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COMMON NON-TAX ESTATE PLANNING ERRORS

by

Gerry W. Beyer

    This article discusses common mistakes attorneys may make while preparing estate plans.  The author hopes that by pointing out potentially troublesome areas, the reader will avoid the ramifications of drafting a flawed estate plan:  frustration of the client’s intent, financial loss to the client or the beneficiaries, personal embarrassment, and claims of malpractice or breach of fiduciary duty.  The list of errors in this article is not exclusive.  The possibility for error exists everywhere and at any time.  An estate planner must be ever vigilant and by “making a list and checking it twice”[1] will increase the likelihood of preparing a flawless estate plan.

I.  Client Interactions

    A.  Failure to Gather Sufficient Information

    The attorney must conduct a very detailed client interview and compile a vast array of data before preparing the estate plan.  Information concerning the client’s assets, liabilities, family situation, disposition desires, and related matters must be gathered.  Failure to obtain relevant facts makes it difficult or impossible to draft an appropriate estate plan.  A client may not reveal certain important information merely because the attorney did not ask; the client may not realize the material’s significance.  Detailed client interview forms and checklists increase the likelihood of discovering relevant information.[2]

    B.  Believing Client Without Independent Verification

    A client unskilled in legal matters may inadvertently (or even intentionally) mislead the estate planner.  To avoid unexpected surprises, the attorney should ask for supporting documentation whenever possible regarding family matters (e.g., marriages, divorces, birth of children, adoptions), ownership of assets (e.g., deeds, stock certificates, bonds), employee benefits (e.g., retirement plans, bonus plans, annuities), bank accounts (e.g., statements, passbooks, certificates of deposit, account contracts, signature cards), debts (e.g., promissory notes, deeds of trust, mortgages), life insurance (e.g., policies and bene­ficiary designations), and other relevant matters (e.g., powers of attorney, directives to physicians).

    Clients frequently believe that documents reflect specific facts when in actuality they do not.  A simple example is instructive.  The client tells the attorney that he has a large certificate of deposit in his name and his best friend’s name.  The client explains he wants this certificate to pass to his friend, rather than to his family under his will.  He assures the attorney that the certificate is in survivorship form and the attorney does not inde­pendently verify this assertion.  When the client dies, the attorney discovers that the friend’s name was either not on the certificate or that the certificate lacked survivorship language.  The friend goes away empty-handed and the client’s intent is frustrated.

    C.  Neglecting Communications With Client

    The attorney must be aware of the importance of maintaining communication with the client both during and after the preparation of the estate plan.  During the estate plan­ning process, the client may have questions or wish to make changes.  This is often the case once a client begins thinking seriously about the disposition of family heirlooms.  A better estate plan will result if the attorney promptly returns telephone calls and answers letters.

    After the estate plan is complete, the attorney needs to maintain contact with the client unless the attorney makes it very clear that the representation does not continue beyond document execution.  The client should understand that wills need to be changed when there is a change in circumstances, e.g., birth, marriage, adoption, death, substantial increase or decrease in assets, change in state of domicile, or change in state or federal law.

    D.  Failure to Act Timely

    An estate plan should be completed in a timely fashion.[3]  Obviously, this is imperative if the client is elderly or seriously ill.  Prompt estate planning is also necessary even if a client is young and in perfect health at the time of the initial interview; the person could have a fatal automobile accident or heart attack on the way home.  It may be wise to have the client execute a simple will, even a holographic one, at the time of the initial inter­view to accomplish at least a portion of the client’s estate planning objectives.  A one page will leaving all the client’s property to the surviving spouse and appointing the spouse as the independent executor is often a desirable alternative to an intestate division between the spouse and children such as would occur with community property if all the deceased spouse’s descendants were not also the surviving spouse’s descendants[4] or if the deceased spouse owned separate property.[5]

    E.  Failure to Document Unusual Requests

    If a client makes an estate planning decision that the attorney fears may appear suspicious to others or might be viewed as evidence of the attorney’s negligence, special steps are necessary.  For example, a married individual may want to leave the entire estate to the spouse or more than $1,000,000 to a non-spouse and thus incur federal estate tax liability which could easily have been avoided.  The attorney should explain the potential outcomes to the client in writing and then have the client sign a copy acknowledging that the client is aware of the ramifications of the decision.

