A true story of a daughter who lost her inheritance…

I have a saying at my office, “if it isn’t in writing it didn’t happen.”  Of course with the prevalence of video cameras in public places and phone cameras, even hidden cameras, the saying is not completely true.  Still, I have had countless business and estate disputes in my office because someone did not get an agreement or promise in writing.  When it comes to the transfer of property upon death, your wishes must be in writing.

Texas law requires that wills be in writing and contain necessary language to be enforceable.  A friend of mine has allowed me to share her true story.  She just lost her inheritance in a long court battle.  I was not her attorney in this case.  There would have never been a battle if her mother’s true wishes were put into a proper Will.

My friend, who we will call LeAnne (named changed for privacy), moved from her home and life in another state to Texas to take care of her mother, who at the time had terminal cancer.  She spent day after day caring for her mother.  LeAnne has three siblings who would often visit and were supportive.  On several occasions, LeAnne’s mother promised her that she and her daughter could have mother’s house when she passed.  LeAnne took several video taped conversations with her mother, saying she could have the house.  LeAnne’s mother also wrote several notes saying that LeAnne and her daughter could have the house to live in when she passed.

 

As LeAnne later came to find out, LeAnne’s brother came to the house, while LeAnne was away, with a lawyer and they drafted a trust document and a Will that gave everything to all 4 of her children equally.  LeAnne’s mother said many times to her, after the signing of the Trust and the Will, that she did not understand what she was signing and she simply trusted her son.  Needless to say, when LeAnne found out about the trust and Will she confronted her siblings, showed them the video and notes, but they were unmoved.

After mom passed away, what ensued was a two year court battle over whether the Trust was valid and whether LeAnne should get the house.  Of course the biggest problem was the written Will and Trust.  Trying to prove someone did not have the proper mental capacity to execute a Will or a Trust is very difficult thing to do.  And what was so difficult for LeAnne to deal with, was that she had video and handwritten evidence showing mom’s real wishes.  As it is said, hind site is 20/20.  When LeAnne’s mother, while of very sound mind, asserted that she wanted LeAnne and her daughter to have the home, mother should have called an attorney to draft a proper will.  The will signing ceremony should have been video taped, and the will could have been filed with the county clerk.  Texas law does not recognize oral or video taped Wills, and if a court did accept one, it would be in very limited circumstances.  You cannot rely on a note or a video.

LeAnne did not have the money to hire a firm and put on a proper case. She did most of the legal work herself.  The siblings that were fighting her, by virtue of the Trust, had access to the estate money and could hire a prominent law firm.  LeAnne ultimately lost the house and she was forced to move out of the home.  The family won a judgment against her, essentially for the attorney fees paid by the family to the tune of over $90,000.00 dollars.  This money most certainly will come out of her share of the estate.

 

It is a classic case scenario that when a parent becomes infirm, a sibling moves in with the parent to care for them.  Make sure, as a family, that the sibling is compensated through their estate distribution or in some other fashion.  LeAnne could have also entered into a contract for compensation with her mother as a care giver, if she was qualified.  Put your wishes in writing.  If your parent promises you a specific gift, politely assert and remind your parent that it should be in their Will to be legally enforceable.  The Will can then be discussed with all the family members, and disputed issues can be resolved while the parent is healthy and of sound mind.

Are Trusts only for rich people?

Although I have written that everyone should have a Will in place, there are many advantages that a trust has over a simple will. A revocable living trust is a legal mechanism/contract for gathering assets in one place, and it is an important financial management tool. The Trustee of your Living Trust can manage all of your assets. You can serve as the Trustee of your trust while you are living, and you can appoint a successor Trustee to manage your financial affairs should you become incapacitated and/or pass away.  A revocable living trust is an excellent planning tool in the case of future disability.  As compared with a Power of Attorney, it offers more flexibility than a Power of Attorney.
 
You do not have to be wealthy to have a trust. A living trust makes sense for people with moderate assets who want to clearly set forth the directives for their estate once they have passed. A trust sets forth how you want your assets distributed and/or managed upon your death or disability.
 
