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U.N % 0( UBH3 U@{ UJ 0 0  0s+ 0 09 1 0=U0 0hFUND 0P 0Z 0d< 0  0z 0" 0  0E 0  0 0 0\ 0L@3w@s4 m 1me\B] 0 0D'& Bk& 0D& 1& 0y' 03=( C:) 0W)A(* Ci/!/E0UQ@0`0F2 3 0g6 w6 0e=7^ 7U>7|7 0@h9 0l9 :N: 0 E: 1ka:0:f: 0N: 1L; 0; 0Z< 02= 0>U? 0DqAfAaA8ABfEaEfEaF:F3NFfGaGfGaGfG GaGfGaGfG D ?Ga:HfNHaPHdHflHanHfHaHU>HHI*K"K9K!N =OGRaaRuRGSTbV|0WUNXUXUNO[[UN\\UN^^UNbb"-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-c-cOcBrother MFC-P2000 series,,,,,,0x9 Z6Times New Roman RegularX($H` AZ0Univers (WN) Regular* `(CG TimesScalableG  Z 2CG Times (WN) RegularxE?:Tbl ContentsNew Pg#: i; Margins; Table of Contents Def@"< TableofContents   :PDP CLE FormMargins, Font, Paper, Justification, TabsC ɯ$$ CTRY 3'Y 3' 3' Letter 3' LetterT&&&&&g&&&XXXX  -XP X-     #dddd(K$2c  I  .3  0  (so$0  0` (#(#2c  1  .3  0 ` (#` (#(I$0  0` (#(#0 ` (#` (#2c  a  .3  0 (# (# $c7msyPDPI. A. 1. a. (1) (a) i) a) I.A.1.a.(1)(a)i)a)x(%$0 ) p`CG Times(V$0 0 (6 Z 6Times New Roman Regular((D$0 0 0 (2e$0 0 0 0 (<>$0 0 0 0 0 ~101 RomanAuto  #, CEOP, Bold, Mark TOC Level 1   2 e  0  .3  Ԁ  l<Y=0ColumnsNewspaper Columns, .25 Gutter , |(e'6Cover PageCenter Page, Very Large, Bold, HPg       .( {^,Title1" L/R Margins, VyLrg/Bold, New Page Method/#: 1     1n:2 UpperAlphaAuto  #, CEOP, Bold, Mark TOC Level 2   2 e  a  .3  Ԁ  4H-63 Arabic #Auto  #, CEOP, Undl, Mark TOC Level 3   2 e  i  .3  Ԁ  5:4 LowerAlphaAuto  #, CEOP, Undl, Mark TOC Level 4   2 e(  0  )3  Ԁ  |2 :5 (Arabic #)Auto  #, CEOP, Mark TOC Level 5   2le(  a  )3  Ԁ  tcC:1st Art.PageNew Page #: 1; JustificationXX  2b0Quick 0 $D$D$$D$$$e$e$e$Ds]&\`Ѓ3|x$?U# e37=CIQYag1.a.i.(1)(a)(i)1)a)C:\WINDOWS\TEMPLATE\STANDARD.WPTp8Lrhd/G/D/ioI&G Letterhead/ GMK/Date/ioXpXXXpXXXXXXXpj@t t Ikard&Golden,p.c.  XXjXXX@attorneys&counselors  LL8 X8"X\;XX\;\;Q44FrankN.Ikard,Jr.*@ll!823CongressAvenueQH H B8"Correspondence: L QAlvinJ.Golden*@&Suite910Q& & A8"P.O.Box684367 $ QZZGlennM.Karisch*@zz Austin,Texas78701Q=8"Austin,Texas787684367 \ QJerryFrankJones(OfCounsel)*@TT$512/4726695Q  A8"Fax512/4723669 4 Q^^\;*BoardCertified D QEstatePlanning&ProbateLaw@email:karisch@io.com\;^^Q?8"WritersDirectLine | Q88\;\;^^\;TexasBoardofLegalSpecialization@http://www.io.com/user/karisch/ikard&golden.html\;^^Q C8"512/4724542  T  XXXXB.` hp x (#%XB\ \;XpX \@,,$ &March8,1996!  (3$ !   d(2$ !   -$HCypdp_#.styI. A. 1. a. (1) (a) i) a) I.A.1.a.(1)(a)i)a)($0  0` (#(#0 ` (#` (#0 (# (#2c(  1  )3  0h(#(#4H-43 NumbersAuto #, ALL CAPS, Mark Text, Underline   2 e  i  .3  Ԁ  6$ Diagonal Lines 1dd z285 (Numbers)Auto #,Upper/Lower Case,Mrk Txt   2 e(  a  )3  Ԁ   7 @$    8    _1XX ` Tex.Prob.CodeAnn._490_Ԁ(statutorydurablepowerofattorneyform);Tex._Health&Safety X Code166.164_Ԁ_(medicalpowerofattorney_Ԁform);Tex._Prob._ԀCodeAnn._679_Ԁ(declarationofguardianform);Tex.Health&SafetyCode_166.033__(directive_Ԁtophysicians_andfamilyorsurrogatesform)._ԀCurrentversionsoftheseformsareavailableinWordPerfectandhtml(WorldWideWeb)formatsattheauthorswebsite_(__4Q G  5  www.texasprobate.com6mG@  7  _Ԁ_Ԅclick_Ԁ Formsor Disability_Planning).There_Ԁisnostatutoryformforamanagement p _trust.#X0WX1S#_d  )'  _ ProtectingtheSurvivingSpouse"""(#_@    5  A  _ X ?*4' dE`? x`  Z(CG Times Regular V +(  __ @    5  A  _(#_UTIntermediateEstatePlanning,GuardianshipandElderLawConference_Ԉ X ?*4' dEx? a, b, c,Level 1Level 2Level 3Level 4Level 5 RemaindermenBRADYSBradys refdn.r.e. DistBarceloApplingMcCamishLoeffler QTIPWesterfeldHuckabyWilkersonMcClaryincludibledecisionmakercaregiversremaindermenterroremnontrusteedisclaimantnonlawyersBogertI.R.C. Rul PLR TRPAMizell FLPs FLPkarischRindfussCochranArlittQuernerDistributees6#54Quick a. 7  .0 71, 2, 3,Level 1Level 2Level 3Level 4Level 54#62Quick 1.:  .0 :ā&W AZ&Univers Regular r @$    1    __ ` 1XXTheword incompetentisusedinthiscontexttorefertogoodoldfashioned_dunderheadedness_ X andnotmentalincapacityordisability.#X0WX1o#2b0Quick 0 ((3$ !      0  H(5$  10  $35;AGOW_e1A.1.a.(i)(1)(a)i)a)mailto:[probate@io.com]($ I -JKLhsCEIMQUY]aAutoList1i)1)a)(_y$0  2c  A  .3  0` (#(#(p$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2c(  a  )3  0h(#h(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2c  i  )3  0(#(#( =$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2c  a  )3  0p(#(# K @$    2    _ ` 1XXIfonetakesaholisticapproachtohealth,thenfreeingthesurvivingspousefromsomeofthe X burdensofcreditorclaimsandfiduciaryclaimsdiscussedabovemayhaveapositiveeffectonhisorherhealth.Plannersworkinadynamicfamilyenvironment,anditisnotmuchofastretchtosaythatanexperienced,capableplannercanenhancethehealthofhisorherclient,ifnotthefamilyasawhole.#X0WX1_#(3$ !  ݤTABLE Ahttp://www.texasprobate.com  @$    9    _1XX ` Inthiscase,_the___Ԁdeterminingfactorforthecourtwasthat,whilethedesignatedagentplannedto X keephermotherinanursinghomenearherhomebecausejobconstraintspreventedherfromkeepinghermotherathome,the_nondesignated_Ԁsiblingworkedoutofhishomeandrepresentedtothecourtthathismothercouldlivethereinsteadof_ina_Ԁnursinghome.Whiletheauthordisagreedstrenuouslywiththecourtoveritsreadinesstodisregardtheproposedwardswishesasexpressedintheguardianshipdeclaration,he_does_Ԁnotdisputethatthecourtwasdoingwhatitthoughtwasbestfortheproposed_ward._#X0WX1S#ԬTABLE BTABLE Chttp://www.texasprobate.com. ) +(  __ @    5  A  _>>>(#SouthwesternLegalFoundationWillsandProbateInstitute X ?*4' dEx? dHTABLE ETABLE Fseparate bypassTABLE G4TABLE H****3 ShadowdZdTABLE ITABLE Jpoa TABLE KjTABLE L/AZ&Univers Regular @$    3    _ ` 1XXGendercorrectnesscheck:Isit conmenor conpersons?#X0WX1_#  @$    4    _ ` 1XXDuringthelastthreesessionsoftheTexasLegislature,abillseekingthesealingofprobate X inventorieshasbeenintroduced.Eachtimethebillhasfailedtopass.AsofApril8,1999,theauthorassumesthatthissessionseffort"HB3233"alsowillfail.#X0WX1_#living trust privacydisclaimer trust / @$    5    _ ` 1XXTheremaysomewaffleroomundertheTexasDepartmentofHumanServicesregulations X regardingdisclaimers,40T.A.C.15.455(e)(5)(D).Forplanningpurposes,oneshouldnotrelyonthepossibilityofadisclaimerforMedicaidpurposes,butinapinchitmaybeworthretaininganattorneywhoiswellversedwithMedicaideligibilityissuestoseeifanythingcanbedone.#X0WX1_#  )'  _ ProtectingtheSurvivingSpouse""J(#_@    5  A  _ X ?*4' dE`?   @$    6    _ ` 1XXItmayseemfarfetchedtodiscussMedicaidplanningandbypasstrustplanninginthesamebreath, X buttherearemanylandrich,cashpoorTexansforwhomthisisaveryrealissue.IfthepotentialMedicaidrecipientlivesonafarmorranchworthgreaterthan$650,000,heorshecouldhaveataxableestatewhileatthesametimebeabletohavethefarmorranchtreatedasanunavailableresourceforMedicaidpurposes,sinceoneshomecanbeanunavailableresourceandsinceTexasdoesnotyethaveanestaterecoveryplantoplaceorenforceaMedicaidlienononeshome.#X0WX1_#V&E v. MoranTABLE D N*  _ lXb7XXDIRECTIVETOPHYSICIANSANDFAMILYORSURROGATES D(#PAGE__#X0WX7lXb7#   @$    7    _ ` 1XXHB2681,pendinginthe76thTexasLegislatureasofApril8,1999,wouldcodifyTexasslaws X regardingbusinessorganizations"includinglimitedpartnerships"intotheTexasBusinessOrganizationsCode.#X0WX1_# v +(  __ @    5  A  _(#_UTIntermediateEstatePlanning,GuardianshipandElderLaw_Conference__Ԉ X ?*4' dEx?  N*  _ lXb7XXMEDICALPOWEROFATTORNEYANDDISCLOSURESTATEMENT D(#PAGE__#X0WX7lXb1#  r @$    1    __ ` {/XXTheword incompetentisusedinthiscontexttorefertogoodoldfashioned_dunderheadedness_ X andnotmentalincapacityordisability.#{XX/o#x9 Z6Times New Roman Regular K @$    2    _ ` }/XXIfonetakesaholisticapproachtohealth,thenfreeingthesurvivingspousefromsomeofthe X burdensofcreditorclaimsandfiduciaryclaimsdiscussedabovemayhaveapositiveeffectonhisorherhealth.Plannersworkinadynamicfamilyenvironment,anditisnotmuchofastretchtosaythatanexperienced,capableplannercanenhancethehealthofhisorherclient,ifnotthefamilyasawhole.#}XX/_#x9 Z6Times New Roman Regular @$    3    _ ` /XXGendercorrectnesscheck:Isit conmenor conpersons?#XX/_#x9 Z6Times New Roman Regular  @$    4    _ ` /XXDuringthelastthreesessionsoftheTexasLegislature,abillseekingthesealingofprobate X inventorieshasbeenintroduced.Eachtimethebillhasfailedtopass.AsofApril8,1999,theauthorassumesthatthissessionseffort"HB3233"alsowillfail.#XX/_#x9 Z6Times New Roman Regular  @$    9    _/XX ` Inthiscase,_the___Ԁdeterminingfactorforthecourtwasthat,whilethedesignatedagentplannedto X keephermotherinanursinghomenearherhomebecausejobconstraintspreventedherfromkeepinghermotherathome,the_nondesignated_Ԁsiblingworkedoutofhishomeandrepresentedtothecourtthathismothercouldlivethereinsteadof_ina_Ԁnursinghome.Whiletheauthordisagreedstrenuouslywiththecourtoveritsreadinesstodisregardtheproposedwardswishesasexpressedintheguardianshipdeclaration,he_does_Ԁnotdisputethatthecourtwasdoingwhatitthoughtwasbestfortheproposed_ward._#XX/S#x9 Z6Times New Roman RegularPECUNIARY BYPASSspecial power !  _  C c$#%CTRX3'X3' Letter3' Letter3'T&{%XX&{%%&{XX  -XP X-     #dddd  e'    % A x6&{PROTECTINGTHESURVIVINGSPOUSE#&{%x# < GLENNM.KARISCHk" 6&{Barnes&Karisch,P.C.   2901DBeeCavesRoad  Austin,Texas78746(512)3288355/FAX(512)3288413karisch@texasprobate.com_http://www.texasprobate.com$www.io.com$#&{% k"#_  ,D,6&{Copyright_1997,_9ByGlennM.Karisch,AllRightsReserved#&{%,D#  _TheUniversityofTexasSchoolofLawIntermediateEstatePlanning,GuardianshipandElderLawConference______August2627,_Ԁ1999_   ,)# _e'    (   &%%&{@"GlennM.Karisch  @WW#&{%%&#L%&{Barnes&Karisch,P.C. J @xx2901BeeCavesRoad,SuiteD@ Austin,Texas78746@AA(512)3288355Fax:(512)3288413@karisch@texasprobate.com j @rr www.texasprobate.com#&{%L#Education  j   TheUniversityofTexasSchoolofLaw,Austin,Texas b  0  _Juris_ԀDoctorwithHonors,1980 (#(# TheUniversityofTexasatAustin,Austin,Texas0  BachelorofJournalismwithHighestHonors,1977 J (#(# ProfessionalExperience B  Barnes&Karisch,P.C.,Austin,Texas,1998PresentIkard&Golden,P.C.,Austin,Texas,19928Hoffman&Stephens,P.C.,Austin,Texas,19912TheTexasMethodistFoundation,Austin,Texas,VicePresidentandGeneralCounsel,19891991Coats,Yale,_Holm_Ԁ&Lee,Houston,Texas,19801989 ProfessionalActivities j  BoardCertified,EstatePlanningandProbateLaw,TexasBoardofLegalSpecializationFellow,AmericanCollegeofTrustandEstate_Counsel__Member,RealEstate,ProbateandTrustLawCouncil,StateBarofTexas,1999_Chair,EstatePlanningandProbateSection,TravisCountyBarAssociation,199697  z LegalArticlesandPapers  r! AuthorandEditor,TexasProbateWebSite_[www.texasprobate.com]_Ԁandemailmailinglist[4E G  5  probate@io.com]6sG  7 Ԁ(1995_Ԅ99).__ $ ____ ModifyingandTerminatingIrrevocableTrusts,StateBarofTexasAdvancedEstatePlanningandProbateLawCourse(1999)._ LegalResearchontheInternet,(withJosephG.Hodges,Jr.,Denver,Colorado),AmericanCollegeofTrustand_Estate_ԀCounsel1999AnnualMeeting. UsingtheInternetinanEstatePlanningPractice,StateBarofTexasAdvancedEstatePlanningandProbateLawCourse(1998). SleepingWiththeEnemy:HowtoSleep_At_ԀNightWhileMakingaLivingWithanEstatePlanningPractice,TravisCountyBarAssociationEstatePlanningandProbateSeminar(1998). AretheWindsofChangeBlowingforTexasProbateCourts?,Or...5B,_orNot_Ԁ5B,ThatIstheQuestion,DocketCallinProbateCourtSeminar,SanAntonio(1998)._____"Court_CreatedTrustsinTexas,"StateBarofTexasAdvancedDrafting:EstatePlanningandProbateLawCourse(1995),updatedtoreflect1997legislativechanges(1998).&%%&{ @*___ #&{%%&;#Ԉ  .*,6   X $3$$r$$$6$$x$$$X$_ E?@" TableofContents      _  k" &{%  %|0 p    I.INTRODUCTIONTHEFORESTORTHETREES? #""J(#.**6p(#p(##1%|݌ } Ќ  %  %^0 p    II.MEETTHEBRADYS #""J(#. p(#p(##1%^y݌  4 Ќ  %  %(0 p    III.ETHICALISSUESINPLANNINGAMARRIEDCOUPLESESTATE #""J(#.Dp(#p(##2%(C݌   Ќ  V  V0 p 0 p(#p(# p   A.WhoistheClient? #""J(#.( (# (##2V6݌    Ќ  V  V0 p 0 p(#p(# p   B.EffectofBarceloandItsOffspring #""J(#.9 (# (##4V݌ a x  Ќ  D  D0 p 0 p(#p(#0@ (# (#   1.Barcelov.Elliott#""J(#.+@ (#@ (##4D ݌ 3 J  Ќ  D  D0 p 0 p(#p(#0@ (# (#   2.Vinson&Elkinsv.Moran#""J(#.1@ (#@ (##4D݌   Ќ  D  D0 p 0 p(#p(#0@ (# (#   3._Querner_Ԁv.Rindfuss#""J(#.dd,@ (#@ (##5D݌   Ќ  D  D0 p 0 p(#p(#0@ (# (#   4.Guestv.Cochran#""J(#.)@ (#@ (##5D݌   Ќ  D  D0 p 0 p(#p(#0@ (# (#   5.Arlittv.Paterson#""J(#.+@ (#@ (##6D݌ k  Ќ  D  D0 p 0 p(#p(#0@ (# (#   6.McCamish,Martin,Brown&Loefflerv.F.E.ApplingInterests#""J(#.V@ (#@ (##6D ݌ 9P  Ќ  D  D!0 p 0 p(#p(#0@ (# (#   7.DraftingEngagementLettersAfterBarcelo#""J(#.B@ (#@ (##7D!1!݌  Ќ  V  V&"0 p 0 p(#p(# p   C.DeathPlanningvs.DivorcePlanning #""J(#.9 (# (##8V&"A"݌  Ќ  V  V#0 p 0 p(#p(# p   D.ClientCommunications #""J(#.+ (# (##8V#1#݌  Ќ  D  D#0 p 0 p(#p(#0@ (# (#   1.TerminatingtheRelationshipattheEndofPlanning#""J(#.ppL@ (#@ (##8D#$݌ y Ќ  D  D %0 p 0 p(#p(#0@ (# (#   2.TooMuchofaGoodThing?#""J(#.2@ (#@ (##9D %'%݌ G^ Ќ  %  %&0 p    IV.FROMWHATAREWEPROTECTINGTHESURVIVINGSPOUSE? #t"t"I(#.@p(#p(##10%&!&݌  Ќ  V  V&0 p 0 p(#p(# p   A.FiduciaryClaimsofDescendantsandRemaindermen #t"t"I(#.F (# (##10V&'݌  Ќ  V  V'0 p 0 p(#p(# p   B.ProtectionfromCreditors #t"t"I(#.LL/ (# (##12V' (݌  Ќ  D  D(0 p 0 p(#p(#0@ (# (#   1.TortCreditorsofDeceasedSpouse#t"t"I(#.:@ (#@ (##12D((݌ Yp Ќ  D  D)0 p 0 p(#p(#0@ (# (#   2.NonTortCreditorsofDeceasedSpouse#t"t"I(#.>@ (#@ (##12D))݌ '> Ќ  D  D*0 p 0 p(#p(#0@ (# (#   3.CreditorsofSurvivingSpouse#t"t"I(#.@@6@ (#@ (##12D**݌   Ќ  V  V+0 p 0 p(#p(# p   C.IncompetentManagementofAssets #t"t"I(#.446 (# (##12V++݌  Ќ  V  V,0 p 0 p(#p(# p   D.DisclaimerIssues #t"t"I(#.' (# (##13V,,݌  Ќ  V  V-0 p 0 p(#p(# p   E.IssuesInvolvingIncapacityandDisability #t"t"I(#.@ (# (##13V--݌ g~ Ќ  V  V.0 p 0 p(#p(# p   F.PrivacyConsiderations #t"t"I(#.ll, (# (##14V..݌ 9P  Ќ  %  %/0 p    V.TRADITIONALPLANNINGTECHNIQUESANDSUGGESTEDALTERNATIVES #t"t"I(#.zzHp(#p(##14%//݌ " Ќ  V  V00 p 0 p(#p(# p   A.WillBasedPlanningvs.RevocableTrustPlanning #t"t"I(#.F (# (##14V00݌  # Ќ  D  D}10 p 0 p(#p(#0@ (# (#   1.Will/TrustContests#t"t"I(#.DD,@ (#@ (##14D}11݌ }!$ Ќ  D  Dr20 p 0 p(#p(#0@ (# (#   2.FiduciaryClaims#t"t"I(#.)@ (#@ (##15Dr22݌ K"b% Ќ  D  Dd30 p 0 p(#p(#0@ (# (#   3.UseofaLivingTrustforDisabilityPlanningPurposes#t"t"I(#.O@ (#@ (##15Dd33݌ #0& Ќ  D  D|40 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#a.UseofaLivingTrustWhenIncapacityisLikely#t"t"I(#.K@ (#@ (##15D|44݌ #' Ќ  D  D50 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#b.ConsiderProhibitingRevocationbytheSettlorsGuardian#t"t"I(#.U@ (#@ (##15D55݌ $ ( Ќ  D  D60 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#c.CorporateTrustee(orSuccessorTrustee)versusFamilyMemberTrustee#t"t"I(#. a@ (#@ (##16#@(#(#K(#.!@ (#@ (##D66݌ %!) Ќ  D  D80 p 0 p(#p(#0@ (# (#   4.PrivacyIssues#t"t"I(#.'@ (#@ (##16D8:8݌ Q&h"* Ќ  V  V90 p 0 p(#p(# p   B.FundingtheBypasswithaFormulaClausevs.aDisclaimer #t"t"I(#.^^O (# (##16V9*9݌ '6#+ Ќ  V  V:0 p 0 p(#p(# p   C.OtherDisclaimerIssues #t"t"I(#.- (# (##17V:1:݌ '$, Ќ  D  D:0 p 0 p(#p(#0@ (# (#   1.CreditorProtection#t"t"I(#.&&,@ (#@ (##17D:;݌ ($- Ќ  D  D;0 p 0 p(#p(#0@ (# (#   2.MedicaidIssues#t"t"I(#.FF(@ (#@ (##17D; <݌ )%. Ќ  D  D<0 p 0 p(#p(#0@ (# (#   3.TheImportanceofGoodAdvice#t"t"I(#.6@ (#@ (##18D<<݌ _*v&/ Ќ  D  D=0 p 0 p(#p(#0@ (# (#   4.MinimizingthePressuresSurroundingaDisclaimerDecision#t"t"I(#.S@ (#@ (##19D==݌ -+D'0 Ќ  V  V>0 p 0 p(#p(# p   D.SpouseasTrusteevs.NeutralTrustee #t"t"I(#.; (# (##20V>?݌ +(1 Ќ  V  V?0 p 0 p(#p(# p   E.HEMSIncomeDistributionStandardvs.AllIncometoSpouse #t"t"I(#.FFP (# (##20V? @݌ ,(2 Ќ  V  V@0 p 0 p(#p(# p   F.SprayPowervs.SpecialLifetimePower #t"t"I(#.nn< (# (##21V@A݌ -)3 Ќ  D  DA0 p 0 p(#p(#0@ (# (#   1.UseofaSpecialInterVivosPower#t"t"I(#.;@ (#@ (##21DAB݌ q.*4 Ќ  D  DB0 p 0 p(#p(#0@ (# (#   2.TaxEffectsofUsingaSpecialInterVivosPower#t"t"I(#.I@ (#@ (##21DB C݌ ?/V+5 Ќ  D  DD0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#a.AvoidingSupportObligations#t"t"I(#.8@ (#@ (##22DDD݌  0$,6 Ќ  D  D E0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#b.IncomeTaxEffects#t"t"I(#..@ (#@ (##22D E(E݌  Ќ  D  DF0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#c.GiftTaxEffects#t"t"I(#.,@ (#@ (##22DF*F݌  Ќ  D  DG0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#0 @ (#@ (#(1)MandatoryIncomeDistributions#t"t"I(#.> (# (##22DG*G݌  Ќ  D  D2H0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#0 @ (#@ (#(2)HEMSIncomeandPrincipalDistributionStandard#t"t"I(#.::O (# (##22D2HMH݌ Sj Ќ  D  DfI0 p 0 p(#p(#0@ (# (#   3.Summary:ProceedWithCaution#t"t"I(#.>>7@ (#@ (##23DfII݌ !8 Ќ  V  VfJ0 p 0 p(#p(# p   G.PerStirpesDistributionatDeathvs.SpecialTestamentaryPower #t"t"I(#.::V (# (##24VfJJ݌  Ќ  V  VtK0 p 0 p(#p(# p   H.FamilyLimitedPartnerships #t"t"I(#.::1 (# (##24VtKK݌  Ќ  D  D]L0 p 0 p(#p(#0@ (# (#   1.TheLaw#t"t"I(#.< < @ (#@ (##24D]LxL݌   Ќ  D  DFM0 p 0 p(#p(#0@ (# (#   2.EffectsonSurvivingSpouseasGeneralPartnerofLimitedPartnership#t"t"I(#.^@ (#@ (##25#@(#(#K(#.  %@ (#@ (##DFMaM݌ a x Ќ  V  VN0 p 0 p(#p(# p   I.StandardFiduciaryPowersandDutiesvs.SpecialPowersandDuties #t"t"I(#.  X (# (##26VNN݌ / F  Ќ  V  VO0 p 0 p(#p(# p   J.ExculpationClauses #t"t"I(#.pp) (# (##26VOO݌    Ќ  V  VP0 p 0 p(#p(# p   K.ConflictofInterestClauses #t"t"I(#.2 (# (##27VPP݌    Ќ  V  VkQ0 p 0 p(#p(# p   L.TweakingTraditionalDisabilityPlanningTechniques #t"t"I(#.I (# (##27VkQQ݌   Ќ  D  DlR0 p 0 p(#p(#0@ (# (#   1.DurablePowersofAttorneyforPropertyandDeclarationsofGuardian#t"t"I(#.]@ (#@ (##27#@(#(#K(#.  @ (#@ (##DlRR݌ w  Ќ  D  DS0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#a.0 @ (#@ (#AlwaysBackuptheDurablePowerofAttorneyforPropertywithaDeclaration E\  ofGuardian,andAlwaysDesignatetheSamePersonsDesignatedasAgentsandAlternateAgentsinthePowerofAttorneyasGuardiansandAlternateGuardiansoftheEstateintheDeclarationofGuardian#t"t"I(#.G (# (##28DSS݌   Ќ  D  DU0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#b.0 @ (#@ (#InGeneral,CoAgentsonPowersofAttorneyforPropertyAreaBadIdea#t"t"I(#.!!b (# (##28DUU݌ } Ќ  D  D(W0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#c.0 @ (#@ (#DontJustUsetheGiftGivingPowerintheStatutoryDurablePowerofAttorney Kb FormWithoutConsideringAlternativeLanguage#t"t"I(#.H (# (##29D(WCW݌ 0 Ќ  D  DX0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#d.0 @ (#@ (#ConsiderRecordingthePowerofAttorneyandRequiringRevocationstoBe  Recorded#t"t"I(#.ZZ# (# (##30DXX݌  Ќ  D  D&Z0 p 0 p(#p(#0@ (# (#   2.MedicalPowersofAttorneyandDirectivestoPhysicians#t"t"I(#.P@ (#@ (##30D&ZAZ݌  Ќ  D  D?[0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#a.0 @ (#@ (#CoordinatetheMedicalPowerandtheDirectivetoPhysicians#t"t"I(#...W (# (##31D?[Z[݌ Qh Ќ  D  D}\0 p 0 p(#p(#0@ (# (#   0@ @ (#@ (#b.0 @ (#@ (#DontForgetThattheClientDoesntHavetoHaveaPhysiciansDirective#t"t"I(#.!!d (# (##31D}\\݌ 6 Ќ  D  D]0 p 0 p(#p(#0@ (# (#   3.DeclarationsforMentalHealthTreatment#t"t"I(#.A@ (#@ (##31D]]݌  Ќ  D  D^0 p 0 p(#p(#0@ (# (#   4.FuneralDirectives/BurialInstructions#t"t"I(#.bb?@ (#@ (##31D^^݌  Ќ  V  V_0 p 0 p(#p(# p   M.PrivacyIssues #t"t"I(#. $ (# (##32V__݌  Ќ  %  %`0 p    VI.CONCLUSION #t"t"I(#. p(#p(##32%``݌ )@ Ќ  V  Va0 p 0 p(#p(# p   A.AppendixAEngagementLetter #t"t"I(#.5 (# (##33Vaa݌  Ќ  V  Vrb0 p 0 p(#p(# p   B.AppendixBTransmittalLetter(ForDrafts) #t"t"I(#.RRC (# (##37Vrbb݌   Ќ  V  Vmc0 p 0 p(#p(# p   C.AppendixCTransmittalLetter(ForExecutedOriginals) #t"t"I(#.>>O (# (##39Vmcc݌ ! Ќ  V  Vtd0 p 0 p(#p(# p   D.AppendixDDisclaimerTrustProvisions #t"t"I(#.RR? (# (##44Vtdd݌ q" Ќ  V  Vke0 p 0 p(#p(# p   E.AppendixEBypassTrustWithAllIncometoSpouse,HEMSPrincipaltoVkee݌C Z# (# (# Ќ  0 p 0 p(#p(#SpouseandSpecialTestamentaryPower #t"t"I(#.  : (# (##45 !&$ V  Vf0 p 0 p(#p(# p   F.AppendixFBypassTrustWithHEMSIncomeandPrincipaltoSpouse,Vff݌!% (# (# Ќ  0 p 0 p(#p(#SpecialInterVivosPowerandSpecialTestamentaryPower #t"t"I(#.M (# (##48 "& V  Vnh0 p 0 p(#p(# p   G.AppendixGSpecialTestamentaryPowertoDescendantsandCharity #t"t"I(#.""Y (# (##51Vnhh݌ #' Ќ  V  Vi0 p 0 p(#p(# p   H.AppendixHSpecialPowers,DutiesandLiabilityWhenSpouseisTrustee #t"t"I(#.D D _ (# (##52Vii݌ Q$h ( Ќ  V  Vj0 p 0 p(#p(# p   I.AppendixIConflictofInterestProvision #t"t"I(#.22B (# (##54Vjj݌ #%:!) Ќ  V  Vk0 p 0 p(#p(# p   J.AppendixJMedicalPowerofAttorneyForm(forusebeginningVkk݌% "* (# (# Ќ  0 p 0 p(#p(#September1,1999) #t"t"I(#.' (# (##55 &"+ V  Vl0 p 0 p(#p(# p   K.AppendixKDirectivetoPhysiciansandFamilyorSurrogatesForm$Vl m݌'#, (# (# Ќ  0 p 0 p(#p(#$$$(forusebeginningSeptember1,1999) #t"t"I(#.::: (# (##60 _(v$- #&{% k"]# Q_______________  1)H%.   C c$$ CTRX3'X3'3' Letter3' LetterT&{%%&{&{%%&{XXXX  3XP Xh3     #dddd  CXXXX     {^       PROTECTINGTHESURVIVINGSPOUSE{^r           Y=(,(#(#(  (,VV(   2c  I  .3  Ԁ  INTRODUCTIONTHEFORESTORTHETREES?kt t       Whenplanningamarriedcouplesestate,itiseasytofocusonthetaxissuesinvolvedandoverlookimportantpracticalissues.Whilemostclientswouldliketosavetaxes,iftheyreallythoughtaboutit,mostwouldprobablysayavoidingfamilyconflictsandprotectingthesurvivingspouse_are_Ԁhigherprioritiesthantaxsavings.Anestateplanner'staskistoelicitthesewishesanddraftdocumentswhicharethemostlikelytoachievetheirgoals.  Thispaperdiscussessomeoftheethicalissuesinvolvedinplanningamarriedcouplesestate,examinessomecommonestateplanningtechniquesfromtheperspectiveofthesurvivingspouseandsuggestsalternativetechniqueswhichoffergreaterprotectiontothesurvivingspousewhilestillachievingsomeorallofthetaxplanningobjectives.Italsofocusesonplanningissueswhicheitherareuniquetosurvivingspousesorareheightenedoraccentuatedfor_surviving_Ԁspousesinmanycases.   2c  II  .3  Ԁ  MEETTHEBRADYSly y   Ul    Heresthestoryofalovelyladywhowasbringingupthreeverylovelygirls.Allofthemhadhairofgoldliketheirmother,theyoungestoneincurls.ItsthestoryofamannamedBradywhowasbusywiththreeboysofhisown.Theywerefourmenlivingalltogether,yettheywereallaloneuntilonedaywhentheladymetthisfellow,andtheyknewthatitwasmuchmorethanahunchthatthisgroupmustsomehowformafamily.ThatsthewaytheyallbecametheBradyBunch.  MikeBradywaswidowedwiththreesons(allminors):Greg,PeterandBobby.MikemarriedCarol,adivorceewiththreedaughters(alsoallminors):Marcia,JanandCindy.MikeandCarolhadthis70ishideathattheycouldmergetheirfamiliesintoonebig,happyfamily,withallsixchildrentreatedasthechildrenofbothparents.  MikeandCarolBradycametoseeyouin1986forestateplanning.ThingshadbeengoingquitewellfortheBradysatthetime,anditappearedlikelythattheircombinedmaritalwealthwouldprobablyexceed$1.2million.Fortunately,theycameintoseeyou,ayoungestateplanningattorney,shortlyafteryoureturnedfromthatyearsAdvancedEstatePlanningandProbateLawCourse,andyouwereequippedwithseveralgoodestateplanningideas.  Afteryourskillfulexplanationofthetaxissuesinvolved,andbasedonyourenergeticrecommendationthattheyshouldtakeadvantageofthetaxsavingsaffordedbycreditshelterplanning,MikeandCarolaskyoutopreparewillsforeachofthemwiththefollowingfeatures:b  b0    Apecuniaryoutrightmaritalgiftwitharesiduarybypasstrust.b݌$ '(#(# Ќ  0   (#(# b  by0    Thesurvivingspouseisexecutorandtrustee,withAlice(thehousekeeper)assuccessorexecutorand %!) trusteeuntilGregreachesage25andwithGregassuccessorexecutorandtrusteeafterheattainsage25.by݌ (#(# Ќ  0   (#(# 0  Thebypasstrustauthorizesthetrusteenotonlytomakeincomeandprincipaldistributionstothe ($- survivingspousebasedonahealth,education,maintenanceandsupportstandard,butalsotomake spraydistributionstoanydescendantofeitherspousebasedonthesameHEMSstandard. (#(# 0   (#(# b  b0    Uponthesurvivingspousesdeath,thepropertyremaininginthebypasstrustisdistributedtothesix %,<(1 children,ortotheirdescendants,perstirpes.b݌ (#(# Ќ    WhentheBradyscomeintosigntheirnewwills,Carolisalittleconcernedaboutallthecomplextax andtrustlanguageinthewill.MikegivesCaroladirtylook,andyouareafraidthattheremaybeanugly e/|+5 scene._QuicklyyousmoothoverthewatersbyexplainingtoMikeandCarolthatthesebypasstrustsarejustlikeoutrightdispositions,butwiththeaddedadvantageoftaxsavings.   Sevenyearslater,in1991,CarolBradycallsyou.ShereportsthatMikeBradyhaspassedaway(thereweresomenastyrumorsaboutAIDS,butsheassuresyouhehadcoloncancer)andthatsheneedstoknowwhattodo.Thefirstthingyoudois_dig_ԀoutyourcopyofMikeswill.Sadly,itdoesntlookanythinglikeyourcurrentwills.Still,itdoesntlooktoobad,andin_duecourse_Ԁyouprobatethewill,filethetaxreturn(thereisnotaxduebecauseoftheoptimummaritaldeductionplan),fundthebypasstrustandsendMrs.Bradyonherway.  NowMrs.Bradyhascometoseeyouagain.(Funny,shedoesntlooksobrightandcheerynow.)Itseemsthatsheishavingtroublewithherchildren.EversinceMikedied,shehasbeenestrangedfromGregandPeter.BobbyistheonlyoneofMikeschildrenwhoisstillonspeakingtermswithCarol,andhesatwentysomethingyearoldwhoisjoblessandstilllivingathome.Peterisnowalawyer,andhesbeenpepperingMrs.Bradywithlettersdemandinginformationandaccountings.Mrs.Bradysaysshehasdecidedthatthewholetaxsavingsthingisntworthit,andthatshejustwantstoundothebypasstrustandmakeanewwillleavingeverythingtoherdaughterJan.(Aftermuchprodding,youlearnthatMarcia(whohasmovedtoMountShastaandchangedhernameto GlisteningStoneUnderFallingWaters)andCindy(whoapparentlyhasdevelopedintosomethingofanactressanddancerperformingunderthestagename Sin_dee_)havefallenintodisfavor.)Mrs.Bradyisespeciallyinterestedinterminatingthetrust,sinceshelostagooddealof hermoneybyinvestinginafailedfernbarcalled FlowersandFriends.  WhatadvicedoyougiveMrs.Brady?   2c  III  .3  Ԁ  ETHICALISSUESINPLANNINGAMARRIEDCOUPLESESTATE    i   Let'sturntheclockbacktowhenMr.andMrs.Bradyfirstcametoseeyouaboutestateplanning.WhatweretheBradys'estateplanninggoals?WhateffortdidyoumaketodiscernifMr.Brady'sgoalsandMrs.Brady'sgoalswerethesame?WhatdidyoudotoassurethattheplanyoudevisedmettheBradys'goals?Whatstepsdidyoutaketoprotectyourselffromlaterproblemswiththeplan?WhatliabilitydoyoufaceasaresultofpreparingtheBradys'estateplan?n   2c  A  .3  Ԁ  WhoistheClient?n        First,let'sstartwithwhatappearstobeasimplequestion:WhowasyourclientwhenyoupreparedtheBradys'estateplan?Mr.Brady?Mrs.Brady?BothMr.andMrs.Brady?TheBradyfamily?MostofuswouldprobablysaythatourclientswerebothMr.andMrs.Brady.Hopefullyweusedanengagementletterwhichaddressedthisissue,althoughmostofusprobablywouldfindfewengagementlettersinour1986estateplanningfiles.  