Are You a Blended Family? What Happens to Your Property If You Die Without a Will?

April 23, 2021

If you have a blended family, your property may be distributed in ways that you do not intend. To show what happens, let’s assume Mommy Shark and Daddy Shark have one baby shark together. Daddy Shark had one baby shark from a previous marriage. When Daddy dies, he leaves behind the following assets: A home that Mommy and Daddy bought together after they got married and still live in it. A flower shop with commercial property acquired during their marriage. A lake house which Daddy owned before he met mommy. A bank account worth $200,000 to which both contributed for their retirement. The home in which they lived is community property. But because daddy has a child from another marriage, Daddy’s half share of the house will pass directly and equally to his 2 children. Mommy will retain the right to live in the home during her lifetime and retain her half ownership in the home. The flower shop and commercial property are classified as community property. Daddy’s half share of the business and commercial property will pass directly and equally to his two children. Mommy will keep her half ownership in the business and commercial property. Mommy will now run the business with her child and stepchild. Did she want partners in this business? Since Daddy owned the lake house before he met mommy, it is classified as separate property. All of the lake house will go to the children but Mommy will have a one-third life interest in the property.  he may not have unlimited access to the lake house as she once did. What will happen to the bank account they saved for their retirement? It will be split in half,  Mommy will retain $100,000 but the rest will be split equally between Daddy’s two children. Will Mommy have enough to retire now? If you find yourself in a similar situation or to avoid issues like these, contact us.

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Common Commercial Lease Mistakes

March 17, 2021

Common Commercial Lease Mistakes and How to Avoid Them — A common business need that every business owner should be prepared to deal with is finding the space for their business operations, be it a manufacturing facility or an office space. Whether it is the main office, a shop, or a manufacturing facility, renting real property can be an asset or a liability depending on how early the negotiations start and how well the final terms are written. Leasing the space out can also be tricky if you and your tenant are not on the same page from the start. Let us give you an overview of some of the common commercial lease mistakes that new and experienced business owners make, how you can avoid them, as well as some details that you should know about. The Basics The business of commercial leasing is a cutthroat world. As they say in real estate, everything is about the location. If you are selling a luxury brand, you definitely do not want to be caught up in the outskirts of town. If you are dealing with downtown clientele, you cannot afford to locate your office in the suburbs. If you are processing specialty food items, you would also want to locate your commercial kitchen in the most suitable location for the business. If you have a manufacturing facility, you would want for it to be easily accessible by your target customers. Keeping yourself and your business in the right location could be critical to your cashflow. What is a commercial lease? Basically, a commercial lease is an agreement written up and signed by both parties, the lessor and the lessee. The lessor is the individual who owns the property or leases it out to others. You, as the business owner, is the lessee. If you get confused by the terms, think of it as the relationship between the landlord and the tenant. A commercial lease is entirely different from a residential lease, both in the key legal terms, in the landlord’s rights and in the financial terms. When you enter into a commercial lease agreement, it is expected that you are knowledgeable about commercial real estate and prepared to negotiate in accordance with the then current local market conditions. Having rented an apartment as a tenant is not sufficient experience for negotiating a commercial lease. If you do not protect yourself properly when entering into a commercial lease, it could lead to legal, financial and tax problems down the road. The Common Commercial Lease Mistakes to Avoid There are a couple of things that you need to avoid in order to make sure that your commercial lease agreement will protect you. Failure To Hire A Realtor, A Lawyer, Or A Professional Hiring a realtor, a lawyer, or any professional with great experience in the law and commercial leasing is not an added cost but an added layer of protection. All of the terms that are included in a commercial lease are going to be easily handled by individuals who know the market and understand what is and is not negotiable in a lease. […]

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When Your Business Partner Divorces or Dies

January 15, 2021

Did You and Your Business Partner form an LLC? Do You Know What Happens If Your Business Partner Dies or Divorces?  Death and divorce are probably two most uncomfortable topics for family members and business partners to discuss. No one wants to start the unpleasant conversation, yet these are necessary topics to consider when forming a business. Figuring out what happens if your business partner dies or divorces is best addressed before either of these events become reality. **       In the event that one of the company co-founders or owners dies, what does happen? **       How is their percentage of the business handled? **       Are you prepared to become partners with your deceased partner’s children? **       What happens if your business partner divorces their spouse? **       Could the court order you to be in business with your partner’s former spouse? These are all tough questions.  Even if you do not want to discuss these matters with your business partner(s), it is important to understand whether your LLC agreements address these contingencies and have a plan of action in place just in case. And it’s definitely important if this is something you’re currently going through. WHAT ARE BUY SELL PROVISIONS? WHY ARE THEY NEEDED? One of the most crucial steps in creating a business with multiple partners is agreeing on buy-sell terms, which could be part of the company agreement for your limited liability company or could take a form of a separate agreement for a corporation. Buy-sell agreements essentially provide a method for the remaining partners to carry on with the business without the concern of becoming partners with unintended parties, such as the former business partner’s ex-spouse or the deceased partner’s family members. WHAT HAPPENS WHEN YOUR BUSINESS PARTNER DIES? First of all, the deceased partner is disassociated from the business, whether it is a partnership, corporation or limited liability company, when he or she passes. There can be a few different options for how this could shake out: The deceased’s estate takes over the deceased member’s share of the business. The deceased’s estate sells the membership interest back to the business upon a payment to the estate. You buy the share of the partnership using a financial formula and insurance proceeds. WHAT HAPPENS IF THERE IS NO AGREEMENT? However, if you and your business partner did not have an agreement providing for transfer of the partner’s interest upon death, business succession might become a bit more complex. In some cases, it could mean that company is dissolved immediately upon one of the partners’ death. The surviving partner might also owe the later partner’s estate a debt for their share of the partnership that accrues at the date of their death. In Texas, combination of the company agreement, the Texas Business Organization Code and the deceased partner’s Last Will and Testament will govern what happens to the former partner’s share of the business. WHAT HAPPENS WHEN YOUR BUSINESS PARTNER DIVORCES? Texas is a community property state, and as a result, your spouse has the right to half of any business interests you created or acquired in the course of the marriage. […]

