Why Most Adults Under Age 35 Needs an Estate Plan

Many young adults assume they won’t need a simple or comprehensive estate plan until they’ve created or inherited a sizeable amount of wealth. However, all adults, especially those who are married or have children, need estate plans to protect their legal interests.

After all, none of us know when we may suddenly become the victim of a severe pedestrian or auto accident – or receive a devastating medical diagnosis. When you have a basic Will, it can greatly simplify matters for your loved ones if you become too incapacitated to manage your own finances or even pass away.

The following information helps explain why no one should want to continue being one of the approximately 60% of American adults who are without a Will or estate plan.

While it may be a bit uncomfortable requesting documents that directly address your own possible incapacitation or death – the peace of mind you and your loved ones will gain always makes the effort worth it.

Key reasons why all younger adults can benefit from a Will or comprehensive estate plan

  • They each allow you to specifically name the beneficiaries you want to receive your real property and investment accounts. When you fail to create a Will, the state of Texas will apply its laws of intestacy to decide who will inherit everything you own. Even if you’ve only had time to pay into a 401k or other investment account for a few years, chances are you also own a car and a few other valuable possessions. Creating an estate plan lets you decide who will receive your assets – although community property and other laws will also come into play if you’re married;
  • You can designate a guardian for any minor children. There may be good reasons why your child shouldn’t go live with certain relatives if you become critically ill (or too disabled) to care for the child. A Will lets you designate one or more people to shoulder this responsibility, along with one or two back-up guardians.
  • You can designate someone else to speak for you in a medical Advanced Directive. This type of estate planning document lets a person you trust choose the specific medical care you wish to receive if you become seriously ill and can’t make decisions for yourself;
  • Your Houston estate planning attorney can provide you with valuable legal advice on how to protect your wealth against excessive taxes as your estate begins to grow. Even if you hold a degree in asset or wealth management, you’ll always need to make sure you’re using tax-efficient wealth transfers to others that fully comply with all recent changes in IRS laws and regulations. You may also want to have a trust account created to help you annually transfer wealth to specific individuals or charitable organizations;
  • Creating an estate plan helps you develop meaningful savings goals as you begin to plan for your eventual retirement. If you begin funding your retirement in your early 20s and 30s, you’ll increase the chances of being able to choose the date when you’ll retire or reduce your workload. Should you marry, having an estate plan can help you and your spouse make more informed choices about assuming a new mortgage, having children, setting aside funds to help pay for your children’s education — and possibly even one day funding a charitable trust or family foundation.

Perhaps the best part of creating an estate plan when you’re very young is that you’ll be able to reflect on how your legal documents are helping you “grow your income.” And you’ll always be able to change and update your financial goals when new life circumstances develop.

While many younger people request an entire set of estate planning documents, others are more comfortable just requesting a Will that will cover all their current, limited possessions.

Please feel free to contact one of our Murray Lobb attorneys so we can provide you with the estate planning advice you currently need. We’ll always be available to answer any questions you have and update your legal paperwork as your life changes and moves forward.

Six Basic Types of Business Insurance You Might Need

Successful companies of all sizes readily address their insurance needs so they won’t later be caught off guard by either a baseless or valid legal claim. No matter how hard you try to provide flawless products and services to the public, there’s always a chance that a defective product or business transaction may render you liable for legal damages.

Although only certain types of companies must carry workers compensation, disability and unemployment insurance to meet federal guidelines, all businesses can benefit from protecting their company assets by purchasing basic and special types of business insurance.

Fortunately, there are only six basic types of business insurance that you and your business partners must carefully review while trying to protect your company against future legal challenges. All six are set forth below with additional information.

Six common types of business insurance

Before reviewing the following types of insurance, be sure to thoroughly discuss the precise nature of all your business transactions with your insurance agent.

