Workplace Retaliation: What Are Your Rights? Learn about workplace retaliation — and what to do if it happens to you.

Most people know that laws exist to protect employees from discrimination and harassment. However, many don’t know these laws also protect employees from retaliation. That means employers cannot punish employees for making discrimination or harassment complaints or participating in workplace investigations. And punishment doesn’t just mean firing or demotion: It can include other negative employment actions, from being denied a raise or transfer to a more desirable position to missing out on training or mentoring opportunities.

What Is Retaliation?

Retaliation occurs when an employer punishes an employee for engaging in legally protected activity. Retaliation can include any negative job action, such as demotion, discipline, firing, salary reduction, or job or shift reassignment. But retaliation can also be more subtle.

Sometimes it’s clear that an employer’s action is negative — for instance, when an employee is fired. But sometimes it’s not. In those cases, according to the U.S. Supreme Court, you must consider the circumstances of the situation. For example, a change in job shift may not be objectionable to a lot of employees, but it could be very detrimental to a parent with young children and a less flexible schedule.

As long as the employer’s adverse action would deter a reasonable person in the situation from making a complaint, it constitutes illegal retaliation.

When Is Retaliation Prohibited?

Federal law protects employees from retaliation when employees complain — either internally or to an outside body like the Equal Employment Opportunity Commission (EEOC) — about workplace discrimination or harassment. That’s true even if the claim turns out to be unfounded, as long as it was made in good faith.

The law also protects employees who cooperate in EEOC investigations or serve as witnesses in EEOC investigations or litigation. A recent Supreme Court case confirms that an employee’s participation as a witness in an internal investigation is protected, too. And various federal laws protect other types of “whistleblowers” too, such as those who complain of unsafe working conditions.

In addition, some state laws prohibit employers from retaliating against employees.

How Do You Know if Your Employer is Retaliating Against You?

Sometimes, it’s hard to tell whether your employer is retaliating against you. For example, if you complain about your supervisor’s harassing conduct, his attitude and demeanor may change. But if the change means he acts more professionally towards you, that isn’t retaliation even if he isn’t as friendly as he once was. Only changes that have an adverse effect on your employment are retaliatory.

On the other hand, if something clearly negative happens shortly after you make a complaint — like firing or demotion — you’ll have good reason to be suspicious. And remember, not every retaliatory act is obvious or necessarily means your job is threatened. It may come in the form of an unexpected and unfair poor performance review, the boss micromanaging everything you do, or sudden exclusion from staff meetings on a project you’ve been working on.

What to Do if You Suspect Retaliation

If you suspect your employer is retaliating against you, first talk to your supervisor or a human resources representative about the reasons for these negative acts. It’s fair to ask specific questions. Your employer may have a perfectly reasonable explanation — you’ve been moved to the day shift because there’s an opening, and that’s what you’d said you always wanted, or your poor performance review may be based on documented problems you’d been told of previously.

If your employer can’t give you a legitimate explanation, voice your concern that you are being retaliated against. No doubt your employer will deny it — and in truth, employers can retaliate without realizing it. You should point out that the negative action took place only after you complained, and ask that it stop immediately.

If the employer isn’t willing to admit its wrongdoing or correct the problem, you may have to take your concerns to the Equal Employment Opportunity Commission (EEOC) or your state’s fair employment agency.

Building a Case of Retaliation

If you suspect retaliation and your employer won’t correct the problem, you will need to show a link between your complaint (or other behavior that you believe triggered the retaliation), and the employer’s retaliatory behavior. The more evidence you have in support of your claim, the better.

To do this, document the allegedly retaliatory behavior. Also, keep track of historical information prior to when you made your complaint. For example, if your boss claims your performance is poor after you make a complaint, be sure to dig up any email messages or other documents showing that your boss was pleased with your work performance before the complaint.

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Your Rights Against Age Discrimination

A number of state and federal laws prohibit employers from discriminating against employees and applicants based on age. This means that although stereotypes about older people abound in our culture, employers are not allowed to rely on them when making workplace decisions.

