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.

Handling Employee Requests for Religious Accomodations

Whether you’re running a large corporation or a small business, it can be challenging to properly reply to employee requests for religious accommodations. However, if you’ll listen carefully to what’s being asked and thoughtfully weigh all your options, you should be able to respond appropriately. As the employer, it’s your duty to strike the proper balance between honoring a legitimate request and prioritizing the most crucial needs of your business.

Here’s a brief overview of the key topics involved with honoring religion rights in the workplace after receiving employee accommodation requests.

Employment discrimination based on religion is forbidden by law

Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees based solely on religion. Upon first learning about this statute, most employers ask how the term “religion” is defined — and exactly when they must fully abide by this law. Stated succinctly, employers should try to make reasonable accommodations based on religious beliefs (and practices) whenever doing so will not place an “undue burden” on their businesses.

How does the EEOC define “religion?”

The Equal Employment Opportunity Commission provides a very broad definition of “religion” that is not limited to just well-known faith groups such as Christians, Jews, Buddhists, Muslims and Hindus. The EEOC states that the employee’s beliefs can be new or uncommon – and separate from those espoused by any formal group or sect. The practice the employee wants to honor must be sincerely held and of a clear, religious nature – as opposed to a mere political, social or economic philosophy.

What are some of the most common types of requested religious accommodations?

  • Permission to attend special worship services during normal work hours;
  • A request by a female employee to wear a headscarf or “hijab” at work;
  • Permission for a male employee to wear his hair long – in keeping with religious beliefs. Some Jewish men also ask to wear “skull caps” or yarmulkes on special religious days;
  • Time off on specific “holy days” – or a day like Saturday or Sunday, in keeping with faith practices;
  • A flexible work schedule that allows for “breaks” during which specific types of prayers may be said;
  • A request to be exempted from specific job tasks, such as dispensing birth control pills or handling specific duties that help advance war efforts. (Members of the Jehovah’s Witnesses and other faith communities might make these types of requests);

While this list is not intended to be exhaustive, it should provide you with a better understanding of the types of accommodations employees may request.

How can employers determine if a request will cause an “undue hardship”?

After making sure you understand the specific nature of each request, you’ll have to decide if your business can still function smoothly if you grant the accommodation. Here are some questions you should be sure to ask yourself.

  • Will making the accommodation prove unduly expensive? For example, what should you do if an employee asks to take off work to attend a Good Friday church service? Will saying “Yes” leave a key job or position uncovered in the person’s absence? Do you have any other employees willing to cover for the individual needing to leave? If no one volunteers to help, can you afford to pay any overtime to a qualified employee (or an outside temp) to cover the position?
  • Is the request one that might violate your company’s legitimate health or safety rules? If so, can you find another way to work out the situation? For example, if a young man wants to wear his hair long in keeping with his stated religious beliefs – can you simply let him wear his hair tied in a ponytail during work hours — or keep it hidden under a work hat that you provide or consider acceptable?
  • Will it prove to be too disruptive to your regular office routine? Should you allow an atheist (or employees of different faiths) to wait and enter meetings normally started with Christian prayers after those prayers have concluded? It might be simpler to just pray with those of like mind at a different time on certain days. That way, you can probably avoid ostracizing those who have said that they don’t wish to take part in your specific prayer practices.
  • Is there a danger that granting one employee’s request to honor faith practices will lead to too many other, similar requests? The EEOC urges employers to consider all requests made very seriously — and to try and accommodate them whenever it’s reasonable. Few employees are likely to abuse this type of request. However, you might consider placing a statement in your employee handbook that all such requests must be made on a sincere basis — and that they’ll probably be granted if they don’t cause any great disruption in the company’s normal workflow – or provision of critical customer services.

All employers, managers and supervisors must avoid all forms of workplace retaliation

Unfortunately, there will always be a few biased supervisors or managers who may resent having to make any religious accommodations. Therefore, you must make sure that once any requests have been granted – the employees are not “punished” in any way.

For example, you cannot force all employees requesting permission to wear special religious clothing, hats or scarves to sit in a back office together where they’ll be less visible. That could be viewed as “retaliation” and make your company vulnerable to a lawsuit based on discrimination.

