texas

The future of Alzheimer’s

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One of the largest burdens on American’s health care system is caused by Alzheimer’s disease and other related dementia.  Currently over 5.4 million people are living with the disease and more than 15 million Americans are caring for persons with Alzheimer’s and other dementias.  Alzheimer’s disease is the sixth-leading cause of death in the US and the ONLY cause among the top 10 that has no cure, prevention treatment or can even be slowed. Is Alzheimer’s our new Cancer?

A strategic plan is being developed by the Journal of Alzheimer’s Association.  States across the country are vamping up their APS departments, elderly abuse divisions of district attorneys offices are popping up, and drug companies are trying to find cures, ways to predict the disease and even ways to slow the disease down.

The pharmaceutical company Eli Lilly & Co. show promise with new experimental Alzheimer’s treatment due to decline of cognition in some patients.  Read the Article.  Researches find promise in attacking a key building block of the Alzheimer’s disease.  Read the Article.  TauRx Therapeutics is conducting a clinical trial on a new treatment for Pick’s Disease (a form of Dementia which is similar to Alzheimer’s.  Read the Article.

What is a Guardianship? Do you need one for mom or dad?

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I. WHAT IS A GUARDIANSHIP?

 A. Basic Definition A guardianship is a Court supervised procedure where the Court gives one person the legal authority to make personal or financial decisions for a person who can no longer make such decisions for himself or herself.

 B. Incapacitated Person A person for whom a guardianship is necessary is known as an “incapacitated person” (“IP”) which is defined in TPC 601(14) to mean a minor or an adult individual who, because of a physical or mental condition and is substantially unable to provide food, clothing or shelter for himself or herself; or to care for the individual’s own physical health; or to manage the individual’s own financial affairs.

 C. Policy – Purpose of Guardianship Unless a Court determines that a guardian with full authority over an IP is necessary, the Court should limit the authority of the guardian so that it is the least restrictive authority possible. Section 602 of the TPC provides that a court may appoint a guardian with full authority over an IP; or a court may appoint a guardian with limited authority over an IP: as indicated by the incapacitated person’s actual mental or physical limitations, and only as necessary to promote and protect the well-being of the person. Except for minors, the Court may not use age as the sole factor in determining whether to appoint a guardian for the person. In creating a guardianship that gives a guardian limited power or authority over an IP, the Court shall design the guardianship to encourage the development or maintenance of maximum self-reliance and independence in the incapacitated person.

 D. Guardian A guardian is the person who accepts the Court’s appointment to be responsible for making decisions for the IP. A guardian has only those powers specified in the Order Appointing Guardian. Generally, two types of guardians exist:

1. Guardian of the Person – A guardian of the person has the right to have physical possession of the IP and to establish the IP’s legal domicile; duty of care, control and protection of the IP; duty to provide the IP with clothing, food, medical care and shelter; and power to consent to medical, psychiatric, and surgical treatment other than the in-patient psychiatric commitment of the IP.

2. Guardian of the Estate – A guardian of the estate of the IP has the following powers and duties to possess and manage all property of the IP; to collect all debts, rentals or claims that are due to the IP; to enforce all obligations in favor of the IP; and to bring and defend suits by and against the IP.

 II. WHEN IS A GUARDIANSHIP NECESSARY?

 A. Common Situations mental retardation, Alzheimer’s dementia, multi-infarct dementia, Down’s syndrome, Parkinson’s disease, closed head injuries, chronic mental illness, excessive short term memory loss.

 B. Guardianship Not Used treatable mental illness, drug addiction, alcoholism, homelessness, spendthrifts, persons receiving only social security benefits (no Guardian of the Estate is necessary).

 C. Less Restrictive Alternatives Court Investigators are to investigate the circumstances of each application to determine if a less restrictive alternative to guardianship is available. In counties without a Court Investigator, the attorney ad litem for the IP should examine these alternatives. A list of some of the most common Less Restrictive Alternatives is attached to this paper.

 III. HOW DOES ONE GET A GUARDIANSHIP STARTED?

A. Courts Statutory Probate Courts, County Courts at Law and County Courts (in that order) have jurisdiction of guardianship cases.

 B. Attorneys Most Courts will allow only attorneys to file a guardianship application. In an ideal situation, a concerned family member will contact an attorney to file an application to be appointed as guardian of an IP.

