Planning your estate is not a glamorous, nor even a particularly pleasant, topic. But it truly should not be feared, and certainly should not be put off. You should view estate planning not as ominous, but as a thoughtful gift to your family. No one enjoys considering their own incapacity or death, but refusing to acknowledge and plan for the eventual occurrence of either will very likely place a substantial burden on your loved ones down the road. One of the most considerate things you can do for your family is to undertake thorough, customized estate planning with a qualified Wills & Trusts attorney at Smith & Garg.

And not only will a properly executed Will or Trust likely eliminate anxiety, animosity and expense for your loved ones—it may also substantially increase their inheritance. You work hard to accumulate your estate during your lifetime, and the fruits of your labor should, and can, be passed on to future generations with little to no interference by way of taxes. If estate or gift taxes are a concern to you, it is very important that you discuss all wealth transfer tax-saving options with your attorney and implement in your estate planning those vehicles that are best for your circumstances.

So consider placing ‘Finally making a Will!’ at the top of your resolution list this year. We hope you enjoy your New Year, and look forward to discussing your estate planning needs with you in 2009!

                An Out-of-Hospital Do-Not-Resuscitate Order (“DNR” order) is a form used to convey a person’s wish to not be resuscitated if his or her breathing or heartbeat ceases. The form essentially states that certain resuscitative measures should not be used on the individual (such as CPR or defibrillation). In a way similar to a Medical Power of Attorney or a Directive to Physicians, this document allows you to express your personal health care decisions and wishes within specified parameters in the event you are unable to directly communicate with your doctors. The purpose of a DNR order is simply to convey your decision to not be resuscitated outside of a hospital.

                Many clients confuse a DNR order with a Directive to Physicians (or “Living Will”). Remember that a living will is a legal document memorializing a person’s wishes with regard to administering or withdrawing artificial life support in the event of a terminal or irreversible condition. Although both a living will and a DNR order do in a general sense deal with the topic of the use of life-sustaining measures, the scope and applicability of both the life-sustaining methods and the documents themselves are significantly different. It is very important to ask your Estate Planning attorney any questions you have regarding these documents to ensure you understand the difference between the two.

                Again, clients are often curious as to why a Living Will is very often included in attorney-prepared estate plans, but a DNR is not. Although DNR orders are in fact very often prepared by lawyers, they are essentially medical documents. While we can provide you with the form, we always advise that it should be thoroughly discussed with your doctor prior to being executed. In fact, your physician’s signature will be required on the form itself if you choose to sign it. We will certainly be able to discuss the legal scope of the document with you, but most attorneys are hesitant to attempt to advise on whether a particular individual should or should not execute a DNR order (and rightfully so). The choice whether to execute the form is one that should be made with the guidance of a trusted doctor after competent medical advice is given.  

                If you would like to discuss the use of advance directives within your estate plan and the importance of each, we invite you to give us a call today.

                The Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), which was signed by president Bush on June 7, 2001, provides for a gradual increase in the estate tax exemption between the years 2001 and 2009. You’ll remember that in 2002, the estate tax exclusion (i.e., the amount that can be transferred free of estate tax) was $1 million, with the highest tax rate set at 50%. In 2003, the exclusion amount remained at $1 million, with the highest rate falling to 49%. In 2004 and 2005, the exclusion amount jumped to $1.5 million, with the highest estate tax rate set at 48% and 47% respectively. In the years 2006-2008, there is a $2 million exclusion amount, with the highest rates dipping from 46% in 2006 to 45% in ‘07 and ‘08.  Now it is important to now note that in 2009, our exemption amount will to increase to $3.5 million, with the highest rate remaining at 45%.

                This means that for the year 2009, individuals may transfer a total of $3.5 million at death without federal estate tax ramifications. How this change will affect your estate plan will depend on the size of your estate and your planning goals; therefore, as always, it is important to understand how your “taxable estate” is calculated by recognizing which assets will be included in your gross estate for tax purposes. Further, if estate taxes are a concern, it is vital to discuss your planning options (whether achieved through the implementation of trusts, disclaimers, marital deduction planning, charitable deduction planning, and so on) with the estate planning attorneys at Smith & Garg.

