Recently, a client came in for assistance because they had sold property to another person by verbal agreement.  In Texas, the transfer of property must be by a written agreement and the description of the property must allow the property to be located on the ground.  My client’s verbal agreement was not valid, worse yet they tried to type something up on their own later that the buyer used to create a false document.  This created a bigger problem that will require a lawsuit to resolve.

A divorce is not something you want to tackle without competent legal advice.  You will find a plethora of  do-it-yourself divorce kits and a whole host of do-it-yourself forms available on the internet.  The problem is that many of these forms are too general, not Texas specific, incomplete, contain unnecessary clauses, or they are just wrong.

You will find that most judges do not like to handle do-it-yourself divorces.  Despite what you might think, this is not because they are out to make attorneys more money or because they are mean and hateful.  It is because judges know all too well the many pitfalls involved in divorce matters.  They are trying to help the do-it-yourselfers, and themselves, from future headaches and problems.

Legalzoom advertises itself as a cheaper alternative to an attorney.  Unfortunately, many people are lured by this promise of lower cost and do not seek the advice of a trained professional.  They believe the document created by LegalZoom will be just as effective as one created by an attorney.

I have reviewed many software programs and took a spin on LegalZoom.  While they look state specific, had I not been a Texas attorney who focuses on estate planning, I might have trusted that the site was providing me with accurate and current information.  Just a few glaring mistakes I found were:

LegalZoom’s advice with regards to Oral Wills.  LegalZoom would have you believe they are valid in Texas.  However, in September 2007, Texas repealed Sections 64 and 65 of the Probate Code, which authorized oral Wills.  In fact, under current Texas Law, oral Wills are ONLY valid if made before September 1, 2007 and in VERY limited circumstances.

Another mistake I found was with regard to providing for pets.  According to LegalZoom, Texas Law does not have provisions for taking care of your pets.  However, Section 112.037 of the Texas Property Code, enacted in January, 2006, does authorize pet trusts.

Almost every attorney I know who works with the formation of business entities has spent hours correcting DIY business formations.  Here is just a list of some of what we fix:

– Selecting the wrong entity

– Failing to complete all steps of formation

– Not correctly obtaining an EIN

– Picking a name that violates a third party’s trademark

– Failing to have a buy out agreement

– Failure to hold the Organizational Meeting or Annual Meetings

Without exception, all of these DIY providers have a disclaimer stating they are not acting as your attorney and their information should not be used as a substitute for the advice of an attorney.

If you are considering are selling or buying real estate, seeking a divorce, formation of a business entity or preparation of a Will, seek the assistance of an attorney.  They can best help you negotiate the minefield of problems that could arise later and the judge or your family will be most appreciative.

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1. They try to lure you with a cheap product and a process that takes less than half an hour to complete.
2. They try to assure you with testimonials of customers professing that their product has given them “peace of mind.”
3. They provide you with a portal that gives you a “general understanding of the law” even though the information it contains  is “not guaranteed to be correct, complete or up-to-date.”
4. They suggest that the document you get from their company will be just as effective as one an attorney creates by garnering endorsements from famous lawyers like Robert Shapiro, a lawyer known for a criminal trial that had nothing to do with Wills or estate planning.

In short, despite a disclaimer that their document preparation services are not a substitute for the advice of an attorney, they try to convince you that the advice of an attorney is simply not necessary.

Do-it-yourself wills provide a false sense of security

As part of an experiment, Minnesota attorney, Gregory Luce, who is currently the Practice Development Director at the Minnesota State Bar Association, agreed to buy a Will though LegalZoom.  He has recorded his progress doing so in a series on his Practice Blawg and plans to compare the service and Will he obtains from LegalZoom with the process of getting a will prepared by an attorney.

Greg is married, and has two children: one from a previous marriage and the other from his current marriage. Even though he does not practice estate planning, he is a licensed attorney. His experience provides a glimpse at how even an educated consumer may be lulled into “peace of mind” by a document with significant flaws.

Is the advice of an attorney necessary in the preparation of a will?