  1. General liability insurance. This will provide you with legal defense support for a variety of alleged wrongs. For example, your company may be sued based on a personal injury claim or the alleged statements of one of your employees. For example, if one of your customers is seriously injured while visiting one of your offices or factories, this policy can help you compensate the injured party for all bodily injuries and medical expenses. In addition, this same type of policy could protect you if a court holds one of your employees liable for business libel or slander — for damages up to the maximum amount of coverage stated in your policy.
  2. Product liability insurance. Even some of the most reliable products on the market will occasionally malfunction and harm a consumer. For this reason, you must secure an ample amount of product liability insurance coverage for this type of claim.
  3. Professional liability insurance. If your company provides any types of services to customers, you must carry this type of policy – often referred to as “E and O” (errors and omissions) coverage. This policy will cover the costs of defending your company in a civil lawsuit that may be based on the alleged grounds of malpractice (often medical or legal). The insurance industry doesn’t view these types of claims as eligible for coverage under either general liability insurance or a homeowner’s insurance policy.
  4. Commercial property insurance. Industrial fires, floods, windy hail storms and other natural disasters can quickly destroy critical manufacturing plants, office buildings and valuable inventory. Always be sure to carry ample coverage under this type of policy — based on recent property value appraisals.
  5. Home-based business insurance. This type of policy is usually offered as a rider to a person’s homeowner’s insurance. It provides limited coverage for such problems as business equipment and inventory damages. This type of policy can also provide funds to cover liability claims brought by injured third parties.
  6. A business owner’s policy. This general type of coverage can let you bundle nearly all (or most) of your insurance needs into one policy. If you pursue this option alone – make sure it adequately protects you regarding all the most unique aspects of your company’s goods and services.

When discussing your insurance needs with your lawyer and insurance agent

Always talk about every reasonable type of harm that your business might suffer. Also, make sure you’ve chosen the best type of partnership or corporate structure to further protect your personal and business assets. Once you fully understand all the risks your company might face, find a highly respected business insurance broker. Always ask trusted business peers for their recommendations for this type of agent.

Finally, speak with your Houston business law attorney about all the specific types of insurance required by the state of Texas for a company like yours. And be sure to address all the federal government’s insurance requirements. Keep in touch with your insurance agent and lawyer throughout each year so they can each readily update you about new legal or policy requirements that may affect your current coverage during the upcoming year.

Please feel free to contact a Murray Lobb lawyer so we can talk with you about the legal aspects of obtaining adequate insurance coverage for all your business needs.

The Key Stages of Buying a Home in Texas

Even if you’ve bought a home in the past, it’s always wise to hire an experienced lawyer and real estate agent to help you buy a house in Texas. Contract clauses often change and you’re likely to need special provisions added to your formal offer and purchase agreement to fully protect your interests.

After contacting your Houston real estate lawyer, you’ll need to select a qualified real estate agent. When searching for one, ask close friends for recommendations if they’ve recently bought a home in one of your target areas. You can also search for an agent by visiting the Texas Real Estate Commission website —  and Trulia.com and realtor.com.

What follows is a general overview of the key stages of finding and purchasing a home in Texas when you’ve hired qualified professionals to help you.

Determining if it’s the right time to buy – what your needs are — and what you can afford

Always take time to decide if it’s really the right moment for you to purchase a home. You must be able to afford a monthly mortgage, homeowner’s (and title) insurance and the other expenses that go with buying a home and making repairs. Once you’re sure you want to buy now and know what you can afford to pay, contact several highly recommended real estate agents (who have brokered properties in your preferred area) and interview them over the phone or in person.

After checking each candidate’s references and hiring the most knowledgeable and pleasant one, you’ll be ready to start conducting your search for the right home.

You’ll first need to discuss your preferred price range and the preferred parts of town where you would like to buy a home. Be sure to note the property features that are “must haves” or “deal breakers” for you. Of course, remaining flexible is important so you can avoid missing the chance to buy one of the best homes available.

Where will you and your agent find the listings that you’ll want to see?