The Age Discrimination in Employment Act

The federal Age Discrimination in Employment Act, or ADEA ( 29 U.S.C. §§ 621-634), is the primary federal law that prohibits employers from discriminating against employees and applicants who are at least 40 years old based on age.

The ADEA protects workers from age discrimination in every phase of the employment relationship, including job advertisements, interviewing, hiring, compensation, promotion, discipline, job evaluations, demotion, training, job assignments, and termination. The U.S. Supreme Court has held that the ADEA prohibits practices and policies that are seemingly neutral, but have a disproportionately negative impact on older workers (disparate impact), as well as those that explicitly treat older workers worse than younger workers (disparate treatment). (See Smith v. City of Jackson, Mississippi, 544 U.S. 228 (2005).)

Not only does the ADEA prohibit employers from discriminating against older workers in favor of those who are younger than 40, it also prohibits employers from discriminating among older workers. For example, an employer cannot hire a 43-year-old rather than a 53-year-old simply based on age.

The ADEA applies to all private employers with 20 or more employees and to federal and local governments. It also applies to state governments, although their employees cannot sue them directly for age discrimination.

Discrimination in Benefits and Early Retirement

The federal Older Workers Benefit Protection Act, or OWBPA (29 U.S.C. § 623 and following), amended the ADEA to make it illegal for employers to use an employee’s age as a basis for discrimination in benefits and retirement. Like the rest of the ADEA, the OWBPA only protects people who are at least 40 years old.

The OWBPA prohibits age discrimination in the provision of fringe benefits, such as life insurance, health insurance, disability benefits, pensions, and retirement benefits. Typically, this means that employers must provide equal benefits to older and younger workers. For some types of benefits, however, employers can meet this nondiscrimination requirement by spending the same amount on the benefit provided to each group, even if older workers receive lesser benefits. In some circumstances, employers are also allowed to provide lesser benefits to older workers if those workers receive additional benefits — from the government or the employer — to make up the difference.

State Laws

Many state laws also prohibit discrimination on the basis of age. Although some of these laws essentially mirror federal law and protect only employees who are at least 40 years old, other state laws are broader and protect workers of all ages.

State laws tend to apply to employers with fewer than 20 employees, so your employer might have to comply with your state law even if it isn’t covered by federal law.

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How to Write a Will

VARIOUS – SEP 2005…Mandatory Credit: Photo By Jonathan Hordle / Rex Features
A last will and testament
VARIOUS – SEP 2005
LEGAL DOCUMENT

Most people know they need one, but aren’t sure how to write a will.  The first decision you’ll need to make is whether to write your will yourself.  Most people can write a simple will without a lawyer, but some situations require professional help.

How to Write a Will Yourself

If you decide to write your own will, you’ll probably want some help creating your document, you’ll want to know what to include, and you’ll want to know how to make it legal.

Will Templates

First, choose a tool to help you write your will.  You might use a book that gives you a variety of will clauses that you put together, or you might use a program that puts it together for you.  In any case, you’ll want to make a document that is typed, because although handwritten wills are permitted in some states, creating a formal, typed document is less likely to cause trouble after your death.

Find a will making tool that you can trust.  There are several types, including:

  • Flat forms –fill in the blank documents that you can edit with your word processor
  • Statutory forms – forms written into the laws of just a few states
  • Will books –  books usually provide thorough instructions for filling out flat forms, and may also offer additional information about estate planning
  • Will software – with estate planning software, you answer “interview” questions, then the program builds the will for you
  • Online will programs – these work like will software, but instead of loading the program on the computer, you make your will online

No matter what type of will template you prefer, make sure to choose one that comes with clear plain-English instructions so that you can feel confident that you are making a will that does what you want it to do.

What to Include in Your Will

No state requires specific language to make a will.  The best wills are those that clearly reflect the wishes of the will maker.  So what you include in your will depends on what you want your will to do for you.  Most people use a will to distribute their property after they die.  A will can also:

  • Name your executor.
  • Name guardians for young children and their property.
  • State how to pay debts and taxes.
  • Provide for pets.
  • Serve as a backup for a living trust.

