Family Law: how much proof do you need for adultery? – By Angela Oaks

Lots of clients say they KNOW their spouse is cheating on them, but they have no proof.  So I ask HOW they know and the responses are eerily similar:  hiding the cell phone, taking it into the bathroom, never letting the cell phone out of their sight, talking in the garage or outside instead of in the house.  

And I tell them they do have proof – cell phone records will show who has been calling or texting, and how often.  A few calls in a month, or a few texts in a month, are not suspicious, but hundreds of texts in a month – that’s suspicious.

In court, proof of fault in a marriage – like adultery –must be proven by a preponderance of the evidence.  Phone records help provide that evidence.  And your attorney can request other information, such as emails and even names of your spouse’s paramour in discovery.

Bottom line:  if you think it’s happening, trust your gut and pull the phone records.  Then contact an attorney for advice on your particular situation. 

713 227-1717

FAQ # 15 - About Social Security Disability – By Salvador Benavidez

What documentation do I need to apply for child’s benefits?  You will need the following:

1.      Child’s birth certificate;

2.      Child’s social security number;

3.      Parent’s social security number.

Survivor’s benefits will require proof of the parent’s death.  For benefits for a disabled child, you will need medical proof of the child’s disability.  NOTE:  Social Security may require other documents.

713 227-1717

Anatomy of a Division Order - By Katherine Van Wagner

If you have a leased mineral interest, you should be sent a division order by the company paying your royalty. This division order is meant to confirm your interest, address, tax information, and other relevant information related to payment of your royalty.

Subchapter J of the Texas Natural Resources Code addresses payment of oil, gas, and mineral sales.  Most companies paying revenue will withhold production payments from royalty interest owners until they fully execute and return the division order.  Section 91.402(c) of the Texas Natural Resources Code lists the provisions a company may include in a division order whose execution and return is a condition precedent to receiving production payments.  Section 91.402(d) of the Texas Natural Resources Code includes an example form of a division order for oil payments that complies with Section 91.402(c).  The example form division order with some notes is included below.

DIVISION ORDER

TO:                     (Payor)Property No. THE PROPERTY NUMBER IS A NUMBER ASSIGNED TO YOU BY THE PARTY PAYING REVENUE.  IT HELPS THE PAYOR IDENTIFY THE PROPERTY IN THEIR SYSTEM.  IF THERE ARE MULTIPLE PARTIES PAYING REVENUE, YOU WILL LIKELY BE ASSIGNED MULTIPLE PROPERTY NUMBERS.                 

                                                                                                 

Effective THE EFFECTIVE DATE EXPLAINS THE PRODUCTION TIME PERIOD THE DIVISION ORDER COVERS. THIS MAY DIFFER GREATLY FROM THE DATE THE DIVISION ORDER IS SENT. (Date)          

          

The undersigned severally and not jointly certifies it is the legal owner of the interest set out below of all the oil and related liquid hydrocarbons produced from the property described below:

OPERATOR:THIS TELLS YOU WHO IS OPERATING THE WELL.

Property name: THIS IS THE NAME OF THE WELL(S) COVERED.                                                  

County:THE COUNTY THE PROPERTY IS LOCATED  State:  TEXAS                

Legal Description: IF THE WELL(S) ARE IN A UNIT, THIS GENERALLY DESCRIBES THE ENTIRE UNIT AND NOT JUST THE TRACT YOU HAVE AN INTEREST IN. IT SHOULD STATE THE TOTAL ACRES IN THE UNIT OR COVERED BY THE WELL(S).                                                

OWNER NO.SIMILAR TO THE PROPERTY NUMBER, THE OWNER NUMBER IS A NUMBER ASSIGNED TO YOU BY THE PARTY PAYING REVENUE.  IT HELPS THE PAYOR IDENTIFY YOU IN THEIR SYSTEM.  IF THERE ARE MULTIPLE PARTIES PAYING REVENUE YOU WILL LIKELY BE ASSIGNED MULTIPLE OWNER NUMBERS.                 

