GORDON & SYKES, LLP
Serving Fort Worth and Dallas

Pursuit of Opportunity: Bidding

Both contractors and owners understand how important the bidding process is. What is at stake is obvious: contractors know that if the bid is too high and not accepted, the work will go to someone else. If the bid is too low, the contractor may lose money. Owners know that if the accepted bid is unrealistically low, the bidder may not be able to fulfill the obligations of the contract.

The bidding process is expected to protect the owner from unjustified high prices through a competition between equally knowledgeable and capable bidders. However, it doesn’t always work that way.

Most of the legal issues relating to the bidding process arise from the tactics that owners and contractors use to avoid the consequences of their mistakes.

The starting point of legal analysis is the principle that a deal is a deal. A party in a contract is normally held to perform the contract once the deal is made, even at a loss. Either or both sides may recognize early in the process that a mistake has been made, and that problems are going to be inevitable. Sometimes a contractor misinterpreted the design documents or underestimated the quantities of materials required, or based a bid on a non-binding estimate by subcontractors or suppliers who change position after the contractor is committed. From the owner’s perspective, these are not good reasons to allow more time or money to the contractor.

It is not usually clear where the mistake came from. It seems that there are usually several mistakes, including the failure to review and catch the mistake before the deal is made. The law recognizes the reality that several mistakes may converge together and produce a damaging event or occurrence. Therefore, there might be responsibility on both sides. This provides good reasons for all sides to be flexible in resolving the problems.

The first action of a legal counsel should be to guide the client to an objective evaluation of what has happened. There may not have been a mistake, or the mistake may be someone else’s fault, but the first task is always to understand what really happened. Remember that the individual who made the mistake could have difficulty in recognizing the mistake. Only after this, can you evaluate all options with the goal of performing all obligations, mitigating possible losses, and preserving relationships if possible.


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Gordon&Sykes Benefits of Marriage in Texas

Preserving And Organizing Documents: Spoliation

Technological advances have irrevocably changed the way we communicate and record and maintain important documents. More and more, the use of email, texting, computer-assisted accounting, and electronic word processing create electronic documents. Because electronic documents are easy to create and are so useful, more documents and communications are created and maintained than ever before. However, electronic documents are also easy to alter or destroy. Many businesses routinely sweep company computers and email, inadvertently destroying evidence that is crucial to both sides in resolving disputes.

Withholding, altering, hiding, or destroying evidence that is discoverable in a civil lawsuit or arbitration proceeding is termed spoliation. Spoliation does not depend on proof that you intended to destroy evidence. Spoliation can occur due to negligence or a mistake. A finding of spoliation can be disastrous in a lawsuit because a judge or arbitrator may punish the “spoliator: with sanctions, fines, or even default in a serious case.

The moment you realize that you may be sued, or arbitration may be demanded, you must act proactively to preserve all documents related to the claim. This includes all data recorded on computers and cellular devices. New developments in electronic documentation management make this task manageable, but those procedures must be implemented. All of the potential parties have the same responsibility to identify and preserve all documents and emails that may be relevant to the dispute.

Your adversary will claim that any deletion of electronic files after you knew a lawsuit might be filed was intentional and wrongful. The judge in your case may agree. In addition to sanctions, the judge may instruct the jury that they should presume that the altered and deleted documents were harmful to your case and would have proven your adversary’s case. If you think you may have deleted any electronic data that might be relevant to the case, you need to contact an attorney to fully understand the consequences and prepare your defense.


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Gordon-Sykes-Contract Drafting And Execution

Pursuit of Opportunity

Teaming Agreements And Confidentiality:

We all know that contractors work with subcontractors during the bidding project. But when you go after a bigger project, think about putting together a formal team, using a teaming agreement.

When pursuing larger projects, teaming relationships are an efficient and beneficial way to pursue opportunity. The team may include a design firm, a general contractor and vital subcontractors and suppliers. A teaming agreement can be key in keeping these self-interested parties focused and in pursuit of a unified goal.

