Source: http://www.law.uh.edu/faculty/wstreng/EstatePlanning2018/3.htm
Timestamp: 2018-11-20 19:16:22
Document Index: 80476076

Matched Legal Cases: ['§124', '§2002', '§2205', '§663', '§102', '§255', '§304', '§401', '§267', '§267', '§6015', '§251', '§254', '§254', '§152', '§751', '§751', '§751', '§ 751', '§751', '§751', '§751', '§751', '§751', '§ 752', '§1104', '§101']

CHAPTER THREE – Structuring the “Will”
Estate planning course objective: to avoid these mistakes (i.e., limit litigation and malpractice risk).
1) Use a comprehensive “memorandum” for client (& client’s spouse) to describe objectives re property dispositions, etc.? And to provide information about location of documents, including computer passwords, etc.
Use a family settlement agreement in
Components of the Last Will – Basic Structure
Debts p.6
Are they really “debts” (e.g., claim by child against parent’s estate)?
Are they enforceable under local law?
How allocate the responsibility for debts? What is the “abatement” process under Texas Estates Code if excess debt? See P. 37.
Taxes p.6
Even if no transfer taxes – note re IRS “Transfer Certificate” – fn. 8, p. 4.
What is the governing law for the allocation of federal/state tax liabilities? See:
Texas Estates Code §124.005 (FN. 10 & p.
38); cf., Uniform Estate Tax Apportionment Act; or, (2) Federal tax allocation rules (next slide).
Note: Is this (1) a “property law” or (2) a “tax law” question?
§2002 – taxes to be paid by the executor
§2205 – reimbursement occurs from the estate
How does client divide these assets among his/her heirs?
Is tax gain realized on the distribution of each asset from estate? See §663(a)(1) & §102.
Or is this “precatory” language only?
Disposition of Tangible Personal Property, cont.
Options for tangible personal property dispositions: P. 12
Recognize the community property interest of the surviving spouse in specific property?
Or, recognize spouse’s ownership of separate property?
Note special requests: e.g., p. 13, re literary manuscripts. Similar to situation in Ch. 1, p. 12, fn. 23? – inclusion of value in gross estate, but here then a loss deduction?
Disposition of Residential Real Estate p.14
How deal with transfer of client’s residential real estate? Use the Last Will? TOD deed?
What treatment of any outstanding mortgage debt against this property?
Retain or satisfy the home mortgage debt?
Power of Appointment Clause p.15
Is the power a “special” or “general” power?
What effect of the residuary clause in the client’s will in exercising the P/A?
Include a specific provision in the will that any P/A which is held is not exercised?
See TX Estates Code §255.351 (p. 15).
Disposition of the Residuary Estate p.15-17
Alternatives for disposition of the residuary estate (after all specific bequests are paid):
“pourover” permitted from estate to a
4) Special receptacles for the residuary estate assets are: (a) marital deduction trust (p. 18) and (b) credit shelter trust (p. 18).
Appointment of Executor & Trustee p.18
Designation of the executor (& successors). What legal qualifications are necessary for the executor? Tx. Estates Code §304.003 (p.19).
Payment of any compensation to the executor? How determine the amount? (P.19, fn. 44).
See Tx. Estates Code §401.001(a) (p.20).
for Executor/Trustee p.21
Property management, including investments (Prudent Investor standard).
Hold unproductive property?
What authority of the Executor or Trustee to retain an investment advisor (permitted delegation of authority)?
How allocate receipts and disbursements to principal or income (P&I)? E.g., property rents & corporate liquidation dividend?
Authority to exercise stock options?
Authority to distribute property “in kind” to beneficiaries? But, what if varying income tax bases for the distributed assets?
Distribution of appreciated property to satisfy a pecuniary bequest will trigger gain realization.
Distribution of loss property? Loss not limited by §267 (see exception in §267(b)(13) for estate’s distribution to satisfy a “pecuniary bequest”).
for Executor/Trustee p.22
File a joint federal income tax return with a surviving spouse?
What are the risks to either party on the joint income tax return?
Is “innocent spouse” relief available to one party (e.g., the executor)? §6015.
File federal gift tax returns and consent to gift splitting?
Common Disaster Provision p.23
Under what circumstances should the survivorship presumption in the common disaster provision be reversed? To equalize the estates for federal estate tax purposes?
Cf., transfer all net assets to one spouse but the executor for transferee spouse is to have a “disclaimer power” so as to equalize estates in the post-mortem context?
How sign, i.e., or “execute,” the Last Will?
What “signing ceremony” procedures should be used (and any special precautions)?
Attestation clause (i.e., “self-proving clause”). What is its function? See Tx. Estates Code §251.1045 (simultaneous execution, attestation and self-proving). P.25.
Include a “No Contest Clause” TX §254.005 p.25
Will Safekeeping p.26
Execute multiple copies and place copies in different locations?Deposit with Probate Court?
See Tx. Estates Code Chapter 252.
1) Joint & mutual will – one will for a couple.
See Texas Estates Code §254.004 - must explicitly state that a contract to make a will exists; otherwise, no contract. What if husband and wife execute wills at same time?
2) Holographic will, Texas Estates Code, §152.052, recognizes validity of a will “written wholly in the testator’s handwriting.”
Will can be “self-proved” with an affidavit.
p.29 (& P. 54 – Est. Code)
What is the governing law for a P/A? Tx. Estates Code – Chapter 751. Ch. 3, p. 54.
See statutory form for P/A in Appendix, P.54, & Tx. Estates Code, Chapter 751 (p. 109).
When make a P/A effective? (1) Immediately or (2) a springing power? P.110-111.
Record the P/A in any official records? Necessary for real estate transactions? See in form at p. 109.
What is the possible grant of authority? §751.031 and P. 98. See form at p. 110 and Estates Code Chapter 752.
Are gifts permitted to be made by the attorney-in-fact? §751.032 and P. 98-99. If so, what type/size of gifts?
“Duty to Preserve Principal’s Estate Plan,” §751.122, p. 102.
Tx. Estates Code § 751.203, p. 105 – provides form for Agent’s Certification provided by the agent presenting a power of attorney.
Before accepting - may also request an opinion of counsel – Estates Code §751.204, p. 106.
May request an English language transaction – Estates Code §751.205.
Written statement of refusal of acceptance is required. Estates Code §751.207; & judicial relief, §751.212. & §751.251, p. 108-109.
Tx. Estates Code § 752.051 – provides form for “Statutory Durable Power of Attorney.”
- Specified powers.
- Additional power may be provided
- Election re time power becomes effective.
Appointment of guardian for oneself. P.32.
Appointing Guardian for Minor Children –
p. 32. Include this in the Last Will? Form at Tx. Estates Code §1104.153.
Living Will – Directive to Physicians, p. 32
& 44. See Tx. Health & Safety Code provisions
Medical Power of Attorney – also Tx.Health
& Safety Code, p.48
Post death care for client’s pets – create a special trust? Who is the guardian? P. 28
Computer passwords and electronic access – deposit this information with a special independent provider? P. 28
Federal Income Status of A Probate Estate? P.35
Effect of Texas Estates Code §101.001(a) when property “vests” in ownership – does income from vested property bypass the probate estate?
How long does the estate continue as a taxpayer? Objective to have multiple taxpayers for federal income tax?