The Good, the Bad and the Ugly for Renewing Your Corporations and LLC

A Joint Will Is Not A Bargain BOGO

Two for the price of one is irresistible. The proverbial “Buy One, Get One Free” (compressed these days into the acronym “BOGO”) is a pretty good deal: buy the 2-liter bottle, get a second one at no cost.

Some people figure that idea applies to legal documents, too: “If I don’t have to get two wills, but can get a Joint Will which we share, well, that’s a pretty good deal, right?” Wrong.

The problem: the promises from years ago doesn’t necessarily fit the realities of today. And so titling the document as a “Joint Will” doesn’t make its terms binding forever.

Example: the couple does a “Joint Will.” One dies. The survivor lives for a long time.

What’s this got to do with it? Well, over time, a surviving spouse’s feelings can change. So this isn’t necessarily written in stone:

“Don’t worry, honey, we leave everything to each other, and then to your children and my children equally.”

Over the years, maybe the surviving spouse no longer hears from the stepchildren. Perhaps the surviving spouse falls into a new, meaningful relationship. Possibly those inherited assets are spent (or deflected) by someone caring for the surviving spouse. You get the idea; things happen.

And consequently, there’s nothing left to go under the second step of the Joint Will.

Or most simply, the survivor decides to make a new will.

Which controls? The new Will or the old Joint Will?

For openers, a Joint Will isn’t automatically binding on both the signers. A Will labeled “Joint” can be revoked by the survivor at any time unless the document has some particular binding contract-type terms in it.

Consider Opal and her husband George. They signed a single document — titled “Joint Will” — in 1997. It left everything to the other. Then it provided that when the other of them, died, their daughter Mary got the real estate, and their sons got all the cash.

So the first part was easy: George died. Opal got everything.

But before Opal died a few years later, she made a new Will. In it, she disinherited daughter Mary and left everything to her two sons.

Why? Opal wrote in her Will that during her lifetime, she had loaned a “significant amount of money” to Joan; and Joan hadn’t paid any of it back. Therefore, wrote Opal, her daughter had effectively received her inheritance already.

Of course, when Opal died, her sons tried to probate their mother’s Will. Opal’s daughter Joan challenged it. She wanted the court to set aside that newer Will, so that everything Opal owned at her death would pass under that 1997Joint Will . . . the one that left her the real estate.

The Georgia Supreme Court said “nope.” The reason: to make a Joint Will binding when both people are gone, it must contain contract terms . . . in effect, to make the Will into a binding contract between the Will signers. Otherwise, per the latest statute, “A joint will or mutual wills may be revoked by any testator in the same manner as any other will.”

So without those magic contract words, after the father died, wife Opal could do what she wanted . . . and did.

Sure, there are some Joint Wills which are enforced. In 2011, the Supreme Court dealt with the husband who had two children from a prior marriage, and so did the wife. They did a “Joint and Mutual” will, so that when both were gone, everything would be divided equally among the four.

But after the husband died, the wife took all she inherited and put it into her own name. Then she divided everything up differently.

Here, the Supreme Court found that with particular language, there was a contract between the husband and wife and unwound the transaction. The Joint and Mutual Will was enforced.

The bottom line: it’s easy to avoid the quicksand of litigation, and not get seduced into a “This is easier, cheaper, and it’s what we both want” document. Circumstances change. Spouses survive. Relations change with relatives and step-relatives. And caregiving eats assets.

So opt for two wills, even if they are parallel. Revocable trusts can prevent the problem, too. But resist the false economy of the joint document. An “I want what you want and you want what I want” BOGO can be bogus.

George practices in Sandy Springs and Big Canoe, and is also Adjunct Professor in Emory Law School’s Center for Transactional Law. Questions are welcome; reach him at Fox@GaLaw.com or on Facebook. He also cautions that what’s above is not legal advice, and you should seek professional advice before doing or not doing something based on this material.

Asset Protection ABC’s: They Won’t Protect Themselves.

Lawsuits are filed for all sorts of reasons. Some are justified, some are frivolous and meant to shake down a settlement. Unexpected things also happen, and sometimes they lead to suits. And people who are perceived as having assets are easy targets to blame . . . and sue.

So how do you hedge the bet? Do some common sense things to protect your assets. They won’t protect themselves.

