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The key terms to know in an Oklahoma living trust agreement

To understand an Oklahoma revocable living trust agreement it is helpful to understand some of the key terms and players used in the trust. 

Below are key definitions for the different roles in an Oklahoma revocable living trust agreement:

Settlor
The person who creates the trust agreement.

Trustee
The person or entity who holds legal title to the property that is transferred to the trust.  The Trustee is responsible for managing and administering the trust.

Beneficiary
The person or entity for which the trust holds the property.  A beneficiary might get something when the settlor passes away or the beneficiary might get a steady flow of income from the trust.

Trust Protector
“A trust protector can be an individual or a group of individuals that is not the settlor, beneficiary, or trustee. Their role occurs in a directed trust. The trust protector’s role, in essence, is to supervise the trustee. ”  Link to the definition.

Trustee advisor
“Means a person appointed by the terms of the trust instrument to act as an advisor to the trustee with regard to all or some of the matters relating to the property of the trust. Unless otherwise provided by the terms of the trust instrument, if a trustee advisor is appointed, the property and management of the trust and the exercise of all powers and discretionary acts exercisable by the trustee remain vested in the trustee as fully and effectively as if an advisor were not appointed, the trustee is not required to follow the advice of the trustee advisor, and the trustee advisor is not liable as or considered to be a trustee of the trust or a fiduciary when acting as an advisor to the trust.”  Link to the definition.

Principal
“Means any real or personal property which has been so set aside or limited by the owner thereof, or a person thereto, legally empowered that it and any substitutions for it are eventually to be conveyed, delivered, or paid to a person, while the return therefrom, or use thereof, or any part of such return or use is in the meantime to be taken or received by or held for accumulation for the same or another person.” Link to the definition.

 

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning

What is an Oklahoma Buy-Sell Agreement?

You may have heard the term “buy-sell agreement” or maybe the term “Shareholders Agreement.” 

These terms essentially describe the same thing:

An agreement between the people that own a business (either Oklahoma corporation or limited liability company) about how the ownership interest (either shares of stock and units of an LLC) is going to be handled if an owner leaves the business.  An owner may leave a business either voluntarily (think no longer interested in the business, has a better opportunity) or involuntarily (think death or disability).

The buy-sell agreement provides a structure for valuing the ownership interest in the business and then transferring ownership of the interests when a person leaves the company.  If you are interested in reading more about why a buy-sell agreement is critical for Oklahoma businesses, check out the post 3 reasons you need a buy-sell agreement for your Oklahoma small business.

Posted by Shawn Roberts in Blogposts, Business Law

What are the elements of a tortious interference claim in Oklahoma?

You might have heard or seen recently that Bob Bowlsby, the President of the Big 12 Conference accused ESPN, its TV partner, of tortious interference.  Mr. Bowlsby’s claim came out of the University of Oklahoma’s decision to leave the Big 12 Conference for the greener cash pastures of the Southeastern Conference.

The tortious interference claim raises an interesting question: No, not why is Mr. Bowlsby invoking French pastry to express his anger.  Instead, the interesting question is what is a claim for tortious interference in Oklahoma?

The Oklahoma Supreme Court has said that generally “[o[ne has the right to prosecute a lawful business without unlawful molestation or unjustified interference from any person, and any malicious interference with that business is an unlawful act and an actionable wrong.  To win any legal claim, the party bringing the claim must prove all of its elements.  The elements of a claim for tortious interference are:  

1) interference with a business or contractual right;  

2) malicious and wrongful interference that is neither justified, privileged, nor excusable;  and

3) damage proximately sustained as a result of the interference.

In defining the element of “malice”, the Court has said “[t]he element of malice, for malicious interference, is defined as an unreasonable and wrongful act done intentionally, without just cause or excuse.  [Authority]

 

Posted by Shawn Roberts in Blogposts, Business Law

I started an Oklahoma business, I need more money . . . what do I do?

You started a new Oklahoma business, you made it through the rocky first months or perhaps even years. 

