texas law

Choosing your agent for a POA is serious stuff!

Posted on Updated on

Many people know they can find the Statutory Power of Attorney form online.  But what they do not usually understand is the extent of the authority they are giving to their agent and how the form needs to be filled out properly to be accepted once incapacity occurs.

Giving a person agency over your financial affairs means they step into your shoes and can do all kinds of things, such as, sell your house, cars, spend your money, make investments on your behalf, etc. Therefore you should makes sure you do not not give away too much authority!

Texas law does provide that an agent under a power of attorney owes the principal a fiduciary duty.  However, many times it is all but difficult to recover lost money or assets because the agent has already spent the money or disposed of the assets.  Power-of-attorney

Therefore, the important lesson is to choose your agent carefully and use an attorney to make sure the POA does exactly what you need it too!

 

Advertisements

SURVIVING SPOUSE’S HOMESTEAD RIGHTS

Posted on Updated on

house
On the death of the husband or wife, leaving a spouse surviving, the homestead shall descend and vest in like manner as other real property of the deceased.” TX PROB CODE § 283. Also, the surviving spouse is entitled to retain a constitutional survivor’s homestead right for life or for so long as the survivor elects to use the homestead. This right is not affected by the deceased spouse conveying the property to a third party through their will.

Here are a few questions which are regularly asked with regards to surviving spouse’s homestead rights:

1. Can the deceased spouse’s administrator force the sale of the house?
This constitutional right protects the homestead against forced sale and partition so long as the surviving spouse chooses to use and occupy the homestead. TX PROB. CODE § 284. The homestead right protects the survivors homestead from forced sale by creditors and from partition among the heirs and beneficiaries of the homestead claimant.

2. Does the surviving spouses rights end when move out of the property? Have they abandoned their homestead rights?

The surviving spouse’s right to occupy or use the homestead for life or for so long as the surviving spouse chooses to do so, but it only lasts as long as the spouse occupies or uses the homestead property. If you can prove the surviving spouse abandoned the house, then the beneficiaries could take possession. It is not required that the surviving spouse continuously reside in the property to be considered as using it. For example, the survivor could rent the land out to satisfy the use requirement.

3. Who is responsible for maintenance on the property?
The surviving spouse will be responsible for making repairs and generally maintaining the property, but the duty to repair does not go so far as to require that the property be maintained in the same condition that existed when the homestead right was originally established.

4. Who is responsible for the mortgage on the property?
A purchase money lien is not subject to the homestead exemption, thus the property could be foreclosed upon default. TX PROP CODE § 41.001(b)(1). If the heirs wish to retain the property, they are responsible for the mortgage.

5. Who is responsible for the insurance premiums on the property?
The surviving spouse is not responsible to insure the property against loss. Even if the surviving spouse did insure the property, the insurance proceeds upon fire or damage would be made to the surviving spouse and not to the heirs/beneficiaries. The heirs/beneficiaries (children) would be responsible to carry insurance on the property to preserve their asset.

6. Who is responsible for paying the taxes on the property? The heirs/beneficiaries are responsible for all tax payments, even if the surviving spouse resides in the house. The homestead is not exempt from forced sale to pay delinquent taxes. TX PROP CODE § 41.001(b)(2).

Disclaimer: The content of this article is provided for informational purposes only and does not constitute legal advice.

Proper Independent Contractor Classification: The Legal Ramifications

Posted on Updated on

Texas Builder Magazine of the Texas Association of Builders
8/23/2013
by Leslie L. Hunt

Most individuals in the construction industry know someone who has been the target of a wage and hour investigation. One of the common issues evaluated during this type of investigation is whether a company’s “independent contractors” have been properly classified. In other words, can the company prove that its “independent contractors” should not be treated as an employee?

Whether a worker who performs services for another person is an employee or an independent contractor is not always easy to determine. The proper classification is important, however, because the distinction between employee and independent contractor affects legal rights and obligations, including liability for employment taxes, the right to workers’ compensation benefits, the employer’s potential liability for a workers’ tortious acts, and wage rights such as minimum wage and overtime. Anyone who performs work for a company is presumed to be an employee by the Texas Workforce Commission, the Department of Labor and the Internal Revenue Service (“IRS”). This means a company bears the burden of rebutting this presumption and convincing the governing authorities that a worker is an independent contractor.

Generally speaking, if a company has the right to control what will be done by a worker and how it will be done, an employer-employee relationship exists giving rise to, among other things, wage reporting and tax responsibility. An independent contractor, on the other hand, is self-employed, bears responsibility for his or her own taxes and expenses and is not subject to an employer’s direction and control. Many companies erroneously believe that so long as you give someone a 1099 and call them an independent contractor, that they are properly classified as an independent contractor. However, this is not the way governing authorities view it. Whether a worker is an independent contractor or an employee depends upon much more than what the parties agree to call themselves. It depends on a thorough analysis of the relationship between the individual and the company.

