estate planning

The Independent Executor’s Job Duties in Texas

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An administration of an estate can take up to nine months or more depending upon the assets contained in the estate. Therefore, there is no reason to feel rushed or the necessity to make a distribution immediately upon being appointed. The appropriate procedures should be followed to protect you from possible litigation. If you are named the independent executor, consult an attorney to be appointed by the Court. Once you are appointed, these are your job duties:

  • Notify the following that apply to the decedent: Social Security office, IRS, banks, retirement companies, investment companies, employers, etc.
  • File Inventory, Appraisement and List of Claims within 90 days of qualification date. Your attorney will provide you with this form to complete and then the attorney will file the Inventory.
  • Publish a notice with the local newspaper to any unknown creditors of the estate, within one month of your appointment. The attorney will usually do this for you.
  • Give written notice to all beneficiaries named in the will within one month of being appointed. You will then need to file a statement of compliance with the Court. The attorney will usually prepare these forms for you.
  • Give written notice by registered mail to holders of real estate liens against Estate property within two months of appointment.
  • Give written notice to all known unsecured creditor’s explaining they have four months to file a claim. If a notice of claim is filed with the court within four months, you can either do nothing and the claim is deemed denied within 30 days or you can send letter denying claim. Once claim is denied, creditor has 90 days to file a litigation case or his case is forever barred. You should not pay any claims to any creditors until this step is completed and you have consulted with your attorney.
  • Give the State of Texas notice of death, but only if the deceased received Medicare financial assistance from the State for such benefits as nursing home or residential care facilities.
  • Liquidate all assets of the estate, sell real property, etc. unless other arrangements have been made between the heirs.
  • Place all Estate funds in insured accounts in the name of the Estate. Retain in a checking account only such funds as are reasonably necessary to pay the debts of the Decedent and the expenses of administering the Estate. Place all additional funds in interest bearing accounts at the highest interest rate available. The bank will require you to have a Tax Identification Number for the decedent’s estate to change the bank account ownership into your name as Executor, so you can go to to obtain an Estate Tax Identification Number or my office can assist you with obtaining this TIN.
  • Preserve, protect and insure, if insurable, all non‑cash assets of the Estate.
  • Maintain an accurate record of all expenditures and receipts of the Estate, regardless of how long the estate remains open. Keeping good records will help you in the long run if a creditor or beneficiary questions your actions as Executor/Administrator. It will also protect you in the long run in explaining your actions to the beneficiaries or heirs.
  • Make arrangements to dispose of or sell all personal property, utilizing estate sale or distributing items to beneficiaries. Hold an estate sale if necessary and sell off any vehicles, or other titled property as necessary.
  • Make arrangements with realtor to sell real property, if necessary. The attorney should review all contracts for you.
  • Pay funeral expenses and expenses of last sickness, before paying anyone.  Reimburse any party who has already paid these expenses.
  • Pay court costs, attorney fees and expenses incurred.
  • Pay only creditors who have made a proper claim against the estate.
  • Pay all delinquent child support and child support arrears, if any.
  • Pay all income taxes, penalties and interest, if any.
  • Pay all claims for the cost of confinement by a correctional facility, if any.
  • Pay all claims for repayment to Medicare, etc. by state agencies, if necessary.
  • Once you are ready to distribute to the beneficiaries or heirs, contact the attorney they can prepare Receipts and Waivers for all parties to sign upon receipt of their checks. Distribute the estate funds to the heirs and have each heir sign a statement of receipt.
  • Submit a Final Account Affidavit to close the estate. This starts the statute of limitations running for four years.

Congratulations!  Now you are done!

Fraud does not protect parental rights!

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The Dallas Court of Appeals confirmed the trial court’s findings in a case concerning the termination of a parent’s rights whereby fraud was used to induce the parent to relinquish.  In RE: C.T.C. a mother used fraud to get the father to relinquish his rights.  The mother argued that Sec. 161.211(a) of the Texas Family Code provides that the father had only 6 months from the date the termination order was signed.  The father argued that the statute was not intended when fraud was used to procure a relinquishment.  The trial court agreed with the mother and they dismissed the father’s petition for bill of review for lack of jurisdiction.  This Sec. 161.211(a) provides that in certain circumstances a termination of parental rights is not subject to collateral or direct attack after six months and the Court of Appeals says that it doesn’t matter if fraud was used. For More information see the Case Findings.

When should you amend your trust?

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Many times people create trust during their lifetime and they face situations that may require amendments to the trust.  If changes are required to your trust, a trust amendment is the proper way to make the changes. Handwritten marks and notes on the trust document are not considered legal changes. An amendment specifically states what paragraphs of your trust is being changed, and sets forth the new trust language. The amendment may be short, or it may be so drastic that it actually changes the entire trust, from the first word to the last.

