Protecting Your Estate Plan With a Broad No-Contest Clause

In one recent case from Michigan, that state’s Court of Appeals had to address a dispute about a man’s will. The man, Danial Span, had a daughter, Kayla. Span and Kayla’s mother divorced when she was 3 and, sometime later, he surrendered his parental rights and her stepfather adopted her in 2007. Two years prior, though, Span and the girl began forming a relationship. When he created his will in 2013, Span identified Kayla as his daughter, but left her nothing.

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Span’s 2013 will also contained a “no-contest” clause in it that, as with many such clauses, dictated that any person who challenged the will would forfeit their entire inheritance they were scheduled to receive under the terms of the will. In Span’s circumstance, the exact language of his no-contest clause stated that any beneficiary who “contests in any court any of the provisions of” the will would be treated as if she predeceased Span.

A week after Span signed his will, he died. Catherine Jock, Span’s personal representative (and the sole beneficiary of his estate) submitted the will for probate. The daughter challenged the will. The basis of her contest centered on Span’s mental capacity and the validity of the signature on the will. The personal representative, acting on behalf of the estate, tried to enforce the no-contest clause against the daughter. The trial court concluded that the personal representative could not enforce the no-contest clause against the daughter because the specific nature of the daughter’s challenge was one challenging the execution of the will and the testator’s capacity, and was not an attack on any provision in the will.

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Because the appeals court upheld the trial court’s ruling that went against the daughter on the substantial portion of her will contest, it did not need to reconsider the trail court’s ruling on the no-contest clause. Nevertheless, the case of Span’s will is a clear reminder of the need to approach no-contest clauses carefully. The language used in Span’s no-contest clause is fairly common. If your desire is only to prevent your potential beneficiaries from launching a challenge against a specific term (or terms) in your will, then such a clause could be beneficial.

However, contests that challenge a provision (or provisions) within a will are only one avenue for upsetting an estate plan. For some disgruntled people, their ends may be accomplished just as effectively by getting your plan invalidated in its entirety. If your goal is to protect yourself from both types of challenges, then, if no-contest clauses are enforceable in your state, you might benefit from using a clause with broader language than what Span had in his 2013 will. A experienced estate planning lawyer can help advise you about the whether no-contest clauses are enforceable in your state and, if they are, what degree of breadth would best match your planning goals.

Summary: For residents of states that allow no-contest clauses in estate plans, such provisions can offer a degree of protection against an unfair or frivolous court contest that would seek to undo your plan. Court cases have clarified whether or not the clauses are enforceable in a given state and, if they are allowed, how far they can go in protecting your plan. Depending on what your goals are, a broadly-worded no-contest clause may be able to give you the best protection against litigation by a disgruntled heir.

 

#LegacyAssurancePlan – How a Detailed Estate Plan Can Potentially Save Your Family Headaches, Heartaches… and Maybe Legal Fees, Too

 

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Creating a carefully crafted and detail-oriented estate plan is important for several reasons. One, the more decisions you make and clearly communicate to your loved ones, the fewer decisions they’ll have to make on their own while they deal with the stress of carrying out final arrangements and the pain that comes with loss. Without a clear plan, they may have to agonize as they desire to do what you would have wanted, but feel unsure what that preference would have been.

Another important potential benefit that comes with detailed planning is that it reduces the possibility for conflict. With anything that remains an uncertainty when you die, the possibility will exist that your loved ones may fall into disagreement about what should be done and what you would have wanted. Last summer, the case of Teffany Teresa Love and her final arrangements, which went all the way to the Tennessee Court of Appeals, offers some insight about this point.

What was the issue that took this woman’s loved ones to the probate court and eventually to the appeals court? It wasn’t her money, her house, her vehicles or her financial accounts. It was her headstone. On one side, her grave marker contained just her married name, “LOVE.” On the other side, it read “Teffany Teresa ‘Terri’ West.” The name West referred to a man named Bobby West, who claimed to be Terri’s biological father. Terri died with no estate plan; the stone and inscriptions were chosen by her husband and her two adult daughters. The problem arose when Terri’s adoptive father, Joseph Gullett, sought to take over administering Terri’s estate for the express purpose of changing her headstone to read “Teffany Teresa ‘Terri’ Gullett.” Ultimately, the appeals court sided against the adoptive father, concluding that the right to control the deceased woman’s headstone went, like the right to control her remains, from her husband (first) to her adult daughters (second). Since the husband and daughters all agreed, “West” remained on the stone.

