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Some Thoughts About Estate Planning

Our office has had the pleasure of assisting thousands of clients in meeting their estate planning needs.  With proper planning, you can prevent unnecessary complications, delay and expense, and, perhaps most importantly, litigation over your estate.  There are numerous estate planning vehicles utilized by attorneys, but a will is usually the first document that comes to mind when considering your estate plan.  The following are a few important items to think about when considering the preparation or revision of your will.

The Will

Most people have a basic understanding of what a will is.  A will is a legally binding document which states who will receive your property at the time of your death and appoints a personal representative whose duty it is to carry out the directives stated therein.  In Massachusetts, a will is a creature of statute.  The recently-enacted Massachusetts Uniform Probate Code governs everything from who may make a will, to the specific requirements regarding the execution and witnessing of the will, to the propriety of certain provisions within the will, and more.

It is important to note that a will covers only your probate property, i.e., what you own outright at the time of death.  It does not cover jointly-owned property.  It also does not cover property owned in trust, proceeds from life insurance policies, or retirement benefits such as pensions or IRA accounts which have their own specifically-named beneficiaries.  Therefore, your will should be considered within the context of your overall estate plan. 

Personal Property Memorandum for Tangible Property not Specifically Devised in Will

You may have accumulated so many items of tangible personal property that it is simply not practical to specifically devise every piece of art, furniture, jewelry, or other tangible possession in your will.  At the same time, if you do not leave some directives regarding the disposition of your tangible personal property, fighting among your heirs regarding who gets what is likely to occur. 

The Massachusetts Uniform Probate Code offers a resolution to this issue.  It allows you to leave a personal property memorandum, separate from the will, which gives direction as to the disposition of tangible personal property other than money.  There is one requirement: the personal property memorandum must be specifically-referenced in the will.  A will provision regarding a personal property memorandum may say as follows:  “I may leave a memorandum stating my wishes with respect to the disposition of certain articles of tangible personal property.  If I do and if my written statement or list is found and is identified as such by my personal representative no later than 30 days after the probate of this will, then my written statement or list is to be given effect to the extent authorized by law and is to take precedence over any contrary devise or devises of the same item or items of property in this will.”  

The personal property memorandum is a useful estate planning tool because it is not required to be in existence at the time the will is made and may be altered after its preparation. 

Anti-Contest Clause in Will

An anti-contest clause, also referred to as an in terrorem clause, is a provision designed to prevent legal challenges to the will by an heir who does not feel he or she has been given a fair share of the estate.  An anti-contest clause can be an important tool to prevent your heirs from fighting over your estate.  If carefully drafted, such a clause is an effective deterrent.  On the other hand, a not-so-carefully drafted anti-contest clause can lead to years of costly litigation and the depletion of estate assets before they reach their intended beneficiaries.

Only two states, Florida and Indiana, refuse to enforce anti-contest clauses in a will.  The courts of every other state have ruled that anti-contest clauses are enforceable to some extent.  The Massachusetts Uniform Probate Code provides that anti-contest clauses, provisions in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate, are enforceable.  However, the case law establishes that, because equity does not favor forfeitures, Massachusetts courts construe anti-contest clauses narrowly.

Therefore, in Massachusetts, great care must be taken in the drafting of an anti-contest clause.  Great thought must be given to the breadth of the clause, i.e., what conduct triggers the clause.  Compare the following two anti-contest clauses: 

(1)        “If any beneficiary hereunder shall contest the probate or validity of this Will, or any provision thereof, then all benefits provided for such beneficiary are revoked, and such benefits shall pass to the other beneficiaries named in the provision.”  

(2)        “If any beneficiary hereunder shall contest the probate or validity of this Will, or any provision thereof, or shall institute or join in (except as party defendant) any proceeding to contest the validity of this Will or prevent any provision thereof from being carried out in accordance with its terms (regardless of whether or not such proceedings are instituted in good faith and with probable cause), then all benefits provided for such beneficiary are revoked, and such benefits shall pass to the other beneficiaries named in the provision.”

The second clause is more far-reaching and is more restrictive regarding what a disgruntled heir can do when he or she is unhappy with the administration of the estate, but could still have unintended consequences.  For instance, what if a disgruntled heir attempts to interfere with a duty of your personal representative, such as the duty to determine the extent of your ownership interest in a piece of real estate at the time of your death?  Does this conduct trigger the clause?  The lesson is that an anti-contest clause can be important to upholding the intent of the testator, but great care must be taken when drafting to make clear exactly what conduct triggers the clause.       

The Will in Conjunction with Other Estate Planning Vehicles

Often times, your estate plan will include more than just a will.  For instance, one or more trusts, legal entities under which a trustee holds legal title to property for the benefit of a beneficiary or beneficiaries, are often utilized in conjunction with a will for a variety of reasons including tax planning and asset protection.  It is important to consult with an experienced estate planning attorney to assist in determining the best way to preserve your assets, minimize taxes, and reduce or avoid the cost and delay of the probate process.

This article cannot possibly cover all the issues or questions that may arise as you contemplate the preparation or revision of your estate plan.  Should you have any issues or questions we would be happy to assist you. 

This newsletter is designed for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. For further information please contact one of our attorneys. Information contained herein has been abridged from laws, court decisions and administrative rulings, and should not be construed as legal advice or legal opinions on specific facts.  The enclosed material is provided for education and information purposes by MacLean Holloway Doherty Ardiff & Morse, P.C. to clients and others who may be interested in the subject matter. 

 

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