Questions of probate privacy raised in the Harold Simmons case

After Texan billionaire Harold Simmons recently passed away, his widow filed to seal documents related to the probate of his estate, including his will.

Regardless of what the judge considering her request ultimately decides, it’s important to think about the issues this case raises.  Generally, documents going through probate court are available to the public.  But families also have concerns about privacy, and the kinds of financial and personal information available on these documents could lead to undesirable exposure.

According to Simmons’ widow, leaving the documents open to the public will pose a security threat to beneficiaries of the will and perhaps endanger certain assets that are listed.

Ultimately, the question is how to best balance the right of the public to know what’s in the documents and the right to privacy and security for individuals going through the probate process.

How do these privacy issues affect Texans?

For some Texans, probate privacy won’t even be an issue; here are a few reasons why:

  • Depending on the assets that make up the estate, probate may not even be necessary.  Certain assets, such as proceeds from life insurance, can be transferred to a beneficiary without the need for probate.
  • Assets held in a living trust also don’t need to go through the probate process.
  • Under some circumstances, an independent executor can file an affidavit instead of filing a full inventory of assets during the probate process.

There are other reasons privacy isn’t always a major issue in these matters.  Most people’s major assets can already be easily discovered and different kinds of personal information (e.g. who’s on your marriage license) are a matter of public record.

In general, probate in Texas is a relatively quick and straightforward process, and in some cases you may not need probate at all.  If you do have concerns about privacy or want to know more about what information could be made public in probate-related documents, you should discuss these issues with a trusted estate planning attorney; an experienced attorney will look after your interests and advise you on the best solutions for your case.

Changes to the Law Regarding Texas Statutory Durable Power of Attorney

In 2013, the Texas legislature passed a new law related to statutory durable power of attorney; this law went into effect January 1st of this year and has changed the form you’d use to grant someone power of attorney.  It’s important to make note of these changes for your estate planning needs, as all of your paperwork needs to be prepared properly.

What is the statutory durable power of attorney form?

With the statutory durable power of attorney form, you’re naming someone to act on your behalf in the event that you become incapacitated.  For instance, if you develop dementia or are involved in a vehicular crash that results in a prolonged coma or damage to the brain, the person you name (known as the Agent) would be able to act on your behalf for a number of financial and personal matters.

What changes have been made to the form?

The most important change is how you go about designating what powers the Agent will have.  On the power of attorney form, you can grant this individual a broader set of powers over financial and personal affairs, or make them more limited in scope.  In the past, you would have crossed out any powers listed on the form that you didn’t want to grant to the Agent.  Now, you need to place your initials near the powers you do want to grant.

It’s important that when you fill out a new form, you make sure to actively initial the powers you want to grant; if you don’t, then you might be looking at a major legal headache and future personal crisis, as the Agent you’ve designated may not get any power of attorney at all.

Other changes to the form include an additional notice for you, urging you to choose someone you trust, and also additional information for the Agent, further explaining the nature of their relationship to you once they receive powers of attorney.

It would be best for you to review the form with a trusted estate lawyer who will be able to explain powers of attorney to you in greater detail, give you advice on who to choose, and ensure that all of your paperwork is correct and reflects your estate planning wishes.  Contact us for more information on this topic and anything else related to estate law.

Trust Litigation Issue: Considering the Use of Mandatory Arbitration Clauses

Trust litigation battles can not only be expensive and time-consuming; they may also lead to lasting damage in relationships between family and friends and expose private family problems to the public.  In general, it’s preferable to find a way to resolve trust-related disputes before they become a drawn-out court battle.

A recent article from WealthManagement.com discusses the possibility of using mandatory arbitration clauses in trust agreements in order to reduce the chances of a trust conflict turning into a costly and damaging trial in court.

One issue to consider is the enforceability of arbitration clauses.  According to a decision (Rachal v. Reitz) reached recently by the Texas Supreme Court, these clauses can be enforceable.  In this case, two brothers were the only beneficiaries of their father’s trust; when their father was alive, he was the trustee, but after his death the role was taken on by an attorney who had written up the trust.  One of the brothers sued this attorney for mismanaging the trust assets and failing to give an account of the status of these assets.

However, the trust agreement included an arbitration provision.  Though lower courts didn’t see this as enforceable, the Texas Supreme Court judged that it was.

Should you use a mandatory arbitration clause?

Not all issues that arise from a trust dispute are easily resolvable through arbitration.  Before writing any such clause into a trust agreement, it’s best to consult with attorneys not only about the enforceability of the clause but also about the usefulness of arbitration in your specific circumstances.

An attorney can also help you weigh the likelihood of a trust dispute, given the extent and complexity of the assets and the individuals named as beneficiaries; some circumstances are potentially more fraught with the possibility of litigation than others.  Are there any beneficiaries who would see it as advantageous to push for litigation? In contrast, who would benefit from arbitration?

Discuss different scenarios with the attorneys at Ford + Bergner  to get a better picture of what issues could arise.  And as much as possible, try to work out any issues between trustees and beneficiaries before drawing up the trust; as much as you can, keep loved ones and other trusted people involved with what’s going on throughout the whole process.

Estate Of Famous Modern Artist Loses Fraud Lawsuit

Alexander Calder was a modern artist best know for popularizing mobiles as artwork (you can see examples of his pieces here), and Calder was rare in that he was an artist who achieved great financial success through his art.

When he died in 1976, Calder’s pieces were selling for millions of dollars. Museums and art collectors continue to pay top dollar for them today.  In 2010, Calder’s family members, acting on behalf of his estate, filed a lawsuit against his longtime art dealer Klaus Perls alleging that he systematically defrauded Calder and his heirs by withholding millions from the sale of Calder’s artwork.

On Dec. 24, 2013, a judge dismissed the lawsuit, saying that the representatives of Calder’s estate failed to show that Perls sold Calder’s artwork without the knowledge of Calder’s heirs.

This case is a great example of estates that can remain complex for many years.  Especially when an artist, musician, or the like has art or music that may generate residual benefits to their heirs, the estate may have ongoing interests for many years that may need to be collected.  These issues can be very complex and can often result in litigation to collect the estate’s interest in these assets.

For a more comprehensive understanding of complex estate issues, we invite you to contact us and schedule a consultation. We would be happy to advocate your interests.