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Ohio Supreme Court Says High Bar to Find Undue Influence in Will

WillA recent case in Ohio demonstrates the very high threshold that must be met to establish that a decedent was unduly influenced or lacked testamentary capacity. In Young v. Bellamy, the Supreme Court of Ohio showed just how difficult it is to overturn a will.

In this case, the person contesting the will—a granddaughter of the decedent—was written out of the decedent’s estate plan in a series of wills executed over a period of five years. In turn, the proponents were incrementally given a larger share of the estate. The granddaughter claimed that her grandfather was unduly influenced and lacked testamentary capacity at the time that he executed his last will.

However, to refute her claim, the other relatives gave the court affidavits of three disinterested witnesses who were with the 96-year-old decedent, when he signed the will. All of these individuals said they saw no indication of lack of capacity, susceptibility to undue influence or actual coercion or duress. One said he was “an engaging elderly man.”

To invalidate a will, undue influence “must so overpower and subjugate the mind of the testator as to destroy his free agency and make him express the will of another rather than his own, and the mere presence of influence is not sufficient,” the Court wrote. Further, proof of undue influence requires: (1) a susceptible testator; (2) another's opportunity to exert influence on the testator; (3) the fact of improper influence exerted or attempted; and (4) a result showing the effect of such influence.

In response to the three affidavits, the contesting granddaughter submitted her own affidavit describing her relationship with the decedent, alleging that the decedent said he had no memory of executing a prior will and asserting that the decedent had requested that she contact an attorney to change the will.

The Supreme Court wrote that testamentary capacity exists when the testator has sufficient mind to: (1) understand the nature of the business in which he is engaged; (2) comprehend generally the nature and extent of the property which constitutes his estate; (3) hold in his mind the names and identity of those who have natural claims on his bounty; and (4) appreciate his relation to the members of his family.

The Supreme Court agreed with the trial court and the Court of Appeals, both of which found that the granddaughter’s self-serving affidavit wasn’t enough to overcome the presumption of validity of the will and the three affidavits of those who observed the testator on the date of execution of the will.

Summary judgment was granted for the other family members and the granddaughter was out of luck.

Reference: Supreme Court of Ohio (May 24, 2017) “Young v. Bellamy”

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How Does Pre-Death Probate Work?

People reviewing documents“There are a handful of states that allow a person to probate a will…before the testator… dies. In recent years, there has been a trend to expand this practice to more states.”

This practice, which lets challengers contest the validity of a will before the person who created the will passes away, is explained by Trust Advisor in its recent article, “10 Arguments Against Pre-Death Probate and Will Contests.”

This concept of Pre-Death Probate, or “Ante-mortem Probate,” is only allowed in four states—Ohio, Arkansas, North Dakota, and Alaska. Why don’t more states allow it? It is because of the long-standing legal notion that that a will doesn’t “speak” (or take effect) until the testator’s has died.

You usually can’t bring a suit until the testator dies, because no one has legal standing to contest the will prior to the testator’s death. The trend away from this traditional rule started some years ago.

Recently, a few states have introduced legislation to permit ante-mortem probate and ante-mortem will contests. Ante-mortem probate procedures vary by state, but they generally allow a testator to seek a ruling from the court, while he or she is still living, that his or her will is legally valid. Every heir named in the will must be named as a party to the lawsuit.  Therefore, it binds any potential challengers to the court’s verdict and keeps them from contesting the will when the testator dies.

Those in favor of ante-mortem probate say that there are several benefits to the practice, including: (i) providing certainty and avoiding family disputes after death; (ii) ensuring that the testator can testify in favor of the will; and (iii) discouraging challenges to a will, because if a person opposes the validity of the will while the testator is alive, he or she would be cut out by the testator and disinherited.

Despite these potential benefits, some say the practice is detrimental, leading to increased litigation.

Here are some of the other drawbacks to ante-mortem probate:

Unnecessary Litigation. Litigation is forced on all heirs, when perhaps none of them would have challenged the will under the traditional scheme.

Discomfort. The testator must deal with the litigious heirs, after the litigation is completed.

Do-Over. A pre-death probate proceeding could be a waste of time and resources, since the testator is always free to change his or her will later.

Cost. A pre-death probate proceeding could take a significant chunk of the testator’s retirement savings. Compare this to a conventional will challenge, which is defended by the executor at the expense of the estate since it occurs after the testator is deceased and doesn’t need the money.