    F.  Failure to Recognize Circumstances Increasing the Likelihood of a Will Contest

    The attorney must always be on guard when drafting instruments which may supply incentive for someone to contest a will or other estate planning document.  Anytime an individual would take more through intestacy or under a prior will, the potential for a will contest exists, especially if the estate is large.  The prudent attorney must recognize situations which are likely to inspire a will contest and take steps to reduce the probability of a will contest and the chances of its success.[6]

II.  Will Drafting

    A.  No Specific Provision Regarding Ademption

    Ademption, i.e., failure of a gift, occurs when the item given in the will is no longer in the testator’s estate at time of death.[7]  For example, if the will gives Blackacre to X and testator sells or gifts Blackacre prior to death, X takes nothing under this provision of the will.  In addition, the intended beneficiary will normally not receive the equivalent value via proceed tracing or otherwise.[8]

    Accordingly, it is important for specific gifts to contain an express statement of the testator’s intent if the item is not in the estate.  The testator should explain either that ademption causes the intended beneficiary to go home empty-handed or provide a substi­tute gift (e.g., other specific property, money, or a greater share of the residuary).

    B.  No Specific Provision Regarding Lapse

    Lapse occurs when a gift fails because the beneficiary predeceases the testator.  Unless the anti-lapse statute applies, the subject matter of the gift will then pass under the will’s residuary clause, or, if the lapsed gift was the residuary, via intestacy.  The anti-lapse statute saves the gift for the beneficiary’s descendants if the beneficiary was a descendant of the testator (e.g., child, grandchild) or if the beneficiary was a descendant of the testator’s parent (e.g., brother, sister, niece, nephew).[9]

    To prevent the result of lapse from being governed by rules that may not comport with the testator’s intent, each gift should expressly indicate who receives the property in the event of lapse.  For example, the testator could make an express gift over to a contin­gent beneficiary, indicate that the gift passes to the descendants of a deceased beneficiary, or merely state that the gift passes via the residuary clause.

    C.  Failure to Discuss Exoneration

    Before specifically gifted estate property is transferred to a beneficiary, all liens, mortgages, and debts against the property are paid by estate assets, except for other specific gifts.[10]  This exoneration could result in a tremendous frustration of a testator’s intent.  Assume that the testator owns Blackacre valued at $200,000 with a mortgage balance of $150,000 and various other assets with a combined value of approximately $50,000.  To equalize the distribution of the estate to the testator’s two children, the testator leaves Blackacre to one child (equity of $50,000) and the residuary to the other child.  Upon the testator’s death, the specific gift of Blackacre will be entitled to exon­eration from the residuary estate and thus one child will receive an equity of $100,000 and the other child will receive nothing.  To avoid this unfortunate scenario, the will should expressly indicate whether debts against specifically gifted property are to be exonerated and if so, from what property and to what extent.

    D.  Failure to Address Satisfaction Potential

    Assume that the testator’s will gives $50,000 to each of the testator’s five grand­children and the residuary to X.  One of the grandchildren enrolled in law school and the testator paid the grandchild’s tuition of $15,000 per year for three years.  When the testa­tor dies, X will claim that the $45,000 testator spent on tuition partially satisfied the gift and thus this grandchild should receive only $5,000 from the estate.  To prevent this type of issue from arising, the will should expressly state whether lifetime gifts are to be construed as satisfactions of testamentary gifts.

    E.  Failure to Extend Survival Period

    Unless the will states otherwise, a beneficiary need only outlive the testator by 120 hours to take under the will.[11]  This length of time is typically too short.  The purpose of requiring survival is to prevent multiple administrations of the same property within a short period of time and thus save administration expenses and estate tax.  This goal, however, is not effectuated by a 120 hour period; probate takes considerably longer than five days.  Therefore, a testator should consider extending the survival period to a more realistic length of time, e.g., three, six, nine, or twelve months.[12]

    F.  Failure to Address Abatement

    The Probate Code mandates the order in which gifts fail if the estate has insufficient property to satisfy all testamentary gifts.[13]  This order may or may not be in accordance with the testator’s intent.  Thus, the attorney must ascertain the relative strength of each gift and make certain the testator’s primary beneficiaries receive preferential treatment either under the statute or by expressly altering the abatement order.

