An Introductory Guide To Tax And Estate Planning

by Jackson Walker


A. Purpose of This Outline. This outline is intended to serve as an introductory guide to tax and estate planning and, thus, focuses on the practical application of the most relevant estate, trust, and tax laws to achieve real results, such as the successful transfer and protection of wealth, and reduced estate administration expenses and estate tax.

B. Purpose of the Estate Plan. Every person should have an estate plan. The Will is the core of the estate plan, and may be supplemented with other estate planning documents, such as a trust, beneficiary designation form, durable power of attorney, medical power of attorney, advanced directive, and/or declaration of guardian. These documents should collectively provide for the disposition of property, make fiduciary appointments, reduce or eliminate estate tax, and reduce estate administration expenses.

C. Creation of Estate Plan; Frequency of Review. An estate plan does not have an expiration date. A Will, trust, or other estate planning document is generally effective until revoked. The estate plan should be reviewed periodically to ensure that the testator’s estate planning goals continue to be met. As a rule of thumb, an estate plan should be reviewed upon the happening of a significant life occurrence (such as the birth of a child, marriage, divorce, change of state or country of residence, or significant change of financial position), or every three to five years regardless of significant life occurrences. Periodic review is critical to determine when an estate plan without estate tax planning should be replaced with a plan with estate tax planning.

D. Attorney Should Prepare Will. Although many advisors may be involved in the estate planning process, an attorney should prepare the estate planning documents. Non-attorney advisors are not licensed to practice law and, therefore, should not prepare estate planning documents. Forms found online or in form books should not be relied on because such forms do not typically address Texas law, tax planning, or the specific needs of the testator.

1. Attorney Preparing Estate Plan Should Not Be a Beneficiary. The attorney preparing the estate planning documents should not also be a beneficiary under the estate plan because a bequest to that attorney is generally void.1 An exception exists if the attorney has a certain relationship with the testator (for example, the attorney is a child of the testator).2

E. Other Advisors Typically Involved in Estate Planning.

1. Accountant. An accountant, such as a certified public accountant (or “CPA”), is often involved in the estate planning process because the 1 TEX. PROB. CODE § 58a(a)(1). 2 TEX. PROB. CODE § 58a(b)(1). 2 5931516v.2 accountant may have knowledge of the testator’s personal balance sheet and cash flow. Fees are typically charged based on an hourly rate. Solo accountants or accountants with small firms typically charge lower hourly rates, accountants with large firms (such as a “Big 4”) typically charge the highest hourly rates, and mid-sized firm accountants typically fall somewhere in between.

2. Financial Advisor. A financial advisor, such as a certified financial planner (or “CFP”), is often involved in the estate planning process as an advisor. A financial advisor is usually associated with a wirehouse, an independent advisory firm, bank, insurance company, or accounting firm. Fees are typically charged based on an hourly rate, flat rate, commission, or percentage of assets managed.

3. Insurance Agent. Insurance agents (who are sometimes also financial advisors) are often involved in the estate planning process for purchasing life insurance. Insurance agents are typically associated with a financial planning firm or an insurance company. The insurance agent can act as an independent broker and offer insurance policies from multiple insurance companies or act as an employee of an insurance company and offer insurance policies from only one insurance company. Fees of an insurance agent are typically paid by an insurance company in the form of a commission.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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