Your business is starting to gain some traction; growth is happening, but . . . you need something more.  You need money.  Money to invest in inventory, research, and development, marketing, or perhaps to hire new employees.  Or maybe you access – to new markets, new customers, new talent to hire.

You need that extra spark to take your business to the next level.  What are the options for bringing the extra spark into your business?

Well, there are essentially two options for bringing additional money and talent into your company:

  1. Debt

Debt is just as it sounds: Someone or some business is going to lend your business money, money which your business will have to pay back, likely at a healthy interest rate.  But if cash is what you need, then perhaps a loan is the right solution for you.  There is another, more robust option that opens new possibilities.

  1. Equity

Equity is giving someone or some business an ownership interest in your company in exchange for payment, usually but not exclusively cash invested in the company.  You essentially are adding a business partner who will have some level of control over the business.

The questions to ask before doling out equity in your business including the following:

How much money do you need?

The answer to this question needs to be based on your business plan, projections, and actual performance of the company.  Being able to accurately determine how much additional funding is necessary allows you to negotiate with the new investor coming into the company accurately.

How much control in the company are you willing to give up?

Let’s assume that right now you are the sole owner of the business; you call all the shots, you make all the rules, the buck stops with you.  Bringing on a business partner will permanently change the dynamic of your company. 

  • Do you want to allow the investor to have decision-making authority in the company at any level? What types of issues and decisions are you comfortable giving up control over?  Or Do you want a silent partner?

 

  • Do you want to use a mix of voting interest and non-voting interest to structure the control in the company the investor/partner has? In a corporation, this would usually be referred to as using preferred shares of stock versus common shares of stock.

 

  • Are you willing to provide the investor with the option to purchase a more significant interest in your company in the future? Using, for instance, a time-based option or performance-based option?

 

What intangible value is the investor bringing to the company?

Can you bring on an investor who has experience moving businesses like yours from point A to point B or even further?  How about an investor with contacts with potential suppliers and customers in your industry with whom you do not have contact?  Or an investor who is willing to get into the trenches with you and help grow the business?

 

How will you value your company?

To properly bring investment money into your company, you need to know what your company is worth to value the equity you provide to the investor accurately.

 

How will you and your investor separate if one of you wants to leave the company?

Obviously, you are planning on your relationship with the investor being successful, and hopefully, it will be.  However, if it is not successful or one of you simply decides you want to leave the company, you need a written plan for how the exit can happen and how the person leaving the company will be compensated for their equity ownership interest in the company.  This type of plan can usually be addressed in the operating agreement if the company is a limited liability company.

Posted by Shawn Roberts in Blogposts, Business Law

In which county will your Oklahoma probate case be filed?

If you end up needing to do an Oklahoma probate case after a loved one passes away, where will that case be filed?

Oklahoma has a system of county courts, with one court in each of Oklahoma’s 77 counties.  The question of where a case is filed comes down to something called “venue”, a fancy French word that simply means “the place where something happens.” 

Oklahoma has a statute that determines the place where probate happens (i.e., the venue) and the statute provides these places that could be the county court where your probate case is filed:

1. County where the decedent was a resident.

2. County where the decedent died if the decedent was not a Oklahoma resident

3. Any county in which the decedent left property, if the decedent was not a resident of Oklahoma.

4. The county where the decedent left property, if the decedent died in a different county and was not a resident of Oklahoma.

5. Outside of the cases listed above, in the county where a probate case is first filed

 

An Oklahoma probate case can be filed in any county that fits into one of those 5 options.

Posted by Shawn Roberts in Blogposts, Oklahoma Probate

The basic elements of an Oklahoma contract

 A contract is an agreement to do or to not do a certain thing

The Oklahoma contract is a fundamental piece of our lives and our legal system.  People make contracts with other people or businesses routinely and regularly, often without even thinking about it (e.g., hiring someone to mow your lawn; engaging a CPA to do your taxes, sending clothes to the dry cleaners, and many many more).

