So, you want or your children want to take over the family business…
Our community takes pride in long-established family businesses. Yet, family businesses are challenging, as seventy percent of family businesses fail.
Separating family issues from business issues is part of the difficulty. While treating children equally at home is admirable, family members have different gifts: One might be more financially literate, another with better social and customer skills, and another with superior technical skills. A good leader recognizes and enhances those skills so each member contributes and improves the team.
A family isn’t necessarily a team with the same vision. Failure will result when emotions, egos, and sibling rivalry gain control. Poor decisions often result and can cause permanent family rifts and even divorce. A parent can be left paying for the loss as a result of guaranties the parent signed.
So, when and how do family businesses continue? To better succeed, a family business’s members should share the same visions, values, and mutual respect. Here are some things to think about:
• Ultimately, one person needs to be a decisionmaker. If two siblings have control, a conflict is likely to arise. Create a succession plan which ensures the succeeding leader understands the business, the customers know that person, and the successor has a vision for the business development.
• Get an accountant and attorney involved in the planning and ongoing operations. Document everything from the start with a shareholder or operating agreement that the business actually goes by, that defines each person’s authority, responsibility, and their access to financial information and that restricts the ability to borrow against or transfer their interest in the business. Be objective.
• Listen, and be willing to learn.
• Each person should understand their financial obligations. Anyone who signs a guaranty should assume that is a personal liability, as guaranties can impose liabilities that are difficult to avoid. Consider why you are being asked to guarantee a company obligation and whether the company assets could stand for the company’s obligations.
• Consider whether there is a clear distinction between the company finances and the family members’ finances. If there is no distinction, that is a significant problem that should be rectified.
• Businesses which do not respond to a changing market and economy will inevitably fail. Each person should check their ego. The parent should avoid saying; “We’ve always done it that way, and it works,” just as the successor who takes over should not disregard experience. Control for its own sake is a business’s killer. The person who has control is not necessarily the smartest person in the room.
• What is the cash flow, the accounts receivable, profit and loss, and liabilities? Just because there is money in the bank today does not mean the business is profitable.
And this is just the start of what one should consider.
Serving another through a power of attorney
Powers of attorney are useful tools to help friends or loved ones carry out transactions, particularly when they lose the understanding or capacity to manage their own financial affairs.
Even when folks are fully capable of managing their affairs, a power of attorney can be a useful and convenient tool to allow someone to assist in managing financial affairs when a person is out of the country on deployment, or perhaps needs to close a transaction in another locale and he can appoint a “fiduciary” to assist.
The nature of a fiduciary requires the power of attorney to look after the interests of the person who appointed them before they can act in their own interest. A recent Mississippi case upheld that principle when it held that a power of attorney, who happened to be the husband, could not cash out his wife’s IRA, even if the power of attorney document gave the husband authority to perform transactions. The Court stated “an agent’s authority under a POA” does not permit the attorney-in-fact to engaged in undisclosed, self-dealing activities” In Re Kolf vs. Stan Autherment, Executor, Nov. 16, 2017, (No. 2017-CA-01627-COA) (Quoting West v. Johnston (In Re Estate of Jonson), 237 So. 3d 698, 708 (Miss 2017).
Some folks have mistakenly believed that a power of attorney gives the attorney-in-fact unrestricted power over someone’s assets so they can help themselves rather than the person who asked for help. Because of these abuses, some financial institutions are hesitant to honor POAs. If you are willing to be unselfish and look after someone’s else’s interest before you own, a POA can be a useful tool. Trust is the key.
Let’s not leave a mess for someone else to clean up
Today I have been trying to help a son clean up the large indebtedness left by his parent who died “land rich and cash poor.”
Often, our firm is called upon to figure out what someone who passed away wanted or to locate and liquidate assets accumulated over the years as determined by searching through boxes of unorganized financial documents. Then there is the occasional property held with legal encumbrance that has to be cleaned up and sold as well.
Financial issues often give rise to misunderstanding and conflicts. All of these create a lot of work for attorneys and courts attempting to resolve these issues. While that is where our firm makes most of its income, we prefer helping folks plan to leave a positive legacy.
While many are hesitant to acknowledge their own mortality by planning for it, the lack of planning results in expensive problems left to your heirs. The lack of planning often leaves permanent rifts in families.
You know your family much better than anyone else. You know what is important to you. Planning documents such as wills, trusts, and powers of attorney – as well as money and other assets – are merely tools through which you can leave a positive legacy. All trusts and estate plans are documents that set out what you would want when you cannot speak for yourself.
Create good will, hope, and strong relationships through your plan. Please don’t leave it to someone else to figure out, clean up, or argue about.
As we said in the Navy, “Proper planning prevents poor performance.”