    G.  Failure to Address Tax Apportionment

    Apportionment refers to whether transfers that occur because of a person’s death (e.g., gifts under a will, life insurance proceeds, survivorship bank accounts) will be reduced by the amount of estate tax attributable to the transfers.  A detailed apportion­ment scheme is provided in the Probate Code.[14]  This scheme may or may not reflect the testator’s intent.  As a result, the testator must be carefully questioned regarding tax apportionment desires in cases where the estate may be large enough to have estate tax liability.

    H.  Lack of Provision Regarding Pretermitted Children

    Under certain circumstances, children born or adopted after will execution are entitled to a share of the testator’s estate.[15]  This automatic alteration of an established estate plan could have a devastating effect on the testator’s disposition desires.  For example, assume that the testator executes a will leaving the testator’s entire estate to the American Red Cross.  Thereafter, testator has a child and then dies without changing the will.  The testator’s intent to leave property to the American Red Cross would be completely ignored and the entire estate would pass to the child.

    Three methods may be used to avoid the application of the pretermitted child statute.  First, the will could expressly provide for the pretermitted heir, e.g., “I leave all my property to my children.”  Second, the will could mention the pretermitted child, e.g., “I intentionally make no provision for any child who may be hereafter born or adopted.”  Third, the testator may provide for the pretermitted child in some other manner such as by naming the child as a beneficiary of a life insurance policy.

    All wills should address the pretermitted child issue, even those of individuals beyond child bearing years.  It is becoming increasingly common for parents to adopt grandchildren and older individuals to adopt disadvantaged children — situations which increase the likelihood of triggering the pretermitted child statute.

    I.  Failure to Address Adopted and Non-Marital Children Issues

    The attorney must carefully question the testator to ascertain the testator’s desires regarding children who may be adopted or born out-of-wedlock.  The testator may or may not wish these children to share in the estate in the same manner as biological children or children born during marriage.  This issue is of particular importance when the testator makes class gifts.[16]

    J.  Failure to Externally Integrate Testamentary Documents

    External integration is the process of establishing the testator’s will by interpreting and construing various testamentary instruments left by the testator.  The documents are pieced together to give effect to the latest statement of the testator’s intent.  Thus, a new will should be accurately dated and revoke all prior wills and codicils to clarify the testa­tor’s most recent desires.  Unless special circumstances exist, use of codicils should be avoided because codicils increase the chance of external integration problems.

    K.  Inadequate Incorporation by Reference

    If the testator intends to incorporate an extraneous document by reference, care must be taken to make certain the document is in existence at the time of incorporation and sufficiently identified so that no other document could reasonably be referred to by the description.[17]  To avoid potential problems, especially if the document is short, the attor­ney should consider including the material within the body of the will rather than relying on an incorporation.  When a pour over provision is included, the Probate Code require­ments should be satisfied.[18]

    L.  Improper Internal Integration

    The will should fit neatly together as a unified document.  All pages should be typed or printed on the same kind of paper, all pages should be the same size, the type style should be consistent throughout the will, the entire will should be typed or printed with the same ribbon or toner cartridge, each page should be numbered ex toto (e.g., page 3 of 5), and blank spaces should be avoided.  In addition, all pages should be securely fastened together.  These precautions help reduce the chance of the testator or third parties insert­ing or removing pages.  In addition, these steps make it easier to show that the pages present at the time of the will execution ceremony are the same pages offered for probate.

    M.  Use of Ambiguous Language

    Ambiguity is one of the most frequent causes of will litigation.  Care must be taken to phrase the will clearly and precisely.  Words must be chosen to avoid doubt as to their intended meaning.  If potentially ambiguous words are used, unambiguous definitions should be included.  An attorney should be especially leery of using the following words and phrases:  cash,[19] money,[20] funds,[21] personal property,[22] issue,[23] and heirs.[24]  The descriptions of specific gifts[25] and designations of beneficiaries[26] should be precise.

    N.  Inadvertent Creation of Election Will

    “The principal of election is, that he who accepts a benefit under a will, must adopt the whole contents of the instrument, so far as it concerns him; conforming to its provi­sions, and renouncing every right inconsistent with it.”[27]  Election provisions are occa­sionally placed in wills where one spouse wants to dispose of the entire interest in some or all of the community property.  The surviving spouse may consent to the disposition of the surviving spouse’s share of the community assets because the will gives the spouse a significant interest in the deceased spouse’s community or separate property.  Attorneys must be careful, however, not to inadvertently create an election situation.  Although there is a presumption that an election will be imposed only if the will is open to no other construction,[28] an attorney could create an election scenario without intending to do so.  Thus, a provision should be included in the will expressly stating the testator’s intent regarding election.

