5 Tips for Preventing Blended Family Legal Problems

Divorce and remarriage are more common than ever today. Blended families require extra attention from estate planning attorneys, but this extra attention to detail is crucial to avoiding costly legal fees for  probate litigation and more. 

Prenuptial Agreements are Your Friends

Two people blending a family can protect their goals and financial resources by entering into a prenuptial agreement. While a prenup may not be necessary for couples entering a first marriage, for a second marriage or any more after that there are all sorts of complex issues that may make such an agreement not only useful but necessary.

  1. Before getting married, people should discuss estate issues with their new intended spouse;
  2. A prenup ensures that both parties enter into the relationship with a clear understanding of assets and intentions;
  3. Both sides have a chance to discuss this plan with an attorney. 

Separate Checking & Savings Accounts

We encourage newly married couples to clarify any ground rules up front regarding “yours,” “mine,” and “ours” in order to avoid confusion. Understanding each other’s finances is key to avoiding fights down the road. Many people will start out having separate checking and savings accounts, primarily using them to pay for personal expenses, including those for children from a previous marriage. Don’t combine your accounts before speaking to an attorney!

If you choose to maintain a joint account for ongoing expenses as a couple, it’s important to discuss how much each spouse is going to contribute monthly – an equal amount or a percentage. 

Update End-of-Life Medical Documents 

Who gets to make end-of-life decisions? If people don’t put their wishes in writing, their loved ones can be left with legal disputes and family fights at one of the most difficult times in their lives.

Talk with your future spouse about this issue.

Children from a previous marriage may have very different ideas about who should make decisions about health care and what decisions should occur. Without specifying those wishes in a living will, also called an advanced healthcare directive, you are looking at thousands in potential litigation.

Update Your Will & Other Documents

In our experience, the ugliest family disputes that occur after someone passes away are not about money but possessions with sentimental value. Even the smallest item can have a significant emotional value, and squabbles over these belongings can cause rifts that are difficult to heal. Discuss your intentions with your family BEFORE you pass away.

Trusts should be as specific as possible about what each beneficiary is to receive. Once again, add this to your discussion.

For those who wish to leave assets to stepchildren, it’s important to include those directives in the trust or will. Stepchildren are not generally considered legal heirs, and they won’t inherit anything without being named in these documents. This is a rue awakening to those who don’t receive an inheritance when expected.

Estate plans can also become complex when a person wants to provide for his or her surviving spouse and still give the children access to inheritances as soon as possible.

For people with children by a previous marriage, a trust can be a good way to protect their inheritance. It can also be used to help ensure that any previous spouses or step-children who were part of that marriage are not inadvertently disinherited by the new relationship.

Prevent Legal Issues For Your Blended Family – Talk To Professionals

Experienced estate planning attorneys understand the unique challenges facing blended families. If you need to discuss the use of trusts or other asset protection strategies, please contact our office. We encourage people to have discussions and to communicate clearly with loved ones about their final goal: a happily blended family that remains a family after the parents have passed.

Avoid litigation. Plan Ahead. I’m glad to help you with questions about preventing legal problems for your blended family. Give me a call at the Weaver Firm – Attorneys at 817-683-9016 or visit WeaverLegal.net to learn more about our services. 

travis-r-weaver

Travis Weaver, Attorney

Nursing Home vs. Assisted Living: Who They Help

group photo canoeing down riverLawyers with experience in nursing home qualification, including those at the Weaver Firm, provide assistance in creating an advanced plan to get care you require as you get older or if you experience illnesses or injuries that make you unable to care for yourself any longer.  

As you experience age-related illness, there is a substantial chance you will some day require care in an institutional care environment. In fact, as Wall Street Journal explains, more than 70 percent of people who reach the age of 65 will require nursing home care at some point in the future.  

Start planning now. Medicaid has a five year loopback period for gifts. VA Aid and Attendance has NO LOOKBACK period as of this post, but changes are coming.

An attorney can help you to understand your options for nursing home care or other types of care

In particular, you should consider the differences between nursing homes and assisted living facilities so you can make a fully informed choice regarding which environment is right for you.