Here are some things that you shouldn’t try to do in your will:

  • Put conditions on your gifts. (I give my house to Susan if she finishes college.)
  • Leave instructions for final arrangements.
  • Leave property for your pet.
  • Make arrangements for money or property will be left another way. (Property in a trust or property for which you’ve named a pay-on-death beneficiary.)

Making Your Will Legal

After you use a will template to write your will, you’ll need to do a few things to make it legal:

  • Sign your will.
  • Have two witnesses sign your will.
  • In most states, have a notary sign a self-proving affidavit – this is optional.

Your witnesses do not need to know what’s in your will.  Simply gather them around, say ‘this is my will’ and have them sign. Wills do not need to be signed by a notary public to be legal and binding.  However, in most states you can also attach a self-proving affidavit and those must be signed by a notary public. Self-proving affidavits don’t affect the legality of your will, but they do make your will easier to probate after your death.

Having a Lawyer Write Your Will

If you decide that your situation is too complicated to write your own will, or if you would just rather have a professional do it, then you’ll need a lawyer’s help.  But hiring a lawyer doesn’t mean you need to hand over the entire process or spend an outrageous amount of money.  Instead, you can educate yourself about the law.  Doing so will save you money because you will need  less time with the attorney and increase the likelihood that the attorney will draft a document that reflects your wishes.

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Business Contracts

Contracts: The Basics

What goes into a legally binding agreement?

Contracts are legally binding agreements, and they pervade almost every aspect of our personal and business lives. If you own or manage a business, you contend with contracts all the time in your dealings with employees, contractors, vendors, commercial landlords, banks, utilities, insurance companies, and, of course, customers and clients.

What makes a contract special — and essential for business dealings — is that it is binding on the parties. If one party doesn’t hold up its end of the bargain, the other party has legal remedies for any resulting damages. This article looks at the basic requirements for a legally binding contract, the contract as a document, and the process of “contracting.”

Contract Requirements

To be enforceable by a court, every contract (whether written or oral) must meet several requirements. Let’s take a look at each of them.

  • Consideration. As Cole Porter wrote in the song, True Love, “You give to me and I give to you.” That sums up consideration. Each party has to promise or provide something of value to the other. Without this exchange, there is no contract. (Learn more in Nolo’s article Consideration: Every Contract Needs It.)
  • Offer and acceptance. There must be a clear or definite offer to contract (“Do you want to buy this?”) and an unqualified acceptance (“Yes!”).
  • Legal purpose. The purpose of the agreement must not violate the law. For example, you won’t be able to enforce a loan agreement that charges interest in excess of what is allowed by usury laws or a service agreement to hire someone to rob a bank or kill your mother-in-law.
  • Capable parties. To be “capable” of making a contract, the parties must understand what they’re doing. For example, there is a presumption that minors and insane people usually don’t know what they’re doing and, for that reason, contracts they enter into won’t be enforced under certain circumstances. (Learn more in Nolo’s article Who Lacks the Capacity to Contract?)
  • Mutual assent. This is also sometimes referred to as a “meeting of the minds.” The contracting parties must intend to be bound by their agreement and must agree on the essential terms.

In addition to these general rules, federal and state laws may impose more requirements on particular types of contracts. For example, certain consumer contracts must meet additional requirements, and some contracts must be in writing.

The Contract as a Document

The term “contract” often refers to a written agreement, typically including some or all of the following elements:

  • introductory material (sometimes known as “recitals” or “whereas provisions”)
  • definitions of key terms
  • a statement of the purpose or purposes of the agreement
  • the obligations of each party (and conditions that may trigger obligations)
  • assurances as to various aspects of agreement (sometimes phrased as warranties, representations, or covenants)
  • boilerplate provisions (see examples of these in Nolo’s article Common Boilerplate Provisions in Contracts)
  • a signature block, and
  • exhibits or attachments.

The Contract as a Process

“Contract” is a noun, but it can be used as a verb, too. When you contract with somebody, you participate in a process that typically involves three phases.

