PROTECTING AGAINST AN HEIR CONTESTING YOUR WILL

When you meet with your attorney to draft your will, you will discuss to whom you would like to distribute your assets. There may be a life circumstance where you do not want to distribute assets to a family member or relative whom would inherit from you if you did not have a will (called intestate distribution). There could be various reasons behind your decision: you already gave the heir financial support during your lifetime above and beyond other heirs; or you lost contact with the heir, or you are estranged. This could lead to a situation where the heir wants to contest the will when it is offered for probate in court.
You cannot necessarily prevent your heir from contesting your will, but you can provide an incentive not to do so. If there is likelihood that an heir will contest your will, you could consider a clause in your will to address this issue.
Courts will honor your wishes and intent as set forth in the will. However, a will contest could cloud what your true intent was with possibly a claim of unduly influence, or lack capacity, or fraud.
Therefore, if you decide to disinherit someone, a drafting technique would be to mention the person and state that you are not leaving the person an inheritance, stating the reason or stating something like “for reason know to her or him.” This allows the court to know (and the heir to know) that you did not “accidentally” leave out the heir but that you intended to disinherit the heir.
However, disinheriting someone outright does not provide an incentive to not contest the will. The heir has nothing to lose when you leave them nothing (except maybe attorneys fees). A good practice is to leave the person a relatively nominal amount so there is an incentive not to contest. For example, let’s say you have an estate worth $4 million. You have four children (your spouse predeceased you), but you have not heard from one of the children in years. No matter how many times you attempted to contact the child, the child refuses to speak with you. So, you decide to disinherit the child.
If you left the child $10,000 and included an ad terrorem clause in your will, then the child could be less likely to contest it. An ad terrorem clause would state that if any named beneficiary contests or seeks to invalidate this Will because of undue influence, lack of capacity or fraud (and loses), they would be disinherited. In this case, the child would lose the $110,000.
Note that an heir can always contest the will based on improper execution and lose without being disinherited. Usually an improper execution claim will fail when an attorney supervises the execution of the will. In any event, an heir can still contest based on undue influence or other claims previously mentioned. Therefore, proper estate planning is necessary.
There could be other ways to help protect against estate litigation, such as the use of trusts. Feel free to contact me for further discussion. dbosco@boscolegal.com (212) 201-1908.

WILL CONSTRUCTION: HANDLING AMBIGUITIES IN A WILL

Introduction

Sometimes terms of a will are ambiguous. This usually occurs when someone attempts to draft a will without using an attorney, either on their own or using an internet service provider that disclaims any liability. Or this can occur even with an attorney who is unfamiliar with estate planning and drafting.

When someone dies with a Will

When a personal representative (“PR”) obtains the original will from the decedent, the PR upon reading the will, must follow its terms. Sometimes the PR alone comes to realize that some terms of the will are ambiguous and other times, the heirs of the decedent or the beneficiaries listed in the will challenge the PR’s interpretation of the will.

When there is no resolution as to how to interpret certain terms of a will, the PR, heirs or beneficiaries, may seek court intervention. The court will look at the construction of the will and in most cases can look at the intent of the testator (the person who’s will it is).

Generally, a fiduciary or a person interested in obtaining a determination as to the validity, construction or effect of any provision of a will may petition the court in what is commonly known as a will construction proceeding wherein the court will make a decision on the particular portion of the will that is ambiguous.

Two types of ambiguities

There are two types of ambiguities that the Court could review: patent ambiguity and latent ambiguity.

A will is patently ambiguous if it is ambiguous on its face. In other words, the ambiguity results from the language or wording in the instrument. With patent ambiguity, there is uncertainty, contradictions, or deficiencies of the language of an instrument, so that no outside evidence can be used to interpret the terms of the will without adding ideas that the words themselves cannot sustain. The trouble with patent ambiguities is that extrinsic evidence cannot remove the difficulty without putting new words into the mouth of the testator.
A patent ambiguity exists, for example when a testator list a beneficiaries to receive a specific gift in one part of the will, but then states in another part of the Will, that someone else is to receive the gift. Or the gift to one beneficiary is unclear. For example the will states that I bequeathed the sum of five dollars ($5,000) to my sister, Mary. In this case, what is the gift: a sum of five dollars or five thousand dollars? The gift could fail because the Will does not accurately identify which amount the testator intended to give Mary.
A latent ambiguity occurs when the language of the instrument is clear (i.e., the defect does not appear on its face); however, when coupled with some extrinsic fact or some extraneous evidence, there could be two or more possible meanings. In other words, a latent ambiguity arises when it is not clear how to apply certain words of the Will.
For example, a will may state that I leave all my belongings to Jack Jones. However, the testator may have two John Jones as cousins. In this case, extrinsic evidence would be need to determine what Jack Jones is to receive the bequest (e.g., the Jack Jones who took care of the testator before death; or a Jack Jones who has not spoken to the testator in years).
Speak with you attorney before drafting a will so you can avoid ambiguities in your will. Or if you are a personal representative, speak with your attorney about how to commence a will construction proceeding. Feel free to contact me for further discussion.

