PLEASE ADVISERE: ESTATE DISTRIBUTION, MANAGEMENT AND TAX PLANNING DOCUMENTS (TEXAS)Dear Clients (mother and father):The following is an overview of the initial drafts of your Wills positioned with flexibility to meet currently unstable federal estate tax law. The respective Will drafts use a Marital Trust (QTIP)/ Family Trust format.Also enclosed are drafts of:- Statutory (Durable) Powers of Attorney- Medical Powers of Attorney (with HIPAA authorizations) and- Directives to Physicians (Living Wills).The latter documents ensure coordination with the goals of your Wills with personal management.MARITAL TRUST (QUALIFIED TERMINABLE INTEREST) WITH FAMILY TRUST WILLS The Marital Trust Wills coordinate ultimate estate management, asset protection and distribution goals together with your estate tax minimization objectives.The surviving spouse will receive the deceased spouse's personal and household items; if there is no surviving spouse, the personal and household effects will be distributed to daughter. If both spouses pre-decease each other and daughter predeceases you, the personal effects are distributed as part of the residue of the Estate. Article 2.2 allows you to gift specific personal effects to family members or friends not otherwise mentioned in the Last Will. The residue of your Estate is divided into the (then current) maximum amount that passes estate tax-free to a non-spouse (Exemption Amount or Credit Shelter Trust under Article 4.1); any excess value is placed into the Marital Trust (under Article 3.1). If you predecease each other the residue will be allocated to daughter.The (draft) nominates daughter to serve as Trustee (or Co-Trustee). Each individual Trustee may also elect to serve with a professional Co-Trustee. In addition, during the surviving spouse’s lifetime, that spouse can be the income beneficiary of the Marital Trust and Family Trust (for qualified plan and IRA distributions).If there is no surviving spouse and daughter predeceases you, in father’s Will DRAFT directs distribution to “heirs at law”. There is unlimited tracing in Texas to “heirs at law” (i.e., if there are no descendants then to ascendants, ••• to maternal and ••• to paternal line). In mother’s Will the draft directs distribution to her friends or her descendants. Please advise as to any specific alternate goals to receive an Estate/ Trust distribution (i.e., charities or specific individuals, or alternatively, individuals you do not want included in any distribution).Based upon a broad view of your general Estate values, you are incorporating the dispositive and tax benefits of the Economic Recovery Tax Act (1981), successor statutes (Tax Reform Act of 2001 and Tax Relief Act of 2010). With the creation of the Credit Shelter Trust/ Exemption Trust (The mother Family Trust or father Family Trust), you take advantage of the ability to pass assets to your heirs free of estate tax. The “”Exemption” / “Exclusion Equivalent” is the amount that a person transfers to a non-spouse, without incurring estate tax. The Exemption/ Exclusion Equivalent is $5,000,000until 12/31/2012 (was scheduled to be $1,000,000 in 2011 under prior Tax Act). The surviving spouse is distributed all the income in the Trust(s) and the principal, if neces¬sary for his / her standard support and maintenance. Daughter can be a beneficiary of The mother Family Trust / The father Family Trust within the sole discretion of the Trustee. After the surviving spouse's death, the Trust will be distributed to Daughter (or descendants).The mother Family Trust / The father Family Trust principal (with appreciation) is excluded from the surviving spouse’s estate for federal estate tax purposes (and protected from creditors). Any excess value of the respective Estates would defer potential federal estate tax under the unlimited marital deduction until the surviving spouse’s death. With your Estate valuation there may be significant savings in federal estate taxes that might otherwise be due at the surviving Spouse's death.PLEASE CONFIRM AS TO EXECUTOR AND TRUSTEE. (ARTICLES 5.1, 5.2).CONTRACT DESIGNATIONS It is critical that beneficiary designations of insurance contracts, qualified plans and IRAs (assets that pass outside of the Will and are not part of the probate process) are consistent with your Estate management and distribution goals.Avoid the designation “to my estate” (or executor/ administrator) in Texas as specific beneficiary designations remove the proceeds / benefits from the reach of any estate creditors.In addition, it might be important that a couple with your Estate value avoid the joint ownership of assets “with right of survivorship” (JTWOS) or “payable upon death”, as that reduces your estate tax planning flexibility at least until one is confident there is NO estate tax that might “reappear”.DURABLE POWER OF ATTORNEY A Power of Attorney allows one person to act with full and unrestricted autho
Optional Information: State/Country relating to question: Texas Already Tried: this site to no avail
Hi - my name is XXXXX XXXXX X'm an Estate Law attorney here to assist you.
What is your question with regard to the above?