Assisted living vs. nursing home long-term care

Assisted living facilities and nursing homes both provide an option for seniors who can no longer live independently. But, as the New York Times explains, there are important differences:

  • Assisted living facilities generally provide a more home-like environment while nursing homes have a more institutional or hospital-like feel.  
  • Assisted living facilities involve seniors living more independently in their own rooms or their own apartments
  • Nursing homes generally provide semi-private or private rooms with much less privacy and autonomy than assisted living facilities offer.
  • Assisted living facility may offer housekeeping services, meals, activities, and some help getting medical care, assisted living facilities typically do not provide the same level of supportive services that a nursing home does. 

The New York Times also indicates that nursing homes are more heavily regulated than assisted living facilities.

Who pays for nursing home or other long-term care? 

  • Medicaid will cover the costs of nursing home care for eligible seniors who can qualify for means-tested benefits.
  • Assisted living facilities are often not covered by Medicaid or any other kind of insurance policy.
  • Assisted living facilities ARE covered by VA aid and attendance if you or your spouse was a veteran during time of war.
  • Some facilities have an assisted living section and a nursing home care section for seniors who are attracted to the idea of assisted living but who may need nursing home care in the future.

Getting help from nursing home lawyers

Because the costs of care are expensive and are not covered by Medicare or by most private insurance, our attorneys at the Weaver Firm provide assistance with the creation of a Medicaid or VA Aid and Attendance plan so you can protect assets while getting Medicaid or VA to cover the costs of your care.

Call 817-638-9016 today to schedule a meeting with Weaver Firm attorneys to review your options for long-term care.

How to Prepare for Being a Widow/Widower in 2018

Among the risks that married couples face in retirement, the risk of becoming a widow or widower is unavoidable.

A recent Society of Actuaries report,

“Managing Post-Retirement Risks: A Guide to Retirement Planning.”

lists some troubling facts about losing a spouse:

►Some income may stop at the death of a spouse or former spouse.

►The death of a disabled person’s caregiver spouse may bring financial problems at a very difficult time.

►The surviving spouse may not be able or willing to manage the family’s finances.

►Inability to cope with a spouse’s death or terminal illness contributes to high rates of depression and suicide among the elderly.

To be sure, it’s difficult to predict which spouse will live longer in individual cases, according to the SOA. But, on average, women are widowed more often than men. 

So, what can you and your spouse do to manage the risks associated with becoming a widow or widower?

Set aside time to talk 

Talking about money matters together is a great gift couples can give each other, says Kathleen Rehl, author of Moving Forward on Your Own: A Financial Guidebook for Widows. “Start by saying, ‘Honey, because I love you so much, I want us to talk about some important money issues together—that are really important to know about for the time one day when one of us is gone.’”

Others agree. “First and foremost, spouses – especially women – need to know about the household’s finances, including where all accounts are held,” says Cindy Levering, a retired pension actuary and volunteer for the Society of Actuaries. “In particular, it is very important that they know what benefits might be available from employment-based plans — pension, 401(k), life insurance, and medical for example — and how to contact the appropriate human resource people to access any benefits that may be due.”

If you avoid these conversations, Rehl says, “a surviving spouse may be in a double whammy — hit with grief and emotions of widowhood plus not having many clues about their money situation.”

Levering also suggests sharing financial information and contacts with children, not just their attorneys. “I know a lot of people don’t want to talk about their finances with their children but it is important that someone know what to do if necessary,” she says.

Run what-if scenarios 

Determine whether your financial plan will provide enough lifetime income to the surviving spouse. Note that expenses don’t necessarily decrease by half after one spouse passes away, says Levering. Also note that the surviving spouse may have less to live on if he or she has to spend down assets to take care of the spouse that passes away, says Levering.

If, after running your what-if scenarios, there’s a shortfall, consider increasing your savings, trimming your expenses, investigating a reverse mortgage and/or downsizing, and buying life insurance.

Delay Social Security 

If you’re the higher earner, consider delaying Social Security until at least full retirement age (FRA) or better yet until age 70, if there’s a good chance that your spouse will outlive you, says Betty Meredith, president of the International Retirement Resource Center. Why so? “The surviving spouse collects a higher lifetime benefit based on the primary earner’s benefit,” she says.

Also consider, if you have traditional defined benefit pension plan, choosing the joint-and-survivor annuity instead of the single life annuity.