TAX I.D./SOC. SEC. NO. PAYEE IF YOU DO NOT PROVIDE A TAX I.D. NUMBER OR SOCIAL SECURITY NUMBER, A NON-REFUNDABLE PERCENTAGE OF YOUR PAYMENTS MAY BE WITHHELD FOR TAXES.  MANY COMPANIES WILL NOT MAKE PAYMENTS WITHOUT BEING PROVIDED A VALID TAX I.D. NUMBER OR SOCIAL SECURITY NUMBER.

DIVISION OF INTEREST BEFORE SIGNING A DIVISION ORDER MAKE SURE THIS DIVISION OF INTEREST (ALSO CALLED NET REVENUE INTEREST) DECIMAL IS CORRECT.  FOR A ROYALTY INTEREST, THIS GENERALLY SHOULD REFLECT YOUR MINERAL INTEREST IN THE TRACT MULTIPLIED BY THE ROYALTY PERCENTAGE MUTLIPLIED BY THE TRACT PARTICIPATION FACTOR (BEING THE NUMBER OF ACRES IN YOUR TRACT/THE TOTAL NUMBER OF ACRES IN THE UNIT).  FOR EXAMPLE IF YOU HAVE A ½ MINERAL INTEREST WITH A 25% ROYALTY INTEREST IN A 10 ACRE TRACT IN A 320 ACRES UNIT, YOUR DIVISION OF INTEREST DECIMAL SHOULD BE 0.00390625 [(1/2)*25%*(10/320)=0.00390625]

THIS AGREEMENT DOES NOT AMEND ANY LEASE OR OPERATING AGREEMENT BETWEEN THE INTEREST OWNERS AND THE LESSEE OR OPERATOR OR ANY OTHER CONTRACTS FOR THE PURCHASE OF OIL OR GAS.

The following provisions apply to each interest owner ("owner") who executes this agreement:

TERMS OF SALE:  The undersigned will be paid in accordance with the division of interests set out above.  The payor shall pay all parties at the price agreed to by the operator for oil to be sold pursuant to this division order.  Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities.

PAYMENT:  From the effective date, payment is to be made monthly by payor's check, based on this division of interest, for oil run during the preceding calendar month from the property listed above, less taxes required by law to be deducted and remitted by payor as purchaser.  Payments of less than $100 may be accrued before disbursement until the total amount equals $100 or more, or until 12 months' proceeds accumulate, whichever occurs first.  However, the payor may hold accumulated proceeds of less than $10 until production ceases or the payor's responsibility for making payment for production ceases, whichever occurs first.  Payee agrees to refund to payor any amounts attributable to an interest or part of an interest that payee does not own.  UNDER SECTION 91.402(f) OF THE TEXAS NATURAL RESOURCES CODE, UPON WRITTEN REQUEST OF THE PAYEE (I.E. THE INTEREST OWNER), THE PAYOR (I.E. THE COMPANY PAYING REVENUE) SHALL REMIT PAYMENT ANNUALLY IF THE ACCUMULATED PROCEEDS ARE LESS THAN $10 AND MONTHLY IF THE ACCUMULATED PROCEEDS ARE GREATER THAN $25 DOLLARS BUT LESS THAN $100.  WHEN RETURNING A DIVISION ORDER, I RECOMMEND REQUESTING IN WRITING PAYMENT OF ACCUMULATED SUMS OF LESS THAN $10 ANNUALLY AND PAYMENT OF ACCUMULATED SUMS GREATER THAN $25 DOLLARS BUT LESS THAN $100 MONTHLY.

INDEMNITY:  The owner agrees to indemnify and hold payor harmless from all liability resulting from payments made to the owner in accordance with such division of interest, including but not limited to attorney fees or judgments in connection with any suit that affects the owner's interest to which payor is made a party.

DISPUTE;  WITHHOLDING OF FUNDS:  If a suit is filed that affects the interest of the owner, written notice shall be given to payor by the owner together with a copy of the complaint or petition filed.

In the event of a claim or dispute that affects title to the division of interest credited herein, payor is authorized to withhold payments accruing to such interest, without interest unless otherwise required by applicable statute, until the claim or dispute is settled.

TERMINATION:  Termination of this agreement is effective on the first day of the month that begins after the 30th day after the date written notice of termination is received by either party.

NOTICES:  The owner agrees to notify payor in writing of any change in the division of interest, including changes of interest contingent on payment of money or expiration of time.

