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.

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.

What is the Medicaid Estate Recovery Program?

If a person (age 55 or older as of March 1, 2005) of limited income received healthcare services through the government program Medicaid, the state of Texas has the right to ask for money back from their estate once they die. The Medicaid Estate Recovery Program (MERP) facilitates that reimbursement.

The MERP applies only to some of the long-term Medicaid services, like nursing home care, extended in-home services, and prescription drugs supported by Medicaid. It is important realize that the MERP will only file a claim on a person’s estate if doing so is cost effective. The MERP will not file a claim when:

- the value of the estate is less than $10,000;

- there is a spouse who is still alive;

- there is a child under 21 years of age;

- there is a child of any age who is blind or permanently and totally disabled;

- there is an unmarried adult child who lived in the person’s home for at least one year before the Medicaid recipient died;

- the amount of recoverable Medicaid costs are $3,000 or less; or

- the cost of selling the property would be more than or equal to the value of the property.

The state of Texas will also not ask for monetary reimbursement if doing so would cause an undue hardship for the deceased person’s heirs. In order to be granted an undue hardship request, the person’s heirs must ask for it, and provide documentation that proves the hardship. Some scenarios that MERP recognizes as undue hardships occur when:

- the estate property was a family business, farm, or ranch for at least 12 months prior to the Medicaid recipient’s death, and this property is the main source of income for their heirs;

- the estate property produces at least 50% of the heir’s livelihood;

- recovery by the state would affect the property and result in heirs losing their primary source of income; or

- the estate’s beneficiaries would be eligible for public or medical assistance if a recovery claim is collected.

- Other compelling reasons may exist.

More detailed information about the Medicaid Estate Recovery Program can be found at the Texas Department of Aging and Disability Services (DADS) website.

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

Identity Theft

Identity theft occurs when your personal information, such as your name, social security number, credit card number, etc., is stolen and used without your knowledge. Theft of identity is a dangerous thing, potentially ruining your bank account, credit score, and reputation.

In order to protect from identity theft, it is helpful to be aware of some of the ways it can occur. The Federal Trade Commission lists the top five most common ways that identity theft happens:

1. “Dumpster Diving” to find any documents that have personal information on them.

2. “Skimming” by stealing credit/debit card numbers when processing your purchases.

3. “Phishing” by pretending to be financial institutions or companies and sending you spam e-mail or pop-up messages enticing you to reveal your personal information.

4. “Changing Your Address” by simply going to the post office and filling out a change of address form in your name. The thieves will then have access to all of your mail, including your bills and bank statements.

5. “Old-Fashioned Stealing” by stealing wallets, purses, mail, new checks, tax information, or even personal records from employers. They may also try to bribe employers who have access to your personal records.

Having your identity stolen is scary. In order to avoid identity theft, here are some key tips from the FTC:

- Shred financial documents and paperwork with personal information before you discard them.

- Protect your Social Security Number. Don’t carry it in your wallet or purse, and don’t give it out unless absolutely necessary.

- Don’t give out personal information on the phone, through the mail, or over the internet unless you know exactly who you’re dealing with.

- Never click on links sent to unsolicited e-mails and use firewalls and anti-virus protection on your computer.

- Don’t use obvious passwords like your name, date of birth, etc.

- Keep your personal information in a secure place at home.

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

How do I obtain a marriage license in Texas?

In order for two adults to legally enter into a marriage in the state of Texas, a man and a woman must obtain a marriage license from the county clerk of any county in this state. The couple must both appear before the county clerk, provide proof of identity, fill out an application provided by the county clerk, and take the oath printed on the application form.

The couple must then participate in a ceremony that is to be conducted within 31 days of the issuing of their license. If a ceremony is not conducted, or an authorized person does not conduct the ceremony, the marriage license expires.

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

How do I have my property rezoned?

It is often advantageous for real estate developers to have properties they purchase rezoned to fit the vision they have for a property. Unfortunately, local governments and citizens do not always share the same vision as the developer. The discrepancies that arise as a result have led the rezoning process to become quite cumbersome, and in some cases, downright painful. There is, however, hope for developers who are willing to reach out to the community and patiently follow the steps required to have their property rezoned.

In Bryan, TX, for example, a developer (or individual) wanting to have their property rezoned must first fill out a “Rezoning Application” and submit it to the Bryan Department of Development Services. The minimum requirements for submission to the department include:

- $300.00 application fee,

- Metes and Bounds description of property, and

- a completed and signed application form.

In the application, the developer is given the opportunity to describe the reasons for their rezoning request, the changing conditions in the area which make the zoning change necessary, whether or not the change is in accordance with the Future Land Use Plan, and any other reasons the developer wishes to include.

Once they have applied for rezoning, it often helps for a developer to reach out to the public. Placing informational ads in local newspapers and/or magazines is a good way to do this. If the rezoning proposal is drastic, one that would affect a large portion of the community, holding an open forum to allow anyone with questions or concerns an opportunity to voice them is often advisable. This demonstrates the developer’s willingness to consider the wishes of the community while providing a venue to clearly present the benefits of the proposed zoning change.

Different local governments have varied requirements regarding public involvement. Some insist that a public forum be held, while others only require that public notice be made. In other areas, no public notice may be required at all. The developer should research the local governing body’s requirements before attempting to have property rezoned.

If you need assistance or advice regarding property rezoning, contact the Texas Real Estate Lawyers at Peterson Law Group.