Greg posted a video on his blog that documents his experience of obtaining a will through LegalZoom. Although it’s somewhat lengthy, I’d encourage you to watch it because it demonstrates how easy it is for even an attorney to make significant mistakes.  One thing that stunned me as I watched the video was the following highlighted statement:

On the top left-hand corner of the page, LegalZoom reveals that 80 percent of people who fill in blank forms to create legal documents do so incorrectly. Despite this disclaimer, LegalZoom tries to reassure its customers that professionals are there to help; that customers can have “peace of mind” knowing that LegalZoom professionals will customize their will based on their legal decisions.  But LegalZoom is not a law firm.  It is not permitted to review your answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation.

Consequently, LegalZoom resorts to providing only general information on legal issues commonly encountered and offers guidance in some instances by indicating that a majority of its customers have answered a question a certain way.  The problem is that everyone’s situation is unique.  Just because the majority of customers have answered a question a certain way, for example, does not necessarily make it right for your individual circumstances.

So if serious legal mistakes are made, you’ll never know because they will not become apparent until you die.  And the people left to deal with the mistakes are the people you are probably trying to protect by creating your Will.

Do it yourself Wills are just not worth the risk.  Attorneys do more than draft a document.  They advise you, based on years of experience and thousands of real life situations, on the best way to protect your family and preserve and distribute your assets according to your wishes.  Additionally, LegalZoom and homemade Wills cost more to probate in most circumstances.

While the advice of an attorney costs more, you have peace of mind that your loved ones will benefit in the manner you desire without adding headaches and problems to an already stressful time.

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In my last column, I discussed landowner liability.  This week, I will discuss a few steps that should allow a landowner the best opportunity to avoid being held liable.

There are a number of steps for a landowner to consider in order to protect himself or herself from liability.  Importantly, there is no magic solution that will ensure a landowner will never be liable for injury.  Further, there is nothing a landowner can do to prevent a person from filing suit against the landowner. 

Carry Liability Insurance

The most important step a landowner can take to protect his or her operation is to carry liability insurance.  Every landowner needs to have a liability insurance policy covering every activity taking place on the property.  For example, if a landowner has a farm and ranch policy for their cattle operation, but also conducts other activities like leasing the property for deer or bird hunting, the landowner should consult with their insurance agent to confirm the additional activities are covered. 

The amount of insurance coverage depends on the activity happening on the property and the location.  Landowners should consider the amount of risk associated with their operation.  For example, a farm in northwest Texas (middle of nowhere) that does not host any sort of events or have any guests would likely need a lower coverage amount than a rancher in East Texas just North of Houston (populated area) that leases day hunts for deer or birds.  Talking through the details of an operation with an insurance agent will allow a landowner to determine the right coverage level.  You should also discuss the endorsements and exclusions that may be contained in your liability policy.

Identify Dangerous Conditions On the Land

As I pointed out in my earlier column, Landowner Liability, a landowner owes certain duties to a person on his or her property.  Although a landowner is only required to conduct a reasonable inspection and make safe or warn of dangerous conditions for a guest, doing so for all persons may help to avoid an injury altogether.  Landowners should think about their properties and seek to identify any potentially dangerous conditions. Once these conditions have been identified, landowners should take care to warn guests about them or to make them safe. 

Obtain Written Liability Waivers

Liability waivers or releases, are simply documents signed by guests agreeing that they will not hold a landowner liable for injuries that occur on the property.  Texas courts will generally enforce this type of waiver if drafted in a manner complying with Texas law. 

Texas courts require liability waivers to be conspicuous and to comply with the express negligence doctrine.  These requirements are in place in order to ensure a person signing a waiver has fair notice and understands what he or she is agreeing to. 

The language required in liability waivers must meet very specific requirements and therefore you should consult an attorney when drafting them.  Releases should identify the activity involved and common dangers.  Again, seeking the professional help from an attorney when drafting them is recommended. 