The Supreme Court of Texas has written that the test to determine whether a worker is an employee or an independent contractor is whether the company has the right to control the progress, details and methods of operations of the individual’s work. The company must control not merely the end sought to be accomplished, but also the means and details of its accomplishment as well. Examples given by the Court regarding the type of control normally exercised by an employer include when and where to begin and stop work, the regularity of hours, the amount of time spent on particular aspects of the work, the tools and appliances used to perform the work, and the physical method or manner of accomplishing the end result.[1]

In order for an independent contractor to be properly classified, he/she must truly be independent; therefore, a business must focus on the degree of control versus the degree of independence when determining how to classify a worker. Analyzing the following factors will increase the likelihood of making an accurate determination: (1) instructions given to the worker; (2) training given to the worker; (3) the extent to which the services rendered are an integral part of the principal’s business; (4) any requirement that the services by the worker be rendered personally; (5) the worker’s ability to hire, supervise, and pay assistants; (6) the continuity or permanency of the relationship between the employer and the worker; (7) whether the employer sets hours of work; (8) a requirement to work full-time; (9) the location of the work (on the employer’s premises or at the worker’s home/elsewhere); (10) setting the order or sequence of work; (11) requiring oral or written reports; (12) paying the worker by the hour, week, or month; (13) the payment of the worker’s expenses (business and/or traveling); (14) providing the worker’s tools and materials; (15) significant investment by the worker; (16) the worker’s opportunities for profit or loss; (17) working for more than one business at a time; (18) availability of the worker’s services to the general public; (19) the firm’s ability to discharge the worker; (20) the worker’s right to terminate the relationship; and (21) the amount of the worker’s investment in facilities and equipment.

Governing authorities’ claim that no one factor listed above is weighted a particular way and that there is no magic formula for determining how to classify a worker. In other words, this is a gray area and even a thoughtful analysis offers no guarantees. In cases where businesses want reassurance, the IRS has a Form SS-8 Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding that can be filed requesting that the IRS review certain facts and circumstances and officially determine a worker’s status. Although it can take at least six months to receive a determination, it is a step that could prove beneficial, especially for businesses that frequently hire the same types of workers to perform particular services.

In the past, it was common for a business to receive notice of an investigation through written correspondence from a governing agency. Today, however, more and more investigators, especially those working for the Department of Labor (“DOL”), are showing up at jobsites unannounced, and requesting to conduct immediate reviews of business records. The information requested during a surprise DOL investigation is likely to be the same as the information requested through a more traditional notice of investigation received through the mail.

If a DOL investigator shows up at your worksite, you can expect to be asked to provide the following items: (1) names, addresses and telephone numbers of all business owners and company officers (e.g. President, Treasurer, Secretary, Board of Directors and other Corporate Officers) along with a company organization chart if one exists; (2) legal name of the company and all other names used by the company (e.g., “Doing Business As” names); (3) records demonstrating your gross annual dollar volume of sales for the past three years; (4) a list of all employees with their address, hourly rate or salary, descriptive job title, shift and whether you consider that employee exempt from overtime for all current and former employees for the investigative period; (5) payroll and time records for the investigative period, including a copy of the last two payroll completed and time records; (6) birth dates for all employees under age 18 who have performed work during the past 24 months; (7) 1099 forms and contract documents with any independent contractors, subcontractors or day laborers; and (8) federal employer identification number.

One of the best ways to prepare your business for a worker classification investigation is to maintain organized records and be able to demonstrate a good faith, reasonable basis for classifying a worker as an independent contractor. Businesses that demonstrate a reasonable basis for its classifications may be relieved from certain monetary consequences depending on which governing authority oversees the investigation.

The IRS recently added an optional program called the Voluntary Classification Settlement Program (VCSP) intended to encourage voluntary compliance with worker classification rules. The VCSP permits employers to prospectively reclassify workers as employees in exchange for limited federal employment tax liability, no interest or penalties, and without an IRS audit or administrative correction procedure.[2] This is something to consider for businesses that become aware that they are currently treating a class of workers as independent contractors but want to voluntarily reclassify the workers as employees going forward.

I am often asked whether it is a good idea for businesses to have contractual agreements with workers designating them as independent contractors. The answer to that question is an unequivocal yes. Using a contract that clearly sets forth the worker’s status as an independent contractor, such as the Texas Association of Builders’ Independent Contractor Base Agreement, can be dispositive of the parties’ relationship, so long as there is no outside evidence contradicting the terms of the contractual provisions. For example, if the contract states the worker will dictate his own hours of performing services, there cannot be evidence that the hours of work were actually controlled by the company. So long as the contractual agreement accurately reflects the independence of the relationship between the company and the worker, it will bolster the likelihood of being able to establish proper classification of the worker as an independent contractor.