Check all your beneficiary designations 

Make a list of every place you have ever worked and contributed to employer-sponsored retirement plans. “When a person divorces and remarries, old beneficiaries stay in place until they are changed by the account owner,” Meredith says.  “It happens all the time where an ex-spouse or other parties receive retirement funds upon the workers’ death instead of the current spouse.”

Do the same for all life insurance plans, bank and credit union checking and savings accounts, titling on real estate, and the like, says Meredith.

Make sure credit cards and other accounts are set up so both spouses have access, says Levering.

Consider long-term care. Think what would happen if one or both spouses needed long-term care. “Purchasing coverage sooner rather than later may be prudent,” says Levering.

Hire a financial team 

Put in place a trusted team of financial advisers, including an attorney, certified public accountant, and certified financial planner, that, Meredith says, “the surviving spouse will feel comfortable working with and trust to help them transition to a life without you, especially if they have typically not been involved in the financial side of your marriage.”

Estate plan up to date?

Create or update your estate-planning documents, including wills, trusts, advance directives, living wills, durable powers of attorney for health care, physician orders for life-sustaining treatment.

 “Consider filing a ‘do not resuscitate’ or DNR order with your local hospital and have readily available if needed,” says Meredith. “Many people want to avoid aggressive attempts to prolong their life, but medical culture and practices often do not support these wishes. This can help prevent racking up large medical bills for the surviving spouse to pay.

For her part, Anna Rappaport, chair of the Society of Actuary’s retirement task force, recommends reviewing all property with your attorney and making sure you understand what is individual and joint names, and how it might be disposed of. 

Also consider planning your funeral arrangements in advance. 

Relocate

Meredith also recommends moving to a home where a surviving spouse can more easily manage upkeep, taxes, have social network, and the like.

For More Information about planning for Widows or Widowers, please contact our office today at 817.638.9016

Estate Planning for Millennials

 

This is an article adapted from the personal finance website, Nerdwallet.

As a Millennial myself, this article really touches close to home. Everyone needs an Estate Plan and many Millennials are starting families, creating businesses, investing in real estate, etc.

Ask people to write down a list of their plans and it’s likely to be chock-full of career accomplishments and vacation experiences. Graduating, getting a great job, getting married, starting a family, buying a home, and traveling are likely to be high on the list.

Odds are Estate Planning isn’t high on the list.

It’s not a surprise that people in their 20s and 30s wouldn’t have estate planning at the top of their mind.

The creation of legal documents such as living wills, last wills and testaments, powers of attorney for medical and financial well-being, and potential trusts is a foreign concept to many people, especially those who aren’t married or don’t have children.

Many people assume you don’t need to work on those plans until your 50s or 60s.

The truth is . . . planning now saves you time and money later on.

The Millennial view of money

Many Millennials have embarked on parenthood, care giving and other stressful responsibilities. But they tend to view money from an entirely different perspective from preceding generations. Growing up in the shadow of the recession and under the weight of sometimes crippling student loan debt, many Millennials are responsible with their finances, contrary to sky-is-falling reports. As we juggle student loans, young family expenses, and startup or freelancing jobs, our estate plan changes and the need for a plan grows.

Being good with money, though, isn’t enough. Part of being fiscally responsible is planning for the long-term. More than 60% of Americans don’t have a will, according to a 2015 Harris Poll

Most Americans don’t have long-term care insurance. Good news for Millennials, the premiums are cheap now.

The benefits of estate planning

No matter where you are in your financial life, you need an estate plan. 

Will. Medical Power of Attorney, Financial Power of Attorney, Physician’s Directive.

Those are the big four.

For those with children, a good estate plan lets you appoint a guardian for your children should something ever happen to you.

 

Come see us with your estate planning questions. 817.638.9016.

Do I Owe Gift Taxes on Gifts from My Parents?

Nothing in life is as certain as death and taxes.

Do you owe tax on gifts from your parents?

Your parents have made wise financial decisions.

They now have a decent amount of money.

Maybe you are struggling a bit financially right now.

Maybe you are fine financially.

Either way, your parents gift you money.

Why?

Your parents love you.

Thanks, mom and dad . . . but . . . do I owe taxes on this gift?

The Short answer is NO.

Here’s Why?

These lifetime gifts made to you by your parents (or others) are not considered income to you.

As a result, the gifts will neither be taxed as income nor will they put you into a higher tax bracket.

