Basic Requirements for Creating a Trust in Texas

Before meeting with your lawyer to create a trust, it should prove helpful to first review the following general legal terms and requirements that govern this effort. Once you understand your duties and the different parties you’ll need to name in the trust, you’ll be better prepared to begin listing the property you wish to transfer through your trust.

Key terms such as grantor, trustee, beneficiary and trust agreement

If you’re the party seeking to create a trust, you may be referenced in the trust document as the grantor, settlor or trustor. In order to create a valid trust in Texas, you must have the present intent or goal to create this type of document that allows you to protect property in a trust during your lifetime. Depending on the exact type of trust you create, you may also retain the right to fully control the property during your lifetime – which may include moving specific bits of property it in and out of the trust according to your needs.

Among your various duties as the grantor, you’ll need to decide who you want to name as the trustee – or controlling party – of your trust. If you choose to create the type of trust that must be managed and controlled by another party, you’ll have to decide if this should be your lawyer, a family member or another party with strong financial management skills.

As the creator of the trust, it will also be up to you to carefully describe all the duties you want your trustee to handle and how you prefer that those duties be carried out. And if you’ve chosen to act as the trustee, you should also name a potential “successor trustee” who can step in and take over if (or when) you become incapacitated — or pass away.

Additional requirements that must be met when creating your trust

You’ll need to be of sound mind, fully capable of understanding all that you’re trying to do with your property and have a proper legal purpose for the trust. In other words, you’ll just need your lawyer to state the specific type of lawful trust that you’re creating – such as a revocable, irrevocable or spendthrift trust – and which parties will receive the benefit of the properties held within the trust.

Texas law also mandates that your trust fully complies with all the requirements of the Statute of Frauds. This basically means that the trust is set forth in writing and is properly executed in full keeping with that statute so that it’s legally enforceable in a court of law. Your Houston estate planning attorney can also explain to you why certain gifts must become vested within set time periods so that they’re not in violation of the Rule Against Perpetuities.

Why you may need more than one trust

In addition to creating a trust that provides all your property with certain tax advantages during your lifetime, you may also wish to create an educational trust that will benefit your grandchildren or even one to cover the needs of a beloved pet after you pass away.

A simultaneous review of your entire estate plan will also benefit you

Whether you’re married or single, it’s always wise to carefully review all your assets with your attorney when creating a trust. In some cases, you may even want to go ahead and change how certain property is currently titled and change some investment accounts so that they’ll pay out directly to specific beneficiaries at the time you pass away – thereby lessening the duties of any party you’ve named as your trustee.

Please feel free to contact one of our Murray Lobb attorneys so we can create the type of trust you currently need. We’ll also help you review your overall estate plan and provide you with legal advice about the right way to properly manage any property or business interests not currently covered by a trust.

What Kinds of Property Can Be Placed in a Revocable Living Trust?

A revocable living trust is an estate planning document that allows its trustee to actively control many properties and possessions during an entire lifetime. Both new and older possessions can be freely moved in and out of this trust and left to various beneficiaries. Once the trustee passes away, all the property still held by the trust can immediately pass to the beneficiaries and avoid incurring unnecessary probate fees.

Since real estate, business interests and personal possessions can be quite varied, it’s wise to discuss their individual characteristics with your lawyer before placing them in this type of trust. This especially holds true if you plan on buying and selling some of your possessions on a regular basis. In some cases, it may be easiest to allow a few less expensive properties to pass through probate when their value will help minimize any fees.

Here’s an overview of the type of personal possessions, real estate, business accounts and other items that you may want to place in your revocable living trust (RLT).

