Get It In Writing
Any lawyer will tell you that a simple rule for avoiding conflict is to, “get it in writing.” In other words, act in the moment by specifying the current terms of an agreement to avoid future conflicts.
It sounds so obvious to ask for an agreement in writing for car repairs, home repairs or large purchases, but, when it comes to business and marriage relationships, people often hesitate to ask for written specifics out of shyness or embarrassment. Women, especially, often feel it is impolite or distrustful to ask, “Can I get that in writing?”
Oftentimes, business partners or spouses feel they understand an oral agreement implicitly and trust the other person to stick to the bargain. The problem is that over the years conversations between friends, partners and business associates become fuzzy; and, what seemed like concrete terms in conversation are replaced with hopeful thinking about what the agreement should be, rather than what it actually is.
Here are a couple of circumstances where putting pen to paper can avoid conflicts, ease future transitions and solidify relationships.
Sharon and Mallory have a great business idea. They have talked endlessly about the idea while working away late into the night. They both feel they share a common vision and ultimate goal for the business. It doesn’t take long before Sharon and Mallory have a long customer list and investors clamoring to buy the business. Mallory is thrilled with the idea of selling the business and moving onto a new venture, but Sharon sees it as her steady income and doesn’t want to let it go. Neither one imagined they would be at odds when it came to the future of the business. Now their relationship, both personal and professional, is on shaky ground.
Solving the sticky situation above could have been much easier if Sharon and Mallory had set down the terms of their professional relationship from the start. In business, this type of written agreement is oftentimes called a Buy-out Agreement and can clarify the different roles of the partners, how decisions are to be made, how much money and time each partner is going to invest, as well as exit strategies when one person wants out of a business and the other wants to retain it. Issues handled in writing ahead of time can make business transitions a lot smoother.
Mary Jo’s husband Ted owned a house before they were married. They have been married for six years and he tells her all the time that the house belongs to her as much as it does to him. The trouble is that the deed to the house still only has Ted’s name on it.
If Mary Jo and Ted did nothing about the issue above, the laws of the state in which they live would impose a solution on death or divorce. Most other couples are more pro-active when it comes to the title on their property, getting property ownership details worked out long before the ink on the wedding invitations has dried.
An agreement as to who owns what property during marriage can be ironed out before marriage in a Pre-Nuptial Agreement, and sometimes after marriage in a Post-Nuptial Agreement. In either agreement, disposition of assets on death and divorce will likely not be conflict-free, but can be cheaper and easier in the long run.
If you are a generous giver (as I know most of you savvy gals are) then you may have made a loan to a brother-in-law for the down payment on a condo or to your sister to start up her own business. Just because you are a generous “giver,” you shouldn’t be shy about asking the “receiver” to sign a promissory note.
A promissory note clearly outlines, for both parties, the specifics of a loan. Like a loan document, a promissory note sets out the terms of the loan, including the date it was made, when payments are due and how much interest will be charged.
Many people find it tacky or impolite to ask friends and relatives to sign a promissory note. On the other hand, nothing is more gauche then having to ask that brother-in-law to repay you over an awkward family dinner. Strains on a relationship tend to happen when your brother-in-law thinks he has ten years to repay a loan, when you really wanted it to be repaid in three. Specifics on paper to which both parties can refer translates to less talk about the loan around the Thanksgiving table.
(You can find standard promissory notes at most office supply stores.)
High real estate prices have forced more friends, relatives and partners to buy property together. For unmarried partners, friends and relatives, a simple co-tenancy or partnership agreement could hammer out the details of an ownership arrangement in advance. If one owner stops paying their part of the mortgage, does not contribute to upkeep, or wants to sell her half of the property, a co-tenancy or partnership agreement could outline how those issues would be resolved.
Wills and Trusts
Grandma always liked you best and she promised you her original Picasso would go to you on her death. Unfortunately, on her passing there is no mention of the Picasso in her will. Oral wills may make for good drama in the movies but directions for disposing of assets on death will likely only be legally enforceable if there is a written will. There are very limited circumstances in which an oral will would be recognized, but don’t count on it.
Each state has their own particular requirements for legal wills and a lawyer in your state is the best advisor when it comes to those requirements.
Written agreements, although they may be hard to ask for initially, can bring specificity to a relationship and force you and a partner to come to agreement on issues that might arise in the future.
You will never be sorry that you asked, “Can I get that in writing?”
Keller Smith is an attorney with The Keller Law Firm in Manhattan Beach, California; she can be reached at www.kellerlawfirm.com. She contributes a column once per month.