I\u2019ve spent some late nights recently working on trust litigation cases that could have easily been avoided if a properly drafted certificate of independent review (\u201cCIR\u201d) had been prepared. Many planners misdiagnose the need for a CIR.\u00a0 In other circumstances, the planner believes that all they need is a CIR containing the magic language and all will be well.\u00a0 \u00a0I am here to tell you that that is not enough.<\/p>\n
In one of my cases, the estate planner recognized the need for CIR because the primary beneficiary of the multi-million-dollar trust was not only a friend, but also a caregiver.\u00a0 A seasoned second estate planner was hired to conduct the review and prepare the CIR. The planner met with the settlor for around an hour, went over the estate planning documents and felt comfortable drafting the CIR. Unfortunately, the planner missed a lot of information and as a result was eviscerated on cross-examination, completely undermining the CIR.<\/p>\n
In other cases I have seen, I have noticed a pattern where a beneficiary doesn\u2019t present like a caregiver; however, a colorable allegation can be made all the same.\u00a0 The trust is then challenged, and like clockwork, the allegation is made that the trust is presumptively invalid as a matter of law <\/em>because of a gift to a caregiver and a lack of a CIR.<\/p>\n These cases can be expensive to litigate, and many of them could have been entirely avoided with a well drafted CIR.\u00a0 CIRs are more than just an administrative exercise. Their function is critical to ensuring that the intent of the trustees is honored. The documents are specifically designed to validate that the directions from the trustor\/settlor are of that individual\u2019s own free will and that the individual understood what he or she was doing in making the gift.\u00a0 They can \u2014 or rather they SHOULD<\/em> \u2014 be time consuming for an attorney to produce. Good CIRs take care to develop. Acting otherwise can be even more expensive, and result in costly legal expenses that can drain a trust\u2019s assets.<\/p>\n Estate planning attorneys that draft such documents are performing a valuable service and need to understand the role they are planning. Moreover, a poorly crafted CIR can put the attorney at risk of being sued or, at the very least, subject the attorney to being raked over the coals in deposition and at trial – and without any compensation for their time.<\/p>\n At a bare minimum, here\u2019s how CIRs should be developed:<\/strong><\/p>\n Relationships between beneficiaries and trustors \/ testators can be ambiguous.\u00a0 Remember, in litigation it\u2019s not what happened but what you can prove.\u00a0 Take your time and carefully consider whether a colorable claim could be made that a beneficiary is also a care custodian.\u00a0 When in doubt, recommend a CIR.<\/p>\n If you are acting as the scrivener for the CIR, scrupulously account for all conversations with the client and the primary estate planning attorney. Carefully review the estate planning documents, go over the key provisions with your client, and notate all conversations regarding that process.\u00a0 Make sure to document the \u201cwhy\u201d as to the reason to leave assets to a caregiver or to disinherit someone else.\u00a0 Remember, you could be deposed 10 years later or more \u2013 don\u2019t expect to be able to rely on your memory.\u00a0 To protect your client\u2019s intent and yourself, take notes as if you will have zero recall at a later date and will be completely reliant on your notes.<\/p>\n As attorneys we are not formally trained, nor may we make an expert opinion, on whether a client has capacity.\u00a0 To the contrary, we start with the presumption that our client is competent.\u00a0 But what we can do is ask questions, observe and take notes.\u00a0 Most planners wouldn\u2019t execute a CIR if they thought the testator was confused or lacked capacity.\u00a0 If you prepare a CIR, make sure to identify why you think the testator is competent to make the gift and then take copious notes detailing the same.<\/p>\n Farm out the responsibilities to a qualified estate planning attorney outside of your legal team and outside of your immediate sphere of influence. In other words, the more independent the better.\u00a0 Otherwise you may find yourself explaining to the judge why you recommended someone that was not entirely independent to prepare an independent review.<\/p>\n In closing, CIRs have an important role in protecting estate plans from being called into question, but only if drafted correctly. Make sure you follow the steps to protect your client\u2019s testamentary intent.<\/p>\n <\/p>\nConsider All Scenarios Where A CIR Is Warranted<\/h5>\n
Keep Diligent Notes<\/h5>\n
Validate the Testator\u2019s Capacity to Make Decisions<\/h5>\n
Keep The CIR Process Independent<\/h5>\n