Will you parents owe taxes?

Perhaps.

If they give more than the annual exclusion amount to an individual, then yes.

How much is the annual exclusion amount?

In 2018, it is $15,000.

They or you can give this amount to any number of people in a year. Gifts for all!

What if their gift exceeds this amount?

Your parent will need to file a gift tax return (Form 709) and claim any gift exceeding the exclusion amount as a reduction against his or her future estate tax exemption.

With the federal estate tax exemption now sitting at $11,220,000 per person in 2018, this will not likely be a problem.

YES . . .you can give away over 11 Million Dollars during your life and not pay taxes on those gifts.

Can your parent claim a deduction on a gift to you, your children, or anyone else?

Nope.

Deductions are allowed on charitable donations, but not on gifts to people.

To take a deduction on charitable donation, donations must be itemized.

Your parents should work with an experienced estate planning attorney to be sure their gifts align with their estate planning goals. 817.638.9016

Are You Responsible For Your Parents’ Debt?

Hopefully your parents enjoyed a happy life, filled with all the joy and good times envisioned on their wedding day.  At the end of their lives, you may be facing questions about your parents’ choices–including debts. Am I responsible for my parents’ debt when they die? The quick answer to that question is…..no.

Unless you co-sign for someone else’s debt, you are generally NOT responsible for their debt. Think student loans. If you, as a parent, co-sign on debt for your child, you are responsible if your child fails to pay the debt. Same thing for houses and cars.

Whether your parents have a Will or not, if they die with debt in THEIR names, there is a legal process that should be followed.

First, if your parent died with assets that are not in a trust, depending on their assets and the amount, a you probably need to go to probate court for the administration process. If you have a Will, you get Letters testamentary. If you don’t have a Will, the Court must determine who your heirs are and appoint someone to administer your Estate. After Letters are issued or an administration is opened, then your attorney should publish notice to creditors in the county where the person passed away. If unsecured creditors exist, they must file a claim with the Estate in the Probate Court.

Whoever is the administrator of the estate is responsible for making all payments to creditors with valid claims. The payments are made from the assets in the estate. These amounts are usually negotiable and you absolutely should negotiate large bills. If there are more debts than assets, creditors will only get a pro-rata payment depending on what class of creditor they fall into per the Texas Estate Code.  Neither the estate, nor the administrator personally, will ever be responsible for coming up with the difference.

If you have any questions regarding completing an estate plan for yourself or an aging parent, or if you are the administrator of an estate, call our office at 817.638.9016 with all of your questions. 

How the Tax Plan Affects You in 2018

On December 22, 2017, President Trump signed into law new tax legislation (the “2017 Tax Bill”). The 2017 Tax Bill makes significant changes to the tax code, including a reduction in corporate tax rates, major changes to individual taxes, a repeal of the Health care mandate, and a number of other changes.

This update focuses on how this law affects individuals from an estate planning and tax perspective, including charitable gift planning, taxation of trusts and estates and asset transfers for planning purposes.

Estate Tax Exemption Doubles to Approximately US$11.2 million per Individual.

Rockefeller would be proud. The 2017 Tax Bill keeps the estate and gift tax at 40% but doubles the estate tax exemption to approximately US$11.2 million per individual (US$22.4 million per married couple), beginning on January 1, 2018. This increase also applies to the exemption from generation-skipping transfer (“GST”) tax, which also increases to US$11.2 million per individual (US$22.4 million per married couple). In layman’s terms, this means your estate will not pay taxes as long as it remains under $11.2 million. If you have a taxable estate, come see us right away so we can begin the planning process.

The other rules applicable to gift and estate taxation, such as heirs receiving fair market value basis for assets received from an estate, stay the same.

This US$11.2 million exemption will continue to be adjusted for inflation each year. Along with most other changes to the individual tax regime, this increased exemption is scheduled to expire after 2025. This increased exemption creates significant planning opportunities for individuals, particularly those with estates in excess of the increased limits. 

Clients Should Consider Using This Increased Exemption Starting in 2018

Clients should consider making gifts (either outright or in trust) in order to utilize this increased exemption, particularly since this increased exemption is scheduled to expire at the end of 2025. In addition, other estate planning techniques, such as GRATs and sales to grantor trusts, can still be used under the new 2017 Tax Law. 