                The IRS has also indicated that the per-donee annual exclusion amount for federal gift tax purposes will be increased to $13,000 for the year 2009. This means that in 2009, you may make $13,000 qualifying inter vivos gifts to as many donees as you choose without triggering the federal gift tax ($26,000 if made as a joint gift by a married couple). Any gift in excess of this amount will impact your lifetime gift tax exclusion (which is still scheduled to remain frozen at $1 million).

                Of course, the practical considerations of the gift tax include understanding what qualifies (or more likely, what does not qualify) as a gift, as well as how to ensure your intended gifts are treated as gifts “of a present interest” to satisfy the IRS. For answers to your burning gift tax questions and to discuss how a lifetime gifting scheme could benefit your estate plan, again, the estate planning attorneys at Smith & Garg are here to help.

                For more details on the estate tax, the gift tax, the 2009 increased exemption amounts, and how these issues affect you, give us a call today.

Apparently Burger King, in a bout of marketing genius, has launched a new men’s body spray called “Flame,” which evidently has been made to resemble the smell of a flame-broiled Whopper. BK describes the product as “the scent of seduction with a hint of flame-broiled meat.”

I thought it was a joke, but according to the Associated Press, this cologne is actually being sold by New York City retailer Ricky’s NYC as well as online, for $3.99 a pop. And just in time for the holidays!

I guess the guy in the creepy King mask wasn’t moving enough hamburgers, and it was time to up the ante. Don’t they have anything in a Frosty? Wait, that’s not Burger King.

It makes me think of a conversation I had with one of my girlfriends several years ago when we were in college. Although we are both now happily married, at the time, we were discussing dating—specifically, our “types.” It just so happened that at that particular time, I seemed to have dated a string of exceptionally skinny fellows, while she had been systematically drawn to a more robust variety. She joked that when we went for a night out, to attract the types we seemed to have been attracting, she should rub French fries on her instead of perfume, and I should bathe in Slim-Fast.

OH, how her ideas were ahead of their time.

Here’s a taste, for your reading enjoyment:

Children of the World, Plaintiffs
     
     vs.
     
     Santa Claus, Defendant.
     

COMPLAINT

     Plaintiffs, consisting of the class of all children who on or about Dec. 24, 1999 were hanging stockings by the chimney with care in the reasonable belief that St. Nicholas soon would be there, sue defendant and allege:
     
     1. This is an action for an accounting, damages and injunctive relief.
     
     2. Upon information and belief, defendant is a citizen and resident of the North Pole, where he maintains his principal place of business. The court has subject matter jurisdiction of the action pursuant to 28 U.S.C. § 1332.
     
     3. Count I – Breach of Contract. Throughout the fall of 1999, plaintiffs met with agents of defendant at various shopping malls to negotiate the delivery of certain goods on the evening of Dec. 24, for which plaintiffs paid valuable consideration in the form of exorbitant tie-in charges for photographs of the negotiating sessions. Plaintiffs repeatedly informed defendant, through his agents, that time was of the essence in completing such deliveries. As of this date, many of the contracted goods have not been delivered. Other goods were nonconforming and lacked batteries, rendering them of no use of plaintiffs.
     
     4. Count II – Deceit. Defendant fraudulently induced plaintiffs to improve their conduct against their will by misrepresenting that defendant knows if plaintiffs have been bad or good, when, in fact, defendant lacks sufficient knowledge upon which to form a reasonable belief regarding such matters. In justifiable reliance upon these representations, plaintiffs invested substantial labor in not shouting, pouting or crying and at all times relevant hereto were good for goodness sakes.
     
     5. Count III – Infliction of Emotional Distress. On the relevant night, defendant knew or should have known that plaintiffs were snug in their beds with visions of hand-held video games and name-brand athletic apparel dancing in their heads. Despite such knowledge, defendant willfully and maliciously concealed off-brand goods and inherently worthless property such as sweaters and umbrellas in packages that misrepresented their true contents. Plaintiffs suffered severe emotional shock and fright upon opening such packages.
     
     6. Count IV – Trespass and Conversion. Defendant’s implied license to enter plaintiffs’ premises terminated upon his substantial breaches of contract, rendering all subsequent entries actionable trespasses. Once on the premises, defendant exercised substantial dominion and control over an estimated 200 tons of cookies and 44,000 gallons of milk, converting such property and depriving plaintiffs of its beneficial use.
     