Freeland Martz helps a Delta heiress receive her mother’s land legacy
The Freeland Martz firm was hired by a lady whose mother left her a one-third interest in a large tract of farmland and prime hunting land in the Mississippi Delta. Initially the client received an offer to purchase her interest for a fraction of its true value. Fortunately, one of her Mississippi Delta relatives made her realize the increased values of Delta land over the decades since her mother had married and moved away. In response, the Delta heiress engaged an agricultural land appraiser who understood the value of the ground and the income it could produce. The appraiser recommended Freeland Martz, PLLC, to assist her in receiving her interest in the property from her numerous cousins. Initially several in her extended family resisted and tried to get the better of her. A partition suit was filed, and her cousins hired an affable and experienced attorney. After a time, each side realized they could best resolve in negotiations the most equitable division of the property. In doing so, they avoided court, a possible arbitrary resolution, and the time and costs of litigation.
POSTED : 10/16/2019
Freeland Martz obtains removal of conservator who was helping herself instead of her Mother
A frustrated spouse came to the Freeland Martz, PLLC, after the attorney who had represented him when his wife became subject to a conservatorship could not get the conservator to do anything about his wife’s care.
The Chancery Court had ordered the conservator to account for the funds meant for his wife, and the conservator failed to file an accounting. Wondering what was going on with the money he was contributing for his wife’s care, the husband hired Freeland Martz, PLLC, who entered the case and subpoenaed the bank records. The bank records revealed the conservator had written thousands of dollars of checks to “Cash” and purchased items for herself.
Upon presentation of these records to the Court, the conservator was removed, an accounting was ordered to be completed by the former conservator’s attorney, the court required the results of the accounting referred to the local district attorney’s office, and a new conservator was appointed to oversee the client’s wife’s care and finances.
Unfortunately, the conservator who was removed for taking advantage of a her position was a daughter of the client.
Financial Scamming ‘Can’t Happen to Me’
Once we pass age 60 or so, public statistics and case studies show we are much greater danger of falling prey to financial scammers. Increasingly, in our practice we are asked to help the victims of scammers. Every day, mature Americans willingly give their retirement savings to skilled emotional manipulators. Unsurprisingly, some of these victims have exhibited signs of dementia, but an astounding number appear completely competent except for this victimization. Scammers quickly figure out how to exploit the vulnerable and create a conflict between friends and family so the scammer can continue exploitation. Typically, they suggest the friends and family are after money when in fact they are the only ones concerned. As we age, we wish to avoid conflict. Cornell University researcher Nathan Spreng says as we age, there’s a natural tendency to filter out uncomfortable realities. “We’re less likely to pay attention to the negative,” he said in an article on cnbc.com. “We’re not as vigilant against threat.” An article on Marketplace.org quotes New York physician Mark Lachs about such victims. “Financial exploitation can happen even to bright, competent people. They need their friends and family to be aware and be ready to help.
AMICABLE SETTLEMENT RECTIFIES PROPERTY DAMAGE FROM NEARBY DEVELOPMENT
Oxford is experiencing a developing boom, and with those changes sometimes come conflicts between landowners. In one recent case, a developer prematurely removed all vegetation on his property, eroding his site and causing thousands of cubic feet of subsoil to partially fill a lake owned by a local civic club, making it far less suitable for its intended recreational purposes.
The developer ignored the complaints of the civic club even after the club hired an engineer and reported his estimates of the costs of repairing the problem. Only after the civic club hired Freeland Martz and the firm filed a lawsuit did the developer pay attention.
The case settled soon thereafter, with the civic club receiving the costs of remedying the problem as well as saving the club the time, money, and trouble that pursuing the lawsuit to its end would have cost.
Getting financial advice
Much of the work our firm does is to assist the victims of financial exploitation. We have seen clients come to us having been exploited by strangers from overseas – recently from Jamaica and Nigeria – promising large prizes if only money would be sent; imposters pretending to be the IRS; friends and family claiming they can help but wanting to convert and control; and victims of investment advisors who get paid more in fees than their clients make.
According to a 2019 Survey by the National Institute on Retirement Security, 73% of Americans lack financial and investments skills to manage their savings through retirement, which is why some are susceptible to those who would take advantage of their lack of acumen. According to the report, “Choosing the best way to convert retirement savings into a stream of income is one of the most complex financial decisions individuals have to make.” This is exacerbated when some of our clients as they age lose the mental capacity to make those decisions.
Our firm does not give investment advice, nor do we receive commissions from the financial advisors that our clients work with. We don’t advise folks to leave the advisers they trust unless, upon review, we see a problem. A March 11, 2019 article U. S New and World report entitled “How to Choose a Financial Advisor“ https://money.usnews.com/investing/investing-101/articles/how-to-choose-a-financial-advisor It recommends five steps: 1. Decide whether you need a personal financial advisor; 2. Determine what type of adviser you need; 3. Research an advisor on Google and ask friends; 4. Check the credentials and licensing; 5. Interview several to get the best fit for you.