What are some reasons why you may need to amend your trust?  Some trusts are completely out-of-date, or irrelevant due to changes in the statutes, case law, or just poorly written. Some trusts may have provisions that are illegal, or contrary to the client’s wishes. Some people need their trusts revised or updated because of changes in their wealth or family circumstances.

Lengthy or complicated trust amendments may be difficult, costly, time consuming and hard to follow for future trustees. Therefore, a good estate planning attorneys will recommend a trust restatement. A trust restatement is a document which completely restates the entire trust agreement, and a new trust is created through the amendment and restatement.

Although a restatement is basically a new trust in the form of a trust amendment, the name of the old trust and the date that it was established remain the same.  Therefore, there is no need to obtain a new tax identification number, move funds to new accounts, change deeds, etc.

With the many tax law changes in recent years, concerns about future ill health and incapacity, or with changes in your family situation, it is recommended to have your trust reviewed by an attorney. A simple amendment may be all that is required or it may be necessary and more efficient for the attorney to restate the entire trust.

Did Aubrey McClendon breach his fiduciary duties to Chesapeake shareholders?

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Bowing to pressures from their shareholders, Chesapeake Energy Corp.’s directors have forced co-founder and CEO Aubrey McClendon to step down as chair, all over his personal financial dealings, including the taking of up to $1.1 billion in loans against his stakes in Chesapeake oil and gas wells.  A Reuters investigation has found, McClendon also ran a lucrative business on the side: a $200 million hedge fund that traded in the same commodities Chesapeake produces.  Is such behaviour to be tollerated and is it a breach of McClendon’s fiduciary duties as CEO and Chair of the Board of Directors?

An officer or director of a corporation owes a formal fiduciary relationship to the corporation and shareholders, such as: 

a)Duty of Loyalty The duty of loyalty “requires an extreme measure of candor, unselfishness, and good faith on the part of the officer or director.” A corporate officer or director must act in good faith and must not allow his or her personal interest to prevail over the interest of the corporation. An officer or director is considered “interested” when he “makes a personal profit from a transaction by dealing with the corporation or usurps a corporate opportunity.”

b)Duty of Care Texas law imposes on corporate officers and directors a duty to exercise due care in the management of the corporation’s affairs. If they breach that duty, they are liable to the corporation for any loss it may suffer as a result of their neglect.

c)Duty of Full Disclosure The duty of full disclosure on all matters affecting the corporation, including disclosing when the officer or director will personal benefit for contracts or certain actions.

d)Duty of Obedience The duty of obedience “requires a director to avoid committing acts, i.e., acts beyond the scope of the powers of a corporation as defined by its charter or the laws of the state of incorporation.”

From first glance it looks as if McClendon did breach his fiduciary duty of Full Disclosure and Loyalty.  It will be interesting to see what the shareholders think and whether a class action lawsuit is filed by them.

Dying without a Will in Texas.

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If a person dies in the State of Texas without a will, there several options for the person who decides to handle the estate. Choosing the correct option depends upon the assets involved and if the heirs are in agreement on certain matters.

If no formal administration of the estate is necessary, there are two options: 1. Small Estate Affidavit (estates of $50,000 or less); or 2. Proceeding to Determine Heirship. These are both pretty simple process that can be done relatively cheaply with the help of an attorney.

If a formal administration is necessary, then there are still two choices: 1. Independent Administration (if all heirs agree on the appointment of an IA); or 2. Dependent Administration (when all the heirs do not agree on the appointment of the administrator; more expensive route).

If either of these latter two options is chosen, then along with the administration filing/proceeding, the administrator will also need to file an Application to Determine the Heirs (and the appointment of an ad litem attorney to assist the Court in determining the heirs of the estate).

To determine which step is necessary, you should consult an estate planning attorney.

Inheritance Rights of Adopted Children

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ImageThe inheritance rights of adopted children are protected when a parent dies without a will. Under the Texas Probate Code, a child adopted by the decedent is treated the same as a natural-born child. Therefore, the adopted child can inherit from his or her adopted parents and vice versa.

If the decedent allowed their child to be adopted, the child can still inherit from his or her natural parents.  However, the natural parents cannot inherit from the child if the child dies without a will. This is an important consideration today when so many children are adopted.

Furthermore, under Section 162.507 of the Family Code, a person who is adopted as an adult, inherits from their adoptive parents but not their biological parents and vice versa.

Texas Business Franchise Tax

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Small business owners in the State of Texas are being inundated with costs which could put them out of business. One of those new costs, is the ever changing Texas’ Franchise Tax. The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas.

The revised franchise tax applies to partnerships (general, limited and limited liability), corporations, LLCs, business trusts, professional associations, business associations, joint ventures, incorporated political committees and other legal entities.