    O.  Use of Precatory Language

    Instructions in a will regarding the disposition of property must be mandatory to be enforceable.  Precatory language, such as I wish, I would like, and I recommend, is normally considered suggestive in nature and not binding on the beneficiary.[29]  Precatory language has no place in a will.  If the testator wishes to express non-mandatory desires, a separate non-testamentary document should be used.  If the testator insists on placing such language in the will, the attorney should add language indicating that the sugges­tions are merely precatory and have no binding effect.

    P.  Violation of Rule Against Perpetuities

    The Texas Constitution provides that “[p]erpetuities . . . are contrary to the genius of a free government, and shall never be allowed.”[30]  Under the Rule Against Perpetuities, an interest is not good unless it must vest, if at all, not later than 21 years after some life in being at the time of the creation of the interest, plus a possible period of gestation.  Care must be taken when drafting wills to make certain the rule is not violated.[31]  If the Rule is violated, the Texas courts must reform or construe the interest to effect the ascer­tainable general intent of the testator.[32]

    Q.  Inadequate Tax Planning

    An attorney, even one who infrequently prepares estates with tax consequences, must be able to recognize situations where tax planning is needed and then make certain the testator obtains proper advice.  A commonly cited excuse for inadequate tax planning is a false belief that the estate is too small to incur estate tax.  Just because property is not in a decedent’s probate estate, does not mean it will escape taxation.  Life insurance proceeds, trusts, retirement plans, and other assets may be includable in the decedent’s estate for tax purposes.  Thus, the attorney must be certain to inquire about all types of assets and determine if it is likely that the client will obtain significant additional assets, e.g., via an inheritance from a wealthy parent.  The areas posing the greatest danger of error are special use valuation, the generation-skipping tax, and the marital deduction.[33]  It is beyond the scope of this article to review the potential errors in tax planning.[34]

    R.  Failure to Provide for Independent Administration

    If the testator wishes to obtain the benefits of independent administration, appropriate language must be inserted in the testator’s will.[35]  Failure to include this language means additional delay, either because a full dependent administration is needed or because of the time it takes to obtain consent of all beneficiaries and court approval of an independent administration.  To avoid these problems, it is essential that the testator’s desires regarding administration be documented in the will.

    S.  Failure to Indicate Alternate or Successor Executor

    A will should indicate at least one executor who would serve if the named executor is unwilling or unable to serve (e.g., dies, resigns, is or becomes incompetent, or does not want to assume fiduciary responsibilities).  Naming an alternate/successor executor will save the time and expense of locating a successor as well as having the estate managed by a person selected by the testator rather than by the court or the beneficiaries.[36]

    T.  Lack of Provision Regarding Bond

    The personal representative must post bond unless bond is waived in the testator’s will,[37] the personal representative is a corporate fiduciary,[38] or bond is waived by the court in an independent administration.[39]  Although bond does provide some protection to beneficiaries from evil personal representatives, bond is expensive and reduces the amount of property available to the beneficiaries.  The client’s desires regarding bond must be ascertained and those wishes made clear in the will.

    U.  Lack of Compensation Provision

    The Probate Code provides the method for determining a personal representative’s compensation.[40]  The testator may have a different intent, either that the personal repre­sentative is to serve without compensation or that a different method be used to compute compensation.  Thus, the will should contain an express statement of testator’s intent regarding compensation for the personal representative.[41]

    V.  Poor Proofreading of Documents

    Many mistakes in estate planning documents are the result of poor proofreading.  In a fast-paced office, time pressure may appear to restrict the attorney’s opportunity to carefully review the documents.  Under no circumstances should a client sign an estate plan­ning document without the attorney and the client carefully reading and studying the final draft.  It may also be advisable for another attorney to review the documents.  Major errors (e.g., a misplaced decimal point in a legacy or an important provision omitted) as well as seemingly minor errors (misspelling of beneficiary’s name) may provide the focus of later litigation.

    W.  Naming Drafting Attorney or Attorney’s Relative as Beneficiary

    Attorneys are often asked by family members and friends to prepare wills, trusts, and other documents involved with the gratuitous transfer of property.  These same individuals may also want the attorney to name him- or herself as one of the beneficiaries of the gift.  This common occurrence is fraught with legal and ethical problems, that is, the attorney may not be able to claim the gift and may be subject to professional discipline.