I can wait, right? Waiting for something to happen or for a lawsuit to be filed against you before acting is locking the barn door after the proverbial horse is out. Waiting for a judgment before acting is like locking that barn door after the horse is glue. Read more

Fish, Yodels, and Why You Can’t Always Beat Probate.

Remember “Give a man a fish and you feed him for a day.  But teach him to fish and you feed him for a lifetime.”  So said Chinese philosopher Lao Tzu, founder of Taoism.

Not quite as wise: “Give a man a fish and you feed him for a day.  Teach a man to yodel and you make him eat alone.”

Groucho Marx once said “Time flies like an arrow; fruit flies like bananas.” Occasionally you hear this, too.

You’d think that if something was said often enough, it would be true.  Or it would become true.

Well here’s one that isn’t always true, no matter who’s saying it and how often they repeat it: “Do a revocable trust and avoid probate.”

Hah. Because often, you can’t.

Read more

A Few Seconds on Minutes.

Minutes are required by law. Sure, there are no Minutes Marshals who will come arrest you if you don’t do Minutes for your business. But there are consequences, and it’s not worth avoiding your doing Minutes.

Note for the uninitiated: Minutes go into a Minute Book, which is not what you use to teach a child how to tell time. It has no hands clipped together which you move around the picture of the face of a clock.

Rather, a Minute Book is usually a three-ring binder, sometimes with a not-so-catchy phrase  — like “Minute Book” — embossed in gold on its cover.  That gold-leaf stuff is totally irrelevant. Read more

A Gift from the New Tax Act: Kill that Trust.

The new Tax Act makes one thing a lot simpler: you can be left alone when your spouse dies.  You won’t have to ask for something from, and you don’t have to answer to, someone supposedly on your side (i.e., a trustee).

In other words: you don’t need a trust for any estate tax savings if you and your spouse don’t have assets over $22 million.

You may be stuck, though, with no choice in the matter, if your estate documents now have certain trust things in them.  Do words like Credit Shelter Trust, Bypass Trust, A-B Trust, Marital Trust or Family Trust sound familiar? Read more

The Not-Very-Subtle Thanksgiving Placemat.

Have a placemat for Thursday? Just print this out.

And while your Loved One is waiting for the platter to work its way down the table, he or she will get some not-very-subtle hints about a matter they refuse to discuss with you but which you’re very concerned about.

It’s no joke. But in the spirit of the season and to put your loved one in a festive mood, let’s start with this story:

A woman goes into a butcher shop, looking for a large enough turkey to cook for Thanksgiving. She’s plowing through the turkeys in the display case, and the butcher is getting exasperated. She sees him staring, and thinks she better explain. So she turns to him, and asks, “These turkeys get any bigger?” “No, madam,” he replies. “They’re all dead.”

And while we’re on the subject. . . Read more

You Have Five Minutes. . .

On January 28, 1986, Dick Scobee, Michael Smith, Ronald McNair, Ellison Onizuka, Gregory Jarvis, Judith Resnik and Sharon Christa McAuliffe were killed when the Challenger shuttle mission failed. We know that part.

What’s not commonly known is how quickly – really how slowly – they died. According to news reports, after the initial explosion, the rockets were still working so the shuttle cabin continued to climb. Then it began its tragic, downward descent into the ocean.

The drop could have taken as long as five minutes. Read more

Protecting You in the New Georgia Power of Attorney Statute.

To help you and loved ones grapple with 21st Century control and access issues, Georgia has a new Power of Attorney statute. It’s powerful if you enable it. Here’s why and how.

Imagine: you wake up and realize that (a) you’re lying flat, (b) the ceiling over you isn’t in your bedroom, (c) something’s beeping, (d) something tall and spiky next to you has Baggies hanging on it, and (e) through your toes you can see a whiteboard which says “Your nurse today is Mabel.” Read more

A Short Story of Jack, The Beanstalk and Survivor IRAs.

Once upon a time, Jack discovered that when he and his wife Jackie were both gone, they could leave what was left of the Beanstalk1 to their child2 and grandchildren3 in an incredibly neat, tax-saving way.

They filled out the papers4 so a Beanstalk Trust would be created when they died. Then they lived happily ever after.

When they both died, there was no Fee Fi Fo Fum. The Big Bad Giant5 got no income taxes at all on the Beanstalk. Read more