© 2013 Robert L. Shepard, Professional Law Corporation
How can Estate Planning help my beneficiaries avoid confrontation?
There are many ways an estate plan can help avoid confrontation and/or litigation over the distribution of the assets. Just about everyone you talk to has a horror story from his or her family or a friend who had a nightmare experience in probate. Common things done as part of the estate plan to avoid problems are:
A. Making effective use of will substitutes such as living trust. A trust can be challenged on the same grounds as a will, but while in a book they appear identical, in the real world it makes a world of difference. Why? Using a will substitute, assets transfer immediately at death. You usually only need a death certificate to change title, which can happen in a few days. Once title is transferred, the money can go straight to Las Vegas for all you know. Under a will, the assets are held in the decedent’s estate. The estate can use the estate’s money to defend itself from any challenges, while you have to pay a lawyer by the hour. Challenging a trust is therefore much more difficult.
B. Videotaping the execution of the documents. This eliminates or at least reduces the effectiveness of any contest based on undue influence. The videotape will show that the testator signed the document without anyone holding a gun to their head or forcing them to do it. It can also show the testators capacity.
C. Preparing a letter of explanation for the testator’s motivation behind the particular distribution scheme chosen. When your chosen plan deviates widely from your intestate heirs, the court becomes more suspicious. It’s not that you can decide who gets your assets, it is just that the court thinks there are natural objects of your bounty. If you disinherit a child for example, it is important to explain why. Maybe they already have sufficient assets of their own, maybe you think someone else is more deserving, maybe you just do not like them. Whatever your rationale, it is important to give the court insight to your intent if you want the court to honor your wishes.
D. Having your medical doctor perform a competency exam just prior to execution of the documents. This is an excellent way to defend against a challenged based on lack of testamentary capacity.
E. Having longtime friends act as witnesses to the documents. This is also an excellent way to defend against either undue influence or lack of testamentary capacity, because your longtime friends presumably know you well enough to know if you were acting oddly, etc at the time the will was signed.
F. Using a No-Contest clause. This is a clause in a will that says something to the effect of: “Anyone challenging this will forfeits anything they might otherwise have received by this will.” In other words, if they challenge and lose, then they are disinherited.
Not this only works if you are leaving the party something. Lets say you had two children, and wanted to leave 60% of your estate to one, and 40% to the other. The one receiving the 40% might challenge out of spite. With a no-contest clause, presumably they would not challenge unless they believed they had a really strong claim.