        1.  Effect on Validity of Gift

        Under Roman law, the drafter of a will could take no benefit under the will.[42]  The common law of Texas law did not follow this strict approach.  Instead, these circumstances gave rise to an inference of undue influence which the attorney could rebut by showing either that (1) the testator was related to the attorney by blood or marriage, or (2) the testator actually desired the attorney to be a beneficiary.  For example, in Oglesby v. Harris,[43] the court permitted the attorney to receive the property because “the estate was of practically nominal value, and the beneficiary [attorney] was an old friend and benefactor of the deceased, to whom the deceased was largely indebted if not in fact legally, at least morally, for assistance rendered in his dire extremity.”[44]

    In 1997, the Texas Legislature removed all discretion from the court to decide the propriety of a testamentary gift from a client to the drafting attorney when it added § 58b to the Texas Probate Code.  The section was designed to reduce overreaching by attorneys who prepare wills in which they or closely connected individuals are named as beneficiaries Under the 1997 version of this statute, any gift to the attorney who prepares or supervises the preparation of a will executed on or after September 1, 1997 is void as are gifts to the attorney’s heirs or employees. However, these gifts remain valid if the beneficiary is related within the second degree of consanguinity (by blood) or affinity (by marriage) to the testator. In addition, the attorney and the other closely connected individuals may purchase the property for value from the beneficiary.

    The 2001 Legislature expanded the categories of individuals to whom an attorney may leave a client’s property without having the gift automatically voided.  Gifts may now be made to the following individuals:  (1) the testator’s spouse, (2) any ascendant of the testator, (3) any descendant of the testator, and (4) any person related within the third degree to the testator, either by blood or marriage.[45]  (Under the original version of this statute, only gifts to persons within the second degree of consanguinity or affinity were excepted.)  The new provisions apply to wills executed on or after June 11, 2001.

    This statute raises several interesting questions as outlined below.[46]

        1.  The statute applies to an attorney who “prepares or supervises the preparation” of the will.  What happens if the beneficiary-attorney was not involved in the drafting of the will but merely supervised the will execution ceremony?

        2.  The statute voids a gift to an “heir” of the drafting attorney.  Does this language mean that this portion of the statute applies only if the attor­ney is deceased because the attorney has no heirs while alive?  For example, assume that the will names the attorney’s child as a benefi­ciary.  If both the attorney and the child outlive the testator, does the child still take because the child is not an heir?  Perhaps the statute is referring to individuals who would be heirs if the testator were deceased.  If this is the case, at what time is this potential heirship status determined?  Assume that the attorney’s grandchild is named as a beneficiary at a time when both the grandchild and the grandchild’s parent (attorney’s child) are alive.  If the testator dies while both are still living, does the grandchild take because the grandchild would not be an heir even if the attorney were deceased?  If this is so, would the result change if after testator executed the will, the attorney’s child died so that at the time of the testator’s death, the grandchild would be an heir if the attorney were deceased?

        3.  The statute voids a gift to an “employee” of the drafting attorney.  How broad of a net is cast by this term?  For example, assume that the testator names a good friend as a beneficiary.  By coincidence, this person works in the drafting attorney’s office as a part-time mainte­nance worker.  The employee-beneficiary was hired by the attorney’s office manager and the attorney and the employee-beneficiary have never met.  Is the gift void?  What type of distinction will be made between beneficiaries who are employees and those who actually qualify as independent contractors?  Further, at what time is employee status determined — when the testator executed the will, sometime between will execution and death, or upon the testator’s death?

        4.  Who receives a gift voided by this provision?  The statute is silent but it would be consistent with statutory and case law in other areas to treat the beneficiary as predeceasing the testator and then distributing the property under the terms of the will.

        5.  The original exception for gifts made to persons closely related to the testator may not apply if the subject property is realty. Subsection (a) which contains the voiding language refers to a “devise or bequest” while the 1997 version of the exception spoke only to a “bequest.” At common law, the term “bequest” was limited to testamentary gifts of personal property. Unlike “devise” which Probate Code § 3(h) broadly defines to cover all types of property, the term “bequest” is undefined. The meaning of the term as used in the Probate Code is thus uncertain. Many judges, including those sitting on the Supreme Court of Texas, use the terms interchangeably.[47] Nonetheless, a court could determine that the legislature was making a distinction between these words because it used both terms in the general rule and only one in the exception.  The 2001 revision makes the language of the exception consistent by using the phrase “devise or bequest.”