SECOND OFFICE LOCATION
We are excited to report that last week we completed the last step in setting up our second office in Chattanooga, Tennessee. This is a photo of the building where our office is located. We will continue to have the same availability and presence in Mississippi that we have always offered. In case you are not aware, the Chattanooga office puts us in a great location to assist you with matters in Tennessee, northwest Georgia, and north Alabama. We lawyers are admitted to practice in Mississippi, Tennessee, Alabama, and Georgia. Missouri is coming soon!!
How involved should friends and family be with estate planning?
When clients begin estate planning, I often tell them, “It’s your money: I don’t know what is important to you or enough about your family to advise you how to leave your estate. If you want to leave your estate to a cat, that is your business, and I won’t tell you to do otherwise. However, consider how you could leave a positive legacy, and if a family member has a problem, don’t make the problem worse by throwing money at it.”
Occasionally we have cases in which family members want to be involved, want to control, might feel entitled, might be dependent, and a conflict arises between what the client might want and what the family member might want.
For example, we have had instances when family members took a will out of our client’s safe and tried to get the client to change their estate plan, or when a non-family member talks badly about a family member to try to get a client to change their plans. Sometimes a person planning an estate innocently asks for a family member to be present or to assist in estate planning. Since most folks are not lawyers, they are not aware that many states impose a presumption that such an estate plan was the product of undue influence and control and the exercise of a person’s independent judgment and free will.
To prevent presumptions and expensive litigation from arising after a disappointed person challenges your plans, when making your estate plans such as a will or beneficiary designation, ask any persons who might benefit from the plan to excuse themselves when you formalize your plan and sign any documents. The beneficiaries’ being there in the room might not affect your plans, but their excusing themselves will avoid an unhappy person’s being able to use the beneficiaries’ presence as a basis to challenge your plans – and may well save your heirs some legal fees.
HOW WE UNWITTINGLY HELP PREDATORS PREY ON THE VULNERABLE
When a friend or family member asks for help, and we care about them, naturally we want to give a positive response and render assistance. Often this means financial assistance.
We may hesitate to “pry” into their business and ask for details concerning why our help is needed, but the problem may not actually be financial. It may be that our friend or family member misunderstands their situation, and someone is exploiting their lack of understanding.
We have seen too many examples of elderly clients who have lost their savings, family heirlooms, and even their homes to predators utilizing social media, cell phones, and personal acquaintance. Such predators promise personal relationships, overseas funds, large prizes, and tax refunds. Or they may use the threat of arrest from the IRS to convince our clients to send money. And once the elderly person’s funds are gone, the predators pressure their victim to solicit funds from their friends, siblings, neighbors, church members, or anyone else.
Strangers who call for funds, whether they bully their victims or charm them, are up to no good. Billionaires do not make random people millionaires. Legitimate government transactions are initiated with documents, not phone calls. If you provide funds for such requests, you are exacerbating the problem and feeding the insatiable greed of predators.
If a friend or loved one asks you for funds, politely ask a few questions about the nature of the request. If it sounds questionable, politely say no and contact those who can render help. Saying yes may be easier, but it only increases the problem.
Entitlement = Greed
It’s insatiable and ruins gifts.
An article by Jane Adams, Ph.D., in Psychology Today declares, “Entitlement is an enduring personality trait, characterized by the belief that one deserves preferences and resources that others do not. Like boundaries, we recognize entitlement chiefly by its effect on us: envy, anger, and frustration. … Whether deserving or not, highly entitled people are less concerned about what is socially acceptable or beneficial, according to researchers at Harvard and Cornell whose studies of 99 undergraduates and 98 MBA candidates yielded another finding: Entitled people don’t follow instructions, because they see them as unfair.”
Entitlement causes problems in relationships, and often in estates it gives rise to legal issues stemming from a person’s manipulation of others to obtain what he or she wants. It is interference with testamentary intent. We have seen it lead to neglect and even murder.
Twin byproducts of entitlement are expectancy and dependency. Some folks give in to providing money rather than hearing repeated demands or complaining about the unfortunate circumstances that always seem to arise and the “unfairness of life.” Others may use money for control. Regardless, entitlement does not serve as a good basis for a relationship.
Being entitled leads to irresponsible financial decisions, because the person who feels entitled does not appreciate the risks, take responsibility of their own actions, or plan for the obstacles that life inevitably brings. Typically, someone who feels entitled expects to be “bailed out” and never changes their behavior.
Ultimately the entitled child may realize their elderly parent will no longer be available to bail them out, and we have seen them take what the parent needs on the assumption that the entitled child will ultimately get the money that is their parents’ anyway, so why wait until they die? (We often say “Momma ain’t dead, and she might need the money.”)
An attitude of entitlement can lead to fraud and other criminal activity, since most predators of the elderly are “friends” and “family members.” We could provide numerous examples based upon the families who come into our office over the years. Thankfully, we have helped many folks prevent or work through those issues.
