Ashley Flotte’s Legal Blog

If you’ve never read Judge Buchmeyer’s column Et Cetera in the Texas Bar Journal, you’re missing out. It’s a collection of humorous quotes from trial records, pleadings, deposition transcripts, etc. that pokes a little fun at witnesses and, yes, of course, lawyers. A few excerpts for your hump-day enjoyment:

From Judge David Cleveland of Palo Pinto (29th District Court), this testimony from the trial of will contest involving two wills left by Walter Howeth:

Q. When did you last see Walter?

A. At the funeral.

Q. Did he make any comment to you at that time?

A. No, sir.

From Robert W. Hedrick of Fort Worth (Hartless, Patton & Hedrick), this excerpt from the deposition of the wife (Robert’s client) in a divorce case. The husband’s attorney “is inquiring about the wife’s ownership of stock in a family corporation, and the wife is claiming the stock under the terms of the husband’s will.”

Q. Do you have any other documents other than a franchise tax report that you claim shows that you have some ownership of stock in Tech-Lab Industries, Inc.?

A. I have a will.

Q. You have a will, your own will?

A. No, Raleigh’s will.

Q. Well, Mr. Simmons’ will - do you have it here today?

A. I think I have it.

Q. And it says in the will that you own an interest in Tech-Lab Industries, Inc.?

A. Should he die it says that, yes.

Q. Well, he’s alive.

A. Well, I’m aware he’s alive most of the time….

From Judge Jerome Jones, probate judge in Galveston, this marvelous exchange - which took place in a will contest trial when the attorney was examining “a woman friend” of the deceased.

Q. And so you had a conversation with the deceased prior to his death.

A. Yes, I did.

Q. When was this?

A. About three months after his wife’s death.

Q. What did he say?

A. Well, he asked me to marry him.

Q. And what did you say?

A. I said, “Isn’t that a little bit soon?”

Q. And what did he say?

A. He said, “Well, she’s as dead as she’s ever gonna be.”

This marvelous contribution is from Judge A. Lee Harris of Hill County Court at Law in Hillsboro, who writes that he found the following message awaiting him on the fax:

I. Comes now Phillip Robertson, Attorney for Defendant, who moves for a continuance and would show the Honorable Court the following: 1. Defendant will be present in court today. He
has a setting this morning at 9 a.m.

II. Unbeknownst to Counsel, Counsel’s wife procured two tickets to THE WORLD SERIES IN BOSTON, MASSACHUSETTS, FOR THE FIRST GAME OF THE WORLD SERIES. She
bought these for his son and him to go. Counsel nor his son has gone to the World Series in either’s life, as both are Texas Rangers fans.

III. Counsel and his son have traveled across the country to Spring Training in Arizona, to (all regular season games) Boston, to Philadelphia, to New York (both Yankee and Shea), to St.
Louis (new and old Busch stadium), to Chicago (Wrigley and Comerica), to Washington, and to Kansas City, all on baseball trips. But never to the WORLD SERIES. Counsel is 38 and his son is 11.

IV. Counsel begs the court to reset the case for a short time so we may dispose of the case without a trial. Counsel has received a recommendation from the Honorable County Attorney.
Respectfully submitted,

Phillip Robertson,
Attorney for Defendant

* * * * *

Motion for Continuance Conditionally Granted.

Defendant’s Counsel’s Motion for Continuance is granted on the condition that he purchase the 11-year-old son at least one jersey from each team and make every effort, including leaping over rails, to obtain a game ball.

Signed Oct. 24, 2007
Judge Lee Harris

From Donald K. Buckman of Fort Worth (Cantey & Hanger), this excerpt from his deposition of the plaintiff in an age discrimination suit:

Q. Was it permissable for you and your employees to use the 1065 photocopier if the others were busy?

A. We were told to use it as little as possible and only onesies and twosies when it was necessary. That’s what I was told.

Q. Somebody told you to use the 1065 only on Monday and Tuesday?

A. No, no, no. I was told to use the machine for onesies and twosies. That’s the way it was put to me, onesies and twosies.

Q. I misunderstood what you said.

A. I’ve got to have a drink.

Q. Let’s take a break.

                Often, clients will seek estate planning with special attention to the unique needs of a child or other family member. For instance, clients with disabled or other special needs children often have questions regarding the most beneficial methods of providing for such children should they themselves be unable to care for them. One key planning tool for the disabled is a “Special Needs Trust.”