Consider Using a Business Entity Structure

Another way to limit potential liability exposure is to consider putting one’s land and/or assets into a business entity which offers limited liability.  This would include a corporation, limited liability company, limited partnership or trust.  These entities must be formed correctly and managed properly.  Many people try to form such entities themselves and/or manage them improperly.  Failing to do either correctly is fatal to the entity and the landowner would lose liability protection.  Factors such as ease of creation, complexity of management and tax liability should all be considered.  Therefore, this is another area to seek legal counsel and expertise.  When formed and managed properly, these entities can provide limited liability for a landowner if someone gets injured on property owned by the entity. 

Does a Limited Libabilty Statute Apply

Texas has three limited liability statutes:  Recreational Use Statute, Texas Agritourism Statute and the Texas Farm Animal Liability Act.  These statutes may apply depending on the activities the landowner is conducting on his or her property.  However, each statute has its own specific requirements.  For example, are fees charged, do the property taxes paid exceed the fees, adequate insurance coverage, and are signs required to be posted?  Therefore the landowner must familiarize himself or herself with each statute’s requirements and consult with an attorney. 

All landowners should be aware of the potential risk of liability if someone is injured on their property.  A personal injury lawsuit can be difficult, time consuming, and expensive to defend.  However, there are a number of steps that can be taken in order to prevent injuries from occurring in the first place and to limit potential exposure in the event one does occur.  Consulting an attorney familiar with real estate and business entity law to help you in this area is very important. 

The information in this column is not intended as legal advice but to provide a general understanding of the law.  Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C.  He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. 

www.moakandmoak.com

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 By Sam A. Moak

 Disposition of Remains

The information in this column is not intended as legal advice but to provide a general understanding of the law.  Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

You might not believe it but some families argue upon the death of a loved one.  They can argue over money, sentimental items, paying bills, and even what to do with their loved one’s remains.  Generally, as a parent, you know your children better than anyone else.  Therefore, you have a pretty good idea of whether or not there will be any “controversies” after your death.  The best way to avoid any arguments, and to ensure your wishes are followed, is to have a well-written Last Will and Testament.

One of the more common issues that can be avoided is what to do with the decedent’s remains.  Unless a decedent has left directions in writing for the disposition of the decedent’s remains, the following persons, in the priority listed, have the right to control the disposition, including cremation, of the decedent’s remains AND are liable for the reasonable cost of interment:

(1) the person designated in a written instrument signed by the decedent;

(2) the decedent’s surviving spouse;

(3) any one of the decedent’s surviving adult children;

(4) either one of the decedent’s surviving parents;

(5) any one of the decedent’s surviving adult siblings; or

(6) any adult person in the next degree of kinship in the order named by law to inherit the estate of the decedent.

A Will can serve as a written and signed instrument.  Generally, the surviving spouse knew the decedent well enough and the family respects their wishes.  A real problem can arise if there is more than one child because the law does not designate which child has authority over the other.  There can be greatly divided opinions about the type and place of interment between children or siblings. Notice a girlfriend or boyfriend is not listed.  This too can cause real disagreement if the decedent was cohabitating with another, but was not married and left no written and signed instructions.

If the directions are stated in the decedent’s Last Will and Testament, then they must be followed immediately and without the necessity of probate.  There may be other reasons for probating the Will later.

Note that the written and signed instructions do not have to be in a Will.  They could be in a prepaid funeral contract or a written instrument signed and acknowledged by the decedent.  Acknowledged means the writing must be notarized at the time the decedent signs the written statement.  The written instructions should name a designated agent for making sure the wishes stated are followed and it is a good idea to name at least one alternate agent.  Additionally, and most importantly, the written instruction should state clearly the special instructions as to the interment the decedent has.

While not necessary, however, it may be required by the funeral home, crematory or cemetery organization, it should state they are not liable due to reliance on the instrument.