     WHEREFORE, plaintiffs demand judgment for compensatory and punitive damages, injunctive relief and an accounting.

                The Texas Property Code outlines the specific parameters regarding what property may be set aside. The exempt property may include: home furnishings; provisions for consumption; farming and ranching equipment; tools and vehicles used in a trade or profession; clothing; jewelry; two firearms; athletic and sporting equipment; a motor vehicle for each member of the family with a driver’s license; two horses, mules or donkeys and a saddle, blanket and bridle for each; 12 head of cattle; 60 head of other livestock; 120 fowl; and household pets. The aggregate value of the property cannot exceed $60,000 for a family, or $30,000 for a single adult.

                These items will be designated and set apart by an order of the probate court after the inventory, appraisement and list of claims is filed. The action for the set-aside may be brought by the court itself, or by the individual who is claiming the exemption. For the surviving spouse or unmarried child of the deceased living in the family home to initiate the set-aside, the process will involve filing an application with the probate court along with a sworn affidavit listing all property that the applicant is claiming as exempt.

                Although the set-aside will be protected from most creditors, it is important to note that it will not be exempt from all claims. For example, the property may be reached for the payment of Class 1 claims of the decedent, for the payment of debts secured by liens against the property, or for the payment of federal tax liens.

Certain provisions apply to the set-aside depending on whether the decedent’s estate is solvent, and depending on whether all children of the decedent were born to both the decedent and the surviving spouse (i.e., whether step-children are involved). There also exists the possibility of obtaining what is called an ‘allowance in lieu of exempt property’ if the circumstances permit. If you have questions about the exempt personal property set-aside, the set-aside of the homestead, or other aspects of Texas probate, we invite you to call the Houston Probate attorneys at Smith & Garg.

Poor Charlie Brown’s frustration with the commercialization of Christmas seemed more relevant this year than ever. I think in a way he’d be happy to see what are anticipated to be nationwide cutbacks in gifts and frivolity, even if they are a result of our current economic crisis instead of the product of a spiritual awakening. Less spending power this holiday season may be a cause of great anxiety for parents unable to check off items on their children’s wish lists, but fewer or more modest gift exchanges may turn out to be a blessing in disguise. A disheartening, but appropriate, “time-out.” An opportunity to really appreciate the holiday, and as cliché as it sounds, to recognize what “really matters.”

It’s been a tough year for the country, and a grueling past four months as our economic bottom dropped out. As with any unfortunate situation, many who aren’t directly affected by the downturn see the issue as grave, but as something that is happening to “other people.” Even if your 401k has taken a beating, if you get to keep your job, if you aren’t facing foreclosure, if you can pay your bills and buy groceries, you may not feel as connected with your evening news broadcast. For those sticking it out just fine, take a big, big moment to be grateful.

The rising unemployment rate crept its way into my own family this week, and I can appreciate the sense of loss and utter frustration in the inability to “fix” the situation. And while it’s appropriate to mourn, it’s vital to pick up and keep going, and keep confidence that brighter days are ahead. Even if there currently aren’t hard facts to back up that hope, you have to put faith in the fact that they will, eventually, exist. I’m a huge proponent of keeping things in perspective:  as hard as it is to do, it’s so necessary to keep your eyes turned on what you have rather than what you don’t. It doesn’t make mass layoffs one bit easier, but at least perspective might offer a silver lining.

Charlie Brown has the right idea. Maybe we all need Linus to recite the meaning of Christmas, or we all need a little dose of economic crisis, to make us really appreciate what matters. Cynical or not, hurting financially or not, religious or not, there’s plenty to celebrate and be thankful for. Even though the volatility may not be over, 2008 almost is; we have a new year, and hopefully a little bit of a new outlook, to look forward to.

                I answer that with a resounding “YES.” And not just for the sake of my livelihood.

