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San Antonio, TX Family Law and Military Divorce Blog

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. 

 

 


Monday, March 10, 2014

Civil Protective Orders: Impact on Military Careers

Here's the scenario.  An active duty servicemember commits family violence against the spouse.  The spouse obtains a Protective Order through the civil court system that restrains the servicemember from commiting further acts of family violence.  What's the impact to the servicemember's career?  Well, there are four possible answers.

  1. The Uniform Code of Military Justice (UCMJ) permits the servicemember's commander to take appropriate action based on the underlying conduct (i.e. spousal abuse) whether or not the civil court system takes any action.  Military commanders have wide discretion in how they use their authority under the UCMJ.  Never forget that fact. 
  2. Federal law prohibits the servicemember from possessing or transporting a firearm or ammunition in his or her "civilian capacity."  This prohibition is established in Federal criminal statutues at 18 U.S.C. § 922(g)(8).  Should the servicemember have a second job as a State "peace officer," as defined in Texas Penal Code § 107, then an exemption exists in Federal law that permits possession and use of a weapon and ammunition when performing duty as a State peace officer.  The Federal exemption is found in 18 U.S.C. § 925(a)(1).
  3. The same Federal exemption found in 18 U.S.C. § 925(a)(1) permits the servicemember to possess a weapon and ammunition for official Federal Department or Agency duties, such as military training and deployment.  In short, a military member will not become "instantly non-deployable" because he or she is restrained by a civil Protective Order.
  4. Should the servicemember violate the Protective Order and be convicted after notice and hearing of a felony or misdemeanor criminal act of family violence, then the servicemember's career is in serious jeopardy.  Department of Defense instructions establish what counts as a "qualifying conviction."  A servicemember with a qualifying conviction is unable to possess a weapon and ammunition in both his civilian and military capacities.  The servicemember now is instantly non-deployable.  Unless the servicemember can be used or retrained into a non-deployable career field, he or she may be subject to discharge. 

In the end, while being restrained by a civil Protective Order isn't necessarily fatal to the servicemember's career, violating the order and being found guilty of a qualifying conviction tends to be fatal to a military career. 

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm. Jim was a three-time commander and retired from the U.S. Air Force in the grade of colonel after having served 29 1/2 years active duty.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Friday, February 28, 2014

Dreaded "Due-on-Sale" Clause

Anyone who has actually read their Deed of Trust (commonly called "the mortgage") noticed the dreaded "due-on-sale" clause.  Due-on-sale clauses are intended to stack the deck in favor of lenders. In simple terms, a due on sale clause gives lenders the right to accelerate or "call" the note and demand full payment of the debt any time the homeowner/debtor transfers his or her interest in the home.  If nothing else, these clauses facilitate lenders in collecting another set of handsome fees whenever they approve loan assumptions (but that's another story).  Awareness of the due on sale clause's effect causes many people to fear what might occur in three common situations:

  1. when the homeowner transfers the home into his or her own living trust;
  2. when the homeowner/spouse transfers his or her interest to the other spouse in divorce as part of a court-ordered division of property; and,
  3. when the homeowner/decedent transfers his or her interest to a relative after death either through a Will, Trust, or by the laws of intestate distribution for those who die without a Will or Trust. 

Despite lenders' efforts to stack the deck in their own favor, all is not lost.  U.S. laws affecting banks and banking contain a specific list of transactions in which lenders are prohibited from exercising their rights under  due-on-sale clauses.  The list is set for in 12 U.S.C. § 1701J-3(d).  Our three common situations noted above are among that list.  So, lenders cannot exercise a due-on-sale clause when a homeowner transfers the home into his or her own inter vivos (living) trust.  Next, lenders cannot exercise a due-on-sale clause when one spouse transfers his or her interest to the other spouse in divorce as part of a court-ordered division of property.  Finally, lenders cannot exercise a due-on-sale clause when the owner/decedent transfers his or her interest to a relative after death either through a Will, Trust, or by the laws of intestate distribution for those who die without a Will or Trust.  That's good news for the homeowner/debtor.  The banks and other lenders don't hold all the cards.  By the way, if you weren't aware of due-on-sale clauses because you've never read your Deed of Trust, now would be a good time to do so.  

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.


Tuesday, February 11, 2014

Federal Retirement Annuity and Thrift Savings Plan Estimator

Estimating the value of a Federal retirement annuity and Thrift Saving Plan (TSP) benefits is important to both Federal employees and spouses facing retirement or divorce.  The Office of Personnel Management (OPM) provides an online tool called the Federal Ballpark Estimator (FBE) that helps answer these questions.

The FBE's stated purpose is to help an employee estimate how much needs to be saved to meet retirement savings and income goals (i.e. retirement planning).  The flip side is that it also helps estimate what the percentage of an employee's retirement annuity awarded to a spouse in divorce should be worth (i.e. divorce planning).  As with any "estimator," the FBE works on a set of assumptions

As OPM explains, the FBE is a useful tool for employees covered by the Civil Service Retirement System (CSRS), CSRS-Offset, or the Federal Employees Retirement System (FERS) who plan to retired under the voluntary age and service rules.  Check it 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.


Thursday, January 30, 2014

Federal Employment-Related Benefits in Divorce

Divorce is stressful.  Much of the stress is tied to uncertainty about what "life after divorce" might look like.  For Federal employees and spouses, questions linger about what employment-related benefits can be impacted by a court order.  Our firm's website provides a wealth of information about how a Texas divorce decree can impact benefits of both Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) employees. 

Some people benefit from reviewing information from multiple sources.  In that vein, we're pleased to mention that the Office of Personnel Management (OPM) published a booklet entitled Court-Ordered Benefits for Former Spouses that briefly explains a few of the topics covered in our website's section on Federal Civil Service Divorce.  Download a copy of OPM's booklet today.  It never hurts to have an additional source for important information.

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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