Basic Will & Durable Power of Attorney Planning in The Woodlands

Conflict

Avoiding Conflict Between Spouses’ Interests

In Estate Planning, typically, a husband and wife are jointly represented by one attorney to perform the estate planning. However, the case could end up as a conflict of interest where one spouse becomes incompetent and the other spouse needs to obtain guardianship or where there is a conflict regarding whether property should be classified as the separate property of one spouse or whether it is community property. Second or more marriage situations are rife with potential or actual conflicts of interest.

It is at this point that a material conflict could arise, whereby the inability to represent both jointly would be precluded and separate representation would be required. If the couple continues to agree to joint representation, obtain a written consent in an attorney/client agreement, unless the situation is so problematic that withdrawing from representation is required.

Client Competency

Clients who are incompetent do not have the power to execute contracts, wills, trusts, powers of attorney or to give property away.

It is best to take the effort to a interview the client to determine the client's mental state prior to performing the legal work. If you have any doubt regarding competency of the client, you should require that the client obtain a written medical opinion regarding his or her competency prior to commencing representation. It may also be useful to have the witnesses sit down and talk to the client for a period of time so that if called to testify at a later date, they can give some statement beyond simply stating the client appeared in sound mind to them. Good notes during a client interview are also a good policy. The standard is, a client must, at the time the document is signed, be capable of understanding and does understand what he or she signing.

Topics to be covered on an initial interview:
The goal is to ascertain the client’s situation.

Information to be Gathered:

Personal information

• Identity and contact information
• Relatives, heirs' names and addresses, and children’s birthdates
• Special burial requirements
• Personal concerns which brought the client to your office

Assets and Liabilities

• Community and separate property
• Real Estate- Mortgage amounts, property descriptions, form of ownership
• Investments- CDs, Bonds, Stocks, Negotiable instruments, etc.
• Insurance
• Safety Deposit Box contents
• Debts owed by the client and owed to the client or by or to the beneficiaries
• Income and expenses

Health

• A candid conversation with the client regarding the nature and extent of impending health concerns. Difficult topics of life expectancy and declining capacity must be discussed in order to make appropriate recommendations
• A successful estate plan assesses the client’s wishes and intentions and provides for them. An unsuccessful one ignores a client’s goals.
• An intake assessment form is an important tool in determining the client’s wishes. The best tool is listening to the client and then asking questions. The client usually has specific reasons in mind for coming to your office. By listening to the client’s description of his family structure and comments on the various family members, you can determine and address concerns that the client may not even be aware of.
• It is important to determine if any of the family members are of special concern, either negatively or positively, to the client.
• It is important to gauge the capacity of your client to understand what you are doing and to participate in the plan you are drawing up.
• In complicated estate plans, it is important to know the lengths to which the client will plan and pay for tax and probate avoidance.
• Some clients want to be actively involved in the planning and others just want the attorney to handle it. This is important to determine and document.
• The initial intake document should include and be discussed:

(a) Basic identifying information: Name, address, phone numbers, birth date, social security number, license number

(b) Basic family information: Names, addresses, phone numbers, birth dates, of family members and other parties who will be named beneficiaries.

(c) General information about income and expenses.

(d) General information about the health of the client and his family

(e) Purpose of the client in coming to the attorney’s office

(f) Previous marriages, divorces, deaths and the identifying information for spouses and children by those marriages.

(g) Special concerns of the client’s family i.e. disabled family members, family members of whom the client is wary, family members who are prone to credit problems, or those who may have conflicts with the family members.

(h) Other financial information- a list of investments, real estate, brokerage accounts, retirement accounts and plans; a listing of any companies or businesses owned, trusts owned of which the client is the beneficiary or creator, list of monies owed and debts owed, and if estate planning for a married couple, distinguish between community and separate property.

• Determine and discuss possible conflicts of interest.
• If there are minors in the family discuss the advisability of trust provisions to govern the inheritance of assets by a minor.
• While some clients will have tax concerns, other clients will have simple estates that require only basic planning. It is important to keep the estate plan proportional to the estate of the client.
• It is important to familiarize the client with the basic applicable tax laws so that the client can tailor their expectations and goals accordingly. It helps to explain the difference between Income, gift and estate taxes. 

Then discuss the following basic terms:

• Marital Deduction
• Annual Exclusion Amount
• Unified Tax Credit
• Gift Tax
• Generation-Skipping Transfer Tax
• Gifts to Charities

Other Matters Concerning Assets

1. Real Estate-homestead verses non- homestead, community verses separate property. Note that a surviving spouse and minor children are entitled to occupy the homestead; however, real property taxes and property and casualty insurance will need to be maintained by the person exercising his or her homestead rights.

2. Bank Records, Safety Deposit Box, Cash, Notes.

3. Trusts- determine if there are any inter vivos (living) trust, or if a post mortem trust will be created.

4. Stocks and Bonds and Employee Benefits- In the case of stocks and bonds determine whether such assets are held in a brokerage account or client has certificates. Determine if there are employee benefits that survive the decedent’s death and pass through the estate or to a named third party beneficiary

5. Joint Tenancy with Right of Survivorship property and Community Property with Right of Survivorship - This type of property poses many problems for an estate. It is important to determine if property is held with the right of survivorship because it will also pass outside the will and defeat the estate tax planning that was provided for in the will.

6. Insurance- may also pass outside of the estate depending on who owns the policy and who are the beneficiaries. It is also important to discuss the tax implications of being the beneficiary of the insurance proceeds.