No change of interest is binding on payor until the recorded copy of the instrument of change or documents satisfactorily evidencing such change are furnished to payor at the time the change occurs.

Any change of interest shall be made effective on the first day of the month following receipt of such notice by payor.

Any correspondence regarding this agreement shall be furnished to the addresses listed unless otherwise advised by either party.

In addition to the legal rights provided by the terms and provisions of this division order, an owner may have certain statutory rights under the laws of this state.

	Signature of	Social Security/
Witness	Interest Owner	Tax I.D. No.	Address
____________	_________________	_________________	____________
____________	_________________	_________________	____________
____________	_________________	_________________	____________

Failure to furnish your Social Security/Tax I.D. number will result in withholding tax in accordance with federal law, and any tax withheld will not be refundable by payor.

Before blindly signing a division order, I suggest confirming that the information on the division order is correct, especially the division of interest decimal shown, the name shown as the owner, and the address where payments and communications from the revenue payor will be sent.  You should also check that the division order does not contain any additional substantive terms not allowed by the Texas Natural Resources Code. Remember the payor cannot withhold payment for your refusal to sign a division order that contains provisions in addition to those allowed and exemplified in Sections 91.402(c) and Sections 91.402(d).  However, under Section 91. 402(e) of the Texas Natural Resources Code, production payments may be withheld if an interest owner refuses to sign a division order that contains only those provisions allowed by Section 91.402(c).   

If you have any questions or concerns over division orders, contact our office to schedule a consultation.

*Please note this post was written for the purposes of providing general information.  This post was not written to provide individualized legal advice or counsel and should not be construed as such. 

713 227-1717

Clients are always nervous about giving testimony in court – and with good reason - By Angela Oaks

Clients are always nervous about giving testimony in court – and with good reason:  it’s a very stressful situation.  Below are the top 10 pointers that I share with my clients before a contested hearing that will require testimony.

1.      When answering, always tell the truth. You are under oath, the truth is always easier to remember than a story, and if you are caught lying, your reputation will be damaged in the eyes of the judge or jury.

2.      Listen to the question. If you do not understand the question, ask that it be repeated.

3.      Answer only the question asked. If you are asked if you have a college education, do not explain how you chose your major and then paid for your education.  Keep it short and sweet unless your attorney asks you to elaborate.

4.       “Yes,” “No” and “I don’t know” are acceptable answers. 

5.      Take your time when answering, and if an attorney stands to object to a question, do not answer!  While you may not need time to formulate your answer, your attorney may need a couple seconds to object; so count to two, and if no one objects, answer away. If an objection is made, wait for the judge to make a ruling (“overruled” or “sustained”) before you proceed.

6.      Do not answer questions with questions. This can give the judge or jury a negative impression, or cause them to see you as a smart-alek.  Only the lawyers and judges are allowed to ask questions in the courtroom.

7.      Do not let the questions or demeanor of the opposing attorney affect you or your demeanor.  The judge and jury are watching your every move.  Something as simple as an eye roll can leave the wrong impression. Keep your cool, be courteous, and stay calm.

8.      Answer each question out loud. The court reporter needs to make a record of each question and response, and she will not see you shaking your head.

9.      Never testify that you did something because your attorney told you to, unless your attorney has told you this is allowed. This information is protected by attorney/client privilege, and you may waive that privilege if you testify about it.

10.  When sitting at counsel table, only pass notes to your attorney.  Don’t try to talk to your lawyer at counsel table:  1) the judge can hear everything you say and 2) your attorney is trying to listen to testimony, and whispering or tugging at his/her jacket may cause your attorney to miss an objection.

FAQ # 14 - About Social Security Disability – By Salvador Benavidez

Are there benefits for children?  YOUR child can receive benefits; this includes biological child, adopted child or dependent stepchild.  The following is required for a child to receive benefits:

·         A parent who is disabled, retired and entitled to Social Security benefits;

·         A deceased parent who died after working long enough and paid social security taxes;

·         Child must be unmarried;

·         Under the age 18;

o   18-19, a full-time student (grade no higher than 12)

o   18 or older and disabled if the disability started before the age 22.