 C. Court Initiated Guardianships The Texas Probate Code provides that “if a Court has probable cause to believe that a person domiciled or found in the county in which the Court is located is an incapacitated person, and the person does not have a guardian in this state, the Court shall appoint a guardian ad litem or a court investigator to investigate and file an application for the appointment of a guardian of the person or estate, or both, of the person believed to be incapacitated.”

 In Tarrant County, the Courts require an information letter and a doctor’s letter to establish probable cause. If the IP’s incapacity is mental retardation, the Court must be provided with a Determination of Mental Retardation or “DMR” pursuant to §687(c) of the Texas Probate Code. This section states that if the basis of the Proposed Ward’s incapacity is mental retardation a physician or psychologist shall conduct an examination according to the rules adopted by the Texas Department of Mental Health and Mental Retardation and shall submit written findings and recommendations to the Court. This report must be based upon an examination conducted not earlier than twenty-four months before the date of a hearing to appoint a guardian for the proposed ward. Unless the IP is in imminent danger, Court Initiated Guardianships take at least 4 to 6 weeks from the date the Court receives the proper letters.

 D. Social Worker Involvement

 1. Adult Protective Services If there is concern that an adult is being abused, exploited or neglected, Adult Protect Services should be called (1-800-252-5400). APS sends a worker to investigate. If APS believes a guardianship is necessary, the worker will take a doctor to examine the IP. If no emergency action is necessary, APS should make a referral to the Texas Department of Aging and Disability Services for a guardianship investigation.

 2. Nursing Home and Hospital Social Workers Social Workers at nursing homes and at hospitals have also used the court initiated guardianship procedure to begin the guardianship process for clients or patients who are IP. Hospital discharge planners should determine if the patient is an IP as soon as possible since the procedure may take a while. Stating that the IP will be in imminent danger when discharged is not considered imminent danger by most courts.

 E. Guardian Appointment Process

1. Application for Guardianship is filed by a private attorney, guardian ad litem or court investigator. Only attorneys can file applications.

2. The Sheriff or Constable personally serves the IP with a copy of the Application.

3. The Court appoints an Attorney Ad Litem to represent and advocate for the IP.

4. The known relatives of the IP must receive statutory notice of the application.

5. Unless the application is for the appointment of a temporary guardian, the guardianship cannot be established until the Monday following ten days from the date the IP is personally served.

 6. The Attorney ad litem must personally visit the IP and determine if the IP wants to contest the guardianship.

7. The applicant’s attorney must file a doctor’s letter with the court which states that the IP is incapacitated and generally describes the nature of the incapacity.

 8. A hearing date is set with the Court. The IP must attend the hearing unless the Court determines that it is not in the best interests of the IP to attend.

9. The Judge or jury hears testimony and decides if a guardianship is necessary, what powers the guardian should have, how the IP’s rights should be limited and whether the person seeking to be appointed guardian is suitable.

 10. The Judge then signs an Order Appointing Guardian. The Guardian must file an Oath and Bond in order to qualify. The Clerk then issues Letters of Guardianship to the guardian.

 IV. WHO WILL SERVE AS GUARDIAN?

Statutory Priority Texas Probate Code, Section 677 provides a legal priority as follows:

1. a person selected by IP on a declaration of guardian;

2. IP’s spouse;

3. nearest of kin;

4. any suitable person.

 V. GUARDIANSHIP MONITORING

 A. Annual Reports A guardian of the person is required to file a guardian of the person report each year concerning the IP’s mental and physical condition and stating any change of the IP’s or guardian’s residence. A guardian of the estate is required to file an annual account stating all receipts, disbursements, cash on hand, and assets being administrated. Failure to file either of these reports may lead to fines and/or removal.

 B. Court Visitor Program Each statutory probate court is required to establish a Court Visitor Program. As a part of this program a volunteer makes an annual visit on each IP who is the subject of a guardianship. The Court Visitor personally visits the IP and the guardian and reports his or her findings and conclusions to the Court concerning the IP’s social and intellectual functioning as well as living conditions. If the Court Visitor recommends an increase or decrease in the guardian’s powers or removal of the guardian or guardianship, the Court will appoint a Court Investigator or Guardian ad litem to investigate, and, if necessary, to file a petition to modify the guardianship order or to remove the guardian or guardianship.