The teaming agreement illuminates who will bear specific parts of the speculative expenses of preparing estimates and working on a joint proposal. The agreement can also define the circumstances in which a party may withdraw or be dropped from the team.

A detailed teaming agreement should also address confidentiality. The work product of team members, their confidential information concerning pricing, and knowledge generated together should remain confidential. This will protect the competitive advantage of the team.

Each team member should require an agreement from other members not to attempt to hire away employees. In addition, they may also want commitments regarding the level of participation of key employees after the project contracts have been signed.

In the event that a dispute occurs, the parties will want a dispute resolution process that is and quickly resolved. Working with expert counsel to customize standard agreements is the soundest way to accomplish these goals.


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Gordon-Sykes-Contract Drafting And Execution

Protecting Charitable Legacies or How to Avoid Losing a Charitable Bequest

1. INTRODUCTION.

Charitable organizations spend countless hours and resources developing planned gifts and assisting potential donors in making good choices to carry out their charitable intent. This article provides a guide to help charitable organizations protect planned gifts in wills, trusts, and non-profit corporations so that the donor’s charitable intent is fulfilled.

2. DRAFTING IS IMPORTANT.

A donor may make a planned gift to a charitable organization by naming a specific organization as a beneficiary in a will or trust or by designating a charitable purpose to be fulfilled without designating a specific organization. They may also use a donor advised fund sponsored by a community foundation or financial institution, or by naming a charity as a beneficiary of an insurance policy, retirement account or annuity. The instrument creating the gift will designate the beneficiary or charitable purpose and the person who will manage the fund and make determinations concerning the amount and terms of a gift or grant.

3. RULES OF CONSTRUCTION.

On occasion, the instrument creating the gift may be ambiguous or incomplete. When this happens, a charity’s gift may be put in jeopardy in a lawsuit to construe the will or trust. A court will attempt to interpret the gift document to fulfill the donor’s intent. With planned gifts, the donor is deceased and determining his or her intent may be harder than it sounds. Examples of lawsuits that might affect a gift to a charity include confusion over the name of the charity, the purpose of the gift or the timing or manner in which the gift is to be made. The real life case studies set out in paragraphs 4 to 7 below provide examples of issues that have arisen regarding ambiguous gift documents.

4. NAME CONFUSION.

Many organizations have an affiliation with another organization. For example, the Red Cross is a national organization with local affiliates. If a donor makes a gift to the Red Cross and he or she intends for the funds to be used locally, then the instrument creating the gift must contain language specifically identifying the local affiliate. Other organizations may have a separate foundation that collectively manages its funds with other charities’ funds such as a Community Foundation. If the donor intends the funds to benefit the specific charity, care must be taken in gifting funds to a Community Foundation in order to identify the particular charity who should receive the funds. The take away for the charity is to make sure that its correct name is included in all of its information pieces and website so that the donor can clearly name the correct organization as a beneficiary.

5. GEOGRAPHIC CHANGES.

A donor may wish to have his or her funds expended to benefit people in his or her hometown or state. With the consolidation of financial institutions, many locally owned banks that serve as trustees of charitable trusts have been acquired by large interstate banks. This has resulted in local communities losing control over the charitable trusts with money being diverted outside their community. The legislature sought to address this problem with an amendment to the Texas Property Code to limit the ability of a trustee to move the situs of the administration of a trust out of state. Section 113.030 requires a trustee to notify the attorney general if any change of trustee would cause the situs of the trust to be moved out of the State of Texas. In working with donors, a charity might recommend that a donor specifically provide in the gift instrument that funds be used for the specified community, e.g. “benefit of needy children in Tarrant County, Texas.