Money is certainly a tool that can be used for good and to help enhance one’s values and gifts. Gifts should be given and received graciously. Entitlement, like the love of money, spoils that gift. Entitlement never appreciates nor sincerely thanks: Giving to one who feels entitlement inevitably feels hollow.
Why you don’t want to keep being manipulated (being a doormat)
Agreeing with a manipulative person isn’t being honest.
It isn’t getting along.
Giving in isn’t necessarily doing what is right.
Guilt is not a good motivator; caring and love of another is. Giving in doesn’t necessarily help the person making the demand any more than giving in to a spoiled child helps the child. Yes, we are told to try to get along with others, being sympathetic and compassionate. [i] We should not be naive when others try to manipulate us.[ii]
If you are uncomfortable with what is being asked of you or feel it’s wrong, then you should go with your gut feeling and stand up and say no; otherwise you may be exploited. [iii] There are knuckleheads out there trying to convince you owe them something or might get something for nothing simply if you trust them. As we know, the only people we should trust are those who care about our interest before their own.
Giving in doesn’t make things easier; it can make things more expensive
It just lets the pressure off temporarily.
It just responds to one person’s demands at the cost of everyone else’s needs and rights.
Escaping confrontation by giving in focuses on your role in the conflict – how it affects you or the antagonist – which is why personality issues don’t solve problems.[iv] Giving in to unjust demands just creates more issues for others, including courts and lawyers, to resolve.
[i] “I am sending you out like sheep among wolves. Therefore, be as shrewd as snakes and as innocent as doves” (Matt. 10:16).
[ii] “Finally, be strong in the Lord and in his mighty power. Put on the full armor of God so that you can take your stand against the devil’s schemes” (Eph. 6:10-11).
[iii] “(1) ‘exploitation of an elderly person or disabled adult’ means: (a) knowingly, by deception or intimidation, obtaining or using, or endeavoring to obtain or use, an elderly person’s (or disabled adult’s) funds, assets, or property … to benefit someone other than the elderly person or disabled adult, by a person who: 1. stands in a position of trust and confidence … “ Hall, Exploitation of the Elderly: Undue Influence as a Form of Elder Abuse. Clinical Geriatrics, Vol 13, No. 2, (February 2005).
[iv] Ken Sande wrote a book called The Peacemaker. “The escape response focuses on the self – on the ‘me’ of conflict.”
Are you, your Family or Your Business unique?
Can you describe your life generically so your life could be encapsulated on a pre-printed form? Is your next major transaction just like a million others? Could a generic form fully interpret your plans for the future?
Recently as I was reviewing a form document for my client to help him determine whether to sign it by reading the fine print that may people overlook, I began to consider how much of the form had nothing to do with my client, or his business situation. In fact, if my client had signed it, he would have agreed to pre-existing circumstances that the other party to the agreement knew would put our client in breach of contract. The contract even agreed that my client could not object to anything unlawful the other party did, any fraud related to the document or whether the other party forged his signature on a document.
Forms have a place, but they should be tailored to your particularly circumstance, whether the form might be used in a contract, a will, or a trust. If you don’t understand the legal effect of the document you are signing, you should not sign it. If you don’t understand the legal effect of the trust, power of attorney, or will presented for your signature, you should not sign it, either. Clients have incurred great difficulty and expense in signing a document they do not understand, have not read, or relied solely on the other party to explain. The best transactions and business relationships are the ones in which each party understands their rights and obligations. It is less expensive and easier to plan and avoid problems than to resolve problems, though no one can avoid all difficulties on personal and businesses relationships.
In either event, we are here to help.
POSTED : 05/30/2019
Freeland Martz Is Expanding to Chattanooga, Tennessee
You may have heard that Reed Martz is moving. That’s mostly true. He and his family are moving to Tennessee to open Freeland Martz, PLLC in Chattanooga. Freeland Martz has long been a regional firm practicing in Alabama, Georgia, Mississippi, and Tennessee so we are excited to open a Chattanooga office to be closer to many of our clients.
Reed is as committed to his Mississippi law practice as ever and will continue to serve all clients and future clients without interruption. The Oxford, MS. office will remain the firm’s primary location. Everything and everyone else will remain as they are to ensure consistency.
Chattanooga was selected as the location of our second office because of its strategic location – within a roughly two hour radius to Nashville, Atlanta, Huntsville, Knoxville, and Birmingham.
We would be very grateful for any contacts you can provide as we get acclimated to this new territory. If you would like to share any referrals or points of contact in these markets please send us an email or give Reed a call.
