Competency to Sign a Last Will and Testament

In order to validly execute a Last Will and Testament in Florida, a person must be of “sound mind.” Mental competency in this context is not a rigid bright line test. A person’s ability to understand his/her acts may vary from day-to-day or even throughout the day depending on medication, fatigue or other factors. Additionally, the threshold for determining competency may vary depending on the complexity of the task being undertaken.

In the case of a Last Will and Testament, “sound mind” generally means that the signer (the “Testator”) must have an understanding of his/her assets, the heir(s) involved and the plan for disposition of the property. More complicated decisions, such as the creation of a trust, may require greater cognitive ability by the signer. (It should be noted that this threshold to execute a valid Will is much lower than the one to show that a person is competent to enter into a contract.)

Generally, the competency of the Testator is presumed, and a person challenging a Will in Court must overcome this presumption. Even proof of the Testator’s incompetency prior to and/or after the signing of the Will may not be enough to disprove competency at the time the Will was signed during a period of lucidity.

However, if you expect that a Will may be contested on the grounds of competency or otherwise, it is best to advise the lawyer drafting it beforehand so that the Will contest will be easier to defeat. The attorney’s ethical obligations are that he/she will not allow documents to be executed if the signer is not competent although there is no requirement that the signer “prove” competency to the attorney and the witnesses.

If a Will contest is anticipated, the attorney may take extra steps to document the signer’s soundness of mind. Some lawyers will ask a series of questions and record the answers for the file.  Precautions can be taken further by getting a concurrent affidavit from the signer’s primary care physician which states what medications are being taken, the breadth of the physician’s familiarity with the Testator, and the Testator’s current condition including the doctor’s opinion of mental competency.

As is generally the case, informing your lawyer of all aspects and concerns will help your lawyer better protect you and your intentions. If the Testator’s mental competency is at issue, challenges beyond the norm are created but may be overcome with good planning and communication.

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Nomination of a Pre-Need Guardian for Minors

One of the many concerns that parents have is the future care of their children, both physical custody and financial oversight, in the event of the parents’ death. This is an issue that the parents should discuss in depth and for which they should make contingent arrangements.

One of the steps to take is the preparation of a Nomination of a Pre-Need Guardian for a Minor. In this document, the parents can specify the person(s) (and alternates) who they would like to serve as guardian for the children in the event of the parents’ death or incapacity. Such guardian, once appointed by the Court, shall have all the rights and obligations necessary to care for the child and his/her property. The parents can also state the names and reasons for not nominating someone as well. Ultimately, a court will make the decision regarding such guardianship using all the information available to the Court, including the wishes and concerns of the parents expressed in the Nomination even though such Nomination is not binding on the Court.

In families with divorced parents, one parent may have strong feelings regarding custody by the other parent in the event of death. While the Court will generally not deny physical custody of a child to the other natural parent unless there is significant cause (such as, poor health, drug abuse, and the like), the Court may designate a different person to have control of the child’s money. Use of the Nomination document to state your concerns regarding the other parent can help make the Court aware of your concerns so that it can better protect the minor’s interests.

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Introduction to Living Wills and Health Care Directives

A Living Will is a document through which you designate your wish as to the type and extent of medical procedures you authorize if you should ever be diagnosed with a terminal condition or enter into a persistent vegetative state.  In other words, you can document that if you ever become terminally ill, you direct that no extreme measures are used to sustain your life.

In your Living Will, also known as your Health Care Advance Directives, you can also designate a person or persons to make your health care decisions for you if you lose the capacity to make such decisions for yourself or the ability to communicate your decisions – even in situations where your life is not in jeopardy.  These people are your “health care surrogates.”

Your health care surrogate has no authority to act until your attending physician determines that you lack the capacity to make informed decisions.  If the attending physician is unsure about your capacity, a second physician must agree with the attending physician’s conclusion before your health care surrogate’s authority is recognized.

Without a valid Living Will, only a court will be able to authorize decisions regarding medical procedures (or the withholding of them) when you lose the ability to make decisions or to communicate them.  The court does this by appointing a guardian to oversee your medical situation.  Since the court-appointed guardian will not know what your preferences are, the medical choices made may not match what you would have wished. So it is important to document your choices while you have the ability to do so.

It is generally recommended that you name at least one alternate health care surrogate in case your first choice is unavailable or unable to act.  It is also recommended that you discuss your desires with the person or persons you choose so that they clearly understand what you want done and so that they can decide if they would be able to do as you wish during a very emotional time.

In order for your Living Will to be effective, it must meet state law requirements about form, language and the formalities of signing (such as witnesses and notarization).

As with other estate planning decisions, it is important that you create your Living Will before you actually need it – because by then, it may be too late for you to do so.  The Living Will also spares your family the expense of seeking a court-appointed guardian as well as the emotional turmoil of guessing at what you would want to be done.

If you have any questions regarding the above, please contact me and I will be glad to assist you.

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Introduction to Estate Planning

Estate planning is the general term used to describe the portfolio of documents that lets you memorialize how you want your life to be conducted if you lose capacity to direct those persons overseeing your physical care and financial resources (for example, a Durable Power of Attorney and a Living Will) and to designate how you want your assets to be distributed upon your death (for example, a Last Will and Testament and/or a Living Trust).  Additionally, if you have minor children, you may want to document your choices for guardians if you die (for example, a Nomination of Guardian).