Types of property often placed in a revocable living trust

  • Real estate and houses. You can place these in a revocable trust, even if they’re encumbered by mortgages. Of course, any debt still owing on the property will pass to the beneficiary;
  • Legal interests you own in most small businesses. You’ll need to give this very careful thought since you’ll want to be sure your beneficiaries can capably run the business and handle other required tasks. Also, you and your Houston estate planning attorney need to carefully read all the small print in your business contracts to be sure they don’t specifically forbid the transfer of your ownership interests into a trust. Other formalities may also become pertinent. For example, if you’re a partner in a group governed by a partnership ownership certificate, that document may have to be changed to indicate your trust is the legal owner of your share in the business. Somewhat similar issues may arise if you own shares in certain types of corporations;
  • Stocks, bonds, bank and security accounts. While it can prove useful (if allowed by the terms of each account) to place all of these in your revocable living trust, it may be simpler to just a name a TOD (transfer on death) beneficiary for one or more of these accounts. Ownership can then pass directly to your beneficiaries as soon as they produce legal proof of your death;
  • Copyrights, trademarks, royalties and patents. These can all be placed in your LRT (living revocable trust). After you pass away, the rights – and limitations – that governed these interests will pass on to your beneficiaries;
  • Gold, silver and other precious metals. Before deciding whether it’s wise to place these in your trust, be sure to get them accurately appraised;
  • Prized pieces of artwork, antiques (and less expensive) furniture. Be sure that all these unique items are properly insured before placing them in your trust;
  • Your collectibles. These often include coins, stamps and other unique items you may have spent a lifetime collecting. (Be sure all these items are also properly appraised and insured).

Should you place your life insurance policy into your revocable trust?

If you’re considering this move because you’re trying to protect the policy proceeds from having to go through probate, be aware that such proceeds automatically bypass probate and go straight to your named beneficiaries. However, if the only beneficiary of your policy may still be a child should you suddenly pass away, you may want to put the life insurance policy into your trust and name the living trust as the beneficiary. Your lawyer can then make sure that the trust names an adult to manage the proceeds of the life insurance policy for the specifically named child until s/he reaches adulthood.

How should 401(k), 403(b), IRA and qualified annuity accounts be handled?

You can create various tax problems for yourself by trying to transfer these into your LRT. Ask your lawyer if it would be better to just change the beneficiaries named for these accounts.

Should you place ownership of any vehicles in your trust?

If you use them regularly, this is often not practical. However, if you own one or more antique autos, you may want to talk with your attorney about whether it’s fully beneficial to hold title to them in your trust – or if there’s a better way to keep them out of the probate process.

Can oil and gas mineral rights be placed in a revocable living trust?

What you can do with these depends on the precise nature of the rights you hold. Ask your Houston business law attorney if you should create an assignment to these rights or try to formally obtain a new deed before transferring them into your revocable living trust.

Please contact us and allow one of our Murray Lobb attorneys to help you draw up any living revocable trusts you may need to help protect your personal property and possessions.

Probating the Texas Estate of a Missing Person

At first glance, it might seem impossible to probate the estate of someone who is missing and presumed dead. However, the Texas Estates Code provides for this very process under Title 2, Subtitle J, Chapter 454 entitled, “Administration of Estate of Person Presumed Dead.”

That chapter clearly states that a probate court has the required jurisdiction to determine the likelihood of a person’s death when specific steps are followed — even if the main evidence presented is entirely circumstantial. However, the Texas Estates Code was carefully drafted to prevent fraud by requiring a lengthy delay before the assets of these types of estates can be distributed.

What are the main steps usually taken to probate the estate of a missing person?

  • Request for letters testamentary. After the probate process has begun with the filing of a request for letters testamentary, the court-appointed personal representative must serve a citation on the person presumed dead in the manner required by the court. Since the person is missing, this often means publishing a notice of the proceeding in one or more print newspapers – and in any other manner dictated by the court;
  • Contacting the proper authorities. The personal representative must then formally contact the proper authorities about the estate owner’s missing status. Among others, law

enforcement officials and state welfare agencies should be notified – along with any others suggested by the court;

  • A professional investigative agency should be hired. This must be done in keeping with the provisions of  Section 454.003 of the Texas Estates Code (requiring efforts to locate the missing owner of the estate). During this process, the investigator may encounter potential heirs who may have crucial information that can help locate the missing person – or help determine where s/he was living shortly before death.

The investigator should create a report based on all research and interviews conducted and then present it to the court – documenting that the missing person cannot be located. The cost of this investigation is normally reimbursed by the estate, after the court has had time to review the requested fees.

How quickly can the estate be distributed?

Section 454.004 of the Texas Estates Code clearly states that this can only be done after three years have passed since the date on which the letters testamentary were issued by the court to the personal representative.

What personal liabilities can arise if the person presumed dead reappears after distribution?

If the missing person returns and presents conclusive evidence that s/he was alive at the time the

letters testamentary were granted, that individual has the legal right to regain control of the estate — whatever remains of the funds or property.

However, this person who was presumed dead – yet has now reappeared – cannot get his/her property back that was sold for value to a bona fide purchaser. Instead, this person only has the right to the proceeds or funds obtained for the sale of the property to the bona fide purchaser.

