{"id":13915,"date":"2023-01-27T16:44:58","date_gmt":"2023-01-27T21:44:58","guid":{"rendered":"https:\/\/gbfamilylaw.com\/?p=13915"},"modified":"2023-06-07T10:58:17","modified_gmt":"2023-06-07T15:58:17","slug":"how-family-law-issues-often-complicate-estate-planning","status":"publish","type":"post","link":"https:\/\/gbfamilylaw.com\/blogs\/how-family-law-issues-often-complicate-estate-planning\/","title":{"rendered":"How Family Law Issues Often Complicate Estate Planning"},"content":{"rendered":"\n<p>One of the most troubling events for estate planning attorneys is when their married clients get divorced. This is because a divorce drives a wedge through the middle of the marital estate and puts the attorney who helped plan the estate at the center of the fray. <\/p>\n\n\n\n<p>An impetus for problems arising in these types of situations is that married couples often start the estate planning process at a time when they are deeply in love, share mutual goals of building wealth together, and are not thinking about what happens <a href=\"https:\/\/gbfamilylaw.com\/services\/divorce\/\">if their relationship sours<\/a>. By the time of divorce, however, these spouses\u2019 interests will likely have changed dramatically. The mutuality of interest from years prior is often replaced by frantic and competing desires to <a href=\"https:\/\/gbfamilylaw.com\/blogs\/maintaining-separate-property-without-a-marital-property-agreement\/\">reclaim property that they brought into the marriage<\/a>, and achieve financial independence from the other spouse. Unfortunately, this sudden change in their interests puts the couple\u2019s estate planning attorney in the middle of the conflict. And clients, who once may have been very satisfied with the attorney\u2019s work, often become angry about how their assets are tied up in the marital estate. <\/p>\n\n\n\n<p>If not prepared to navigate this common scenario, the estate planning attorney will be put in a difficult position, and find him or herself at risk for a potential malpractice claim. However, there are a number of measures that lawyers can undertake at the outset of client representation to limit his or her future exposure. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Declare Separate Property<\/h2>\n\n\n\n<p>First, the attorney should have both spouses complete and sign forms declaring all property they intend to <a href=\"https:\/\/gbfamilylaw.com\/videos\/how-to-protect-your-separate-property-in-divorce\/\">maintain as separate property<\/a> during the marriage. Separate property is any property owned before marriage and any property acquired during the marriage by gift, inheritance, or as compensation for personal injury damages such as pain and suffering. If a dispute arises in a future divorce regarding the treatment of any property that was not previously disclosed, the attorney will have a clear record of the clients\u2019 stated instructions in the file. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Explain Joint Representations and Potential Conflicts  <\/h2>\n\n\n\n<p>Second, the attorney should develop a handout explaining joint representations for an estate plan and the potential conflicts that may arise. Prior to beginning the joint representation, have the clients sign a form acknowledging they were provided this information in writing and that they agree to waive any conflicts of interest. If the couple later divorces and one of the spouses tries to claim his or her interests were not appropriately served, the attorney will have a clear record of the written waiver as reference. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Provide Other Written Disclosures at the Outset <\/h2>\n\n\n\n<p>Third, the attorney should provide other written disclosures that the attorney deems to be necessary at the outset of engagement. These disclosures can be tailored depending on particular client situations or other unique circumstances. At a minimum, include disclosures about <a href=\"https:\/\/gbfamilylaw.com\/services\/property-division\/characterization-of-separate-and-community-property\/\">the differences between separate and community property<\/a>. Also disclose how spousal interests often change in the event of divorce, family deaths, or other contingent events that may arise. A discussion of options for these possibilities is a necessary element of a client being able to provide \u201cinformed consent\u201d for a particular estate plan. The lawyer may also want to ask the clients to sign a disclosure acknowledging that they are giving up important marital property rights to accomplish their desired estate plan. The lawyer should keep all signed disclosure forms in a file. These signed documents will help protect the lawyer from becoming a target for client unhappiness at the time of a future divorce. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Field Questions About the Estate if They Divorce<\/h2>\n\n\n\n<p>Fourth, the attorney should be well prepared to field questions about the possibility of unwinding an estate<a href=\"https:\/\/gbfamilylaw.com\/services\/divorce\/pre-divorce-guidance\/\"> in the event of a future divorce<\/a>. This is not always an easy task. For example, there are special rules when clients use legal entities as part of their estate planning goals. When a spouse as part of an estate plan conveys his or her separate property into entities such as a trust or family limited partnership, the contributed property loses its separate property character and becomes the property of the entity itself. Additionally, if the entities are created during the marriage, the spouses\u2019 ownership interests in these entities are treated as community property. They will have no direct interest in the property contributed to the entity. In some estate plans, only one of the spouses has managerial powers over the entity, yet both spouses will still hold the same undivided, community property interest in the entity itself. At the time of divorce, the court will value and award a spouse\u2019s interest in the entity, but not the property owned by the entity. While a divorcing spouse can ask the court to dissolve an entity and distribute its assets, how readily that can be accomplished depends, in part, on the terms of the formation documents. Importantly, if a spouse contributed separate property to the entity and is successful in getting the court to order dissolution of the entity and distribution of the assets, the property being returned out of the entity will be community property\u2014and will not revert to its prior separate character. <\/p>\n\n\n\n<p>By preparing in advance and taking the right steps at the outset of representing married couples, an estate planning attorney\u2019s effort will go a long way in protecting themselves from the claims of their clients in the event of a future divorce.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Learn More<\/h2>\n\n\n\n<p>Jeff is a highly experienced litigator, mediator, and <a href=\"https:\/\/gbfamilylaw.com\/services\/divorce\/collaborative-divorce\/\">Collaborative law<\/a> attorney. With a versatile skill set, he is exceptionally equipped to advise clients on the best approach to resolve their family law matters and achieve an outcome that is ultimately successful. Jeff manages the full range of&nbsp;family law&nbsp;issues, with special expertise in high net worth business and complex property cases.<\/p>\n\n\n\n<p>*Originally published in the <a href=\"https:\/\/www.dallasbar.org\/?pg=Headnotes\">Dallas Bar Association<\/a> December 2022 <em>Headnotes<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Popular Family Law Articles<\/h3>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/allocating-parental-rights-divorce\/\">153.132 Texas Family Code<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/how-to-start-the-new-year-off-right-after-a-divorce\/\">How to Start Over After a Divorce<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/negotiation-principles-techniques-and-strategies\/\">Divorce Negotiation<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/what-rights-do-stepparents-have-after-a-texas-divorce\/\">Step Parents Rights in Texas<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/what-to-do-if-my-child-refuses-visitation-in-texas\/\">Can a Child Refuse Visitation<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/drug-testing-seven-faq\/\">Finger Nail Drug Test<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/child-support-adult-children-disabilities-texas-customized-support-18\/\">Autism Child Support After 18<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/texas-divorce-forms-and-helpful-resources\/\">Uncontested Divorce Forms in Texas<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/can-i-spy-on-my-spouse-if-i-suspect-they-are-cheating\/\">Is Spying Illegal<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/how-is-child-support-calculated\/\">What is the Percentage of Child Support in Texas<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/divorce-mental-health\/\">Mental Illness and Divorce<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/recording-spouse-preliminary-guide\/\">Texas Law Recording Conversations<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/what-does-primary-custodial-parent-mean-in-a-texas-divorce\/\">What Does Primary Physical Custody Mean<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/understanding-texas-divorce-and-child-support-law\/\">Divorce Laws in Texas with Child<\/a><\/td><td><a href=\"https:\/\/gbfamilylaw.com\/blogs\/substance-abuse-cases-what-every-attorney-should-know-about-drug-and-alcohol-testing\/\">Nail Drug Test Results PG MG<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Partner Jeff Shore shares common scenarios which complicate the estate planning process and what attorneys can do to mitigate these situations. <\/p>\n","protected":false},"author":3,"featured_media":13843,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"12161,4323,12894,12898,2842,10435","_relevanssi_noindex_reason":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-13915","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.8 - 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