Essential (Preventive) Estate Planning Checklist Provisions

My sample estate planning document provisions below are essential in many cases for helping prevent issues that I see in my trust and estate litigation work.

My experience indicates these provisions are not used frequently enough among estate planning attorneys.  Also, readers of this blog cannot, and should not, rely on these sample provisions nor read this post as my recommendation for using any one or more of the provisions in a particular estate planning document or situation.  But, the provisions should be on your estate planning checklist.

The following are, therefore in my view, important sample provisions for a trust document (the last two deal only with a married couple situation):

Fiduciary Duty.  In exercising any power with respect to a trust created under this trust agreement, each Trustee, Co-Trustee, and directed trustee (Article XIII) shall at all times serve in a fiduciary capacity and act in accordance with fiduciary principles, including, but not limited to, the duty of care, loyalty, and confidentiality.

Allowable Self-Dealing.  The decisions by my spouse Jane while serving as a Trustee or Co-Trustee under this trust agreement that may or could be otherwise construed as self-dealing with respect to Jane’s exercise or non-exercise of any power hereunder, or the time or manner of the exercise thereof, made as a prudent person in good faith, shall fully protect Jane and shall be conclusive and binding upon all persons interested in the trust estate; provided, however, that no self-dealing as to any charitable or non-profit interest under this section 1.7 is allowable to the extent prohibited by any applicable tax or non-tax laws or related regulations.

Divorce[But, see my Important Note below.]  Although Jane and I do not contemplate a divorce, we each acknowledge and are aware that in the event either one of us (i) files a complaint or petition for divorce in any jurisdiction or (ii) obtains a decree or judgment of divorce in any jurisdiction, Jane shall, as of the occurrence of the earlier of either of these conditions (i) or (ii), at such time be deemed for all purposes (including any position as a fiduciary and as to any trust created by exercise of a power of appointment or distribution-in-further trust) to have predeceased me as of my date of execution of this trust agreement.

Contemplation of Remarriage. Although neither Jane nor I contemplate the occurrence of a divorce from one another or a remarriage to another spouse, if for any reason following my execution of this trust agreement, I were to enter into marriage with anyone else other than Jane, my express and clear intention is that that new spouse  shall not receive any property from my estate nor under the provisions of this trust agreement, with the result that all provisions in my Last Will and Testament and this trust agreement (whether or not either document is amended after my execution of this trust agreement) shall remain fully in effect and unchanged by reason of my marriage to that other spouse.

Important Note re the Above Divorce Provision

The estate planning lawyer who represents both spouses needs to memorialize and make clear to both spouses that each spouse understands the divorce provision can result in potentially adverse consequences to either or both spouses in the event of a future divorce. The estate planning lawyer, in my opinion, also should inform both spouses together that they have the option of seeking separate counsel to review this divorce provision before the estate planning lawyer includes it in the spouses’ documents.

And, I also believe the estate planning lawyer under the ethics rules cannot include the divorce provision only in one spouse’s document if that lawyer represents both spouses, even if the spouses consent; unless both spouses seek separate counsel.  Otherwise, including the provision only in one spouse’s document — by the estate planning lawyer who represents both spouses — is substantively akin to preparing a prenuptial agreement only for one of the two spouses while representing both spouses.

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