  • Phase 1: Contemplating the deal. The parties each assess the prospective arrangement and its risks (“Can I trust her?”) and attempt to predict the future (“Will I regret paying this price for the computer next month? Will it be outdated?”).
  • Phase 2: Reaching an agreement. During this phase the parties negotiate and agree on the terms, usually formalized in a written contract or some other documented evidence of the arrangement (such as a receipt or purchase order, for example).
  • Phase 3: Performance and enforcement. Once the contract is in place, the parties are legally required to perform their mutual obligations. If one party fails to perform, the other can sue to enforce the deal.

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How to Properly Document Money Your Business Receives

Know how to document loans and equity investments in your business.

When raising money for your business from through loans, equity investors, or gifts, it’s important to document what you’ve received. The form of documentation will vary depending on where the money is coming from.

Unsecured Loans

An unsecured loan is a loan you obtain without having to provide collateral or “security.” You might obtain this sort of loan from a bank. Alternatively, you might find another commercial lender, or even a private individual, who will give you an unsecured loan.

The key document for an unsecured loan is the promissory note. A promissory note should lay out the basic conditions of the loan, such as the number and amount of monthly installment payments you are agreeing to make, and what interest rate is being charged. It may also include other conditions of the loan, such as fees for late payments and whether you can pay in advance without a penalty. If you’re getting an unsecured loan from a bank, the bank itself will have its own promissory note form.

Make sure you sign only one promissory note for a loan; additional, signed copies can cause legal confusion about whether more than one loan is involved.

Secured Loans

With a secured loan, you are pledging some sort of collateral or security against the loan. If you fail to meet the terms of the loan, the lender ultimately will have the right to seize that security.

A secured loan, like an unsecured loan, should include a promissory note. However, the promissory note for a secured loan should include additional language indicating that the loan is secured, and that there are additional documents regarding the lender’s rights in regard to the collateral. If you’re dealing with a bank or similar institutional lender, then the lender should have the relevant documents.

Documentation will vary depending on what kind of asset you are using for security. If you are using personal property, such as business equipment or inventory, you should expect to fill out and sign a document where you agree that the lender can take that property if you fail to repay the loan. You can also expect that the lender will ask you to sign a financing statement as specified under the Uniform Commercial Code (UCC). Sample versions of this document, commonly known as Form UCC-1, are readily available online. Once you’ve completed the UCC-1, the lender will file it with a local government office to provide notice to the public that the lender has a claim or “lien” on your property. Once you’ve paid off the loan, you should make sure the lender releases the lien.

A loan secured with real estate is more complicated than one secured with personal property. It will involve more specialized documentation than a promissory note and a Form UCC-1, and you may need to consult a lawyer for assistance. When the time comes to sign, you will need witnesses and notarization. As with a loan secured by personal property, documentation will be filed with a government office to provide public notice of a lien on your real estate. And, as with other types of secured loans, you will want to make sure that the lien is removed when you pay off the loan. With real estate, it’s particularly important not to have some blemish on the title, which might cause problems with a future sale of the property.

Equity Investments

An equity investment involves a person giving you money in exchange for an ownership interest in your business. Depending on how your business is structured, this may more specifically mean that the investor receives shares of stock in the business, or is now legally a partner in your business.

In the case of corporations, limited liability companies, and partnerships, equity investments are usually considered to be securities, and therefore are subject to certain federal and state laws. Those laws require some businesses to file a variety of documents with the government. If your business is “closely-held”—meaning most of its shares are held by a small number of people—then you should be able to avoid much of the securities paperwork. Otherwise, you should seek expert counsel on meeting your securities filing requirements.

As a separate issue, you should always have some written agreement with an equity investor. The exact form of agreement will depend on the legal form of your business:

  • for a corporation, an equity investor will be a shareholder, and should sign a shareholders’ agreement;
  • for a partnership, an equity investor will be a partner, and you should properly modify, and then all the partners should sign, the partnership agreement; and
  • for a limited liability company (LLC), an equity investor will be a “member,” and all members should sign (or, as appropriate, amend and sign) the LLC’s operating agreement.