                Special Needs Trusts, also sometimes referred to as Supplemental Needs Trusts, are trust vehicles designed allow a disabled beneficiary to receive lifetime gifts, an inheritance, lawsuit proceeds, or other funds without losing their eligibility for government programs. These types of trusts are drafted to ensure that funds aren’t considered as owned by the beneficiary in the determination whether such beneficiary is eligible for public benefits. It is important to note that these trusts are not typically designed to provide for basic needs (as this is often the purpose of such government benefits), but rather to pay for other comforts of life that are not included under public programs. For example, a Supplemental Needs Trust may be designed for the benefit of a disabled child to provide for his or her education, housing, entertainment, transportation, and so on.

                Special Needs Trusts can be created by a parent or other family member for a disabled child during such parent or family member’s lifetime, or can be created via Will. In some circumstances, the disabled individual may even initiate and fund a Special Needs Trust him or herself.

As you may imagine, it is very important to discuss the circumstances of the disabled individual’s condition, needs, lifestyle and public benefits with a qualified estate planning attorney in order to properly draft a trust which will not exclude such individual from being eligible for government assistance. There are distinct types of Special Needs Trusts that should be explored, and many caveats which should be understood prior to implementation. For answers to all of your questions regarding Special Needs Trusts or other trust vehicles, please call the estate planning attorneys at Smith & Garg to schedule a consultation.

Check out the following article appearing in last Saturday’s Wall Street Journal, entitled Tax Boost Proposed for Estates, Firms, by Laura Meckler, May 9, 2009. It deals with the Obama administration’s proposed tax increases (including estate tax increases), the revenue of which will be used to pay for the president’s refurbishing of the health care system. An interesting aspect of the effect on estate and gift taxation relates to the proposal that valuation of assets must be equalized for both estate and gift tax purposes. See the full article below, or on the Wall Street Journal’s website here:

“WASHINGTON — The Obama administration will propose $60 billion in new tax increases over 10 years on wealthy estates, businesses and others to make up for shortfalls in its fund to pay for an expensive overhaul of the health-care system.

The measures go beyond plans the White House has announced in the past few weeks. Officials said that upon further analysis they realized that they had overestimated savings and tax increases proposed in February to help pay the bill.

Some of the changes will be announced Saturday, with the full proposals coming Monday when the White House releases a detailed analysis of its budget blueprint.

Administration officials described the new proposals not as tax increases, but as eliminating “tax loopholes.”

One element would raise an estimated $24 billion over 10 years by tightening estate-tax rules, giving taxpayers less flexibility to minimize their liability on inherited goods by claiming a different value on the same item for different transactions.

A second element, which would raise $10 billion over 10 years, would require businesses and others who make payments to corporations to report such payments to the Internal Revenue Service. Under current law, payments to individuals are required to be reported on a 1099 form, but no such requirements exist for similar payments to corporations. The goal is to make sure that the recipient corporations report all their taxable income.

How to pay for a health-care overhaul estimated to cost more than a trillion dollars over a decade is one of the trickiest questions facing the administration and Congress. The White House has proposed a combination of health-care spending cuts and tax increases.

In February, the administration identified $634 billion over 10 years to set aside in a health-care “reserve fund,” enough to cover about half the total cost. The money would be needed to pay for new subsidies to help people buy insurance, among other things.

The cuts to government health-care spending are controversial because they mean lower payments for various providers, and they are not expected to raise anywhere near enough money to pay the full tab.

President Barack Obama’s main tax proposal — to cap deductions for the wealthy — has been all but dismissed by key members of Congress, but officials Friday said they are sticking with it.

The matter was made more challenging after further analysis, when officials realized that their proposals did not actually raise $634 billion.

The spending cuts, originally estimated at saving $316 billion, would actually save only $309 billion, a White House official said. The tax increases, originally estimated at $318 billion, would actually raise $267 billion. That leaves a gap of $58 billion over 10 years.

To make up the gap, officials found about $60 billion in new taxes. On Friday, they detailed about $35 billion of that to The Wall Street Journal and said they would reveal the rest of the proposals on Monday.

The provision regarding estates would prevent taxpayers from using two different valuations for the same items. Under current law, the White House official said, some people estimate a particular inherited item at one value for the purposes of the estate tax, but estimate the value of the same item at a higher amount when reporting it as a gift.

That is because the incentive is to undervalue items when paying the estate tax. But the incentive is to overvalue them when reporting gifts, so that the basis will be higher when calculating capital gains if the item is sold. Under the proposal, taxpayers would have to use the same value for both purposes.

The administration is also proposing to more quickly kill what it calls the “paper company loophole.” The tax code gives a tax credit to companies that develop alternative fuels if they mix biological products with other fuel. The official said that paper manufacturers have figured out that if they add some gasoline to the sludge they have long produced and used as a fuel that they can qualify.

The change will raise less than $1 billion over 10 years.”