LIFE ESTATES – HOW TO USE THEM IN ESTATE PLANNING

Life estates are used in estate planning for various purposes. This article will discuss some of the ways. First, we will explain what a Life Estate is.

What is a Life Estate

A life estate is when a person has a right to live in a home or occupy real property during their lifetime. The person does not have a right to bequeath the real property upon death, but the right to live on the property. It lasts only for the life of the person. The life estate holder cannot leave the property or land to anyone in their will, because their interest in the land ceases to exist when they die.

The person with the life estate has a full right to possess the land or transfer their interest during their lifetime, but must refrain from engaging in waste or activity that would prevent the next person in line (usually called the remainderman) from putting the property to full use.

How a Life Estate is created

A person owning land can create a life estate in a deed that gives the land to a person “for life” and identifies what should happen to the property after that person dies.  For example, the deed could state that the property is transferred to Sam Doe do for life, and upon Sam’s death, is transferred to Jane Doe.  The owner of a life estate is called a “life tenant”.

Right of Life Tenant

The Life Tenant has certain right including income derived from rent or other uses of the property, during his or her possession. However, as mentioned, the life tenant cannot damage or devalue the land or cause the destruction of it. Sam could use the property during his lifetime, and possibly even sell or rent out his interest to a third party, but that third party would have to surrender the property to Jane upon Sam’s death.

Duties of the Life Tenant

Generally, the Life Tenant is responsible for the upkeep of the property, including the payment of property taxes, utilities and ongoing household expenses. The issue of expenses usually take a toll when there are necessary major renovations such as a roof repair, electrical or plumbing issues to be done. Case law shows that if the renovation is minor in nature then it is the responsibility of the Life Tenant, but if major in nature, may be responsible by the remainderman. For example, if there is a leak in the roof and it just needs patching, that would be the responsibility of the Life Tenant. If the whole roof needs replacing, this cost may be share or mostly funded by the remainderman. This is when disputes usually occur.

Major Uses of Life Estates

One of the major uses of a Life Estate is for couples in a second marriage to provide a life estate to the surviving spouse with the remainder to go to the first to die’s spouse’s children. For example, let’s say Jane owns a house, is widowed with three children. She meets Sam who lives in another house. They fall in love and get married. They agree for Sam to sell his house so he can live with Jane in her house. Because Sam gave up his house, he runs the risk of not being able to have a place to live if Jane dies first. So, Jane gives Sam a life estate in the him in her Will or Trust so that if she dies first, Sam gets to stay in the house during his lifetime. Also, this allows for Jane to give the house to her children upon the death of Sam.

Life Estate are used in the same matter if the couple wants the real property to go to charity upon the last surviver’s death. After passing to the surviving spouse, upon the surviving spouse’s death, the house is given to a charitable organization.

Life Estates are also used in Medicaid planning. For example, Jane can give a remainder interest in her house to her children, while retaining a life interest for herself. The transfer of the property with a retained life estate triggers Medicaid’s five year look-back period for nursing home care, which means the earlier she would transfer the home, the sooner she would be eligible for Medicaid nursing home care coverage. By retaining a life estate,l the penalty period will be much less than if she had transferred the property outright, since the penalty is based on the value of the transfer.

Another Medicaid planning strategy involves a parent purchasing a life estate in the home of a child. This takes some cash out of the estate of the parent. Medicaid allows this technique so long as the parent actually resides in the home for at least a year after the purchase.

Speak to your attorney about the use of Life Estates in your estate plan.
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COMMON MISTAKES IN ESTATE PLANNING

Common Mistakes in Estate Planning

The following are typical mistakes people make when planning their estates:
• They have an outdated plan

• They have no will or an outdate will

• They rely on joint tenancy as a tool, especially children as joint tenants

• They incorrectly title an asset so an unintended beneficiary receives the asset

• They designate an inappropriate beneficiary for IRA accounts, insurance policies and retire benefits

• They fail to provide for a successor in interest if a primary beneficiary dies first or disclaims the gift

• They fail to provide for a guardian for themselves in the event of disability

• They rely on outdated or stale powers of attorney

• They do not properly coordinate their will and their trust or have no trust at all

• They fail to consider Medicaid planning