Why You Need To Probate Your Loved One’s Estate
Winding up the affairs of a loved one who has passed on is never the most pleasant endeavor when you are in the midst of grieving his or her loss. However, the sooner the process is started, the easier it will be and the sooner it will be over. Probate is the legal process by which your deceased loved one’s debts are paid and her property is distributed to her survivors. The following details the steps involved in, and the importance of, the probate process in New Mexico.
When should an estate be probated in New Mexico?
If a person resided in New Mexico or owned real property located in New Mexico at the time of his or her death, a probate should be opened in New Mexico.
What are the steps involved in a probate?
(1) A petition to be appointed as personal representative or administrator must be filed with the court, and a notice must be sent to all interested parties.
(2) After a hearing, the court will typically issue an order appointing the petitioner as personal representative or administrator of the estate and Letters Testamentary or Letters of Administration authorizing the petitioner to take control of the assets and affairs of the estate.
(3) With the Letters Testamentary, the personal representative may begin collecting and inventorying the estate’s assets, including bank accounts, insurance policies, personal property and real property.
(4) The personal representative is also responsible for notifying creditors by letter and/or publication of the passing of the deceased, which starts the clock running on the deadline for creditors to make claims against the assets of the estate.
(5) After gathering the assets and determining the debts of the estate, the personal representative distributes the required statutory personal and family allowances, if applicable, satisfies the debts of the estate, and distributes the assets of the estate to the beneficiaries.
Who can be appointed as personal representative?
If your loved one has left a will naming a willing and able personal representative, the court will typically appoint that person. If the person named in the will is unable or unwilling to serve, or if your loved one has died intestate (without a will), any person interested in the deceased’s estate can petition to be appointed personal representative. Usually a spouse or child of the deceased will petition the court to be appointed personal representative, but any heir or even creditor is an “interested person” authorized to petition the court to be named personal representative.
Why is it important to go through the probate process?
Only through the probate process can you legally transfer title of the deceased’s property to the intended beneficiaries. All too often, a child takes up residence in the deceased’s home without having legal title transferred to him or her by a personal representative. Even though it may be undisputed that Mom wanted her child to have the home, the home still legally belongs to the deceased’s estate–not to the child. An unknown creditor, whose claim might have been foreclosed if the estate were probated, could come out of the woodwork, and the home could be available to satisfy the claim. The deceased may owe taxes, which would have been addressed by the personal representative during the probate process, and a taxing authority could impose a lien against the property. Suddenly, the small amount of money the child saved by foregoing the probate process costs the child the house that his or her Mom wanted to leave to the child.
Perhaps the most important reason to probate an estate is to assure the orderly transfer of assets from one generation to the next. Feelings of unfairness often arise when one sibling perceives that his or her parent left more to another sibling. The supervised distribution of assets through the probate process adds legitimacy to the transfers of property, which will reduce the chances of litigation over how assets are distributed. Additionally, proper administration of the estate assures that the intended beneficiaries will obtain the legal title to property necessary, in turn, to pass that property to future generations.
How much does it cost to probate an estate?
The attorney fees and other professional fees, such as those charged by accountants, depend on the complexity of the estate. The fewer debts owed by the deceased and the fewer assets to be distributed, the lower the cost of administering the estate tends to be. In any event, the cost of probating your loved one’s estate will almost always be less than the cost of the legal nightmares that result from foregoing the probate process.
If you are in need of an attorney to help you probate a will and/or administrate a loved one’s estate in New Mexico, be sure to contact a probate attorney as soon as possible. Probating a will should not be procrastinated.
Business Formation Options
Congratulations, you’re ready to start your own business! You have your idea, your location, your funding, and possibly a business plan to get it all together. But, first things first–you’re going to have to plan how you want your business to be organized for tax purposes, accounting purposes, and most importantly, for liability purposes. So which business formation structure best serves your needs? You have a number to choose from, and here are the most common ways to do so:
- sole proprietorship (or entrepreneurship);
- general partnership;
- limited partnership (LP) or limited liability partnership (LLP);
- limited liability company (LLC);
- corporation; and
- nonprofit corporation.
