It eliminates the argument that the disinheritance was a mistake-the result of Mr. XYZ having prepared his own Will without the assistance of an attorney.
Correspondence and memos in the attorney’s files can be used to prove that the disinheritance was deliberate, and was done when Mr. XYZ was of sound mind.
The attorney can advise Mr. XYZ that a better way to go would be with a revocable living trust, which could maintain his privacy and allow his assets to be distributed without notifying the disinherited child.
In some states, if Mr. XYZ signs his Will under the supervision of an attorney, then it is presumed to have been validly executed.
Example #3
Wife is married to Husband, her second spouse. Wife has three adult children from a prior marriage. Husband has one adult child from a prior marriage. Wife goes to her lawyer and says that if Husband survives her, then she wants to leave 70% of her estate to Husband and the other 30% of her estate to her 3 children. If Husband does not survive her, then she wants her entire estate to pass to her three children.
The lawyer dutifully draws up a Will that says something like “Upon my death I give, devise, and bequeath my residuary estate 70% to Husband and 30% to my three children in equal shares.” Sounds simple, right? Why does Wife need a better lawyer?
This is a disaster waiting to happen. Think about what happens if Wife dies first. Husband receives 70% of Wife’s estate and each of Wife’s children receives 10%. That’s okay so far.
Husband later dies (perhaps as soon as the next day). Who now gets the 70% of Wife’s estate that was left to him? Do Wife’s children get it? No, Wife left it to Husband outright, so now it passes to his estate. As it turns out, Husband’s Will leaves his entire estate to his only child.
Bottom line: Husband’s child winds up with 70% of Wife’s estate, while each of Wife’s children gets only 10%. Is this what you think Wife wanted? Wife’s estate planning attorney could have solved this problem by using a trust to benefit Husband during his lifetime, while at the same time preserving her children’s inheritance.
How to Choose an Attorney
You can see how important it is to have the right attorney. Start by getting recommendations from people you know, as well as other professionals you trust, such as your accountant, financial advisor, insurance agent, or banker. You should be able to answer the following questions about any attorney that you might hire:
Where is the attorney licensed to practice law?
What type of law does the attorney practice and how much experience does he or she have?
Are you comfortable discussing personal matters with the attorney?
Is the written communication you receive from the attorney clear? Does it make sense to you?
How will the attorney charge you for the work?
Choose an Attorney Licensed in Your Domicile
An attorney must be admitted to the bar (licensed) by each state in which he or she practices law. The state that has legal control (jurisdiction) over the settlement of your estate is, generally speaking, the state of your legal residence or domicile when you die. It’s best to choose an estate planning attorney who is licensed in the state of your domicile.
A typical definition of domicile is “a fixed, permanent and principal home to which a person wherever temporarily located always intends to return.” (NY SCPA §103(15); O’Neill’s Estate v. Tuomey Hospital, 254 S.C. 578 (S.C. 1970)). In many cases, it’s easy to determine your domicile. However, it can get complicated if you have more than one residence and/or have businesses and property in more than one state. You can have more than one residence, but you can only have one domicile.
If you’re not sure which state is your domicile, discuss it with your prospective attorney. Although the definitions of domicile usually refer to a person’s intention, as a practical matter some of the following factors may apply:
How many days out of the year do you live in the state?
Do you have a residence in the state?
Do you own real estate in the state?
Do you own other types of property located in the state?
Do you file income tax returns in the state?
Are you registered to vote in the state?
Do you have a driver’s license in the state?
Do you own or operate a business in the state?
In addition, if you own real estate or tangible personal property in a state other than your domicile, that other state will generally have jurisdiction over that specific property. Your estate planning attorney may have to consult with, and you may have to hire, an attorney licensed in the other state in order to plan for your out-of-state property.
Choose an Estate Planning Attorney
The practice of law has become so complicated that it is now quite common for attorneys to limit the areas of the law in which they practice.
For example, the attorney who helped you buy your home might limit his or her practice to real estate matters. A real estate lawyer might further limit his or her practice to residential real estate, as opposed to commercial real estate. A divorce lawyer might not handle DUIs. A criminal lawyer might not handle business transactions.