If you want the freedom to decide how and where your remains will be handled and distributed when you die, you should consult with an estate planning and probate attorney.  If you are considering entering a contract with a funeral home, then be sure to discuss this matter with them.  Plan to avoid arguments and controversy to make things easier on your loved ones.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C.  He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

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By Sam A. Moak

Seek Advice Before Signing Oil & Gas Leases

 The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

 The Huntsville-Walker County Chamber of Commerce and the Texas AgriLife Extension Service in Walker County sponsored a very good presentation last week on oil and gas leases. Judon Fambrough, a professor with Texas A&M University, gave the presentation.  I estimate over 100 people and myself were in attendance.  While it was a subject, I am very familiar with, it was eye opening for most in attendance.  Therefore, I thought it would be a good subject for this week’s column.

If you own real estate, you may own mineral rights as well.  I say may because it is not a given fact that you own the mineral rights to your property.  It is possible that the mineral interest was sold previously.  This is an important consideration because if you enter an oil and gas lease and later it is learned you have been overpaid, then depending on the oil and gas lease you signed, the producer can demand you repay the overpayment years later.  Just saying you spent the money will not stop them from filing suit.

 Most oil and gas leases presented to mineral owners are known as the Producers 88.  These leases can be easily identified because in the upper lefthand corner will be printed PROD 88. The problem with the Producers 88 is not what it contains, but what it is vague about.  It was written for the oil and gas industry and is very well written in THEIR favor.

 One matter that is not vague is a statement that you the lessor are warranting the title to the mineral interest.  This simply means you guarantee you own all the mineral interest. However, it is the Landman who is presenting you the lease that has done the research.  He works for the lessee or oil and gas company, not you.  He is paid by the oil and gas company, not you.  If his research is wrong guess who is liable, you.  This is just a small example of why you need to be very careful when signing an oil and gas lease.

 I have long been taught, and through personal experience have learned, the best thing to sign is anything but a Producers 88 lease.

 Too many people are drawn into signing bad leases because the Landman has waived a Bonus Check in front of them.  A Bonus Check is payment just for signing the oil and gas lease. While this money can be tempting, it is carefully derived to entice you to sign without thinking about what you are signing and what rights you are giving up.  Additionally, many signed leases are simply then sold to another party for more money.  Meaning you left money on the table.

 Each mineral owner has five (5) basic rights as follows:

1) The right to sign a lease

2) The right to explore for minerals

3) The right to receive a bonus for signing

4) The right to receive delay rentals

5) The right to receive a percentage of the production.

 Within these rights are many considerations.  For example, with the advent of new drilling technology companies now are able to drill deeper, into formations they have not been able to before and horizontally.  If you sign a Producers 88 lease, the oil and gas company have the right to drill to the center of the earth.  However, you could negotiate a different payment based on depth and formation.  You could even negotiate a minimum royalty payment.

 If you are also the surface owner, then you have many additional rights as well.  These include how your surface is used, where access is located, the type of access, where the drill site is located and who may enter your property and what they may bring.  Any guess as to who has the advantage on all these points in the Producers 88? Would you want a well site right up against your home or barn?  How about an employee of the oil and gas company shooting that prize deer you have been watching?

 As with any written document, the devil is in the details.  There is not enough room for me to go over all of the details that should be considered and addressed when negotiating with an oil and gas company.  Suffice to say, the lease document I draft and recommend is 50 plus pages and addresses not only your mineral rights, but your surface rights as well.  The producers 88 is usually 2 pages.

When dealing with mineral interest and oil and gas leases the terminology used is often foreign to most individuals and the cards are stacked against you.  Therefore, if you are approached by a Landman wanting to give you a “bonus” to sign a lease, do not feel alone.  Contact me and I will sit down with you to explain all your rights and how to negociate the best lease.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

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Remember, you and your attorney are working as a team. That means good communication and a clear understanding of each person’s assignments is essential.

[author] [author_image timthumb=’on’]https://moakandmoak.com/wp-content/uploads/2011/05/samamoak-copy1.png[/author_image] [author_info]Sam A. Moak is an attorney and managing partner with the Huntsville law firm of MOAK & MOAK, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas and is a Member of the State Bar College. [/author_info] [/author]

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