According to the Social Security Trustee the Social Security Funds depleted by 2035
The Social Security Trustee released its annual report on the finical status of social security asset reserves. The trustees asked Congress to act and address the shortfalls based upon its annual report:
- The Old Age and Survivors Insurance and Disability trust fund is projected to be depleted by 2035 as estimated last year with 77% of benefits payable then
- The Old Age and Survivors Insurance is projected to be depleted by 2034 with 77% of benefits payable then
- The Disability Trust Fund is projected to be depleted by 2052 with 91% payable then
- The assets reserved increased in 2018 by $2.895 billion in 2018
- The annual cost of the program is projected to exceed annual income “for the first time since 1982” and remain higher
For the Social Security Press office release see: https://www.ssa.gov/news/press/releases/2019/#4-2019-1
19.04.16 Freeland to Teach Ethics – How to Get It Done Without Being a Jerk
Hale Freeland to tell aspiring lawyers “How to Get It Done Without Being a Jerk” at the University of Mississippi School of Law
Each year recent law graduates are required to attend a Continuing Legal Education program toward their admission to the Mississippi Bar. As one option in that training, Hale Freeland of Freeland Martz, PLLC, will offer an ethics presentation titled “How to Get It Done Without Being a Jerk” at 3 p.m. on May 15, 2019, at the University of Mississippi School of Law.
Freeland’s interactive talk will focus on how to succeed as an advocate while acting with respect toward adversaries – and building credibility in the process. The presentation will consider what makes certain attorneys difficult, how to address a bully without responding in kind, and how such a measured response can more effectively represent one’s client.
Freeland Martz wins reversal of judgment of beneficiary
designation ruling in U.S. Court of Appeals
Hale Freeland argued a case before the U.S. Fifth Circuit Court of Appeals in February, and he and Beth Smith who both worked on the appeal prevailed. The firm represented a widow whose husband designated his side of the family as beneficiary of several assets before and after their marriage. The husband had later told the various financial institutions that he wanted to make his wife the beneficiary of those assets.
The man’s children, whom he had supported as adults, had transferred some of his assets without their father’s knowledge, and had not seen their father for months prior to his death, objected to beneficiary designation change to his widow. As a result, the insurance company that held the assets paid the funds into Federal Court after his death to determine who was entitled to the funds.
The Fifth Circuit reversed the trial court, which had decided the issue without a trial. The Court of Appeals held that the widow had presented evidence that the beneficiary designation was what the husband intended and not the product of undue influence. The Fifth Circuit Court of Appeals reversed the District Court, finding witness credibility issues for the lower court to revisit.
“That’ll be mine ….” to “It mine;” a problem with entitlement, i.e. greed.
Contrary to the assertions of Gordon Gekko in the 1987 movie Wall Street, greed ain’t always so good, is it?
We have seen in our practice, we’ve seen problems arise when people begin to assume that their parents’ assets are their own with the rationalization, “It’s going to be mine anyway.” That attitude has led to years of expensive litigation and family divisions..
We have seen this attitude toward entitlement in closely held family businesses in which a person uses the corporation as a personal bank account and spends regardless of the income the business produces. This can result not only in insolvency but the loss of corporate status – and resulting personal liability for the shareholders/members of the corporation.
We have seen such greed result in taking assets that an elderly client needs for her care. An attitude of entitlement creates an agenda, a rationalization that justifies the feeling and the actions taken. This rationalization does not distinguish between what is wanted, or the needs of others or the assets of another person. More often than not our experience shows that people who feel and act on “my agenda no matter what” are never satisfied and unwittingly illustrate their character to courts, if it come to that.
The problem with that attitude is it involves taking instead of receiving. In some estates we have seen transfers of the parent’s assets that not only make the parent indigent, without assets to pay for their care, but those transfers to a family member leave the elderly ineligible for Medicaid as well. The attitude of “It’ll be mine one day anyway” is one of taking and self-dealing. If one is a fiduciary such as a power of attorney, for example, such transfers can be determined to be fraudulent and require a high level of proof to show the parents intended the transfer. Fortunately, in most of the cases that have come to us, a friend or family member became concerned in time to preserve assets – and the well being of the elderly client who needed their assets. In some instances that friend or Family member saved the life of one who was being neglected.
Freeland Martz Negotiates a Reduction for Bank’s claim against client by $226,223.62
The firm’s clients became the victim of a bank fraud and check kiting scheme in which their names were forged on loan documents as part of a multimillion-dollar check kiting scheme. The check kiters used the loan proceeds to support the kiting scheme which eventually collapsed. The kiters and financial institutions then sought the clients to cover the losses. Through a review of voluminous account records at various banks subpoenaed by Freeland Martz, the law firm discovered the kiting scheme. When the clients realized they had been unwittingly paying for an unlawful kiting scheme, they stopped making loan payments, and Freeland Martz began litigation with the check kiters and the various banks who the clients alleged activities participated in the scheme. Freeland Martz settled with five of the banks and recently settled with another bank that filed a claim against the client in the amount of $271,223.62. That Bank and the client agreed to settle for the one legitimate loan the client had signed in the amount of $45,000. The other loans were questionable on which the client’s signatures were alleged to have been forged. The settlement valued at $226,223.62 in debt forgiveness. Each party settled for their own reasons, and the bank denied liability for the claim. To date, the firm has helped the clients realize $8,297,399.93 in settlements of loan forgiveness and settlement proceeds paid to the clients. The firm and the clients worked together resolving these cases.