Conclusion

Be sure to treat every employee’s request for a religious accommodation with sincere respect. And always keep detailed notes in each employee’s file as to why you did or did not grant a request in case there are any later lawsuits. (For example, if you decide a request will prove to be too costly or place an “undue burden” on your business – make sure you can prove that with adequate facts and figures.)

Please feel free to contact one of our Murray Lobb attorneys with any questions you may have about making workplace accommodations based on religion (or disability). We can provide you with the legal guidance you’ll need to keep your business running smoothly.

 

  

Small Businesses Often Make Crucial Legal Mistakes

Even highly competent employees sometimes make serious legal errors while handling human resource, management, accounting and other business tasks. Since federal, state and local laws are constantly being updated, you must regularly speak with numerous employees to be sure they’re making timely and lawful decisions.

Should the feedback you receive concern you, it’s always best to consult with your Houston business law attorney to be sure you know how to promptly correct any possible errors. Lawsuits are often filed over very basic legal mistakes.

What are some of the most common legal errors that businesses keep making?

Most mistakes are made when employers try to be flexible with their rules. While compassion can go a long way toward helping you get along better with your employees, clarity and consistency are crucial. Always exercise caution when addressing the following issues.

  1. Each employee must be properly classified. You need to look at each position separately, based on all pertinent state and federal laws. If you simply decide to treat everyone as an “exempt” employee, you might be sued if you fail to provide proper overtime pay or adequate rest periods.
  2. Lunch breaks must be provided when required by law. Some employees may be entitled to a meal break after completing a specific number of hours during a shift.
  3. Make sure you’re properly labeling workers as either employees or independent contractors. You may hear from the IRS if you make this type of mistake. Take the time to speak with your lawyer about how you should carefully interact and communicate with independent contractors. Once a worker has strong legal grounds for believing that “employee” status has been conferred, you can be sued for specific benefits.
  4. You must be sure all employees understand what constitutes “sexual harassment.” If you’re sued in this field, one of your strongest defenses will be that you promptly trained all new managers and employees to help create a healthy work atmosphere. You must also develop a secure way for employees to submit complaints before problems escalate.
  5. You cannot punish or fire an employee for simply taking a leave of absence under the Family Medical Leave Act (FMLA). To protect yourself, keep accurate records of all employee evaluations being conducted at routine intervals. If you’re particularly concerned about the behavior of someone taking FMLA leave, ask your attorney when you should sit down with that employee to discuss why you’re carefully monitoring their work performance – before letting them go.
  6. Be sure to issue final paychecks on a timely basis to all employees who are leaving. Find out if you’re required to provide this type of check even before an employee has returned all employer-provided equipment, vehicles or other materials.
  7. You must handle making loans to employees in a very careful manner. While this is often a kind gesture, you must set up a formal repayment schedule. Never simply deduct a portion of what’s owed from each future paycheck.
  8. Be sure to properly handle all employer obligations under the Americans with Disability Act (ADA). You may need to make appropriate work accommodations and should always treat such workers fairly. Most disabled workers take great pride in being highly dependable and productive workers.
  9. COBRA healthcare coverage must be offered and administered properly. Give serious thought to creating a comprehensive package of this medical insurance paperwork so that it’s immediately ready to be given to qualified employees when they leave. Timing is critical so potential coverage won’t lapse.
  10. The Health Insurance Portability and Accountability Act (HIPAA) must be explained and handled appropriately. Employees have a right to privacy regarding their medical data and information – be sure you’re adequately protecting it while processing claims.
  11. Pension concerns must be addressed in a timely and proper manner. The Employee Retirement Income Security Act (ERISA) is a complicated law that requires extreme attention to detail. Always request legal advice when uncertain how to administer it.
  12. You must carefully handle all responsibilities under the Consumer Credit Protection Act (CCPA). You may need expert help calculating all your employees’ paycheck deductions for lawful wage garnishments – including those for child support and student loans. Look for highly respected software that may help your most experienced workers.
  13. Equal Pay Act. This law must be carefully followed since too many businesses keep failing to pay men and women fairly when handling similar work.
  14. Title VII concerns. Your company must avoid discriminatory practices when hiring, laying off and firing employees. Many businesses are learning to use multiple interviewers with highly diverse backgrounds so that fairness can be readily achieved.
  15. OSHA laws. You must make sure to keep adequate records covering all workplace accidents and injuries for an appropriate number of years — if you employ ten or more workers.