713 227-1717

Asset protection of inheritances and windfalls - by Daniel L. O’Neil

There is no one size fits all solution for an unhappily married person to begin contemplating divorce and the impact that might have on a recent inheritance from a recently deceased parent or other family member. This is one of the most common inquiries we get in the overlapping world of my practice (estate planning, probate, and tax controversy) and my law partner Angela’s (all things family law) to take care of the lifetime legal needs of families.

There is no one size fits all solution because it depends on what type of assets they are (cash, land, or stuff) just as much as how it fits into the overall estate plan you have in place just as much as the state of life your beneficiaries and fiduciaries are in just as much as managing the possible tax consequences of one maneuver over another while balancing the potential need to have that cash available in the future to pay medical bills or college tuition for children or grandchildren.

Trusts can be revocable or irrevocable and that is a big difference to appreciate the benefits and burdens of each, especially as they relate to the overall comprehensive estate plan that is already in place. Depending on the size of the inheritance that might force tax planning updates to your estate plan which are relevant for gift, estate, and GST tax reasons unrelated to a possible impending divorce. Trusts cost money to set up. Trusts cost time and energy to set up. Trusts require additional reporting requirements once they are funded. And trusts are not an opaque vessel – it’s a standard request in discovery in a contested divorce case and it is discoverable.

State law marital property concepts are important too: marital property characterization, community property presumption, tracing, commingling, reimbursement, and more can come into play depending on the exact specifics. Inheritances are separate property, until they are not.

“Lawyer in a box” packages you can buy off the internet are usually not asking you any of the important questions to be able to advise you based on the facts and the law, they are just trying to move product. That product is appealing to some people since they can order it off of their phone pretty cheaply and take care of the paperwork in their living room without ever needing to go into a lawyer’s office. But the consequences of taking your legal advice that way can definitely impact you financially later on – those papers you got in the mail or downloaded offline might not be doing what you thought were doing for you and now you have expensive problems in a divorce case, or more serious problems with the IRS with hefty civil penalties and interest; and perhaps an opened tax crimes investigation as well.

There are two kinds of estate plans: comprehensive estate plans and estate plans that are not comprehensive. Asset protection, trusts, and other maneuvers are a part of that conversation if you have received a large inheritance or other windfall, just as much as if you are contemplating divorce and you need someone to explain community property and separate property to you and how that looks in a contested divorce case with boxes and boxes of discovery as we commonly see.

Frye, Oaks, Benavidez & O’Neil, PLLC: Over 105 years of legal experience now under one roof.

713-227-1717

NeNe Leakes: IRS Tax Liens & the new normal - by Daniel L. O’Neil

NeNe Leakes was in the news (on my facebook trending news feed at least) recently over an IRS tax lien of $824,366.01.

Who is NeNe Leakes? She was the Rocky Rhoades character on the brilliant NBC sitcom The New Normal, which was canceled well before its time. She was the production assistant and producer for Bryan in the show on the show he worked on; and she had some of the funniest lines in the show. That is the easy question. Now let’s talk about tax liens.

The Internal Revenue Manual words it interestingly as they describe it this way:

The law generally defines a lien as a charge or encumbrance that one person has on the property of another as security for a debt or obligation. Essentially, this concept can be reduced to a simple metaphor — i.e., a special "sticker" similar to what a moving company puts on the furniture, boxes, and other contents of a house when it takes the owner’s property from one place to another. The lien (or "sticker" ) does not change the ownership or other qualities of the property to which it is affixed; it merely identifies the property as having some kind of claim against it. IRM 5.17.2.2.

But keeps it more buttoned down describing how it arises:

The federal tax lien arises when any "person" liable to pay any federal tax fails to pay the tax after a demand by the Government for payment. IRC § 6321. For federal tax law purposes, a "person" is defined to include individuals, trusts, estates, partnerships, associations, companies, and corporations. IRC § 7701(a)(1). The lien is effective from the date the Government assesses the tax. Thus, if the taxpayer neglects or refuses to pay the assessed tax, then the lien is deemed to relate back to the assessment date. IRC § 6322. The Service is not required to file a NFTL in order for the tax lien to attach. As discussed later in the text, the Service may file a NFTL in order to have priority over the taxpayer’s other creditors. IRM 5.17.2.2.1

For purposes of addressing the basics of a tax lien these are some (not all) of the important things to know:

It’s civil, not criminal. There are criminal avenues to pursue if they want but that’s not this – it’s just money that’s due when there is a lien. At the point the lien originates that means the taxpayer compliance is pretty low. Your taxpayer compliance history with the IRS is important because it is your “permanent record” like when you were in elementary school. Everything is on that. If you have a low taxpayer compliance history score it means you are on the IRS radar. This is something you do not want, unless you think audits are fun.

