estate planning and probate questions covering a range of concerns regarding Wills and probate questions.

In one of those questions, the reader asked Lipman, “What should I expect to pay for a simple Will…?” The reader pointed out that he just wanted a Will that passed everything to he or his wife when the first of them died, and then upon the death of the second of them, everything would be split equally between their children.

Having apparently conducted an informal survey of other attorneys in Houston, Lipman discussed that fees for a simple Will can sometimes be as high as $2,000 for a married couple. He also pointed out that a simple trust for a special needs child will generally cost anywhere from $2,000 on the low side or $4,000 on the higher end.

In my opinion, Lipman has provided useful information to answer this reader’s question, and his answer is probably fairly accurate. What surprises me, though, is the fairly high cost that some lawyers are charging for their “simple” Wills and for trusts for special needs children.

Ford & Mathiason has always advocated that each person in Texas should have a Will and that there is no substitute for the competent, experienced advice of attorneys who routinely advise clients in estate planning. However, Ford and Mathiason has historically charged much lower rates for these services and has always been very upfront and honest about the manner in which we charge for our estate planning services. In the Rates and Fees section of our website, you can find detailed information on the methods that we use for charging for our services, which we provide so that potential clients can fully understand the financial commitment that they are making when hiring an attorney.

As you embark on new decisions in 2010, consider carefully whether you need to make changes to your existing Will or if you need to create a Will for the first time. At the same time, do not let articles like Lipman’s scare you into thinking that these services are cost prohibitive. Ford & Mathiason is happy to offer estate planning expertise at reasonable rates. Please contact us if you would like to discuss your options further.

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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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