Avoiding Family Conflict - Drafting a Will with This in Mind
by Don Drake, Connelly Law Offices, Ltd. 6.5.24
"In our previous blog, we delved into the fundamentals of estate planning," said professional fiduciary and certified elder law Attorney RJ Connelly III. "In response, we received inquiries regarding creating a will and concerns about potential disputes within the family over its content."
"When developing a will, it's critical to anticipate the possibility of family members contesting its provisions after your passing," Attorney Connelly continued. "Any individual impacted by the will's contents has the right to contest it. In such scenarios, the probate process may become drawn out and quite expensive."
A Famous Contested Will
"The issue of contested wills is a widespread phenomenon transcending age and socioeconomic boundaries," said Attorney Connelly. "In recent years, numerous high-profile disputes regarding wills and estates have attracted widespread public attention in traditional print media and social networking platforms. These conflicts typically arise from dissatisfied family members who view their exclusion or inheritance allocation as unjust. One notable case is the late comedian Robin Williams, who thought that he had everything in place to prevent familial infighting; however, by not being thorough enough, his Will still led to significant legal disputes for his surviving heirs."
Unfortunately, his Will lacked certain specifics that caused years of distressing legal battles among the family. At the time of his passing in 2014, his will, which had been updated several years prior, left his $100 million estate to his three children. He also instructed his wife to live in their shared Tiburon, California home until her passing, after which the estate was to be divided among their children. While this seemed straightforward, family members may still challenge the terms of a will, especially when its language is ambiguous. Williams failed to include certain distinctions that would have specified the allocation of his personal belongings in the document.
His widow and surviving children vied to possess Williams' sentimental belongings, such as his clothes, fossil and graphic novel collections, and personal photographs. His wife argued that because Williams left her their home, it implied she owned everything inside the house. His children argued that the will indicated Williams' intention to pass on his possessions to them. This dispute led the family to rely on the legal system to resolve it.
While the disagreement was eventually settled in court, the details of the settlement arrangements were never made public. It is only known that the wife received a few of Williams' belongings, such as his watch and wedding gifts, and continued to reside in their shared home.
"In many instances, the lasting emotional damage caused can be irreparable, resulting in long-term bitterness among family members," Attorney Connelly said. "Fortunately, measures can be implemented to diminish the chances of a challenge's success. Let's explore some of these steps."
Validating a Will
For a will to be considered valid, the person creating it must have been of sound mind and fully aware of the implications of their actions at the time of its creation. If it can be argued that the individual lacked the mental capacity to understand the nature and consequences of creating a will, the will's legitimacy can be called into question. This underlines the importance of ensuring that the testator has the necessary mental capacity, known as Testamentary Capacity, to create a valid will, as challenges to the will's validity can lead to protracted legal disputes and potentially undesired distribution of assets.
About Testamentary Capacity
"Understanding testamentary capacity is essential when signing wills, trusts, and other estate planning documents," said Attorney Connelly. "Testamentary capacity refers to being of 'sound mind' and involves having a basic understanding and knowledge necessary to sign these legal documents that distribute property validly."
When a person signs these documents, they don't need perfect memory or technical legal knowledge. What's important is that they understand what the documents are and what they accomplish and agree that they express their intentions. If these conditions are met, the signing can proceed.
A notary must assess the capacity of the person signing a will before the document is formally executed. Capacity is assessed at the time the estate planning document is signed. Witnesses should be present with the notary before any documents are signed and the assessment is conducted.
To determine if a person has testamentary capacity, these conditions must be met:
The individual executing the document should be able to acknowledge and distinguish their immediate family members, commonly known as the "natural objects of their bounty." This term refers to the closest surviving relatives who would typically inherit the property of a deceased individual if they did not create a will.
Individuals need to understand the types and value of their assets clearly.
Individuals must clearly understand the connection between their family and their property to develop a well-thought-out plan for distributing their assets.
They must comprehend the implications and consequences of their decision to sign the document.
When drafting a will and other estate planning documents, it's typically presumed that individuals have the mental capacity to undertake this task, and those who challenge these documents must provide evidence to the contrary," stated Attorney Connelly. "Disputes over wills, as discussed previously, can lead to expensive legal disputes that are documented publicly and, in certain instances, may even attract media attention, whether through newspaper articles or online chatter."
Undue Influence
"The correlation between reduced mental capacity and heightened susceptibility to undue influence, a recurring subject we have addressed extensively due to its prevalence, must always be considered," stated Attorney Connelly. "The influencer can leverage persuasion and pressure to ensure that the decisions reflected in legal documents align with their preferences rather than those of the individual signing. Therefore, individuals with diminished mental capacity are particularly susceptible to such manipulation and undue influence."
An indicator of potential undue influence within families is when a particular beneficiary, such as a caregiver or external influencer, is suddenly and significantly favored over others. Notaries should be cautious if a beneficiary or self-interested party is present and insist on immediately signing documents.
Disagreements often arise among siblings when estate planning documents deviate from expectations, resulting in unforeseen consequences and family battles. Unequal distribution of inheritances, denial of inheritances, or leaving assets to non-family members, such as caregivers, often raises suspicions. Additionally, substantial changes to beneficiaries and distributions in wills and trusts as the testator's final days approach can lead to challenges over testamentary capacity.
