Avoid Probate

Estate Planning: Lady Bird Deed

2011-11-03T11:49:00.004-04:00

The term "Lady Bird Deed" is a nickname given to the Enhanced Life Estate Deed which is used to convey property to your heirs outside of probate. The nickname "Lady Bird" was given to the deed after President Lyndon B. Johnson allegedly used this type of deed to convey some of his real property to his wife Lady Bird. So why would President Johnson use this type of deed?

Lady Bird Deed Features
The Lady Bird Deed is a variation of the quitclaim deed with certain "enhanced" features. These features include:
(1) allowing the property owner to retain his homestead creditor and tax exemptions;
(2) keeping the property owner's home exempt from Medicaid claims during his lifetime;
(3) allowing the property owner to pass the property to his heirs outside of probate upon death free of Medicaid claims and liens; and
(4) allowing the property owner to sell or otherwise dispose of the property without the consent of the beneficiaries.

It is a specially designed instrument that is only available in certain states. Like the traditional Life Estate Deed there is often no capital gains tax if the property is sold shortly after your death. It goes beyond a life estate deed, because not only does the property owner get to live there for life, but the owner also reserves the right to sell or otherwise dispose of the property without the consent of the heirs. See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

Texas Enhanced Life Estate Deed

2011-11-02T17:11:00.000-04:00

Texas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away. In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Unlike Beneficiary Deeds in other states, the Texas Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive. This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive. There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

Florida Enhanced Life Estate Deed

2011-11-02T16:18:00.000-04:00

Florida is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away. In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Unlike Beneficiary Deeds in other states, the Florida Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive. This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive. There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Texas Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

Kansas Enhanced Life Estate Deed

2011-11-02T14:25:00.000-04:00

Kansas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away. In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Unlike Beneficiary Deeds in other states, the Kansas Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive. This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive. There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, and Ohio Enhanced Life Estate Deed.

What is a Beneficiary Deed?

2011-11-02T12:20:00.002-04:00

A Beneficiary Deed is used to transfer a property owner's real property to his heirs without going through the probate process which can be time consuming and expensive.

Included in the Beneficiary Deed are the names of the property owner's "beneficiaries." The interest in real property conveyed by a Beneficiary Deed does not take effect until the death of the owner. When the owner passes away the interest stated in the Beneficiary Deed transfers automatically by law to the designated "beneficiaries" named in the deed.

As stated above, a Beneficiary Deed takes the property out of the probate process as ownership is transferred upon death and no longer part of the decedent's estate. A beneficiary deed typically avoids the cost and delay of probate because the property is not part of the probate estate of the deceased owner. However, the property is usually included in the deceased's estate for estate tax purposes. Gift taxes may not apply because the Beneficiary Deed is not a present transfer of property.

Beneficiary Deed v. Trust
A Beneficiary Deed is typically less complex and expensive than setting up a trust. However, a trust may still be desirable in certain situations, such as when the beneficiary is a minor, when multiple beneficiaries will own undivided interests in the property, or when property is owned as joint tenants with right of survivorship.

Beneficiary Deeds are more common among the various states than the Enhanced Life Estate Deed. State laws governing beneficiary deeds vary by state, so local laws should be consulted.

Ohio Enhanced Life Estate Deed

2011-11-01T17:20:00.000-04:00

Ohio is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away. In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Unlike Beneficiary Deeds in other states, the Ohio Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive. This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive. There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

What is a Life Estate Deed?

2011-11-01T15:41:00.000-04:00

Life Estate Deed
A Life Estate Deed is a document that grants ownership of a parcel of real property to two separate parties: (1) the Life Tenant, and (2) the Remainderman.

The Life Tenant
The deed gives the Life Tenant complete use and ownership of the property for a certain period of time. That period of time is measured by the life of a natural person; usually the Life Tenant’s. In other words, if I am the Life Tenant and the time period is measured by my life then when I pass away the “life tenancy” automatically terminates. However, if the time period is measured by the life of my wife and my wife passes away before me the Life Estate automatically terminates upon her passing and I can legally be evicted from the property.

The Remainderman
When the Life Estate owned by the Life Tenant terminates, the Life Estate Deed transfers ownership of the property to the Remainderman. The Remainderman is the person or persons whose names are listed on the Life Estate Deed as a Remainderman. To officially transfer ownership, in most states the Remainderman need only record the death certificate of the person whose life was the measure of the Life Estate.

Transferring a Life Estate
A Life Estate may be transferred from the Life Tenant to any other person. However, the person to whom the Life Estate is transferred takes ownership subject to the same conditions as the original Life Tenant. This is so even if the person is unaware of the Life Estate.

A Life Estate may be transferred using a Warranty Deed. The Warranty Deed must contain the state specific Life Estate language to create a valid Life Estate.

Obligations of the Life Tenant
A Life Tenant owes certain duties and obligations to the Remainderman. The Life Tenant is required to pay real estate taxes assessed against the property during the Life Tenancy, protect the property from tax sales, and keep the property free from encumbrances and not to allow the property to just go to waste.

A Life Estate is different from an Enhanced Life Estate. You can read my other articles on the Enhanced Life Estate Deed for a greater understanding of the differences.

Creditors and the Lady Bird Deed

2011-11-01T12:19:00.000-04:00

Does a Lady Bird Deed Protect My Property from Creditors of My Beneficiaries?
Yes. A Lady Bird Deed does not transfer ownership of the property to your beneficiaries until you pass away. This is different from other forms of transfer like the life estate, tenancy in common or joint tenancy with right of survivorship. While you are alive, your beneficiaries' creditors cannot attach or satisfy any claims to your property. A Lady Bird deed even allows you to remove a beneficiary if you find out that beneficiary has a creditor or creditors who would end up taking that beneficiary's portion of your property.

In states that recognize "tenancies by the entireties," Lady Bird deeds also protect married couples who own their home as husband and wife.

Ohio Payable on Death Accounts

2011-11-01T11:39:00.000-04:00

Ohio's banking regulations allow bank account owners the ability to name a beneficiary of their bank accounts in the event the bank account owner dies.

POD Account Avoids Probate
A Payable on Death (POD) bank account is not included in the account owner's estate and, therefore, passes to the beneficiary outside of probate.

How a POD Account Works
A POD account is different from a Joint Account in that the named beneficiary of a POD does not own an interest in the bank account until after the bank account owner passes away. The beneficiary cannot withdraw funds from the account while the owner is still alive and creditors of the beneficiary cannot attach the account to satisfy the beneficiary's debts.

How a POD Account is Set Up
To set up a POD bank account you will be required to execute a written contract with the bank designating the beneficiary of the account. Your bank likely has a standard form POD contract, but if not you may want to consult an Estate Planning attorney. The contract allows the owner to retain full ownership of the accound during his lifetime and to change the named beneficiary as often has desired.

Ohio Transfer on Death Deed

2011-10-31T16:29:00.000-04:00

In August 2000, the Ohio General Assembly approved the “Transfer on Death Deed” in the State of Ohio. The Ohio Transfer on Death Deed allows a property owner to transfer his or her property to beneficiaries named in the deed when the property owner dies. The obvious benefits to the Ohio Transfer on Death Deed are: (1) the property is passed to the heirs without having to get the courts involved with the probate process, and (2) there are no gift tax consequences like there might be using a Joint Tenancy with Right of Survivorship. The transfer is still subject to estate taxes.

Requirements for Valid Transfer on Death Deed There are several requirements that must be met before a Transfer on Death Deed is will be recognized in Ohio. Among the requirements are: (1) The deed must name the beneficiary or beneficiaries of the property (a contingent beneficiary may be named should one of the beneficiaries die before the property owner); (2) The deed must be properly executed; and (3) The deed must contain the language prescribed under the Ohio Revised Code §5302.22

Beneficiaries Must Survive Property Owner Only beneficiaries who survive the property owner may inherit the property. This means you cannot designate a class of people, such as “all of my children” or “all of my lineal descendants, per stirpes,” the way you can in your Will or Trust. The birth of additional children born after the Transfer on Death Deed was executed may mean a new deed will need to be executed.

Affidavit of Death When the property owner passes away, the surviving beneficiaries must file an affidavit with the county recorder in the county where the land is located. Once the affidavit is recorded the property is owned by the surviving beneficiaries A certificate of death must accompany the affidavit. The affidavit must: (1) state that the owner of record is deceased; (2) identify the property; (3) name all beneficiaries who survived the property owner; and (4) name all beneficiaries who did not survive the property owner.

Other Significant Aspects to the Transfer on Death Deed (1) If there are multiple surviving beneficiaries the become co-owners with equal shares in the property; (2) The surviving beneficiaries take the property subject to any liens, encumbrances, or other rights of creditors; and (3) The Transfer on Death Deed does not give a beneficiary any legal interest in the property during the property owner’s lifetime. The beneficiary has no ownership rights until the property owner dies.

Bankruptcy: Postpetition Income Part I

2011-10-14T22:00:00.000-04:00

The Question Presented
If I file bankruptcy what happens to my postpetion income? That issue was faced by a debtor doctor who filed a bankruptcy petition some time ago, but continued to practice medicine from consulting rooms sheowned prior to the petition. She also continued to use equipment and suppliespurchased before her bankruptcy. Is her postpetition income property of the bankruptcy estate? (Answer to follow)

The Bankruptcy Code
The Bankruptcy Code states that a petition for bankruptcy creates a new legal entity separate and apart from the debtor's prepetition estate. The debtor`s property prior to the date of bankruptcy goes into the bankruptcy estate. In due course, all the prepetition property is liquidated and its proceeds distributed to creditors.At the same time as the bankruptcy estate is created, the individual Ch. 7 debtor begins to accumulate a new estate. This new estate consists of earnings and property acquired after the filing as well as property that has been released to the debtor from the estate as exempt or abandoned by the trustee has having no economic value. These postpetition assets of the debtor are the basis of his or her fresh start. Petition creditors cannot reach them because they are stayed from doing so pending the debtor’s discharge, and are thereafter permanently enjoined from collecting prepetition debts.

So What About the Postpetition Income?
Where the debtor is in the business of rendering personal services (eg., as a doctor, lawyer, or other professional), the doctor's earnings must be apportioned between the bankruptcy estate and the new estate. The doctor is not entitled to all the postpetition income derived from the business. The part attributable to the debtor’s own services does not fall into the bankruptcy estate, but the remainder deriving from the capital, assets, goodwill, or employees’ labor is property of the estate.

For more bankruptcy information read: Bankruptcy: Postpetition Income Part II, Bankruptcy: Automatic Stay, and What is Bankruptcy, Bankruptcy: Fresh Start, Bankruptcy: Student Loans, Bankruptcy: Means Test, Bankruptcy: Income Eligibility, Bankruptcy: New Asset Evaluation

Bankruptcy: Postpetition Income Part II

2011-10-13T23:26:00.000-04:00

Post Petition Income from Sale of BusinessA debtor sold her business about ll months before filing her bankruptcy petition. At the time of the sale, the debtor entered into a non-competition agreement with the purchaser under which the debtor agreed, for a consideration of $150,000 per year, not to compete with the business in a specified area for a period of five years. This type of non-compete is not uncommon. The annual payments were to be made at the end of each of the five years. About a month after the petition, the debtor received the first payment. The question became whether the payment is property of the bankrutpcy estate?

The Bankruptcy Code
The Bankruptcy Code states that a petition for bankruptcy creates a new legal entity separate and apart from the debtor's prepetition estate. The debtor`s property prior to the date of bankruptcy goes into the bankruptcy estate. In due course, all the prepetition property is liquidated and its proceeds distributed to creditors.At the same time as the bankruptcy estate is created, the individual Ch. 7 debtor begins to accumulate a new estate. This new estate consists of earnings and property acquired after the filing as well as property that has been released to the debtor from the estate as exempt or abandoned by the trustee has having no economic value. These postpetition assets of the debtor are the basis of his or her fresh start. Petition creditors cannot reach them because they are stayed from doing so pending the debtor’s discharge, and are thereafter permanently enjoined from collecting prepetition debts.

So What About the Sale of the Business?
Although the earnings from the non-competition agreement accrue postpetition, the agreement creating the right to the earnings was entered into prepetition. The proceeds from the non-competition agreement were derived from the debtor’s prepetition activities, and are likely proceeds
of the bankruptcy estate property.
For more bankruptcy information read: Bankruptcy: Postpetition Income Part I, Bankruptcy: Automatic Stay, and What is Bankruptcy, Bankruptcy: Fresh Start, Bankruptcy: Student Loans, Bankruptcy: Means Test, Bankruptcy: Income Eligibility, Bankruptcy: New Asset Evaluation

Bankruptcy: Debtor's New Estate

2011-10-13T22:09:00.000-04:00

The Question Presented
If I file bankruptcy can I keep my cat? That may seem like a strange question, but that was just the situation faced by a debtor in a recent Chapter 7 filing. At the time of the petition the debtor owned a pregnant Persian cat. The cat produced a litter three weeks after the filing. So who owns the cat and who owns the kittens? (Answer to follow)

The Bankruptcy Code
The Bankruptcy Code states that a petition for bankruptcy creates a new legal entity separate and apart from the debtor's prepetition estate. The debtor`s property prior to the date of bankruptcy goes into the bankruptcy estate. In due course, all the prepetition property is liquidated and its proceeds distributed to creditors.At the same time as the bankruptcy estate is created, the individual Ch. 7 debtor begins to accumulate a new estate. This new estate consists of earnings and property acquired after the filing as well as property that has been released to the debtor from the estate as exempt or abandoned by the trustee has having no economic value. These postpetition assets of the debtor are the basis of his or her fresh start. Petition creditors cannot reach them because they are stayed from doing so pending the debtor’s discharge, and are thereafter permanently enjoined from collecting prepetition debts.

So Who Owns the Cat and Kittens?
Although property acquired by a Ch. 7 debtor after the petition is generally part of the debtor’s new estate, the Bankruptcy Code includes certain postpetition receipts in the estate if they have an appropriate connection with prepetition property.The Persian cat became property of the bankruptcy estate upon the debtor’s petition filing. Although the litter was born after the petition, it is property of the bankruptcy estate which includes in the estate all proceeds, product, offspring, rents or profits of or derived from estate property. It should be noted that if the cat or kittens had no economic value the bankruptcy estate would ultimately abandon them to the debtor.

For more bankruptcy information read: Bankruptcy: Automatic Stay, and What is Bankruptcy, Bankruptcy: Fresh Start, Bankruptcy: Student Loans, Bankruptcy: Means Test, Bankruptcy: Income Eligibility, Bankruptcy: New Asset Evaluation, Bankruptcy: Postpetition Income

Bankruptcy: Fresh Start Policy

2011-10-13T16:11:00.000-04:00

One of the cases heard in Bankruptcy Court today involved a twenty something who graduated from college 3 or 4 years ago. After graduation he got a job with the State of Florida which pays him an annual salary of around $40k per year. He apparently thinks he makes $80k as he lives in a $2,000 per month appartment, drives a brand new BMW and has $35,000 in an unsecured loan. He has fallen behind on his car payments and on the loan. With few real assets and unable to pay his debts he has filed a petition to have his debts discharged in bankruptcy. The Bankruptcy Court will have to decide whether he is deserving of a "Fresh Start." In doing so, the Court will be taking into account the following considerations:

Why Give the Debtor a Fresh Start?
One goal of the Bankruptcy Code's long-term debtor rehabilitation is to give the debtor a "fresh start." Assuming the debtor has complied with the Code’s requirements and has surrendered executable assets or sufficient future income for distribution to creditors, the debtor is entitled to a new beginning, unburdened by the unpaid balance of prebanktuptcy debts. The fresh start is intended not only to serve the interests of the debtor but also the public good. A rehabilitated individual debtor may become self-sufiicient once again, rather than a public charge. The rehabilitation of a corporate or business debtor may preserve jobs and add to the general well-being of the economy.

Cons of the Fresh Start Policy
In determining who may receive a bankruptcy discharge, bankrupcty courts have to balance the above considerations against the harm individual debtor may fail to learn from the bankruptcy and may simply slide again into debt, or, where a business is failing, attempting to save it may ultimately be less economically advantageous than selling its assets to a more effective user. Furthermore, the debtor’s fresh start comes at the expense of its creditors, who are forced to forgive a portion of the debt to which they would otherwise have been entitled. In addition to the direct effect that this has on the creditors themselves, the discharge of debt adds to the cost of giving credit and, therefore, affects the market as a whole. That is, borrowers ingeneral are likely to pay more for their credit because lenders factor into their interest rates the predicted percentage of loans that will be uncollectible because of bankruptcies.