6. CHANGE OF CHARITY.

Many charitable organizations will change over time or even split into multiple entities. For example, a local church who was affiliated with a national denomination left to become an independent church. The split created confusion as to which church was entitled to receive bequests made to the church in wills drafted many years before. Some changes may not be able to be anticipated by a donor and therefore a donor could provide a method for resolving disputes, such as arbitration or mediation in the document creating the gift.

7. GIFTS OF SPECIFIC ITEMS OF PERSONAL PROPERTY

Many donors desire to make gifts of specific property. For example, a donor may donate artwork to a museum or horses to an equine therapy program. If the charity cannot accept the gift due to its gift acceptance policies there should be language in the document creating the gift authorizing the trustee or executor to sell the item and then distribute the proceeds to the charity. Without such language, the charity may be limited to either accepting the gift as is or rejecting it.

8. PROTECTING THE LEGACY BY AVOIDING WILL CONTESTS.

Wills and trusts may be contested if the decedent lacked testamentary capacity or was unduly influenced. Many fundraising professionals develop close relationships with donors through personal contacts and social activities. In general, these types of activities are common and should not raise an issue in a potential will contest proceeding. However private dinners between a fundraising professional and a donor that appear more like a date, can cause a jury to determine that undue influence was exerted. When possible, it is best to have another person meet with the fundraising official and the donor. Consider the time of day of the meeting. Include the donor’s professional advisers and when in doubt, have the donor’s physician give an opinion of capacity. Remember also that emails, notes and journal entries should be written with the assumption that they will be offered as evidence at trial. Because the motive of a donor to make a gift is important, ask yourself: Does the donor have a history with the organization? Does the donor currently support the organization? What interests does the donor have? A fundraising professional should document the file with information regarding the interests of the donor and his or her connection to the organization.

9. PROTECTING THE GIFT BY WATCHING THE FIDUCIARY

Unfortunately many charitable dollars are lost to unscrupulous and dishonest fiduciaries. A trustee or attorney may charge unreasonable compensation or delay the distribution of the gift. Fortunately, there are some things that a charity can do to minimize loss on account of breach of fiduciary duty. A Charity should ask for and obtain a copy of the will or trust, the initial inventory of assets and the estate tax return, if any. Thereafter, the charity should obtain annual accounting from the executor or trustee. One might also have their attorney or a board member monitor the estate. Expect a distribution within eighteen months from date of death. Most estates remain open for a minimum of twelve months before distributions can be made. If your organization has not received its gift within eighteen months, contact should be made to the executor or trustee asking for the status and timing when distributions will be made.

10. ATTORNEY GENERAL’S CHARITABLE DIVISION

The Texas Attorney General is charged with protecting charitable interests for the public. At the earliest sign of trouble, one should contact the Attorney General’s Charitable Organizations division for advice or to express concern.

The contact information is:
Office of the Attorney General
P.O. Box 12548
Austin, Texas 78711-2548
512-475-4233 phone 512-475-2994 fax

11. CONCLUSION.

A charity may increase its chances of receiving a donor’s gift by working carefully with the donor in drafting the gift instrument. Provisions should be included to specifically identify the beneficiary and anticipate any changes that might occur. Special consideration should be given to the type of property transferred. geographic limitations and restrictions of the persons or entities who may serve as trustees are important. The fiduciary’s compensation should be clearly defined. Fundraising activities should be kept on a professional basis and should look like meetings rather than dates. A charity should monitor gifts by keeping copies of gift instruments when provided by the donor, including copies of wills naming the charity as a beneficiary. When a donor dies, the charity should obtain a copy of the will and contact information for the executor and the executor’s attorney. The Charity should request and receive a copy of the estate’s inventory and, if an estate tax return is filed, ask for a copy of the return. The Charity should know the date that letters testamentary are issued and monitor the estate so that if the gift is not received within eighteen months, further inquiry is prudent. Legal counsel should be included as a monitor of the estate process. If anything appears wrong or suspicious, one should seek contact the Texas Attorney General or legal counsel.