Since the contract plays such an important role in our lives, it seems wise to know the basics of a contract.  Below are the basic and essential elements of an Oklahoma contract:

(1) Parties capable of contracting.

Everyone 18 or older is generally capable of making a contract in Oklahoma with exceptions for people of “unsound mind”, some people in prison depending on the type of contract.  Unless you believe that a person lacks mental capacity you can assume the person is capable of entering into a contract.

(2) The parties consent to the contract

The parties to a contract must be entering into the contract freely, mutually and they must communicate this free consent to the other party.  Many times consent to the contract is implied by when there is an offer to make a contract and an acceptance of such offer to contract.  Consent to enter into a contract may be questioned if the person giving the consent was under duress, menace and/or a victim of fraud.

(3) A lawful object

According to Oklahoma law “The object of a contract is the thing which it is agreed, on the part of the party receiving the consideration, to do or not to do.”  This one plays out kind of like you might expect: contracting to purchase illegal drugs would not be a lawful object of a contract while contracting to purchase widgets would be a lawful object

(4) Sufficient cause or consideration

Consideration is any benefit one party to a contract either gives or promises to give to the other party to a contract.  A simple example would be a contract to construct a new home – the homeowner is agreeing to pay a sum of money and the home builder is agreeing to build a home.  The consideration is money flowing to the builder and a new home being provided by the builder to the homeowner.

 

Posted by Shawn Roberts in Blogposts

Super Easy Business Search on the OK Secretary of State’s Website

Have you ever wanted to know whether you dealing with a legitimate entity?  That is, a real corporation or real LLC?

For companies based in Oklahoma, finding out the legitimacy is snap, by doing a free search on the Oklahoma Secretary of State’s Website.  You can get to the site here and below I recorded a short screencast to walk you through the search process step by step.

 

Posted by Shawn Roberts in Blogposts, Business Law

What is an Oklahoma corporate veil and why does it matter?

Pierre Bonnard – Woman in a Veil

You may have heard the term “corporate veil”.

But do you understand what it is?  It sounds as if it could be a magic force field that encases companies housed in large buildings.

Actually, the concept is simpler than that, although it may have a bit of magic to it. 

Let start with the term “veil”. One of Merriam Webster’s definitions of “veil” is  to cover, provide, obscure, or conceal with or as if with a veil.

When a person forms a corporation or a limited liability company the entity has a legal existence that is distinct from the person.  One way to think of it is that usually the entity and the person file separate tax returns.  This means the company is legally different from the person.  The company can enter into contracts, make purchases, hire employees all on its own.  These activities, while guided by the owner of the company, are legally considered the actions of the company.

The corporate veil is the protection the owner of the company receives by forming a company.  The company assumes liability for actions rather than the owner being liable (usually).

The owner is veiled from liability by the company.  That is, the corporate veil is an intangible force field surrounding the owners of the corporation. It prevents the owners of the corporation from being liable for the misdeeds of the Corporation. Despite that, it may be the owners of the corporation who perpetrated the misdeeds through the Corporation.

There are some circumstances where the Oklahoma corporate veil may not hold up as expected and you can read about those situations in this blog post on “What does it mean to have your corporate veil pierced?”

Posted by Shawn Roberts in Blogposts

A diagram helping Oklahoma businesses navigate the Americans with Disabilities Act

The Americans with Disabilities Act (“ADA”) is a federal employment law focused on preventing hiring and workplace discrimination against employees with disabilities.  

The ADA applies to businesses with 15 or more employees.  That means any Oklahoma employer with 15 or employees needs to be aware of and in compliance with the ADA.

While a well-intended and often effective law, the ADA can be difficult for employers to navigate.  The definition of a “disability” is broad and working with a disabled individual to allow them to do their job often taxes business resources.  Nonetheless, businesses must comply with the ADA, and for this reason, I put together the diagram below to assist Oklahoma employers in understanding the ADA and complying with it.

