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Sample Engagement Letter -- Married Couple as Clients
Mr. and Mrs. [Husband's Name]
Re: Agreement for Legal Services
Dear Mr. and Mrs. [Client Last Name]:
The purpose of this letter is to set forth the terms of my legal representation of you.
1. Scope of representation. You have asked me to help you with planning your estate. This representation will include the following:
a. Drafting your estate planning documents based on the information you have provided to me. Your estate planning documents will include the following documents for each of you:
(1) A will, which provides (among other things) for the creation of a "Bypass Trust" as a means to preserve the estate and gift tax credit of the first spouse to die. This credit, which is currently equivalent to $600,000 in assets, may allow the two of you to pass more of your combined marital wealth to your descendants or other estate beneficiary free of the estate tax. [Option 1: The Bypass Trust in each will is funded by means of a disclaimer by the surviving spouse. This method of funding permits the surviving spouse to wait until the death of the first spouse to die to decide to what extent the Bypass Trust is to be funded. The surviving spouse could choose to disclaim nothing, meaning that the surviving spouse would receive the entire estate and nothing would be placed in the Bypass Trust. Or the surviving spouse could decide to disclaim up to $600,000 worth of property, causing the property so disclaimed to pass into the Bypass Trust. Thus, the estate tax savings under each will is totally dependent upon the decision of the surviving spouse to disclaim or not to disclaim.][Option 2: The Bypass Trust in each will is funded by means of a formula. This formula contains language which is intended to maximize the amount of property passing into the Bypass Trust without causing there to be any tax due on the death of the first spouse to die. Funding of the Bypass Trust pursuant to this formula is mandatory on the death of the first spouse -- the surviving spouse has no power to choose whether or not to fund the Bypass Trust.]
(2) A statutory durable power of attorney.
(3) A durable power of attorney for health care.
(4) A declaration of who you want your guardian to be if the need for one ever arises in the future.
(5) A directive to physicians (often called a "living will").
b. Providing you with instructions on how to coordinate your life insurance and retirement plan beneficiary designations with your estate planning documents.
c. Sending these drafts to you and answering any questions that you may have.
Preparing final drafts of the documents for signing.
e. Supervising your execution of these final documents in my office.
Sending you the completed, signed documents for your records.
2. Excluded from representation. My representation of you is limited to matters described above, and I owe you no duty of ongoing representation in this or other matters. My duties to you under this agreement will end when I have sent you your completed documents and you have had two weeks to review them for accuracy. After that time, my representation of you will cease, and I will owe you no duty to update your plan or to notify you of law changes which may affect you. Any future representation is not a part of this engagement and will be covered by a separate agreement.
3. Planning objectives. In helping you with your estate plan, my objective will be planning for the death or disability of either or both of you; I will not be considering the effects of a possible divorce. Either or both of you may be adversely affected by your estate plan in the event your marriage ends in divorce. If you have any questions about how this plan may affect you in the event of a divorce, please consult with an attorney experienced in family law matters. In addition, you have indicated that you want your estate plan to include provisions designed to save your family estate and/or gift taxes. By including these provisions, you should recognize that (a) your estate planning documents are likely to be more complex than they would have been if tax savings was not an objective and (b) restrictions may be placed on your beneficiaries (including the surviving spouse) that may make it more difficult to fully utilize and enjoy the property free from interference by and/or liability to others. This will confirm that we have discussed these issues at some length and that you have decided that the potential tax savings to be gained from this plan take priority over these potential detriments.