In addition, Section 454.052 states that the personal representative who handled all the legal sales transactions for the estate, not knowing that the missing person was actually alive, cannot be held liable for any financial losses suffered by that individual who has now returned. And any surety who issued a bond to that personal representative cannot be held liable for anything the personal representative did while complying with approved court-ordered activities.

Should you need help probating any estate, please feel free to contact one of our Murray Lobb attorneys. We’ve had the opportunity to help many clients and can readily answer all your questions.

Should My New Texas Business Be Formed as an “S” Corp or an LLC?

While deciding which business structure will best serve your needs, always consider several key factors. For example, look at how many employees you plan on hiring and how much time you want to spend managing the company. You should also make sure you’re fully protecting your personal assets against future lawsuits and not incurring any excess taxes.

One excellent way to choose the best structure for your company is to meet with your Houston business law attorney. The two of you can discuss all that you might gain (or lose) by starting your company as either an LLC (limited liability company) or an “S” corporation.

Before noting some of the basic steps involved with forming an LLC and an “S” corporation, here’s a brief overview of the unique offerings and drawbacks of both structures.

What are some chief advantages and drawbacks of starting an LLC?

Depending on the size of your business and the types of goods or services you’re selling, you may prefer an LLC for the following reasons.

  • It offers a less formal structure. An “LLC” is also often easier to manage than an “S” corporation, especially when you have few employees. And you’ll never need to have any board meetings to tackle problems tied to issuing stock certificates;
  • You can readily change this business structure (once all proper paperwork is filed). If

you’re running an “S’ corporation, you’ll first have to arrange a formal board meeting before trying to change the business structure);

  • All members of an “LLC” do not have to be permanent residents or U. S. citizens;
  • You can more easily divide up who handles most of the daily work – while allowing others to just be investors. You can also simply divide up the profits based on each person’s initial investment and daily work contributions;
  • Disadvantages of an “LLC” compared to an “S” corporation. These can include having all the company profits subjected to self-employment taxes. Your growth may be limited since your business cannot issue any stock shares. Always ask your Houston business law attorney about any other potential disadvantages that may apply to your unique situation.

Why do some entrepreneurs prefer forming “S” corporations – despite the limitations?

  • Formality is viewed more favorably by some. Outside businesses often prefer interacting with companies that employ a more formal corporate structure;
  • You can often use this structure to avoid double taxation of income;
  • Profits are passed on to the shareholders (by way of their paid dividends). Therefore, the company does not have to pay taxes on those profits;
  • Possible drawbacks. All shareholders must be permanent residents or U.S. citizens. There can be no more than 100 shareholders. Added state filing fees may apply. Also, the IRS

tends to monitor “S” corporations very closely since some people try to improperly avoid certain taxes by wrongfully using this business structure.

What are some basic issues that must be addressed while forming an “LLC” in Texas?

  • Membership. You’ll need to decide how many owners or members you’ll have and if they’ll share all the managerial duties;
  • Naming your business. You must choose a unique name to avoid confusion with already existing companies;
  • File all required forms. You’ll need to start with a certificate of formation (Form 205) that must be filed with the Texas Secretary of State’s Office;
  • Registered agent. You must name a registered agent who can accept the service of process on behalf of your company;
  • You’ll need to create an operating agreement. It’s usually best to ask your Houston business law attorney to draft this document for you after you’ve

discussed the precise nature of your new business;

  • Fully satisfy all state and federal paperwork requirements;
  • Obtain all required state and local business licenses that may be required for your industry.

(Note: Some of these same steps may also be required while forming an “S” corporation below, regardless of whether they’re listed).

Here’s a brief review of key issues involved in starting an “S” corporation in Texas

  • The drafting of Articles of Incorporation. These must be filed with the Texas Secretary of State’s Office;
  • Stock certificates must be issued to all initial shareholders;
  • All applicable business licenses and certificates must be obtained in a timely manner;
  • You’ll need to file Form 2553 with the Internal Revenue Service. (Your lawyer can first check to be sure you meet all the qualifying terms for creating an “S” corporation).

Please feel free to contact one of our Murray Lobb lawyers so we can answer your questions about each of these business structures. We can also help you draft all the documents you’ll need to transact business throughout the year.

Should You Always Enforce Covenants Not to Compete?