Identifyingtheclientorclientscanbetricky,especiallywhen2020hindsightaffectstheparties'recollectionofthefacts.Theattorneyclientrelationshipisgovernedbythelawof_agency_Ԁandarisesonlyuponthemutualconsentoftheattorneyandtheclient.See_Duvall_ԀCountyRanchCo.v.AlamoLumberCo.,  & "* 663S.W.2d627,633(Tex.Civ.App.Amarillo1983,writrefd.n.r.e.);Thompsonv.Vinson&Elkins,859 &"+ S.W.2d617,62123(Tex.App.Houston[1stDist.]1993,writdenied).However,consenttoestablishan '#, attorneyclientrelationshipmaybeinferredfromtheconductoftheparties._Duvall_ԀCountyRanchCo.v. y($- AlamoLumberCo.,663S.W.2dat633.AssumeforthemomentthatoneoftheBradys'childrenattended I)`%. theestateplanningconference.Thatchild'srecollectionofthemeetingmightconvinceajurythatanattorneyclientrelationshipexistedbetweentheattorneyandthechild,despiteeverythingtheattorneymaysaytothecontrary. t InVinson&Elkinsv.Moran,946S.W.2d381(Tex.App.Houston[14thDist.]1997, +'1 writdismissedbyagreement),whichwasanestateadministrationcase,theestatebeneficiariessuccessfullyestablishedtheexistenceofanattorneyclientrelationshipwiththeexecutor'sattorneysbasedon"beneficiarymeetings"withattorneysandletterssentdirectlyfromthelawyertothebeneficiaries.  .+5   Ifanengagementletterisused,theidentityoftheclientorclientsshouldbeexpresslystated.For example,intheformengagementletterattachedasAppendix_A_,thefollowinglanguageisused:*Oc*P'ddd Xdd Xdd X(#(#,dd +   Yp &!(%%&{You,andyoualone,aremyclients.Iowenodutytoyourfamilymembersor  toyourpotentialestatebeneficiaries.#&{%(%&!֜#    Thislanguagemaymakethingsclearvis_avis_theattorneyandthepersonsheorsheconsidersthe   clients,butitisonlymarginallyhelpfulindefeatingtheclaimofafamilymemberwhoattemptstoasserttheexistenceofanattorneyclientrelationship.Shouldtheattorneyinsistthatacopyoftheengagementletterbegiventoallpotentialestatebeneficiaries?Thatseemsextremeandislikelytobecountertotheclients'bestinterests(sincetheclientsmaynotwishtobroadcastthefactthatestateplanningisoccurringtoallpotentialestatebeneficiaries).However,ifapotentialestatebeneficiarymeetswiththeattorneyandtheclientsatoneormoreoftheestateplanningconferences,thenitisagoodideatoprovideacarboncopyofthelettertothepotentialbeneficiaryor,perhaps,aseparatelettertothepotentialbeneficiary.  Inthevastmajorityofcases,boththehusbandandthewifewillbetheattorneys'clients.Thismultipartyrepresentation,whichpractitionersinotherareasofpracticemayshun,isthebreadandbutterofanestateplanningpractice.Thus,estateplanninglawyersmustlivewiththeissuessurroundingmultipartyrepresentationeveryday.  RustE.Reid,inhispaperentitled"EthicalProblemsinMultiPartyRepresentationinEstatePlanning, 3J Probate,andFiduciaryMatters,"1996AdvancedEstatePlanningandProbateCourse,StateBarofTexas,pointsoutthatthemostobvious(butnottheonly)problemspresentedintherepresentationofmultiplepartieshavetodowithcommunications(1)keepingclientcommunicationsconfidentialand(2)keepingbothclientsreasonablyinformed.  Handlingtheproblemwithkeepingclientcommunicationsconfidentialiseasytosolve,atleastonthesurface.Anattorneycannotkeepconfidentialinformationgivenbyoneclientsecretfromtheotherclientandstillkeepbothclientsreasonablyinformed.Therefore,bothclientsshouldagreethatnocommunicationsbetweentheattorneyandeitherclientwillbekeptconfidentialfromtheother.TheformengagementletterinAppendix_A_Ԁincludesthefollowinglanguageforthispurpose:*eSc*T'd'ddd Oc*P(#(#e,dd +      &!(%%&{Sincetherearetwoofyou,thepossibilityofaconflictbetweenyouexists. Wn! Youacknowledgeandunderstandthat,sinceIamrepresentingbothofyou,nocommunicationeitherofyouhaswithmecanbekeptconfidentialfromtheotherofyou.Ifaconflictdevelopsbetweenthetwoofyou,Imaydeclinetocontinuetorepresentyou.#&{%(%&!o# "%   Inpractice,theattorneyislikelytorunintoproblemswherethistidysolutiontotheproblemischallengedbymessyfacts.Assume,forinstance,thatthehusbandistheattorney'soldcollegebuddyandthatthisfriendshipisthereasontheattorneyclientrelationshipwasestablishedinthefirstplace.Ifthehusbandsharesinformationwiththeattorneywhichthehusbandassumeswillbekeptconfidential(forexample,newsofanimpendingdivorce),istheattorneygoingtokeepthatinformationconfidential?Istheattorneyinsuchasituationgoingtodeclinefurtherrepresentationofthefriend?  Theproblemsofkeepingeachclientreasonablyinformedcanbeequallytroubling.Theclientcontactonanestateplanningprojectisrarelyequal.True,therearesomecasesinwhichamarriedcouplecomestoeachplanningsessiontogether.However,eveninthesecasestherearelikelytobetelephoneconferenceswithonespouseortheother.Also,theclientsmayparticipateunequallyinplanningconferences,andoneclientmayunderstandtheissueslessthantheother.Finally,onespousemayappeartodominatetheotherormakedecisionsfortheother.  /+3   Howdoestheestateplannerassurethattheestateplanningdocumentmeetsthewishesofbothclients? Onewayistorelymoreheavilyonwrittencommunications(althoughthismayinrealityprotecttheattorneymorethanitprotectsthe"quiet"spouse).Descriptionsofstrategicdecisionsinvolvedindevisingtheestateplancanbeincludedinengagementlettersortransmittalletters.Forexample,thefollowinglanguage(fromtheformengagementletterattachedasAppendix_A_)maybeusedtoemphasizethatmeetingtaxplanningobjectivesmeantsacrificingotherobjectives:*eUc*V'd'ddd Sc*T(#(#e,dd +     &!(%%&{Youhaveindicatedthatyouwantyourestateplantoincludeprovisions   designedtosaveyourfamilyestateand/orgifttaxes.Byincludingtheseprovisions,youshouldrecognizethat(a)yourestateplanningdocumentsarelikelytobemorecomplexthantheywouldhavebeeniftaxsavingswasnotanobjectiveand(b)restrictionsmaybeplacedonyourbeneficiaries(includingthesurvivingspouse)thatmaymakeitmoredifficulttofullyutilizeandenjoythepropertyfreefrominterferencebyand/orliabilitytoothers.Thiswillconfirmthatwehavediscussedtheseissuesatsomelengthandthatyouhavedecidedthatthepotentialtaxsavingstobegainedfromthisplantakepriorityoverthesepotentialdetriments.#&{%(%&!##     Thissolutionmaysucceedonlyinprotectingtheattorney,ratherthanoneorbothoftheclients.Also,theattorneymaybereluctanttodiscusssomestrategiesinsuchaletter.And,ofcourse,thereisalwaystheriskthatthedescriptionoftheplanmaydeviate_fromtheplan_Ԁitself.Nevertheless,writtencommunicationofthissortisonewaytoattempttoassurethatyourclientsknowwhattheyaregettinginto.n   2c  B  .3  Ԁ  EffectofBarceloandItsOffspringn@ [       Akeyreasonwhyitisimportanttoidentifyone'sclientsistheprivitydefenseinlegalmalpracticeclaims.PrivityisaliveandwellinTexas,asevidencedbytheTexasSupremeCourt'sdecisioninBarcelo cz v.Elliott,923S.W.2d575(Tex.1996).However,BarceloitselfandthecasesafterBarceloleaveattorneys 3J vulnerabletobeneficiariesclaims..H-   2c  1  .3  Ԁ  Barcelov.Elliott.H-ٸrney       InBarcelo,theintendedbeneficiariesofaninvalidtrustbroughtalegalmalpracticeclaimagainstthe CZ  attorneywhopreparedthetrust,allegingthattheattorney'snegligencecausedthetrusttobeinvalid.TheSupremeCourtheld,inasplitdecision,thattheattorneyowednoprofessionaldutytotheintendedtrustbeneficiariesbecausehedidnotrepresentthem.ChiefJusticePhillipswritesinthemajorityopinion:8  Webelievethegreatergood_is_Ԁservedbypreservingabrightlineprivityrulewhichdeniesacauseofaction toallbeneficiarieswhomtheattorneydidnotrepresent. Thiswillensurethatattorneys #$: & mayinallcaseszealouslyrepresenttheirclientswithoutthethreatofsuitfromthirdpartiescompromisingthatrepresentation....Wethereforeholdthatanattorney retainedbyatestator %!( orsettlor todraftawillortrustowesnoprofessionaldutyofcare topersonsnamedas &") beneficiaries underthewillortrust.i'#*!! 923S.W.2dat5789.[Emphasisadded]  Thus,itseemsclearunderBarcelothat,iftheattorneysuccessfullyestablishesthattheintended *&. beneficiariesarenothisclients,thentheattorneyowesnodutytosuchbeneficiariesandheorsheisoffthehookfornegligentlypreparingestateplanningdocuments..H-   2c  2  .3  Ԁ  Vinson&Elkinsv.Moran.H-rney    -*2   WhileBarcelomaypreserveprivityasadefense,thebeneficiariesmayovercomethishurdlebyproving /+4 thatanattorneyclientrelationshipexistedbetweentheattorneyand_themselves_.Asnotedatpage)tV&E v. Moran)2  Հabove, [0r,5 inVinson&Elkinsv.Moran,946S.W.2d381(Tex.App.Houston[14thDist.]1997,writdismissedby  agreement),estatebeneficiarieswereabletoshowtheexistenceofanattorneyclientrelationshipbetweentheexecutorsattorneyandthemselvesbasedonmeetingswithandcorrespondencetobeneficiaries..H-   2c  3  .3  Ԁ  Quernerv.Rindfuss.H-8rney S   )@   InQuernerv.Rindfuss,966S.W.2d661(Tex.App."SanAntonio1998,nowrit),anindependent  executorhadbeenfoundtohavebreachedherfiduciarydutiesanddamageswereawardedagainsther.Thebeneficiariesthenturnedtheirwrathontheattorneywhohadrepresentedtheindependentexecutor.  