A properly funded revocable living trust (“funded” means all assets have been properly transferred to the trust) provides the following advantages and benefits: 
 
* Gathers assets in one place, which eliminates many management problems and paper work for beneficiaries
* Names a trustee (family member or professional) who can manage all the trust’s assets if the Grantor/Settlor/Trustor (the person who established the trust) becomes incapacitated
* Eliminates the need for a court-appointed guardian (important because anyone can petition the court to be appointed guardian for an individual who is not able to handle their own financial affairs)
* Financial institutions that hold legal title to the assets can rely on the actions of the trustee
* Doesn’t require special tax forms on April 15 because a revocable trust is not taxed as an entity, taxes are assessed at the Grantor/Settlor/Trustor’s tax rate
* Changes can be made with a very simple “Trust Amendment”
* Avoids probate, probate hearings, and the probate paper work
* If you have a Will, it will have to pass through probate to be enforceable
* Keeps financial information private at death
* Can set up other trusts for your beneficiaries upon your death (separate share trusts)
* Usually, a simple revocable trust costs less than the average costs of a simple probate.
 
A living trust, however, will not solve all incapacity and estate issues, and it is not the best instrument for everyone. It will not: 
 
* Avoid probate for assets held outside the trust
* Protect assets from creditors
* Be effective unless the trust is properly funded (each asset you own is placed within the trust and retitled in the name of the trustee, or successor trustees of the trust)

When you set up a Trust, you will still have a Will.  It is a “pour-over Will.”  This Will essentially says that everything you own goes into the Trust to be distributed pursuant to the Trust provisions.  

To benefit from the advantages of a living trust set up a consult with an attorney to discuss your unique financial situation.

Top 10 questions I am asked about Wills

When I first began writing “Wills” for clients, it was somewhat awkward to talk about the topic.  After all, you have to die before it really becomes an issue right?  I would use terms like, when you pass, or after you are gone, or should “something happen to you” to reference the obvious issue – we are all going to die.  Not to be depressing, but the day cometh.  I started to encourage my clients to see that drafting a Will is really an act of love towards your family and loved ones.   It will make a difficult time for them a lot easier when they do not have to guess (or argue) about  your wishes and desires for the distribution of your property and personal belongings.  Yes, you will be gone, but your family will be grateful you took the time to create your Last Will and Testament.

 1.  Does a Will have to be probated?

Answer:  It depends on whether there is titled property that needs to be transferred to a named beneficiary at the time of the “testator’s” death.  The testator is the person who made the Will. Untitled property can be distributed pursuant to the Will without a probate through a family agreement.  It is always best to probate a Will.

 2.  When should a Will be probated?

Answer:  It should be probated as soon as possible after the “testator’s” death.  You have 4 years after the date of the testator’s death to probate – after four years, it can still be probated, but it takes a lot of extra paper work.

 3.  My brother or sister influenced my mom or dad to change their Will.  I know it was changed but I don’t know what is in the new Will.  What can I do?

Answer:  I get asked this at least once a month, and was just asked this today.  If your parents will not share with you what is in their Will, there is no legal remedy to make them tell you.  If your parents’ mental capacity is an issue, and you think they are being manipulated by a relative,  then you can request a guardianship proceeding from a court. The court can appoint a guardian to look over your parent’s financial affairs.  I have initiated “undue influence” cases and challenges to a testator’s mental capacity.  These cases are hard to prove after the testator has passed away.  Those that know me know I love legal movies.  See the movie “Rainmaker” – it addresses this topic.

 4.  Can I write out my own Will?

Answer:  Yes, although I don’t recommend it.  Texas allows Holographic Wills (handwritten) – they are valid if they express a testamentary intent and are completely in your own handwriting.

 5.  Who should I appoint as the executor of my Will? 

Answer:  The “Executor” is named in your Will and is the person who distributes your belongings and property to those people named in your Will.  Bottom line, it should be someone you trust.  It can be a beneficiary of the Will, it is often an adult child or relative of the testator.

 6.  Who gets my money and things if I don’t have a Will?

Answer:  Contrary to popular belief – the government rarely gets your estate.   The Texas probate code sets out the “laws of succession.”  These laws set forth how it is determined which of your relatives (heirs) get your stuff.  You have a legal right to say who gets your estate when you pass-way.  Don’t leave it up to the probate code – you decide!  If it is not apparent who your heirs are – enter ancestry.com (or other resources)  to find your nearest of kinfolk.

 7.  Should I use an inexpensive “on-line” service to create my Will?

 Answer:  No.  I could tell you many stories of the Wills drafted on-line that I have gotten to probate – with a lot of extra trouble.   Some would say that I am just saying that so you Will go to an attorney and pay the legal fees for a proper Will.  But consider that it generates a lot of business for attorneys to fix the on-line Wills.  Have your Will prepared by a professional.

