Greater Houston Area Estate Planning and Administration, Family Law and Business Law Attorney Answers Frequently Asked Questions:

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Below are answers under Texas law to frequently asked questions about (i) wills, trusts and estates; (ii) annulments, grandparents' rights and marital separation; and (iii) legal entity types, non-compete agreements and arbitration clauses. If you have other questions or are ready to start a discussion about your own estate planning and administration, family law or business law needs contact C. Bell Law, PLLC for compassionate and capable legal assistance in the greater Houston area, including Harris, Brazoria, Fort Bend, and Montgomery counties.

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I.  Texas Wills, Trusts and Estates:

If you are looking into creating an estate plan for the first time, congratulations! One of the worst mistakes some people make is failing to take care of this vital task in time. If you are nervous about taking this step, it’s a great idea to learn all you can about the estate planning process, so that when you sit down with your estate planning attorney, you’ll be comfortable listening to advice and making informed decisions about your future.

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Q.  What is a will?
A.   A will is a legal document that allows you to say what will happen to all of your property after you die. You may wish to give all of your property to your spouse and children in certain proportions, or you may want to make specific gifts to grandchildren, other relatives, friends or special people in your life, charities and educational institutions. With a will, you create your own legacy to live on after you have gone. If you die without a will, or if your will is declared invalid, your property will be distributed to your surviving family members in proportions according to Texas intestacy law, which may not be what you would have wanted. As an estate planning attorney, Carol R. Bell, at C. Bell Law, PLLC can draft a complete last will and testament that conforms to your wishes and meets all the requirements for a valid and enforceable will under Texas law.

Q.  Why do I need a living trust?
A.  When you create a living trust, assets that you place into the trust will pass to your beneficiaries without having to go through probate. This means your beneficiaries will receive their inheritance more quickly and with less expense to your estate. Also, a trust is confidential, so you can keep details about the size and content of your estate from becoming public record. A trust can even be used to help you manage your finances during your lifetime if you become incapacitated for a brief period or long-term, avoiding having a guardianship imposed on you by a court.

Q.  Do I need a will if I have a living trust?
A.  Even if you are passing all of your property through a living trust, it is still important to have a will to name an executor for your estate and name a guardian for any minor children you may have. Also, you want to make sure that all of your property is accounted for, but a trust can only distribute property that was transferred into the trust during your lifetime. Your attorney can draft your will with a “pour-over” provision that will transfer any leftover property into the trust, so you can be assured that all of your property will pass to your intended heirs and beneficiaries.

Q.  What are advance directives?
A.  Advance directives are legal documents that let doctors, hospitals, your loved ones and others know how to proceed with medical, financial and legal decisions that concern you if you become incapacitated and unable to make or communicate these decisions for yourself. With advance directives, you can appoint someone you trust to make decisions on your behalf, and inform medical professionals regarding your wishes in certain situations. Common Texas advance directives include a durable power of attorney, medical power of attorney, out-of-hospital do-not-resuscitate order (DNR), living will, declaration for mental health treatment, and directive to physicians and family or surrogates.

Q.  What is a muniment of title?
A.  Muniment of title is a procedure authorized under Texas probate law allowing an estate to pass directly to named beneficiaries without having to go through a full estate administration and without the appointment of an administrator or executor. In order to use this procedure, the deceased must have left a valid last will and testament, which is certified by the court and serves as the record of title. Also, the deceased must not have left any outstanding debts that are not secured by real estate.  Bank accounts, brokerage accounts and other financial instruments must also be designated properly in order for the muniment of title process to work smoothly and successfully.

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II.  Annulments, Grandparent's Rights and Marital Separation under Texas Family Law:

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Q.  I’ve heard about some people getting an annulment instead of a divorce. Is that something I should look into as well?

A.  An annulment is not the same thing as a divorce. Basically, an annulment dissolves a marriage that was never valid to begin with, so if you were legally married in the first place, you would need a divorce to dissolve that marriage. A judge can grant an annulment when the marriage is void, meaning it is illegal under Texas law. This includes marriage between persons who are related too closely; marriage where one person was already legally married to someone else; marriage to a person under 16 without a court order; and marriage between a current or former stepchild and stepparent.

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A judge can also annul a marriage that is voidable by either spouse. These include marriages where one party was tricked into marriage; marriage to a person between 16 and 18 without parental consent; marriage where a party lacked the capacity to consent due to intoxication or mental disability; and the impotence of one partner that was unknown by the other partner at the time. Although these marriages are voidable and can be annulled, they can also become legal marriages if the parties continue to live together even after learning about the facts that rendered the marriages voidable.

