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The making of a contract

Have you ever wondered what “consideration” means when people talk about it in Oklahoma contract law?

Attorneys occasionally throw around big words that end up sounding like gibberish to everyone else. I don’t think most of us do it intentionally it’s just that we are immersed in legal staff and a lot of times don’t and stopped to think how it’s can the sound of people who don’t spend all day working on legal stuff.

One word that is used quite a bit is consideration. Consideration is one of the elements of a binding legal contract in the state of Oklahoma. But what does it mean in plain English terms and why is it important?

The Legal Definition of Consideration

Let’s start with the formal legal definition from Oklahoma law:

Any benefit conferred, or agreed to be conferred upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered or agreed to be suffered by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.

The Simple Definition

In simple terms, consideration is anything you give to the other person in the contract in exchange for what they give you.  Sometimes its money, sometimes it a promise to do something, sometimes it a promise to not do something.

An example

Consider this example:

I make an agreement with my next-door neighbor in which I agree to mow his lawn every month for one year and he agrees to pay me $45.00 each time I mow it.  The consideration I am giving to my neighbor is my promise to mow each month.  The consideration my neighbor is giving to me is the promise to pay me when I mow.

Key points to remember about consideration

Finally, a couple of things to remember about consideration:

  • Consideration must be something new or different above what a person was already obligated to do. For example, I cannot give someone as consideration in a contract my promise to deliver them a product if I am already obligated to deliver the product.
  • Courts are not typically concerned with the amount or type of consideration. Courts are concerned with whether there is any consideration. That is, a very small amount of money or a very small promise could be sufficient consideration to create a binding contract.

 

 

 

April 15

April 15

Have you thought about ways you may be able to save money on your taxes?  Would like to see a list that provides a few ideas?  Check out the list below.

I think I have mentioned Metro Business Alliance in previous posts.  It is a business networking group I have been in since June 2002.  It has been a huge part of building and growing my law practice.  On top of that, I have many wonderful relationships with people I have met in the group.  The group is also a great information resource.  One example of that is the document below, provided by Galen Taylor of Platinum Accounting Group.  Galen is a CPA and is very experienced and knowledgeable on tax issues.

While this document is not tax advice, it is a good list of issues to think about as we close out 2014.

 

Judge Bernard M. Jones denied Douglass High School’s request for a temporary injunction. The OSSAA’s decision will stand. Apparently, Locust Grove will be able to move forward in the Oklahoma high school football playoffs.

You can read the Order from Judge Jones’ below.

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Gifting into a tax return

While it is not a subject that most people consider often, there are circumstances where a person can make a gift and be required to file a tax return covering the gift and potentially paying tax on the gift. Most people are aware that if you die owning a large enough estate you may have to pay the IRS tax. Many people are also aware that there is an exemption, this year in the amount of $5.3 million, under which you are not required to file a return or pay taxes to the IRS.  What a lot of people don’t think about is that the exemption can be whittled down based on gifts a person makes during their lifetime.

The Annual Exclusion

One way to avoid reducing the lifetime exemption is to take advantage of the annual exclusion.  Each person is entitled to make an unlimited number of gifts each year without any tax consequences provided that the gifts do not exceed the annual exclusion, which in 2014 is $14,000.00. Gifts above the $14,000 number require that the person making the gift file a gift tax return.

What the IRS say about gifts

As the IRS states:

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

 The key points

So, here is a summary of how it breaks down:

  • You can gift up to $14,000.00 to just about any person without  return required or tax being owed;
  • You can gift more than $14,000.00 each year to your spouse without a return required or tax being owed;
  • If you gift over $14,000.00 to a person this year, you will need to file a federal gift tax return, IRS Form 709.  The IRS Form 709 is due on or before April 15 of the year following the year that you have made taxable gifts.

 

Remember however that the rules on gift taxes like many other taxes are complicated. You should consult a tax professional before making any final decisions including the decision whether you need to file a return or not

While it is somewhat difficult for me to believe, back in 2007 I was actually giving people advice on managing your law office if you were a solo or small firm attorney! I know that this happened because I came across the PowerPoint presentation that is below when I was looking for some other files this morning.

If you are interested in the ideas for management organization in a small office there could be some good material in here.

