Many estate-planning attorneys use a private property memorandum (memo) for the disposition of private property. It’s used when the legal professional drafts a shopper’s will to permit the shopper to alter their private property distributions after the property plan has been formally executed. This apply permits the shopper to effectively alter their private property distributions with out formally modifying their property plan, saving the time and expense of assembly with their authorized counsel to tweak their property plan. As useful as this apply could also be in facilitating the altering needs of the shopper, is it opening the door for undesirable dangers to the shopper and their legal professional? Probably.
The Technique
Together with the non-public property memo with the shopper’s will permits restricted flexibility for the shopper to eliminate their private property. To avoid wasting the shopper from assembly with their estate-planning legal professional each time they eliminate or purchase private property, the memo permits the shopper to determine the change in property and modify who will obtain (or not will obtain) it on the shopper’s demise. The memo qualifies its restricted energy, and the shopper’s legal professional discloses the identical sooner or later within the drafting or execution phases by stating that the non-public consultant isn’t required to comply with the dispositive provision discovered herein. So, the non-public consultant can both comply with the directions within the private property memo or select to not comply with the directions. It’s typically presumed that the non-public consultant can choose and select which memo directions to comply with. If a private consultant elects to comply with just a few of the letter’s directions, what occurs to the remaining private property? Usually, these belongings will comply with the need’s formal provisions for disposition.
Reference to Memo
Within the part of the shopper’s will that disposes of private results, seek advice from the non-public property memo. For instance, you may say one thing like this:
If my partner fails to outlive me, I give and bequeath sure objects of private property in accordance with a memorandum signed by me, which I plan to depart with this final will and testomony or amongst my different private papers. I request my private consultant comply with the distributions of the listed private property to the meant beneficiaries to one of the best of their skill, understanding this request is precatory in nature and can’t be enforced by regulation. Moreover, I request that the beneficiaries thereunder settle for amicably the disposition of such articles of private property. If I don’t go away such a memorandum, or if there shall be any of stated objects as to which I’ve not made my needs identified on stated memorandum, then the identical shall kind part of my residuary property and be disposed of in accordance with my final will and testomony.
Pattern Memo Language
The memo can take many types and is usually ready upfront by the legal professional to assist in its future growth by the shopper. For instance, the memo may say:
I request my private consultant comply with the under listed distributions of private property to the meant beneficiaries to one of the best of their skill, understanding this request is precatory in nature and can’t be enforced by regulation. Moreover, I request that the beneficiaries hereunder settle for amicably the disposition of such articles of private property. My private consultant is given full discretion in making the under listed distributions and the non-public consultant’s determination shall be ultimate as to the beneficiaries.
Private Property Description
- 14k gold wedding ceremony ring.
- 2024 HP Envy x360 laptop computer.
3. ______________________________
4. ______________________________
Date: Jan. 23, 2025
By: Harvey A. Hutchinson Harvey A. Hutchinson,
Testator
Beneficiary
1. Courtney Hermes (Daughter)
2. Morgan Altra (Daughter)
3. _______________________________ 4. _______________________________
Potential Dangers
Usually, the shopper by no means makes use of the memo. The empty memo is discovered with the shopper’s estate-planning paperwork. An unscrupulous actor who has unfettered and unaccountable entry to the shopper’s estate-planning paperwork might take the chance to finish the memo as they like or as they imagine the shopper would need. As a result of there are few, if any, safety measures (aside from the signature of the testator or testatrix that could be topic to forgery) in place to finish the memo, and the memo could also be administered exterior the evaluation of the probate court docket, the prospect for fraudulent conveyances is nice.
If the memo is used, it’s usually outdated, and the shopper not owns a lot of the listed property. The listed beneficiary who was meant to obtain the pre-disposed private property is left confused and questioning if they need to get one thing else as an alternative. After studying they gained’t obtain a substitute private asset of equal worth, they’re left feeling jilted and will start questioning the legitimacy of the property plan and its administration going ahead.
Moreover, if the shopper suffered from diminished capability when finishing the memo, and a number of other years have handed after the estate-planning paperwork had been drafted, may the memo grow to be proof in a court docket continuing that all the property plan was invalid? Take into account the next state of affairs: The shopper lists cartoon characters (for instance, Charlie Brown or Daffy Duck) as beneficiaries within the memo and describes private property the shopper has by no means owned. The memo will grow to be Exhibit A to an unhappy inheritor or beneficiary who chooses to contest the need. Was this threat seemingly or foreseeable on the time of the memo technique? Probably. Ought to this threat, and the opposite described dangers above, be weighed earlier than utilizing a private property memorandum technique? Sure, with out query.
Restrict Frequency of Use
Advise your purchasers to restrict the frequency of using the memo. The pliability given to the shopper to alter their thoughts within the disposition of the non-public property is definitely met with this technique; nonetheless, the dangers mentioned above seemingly outweigh the price financial savings and asset distribution advantages the technique gives. Likewise, having the legal professional engaged with the shopper when making ready the memo might forestall foreseeable and unforeseeable dangers in its growth, such because the hallucination instance of naming cartoon characters as beneficiaries mentioned earlier. Moreover, the legal professional may place an expiration date on the memo to make sure the shopper stays in touch with the legal professional to maintain the property plan (or no less than the memo) present and related. Nonetheless, further safeguards and extra communication between the agency and its purchasers ought to be made earlier than persevering with use of the non-public property memo.
Harvey A. Hutchinson at the moment serves as a Lead Monetary Planner with Brown Monetary Advisory in Fairhope, Ala.
