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American Bar Association - Defending Liberty, Pursuing Justice

SPRING 2011

Vol. 7, No. 3

 

ESTATE PLANNING

 

Estate Planning Forms: Engagement Letters

By L. Rush Hunt

This book is intended to be a user friendly will and trust manual. I have sought to make the book user friendly by having numerous comments throughout the various provisions of each of the documents. Just consider these comments my conversation with you as you use the forms. Also, I have made references to a number of excellent ABA publications that can assist the reader with some of the more intricate substantive issues of the law concerning wills and trusts. These are excellent publications and will make an important addition to your library.

The book is divided into five basic parts. Part one provides samples of various documents that can be used in client interviews and samples of engagement letters. The assumption is that the reader already uses forms for these purposes, but it is my hope that by providing you with these documents, you will be able to modify your existing forms. While many lawyers do not use engagement letters for will and trust work, it is suggested that you consider an engagement letter for this area of practice. As litigation in the estate and trust area is increasing, it is a wise practice for the lawyer to use an engagement letter to better define the limits of representation and as an aid to your liability protection. The forms provided are based upon an hourly rate being charged. Simple modifications can be made if the fee agreement is a flat fee.

Part two provides a number of basic documents that the lawyer can use for most estate plans. These forms include a master will, a pour over will, a master inter vivos trust for a single grantor and a master inter vivos trust for multiple grantors. These forms have more options than will be needed in most estate plans. You must review these documents in detail in order to be familiar with the various provisions. Then you can delete those provisions not needed when drafting for a given client’s estate plan. Also, you will find basic forms for a power of attorney, an advanced health care directive and several marital agreements.

While part two provides general forms for estate planning, the other three sections deal with specific drafting situations. For example, part three provides multiple options that the lawyer may wish to use for clients who have young children. These include forms specifically designed for families with young children, including both a testamentary and an inter vivos trust. The other two options are ones that are sometimes used by clients when establishing a trust fund for a child’s education. While these forms are not inclusive of all options, they do provide two options that are frequently used.

Part four provides several different options when drafting for a client who has a child with special needs. Both a testamentary trust and an inter vivos trust are provided as sample documents. Both documents include supplemental care trust provisions that will keep the trust beneficiary from losing SSI or Medicaid benefits. The qualifying income trust, or Miller trust, is of limited applicability, but is used in those situations in which the client could qualify for Medicaid to pay nursing home expenses but has income in excess of the state’s income cap, thus prohibiting the person from receiving Medicaid benefits. The sample trust will allow the person to qualify for Medicaid benefits. The final form in this section is a spendthrift trust. The form is the basic type of trust used for trust beneficiaries who should not receive an inheritance outright due to any number of reasons such as, health, marital, financial, or addiction problems.

Part five provides an irrevocable life insurance trust and a marital-credit shelter trust. These trusts are used when there are federal estate tax considerations that require special drafting. These are basic forms to get the lawyer started. There are a number of variations of each of these trusts. The ones provided are intended to provide one set of options. If the lawyer is going to become deeply involved in estate tax planning, then these forms are a good starting point. But the lawyer is cautioned that there is much more to learn when tax planning is involved. The reader will find the cited ABA resources to be most helpful.

As with all form books, the reader is cautioned to not use them blindly. They are intended to be an aid to you as you customize an estate plan to meet your client’s own particular needs. These forms should be a helpful supplement to those forms you currently use, or for the less experienced lawyer these forms should be a springboard to establishing your own forms.

* * *

Engagement Letter for Individual

Dear_______________:

I am pleased that you have asked me and [name of firm] to assist you in developing your estate plan. This letter confirms my discussion with you regarding your employment of our firm and describes the basis upon which we will provide legal services to you. Accordingly, I submit for your approval the following provisions governing our employment. If you are in agreement, please sign a copy of this letter in the space provided below.

Scope of Representation. You have asked me to represent you with regard to the planning, preparation, and implementation of appropriate estate planning documents (such as wills, health care power of attorney, durable power of attorney and revocable trust agreements). You may limit or expand the scope of my representation from time to time, provided that any substantial expansion must be agreed to by me. While our firm would be interested in assisting you in other matters, unless our firm is specifically engaged for some other future matter this letter shall confirm that our representation of you is limited to the foregoing matters and shall end when they are concluded.

Fees. Our fees are based primarily upon the time expended by our attorneys and paralegals on the engagement. Attorneys and paralegals have been assigned hourly rates based upon their experience and level of expertise. The present rates of those attorneys and paralegals likely to work on these matters range from $______in the case of the paralegal who will work on this matter, $______in the case of the associate who will work on this matter, and $_____ in my case. Our hourly rates are reviewed periodically and may be increased from time to time, but will remain at these rates during this representation. We do not consider any billing for our services final until you are satisfied as to both the quality of our services and the amount charged. If you have any questions about a billing, please contact me directly.

Potential Conflicts. Our firm represents other businesses and individuals. This can create situations where work for one client on a matter may preclude us from assisting other clients on unrelated matters. It is at least possible that during the time that we are representing you some of our present or future clients may have disputes or transactions with you. In order to avoid the potential problems that this kind of restriction could have for our practice, we ask you to agree that we may continue to represent (or may undertake in the future to represent) existing or new clients in any matter that is not substantially related to matters in which we have represented you, even if the interests of such clients in those other matters might be adverse to yours. We do not intend, however, for you to waive your right to have our firm maintain confidences or secrets that you transmit to our firm, and we agree not to disclose them to any third party without your consent. We will, of course, take appropriate steps to insure that such information is kept confidential.

Additional Standard Terms. Our engagement is subject to the policies included in the enclosed memorandum.