        6.  The original exception may not apply if the attorney drafting a will for the attorney’s spouse is also a beneficiary under that will. The exception did not apply “to a person who is related within the second degree by consanguinity or affinity to the testator.”  At common law, spouses were not related by “affinity.”  Affinity referred only to a relationship between one spouse and the blood relatives of the other spouse.  However, § 573.025(a) of the Government Code expands on the common law by providing that a “husband and wife are related to each other in the first degree by affinity.”[48]  Unlike most other nepotism statutes, however, Probate Code § 58b does not make reference to this Government Code definition and thus its applicability in this circumstance is uncertain.  The 2001 Legislature solved this issue with respect to wills executed on or after June 11, 2001 by expressly expanding the exception to include “the testator’s spouse.”

        2.  Effect on Ethical Duties

        The Texas Disciplinary Rules of Professional Conduct prohibit a lawyer from preparing a will not only if the attorney is a beneficiary, but also if the beneficiary is the attorney’s parent, child, sibling, or spouse.[49]  There are two exceptions to the general admonition.  The first exception is when the client is related to the donee.  Although permitted, the prudent attorney should avoid drafting for relatives unless the disposition in the will is substantially similar to that which would occur under intestacy.  The second exception is if the gift is not substantial.  An attorney should not rely on this exception because although the attorney might not be risking loss of the attorney’s law license for drafting the instrument, the attorney may still not receive the gift because of Probate Code § 58b.

    X.  Naming Drafting Attorney as Executor

    The former Ethical Considerations provided that “[a] lawyer should not consciously influence a client to name him as executor [in a will].  In these cases where a client wishes to name his lawyer as such, care should be taken by the lawyer to avoid even the appearance of impropriety.”[50]  This rule was interpreted to mean that a lawyer may be named as the executor for an estate “provided there is no pressure brought to bear on the client, and such appointments represent the true desire of the client.”[51]  Despite the authority to do so, the attorney must exercise great care to avoid potential claims of overreaching or conflict of interest.[52]  It is wise to have the client sign a plain language disclosure statement which explains the ramifications of the attorney serving as the executor.[53]

    Y.  Representation of Both Spouses

    The attorney must exercise caution when preparing an estate plan for both spouses.  There is always the potential for a conflict of interest giving rise to claims of disloyalty or breach of confidence.  Prior to agreeing to represent both spouses, the attorney should conduct a careful investigation and then make the decision whether to represent both spouses based on the facts of each case.[54]

III.  Will Execution

    The will execution ceremony provides a fertile field for error.  “The majority of estate planning malpractice cases have involved execution errors.”[55]  The importance of the ceremony is manifest; without a proper execution, the will has no effect regardless of the testator’s intent.  A careless, hurried, or casual ceremony increases the likelihood that an error will occur.  The best way to increase the chances that the ceremony encompasses all of the required formalities is to have a detailed form or checklist of elements and follow it closely for every ceremony.[56]

    A.  Ceremony Conducted by Non-Attorney

    The will execution ceremony should be conducted by the attorney, not by the client or the attorney’s staff.  There are reports of attorneys mailing or hand-delivering unsigned wills to clients along with will execution instructions.[57]  Even if the instructions are correct, there is little assurance that they will be correctly followed.[58]  Some attorneys may allow law clerks or paralegals to supervise the ceremony.  This practice is question­able not only because it increases the probability of error, but because the delegation of responsibility may be considered a violation of professional conduct rules proscribing the aiding of a non-lawyer in the practice of law.[59]

    B.  Beneficiary Present During Ceremony

    The testator, the disinterested witnesses, the notary, and the supervising attorney are the key players in the will execution ceremony.  In the normal situation, no one else should be present.  It is especially important to make certain no beneficiary under the will attends the ceremony as a precaution against claims of overreaching and undue influence.

    C.  No Testator Signature

    The will must contain the testator’s signature.[60]  An unsigned will is of no effect, regardless of other evidence proving the testator’s intent, unless the testator’s signature appears on the self-proving affidavit in which case the affidavit’s signature is sufficient.[61]  If a testator is using a proxy signatory, appropriate documentation of why the testator is not personally signing is needed as well as evidence that the proxy signed at the testator’s direction and in the testator’s presence.