4. Fees. I will perform the services described above for a fee of $[Flat Fee], which fee includes up to [Hours in Flat Fee] hours of attorney time. If this project takes more than this amount of time, you agree to pay for time in excess of [Hours in Flat Fee] hours of attorney time at the hourly rate of $[Attorney Rate] per hour of attorney time. I will keep track of all time that I spend on this matter, and all of that time will count this limit. This will include the time that I or other office personnel may have already spent discussing this matter with you, time that I or other office personnel spend talking to you on the telephone or in person, time that I or other office personnel spend talking to each other or to third parties (your advisors, other attorneys, etc.) about your matter, time that we spend doing research on your matter, time that we spend drafting, revising and reviewing your documents, time that we spend drafting and reading correspondence, and time that our attorneys or other office personnel spend supervising your execution of documents. It has been my experience that I and my staff have been able to prepare estate plans like the one you have indicated you want for the majority of my clients within this time frame. Therefore, I have priced my services so that the majority of my clients can get a fair price for their plans and have a good idea of what those plans will cost. If I exceed the time limit in your case, I will charge you a larger fee based on the hourly rate stated above. Reasons why the time limit may be exceeded are: the need to make more revisions than usual; the need to spend more time than usual explaining provisions or answering questions; and delay in providing me with requested information. We mention these reasons not to discourage you from asking questions or having your documents be just the way you want, but to explain to you the effect this may have on the fee I charge so that you are in a position to control costs if you wish to do so.
5. Expenses. In addition to the fee described above, you agree to pay all expenses related to this matter. These expenses include, but are not limited to, postage, long distance telephone, photocopying, overnight messenger charges and filing fees. It has been my experience that, if there is only one overnight messenger charge and no long distance charges, the expenses associated with a plan such as yours will be approximately $[Flat Expenses]. Since these expenses usually are not known precisely until after you sign your documents, I probably will bill you the estimated amount stated above. This allows you to pay your bill in full and complete your business with my firm without having to wait a month or two to pay the expenses.
6. Billing procedure. Payment for fees and expenses is due at the earlier of (1) the time you sign your documents; or (2) 45 days from the date of this letter. Please be ready to pay when you come in to sign your documents.
[Option 1:7. You are my clients. You, and you alone, are my clients. I owe no duty to your family members or to your potential estate beneficiaries. Since there are two of you, the possibility of a conflict between you exists. You acknowledge and understand that, since I am representing both of you, no communication either of you has with me can be kept confidential from the other of you. If a conflict develops between the two of you, I may decline to continue to represent you.]
[Option 2:7. Multi-party representation. My representation of you in this matter requires me to represent each of you as clients at the same time. Of course, you could each retain your own attorney to prepare your estate planning documents, but you have indicated that you prefer to have me prepare estate planning documents for both of you. I am happy to do this, subject to the following conditions regarding multi-party representation:
a. Since there are two of you, the possibility of a conflict between you exists. You acknowledge and understand that, since I am representing both of you, no communication either of you has with me can be kept confidential from the other of you. If a conflict develops between the two of you, I may decline to continue to represent you.
b. When I am advising [Husband] and preparing [Husband]'s documents, [Husband] is my only client, and I owe no duty [Husband]'s family members or potential estate beneficiaries.
c. When I am advising [Wife] and preparing [Wife]'s documents, [Wife] is my only client, and I owe no duty [Wife]'s family members or potential estate beneficiaries.]
8. Termination of Representation. Either of us can terminate this relationship at any time for any reason by giving written notice to the other party. My representation of you will terminate immediately upon the giving of this notice by either party, except that, if you are involved in a court proceeding (such as a lawsuit or probate proceeding) at the time of termination and I am the attorney of record, my representation will continue until I am sure that my immediate withdrawal as your attorney will not jeopardize your interests in the proceeding. Upon termination by either party for any reason:
a. You agree to pay my fees through the date of termination calculated at the hourly rate or rates stated above;
b. You agree to pay expenses incurred through the date of termination; and
c. You are entitled to the file I maintain on your matter if you request it, provided that I am entitled to photocopy the file contents at your expense prior to delivery of the file to you.
9. Grievances. The State Bar of Texas investigates and prosecutes professional misconduct committed by Texas attorneys. Although not every complaint against or dispute with a lawyer involves professional misconduct, the State Bar Office of General Counsel will provide you with information about how to file a complaint. For more information, please call 1/800/932-1900. This is a toll-free phone call.
I look forward to working with you on this matter. If you want me to represent you, and if you agree to the terms of this letter, please sign one copy of this letter and return it to me. (The other copy is for your records.)
Very truly yours,
Accepted and Agreed:
Comments? Problems? Email firstname.lastname@example.org
Copyright 1998 by Glenn M. Karisch Last Revised June 11, 1998