Sole Proprietorship
The sole proprietorship is owned by one person and one person alone, and it doesn’t require state registration like other corporate structures. As such, in the eyes of the IRS and the law, the business is not separate from the owner. All business income and business losses have to be filed on the owner’s personal income taxes, and the owner is personally liable for anything and everything that happens on behalf of the business.
General Partnership
A general partnership very similar to a sole proprietorship, except that this business is owned by two or more people. Like the sole proprietorship, a general partnership does not have to be registered with the state, the partners are all personally liable for the business, and all partners have to file business income and losses on their personal income taxes.
A general partnership works best for small businesses where the partners rarely have to borrow money and their business has a relatively low risk of ever being sued.
Limited Partnerships and Limited Liability Partnerships
A limited partnership consists of at least two people going into business together, where one person (or a company) will be a general partner. The general partner is personally liable for the business’s actions and is in charge of the business’ operations. The limited partners invest in the partnership, but they have little control over business decisions. As such, they are not liable for the business’s actions.
Limited liability partnerships (LLP) make all partners have control over the business like they would in a general partnership, but none of the partners are personally for the business, as if they were limited partners. LLPs are generally reserved for professional organizations, such as law firms, physician groups, accountants, architects, etc.
Neither type of limited partnership is recommended for the average small business owner, as these partnerships are not simple to set up and are often expensive to do so.
Limited Liability Companies
For businesses who would like all the perks of a LLP but aren’t considered a professional service business, then limited liability companies (LLC) are definitely your best bet. Like a partnership, members of the LLC have to file their portions of the business’ income on their personal tax returns, and the members are not personally liable for the company’s debts and claims.
Also like a LLP, a LLC is costly and a bit complicated to set up.
Corporations
Like a LLC and LLP, corporations separate the business from the owners, which prevents the owners from being personally liable for the business’ debts and claims. What makes it different from a LLC and LLP is the fact that it is completely separate from the owners as its own legal entity. Corporations pay their own taxes based on profits, not the owners. Owners only pay income taxes on the salaries and bonus income they receive from the corporation. Corporations are often set up to be the general partner in a limited partnership to further protect the limited partners.
Many small business owners rush to set up corporations, but they really only make sense for businesses that have a high risk of being sued and/or a high risk of acquiring a substantial amount of debt, or business owners who need to separate and protect their personal assets from the business.
Nonprofit Corporations
A nonprofit corporation is set up similarly to a corporation, but nonprofit corporations are exclusively set aside for charities, religions, and other educational purposes. Nonprofits can raise money for their projects, but nonprofits generally do not have to pay taxes on any funds obtained for these projects because of how these projects benefit and contribute to their communities and not the business owners. For example, the Sesame Workshop is a nonprofit corporation, because all of the money they raise from putting on shows and selling DVDs and toys goes back into funding the organization and their contributions to children education across the world.
So which business formation best fits your needs? If you are needing a limited partnership, a limited liability company, or a corporation, do not try to set these organizations up on your own. You will need an experienced business law attorney to make sure that not only your formation is legally registered correctly, but also that it’s the most ideal structure for you and your business.
SKM Welcomes Michael Stern to the Team
A new face will be roaming around the SKM offices starting May 16, 2011 thanks to Michael (or Mike) Stern joining the SKM family. Michael is relocating his highly successful national commercial real estate practice from St. Louis, Missouri, and will be Of Counsel to SKM where his focus will be in commercial real estate, real estate litigation, and business representation and formation.
All of us at SKM are excited to have this new addition to our team, and further deepening our expert offerings to a wide variety of clients. Welcome aboard, Mike!!
