Wills can be legitimately contested for many reasons. Was the deceased subject to undue influence, say by an unrelated nurse, girlfriend, or companion who ended up in the will? Is a child of the deceased disinherited without apparent cause? Perhaps the deceased was suffering from some form of dementia at the time the will was made. Does the will violate the terms of a divorce judgment or prenuptial agreement? These can be questions of fact that require a formal trial and presentation of evidence for the judge to determine the validity of the will. And again, it is easy to do, since the court case has been filed and already exists. Plus, the fees of both sides are often paid out of the estate, so the person contesting has nothing to lose.
Suppose you have a child from hell and there is no way you want the kid to inherit anything from you. If you make out a will and just leave their name off, he or she will be able to inherit anyway. The assumption is that you would not have omitted the object of your affection, so it must have been a mistake. An oversight. The child would be what the law calls a pretermitted heir. Even if you specifically state that it is your intention to leave nothing to Johnny under any circumstance, he can still contest it using various theories, such as that you were mentally incompetent or under duress when you excluded him. We do not want a will probated that could be contested by Johnny. Using a trust or another method avoids most court problems.
Probate-avoiding methods such as trusts can be contested in court, of course, but it is much more difficult. First, the person contesting has to find a lawyer and pay a hefty retainer fee. They don’t take these kinds of cases on a contingency basis. They must pay court filing and service of process fees. You have to pay for the court challenge whether you win or lose. It is an hourly rate that adds up fast. There are no fill-in-the-blank forms for this type of lawsuit, so the paperwork has to be especially written, which takes more time.
Most trusts contain a disinheritance clause, which says that if anyone contests the trust, they are either disinherited or their share is limited to one dollar. While this provision is not necessarily always enforceable, it discourages people from litigation. Arbitration clauses are also usually added to trusts, which also limit the options for a contestant.
Probate and its attendant costs and time delays is a certainty for those with assets that remain in their own name at the time of their death. Making a will doesn’t change the length of time probate takes or its costs. In both cases, will or no will, probate will be necessary to transfer the assets remaining to the rightful heirs. And the probate process is neither simpler nor shorter just because you have a will. The common misconception is that a will solves all the problems, but that is just not true. There are non-probate alternatives that we will explore in this book that eliminate most of the expense and time of the probate process.
Of course, the number-one most effective never-fail way of avoiding probate is the plan recommended by the former billionaire Jorge Guinle: “The secret of living well is to die without a cent in your pocket. But I miscalculated, and the money ran out too early.” Proper estate and financial planning is a must.
Again, a will is not the way to avoid probate. However, a will might still be needed even when there is no probatable estate. There are several reasons why this seeming contradiction is correct.
When a person dies leaving minor children but no living parent, a will is absolutely necessary to ensure that the children wind up living with a guardian of the parents’ choice.
Wills prepared for parents with minor children (even pour-over wills, which are described later) should always contain a provision appointing a guardian for minor children. Ideally, first and second choices are nominated in case the first choice is unable to be the guardian. Couples are not recommended since we have no idea if they will still be married at the time of the parents’ deaths. Naming a couple could lead to a custody battle between the two of them in the future. A first and second and even third choice of nominated individuals is best.
Your choice of guardian can be contested by other relatives despite your having put your choices in your will, but the named guardians will have preference to a judge unless they can be shown to be unfit to the point that they are not in the best interests of the children (again, depending on local state law). A guardianship is necessary in order to have someone fill the parental roles of raising the children. Feeding, clothing, housing, discipline, religion, education, and things like when they can date or drive a car. The guardian is in charge of all those decisions and medical care as well. The children’s expenses, however, would likely be paid to the guardian through the child’s conservatorship account or, we hope, their trust funds.
A conservator is the court-appointed person(s) who manages the child’s money if there is no trust. If the parents did not set up a trust with a trustee, then the court will appoint a conservator who has to account periodically to the court for what has been spent and earned on the account. Sometimes the guardian and conservator are the same person, and sometimes not. Someone might be very good at raising children but not so good in financial matters, and vice versa. Your choice of these two people has to take that into account.
You can appoint a conservator in your will in the same paragraph that you name the guardian and should have alternate choices for that job as well. It is also recommended that two people serve together as conservator, since it ensures that the asset management is done efficiently and honestly.
(To be continued...)
This excerpt is taken from “How to Avoid Probate for Everyone: Protecting Your Estate for Your Loved Ones” by Ronald Farrington Sharp. To read other articles of this book, click here. To buy this book, click here.
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