    D.  Testator Signs Wrong Will

    When wills for several people are being executed simultaneously, e.g., husband and wife, the possibility exists that they will sign the wrong wills.[62]  In this case, neither will would be valid; the signing testator lacked intent for the signed document to be the will and the other document lacks the testator’s signature.  To avoid this possibility, only one will should be executed at a time and the wills should be inspected closely to ascertain that they were not inadvertently switched.

    E.  Lack of Sufficient Number of Witnesses

    A non-holographic will requires a minimum of two competent witnesses.[63]  Failure to have at least two witnesses is fatal to will validity.  If the witnesses sign the self-prov­ing affidavit rather than the will, the attestation will be sufficient although the self-proving affidavit fails.[64]

    F.  Witnesses Fail to Attest in Testator’s Presence

    Although the testator is not required to actually see the witnesses sign the will, the attestation must take place in the testator’s presence.[65]  The term presence means a conscious presence, that is, “the attestation must occur where testator, unless blind, is able to see it from his actual position at the time, or at most, from such position as slightly altered, where he has the power readily to make the alteration without assis­tance.”[66]

    G.  Using Beneficiary as Witness

    A will beneficiary should not serve as one of the two required witnesses to a non-holographic will.  Under Texas law, a gift to an attesting beneficiary is generally void.[67]  If the beneficiary is an heir who would have inherited had there been no will, then the beneficiary takes the smaller of the gift under the will and what the beneficiary’s intestate share would have been.[68]  Alternatively, the gift may be saved via corroboration by one or more disinterested and credible persons.[69]

    H.  Improperly Completed Self-Proving Affidavit

    A self-proving affidavit may be invalid for many reasons.  The notary might fail to swear the testator or witnesses.[70]  The testator and both witnesses might not sign the affi­davit.  Although the testator or witnesses sign the affidavit, one or more may not have signed the will.  In this case, the signatures on the affidavit may be used to bootstrap the will but the self-proving affidavit would then be ineffective.[71]  Although not a condition to the affidavit’s validity, the notary should record the ceremony in the notary’s record book.[72]  This record may provide helpful evidence if a will contest ensues.

    I.  Execution of Duplicate Originals

    A testator should never execute duplicate originals.  Problems arise when, at time of death, all of the duplicate originals cannot be located.  The general presumption is that the destruction of one duplicate original by the testator with the intent to revoke operates to revoke all copies.  However, this presumption may be rebutted by evidence that to avoid confusion resulting from having multiple last wills, the testator destroyed one of them intending to strengthen the validity of the other.[73]

IV.  Trust Drafting

    Special opportunities for error exist in trust drafting.  Many of the items discussed in the will drafting section are applicable to trust drafting as well.[74]  These problems include the following: no specific provision regarding ademption, no specific provision regarding lapse, failure to discuss exoneration, inadequate incorporation by reference, trust not properly internally integrated, use of ambiguous language, use of precatory language, inadequate tax planning, poor proofreading of trust documents, failure to indicate alter­nate trustee or method to select a successor, lack of provision regarding bond, lack of compensation provision, drafting attorney as beneficiary, drafting attorney as trustee, and representation of both spouses.

    A.  Failure to Anticipate Possible Divorce or Annulment

    The Probate Code provides that “[i]f, after making a will, the testator is divorced or the testator’s marriage is annulled, all provisions in the will in favor of the testator’s former spouse . . . [are] null and void and of no effect unless the will expressly provides otherwise.”[75]  The Texas Trust Code, however, does not contain an equivalent provision.  Thus, the ex-spouse will continue as beneficiary of any irrevocable trusts created in the ex-spouse’s favor and as a beneficiary of revocable trusts if the settlor fails to change the beneficiary designation.  Likewise, an ex-spouse would continue to serve as trustee.