Should you have any questions about these topics, please contact your Murray Lobb lawyer to discuss your concerns. We have extensive experience providing legal advice to our clients so they can can readily comply with all federal, state and local laws.

A Review of Basic Texas Landlord-Tenant Laws & Interests

When Texas leases successfully balance the rights and privileges that landlords and tenants most desire, they often help minimize future disagreements and legal challenges. However, before such leases can be drafted, all contractual parties must try to better understand the primary interests of those countersigning the required documents.

In general, stable and responsible tenants want to extend their leases with landlords who provide quality property, respect tenant privacy rights and make all promised repairs promptly. And good landlords want to attract and retain tenants who pay their rent on time, get along well with other tenants — and keep the rented or leased property in good condition. If respectable landlords will also provide all required legal disclosures to prospective tenants, few problems may arise.

Here’s additional information both Texas landlords and tenants should bear in mind while trying to build and maintain good relationships with one another.

Federal laws forbid discrimination and other wrongful practices

Whether renting commercial or residential properties, landlords must avoid violating all

federal statutes and regulations. Perhaps the most important law is the Fair Housing Act that forbids treating anyone unfairly who’s looking for a place to live.

Stated simply, property owners cannot discriminate against prospective tenants based upon their gender, race, color, national origin, disability, family status (regarding whether they have children under age 18 living with them) or religion. This law extends to all sales, rentals and financing of dwellings. Furthermore, as your Houston real estate attorney can explain to you in greater detail, there are Texas state, county, city and municipal laws that also define and extend these rights and obligations. In addition to forbidding discrimination, all these laws are designed to overcome past efforts to segregate society based on poverty and the seven factors named above.

Other federal laws affecting prospective property tenants include the Fair Credit Reporting Act (FCRA) and specific Environmental Protection Agency laws and regulations. After obtaining an FCRA “background check” on a prospective tenant, landlords must allow people to formally dispute negative material in their credit reports with pertinent legal documents.

While respecting all federal, state, local and municipal laws – Texas landlords must also be prepared to provide tenants with numerous disclosures – including those set forth below.

Property information, equipment & disclosures all Texas landlords must provide

Since these can be quite numerous, the following list is merely representative of the more common ones.

  • Name and address of the property owner or property management company that can be contacted about ongoing needs or concerns;
  • All specific, defining rental lease terms. With renters, this must include information about the monthly “final” due date for rent and the acceptable ways to make all payments;
  • Information about the required security deposit – and when it will be returned after a tenant moves out (unless the tenant is no longer qualified to receive it);
  • Special rights of domestic violence victims. They must be informed about their right to withdraw from a lease when being subjected to abuse. While specific procedures must be followed, they should not further jeopardize these tenants;
  • Adequate security devices including window and door locks must be already installed upon move-in. Many state and local laws may also require the presence of fully functional fire extinguishers, smoke alarms and other safety equipment;
  • A clear and firm commitment to make all crucial repairs in a timely fashion. The most critical repairs are those that directly affect the health and safety of tenants;
  • Tenant parking and pet deposit information;
  • Detailed information on how all move-out matters must be handled.
  • Disclosures regarding the possible presence of lead-based paint or asbestos in the units. Likewise, recent bedbug infestations and other similar problems must be disclosed.

While this list isn’t entirely comprehensive, landlords who meet all these basic legal standards are likely to create harmonious relationships with tenants.

Please contact our law firm so we can answer your questions and prepare any rental contracts that you may require. Our experience in this field should allow us to fully meet your needs.

 

How Wage Garnishment Laws Affect Many Texans

Although wealthier Texans may build up significant savings and retirement accounts by middle age, most residents must keep working far longer to meet their individual and family needs. And if unexpected family or medical crises occur creating new financial emergencies, some people may face wage garnishments. Fortunately, Texas offers strong protection against many types of creditors.

