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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.
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]
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.
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.
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]
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.
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]
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).
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.
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.
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.
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]
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.
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.
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.
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]
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.
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]
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 numberedex 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.
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.
“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.
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.
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]
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]
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.
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]
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.
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]
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.
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.”
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.
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]
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]
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]
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]
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.
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.
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.
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]
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]
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]
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.
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]
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.
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]
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]
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]
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.
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.
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.
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]
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.
[1]Coots-Gillespie, Santa
Claus is Coming to Town (Christmas song).
[2]See,
e.g., 11 Donald J. Malouf & Henry J. Lischer, Jr., West’s Texas
Forms — Estate Planning §§ 1.6-1.9 (2d ed. 1994).
[3]See
generally Gerald P. Johnston, Legal Malpractice in Estate Planning and
General Practice, 17 Mem. St. U. L. Rev. 521, 534-36 (1987)
(“Procrastination may be an even greater problem in the trusts and
estates field than it is in other areas.”).
[4]Tex.
Prob. Code Ann. § 45(b) (Vernon Supp. 2002).
[5]Id.
§ 38(b) (Vernon 1980).
[6] See Gerry
W. Beyer, Drafting in Contemplation of Will Contests, Prac. Law., Jan.
1992, at 6.
[7]See Rogers
v. Carter, 385 S.W.2d 563 (Tex. Civ. App.—San Antonio 1964, writ ref’d
n.r.e.).
[8]See Shriner’s
Hospital for Crippled Children of Texas v. Stahl, 610 S.W.2d 147 (Tex.
1980); Opperman v. Anderson, 782 S.W.2d 8 (Tex. App.—San Antonio 1989,
writ denied).
[9]Tex.
Prob. Code Ann. § 68(a) (Vernon Supp. 2002).
[10]See Currie
v. Scott, 144 Tex. 1, 187 S.W.2d 551 (1945). Note that this
holding needs to be considered in light of Tex. Prob. Code Ann. § 322B
(Vernon Supp. 2002).
[11]Tex.
Prob. Code Ann. § 47(c) (Vernon 1980).
[12]A
survival period of over six months will prevent a gift to a surviving
spouse from qualifying for the marital deduction. I.R.C.
§ 2056(b)(3).
[13]Tex.
Prob. Code Ann. § 322B (Vernon Supp. 2002).
[14]Id.
§ 322A.
[15]Id. § 67.
[16]See Martin
D. Begleiter, Attorney Malpractice in Estate Planning—You’ve Got to Know
When to Hold Up, Know When to Fold Up, 38 U. Kan. L. Rev. 193, 232
(1990).
[17]See Allday
v. Cage, 148 S.W. 838 (Tex. Civ. App.—Fort Worth 1912, no writ).
[18]Tex.
Prob. Code Ann. § 58a (Vernon Supp. 2002).
[19]See Stewart
v. Selder, 473 S.W.2d 3 (Tex. 1971).
[20]See West
Tex. Rehabilitation Ctr. v. Allen, 810 S.W.2d 870 (Tex. App.—Austin
1991, no writ).
[21]Id.
[22]See Gilkey
v. Chambers, 207 S.W.2d 70 (Tex. 1947).
[23]See Munger
v. Munger, 298 SW 470 (Tex. Civ. App.—Dallas 1927, writ ref’d).
[24]See Federal
Land Bank v. Little, 130 Tex. 173, 107 S.W.2d 374 (1937).
[25]See In
re Estate of Cohorn, 622 S.W.2d 486 (Tex. App.—Eastland 1981, writ ref’d
n.r.e.).
[26]See Hultquist
v. Ring, 301 S.W.2d 303 (Tex. Civ. App.—Galveston 1957, writ ref’d
n.r.e.).
[27]Philleo
v. Holliday, 24 Tex. 38, 45 (1859).
[28]See Wright
v. Wright, 154 Tex. 138, 274 S.W.2d 670 (1955).
[29]See Wattenburger
v. Morris, 436 S.W.2d 234 (Tex. Civ. App.—Fort Worth 1968, writ ref’d
n.r.e.); Najvar v. Vasek, 564 S.W.2d 202 (Tex. Civ. App.—Corpus Christi
1978, writ ref’d n.r.e.).
[30]Tex.
Const. art. I, § 26.
[31]Cf. Lucas
v. Hamm, 364 P.2d 685 (Cal. 1961), cert. denied, 368 U.S. 987 (1962)
(holding that attorney was not negligent for failing to master a rule
against perpetuities problem). See generally David M. Becker, A
Methodology for Solving Perpetuities Problems Under the Common Law Rule:
A Step-by-Step Process that Carefully Identifies All Testing Lives in
Being, 67 Wash. Univ. L.Q. 949 (1989).