Federal Courts Should Use State Law to Interpret a Contract’s Venue or Forum Selection Clause
Most circuits have not decided this issue. Those that have addressed it typically recognize that no reason exists to treat a venue selection clause differently from the remainder of a contract that will be interpreted using state law. See, e.g., Northwest Nat. Ins. Co. v. Donovan, 916 F.2d 372, 374 (7th Cir. 1994) (“Validity and interpretation are separate issues, and it can be argued that as the rest of the contract, in which a forum selection clause, is found will be interpreted under the principles of interpretation followed by the state whose law governs the contract, so should that clause be.”); General Engineering Corp. v. Martin Marietta Alumina, Inc., 783 F.2d 352 (3rd Cir. 1986) (“The construction of contracts is typically a matter of state, not federal, common law, and forum selection clauses in diversity cases do not implicate a federal interest that justifies displacing state law.”); 14D Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3803.1, at pp. 131-32 (3d ed. 2007) (“Despite the curious appeal by some lower courts to the federal common law of contract construction, it seems that the interpretation and character of the contract[’s forum selection clause] must be governed by state law.”)
Decisions from other courts that have not explicitly weighed in on the issue are nonetheless evolving towards using state law to interpret contractual venue provisions. For example, the Tenth Circuit has not explicitly decided this issue but recently has come to construe forum and venue selection provisions using state law. This evolution in the Court’s thinking may be traced from earlier cases like SBKC Service Corp. v. 111 Prospect Partners, L.P., 105 F.3d 578, 581 (10th Cir. 1997), in which the Court focused on the “language and intent” of the parties to interpret a choice of venue provision. Id. Ultimately, however, the court determined that such an approach “makes unnecessary exploration of whether federal common law or Kansas law should apply because the result would be the same in either case.” Id. Similarly, in Excell, Inc. v. Sterling Boiler & Mechanical, Inc., 106 F.3d 318 (10th Cir. 1997), the court stated, “The parties have not discussed whether Colorado state law or federal common law controls the validity and interpretation of the forum selection clause. Because we believe there are no material discrepancies between Colorado law and federal common law on these matters, we find it unnecessary to decide the issue. Id. at 320.
More recently, the Tenth Circuit has recognized that a federal district court’s interpretation of forum and venue selection clauses is a matter of contract interpretation and looked to the relevant law chosen by the parties to guide that effort. In Yavuz v. 61 MM, Ltd., 465 F.3d 418 (10th Cir. 2006), the Court stated that it saw no reason why a forum selection clause in an international agreement, “among the multitude of provisions in a contract, should be singled out as a provision not to be interpreted in accordance with the law chosen by the contracting parties.” Id. at 427-28. In Jones v. KP&H LLC, 288 Fed. Appx. 464, 468 (10th Cir. July 22, 2008) (unpublished), the court looked directly to Kansas law rather than federal common law to construe a choice of venue provision because the contract provided that Kansas law governed construction of its terms.
Especially in cases where the parties to a contract have chosen the law of a state to govern the interpretation of their agreement, courts should not overrule their decision by imposing a construction of their venue provision using federal common law. We recently submitted a brief on this issue in the Tenth Circuit, but the case settled after we filed our opening brief.
Burden of Proof on a Motion to Dismiss for Improper Venue
Defendants should have the burden of proof on a motion to dismiss for improper venue. A split of authority exists on this issue. 14D Charles Alan Wright, et al., Federal Practice and Procedure § 3826, at pp. 555-62 (3d ed. 2007). In our jurisdiction, the federal courts, unfortunately, have not ruled on the issue. See Burns v. Events & Transportation Assocs, Inc., No. 08-713 LH/RHS, at 3 (D.N.M. Dec. 15, 2008) (not resolving the issue but noting split of authority in circuits and lack of decision by Tenth Circuit). However, the better reasoned view is that the defendant has the burden of proof in establishing that the venue is improper. See In re Peachtree Lane Assocs., Ltd., 150 F.3d 788, 798 (7th Cir. 1998); Myers v. American Dental Ass’n, 695 F.2d 716, 724 (3rd Cir. 1982); Bartholomew v. Virginia Chiropractors Ass’n, 612 F.2d 812, 816 (4th Cir. 1979); Long John Silver’s, Inc. v. Diwa III, Inc., 650 F.Supp.2d 612, 630 (E.D. Ky. 2009); Simon v. Ward, 80 F.Supp.2d 464, 466-468 (E.D. Pa. 2000); 17 James Wm. Moore et al., Moore’s Federal Practice § 110.01[5][c] (3d ed. 2010).