Here’s a brief review of the most common types of wage garnishments pursued in Texas, basic terms you’ll need to know regarding this field – and references to special concerns you may need to discuss with your Houston business law attorney to fully protect your rights.

Important terminology related to attaching employee wages

  • Wage garnishments. In Texas, this term is often used interchangeably with “wage attachments” and refers to court orders directing employers to withhold certain amounts of money from employee paychecks to satisfy certain debts;
  • Administrative garnishments. These usually refer to federal government back taxes or student loans now in default – and they do not require a court order to be activated. Once debtors have student loans in default, they’ll normally be contacted by the U. S. Department of Education and told which collection agencies will be collecting their debts. (Note: Students loans can almost never be discharged by a bankruptcy filing);
  • Disposable earnings. This refers to the amount of money you have left in your paycheck after all mandatory deductions have been made for federal taxes, disability insurance, union dues, unemployment insurance, nondiscretionary retirement deductions, workers compensation and health insurance.

Types of debts often leading to wage garnishment

Texans are very fortunate compared to citizens of other states since Texas only honors a very limited number of garnishable debts.

  1. Unpaid child support and alimony (in arrears)
  2. Current court-ordered child support and alimony
  3. Government debts owed to the IRS (back taxes) — and all related fines and penalties
  4. Unpaid student loans (in arrears)

Note:  In light of Article IV of the U. S. Constitution, Section I (requiring each state to honor the “public acts . . .  and judicial proceedings of every other state,” certain other limited creditor debts referenced in judgments obtained outside of Texas may also be garnishable.

Be sure to speak with your Houston business law attorney whenever you receive any notice of an order to garnish your wages.

Fixed garnishment limitations that benefit Texas debtors

  • Total amount that can be garnished (based on all court orders). This is equal to 50% of your disposable earnings;
  • Percentage allowed for tax debt. This varies, based on your current deduction rate, the number of your dependents and other factors;
  • Student loans. The Department of Education can normally only garnish up to 15% of your disposable income from each paycheck;
  • Spousal support. The most your wages can be attached for this obligation is either $5,000 or 20% of your average monthly gross income – whichever is less.

Priority of wage garnishment orders

Although unusual factors might be able to change the list below, employers must normally prioritize their payment of garnishment orders in the following manner.

  • Unpaid child-support
  • Spousal support
  • Back taxes
  • Student loans

Texas employers are not allowed to discriminate against employees with wage garnishments

This has long been a concern of many employees since handling wage garnishments can take up a considerable amount of an employer’s time. Texas doesn’t allow those with wage attachments to be treated unfairly when it comes to hiring, promoting, demoting, reprimanding and firing (among other actions).

How creditors can still reach your money – apart from using wage garnishment

Even if your wages cannot be reached, regular creditors can still gain access to your money by obtaining court orders to freeze one or more of your financial accounts – and place liens on certain types of real property you own.

Please contact our law firm with any questions you may have about the proper handling of court orders to garnish wages — or any other types of administrate tasks regarding employees.

How the Texas Business Opportunities Act Seeks to Help Consumers

One the main goals of the Texas Business Opportunity Act is to protect consumers interested in starting their own businesses from scam artists eager to defraud them out of their money. When ads appear on TV or via email — promising large profits in exchange for a small, initial investment – it’s never wise to assume a valid offer is being made.

Some of the most common business opportunity ads often claim that you’ll need to do very little work before you’ll start receiving your first profits. That’s rarely an honest offer since running a business is often hard work. Now that so many older Americans (and others) have been laid off from their jobs, it’s critical to carefully review each offer and look for “red flags” warning you of possible fraud.

The following information will help explain some of the different ways that the Texas Business Opportunity Act tries to regulate the way that many programs go about seeking investors and operating in this state.

Types of business offers governed by the Texas Business Opportunity Act

  1. Those that require the buyer to pay at least $500 to begin setting up the business that’s being sold;
  2. Where the seller claims that you’ll earn back your initial investment (or more) in profits; and
  3. The seller promises to do one or more of the following acts to close the deal:

a). Provide you with a location – or help you find one (that’s not currently owned by you or the seller) where you can use or operate the goods or services being leased or sold by the seller;

 b.) Help you create a marketing, sales and production program (unrelated to a formal franchise business governed by separate laws);

 c.) Promises to buy back products, equipment or supplies (or goods made from them) provided to you so you can run the business.