Stress. The testator must endure the stress of the pre-death probate proceeding, which entails being deposed, discovery and court appearances.

Privacy. The testator’s privacy could be invaded in any litigation and in discovery.

Reference: Trust Advisor (February 23, 2017) “10 Arguments Against Pre-Death Probate and Will Contests”

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The Worst Estate Planning Mistakes by Celebs in 2016

Lawyer buried under paperworkA wealthmanagement.com article, “Top Four Estate Disputes of 2016,” gives us a sampling of some of the major estate planning issues among the recently passed celebrities.

Prince. The rock star died in April of 2016 without a will. Since his passing, a will still hasn’t popped up.  As a result, the Minnesota judge overseeing the administration of his estate has had to handle all of the people claiming to be his kids, who’d get a share of his estate under Minnesota’s intestacy laws. The judge has already excluded 30 would-be-heirs from inheriting a portion of his estate. It looks like Prince’s younger sister and five half-siblings were his only heirs. The judge ordered genetic testing to make sure, and pending the results of the tests, they’ll divide his estate, which is valued at about $200 million. The lesson here, of course, is the most basic: complete an estate plan and keep the documents in a safe place where people can locate them when you pass away.

Frank Sinatra Jr. The son of the famous crooner died in March 2016. At the time of his death, his ex-wife Cynthia had filed for divorce and the two were in litigation. They had originally separated in 2001, but continued to live together, even buying a home together during their separation. Sinatra was ordered to pay Cynthia $5,000 a month in alimony and did so for eight years more than the judge required. Cynthia also said he called her his wife at parties. This supports Cynthia’s claim that the two were in a common-law marriage. In 2013, she filed for divorce again, and a Texas district judge awarded Cynthia the second divorce. This judgment included a $500,000 equalization payment, a share of his property, and another $5,000 per month in spousal support. Sinatra’s appeal was pending when he died, and the appellate court reversed the trial court. That court cited the fact that the couple filed separate tax returns, listed themselves as single tenants in common for the house they purchased, and that Sinatra labeled Cynthia as his ex-spouse in tax returns. The court also noted that a common-law marriage requires a specific and mutual agreement in Texas.

Sinatra could have avoided this by being more careful with his decisions and actions (like consulting with and listening to his estate planning attorney!). Many states don’t recognize common law marriage. Where it is valid, however, folks should exercise extreme care so that their actions don’t give their lover a basis to claim that the parties had a common-law marriage.

Jose Fernandez. Marlins pitcher Jose Fernandez died last fall in a boating accident off the coast of Miami.  The 24-year-old was unmarried, and he reportedly named his mother as the sole death beneficiary in his trust. At the time of his death, Fernandez’s girlfriend was pregnant with their child, but because she wasn’t named in the trust and not married to Fernandez, she’ll miss out on millions. It also looks like Fernandez’s child wasn’t provided for in his trust, but the child wasn’t intentionally left out of the will, so little Penelope still is entitled to a portion of the estate. Time will tell if this will end up in court.

Tom Clancy. Best-selling author Tom Clancy passed away in 2013, leaving an estimated $80 million estate that saw a lot of litigation in 2016. Clancy’s estate plan had three groups of assets. One funded a trust for his second wife, Alexandra Clancy, as the sole beneficiary. The second funded a trust for the benefit of Alexandra and Alexis Clancy, the minor child of their marriage. And the final bucket was for the benefit of each of Clancy’s four children from his first marriage. Originally, estate tax on the estate was to be shared equally between the second and third buckets—the four children would be responsible for $7.85 million of taxes, and Alexandra and Alexis would be responsible for another $7.85 million of taxes. But just before he died, Clancy signed a codicil including a clause that stated that “[n]o asset or proceeds of any assets shall be included in the Marital Share of the Non-Exempt Family Residuary Trust as to which a marital deduction would not be allowed, if included.” The Court of Appeals of Maryland said that the codicil shifted the entire tax burden to the four children’s trusts to maximize the amount exempt from federal estate taxes under the marital exemption. The four children will now be jointly responsible for $11.8 million worth of estate tax. That’s a lot of Bourne novels.

The lesson for “regular” folks: sit down with an estate planning attorney and map out an estate plan, then execute the necessary documents. Your personal business might not be the stuff of gossip columns and celebrity websites, but that’s no reason not to protect your current spouse, your children and your legacy by taking care of these matters.