This woman’s case presents two clear potential reasons for engaging in detailed estate planning including final arrangement planning. First, if you have loved ones who you know (or fear) may fight over issues like your final arrangements, you can possibly reduce the risk of quarrels, and potential litigation, by making those decisions yourself and putting them in your plan. Second, as the Tennessee court pointed out, the law recognizes a specific order of priority in terms of who makes your final arrangement decisions. If you do not want your final arrangement decisions made by the person who would stand to hold that role according to your state’s laws, you need a plan where you make as many decisions as possible for yourself and, depending on your state’s laws, where you appoint the person you desire to serve as your agent for final arrangement decisions.

Summary: There are several things about estate planning that are true far more often than they are not. If you procrastinate, you may run out of time, because none of us knows what tomorrow will bring. If you fail to create a plan, the government will make one for you — and it may be one that you wouldn’t like. Once you make a plan, you have to maintain it in order to be sure it will work as best as it can. A properly created and maintained plan can give you a great deal of control over your affairs, even after you’re gone. Last, but not least, if that benefit of control is important to you, the more thought and detail you put into your plan, the more benefit it will give you.

Legacy Assurance Plan Of America – Planning to Protect Your Assets and Avoid Probate, Too

The process of estate planning involves taking inventory, not only of your wealth, but also of your needs and desires. Whether or not a particular planning technique makes sense for you may depend, in whole or in part, on whether your estate planning objectives do or do not include certain goals, as well as whether your estate does or does not include certain risk factors. Carefully assessing all of these things is an important early step in the process of reaching a well-thought out estate plan.

For many people, avoiding the probate process, with its potentially large fees and consumption of time, is a central objective. For a lot of those people, a revocable living trust may represent a viable way of leaving a legacy, providing for your loved ones and escaping the lost time and money that comes with going through probate administration. Depending on the makeup of your estate and the laws of your state, you may have other options in addition to living trusts that may allow you to avoid the probate process. In some states, the laws regarding death beneficiary designations have been broadened to the point that you may be able to transfer most or all of your wealth using pay-on-death or transfer-on-death techniques. In some cases, though, a living trust may still provide you with valuable benefits even though your state allows you to transfer your assets using death beneficiary designations.

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Another objective some people have is asset protection. These people want to have the peace of mind that their money will pass to their loved ones, not their creditors. Implementing certain types of irrevocable trusts may protect your assets in some situations.

In the past, people with issues regarding creditors have avoided creating living trusts because they were less advantageous than probate when it can to putting creditors “on the clock” to make a claim for payment. The executor of an asset must give notice to all of a deceased person’s creditors and then, once that notice is sent, the creditor only has a few months to demand payment. If that period passes before the creditor acts, the creditor forfeits that claim forever. With living trusts, the creditor’s time period to act could be two years or more.

Today, though, in some states, the trustee of a living trust has the option to serve notice on creditors when a trustor dies. Submitting this optional notice to creditors subjects them to the same limited time-period as a creditor who received notice from a probate estate’s executor. This way, you can have both the asset protection of a limited time period for creditor action, as well as the probate-avoidance and other benefits that come with a living trust.

Legacy Assurance plan of America Probate-Attorney-living trust  All of this is meant to highlight the multitude of options that exist for your estate plan, in order to ensure that your plan best fits your needs and goals. The key, of course, is to take that first step and being putting your plan in place right away.

Summary: Estate plans can be customized to meet a variety of different desires and objectives. Your plan may include revocable trusts, irrevocable trusts death beneficiary designation ownership techniques, or a combination of tools. Whether you seek to avoid probate, protect your estate against creditors or achieve other goals, a well-thought out plan can get you to the outcome you seek.