Gifts

If you’re lucky enough to have someone give you money for your business as a gift, it’s still appropriate, though not legally required, that you prepare some kind of documentation. One reason for documenting a gift is to avoid later arguments; for example, you may think that money given to you by a parent was obviously a gift, but later find that a sibling always thought otherwise, leading to an unexpected legal dispute. Also, by documenting a gift, you can avoid wrangling with the IRS over whether the money was really a loan, and is therefore taxable; the IRS does not tax monetary gifts up to $13,000.

Additional Information

This article touches on just a few areas where you may bring money into your business in order to keep it running. There are many other sources you might rely on to raise money for your business and those sources will require their own forms of documentation

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Contracts 101: Make a Legally Valid Contract

All you need is a clear agreement and mutual promises to exchange things of value.

Lots of contracts are filled with mind-bending legal gibberish, but there’s no reason why this has to be true. For most contracts, legalese is not essential or even helpful. On the contrary, the agreements you’ll want to put into a written contract are best expressed in simple, everyday English.

Most contracts only need to contain two elements to be legally valid:

  • All parties must be in agreement (after an offer has been made by one party and accepted by the other).
  • Something of value must be exchanged — such as cash, services, or goods (or a promise to exchange such an item) — for something else of value.

Does a contract have to be in writing? In a few situations, contracts must be in writing to be valid. State laws often require written contracts for real estate transactions or agreements that will last for more than one year. You’ll need to check your state’s laws to determine exactly which contracts must be in writing. But even if it’s not legally required, it’s always a good idea to put business agreements in writing, because oral contracts can be difficult or impossible to prove.

Let’s take a closer look at the two required contract elements: agreement between the parties, and exchange of things of value.

Agreement Between the Parties

Although it may seem like stating the obvious, an essential element of a valid contract is that all parties must agree on all major issues. In real life, there are plenty of situations that blur the line between a full agreement and a preliminary discussion about the possibility of making an agreement. To help clarify these borderline cases, the law has developed some rules defining when an agreement legally exists.

Offer and Acceptance

The most basic rule of contract law is that a legal contract exists when one party makes an offer and the other party accepts it. For most types of contracts, this can be done either orally or in writing.

Let’s say, for instance, you’re shopping around for a print shop to produce brochures for your business. One printer says (or faxes, or emails) that he’ll print 5,000 of your two-color flyers for $300. This constitutes his offer.

If you tell the printer to go ahead with the job, you’ve accepted his offer. In the eyes of the law, when you tell the printer to go ahead you create a contract, which means you’re liable for your side of the bargain (in this case, the payment of $300). But if you tell the printer you’re not sure and want to continue shopping around (or don’t even respond, for that matter), you haven’t accepted the offer, and no agreement has been reached.

But if you tell the printer the offer sounds great except that you want the printer to use three colors instead of two, no contract has been made. This is because you have not accepted all of the important terms of the offer. You have actually changed one term of the offer. (Depending on your wording, you have probably made a counteroffer, which is discussed below.)

When Acceptance Occurs

In day-to-day business, the seemingly simple steps of offer and acceptance can become quite convoluted. For instance, sometimes an offer isn’t quickly and unequivocally accepted; the other party may want to think about it for a while, or try to get a better deal. And before the other party accepts your offer, you might change your mind and want to withdraw or amend it. Delaying acceptance of an offer and revoking an offer, as well as making a counteroffer, are common situations that may lead to confusion and conflict. To minimize the potential for a dispute, here are some general rules you should understand and follow.

How Long an Offer Stays Open

Unless an offer includes a stated expiration date, it remains open for a “reasonable” time. What’s reasonable, of course, is open to interpretation and will vary depending on the type of business and the particular fact situation.

To leave no room for doubt as to when the other party must make a decision, the best way to make an offer is to include an expiration date.

If you want to accept someone else’s offer, the best approach is to do it as soon as possible, while there’s no doubt that the offer is still open. Keep in mind that until you accept, the person or company who made the offer — called the offeror — may revoke the offer.