So What Decision Will the Court Make?
It is a longstanding policy of bankruptcy law that relief is intended to help the honest debtor who has encountered serious financial difficulty. Bankruptcy is not supposed to enable prodigals to evade payment of their debts. This does not mean that aprodigal should never be placed in bankruptcy. Sometimes the bankruptcy of a dishonest or manipulative debtor serves the best interests of creditors. It does mean, however, that when bankruptcy has the effect of allowing a dishonest debtor to take advantage of creditors, it should be denied to the debtor. To draw the line between a deserving and undeserving debtor requires a moral judgment which is not always self-evident or easy to make. Nevertheless, many provisions in the Code require the court to take into account the debtor’s good faith or sincerity in determining the availability and form of relief. Sometimes an undeserving debtor may be denied relief altogether, and sometimeslimits may be imposed on the advantages to be obtained by the debtor.In the end, the Code generally favors rehabilitation over liquidation, on the theory that creditors are usually likely to do better under a plan of payment. The Bankruptcy Court will likely grant a discharge.

For more bankruptcy information read: Bankruptcy: Automatic Stay, and What is Bankruptcy, Bankruptcy: Fresh Start, Bankruptcy: Student Loans, Bankruptcy: Means Test, Bankruptcy: Income Eligibility, Bankruptcy: New Asset Evaluation,

What Is Bankruptcy?

2011-10-13T15:57:00.000-04:00

When a debtor files bankruptcy in a Federal Bankruptcy Court the federal and state debt collection procedures that are otherwise available to creditors are replaced by a powerful and wide-ranging system of federal laws and procedures. Bankruptcy takes different forms and is flexible enough to accomplish different goals. Two of the distinctive characteristics that make bankruptcy so different from collection remedies under state law are: (1) Bankruptcy encompasses all of the debtor’s assets and debts; and(2) Bankruptcy is designed to afford relief to the debtor by resolving and settling current debts, while at the same time protecting creditors and guarding their interests.

For more articles on Bankruptcy see: Bankruptcy: Automatic Stay,

Bankruptcy: Don't Violate the Automatic Stay

2011-10-13T15:09:00.000-04:00

What happens when a major banking institution decides to proceed with the sale of levied property even though the property owner has filed bankruptcy and an Automatic Stay is in effect? That issue came up last week in Bankruptcy Court. The debtor had defaulted on a loan from her bank. The bank filed a collection suit against her, obtained a default judgment, and issued a writ of execution. The sheriff then levied on her personal property creating a lien on the property. An execution sale was subsequently scheduled, but before the sale date the bank received notice from the clerk of the bankruptcy court that the debtor had filed a Chapter 7 Bankruptcy petition. Because the collection suit was so close to its conclusion, the bank decided to proceed with the sale, thereby avoiding the need to become involved in the debtor’s bankruptcy proceedings. Was the bank's decision to proceed with the sale legal? Short answer: absolutely not.

Automatic Stay
Under Section 302 of the Bankruptcy Reform Act, filing a petition for bankruptcy automatically provides a debtor with protection from creditor harassment. In simple terms, the automatic stay is an injunction that arises by operation of law immediately upon the commencement of the bankruptcy case. It is described as automatic because the act of filing the bankruptcy petition is all that is required to bring it into effect. No application for the injunction is made, and no court order is needed. Its effect is to impose a wide-ranging prohibition on all collection activity against the debtor. Any action by a creditor after the Automatic Stay is in effect is void even if the creditor did not know about the Stay when the action was taken.

So What Happened to the Bank?
The Bankruptcy Court concluded that the bank sale was a violation of the Bankrupcty Code's Automatic Stay provisions. The fact that the bank continued with the sale even after receiving notice of the bankrupcty made the bank a willful transgressor of the Stay. The Court tonguelashed the bank's representative and reserved ruling on additional sanctions. The bank could be held in contempt of court or be held liable for the debtor's actual damages, including costs, attorney’s fees, and punitive damages. The Bankruptcy Court determined that the bank had committed a "willful violation" which means its actions were intentional, even if the creditor believed it had a right to proceed.

Bankruptcy: Obtaining an Inheritance After Filing the Petition

2011-10-13T11:18:00.000-04:00

Bankruptcy and Inheritance
If I file bankruptcy and then receive and inheritance, does the inheritance become part of my bankruptcy estate?

Answer
The Bankruptcy Code includes in the bankruptcy estate any property that the debtor acquires or becomes entitled to by bequest, devise, or inheritance within 180 days after the petition is filed, if such property would have been property of the estate if the debtor had an interest in it at the time of the petition. The inheritance is estate property.

The Bankruptcy Code
The Bankruptcy Code states that a petition for bankruptcy creates a new legal entity separate and apart from the debtor's prepetition estate. The debtor`s property prior to the date of bankruptcy goes into the bankruptcy estate. In due course, all the prepetition property is liquidated and its proceeds distributed to creditors.At the same time as the bankruptcy estate is created, the individual Ch. 7 debtor begins to accumulate a new estate. This new estate consists of earnings and property acquired after the filing as well as property that has been released to the debtor from the estate as exempt or abandoned by the trustee has having no economic value. These postpetition assets of the debtor are the basis of his or her fresh start. Petition creditors cannot reach them because they are stayed from doing so pending the debtor’s discharge, and are thereafter permanently enjoined from collecting prepetition debts.

For more bankruptcy information read: Bankruptcy: Postpetition Income Part I, Bankruptcy: Postpetition Income Part II, Bankruptcy: Automatic Stay, and What is Bankruptcy, Bankruptcy: Fresh Start, Bankruptcy: Student Loans, Bankruptcy: Means Test, Bankruptcy: Income Eligibility, Bankruptcy: New Asset Evaluation

Warranty Deed (General and Special) and Quitclaim Deed

2011-10-07T17:06:00.002-04:00

Deeds in General

A deed is a written document which transfers all or partial ownership in real property to someone else. The deed must describe the real property, name the person transferring the property, the person receiving the property and must be signed and notarized by the transferring person. Once signed and notarized, the deed must be recorded in the office of the local county records.

Warranty Deed v. Quitclaim Deed
Two ofen used types of deeds include the Warranty Deed and Quitclaim Deed. The Warranty Deed guarantees that the transferring party owns clear title to the property while the Quitclaim Deed transfers only that interest in the real property which the transferor actually owns.

What Does a General Warranty Deed Warrant?
Depending on the state, a Warranty Deed warrants the following:

(1) The transferor warrants that he is the lawful owner of the property at the time the deed is made and delivered and that the transferor has the right to convey the property;
(2) The transferor warrants that the property is free from all encumbrances or liens;
(3) The transferor warrants that he or she will defend title to the estate so that the transferee and the transferee's heirs and assigns may enjoy quiet and peaceable possession of the premises with the power to convey the property.

What Does a Special Warranty Deed Warrant?
In contrast to a general warranty deed, a special warranty deed limits the liability of the transferor in a manner similar to the Quitclaim Deed. Special warranty deeds are generally used by corporations or other entities that want to avoid assuming the liability of a general warranty deed. The transferor warrants that he or she did nothing to impair title during the period the transferor owned the property. While a special warranty deed may contain covenants of title, these covenants will usually cover only those claims arising by, through, or under the transferor.

What Does a Quitclaim Deed Do?
A Quitclaim Deed contains no warranties and the seller does not take on any liability to the purchaser for other recorded claims against the property. The purchaser takes the property subject to existing taxes, assessments, liens, encumbrances, covenants, conditions, restrictions, rights of way and easements of record. A person who obtains a mortgage is still liable for mortgage payments after executing a Quitclaim deed on the property securing the mortgage.

The Quitclaim Deed is often used among family members or from one joint owner to the other when there is little question about existing ownership, or just to clear the title. A Quitclaim Deed conveys only such rights as the grantor has. A Warranty Deed conveys specifically described rights which together comprise good title. If the property is owned jointly, all owners must consent to the transfer. You cannot force a joint owner sign an instrument such as a Quitclaim Deed that would result in the forfeiture of the joint owner's interest in the property.

California Warranty Deed

2011-10-06T19:02:00.000-04:00

Covenant of Warranty
In contrast to the Quitclaim Deed, a Warranty Deed is a deed that contains an express covenant of warranty. A covenant of warranty is an undertakingby the grantor that he will compensate the grantee upon thefailure of the grantee’s title by reason of some third partysetting up a superior title. A covenant of warranty that is in the deed and made for the direct benefit of the property runs with the land and thus the grantor is liable to purchasers from his grantee as well as the grantee. A covenant of warranty is breached only when the grantee is evicted from possession of the property.

Quiet Possession
A covenant for quiet possession or enjoyment is similar to a covenant of warranty and will provide compensation to the grantee if his quiet possession of the property is disturbed. It too runs with the land and is not breached until the quiet possession is disturbed. Another similar covenant is the covenant for further assurance under which the grantor covenants to do such further acts for the purpose of perfecting the grantee’s title as the grantee may reasonably require. It too runs with the land.

Right to Convey
The final covenant is the covenant of right to convey. It is similar to the covenant of seisin but it may be used by one who does not own the property but has the right to convey it such as an attorney in fact for the owner. It does not run with the land and is breached at the time of conveyance. Warranty deeds and the other covenants discussed in this section are not used very often in California because buyers rely on title insurance to protect them if they have title problems.

8a Certification

2011-10-05T11:44:00.000-04:00

8a Certification is required before the GSA will give a minority owned or woman owned small business the benefits of federal contracts that have been set-aside for such businesses. The process can be long and tedious if you do it yourself. It can be much quicker and cheaper (in the long run) to hire a company that specializes in federal government contracting and 8a Certification. The reason it can be longer and more tedious is because a simple mistake at the beginning (like entering the wrong procurement classification code) and your whole application can be processed incorrectly. Companies that specialize in 8a Certfication have seen the potential areas for messing up an application and know up front what questions to ask you so that your application is processed correctly from the beginning.

This GSA Website has a ton of information dealing with 8a Certification, Central Contracor Registration, Set Asides for Small Businesses, DUNS Numbers, Form 1010 and GSA Contracts.

California Quitclaim Deed

2011-10-04T18:46:00.000-04:00

Form and Use of Quitclaim Deed
The quitclaim deed is probably the second most popular deed in California. It is often used in transfers of real property among friends and relatives, where the grantee does not seek any personal guarantees from the grantor; in transfers of real property by gift; and in transfers made for the purpose of unclouding title to real property. In this way, the Quitclaim deed differs from the Warranty Deed which grants certain warranties to the grantee.

A quitclaim deed is distinguished from a grant deed by the use of the Word "quitclaim" rather than "grant" as the operative word of the deed. In general, a quitclaim deed will not transfer after-acquired title, but where the equitable interest of the grantor has been conveyed by a quitclaim deed, a later legal title acquired by the grantor is deemed to be transferred. Unlike a grant deed, a quitclaim deed does not imply coveants. Subject to recording laws and sales made by the sheriff under execution a grantee of a quitclaim deed takes the interest of the grantor in the land subject to all defects and equities which could have been asserted against the grantor.

Recording a Quitclaim Deed
Quitclaim deeds are entitled to be recorded, and the grantee of a quitclaim deed may be a purchaser for a valuable conderation, without notice, within the recording laws, so as to be protected from unrecorded instruments, of which he or she had no notice, which affect the title to the property.

8a Certified Business

2011-10-04T15:05:00.000-04:00

An 8a Certified Business is a small business which has been registered with the GSA as being economically or socially disadvantaged. In general, most 8a businesses are either minority owned or women owned. The GSA has identified a number of races as qualifying for minority status. These include: African-Americans, Hispanic Americans, Asian Pacific Americans, Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians), and Subcontinent Asian Americans. If you are not a member of one of these groups you may still be able to show that you are socially disadvantaged to receive 8a consideration.

Check out this GSA Website for more articles on 8a Certification, CCR Registration, Small Business Set Asides, DUNS Numbers, and GSA Contracts.

What Does It Mean to Own Property as "Tenants in Common"?

2011-10-03T13:52:00.003-04:00

Owning property as Tenants in Common means two or more people (or businesses) own an undivided interest in a piece of property. Each property owner has the right to use the property without being able to exclude the other owner or owners from using it unless a separate written agreement states otherwise. When one of the tenants dies, his or her interest in the property passes to his or her heirs and not to the other tenants (unless the other tenants are also heirs).

There is no limit to the number of owners who can hold an interest in the property.

Tenants in Common v. Joint Tenants with Right of Survivorship

The biggest difference between a Tenancy in Common and Joint Tenancy is in the way the property is transferred when an owner dies. Under a Tenancy in Common, the deceased owner's interest passes to his or her heirs via Will, Trust, intestate, etc. Under a Joint Tenancy, the deceases owner's interest passes to the other owners (i.e. those who "survived" the deceased owner).

Other characteristics of a Tenancy in Common

(1) Ownership can be held in equal shares or unequal shares.
(2) Each owner has the right to possess the property without being able to exclude the other. Again, a separate agreement can be drafted and signed by all of the owners outlining who is to occupy the property and when. This is often the case in a time-share property.
(3) When an owner dies, that owner's interest passes to that owner's heirs.

Other Suggested PostsBefore buying property as a "Tenant in Common" check out these other related articles: Estate Planning and the Enhanced Life Estate Deed, The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quitclaim Deed, The Traditional Life Estate Deed, The Revocable Transfer on Death Deed and California's Revocable Deed, Joint Tenants with Right of Survivorship.

Child Custody Information

2011-10-02T12:26:00.001-04:00

In determining Child Custody in a divorce proceeding, the most important question asked by the courts is "what is in the best interest of the child?" This question focuses the courts' attention on the custody and care of the child and away from the desire and wishes of the two competing (and often hostile) parental interests. Although there are no uniform standards among the states as to what factors make up the "best interests of the child," the child's ultimate safety and well-being are of the greatest concern.

Principles Used to Determine the "Best Interest of the Child"
Courts are to assume the following in making a determination on the best interest of the child:
(1) It is important to maintain stability through family integrity and keeping the child in his or her home;
(2) It is important to protect the health and safety of the child;
(3) It is important to make a timely decision that will result in permanency and stability;
(4) It is important when a child is taken from his or her home that the child be given care, treatment, and guidance that will assist the child in developing into a self-sufficient adult.

Factors Used in Determining the Best Interest of the Child
Given the assumptions stated above, the Courts then consider the following factors:
(1) The ties between the child and his or her parents, siblings and other family members;
(2) The ability of the parents to provide food, shelter, medical care and other necessities for the child;
(3) The mental and physical health needs of the child;
(4) The mental and physical health of the parents;
(5) Whether there is a history of domestic violence in the home; and
(6) In some states the child's wishes, but most of these states require the child to have reached a certain age of maturity.

What is Child Support and How is it Determined?

2011-10-01T16:53:00.003-04:00

In a divorce proceeding where minor children are involved, the Court may order (and usually does) one of the parents to pay to the other parent funds to be used to support their children. These funds are commonly referred to as Child Support. Although the Court will take into consideration an agreement between the parties for child support, any such agreement will be nullified by the Court if it does not provide for the proper care and maintenance of the children.

Depending upon the state, some of the factors considered by courts in deciding whether (and how much) child support is to be paid by one spouse to the other include:
(1) the ages of the children;
(2) a child's extraordinary medical costs or needs that are not paid by insurance;
(3) the children's educational costs;
(4) the children's day care costs;
(5) the amount of shared physical custody, including extended visitation;
(6) a party's other support obligations to another household;
(7) income that should be imputed to a party because of voluntary "suppression" of income (i.e. when one party won't get a job just to avoid paying child support);
(8) in-kind income for the self-employed, such as reimbursed meals or a company car;
(9) other support a party is providing or will be providing, such as payment of a mortgage;
(10) a party's own extraordinary needs, such as medical expenses;
(11) extreme economic circumstances, such as one party having a ton of debt or making a ton of money;
(12) the history of the family's spending for their children;
(13) cost of living factors in the community of each party;
(14) in-kind contributions of either party;
(15) the income of the custodial parent;
(16) the cost of accident and illness insurance coverage for the dependent children; and
(17) extraordinary travel expenses to exercise visitation or shared physical custody.

Modification of Child Support
In most states, an order for child support may be modified by showing that a substantial change in the income and financial status of either former spouse has occurred. Also, modification may be ordered when the needs of the children have substantially changed and the best interests of the child would be served by the modification.

Enforcing a Child Support Order
Failure to make the required child support payments can result in a continuing writ of garnishment against the income of the delinquent former spouse. In many states, the Court may also suspend the delinquent spouse's professional and driver's licenses or have the delinquent spouse thrown in jail for failing to comply with a Court Order (i.e. contempt of court).

Given the complexities that go along with divorces involving children, you are best off hiring an attorney to handle such a divorce. As a practical matter, it is much easier to get what you want in the original child support order than to try to modify the order later.

Estate Planning: Dividing Property Amongst Heirs

2011-09-07T11:36:00.000-04:00

"When my father died he was 85 years old and had very little property of monetary value. He did have a number of sentimental items (paintings, jewelry, photo albums,etc) some of my siblings and I had given him over the years. After the funeral we went back to his home and started sorting through his belongings. For the most part, the process was friendly and gave us a chance to reminisce happier times. For the most part that is.We decided to divide up my father's belongings by returning each item to the giving sibling. I had given him a football signed by Johnny Unitas and some other sports related memorabilia. It became clear during the process that one of the siblings had given much less (i.e. nothing) to him than the rest. That particular sibling also received more financial assistance from my father than the others. As the night went on and we worked our way from one room to the next, that sibling started getting upset about the lack of items she had received. She started accusing me and my other siblings of being 'greedy, heartless and cold.' Our pleasant experience down memory lane was gone." The above account is real, and indicative of what can happen if you leave the decision about who gets what until after die. You can avoid this scenario if you plan ahead and discuss it with your heirs.