In addition to visiting publicly advertised “open house” events in your target areas, you and your agent can also view many available properties online. Savvy sellers often offer online visual tours of their homes to help attract prospective buyers — who can then request showings.

You can also visit the Multiple Listing Service (MLS) online and then discuss the properties that you like most with your agent. If your agent is well established in the area, you may even become privy to some private listings before others learn about them. Websites like trulia.com and realtor.com should also provide lists of many homes still on the market.

What other initial tasks can a realtor help you handle?

After you’ve met with a mortgage broker and located several properties that meet your needs, your realtor can prepare a written offer for the seller. Prior to making an offer, be sure to ask your agent if the seller has any recent home inspection reports to share with you. If none are available and you still want to make an offer on a house, your agent can make obtaining an acceptable home inspection report one of the contingencies in the home purchase agreement that must be met before you’ll purchase the house.

You’re now ready to go over the legally required disclosures that Texas requires property owners to make to parties offering to buy a home. Repairs currently needed must be detailed – along with notes about all recently completed ones. If you haven’t already received a thorough (recent) home inspection report, you really should obtain one now — so you won’t be suddenly surprised by major plumbing or other serious home repairs in the future.

Should certain repairs be needed – and you’re still willing to buy the house – your real estate agent can negotiate these matters with the buyer on your behalf. Also, you must have a title search run on the house. You don’t want to buy property with any troubling liens, easements or other encumbrances that can greatly limit your ability to fully enjoy the use of your new home.

At this point (if not already done), you should purchase title insurance so that if any future claims are made against the property by third parties, you’ll be able to properly protect all your legal interests.

Once all these matters have been fully negotiated between your agent and the seller, you’re ready to move forward into escrow.

What basic, final tasks should be handled right before — or during — escrow?

Your lawyer will make sure that the home purchase agreement contains all the necessary clauses required to protect your interests before escrow closes. If it hasn’t already been done, you should also have the home appraised to make sure your offered purchase price is reasonable and fair.

Next, all new home inspection reports should be carefully analyzed, and all financial arrangements finalized. On closing day, you’ll go to the title agent’s office to sign all the documents and pick up the keys to your new home. As the buyer, you’re not responsible for paying your real estate agent’s fees – they are covered by the seller.

After closing day, your Houston real estate attorney can check to be sure that the title to your new home has been properly recorded in the correct local government offices – and then provide you with official copies of the newly recorded title deed for your records.

Please contact Murray Lobb so we can provide you with the clear advice you’ll need while buying your new home. Since we have the necessary experience to address any problems that may arise, we should be able to minimize any stress for you. Your lawyer will remain available to answer all your questions as you prepare to move into your new home.

Hurricane Harvey: Avoiding Fraudulent Repair Contractors

Fortunately, many first responders and volunteers nobly rushed out to help residents of Houston and surrounding areas after this catastrophic hurricane unleashed torrential rainfall and flooding. However, too many people lost their lives during the lengthy onslaught and far more suffered extensive property damage. As survivors try to reclaim their lives, they must exercise great caution when hiring repair contractors so they can properly repair and rebuild their homes.

Based on Texas Attorney General website information, and on our country’s recent storm history, we now know that many dishonest “scam artists” tend to show up (often from out of town) right after natural disasters like Hurricane Harvey. They eagerly try to convince desperate homeowners that they alone know how to repair their homes quickly and for far less money than their competitors.

Our general advice to you is to do your homework and carefully check out each contractor’s business reputation before signing on any dotted line. As we stated in our Labor Day email, we will review any contracts from contractors who want to perform work on your property.  We will do this free of charge limited to contracts that are presented to you by the contractor. Please call us for assistance.

