John W. Porter and Stephanie Loomis-Price of Baker Botts LLP in Texas and Charles E. Hodges II of Chamberlain, Hrdlicka, White, Williams & Martin in Georgia published a useful article entitled: Anticipating the Audit Call: Thinking About Controversy at the Planning Stage, Prob. & Prop., Jan./Feb. 2008, at 20.
The article does a good job of explaining why every email, letter, memo and draft document you prepare as an estate planner should be written under the assumption that one day the IRS (or opposing counsel in a will contest) will read the document and construe it in worst light possible for your client. The following excerpt sums up this point:
[T]he production of carefully drafted estate planning correspondence or similar documents in response to . . . an IRS request can actually help the taxpayer state his or her case with the examiner or in litigation. With that goal in mind, while a planner works on a client’s estate plan, he or she must assume that every document prepared by the estate planning lawyer, the client, the accountant, or any other person involved in the estate planning process may be reviewed by an IRS agent, appeals officer, IRS counsel, or the finder of fact in tax litigation (perhaps a judge or even a jury). Of course, certain documents may be withheld from production based on one or more applicable privileges. Thus, every estate planner should have a solid understanding of the relevant privileges.
The authors then go on to provide a solid summary of the evidentiary privileges most likely to come up in an estate tax audit or any other type of estate litigation. This article is worth holding on to. The following excerpts sum up the evidentiary-privileges aspect of the article:
Understand and Preserve All Privileges
All planners should have a general understanding of five types of privileges when representing their clients: (1) the attorney-client privilege, (2) the attorney work-product doctrine, (3) privileges extending to third parties who assist attorneys in rendering legal advice to their clients, (4) the tax practitioner’s privilege, and (5) the doctor-patient privilege. . .
The work product of an attorney or his or her staff in anticipation of litigation is protected from disclosure. In fact, the attorney work-product doctrine is not a privilege, although some courts (and many practitioners) refer to it as one. The purpose of the work-product doctrine is to encourage lawyers to thoroughly prepare for litigation (whether pending or not) through investigation of the good and the bad, without fear of being forced to disclose their thoughts and analysis.