Discuss Who Gets What
One way you can avoid hurt feelings when you pass away is to discuss with your heirs who gets what before you die. These discussions will allow you to explain the things contained in your will and to share precious memories with your family in the process. You may find out that your youngest son would rather have your Navy flight jacket instead of your vintage automobile (this actually happened to one of my clients) or that your daughters would rather exchange with each other the items you had left to them. The homework desk your father made you when you were 7 may need to go to your grandson instead of your son.

Make a ListOnce you have decided who should get which item, make a list and keep it in a safe place with your Will or other estate planning information. You may also want to send the list to your attorney. If you end up giving away items off the list before you die, be sure to update the list, so there isn't any confusion.

Other Estate Planning Articles
Estate Planning and the Enhanced Life Estate Deed, The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quitclaim Deed, The Traditional Life Estate Deed, The Revocable Transfer on Death Deed and California's Revocable Deed.

Asset Protection: Four Important Techniques

2011-09-01T14:41:00.000-04:00

The topic of Asset Protection from creditors is an important one. The following are four general techniques you should consider when deciding how to protect your assets:

(1) State and Federal Statutory Exemptions.A number of your assets are automatically protected from creditors by state and federal statutes. For example, some states do not allow judgment creditors to attach the home of a "head of household" to the judgment. The term "head of household" applies to a person who supports either a spouse or children or both. You should consult an attorney to determine which Statutory Exemptions are available in your state.

(2) Forming a Professional Entity.Forming a Corporation, LLC, PC or other professional entity can limit your individual liability. If you own rental homes or other rental properties you may consider forming a corporation or other professional entity and placing ownership of the property into the entity. If someone is injured on the property your personal assets will be exempt from any potential judgment against the professional entity.

(3) Domestic Asset Protection Trusts.A Domestic Asset Protection Trust will allow you to protect your assets by placing them into a trust. You can name yourself as the beneficiary, but prevent potential creditors from getting at trust assets.

(4) Transmutation Agreements.Transmutation Agreements are available in community property states and effectively convert a husband and wife's community property into separately owned property for more protection.

Medicaid and the Lady Bird Deed

2011-08-08T11:25:00.000-04:00

Does Medicaid Look at a Lady Bird Deed as a Divestment of Assets?
No. In general, a patient who gratuitously transfers property to his or her children reserving a life estate, or transfers property into a joint tenancy or tenancy in common is subject to a Medicaid divestment penalty if the transfer occurs within 60 months from the date of the Medicaid application. A Lady Bird Deed does not transfer ownership of the property at the time it is executed and may be used to avoid the divestment penalty.

What is Alienation of Affection?

2010-11-07T17:01:00.000-05:00

Alienation of Affection is a legal term for convincing one spouse to leave the other spouse for a lover. The damages resulting from Alienation of Affection are those resulting from the loss of conjugal relations. The lawsuit is brought against the lover and not the spouse. Hawaii, Illinois, North Carolina, Mississippi, New Mexico, South Dakota, and Utah are the only states that still recognize it as a cause of action as of the date of this post.

See my other post on Alienation of Affection about a lady who obtained a judgment for $500,000 against her husband's mistress.

Trusts: Rule Against Accumulations

2010-11-03T00:03:00.000-04:00

Rule Against Accumulations
In most states a private trust may accumulate income only for the period of the Rule Against Perpetuities, unless a different period is set by statute. While the Rule Against Perpetuities is concerned with restraint on alienation of property as a result of the creation of uncertain and remote future interests, the Rule Against Accumulations is concerned with the unreasonable tying up of wealth as the result of unreasonable accumulation requirements. A gift which vests within the period ofthe Rule Against Perpetuities will be valid although a provision as to the same gift requiring accumulation beyond the period of the Rule will be stricken.

Trusts: Rule Against Perpetuities

2010-11-02T23:54:00.001-04:00

The common law Rule Against Perpetuities holds that a beneficiary’s interest in a trust is void unless it must vest, if at all, within twenty-one (21) years after some life in being at the creation of the trust.

However, there has been a modern trend toward reform of the Rule. The reform Rule states that a beneficiary’s interest will not be found to be in violation of the Rule if it must vest within 21 years of some life in being at the creation of the trust or actually does vest within 90 years after its creation. This is a statutory "wait and see" rule. In determining whether a beneficiary’s interest must vest within 21 years after a life in being, the possibility that a child will be born to an individual after the individual’s death is disregarded.

Some states have also statutorily alleviated the more damaging consequences of the Rule by
allowing their courts to modify the trust mode of distribution so as to bring the beneficiaries’
interests within the Rule. In some states, the court with jurisdiction of the trust may exercise its equitable power to reform the disposition in a manner which conforms with the settlor’s manifested plan of distribution and is also within the limits of the prior existing Rule of Perpetuities. In other states, the court can exercise its equitable power to modify the trust disposition in a manner which both conforms with the settlor’s plan of distribution.

Estate Planning: Where Should I Keep My Will?

2010-10-28T13:03:00.004-04:00

Losing your Will can create a nightmare for your heirs and result in your property ending up with an unintended beneficiary. Keeping up with a Will presents the distinct problem of keeping the contents secret from your heirs, and still making sure they can access it once you pass away.

Try a Safe Deposit Box
You may consider renting a safe deposit box for your Will. A safe deposit box would keep the Will away from your heirs, but might make it difficult for family members to retrieve the Will when the time comes. If you choose a safe deposit box, you might consider granting access to someone you trust to leave the Will alone until it needs to be probated.

Leave Your Will with an Attorney
You may choose to leave the original of your Will with an attorney. An attorney is obligated to keeping your Will confidential, and may only charge a nominal fee for maintaining it.

Alimony in Gross (Lump-sum Alimony)

2010-01-03T13:39:00.000-05:00

"Alimony in Gross" or "Lump-sum Alimony" refers to alimony that is fixed, single, and definite in amount which cannot be modified in subsequent modification proceedings. Alimony in gross is referred to as "lump-sum" alimony because it can take the form of a specific number of payments over a specific period of time.

Usually, Alimony in Gross is given as part of the property settlement in divorce proceedings. It compensates the recipient of the alimony for the loss of inchoate property rights in the spouse's estate. Upon receiving the alimony in gross the property rights of the recipient over the spouse's estate gets terminated. Alimony in Gross can be subject to discharge in bankruptcy proceedings.

An award of Alimony in Gross should be based on:

(1) each party's earning ability;
(2) probable future prospects of the parties;
(3) source of the marital property;
(4) the contribution of each party to marital property attainment;
(5) the duration of the marriage;
(6) the extent of the offending party's fault; and
(7) the compensation to the recipient for the loss of future support and statutory inchoate property rights.

See also Alimony Pendente Lite (i.e. Temporary Alimony).

Temporary Alimony or Alimony Pendente Lite

2010-01-02T13:51:00.000-05:00

Temporary Alimony or "Alimony Pendente Lite" is a court ordered temporary alimony awarded during the time an action for separation or divorce is pending. The purpose for Temporary Alimony is to provide support during the divorce process so that each spouse can maintain his or her standard of living.

Temporary alimony can also be referred to as temporary spousal support, or allowance pendent lite.

The term "Alimony" should be distinguished from Child Support as the two are separate legal principles.

If I Have a Living Trust, Do I Still Need A Will?

2009-11-11T13:22:00.003-05:00

The answer is, Yes. You still need a Will to transfer assets that may not have been transferred to your trust during your life. The type of Will that transfers the assets to your trust is called a "Pour-Over Will." Once you establish a living trust, you still need to remember to transfer your assets into the trust. Assets that are not in your trust, do not have beneficiary designations or are not jointly titled with another individual will be subject to probate.

Remember
Most people understand that there is no tax liablity (not under the current Tax Code anyway) when one spouse dies and the assets pass to the surviving spouse; however, they do not realize that they have lost the first spouse's available tax credit.

You can pass your assets under the marital deduction if you meet one of the following conditions:
(1) Your property is currently titled jointly with your spouse. One example of this is a deed titled as "Joint Tenants with Right of Survivorship;" or

(2) Your spouse is the primary beneficiary of life insurance, annuities and retirement plans; or

(3) Your Will transfers everything to your surviving spouse.

It does not matter how your assets pass to your surviving spouse; if they do, they are passing under the marital deduction, and you are not using your available credit.

How to Preserve the Credit
One way to preserve the credit and help ensure that your spouse receives income and principal is by setting up a credit shelter trust. You can use your credit by transferring assets outrigth to someone other than you surviving spouse (i.e., a child). Most couples do not desire this because the child receiving the assets has no legal duty to share with the surviving spouse. In addition, unexpected gift tax problems can arise.

What is an Alimony Trust?

2009-11-10T14:17:00.000-05:00

An Alimony Trust is a trust set up where the paying spouse pays or transfers to the trustee of the Alimony Trust money or property from which the receiving spouse will be supported after divorce or separation. The receiving spouse is named as the beneficiary of the Alimony Trust.

One reason for setting up an Alimony Trust is to make sure support for the receiving spouse continues even when the paying spouse has run into financial difficulties. Suppose a paying spouse owns a Certificate of Deposit and uses the interest from that CD to pay some or all of the alimony owed to the receiving spouse. If the paying spouse runs into financial difficulties he or she might be tempted to cash the CD out to be their own bills, leaving the receiving spouse to apply to the court for help with alimony.

However, if the same CD had been put into an Alimony Trust the paying spouse could not cash the CD out and the receiving spouse's alimony payments would remain steady.

Under an Alimony Trust, the paying spouse does not receive an alimony deduction for income reported by the receiving spouse from the trust. Nor does the paying spouse pays taxes on the trust income received in lieu of alimony. The paying spouse does not pay taxes on any trust income unless the divorce instrument or trust instrument fixes an amount or portion of payments as child support.

Avoid Probate: What is a Trust?

2009-11-09T15:40:00.003-05:00

I had several clients ask about setting up trusts last week and was surprised at how little they knew about what a trust is and what a trust does. I have done work for them in the past and just assumed they knew more about Estate Planning than they did. It served as a reminder that sometimes as an attorney I get "institutionalized" when it comes to what I do for a living. By "institutionalized" I mean I often get so caught up in practicing Estate Planning Law that I begin to assume everyone knows what I know about it. I thought back to how much I knew about Estate Planning before I went to law school and even several years after law school. Not much. So for the likely many of my readers who don't know what a trust is, here goes.

A Trust Is...
A trust is bascially a set of instructions that specifies how you would like your assets to be managed and distributed to your beneficiaries. A trust is created by a legal document that names an individual or institution to manage the assets placed in the trust. In general there are two types of trusts:

(1) Trusts that are implemented while you are alive (i.e., revocable living trusts or inter vivos irrevocable trusts). When you establish a living trust, you reregister your assets to the trust, and the trust becomes the owner of your assets. You can name yourself as trustee. When you die, the trust assets avoid probate; and

(2) Trusts that are created through your Will after you pass away (i.e., testamentary trusts).

Why Create A Living Trust?
There are two basic reasons to create a living trust. First, to maximize your ability to control the management and distribution of your assets. There are many advantages to retaining control over your assets through a living trust. Some of these advantages include naming someone to manage your assets in case you become incapacitated, controlling when your assets will be distributed to your heirs, and maintaining privacy of your finances even after you have passed away.

The second reason to create a living trust is to prepare for possible tax consequences. The IRS treats transfers of assets for individuals at death as either nonmarital or marital. A nonmarital transfer is taxable, a marital transfer is not.

What is an Accelerated Death Benefit?

2009-11-07T16:27:00.000-05:00

One of my client's recently obtained guardianship of her aged mother. Her mother was recently moved to a nursing home due to health problems. She is not expected to live longer than a year. My client approached me about getting help paying for the cost of the nursing home and otherwise caring for her mother. We went through her mother's finances and discovered that she took out a life insurance policy that contained an Accelerated Death Benefit clause. An Accelerated Death Benefit clause allows the insured to collect part of her death benefits before she dies if certain circumstances exist.

Accelerated Death Benefit
An Accelerated Death Benefit clause in a life insurance policy allows the insured to received a percentage of the policy’s face amount, discounted for interest, prior to the insured's death. As in the case of my client's mother, the benefits kick in when the insured becomes terminally ill, needs extreme medical intervention, or must reside in a nursing home. The payments made while the insured is living are deducted from any death benefits paid to beneficiaries.

Use of the Accelerated Death Benefit has allowed my client to give her mother the kind of care she needs without draining her bank account and having to sell off sentimental property.

Florida Probate Law: Execution of Wills

2009-10-29T20:38:00.006-04:00

Any person 18 or older who is of sound mind may make a Will.

Every Will must be in writing and executed as follows:

By Testator
(1) The Testator must sign the Will at the end; or
(2) The Testator's name must be subscribed at the end of the Will by some other person in the Testator's presence and by his discretion.

By Witnesses
Witnesses signatures must sign the Will in the presence of the Testator and in the presence of each other.

A Will may be Self-proved to avoid having to bring the attesting witnesses into probate court to prove the Will.

Form
No particular form of words is necessary to the validity of a Will if it is executed with the formalities required by law.

A Codicil must be executed with the same formalities as a Will.

Florida Probate Law: Definitions

2009-10-28T20:14:00.002-04:00

The following definitions are included in the Florida Probate Code:

Beneficiary - an heir at law in an intestate estate, and devisee, in a testate estate. The term "beneficiary" does not apply to an heir at law or a devisee after his interest in the estate has been satisfied. In the case of a devise to an existing trust or trustee, or to a trust or trustee described by Will, in the absence of a conflict of interest of the trust, the trustee is a beneficiary of the estate. An owner of a beneficial interest in the trust is a beneficiary of the trust and is, in the absence of a conflict of interest of the trust, not a beneficiary of the estate.

Child - includes a person entitled to take as a child under the Florida Probate Code by intestate succession from the parent whose relationship is involved, and excludes any person who is only a stepchild, a foster child, a grandchild, or a more remote descendent.

Devise - when used as a noun means a testamentary disposition of real or personal property and, when used as a verb means to dispose of real or personal property by Will. The term includes "gift," "give," "bequeath," "bequest," and "legacy." A devise is subject to charges for debts, expenses, and taxes.

Devisee - means a person designated in a Will to receive a devise. In the case of a devise to an existing trust or trustee, or to a trustee of a trust descibed by Will, the trust or trustee is the devisee. Beneficiaries of a trust are not devisees.

Distributee - a person who has received estate property from a personal representative other than as a creditor or purchaser.

Domicile - a person's usual place of dwelling and is synonymous with "residence."

Estate - property of a decedent that is subject to administration.

Grantor - one who creates or adds to a trust and includes "settlor" or "trustor" and a testor who creates or adds to a trust.

Heirs - those persons, including the surviving spouse, who are entitled under the statutes of intestate succession to the property of a decedent.

Interested Person - any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved.

1031 Exchange: General Requirements

2009-10-14T13:24:00.000-04:00

There are three general requirements for nonrecognitiontreatment with respect to the properties involved in 1031 like-kind exchange. These include:

The property transferred by the taxpayer must be heldby the taxpayer for productive use in a trade or business or for investment.
The property received by the taxpayer in the exchangemust be property which is to be held for productive usein a trade or business or for investment.
The property transferred and the property exchangedmust be of like kind.Property held for productive use in a trade or business maybe exchanged for property to be held for investment, and property held for investment may be exchanged for property to beheld for productive use in a trade or business.

However, even if the above requirements are met, nonrecognition is not permitted on exchanges of the following types ofproperty:

Stock in trade or other property held primarily forSale;
Stocks, bonds, or notes;
Other securities or evidences of indebtedness or interest;
Interests in a partnership;
Certificates of trust or beneficial interests; and
Choses in action.

You may also want to read my other articles on 1031 Like-Kind Exchanges and the Near-Simultaneous Requirement.

What does "Like Kind" mean?

2009-10-10T13:40:00.000-04:00

In a 1031 nonrecognition transaction the property exchanged must be of like kind. With respect to real estate, the regulations define like kind property quite expansively. As used in Section 1031(a), the words ‘like kind’ have reference to the nature or character of the property and not to its grade or quality. One kind or class of property may not, under that section, be exchanged for property of a different kind or class. The fact that any real estate involved is improved or not improved is not material, for that fact relates only to the grade or quality of the property and not to its kind or class. For example, the regulations specifically approve an exchange of urban for rural real estate, the exchange of a thirty year leasehold for real estate, and an exchange of improved for unimproved real estate.

The regulations have been understood to permit the exchange of any real property for any other real property.