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Changes to Texas Law Regarding Small Estate Affidavits

It is highly recommended that all persons living in Texas who own property should have a properly prepared will. Unfortunately, there are those who die without a will. When a person dies without a will, the state law will specify the heirs and their share of the estate. A probate proceeding will be required for the heirs to be able to obtain the decedent’s bank accounts, assets and to transfer title to property. The proceeding is filed by an attorney with the Probate Court. The Probate Court will enter an order determining heirship and appointing an administrator to administer the Decedent’s estate. Heirs may not represent themselves in court without an attorney. The cost of a probate proceeding in an intestate estate generally exceeds the cost of a probate proceeding when an individual dies leaving a will.

However, the cost of a probate proceeding may be minimized if the value of the estate is less than $50,000.00 excluding the value of the Decedent’s homestead.

A new law effective September 1, 2015 directs the Texas Supreme Court to create a form for a Small Estate Affidavit for use in small estates where the value of all property in the estate, exclusive of the Decedent’s homestead is less than $50,000.00. In order to qualify as the Decedent’s homestead, the Decedent must be survived by a spouse or a minor child living in the home at the date of death. Thus, if the Decedent is not survived by a spouse, and all of the heirs are adults or non-children, a Small Estate Affidavit may not be used even if the value of the estate is less than $50,000.00.

If the estate meets the criteria of a “small estate”, the heirs may file a small estate affidavit with the court. The affidavit must be signed and sworn to by all heirs before a notary public and also by two disinterested witnesses. The affidavit must list the names and addresses of all heirs, and must include a list of the Decedent’s assets and debts.

If the affidavit meets the requirements of Texas law, the Court will approve the affidavit and will provide the heirs with a certified copy. The heirs may use the certified copy to collect estate assets or sell the homestead without any further action of the court.

Our firm specializes in probate and provide you with superior legal advice in connection with the administration of a decedent’s estate. Please call or email us if you have any probate or estate planning needs.


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changes to texas law regarding small estate affidavits

The Benefits of Marriage in Texas

With the U.S. Supreme Court ruling in Obergefell v. Hodges, some changes are in store for the Texas Family Code. The Texas Family Code’s prohibition against the issuance of a marriage license for persons of the same sex in 2.001 (b) has been declared unconstitutional. The prohibition of the recognition of same-sex marriage or civil unions found in 6.204 (b) would also be unconstitutional. On the other hand, Title 1 “the Marriage Relationship” of the Family Code is replete with the gender neutral term “spouse”. Regardless of your political or moral stance on the issue, the practical consequence of same-sex marriage will have a significant effect on the practice of family law throughout the country. Certainly the ruling has been a blessing for those who want to express the depth of their commitment through the institution of marriage. However, some of the benefits of marriage may not be intended. Some of the benefits might include:

  • Acquire Community Property and have non-exempt community property subject to liabilities incurred by the other spouse before or during marriage. Texas Family Code 3.202(c) All community property is subject to tortious liability of either spouse incurred during the marriage. Texas Family Code 3.202 (d)
  • Incur liabilities for debts of necessities merely because you are married. Texas Family Code 3.201(a)(2).
  • File jointly for bankruptcy – talk to a Bankruptcy Attorney for the advantages for this benefit.
  • If you or your spouse commit a crime, you are protected under spousal testimonial privilege (one spouse can’t be forced to testify against the other in court)
  • File joint tax returns and be jointly and severally liable for the tax debts of your spouse. Talk with your tax advisor about this one.
  • Adopt Children, Get divorced, Pay Child Support, and see your children every other weekend (visitation may need to be supervised)
  • Prosecute or Defend Child Support Obligations. Spend time in jail for not supporting your child.
  • Pay Spousal Support and Deduct alimony payments from federal income tax.
  • Engage in contested litigation involving Temporary Restraining Orders, Fraud on the Community Estate, Reimbursement, and Determinations of separate vs. community property, Tracing, Commingling and other expensive proceedings.
  • Request the Court to make a Just and Right Division of your Pension, 401k, IRA’s or any other community assets.