 8.  Where should I keep my Will?

 Answer:  It is required to file with the “Original Will” with the court once the probate application is filed.  We always sign with blue ink pens in my office to help identify an original.  Keep the original in a fireproof and water proof safe.  You can store it in a safe deposit box as long as you have authorized with the bank the executor to access the safe deposit box.  If your executor does not have access then an order will have to be signed by the judge giving someone access.

 9.  Should I make copies of my Will?

 Answer:  No.

The original of the Will should be filed for probate. I have you sign in blue pen so I can more easily identify the original.  The problem with copies is that if you change your Will, you have to worry about other copies floating around that can cause confusion when it comes time to probating your most current Will.

 10.   How do I make sure my nephew gets my favorite watch?

 Answer:  Hopefully, you have someone you trust completely to act as your executor.  This person most likely will follow your directives.  We prepare a “memorandum to your will.”  On this memorandum you hand write to whom you want certain personal items to go. “My nephew is to receive my Rolex watch.”  Most of the family disputes I have helped to resolve have been over personal and sentimental items.  As of recent, in different cases – a ring, a tool box, a flag that was draped over the casket, and even a fur coat!  The problem with each case was the same, nothing in writing from the deceased.  Be very specific in the memorandum.  Take pictures and attach the picture.  Usually, that will be enough direction for the executor.  If it is an item of great value, there are some technical ways you can make certain the gift can be enforced by the court. You will need to discuss this with a probate lawyer.

 11.  Bonus question — I don’t have much property, do I still need a Will?

 Answer:  Absolutely yes.

A Will is an important document to help identify your family.  It is my understanding that ancestry.com gathers much of its information from Wills that have been recorded in courts around the world.  If you have a middle name, use your full name on you Will instead of just an initial.  We can also include a designation of guardians for your children, funeral directives and any gifts you may want to make to a charity.  When the Will is probated, it becomes a permanent historical document.   If you have titled property, and you pass without a will, it is very expensive and time consuming to conduct an “intestate probate proceeding” to determine your legal heirs and transfer title to property.

Halloween Movie

Suggested Scary Movie

 

As many of you know I have been working for some years on a book about legal themed movies. The goal of my book is to point out how much of the material in the actual movie could happen in reality. A good movie for you to watch around Halloween or anytime (warning: very scary!) is The Exorcism of Emily Rose, which was released in 2005.

 

The movie is set in America, but the actual events happened in Germany in 1976. In the movie, lawyer Erin Bruner (Laura Linney) defends a priest, Father Richard Moore (Tom Wilkinson), charged with negligent homicide for his spiritual intervention with Emily Rose. The character of Emily Rose was inspired by the true story of Anneliese Michel, a young German Catholic woman who died in 1976 after 67 unsuccessful attempts by her priests to perform an exorcism. The court accepted the doctor’s version that she was epileptic, refusing to accept the idea of supernatural involvement in her case. Two priests involved in the exorcism, as well as her parents, were found guilty of manslaughter resulting from negligence and received prison time (which was suspended), generating controversy. What is fascinating about the movie is the fact that it is based on actual trial transcripts.

 

To find out more about the true story and the movie, check these links:

http://diabolicalconfusions.wordpress.com/2011/03/14/the-entire-case-history-of-anneliese-michel-the-real-emily-rose-warning-shocking-content/

http://www.godlikeproductions.com/forum1/message468071/pg1

 

“Take Care of Your Mother or Your Mother May Get Taken”

The following is a true story, the names have been changed.

Beth’s mother, Ms. Tate, passed away and Beth had not spoken to or visited her mother in several years.  When her mother died, Beth went by her mother’s home and found that her mother’s home was in a seriously dilapidated condition.  Although Beth was aware her mother had a substantial amount of funds set aside, she was shocked when she discovered that she and her two sisters were not mentioned in her mother’s will.  Beth and her sisters received nothing from their mother’s Estate, not her house or any of her personal property, not even a simple heirloom.  All of her property went to someone else. As Beth would later discover, someone had been visiting Ms. Tate.

In the year prior to her passing, Ms. Tate’s nephew and his wife began making frequent visits with her. During that time they influenced and maybe even deceived Ms. Tate into signing a new will and a new Power of Attorney. The new will did not grant any gifts to Beth and her sisters.  The new Power of Attorney made the nephew the legal agent of Ms. Tate and authorized him to make financial transactions on Ms. Tate’s behalf.  They now could essentially do anything financially that Ms. Tate could do and were able to transfer Ms. Tate’s funds and property.  The nephew’s wife understood the significance of a Power of Attorney (because she apparently had worked for an attorney at one time) and what kind of powers it granted, so the two were quickly able to transfer a substantial amount of Ms. Tate’s funds and the ownership of Ms. Tate home to themselves.  They then used Ms. Tate’s funds to purchase new cars, expensive gifts for their children, and even a brand new home of their own.