Florida Probate Law: Revocation of a Will

2009-10-08T20:48:00.005-04:00

A Will or Codicil, or any part of either, is revoked:

(1) By a subsequent inconsistent Will or Codicil, even though the subsequent inconsistent Will or Codicil does not expressly revoke all previous Wills or Codicils, but the revocation extends only so far as the inconsistency exists. The law favors two separate Wills to be read together except where the two are inconsistent.

(2) By a subsequent written Will, Codicil, or other writing declaring the revocation, if the same formalities required for the execution of Wills are observed in the execution of the Will, Codicil, or other writing.

(3) By burning, tearing, canceling, defacing, obliterating, or destroying it with the intent, and for the purpose of revocation.

Effect of Subsequent Marriage, Birth or Divorce
Neither subsequent marriage nor birth or adoption of lineal descendants revoke the prior Will of any person, but the pretermitted spouse or child shall inherit regardless of the prior will.

All Wills made by husband and wife whose marriage has been subsequently dissolve or who become divorced shall become void by means of the dissolution of marriage or divorce as the Will affects the surviving divorced spouse.

1031 Exchange: The Near-Simultaneous Requirement

2009-10-08T13:06:00.000-04:00

The Near-Simultaneous Requirement
In 1984, the IRC was modified to add the requirement that a like-kind exchange be done "nearly simultaneously" to receive nonrecognition treatment. Nonrecognition treatment does not apply to an exchange of property unless the property received by the taxpayer is identified within 45 days of the transfer of the property relinquished by the taxpayer. Also, the property must be received by the taxpayer within 180 days of the transfer of the relinquished property, or by the due date (including extensions) of the transferor’s tax return for the year in which the transfer of the relinquished property occurs, whichever is earlier. This provision was enacted to curb the practice of deferred exchanges, often called "Starker" exchanges, in which a taxpayer would transfer property to a purchaser who would promise to purchase an as yet unidentified property in the future, at the taxpayer’s direction, for transfer to the taxpayer.

Read my other articles on 1031 Like-Kind Exchanges.

Florida Probate Law: Pretermitted Spouse

2009-10-07T21:00:00.002-04:00

A Pretermitted Spouse is when a person marries after making a Will and the spouse survives the Testator. The surviving spouse receives a share in the estate of the Testator equal in value to that which the surviving spouse would have received if the Testator had died intestate, unless:

(1) Provision has been made for, or waived by, the spouse by prenuptial or postnuptial agreement;

(2) The spouse is provided for in the Will;

(3) The Will discloses an intention not to make provision for the spouse.

Florida Probate Law: Self Proving Will

2009-10-06T21:07:00.002-04:00

A Self-proved Will executed in accordance with the Florida Probate Code may be admitted to probate without further proof.

A Will or Codicil executed in conformity with the Florida Probate Code may be made self-proved at the time of its execution or at any subsequent date by the acknowledgment of it by the Testator and the affidavits of the witnesses, each made before an officer authorized to administer oaths and evidenced by the officer's certificate attached to or following the Will.

Intestate Distribution

2009-10-05T20:19:00.001-04:00

Complete Intestacy
In most states, if a person dies without a Will or if his Will is totally invalid the result is complete intestacy. This means the entire estate of the deceased will be decided by the court under the rules of the forum state.

Partial Intestacy
Intestacy is partial if the testator made a Will but not all of his property is disposed of by the Will. This can happen when the Will does not contain a residuary clause or a residuary heir disclaims his interest. Any such property will pass under the laws of intestacy as described above.

A testator may prevent an heir from taking by intestacy by simply disposing of all his
property by his Will. However, if a Will does not dispose of all his property, the heir may take by intestacy. Also, in most states a Will may not completely disclaim a spouse or minor children under "Elective Share" statutes.

Estate Planning: Escheat

2009-10-04T21:06:00.001-04:00

When someone dies intestate (i.e. without a Will) and leaves no spouse and no kindred, their property escheats to the state. Most states place a time period (often five years or so) for heirs to come forward before selling the property and distributing the proceeds of the sale.

Estate Planning: Adopted Children

2009-10-03T21:18:00.002-04:00

Under the law of most states, an adopted person takes by intestacy from his adopting parents or
their kindred the same share as if he was actually born to his adopting parents. However, he
loses all rights to inherit from his natural parents or their kindred under the laws of intestacy.

One exception, to the general rule is when one of the natural parents of a minor child has
died and the parent-child relationship was not terminated before death. In this case, the minor child may
still inherit from or through the deceased parent or kindred.

If the adopted person dies intestate, his property is distributed among those persons who
would have been his kindred if he had actually been born to his adopting parents.

What is a Codicil?

2009-10-02T21:23:00.002-04:00

Codicil is the legal term of the document used to amend your Will. Unlike a regular contract, you can't just strike through a provision in your Will, initial the change and have a Court recognize the change as valid and binding. Instead, if you want to change a portion of your Will and keep the rest you will need to execute a Codicil with the same formalities (i.e. witnesses, etc.) as you would a Will.

In most states, a validly executed Codicil attached to the Will republishes the Will so that the Will and the Codicil take effect on the date of the codicil. This means the Will and all prior Codicils are treated as if they were re-executed as of the day the Codicil was executed. A Will republished by a Codicil is interpreted according to the law in effect at republication, not according to the law in effect when the Will was originally executed.

A validly executed Codicil validates an improperly executed or otherwise invalid Will if the Codicil refers to the earlier invalid Will with sufficient certainty to identify and incorporate it or if the Codicil is on the same paper as the invalid Will.

In most states, a codicil may be self-proved in the same manner as a Will.

1031 Like-Kind Exchange

2009-07-13T20:33:00.000-04:00

Like-Kind Exchange
Section 1031 of the Internal Revenue Code deals with the tax-free treatment of exchanges of "like-kind" property in the context of real estate. This post deals with the various requirements for nonrecognition of gain under Section 1031.

Why is a 1031 Exchange Not Recognized?
In general, any sale of real property causes gain or loss to be realized for accounting purposes, and the Internal Revenue Code follows this principle as well. Under Internal Revenue Code Section 1001, the sale or other disposition of property produces taxable gain or loss on the difference between the adjusted basis of the property and the amount realized for it. Property that has an adjusted basis of $10 is sold for $20, taxable gain of $10 is realized. Despite the fact that taxable gain or loss is realized in a given year, the Code may provide for the nonrecognition of the gain or loss. This is the case under Section 1031 when investment property is exchanged for investment property of like-kind.

If realized gain or loss is subject to nonrecognition treatment under a Code provision, the gain is not included in gross income nor is the loss deductible in determining gross income. Nonrecognition provisions are numerous in the Internal Revenue Code. Generally, these provisions are similar in the sense that after the transaction, the taxpayer has remained invested in the property that can be viewed as a continuation of his or her investment in the property disposed of. Nonrecognition of gain or loss is predicated on the notion that taxation of gain or loss is not yet appropriate, despite the fact that a technical realization of gain or loss has occurred. For example, if appreciated property is contributed to a partnership or corporation, taxable gain is generally not recognized. The technical sale of the property in exchange for a partnership interest or stock is ignored for tax purposes because the taxpayer has, in effect, continued his or her investment in the property.

What Does Like-Kind Exchange Mean?
The IRC Section 1031 provides for the nonrecognition of gain or loss if property held for productive use in a trade or business or for investment is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment. Thus the taxpayer disposing of real property in exchange for other property must ask three questions:

Was the property relinquished by the taxpayer held for investment or for productive use in a trade or business (qualifying property)?
Is the property received by the taxpayer to be held for investment or for productive use in a trade or business (qualifying property)?
Are the properties exchanged of "like kind"?

If these thiree questions are answered in the affirmative, nonrecognition of gain or loss is mandatory, not elective.

What if the Exchange is Not Solely in Kind?

The nonrecognition rule of Section 1031 would be of limited utility if it applied only to exchanges solely of the like kind qualifying property. Because it is highly unusual for two pieces of real property to be exactly equal in value, an exchange of real property is likely to involve some cash or other nonqualifying property to equalize the transaction. For example, A may trade a parcel worth $100 for a parcel worth $90, plus $10 in cash to equalize the transaction. If nonrecognition treatment applied only to exchanges solely of like kind qualifying property, A would be denied nonrecognition treatment due to the receipt of a small amount of nonqualifying property.

What is Boot in a 1031 Exchange?

However, Internal Revenue Code Section 1031 provides that if cash or other nonqualifying property is received by the taxpayer in addition to qualifying like kind property, gain is recognized only to the extent of the amount of money received and the fair market value of any other nonqualifying property received. Cash or nonqualifying property received in an exchange is referred to as "boot," presumably because it is thrown in "to boot."

If we assume in our example that A had a basis of $60 in the $100 parcel he relinquished, his realized gain on the exchange is $40, the difference between his basis ($60), and the amount realized on the exchange ($90 + $10 = $100). Under Internal Revenue Code Section 1031(b), however (assuming all the other requirements for nonrecognition treatment are met), A will recognize only $10 of the $40 realized gain because he received only $10 of boot.

U.C.C. §3-601: DISCHARGE AND EFFECT OF DISCHARGE

2008-11-02T23:36:00.002-05:00

U.C.C. §3-601. DISCHARGE AND EFFECT OF DISCHARGE.
(a) The obligation of a party to pay the instrument is discharged as stated in this Article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract.

(b) Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.

U.C.C. §3-305: DEFENSES AND CLAIMS IN RECOUPMENT

2008-11-02T23:33:00.001-05:00

U.C.C. §3-305. DEFENSES AND CLAIMS IN RECOUPMENT.
(a) Except as stated in subsection (b), the right to enforce the obligation of a party to pay an instrument is subject to the following:

a defense of the obligor based on (i) infancy of the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;
a defense of the obligor stated in another section of this Article or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and
a claim in recoupment of the obligor against the original payee of the instrument if the claim arose from the transaction that gave rise to the instrument; but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time the action is brought.

(b) The right of a holder in due course to enforce the obligation of a party to pay the instrument is subject to defenses of the obligor stated in subsection (a)(1), but is not subject to defenses of the obligor stated in subsection (a)(2) or claims in recoupment stated in subsection (a)(3) against a person other than the holder.
(c) Except as stated in subsection (d), in an action to enforce the obligation of a party to pay the instrument, the obligor may not assert against the person entitled to enforce the instrument a defense, claim in recoupment, or claim to the instrument (Section 3-306) of another person, but the other person's claim to the instrument may be asserted by the obligor if the other person is joined in the action and personally asserts the claim against the person entitled to enforce the instrument. An obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument does not have rights of a holder in due course and the obligor proves that the instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation party to pay an instrument, the accommodation party may assert against the person entitled to enforce the instrument any defense or claim in recoupment under subsection (a) that the accommodated party could assert against the person entitled to enforce the instrument, except the defenses of discharge in insolvency proceedings, infancy, and lack of legal capacity.

U.C.C. §3-302: HOLDER IN DUE COURSE

2008-11-02T23:29:00.002-05:00

U.C.C §3-302. HOLDER IN DUE COURSE. (a) Subject to subsection (c) and Section 3-106(d), "holder in due course" means the holder of an instrument if:

the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).

(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.
(d) If, under Section 3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.
(e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.
(f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions.

U.C.C. §3-104: NEGOTIABLE INSTRUMENT

2008-11-02T23:18:00.003-05:00

U.C.C. §3-104: NEGOTIABLE INSTRUMENT
(a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
is payable on demand or at a definite time; and
does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

(b) "Instrument" means a negotiable instrument.

(c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check.

(d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.

(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it as either.

(f) "Check" means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order."

(g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.

(h) "Teller's check" means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.

(i) "Traveler's check" means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's check" or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.

(j) "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

U.C.C. ARTICLE 3 (NEGOTIABLE INSTRUMENTS)

2008-11-02T22:52:00.002-05:00

Good Faith Purchaser vs. Obligor
One of the most common Article 3 lawsuits involves someone who has purchased a negotiable instrument, demanded payment from the person obligated on it, has been refused payment and then sues the obligor.

A Helpful Example
Assume that Sally Seller agrees to sell her car to Billy Buyer for $1,500. Billy is to take delivery of the car immediately, but has thirty days to pay Sally the $1,500. Once the contract is signed and Billy receives the car, Sally has a right against Billy to recover $1,500 in thirty days. If Sally demands payment from Billy, Billy can raise any defenses that might exist to the contract (e.g., fraud, failure of consideration, duress, statute of frauds, etc.). If these defenses are established Sally will not recover from Billy.

If Sally assigns her right to the $1,500 obligation to John and John brings the lawsuit against Billy, the same rule applies, (i.e. that all defenses that Billy has against Sally can be raised against John). An
assignee of a chose in action takes only those rights that the assignor has to transfer and takes
them subject to any defenses that might exist.

However, Article 3 cuts off most of the defenses available to Bill if:
(1) Billy's obligation to Sally is in the form of a negotiable instrument written so as to meet the requirements of U.C.C. §3-l04; and
(2) if John is a holder in due course under U.C.C. §3-302.

The defenses that are not cut off are those listed in §3-305 and §3-601.

Analysis
(1) Is the instrument negotiable (§3-104)?
(2) Is the plaintiff a holder in due course (§3-302)?
(3) What is the liability of the defendant?
(4) Is the defense raised one that is cut off? (§§3-305, 3-306, 3—601)

Enhanced Life Estate Deed a/k/a Lady Bird Deed

2007-09-11T16:12:00.002-04:00

One of my clients is an elderly widow. She recently contacted me with several concerns about her estate. Her primary concern was that she wanted to keep her home out of probate when she passes away. Like most people, she doesn't like the idea of her property being tied up in legal limbo for months before her beneficiaries (i.e. her daughter and two sons) take possession of the home. She was advised by another attorney to set up a trust, put her home (her only asset of real monetary value) into the trust and then manage the trust until she passes away. She brought the matter to me as she does with all of her legal concerns. I advised her that a simpler way for her to handle the matter might be to execute an "Enhanced Life Estate Deed" also known as the "Lady Bird Deed" (named in honor of former First Lady, Ladybird Johnson) or a "Transfer on Death Deed."

What is an Enhanced Life Estate Deed?
An Enhanced Life Estate Deed is a document that would deed my client's home to her children but reserve for my client a life estate coupled with the ability to sell the property at any time. This is called an "Enhanced Life Estate." In layman's terms, this means that (1) my client still owns the property; (2) my client can sell the property at any time without notifying her beneficiaries; and (3) if my client never sells the property, the house will pass directly to her beneficiaries after she passes away without going through probate.

Florida, Texas, Ohio, California, Kansas and several other states now accept this form of conveyance. In these states it is a recommended alternative to the traditional life estate deed. Of course, where a life estate can result in unwanted capital gains taxation, it should not be used, and other forms of planning should be considered (such as a living trust).

Other Benefits to a Lady Bird Deed
The Enhanced Life Estate Deed has several other benefits including:
(1) bypassing probate;
(2) it does not result in capital gains for the beneficiaries because they will not receive any value until my client passes away. When she passes away, her beneficiaries take the home at a "stepped-up basis" - not my client's original basis. A "stepped-up" basis is the value of the property on the day of my client's death;
(3) it does not open up the property to the beneficiaries' creditors during my client's lifetime because the beneficiaries have no interest until my client has passed away without selling the home;
(4) it allows my client to sell her home at any time, compared to a regular life estate where she would not be legally entitled to sell her home.

Divorce: Arizona Divorce Proceedings

2007-02-25T23:24:00.001-05:00

I have a friend who moved his family (consisting of his wife and two elementary school age children) to Arizona in January of last year. He did so over his wife’s objections to leaving her extended family. About two months after moving to Arizona his wife grew too homesick to stay any longer. One day while my friend was at work, his wife packed her bags, loaded up her car and moved herself and their children back to Florida. Within a week after his wife left him, my friend decided to file for divorce.

Although I am not licensed to practice in Arizona, my friend contacted me about how to go about filing for divorce. His first question concerned whether he could legally file for divorce in Arizona when his wife and children now lived in Florida. His second question dealt with grounds for the divorce. Specifically, whether his wife leaving him for a little over a week and telling him that she would not return constituted grounds for divorce. His third question was whether he was required to obtain an attorney to represent him in his Arizona divorce proceeding.

Arizona Divorce: Residential Time Limits
The answer to his first question could be found with a simple appeal to the Arizona Divorce Statute. In Arizona, either spouse must have lived in Arizona for at least ninety (90) days prior to filing for divorce. This meant my friend would have to either file in Florida or wait an additional three (3) weeks before filing.

Arizona Divorce: Grounds for Divorce
Unlike some states, Arizona does not require that one of the spouses prove blame or responsibility in order to end the marriage unless the marriage is a “covenant marriage.” Instead, the court is simply required to answer in the affirmative the question of whether the marriage is "irretrievably broken." “Irretrievably broken” means the parties have differences or disputes that cannot be settled which are so serious that they have caused the marriage to totally and completely break down.

