Areas of Practice
Estate Planning
Elder Law
Will & Trust
Probate
Guardianships
Family Law
Business Law
Real Estate
Estate Planning
Elder Law
Will & Trust
Probate
Guardianships
Family Law
Business Law
Real Estate
Contact Information:
William B.C. Pittenger
8595 Meadow Hill Drive
Frisco, TX 75034
972-335-9473
972-335-0073 (Fax)
e-mail
William B.C. Pittenger
8595 Meadow Hill Drive
Frisco, TX 75034
972-335-9473
972-335-0073 (Fax)
Simple Wills: It is important to have a Will. You do not want the State to dictate where your property goes upon death. A Will needs to be properly signed, witnessed and notarized.
Handwritten Wills: These simple documents are sometimes used in a basic situation. However, it is easy to overlook options and future events. Many times these wills are subject to a will contest. I can recall two contests over such wills involving considerable attorney time and fees in Probate Court. Why risk it?
Internet Wills: These documents are not recommended as there is not a way that they could comply with the law of 50 states. As with handwritten wills, options and future events are often overlooked. Execution may well be faulty, not complying with the Texas Probate Code. We litigated over such a Will several years ago and the intended beneficiary of all of the assets gave up about 40% of the total estate, being several hundred thousand dollars in the process. Why risk it?
Will for a Single Person: If giving property to an adult, one may not need a Trust. Just give it outright to your beneficiaries. What if the person you give it to no longer is living? Where does your property go next? What if the other choices are minor children? This may create a guardianship in the Probate Court to manage property for children under age 18, which is very expensive. Many 18 year olds are not ready to handle lump sum inheritance assets, which the law allows in a guardianship.
Trusts for Children: You can avoid guardianships over minor children or older children by creating a trust for them. These do not have to be complex. Trusts for minors can continue after age 18. Trusts for minors and adult children can protect against loss of trust money to creditors and to spouses in a divorce.
Trusts for Grandchildren: What if children do not survive and have minor children (your grandchildren), then a trust to manage assets for their schooling, college and living expenses is much better than a guardianship to age 18. Again asset protection is the name of the game for grandchildren.
Trusts for a Single Person: Why would you want to put your assets in trust for yourself? Would you want to avoid probate proceedings in Court? Would you want to select your own Trustee or money manager, rather than having a Court to appoint one for you through a guardianship? You can be your own Trustee, however, and you should have an alternate Trustee to serve if you could not handle your affairs. Would you want your children competing as to which one has the latest Power of Attorney to manage your money? We have seen this happen. Trusts avoid these problems. A professional trustee is a good choice as they are not personally motivated and certainly cannot use the money for themselves or make transfers of assets to themselves. Sometimes there is abuse of Powers of Attorney. Of course, a trust becomes a shelter for you and can be a substitute to direct and protect your assets for the next generations.
Trusts for Married Persons: When would you create a trust for a married couple? If you want to protect assets from creditors, from second marriages and possibly from estate taxation, a trust can avoid these problems.
Point 1 The surviving spouse could be Trustee, or if desirable, one may have a professional trustee work with the spouse as a joint or co-trustee or as an agent. Example: There is a possible conflict of interest or split loyalty if a stepparent is trustee for your child and happens to remarry. An independent trustee would be the answer.
Point 2 If the surviving spouse remarried, the trust assets remain the spouse's separate property, not to be lost in a subsequent divorce, if carefully managed.
Point 3 Children of the surviving parent are most likely to inherit rather than lose their inheritance, by the use of a trust.
Point 4 Trusts can avoid substantial federal estate taxes if your estate is taxable. Stay tuned on what happens in the next two to three years on estate tax changes. The types of trusts drafted to handle estate tax planning are usually known as testamentary bypass trusts or living trusts with bypass & marital deduction trusts.
Life Insurance Trusts: If the use of the tax planning trusts mentioned above has been employed and there is still an estate tax problem, then exploring several options should be done. One option is the Irrevocable Life Insurance Trust. One spouse established this type of trust and the trust, once signed, is then utilized by having the trust purchase a life insurance policy upon one spouse's life. The beneficiaries of the trust would be the surviving spouse and children. Much care has to be exercised in establishing this type of trust, as a mistake can be costly. Generally, the trust is funded by separate property of the Insured spouse, which may be created from community property by a proper partition agreement and transfers are made annually to the trust to allow the trust to pay the premiums. Much care is needed in providing withdrawal powers to the beneficiaries in an amount to at least equal the premium with a short deadline to exercise withdrawal rights of the premiums contributed to the trust. Then if not withdrawn, the funds after a proper lapse of time are used to pay the insurance premium. The withdrawal rights prevent a taxable gift from being made by the Insured to the trust under some rather complicated tax rules.
Limited Partnership Agreements: For a variety of reasons a family limited partnership may be drafted. One would be to have management of assets distributed to Limited Partners managed by a General Partner. Another may be for a business purpose to run a company such as a construction company or land development company. Another purpose may be for asset protection if a spouse is engaged in a risky business and there is a desire to protect investment assets, which are not sheltered by any state exemptions from creditors. Another may be to provide a gifting vehicle to the next generations and yet have centralized management and over time reduce the value of the estate of the parent or grandparent with discounts. This area has been very active with the IRS challenging FLPs for a variety of reasons and thus requiring great are in establishing and especially maintaining over the life of the FLP. The area of law has been changing for at least seven years.
Buy-Sell Agreements: When more than one person is involved in a business, it becomes wise to consider Buy-Sell agreements during lifetime, disability or demise of a member. Many times these are funded with life insurance contracts. For years the typical agreements have been Entity Plans and Cross-Purchase Plans. Variations have appeared over the years adding an intervening partnership to deal with the life insurance policies. Without life insurance, a buy out depends solely on the existence of the business and the ability of the business to make payments or the same concept as between partners, whether the purchasing partner will be able to meet the commitment over some years, without life insurance. There is no one agreement that fits everyone. The type of business is a material factor. The contributions of the members is also an important issue. The ability to survive in a new business is important to assess.
Employment Contracts: Employment Contracts for employees become important for non-competition and non-disclosure reasons. Usually they are at-will contracts with no specific period of employment. This area of the law is continuing to evolve. Enforceability is the real issue in these agreements. Consideration is a material issue. Our firm has been involved in litigation relating to such contracts. We have reviewed such contracts for an employee who wants to leave his company and move on to another company, only to find an onerous employment contract if he makes the move. These can be negotiated in many instances. We have protected companies from losing their client base in litigation and by appropriate drafting of employment non-disclosure provisions.