Privacy Policy. Enclosed is a copy of the Firm’s privacy policy. Please let us know if you have any questions about it.

If these terms of our engagement are acceptable to you, please sign a copy of this letter for my records. You may keep the original letter for your records.

Sincerely,

[name of firm]
________________________

[name of attorney]

The foregoing is understood and accepted:

__________________________________

Date: _____________________________

* * *

Engagement Letter for Couple

Dear___________,

I am pleased that you have asked me and [name of firm], to assist you in developing your estate plan. This letter confirms my discussion with you regarding your employment of our firm and describes the basis upon which we will provide legal services to you. Accordingly, I submit for your approval the following provisions governing our employment. If you are in agreement, please sign a copy of this letter in the space provided below.

Scope of Representation. You have asked me to represent you with regard to the planning, preparation, execution and implementation of appropriate estate planning documents (such as wills, health care power of attorney, power of attorney and revocable trust agreements) for each of you concerning the management of your assets during your joint lives and the life of the survivor and the disposition of those assets to beneficiaries in connection with various contractual rights, such as life insurance policies and retirement plan accounts. You may limit or expand the scope of my representation from time to time, provided that any substantial expansion must be agreed to by me. While our firm would be interested in assisting you in other matters, unless we are specifically engaged for some other future matter this letter will confirm that our representation of you is limited to the foregoing matters and will end when they are concluded.

Joint Representation. Under the ethical rules that govern attorneys, I may represent both of you jointly so long as you are in agreement about your estate plan. It is normally quite beneficial for one attorney to represent both a husband and wife in the estate planning process, and my goal in doing so will be to help you implement a mutually agreeable plan for both the present and future. However, in the course of the estate planning process a husband and wife sometimes develop differences in their choices of beneficiaries, appointments of trustees, executors and representatives and in their overall interests and desires. Occasionally, couples initially agree on a plan and then later change their minds and go in different directions. Consequently, please understand that if I undertake to represent both of you jointly, I cannot take sides or favor one of you over the other, either now or in the future.

During the planning process, I will obtain confidential information from each of you, whether in conference with both of you together or with one of you alone. If I undertake to represent you jointly, please understand that I cannot withhold any such information from either of you even if one of you asks me to do so. The alternative is for me to represent only one of you separately without open sharing of information. The other one of you would then have to either engage separate counsel or choose not to be represented at all. Such separate representation is usually not practical and having one party unrepresented is usually not desirable. If during the course of my joint representation of you a conflict should develop that in my opinion would keep me from adequately representing both of you or if either of you asks me to take sides against the other, I will have no choice but to withdraw from further joint representation of the two of you and advise each of you to obtain separate counsel. By your signing this letter you are assuring me that you are comfortable with my representing both of you jointly.

Fees. Our fees are based primarily upon the time expended by our attorneys and paralegals on the engagement. Attorneys and paralegals have been assigned hourly rates based upon their experience and level of expertise. The present rates of those attorneys and paralegals likely to work on these matters range from $______ in the case of the paralegal who will work on this matter, $_____ in the case of the associate who will work on this matter, and $______ in my case. Our hourly rates are reviewed periodically and may be increased from time to time, but will remain at these rates during this representation. We do not consider any billing for our services final until you are satisfied as to both the quality of our services and the amount charged. If you have any questions about a billing, please contact me directly.

Potential Conflicts. Our firm represents other businesses and individuals. This can create situations where work for one client on a matter may preclude us from assisting other clients on unrelated matters. It is at least possible that during the time that we are representing you some of our present or future clients may have disputes or transactions with you. In order to avoid the potential problems that this kind of restriction could have for our practice, we ask you to agree that we may continue to represent (or may undertake in the future to represent) existing or new clients in any matter that is not substantially related to matters in which we have represented you, even if the interests of such clients in those other matters might be adverse to yours. We do not intend, however, for you to waive your right to have our firm maintain confidences or secrets that you transmit to our firm, and we agree not to disclose them to any third party without your consent. We will, of course, take appropriate steps to insure that such information is kept confidential.

Additional Standard Terms. Our engagement is also subject to the policies included in the enclosed memorandum.

Privacy Policy. Enclosed is a copy of the Firm’s privacy policy. Please let us know if you have any questions about it.

If these terms of our engagement are acceptable to you, please sign a copy of this letter for my records. You may keep the original letter for your records.

If you have any questions regarding any of the matters discussed in this letter, please feel free to give me a call.

Sincerely,

[name of firm]

__________________________

[name of attorney]

The foregoing is understood and accepted:

__________________________________

Date:______________________________

__________________________________

Date:______________________________ 

 

Estate Planning Forms

Did you find this article helpful? Do you think more information like this would help you? More information is available. This material is excerpted from Estate Planning Forms, 2009, by L. Rush Hunt, published by the American Bar Association General Practice, Solo and Small Firm Division. Copyright © 2009 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. GP/Solo members can purchase this book at a discount.

L. Rush Hunt is currently engaged in the private practice of law in Madisonville, Kentucky, where he devotes much of his time to areas of estate and trust law. Mr. Hunt brings more than thirty years of experience in estate planning and related areas of the law to the writing of this text, including not only his legal experience but also his experience as a certified financial planner and his previous employment as a vice-president of trust services for Citizens Bank of Kentucky, where he supervised trust administration and investments. Mr. Hunt earned his B.S. in accounting from Murray State University, his J.D. from the University of Louisville School of Law, and his Ph.D. in public law at Southern Illinois University. A frequent lecturer at continuing legal education seminars for both lawyers and accountants, Mr. Hunt is a member of the General Practice, Solo and Small Firm Section of the American Bar Association; the Kentucky Bar Association; and the Christian Legal Society.

© Copyright 2011, American Bar Association.