Also, a lien is not a levy. A levy is more serious because your stuff goes out the door (literally or you know, figuratively) to pay your debt. A lien is just a piece of paper hanging over your head. A levy means the Tax Man blew through town and took your stuff and sold it.

Form 668(Y)(c) is the important form when we talk about tax liens. The Form is filed with the county clerk. This is the form that is public record. This is the form that title companies will find and tell you that you have a problem if you are involved with title companies for one reason or the other such as selling property or something else that our new associate Katherine Van Wagner may be helping you out with over in our Land Department.

These are the important parts of the Form 668(Y)(c):

Kind of Tax – what type of return gave rise to the lien. Very often it is a 1040. Someone got tired of paying personal income tax and well, the IRS didn’t really like that arrangement. So they fired off a tax lien, and you can imagine they shouted “Get good!” as they did it because this is the kinder gentler IRS that is trying to relate to you after acknowledging the public perception issues they have had in the past, choosing enforcement priorities to shake down waiters and bartenders for underreporting tips rather than the investment banks who were doing different stuff with tax consequences during both the Bush and Obama administrations.

Tax Year(s) – this matters for statute of limitations, but tells you how many tax years you are in the doghouse over. If it is an open year there is more that can be done to address penalties and interest. For closed years there are sometimes maneuvers a trained tax lawyer can make to “open” up closed years in the tax controversy process. For instance, I was able to open up 2007 and 2008 recently in one case with a loophole. For open years you might be able to amend your return if you forgot what deductions and credits were on that year. Or if you didn’t file a return for that year you can actually file a real one prepared by a reputable CPA who can give you much more preferential numbers to deal with than what the IRS uses for you if you do not file a return – what is called “substitute for return” numbers, which for essentially hypothetical purposes the IRS theorizes you made the most money possible that is realistic given other information they have about you from other people (e.g. 1099s, W-2s, whatever) and that you decided to not take any deductions or credits on that huge bag of money you made. Obviously, substitute for return numbers are not favorable so if it’s a nonfiling situation you can reduce your tax lien amount considerably by just filing a return.

Date of Assessment – this is important for the clock that gets started from this day. If you ignore the lien (and are able to ignore the lien, and the IRS will let you ignore the lien) there will come a time when the lien might no longer be valid if you wait it.

Last day to refile – this is when the shot clock runs out on the date of assessment mentioned above. If you have ignored the lien and the IRS has let you ignore the lien they need to refile it by this date, or the lien dissolves. These are not super common but they can happen.

Unpaid balance of assessment – this is important for a few different reasons. It tells you how bad things are. Which is good if you can find a way to knock that down quickly by addressing penalties and interest. But it is also bad since you probably know that interest will be running so that number will climb higher if you ignore it.

Payoff amount – this is a different number than what you find on the IRS transcript. This comes from the Centralized Lien Operations unit at the IRS.

Release – this is what you want when you have a tax lien. In a perfect world you pay off your lien one way or another and the IRS timely processes the release within 30 days of you dissolving the lien. In an imperfect world the IRS doesn’t get around to it in 30 days so you then need to take some extra steps to substantiate payment and other details, then you ask the IRS for a certificate of release.

This is a good introduction to the wonderful world of tax liens if you saw NeNe Leakes in the news recently and you wanted to know a bit more about how this all works. There is more to know of course if you have a specific interest – discharge, subordination, withdrawal, installment agreement, fresh start initiative, and more.

If you have a tax problem and you think you might need some help in the tax controversy process you can give us a call and we can see how we can help you today. Frye, Oaks, Benavidez & O’Neil, PLLC: over 105 years of combined legal experience now under one roof.

713-227-1717