You are best served by choosing an attorney to plan your estate from among experienced estate planning attorneys, also known as trusts & estates attorneys. These are attorneys who spend a significant proportion (if not all) of their professional time practicing in the area of trusts & estates law. They are highly familiar with the laws and customs of the state or states where they practice when it comes to estate planning, probate and trust matters like the ones discussed in this book. They also keep up with important changes to these laws.
If you’re concerned about matters like nursing home expenses or qualifying for Medicaid, you may also wish to consult an elder law attorney. Elder law attorneys spend a significant proportion (if not all) of their professional time in the realm of Medicaid, long-term care, nursing home, and other issues of concern to the elderly. Because they concentrate their practice in these areas, they can more easily keep up with the complexities of the laws and regulations and any changes to them.
While many estate planning attorneys have a working knowledge of how Medicaid operates, not all of them have experience in navigating the day-to-day complexities of planning for Medicaid eligibility and applying for Medicaid. If you think you may have a need in these areas, you should discuss this with your attorney or prospective attorney.
Choose an Attorney With Experience in Your State
Let’s say you’re considering an estate planning attorney who is licensed to practice law in the state of your domicile. You should also find out whether the prospective attorney has experience practicing trusts & estates law in that state. Having a license to practice law in a certain state and having estate planning experience there are two different things.
For example, an attorney who practices law in State A might apply for and obtain a license in State B, but that doesn’t mean that he or she has experience practicing law in State B. Evaluate both the licensure and the experience of a prospective estate planning attorney before making your choice.
Evaluating Your Comfort Level
Estate planning is more than just document production. Your attorney should counsel and advise you about the best ways to accomplish your estate planning goals and objectives.
Therefore, you should feel comfortable talking with your attorney about your goals, questions, and concerns. Estate planning is complicated and you’ll need to consider many details. Your attorney should be able to explain to you why the plan is structured as it is, and how it will achieve your wishes. Don’t be afraid to ask questions. If you don’t understand something, go back over it until you do.
Many people, consciously or subconsciously, think that if a speaker uses a lot of jargon or is otherwise incomprehensible it means that the speaker is knowledgeable. Don’t fall into that trap. If a prospective attorney can’t explain something in a w
ay that makes sense to you, that is a red flag.
If you think a prospective attorney is dismissive or overbearing, or you feel uncomfortable or pressured in any way, you should not go forward.
Evaluating Written Communications
When evaluating the written work you receive from your attorney, consider the quotation at the beginning of this book. Albert Einstein said, “Everything should be made as simple as possible, but not simpler.” That is a good guide. Chances are you won’t understand every word of the draft Wills, trusts and other documents your attorney prepares for you, and you should not expect to. But neither should they be completely incomprehensible.
Also, the documents used in estate planning should not resemble commodities that can be purchased off the shelf. You are not just purchasing a binder full of papers (no matter how nice the binder is). I would be wary of anything that was touted as a one-size-fits-all, fill-in-the-blanks solution. Beware of documents that have blanks that are not filled in or that have schedules and attachments which are blank.
As I mentioned at the start of this book, one of the first written items you receive from your attorney will probably be an estate planning questionnaire. The questionnaire usually asks about your family, your assets and other information necessary to plan your estate successfully. It is also often your first impression of the attorney and can provide an important clue about the attorney’s communications skills. Do the questions make sense to you? Is the questionnaire laid out in a logical fashion or is it rambling and overly long? Do you get tired just looking at it? The questionnaire may tell you a lot about whether or not this attorney is someone with whom you wish to work.
About Legal Fees
Make sure you establish early on (no later than the first meeting), how the attorney will charge you for the work. While some attorneys will quote a flat fee, many attorneys charge by the hour. The hourly rate is usually a function of the attorney’s experience. The more experienced the attorney, presumably the less time the work will take.
Some estate planning attorneys use paralegals and will charge you for the paralegals’ time. In theory, this saves money because presumably the paralegal is performing functions (at a lower hourly rate) which the attorney would otherwise be performing (at a higher hourly rate). For example, paralegals can help to transfer property into an RLT efficiently. But beware of being charged for secretarial tasks, such as setting up meetings and the like. You may want to ask the prospective attorney about paralegal charges and listen carefully to the answers.