"To prevent family disputes over estates, I strongly recommend that it's critical to engage in thorough estate planning before any mental incompetence or dementia arises," said Attorney Connelly. "While changes to wills and trusts may be justified later in life, disputes are likely to occur when a person diagnosed with dementia eliminates a family member in favor of a caregiver."
Ways to Avoid Some Battles
Conflicts between siblings often arise when dividing the estate's assets, leading to prolonged and costly legal battles. Fortunately, with some planning, parents can prevent these disputes from occurring, or siblings can use clever strategies to resolve them after their parent or parents have passed away. Consider some of the following tips to avoid or resolve conflicts.
No Contest Clause - To prevent a potential challenge to your will, consider including a "no-contest" or "in terrorem" clause. These clauses typically stipulate that if an heir contests the will and is unsuccessful, they will receive nothing. However, it's important to note that it's advisable to leave enough of a gift to the heir so that challenging the will would not be worth the risk of losing the gift under the terms of the will. This can act as a deterrent while ensuring that the heir still receives something from the estate.
Letter of Intent - If you have decided to exclude someone from your Will or to allocate a smaller portion of your estate to them than other beneficiaries, it's important to articulate your intentions clearly. Express your rationale in a letter to your Executor, explaining the reasons behind the decision. Feel free to provide as much information as possible, ensuring that the attorney responsible for drafting your Will reviews the letter. Keep the letter of intent alongside your Will to ensure your wishes are fully understood and respected.
A Medical Evaluation - When contesting a Will, one of the most common arguments is that the person who created the Will (the testator) was not mentally competent when signing. To prevent such a challenge, the testator can proactively address this issue by seeking a competency evaluation from a qualified professional, ideally a psychiatrist, geriatrician, or psychologist.
Although obtaining such an evaluation can be challenging, expensive, and time-consuming, a report from a psychiatrist can provide strong evidence of the testator's mental competence. This evaluation and the resulting report must be completed during the same period the Will is written and signed to demonstrate the testator's state of mind when executing the Will.
Use Technology - Creating a video recording during the Will signing process can be powerful evidence that you are willing and, without any pressure, to sign the Will. It can also be quite impactful to verbally explain in your own words why you have chosen to distribute your estate. However, knowing the potential risks of videotaping the Will signing is important. The video might unintentionally demonstrate that the person making the Will was not of sound mind when signing or that someone exerted undue influence on the estate plan.
Another important consideration is that any practice sessions or rehearsals with the attorney could be subject to examination and use in a court of law. Consequently, this method is rarely utilized unless the person making the Will (the testator) is unquestionably competent and at ease in front of a video camera.
Transfer Property Outside the Will - One effective strategy is to avoid formal probate to minimize the chances of a will being contested. This can be achieved by establishing a revocable living trust, designating beneficiaries on financial accounts and life insurance policies, and implementing joint property ownership. Additionally, communicating your wishes and rationale for your decisions to your family members can help lessen the likelihood of a will contest. Here are some ways you can do that:
Transfer your assets to your chosen beneficiary during your lifetime, demonstrating clear independence and competence (this may be an issue if Medicaid is needed, consult with a Medicaid planning attorney).
Designate beneficiaries for all your investment accounts, including brokerage and mutual fund accounts, and your retirement accounts, such as IRAs and 401(k) plans. Regularly reviewing and updating these beneficiary designations is crucial to aligning with your current wishes and circumstances.
You may want to consider transferring your real estate property into a trust or holding it as Joint Tenants with Rights of Survivorship with the intended beneficiary. This can help ensure the property is passed on to your chosen beneficiary smoothly and efficiently, potentially avoiding probate and clarifying the property's future ownership.
Consider transferring physical assets such as artwork, jewelry, coin collections, antiques, and similar items into a trust.
Please indicate who will receive your car in case of unforeseen circumstances on the back of your car registration. If you own a boat, ensure that ownership of it is shared with its intended beneficiary.
By avoiding formal probate, the assets dictated in the Will would not be subject to the court's control. Potential heirs would not have any reason to dispute or contest the distribution of the assets. Consequently, this would result in a simpler process for the executor, who would only need to file an estate tax return, transfer the property to the specified beneficiaries, and conclude the estate settlement.
A Final Word
Developing a well-structured estate plan, reinforced by effective estate planning tools, is crucial for ensuring that your loved ones are cared for in line with your intentions. Fortunately, many robust estate planning tools and strategies are available to help execute your wishes. However, formulating the most suitable strategies for you and preparing the requisite documentation necessitates a comprehensive grasp of legal, financial, and tax planning, expertise that can be provided by an experienced and knowledgeable elder law attorney.
"Your estate plan should be developed to safeguard the financial well-being of your loved ones while fostering amicable relationships among them," said Attorney Connelly. "This will ensure their financial security and mitigate potential conflicts and legal disputes. The key factors in achieving this objective are open communication, fairness, and transparency within your family, which are pivotal in preserving harmony during the estate's administration."
Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.
コメント