Kirk - You are under real estate law. I need an estate lawyer. I clicked on estate lawyers twice, but JUSTANSWER.COM keeps reverting me to layers outside of the area of expertise in estate planning. As an insider on JUSTANSWER.COM will you please forward my response to the tech people and get me to an estate lawyer. Thanks.
No, this is the "estate law" category. If you'll notice at the top of the page it says "Estate Law" by the JustAnswer symbol.
I am an estate lawyer and have a large practice dealing with wills, estates and probate.
My bad. OK, cool.
Ok. There's a lot of information and documents identified or mentioned in the post, which I assume is an excerpt from a letter you received from your estate attorney.
Also without physically reviewing all of the documents, I can't give you a specific response as to what each document says or will do in this instance.
That said, my review of the information available basically outlines a plan where the surviving spouse (upon the death of the other spouse), will receive all right title and interest in all property owned by the deceased at the time of death.
So, if the either the mother or father dies first, the other spouse will take everything under the trust and will. Once both parents are deceased, the daughter would inherit everything under the documents.
Also, there is a right for either spouse to transfer certain items to anyone they desire, etc. (Article 2.2).
The balance of the letter is basically telling you that the documents are set up in a way to minimize tax liability to the estate and to the surviving spouse.
If you have a specific question about a specific provision, please let me know and I'll be glad to address that.
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Yes, Kirk. I just noticed the doc cut off. Here is the remainder where it cut ... please comment.
... authority for another to complete financial transactions (universal power). This avoids the necessity of going to a Probate or County Court to petition for Guardianship of the Estate if one spouse becomes unable to complete financial transactions. It reduces delays, expenses, the emotional trauma, etc. when one spouse has reduced capacity.
Under Texas law the power requires less formalities to delegate (no witnesses aside from Notary Public, and one does not have to file the document with the County Clerk). You can elect to make the power effective now, or only if you are disabled [See; Page 2, (A) or (B)]. In addition the drafts reflect the option to nominate daughter as Attorney-in-Fact “back-up” if you are both disabled (PLEASE ADVISE AS TO PREFERENCES.).
The Power of Attorney has a provision whereby the holder can gift assets from your estate (for tax-planning purposes). The holder of the power can delegate authority to others (Attorneys, CPA, etc.) to manage specific matters directly. These additional clauses give the Attorney in Fact more power and flexibility in managing financial affairs. If you ever have a lack of trust in the person that you delegate to hold the power, the document and all copies should be destroyed.
MEDICAL POWER OF ATTORNEY
A medical proxy gives to the person, to the extent that you delegate, the power to make medical decisions for your benefit. This medical treatment comprises a very broad range of healthcare decisions that affect the person delegating the power, but does not include voluntary inpatient mental health services, shock treatment, psycho- surgery or abortion. This document is revocable orally or by written decree. The power of the person whom you have delegated as an agent begins when your physician certifies that you lack the capacity to make health care decisions. The draft reflects the option of naming someone else as “back-up” if you are both unable to communicate medical decisions.
PLEASE ADVISE AS TO “BACK-UP” AGENTS - PROVIDE ADDRESSES/ CONTACT INFO
DIRECTIVE TO PHYSICIANS
This document does not direct estate distribution, but rather expresses your personal preferences as to the point when life support machines should not be connected or be disconnected (includes hydration and nutrition). This eases the burden on the family as to that decision, as well as protecting the medical attendants from potential legal liability if the decision is necessary. Of course, this decision is revocable by destroying the document.
The newer form of the Directive attempts to address more circumstances where the extraordinary methods of life support are addressed (beyond the ‘brain death’ threshold of the older form). On page 1 is highlighted a sentence that has caused much distress with family and health care attendants, as the sentence is inconsistent with the Act.
PLEASE ADVISE AS TO YOUR ELECTIONS ON PAGE 1 (INITIALS) AND WHETHER YOU WANT THE
HIGHLIGHTED SENTENCE AFTER “ADDITIONAL REQUESTS” INCLUDED OR OMITTED
(HIGHLIGHTED).
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT AUTHORIZATION
Recent federal legislation has placed severe restrictions on the exchange of medical information between entities and people (limited to patient). The authorization would assure that those you designate to hold a Medical Power of Attorney have access to sufficient information to make informed decisions on medical care.
CONFLICTS OF INTEREST
This party is providing separate, distinct legal services for you as a married couple. This office will be representing you in a joint capacity and will freely exchange information between and among ourselves. If it becomes clear that your interests are no longer coordinated, this party will inform you of such conflict and stop representing all parties in the transaction.