The first step in this process is to gather information regarding your assets and to think about how you would like those assets distributed.  You should also consider alternates to your primary plan in case something happens to a person or persons between the time you execute your estate planning documents and the time when these plans need to be implemented.

Also you need to think about who will be authorized to act on your behalf financially (your agent) and who will be authorized to act on your behalf regarding your physical well-being (your health care surrogate) if you are no longer able to do so for yourself.  You may first want to discuss with these designated person(s) your intentions to see if they are willing to accept these responsibilities and that they understand your wishes.

Your estate plan is the sum of all the above choices you have made when formally documented in accordance with the requirements of state law.

As long you have are still mentally competent and physically able, you may change your estate plan as often as you wish.  In fact, it is often a wise plan to look at it annually to see if any changes need to be made due to changes in your intentions, in your financial or family situation, or in the law.

It is never too early to think about setting up your estate plan, but it can be too late.  As we all know, life is full of surprises – some good and some bad.  If tragedy strikes before you create your  estate plan, you waive your right to make many choices about your life and your assets.

Please see additional blogs on this website to address specific areas and issues regarding estate planning.

If you have any questions regarding the above or creating your estate plan, please contact me and I will be glad to assist you.

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Preventing Employees from Taking Valuable Company Information

In many cases, a company’s most valuable asset is its intellectual property, that is, items such as its customer list, its trade secrets, its marketing strategy, and so on.  With any of the above information, a competitor could gain an unfair advantage.

The non-disclosure provision of an employment agreement or a stand-alone non-disclosure agreement (also known as an “NDA”) may be an employer’s most critical means of protection against employees who have access to confidential or proprietary company information.  In the agreement, the employee agrees not to take, use or disclose to any third party any of the employer’s confidential information or be subject to penalties for a breach of such agreement.

To minimize future disputes, the parties should clearly specify exactly what information is considered “confidential and/or proprietary” and what means will be used to protect such information both during the term of employment and after.

Some people prefer a stand-alone NDA so that other sensitive terms of the employment agreement (e.g., salary) are not disclosed to the public during litigation which may later occur.

It is best that the employee be required to sign the chosen document(s) prior to the start of employment.  If that did not occur, it is still a good practice to get the document signed as soon as possible although some additional steps may be needed when the person has already begun his/her employment.

A non-compete provision or agreement may also be useful to help further limit the future employability of such employees for a reasonable time (which may influence his/her decision to leave in the first place).  The enforceability  of non-compete agreements varies from state to state so care should be taken when these documents are prepared.

An audit of the company’s records to ensure that each employee has signed the appropriate documents may be a valuable exercise to plug any undiscovered weak links in the company’s protection of its assets.

If you have any questions or need help implementing a plan to protect your company’s information, please contact me and I will be glad to assist you.

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Protecting a Minority Ownership in a Company

Without an agreement to the contrary, generally decisions in a corporation or a limited liability company are made according to a majority vote of its owners.  Therefore, there is a risk that the majority owner(s) will control all of the decision-making authority.

In order to avoid this, a minority owner needs to obtain a written agreement with the other owner(s) specifying that certain decisions require the consent of the minority owner.  The best time to obtain this agreement is prior to the purchase of the minority interest.  Once the funds to purchase the minority interest have been transferred by the minority owner, the minority owner will generally have lost all leverage to make the other owner(s) agree to such conditions.

Most likely the minority owner will need to pick and choose exactly which decisions will require his/her consent as the other owner(s) are unlikely to agree to the minority owner participating in all of the decision-making.  Major issues, such as, raising capital, adding other owners, diluting ownership interest, obtaining loans, granting guarantys, undertaking new business ventures, declaring dividends, setting salaries and bonuses, and electing officers/directors, may be of the most concern to the minority owner.  Of course, other issues may be of special interest on a case-by-case basis.

A qualified corporate law attorney can help identify the issues with the most sensitivity in the circumstances and prepare/review the necessary documents (such as, bylaws, a shareholder agreement, an operating agreement, or a membership agreement) to protect the minority owner’s interests.

If you have any questions regarding the above or need help addressing these concerns in your company, please contact me and I will be glad to assist you.

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Disinheritance of an offspring in Florida

There are many reasons why one may wish to disinherit a relative in a Will  In Florida, you may freely disinherit anyone except a spouse or a minor child.

So long as your offspring is not a minor and you do not have any contractual obligations to him/her (such as a divorce settlement requirement), then you are able to disinherit your offspring in your Will rather easily.

Generally, it is best to first acknowledge the existence of your offspring and his/her relation to you so that a claim cannot be made that you simply overlooked them.   Second, your Will should include ta simple statement that it is your intention that he/she not receive anything under your Will.  You do not have to detail the reason why you are acting in this manner, but you may.  If you do wish to state a reason, just remember that if your estate is probated, the Will becomes a public document.  If you do not wish your reason for the disinheritance to become public knowledge, you could instead include a private note or letter explaining the reason for your action with your other estate planning documents to be delivered to the offspring upon your death.

Some people prefer to include a very nominal bequest, say $1, to the disinherited offspring as a means of sending a signal to him/her.  Generally, this is not a wise step.  If you include the nominal bequest in your Will, then the offspring becomes a party to the probate proceeding and be entitled to participate in it.  By not leaving anything to the offspring, then not only is the offspring not required to be included in the probate administration but also he/she is not even required to be notified that the probate has begun.

If you have any questions regarding the above, please contact me and I will be glad to assist you.

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