As my friend did not have a “covenant marriage” this post does not address that type of marriage. Suffice it to say that Arizona divorce law prohibits a court from granting a divorce after such a marriage unless one of the parties can prove adultery, abandonment, physical abuse or regular substance abuse or both spouses agree that the marriage should end. A “covenant marriage” is a marriage where both parties agree to limit grounds for divorce prior to their getting married.

Arizona Divorce: Self Representation
Arizona did not require that my friend obtain an attorney to file his divorce papers. However, I advised him that in addition to being without the benefit of an experienced attorney to guide him through the process, he would be required to abide by the same statutes, rules and procedures as an attorney would. This includes the proper and timely filing of legal documents, observing proper courtroom decorum and having at least a working knowledge of the divorce process. In the end, he chose to retain an Arizona divorce lawyer.

Another legal fact of interest is that in Arizona the court cannot grant a divorce until at least sixty (60) days after the other spouse is first served with the original court papers.

Enhanced Life Estate Deed Revisited

2007-02-17T22:52:00.001-05:00

Click on the Picture below to read my article on the Enhanced Life Estate Deed/Lady Bird Deed. You can also purchase the Enhanced Life Estate Deed/Lady Bird Deed Here.

Mediation: Small Claims in Florida

2007-02-05T16:50:00.003-05:00

This topic may seem a little dry to some of you so if you want to bypass the legal information and go straight to the somewhat humorous anecdotes, skip down to the paragraph titled "Some Words of Caution."

And now for the post.

I've had several people e-mail me with questions about Florida's lawsuit procedures in civil "small claims" court cases. In response, this post is intended to shed a little light on one particular area of Florida Small Claims Court: Mediation. If you are suing or have been sued in a Florida Court I hope this post is helpful.

Three Separate Divisions
As a general rule, Florida's Civil lawsuits are handled by one of three separate divisions, most often depending on the amount of money involved in the case: (1) the Circuit Civil Division, (2) the County Civil Division, or (3) the Small Claims Division. Cases where the amount sought in the suit is $5,000 or less usually belong in the Small Claims Division.

Small Claims Mediation (Pre-Trial)
It is always interesting to me to see the expression on a defendant's face when he or she first finds out that most of the Florida Rules of Civil Procedure DO NOT APPLY in Small Claims court. To begin with, discovery (i.e. depositions, interrogatories, production requests, etc.) is generally either extremely limited or altogether prohibited. If you file suit in Small Claims court thinking you are going to be involved in a full-blown, knock-down, drag-out fight you need to think again. "A pound of flesh nearest the heart" has very little place in Small Claims court. Short, sweet and to the point is what Small Claims is all about.

The Nuts and Bolts of the Small Claims Process
It has been my experience that Small Claims court is primarily designed to help the two parties work their case out prior to trial. This design is typified by the process itself. Once suit is filed the Small Claims court (often the same judge who runs County Civil) sets a Mediation, or Pre-Trial, date. The Pre-Trial date requires both parties to show up on a set date, sit down with a mediator and try to work things out.

In practice it works like this. Suit is filed and the defendant is served with the papers. The suit papers contain a Pre-Trial date instructing both parties to appear before the Court on a certain date. There are usually a number of other cases and parties scheduled to appear on the same date and at the same time. The judge will then call roll (yes, just like elementary school) and the parties answer "present," "here," or some other respectful reply to the judge. If both parties to a case appear, the judge will assign the case to a mediator. The parties will go into a separate room in the Courthouse and try to work their case out. If the case cannot be worked out, the parties will then return to the Courtroom. The judge then assigns a trial date (usually within 30-60 days). The judge will not take testimony at Pre-Trial and no witnesses are required.

Some Words of Caution
The following things should be avoided with regard to Pre-Trials:

(1) Do not leave your cell phone turned on while in the Courtroom. I saw a guy get stared down, yelled at, held in contempt of court, handcuffed and taken to jail all because of his cell phone. In all honesty, if the guy had not answered the phone in open court only the first two would have happened. The judge was clearly not running for re-election;

(2) Do not answer "Uh-huh" when the judge calls your name. You guessed it-stared down and yelled at;

(3) Do not tell the judge "Judge, you don't know what the H--- you're talking about." The judge will likely skip staring you down and yelling at you and just send you straight to jail; and

(4) Do not miss the Pre-Trial. If you miss the Pre-Trial the judge will dismiss the case (if you are the Plaintiff) or enter a judgment against you (if you are the Defendant).

Lawyer Ethics: An Ethics Post Revisited

2007-01-25T13:09:00.001-05:00

The last two weeks have been about as hectic as any I have had in recent months. A good time to revisit the archives. Check out this post on Lawyer Ethics. The post started a buzz on several different blogs the week it was written dealing with lawyers and ethics.

An apt summary of the post is that sometimes the non-lawyer and lawyer worlds clash as to what constitutes the right ethical decision. The primary case cited in the post involves an attorney faced with whether to tell the grieving parents of two murdered children where the children's bodies were buried. The attorney knew because his client murdered the children and told the attorney where the bodies were located.

After reading the above facts, what would you do if you were the attorney? The answer likely depends on whether you have attended law school and, if so, how well you did in your Ethics 101 class.

Divorce: A Mediation Post Revisited

2007-01-15T16:32:00.001-05:00

I don't think "Find A Divorce Attorney" is at the top of most people's New Year's resolutions, but that seems to be the way it is going in my circle of friends. In addition to my friend in Arizona last year, several others have brought the topic up of divorce lately. I thought it would be a good time to revisit a post I wrote on Divorce Mediation. An apt summary of the post is that more often than not both parties to a divorce will be happier if most of the issues can be taken care of through mediation.

My advice: give mediation a try, especially if children are involved.

Thanks for the Shout Out Inter Alia

2007-01-15T15:45:00.000-05:00

Like many of you I love reading other legal and political blogs. One blog I check often is Inter Alia. I noticed that Inter Alia gave a shout out to this blog yesterday. Thanks Inter Alia.

Labor Law: Employee or Independent Contractor?

2007-01-10T10:51:00.001-05:00

One of my colleague’s clients recently found itself in trouble with the IRS and its insurance company for incorrectly designating several of its employees as independent contractors. The employees had been with the company for at least a year when the company decided to restructure the relationship to “save money.” The company laid the employees off only to hire them back as independent contractors the following week. The idea was that by designating the employees as independent contractors the company would not have to pay payroll related taxes and could cut down on the amount it spent on insurance benefits.

Several months after designating the employees as independent contractors, one of the employees wrecked his truck while working for the company. The company was held liable for the accident, but because it did had not identified the driver as an employee for insurance purposes it was prohibited from claiming coverage under its insurance policy.

In addition, it is my understanding that the company has recently had penalties levied against it by the IRS for failing to pay employee related taxes.

Autonomy versus Control
The company failed to understand the biggest factors in distinguishing an employee from an independent contractor: (1) the ability to control how the individual performs the job; (2) whether the individual uses his own or the company’s equipment; (3) how the individual is paid; (4) where the individual works; (5) when the individual works (i.e. set work day schedule).

Recommended Precautions
What could the company have done to avoid problems with its insurance and the IRS? Consider the following:

The company may have been able to address the above factors and ensure the individuals received the treatment the company wanted them to have by (1) having the individuals sign an agreement acknowledging their status as independent contracts; (2) requiring the individuals to obtain their own business licenses, tax identification numbers, places of business and other clients; (3) allowing the individuals to control the manner in which their work was performed (i.e. does the company give “instructions” to the individuals or merely make “suggestions.” Instructions are indicative of an employee, Suggestions are indicative of an independent contractor); (4) not hiring former employees and designating them as independent contractors. The company may have considered hiring the individuals through an employment agency.

When In Doubt, Designate As An Employee
But probably the most important precaution the company could have taken is to have treated the workers as employees when it had doubts as to their correct classification. The company may have even asked the IRS to give an opinion on the classification. Trust me, it would have been far better for the company to have taken the above steps than to attempt to clean up the mess they are now in.

Labor Law: Hiring Checklist

2007-01-02T09:11:00.001-05:00

2006 ended with one of my small business clients running into a flury of employee problems. Employees on drugs, allegations of sexual misconduct in the workplace and theft to name a few. One of his employees was brazen enough to use the business gas card to fill the tanks of ten personal vehicles. I guess the guy thought it was some type of "friends and family plan." The business caught him because his purchases maxxed out the credit limit of the card and because he purchased the gas at 11:00 at night when all of the company vehicles were tucked safely in the company parking lot.

It is my opinion that the employee problems the company has run into is largely a result of its hiring practices. It seems my client is still trying to run his 10 employee business the same way he ran the business when he had only one employee.

In addition to assisting him with putting together an official Employee Handbook, Confidentiality Agreement and Non-Compete Agreement I suggested he consider the following checklist when hiring employees:

Employee Hiring Checklist

1) Draft a written job description for the position you want to fill;

2) Let current employees review the job description and make suggestions on possible alterations;

3) Screen applicants by requiring them to provide a resume with references;

4) Write down interview questions, interview applicants and evaluate the effectiveness of the questions after interviewing each applicant;

5) Put together an applicant appraisal form and complete the form after each interview;

6) Call references (employers, schools, etc.);

7) Perform background checks (DMV, credit, criminal background, etc.);

8) Ask the applicant about any confidentiality agreements he or she may have signed with former employers.

9) Provide the applicant a written offer or written rejection letter;

10) Make all offers contingent upon successful completion of drug, skill, physical and psychological testing.

11) Write out the new employee's terms of employment and have the employee sign it prior to beginning work; and

12) Have the new employee review and sign your employee handbook, Confidentiality Agreement, Non-Compete Agreement and any other applicable agreements.

You may have other items you would add to this checklist. Feel free to copy this checklist and add to it as best suits the needs of your business.

Estate Planning: Will or Intestate Succession

2006-12-22T15:51:00.002-05:00

This post is intended to give a brief explanation of the use of a Will in transferring property at death. Use this post in conjunction with my posts on the Enhanced Life Estate Deed, the Revocable Transfer On Death Deed, Life Insurance Proceeds, Beneficiary Deed and the Lady Bird Deed.

What Is A Will?
A Will is a document you can execute which transfers property to your beneficiaries when you die. A Will may be revoked or revised at any time up until the moment you die. It does not grant any beneficiary a right to your property until you die. The downside is that your beneficiaries are usually required to wait a period of time after your death before they can apply for ownership of your property.

Probate Administration
Probate Administration is a process whereby a personal representative is designated to administer your estate. You may (and probably should) designate a personal representative in your Will. It would be wise to designate multiple back up personal representatives should the person you originally designate be unable or unwilling to perform.

Probate administration requires the determination of your heirs or devisees as well as the settlement of your debts and taxes. The process involves court oversight for resolution of disputes. All proceedings are a matter of public record and, therefore, may be subject to public scrutiny. The process usually takes at least six (6) months after the decedent’s death and the cost is usually based on the value of the estate involved.

Small Estate Proceedings
If your estate is of relatively small value, it may pass by Will without probate administration. The gross value is usually placed at less than $100,000 to be eligible for small estate proceedings. Real property beneficiaries are usually required to wait a period of time before they can use this procedure (usually around six (6) months) to give other potential claimants or creditors time to file a claim against the property.

Caution
There are a number of requisites that must be met before a Will can be valid. Each state has different requisites. If your will is not executed with the requisite formalities your state will most likely not recognize the Will and it will then become subject to intestate succession. Be sure to contact an Estate Planning attorney when preparing your Will.

A Shout-Out To My Boys

2006-12-20T08:13:00.000-05:00

Every now and then I use this blog to post something family related. This is one such post.

Stephen's Latest Triumph
About a year ago my oldest son Stephen (now 10) was disappointed when he was passed over for the All-Star Soccer Team. He had worked hard on his soccer skills the previous summer and had certainly improved as a player. If I had to guess, I'd say he was probably on the bubble last year to make the team.

But this year was different. After last year's disappointment, Stephen again worked hard on dribbling, passing and blasting the ball. He scored an average of 2 goals each game in his league and was one of the first kids picked for the All-Star Team. His All-Star Team made it to the district championship game which determined which team was to go to the state tournament.

The team they played against in the championship game was very good. Within 5 minutes the other team had scored three times. At halftime the score was 4-0. Let me say here that this is not one of those triumphant comeback stories you see in the movies. No, when the whistle blew to end the game the final score was 7-1. The one point our team did score was scored by Stephen. Although I am certain Stephen would have traded his score for a win it was nice to see him juke the fullback and blast the ball into the corner of the net.

Jacob's Latest Triumph
Yesterday my 7 year old son, Jacob, brought home an award with the words New School Hula Hoop Record - 49:18. I thought it a little odd that the school had a Hula Hoop Record and that noone had been able to hula hoop for longer than a minute. I congratulated Jacob on his triumph and he said "Dad, can you believe I hula hooped for 49 minutes and 18 seconds." I told him it was 49.18 seconds; not 49 minutes 18 seconds.

Jacob continued to insist that it was in fact 49 minutes but neither my wife nor I really thought he knew what he was talking about. I mean he is a first grader and what do they know. I reasoned that even if it were possible for him to hula hoop for 49 minutes, no teacher would stand there and let some 1st grader keep hula hooping when there were other subjects to teach.

This morning when my wife dropped Jacob off one of the teachers approached the van and asked her if she was proud of Jacob hula hooping for 49 minutes. The teacher said she had actually watched him set the record and that she had even fallen asleep at one point. Boy did I feel stupid when my wife called and told me that Jacob was right all along. Jacob won't let us get out of this one without eating a little crow.

A Good Time to go to Law School

2006-12-15T09:21:00.001-05:00

A recent poll taken by the Florida Bar shows the average income of lawyers in Florida has risen to $110,000 during the past two years. That is up from $100,000 in 2003. The rise in income does not appear to be the result of additional hours at the office. The same poll showed that private practice lawyers spent around 50 hours per week in the office in 2005-2006. That number is roughly the same as those reported for the last six (6) years.

Other income statistics of note show the following median incomes for the corresponding years: $85,000(2001); $82,000(1999); $75,000(1997).

A good time to go to law school! Might I put in a plug for my Alma Mater, Florida State University.

Child Labor Law: Florida

2006-12-08T11:08:00.002-05:00

I went to high school in Tallahassee, Florida. When I was in High School my parents gave me the option of either playing in the band, playing sports or getting a job. I chose the band my freshman year and sports the other three years. It's crazy how having my skull mashed in playing football and having my arms wrenched out of the sockets on the wrestling team were more appealing than getting a job; but such was the case.

When it finally came time for me to get a job I went to the local recreation department and hired on as a part-time umpire. Not exactly what my parents had in mind. I used to tell them that the Child Labor Law prohibited me from doing anything more taxing (as if 3 hours standing in the hot sun for marching band rehearsal was easy). But what does the Florida Child Labor Law really say?

Minors Under 18 Years Old
Florida's Child Labor Law applies to workers under the age of 18. It prohibits such minors from working in hazardous occupations like construction, electrical work, roofing, mining, excavation, or operating heavy machinery. It also prohibits minors from working around explosives. So much for Mr. Garth's science class.

Minor Work Hour Restrictions
Unless exempted, minors cannot work during school hours. One of the exemptions includes a DCT class my wife (then girlfriend) took that allowed her to earn high school credit while working with a draftsman and getting paid for it. Minors 14 and 15 can only work 15 hours per week when school is in session. Minors 16 and 17 may work up to 30 hours per week when school is in session.

When school is out, minors 14 and 15 may work 40 hours per week, eight hours per day between 7a and 9p. Minors 16 and 17 may work as many hours as they choose when school is not in session.

Estate Planning: Intervivos Trust a/k/a Living Trust

2006-11-27T15:29:00.002-05:00

A friend of mine recently gave birth to her first (and likely only given her experience) child at the age of 35. Like most people, she executed a General Will years ago but otherwise did not spend any more significant time thinking about estate planning until her daughter was born. It seems she now spends a great deal of time changing diapers and a little more time worrying about her estate and its impact on her daughter's future. The other day the question arose as to whether she should set up an "Intervivos Trust" a/k/a "Living Trust."

What is a Living Trust?
A Living Trust is probably the most common instrument used by estate planners today for passing property upon death. A Living Trust allows an individual (the "Settlor") to put all of his or her property into a revocable living trust and name himself or herself as trustee. When the Settlor dies, the successor trustee conveys the property held in the Living Trust to the beneficiary designated by the Settlor in the Trust instrument.

A Living Trust allows the Settlor to pass his or her assets to a beneficiary quickly and inexpensively upon death of the Settlor and to revoke the Trust at any time during the life of the Settlor. A Trust may be funded by a life insurance policy even though the actual funds do not go into the trust until the Settlor passes away.

One Common Complaint About the Living Trust
One common complaint about the Living Trust is that it should be drafted by an attorney which can result in a lengthy and expensive document. You may be able to find online software to help you draft the document yourself, but doing may expose you to the risk of not crossing a "t" or dotting an "i" and having the trust declared invalid.