Who has to pay the Franchise Tax? Most business who make more than the $1,030,000 (the no-tax-due threshold) for January 2012 through January 2014 tax years. On January 1, 2014, the no-tax-due threshold is scheduled to be $600,000. Keep in mind that the no-tax-due threshold is calculated taking the lowest of three calculations:

  • total revenue minus cost of goods sold;
  • total revenue minus compensation; or
  • total revenue times 70 percent.

On January 12, 2012, the Texas Supreme Court dismissed the Nestle case, In Re Nestle USA, Inc., Switchplace, LLC, and NSBMA, LP, challenging the revised franchise tax, the so-called “Margin Tax,” on constitutional grounds. On February 10, 2012, the Texas Supreme Court rejected a second challenge by Nestle Case to the Texas franchise tax

So for now, small business owners will just have to suffer through trying to calculate and pay this complicated business tax.

Small Businesses, the largest employer gets the least attention!

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Many people are surprised to learn that the largest employer in the United States is the small business owner.  All the small business owners combined employ more than 52% of the employees. This means that more Americans work for a company with fewer than 100 workers (a small business) than for the large corporations with more than 500 workers.

Small businesses are very important to our economic recovery because they create two out of every three new jobs. Small businesses have played a vital role in helping our economy add more than 5.1 million new jobs since August 2003; they have helped keep America’s unemployment rate below the average decade rate of the 1960s, 1970s, 1980s and 1990s.

In times such as these, when our country is in economic crisis, small businesses continue to grow and create jobs, which I expect will continue to be the case. However, while small businesses adapt easier to change than large corporations, they can be put out of business by drastic economic changes. For example, when the price of gas rose a few years ago it was the small business that was hurt the most. Increases in the price of fuel have affected small businesses in the following areas: farming, cattle, restaurants, clothing, tourism, auto sales, auto parts, freight services, computers, prescription drugs, electrical, construction, hospitals, lodging and real estate, to name a few.

One of the main problems facing small businesses today is that Congress appears to be more focused on helping large corporations, rather than the small business owner. The President started his term wanting Congress to do several things to help the small business owner, such as pass responsible housing legislation, make health care more available and affordable, ensure our workforce is prepared for the jobs of the 21st Century and re-affirm the principles of freedom and choice that gave rise to the labor movement.

While these changes might help, the real problem is that very few changes have been made permanent. Small business owners plan over the long term, not short term. Congress appears more focused on helping the large corporation through tax incentives, bailouts of financial problems, and set asides for different Congressional districts that have limited benefit to the economy as a whole, than the small business owner.

For example, in 1953, Congress created the Small Business Administration to provide professional expertise and financial assistance to persons wishing to form or run small businesses. On average, the SBA makes about $12.3 million in loans to small businesses yearly, usually in the form of purchase money for buildings and equipment, or working capital.  They also help small business procure more than $40 billion in federal contracts last year alone. However, the SBA had done this with an ever shrinking budget.  Now Congress has set the SBA’s 2008 budget to include 191 earmarks totaling $69 million in funds, which are to be used for everything from small business incubators to renovation of a riverfront park in Charleston,W.Va.  These funds should have been used for the survival of the small business owner.

The HUBZone program was developed by the SBA to help economically distressed areas, but funds for the program were going to fraudulent companies more than half the time. Corporations received millions of dollars in federal contracts under the guise of being located in low-income neighborhoods when actually they were not.  Also, since 2003, more than a dozen federal investigations have found Fortune 500 firms were the actual recipients of billions of dollars in federal small business contracts. An entity created for the benefit of small business owners should be available for small business owners.  The SBA needs to be more proactive in watching over the interest of the small business owner if they want to improve the economic situation in this country.

Congress and our president will need to make small business a priority if there is any hope in economic reform to pull our country out of this recession.  This election year might have a huge impact on the survival of the small business owner unless the politicians wake up and realize how their actions are killing small businesses.  Employees need to ensure they are informed before going to the polls in November, because their vote will likely affect their employers and eventually their jobs.

Obama changes birth control rule

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President Barack Obama announced a plan to accommodate religious employers outraged by a rule that would require them to cover birth control for women free of charge.

The administration announced in January that religious-affiliated employers had to cover birth control as preventative care for women. Churches and houses of worship were exempt, but all other affiliated organizations were ordered to comply by Aug. 2013.

Opponents of the measure, including Catholic cardinals and bishops and Republican leaders, responded with intense anger.

For more information, check out this article on Huffington Post.

10 things to do if you won the powerball

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Last night’s Powerball jackpot was over $325 million. If you won the jackpot or any other lottery jackpot, you might be thinking that you won’t ever have to worry about money again–right?


With good money management you–and your heirs–could live handsomely for many, many years. But from the moment that you claim that prize, you will be descended upon by vultures who want a hefty helping of those winnings. And if you didn’t have smart money habits up until now, you could easily turn out to be your own worst enemy by quickly squandering the fortune.

Forbes has written a wonderful article about the 10 things you should think about if you win!