Theattorneysfirstlineofdefensewasthelitigationprivilege"everythingtheattorneydid,hedidasattorneyinalitigationproceedingand,therefore,isprivilegedfromtortliability.Thecourtrejectedthisdefenseasitmightapplytofraudulentactivities. Ifanattorneyactingforhisclientparticipatesinfraudulentactivities,thecourtwrites, hisactionisforeigntothedutiesofanattorney.966S.W.2dat665.Ifanattorneyactivelyengagesinfraudulentconductinfurtheranceofsomeconspiracyorotherwise,theattorneycanbeheldliable.  Whileanattorneymayfaceliabilityforfraudorconspiracy,thecourtheldthattheattorneyssignatureonpleadings,suchasaccountings,applicationsforsale,etc.,arenotevidenceofcollusion.Thecourtstated:8  Ifweheldthat[theattorneys]signatureontheapplicationsandaccountingswasevidenceofcollusionorotherwrongfulacts,wewouldimposeafiduciaryresponsibilityontheattorneyfortheexecutrixtoensurethattheexecutrixperformsherfiduciaryresponsibilitytotheestate.Thatisnottheattorneysjob. !! 966S.W.2dat669.  Ontheprivityissue,thecourtfoundenoughevidencethattheattorneymighthavebeenrepresentingthebeneficiariesdirectlytopermitthatissuetogotothejury.Inparticular,thecourtnotedaletterdraftedbytheexecutorsattorneytotheattorneyforoneofthebeneficiarieswhichstated:8  IamtheattorneyfortheEstateasopposedtotheattorneyfortheIndependentExecutrix.AstheattorneyfortheEstate,IshouldbefamiliarwithallofthefactsbeforeanymatterispresentedtotheCourt. !! Thelettergoesontosaythattheattorneywillkeepthebeneficiariesfully_apprised_Ԁofboththeindependentexecutorspositionandtheotherbeneficiaryspositionontheinterpretationofthewill.966S.W.2dat667.Obviously,thatlettergoesinthe hownottodoitfile. !% .H-   2c  4  .3  Ԁ  Guestv.Cochran.H-rney    #'   OnepossibleendrunaroundthebrightlineBarceloprivityruleisforthepersonalrepresentativeofthe 9%P!) testatorsestatetobringamalpracticeclaimagainsttheattorneywhodraftedthetestatorswill.Thepersonalrepresentativecanarguethatheorshestepsintothetestatorsshoesand,therefore,overcomestheprivitydefense.InGuestv.Cochran,993S.W.2d397(Tex.App."Houston[14thDist.]1999,nowrit), '#, theissuecameup,butthecasewasdecidedonaproceduralissue,leavingthesubstantiveissueunaddressed.  InGuest,abeneficiarysuedtheattorneywhopreparedthewillbothindividuallyandasindependent *0&/ executorofthetestatorsestate.(Oneoftheclaims,bytheway,isthattheattorneyshouldhaveincludedabypasstrustinthetestatorswilltosaveestatetaxes.)Thecourtofappealsaffirmedthetrialcourtssummaryjudgmentforthedefendantattorneyontheindividualclaimsbutheldthatthedefendanthadnotproperlyaddressedtheclaimsbroughtasindependentexecutorinitssummaryjudgmentmotion.Thus,summaryjudgmentwasnotgrantedonthemalpracticeclaimsbroughtbytheindependentexecutor,butthe ).@*4 decisionwasbasedonprocedural,ratherthansubstantive,grounds. /+6 .H-   2c  5  .3  Ԁ  Arlittv.Paterson.H-9rney T      InArlittv.Paterson,1999WL214882(Tex.App."SanAntonio1999,opinionnotyetreleased),the  SanAntonioCourtofAppealshadtheopportunitytoreachfourissueslefthangingbyBarcelo.Itdecided Yp twoissuesintheattorneysfavorandtwointhebeneficiariesfavor.  First,thecourtaddressedtheissuelefthanginginGuestv.Cochrananddecideditintheattorneys  favor.ItsustainedasummaryjudgmentintheattorneysfavoronlegalmalpracticeclaimsbroughtbythepersonalrepresentativeofthetestatorsestatebasedontheBarceloprivityrule.Thecourtheldthatthe i  personalrepresentativecouldpursueonlythoseclaimsarisingafterthetestatorsdeath,andinthiscasethecauseofaction(allegednegligentestateplanningservices)occurredbeforethetestatordied.  Second,thecourtsustainedasummaryjudgmentintheattorneysfavoronlegalmalpracticeclaimsbroughtbythechildrenofthetestatorbasedontheBarceloprivityrule,eventhoughthechildrensmother y  (thewifeofthetestatorwhoalsoretainedtheattorneytoprovideestateplanningservices)testifiedthatsheandthetestatorwereactingasagentsforthechildrenwhentheyobtainedestateplanningservices.Thecourtfoundthatsuchassertionwas _conclusory_andthusnotcompetentsummaryjudgmentevidence.  Third,thecourtaddressedthelegalmalpracticeclaimsbroughtbythetestatorswidowinherindividualcapacity.Sincetheattorneyrepresentedboththetestatorandhiswifeinpreparingestateplanningdocuments,thecourtfoundthatprivityexistedbetweenthetestatorswidowandtheattorney.Therefore,thewidowsmalpracticeclaimwasnotbarredbytheBarcelorule.    Fourth,thecourtpermittedthebeneficiariestogoforwardwiththeirnegligentmisrepresentationclaimsdespitethelackofprivity,findingthatanegligentmisrepresentationclaimisnotequivalenttoaprofessionalmalpracticeclaimandthatanattorneycanbesubjecttoanegligentmisrepresentationclaiminacaseinwhichheisnotsubjecttoaprofessionalmalpracticeclaim.Formoreonnegligentrepresentationclaims,seethediscussionofMcCamish,Martin,Brown&Loefflerv.F.E.ApplingInterests,below.  .H-   2c  6  .3  Ԁ  McCamish,Martin,Brown&Loefflerv.F.E.ApplingInterests.H-rney 3   y   McCamish,Martin,Brown&Loefflerv.F.E.ApplingInterests,991S.W.2d787(Tex.1999),isnot 0 aprobateortrustcase,butitisimportantnonethelessinananalysisofclaimsbybeneficiariesagainstattorneysfortestatorsandfiduciaries.InMcCamish,theSupremeCourtexpresslydecidesthata_nonclient_ ! maybringanegligentmisrepresentationcauseofactionagainstanattorney.TheSupremeCourtexplainsthetortofnegligentmisrepresentationthisway:8  [A]negligentmisrepresentationclaimisnotequivalenttoalegalmalpracticeclaim....Underthetortofnegligentmisrepresentation,liabilityisnotbasedonthebreachofdutyaprofessionaloweshisorherclientsorothersinprivity,butonanindependentdutytothe_nonclient_Ԁbasedontheprofessionalsmanifestawarenessofthe_nonclient_srelianceonthemisrepresentationandtheprofessionalsintentionthatthe_nonclient_Ԁsorely....Therefore,anattorneycanbesubjecttoanegligentmisrepresentationclaiminacaseinwhichsheisnotsubjecttoalegalmalpracticeclaim. !! 991S.W.2dat792.  Giventhe _nonconfrontational_and wholefamilyapproachthatestateplanningattorneysarewonttoemploy,onecanimaginethecontextsinwhichnegligentmisrepresentationclaimsmightariseinprobateandtrustlaw.Themostobviousisincaseswheretheattorneyrepresentstheexecutor,trusteeorotherfiduciary.Inthatrole,theattorneyhasoccasiontomakestatementsto(or,atleast,inthehearingof)beneficiariesonwhichthebeneficiariesmayrely.Alessobviouscontext,andtheonewhicharoseinArlitt ,(2 v.Paterson,discussedabove,istheestateplanningone.Theattorneymaybefoundtohaveimplicitlyor Y-p)3 explicitlyrepresentedtothe familythattheestateplanwasagoodone,addressedtaxconcerns,etc.Sinceprivityisnotanessentialelementofthiscauseofaction,nodoubtbeneficiarieswillalwaysincludeitinthelaundrylistoftheoriesinseekingtorecoverfromthetestatorsorfiduciaryslawyer. /+6 .H-   2c  7  .3  Ԁ  DraftingEngagementLettersAfterBarcelo.H-tru       ConsideragainthefollowinglanguagefromtheformengagementletterattachedasAppendixA:*eYc*Z'd'ddd Uc*V(#(#e,dd +   )@ &!(%%&{You,andyoualone,aremyclients.Iowenodutytoyourfamilymembersor  toyourpotentialestatebeneficiaries.#&{%(%&!Ո# g~ Doesthislanguagehurttheattorney'sprivityargumentinamalpracticeclaimbroughtbythesurvivingspouse?Ifthisprovisionwasnotintheengagementletter,theattorneymightarguethat,underBarcelo,the s  attorneyclientrelationshipinquestionwasbetweentheattorneyandthedeceasedspouse.Thisaffirmativestatementthatbothspousesareclientsmayactuallydomoreharmthangood.InArlittv.Paterson,1999WL  *  214882(Tex.App."SanAntonio1999,opinionnotyetreleased),thecourtfoundthatBarcelodoesnot   barajointclientsclaim,soawidowsclaimagainsttheestateplanningattorneywasnotbarredbyprivity.ThecourtinArlittdidnotmentionthewordingoftheengagementletter,soitisunclearwhetherthe   engagementlettercanhelporhurtthesurvivingspousesclaim.  Howwouldaprospectiveclientreacttothefollowingprovisioninanengagementletter?*e[c*\'d'ddd Yc*Z(#(#e,dd +    =&!(%%&{You,andyoualone,aremyclients.#&{%(%=&!#&!(%%&{Iowenodutytoyourfamilymembersor  toyourpotentialestatebeneficiaries.#&{%(%&!Յ#=&!(%%&{ԀInpreparing[Husband]'sestateplanning  documents,Iamrepresenting[Husband]onlyandowenodutyto[Wife].Inpreparing[Wife]'sestateplanningdocuments,Iamrepresenting[Wife]onlyandowenodutyto[Husband].#&{%(%=&!*# _v 5&%%&{&{%%5&  Couldonereasonablyexpectaclientwhoreadsthisprovisiontosigntheengagementletter?Ifnot,isn't  thataprettygoodindicationofwhattheclients'expectationsareregardingprofessionaldutiesowedtothesurvivingspouse?  Ontheotherhand,thefollowinglanguageisnotsooffensiveandmaypreserveaBarceloprivity  argumentinasuitbythesurvivingspouse:#5&%%&{#  *e]c*_'d'ddd *\(#(#e,dd +   Kb =&!(%%5&=ON,(%=&!  