[32]Tex.
Prop. Code Ann. § 5.043(a) (Vernon 1984).
[33]See Martin
D. Begleiter, Attorney Malpractice in Estate Planning—You’ve Got to Know
When to Hold Up, Know When to Fold Up, 38 U. Kan. L. Rev. 193, 238-39
(1990).
[34]See id.,
at 233-42.
[35]Tex.
Prob. Code Ann. § 145 (Vernon 1980 & Supp. 2002).
[36]Id.
§ 154A (independent administration); id. §§ 223-27 (dependent
administration).
[37]Id.
§ 195(a).
[38]Id.
§ 195(b).
[39]Id.
§ 145(p).
[40]Id.
§ 241.
[41]See Stanley
v. Henderson, 139 Tex. 160, 164, 162 S.W.2d 95, 97 (1942).
[42]See Elmo
Schwab, The Lawyer As Beneficiary, 45 Tex. B.J. 1422 (1982) (discussing
ancient doctrine of “qui se scrip sit heredem”).
[43]130
S.W.2d 449 (Tex. Civ. App.—Austin 1939, writ dism’d judgmt cor.).
[44]Id. at
451.
[45]Tex.
Prob. Code Ann. § 58b(b) (Vernon Supp. 2002).
[46]For
a comparison of this statute with Rule 1.08(b) of the Texas Disciplinary
Rules of Professional Conduct, see e-mail from Glenn Karisch to
probate@i.com entitledGovernor signs SB 1176 — Voiding Bequests to
Attorneys (June 20, 1997) (also reviewing some of the problems with the
new statute).
[47]See,
e.g., Hurt v. Smith, 744 S.W.2d 1, 3 (Tex.1987) (“Although the old
common law made a distinction between bequests, legacies and devises, we
use the terms interchangeably in this opinion.”); Perry v. Hinshaw, 633
S.W.2d 503, 505 (Tex.1982) (using terms “devise” and “bequest” when
referring to real property).
[48]See
also Texas Government Code § 573.024 which provides that two individuals
are related to each other by affinity if they are married to each other.
[49]Tex.
Disciplinary Rules of Prof. Conduct, Rule 1.08(b) (1991).
[50]State
Bar Of Texas, Ethical Considerations on Code of Professional
Responsibility, EC 5-6 (1972).
[51]State
Bar of Texas, Comm. on Interpretation of the Canons of Ethics, Op. 71
(1953).
[52]See Howard
M. McCue III, Flat-Out of the Will Business—A Recent Malpractice Case
Results in an Expensive Settlement for Both Lawyer and Executor, Tr. &
Est.,Sept. 1988, at 66 (discussing San Antonio lawsuit which was settled
when law firm agreed to pay over $4 million to plaintiff; the attorney
who drafted the will had named attorneys employed by the firm as
executors).
[53]See Larry
W. Gibbs, The Lawyer’s Professional Responsibility in Estate Planning
and Probate—Common Solutions and Practical Problems, in State Bar of
Texas, Practical Will Drafting and Representing the Estate and
Beneficiaries in Hard Times, ch. F, 2-6, 24-26 (1987) (includes sample
disclosure form).
[54]See
id. at ch. F, 13-26 (1987); Teresa Collett, And the Two Shall Become as
One . . . Until the Lawyers are Done, 7 Notre Dame L.J. Ethics &
Pub. Pol’y 101 (1993); Malcolm M. Moore & Anne K. Hilker, Representing
Both Spouses: The New Section Recommendations, Prob. & Prop., July/Aug.
1993, at 26; James R. Wade, When Can A Lawyer Represent Both Husband and
Wife in Estate Planning?, Prob. & Prop., Mar./Apr. 1987, at 12.
[55]Martin
D. Begleiter, Attorney Malpractice in Estate Planning—You’ve Got to Know
When to Hold Up, Know When to Fold Up, 38 U. Kan. L. Rev. 193, 218
(1990).
[56] See Gerry
W. Beyer, The Will Execution Ceremony — History, Significance, and
Strategies, 29 S. Tex. L. Rev. 413 (1988).
[57]See Hamlin
v. Bryant, 399 S.W.2d 572, 575 (Tex. Civ. App.—Tyler 1966, writ ref’d
n.r.e.). See generally Gerald P. Johnston, Legal Malpractice in Estate
Planning and General Practice, 17 Mem. St. U.L. Rev. 521, 529 n.43
(1987).