Covenants not to compete are binding contracts that are designed to protect companies against exiting employees unlawfully sharing different types of proprietary information, “trade secrets” and intellectual property with their new employers and others and engaging in post-employment activities that can be detrimental to the company they left.

Before discussing whether it’s wise to develop an ironclad attitude toward enforcing these covenants, it’s helpful to review the basic reasons why these documents are usually drafted and what standards courts consider when deciding whether they should be upheld.

Companies must protect specific types of information

Whether your business sells cutting-edge security software or sends out consultants to advise clients in mostly rural areas, your employees often learn highly detailed information about how you help your clients. If you were to always let key employees leave and immediately put that proprietary information and knowledge to work for a competitor, your business might quickly lose its competitive edge and market dominance.

Therefore, many companies regularly require employees to sign noncompete agreements to prevent them from using what they learn while employed for a limited time post-employment. Should former employees violate these agreements, they (and their new employers) can often be sued in court.

Common types of proprietary interests you’ll usually want to protect

  • Trade secrets. Perhaps your company has invented a manufacturing process that should not be shared with any competitors. It’s also possible that you’ve designed a highly effective training program for your employees that makes them uniquely effective at handling their work. You clearly don’t want them to share those training methods with others;
  • Client databases. You’ll want to prevent all departing employees from reviewing any past buying practices, requests and needs of your clients;
  • Other highly confidential materials. These could include almost anything – perhaps you’ve implemented a specialized marketing plan that’s helped your business grow several times over during recent years.

These examples should help remind you of the many proprietary types of information you must protect by requiring your exiting employees to sign covenants not to compete.

Within such covenants, you’ll need to address various topics that may include the following ones.

  • A specific time period. Any time period must be reasonable, normally 1-3 years;
  • A description of the types activities the employee cannot engage in post-employment. You can list specific industries, customers or businesses the departing employee should not contact for a new employer;
  • A specific geographical area where the departing employee cannot work. You can state a certain region where the employee who left cannot compete with you for a set time period.

When evaluating the reasonableness of covenants not to compete, courts look to see if they are over-broad or too restrictive. While businesses have a right to protect certain information or “legitimate business interests”, they aren’t allowed to unfairly prevent a departing employee from pursuing most forms of gainful employment.

Should you always enforce your contracts containing noncompete clauses?

Although the most obvious response is to say you’ll always strictly enforce them, it’s important to recognize certain factors before suing someone for not honoring a noncompete covenant.

Please feel free to contact one of our Murray Lobb attorneys so we can help you draft any contracts you need containing covenants not to compete. We can that someone is currently asking you to sign – or assist you in enforcing or defending a lawsuit.

Special Estate Planning Concerns for Second Marriages

If you’ve recently married for a second time or are planning to do so, it’s important to meet with your attorney to be sure all your assets will still be properly distributed in the future. Even if you think your new spouse is very trustworthy, you must understand how Texas community property laws may affect all preferred beneficiaries when you pass away one day.

In order to minimize future misunderstandings, many spouses in second marriages enter into property agreements that help balance out the interests of all children from prior marriages – as well as those who might be born into your new one.

Before reviewing some of the basic legal documents your lawyer may need to redraft on your behalf now that you’ve remarried, it will be helpful to note some of the complications that can develop when newlyweds simply assume their current estate plans don’t need to be updated.

Careful planning can help you minimize problems with the future disposition of your estate

  • Suppose you’ve married a much younger new spouse and you have children from your first marriage. What will likely happen to your home and all other possessions upon your death? Sometimes, newlyweds just assume that all will go well once the older spouse dies first – and that older children of the deceased spouse will just wait many years until the new spouse passes dies to inherit the family home and other wealth.

Unfortunately, bitter legal fights can erupt between your adult children and your surviving spouse under this type of scenario. What’s often best is to leave an insurance policy (and possibly other funds) in a trust, so that your children can receive specific amounts of money upon your death – and then other property or wealth years later when your surviving spouse finally passes away;

  • What if your new spouse keeps insisting that if you pass away first, he’ll make sure your kids from an earlier marriage will inherit all that you wish, without stating this in newly executed documents? Can this type of arrangement ever be risky? Yes, it can. It’s always possible that you and your new spouse will experience hard times financially at some point in the future. If that happens, keeping sincere early promises may no longer seem reasonable to a surviving spouse left with only a modest amount of money.