COSTS OF PROFESSIONAL SERVICES:
The fees to draft, edit, and review the above cited documents are (assume 2 documents each):
UCT Will * (2) (discounted) $___
Universal Durable Power of Attorney (2) $___
Medical Power of Attorney (2) $___
HIPAA authorization (2) $___
Directive to Physicians (2) $___
TOTAL: $___
* The drafts presented both have the marital / family trust formula. This would provide more assurance for the testator/ testatrix of who final beneficiaries will be - certain what the “exemption amount” will be after 2012 compared with specific values of your community or separate property estates. The amount charged is for the single (exemption amount/ family trust) we discussed in our meeting.
A drafting fee of $___ is due to prepare the above specified documents and will be credited against the total professional fee for the documents.
The documents will be placed into final draft within three to seven days after your input, editing and approval to be ready for execution with the requisite formalities. The fee balance (less drafting fee) for the approved documents will be due at that time. After you have reviewed the documents, please contact me so that we can further discuss the documents, edit and clarify the language.
Sincerely yours,
Lawyer
Ok. Thanks. XXXXX of Attorney is a good document to have in place. It is only good during your lifetime and gives the attorney in fact th authority to act on your behalf in the event that you become incapacitated or if you can't make decisions for yourself because of a mental disability. You can either make the POA effective immediately or only if you become incapacitated. Most people want the POA to only be used if they become incapable of making their own decisions. Also, you can revoke a POA any time you wish. The Medical Power of Attorney (also called a Living Will) is a good document to have as it allows you to make your own end of life decisions yourself and take the obligation or pressure off of your family to make the call. The most famous example is whether or not to "pull the plug". You can decide this and keep your family from having to make such a tough decision. Also, there are several other issues and options which are outlined in the letter above. The Directive to Physicians should be included in the Medical POA (or at least that's the way I've always done this). There's no need for 2 documents when once will suffice. I would recommend that you ask the attorney to consolidate the directive to physicians into the Living Will. Also, the HIPAA Authorization is usually not necessary. Basically, it is a statement that says you give someone authority to gain access to your medical records. This is really only an issue if your death is caused by some event that required medical care and the heirs want to sue for wrongful death. Even if you don't have a HIPAA authorization in place, you can get the medical records by other means and methods. For instance, when your estate is opened for probate, you can have the estate representative execute a document requesting the records, which is basically a HIPAA authorization.If you get all of the thing suggested done (even the few that may be overkill), you should be very well set up in the event that either spouse passes away.
Ok, so Power of Attorney (POA) is just about this attorney?
No, a the power of attorney is not about this attorney; it not about any attorney. A power of attorney gives the attorney in fact (whomever you designate) the right to act on your behalf. You and our spouse would need a POA, and both of you can name whoever you want to be your attorney in fact. You can name your spouse, your daughter, your best friend, etc. - anyone you want. However, most people designate their spouse and then name a child as successor or alternate.
Let me know if you have any additional questions. Also, please don't forget to rate my question so I may receive credit for my time assisting you. Thanks!!
Did you not get my last question? I never heard back from you on July 4th and I got busy at work yesterday?
Hi - The last question I received was about the POA, which I responded to above. Did you have another question?
No problem, the question was …
OK, I think I understand Power of Attorney.
Now back to your original take on cover letter.
Giving you the benefit of the doubt, because you did say you have not read the attached docs (the wills), you wrote …
“If the either mother or father dies first, the other spouse will take everything under the trust and will.”
Confirm then if these are true statements …
- If mother dies first everything goes to father.
- Then father meets and marries new woman
- Then Father sets up new legal estate docs with new woman
- Daughter is then not provided for
Then confirm if these would be true statements …
- There’s one caveat at protecting daughter
- If mother clearly defines in HER will to give daughter a widget
Then confirm this statement …
- BUT, even if mother clearly defines to give daughter a widget, under (Article 2.2) father has right (obviously while he is alive) in HIS will to transfer ½ of his ownership in widget to anyone he desires.
Thanks for the follow-up. I'll answer your questions based on what we have read and been over so far:
* Yes, if mother dies first everything goes to father or in accordance with the terms of the trust.
* If the father meets a new woman, the terms of the trust will still be in effect. A remarriage should not effect the trust and the bequest to the daughter.
*The father can change his will to leave property to his new wife, but that would only pertain to his property that is not a part of the trust. Whatever is in the trust would flow to the daughter in accordance with the trust terms.
* Yes, even if mother clearly defines to give daughter a widget, under (Article 2.2) father has right (obviously while he is alive) in HIS will to transfer ½ of his ownership in widget to anyone he desires. The way to combat this is to have both the mother and father's will state what the daughter is to get OR the property could be placed into the trust for ownership and the trust could disburse this item upon the death of the first parent.
I think I addressed everything. If not, let me know. Thanks.
Great. Thank you. It's clear and concise. I'm rating you excellent, now.