By the time Ms. Tate passed away her estate had depleted significantly.  Immediately after Ms. Tate died, the nephew submitted the new will to probate, and what was left of Ms. Tate’s estate was given to the nephew and to Ms. Tate’s two brothers. Beth and her sisters were left with nothing.

An empty toothpaste tube is a good illustration of the unfair and often times illegal transfer of someone’s estate.  When you hold an empty toothpaste tube, you know there is no chance that you are going to get the toothpaste back in the tube. This toothpaste illustration applies to Ms. Tate’s estate and so many others.  The nephew and his wife had completely depleted Ms. Tate’s estate by the time Beth became aware of what happened to her mother.  Beth was now faced with challenging the capacity of her mother to execute a will or sign a Power of Attorney.  It would also be extremely difficult to undo any transaction that was done under the Power of Attorney. What further complicated matters was that neither Beth nor her two sisters had any funds available to pay an attorney to contest the validity of the will or to challenge the Power of Attorney.   The nephew and his wife had transferred to themselves enough funds to hire a large law firm to draft the new will, and also defend against any will contest or challenge to the authenticity of the documents signed by Ms. Tate.

It would be difficult to prove, now that she is gone, that Ms. Tate did not intend to give the nephew and his wife practically everything she owned. And of course, the position of the nephew and his wife is that they were there taking care of her and were entitled to compensation.  However, this explanation begs the question, why was her home in such a dilapidated condition at the time of her death?  After her mother died, and Beth was able to visit her mother’s home, she found the condition was so bad that squirrels had been living there.  In her old age, Ms. Tate was not taken care of but rather taken advantage of.  Her nephew and his wife clearly understood what they could get away with.  What they did is morally wrong and possibly criminal.  However, providing the necessary proof of their wrong doing would be very difficult and costly.

Perhaps it is the unpleasant subject matter of death and dying – writing your will is one of those things that can always be postponed until some “later date down the road.” Whatever the reason, people too often overlook planning for their future care, should they become incapacitated, or for the appropriate distribution of their property when they pass away.  Failing to plan ahead for yourself or your family can have dire consequences for everyone involved. It is critical that you encourage your loved ones to record their wishes in a will and/or trust to protect and preserve their property.  You must be careful about who is appointed as your parent’s agent with “power of attorney.”  This will prevent unscrupulous people from hijacking your parent’s estate and/or your future inheritance. Proper Estate documents and planning provides protection against unfortunate situations like Beth has faced. You must be proactive in protecting your family’s interests.  And….call or visit your mother.

Information provided in this blog is for general purposes only and should not be interpreted as legal advice for any situation. Legal advice can only be given after an official attorney-client relationship has been formally agreed upon with the attorney. 

Alternative to Bankruptcy

Bankruptcy is governed by Federal law and it is your right to pursue it.  As a result of the recent recession, many people have seriously considered – or have filed bankruptcy.  When you get so far behind on your bills that it looks like you will never get caught up it can be overwhelming.  Creditors eventually call unceasingly to harass and hound you to make a payment.  Even though prohibited by fair debt collection laws, they may even begin to call you at work.  I have even known them to call your distant relatives!  Debt collectors can be unscrupulous and unrelenting.  Bankruptcy puts a legal halt to all collection activity and lawsuits. Bankruptcy can offer relief. 

However, there is an alternative to bankruptcy.  Generally, when you are at the place of filing bankruptcy, your credit score on your credit report has been greatly reduced due to the late payments and/or non-payment.  The negative information about unpaid creditors or late payments will remain for seven years.  Once you file bankruptcy, the bankruptcy will remain on your credit report for 10 years.  Although the credit bureaus must remove this information after the statutory time frame has lapsed, the history of your bankruptcy most likely will turn up elsewhere. 