Always update your estate plan when you remarry. And if you and your new spouse hold very different attitudes toward certain financial bequests, go ahead and meet with different attorneys to update your estate plans separately. However, make sure you both understand your responsibilities to your new spouses under the new estate plans (and ask your lawyers to review both plans to be sure they won’t precipitate any crises);

  • Will it cause unnecessary confusion for spouses in a second marriage to hold joint bank accounts in the future to pay certain mutual expenses – without jeopardizing the later disposition of assets when one spouse dies? That arrangement should work out fine, although you should both consider also maintaining separate bank accounts to help you pay expenses tied to all separate properties you brought into the marriage.

Should new spouses carefully revise named beneficiaries in POD and retirement accounts?

The answer to that question is almost always, “Yes.” Be sure to bring information about all accounts you have when meeting with your Houston estate planning attorney. You should also bring copies of any property deeds in which you’re named — and information about any trust accounts you currently have (or may desire). Your attorney will also need to see copies of your current Last Will and Testament, 401k and POD accounts, all retirement accounts and all insurance policies.

If you need any advice about your current estate plan due to an upcoming marriage – or divorce, please contact one of our Murray Lobb attorneys at your convenience. We will look forward to providing you with the documents you’ll need to feel confident and secure about your entire family’s financial future.

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Key Ways to Protect Your Business Against Cybersecurity Threats

After the massive data breach involving Marriott’s Starwood hotel brands was reported in 2018, businesses of all sizes began wondering again if anyone can remain safe against hackers. About 500 million guests who stayed at Starwood properties (including Westin, Sheraton, W Hotels, and the St. Regis) had their names, phone numbers, email addresses, birth dates, encrypted credit card data and other information stolen.

What’s shocked people even more is that this breach covered a four-year time period extending from 2014 through September 2018. It’s hard to believe that any company’s computer networks could be so severely compromised over such a long period of time before being discovered.

Companies of all sizes who haven’t already done so must immediately take proactive steps to reduce their chances of having their customer data and other proprietary information suddenly stolen or compromised.

What one past study revealed about cybersecurity threats – that keep increasing annually

  • Close to half of the businesses surveyed consider themselves “very dependent” on the Internet for their daily business operations;
  • Over one-third of those interviewed said that it would be very damaging for their companies to be without Internet access for 48 hours in a row;
  • Small business employees rely on using the Internet for 75% to 100% of their daily work.

A much more recent study revealed that 58% of the victims of malware (cybersecurity) attacks are small businesses. Furthermore, cyber attacks wound up costing most targeted small companies about $2,235,000. Clearly, no one should avoid addressing this crucial issue.

Fortunately, various cybersecurity experts and business professionals are sharing their ideas about some of the best ways to prevent new attacks – as opposed to just responding to them.

You must determine your current level of risk to an attack before creating a protection plan

Even if you already have a highly qualified IT professional on your payroll, it’s often best to hire an outside cybersecurity consultant to come in and objectively assess your various levels of risk to a hacking attack. A “white-hat hacker” (someone on your side) can attempt to evaluate your code vulnerabilities and network and system weaknesses.

This expert can also evaluate how appropriately your employees are responding to suspicious emails that could easily introduce malware into your computer networks and databases. Give serious thought to having this type of outside expert audit your risk level at least once every two years – if not annually.

Keep in mind that it’s often useful to assign a risk level of low, medium or high to each system that might be compromised by a data breach. This can help you as you design a cybersecurity protection plan that prioritizes various risks.

Regularly review the FINRA cybersecurity checklist if you’re a smaller firm or business

This source is designed to help companies handle the following tasks.

  • Identify and evaluate all current cybersecurity threats to better protect all business assets against outside intrusions (or in-house security lapses);
  • Readily determine when your company software or databases have been hacked or compromised;
  • Decide (in advance) how to quickly counter attacks or threats as soon as they’re detected. It’s always wise to create several options based on the type of information or software that may be under attack;
  • Develop a plan with any in-house IT professionals and your outside cybersecurity consultant for readily recovering any company assets that are lost, stolen or otherwise compromised.

Create an employee training program that will help protect your systems and networks

Your employees must take the ongoing threat of a cyberattack very seriously. Staff members who fail to follow all in-house cybersecurity protocol often make it easier for outside hackers to gain entry. You might consider requiring a two-factor authentication password for those seeking to gain access to some of your company’s most valuable or vulnerable accounts.