It is a defendant’s responsibility to timely object to plaintiff’s choice of venue. Otherwise, it waives that defense. Fed. R. Civ. P. 12(h)(1). Because a defendant must raise the issue of venue, a motion to dismiss for improper venue should be treated as an affirmative defense, and the defendant must bear the burden of proof that the venue is improper. See Pacer Global Logistics v. National Passenger Railroad Corp., 272 F.Supp.2d 784 at 788 (E.D.Wis. 2003); Strickland v. Trion Group, Inc., 463 F.Supp.2d 921, 925 (E.D.Wis. 2006); Myers, at 724-725. When a defendant seeks the dismissal of a case based on the personal privilege of venue, proof should be required to establish the privilege. Moore et al., § 110.01[5][c].
We recently briefed this issue in the Tenth Circuit. However, the case settled after we filed our Opening Brief.
Twombly/Iqbal Stay of Litigation
Under Twombly/Iqbal pleading standards, defendants who are named in a poorly drafted lawsuit should not have to bear the expense of defending frivolous claims before the court can evaluate the plaintiff’s claims. As the Supreme Court noted in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), a plaintiff who fails to adequately allege a viable complaint is not entitled to “unlock the doors of discovery.” 129 S. Ct. at 1950. The purpose of a Motion to Dismiss is to streamline litigation by testing the legal sufficiency of a claim without extensive and costly discovery. See Mann v. Brenner, 375 Fed. Appx. 232, 239 (3rd Cir. 2010). Therefore, “[i]n certain circumstances it may be appropriate to stay discovery while evaluating a motion to dismiss where, if the motion is granted, discovery would be futile.” Id. (citing and quoting Iqbal, 129 S. Ct. at 1954 (“Because respondent’s complaint is deficient under Rule 8, he is not entitled to discovery.”)).
Although courts may be reluctant to allow cases to languish on their dockets, the Supreme Court was clear that civil cases should not proceed on complaints that do not meet the pleading standards of Rule 8. Also, the Court specifically noted that limitations on discovery will not be sufficient to allow litigation to proceed on a defective complaint.
Recently, we successfully stayed a shareholder dispute in federal court pending the court’s resolution of our Rule 12(b)(6) motion to dismiss the plaintiffs’ amended complaint. The court previously dismissed their original complaint and allowed to the plaintiffs another attempt. The following link contains our Motion to Stay brief.
Twombly/Iqbal Dismissal of Litigation
Courtesy of Courtoons
The Twombly/Iqbal pleading standard can be effective in resisting frivolous claims by plaintiffs. This pleading standard demands “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
In applying these standards, a court considering a Rule 12(b)(6) motion to dismiss need not accept the truth of legal conclusions–only well-pleaded, nonclusory facts. Id., at 1949-50. Rule 12(b)(6) requires that a complaint set forth the grounds of the pleader’s entitlement to relief through more than labels, conclusions and a formulaic recitation of the elements of a cause of action. Id., at 1949 (citing Twombly, at 555). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “Nor does a complaint suffice if it tenders ‘naked assertions’ devoid of ‘further factual enhancement.’” Iqbal, at 1949 (quoting Twombly, at 555).
Furthermore, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950. If the “well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not ‘show[n]’ – ‘that the pleader is entitled to relief.’” Iqbal, at 1950 (quoting Fed. R. Civ. P. 8(a)(2)).
Recently, we convinced a federal court to dismiss a shareholder suit because the complaint did not meet the pleading standards of Twombly/Iqbal. Our brief and a copy of the federal district court’s order are posted with this blog.