To further protect the public from dishonest business offers, the Attorney General of Texas requires parties making offers that meet the description above to first register with the Secretary of State and provide any applicable bond or trust account required.

Whenever you become interested in investing in any business opportunity that even vaguely appears to be covered by the Texas Business Opportunity Act, it’s always best to review the matter with your Houston business law attorney. Our firm can check to be sure the seller’s company has formally registered with the Texas Secretary of State’s Office and posted all required funds.

As a potential investor, you should also be provided with key information (required by law) about any company – before ever tendering any money.

Legal disclosures companies must provide

When a business offer is made in Texas and is covered by the Texas Business Opportunity Act, the seller must provide specific information to the buyer ten (or more) days before any contract is signed by the parties and before any money is paid to the seller.

Here are some of the disclosures that must be provided.

  • Names and addresses of all parties directly affiliated with the seller in the business being marketed;
  • A specific listing of all services the seller is promising to perform for the buyer (such as setting up a product marketing program);
  • An updated, current financial statement covering the seller’s finances;
  • All details covering any training program being offered by the seller;
  • How all services will be provided by the seller regarding the products and equipment being sold – and all key terms involved with the leasing agreements covering business locations being provided to the buyer;
  • Information pertaining to any of the seller’s bankruptcies (or civil judgments obtained against the seller) during the last seven years.

The importance of distinguishing multi-level marketing offers from pyramid schemes

Make sure the business you’re interested in requires you to do some type of work (such as selling products or services) before paying you any profits. If you are only being urged to solicit additional participants in the business, there’s a strong chance that you’re being “tricked” into building a pyramid scheme that may earn you short-term gains before the entire investment program collapses.

Always obtain legal advice regarding any business that sounds too much like a quick way to earn a lot of money. Attractive shortcuts to huge profits – especially those promoted in many weekend hotel and restaurant seminars – are often sham operations.

Please contact our law firm so we can provide you with the legal advice you’ll need before investing in any new business opportunities.

Buying a New Company:  Conducting Due Diligence

Depending on the nature and size of the business you’re interested in buying, the process of completing due diligence can be straightforward or complex. Fortunately, the basic steps you’ll need to follow are rather standard.

After your lawyer has negotiated a Letter of Intent (LOI) with the seller –  covering each party’s duties and responsibilities involving confidentiality, exclusivity and other matters – you’ll be ready to begin the due diligence phase of possibly buying the company.

The Main Reasons for Performing Financial Due Diligence

This process is partially designed to help determine if the initial evaluation placed on the business is fair and if the company is both stable and viable. Time must also be set aside to review all current contracts and potential legal and regulatory liabilities.

Some of the specific aspects of the business you’ll want your Houston business law attorney and personal accountants to carefully review and examine are set forth below.

  • All accounts receivable and payable
  • At least the last three years of the company’s tax filings
  • All current payroll obligations
  • Most or all the major banking transactions for the past year or more
  • The full nature and extent of any outstanding loans on the books

As this initial list of matters indicates, this process can take many months with some businesses. Normally, the parties negotiate the timetable for completing all due diligence examinations in their Letter of Intent (LOI).

Special Inquiries You Must Include Regarding Other Financial Matters

Hopefully, your review of all the financial accounts won’t turn up any troubling questions that can’t be answered. However, since a small percentage of business sellers may be dishonest, your due diligence team must carefully watch out for certain types of “red flags” or irregularities. These can include some of the following concerns.

  • Missing funds
  • References to non-existing accounts
  • Improperly filed tax returns
  • A varying degree of bad debt that’s regularly written off
  • Unstable profit margins

Your lawyer’s due diligence inquiry must also include carefully reviewing all current contracts with other businesses or corporations.