A WILL OR A TRUST: WHAT’S BETTER FOR YOU?
Some financial advisers strongly suggest that you create a trust to avoid probate courts. Their thinking is that the costs of probating a will outweigh the costs of creating a trust.
A simple will involving a couple, their house, and some personal property is not expensive to create. Probate courts are intended to identify the heirs; to appoint a fiduciary to locate and disperse estate assets consistent with the deceased person’s will and state law; to resolve conflicts regarding the preparation, execution, and distribution of estate assets; and to oversee that process. A probate court also requires persons who might challenge a will to address those issues in open court, so if they have a complaint, it’s time to “put up or shut up.” More often than not the challenger does not appear because the person is unlikely to convince a court to change a will the decedent was fully capable of making.
A trust is a private agreement carried out by a trustee over a longer period than the time it typically takes to probate a will. Trusts are convenient and inexpensive ways to transfer your assets when assets are held by a financial institution. Trusts are as different as the person’s intentions in creating them, so they are better at tailoring a plan to a family’s unique circumstances. Occasionally we see clients who have created a trust, but because they do not transfer all of their assets into the trust or identify assets they intend to include in the trust, their heirs have to probate an estate to transfer assets left out of the trust anyway.
The mistake folks often make is trying to figure what document they want to have prepared rather than considering what their assets are, what is important to them, and how their estate could further those values. Those considerations — and the size and complexity of your estate — often dictate what documents will help you carry out your unique plan while ultimately saving you and your family money and helping avoid conflicts and confusion over what you intended. Filling out a form based upon what you guess might be “OK” or one that some TV commercial recommends won’t do that. Tailoring documents to your needs will better carry out your goals. As we often said in the Navy: “Proper planning prevents poor performance.”
The Problem with trying to take control of your parents’ assets
As long as your parent is competent, he/she can make financial decisions for themselves, even ones you consider foolish. As long as you are competent, you can do foolish things you’re your money. Why do you thing Casinos make money?
Attempting to gain control through a conservatorship can create real conflict. Regardless of the level of your parent’s competency if you can and protect him at the same time it is best to would involve him in the decisions making that he needs assistance and you would like to help. Even if you have a power of attorney you should keep your parent advised of plans and transactions. Attorneys in fact have a duty to account for transactions utilizing powers of attorney, must act according to the terms of the power of attorney and for the benefit of the parent who appointed and signed the power of attorney. A power of attorney can be revoked. Going to court can be the “nuclear option,” upsetting to all. We have seen a summons issued without prior notice or discussions divide families and give financial predators an opportunity to exploit the conflict. Short of going to Court, keeping involved and closely monitoring things is essential. If you loved one is being exploited and does not comprehend what is happening, going to court may be the only option to protect them. Even then, your Parent should be consulted as much as possible and throughout retain their dignity. After all, who wants to give up total control or understanding of their circumstances?
So, you want to share your estate plan with your heirs?
After making your estate plan, you think you may want to share your estate plan with your heirs for emotional and practical reasons. For example, you have an estate that you want to share and for your heirs to enjoy, and as a practical matter you want those who will carry out your estate plan to understand your assets and how to carry out your plan. A few things you might consider:
- Will those you tell respond with gratitude and understand your plan and how to carry it out?
- If you ask the folks you tell to keep the plan in confidence, will they do that?
- Will someone be upset about your plan in a way that affects your relationship, or will they try to get you to change your plan?
- If one of your heirs has an addiction will your gift aggravate that?
Remember that legacy bequest in an estate is a gift, not an entitlement. You should accept your heirs for who they are:
- If they are spendthrifts, don’t give them money freely where they will waste it and soon be left with nothing.
- If they are financially responsible and trusted by you, family members, or your other heirs, that person is probably the one you should appoint to administer your estate. Telling them alone will be helpful in carrying out a more complicated estate plan.
- If there is a family dynamic of some dependency or sibling rivalry, you should not tell your children and create family conflict.
Money is a funny thing. It is simply a tool, which can do a lot of good or create division and harm. Your estate plan should further your values, enhance your and your family’s gifts, and bring joy, not drama or conflict. You best know best. Give joyfully – not out of a sense of obligation. We can help you do things that no downloaded form ever could – to help you clarify and understand your values, your family, and your dreams.