MultipartyRepresentation.Myrepresentationofyouinthismatterrequires   metorepresenteachofyouasclientsatthesametime.Ofcourse,youcouldeachretainyourownattorneytoprepareyourestateplanningdocuments,butyouhaveindicatedthatyouprefertohavemeprepareestateplanningdocumentsforbothofyou.Iamhappytodothis,subjecttothefollowingconditionsregardingmultipartyrepresentation:8  0[  1.Sincetherearetwoofyou,thepossibilityofaconflictbetweenyouexists.Youacknowledgeandunderstandthat,sinceIamrepresentingbothofyou,nocommunicationeitherofyouhaswithmecanbekeptconfidentialfromtheotherofyou.Ifaconflictdevelopsbetweenthetwoofyou,Imaydeclinetocontinuetorepresentyou. [ [  8  0[  2.WhenIamadvising[Husband]andpreparing[Husband]'sdocuments,[Husband]ismyonlyclient,andIowenoduty[Husband]'sfamilymembersorpotentialestatebeneficiaries. [ [  8  0[  3.WhenIamadvising[Wife]andpreparing[Wife]'sdocuments,[Wife]ismyonlyclient,andIowenoduty[Wife]'sfamilymembersorpotentialestatebeneficiaries.#=&!(%,=ONv##5&%(%=&!W#(0.,4[ [   (Ї&{%%5&  ThislanguageisincludedasanoptionintheformengagementletterattachedasAppendixA.  #5&%%&{:#&{%%5&n   2c  C  .3  Ԁ  DeathPlanningvs.DivorcePlanningn 4      Anestateplanthatisanestateandgifttaxmasterpiececanbeadisasterforeitherorbothspousesiftheirmarriageendsindivorceratherthandeath.SeeRobertH._Kroney_ԀandThomasP._Goranson_,"Estate  Planning/DivorceInterface,"18thAnnualAdvancedEstatePlanningandProbateCourse(1994),StateBar  ofTexas.Hopefullyweallcoverthisissueinourestateplanningconferences.Eveniftheissueisdiscussed,itshouldalsobecoveredinwrittenform.Thefollowinglanguage(fromtheformengagementletterattachedasAppendixA)maybeused:*eFc*u'd'ddd ]c*_(#(#e,dd +      #5&%%&{#&!(%%5&Inhelpingyouwithyourestateplan,myobjectivewillbeplanningforthe = T  deathordisabilityofeitherorbothofyou;Iwillnotbeconsideringtheeffectsofapossibledivorce.Eitherorbothofyoumaybeadverselyaffectedbyyourestateplanintheeventyourmarriageendsindivorce.Ifyouhaveanyquestionsabouthowthisplanmayaffectyouintheeventofadivorce,pleaseconsultwithanattorneyexperiencedinfamilylawmatters.#5&%(%&!s#&{%%5&   #5&%%&{#&{%%5&n   2c  D  .3  Ԁ  ClientCommunicationsn "      Hasthereeverbeenapaperaddressingethicalissueswhichdidnotemphasizetheimportanceofclient [r communications?Thispaperisnodifferent.Asmaybegleanedfromtheabovediscussion,anumberoftheethicaldilemmaswhichariseinrepresentingamarriedcoupleinestateplanningcanbeaddressed,ifnottotallyavoided,inanattorney'scorrespondencewiththeclient.  AttachedtothispaperasAppendix_A_Ԁisaformengagementletterwhichaddressesanumberoftheseissues.AttachedasAppendixBisaformof_letter_Ԁusedtotransmitdraftsofestateplanningdocumentstotheclientsforreview.AttachedasAppendixCisaformof_letter_Ԁusedtotransmitexecutedoriginalestateplanningdocumentstotheclients..H-   2c  1  .3  Ԁ  TerminatingtheRelationshipattheEndofPlanning.H-Ne]'s i   {   Notethattheseformsattempttoterminatetheattorneyclientrelationshipattheconclusionoftheestateplanningprocess.Forexample,thecoverlettertransmittingexecutedoriginals(AppendixC)provides:#5&%%&{# ! *e`c*a'd'ddd Fc*u(#(#e,?dd +   !# &!(%%5&8   [  7.Myrepresentationofyou. Pleasereadthroughtheenclosed !$ documentscarefullyoverthenexttwoweeks.IfIhavemadeanymistakes,orifthereissomethingyoudonotlikeorunderstand,pleasecallme,andIwillclearthingsup.IfIhavenotheardfromyouwithintwoweeks,Iwillassumeeverythingisthewayyouwantit,andmyrepresentationofyouinthismatterwillcease.  8   [ Inthismatter,youandyoualonehavebeenmyclient.Iowenodutytoanyofyourfamilymembersorotherpossiblebeneficiaries.Ihavenocontinuingdutytoupdateyourplanorotherwiserepresentyou.Ofcourse,Ilookforwardtoworkingwithyouagaininthefutureshouldyouwishtohiremetohelpyouwithrevisingyourestateplanorwithanothermatter.#5&%(%&! ##',>(0 #&{%%5&Ԁ  AspeakerattheAdvancedEstatePlanningandProbateCourseseveralyearsagosuggestedthis c.z*1 approach,includinggivingtheclientacoupleofweekstoreviewthedocuments.Inseveralyearsofusingthislanguage,theauthorhasneverhadaclientcallbackduringthetwoweekperiodwithaproblem. 0,3 Ї  Terminatingtheattorneyclientrelationshipisimportantsothatthereisnoconfusionaboutwhetherornottheattorneyhasadutytokeeptheclientinformedoflawchangesandtoupdatedocumentsasnecessary..H-   2c  2  .3  Ԁ  TooMuchofaGoodThing?.H-&e]'s A   Yp   Itiseasytogetcarriedawayinclientcommunications.Documentassemblyprogramsnow_make_Ԁitpossibletoproduce"understandable"abstractsofestateplanningdocumentswhichcanaccompanythedocumentsthemselves.Livingtrustfactoriesproduceimpressivebindersanddocumentdescriptionswhichtheircustomersobviouslylike.Estateplanningattorneysunderstandablyfeelpressuretodolikewise.  The_goalinclientcommunicationsshouldnotbedetaileddescriptions_Ԁofeveryaspectoftherepresentation,butrathergeneraldiscussionsofthekeypoints.Asectionbysection_descriptionofeachdocument_Ԁpresentsthefollowingpotentialproblems:b  b 0    Theclientmaywonderwhythedocumentswereso"ununderstandable"thatadescriptionhadto I`  accompanythem.b '݌ (#(# Ќ  0  Theclientmayconfusethedescriptionwiththedocumentitself. (#(# b  b0    Discrepanciesbetweenthedescriptionandthedocumentareinevitable.Ifthiswasnotthecase,then Yp thedocumentcouldbeassimpleasthedescription,andthedescriptioncouldbeeliminated.b݌ (#(# Ќ    Thus,ratherthanasectionbysectiondescriptionofthebypasstrust,thefollowinggeneraldescriptioninthetransmittalletter(AppendixB)getsthenecessarypointsacross:#5&%%&{#  *ebc*d'd'd?dd ?`c*a(#(#e,dd +   9P &!(%%5&  [Eachofyourestateplanswillincludea]Will,whichprovides(amongother  things)forthecreationofa BypassTrustasameanstopreservetheestateandgifttaxcreditofthefirstspousetodie.Thiscredit,whichcurrentlyisequivalentto$650,000inassets,mayallowthetwoofyoutopassmoreofyourcombinedmaritalwealthtoyourdescendantsorotherestatebeneficiaryfreeoftheestatetax.TheBypassTrustineachWillisfundedbymeansofaformula.ThisformulacontainslanguagewhichisintendedtomaximizetheamountofpropertypassingintotheBypassTrustwithoutcausingtheretobeanytaxdueonthedeathofthefirstspousetodie.FundingoftheBypassTrustpursuanttothisformulaismandatoryonthedeathofthefirstspousethesurvivingspousehasnopowertochoosewhetherornottofundtheBypassTrust.#5&%(%&!u# !% &{%%5&  Anotherpracticewhichmaycreatesomeproblemswhilesolvingothersistheuseofestateplanning 7$N & questionnaires.Beforepreparingandusingaquestionnaire,theattorneyshouldaskhimselforherself:Whatisthepurposeofthequestionnaire?Itmaybemarketing_tool_.Forexample,inansweringthequestions,thepotentialclientmayconvincehimselforherselfthatestateplanningisneededorgivetheattorneydiscussionpointsintheinitial_client_Ԁconferencewhichwillhelpclosethedeal.Oritmaybeatoolfortheattorneytousetobetterplantheestate.Forexample,itmayincludeobscurequestionswhichareeasilymissedintheinitialclientinterview.  Whateveritspurpose,theattorneyshouldreviewthequestionnaireformalpracticetraps.Imagine,forexample,thattheattorneyrepresentingtheBradysusedaquestionnairewhichaskedthefollowing[theBradys'responsesareshown]:#5&%%&{S# W,n(0   '->)1 *eec*f'd'ddd bc*d(#(#e,dd +    =&!(%%5&Pleaseindicatewhichofthefollowingareyourestateplanninggoalsandrate Md thosegoalswhere"1"isthemostimportantgoaland"10"istheleastimportantgoal: 0  =+/(%=&!3#=&!(%/=+^##Ԁ0[ !!Taxsavings[ ![ ! 8  =+/(%=&!4#=&!(%/=+##0[ 0 0 Providingformychildren [ 0 [ 0  8  =+/(%=&!6#=&!(%/=+$#Ԁ0[ 0 0 Providingformygrandchildren  [ 0 [ 0  8  =+/(%=&!1#=&!(%/=+@%#Ԁ0[ 0 0 Providingforthesurvivingspouse [ 0 [ 0  8  =+/(%=&!5#=&!(%/=+%#Ԁ0[ 0 0 Assetprotection} [ 0 [ 0  8  =+/(%=&!2#=&!(%/=+&#Ԁ0[ 0 0 Preventingfamilydisputes#5&%(%=&!j"#=&!(%%5&o [ 0 [ 0  #5&%(%=&! '#  &{%%5&  NowimaginethattheplantheattorneycameupwithfortheBradysinvolvedabypasstrustwiththe  survivingspouseasthetrusteeandaspraypowertothespouseanddescendantsbasedonahealth,education,maintenanceandsupportstandard.IfMrs.Bradyissuedbyoneofhergrandchildrenforbreachoffiduciaryduty,andifshedigsouthercopyofthequestionnaire(oritisproducedindiscovery)andfindsthatprovidingforthesurvivingspouseandpreventingfamilydisputesweregiventhehighestpriorities,whatpositionwilltheattorneybein?   2c  IV  .3  Ԁ  FROMWHATAREWEPROTECTINGTHESURVIVINGSPOUSE?*le" )*   i   Beforeexaminingseveraltraditionalestateplanningtechniquesandpossiblealternatives,considerwhatevilslurkouttherefromwhichthesurvivingspouseshouldbeprotected.Thispaperfocusesonthese:(1)fiduciaryclaimsofdescendantsandremaindermen,(2)claimsofcreditors,(3)incompetentmanagementofassets,(4)problemsarisingasaresultofdisclaimers,(5)problemsinvolvingdisabilityandincapacityand(6)invasionofprivacy.  Whileallofthese"evils"maybepresentinvaryingdegreesineveryplanningcontext,theparticularcircumstancesofeachmarriedcoupleorsurvivingspouseusuallymakeoneortwopredominate.n   2c  A  .3  Ԁ  FiduciaryClaimsofDescendantsandRemaindermenn-le" -   Y#p#   Mostcommonestateplanningtechniques,includingbasiccreditshelterandGSTplanning,seektoreduceestateandgifttaxes.Achievingthisgoaldirectlybenefitsdescendantsandremaindermen,usuallyattheexpenseofthedonor/testatorandhisorherspouse.Itiscrucialfortheestateplanningattorneytodiscussthisphenomenonwithhisorherclientsinclientconferencesandincorrespondencewiththeclient.Mostmarriedcoupleswithtaxableestateswhomakeitintoanestateplanner'sofficearegoingtooptfortaxplanningoveroutrightbequeststothesurvivingspouse,buttheyshouldbe_giventhechoiceofasimple"I_loveyou"will.  