With the recent economic disaster, bankruptcies have increased.  With bankruptcy so wide spread, many of the negative connotations to filing bankruptcy have eroded.  Before you file bankruptcy you need to be aware of another option – litigation.  When a bank or creditor goes unpaid they usually begin collection activities in-house.  Someone from the creditor’s collection department will call and write you trying to work out a payment plan.  If you are unable to pay – after a period of time – the account will be “charged off” and the debt will be sent and/or sold to a collection agency.  Collection agencies are professional debt collectors who work overtime to get you to pay.  They may be nice and friendly or dastardly and nasty to try to get you to send them a check or set up some sort of payment plan.   Oftentimes these agencies have bought the debt from a creditor for pennies on the dollar or they have an arrangement worked out where the original creditor will get a percentage of the money collected.  I have seen more of a willingness on the part of banks and creditors to try to work out some sort of repayment plan, even offering to waive late fees and penalties and to greatly reduce the overall amount due to collect some money from their debtor.  I know of a client who had a $70,000.00 dollar debt to a bank and the bank made an offer of settlement of $14,000.00.  Of course, if the client had $14,000.00 to spend she would not have been in the situation to have to settle in the first place.  The creditors realize that once you file bankruptcy, they may not collect any money from you at all.

I have also seen more of an unwillingness of creditors to pursue you in the courts.  Being a litigation attorney myself, I know how costly and time consuming the litigation process can be.  Creditors, and their attorneys, know that even if the creditor obtains an almost certain judgment – how will they collect if you have no assets? They may not be able to collect at all if you file bankruptcy.  You may be what we call in litigation “judgment proof.”  If you own a home in Texas (each state law varies) you have the Texas homestead exemption.  This includes your home and $30,000.00 in personal belongings (there is much more to learn about this valuable exemption).   A judgment creditor cannot force you to sell your home (if it is your homestead) to satisfy their judgment.  Your main concern with being sued by creditors is post judgment collection efforts aimed at your non-exempt assets.  They may go after bank accounts, extra vehicles, watercraft, or other non-exempt properties.  If you have not filed bankruptcy, often times you can work out a settlement agreement or a payment plan with the creditor of collection agency – post judgment.  The creditor can aggressively pursue your non-exempt assets after judgment, but again, this costs the creditor more time and money in legal proceedings.   One thing that a lawsuit defense to collections will buy you is time – time to reposition yourself to pay back the creditors, and time to determine if bankruptcy is really the best option.  If you do get a judgment against you by the creditor, you may be able to bankrupt the lawsuit judgment if there is no finding of fraud.  The lawyers pursuing you understand they could spend all the time and money collecting a judgment from you and then you file bankruptcy anyways.  They do a risk and cost benefit analysis every step of the way in litigation.

Litigation is expensive.  It costs to put up a defense to a lawsuit.  Many people don’t want to deal with a lawsuit.  However, understand it is an option.  Bankruptcy is also very expensive – not in terms of legal fees but in terms of your credit rating.  It is a decision you will live with for the next ten years.  Please give it careful consideration.

The above is not intended as legal advice specific to your situation but as a very general overview of options to bankruptcy.  You must discuss your circumstances with a lawyer personally to fully understand how the bankruptcy laws and collection laws apply to you. 

Inheritance Theft

Often times people have chosen the wrong individual to handle their money after their death. They also may have chosen the wrong person to handle their money when they are incapacitated. Unfortunately, the mishandling of someone’s money is not immediately recognized. It may be months or years before you or another beneficiary realizes that your inheritance was not distributed. When you or another beneficiary does realize that someone has stolen your money, you face the very difficult task of proving a theft or gross mismanagement has occurred. You then face a more difficult task of legally recovering your lost inheritance. Someone steals an inheritance when they divert the money from its intended recipient. This is most often done by someone destroying a valid will. In situations involving a trust, the inheritance is stolen by the trustee simply not following the trust provisions and then trying to keep it a secret. Our law firm can help you if you suspect foul play has occurred in regards to your inheritance. Our firm can assist you in recovering assets and possessions for you that rightfully and legally belong to you. The provisions of a will and trust must be followed. Someone can become a victim of inheritance theft if: They are subject to the influence of another person who may cause them to act against their own wishes; Mentally or physically incapacitated; Elderly and under the care of a family member who is estranged from the immediate family: Make assumptions about how their estate will be distributed without consulting professional legal advice; Recently married or divorced; Estranged from family members, especially if one child is the executor of a will and the other siblings are beneficiaries; Died without any immediate family members to inherit the estate; Careless about who they trust to handle their estate.  Protect those you love by talking with them about their will and/or their trust.  Offer to assist them in having it reviewed by a professional to ensure it says what they want it to say.  Offer to help protect it by having it secured in a safe place and make sure that someone trustworthy has access.

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