When family gets too involved in estate planning. Before I spoke at an Elder Law Conference group of social workers were discussing having family meetings about how to dispose of a parent’s estate. The idea was families should get a consensus in creating an estate plan. Such a Family meeting would likely make any document created from a family meeting void. Because Courts wish to protect the intentions of the testator, the person making the will, many states have presumptions that discourage heirs from being involved in the preparation and execution of a will or trust. Heirs can have a very limited role in estate planning. The greater the family’s involvement, the more likely testamentary documents can be challenged. First and foremost, the person making an estate plan should ensure their needs during their lifetime will be met. Second, a will should leave a positive legacy, not aggravate problems within the family. Enhance the gifts of your Family, don’t aggravate the problems.There is no perfect person or Family. An estate plan should be consistent with your values and make you feel good about having planned well. Elderly persons want security and good family relationships. Some folks will do about anything to avoid a family conflict to the point of sacrificing and compromising their values or giving in to pressure. Getting professional help to formalize a good plan will be less expensive and create less uncertainty for your Family. LIVE WELL, GIVE WELL.
The Problem With “Do It Yourself” Wills: They Usually Don’t Work as Intended
We are occasionally asked to probate a “Do It Yourself” will, which someone either prepared by writing what they thought a will looked like or through some sort of downloadable form. Like most states, Alabama, Mississippi, and Tennessee (where we practice) have specific requirements on what it takes to probate a will as a valid and enforceable testamentary document. In our practice, we have seen less than five valid wills that have been prepared by non-lawyers. More often than not, the “Do It Yourself” documents don’t accomplish the purpose as intended, create problems for those who are left to probate the will, and increase both court costs and attorney fees.
Typical problems include: the beneficiaries of an estate being too involved in the preparation of the document; the document not being properly witnessed, and therefore difficult to enforce; or the document being unclear in its terms. These issues usually prevent the document from being considered a valid will, and thus leave the court giving the estate assets to whomever state law dictates. Doing it yourself and guessing how to prepare and execute a valid will is risky. Planning can avoid these uncertainties, out-of-pocket costs, and conflicts. By planning your will, we can ensure that your estate will be left with the people you intend. We prefer to help you plan for the future and achieve your goals rather than attempt to fix past mistakes. Saying what was intended never works.
Guides to help those who manage another people’s money
The Consumer Protection Bureau is a government agency that helps protect consumers from being exploited. Through their office they have published helpful guides for those who manage other people’s money, such as powers of attorney, trustees, guardians and conservators. The purpose of the guides is to protect the consumers who are acting through their fiduciaries and instruct those persons managing their money concerning the proper use and accounting of transactions in behalf of financial caregivers. The website may be found at https://www.
Freeland Martz Negotiates a Settlement of Racketeering Claim valued at $1,595,986.02
The firm’s clients became the victim of a bank fraud and check kiting scheme in which their names were forged on loan documents – the loan proceeds of which were used to help fund a multi-million dollar check kiting scheme. The clients stopped paying the loans they thought were legitimate after they subpoenaed the account records of the check kiters and, through a review of the voluminous account records from various banks, discovered the kiting scheme. When the clients realized the loans they had been unwittingly paying arose from an unlawful kiting scheme, they stopped making loan payments and began litigation with the various banks who the clients alleged actively participated in the scheme. Freeland Martz settled with four of the banks, and a remaining bank denied its responsibility or participation in the scheme. The Federal Bankruptcy Court denied the Bank’s attempt to dismiss the racketeering claim after which the parties negotiated a resolution of the clients’ claim against the bank. The settlement valued at $1,595,986.02 included $795,981.02 in debt forgiveness, $400,000.00 in payments in behalf of the clients, and forgiveness of the bank’s claim for attorney’s fees of $400,000.00 based upon terms in the bank loans. Each party settled for their own reasons and the bank denied liability for the claim. To date, the firm has helped the clients realize $8,071,176.31 in settlement of loan forgiveness and settlement payments. The firm worked as a team in resolving these cases. Posted 11/29/2018 Freeland Martz recovers thousands of dollars in Equipment taken from Estate property Freeland Martz was hired by a substitute executor of an estate after the Mississippi Secretary of State asked the prior executor to resign. After the decedent’s death, thousands of dollars of equipment was taken from the Estate property, the executor knew where it had been taken, and sought to recover the equipment. The owner of the property where the equipment was located claimed the equipment and would not allow the executor access to the property to recover it. In order to identify the estate’s equipment located on the private property, a drone flew over the property and photographed the equipment there (see below). The photos taken from the drone were used in court to identify the estate’s equipment by witnesses who had been employed by the decedent and operated the equipment. After a hearing, the court entered an order allowing the executor to recover the equipment, which the Court found belonged to the estate rather than the private property owner that claimed ownership of the equipment.” Posted 11/06/2018 Chancery Court sustains objection to Finance Company’s claim filed in Conservatorship As an elderly gentleman lost capacity, unrelated persons who were supposed to be his house cleaners began to take advantage of the gentleman. They began to prey on him financially, obtaining loans, vehicles and furniture through his good credit. The predators ruined his credit and went through significant amounts of his money which he had saved over the years. Two local businesses, a bank and an insurance agent, saw something was wrong when the predators brought the gentlemen to their businesses to get his assets and notified the gentleman’s daughter. She engaged the firm and initiated a conservatorship proceeding.
