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San Antonio, TX Family Law and Military Divorce Blog

Sunday, July 20, 2014

Formal Probate Alternatives - Part 2: Small Estate Affidavit

This is the second blog in a three-part series that describes alternatives available in Texas when a full, formal probate either isn't possible or necessary.  Today, we'll discuss the "Small Estate Affidavit."

The Small Estate Affidavit may used by the heirs of the decedent's estate who are entitled to a share of the decedent's property (i.e. the "distributees") under Texas laws of intestacy.  The laws of intestacy prescribe the order in which descendants (e.g. children and grandchildren), ancestors (e.g. parents and grandparents) and/or other relatives (e.g. brothers, sisters, nieces and nephews, and cousins) share in distribution of the decedent's property when there was no valid Will.

When approved, the Small Estate Affidavit permits distribution of the property directly to the heirs without need for appointment of a Personal Representative to administer the estate. Other requirements that must be met before a Small Estate Affidavit can be used include:

  1. At least 30 days have elapsed since the decedent's death;
  2. No petition for appointment of a Personal Representative is pending or has been granted; and,
  3. The value of the estate's assets, excluding the decedent's homestead and exempt property, does not exceed $50,000.

The Small Estate Affidavit filed with the court must contain sworn statements by two disinterested witnesses and all distributees (i.e. persons who will take property) that list:

  1. All estate property and debts;
  2. The names and address of each distributee; and,
  3. Relevant marital and family history that proves each distributee's right to received property.

Once approved and signed by the court, the distributees must provide a copy of the Small Estate Affidavit to each person who owes money to the estate (i.e. borrowers) or has custody of property off the estate (i.e. banks holding the decedent's money).  Prior to distributing the decedent's property, the distributes must also ensure the decedent's valid debts get paid by liquidating assets other than an exempt homestead and any exempt personal property.

When title to the homestead will transfer, the Small Estate Affidavit can be recorded in the deed records of the county in which the decedent's homestead is located. Then, any bona fide purchaser of the homestead is entitled to rely upon the Small Estate Affidavit to take ownership free and clear from future claims of any potential undisclosed heirs.  A bona fide purchaser of the homestead, however, remains liable to any lawful creditors who were not paid by the distributees prior to distribution of the decedent's property.

Altogether, there a several advantages and potential pitfalls to using a Small Estate Affidavit.  A qualified probate attorney can advise whether use of a Small Estate Affidavit, rather than some other alternative to a full, formal probate, fits your circumstances.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm. The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Thursday, July 10, 2014

Formal Probate Alternatives - Part 1: Proceeding to Declare Heirship

This blog post is the first in a three-part series that describes alternatives in Texas when a full, formal probate either isn't possible or necessary. Today, we'll discuss a "Proceeding to Declare Heirship."  There two main scenarios in which a Proceeding to Declare Heirship becomes necessary are:

  1. The decedent died "intestate," meaning without having left a valid Will; and,
  2. The decedent's Will was not probated within four years after death (in which case the Will no longer is valid).

An application can be filed with the court by an heir, guardian, creditor or other interested person.  The application includes four important categories of information:

  1. A description of the decedent's marital and family history (i.e. the known heirs, who must be served with notice of the proceeding);
  2. A description of the decedent's separate and community property, including both real property (e.g. house/land) and personal property (e.g. cars, furnishings, money);
  3. A listing of the percentage of the decedent's separate and community property, both real and personal, that each known heir will receive (assuming no unknown heirs are identified) with the percentages determined by Texas law; and,
  4. Identification of at least two credible, disinterested witnesses who can testify to the decedent's marital and family history; a disinterested witness can be a long-time friend or family member, but they must be someone who will not "take" property as a result of the proceeding.

Next, an Attorney Ad Litem must be appointed by the court to represent the interests of potential "unknown heirs."  The Attorney Ad Litem will interview the disinterested witnesses and perhaps other persons who have the similar knowledge before filing a report with the court.  If no previously unknown heirs are discovered during the Attorney Ad Litem's investigation, the next step is the heirship hearing in court.