Before providing this training, you must decide which parts of your computer network, systems and databases should remain off limits to various levels of employees.

It’s also important to let your employees know if you’ll be regularly monitoring their usage of all company computers. (It’s best to obtain written permission for this practice at the time you initially hire all employees). Inform everyone that each employee’s access to information will probably be restricted — based on their normal daily need to access certain information or to complete their assigned tasks.

Give very serious thought to limiting the outside Internet websites that employees can visit while at work and indicate what types of data downloads from outside sources are forbidden. Including these restrictions in your company’s formal training and cybersecurity protocol can help decrease the chances of anyone downloading threatening malware or viruses.

Always ask everyone to encrypt their attempts to access various company databases and accounts. You should also encrypt access to all email accounts. Finally, be sure all employees know the safest ways to file and store data, so it can be fully protected from hackers, while remaining easy to access again when needed.

Develop a comprehensive plan for offboarding employees (those leaving your company)

Regardless of whether someone is being fired or has accepted a new job elsewhere, you need to have a systematic way of reclaiming company property when workers leave. You must also revoke their access to all business networks. Be sure all exiting employees return all company laptops, ID badges, company credit cards, mobile devices and other equipment.

Finally, delete the email addresses of exiting employees as soon as they leave. Someone should also change the company passwords they regularly used that were not encrypted. And always try to make sure every employee has signed an appropriate NDAs (non-disclosure agreements).

Although not intended to be comprehensive, we hope this list of suggestions will help your company gain greater protection against future cybersecurity attacks.

Please feel free to contact one of our Murray Lobb attorneys about how various Texas and federal cybersecurity laws and regulations may impact your company. We can also provide you with a non-disclosure agreement for exiting employees to sign and review the terms and legal limitations of any cybersecurity insurance policy that you may be looking at in hopes of limiting your business liability for future data breaches.

How Texas Estates Are Often Handled When Wills Cannot Be Found

Given how hard most people work to pay their bills and save up for their retirement years, you would think all of us would want to maintain strict control over who will inherit from us. Yet statistics reveal that only about forty percent (40%) of Americans have faced their mortality and asked their lawyers to help them create Wills.

When we make this error, we increase the chances that relatives we don’t know very well – or perhaps even like – may one day receive all our wealth. That’s regrettable since most of us have specific family members who would benefit the most from an inheritance. And great charities and faith-related beneficiaries can always use our funds to bless many others.

Hopefully, this article will help you see the advantages of meeting with your Houston estate planning attorney to create a first Will — and then later update it as your estate grows.

What are the five ways Texas wealth is often distributed when there is no Will?

  1. Under the state’s intestate succession laws. While these are useful, they do not let you determine who will inherit from you. Furthermore, if you own any of the following types of accounts or property, you must make sure that you’ve provided an updated list of beneficiaries to those who maintain these accounts (or other forms of wealth) on your behalf.
  1. Proceeds from a life insurance policy
  2. Retirement account funds that may include a 401k, IRA — or another, similar type of account
  3. Property that you and another person own together
  4. POD or payable-on-death account funds
  5. Property that’s already held in some type of living trust
  1. Through the filing of an Affidavit of Heirship. This approach can normally only be used when the assets requiring a title transfer are real estate. However, you can sometimes use this type of affidavit for non-property assets – depending on the rules of the institution that currently manages those items. Be prepared to discuss this topic in detail with your lawyer since there are certain limitations involved with using this type of affidavit.

For example, some title companies will not accept these types of affidavits when you’re trying to establish a legally valid chain of title for property. In addition, since no personal representative will be appointed, there won’t be anyone who can manage the estate’s assets and pay all required debts. Also, two witnesses must sign this type of affidavit and both are liable for any false statements that may be contained in it.

  1. By filing a Small Estate Affidavit. If your attorney takes this approach, he’ll first have to determine if the estate is solvent and if it’s worth $75,000 or less. In addition, the affidavit can only be used to transfer title to a homestead. Furthermore, there will be no appointed personal representative to collect all the assets, pay all required debts and deal with necessary third parties. Financially responsible witnesses must also sign this type of affidavit.
  1. Using a probate court proceeding called a determination of heirship. The advantages of this approach include having a hearing, the presentation of evidence and a court issuing a judgment accepting or rejecting all submitted affidavits of heirship. However, some relatives eager to settle an estate may find this approach less appealing since it can be rather costly – mainly due to the need to file various pleadings with the probate court. You must also coordinate everything with the court appointed attorney ad litem who will investigate whether there’s any possible fraud regarding the filed affidavits of heirship. However, obtaining a court ruling that specific parties are lawful heirs is very useful;
  1. Handling the matter as either an independent or dependent administration of the estate.