Basic Considerations When Planning to Repair Your Home

To help you obtain the quality repairs you need, we’ve summarized some key steps below that can help you hire a competent repair contractor. Specific warnings have also been added so you can spot some of the many “red flags” indicating that someone either isn’t properly skilled or licensed as required under Texas law. Hopefully, you can avoid being swept up in what “60 Minutes” has called “The Storm after the Storm” when disreputable contractors sweep in to make a fast buck while you’re still grieving various losses.

Key Steps to Take While Getting Your Home Repaired

1. Only hire a contractor who has a fixed, local business address (or one nearby) and who offers fair terms of service. You need to hire someone who has lengthy experience doing the type of work you require and who can provide you with local references. This person must be willing to accept partial payments as the job progresses, while regularly paying all subcontractors for their labor and materials as the project moves forward;

2. Search for a contractor who has worked for someone you know and quotes reasonable fees. Whenever possible, only hire someone who has worked for a family member, close friend or business associate. If you cannot find someone that way, then at least call the Houston Better Business Bureau to check on the company’s reputation. Don’t let anyone pressure you into quickly signing a contract so you won’t lose a special price break.

3. Take the time to solicit several bids before choosing the best one (which may not be the lowest). Those who bid too low are often hoping to trap you into later adding other fees that aren’t properly covered in your repair contract.

4. Check online websites to see if you can learn more about each contractor. When you contact the Houston Better Business Bureau, ask if there are any recent negative or unresolved complaints on file. Remember, no listing at all is not necessarily a positive sign. You might also consider visiting such websites as HomeAdvisor.com and the Angie’s List website. The latter one now allows everyone access to most general information for free. Also check the name of the owner(s) of the company. Many times, unscrupulous contractors form new companies to hide their real reputation. Check with the Secretary of State in the state in which the company is incorporated and get the names of individuals shown as officers and directors;

5. Get every contract term in writing – never agree to a mere oral contract for this type of work. Also, avoid signing a contract that’s missing key terms, due dates, or estimated amounts for materials. You can be sure that if you let any lines remain blank, they’ll often be filled in later with terms that greatly benefit the contractor at your expense. Also, keep in mind that if the main contractor fails to pay all subcontractors, they can place liens on your home until you pay them. If the contractor disappears, most courts will hold you liable for the unpaid wages and materials;

6. Find out if the contractor is fully licensed to do the type of work you want, based on Texas law. If you’re unfamiliar with the laws in this area, call your Houston business law attorney here at Murray Lobb for timely advice. Also, make sure the contractor will be securing all required permits before the two of you sign a contract and let the work begin. Keep in mind that it can be a a negative “red flag” if the company says it’s your responsibility to obtain the permits;

7. Inquire about the type of insurance the contractor carries. The company should normally be carrying worker’s compensation, personal liability, and property damage coverage. Don’t just take the company’s word – ask to see proof (insurance certificates) clearly indicating that all such policies are currently in force;

8. Request the inclusion in your contract of a “sign-off checklist” tied to all payments. This will help you hold on to your property and hopefully avoid the placement of any liens upon it because your general contractor left the area, without paying all subcontractors.

9. Obtain your own financing if you can’t pay with a check or credit card. Never sign up for financing through a lender suggested by the contractor. It’s never wise to go through a lender who is a close associate of your contractor since critical terms may be hidden from you. If you can’t pay “cash” – and many people cannot – carefully review the interest rates and fees various banks or credit unions are offering before hiring a contractor

10. Move forward cautiously if you still have a mortgage on your home. Be sure to contact the bank holding the mortgage and obtain its written approval of the contractor you are hiring. (It’s always possible that the bank may already have a short list of reputable contractors that you can choose from when making repairs).

The attorneys here at Murray | Lobb, PLLC would like to help you sort through this daunting task by offering to review any contracts from contractors who want to perform work on your house. 

Please remember that our firm is here to help you as you try to rebuild your home and your life. (If you’re in need of immediate financial or other emergency assistance due to the hurricane, please visit this federal government website.) We look forward to helping you when you call.