 

The difference between joint tenants and tenants in common is often perplexing but critically important for understanding property ownership rights particularly when there are Oklahoma probate issues. Let me try to explain how it works under Oklahoma real property law.

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The definitions – Joint Tenants – Tenants in Common

Joint Tenancy with a right of survivorship is where two or more individuals own real estate together and each has exactly the same rights in the property as the other owners or co-tenants. Upon the death of a joint tenant, the survivor has legal title and, unless fraud or a trust is established, the survivor will also acquire equitable title.

Tenancy in common is where all the owners have legal right of possession of the real estate but each owner has a separate and distinct title. Subject to the rights of the co-tenant(s), each tenant in common is equally entitled to the use, benefit, and possession of common property. A tenant in common may convey her interest in the real without the other tenants in common joining in the conveyance (unless it is homestead property, in which event her spouse must join). Tenancy in common is the default manner of taking title – if there is no evidence that the real estate was supposed to be conveyed as a joint tenancy, then title is held as a tenancy in common.

The similarities

  • Both Joint Tenancy and Tenancy in Common are ways of holding title to real estate.
  • Someone would use one of these methods when they own real estate with at least one other person.
  • Under both types, you purchase only a portion of the property, cooperating with other owners who purchase the remaining amount.

 

The differences

Major differences between holding title as a joint tenant and holding title as a tenant in common:

  • Upon the death of one joint tenant, his or her interest automatically passes to the surviving joint tenant, who becomes sole owner. This does not happen with a tenancy in common.
  • A tenant in common can freely sell her interest while a joint tenant can convey her interest in the real during her lifetime, but the joint tenancy interest cannot be devised and will not descend except possibly in the event of the simultaneous death of all the joint tenants.
  • Tenants in common may have different ownership interests. For instance, Tenant A and Tenant B may each own 40 percent of the real estate, while Tenant C owns 20 percent. However, joint tenants obtain equal shares of the property with the same deed, at the same time.

 

Example

An example of where joint tenancy with right of survivorship is commonly use is for homestead property owned by a married couple. The title will typically be held as “joint tenants with right of survivorship.”

On this blog, I discuss many ways to avoid having to do an Oklahoma probate after someone dies. However, what happens if you can’t avoid it?

One thing that happens is a person is appointed to administer the estate. Different terms are used for this person including the executor, executrix, administrator, special administrator and personal representative. Regardless of what term is used, the person who is appointed to handle the estate has certain duties under Oklahoma law.

Some of these duties are:

1.Taking charge of all property of the estate;
2.Being subject to the orders of the probate court in the control and disbursement of the property of the estate;
3. Determine whether the decedent had any debts and if so compile a list of the debts;
4. Take control of, continue, or terminate any of the decedent’s social networking networking account or short message service website or any e-mail service websites.
5. Be prepared to provide a report to the court of the condition of the affairs of the estate;
6. Maintain financial records for the estate including being able to show all receipts and disbursements and a list of present assets.
7. Provide an accounting to the court of all estate business including:

a. All income has been properly received and expenses lawfully made;
b. All allowed and approved claims have been paid;
c. All funeral expenses, taxes and costs of the administrator have been paid; and
d. The estate is ready for closing.

Who says nothing good ever happens when you are out after midnight?

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Regular readers of this blog know that I rarely write about personal matters.  It typically requires a momentous moment in my life or the life of my family.  Today is precisely one of those moments.

Four years ago today a young girl sat in a hospital bed in the wee hours of the morning waiting to give birth to a baby boy. The girl knew that she could not keep the baby because of her circumstances. However, she also did not know what she was going to do with the baby.

While watching the television in the hospital room, she saw an advertisement for Deaconess Pregnancy & Adoption Services. It was the Deaconess commercial that inspired the girl to call Deaconess and set the process in motion of her making a courageous decision to place her baby for adoption.

The result of that decision is that my wife and I ended up becoming parents to one of the sweetest little boys in the world, David, who is four years old today. David joined our family as a a brother to the best big brother a little brother could ever hope to have, Sam.
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If you are an employee being asked to sign an Oklahoma non-compete agreement, you should consider the four questions below before you sign:

 

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If I am an Oklahoma business with independent contractors, do I still have to respond to an income assignment for child support?

Read on to find out.

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