Companies can decrease their chances of misclassifying workers in a variety of ways such as (1) routinely reviewing payroll records to determine how many workers are classified as independent contractors and to confirm that a reasonable basis for such classification exists; (2) allowing workers to control the details of a project such as starting and stopping time and the ability to delegate work duties to others individuals under the control of the worker; (3) paying the worker by the project; (4) having worker use his/her own tools or equipment; and (5) avoiding ongoing, continuous relationships with workers.

Companies should strive to maintain a good relationship with their workers. It is important to listen to concerns or questions raised by workers relating to their classification. These questions can often come in the form of questioning whether a worker or class of workers should be receiving overtime pay. If a worker voices concerns over overtime pay, take it seriously and analyze whether that worker is properly classified. If you discover the worker is misclassified and is owed overtime wages, it is advisable to consult with an employment attorney.

Companies should also encourage workers to come discuss any questions or concerns they have about classification or wage issues. Taking this step can prevent a disgruntled worker from filing a complaint with the Texas Workforce Commission or the Department of Labor, which would likely trigger a wage and hour investigation.

Businesses that take a closer look at existing worker classifications and that take proactive steps to comply with state and federal laws are less likely to be found liable for taxes, wages or other damages and penalties down the road.

Leslie_Headshot_2011%20bio
About the author: Leslie L. Hunt is a shareholder at Decker, Jones, McMackin, McClane, Hall & Bates, P.C. in Fort Worth, Texas. She earned her J.D. from Baylor Law School and her primary practice areas include employment law and business litigation.

Disclaimer: The content of this article is provided for informational purposes only and does not constitute legal advice.
——————————————————————————–
[1] Thompson v. Travelers Indemnity Co. of Rhode Island, 789 S.W.2d 277, 278 (Tex. 1990).
[2] Certain eligibility requirements apply.

Does a Transfer on Death deed interfere with spouse’s homestead right?

Posted on Updated on

I was recently asked a specific question as to how the Transfer on Death deed affects the spouses homestead rights.

Example: A party is married and they execute a transfer on death deed to their children on their separate property which is their homestead.

The deed would not displace the spouse at death because the homestead right is attached to the separate property and community property. Therefore, while the children might own the property upon their parent’s death, the spouse has the right to live in the house.

 

When should you amend your trust?

Posted on Updated on

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.

Reasons to Sell Royalties

Posted on Updated on

The sale of royalty interest provides the opportunity to liquidate and clean up the assets of an estate to avoid foreclosure delinquencies or estate tax problems.

Some people sell in order to eliminate future legal expense to Probate their estates. For the Small Interest Owner, the cost associated with transferring ownership can exceed the perpetual value of the royalty interest.

It is very important to understand cost or percentage depletion of a well when computing taxes. Some interest owners do not want to incur extra costs or out-of-pocket expense for the tax preparation and administration.

Some people feel it is cumbersome to try to keep track of royalty interest income and the taxes associated with the interest. This seems to be especially true for owners of small interests. By selling your interests now, you will no longer be required to pay property taxes, which can simplify your taxing preparation or taxing problems.

With energy prices at an all time high, this is an excellent time to convert royalty interest into cash and liquidate. The Cardinal Rule is, “Buy Low, Sell High”, with the oil and gas commodity markets at an all time historic high, there has never been a better time to sell.

There are various companies that will buy your interest, just make sure you go with a reputable one so you are not taken advantage of when selling.

A Cancer drug reverses Alzeheimer’s Disease in Mice

Posted on Updated on

Researchers at Case Western Reserve University have discovered that a drug currently used to treat cancer patients can reverse the cognitive deficits related to Alzheimer’s disease in mice, and what’s more, it accomplishes this feat in a remarkably short period of time.

The drug, called bexarotene, has been approved for the treatment of a type of skin cancer since 1999. In the new experiments with genetically engineered mice, the drug quickly cleared away the beta-amyloid plaques in the brain that are believed to cause cognitive deficits in Alzheimer’s disease.

This is not the first time that scientists have essentially cured Alzheimer’s in rodents. A decade ago, scientists got excited when a potential Alzheimer’s vaccine appeared to chew up nerve-destroying amyloid protein deposits in animal brains, but were equally disappointed when it failed to do the same in human patients.

Read more: http://healthland.time.com/2012/02/10/a-cancer-drug-reverses-alzheimers-disease-in-mice/#ixzz1lzgGDpoY