Here is the continued part in our series regarding probate litigation. We hope you enjoy, and contact France Law Firm with any questions if you’re seeking assistance.
Dysfunctional Families
The term dysfunctional family is often used by lawyers who handle probate litigation (one of my former law partners liked to explain his practice by saying he represents “dysfunctional families with wealth”). By definition, a family involves multiple people who have wants and needs and must interact with each other. It is easy for dysfunction to arise in families, especially if resources must be shared. Family relationships can be very rewarding, but they also can be very hard. It appears that many misunderstandings arise because of the fact that people do not always communicate clearly with each other, leading to unresolved issues. Sometimes it is just too painful for people to address issues that really should be addressed. Estate planning lawyers are not psychologists, but they understand the difficult situations some people are in. They are able to help clients deal with difficult issues in a proactive way: “An ounce of prevention is worth a pound of cure.” This is particularly true when it comes to avoiding probate litigation. Some people say they do not care what happens after they are dead. But, if there is probate litigation after death, even the decedent’s favored beneficiaries suffer. Good planning is the answer.
Factors That Could Lead to Probate Litigation
Here is a list of some of the factors (in no particular order) involved in probate litigation, grouped by categories.
Creating a “Nonstandard” Estate Plan
Some examples included estate plans that (1) “cut out” a child, (2) treat children differently, (3) create overly detailed trusts attempting to “control from the grave,” and (4) make gifts to mistresses. It does not matter if the person creating the plan has “good reasons” for doing what he is doing. A nonstandard estate plan increases the odds for probate litigation after death. It’s just a fact.
Other Difficult Situations
Other situations that are always more difficult to plan for and that increase the need for solid planning to avoid probate litigation (and other problems) include (1) heterosexuals living together who have not executed a “non-marital cohabitation agreement” to avoid a “common law spouse” lawsuit on death; (2) gay and lesbian couples who do not do “special additional planning” to place their partners in a secure position of control (to override state law priority statutes) and to arrange for the unassailable transfer of assets to their partners on death (tax planning also can be harder because the estate tax marital deduction is not available to gay and lesbian couples); (3) making unreported “taxable gifts” during life (a taxable gift is a gift that is more than $12,000 per person per year (the current annual exclusion amount)); (4) making gifts during life to just one child and not to all children in equal amounts; (5) failing to tell the estate planning attorney about an illegitimate child or child from a prior marriage; and (6) failing to organize the client’s financial and other important information to enable the executor of the estate to do a good job.
Failure to Follow Up
This category includes the client (1) failing to review the estate plan on a periodic basis (estate plans become outdated very quickly now); (2) failing to do the necessary “homework” incident to the estate plan (such as retitling accounts and completing beneficiary designation forms as instructed so that non-probate assets are coordinated with the client’s estate plan in his will or trust); (3) failing to change the will, account titles, and beneficiary designations after marriage or divorce; and (4) failing to retitle all the assets in the name of the living trust before death if the intention is to avoid probate completely.
How to Avoid Probate Litigation
Don’t do things that could cause serious legal consequences without first discussing them with legal or other advisors. Come in for a “check up” on a regular basis and be prepared to discuss every issue and concern. Follow through on necessary “homework” such as account titling and beneficiary designation matters (see above). Plan ahead for possible mental incapacity by having the appropriate documents in place. Make sure the persons appointed to fiduciary positions are completely trustworthy and responsible.
If a nonstandard estate plan is being implemented, use stronger techniques (such as a funded living trust) and additional provisions (such as a “no contest” clause). Consider creating a “will wall”: a series of wills executed over a lengthy period of time, designed to make it undesirable for a relative who the client wishes to “cut out” (or treat less favorably) to contest the will, so that if the last will is successfully contested, the contestant will still have to contest the prior will, which, through advance planning, would have been prepared to provide even less generous gifts to the contestant than the last will (and so on).
In discussions with family members, the client should explain the reasons for the plan being implemented, although the client will need to be careful to state the reasons in a way that is calm and rational (“incendiary” statements will only add fuel to the fire and could be detrimental in a will contest).
Not all probate litigation can be prevented, of course, but a large portion of probate litigation can be prevented by good planning. Good planning is what estate planning is all about.