Revoking an Offer

Whoever makes an offer can revoke it as long as it hasn’t yet been accepted. This means that if you make an offer and the other party wants some time to think it through, or makes a counteroffer with changed terms, you can revoke your original offer. Once the other party accepts, however, you’ll have a binding agreement. Revocation must happen before acceptance.

An exception to this rule occurs if the parties agree that the offer will remain open for a stated period of time.

Offers With Expiration Dates

An offer with an expiration date is called an option, and it usually doesn’t come for free. Say someone offers to sell you a forklift for $10,000, and you want to think the offer over without worrying that the seller will withdraw the offer or sell to someone else. You and the seller could agree that the offer will stay open for a certain period of time — say, 30 days. Often, however, the seller will ask you to pay for this 30-day option — which is understandable, because during the 30-day option period, the seller can’t sell to anyone else.

Payment or no payment, when an option agreement exists, the offeror cannot revoke the offer until the time period ends.

Counteroffers

Often, when an offer is made, the response will be to start bargaining. Of course, haggling over price is the most common type of negotiating that occurs in business situations. When one party responds to an offer by proposing something different, this proposal is called a “counteroffer.” When a counteroffer is made, the legal responsibility to accept, decline or make another counteroffer shifts to the original offeror.

For instance, suppose your printer (here, the original offeror) offers to print 5,000 brochures for $300, and you respond by saying you’ll pay $250 for the job. You have not accepted his offer (no contract has been formed) but instead have made a counteroffer. If your printer then agrees to do the job exactly as you have specified, for $250, he’s accepted your counteroffer, and a legal agreement has been reached.

Even though a contract is formed only if the accepting party agrees to all substantial terms of an offer, this doesn’t mean you can rely on inconsequential differences to void a contract later. For example, if you offer to buy 100 chicken sandwiches on one-inch-thick sourdough bread, there is no contract if the other party replies that she will provide 100 emu filets on rye bread. But if the other party agrees to provide the chicken sandwiches on one-inch-thick sourdough bread, a valid contract exists, and you can’t later refuse to pay if the bread turns out to be a hair thicker or thinner than one inch.

Exchange of Things of Value

In addition to both parties’ agreement to the terms, a contract isn’t valid unless both parties exchange something of value in anticipation of the completion of the contract.

Consideration Defined

The “thing of value” being exchanged — which every law student who ever lived has been taught to call “consideration” — is most often a promise to do something in the future, such as a promise to perform a certain job, or a promise to pay a fee for a job. For instance, let’s return to the example of the print job. Once you and the printer agree on terms, there is an exchange of things of value (consideration): The printer has promised to print the 5,000 brochures, and you have promised to pay $250 for them.

Gifts vs. Contracts

The main importance of requiring things of value to be exchanged is to differentiate a contract from a generous statement or a one-sided promise, neither of which are enforceable by law.

If a friend offers you a gift without asking anything in return — for instance, offering to stop by to help you move a pile of rocks — the arrangement wouldn’t count as a contract because you didn’t give or promise your friend anything of value. If your friend never followed through with her gift, you would not be able to enforce her promise.

However, if you promise your friend you’ll help her weed her vegetable garden on Sunday in exchange for her helping you move rocks on Saturday, a contract exists.

Promises vs. Action

Although the exchange-of-value requirement is met in most business transactions by an exchange of promises (“I’ll promise to pay money if you promise to paint my building next month”), actually doing the work can also satisfy the rule.

If, for instance, you leave your printer a voicemail message that you’ll pay an extra $100 if your brochures are cut and stapled when you pick them up, the printer can create a binding contract by actually doing the cutting and stapling. And once he does so, you can’t weasel out of the deal by claiming you changed your mind.

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How to Avoid Probate

Wooden justice gavel and block with brass

Living trusts are probably the best-known way to avoid subjecting your family to the hassle and expense of probate court proceedings after your death. But there are many other good probate-avoidance techniques, which you can use in addition to or even instead of a living trust. What’s right for you and your family will depend on your unique circumstances.

How to Avoid Probate

Learn the most popular ways of avoiding probate

Avoiding probate doesn’t have to be difficult. Many people can use these simple and effective ways to ensure that all, or some, of their property passes directly to their heirs, without going through probate court.