    In most circumstances, the settlor would not intend for an ex-spouse to continue as trustee or beneficiary.  Thus, the trust should address the possibility of divorce by including, for example, a provision requiring the marriage to remain in effect for the spouse to continue as trustee or receive trust distributions.[76]

    B.  Failure to Address Principal and Income Issues

    The Trust Code contains extensive provisions regarding the method of crediting a receipt or charging an expenditure to the principal or income of the trust.[77]  Depending on the circumstances, this may or may not be in accordance with the settlor’s intent.  Thus, the trust instrument should contain an express provision addressing how allocation of principal and income should be done (e.g., specific rules, follow the Trust Code rules, or left to the trustee’s discretion).[78]

    C.  Omission of Spendthrift Provision

    If the trust is silent on the issue, the beneficiary has tremendous control over the beneficiary’s trust interest; the beneficiary may sell it or give it away.  In addition, the beneficiary’s creditors may reach the beneficiary’s interest to satisfy their claims.  The vast majority of settlors, however, want to prevent the beneficiary from transferring the trust interest either voluntarily or involuntary.  Thus, a spendthrift provision is appropri­ate in almost all trusts.[79]

    D.  Misstating Ability to Revoke

    The settlor must decide on the revocability of the trust.  If the settlor desires flexibil­ity, retention of the ability to revoke is paramount; however, if the settlor seeks tax benefits, the trust usually must be irrevocable.  Under Texas law, a trust is presumed revocable unless the trust instrument expressly makes it irrevocable.[80]  Thus, if the trust is created for tax reasons and lacks an express irrevocability provision, the tax advantages may be lost.  Likewise, if the settlor actually intends a revocable arrangement, inclusion of an irrevocability clause would be intent defeating.

V.  Other Troublesome Areas

    A.  Document Preservation

    It is important for estate planning documents to be stored in appropriate locations.  If the document is not available to the appropriate person when needed, the client may lose the benefits of executing the document.  The disposition of an executed document is simple in some cases.  For example, a medical power of attorney should be delivered to the agent.[81]  In other cases, however, the proper receptacle for the document is less easily ascertained.

    The proper disposition of a will is often a controversial issue.  The original will should normally be stored in a secure location where it may be readily found after the testator’s death.  Thus, some testators keep the will at home or in a safe deposit box, while others prefer for the drafting attorney to retain the will.  The attorney should not suggest retaining the original will because the original is then less accessible to the testa­tor.  When the drafting attorney retains a will, the testator may feel pressured to hire the attorney to update the will and the executor or beneficiaries may feel compelled to hire that attorney to probate the will.[82]

    If a will contest is likely, the client must be informed of the dangers of retaining the will, i.e., it increases the opportunity for unhappy heirs to locate and then alter or destroy the will.  The attorney may need to urge the testator to find a safe storage place that will not be accessible to the heirs, either now or after death, but yet a location where the will is likely to be found and probated while simultaneously making certain not to suggest that the attorney retain the will.

    B.  Failure to Provide Client With Sufficient Post-Estate Plan Instructions

    After the will and other estate planning documents are executed, the client should be informed of several important matters.  For example, the client needs to realize that the client must reconsider the plan if the client’s life or circumstances change due, for example, to births or adoptions, deaths, divorces, marriages, change in feelings toward beneficiaries and heirs, significant change in size or composition of estate, change in state of domicile, or change in state or federal law.  The client must also be told that mark-outs, interlineations, and other informal changes to estate planning documents, especially attested wills, are usually of no effect.[83]  Not only should these and other matters be discussed with the client in person, they should also be provided to the client in written form.

    C.  Failure to Use Disclaimers Where Appropriate

    Texas law permits the beneficiary of a will, trust, insurance policy or like arrangement, as well as an heir, to disclaim property.[84]  A proper disclaimer has many potential benefits including tax savings,[85] liability avoidance (e.g., property has potential liability connected with it such as buried hazardous waste), and protecting assets from the disclaimant’s creditors.  The attorney must be aware of these and other reasons to disclaim property and give advice accordingly.[86]

    D.  Failure to Plan for Disability and Death

    Research has demonstrated that approximately one-half of the population of the United States will be disabled for ninety days or more.[87]  A person age 60 or younger is more likely to become disabled within the next year than to die.  Nonetheless, attorneys are often lax in planning for the possibility that their clients will suffer from a debilitating disease, accident, or general deterioration of mental function due to senility or other disabling cause.  Attorneys must recognize that disability planning is at least as important as death planning and make appropriate arrangements.  The techniques which the attorney and client should evaluate include the following: stand-by trust, wage replacement insurance, durable power of attorney for property management, medical power of attorney, self-declaration of guardian, directive to physicians, anatomical gift statement, and body disposition instrument.

    In publishing this article, the author is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the service of a competent professional should be sought.

Ó 2002 Gerry W. Beyer