Tuesday, April 13, 2010

Separate Property vs. Community Property

The Texas Family Code defines separate property as:

- property owned or claimed by the spouse before marriage;

- property acquired by the spouse during marriage by gift, devise, or descent; and

- the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.

In essence, all other property acquired by one or both spouses during marriage is considered community property. This includes income earned on separate property during the marriage. The Texas Family Code states that “property possessed by either spouse during or on dissolution of marriage is presumed to be community property.” In a divorce, clear and convincing evidence as to why property should be considered separate is required to establish separate property designations.

If you need a Texas Family Lawyer, contact Peterson Law Group.

Saturday, April 10, 2010

What is an attorney ad litem?

The term ad litem simply means “for the suit”. An attorney ad litem may be appointed or assigned in family law cases or probate cases where representation is deemed necessary by a judge. While the Texas Family Code does not specifically define the role, the Texas Probate Code provides a definition that is generally accepted in family law cases:

An attorney ad litem is an attorney who is appointed by a court to present on behalf of an incapacitated person.

In family law cases, judges will recommend the appointment of an attorney ad litem when doing so is deemed to be in the best interest of the child (or any party) with regard to the child’s interests in the case at hand.

In any probate proceeding, a judge may appoint an attorney ad litem to represent the interests of a person with a legal disability, a person who is a nonresident and cannot be present, an unborn person, or an unknown heir.

In either area of law, the role of an attorney ad litem is that of advocate for his client.

If you need a Texas Family Lawyer or a Texas Probate Lawyer, contact Peterson Law Group.

Thursday, April 08, 2010

How is an LLC different from an LLP?

A Limited Liability Company (LLC) is a hybrid organization that takes aspects of corporations and combines them with the framework of a partnership. The owners of an LLC benefit from the ability to choose to be taxed at the company level, much like a corporation, or using pass-through taxation, as found in partnerships. An LLC generally has the management flexibility of a partnership as well. In Texas, this organizational structure may be owned by a sole individual or by a group. Either way, members have limited personal liability for the actions of the LLC.

A Limited Liability Partnership (LLP), on the other hand, cannot be considered a separate taxable entity, and therefore is restricted to pass-through income taxation. An LLP is essentially a General Partnership in which each partner is not liable for certain acts of other partners. Each partner is, however, directly impacted by any profits or losses that the LLP encounters. If one partner obligates the LLP to a debt, be it to creditors, landlords, lenders, etc. each partner can, to some extent, be held personally responsible.

If you are considering forming a business in Texas, contact Peterson Law Group.

What assets do and do not pass under a will?

In Texas, assets that commonly pass under a testator’s will include:

  • Real property, both surface rights and mineral interests.

  • Bank and brokerage accounts, Certificates of Deposit, stocks, and bonds (depending on whether there is a beneficiary designation).

  • One-half of any Individual Retirement Accounts which are considered community property owned by the testator’s spouse.

  • Tangible personal property, both titled and untitled.

  • Royalties generated from intellectual property.

  • Money owed to the testator at the time of his/her death.

Assets that generally do not pass under a will in Texas include:

  • Life insurance.

  • Some employer provided retirement plans in which the testator is the participant.

  • Employer provided retirement plans in which the testator’s spouse is the participant.

  • Individual retirement accounts owned solely by the testator.

  • Property owned in a trust of which the testator is a beneficiary.

There are instances where some of the assets described above may be passed under a will. One common example occurs when the estate or will executor is named as the beneficiary for one or more of the assets listed.

If you need a Texas Wills, Trust & Estate Planning Lawyer, contact Peterson Law Group.

If you need a will, check out our estate planning questionnaire.

If you need to start a probate, check out our probate questionnaire.

Wednesday, April 07, 2010

What is a “Bypass Trust” in a will?

A bypass trust is an estate planning tool employed by married couples who wish to take advantage of both of their estate tax exemptions, thereby saving hundreds of thousands of dollars in federal estate taxes. While the federal estate tax is currently non-existent, it is safe to assume that the rate of taxation will soon return to familiar percentages. Planning for this, it behooves married persons to consider establishing a will that allows them to pass on as much of their estate as possible to their loved ones.

In a simple will, all property passes to the surviving spouse when one party dies. This scenario qualifies for the marital deduction; however, once the surviving spouse passes away, they have only one estate tax exemption to apply to property passed to the couple’s children. A bypass trust, also known as a credit shelter trust or an A/B trust, allows a married couple to use both of their estate tax exemptions.

The way a bypass trust allows married couples to avoid federal estate taxes is by leaving the exemption amount available upon the first spouse’s death to a trust that provides the surviving spouse with a lifetime income. Once the surviving spouse passes away, the remaining funds in the trust will then be distributed among the couple’s children. This trust, if properly created and maintained, is not subject to the federal estate tax because the surviving spouse cannot be deemed the owner of the trust.

If you need a Texas Wills, Trust, and Estate Planning Attorney, contact Peterson Law Group.