Keeping Your Estate Plan Up to Date
Once you have an estate plan, it’s tempting to put it away and forget about it. That may be reasonable for a time. But you don’t want an out-of-date estate plan to create problems for your beneficiaries. Here are some tips to help you keep your estate plan up to date and problem free.
If You Move to a Different State
What happens if you’ve planned your estate with the help of an attorney in one state, but later move to another? Will your estate plan still be valid? Just as important, will it still function in a way that accomplishes your goals and objectives?
If you move, the best course of action is to have a licensed, experienced estate planning attorney in your new location review your estate plan. The attorney can make sure that the documents function as intended under the law of your new state. Your estate plan may still be fine the way it is, or it may need some minor changes, or it may need to be totally re-done. Your new attorney can make recommendations and explain any necessary changes.
When Should You Review Your Estate Plan?
You should review your estate plan any time there is a significant change in your family or financial situation. You may also want to review it at set intervals, for example, every few years. Here are some situations that may prompt you to review your plan:
you become aware of a change in federal or state law,
you get married, divorced or re-married,
you have a new child or grandchild,
you wish to change who you named as executor or trustee, or your named executor or trustee dies,
you wish to change who you named as your children’s guardian or your named guardian dies,
one of your beneficiaries dies,
a beneficiary’s situation changes (for example, marital problems, substance abuse),
your assets change in a significant way,
you inherit assets or receive assets as a gift,
you purchase new or additional life insurance,
you change your mind about the distribution of your estate, or
you feel uneasy about any part of your estate plan.
How Should You Make Changes to Your Estate Plan?
If you think you need to make changes, contact your attorney for help. It is not enough for you simply to write your new wishes on your documents, cross things out, or send a letter to your attorney about the changes you wish to make.
All changes must be made with the appropriate legal formalities. For example, you can’t change a Will by altering the document. Rather, your attorney may prepare a separate document called a codicil (an amendment to your Will), which must be signed and witnessed just like a Will. Or, because computers make it so easy these days, your attorney may prepare a new Will altogether. It’s less confusing to have a new Will than an old one with many codicils.
Similarly, to change a trust, your attorney may prepare an amendment to your old trust, or may prepare a new trust agreement. A new trust document avoids the complication of a trust agreement with many separate amendments. Another advantage of a new document is that your beneficiaries won’t see changes that were made with respect to property passing to them.
Your attorney can guide you in the best way to update your estate plan.
Remember
In the complex and technical world of estate planning, what appears “simple” can cause problems down the road.
You are best off with the guidance of an estate planning attorney who is licensed and experienced in the state of your domicile.
Make sure you are comfortable with your estate planning attorney and that he or she has excellent oral and written communications skills.
Conclusion
YOU HAVE A LOT of choice when it comes to estate planning. You want to make sure that the money you spend on it is money well spent. How you do that starts with understanding the basic concepts and building blocks of estate planning. Next you need to find the right attorney to help you define and achieve your estate planning goals and objectives. Finally, you need the confidence to ask the right questions and the ability to evaluate the answers based on your own knowledge.
I hope this book has helped you acquire the knowledge you need to move forward confidently with your estate planning. Don’t forget-You are the Savvy Client!
Index
account
of an agent
of an executor
accounting
of an agent
of an executor
advance directives
agent
attorney-in-fact
beneficial ownership
beneficiary
of a trust
of a Will
beneficiary designation
bequest
conservator
for an adult
for a child
created (how a trust is)
custodian
decedent
devise
discretion
domicile
elder law attorney
estate
estate plan
estate planning attorney
executor
funded (how a trust is)
general durable power of attorney
general power of attorney
grantor
guardian
for an adult
for a child
guardianship
Health Care Power of Attorney
> incapacitated
intangible personal property
intestacy
intestacy laws
intestate estate
inventory
joint owner
jurisdiction
Last Will and Testament
legal heirs
legal ownership
living trust
Living Will
non-probate property
personal property
personal representative
pourover Will
power of attorney
principal
probate
probate estate
probate property
property
real property
residuary clause
residuary estate
residue
revocable living trust ("RLT")
springing power of attorney
surviving spouse
tangible personal property
taxable estate
testamentary trust
trust
trust agreement
trust document
trust property
trustee
trusts & estates attorney
Will
Estate Planning for the Savvy Client Page 7