This diagram is not intended to be used as a checklist for either complying with the ADA or determining that an employee with a disability can be terminated.  Instead, this diagram is intended to be a general guide for employers dealing with disability issues.  If you have specific questions about an employee or need assistance, do not rely on this diagram to make a decision, contact an attorney.

 

Posted by Shawn Roberts in Blogposts

Definition of Oklahoma Probate and Estate Planning Terms

The key for me to understanding a concept, idea, directions etc. . . is to understand the terms used in the description.  Without knowing what the words mean, I have little chance to understand the big picture ideas.  So, to see it all fit together, I learn the keywords.

It is no different in probate and estate planning in Oklahoma.  We need to understand what the keywords mean.

Below is a table containing many key terms in Oklahoma probate and Oklahoma estate planning followed by the definition of the term.  If you want to check my sources or read more about the term click on the link below each definition.

Enjoy.

 

Term Definition
Advancements All gifts and grants are made as advancements, if expressed in the gift or grant to be so made, or if charged in writing by the decedent as an advancement, or acknowledged in writing as such, by the child or other successor or heir.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=73041
Beneficiary means and includes any person entitled, but for his disclaimer, to take an interest, by intestate succession; by devise; by legacy or bequest; by succession of a disclaimed interest by will, intestate succession or through the exercise or nonexercise of a testamentary power of appointment; by virtue of a renunciation and election to take against a will; as beneficiary of a testamentary trust; pursuant to the exercise or nonexercise of a testamentary power of appointment; as donee of a power of appointment created by testamentary instrument; or otherwise under a testamentary instrument;
https://www.oscn.net/applications/oscn/deliverdocument.asp?id=72940&hits=294+280+265+
by right of representation means the estate is to be divided into as many equal shares as there are surviving heirs in the nearest degree of kinship and deceased persons in the same degree who left issue who survive the decedent, each surviving heir in the nearest degree receiving one equal share and the equal share of each deceased person in the same degree being divided among his issue in the same manner.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=73029
Condition Precedent A condition precedent in a will is one which is required to be fulfilled before a particular disposition takes effect.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=73020
Condition Subsequent A condition subsequent is where an estate or interest is so given as to vest immediately, subject only to be divested by some subsequent act or event.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=73023
Disclaimer means a written instrument which declines, refuses, releases, renounces or disclaims an interest which would otherwise be succeeded to by a beneficiary, which instrument defines the nature and extent of the interest disclaimed thereby and which must be signed, witnessed and acknowledged by the disclaimant in the manner provided for deeds of real estate.
Holographic Will is one that is entirely written, dated and signed by the hand of the testator himself. It is subject to no other form, and may be made in or out of this State, and need not be witnessed.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=72958
Interest means and includes the whole of any property, real or personal, legal or equitable, or any fractional part, share or particular portion or specific assets thereof or any estate in any such property or power to appoint, consume, apply or expend property or any other right, power, privilege or immunity relating thereto
https://www.oscn.net/applications/oscn/deliverdocument.asp?id=72940&hits=294+280+265+
International Will means a will executed in conformity with the Uniform International Wills Act
https://www.oscn.net/applications/oscn/deliverdocument.asp?id=461008&hits=12+
Issue lineal descendants
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=73029
Legacy, annuity bequest of certain specified sums periodically; if the fund or property out of which they are payable fails, resort may be had to the general assets, as in case of a general legacy.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=72919
Legacy, demonstrative demonstrative when the particular fund or personal property is pointed out from which it is to be taken or paid; if such fund or property fails in whole or in part, resort may be had to the general assets as in case of a general legacy.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=72919
Legacy, general All other legacies than those specifically defined
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=72919
Legacy, residual embraces only that which remains after all the bequests of the will are discharged.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=72919
Legacy, specific A legacy of a particular thing, specified and distinguished from all others of the same kind belonging to the testator is specific
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=72919
Succession is the coming in of another to take the property of one who dies without disposing of it by will.
https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=73027

 

 

Posted by Shawn Roberts in Blogposts