Revocable Living Trust

Living trusts were invented to let people make an end-run around probate. The advantage of holding your valuable property in trust is that after your death, the trust property is not part of your probate estate. (It is, however, counted as part of your estate for federal estate tax purposes.) That’s because a trustee — not you as an individual — owns the trust property. After your death, the trustee can easily and quickly transfer the trust property to the family or friends you left it to, without probate. You specify in the trust document, which is similar to a will, who you want to inherit the property. (To learn more about living trusts, read

Pay-on-Death Accounts and Registrations

You can convert your bank accounts and retirement accounts to payable-on-death accounts. You do this by filling out a simple form in which you list a beneficiary. When you die, the money goes directly to your beneficiary without going through probate. You can do the same for security registrations, and, in some states, vehicle registrations. A few states also allow transfer-on-death real estate deeds that allow you to transfer property using a deed that doesn’t take effect until you die.

Joint Ownership of Property

Several forms of joint ownership provide a simple and easy way to avoid probate when the first owner dies. To take title with someone else in a way that will avoid probate, you state, on the paper that shows your ownership (a real estate deed, for example), how you want to hold title. Usually, no additional documents are needed. When one of the owners dies, the property goes to the other joint-owner — no probate involved.

You can avoid probate by owning property as follows:

  • Joint tenancy with right of survivorship. Property owned in joint tenancy automatically passes, without probate, to the surviving owner(s) when one owner dies.
  • Tenancy by the entirety. In some states, married couples often take title not in joint tenancy, but in “tenancy by the entirety” instead. It’s very similar to joint tenancy, but can be used only by married couples (or in a few states, by same-sex partners who have registered with the state). Both avoid probate in exactly the same way.
  • Community property with right of survivorship. If you are married (or in California, if you have registered with the state as domestic partners) and live or own property in Alaska, Arizona, California, Idaho, Nevada, Texas or Wisconsin, another way to co-own property with your spouse is available to you: community property with the right of survivorship. If you hold property in this way, when one spouse dies, the other automatically owns the asset.

Gifts

Giving away property while you’re alive helps you avoid probate for a very simple reason: If you don’t own it when you die, it doesn’t have to go through probate. That lowers probate costs because, as a general rule, the higher the monetary value of the assets that go through probate, the higher the expense. And most gifts aren’t subject to the federal gift tax

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Avoiding Family Disputes

Inheriting property does not always bring out the best in family members. Many people, of course, handle everything smoothly, following a loved one’s instructions as much as they can and peacefully agreeing on the rest. But a death can raise long-dormant relationships issues and revive old jealousies and resentments.

Probably the one element most likely to provoke bad feelings is surprise. If everyone in the family knows the broad outlines of how you’re planning to leave your property, they may understand your choices. Even if they don’t, they will have had some time to get used to the idea and air their concerns. They are likely to respect your choices, and not try to undermine them informally or through a lawsuit.

If, on the other hand, your estate plan takes everyone by surprise, there could be confusion, argument, and possibly court fights. Say, for example, an elderly man leaves the lion’s share of his estate to a charity or to a caregiver who recently arrived on the scene, or a woman leaves a valuable piece of art not to her children but favors a niece who wasn’t known to be particularly close to her. If the children knew that the niece had a special connection to the artwork, or that the caregiver had performed extraordinary services, they wouldn’t be left to wonder at the fairness of the bequests.

Even more common is the hurt caused by an unequal division of assets among offspring. Most parents leave their property to their children more or less equally, but there can be many good reasons for a different plan–perhaps one child has problems handling money, or already received an “advance” on his inheritance in the form of a gift. As long as the children all understand the reasoning, they are likely to accept your decisions. After all, it’s your money.

Strategies for Heading Off Trouble

We’ve all heard the horror stories of families torn apart by arguments over inheritances. Siblings fighting with each other over parents’ belongings, children fighting with a stepparent over the family home or bank accounts… it’s ugly.

You may assume that your family will behave well—and you may be right. Most families don’t have serious disputes over inherited money, and very few end up battling in court. But a death in the family doesn’t always bring out the best in people. You can encourage family harmony by taking some simple steps now.