Key Concerns Involving Executory Contracts

  • When are they each due to expire? (This is important since this information can affect the company’s current valuation and other issues). For example, if current supplier contracts are ending soon, you may soon find yourself having to pay far more for critical supplies;
  • What’s the status of all customer contracts? You need to be sure all funds owed to the company are being collected regularly and all goods and services promised are being delivered in a timely manner. Failure to carefully monitor all contract terms can cost you valuable customers and open you up to major legal liabilities;
  • Are all Service contracts being carefully monitored? Nearly every business is dependent on outside service vendors to keep their manufacturing and other equipment working properly. Likewise, contracts are often in place to secure the professional services of lawyers, accountants, computer repair technicians and others. You must make sure the company is properly honoring all these contracts and renegotiating them in a timely and responsible manner;
  • Are all current leases being properly maintained? Companies can’t afford to accidentally let leases lapse on buildings or other property that are essential to their daily operations.
  • Employee Agreements? Do current employees have employment agreements with non-compete clauses? These must be carefully examined because they cannot be assigned if you are only buying the assets.

Due diligence can also extend beyond merely reviewing key financial documents and contracts. It should also include a detailed review of all actual or threatened litigation and regulatory investigations.

Your Lawyers Must Review All Current or Likely Lawsuits & Regulatory Challenges

Each of the following issues must be examined regarding all current or anticipated litigation. They may prove crucial if you decide to still buy a specific company since you’ll probably need to request contractual indemnity for all future liability (and litigation expenses).

  • How costly might each case eventually prove to be? In other words, what potential liabilities are involved?
  • Has the business received formal notice that any of its operations may be operating in conflict with any state or federal statutes or regulations?

You must be willing to sit down with your lawyer and the target company’s current legal counsel to sort through all these legal and regulatory concerns since they directly bear on the business’ current valuation and the wisdom or folly of buying it.

While the due diligence concerns referenced above are not intended to be fully comprehensive, they should help you understand many of the critical matters that must be examined. Once you make it through this due diligence stage, you can then either decline to buy the company or move forward into the “closing” or final transactions phase.

Please feel free to contact our law office so we can help guide you through the various stages of due diligence as you try to decide whether you should buy a specific company.

Choosing Reputable Charities for Your Texas Estate Plan

Many Americans now name one or more charities in their Wills or other estate planning documents to help these important cultural and humanitarian groups maintain adequate funding. However, others less familiar with charitable giving need to understand that, before arranging these types of gifts, they must carefully evaluate each charity or non-profit group to be sure their funds will be shared properly. 

Fortunately, there are several reputable organizations that will readily help consumers decide which charitable or non-profit groups are properly using all their donations while minimizing administrative costs. These same “watchdog” groups often urge all charitable groups to maintain open donation and expenditure records. In addition, our Texas Attorney General’s Office has put together some useful tips that can help all of us do a better job of deciding which charities will be the most responsible recipients of our testamentary gifts.

Here’s a list of basic tips that can help all of us better evaluate all non-profits and charities. That information is followed by a list of different websites and groups dedicated to providing consumers with current news about charitable activities. Of course, it’s always best to start your search by first visiting with your Houston estate planning attorney who may already know about the reputations of many charitable organizations.

Important Information to Obtain While Choosing Charities to Include in Your Estate Plan

  • First, be sure to obtain the full legal name of each group, its address and telephone number. Next, ask if the IRS has formally recognized it as a public charity that’s tax exempt. Then, ask if your donations will all be fully tax deductible.
  • Find out how long the non-profit or charity (hereinafter just referenced as ‘charity’) has been in existence.  While longevity doesn’t always ensure completely honest and frugal management of funds, it does mean that it should be easier to research the group’s reputation by visiting several of the online sources named below.
  • Request a recent annual report that clearly indicates how much money the group spends on administrative costs and how much of every donated dollar will directly benefit those the charity is seeking to help.
  • Find out if the charity’s main goals are related to education, medical services, scientific and medical research – or perhaps providing scholarships to those pursuing careers in specific vocational fields.
  • Do not give the group any of your private bank account or credit card information during your investigative calls – although it’s best to be honest about your intentions. Also, if you’re not ready to receive numerous emails or letters to your home address, avoid giving that type of information out right now.

Be sure to ask members of your professional or business circles if any of them have had positive experiences with the charities that interest you the most. When any charity has a publicly named board of directors, consider contacting those individuals directly by phone to ask them about their experiences with handling tasks on behalf of the charity.