[58]See Martin
D. Begleiter, Attorney Malpractice in Estate Planning—You’ve Got to Know
When to Hold Up, Know When to Fold Up, 38 U. Kan. L. Rev. 193, 221 n.160
(1990).
[59]See Palmer
v. Unauthorized Practice Comm. of the State Bar, 438 S.W.2d 374, 376
(Tex. Civ. App.—Houston [14th Dist.] 1969, no writ); Gerry W. Beyer, The
Role of Legal Assistants in the Estate Planning Practice, Est. Plan.
Dev. for Tex. Prof., April 1989, at 1, 2-3. See generally Gail E.
Cohen, Using Legal Assistants in Estate Planning, Prac. Law., Oct. 15,
1984, at 73; Robert S. Mucklestone, The Legal Assistant in Estate
Planning, 10 Real Prop. Prob. & Tr. J. 263 (1975).
[60]Tex.
Prob. Code Ann. § 59 (Vernon Supp. 2002).
[61]Id.
[62]See Estate
of Pavlinko, 148 A.2d 528 (1959).
[63]Tex.
Prob. Code Ann. § 59 (Vernon Supp. 2002).
[64]Id.
[65]Id.
[66]Nichols
v. Rowen, 422 S.W.2d 21, 24 (Tex. Civ. App.—San Antonio 1967, writ ref’d
n.r.e.); see also Morris v. Estate of West, 643 S.W.2d 204, 206 (Tex.
App.—Eastland 1982, writ ref’d n.r.e.) (attestation deemed to be outside
of testator’s presence because testator could not have seen witnesses
sign without walking four feet to office door and fourteen feet down a
hallway).
[67]Tex.
Prob. Code Ann. § 61 (Vernon 1980).
[68]Id.
§ 61.
[69]Id.
§ 62.
[70]See Broach
v. Bradley, 800 S.W.2d 677 (Tex. App.—Eastland 1990, writ denied)
(self-proving affidavit invalid because the notary had not properly
sworn the witnesses).
[71]Tex.
Prob. Code Ann. § 59 (Vernon Supp. 2002)
[72]Tex.
Gov’t Code Ann. § 406.014 (Vernon 1990).
[73]See Combs
v. Howard, 131 S.W.2d 206 (Tex. Civ. App.—Fort Worth 1939, no writ).
[74]See § B
beginning on page 2.
[75]Tex.
Prob. Code. Ann. § 69(a) (Vernon Supp. 2002)
[76]If
there is no express provision, it may be possible to demonstrate to the
court that the terms of the trust must be modified or that the trust be
terminated because compliance with the terms of the trust would defeat
or substantially impair the accomplishment of trust purposes because of
circumstances not known to or anticipated by the settlor. Tex. Prop.
Code Ann. § 112.054(a) (Vernon 1995). However, the court’s power
of deviation is not usually available to change or remove a trust
beneficiary. See George T. Bogert, Trusts § 110, at 401 (6th ed. 1987).
[77]Tex.
Prop. Code Ann. §§ 113.101-111 (Vernon 1995 & Supp. 2002).
[78]Id.
§ 113.101(a).
[79]Id.
§ 112.035 (“A declaration in a trust instrument that the interest of a
beneficiary shall be held subject to a “spendthrift trust” is sufficient
to restrain voluntary or involuntary alienation of the interest by a
beneficiary to the maximum extent permitted by [the Trust Code].”).
[80]Tex.
Prop. Code Ann. § 112.051(a) (Vernon 1995).
[81]Tex.
Civ. Prac. & Rem. Code Ann. § 166.152 (g) (Vernon Supp. 2002).
[82]Some
courts in other jurisdictions hold that an attorney may retain the
original will only “upon specific unsolicited request of the client.”
State v. Gulbankian, 196 N.W.2d 733, 736 (Wis. 1972).
[83]See Leatherwood
v. Stephens, 24 S.W.2d 819 (Tex. Comm’n App. 1930, judgment adopted).
[84]Tex.
Prob. Code Ann. § 37A (Vernon Supp. 2002); Tex. Prop. Code
Ann. § 112.010 (Vernon 1995).
[85]I.R.C.
§ 2518 (West 1992).
[86]See
generally Ronald A. Brand & William P. LaPiana, Disclaimers in Estate
Planning: A Guide to Their Effective Use (1990); Bruce D.
Steiner, Disclaimers: Post-Mortem Creativity, Prob. & Prop., Nov./Dec.
1990, at 43.
[87]See John
L. Lombard, Jr., 10 Reasons Why You Should Be Recommending the Durable
Power of Attorney to Clients, Prob. & Prop., Jan./Feb. 1987, at 28, 28.
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.
© 2002 Gerry W. Beyer