Reference: wealthmanagement.com (January 31, 2016) “Top Four Estate Disputes of 2016”

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Estate Planning for Those Who Will Live to Be Over 100

Old couple with computerWith advances in medical technology, it’s increasingly possible to live a long and active life. Experts in longevity planning use advanced medical testing to create healthcare plans that maximize longevity and help people live longer, more rewarding lives.

Forbes’ recent article, “Estate Planning For The Ultra-Wealthy When Living To 120 Or Beyond,” says that as far as estate planning for the wealthy, the potential to live much longer is becoming a potential issue for the families. When and how should high-net-worth families transfer assets to future generations?

Among very wealthy families, a critical question is when the next generation will be able to benefit and control the assets they are intended to have. If a wealthy father—thanks to medical advances—is living past 100, it will be some time before his children take control. Perhaps they’ll be in their 70s or 80s. Unless families carefully contemplate all of the possibilities and take proactive estate planning steps, there could be potentially disastrous consequences lurking.

Controlling wealth until death is a common practice with self-made millionaires. However, this can lead to poor estate plans—especially when they live a long time. With wealth holders living a very long time, they must create estate plans that clearly define what’s going to happen. It many cases, it’s prudent to transfer assets before death. This can eliminate possible problems such as family disputes and lawsuits and assets strangely disappearing. Due to the possibility of dementia or older wealth holders being exploited, moving some of the wealth before death can be very beneficial for everyone.

With medical breakthroughs that may help affluent people live longer fruitful lives, there are critical implications. In order to have an effective wealth transfer of a high-net-worth estate, speak with an experienced estate planning attorney to work through the timing and disposition of your assets.

Reference: Forbes (January 18, 2017) “Estate Planning For The Ultra-Wealthy When Living To 120 Or Beyond”

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Should I Just Copy and Paste an Estate Plan from the Internet?

Senior couple at computerHave you considered creating your own estate plan from a template on a website, instead of using the services of a qualified estate planning attorney? Is that smart?

Modern Medicine’s article “Estate planning: Don’t make these mistakes”, says that, in some instances, folks try to create their estate plan without consulting an experienced lawyer. These folks think that because they may have a general understanding of estate planning, they can do it for themselves without the help of an estate planning lawyer. But everyone’s different, and boilerplate forms won’t always cover a specific situation. Take a look at this list of potential estate planning mistakes that you can help to avoid by working with an experienced attorney.

Failing to update your estate plan. Your life and financial circumstances may change over time. As a result, you need to change your estate plan accordingly.  You should also make sure to review your plan regularly.

Failing to revise your will. The will that you drafted 15 years ago may no longer apply for a variety of reasons. You can’t just cross-out provisions or names on an old will, add or change information, and initial the document. That won’t work and could revoke the entire will. You need to see an estate planning attorney.

Failing to use more than joint tenancy to avoid probate. Many assets are transferred outside of wills, like assets titled in joint tenancy that pass to the surviving joint tenant, not under your will. Remember this only avoids probate on the first death. When the surviving spouse dies, the home will usually end up going through probate.

Failing to coordinate the will and trust. If you have a will and a trust, you must ensure that the documents are aligned so your wishes will ultimately be carried out. If you don’t, there will be delays and unnecessary expenses.

Failing to title assets correctly. You want your primary residence, vacation home, bank accounts, brokerage accounts, retirement accounts, and vehicles to be passed on to the persons you designate.  Therefore, be certain to keep beneficiary designations up-to-date and to properly title accounts.

Failing to name successor or contingent beneficiaries. If you don't update a beneficiary designation after a beneficiary dies, there’ll be no successor to receive those assets when you die. You should name more than one beneficiary on your accounts and keep your designations up to date.

Failing to name a person to make health care decisions. Designate someone that you trust to follow your wishes as far as your healthcare decisions in the event you are incapacitated. Depending on the state, this may be called a living will, a medical directive, a health care proxy or an advance health care directive.

Failing to update outdated financial powers of attorney. If you chose a person to make financial decisions for you with a power of attorney some years ago, his or her circumstances may have now changed, along with your situation. Consult with an attorney about how to proceed.

Reference: Modern Medicine (December 1, 2016) “Estate planning: Don’t make these mistakes”

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