The difference between these two types of administrations is based on the degree to which the probate court must be involved in the proceedings. The term “independent administration” simply means that the court has minimal involvement.

Whichever approach is chosen, there will need to be an appointment of a personal representative who is qualified to receive letters of administration provided by the probate court. These “letters” allow the personal representative to collect all the assets and pay all the debts. The biggest drawback of this approach is that it’s often the most expensive way to handle the estate of someone who died without a Will.

Hopefully, this general information has helped you see that creating a Will is one of the best ways to move forward into a more stable financial future.

Please feel free to contact one of our Murray Lobb lawyers so we can answer any questions you may have about settling someone else’s estate — or drawing up a Will (or full estate plan) of your own. We appreciate the opportunity to help our clients handle these types of matters and look forward to hearing from you soon.

What Should Be Included in Your Employee Handbook?

Both large and small companies can benefit from providing their workers with employee handbooks. These texts help employers answer key questions and clearly document that the same standards and rules govern their interactions with everyone. After all, no one wants to work for an employer who grants special privileges or benefits to some workers and not to others.

Employee handbooks also let employers set forth all their behavioral standards and procedural rules in a manner that can help them limit future liabilities — should anyone ever try to sue them for wrongful termination or acting in a discriminatory manner.

Before reviewing some crucial sections that many businesses like to include in their employee manuals, here’s a quick look at some of the topics that most workers want to see addressed.

Employees often search for information about key standards and office procedures

  • Be sure to outline your behavioral standards, attendance rules, office attire and the level of respect required for all relationships. Most employees are eager to learn how you view tardiness and what you consider acceptable clothing. Likewise, new workers want to learn about your conduct standards — and if your office has a “zero tolerance” policy toward all forms of sexual harassment and discrimination;
  • Always provide clear information about pay grades, qualifications for receiving medical insurance, pay periods and all forms of employee benefits. Workers usually start to relax more once they’re told how often they’ll be paid and the exact size of their payroll deductions. Likewise, it’s important to tell employees when (and if) they may be considered qualified for healthcare insurance;
  • Always state how often employee evaluations are conducted and the best ways workers can try to position themselves for future raises and promotions;
  • Be sure to note any individual or family leave policy provisions that your company honors. Always have your Houston employment law attorney read over this information for you, to be sure it fully complies with all current federal, state and local laws; and
  • Describe your most crucial emergency and safety procedures. Always tell your workers how they should evacuate from the office during extreme weather events, fires and even possible shooting incidents. Each new worker should be shown the proper way to exit the building on their first day on the job – and be shown where fire extinguishers and first aid kits are kept.

While these are just a small sampling of the general topics most employees want to see covered, they should help remind you of many other important subjects that you should cover in your employee handbooks.

The following list is compromised of some of the most commonly used sections in employee handbooks.

Key headings or sections most employers include in their employee handbooks

  • A “Preface” section. You may want to provide a general history of the company here, along with information about the founding members of the business. You can also note who currently heads up various office branches. The company’s key values and goals for the future are also often stated here. If you like, you can also add a brief congratulations to each new employee for being hired;
  • Material explaining all basic pay arrangements, promotions and current employee benefits. You can describe any 401k or stock options in this section, as well as the various types of retirement benefits. Overtime pay policies should also be covered;
  • A section that describes “at-will” employment versus jobs offered under contract;
  • Standards for employee behavior. Be sure to address the need for regular attendance; rules governing personal cell phone use during the work day – and any restrictions on using work computers for private purposes. (Ask your attorney if you need to obtain written permission from all employees to monitor their computer usage);
  • Formal leave policies. In this section, you’ll need to list all paid office holidays, how employees should handle vacation and sick leave, personal days off, family medical leave and time off to honor current military service commitments;
  • Employee termination policies. Be sure to note that these can vary, depending on; if an employee is considered an “at-will” worker who can be dismissed rather informally or if the person was hired under a formal contract.
  • Confidentiality policies. Be sure to clearly state what information and trade secrets the company considers confidential and trade secret. Ideally, all employees would signed a confidentiality and non-disclosure agreement.

