Tuesday, December 20, 2011

Honey, I lost my will!!

Hopefully you've done the proper thing and put together an estate plan.  But what do you do with the original will?  The original will is an extremely important document.  In Iowa, as in many other states, if the original will cannot be located, there is a presumption under the law that the decedent intentionally destroyed the will.  Even if you can find a copy of a signed will, it may not be enough.  It is possible to argue to a court that it was not revoked, but the law requires you to show by clear and convincing evidence that they did not destroy (revoke) the will.

So, some options and things to think about for storing a will:

  1. Keep it with the attorney - normally the safest, so long as the family can find the attorney and the attorney/firm is still in business. (We don't charge for this service, but we are a pretty cool law firm.)
  2. Keep it in your freezer - never understood the use of a freezer as storage.  Could get tossed out, cooked, freezer burned, or destroyed by accident.
  3. Keep it in your bank deposit box - Not bad, but could be an issue getting it out of the box after death.  Unless there is another person authorized, the only person capable of getting into a bank box after death is the executor.  You need an original will in order to be appointed executor.  (See the problem? Catch 22.)  Some banks can help you set the box up for access after death, but make sure you ask the question and get it taken care of.
  4. Store in house in [insert location] - As long as it is in a location where family can find it if necessary.  (I've had estates where we never found one that we knew existed.)  Risk of house burning or misplaced.
Moral of the post - Will is an important document to keep: store it in a safe location.

Saturday, July 16, 2011

Will Contest Ruling from Iowa Court of Appeals

The Iowa Court of Appeals had a recent ruling on a will contest based on a claim of undue influence and lack of "brotherly love".

Mom left her substantial estate to one of her two sons, and disinherited the other son completely. The disinherited son challenged the will based on undue influence and lost, then filed an appeal.

The Court of Appeals goes through a thorough analysis of the undue influence elements in a challenge to a will. Those elements being: (1) susceptibility to undue influence; (2) opportunity; (3) disposition to unduly influence; (4) result which is the effect of undue influence.

Of interesting note is the fact that apparently there was a recording of her estate plan changes. While it is not clear whether these were video or audio taped, the court indicated the recording corroborated the attorneys' statements about her susceptibility.

The use of a recording, in my opinion, could cut both ways in supporting a will. For example, if a recording is made, it raises the question of "why" a recording was even made ("because we knew there was a concern about the individuals's capacity"). Also, the recording process may make the individual nervous and less at ease, which may translate to raising additional questions about the individual.

My recommendation has been to not do a recording, but the Court here may make me question that process. Of course, every case is different and has unique facts.

On the Iowa-Law Blog, I posted about another recent ruling involving an interference with an inheritance case.

Wednesday, May 25, 2011

Declining to Serve As Executor of a Will

While it may be hard to believe, people and relationships change over time. (Duh.) However, some people's Last Will and Testaments don't change in a similar fashion. A question that occasionally arises when it comes time to probate someone's will is 'what if this person doesn't want to serve as executor?'

Going back to 1864 and the 13th Amendment to the Constitution abolishing involuntary servitude, no one is legally required to serve as the executor of an estate, or a trustee of a trust, or guardian for a minor. If you are nominated to serve and don't want to get involved because: (a) it is going to get messy, (b) you don't have the time or (c) you don't like dealing with attorneys, you can simply decline to serve. Of course, you may have to battle any moral coercion to fulfill the decedent's wishes, but that is for each person to deal with.

Hopefully, the testator named an alternate name as a backup in the event the first choice either declines to serve or cannot for some reason, which I strongly recommend for my estate plans.

Sunday, February 20, 2011

Debts of the Decedent Not Inheritable

A common question that arises in some estate administration is "whether the beneficiaries of the decedent are responsible for any unpaid debts?" Short answer: generally, no. Barring any issues such as fraudulent activities by the beneficiaries, if the estate is a bankrupt estate and insufficient assets to pay the debts, that will be the end of the story on the debts. The court may determine which creditors are paid and how much of their claims are paid, but that unpaid amount of the debt will not pass to the beneficiaries. Thus, when a client signs their will and jokes that their kids won't get anything except their unpaid bills, that isn't entirely accurate.

Monday, January 10, 2011

Estate Tax Changes for 2011-2012 (& 2010)

Apparently Congress was following my posts and decided to wait until the last minute to make changes to the federal estate tax system. Three significant changes to be aware of from the TRA 2010:

Exemption Amount Change - While $1 million was scheduled for the exemption amount for 2011 the new act implements a $5 million exemption per person. Thus, a married couple could pass on $10 million without worrying about federal estate taxes. With these type of numbers, there will be very few estates that will have any federal estate liability. In addition, for those individuals that passed in 2010, their estate can choose either the old 2010 "no estate tax - carryover basis" rules or the new "$5 million exemption - stepped-up basis".
Portability - In somewhat of a surprise, one of the bigger changes was the addition of the idea of portability. The idea is essentially if your spouse doesn't "utilize" their exemption amount, the surviving spouse can take advantage at their death. Previously, unless the assets were properly titled, it was possible that the first-to-die spouse may not use their exemption and it is lost forever for no one to use. Portability concept avoids that situation. However, it creates different "issues" that arise out of second marriage situations.
Gift Tax Exemption - The lifetime gift exemption was matched to the federal exemption amount as well ($5 million). Thus lifetime and/or death transfers up to $5 million are permitted.

However, while Congress did make some changes, at the last minute, it is only temporary as the provisions will expire December 31, 2012. I suspect I'll have to re-post my comments from last month about the "what if" scenario, which include the scheduled return of a $1 million exemption. On the night of the BCS national football championship, it is appropriate to describe this move by Congress as a "punt".