As you may know, the term “probate” refers to a court’s determination and declaration of the validity of a deceased person’s Will. More broadly, “probate” is the legal process of making a court aware of a person’s death and getting the court’s approval to administer his or her estate. The need for a probate procedure arises when an individual has passed away, and his or her assets need to be legally transferred to either the individuals named in a Will, or if no Will as left, to the individuals entitled to such property under the default intestacy laws in effect in the state.

Many people view the probate process as confusing, expensive, and time-consuming. In many U.S. states, unfortunately, this can be true. We are lucky in Texas to have a relatively streamlined process, often with only a few weeks between application and full administration of an estate. Court fees are generally minimal; therefore, with the guidance of an experienced probate attorney, wrapping up an estate need not be as emotionally nor as financially burdensome as in other states. But if a death occurred in Texas, when might a probate administration be necessary in another state?

Very often, clients come to Smith & Garg requesting to update their Wills when they have just moved to Texas from out of state. This is a wise and responsible practice, since a qualified Texas attorney should at a minimum review, if not revise, any estate planning documents created in other states to ensure they will suffice in Texas at the time of probate. However, an issue that very often arises is the fact that these clients, in addition to their new Texas property, still own assets in another state. How to deal with these assets will depend on the circumstances of the individual case, but occasionally, an “ancillary probate” will be necessary at the time of death.

Ancillary Probate is a probate of the decedent’s assets which are located outside the state of administration of the estate. For instance, if an individual dying and owning property in Harris County, Texas also owns a home in Louisiana, an ancillary probate procedure may be necessary in Louisiana. Every state has its own real property laws governing the ownership and transfer of property that is located within the state. Therefore, Texas would not be able to ultimately determine how the home in Louisiana should be transferred, and the sole purpose of an ancillary probate in Louisiana in this case would be the conveyance of the decedent’s real property located in that state.

There are, of course, various planning mechanisms available for individuals owning out-of-state property that should be thoroughly discussed with a trusted estate planning attorney. Tactics such as joint ownership of property or the creation of a Revocable Trust may minimize or eliminate the need for an ancillary probate procedure. For more information on Texas probate, ancillary probate, or other planning issues pertaining to those formerly living out-of-state, please call the probate attorneys at Smith & Garg.

What does it mean to be “of sound mind?” Do you have to have a certain level of intelligence? Be able to remember your grandchildren’s birthdays? Do you just have to be relatively coherent?

Mental capacity issues arise in various areas of the law, from criminal trials to guardianship cases. One arena in which being “of sound mind” is always a key issue is in the preparation of a Will. Remember that Texas law says a person has to be at least 18 years old (or lawfully married or a member of the armed forces), and of sound mind, in order to validly create a Will. Our law has indicated that being “of sound mind” means that the testator fulfills the legal requirement of having “testamentary capacity” to execute a Will. The term generally describes the testator’s ability to understand the significance of what he or she is doing in undertaking the execution of his or her Will, understands the effect of the document, understands the objects of his or her bounty (i.e., has a knowledge regarding the identity of his or her legal heirs), and understands the nature and extent of his or her property.

Those generally held to lack testamentary capacity include mentally disabled persons, insane persons, and those who are mentally incompetent to care for themselves or manage their property and finances. For example, an individual with Alzheimer’s disease or dementia may not qualify as having sufficient testamentary capacity to validly execute a Last Will and Testament. Those who attempt to execute Wills while in a state of such mental incapacity leave plenty of room for contests to the Will’s validity in probate.  

It’s important to remember, though, that a testator’s capacity to execute a Will is determined as of the exact day upon which the Will is executed. This means that even someone who is in a general sense mentally incompetent or experiencing symptoms of dementia may create a Will during even a brief period of mental capacity, and have the Will upheld in probate. Attorneys will sometimes refer to such occurrence as a “lucid moment,” since mental competency on the precise day of execution is all that will and should be considered in determining the document’s validity. The witnessing requirement often rises to great importance in such cases, since the two witnesses to the testator’s signature will be required to attest that they believed the testator to be of sound mind at the time of the execution ceremony.

If you believe capacity issues might arise upon the probate of your Will, it is important to discuss your options, available safeguards, and possible legal ramifications with your estate planning attorney.  It is vital to recognize your medical and mental history, your personal estate planning needs, and possible Will contestants and the evidence supporting litigation when you undertake the execution of a Will. Your attorney will likewise be under a duty to oversee Will execution ceremonies only for those testators who have the requisite capacity to legally execute their documents.

                If you have any questions about capacity issues as they relate to estate planning or probate, please call the estate planning attorneys at Smith & Garg today.