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Dying without a Will

November 9, 2020

Who Inherits When A Married Person Dies Without a Will in Texas? Many Texans think that the surviving spouse will inherit all of a deceased spouse’s estate if there is no will. This is NOT always the fact. Here is how the property will be divided. Community Property Texas has a a presumption that all property acquired during a marriage is community property. Under Texas laws, when a spouse dies and all of the deceased spouse’s children are also the surviving spouse’s children: The surviving spouse will inherit all of the deceased spouse’s community property. This will happen only IF ALL children are also the children of the deceased spouse. Under Texas laws, when a spouse dies and the deceased spouse has children that are not the children of the surviving spouse: The deceased spouse’s one-half interest in the community estate will pass to that spouse’s children and the surviving spouse will keep his or her one-half interest in the community property. Homestead Real Property The surviving spouse will have a life estate in the homestead. This means that the surviving spouse will have the right to use the property until his or her death. If the deceased spouse does not have any children, then the surviving spouse will inherit all of your community property. Separate Property Separate property is property that you owned before marriage, or acquired, even during a marriage, by gift or inheritance. The intestate distribution formula is different for separate property: If you are married and have children, the personal property and real property are handled differently. Personal Property The surviving spouse and children will receive one third of your separate personal property. Real Property The surviving spouse will only receive a life estate (the right to use the property until his or her death) in one-third of your separate real property. The surviving children inherit the remaining interest outright. If you are married but don’t have children, your separate personal property will be distributed to your surviving spouse . However, if you have surviving parents and siblings, your surviving spouse will receive only one-half of the separate real property. The other half will pass to your parents, siblings or descendants of siblings according to a statutory formula. If you want the freedom to decide how and to whom your property will be distributed when you die, you need a will. For assistance creating a will or updating one that you may already have, please contact Cynthia Fronterhouse of Nimmons & Fronterhouse.

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Elder Law: Documents Every Adult Needs, Probate and More

July 10, 2020

The following transcript was excerpted from a June 22, 2020 virtual presentation on elder law, wills and probate in Texas by attorney Cynthia Fronterhouse. The event was organized and sponsored by CarePartners, whose vision is to be the leader in caregiving resources in Texas. You can click the image above or watch the recorded presentation on YouTube. My name is Cynthia Fronterhouse and I am an attorney in Houston. I actually practice law with my father. He is semi-retired, but he has over 50 years of experience. He has always focused his practice on construction litigation, representing small companies, so when I joined him, so he could go enjoy his life, I really enjoyed meeting with the clients and their families, preparing for the inevitable as well as when they lost a loved one. I grew up in the Spring Branch/Memorial area. I did go away to college to Smith College in Massachusetts and then I came back to Texas and went to the University of Texas Law School.  I am married, and I have one daughter, age nine years old. Really helping families before they lose someone and then when they lose a loved one is really my passion and walking them through that process. It’s so difficult when you’re trying to process and grieve, and then having to deal with a lot of the probate aspects is tough. So that’s really what I’m going to focus on. Most people know what a will is and why it’s important, but then what happens when you do lose a loved one? A will is a document that determines where your assets are going to go when you die. It doesn’t take effect until you’ve passed away, so once you pass away is when your will goes into effect. And one of the big cases that we had when I first started with my dad was one where one of his clients lost a brother, who didn’t have a will. When he died, he had two minor children. Watching the family go through that grieving process, and then having to see how difficult it was because the man didn’t have a will was what really inspired me to help people and educate people. That’s so important. You can use a will to determine where your assets are going to go and to whom you want them to go. Also in your will, you can appoint a guardian to your children. Also in your will you can appoint an executor. The executor is only responsible for determining and following your wishes that are outlined in your will. So what happens when you lose someone if they have what’s called probate? Probate is the process of authenticating the will. You file an application to probate a will with the court. You file the original will with the court and normally do it in the county where the person resided. You have to do that within four years. Then you file with the County Clerk. You have to wait 10 days because the will is posted at the County Courthouse and then, after 10 […]

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