The Application for a Proceeding to Declare Heirship may or may not need to be accompanied by an Application for Independent Administration.  Whether an Independent Administration (meaning, a probate adminstration largely free of court supervision) is necessary will depend on the nature and extent of the decedent's property and debts. An example of when an application for Independent Administration might not be required is when the only issue is resolving title to real property.  In those cases, the Proceeding to Declare Heirship can take as little as two to three months, depending on everyone's schedule, including the court's. A qualified probate attorney will be able to advise you after discussing the specific facts of your situation.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm. The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Monday, June 30, 2014

Social Study's Role in Child Custody Disputes

A "social study" is a common tool court's use to help determine the outcome of child custody disputes.  Texas Family Code Section 107.0511 specifies the minimum qualifications that a social study evaluator must meet.  In general, the evaluator must be a licensed social worker, counsel, family therapist or psychologist who meets the certain education and experience requirements.  Basic elements of a social study are specified in Section 107.0514 as follows:

  1. an interview, conducted in a developmentally appropriate manner, of each child at issue in the suit who is at least four years of age;
  2. observation of each child at issue in the suit, regardless of the age of the child;
  3. the obtaining of information from relevant collateral sources (e.g. school teachers);
  4. evaluation of the home environment of each party seeking custody of a child at issue in the suit or visitation with the child, unless the condition of the home environment is identified as not being in dispute in the court order requiring the social study;
  5. for each individual residing in a residence subject to the social study, consideration of any criminal history information and any contact with the Department of Family and Protective Services or a law enforcement agency regarding abuse or neglect; and
  6. assessment of the relationship between each child at issue in the suit and each party seeking custody of or visitation with the child.

When a court orders a social study, its cost is usually split by the parties.  In Bexar and surrounding counties, the typical cost is between $1,000 to $2,500 depending on the evaluator's qualifications and the complexities of the situation.  Upon completion, the social study is filed with the court and becomes part of the case record.  It can be used at trial and is subject to the customary rules of evidence.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Friday, June 20, 2014

Naming Guardians for Minor Children in a Will: A Better Approach

Many people include a provision in their Will that designates a guardian for minor children after their death.  That approach may prove insufficient.  Remember, a Will only has effect after your death.  It has no effect, for example, if you're still alive but incapacitated (e.g. in a coma after getting "hit by a bus").

A better approach is to execute a stand-alone document that has effect after either incapacity or death.  The Texas Estates Code lays out the legal requirements for this type of stand-alone document.  A stand-alone "Declaration of Guardian for Minor Children in the Event of Death of Later Incapacity" is a great complement to the Will and your estate plan.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Friday, June 6, 2014

Non-Probate Assets and Will-Making

Many people believe that upon making a Will, they now have an up-to-date plan for distribution of all property after death.  That's true--but only for assets that the Will actually controls.

A Will only controls "probate" assets.  A Will does not control "non-probate" assets.  Non-probate assets are assets that transfer after the owner's death according to the laws of contract, such as a valid survivorship or beneficiary designation. 

An example of a survivorship designation is a jointly owned bank account with "right of survivorship."  Upon proof of death, the surviving joint owner gains title to the whole account without regard for what the deceased owner's Will might say.  An example of a beneficiary designation is life insurance.  Upon proof of death, the company pays the policy amount to the named beneficiary. 

But that's not the end of the story.  It is possible for what are normally "non-probate" assets to become probate assets.  This transformation would occur under the following non-exhaustive list of circumstances: (1) the deceased's estate is named as beneficiary (i.e. John Smith's life insurance policy names "The Estate of John Smith" as beneficiary); (2) all primary and alternate beneficiaries predecease the insured;or, (3) a joint account has no right of survivorship provision and no pay-on-death designation.