Ifthesurvivingspouseisthetrusteeofatrust,heorshehasfiduciaryduties,unlessheorshehasageneralpowerofappointment.SeeWesterfeldv.Huckaby,474S.W.2d189(Tex.1971),andWilkersonv. I,`(. McClary,647S.W.2d79(Tex.App.Beaumont1983).Clientsneedtobetoldintheplanningphaseabout -0)/ theseduties.  .*1   Toanestateplanner,whatconstitutesafiduciarydutyandwhatittakestobreachsuchadutymayseemtobelimitedonlybytheimaginationofafiduciarylitigator.Onefiduciarylitigatorwithwhomtheauthorisfamiliarrecentlylistedthese15fiduciaryduties: b  b#40    Thedutyofprudence;b#4>4݌)@(#(# Ќ  b  b40    Thedutyofloyalty;b44݌(#(# Ќ  b  bf50    Thedutyofimpartiality;bf55݌i (#(# Ќ  b  b 60    Thedutyofgoodfaithandfairplay;b 6'6݌  (#(# Ќ  b  b60    _Thedutytotakepossessionoftrustproperty;_b66݌ (#(# Ќ  b  b70    _Thedutytosegregatetrustassetsandnottocommingle;_b77݌I` (#(# Ќ  b  b~80    Thedutytocarryoutthedirectionsofthesettlor;b~88݌ (#(# Ќ  b  b?90    Thedutytokeepbeneficiariesinformedandtoaccounttothem;b?9Z9݌(#(# Ќ  b  b :0    Thedutytopreserveandprotectthetrustproperty;b :&:݌)@(#(# Ќ  b  b:0    Thedutynottodelegatetrustresponsibilities;b::݌(#(# Ќ  b  b;0    Thedutytokeepaccuratebooksandrecords;b;;݌i(#(# Ќ  b  bB<0    Thedutytomaketrustpropertyproductive;bB<]<݌  (#(# Ќ  b  b<0    _Thedutytoreviewtrustinvestmentsperiodically;_b<=݌(#(# Ќ  b  b=0    Thedutytoupholdanddefendthetrust;andb==݌I`(#(# Ќ  b  b>0    Thedutytoinvestigatetheactsandomissionsofpredecessorfiduciaries.b>>݌ (#(# Ќ  SeeFrankN.Ikard,Jr.,"AdministrationofCommunityPropertyAfteraSpouse'sDeath,"1996Advanced " EstatePlanningandProbateCourse,StateBarofTexas.  Outrightbequeststothesurvivingspouseeliminateallpotentialfiduciaryclaimsagainstthesurvivingspouse.(Thesurvivingspousereceivinganoutrightbequestmaybeanattractivetargetforaguardianshipproceedingtowrestcontrolofassets,butthatisnotafiduciaryproblem.)  OftentheprimarygoalofestateplanningistoputthesurvivingspouseascloseaspossibletowhereheorshewouldbeifanoutrightdispositionhadbeenusedwithoutcrossingthelinethatmakestheassetsintheBypassTrustincludibleinhisorherestate.Whilethatmaybethegoal,estateplannersshouldresistthetemptationtounderstatethedistinctionsbetweenoutrightdispositionsandtrustdispositionswhencounselingestateplanningclients.Bypasstrustsarenot"justlikeowningitoutright,"andclientsshouldnotbetoldthis.  Whilepotentialfiduciaryclaimsmaybemorelikely(andobvious)whenclientshavechildrenfromtheirpriormarriages,nuclearfamiliesarebynomeansexemptfromfamilyfightsovermoney.Thelikelihoodofafiduciaryclaimseemsdirectlyproportionaltotheamountofpropertyheldbythefiduciary.Eveninthemostcongenialfamilysituations,thepossibilityoffutureconflictshouldbeconsideredandaddressed.  Thefiduciaryliabilityaspectsofspecificplanningtechniquesarediscussedbelow. /+6 n   2c  B  .3  Ԁ  ProtectionfromCreditorsnEsho E      Thesurvivingspousemayneedprotectionfromcreditors.Creditorscomeinmanyshapesandsizes:H-   2c  1  .3  Ԁ  TortCreditorsofDeceasedSpouseH-Fsho G   )@   Thesurvivingspouse'sseparatepropertyisnotliableforanyofthedeceasedspouse'sliabilities,whetherornottheliabilityisbasedonatort.Tex._Fam_.Code3.202(a).Allcommunitypropertyissubjecttothetortcreditorsofthedeceasedspouse.Tex._Fam_.Code3.202(d).Creative_use_ԀofprovisionsintheProbateCodefavoringthesurvivingspousemayhelpprotectsomecommunitypropertyfromthetortcreditorsofthedeceasedspouse.See,e.g.,Tex.Prob.CodeAnn.177(b)and270293.Also,investingmaritalassets    priortothedeathofthefirstspousetodieininvestmentswhichareexemptfromcreditors'claimsmayaffordsomeprotection.H-   2c  2  .3  Ԁ  NonTortCreditorsofDeceasedSpouseH-Ksho )K   I`    Thenontortcreditorsofthedeceasedspousecannotreachtheseparatepropertyofthesurvivingspouseorthesolemanagementcommunitypropertyofthesurvivingspouse.Toavoidlossofcreditorprotectionforthesurvivingspouse'ssolemanagementcommunityproperty,suchpropertyeithershouldnotbelistedontheprobateinventoryortheinventoryshouldincludeaprovisionstatingthatthesurvivingspouseisnotwaivinghisorherrightsunderTex.Prob.CodeAnn.177(b).SeeFrankN.Ikard,Jr.,"Administrationof )@ CommunityPropertyAfteraSpouse'sDeath,"1996AdvancedEstatePlanningandProbateCourse,StateBarofTexas.H-   2c  3  .3  Ԁ  CreditorsofSurvivingSpouseH-Nsho N   i   Ifthesurvivingspouseislikelytohavecreditorproblems,spendthrifttrustplanningshouldbeconsidered.Forexample,aobstetricianmaywanthisorherspousetoutilizeabypasstrust/QTIPtrustarrangement(perhapsfundedwithlifeinsurancewhichpoursoverdirectlyintooneofthetrusts)sothatthoseassetswillbebeyondthereachoffuturetortclaimants.Theprobabilityofharmfromfiduciaryclaimsforthedoctormaybemuchlowerthantheprobabilityofatortclaim.  Whenplanningtoprotectthesurvivingspousefrompossiblecreditors'claims,considerusingacorporatetrusteeeitherastheinitialtrusteeorassuccessortrustee.Theoreticallythereshouldbe_noless_spendthriftprotectionforabeneficiarywhoisatrusteeofthetrust.However,asapracticalmatter,acreditormayhavemoreluckbustingatrustwherethedebtoristhetrusteewithahealth,education,maintenanceandsupportstandardthanwhereatrustcompanywithbroaddiscretionarypowersisthetrustee.Considernamingthesurvivingspouseastrusteewithacorporatesuccessor.Thecorporatetrustee'spowerscanbedifferentfromthespouse's,andthespousecanbegiventhepowertoremoveandreplacethecorporatetrustee.n   2c  C  .3  Ԁ  IncompetentManagementofAssetsnTsho T   9%P!)   Onespousemaywishtoprotecthisorherspousefromincompetent$_>$$z$ C5  1      _Ԁ_management_Ԁofassets.This &"+ incompetencecouldbeinoneoftwoforms:(1)thetestatorcouldworryabouthisorherspouse'sabilitytomanagetheassets(astrusteeorotherwise)or(2)thetestatorcouldworryabouttheincompetenceofathirdpartytrustee.  Ifonespousehashandledacouple'sfinancialaffairstotheexclusionoftheother,heorshemay legitimatelyworryabouttheabilityoftheoutofpracticespousetohandlethings.Thismaybeanawkward +'1 issuetodiscusswiththecouple,butitisimportanttogettheissueoutintheopen.(Ofcourse,thatisaloteasiertowriteinthispaperthanitistodoinpractice.)   Ifaspousemaybeunabletohandletheproperty,considerbypasstrust/QTIPtrustplanning.Ifthespouseisnamedastrustee,reviewcarefullythesuccessortrusteeandincapacitatedtrusteeprovisionsoftheinstrument.  Ifacorporatetrusteeorotherthirdpartytrusteeisused,considergivingthesurvivingspousethepowertoremovethetrusteeandappointasuccessor.n   2c  D  .3  Ԁ  DisclaimerIssuesnZsho [        Oneofthehandiestestateplanningtechniquesformidsizedestates(thosebetweenroughly$500,000and$1,300,000invalue)isdisclaimertrustplanning.Ratherthanforegoingtaxplanningentirely(atoneextreme)orencumberingthesurvivingspousewithamandatorybypasstrustevenifthecircumstancesatthedeathofthefirstspousedonotjustifysuchatrust(attheotherextreme),disclaimertrustplanningenablesthesurvivingspousetodecideshortlyafterthedeathofhisorherspousewhetherornottofundthebypasstrustandwithwhichassets.See FundingtheBypasswithaFormulaClausevs.aDisclaimeratpage1p"disclaimer trust116  Հbelow.  Thereareother,nonfiduciaryissuestoconsiderwhencontemplatingdisclaimers,however.First,considerwhetherornotthesurvivingspousewillbeabletohandlethepressureofmakingthedisclaimerdecisionwithinninemonthsofhisorherspousesdeath.Awidowsorwidowersgriefmaycloudherorhisthinkingduringthisperiod.Second,what_affect_Ԁwillchildrenandstepchildrenhaveonmakingthedisclaimerdecision?Third,whatcreditorprotectionandMedicaidplanningeffectswillthedisclaimerdecisionhave?  Ofcourse,asurvivingspousemayconsiderdisclaimingpropertyheorshewouldotherwisereceivefromhisorherspouseevenifthedeceasedspouseswilldoesnotprovideforadisclaimertrustbenefittingthesurvivingspouse.Inthepropercase,itmaymakesenseforasurvivingspousetodisclaimproperty,allowingittopassoutrightorintrustforhisorherchildren.Whatfactorsshouldbeconsideredinmakingthisdecision?n   2c  E  .3  Ԁ  IssuesInvolvingIncapacityandDisabilitynbsho b   !   Eveniftheplannerhastakeneverystepimaginabletoplacethesurvivingspouseinapositionofcontrolandtoinsulatehimorherfromliabilitytocreditorsorremaindermen,thesurvivormaybeexposedtopotentialharmintheeventofincapacityduetoinjuryorillness.Whileaplannermaynotpreventtheincapacity$M$$|$ C5  2      ׀ofhisorherclient,heorshemayhaveapositiveeffectonthesurvivingspouseslifeduringthe "& incapacity.  Whenbothspousesareliving,mostoftheincapacityplanningdecisionsseemfairlyobvious.Inallbutahandfulofcases,spouseswillwanttonameeachotherastheiragentsonpowersofattorney,directivestophysicians,etc.Whileholdingthepowersofanagentunderonesspousespowerofattorneymayenhanceonesabilitytowrongfullylootthemaritalestate,asapracticalmatteraspousewiththispurposeinmindusuallydoesnotneedthepowerofattorneytoaccomplishit.Thus,mostcouplesgivelittleornothoughttopowerofattorneyplanningwhilebothspousesareliving.  *0&/   However,casualdecisionsaboutalternateagents_made_Ԁwhilebothspousesarelivingcanbecomecritical afterthedeathofthefirstspouse.Suddenlythesurvivingspousedoesnothavethecomfortableandcustomarysurrogatedecisionmaker"hisorherformerspouse"tofallbackon.Thechoicesofwhichchildtoanoint,whethertousemultipleagents,etc.,allcomerushingtothefore.  ArelatedissueisMedicaidplanning.Whenbothelderlyspousesarealive,eachcanoftenhelptakecareoftheother,avoidingtheneedforassistedliving.Afterthedeathofthefirstspousetodie,thesurvivorismuchmorelikelytoneedassistedliving,especiallyintodayssociety,wherefamily(andpotentialcaregivers)arewidelydispersed.Privatepaynursinghomecostsarehigh,andmanyfamiliesendupfacingthetoughissuesofassetpreservationvs.nursinghomeMedicaidqualificationvs.qualityoflifeenhancement.Therearethingsthatcanbedonebothbeforethedeathofthefirstspousetodieandafterthedeathofthefirstspousebutbeforethenursinghomeneedisacutetoputthesurvivingspouseandhisorherfamilyinabetterpositionifanextendedstayinthenursinghomeisinthefuture.n   2c  F  .3  Ԁ  PrivacyConsiderationsnmsho m  #5&%%&{'#&{%%5& I`    Manywidowsandwidowersarequiteconcernedaboutkeepingtheiraffairsprivateandconfidential.Ofcourse,virtuallynoonewantsmoreinformationavailabletothepublicabouttheiraffairsthanisnecessary.Elderlypersons,however,oftenhaveaheightenedsenseoftheimportanceofprivacyforoneormoreofthefollowingreasons:0  APreInternetSenseofPrivacy.Youngerpersonsareusedtothewholesaleinvasionsofprivacy  prevalentintodayssociety.Whichpersonunderagefiftyhasntmemorizedhisorhersocialsecuritynumber,driverslicensenumber,etc.,fromcountlessrepetitionatcollegeregistrationdesks,checkcashingestablishments,etc.?Olderpersonsdonotsharethissameexperience"atleastnottotheextentoftheiryoungerneighbors.Ofcourse,Medicarehaschangedallthatformanypersonsoverage65. (#(# 0  FearofElderAbuse.Manywelltodoelderlypersonsdonotliveawelltodolifestyle.Througha  lifetimeofcareandfrugality,theymayhavebuiltupsignificantwealth,eventhoughtheirhouses,cars,etc.,donotmakethisobvious.Thesepersonsmayreasonablyfearthattheywillbetargetedbyconmen$m$$~$ C5  3      ׀whowilldiscovertheirwealthandseektotakeadvantageofthem.0(#(#    2c  V  .3  Ԁ  TRADITIONALPLANNINGTECHNIQUESANDSUGGESTEDALTERNATIVESt t   !   Assumingthatcreditorprotection,assetmanagementorotherprioritiesdonotsupersedeprotectingthesurvivingspousefromclaimsbydescendantsandremaindermen,whataresometechniquesthatoffergreaterprotectiontothesurvivingspouse?n   2c  A  .3  Ԁ  WillBasedPlanningvs.RevocableTrustPlanningnv v   #'   Afullexaminationoftheprosandconsofwillbasedestateplanningversuslivingtrustbasedplanningisbeyondthescopeofthispaper.Nevertheless,therearesomecircumstanceseitheruniquetoorprevalentwithsurvivingspousesthatmakelivingtrustplanningespeciallyworthconsidering:H-   2c  1  .3  Ԁ  Will/TrustContestsH-x x   y($-   Althoughnotstrictlyafiduciaryclaim,theprobabilityofawillcontestortrustcontestcouldbeaseriousthreattothesurvivingspouse.  Ifacontestisexpected,considerusingafundedrevocablemanagementtrustastheprimaryplanningvehicle.(Anunfundedtrustaccomplisheslittleornothinginthisregardifthewillmustbeprobatedtopour Y-p)3 overassetsintothetrust.)SeeFrankN.Ikard,Jr.,"DraftingtoAvoidWillContestsandFiduciary  Litigation,"1996AdvancedDrafting:EstatePlanningandProbateCourse,StateBarofTexas.  Whethertheprimaryvehicleisawillortrust,aninterroremclauseshouldbeconsidered. Yp .H-   2c  2  .3  Ԁ  FiduciaryClaims.H-x|the |      Texasstatutesandcourtshaverecognizedthevalidityofrevocabletrustswherethesettloralsoisthetrusteeandprimarybeneficiaryofthetrustand,infact,hasageneralpowerofappointment.SeeWesterfeld i  v.Huckaby,474S.W.2d189(Tex.1971),andWilkersonv.McClary,647S.W.2d79(Tex.App.Beaumont 9 P  1983).Ifthesettlor/trusteecanterminatethetrustatanytimeandpaythetrustpropertytoherself,thensheeffectivelyhasnofiduciaryduties.Inthatsense,afullyrevocabletrustislikeanambulatorywillforfiduciaryliabilitypurposes.  Thefiduciaryproblemswithrevocabletrustplanningarelikelytoarisewhenthefirstspousedies.Inthetypicalcase,thehusbandandwifeestablishasinglemanagementtrustwhilebothspousesarelivingthatsplitsintotwoormoretrustswhenthefirstspousedies.Unlessthesurvivingspousehasageneralpowerofappointmentoverbothsuchtrusts(whichisunlikely),thesurvivingspousewillowefiduciarydutiestoremaindermen.  Thus,ifyouacceptthepremisethata"standard"revocablemanagementtrustsplitsintoatleasttwotrustswhenthefirstspousediesandthatthesurvivingspousehasnogeneralpowerofappointmentoveratleastoneofthetrusts,whilea"standard"willforamarriedcouplemakes_an_Ԁoutrightbequesttothesurvivingspouse,thenthe"standard"revocablemanagementtrustgivesthesurvivingspouselessprotectionfromfiduciaryclaimsthantheprotectiongivenbya"standard"will.  Ofcourse,ifacreditsheltertrustisgoingtobeusedwiththespouseastrusteeand,thenthespouseisgoingtohavefiduciarydutieswhetherthetrustissetupbywillorbyinter_vivosinstrument_..H-   2c  3  .3  Ԁ  UseofaLivingTrustforDisabilityPlanningPurposes.H-the    y     Occasionallyarevocablemanagementtrustmaybethebestchoicefordisabilityplanningpurposes.   2c  a  .3  Ԁ  UseofaLivingTrustWhenIncapacityisLikelyhty 2   !   Inmostcases,disabilityplanningisapurelytheoreticalexercise"whileitispossiblethatonesclientmaybecomedisabledpriortodeath,itisnotacertain,orimminent,event.Insuchcases,powersofattorneypresentanattractive,inexpensivealternativetolivingtrustplanning.  Whenaclientsdisabilitymovesfromthetheoretical,distantrealmintothenottoodistantreality,theadditionalcostofalivingtrustmaybejustified.Thereislittledoubtthat,inalongtermdisability,alivingtrustisabettermanagementdevicethanapowerofattorney.Thetrustinstrumentenablesthesettlortobeveryspecificabouthowhisorherpropertyistobeadministered.Thirdpartiesaremuchmorecomfortabledealingwithtrusteesandaremuchmorelikelytoaccepttheauthorityofthetrusteetoact.Thebodyofcommonlawandstatutorylawregardingtrustsismuchbetterdeveloped,sothatthereismuchmorelikelytobeananswertoissueswhichmayarise.Trustsdonotfailforwantofatrustee,sothetrustwillcontinueevenifallnamedtrusteesandsuccessortrusteesfailtoact,whileapowerofattorneygoesawayifallnamedagentsandsuccessoragentsfailtoact.   2c  b  .3  Ԁ  ConsiderProhibitingRevocationbytheSettlorsGuardianhty    +'1   Forthesamereasonsthatadeclarationofguardianshouldbeusedtobackupapowerofattorney(see DurablePowersofAttorneyforPropertyandDeclarationsofGuardianatpagegpoa27  Հbelow),inmostcases thelivingtrustinstrumentshouldprohibitthesettlorsguardianoftheestatefromrevokingthelivingtrust. .+5 Withoutthisprotection,adisgruntlednontrusteecouldseekaguardianshipasawaytorevokethelivingtrust"hardlywhatthesettlorintendedwhenheorshesetupthetrustasadisabilityplanningdevice.    2c  c  .3  Ԁ  CorporateTrustee(orSuccessorTrustee)versusFamilyMemberTrusteeshty    Yp   Ifthepurposeofthelivingtrustisdealingwithanimminentdisabilityratherthanwealthtransferplanning,considerusingacorporatetrusteeeitherastheinitialtrusteeofthetrustorasthesuccessortrusteeofthetrustwhenandifthesettlorceasestoactastrusteeduringhisorherlifetime.Traditionalcorporatetrustees(banksandindependenttrustcompanies,ratherthanbrokeragefirmoffshoots)areexperiencedatdealingwithincapacitatedbeneficiariesandshouldoffercompetent,impartialservice.Familymemberscanbegiventheauthoritytomakepersonalandhealthcaredecisions,buttheymaynotdothebestjoboftakingcareofdadspropertywhiledadisinthenursinghome..H-   2c  4  .3  Ԁ  PrivacyIssues.H-Xthe s  #5&%%&{jn#&{%%5& o  y    Oneofthebigsellingpointsatlivingtrustseminars(after avoidingprobate)istheenhancedprivacyavailablewithlivingtrustplanning.Itistrue.Assetsinafullyfundedlivingtrustneednotbeplacedontheprobateinventory,whichofcourseisfiledintheprobaterecordsandisavailableforpublicinspection.$n$$$ C5  4           Arevocablemanagementtrustcanprovidegreaterprivacyforasurvivingspouse,butonlyifandtotheextentitisfundedpriortodeath.Theremaybereasonsthatassetsarekeptoutofthetrustuntiltheyarepouredintothetrustbywillafterdeath.Forexample,manylawyersrecommendleavingthehomesteadoutofthetrusttobeassuredofthepreservationofthecreditorprotectiongiventohomesteadproperty.  Ofcourse,privacyisonlyoneoftheconsiderationsthatgoesintodeterminingwhetheraclientwillbebetterservedwithalivingtrustbasedestateplanorawillbasedplan.n   2c  B  .3  Ԁ  FundingtheBypasswithaFormulaClausevs.aDisclaimernӘ    p     Mostcreditsheltertrustsarefundedbymeansofaformulaclause.ThemostcommontypeoffundingclauseinTexasprobablyisthepecuniarymaritaldeduction/residuarybypassclause(or,incaseswherethemaritaldeductiongiftexcee