States that provide protections to family members such as the probate homestead found in Florida and California are unavailable to dependents of the Settlor. Also, creditors may be able to attach property of the Trust if the Settlor's estate is insufficient to cover the debts.

Trust Property Is Included in Decedent's Estate
Trust property is included in the decedent's taxable estate for estate tax purposes. The beneficiary takes the property at a "stepped up" basis.

Business: What is a Corporation?

2006-11-21T15:38:00.001-05:00

Many of my clients come to me with questions related to what type of business they need to set up. I usually advise them that at least two primary concerns are involved in determining what type of business to go with: liability and taxes. There are obviously other factors to consider but these are usually the primary concerns.

The following are brief definitions of a Corporation. I intend to follow this post with information on other legal entities.

What Is A Corporation?
A corporation is a legal entity created by statute that has all the rights privileges and responsibilities of a natural person. In the eyes of the law a corporation is treated as if it were a natural person. It can open bank accounts, conduct business, and be sued just like you and me.

A corporation possesses attributes of limited liability (i.e. protects its owners from lawsuits), centralized management, continuity of life (i.e no set expiration period) and free transferability of interest (i.e. stocks, etc.).

There are different types of corporations. For small businesses, you may want to look into setting up an S-Corporation.

What Is A For-Profit Corporation?
A For-Profit Corporation is a corporation created for the purpose of conducting business in the broadest sense of the term. Its main purpose is to make money for those who own the business. The one restriction placed on a For-Profit Corporation is that the business it conducts must be legal. In other words, setting up a For-Profit Corporation to run a drug ring will not protect the corporations owners. Sorry Mob Bosses.

What Is A Non-Profit Corporation?
A Non-Profit Corporation is a corporation normally thought of as one created for religious, charitable or educational purposes. A Non-Profit Corporation is not precluded from engaging in a profit making situation. In fact, a Non-Profit Corporation is not necessarily a charitable corporation or one that is tax exempt. They are simply corporations that may not distribute their income to a member, director or officer.

Consumer Protection: I'm All Outta Love

2006-11-10T10:27:00.002-05:00

You may have heard about the Los Angeles, CA court case where the sixty (60) year old woman hired an online matchmaking service to find her a wealthy husband. The woman made an initial payment of $100,000 to the service and the service guaranteed it would introduce her to rich men; presumably eligible marriage candidates. The service took her money and promptly introduced the woman to a man in bankruptcy and another wealthy (but married) man.

The Solution: More Money
Unhappy with the results, the woman paid the service an additional $25,000 for instructions on how to snare a wealthy husband. The service then introduced her to a retired, middle class firefighter and several other middle class men. Still no wealthy prospects.

When All Else Fails, File Suit
In the end, the service failed to provide what it had guaranteed. After numerous unsuccessful matches, the woman sued the service. The jury awarded the woman her initial $100,000 as well as a punitive award of $2 million. Now she can marry whoever she wants (rich or poor) and still be distinguished as a millionaire's wife.

Vote Today

2006-11-07T11:20:00.000-05:00

Just a reminder (if you didn't already know it) today is the day to vote. I voted on the way into work this morning. My voting precinct is located at a small rural airport in the middle of nowhere. I was surprised when I arrived to see how many people showed up to vote for this mid-term election. There were about 10 proposed amendments to the Georgia Constitution and no real interesting races. Despite its location, our precinct has what I would call state of the art voting equipment. I enjoyed voting on the touch screen machine.

I am actually more interested in the issues being voted on just south of the border in Tallahassee, Florida. There is a new County Judge seat up for grabs and one of the guys I knew in high school is running for County Commissioner. They are also deciding on whether a new sales tax should be implemented. I personally oppose the tax because I would have to pay it but would not get the benefits; my being a resident of Georgia.

General Election November 7, 2006

2006-10-31T09:29:00.000-05:00

Just a reminder: if you didn't already know it a General Election will be held on Tuesday, November 7, 2006. They call this election a "mid-term" election because it comes in the middle of a presidential term. Although not as sexy as a presidential election it is no less important on a national level. The political blogs say the election could either transfer control of the Senate and/or House to the Democrats or strengthen control of the Senate and/or House by the Republicans.

I would encourage those who intend to vote to take the next week to brush up on the local and national issues and cast your ballot accordingly. No matter who or what you vote for, your vote should be an informed one.

Joint Tenancy with Right of Survivorship

2006-10-18T10:14:00.022-04:00

What is Joint Tenancy with Right of Survivorship?

A Joint Tenancy with Right of Survivorship is a document (usually in the form of a deed) wherein two individuals (often husband and wife) own equal and undivided interests in a piece of property. When one of the individuals dies, the surviving individual acquires ownership of the entire piece of property by right of survivorship. To establish ownership, the surviving individual simply executes and records an affidavit of death.

Pros of the Joint Tenancy with Right of Survivorship

The biggest pro to a Joint Tenancy is the fact that ownership of the property is transferred outside of probate. This makes this type of transfer simple and economical. In addition, the joint tenants are not required to record the deed to create the tenancy which can provide a measure of confidentiality from those who might object to the transfer. Also, when one tenant dies the decedent's creditors lose their rights against the property.

Cons of the Joint Tenancy with Right of Survivorship

A Joint Tenancy Deed is Irrevocable and the transfer is taxable as a gift at the time the deed is executed. Also, during the life of the tenancy, the creditors of both tenants can reach the tenants' share of the property.

Recommendation

Before executing a Joint Tenancy with Right of Survivorship, check out these articles:

Estate Planning and the Enhanced Life Estate Deed, The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quitclaim Deed, The Traditional Life Estate Deed, The Revocable Transfer on Death Deed and California's Revocable Deed.

Can I Evict My Landlord?

2006-10-06T11:26:00.001-04:00

Yesterday's trip to kangaroo court (i.e. county court) was more than a little eventful. While I waited for my case to come up on the docket I witnessed one of the strangest landlord/tenant issues I have ever seen. The facts are these:

Ms. Landlord and Mrs. Tenant were very good friends in college. Ms. Landlord owned a five bedroom home near FSU's campus and agreed to rent a room to Mrs. Tenant. After a year of this arrangement Ms. Landlord decided to sell the home. Mrs. Tenant offered to enter into a lease/purchase contract whereby Mrs. Tenant would lease the home for five years with the option of purchasing it at the end of five years at a price yet to be determined.

Ms. Landlord agreed and leased the home to Mrs. Tenant. During the term of the lease Mrs. Tenant married and had two children who all lived in the home. About three years into the lease, Ms. Landlord's funds ran out and she decided to move back into the home with Mrs. Tenant and her family. Without any notice to Mrs. Tenant, Ms. Landlord just showed up one day, moved Mrs. Tenant's children's furniture out of one of the rooms, replaced the children's furniture with her own and moved back into the house. You should have seen the look on the Judge's face when he heard this.

Mrs. Tenant somehow didn't realize that a landlord cannot just move back into the house whenever she wants. Instead of throwing Ms. Landlord out, Mrs. Tenant decided to cut the amount of rent she was paying in half. When Ms. Landlord got the reduced rent check she sued Mrs. Tenant to have her evicted. Mrs. Tenant countersued Ms. Landlord to have her evicted. The whole scenario was nuts.

In the end, the Judge rendered a Solomonlike verdict evicting both the Tenant and the Landlord. The Landlord was evicted immediately because she should never have been there in the first place. The Tenant is to be out by the end of the month at which time the Landlord can move back in. A perfectly unhappy solution to both parties.

Legal Advice
No legal advice on this one. If you are crazy enough to get caught up in this type of scenario there is really no telling what a Judge will do. I do think he made the right decision though.

A PR Query to Political and Legal Bloggers

2006-10-03T15:54:00.000-04:00

Fellow bloggers, I have a question. I have been told that google has recently performed a page rank update? It appears that the PR on this blog has not changed at all and that none of the posts have updated PR. Is the update over and did I miss all of the fun? Please let me know in the comments section. Thanks. Hope everyone else's PR went up.

Estate Planning: Will or Intestate Succession

2006-09-27T15:21:00.003-04:00

A Shout-Out To My Niece, Jessica

2006-09-14T12:29:00.000-04:00

I apologize to those of you who were hoping for a law related post, but family ALWAYS takes precedence.

Yesterday my sister called me and invited me out to one of the local high schools to watch my niece, Jessica, compete in the countywide sixth grade girls cross-country race. I didn't know they even had a race like that for sixth graders, but I have since discovered that it is a very big deal in Tallahassee. Shows how much of an athlete I was in middle school.

I shuffled around some of my hearings this morning and headed to the high school. When I arrived you would have thought there was a Florida State/Miami game going on. Well, maybe not that big, but there were a lot of people in attendance. Most of the girls were tall and lanky and all decked out in running gear (timing watches, arm bands, etc.).

Jessica, on the other hand, does not fit the tall and lanky mold. No timing watch or arm band either. She is small to middle sized for her age, pony tailed and always smiling. I would imagine that those who saw Jess line up beside the 140 or so other girls would not have given her much of a chance against them. Those who don't know Jessica, anyway.

But those of us who do know Jess knew exactly what to expect. Her heart is bigger than her height and her mind incredibly determined. She has always been that way.

When the girls were lined up to begin the race I noticed that she would not only be racing against the sixth graders, but all middle school grades (sixth through eighth). She began the race in the back half of the pack. By the time she made it around the first lap of the track and headed out of the fence for the cross country portion she had moved to eighth overall.

My sister, brother-in-law and I climbed to the top of the bleachers to get a better look at the runners as they circled the high school campus. We were able to catch brief glimpses of Jessica before she disappeared around the main building. It appeared that at the midway point she had moved into fifth place. As the runners came back into sight one tall eighth grader was well out in front (this girl eventually won). Then another girl, then another girl, then Jessica in fourth place.

As the girls came down the hill and neared the entrance to the track several of the older girls were able to overtake Jess. By the time she entered the gate and ran back onto the track she was in eighth place. Good. But Jess wasn't satisfied.

With about twenty yards left she trailed the seventh place girl by about fifteen feet. I watched her eyes and saw in them the same look of determination I have seen many times before. She began to speed up. With about ten yards left she made up 10 feet on the girl. Jessica was now about five feet behind. Her pace quickened even more and by the time Jess crossed the finish line she had overtaken the girl and beat her by about a yard.

As it turns out, Jessica came in seventh overall and first among the sixth graders. This may just be uncle-ly pride, but it would not surprise me to see Jess competing in an Olympic sport during the next decade or so. GO JESS!!!

Transfer on Death Deed to Avoid Probate

2006-09-11T14:00:00.011-04:00

Thinking about updating your Will? You may consider removing real estate (to avoid probate) by executing a Revocable Transfer on Death Deed (TOD) instead. Simpler to create than a Trust, a TOD is similar to the Enhanced Life Estate Deed and is valid in Missouri, Kansas, Ohio, Arizona, New Mexico, Nevada, Colorado, Arkansas or Wisconsin.

A TOD is a real estate deed that allows you to designate a beneficiary to whom your real estate will pass when you die. Generally speaking, a valid Revocable Transfer on Death Deed works as follows:

How a TOD Works
(1) The deed must state prominently that no interest in the real estate is conveyed until after the transferor's death. The exact language differs from state to state usually necessitating a visit (or at least a phone call or an e-mail) to a competent estate planning lawyer. The deed does not need to be delivered to the beneficiary, but must be recorded prior to death to be effective as a transfer.

(2)The property passes outside of probate. The deed can be revoked at any time prior to death. The beneficiary has no present interest in the property as the property remains within the transferor's absolute possession, custody and control;

(3) The transferor's Will does not affect the transfer on death unless the beneficiary dies prior to the transferor;

(4) The property is subject to the transferor's creditor's claims but not the beneficiary's creditor's claims;

(5) The property remains taxable to the decedent's estate; and

(6) The beneficiary simply records a death certificate to effectuate a transfer.

The Transfer on Death Deed is similar to an Enhanced Life Estate Deed (or Lady Bird Deed) and the Beneficiary Deed. In addition to the states mentioned above, California is also considering a statute that would recognize the Transfer on Death Deed.

Get A Tax Attorney Involved

2006-09-05T11:29:00.001-04:00

Do you cringe when I mention the date April 15? If you don't its probably because you are one of the millions of Americans who give the government an interest free loan during the course of each year and then anxiously await repayment (that's what a tax refund is). But whether you owe taxes or receive a refund each year you may want to consult a tax attorney way before the taxes become due.

Most people don't think about consulting a tax attorney until they are faced with a negative IRS audit. Although this is certainly one of the biggest incentives to consult a tax attorney there are other reasons as well. For example, do you know what a 1031 like/kind exchange is? The IRS will allow you to "exchange" one piece of investment property for another, tax free.

1031 (Like/Kind) Exchange
Suppose I have a job as a traveling nurse and I am currently working in Nevada and own a beach house in California. One day I decide to relocate to a New York travel nurse job and I have to move with it. Living in Nevada allows me to stay in my California beach house every weekend. Moving to New York will make using the beach house nearly impossible. If I sell the beach house in the usual manner and buy a mountain house in New York I will be required to pay taxes on the sale (probably long term capital gains). However, the IRS allows me to "exchange" the beach house in California tax free for a mountain home in New York provided certain legal criteria are met. The sale of the California beach house would be performed in the usual manner but the proceeds from the sale would go into a special holding account until you found the mountain house you wanted to "exchange" for. A tax attorney will be able to advise you on the best method for setting up the exchange and update you on any changes to the law.

Estate Planning
Another reason to consult a tax attorney is for Estate Planning. The terms Will, Trust, Power of Attorney, Beneficiary, Life Insurance, Health Care, Enhanced Life Estate Deed and Lady Bird Deed should be somewhat familiar terms. A tax attorney can show you how to best structure your estate to minimize your current estate taxes and allow you to pass your estate onto your heirs with the least amount of tax burden.

Tax Law Constantly Changes
Remember, tax laws are constantly changing; so what may be the law in 2006 may not be the law in 2007. If you don't believe me, ask yourself why "do-it-yourself" tax companies like Turbo Tax and other online business and tax companies are able to make money selling new versions each year. A friend of mine selling nursing scrubs recently discovered the value of a tax attorney who was able to explain to her a complex tax issue that her CPA was not able to explain. Tax attorneys monitor changes to the laws and can advise you if a change affects your tax structure.

For more tax related information, you may also want to read an article about maintaining a Permanent Tax Home.

Rest In Peace Crocodile Hunter

2006-09-04T17:30:00.000-04:00

One of our blog family's favorite television personalities, Steve Irwin a/k/a the Crocodile Hunter, was killed when a stingray stuck him in the chest with its barbed tail and pierced his heart. The Crocodile Hunter's zeal for the outdoors and wildlife has been an inspiration to our family and we will never forget him. Crikey! we will miss you Steve.

Love,

What is a Grand Jury?

2006-09-02T15:32:00.001-04:00

Before I went to law school I used to wonder what made a Grand Jury, well, Grand. Was it bigger than a regular jury? Were the people who served on it smarter than regular jurors? Was a Grand Jury assigned to handle "Grand" cases while regular juries were stuck deciding the chump change stuff?

Officer Shoots Drug Junkie
I know this is an odd subheading given the first paragraph of this post, but let me explain. On Tuesday, I went down to the Leon County Circuit Courthouse for a hearing in the judge's chambers. Most days at Circuit are quiet. A couple of people in the hallway waiting to see a judge; a few lawyers talking about golf, what they did that weekend, etc. But not this Tuesday.

On Tuesday the third floor hallway (a wide hallway used to enter three courtrooms and six judge's chambers) was elbow to elbow with camera crews, news reporters, police officers and attorneys. As I tried to make my way past the throng I overheard a number of people discussing a police shooting and whether the police officer would be indicted for an “excessive force shooting.” I had read about the shooting in the paper.

It seems some three to four weeks prior, several police officers were called to the scene of a car wreck. One car had run a red light and hit another car. After the police arrived at the scene, the owner of one of the vehicles became unruly (the newspaper said without provocation). The owner pulled something about six inches long out of his car and began to charge one of the officers. It was dark. The officer thought it was a knife and put three bullets into the man’s chest. If memory serves, the object turned out to be a wrench. It was ultimately determined that the man was high on cocaine, marijuana and alcohol. No DUI lawyer in the Nation could have helped him.

As an aside, it also turns out that the man had stolen a gas card from one of my clients and run up a bill. I filed suit against the man and he had just been served with the papers shortly before the incident happened. I doubt the lawsuit led to the man’s drug induced state but you never know.

Back to the Grand Jury
That leads me to the reason the third floor hallway was so crowded. Everyone was waiting to find out whether the Grand Jury would indict the officer.

In Florida, a person can be indicted for a crime in one of two ways. The State Attorney can simply fill out the indictment papers himself or he can empanel a Grand Jury, present evidence and let the Grand Jury decide whether an indictment is appropriate. The former is most often used when the State Attorney wants to take credit for the indictment. The latter is usually chosen in high profile cases where the State Attorney does not want to take the blame for indicting.