The gentleman was examined by a court appointed expert who found the gentleman incapable of managing his financial affairs and susceptible to undue influence. As a result, the Court found the gentleman incompetent and appointed his daughter as his conservator.
Thereafter, a finance company filed a claim for over $900.00 for furniture obtained on credit and a $1500.00 mailed out check sent to the gentleman. The Conservator objected to the claim. The Chancery Court found due to the appointment of a conservator, and the gentleman’s diminished capacity, he lacked the ability “to make a contract and give mutual consent.”
Client’s $177,019.00 judgment given priority over Bank’s deed of trust of $701, 000.00
A farmer came to the firm after he filed a judgment of $177,019.00 in a county where the judgment debtor was located. The judgment debtor owed approximately $701,000 which was secured by a deed of trust on his property by “Bank A”. The judgment debtor sold the property and the purchase price was financed by “Bank B.” Bank B paid off the first debt owed on the property, releasing the deed of trust owed to Bank A. However, the farmer’s judgment was not paid off when the sale of the property occurred. Bank B sued the farmer claiming the farmer’s judgment was void and that it was not “fair” that the framer’s judgment debt would have priority over Bank B’s debt because the bank had paid $701,000.00 and financed the purchase. Because the Bank B’s deed of trust was filed after the farmer’s judgment, and the Farmer had properly filed his judgment, the Court denied Bank B’s motion which placed the farmer’s $177,019. Judgment ahead of Bank B’s $701, 000.00 deed of trust.
Predator incarcerated for six months for taking pray upon elderly clients
After the chancery court entered an order prohibiting a predator who was determined to financially exploit an elderly gentleman – even while serving a 90-day jail sentence for contempt – the chancery court extended the predator’s sentence for an additional six months hoping that would get the predator’s attention to leave the gentlemen alone.
Hale Freeland to address the use and abuse of powers of attorney
Hale is presenting a program concerning the uses of powers of attorney and problems that arise from the abuses of powers of attorney through self-dealing. The educational program will be presented to Northeast-Mississippi attorneys sponsored by the Prentice County Bar Association as a part of the Prentice County Bar Association’s annual continuing education program on July 27 at J.P. Coleman State Park near Iuka.
Hale Freeland obtains Court protection through a guardianship for Navy Veteran
A Navy Veteran’s sister and her other siblings’ discovery that a relative was taking advantage of the Veteran as she lost capacity with memory lapse. The relative used a power of attorney that the Veteran had signed to obtain her home and the income from her Veteran’s Navy pension. At a loss of what to do, the Veteran and her sister came to the firm. The Veteran recognized she needed assistance, wanted her house back and wanted to avoid the abusive use of the power of attorney she could not remember whether she signed. The firm obtained protection from the Court through a guardianship which the Veteran agreed to, through which her assets could be recovered and her income will be protected and accounted for. The firm was also able to get her house back.
National Business Institute’s Evaluation of Attorney Reed Martz
In making his presentation on the recent changes applicable to Mississippi Gun Laws Reed Martz received a total evaluation score of 64 out of 65 (average 4.92 where 5 is “excellent”/top score).
Gun Law in Mississippi
Reed Martz will be speaking on topics which have recently been before the legislature, the courts and in the news; “Gun Law in Mississippi” in a seminar put on by National Business Institute on June 15, 2018, in Olive Branch, and then again on June 19th in Pearl, Mississippi. He will be covering topics such as Firearms and Their Regulation, Firearms Dealers and Licensing Requirements, and Ethical Considerations When Representing Gun Owners or Dealers. Also, Reed will speak on July 13, 2018, at the University of Mississippi Center for Continuing Legal Education’s “Current Issues in Civil Rights” seminar on the Second Amendment as the Courts have interpreted and applied it.
This week Reed Martz became licensed in Georgia. The firm now has attorneys licensed in Mississippi, Alabama, Georgia and Tennessee!!
Recovery for heirs after Executor of Mother’s Estate discovered Mother’s funds converted through a power of attorney
After a client’s Mother’s estate was opened the Executor began determining what assets the decedent his Mother had and found irregularities in accounts held in common, and not jointly with other her Brother. Before being appointed as his Mother’s executor, the son lacked access to the accounts which she failed to monitor as she lost the capacity to do so. Her funds were converted through the use of a power of attorney her brother had signed as the Brother and Sister began to lose the ability to keep up with their funds. The attorney in fact for the Brother took the funds held in the Brothers and Sister’s names for himself. The suit was filed on behalf of the Mother’s Estate and the firm was able to receive over well hundred thousand dollars taken by the attorney in fact.