Should you wish to review a large number of sections that different employers have included in their employee handbooks, consider reading 53 Key Sections of an Employee Handbook (and Other Helpful Tips).”

The Texas Workforce Commission also has a number of policies and a form of Employee Handbook available for free at https://twc.texas.gov/news/efte/table_of_contents-az.html. However, choosing the right sections for any employee handbook often requires a keen understanding of employment law and many complex human resources issues.

Please feel free to contact one of our Murray Lobb attorneys for help in drafting your new or updated employee handbook. We can provide you with the proper legal terminology required to meet your company’s unique needs.

Why You Need to Create a Business Succession Plan NOW

Why You Need to Create a Business Succession Plan Now

Even when all owners of a company plan to work until the very end of their lives, there’s still a need for a viable business succession plan. After all, anyone can become totally or partially disabled as a result of a serious car accident or die of a deadly disease on almost any day.

When business owners hide from this reality, they often create havoc for all surviving partners or family members. Instead, it’s better to move forward at a calmer time to carefully address these types of possible future events.

Your Houston business law and estate planning attorney can help you decide on the best way to either pass your business on to others — or liquidate all the assets to meet your own needs and those of your survivors.

General questions you must answer yourself about any succession plan

  • What is the current market value of this business and all its assets?
  • Who is the best possible buyer? Do I prefer to sell the business to a co-owner, family member, employee or a third party?
  • Am I more likely to sell the business sooner rather than later? Am I interested in selling the company now due to health, retirement or other reasons?
  • Is this business tied to its current location? If not, would it be reasonably simple for the business to be moved elsewhere and successfully run by someone there?
  • What preferences do I have about how the sale should be financed? Am I willing to personally finance the loan? If so, what type of collateral should I require?
  • Which business advisors should I consult with while securing all the required contracts and other paperwork? Besides business and tax lawyers, do the specific assets of my company require me to consult with real estate agents, insurance and business brokers, bankers and financial advisors?

It’s often wise to start this process by locating and reviewing all your current business contracts and deeds. Next, give some thought to your company’s most productive and respected employees. Then, carefully determine the current market value of every business asset. Finally, schedule confidential, preliminary talks with any co-owners, family members who work for you, other key employees and perhaps one or two other potential buyers of your company.

Once these initial tasks have been handled – or while you’re completing them – it’s wise to meet with your Houston business law attorney.

Advantages and disadvantages of selling to different parties

Unless you’re the sole owner of the company and simply want to liquidate all the business assets and not sell (or transfer) the company to others, you must carefully evaluate each potential buyer and decide which one is best qualified to run the company in your absence.

  1. One or more family members. In most instances, it’s usually best to sell to only one family member, preferably one who is already involved in the business and respected by your employees. Ask your attorney about the best ways to prevent future challenges to any decision you make. One approach might involve drafting a buy-sell agreement that clearly states who is going to be running the company — and asks all others who currently work there (or own shares) — to sell their shares to the person you’ve named as your successor. This approach often helps minimize future family disagreements.

When selling a business to a family member, you may want to execute a self-canceling installment note (SCIN). Your attorney can explain why that may be useful;

  1. A key employee who is highly knowledgeable and well liked by other workers. The most common drawback to selling to a key employee is that the person may not be able to give you a large down payment in cash. Be prepared to execute a buy-sell agreement that clearly lists all the valuable collateral for any loan you may be willing to finance. You can also suggest that this employee try to obtain an SBA (Small Business Administration) or bank acquisition loan that will provide you with up to 70% or more of the purchase price upfront;
  2. You can sell your shares to your co-owners. Be sure to clearly indicate the sale’s price and all purchase terms;
  3. An outside third-party or competitor. Be very careful when selling to this type of buyer if you’re financially depending on the person to keep running the company. Due diligence is critical when evaluating every potential buyer.

Since this article only provides a broad overview of the types of issues involved when drafting a business succession plan, you’ll need to obtain competent legal help to handle this entire process. Should you already have some type of succession plan, we can help you decide if it’s time to update it.

All our Murray Lobb attorneys have the necessary experience to help you create a business succession plan that’s specifically tailored to your company’s unique needs. We look forward to helping you draft all the contracts and other documents you’ll need while selling your business.