The moral of the story is that updating your estate plan involves more than just updating your Will.  It is wise to review the status of probate and non-probate assets in order to make deliberate choices.  Either bring certain non-probate assets under the control of your Will or validate/update the applicable survivorship or beneficiary designations so your intent will be met.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Saturday, May 10, 2014

Military Couples and Overseas Divorce

Military couples should be wary before filing for divorce in a foreign country simply because it might be quicker of cheaper than obtaining a divorce in the U.S.  A divorce decree from a foreign country generally won't be recognized in the U.S. unless one of the spouses was domiciled in the foreign country at time of divorce (i.e. resided there with intent that the foreign country be their "permanent home"). 

The U.S. Supreme Court established that a State court must have jurisdiction over the parties for a divorce to be valid.  Jurisdiction is based on one of the parties being domiciled in the State in which the divorce court is located.

One place this issue absolutely will bite a former spouse is when he or she files to obtain their court-ordered share of the member's military retired pay.  The Defense Finance & Accounting Service (DFAS) will not honor a divorce decree from a foreign country.  Per the Uniform Services Former Spouse Protection Act (USFSPA), DFAS can only honor divorce orders from courts of "competent jurisdiction," which according to the USFSPA does not include courts of foreign countries.  Check out DFAS' frequently asked questions, or FAQs.

Author Jim Cramp is an attorney and retired active duty colonel.  He provides a spectrum of family-related legal services in the greater San Antonio region.


Wednesday, April 30, 2014

Is My Will Still Valid After My Divorce?

Yes, but...  Divorce does not invalidate the entire Will.  However, all provisions in the Will, including any fiduciary appointments such as trustee or executor, shall be read as if the ex-spouse predeceased the Will-maker.  So, rest assured, your ex-spouse won't be in the driver's seat as the executor of your estate (unless you specifically write them back in after the divorce). 

Similarly, any provisions in the will that favor a relative of the former spouse who is not also a relative of the Will-maker (i.e. your former stepchildren) are read as if the ex-spouse's relative predeceased the Will-maker too.  Stepchildren (or other relatives of the ex-spouse) can be written back into the Will after the divorce, but, immediately upon divorce, they're "out."

In sum, divorce writes the ex-spouse and non-shared relatives of the former spouse out of the Will by operation of Texas law.  That said, it's still a good idea to have your attorney draft a new Will so that a court is not challenged to interpret "who's in" and "who's out."

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.

Sunday, April 20, 2014

Indemnity - What It Takes to Collect

Indemnity clauses are common in divorce decrees to protect one spouse against the other spouse's court-assigned responsibility for paying a joint debt.  "Indemnify" means to hold harmless for loss.  A short scenario will help explain the concept:

Husband and Wife have a credit card in both names with a $5K balance.  In their divorce decree, the credit card debt is assigned to Husband and Wife is indemnified against any loss from Husband's failure to pay the credit card debt.  Pretty simple so far.

Now here's where it gets interesting.  Husband quits paying the bill when the balance is $3K.  The credit card company seeks payment from Wife.  She refuses to pay because the "it's not her debt" (which is a wrong belief since a decree only allocates responsibility "as between the spouses" but does not affect the creditor's rights).  Still, Wife is outraged and sues Husband for $3K since, after all, she was indemnified against Husband's failure to pay.  The court denies Wife's request for indemnity.  What went wrong?

Indemnity is not a right to personal enrichment.  It is a right to be made whole from loss.  Wife was not entitled to indemnity until she proved she actually paid the bill assigned to Husband in the divorce (i.e. suffered harm or loss).  Wife cannot merely collect money from Husband based solely on his failure (and hers) to pay.

For attorneys, a good case to review is Shumate v. Shumate, 310 S.W.3d 149 (Tex. App.—Amarillo 2010, no pet.)

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.