When you’re ready, start visiting some of the websites set forth below to see what you can find out about each of the charities that seem to be highly reputable.

Online Websites Offering Detailed Information About Various Charities

  • Give.org. This website includes the sub-title, “BBB Wise Giving Alliance.” On its page dedicated to donors, it states that you can look up information about each charity’s effectiveness, governance, finances – and current brochures or other materials available to the public.
  • The American Institute of Philanthropy (Charity Watch). Among its various offerings, this website offers a list of charitable groups involved with some highly specific causes and issues.
  • Guidestar. This online resource offers a wide array of information about many reputable non-profit groups.
  • Charity Navigator. Like the other websites already named above, this one offers timely information about many charities. It also provides a “hot topics” link that will tell you more about charities currently in the news for one reason or another.

All four of the oversight groups listed above are noted on the Texas Attorney General website. You can also find out additional information about specific charities by visiting this Consumer Reports page.

If you haven’t already thought about giving to a charity or non-profit when you pass away, please consider doing so now.  All Texans need to do a bit more to help others so our state can become more compassionate — and improve our current ranking for charitable giving.

Please feel free to contact our firm so we can explain some of the best ways to include charities as beneficiaries in your estate plan. There are specific legal ways of handling this task so that your estate will reap the best tax advantages available.

How Should You Respond to Potentially False I-9 Documentation?

At present, the federal government expects companies to carefully examine all I-9 documents presented by job applicants and to ask questions about required paperwork that looks like it may have been altered. Once you receive proper documents that look valid, you must keep your copy of the completed I-9 form on file, ready to share it with ICE (Immigration and Customs Enforcement) upon request. In some cases, you may be given only three days’ notice to produce these documents for all your employees.

To help employers fulfill their duties, ICE provides general guidelines that describe how all I-9 document reviews should be handled. These guidelines are further referenced below, along with topics you should address with your human resource staff to help them avoid accidentally discriminating against applicants and employees while simply trying to obtain fully updated, accurate documents.

What federal law established the need to obtain I-9 documents from job applicants?

Congress passed the Immigration Reform and Control Act (IRCA) back in 1986. It requires employers to obtain job applicant documents that validate each person’s right to work in this country. This task is handled by fully completing a Form I-9 document for each job applicant. To help establish their legal status, applicants can produce such items as:  a driver’s license, a Permanent Resident Card, a US passport, a birth certificate and a Social Security card.

Can some I-9 documents be acceptable even when they initially look questionable?

The simple answer to that question is “Yes.” However, you should always keep notes in your file concerning any odd documents that you first believed might be false – and keep a copy of them. As ICE notes on its website, there are times when a worker may show you documents indicating different last names – and that may be acceptable if the job applicant can provide you with a reasonable explanation for the varied listings.

While employers must be respectful and open-minded while handling required I-9 tasks, they should be acting in agreement with previously established, written employee guidelines clearly noting that all new hires and established employees can be fired for providing any false job applicant documents. When you haven’t already created such written guidelines and acceptable standards of employee conduct, you may later find yourself accused of discriminating against an applicant or employee based upon his or her immigrant (or special ethnic) status.

This type of scenario often unfolds when an employee informs you after being hired that one or more documents given to you before being hired was fraudulent or invalid. This tends to occur when the employee is trying to provide you with newly updated, valid documents.

This specific type of issue was presented to the Department of Justice (DOJ) back in 2015. Unfortunately, instead of issuing an advisory opinion, the DOJ simply noted that employers should already be prepared to handle these types of issues — based on established employee conduct guidelines. Otherwise, they risk being sued for one of at least four employment-related forms of discrimination.

Is it true that some employers have been heavily fined for I-9 violations?

Yes. One of the largest fines recently imposed by the Office of the Chief Administrative Hearing Officer (OCAHO) involving I-9 irregularities was against Hartmann Studios. That company was required (in July of 2015) to pay $600,000 in civil penalties. (That amount had been reduced from the original penalty sought of $812,665.) When Hartmann was undergoing a new inspection back in 2011, the company employed over 700 workers.