Using a Grand Jury, the State Attorney can avoid being the bad guy in a case like the one above. If the Grand Jury indicts, the State Attorney can say “it wasn’t me, it was the Grand Jury.” If the Grand Jury doesn’t indict, the State Attorney can say “see, there wasn’t even enough evidence to convince a Grand Jury.” Hearsay evidence is admissible as well as other evidence that could not be admitted at trial. That is because a Grand Jury does not determine guilt or innocence. Only whether there is enough evidence that someone may have committed a crime.

Wills: Another Ethical Dilemma

2006-08-29T09:51:00.002-04:00

Several weeks ago I was approached (informally) by a woman in her mid-70's with a question regarding her will. It seems the attorney who drafted the will had contacted her about updating the will to address recent legislative changes made in the law. It had been twenty years since the will was drafted. She also said the attorney wanted to schedule an appointment for her to come in and go over her estate plan.

To the lay person this may seem like an attorney who is looking out for the interest of his client. And this is most likely the case. But many in the legal profession take a more jaded view of the attorney's actions. They would characterize the attorney’s actions as a desperate attempt to make money by soliciting former clients for business. If the latter is the case, his actions are prohibited under ethical restrictions imposed under most state bars. This article deals with the Florida Rules Regulating Professional Conduct.

Florida Ethical Requirements
In Florida, the Rules Regulating Professional Conduct place a number of restrictions on soliciting clients for business. Specifically, Section 4-7.4 states that unless certain restrictive conditions are complied with “a lawyer shall not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship, in person or otherwise, when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain.”

The question then becomes “what about soliciting former clients to update their wills?” For the answer to this question Florida Bar Ethics Opinion 64-61 sheds some light. To my knowledge the opinion is still valid despite being several decades old. It is cited in a number of recent opinions.

Ethics Opinion 64-61
Florida Bar Ethics Opinion 64-61 states that “a lawyer may notify his clients, whose wills are prepared by the lawyer, of changes in federal tax law or regulations which may affect their wills.” But this is not a rubber stamp for all attorneys to begin soliciting former clients. The Opinion placed several conditions that must exist for the attorney to contact the client. These restrictions include: (1) the lawyer (or his firm) must have prepared the will; (2) the lawyer must not have a reason to believe that the will has been revoked or superseded; (3) the lawyer must have reason to believe that, because of the new developments in the law, the existing will may no longer achieve the testator's desires; and (4) the lawyer may not solicit or suggest his or his firm's professional employment.

Estate Planning: The Life Estate Deed

2006-08-22T12:54:00.004-04:00

Beware of the traditional "Life Estate Deed." If you own real estate and want to leave that real estate to your beneficiaries there are two main things to consider: (1) taxes related to the transfer and (2) difficulty in effectuating the transfer. One easy way of transferring real estate to your beneficiaries is the Life Estate Deed.

Life Estate Deed Pros
The Life Estate Deed is a document that deeds your ownership in the real estate to your beneficiary but allows you to retain possession and control of the real estate until you pass away. This type of transfer is usually quick and inexpensive. In most states you may instruct your beneficiary not to record the deed until you pass away. This allows you to maintain your privacy and avoid tensions between beneficiaries until after you pass away. It also prohibits your beneficiary's creditors from attaching a lien to the property while you live.

Life Estate Deed Cons
The cons of a Life Estate Deed are that you will no longer have the same ownership rights to the property once the deed is recorded. For instance, you cannot sell the property without the consent of the beneficiary. Also, the deed is irrevocable once it is recorded and the transfer may be subject to a gift tax.

Recommendation
Based on the above, I recommend you at least look into the Enhanced Life Estate Deed. If you need help deciding which deed is right for you (and if you are reading this post you probably do).

California's Revocable Deed a/k/a Enhanced Life Estate Deed

2006-08-18T12:03:00.003-04:00

A number of people who visit this blog from California have asked me why they cannot find references to the Enhanced Life Estate Deed in their state. The reason is a matter of semantics. You see, in California the Enhanced Life Estate Deed is called a Revocable Deed. The two deeds share essentially the same functions. Those functions are described in my posts Estate Planning and the Enhanced Life Estate Deed and The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quitclaim Deed.

Recently there has been a movement in California to revise the state's Beneficiary Deeds laws. One reason for the movement may be that most lay persons in California are unaware of the Revocable Deed or do not understand how the Revocable Deed works.

Options for Passing Real Property Upon Death
California allows you to pass your real property to your beneficiaries in a number of different ways. Among the ways property can be passed are: (1) Lifetime Deed, (2) Will or Intestate Succession, (3) Intervivos Trust, (4) Joint Tenancy, (5) Community Property, (6) Intervivos Transfer with Reserved Life Estate, (7) Revocable Deed a/k/a Lady Bird Deed, and (8) Conveyance Pursuant to Non-Probate Transfer. This post deals specifically with the Revocable Deed a/k/a Lady Bird Deed a/k/a Enhanced Life Estate Deed.
The Validity of the Revocable Deed in California
California has recognized the validity of the Revocable Deed from as far back as 1914 (see Tennant v. John Tennant Memorial Home, 167 Cal. 570) and as recent as 2002 (see Bonta v. Burke, 8 Cal. App. 4th 788).

Before you support a change in California’s Beneficiary Deeds laws check out my posts referenced above on the Revocable Deed a/k/a Lady Bird Deed a/k/a Enhanced Life Estate Deed. You will likely find that California already recognizes the type of real property transfer you are looking for.

Landlord and Tenant: Lease Terms

2006-08-14T11:34:00.001-04:00

I just got back from county court where the county has finally updated the 1970's carpet and wood panels on the walls and judge's bench. Thank goodness the pipes on the second floor burst and flooded the courtroom. Otherwise the updates never would have been made. But that is not what this post is about.

Lease Agreement "Maximum Occupancy" Clause
While I was in court this morning the judge had to deal with several landlord/tenant law disputes arising out of lease agreement ambiguities. One of the disputes involved a lease agreement legal form where the landlord did not include a "maximum occupancy" clause in the agreement. Apparently the tenant had leased a 1000 sq ft, two bedroom home and had thirteen people (four adults and nine children) living in the home. Without a "maximum occupancy" clause the judge did not allow the landlord to evict the tenant unless the landlord could show the additional people were damaging the house. He couldn't.

A standard "Maximum Occupancy" Clause should look something like this:

"MULTIPLE AND MAXIMUM OCCUPANCY: It is expressly understood that this Lease is between the Owners and each signatory individually and severally. In the event of default by any one signatory, each and every remaining signatory shall be responsible for timely payment of rent and all other provisions of this Lease. The signatories and their minor children shall be the sole occupants of the Premises."

Lease Agreement "Lawn Maintenance" Clause
Another dispute arose out of a rental agreement that failed to state whether the landlord or tenant was responsible for lawn maintenance. That case was also resolved in favor of the tenant. The reason: the landlord drafted the contract and standard contract law says that contracts are to be construed against the drafter. The landlord was the drafter.

A final dispute arose when the landlord tried to enter the rental home and the tenant stuck a gun in his face. The judge evicted the tenant, issued a restraining order against both parties and told the parties to file criminal complaints against each other (unlawful entry against the landlord and assault against the tenant).

An interesting day in court to say the least.

Family Law: Adoption Forms

2006-08-09T09:55:00.002-04:00

This is a follow up to my Stepparent Adoption article on July 11. I have received a number of e-mails requesting that I put some of the adoption forms online. The following Adoption form is a Joint Petition for Adoption filed by both the natural and stepparent.

The form is provided for informational purposes only. You will need to have an attorney revise the form to meet your specific needs. It is important that you have an experienced family law attorney review the form. Family Laws frequently change and your attorney will be able to advise you on any new changes. The form is as follows:

IN THE _____________ COURT IN___________ COUNTY, [STATE]
FAMILY DIVISION

CASE NO.:

IN THE MATTER OF THE ADOPTION OF:

[NAME OF ADOPTEE(S)],

Adoptee(s),
_______________________________________/

JOINT PETITION FOR ADOPTION BY STEPPARENT

Pursuant to [PROVIDE YOUR STATE’S ADOPTION STATUTE], petitioner [NAME OF STEPPARENT PETITIONER] ("Petitioner") files this joint petition for adoption of the above named children. This petition is filed by Petitioner along with [NAME OF NATURAL PARENT] (the "Children's [FATHER/MOTHER]"), Petitioner's [WIFE/HUSBAND] and the [FATHER/MOTHER] and guardian of the children. Petitioner and the Children's [FATHER/MOTHER], being sworn, state as follows:

1. This is an action for adoption of [NUMBER OF CHILDREN TO BE ADOPTED] minor children by Petitioner, their step[FATHER/MOTHER].

2. I desire to adopt the following children:
(a.) [NAME OF FIRST CHILD], born on [BIRTHDATE OF FIRST CHILD] in [PLACE OF BIRTH];

(b) [NAME OF SECOND CHILD], born on [BIRTHDATE OF SECOND CHILD] in [PLACE OF BIRTH]; and

(c) [NAME OF THIRD CHILD], born on [BIRTHDATE OF THIRD CHILD] in [PLACE OF BIRTH];.

Certified copies of their birth certificates are attached hereto.

3. The children have resided in my care and custody since [DATE]. I wish to adopt the children because I would like to legally establish the parent-child relationship already existing between the children and me. Since the above date, I have been able to provide adequately for the material needs of the children and am able to continue doing so in the future, as well as to provide for the children=s mental and emotional well-being.

4. I am [AGE] years old and have resided at [STEPPARENT PETITIONER’S ADDRESS] for [NUMBER] years.

5. I married [CHILDREN’S NATURAL PARENT], the [FATHER/MOTHER] of the children on [MARRIAGE DATE] in [PLACE OF MARRIAGE].

6. [IF APPLICABLE] I was divorced from [EX-SPOUSE] on [DATE OF DIVORCE] in [PLACE WHERE DIVORCE WAS FINALIZED].

7. A completed Uniform Child Custody Jurisdiction and Enforcement Act Affidavit (UCCJEA), Florida Supreme Court Approved Family Law Form 12.902(d), is filed with this petition.

8. A description and estimate of the value of any property of the adoptee children is as follows:
The children do not have any property.

9. Consent to the adoption by [ALL CHILDREN TWELVE YEARS OLD OR OLDER] is attached. Consent is not required for the adoption of [CHILDREN UNDER TWELVE YEARS OLD] because they are not twelve (12) years of age.

10. No person exists whose consent is required but did not waive notice or whose consent is required but did not provide consent.

11. The three (3) children all have the same birth [FATHER/MOTHER] whose name is [NAME OF BIRTH PARENT GIVING UP PARENTAL RIGHTS] (the "Birth [FATHER/MOTHER]"). Attached is the Birth [FATHER/MOTHER]'s consent to this adoption.

WHEREFORE, I request that this Court terminate the parental rights of the noncustodial Birth [FATHER/MOTHER], enter a Final Judgment of Adoption of the Minor Children by Petitioner Step[FATHER/MOTHER] and, as requested, change the name of the adopted children.

I understand that I am swearing or affirming under oath to the truthfulness of the claims made in this petition and that the punishment for knowingly making a false statement includes fines and/or imprisonment.

Dated: ________________________ _____________________________________
Signature of Petitioner Stepparent

Printed Name:
Address:
Telephone Number:

STATE OF _________________
COUNTY OF _______________

The foregoing instrument was sworn to and subscribed before me this _________ day of _______________________, 2004, by [PETITIONER STEPPARENT] who executed the foregoing and produced ____________________ as identification or is personally known to me.

____________________________________
Signature of Notary Public

(SEAL)

____________________________________
Print, Type or Stamp Commissioned
Name of Notary Public

What is a Legal Nurse Consultant?

2006-08-02T00:12:00.004-04:00

A Legal Nurse Consultant is a registered nurse who uses professional expertise as a nurse to consult and advise attorneys on medical-related cases. Most Legal Nurse Consultants work independently from home for attorneys. Attorneys hire Legal Nurse Consultants as a cost-effective way to learn medical terminology and subtleties of the healthcare system. Consultants also assist attorneys in understanding medical records. Other consultants provide consulting services to insurance companies, government agencies and private corporations.

Legal Nurse Consultant fees range from $100-$200 per hour.

Consulting Services

Consulting services include (1)helping with the discovery process; (2) reviewing medical records; (3) identifying standards of care; (4) preparing reports and summaries; (5) conducting research; and (6) locating expert witnesses. Legal Nurse Consultants may even serve as expert witnesses.

Why Hire A Legal Nurse Consultant?

2006-08-01T13:32:00.003-04:00

I used to work with a roadway construction attorney who said "I don't need to know the nuts and bolts of paving a road as long as I have an expert who does." And thank goodness he did have such an expert because, as I informed him, you don't pave a road with nuts and bolts. Okay, so the joke was stupid but it was the best material I had at the time.

What did he mean by his comment? He meant it is better for an experienced expert witness to explain complicated issues to a jury than for an attorney to stumble his way through them. That is certainly the case when it comes to complicated medical issues which is why just about every successful medical malpractice lawyer has a Legal Nurse Consultant on staff.

What is a Legal Nurse Consultant?
It may surprise you to learn that many attorneys who practice medical malpractice and personal injury law have no real working knowledge of the complex medical issues the deal with. Many lack the knowledge to understand even simple medical records. I will refrain from naming the dozen or so friends of mine who practice personal injury law as medical record illiterates. So how do they have any idea whether they have a valid medical malpractice, slip and fall, whiplash or other personal injury case? They rely heavily on Legal Nurse Consultants.

A Legal Nurse Consultant is someone with a nursing degree who reviews, analyzes and summarizes medical records for an attorney. As a Legal Nurse Consultant you may choose to work for plaintiff or defense attorneys, governmental agencies, insurance companies or private corporations. You may choose to work in the geographic area where you are currently located or to move around the country.

What does a Legal Nurse Consultant Do?
A Legal Nurse Consultant advises attorneys both prior to, during and after trial (usually on appeal). If you are a person who does not like to give live testimony at trial you do not have to. There are a number of legal nursing consulting opportunities that do not require trial testimony. If you are (like many attorneys) a frustrated actor, then expert trial witness testimony may be right up your alley.

Most Legal Nurse Consultants deal with cases involving medical malpractice, personal injuries, products liability, toxic and environmental cases, worker's compensation, workplace injury, criminal and family law issues.

If you are looking for an opportunity to work in the field of Legal Nurse Consulting, contact one of our attorneys today.

Commercial Lease Agreement Form

2006-07-27T10:28:00.002-04:00

I recently revised a Florida Commercial Lease Agreement for a large commercial real estate company. The company owns multi-million dollar properties throughout the southern United States and has found a number of problems with its standard Lease Agreement.

Provisions for eminent Domain, Subordination of Mortgages, Bankruptcy, Indemnification, even Radon Gas were included in the lease. I brought the lease to the partner expecting a big pat on the back and possibly a raise. Neither came.

The Final Product
After many more trips to the partner's office and many more revisions we finally ended up with a 15 page Commercial Lease Agreement that fit our client's needs. The process was long and arduous and I learned much of what I now know about writing during the experience. As it turned out, the partner had done me a huge service in requiring me to start from scratch; and he knew it. I later learned that he had experienced a similar start to practicing law from his mentor. I now view the partner as a mentor and someone I greatly respect.

Purchase the Lease Agreement Template
I have provided a number of legal documents on my blog free of charge. Some of these include the Warranty Deed, Quitclaim Deed and Claim of Lien. As I have described above the Commercial Lease Agreement is something I spent hours preparing. You can purchase the Commercial Lease Agreement for $14.99. It has obviously been modified to appear as a template so that you can adapt it to your specific use.

Credit Repair: This One's For Jamie

2006-07-26T13:13:00.003-04:00

For more than seven years my sister-in-law, Jamie, has been upset about something one of her former roommates did to her when she was in college. Now that Jamie has moved to south Georgia she might say what her roommate did "sticks in her craw." The situation involves a telephone bill, a roommate and a hoodlum. Sounds a lot like a board game or a clue on Jeopardy, but it's not.

What happened to Jamie is so common that it may have happened to you when you were a wide-eyed, wet-behind-the-ears freshman away from home for the first time. Not that Jamie really fit into that category at the time, but I don't want to be overly critical of how long it took her to catch on. Just kidding.

They Started Out As Friends
From what Jamie has told me, she and a number of her friends decided to move into an apartment together. As is often the case, each of the friends had a separate utility put in her name. One got the electric bill, one the water and Jamie got the telephone bill. The friends were to split the electric, water and telephone (cost of standard service) and each friend was to pay for her own long distance telephone calls. So far, so good.

It seems the roomies rocked along quite comfortably for awhile splitting the bills, hanging out and enjoying each other's company. Then one day things started to change. One of her roommates had started dating a hoodlum. After the hoodlum was thrown in jail (as is often the case with hoodlums) he began making collect telephone calls from prison. Each time her friend accepted a collect call from prison the call would show up on the telephone bill in Jamie's name as "Collect Call: Sing-Sing Prison." Jamie didn't like the idea that her name was now attached to a building repository for the underbelly of society. But that is not what has upset Jamie lo these many years.