Choose Your Executor Carefully

Some parents think that their oldest child should be the executor, even if he or she doesn’t seem very well suited to the task. But you’ll do better to discard any preconceptions about who should be the executor, and instead pick someone who is honest, organized, hardworking, and a good communicator. Inheritors are less likely to become anxious or suspicious if the executor keeps them up to date on what’s happening.

Avoid Surprises

Think about people who are unpleasantly surprised after a loved one’s death: the daughter who doesn’t inherit the family china, the son who gets a smaller share than his siblings, the favorite niece who isn’t even mentioned in the will. Their disappointment doesn’t mean they’re greedy; they’re probably just mostly hurt, confused, and frustrated by the fact that they will never know why they didn’t get what they expected. But hurt feelings can lead to suspicion and anger.

You can avoid all that by making your decisions—as many of them as you wish, anyway—known while you’re alive. You can explain, for example, that the family china is going to your brother’s daughter because her side of the family doesn’t have anything else from your mother; that your son is getting less because you paid for his graduate school education; and that you would like your niece to choose a memento but don’t plan to formalize it in your will. These simple explanations will go a long way toward avoiding bad feelings. Keep in mind that your family members don’t have to agree with you—after all, these are your decisions to make, and they don’t get to vote. But if everyone knows that you made your decisions thoughtfully, not in anger or by mistake, then the arguments will probably go away.

Deal With Your Lawyer Independently

If you consult an attorney for estate planning advice or to draft documents, keep your relationship independent of influence from others. Choose someone who comes recommended by friends or others whose views you respect, not someone who has done work for anyone you plan to leave money to.

Make sure you talk to the attorney alone. If one of your relatives or friends helps you out by driving you to the lawyer’s office, that’s great, but your discussions with the lawyer should be private. You need to feel free to express your wishes, whatever they are and whomever they might displease—and your lawyer needs to know that you are expressing your honest wishes, not altering them because someone else is listening.

Keep Your Estate Planning Documents Up to Date

It’s common advice to update your will, trust, and beneficiary designations every few years or whenever you have a major life change, such as marriage, a new child, divorce, or the death of a major beneficiary. This is good advice, because if you don’t change your documents now and then, they probably won’t reflect your current wishes. There’s another benefit as well: Your continuing involvement can head off suspicions that you didn’t take an active role in your estate planning and were so influenced by someone else that your decisions weren’t really your own.

For example, if you regularly meet privately with your lawyer, banker, or accountant to discuss your estate planning, they could say, if asked, that you were on top of your financial matters and reacted appropriately to changed circumstances. Documents produced in that setting are probably going to be tough to challenge. In contrast, it would be much easier to contest the will of an elderly person who hadn’t made a will in 25 years and was taken to an unfamiliar lawyer’s office by a relative—who turned out to be the main beneficiary.

Don’t Make Someone a Co-Owner If You Intend Something Else

Many people add a son or daughter to their checking account as a co-owner, just so the new account signer can write checks and help out with managing money. But in most cases, adding someone to the account makes that person a full co-owner, with the right to keep the money after the original account holder’s death. It’s an argument waiting to happen: All the children expect to share the money in the account, but the one who is the co-signer on the account legally inherits it all.

There are better alternatives. You can give someone you trust “power of attorney,” giving that person access to the account, or create (in some states) a “convenience account,” which also authorizes the person you choose to write checks for you. Either way, the person has a legal duty to act only in your best interests—and won’t automatically inherit the money in the account after your death.

Give Guidance on Items of Sentimental Value

Many wills contain a clause that leaves personal belongings and household furnishings to several beneficiaries “in equal shares,” but without any instructions on how that’s to be accomplished. Who divvies up the items? Who decides what constitutes “equal” shares when you’re allotting personal items that are all but impossible to put a dollar value on?

Do your beneficiaries a favor and provide some guidance. You might name specific items in your will, give the job of dividing personal effect to the executor, or instruct your offspring on how to conduct an auction for items they just can’t agree on.

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