Clients Should Review Current Estate Plans in Light of the Increased Exemption

One planning item to consider is that many clients have wills and other estate planning documents that use formulas based on the exemption amounts available at the client’s death. For example, an individual’s will may leave an amount equal to her available exemption from the estate tax to her children (either outright or in trust) and the balance over the exemption to her spouse. Without changing her documents, the change in the law increases the amount passing to the children and decreases the amount passing to her spouse by more than US$5 million. Accordingly, clients should review their current estate planning documents to ensure that their plans and these formulas still accurately reflect their wishes in light of the dramatically increased exemption amounts.

In addition, clients who live in New York State and whose estate planning documents fund trusts with the entire federal exemption amount may owe significant New York estate tax on the death of the first spouse and, therefore, may wish to review the structure of their estate plans. Clients living in other states that have state estate or inheritance taxes may also have similar tax considerations.

529 Plans May be Used for Educational Expenses for K-12 

The Tax Bill also expands the use of 529 plans so that they may be used for K-12 education. 529 plan funds (up to US$10,000 per year per beneficiary) can now also be used for tuition expenses for any elementary or secondary school, including public, private, or religious schools. Previous law only allowed 529 plan funds to be used for college and other post-secondary programs and expenses. A previous provision also allowed 529 plan funds to be used for homeschooling expenses, but that provision was removed from the final 2017 Tax Bill.

Limit on Deductions for Charitable Cash Contributions Increases to 60% of AGI

In addition, although the 2017 Tax Bill limits a number of income tax deductions, it does increase the deductibility limitation for cash contributions to public charities from 50% to 60% of adjusted gross income. This increase is scheduled to expire after 2025. Other charitable contributions (such as contributions of appreciated property and contributions to private foundations) are still subject to the 30% (and in some cases 20%) of adjusted gross income limitations, and the ability to carryover unused charitable contribution deductions for five years remains unchanged. 

Many Changes to Individual Taxation Also Affect Trusts and Estates, Including the New 20% Deduction for Certain “Pass-through” Income

Many of the changes to the taxation of individuals (e.g., reduction in tax rates, limitation on state and local income tax deductions, etc.) will also apply to trusts and estates. 

However, one change of particular importance for trusts and estates is the deduction for income received from pass-through entities. 

Under the 2017 Tax Bill, trusts and estates are entitled to take the 20% deduction for pass-through income also applicable to individuals, which creates an effective tax rate of 29.6% for most pass-through income earned by a trust. While beyond the scope of this discussion, certain restrictions apply to the availability of this deduction. It is important for trustees of trusts that own interests in pass-through entities to understand the effect of these rates on fiduciary income tax obligations. 

Conclusion

Although the ultimate scope and effects of the 2017 Tax Bill will continue to unfold, the most significant change from a transfer tax and estate planning perspective is the doubling of the estate, gift and generation-skipping transfer tax exemptions to approximately US$11.2 million beginning on January 1, 2018.

For questions or concerns about tax planning, please contact us immediately at 817.638.9016. Don’t wait until you’re facing an enormous tax bill!

The Most Important Things You Need To Include In Your Will

A will can accomplish many different legal tasks, including naming heirs, naming guardians for minor children, and naming an executor to take care of your estate. Many people can get by with a simple will that has a few important provisions. You can even draft your own Will as long as you carefully follow state specific instructions for execution and drafting. If you have questions, come see a qualified Estate Planning Attorney. Here is what your Will needs to include.

Choose Who Receives Your Property…Who Gets What

Many people will want to leave all of their property to their spouse or children. This is standard. Here is what you don’t usually think about.

First, you may want to spell out what should happen if one of your beneficiaries passes away before you do. We often see people who leave all of their estate to one beneficiary and forget to include a back up plan. In many cases, you can simply state that their share will be divided equally among the remaining heirs based on current intestacy laws. Don’t forget your backup plan.

You may also want to include a survival clause. For example, if you both you and your spouse are involved in an accident, there is a possibility that your assets could have to go through probate twice if one of you passes away shortly after the other spouse does. You can designate a longer survival period to avoid this problem. Standard survival is 120 hours or 5 days for the math majors out there.

Name an Executor…Who is the Boss

The executor is in charge of administering the estate. Many people choose a family member or someone else with the necessary skills to complete this task. This person needs to be trustworthy and should immediately move to secure the Estate after you die.

