This week, Devin and John talk about some ways to prevent problems if you anticipate a fight about your will. John shares five things that you want to do, and four things you do not want to do.
There are a variety of situations in which you see a potential fight. Do your heirs get along? Do you have a blended family? (90% of all contested divorce are between the surviving wife and the children of the deceased husband, and those numbers are gender-based.) Are there any other situations that are going on?
A little bit of a side note: A couple of weeks ago, Devin and John did an episode called the Financial Abusers Playbook. If you haven’t listened to that episode, you need to go back and listen to that. You need to be able to recognize these signs, and a financial abuse situation may may play into a contested will situation.
If you have a second marriage, even if it has been long term, it an seem normal to leave everything to your surviving spouse. However, that is often a disproportionate distribution in the minds of the children of the deceased spouse. Right or wrong, that’s how they often look at it. That’s a perfect situation where you can probably anticipate a contest.
Do Be Very Specific
The biggest thing to know is that you need to be very specific about what you are doing.
If you are doing a disproportionate distribution between the kids, or if you are leaving someone out of the property distribution entirely, be excruciatingly specific about your intent, including your intent to leave nothing to certain potential beneficiaries.
There is this concept of a pretermitted child. Unless there is specific language otherwise, the law assumes that the omission of a spouse or a child is a mistake, which opens up a way for them to make a claim against the estate.
In the same vein, there is another law called adoption by estoppel. This is where you have treated a step child as a your own child, to the extent that you are legally barred from saying that they are not your child. The law holds you to the standard of a parent because you have treated the child like your own child. In this case, it is a good idea to state that you have X number of children, and X number of step children, and you intend to leave your inheritance to these specific kids.
You can disinherit anyone you want. You don’t have to include anyone, but you want to be very specific.
A bonus Don’t: Do not explain WHY you are excluding a certain person in your will. An explanation may create an additional set of arguments for the will to be contested.
Do Consider Using A No Contest Clause
Consider using a no contest clause, also called a in terrorem clause. Basically, you say that anybody who contests the will is treated as predeceasing the testator (the person who wrote the will.)
Devin asks John if this actually works. John says that it is an effective threat, but not always legally defensible. The way a no contest clause works best is with a carrot and stick approach: “You’ll get $10,000 unless you contest this will.”
Depending on the state in which you are located, you have to be very specific in the way you structure a no contest clause. You can expand the no contest clause to include different ways that someone could challenge the overall administration of the estate.
Do Your Best To Keep It Out of Probate
If you know there is going to be a fight about your estate, using a will as your primary estate planning vehicle is inviting the contest. Before the will is valid, it has to go through the probate process. That means somebody has to take the will, hire a lawyer, and go to court. You’ve now opened the door for trouble. All someone has to do is walk up to the courthouse and file some papers. And now the brakes have been put on, and even if it is completely frivolous, you have to address it.
On the other hand, if you have set up a trust, then the trustees go ahead and distribute the estate according to the terms of the trust and it’s done. Could someone still contest it? Yes, but now it is on them – they need to get a lawyer, they need to initiate the court case.
It is a lot harder to get something back that has already been distributed. Whereas, if the contestor can stall it on the front end, where no one has access to anything, then people are willing to negotiate. People will want to settle just to get access to the inheritance. If they already have access to it, then they are more likely to fight.
In addition to trusts, you can avoid probate with beneficiary designations, transfer on death deeds, or other transfer tools. That will limit the ability to contest the distribution.
Do Things To Demonstrate Your Competence
If there is any reason that someone could argue that you were incompetent when you wrote the will, then you want to take some steps to make it legally difficult for people to claim that you were incompetent, frail, mentally vulnerable, or any other issue.
John has a tricky strategy for this. He suggests that on the day you sign your estate paperwork, you also send potential beneficiaries a check. Then, after your death, if they try to claim that you weren’t mentally capable when you signed the will. The fact that they accepted money from you defeats the argument that you were mentally incapable.
Don’t make a videotape of the execution of the will It gives someone a video evidence that they can pick apart.
An alternative is to get the lawyer and the staff to write out some notes, and sign affidavits that outline the process and safeguards, including their perception of the competence of the person signing the documents. Since they were signed at the time, they won’t be subject to question about the accuracy of old memories.
Don’t wait until later in life to do your first estate planning documents. The longer your estate planning has been in place, the less likely it is to be defeated.
Do not explain WHY you are excluding a certain person in your will. An explanation may create an additional set of arguments for the will to be contested.
Don’t Do It Yourself
You almost never want a do-it-yourself will. You definitely don’t want a self-prepared will if the will is contested. There are so many things that can go wrong with this.
Don’t Make Changes
Avoid making changes, particularly frequent changes. What you don’t want to get into is a situation where you have a series of changes, because it can suggest that you aren’t mentally competent.
Even if you don’t think your will might be contested, it won’t hurt to take these steps. And they might protect your survivors from a fight.