They Stiffed Her
At some point in the relationship, the roomies decided that all good things must come to an end. The three packed up their boxes, loaded up their cars and parted ways. The problem arose when it came time to get payment from the newly separated friends. When the final telephone bill arrived the collect call portion from Sing Sing Prison was outrageous.

Jamie contacted her former roommate about paying the bill. Payment never came. She again contacted her roommate. Still no payment. Again she contacted her roommate. Well, you can see where this is going. It wouldn't be much of a story if the roommate ended up paying the bill now would it. Jamie was stuck with the bill which, I am told, has never been repaid by the roommate.

Now A Word Of Advice
To those students who are getting ready to move into an apartment with roommates for the first time consider this:

(1) If the utility bill is put in your name you are responsible for it. The utility company does not care that two of your roommates stiffed you on the bill. When it comes time to issue a negative credit report or sue, you are the one who will suffer; not your roommates. Try to have the bill put in all of the roommates' names.

(2) Before parting ways with your roommates, call and have any utilities in your name shut off. You do not want to be responsible for bills from people who moved in after you left.

(3) Get a payoff from all of the companies that have bills in your name (i.e. utility, telephone, Blockbuster, etc.) before you move out. Make sure your roommates pony up their portion before you part ways.

(4) Check out my post on repairing your credit for more information on fixing your credit.

Is Your Car A Lemon?

2006-07-25T12:44:00.000-04:00

One of my clients bought a new minivan two years ago. One month after she bought the van it began having engine problems so she took it to the dealer's repair shop. They diagnosed the problem and "fixed it" within an hour. Two weeks later the van started having the same problems. Again she took it to the repair shop and again they "fixed it" and sent her home. Within another month she had experienced the same problems two more times. The fourth time she took the car to the dealer, handed them the keys and told them she wanted her money back. She had purchased what is known as a "lemon" vehicle.

What is a Lemon?
In most states, a new vehicle (no more than a year old and still under warranty) is considered a "lemon" if it has a serious defect the dealer can't fix in four tries, or has one or many defects that prevent you from using it for 30 days or more (the 30 days need not be consecutive). Lemon laws generally do not apply to used vehicles. A defect covered by the Lemon Law must seriously affect the "use, value or safety" of your vehicle and must be covered by the warranty. An irritating rattle may not be "serious" enough to make your car a lemon. Stalling probably is.

Protect Yourself
You will not know the first time you take your vehicle into the shop whether you have a lemon or not. Document everything. If you have any problems with your vehicle during the first year after purchase be sure to get a repair order for every repair visit. This is so even if the shop doesn't diagnose the problem or attempt a repair. A repair order should show the problem you report, and the dates your car is in the shop. Keep purchase contracts, warranties, and repair orders to prove you have a lemon. Don't keep repair orders in your car where they may get lost or removed.

Consult your state Department of Consumer Protection for forms you may need to complete to be refunded for your purchase. Many states require the use of specific language before a vehicle can be deemed a lemon.

If you return your vehicle to the manufacturer damaged, a manufacturer may want to negotiate a damage deduction. In most states, you are not responsible for paying for normal wear and tear, such as minor dents, scratches, pitted glass, soiled carpets, minor stains or tears. You may consider having the damage appraised by a third party, or have it repaired rather than paying a deduction.

Filing Suit
In many states, a court may be required to decide whether your vehicle is a lemon and what you are entitled to receive. If you sue the manufacturer and win, you may be entitled to double the vehicle purchase price, as well as other costs and attorney fees.

Oh, The Sweet Smell Of Victory

2006-07-21T10:59:00.000-04:00

About eight months ago my law firm was hired to sue a restaurant chain for failing to pay its bills to one of our local clients. Our client had done work for the restaurant over a 10 year period. During most of that time the restaurant was prompt in its payments.

About a year ago the regional manager of the restaurant got into an argument with our client and refused to pay for more than $100,000 in work our client had performed. When it became clear the restaurant would not pay without litigation, our client turned the case over to us. We filed suit seeking damages for breach of a promissory note, court costs and attorney's fees pursuant to a clause in the note allowing us to recover such fees.

A Contentious Discovery Stage
From the beginning the suit was very contentious. During the first round of depositions it became clear that the two opposing parties could not be in the same room with each other (name calling, swearing, arguing, etc.). You can find out some very interesting details about a business relationship when the relationship deteriorates into hatred.

The second round of depositions were full of racial slurs (although not on the record and not by our client), allegations of fraud and other criminal activity, and more name calling and swearing.

At the conclusion of the depositions it was clear to us that the restaurant knew it owed our client the money but refused to pay because the manager hated our client. The manager admitted during a deposition that the money was owed but that he just didn't want to pay it. He indicated that he wanted to go before a jury and explain why our client was a jerk and that because of that he shouldn't have to pay our client's bills. The manager felt he could persuade a jury to let the restaurant off the hook once they saw how bad a person our client was. The legal term for this strategy is "jury nullification."

Summary Judgment
What the restaurant manager didn't know about is a legal procedure known as Summary Judgment. Summary Judgment states that if the deposition testimony shows that the money is owed and there are no valid defense for not paying the money (no, "the guy is a jerk" is not a valid defense) then the Court can rule in favor of my client without a trial.

This morning the manager received an eye opening lesson in Civil Procedure and Summary Judgment. The judge granted our Motion for Summary Judgment and awarded us the entire principal amount, plus court costs and attorney's fees. This may sound like chest beating or poor sportsmanship, and it probably is. But once you've had to deal with a defendant like that for the last eight months you might be able to see where I'm coming from.

To those of you who want to use a jury to try to defame someone's character, let this be a lesson to you. It was to the manager of this restaurant chain.

Family Law: For $500,000 She Can Have My Husband

2006-07-19T14:40:00.002-04:00

It sounds like an episode of the Jerry Springer show: Husband suddenly begins "working" late and making midnight phone calls to strange telephone numbers; wife has a private investigator tail her husband to one of their vacant rental homes; husband is caught in the act of cheating on his wife. The title of that episode might be "You've Heard It All Before."

What makes this case interesting is not the sordid love affair between Home Depot co-workers Clay Harrell (the husband) and Beth Carroccio (the mistress). Nor is it the way the two "lovers" were busted when Cindy Harrell (the wife) walked in on the two in a vacant rental home the Harrell's owned. Nor is it the subsequent break up of their marriage and the effect it has had on their toddler son.

When All Else Fails, Sue
So how did Cindy Harrell handle her husband's affair once she discovered what was going on? She didn't pack up her husband's things and throw them out in the street. She didn't threaten to kill his mistress. She didn't blame herself for the affair. Instead she hired an attorney and sued her husband's mistress for "alienation of affection."

Mrs. Harrell's decision to hire an attorney turned out to be a good one. After the suit was filed, Mrs. Carroccio failed to respond to the allegations and a Default Judgment was entered against her for $500,000. Now that is an expensive love affair.

But before you become giddy thinking you have figured out how to get revenge on the other woman, let me point out that this suit was filed in North Carolina (one of the only states that allows suit for alienation of affection). It is reported that the largest verdict for "alienation of affection" in North Carolina to date is $2 million. North Carolina allows jilted spouses to sue not only the mistress, but the spouse's employer if the "lovers" work together and the company does not take steps to stop the affair.

So if you can convince your spouse and his/her mistress to move to North Carolina then let the lawsuit begin. If not, tune in to the Jerry Springer show for some ideas.

Bankruptcy: The New Asset Valuation Method

2006-07-18T11:10:00.002-04:00

As you may know, some of the legal work I perform is for clients seeking to collect against debtors. I often advise my creditor clients that the real work of collecting on a bad debt does not begin until after a judgment has been entered against the debtor. It is not until after a judgment is entered that the collection attorney is able to begin the formal post judgment discovery process.

One of the tools used in post judgment collections is a set of interrogatories (questions) regarding the debtor's finances. The debtor is asked under oath to list all of his or her assets and to give a value for each asset. The value usually listed by a debtor is what the debtor would receive for the asset if it were sold at an auction or "fire sale."

Bankruptcy and the Old Asset Valuation Method
Until recently, bankruptcy debtors have also been able to list their assets at the "auction value." This has been an incredible benefit to bankruptcy debtors trying to hold onto assets. If the value of an asset is less than the cost it would take to sell the asset at auction, bankruptcy trustee prudence dictated allowing the debtor to retain the asset. On the other hand, the higher the value of an asset the greater the likelihood the bankruptcy trustee would take the asset and sell it to pay back creditors.

The difference between the auction value and replacement value of vehicles, furniture, boats, clothing, etc. is usually significant.

Bankruptcy Assets Now Must Be Valued at Replacement Cost
The new bankruptcy laws require that a bankruptcy debtor now value his or her assets at what it would cost to repurchase the assets at a retail store. The debtor is allowed to account for the asset's age and condition. In almost every instance, (even accounting for age and condition of an asset) the value of the asset will go up and the likelihood of the asset being taken and sold by the trustee increased.

For more information on the new bankruptcy law changes see my articles on whether bankruptcy is right for you, the income eligibility requirement, the means test and bankrupcty and student loans.

Your Business Needs a GSA Contract

2006-07-17T12:49:00.002-04:00

In June, 2006, I posted about how I helped an online business selling thermal underwear obtain a contract through GSA. The online business recently informed me that the federal government placed two substantial orders for thermal underwear in the middle of June. Not quite selling ice cream to an eskimo but pretty close. The orders were placed through the online catalog GSA has made available to every federal and state government agency in the United States (now that's free advertising on a nationwide scale!).

For more information on obtaining a GSA Contract for your company check out this article titled What is GSA.

Apparently selling thermal underwear (and probably a million other products) is only seasonal if you do not have a contract to sell to the federal government. What does this mean to you? It should mean that you need a GSA contract for your business.

Reflections on My Time In "Paper Chase" Land

2006-07-14T09:18:00.000-04:00

I thought I might take a brief hiatus from dispensing legal advice to reflect back upon my time in law school. If this post is received well I might devote additional Fridays to some of the many surreal experiences I had while a law student at The Florida State University College of Law. Surreal, but nice.

The Spitter
I remember walking into Florida Con Law I for the first time. It was my second semester of law school and I now felt like a seasoned veteran. I had been through the fire of the first semester's end of semester exams and had done well (averaging a B+). I am not one of those people who gets an 88 on a law school exam and acts like he's disappointed. My B+ average put me in the top third and that was good enough for me. Sure beat a poke in the eye with a hot stick anyway.

I was looking forward to having my skull full of mush filled with grand discourses on the lofty document of grandeur that is the Florida Constitution. Just kidding. I was really just wanting to find out how pregnant pigs and a monorail train had somehow ended up in the Consitution.

I had been told that a new highly qualified professor was scheduled to teach the class. He was a judge in his previous life and had recently ascended (or descended depending on your view of those who teach and do not practice) to the heights of the law school professor. As was my custom I entered the classroom and took a seat in the front row. Not long after I sat down, a distinguished looking gentleman entered the room, walked down the aisle which sloped to the front of the room (stadium seating) and opened up his briefcase. He took out some chalk and wrote his name and the name of the class on the board. He then turned around and began to address the class.

I will never forget the first words I ever heard him speak. Not so much for what he said, but for the way he said it. "My name is Professor So-And-So and this is Florida Con Law I." The words were moving and spoken with a great deal of feeling. At least for those of us in the front row. You see, Professor So-And-So was a spitter. When he spoke, a light mist sprayed out of his mouth and onto those of us in the front row (the feeling part). We all wanted to move (the moving part).

I had seen people roll their tongues when they spoke. I even know a guy from Swaziland who can make tiny clicks with his tongue when he speaks. But this was the first time I had ever seen anyone who could seamlessly spit and talk at the same time. One of my friends turned to me and said, "He's a spit talker." The whole situation seemed like it should have been the topic of a Seinfeld episode. The next time we met for the class I was comfortably seated in the back row well out of range of the Spitter. I calculated that anyone sitting in the fourth row or further back was out of his range unless the professor walked up the aisle.

Several days into the class one of the students wore a yellow raincoat into class. It hadn't rained in a week.

Asbestos and Mesothelioma: Georgia-Pacific Exposed Again

2006-07-13T09:11:00.001-04:00

This is a follow-up to my post on Asbestos and Mesothelioma in May fussing about how long it has taken for our local school board to remove the asbestos from my kid's school. I bring the subject up again because of an article I recently read about a man (Mr. Timothy Shawn Bostic) who died at the age of 41 as a result of being exposed to asbestos when he was a teenager. The article is reported in the most recent edition of LawyersUSA and titled "Man exposed to asbestos as a child wins $13 million."

The facts of Mr. Bostic's death are tragic. In brief, when Mr. Bostic was a teenager he worked with his father in the construction business. One of his tasks involved sealing the seams between pieces of wall board (also called sheetrock) using a joint compound containing asbestos. The tiny asbestos fibers entered into Mr. Bostic's lungs causing him to develop Mesothelioma. Mr. Bostic showed no signs of having Mesothelioma until shortly before it killed him in 2003. What makes the story even more distressing is what happened after the family filed suit and the jury awarded the verdict.

The First Trial
Mr. Bostic's family filed suit against the manufacturer of the joint compound, Georgia-Pacific, claiming the company "knew, but failed to warn customers, about the dangers of the product." In March, 2005, a jury awarded Mr. Bostic's family $9.3 million ($3.1 million in compensatory damages and $6.2 million in punitive damages). The trial judge then threw out the verdict claiming the jury did not understand how to correctly calculate punitive damages. The judge gave the family a mandate. Either accept a drastically reduced verdict of $2 million or have the case tried again. The family chose to retry the case.

One of the things that bothered me about the judge's mandate is his offer of $2 million. If he felt the jury was confused about punitive damages then why not offer the family all of the compensatory damages (i.e. $3.1 million) and throw out the punitive damages. But it is not my intention to criticize the judiciary in this post.

The Second Trial
The second trial lasted one month. At the end of the trial the new jury deliberated just three hours before awarding the family $13,593,814 ($7,554,904 in compensatory damages and $6,038,910 in punitive damages). The thought comes to mind: "I bet the original $9 million figure is looking pretty good to Georgia-Pacific right about now." The case is currently in the appeals stage. I will update this post once the appeals are over.

The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quitclaim Deed

2006-07-12T08:32:00.010-04:00

On June 19, I wrote an article explaining the benefits of the Enhanced Life Estate Deed. The article has quickly become one of my most popular reads. Professor Gerry W. Beyer of the Texas Tech University School of Law commented on my article in his post titled Lady Bird Deed. Other estate planning lawyers and professors have e-mailed me extolling the benefits of the Enhanced Life Estate Deed.

Enhanced Life Estate Deed
As explained in my Enhanced Life Estate Deed article, a Lady Bird Deed and an Enhanced Life Estate Deed are the same thing. The documents allow you to deed your home or other real estate to your beneficiaries now and reserve for yourself a life estate interest (i.e. the right to live in the home for the rest of your life). This helps your beneficiaries because the property does not go into probate when you pass away. Instead, the property passes directly to your beneficiaries without additional costs and administrative paperwork.

Another important distinguishing and unique feature of the Enhanced Life Estate Deed is that it reserves to you the right to sell the property at any time without your beneficiaries' consent. This is not the case with a Warranty Deed or Quitclaim Deed. Should you sell the property after executing an Enhanced Life Estate Deed the interest your beneficiaries have in the property is dissolved. This means you can sell the property free and clear of any claims your beneficiaries might have on it under the Enhanced Life Estate Deed.

Another important feature of the Enhanced Life Estate Deed is that your property is not subject to the bad financial decisions of your beneficiaries. Should your beneficiaries have tax liens, judgment liens or other encumberances against them, the liens do not become liens against your property. This is particularly important in states with statutes that prohibit attaching a family's homestead to judgment and tax liens.

General Warranty Deed
A General Warranty Deed is a document which conveys all of your interest in and title to your home or other property. This type of deed does not give you any right to remain on the property after the closing. Once the deed is executed, you are out. This is the type of deed used in most standard real estate purchase and sale contracts to transfer property.

In addition, the General Warranty Deed warrants that if the title is defective or has a “cloud” on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the person executing the deed may be held liable by the buyer of the property. This means you (as seller) will have to pay the costs of clearing the title defects.

Quitclaim Deed
A Quitclaim Deed is a document which transfers any interest you may have in a particular piece of property to someone else. This type of deed is most often used to clear the title when the property interest of the person signing the deed is questionable. A Quitclaim Deed is basically your way of saying "I don't know if I have any interest in this piece of property, but if I do I am relinquishing that interest."

By accepting such a deed the buyer assumes all the risks. Unlike the General Warranty Deed, a Quitclaim Deed contains no warranties as to the title. It simply transfers to the buyer whatever interest the grantor has. If you have a question as to whether someone may claim an interest in property you own or are interested in purchasing request that the person execute a Quitclaim Deed. You may have to pay them something for it, but in the long run it may be worth it.