Not Having a Valid Will and Testament Can Become a Burden to Your Family

Many people assume that if they dies without a Last Will and Testament (“Will”), their property will just automatically pass to their spouse or children without any action required to be taken by their heirs, such as having to go to probate court. However, without proper estate planning, this is rarely the case.

While some assets in your estate necessitate having to go to probate court even with a Will, the process of probate court when you do not have a Will is much more time consuming and costly.

So long as there is a Will to probate that allows for independent administration, the probate process is relatively simple and straightforward and generally proceeds as follows: An application to probate a will is filed by the proposed Executor/Executrix with the probate court in the county in which you had your primary residence. Once the application has been on file with the court for a certain number of days, the Executor/Executrix will be allowed to set a hearing with the court where the court will appoint that person as Executor/Executrix, and that person will then take an oath. Once the Executor/Executrix has been appointed and taken their oath, Letters Testamentary (often called “Letters”) will be issued. It is these Letters that let third parties know the Executor/Executrix has the authority to act on behalf of your estate. Within three months after receiving Letters, the Executor/Executrix will be required to file an inventory, appraisement and list of claims or an Affidavit in Lieu of Inventory, which must be provided to all beneficiaries in the Will. Once Letters have been granted, your Executor/Executrix is able to take whatever steps and actions are necessary to administer your estate without any further court involvement.

When there is not a Will to probate, then there are several options that your family will need to consider and then decide on the best probate option based on the particular facts, circumstances and type of assets in your estate.

Dependent Administration: A dependent administration is the most common type of administration that is created when you die without a Will in place. In order to have your assets distributed, someone, usually a family member, must apply to the court to be appointed as dependent administrator. A dependent administrator MUST have court permission to take any action with regard to your estate such as distributing money, selling property, etc. The dependent administrator must also file an annual report every year that the administration is open, which is usually several years. Because of these factors, a dependent administration is very time consuming and costly to your family.

Independent Administration with Heirs’ Consent: There is a possibility that, if all of your heirs agree, they can ask the court to allow the agreed-upon applicant to serve as an independent administrator, without the requirement of court supervision (much like if you had died with a Will that allowed independent administration). However, this means that all heirs must agree upon the same person to serve as independent administrator and that all heirs are adults who have not been adjudicated incapacitated. While that seems easy enough, you will be surprised how the possibility of money can turn family against one another, and if you had a child who predeceased you but left grandchildren, then you may end up with a minor beneficiary who does not have the legal capacity to agree to such an appointment.

No matter if your family chooses to go the route of a dependent administration or an independent administration with consent, each of those options requires an additional step that is not required when you die with a Will. The court will be required to determine who are your legal and proper heirs, which is accomplished via a process called a “Heirship Determination” or “Judgment to Declare Heirs”.

In an Heirship Determination, the court will appoint an “attorney ad litem” whose job it is to determine that the heirs that are listed in the application for either dependent administration or independent administration with consent are true and accurate, that no heirs have been omitted, and to confirm that there are no unknown heirs. The cost for the attorney ad litem is paid by the decedent’s estate, and the costs can range anywhere from about $500 to a $1,000 or more depending on how much work the attorney ad litem is required to undertake to determine the heirs. However, as an estate has not yet been officially opened, the cost usually has to come directly out of the applicant’s pocket until the estate is opened, and then the applicant can be reimbursed by funds from the estate.

Even if you believe that you have taken all the steps necessary to have your assets pass directly to your heirs, it is important that you also execute a basic Will as a safety net for assets that are later acquired, assets that you forgot you owned, or in the event a direct beneficiary predeceases you. For example, 401(k) plans can pass outside of probate and directly to a specific beneficiary by listing them as a beneficiary on the required forms with your plan administrator. However, if you don’t list a beneficiary or the beneficiary you list predeceases you and you fail to update your beneficiary, then in order for your 401(k) funds to be distributed, the plan administrator will want authorization from the probate court. If you did not have a Will, then this would be accomplished via a Heirship Determination, at the minimum. However, if you had a Will, then this could be accomplished via the simpler and cheaper independent administration with the issuance of Letters Testamentary.

