Every estate planning client intends that his or her wishes will be carried out, even though they won’t be around to see the results. But will contests are a frustratingly common occurrence among heirs who feel they haven’t gotten their just rewards.
Here are a 9 ways to help insure that your clients will won’t be successfully contested:
- Insert a no-contest clause that disinherits a beneficiary who contests a will and loses. There are different regulations about these in different states; some states don’t permit no-contest clauses at all. If you live in a state in which no-contest clauses are not enforceable, your client might still want to consider one if they own property in a state where they are enforceable or are considering a move to such a state. Some states also have different rules about what constitute a “contest.” In some states, heirs may be able to challenge the appointment of an executor or trustee even with a no-contest clause. Remember, in order for a no-contest clause to scare off a dissatisfied beneficiary, that beneficiary must be given a bequest. Otherwise there is no incentive to avoid a contest.
- Structure assets so they pass through trusts and other gifting methods rather than through a will. While a disgruntled potential heir can file a claim or contest a will with little to no initial out-of-pocket costs, challenging a trust can be far more costly and difficult to initiate.
- Have a doctor certify the client’s mental competency. To protect against an argument of testator incompetence, the client can get a physical examination and written report by a regular physician, the report focusing on the cognitive ability to demonstrate that they can comprehend and execute estate planning documents. The client can even schedule the exam for right before they sign their estate planning documents, to prove that the client has testamentary capacity at the time the documents were executed.
- Minimize the involvement of beneficiaries. If the client is concerned that an heir will argue that a primary beneficiary exerted undue influence during the estate planning process, one helpful strategy is to keep the involvement of that beneficiary to a minimum while the documents are being prepared. If the client plans to leave a disproportionate amount of the estate to one child, that designated child should probably not attend the estate planning meetings, to avoid any evidence of impropriety.
- Have the estate planner and attorney testify as to the client’s intent. In general, it is very helpful if the attorney and estate planner testify that they met with the client alone and were assured that the plan genuinely reflected the client’s wishes. It may also be prudent to seek advice from a second attorney experienced in estate and trust matters. That would solidify the notion that the client was acting with independence.
- If the client is excluding a natural heir, mention that heir in the estate planning documents. That will help establish that the omission was intentional, and that the heir wasn’t simply forgotten. But be careful: In some states leaving natural heirs a small or nominal bequest may grant them rights permitting greater participation in court proceedings, which may give them a leg up in a will contest.
- To definitively establish the client’s independence of thought, videotape the signing ceremony. If the client is shown answering questions about the will or estate plan, that can demonstrate that they were not under anyone’s influence.
- Include an explanation of decisions with the estate plan. Many people are tempted to do this in cases where they expect decisions to be contentious. But be careful: if the explanation contains inaccuracies, it can be used to call into question the entire plan.
- Periodically update the estate plan. A successfully contested will becomes invalid, but the disposition of the client’s property then reverts to the prior estate plan. If that plan is substantially similar to the plan that was contested, that should deter a contest or at least leave the contestant with no more than he or she first bargained for.
Tom Nawrocki is president and editor in chief of Triton Financial Newsletters, a full-service financial communications shop. A longtime editor at Worth magazine, he now creates newsletters, blogs, articles and commentaries for financial advisors and asset managers around the country. He can be reached at [email protected].