You should also consider choosing a backup executor just in case your primary executor is unable to serve or refuses or resigns. This position does require some legal or business knowledge, so make sure you choose someone with those skills.

Other Important Will Language

The following are a few additional things you should include in your last will and testament:

  • State that you are revoking all prior wills to avoid a potential conflict between the new will and a prior will.
  • Include a residuary clause, which controls what happens to all property not specifically mentioned in the will. This ensures that any property you acquire after drafting the will is still distributed to your designated heirs.
  • If you have minor children or a trust, you should name any trustees and guardians in your will.

Every family is unique, and very few Wills are “simple.” If you have questions about what to include in your will, give us a call and let us craft a plan for your family.

817.638.9016

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Probate of a Salesman

Willy Loman’s story resolves most of the conflicts between the characters.

SPOILERS AHEAD. (But seriously, this play premiered in 1949…you should know what happened by now)

What the play didn’t touch on would probably put the original story to shame. A tale of drama, death, INTRIGUE! That story is…probate. Maybe Biff runs off with the assets. Perhaps Linda remarries and leaves everything to her new spouse. What if Uncle Ben created a Trust but left someone out of his diamond fortune??? SO MANY POSSIBILITIES.

Probates can get messy very quickly. Even famed playwright Arthur Miller’s estate is whirlwind of emotions and drama…much like his play.

The crux of this drama revolves around more than 160 boxes of Miller’s manuscripts and writings. The battle pits Yale University vs. the University of Texas. The loot:

The Miller archive, comprising 322 linear feet of material, is certainly a rich one. It documents the whole of his public career, including the development of classic plays like “Death of a Salesman” and “The Crucible” and his showdown with the House Un-American Activities Committee and advocacy against censorship around the world.

There is also intensely personal material, including early family letters and drafts of an essay about the death of Marilyn Monroe, Miller’s second wife, begun the day of her funeral and revised over many years but never published. But the richest vein may be the journals, which span more than 70 years, often mixing fragments of works in progress with intimately diaristic reflections.

Miller began his relationship with the Ransom Center in the early 1960s. Short on funds and facing a large tax bill, Miller donated 13 boxes of material, including manuscripts and working notebooks for the plays that made his name — including “Death of a Salesman,” “All My Sons” and “The Crucible” — in exchange for a tax deduction. (You can do this too…by contacting our firm).

In 1983, after a fire damaged Miller’s house in Roxbury, Conn., he shipped another 73 boxes to Texas for safekeeping. In a letter held at the Ransom Center, he said he’d like to eventually formalize the transfer either by sale, or by donation should the tax deduction (which had been eliminated in the early 1970s) be restored.

“I am in full agreement with your suggestion that I give them absolute first refusal in whatever decision I make for the disposition of the archive,” he wrote to the Manhattan bookseller Andreas Brown, who was serving as his archival consultant.

PAUSE. This is the point where a good estate planning attorney would step in and create a valid estate plan leaving the manuscripts to the Ransom Center with a right of first refusal. This right would exists in the Last Will and Testament of Arthur Miller and should also exist in any other planning documents involved with the gift. Sadly, this did not happen.

In January 2005, a few weeks before his death at the age of 89, Miller shipped 89 more boxes to the Ransom Center, whose extensive American theater holdings also include the papers of Tennessee Williams, Lillian Hellman and Stella Adler.

In the summer of 2015, three staff members from Yale’s Beinecke Rare Book and Manuscript Library visited the Ransom Center to inspect the Miller collection. Yale then made an offer of $2.7 million for the materials on deposit, plus some 70 boxes still held by the estate.

The Ransom Center matched the price, but refused to go higher, citing Miller’s 1983 letter as providing them a right of first refusal.

So now, the heirs of the estate of Arthur Miller are in a quandary. Clearly, the works are worth more than $2.7million, but why would either side increase their offer?

Ultimately, the Ransom Center won and purchased the works from the Estate for $2.7million. The Court relied upon the letter from Miller as sufficient proof that a right of first refusal existed. Who knows how much Yale would have offered???

h/t to the New York Times for this great article.

Plan your Estate with us now. Become a famous playwright later.

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817.638.9016 or weaverlegal.net