Marriage carries with it privileges and responsibilities.  If you are contemplating affirming your commitment to another person, agreements can be prepared to address some of the responsibilities listed above.   Let us know if we can advise you in this process.


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Gordon&Sykes Benefits of Marriage in Texas

 

Federal Estate Tax & Gift Tax Laws Update

New changes in the law could mean updates in your will.

Substantial changes have occurred to the federal estate tax and gift tax laws. There has been a substantial increase in the estate and gift tax exemption and a reduction in estate tax rates. The current estate and gift tax exemption is now $5,430,000 and this is a very good thing for taxpayers.

Previously the federal exemption was smaller and the rates for estate taxes were higher than income tax rates. To minimize federal estate and gift taxes a bypass trust was used, family limited partnerships or LLC’s were set up and making gifts of interests to family members were made to save taxes. Now these devices could have adverse income tax consequences in estates worth less than the federal exemption amount.

In addition to the increased federal exemption, Congress enacted legislation allowing a surviving spouse to apply any unused exemption from the estate of the first spouse to die against the estate of the second spouse to die. This new concept is called portability and could eliminate the need for a bypass trust.

In marital estates worth less than the federal exemption amount, a married couple can have an estate plan that leaves all of the property to the surviving spouse, either outright or in trust. The marital estate is not taxed when the first spouse dies because all property would qualify for the unlimited marital deduction. When the surviving spouse dies, the entire estate receives a new basis for federal income taxes. When the beneficiaries sell the property, they will owe less income tax because the basis for calculating gain has increased. The benefit of receiving a step up in basis does not apply to assets left in a bypass trust.

For all but the very largest estates it may be desirable to change your plan and eliminate the bypass trust in order to achieve the step up in basis for income tax purposes and rethink the use of family limited partnerships. By increasing the value of the estate we can obtain a higher basis for income tax purposes in cases where increasing the value of the estate does not incur estate taxes.

Bypass trusts may still be useful with estate valued at less than the federal exemption. A bypass trust could allow distributions to beneficiaries other than the surviving spouse. A bypass trust can be beneficial for Medicaid planning to qualify a surviving spouse for governmental benefits for long term care and also lock in the use of the federal exemption of the first spouse to die.

The new changes have created new opportunities to save income taxes and have given taxpayers more choices which means an even greater need to review and update existing estate plans.

You may also have experienced changes on account of the birth or death of a family member, changes in the marital status of you or a family member, or changes in the financial condition of you or a family member. All of these changes make it prudent for you to review your will and contact us for consultation.

Please review your wills in light of your current circumstances to be sure that they still reflect your wishes and desires. If you would like to make changes or discuss any questions regarding changes in the federal estate and gift tax laws, please do not hesitate to call me.


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Gordon&Sykes Power of Attorney Policy Update

 

Power Of Attorney Policy Update

At Gordon & Sykes, LLP, we are committed to keeping our clients up to date on policy changes that might affect them.

For example, several years ago we prepared a power of attorney for a client giving their designated agent the authority to act on their behalf. Since the document was prepared, many financial institutions have instituted new policies requiring powers of attorney to have been executed in the last three to five years. Also, the legislature has made revisions to the statutory forms for power of attorney. Although the law is clear that older powers of attorney are valid, there is no requirement that a person accept your power of attorney.

In addition, circumstances may have changed regarding the person you named as
your agent and it may be necessary to change your agent.

For these reasons, it is prudent that you update your power of attorney.


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Gordon&Sykes Power of Attorney Policy Update

 

GORDON & SYKES, LLP
1320 SOUTH UNIVERSITY DR, SUITE 806 - FORT WORTH, TX 76107 - PHONE: 817-338-0724