BUSINESS AND ESTATE PLANNING IS ESSENTIAL FOR ALL SMART FAMILIES

If you’re getting married (or remarried). . .

Texas is one of a handful of community property states. This means that once you’re married everything you earn is legally half yours and half your spouse's. Half your salary is your spouse’s. Half your spouse’s salary is yours. If you don’t like this automatic default, you can change it by entering into a separate property agreement.

What if you have significant assets that you earned before marriage? Well, those assets are your separate property; however, if you mix them with community property they will become tainted and the separateness of them will be hard to verify.
What if you earn a nice income from your separate property (i.e. investments or a business)? The income and the appreciated growth from separate property in Texas is community property!

If you are getting married (or remarried) and you have significant separate assets, you might want to think about planning ahead legally. Smart and successful people who are also very committed to each other enter into separate property agreements all the time.

If you’re having a baby . . .

Smart parents know that legally they need to plan ahead to provide for their children. What if something happens to you and you aren’t there for your child? What if one parent decides to stay at home with your baby . . . and something happens to the working spouse? What if something happens to both of you?

All parents should prepare a will and a legal guardianship document naming who they choose to become the guardian of their child if they aren’t available anymore. But, there are some common mistakes that many parents make when preparing their wills and naming their guardian—the primary one is naming your guardian inside of your will. Your will is a private document that no one but you, your spouse and your attorney needs to have access to. Your guardianship document though is an emergency document. If you aren’t available to take care of your child, your guardian should have access to that document immediately.

Your will shouldn’t be a slapped together template from an online sight. Rather, smart parents think about their goals and values when preparing their wills and incorporate these into the legal document. If done properly, your will should be a unique document unlike no one else’s.

If you’re child is turning 18 . . .

Once your ‘child’ turns 18, they’re considered a legal adult. Federal laws prevent doctors, hospitals and other medical care providers from giving medical information to parents of adults. If your 18 year old is in an accident, you may not be legally eligible to know what is going on medically. You are still able to pay for their medical bill, but you won’t be able to inquire about what procedures were performed.
Consider this story that happened to a friend of mine: Your child leaves for college in your vehicle. On the drive to campus, your child is in a car accident and must be hospitalized. You, as owners of the vehicle are contacted. You aren’t concerned about your car — you only want to know how your ‘baby’ is. You are far away. You are concerned. You want to know what is going on.

Your child is unconscious and needs serious medical attention, maybe even surgery — it doesn’t matter. The hospital refuses to provide you with any information.
Why? You aren’t authorized. Your child is now an adult! Legally, you aren’t able to find out. In the eyes of the government, turning 18 means parents no longer have access to the same legal rights regarding their children.

Don’t be left without a legal plan for your young adult child. Do some legal planning for your 18 year old and stay in the know.

If you’re starting a business . . .

Every business needs to be set up correctly and maintain its records correctly. Have you ever heard of piercing the corporate veil? This legal term happens when a business fails to maintain its corporate formalities. Instead of being able to hide behind the corporate shield, individual investors in the business are held personally liable for the business’ debts.

If you are starting a business, a ‘dba’ (doing business as) may not be enough. Setting up the proper legal structure and maintaining the corporate books are vital to ensuring you and your business stay protected.

When your business becomes successful . . .

If you own a business with other investors, it is important to think about what happens if someone dies, divorces or becomes incapacitated. Consider this scenario, which happens all too often: You’re in business with your long time friend You both built the business from an initial $1,000 investment. Your business is now worth $2 million. Last year your friend took a loan from the business to buy a lake home. You didn’t legally document the loan---knowing that it was to your good friend and that he or she would pay it back. Your friend just died. Their spouse’s estate attorney wants to see your corporate records. Your friend’s spouse is entitled to your friend’s portion of the business.

Do you have a right of first refusal to purchase your friend’s portion of the business? Can you afford to buy out the spouse? Since you never documented the loan for the lake house, how will that affect the value of your partner's portion? Since you never thought about these things, will you now be forced into business with your friend’s spouse? Or (possibly) worse, litigation? Smart business owners plan for these things and legally document them.

If you’re getting divorced . . .

Most of us know that after getting a divorce you should update your will. Another key legal step to take after getting divorced is to change your beneficiary designation forms on your life insurance and retirement plans (i.e. IRAs and 401(k)s). These assets don’t pass pursuant to the terms of your will.

Imagine your family in this litigation battle: You get divorced. You never change your beneficiary designation forms which listed your ex-spouse as your primary beneficiary. You die. Your ex-spouse inherits the life insurance pay out and your retirement accounts.

If you’re getting divorced or recently got divorced, your divorce documentation may require you to name your spouse as your primary beneficiary for a period of time. If not, call your benefits department and your life insurance carrier and update those beneficiary designation forms.

If you’re a smart family . . .

Smart families plan ahead. We plan our weddings, our children’s birthday parties, our vacations, our corporate sponsorships. We also need to remember how important it is to be educated on some legal basics and to plan ahead legally.