Thursday, April 10, 2014

Thumbtack - New Way to Locate Professionals

I'm a proud member of Thumbtack, an internet based marketplace that helps consumers with specific needs find qualified and affordable professionals.  To sign up as a consumer, simply visit Thumbtack's website.  To view my profile on Thumbtack, click here.  My profile, of course, includes a link to my website where prospective clients can find an abundance of information about me and my legal service areas.

I find Thumbtack to be a convenient way for both parties to communicate.  I get to convey a tailored message that speaks directly to the prospective client's need.  Prospective clients have the option of comparing perspectives and costs among a handful of attorneys.  Check it out.

Sunday, March 30, 2014

Power of Attorney: the Demand for an Accounting

A durable power of attorney is a routine part of many people's estate plan.  Unfortunately, sometimes the person designated under the power of attorney--the agent--no longer deserves the principal's special trust.  My previous blog discussed steps involved in revoking a durable power of attorney.  At that blog's conclusion, I mentioned that a demand for an accounting of all actions the agent took under the power of attorney should be made.  This blog takes a closer look at what goes into an accounting.

A principal is free to specify the exact elements of an accounting.  If the principal doesn't specify the elements, then the minimum elements are established in the Texas Estates Code Section 751.104, as follows:

  1. The property belonging to the principal that has come to the agent's knowledge or into the agent's possession;
  2. Each action taken or decision made by the agent;
  3. A complete account of receipts, disbursements, and other actions of the agent that includes the source and nature of each receipt, disbursement, or action, with receipts of principal and income shown separately;
  4. A list of all property over which the agent has exercised control that includes: (a) an adequate description of each asset; and (b) the asset's current value, if the value is known to the agent;
  5. The cash balance on hand and the name and location of the depository at which the cash balance is kept;
  6. Each known liability; and,
  7. Any other information and facts known to the agent as necessary for a full and definite understanding of the exact condition of the property belonging to the principal.

The list above is a good start on a full and proper accounting.  The principal can set the length of time the agent has to reply.  Texas Estates Code Section 751.105 sets the deadline at 60 days unless the principal sets a shorter time, after which the principal can bring suit through the courts to compel the accounting, if necessary.  The principal should carefully evaluate the complexities involved before shortening the agent's time for response too much.  A quality effort by the agent will take some time.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Thursday, March 20, 2014

Revoking a Power of Attorney

A durable power of attorney is a normal part of an estate plan.  Yet, when a need to revoke a durable power of attorney arises, the "principal" (i.e. the person who gave the power of attorney to his agent) should do more than simply demand a return of the document.  More is required because third parties who rely on the agent's authority under the power of attorney aren't liable to the principal unless they have "actual knowledge" that the agent's authority has been revoked.  The requirement for "actual knowledge" is established in the Texas Estates Code Section 751.058.  Thus, there is a set of minimum actions that a prudent person should take when revoking a power of attorney, as follows:

  1. Send, by certified mail/return receipt requested, a letter that notifies the agent that the principal has terminated his authority under the power of attorney.  The principal should demand the agent return the original power of attorney document and all copies.
  2. File an Affidavit that verifies the principal revoked the named-agent's authority under the power of attorney in the official records of each county where the principal owns real property.  While the act of filing itself merely constitutes "constructive notice," the filing increases the chances that entities such as banks and title companies will receive actual notice during routine record searches.
  3. Send, by certified mail/return receipt requested, a copy of the affidavit with a cover letter requesting written confirmation of receipt to each financial institution with which the principal does business (e.g. banks, stock brokers, retirement fund managers, etc.).  Written confirmation documents that actual notice occurred.
  4. Demand the agent provide the principal with an accounting of all actions the agent took on behalf of the principal under the power of attorney.  This demand can be added to the revocation letter sent in step one.

My next blog post will take a closer look at what constitutes a proper accounting.  Stay tuned.

Special Notice:  This information is provided for educational purposes only and does not constitute legal advice.  Principals wishing to revoke a power of attorney should discuss the unique factors of their situation with a qualified attorney before taking action.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region. 

 

 


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