                First, let me point out one common method of creating a legally sound, self-written Will. A “Holographic Will” is a Will that has been drafted, signed and dated entirely in the testator’s own handwriting. As long as certain statutory requirements are met, such Wills can in fact be admitted to probate. The key, however, is that a Holographic Will be wholly handwritten—no portion of the Will may be typed. Common pitfalls to self-written Wills, however, include handwritten provisions being mixed with typed provisions, clauses being scratched out or overwritten, or portions being illegible. In a do-it-yourself Will, much room is left for error and statutory violations. Holographic Wills are often used in situations of grave health or significant danger, when an attorney-prepared Will is either pending or simply not feasible. If the circumstances allow for time and availability of consulting with an attorney, it is strongly suggested that you have a clear, properly-drafted, and properly-executed Will drafted by a qualified Estate Planning professional.

                Some people do choose to create their own typewritten Wills with the aid of pre-printed office supply-store forms or documents downloaded from the internet. These pre-created Will forms are usually very general in nature, and do not consider the unique requirements and circumstances of the testator. Therefore, persons using such forms very often do not account for and coordinate all assets, do not take into account advantageous planning strategies, do not provide for ultimate wealth transfer tax savings, and do not tailor the provisions to the circumstances of their particular estate. Further, just as with a Holographic Will, much room is left for scratch-outs, handwritten additions, or other changes—which could give rise to possible challenges to the validity of the Will when the time for probate rolls around. For instance, if changes are made to the self-created Will by the testator without the statutory formalities being observed, this could spawn a claim of fraud or forgery. Potential heirs or contesters could allege that a self-made addition or change was made by a fraudulent third-party and should therefore be stricken. It is often difficult to prove who, exactly, made the changes or why.

Again, as long as the self-written or self-created Will complies with Texas law, it can be found as valid, but significant room is left for error and future challenges in the probate court. At a minimum, we highly suggest that you have a self-created Will thoroughly reviewed by the qualified Wills & Trusts attorneys at Smith & Garg to ensure that it meets the requirements of Texas probate law. To fully protect your wishes, however, we strongly urge you to create your Will in conjunction with the experienced Houston Wills & Trusts attorneys at Smith & Garg.

                I honestly don’t know anything about the movie, or the books for that matter. But I have overheard the stars plugging the film on various early-morning news programs, and one particular interview caught my attention. Robert Pattison, one of the film’s actors, mentioned that he starred in a movie called Little Ashes that will be selectively released in 2009. In it, he portrays a young Salvador Dalí. How fabulous! The film explores Dalí’s early years, including his experimentation with cubism and his covert relationship with famous poet Federico García Lorca. How scandalous! I hope it comes to the Houston area; I’d love to check it out.

                I think my love for Spanish and Latin American art is a direct product of it being shoved down my throat by my high school and undergraduate Spanish studies. Although I have a huge appreciation for art in general, being forced to study the works of Picasso, Miró, Dalí, Velázquez, Rivera, Goya, Botero, El Greco, etc. in particular really made me grasp their genius. I had the opportunity to study abroad in Spain in 2002, and while obviously I couldn’t wait to get to the ‘discotecas,’ I also couldn’t wait to get to the Prado, the Reina Sofia, and the Picasso Museum. I remember seeing Galatea de las Esferas and Imperial Monument to Woman-Child at the Reina Sofia and thinking that Dalí’s mind and talent were on a level that I couldn’t even comprehend.

                He apparently was also quite an eccentric fellow. I’ve heard everything from his delivering a lecture dressed in scuba gear to his bringing a leather rhinoceros with him on The Tonight Show and refusing to sit on anything else. I wonder what we’ll learn about his days as a youngster in the movie. It might not be as popular, though, as Twilight… crazy surrealist artist vs. teenage heartthrob vampires…

·         The attorneys at Smith & Garg are here to help you in all your Wills, Trusts & Estate Planning, Probate, Family Law, Immigration, Business Law, Litigation, Credit, and Employment Law needs.

·         It’s a short week. T minus three days until turkey, dressing and cranberry sauce.

·         A Charlie Brown Thanksgiving comes on ABC tomorrow night.

·         24 fans got a long-awaited taste of Jack Bauer last night.

·         Usher is performing at the House of Blues tonight.

·         T minus four days until the Christmas tree can come out.

·         Black Friday sales.

·         I heard a rumor that the new album Alone II: The Home Recordings of Rivers Cuomo is being released today, instead of tomorrow.

·         I have just confirmed the rumor that Alone II is in fact being released today. Therefore, it’s time to head out for the evening. Please call me on my cell with your Wills, Trusts & Estate Planning and Probate needs.