 C. Annual Determination Each Court is required to make an annual review and determination of whether a guardianship should be continued, modified or terminated. In making this annual determination, the Court reviews the Court Visitor report and the guardian of the person report.

Filing suit in Small Claim’s Court!

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If someone owes you money and won’t pay, you don’t have to hire an attorney, instead you could take them to small claims court.  In Texas, each County has its own JP Courts that decide cases under $10,000.00.  The process is very simple and the JP staff are very helpful.

 You will be requested to fill out a civil warrant or a civil summons form which contains space for the details of the claim.  Be sure you have the Defendant’s correct address, so the Sheriff’s office can serve them with a copy of the legal papers.

Once a hearing is set and held, you must show up to tell the Court or a Jury your side of the case. The judge will conduct the trial in an informal manner so as to do substantial justice between the parties. The judge will have the discretion to admit all evidence which may be of probative value although not in accordance with formal rules of practice, procedure, pleading or evidence, except that privileged communications shall not be admissible. The object of such trials shall be to determine the rights of the litigants on the merits and to dispense expeditious justice between the parties.

The successful plaintiff in a civil case will in most cases be awarded a money judgment as compensation for the defendant’s wrongful act. The judgment is judicial recognition that the defendant is indebted to the plaintiff for a particular sum of money. The plaintiff is never assured of actually receiving the money, however, since the judgment can only be enforced out of property belonging to the defendant. Remedies to enforce judgments are available, but a defendant in a civil case is not subject to criminal sanctions for failing to pay a money judgment.  Good luck!

Do you need a Lady Bird Deed?

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A “Lady Bird Deed” is a nickname given to an Enhanced Life Estate Deed, which is used to convey property to your heirs outside of probate. This deed is commonly used in Texas because it allows the grantor to transfer property to beneficiaries while retaining a life estate in the property coupled with the power to sell, convey, or mortgage the property without the beneficiaries’ consent. The beneficiary of the deed does not get any rights to the property while the current owner is alive.  However, these deeds are outdated!

In Texas you do not need a Lady Bird Deed because the Texas Legislature created a Transfer on Death deed with a new law.  This new law allows property to transfer at death to someone else, so no probate is needed.  A Transfer on Death deed conveys property outside of probate. Avoiding probate allows for you to avoid court costs and administrative costs to deed the property to your beneficiary. Under current Texas law, it also excludes the real property from Medicaid estate recovery.

The Transfer on Death deed can only transfer real property (ie home, commercial property, etc) and the deed must be formal in all ways and filed with the local real property records office.  Anyone can sign a Transfer on Death deed but they must have the capacity to understand what they are doing or the deed could be found to be invalid.  You should consider retaining an attorney to prepare this deed as the cost would not be large.

Protecting assets from MERP

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How can I protect my house from Medicaid Estate Recovery Program (MERP) after my death?

Medicaid imposes stringent limits on income and assets of recipients, consistent with its mission to provide a health care safety net for the poor and for those whose personal resources are insufficient to pay the full cost of care. Many times assistance is provided to those who own homes, because the home is an exempt assets when determining qualification for the program. The Medicaid Estate Recovery Program reclaims funds paid on your behalf and during your life for assisted living costs. The State of Texas expects to be repaid at the time of your death from any assets you may own.

States are prohibited from making estate recoveries:

-During the lifetime of the surviving spouse (no matter where he or she lives). -From a surviving child who is under age 21, or is blind or permanently disabled (according to the SSI/Medicaid definition of “disability”), no matter where he or she lives. -In the case of the former home of the recipient, when a sibling with an equity interest in the home has lived in the home for at least 1 year immediately before the deceased Medicaid recipient was institutionalized and has lawfully resided in the home continuously since the date of the recipient’s admission. -In the case of the former home of the recipient, when an adult child has lived in the home for at least 2 years immediately before the deceased Medicaid recipient was institutionalized, has lived there continuously since that time, and can establish to the satisfaction of the State that he or she provided care that may have delayed the recipient’s admission to the nursing home or other medical institution.

If you believe that you will one day need assisted living assistance, you may want to take actions to preserve your assets now. The Medicaid program has a 5 year look back period, which means they look at all gifts or transfers that have occurred for the 5 years prior to qualifying for Medicaid. If you gave something away or transferred it to an irrevocable trust then they pull it back into your estate and you may not qualify for Medicaid.

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 IRS.gov 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.