The extra steps that are required to administer your estate if you die without a will can be time consuming and a drain on your loved ones, both financially and emotionally.

At Murray | Lobb, we have the expertise in estate planning and probate matters to ensure that your passing does not become a burden on your family. We can assist you with executing a Will, updating a Will, executing a Statutory Power of Attorney, a Medical Power of Attorney and a Physician’s Directive (also known as a Living Will). While you are at our office executing your Will, be sure to ask us about the steps you can take to have most of your assets pass outside of probate and directly to your heirs.

Construction Insurance: Challenges Posed by the Texas Anti-Indemnity Act

Prior to the passage of the Texas Anti-Indemnity Act back in 2011, the parties most active in the state’s construction industry could still readily determine the degree of insurance coverage and indemnity they were securing regarding various projects. However, since that law went into effect on January 1, 2012, significant confusion over such issues has been introduced into the field of Texas construction law — and it’s unlikely to dissipate anytime soon.

Balancing Constitutional Rights Against Insurance Industry Concerns

Today, many in the Texas construction industry might argue that this law has had a chilling effect on their constitutional right to contract with others.  As one scholar has put it, referencing a long-standing legal principle cited in numerous U.S. Supreme Court cases, “Parties should be allowed to create contracts however they wish, as long as they do not violate the State’s police power or public policy.” Unfortunately, the Texas Anti-Indemnity Act “binds parties’ hands and prevents them from contracting as they wish.”

While many in the insurance industry pushed hard to pass this legislation, especially since the Act was designed to “protect insurance companies from exposure to liability for claims which they did not agree to underwrite” — major questions remain unanswered. One of the Act’s most glaring deficiencies is its failure to provide clear definitions of critical terms. These could have provided guidance to the courts that are now handling pending lawsuits. Many of these specific deficits are clearly pointed out in a well-researched 2014 article published in St. Mary’s Law Journal.

Types of Questions the Courts Must Now Specifically Address

  • Exactly which types of indemnity (risk-transferring) agreements are strictly forbidden under the Texas Anti-Indemnity Act? Jurists will soon be asking their sharpest law clerks to help them interpret Texas Insurance Code Section 151.101 where this vague statute is located. They will also need to spend considerable time reviewing Title 10 of the same code which addresses property and casualty insurance contracts – among many others;
  • Are most of the standard builder’s risk insurance policies common available now void? For many years, these policies have been among the first negotiated by most parties to construction projects since they help cover losses tied to the damages many new buildings incur while under construction;
  • Are policies which include a “duty to defend” now void under the Act? Strong arguments can be made that this is a very distinct provision apart from the broader duty to indemnify;
  • How can insurance companies legally offset possible losses caused by the Texas Anti-Indemnity Act, without penalizes customers with higher rates? As one scholar has pointed out, “If [insurance] companies interpret the statute broadly, they risk losing business, as they can no longer offer additional insured status or obtain indemnity agreements from other insurance companies;”
  • Which uncontroverted facts support the claim that the Texas AntiIndemnity Act was passed due to the troubling “unequal bargaining positions between owners, general contractors, and subcontractors”? Hasn’t capitalism always encouraged parties with the most money to fully insulate themselves from as much litigation as possible? As the Mary Law Journal article notes, if this was one of the true motives for passing this legislation, why did the legislature completely exclude residential construction from the Act, given the common belief that there is probably more unequal bargaining power within that specific field of construction than most others?
  • Which specific and compelling state rights are being upheld by this Act, at the apparent expense of citizens’ constitutional right to contract with one another as they choose?

Until significant case law is decided regarding the proper scope of this Act, those most active in the Texas construction industry may need to spend far more time conferring with their attorneys about the best possible ways to protect themselves against excessive litigation caused by this questionable law.