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Q.  My spouse and I are on the outs and need a break from each other, but we’re not sure we want to get divorced. If we separate, what happens to our kids, and will I be able to get any financial support from my spouse, who has been the primary wage earner?

A.  Texas family law does not recognize the concept of “legal separation” as a distinct legal status. However, this does not prevent you from undertaking a trial separation, and it’s smart to create a legal document outlining issues such as spousal support, possession of the family home, custody, etc. This agreement can later become part of your divorce decree if you and your spouse are unable to reconcile and decide that divorce would be best.

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Q.  Our son’s ex-wife has custody of the kids and won’t let us see our grandbabies out of spite. What can we do?

A.  Although grandparents don’t have a specific legal right to visitation under Texas law, you may still be able to petition the judge with jurisdiction over your son’s custody case for visitation rights. If the judge grants your petition, you will have an enforceable court order detailing your rights and obligations to spend time with your grandchildren. Keep in mind that if your grandchildren’s mother opposes the idea, you will need to litigate the issue in court and will want the help of a skilled attorney on your side.

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Grandparents in Texas can even sue for parental rights over their grandchildren in certain instances when the parents are unavailable or unfit. This requires going to court and filing a “suit affecting the parent-child relationship,” or SAPCR. The Texas Supreme Court recently ruled that grandparents have the ability to bring a SAPCR case in appropriate circumstances.

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III.  Legal Entities, Non-compete Agreements and Arbitration Clauses Under Texas Busines Law:

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Q. How do I know whether to form a corporation, a partnership or a limited liability company (LLC)?

A. There are many different types of business entities that may be formed under Texas state law, including corporations, general partnerships, limited partnerships, limited liability companies, limited liability partnerships, sole proprietorships and more. The right business structure for you depends on a number of factors related to your specific needs and goals, the number of business owners involved, how the business is capitalized, etc. Sit down with an experienced business lawyer who understands business structures and operations and can advise you on the best options for your particular needs.

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Generally speaking, a corporation is favored for protecting owners from personal liability for actions or debts of the corporation. However, owners may be subject to double taxation as they are taxed on corporate income as well as personal income. Partnerships offer tax advantages over corporations but may leave partners exposed to liability. Different types of partnerships offer different layers of protection for different classes of partners. A limited liability company, or LLC, is attractive because it offers the liability protection of a corporation with the tax advantages of a partnership. Talk to your business lawyer about your needs to find the right entity for you.

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Q. Can I put a non-compete agreement in my employment contracts?

A. When you hire an employee, you likely invest time and money training that person in your organization. Over time, that employee may learn valuable information about how your business operates and form important relationships with your client base. It may seem unfair to you to spend months or years grooming an employee only to have the worker leave your employment and go into direct competition with you, using all that inside information against you. Texas public policy in general favors competition and disfavors restraints on business, but Texas law does recognize the utility of a covenant not to compete and does allow it in limited circumstances.

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To be valid and enforceable, a non-compete agreement must be carefully drawn up so that it is reasonable in terms of how long it lasts, how broad a geographic territory it covers, and how extensively it restrains the employee from engaging in commercial activities. Also, a non-compete agreement (a benefit to the employer) must be exchanged for some valuable consideration that is of benefit to the employee. For instance, an actual cash payment in the form of a bonus or other fringe benefit may suffice, so long as it is linked to the non-compete agreement and not offered to all employees as a matter of course. Have a skilled and knowledgeable Texas business law attorney draft important and complex documents such as covenants not to compete, so they will be enforceable if they are ever challenged.

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Q. Can I put arbitration clauses in my contracts?

A. Requiring companies to resolve disputes through arbitration rather than litigation can have many benefits: arbitration is generally faster and cheaper than litigation, and the proceedings can be kept private and not made a matter of public record. Also, arbitrators are typically people with extensive experience in the field under dispute, so they have a better grasp of the complex issues and technical facts related to your dispute than the average juror or even an experienced judge.

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If you are negotiating a transaction with another company, the terms of the contract are matters for negotiation. Issues such as whether to require arbitration, who would pay for the arbitrator, how the arbitrator would be selected, and which jurisdiction’s law would apply, would all be terms subject to negotiation between the parties. Make sure you work with your attorney when drafting an arbitration clause or negotiating an agreement. Customer contracts and employment contracts are typically more one-sided. You can include mandatory arbitration in your contracts, and the customer or employee must either accept the contract as-is or go somewhere else, unless you choose to waive the arbitration clause in a particular instance. Requiring mandatory arbitration to resolve employment disputes was recently upheld as lawful for employers by the U.S. Supreme Court.