While that large sum of money is quite high, it’s important to recognize that Hartmann Studios was unable to provide any I-9s for some of its employees who had been terminated and needed an extension of time to produce documents for others.

What steps can our office (or company) take now, to make sure were fully complying with all current I-9 document guidelines?

If you haven’t already done so, give serious thought to signing up for the US government’s
E-Verify program that can help you properly process all your I-9 documents. By visiting this government website, you can learn more about how this program works. Your usage of this service may help establish your good-faith attempt to properly handle all I-9 duties.

You may also want to ask your lawyer if you should require all newly hired (and established) employees to sign a form that clearly indicates their awareness that they may be immediately fired for their dishonesty if you ever learn that they’ve provided you with any fraudulent I-9 documents. If you do this, you’ll need to strictly apply this standard.

Please contact our Murray Lobb law office so we can answer any other questions you may have about properly handling all I-9 documents. We can also provide you with advice on drawing up a general employee handbook — that also fully alerts all employees to the possible consequences of supplying your company with fraudulent I-9 documents.

Creating a Valid Limited Partnership in Texas

Few activities are as rewarding as setting up a new business when you’re ready to start selling your goods or services to the public. However, it’s important to understand the distinct benefits and drawbacks of the various business structures you can choose from. While some people prefer to run a sole proprietorship, others believe they’ll be better served by either creating a partnership, limited liability company or corporation. If you’re uncertain which structure may work best for you, it’s important to meet with your Houston business law attorney for early guidance and advice.

This article focuses on the formation of a Texas limited partnership (LP) and how its structure and requirements are unique compared to those of a limited liability partnership (LLP).

How Can Specific Business Structures Affect You & Your Company?

The structure you choose directly bears on the taxes your partnership may have to pay, the paperwork that must be filed with the state before you can begin transacting business, how you can raise money to finance your activities, and your own personal liability for debts owed by the partnership.

How Do Texas Limited Partnerships and Limited Liability Partnerships Differ?

One of the main distinctions between an LP and an LLP is that a limited partnership has only one general partner whose liability is unlimited – and all the other partners have limited liability. As might be expected, the partners assigned limited liability only have limited control over how the company or business is run.

A limited partnership is required to operate in keeping with its oral or written partnership agreement. As is true regarding most business matters, it’s always best to capture any agreement this important in written form. Although you do not have to file a copy of the partnership agreement with the state of Texas, you do need to provide a “certificate of formation” to the Texas Secretary of State’s Office.

Some businesses prefer to limit the general partners’ liability by creating a limited liability partnership (LLP). Those forming this type of business structure must provide the Secretary of State’s Office with a properly completed registration form.

Additional Key Facts You Should Know When Forming a Limited Partnership (LP)

  • Each LP is governed by Texas Business Organizations Code (BOC) Title 4, Chapters 151, 153 and 154. Specific details governing the contents of the required certificate of formation are set forth in the BOC Title 1, Chapter 3, Subchapter A;
  • Every LP will have one or more general partners – as well as one or more limited partners. In addition to individual people, partners can also be corporations, partnerships and other types of legal entities;
  • Taxation. Keep in mind that limited partnerships are subject to paying a franchise tax. You can learn more about your partnership’s tax status by contacting the Tax Assistance Section of the Texas Comptroller of Public Accounts. (Be sure to research other possible federal government tax issues by visiting the Internal Revenue Service website at www.irs.gov);
  • In your certificate of formation, your LP must provide the Secretary of State’s Office with a fully unique name for your partnership that’s distinctly different from any other one currently in existence;
  • A registered agent (who has fully consented to serve in this role) and a registered office must be set forth in your certificate;
  • The name (and address) of each general partner must be provided in your certificate. Every general partner must sign the certificate of formation.

While this is not intended to be a comprehensive listing of every requirement for properly filing an LP’s certificate of formation, it should clearly indicate that you must provide highly accurate and detailed information. Once the Texas Secretary of State files your certificate, your LP should become legally recognized. However, since certain questions may be raised about the certificate’s contents, it’s always best to have a lawyer help you fill it out and then review it before it’s filed.

Lawyers in our office are always available to help you determine the best formal structure for your business – and to help you file all required paperwork with the Texas Secretary of State’s Office.