WILL CONTESTS ON THE RISE
By P. Keith Staubus
There is currently more wealth being transferred between generations than at any time in our nationís history. According to the Center for Retirement Research at Boston College, it is estimated that the baby boom generation will inherit $8.4 trillion over their lifetimes. It is also clear that the number of wills being contested is on the rise. Factors including the blended family, and parents living longer and being cared for either by one of their children or by a private caregiver, can result in late-in-life changes to Last Will and Testaments, which reduce or cut out the shares of family members. This is one of the classic recipes for a will contest. Here is what you need to know if you find yourself in that situation.
When Can a Will be Contested?
A will cannot be contested prior to the testatorís death. After death, it is most advantageous to contest a will prior to the hearing to admit it to probate, which is normally within approximately two weeks after it is filed with the Court. By contesting the will prior to it being admitted to probate by the Court, the burden of proof as to the testatorís mental capacity is placed on the person offering the will for probate, rather than on the contestant, which can be a significant advantage for the contestant.
Once a will has been admitted to probate, a will contestant has up to two years from the date of the contested willís admission to file a will contest, or it is forever barred. If contested after the will has been admitted to probate, the burden of proof as to the testatorís mental capacity is on the contestant.
What are the Grounds for a Will Contest?
The primary grounds for contesting a will are lack of testamentary capacity and undue influence. In order to prove that a testator had the necessary testamentary capacity at the time the will in question was executed, the person offering the will, assuming the will is contested prior to it being admitted to probate, has the burden of proof to show:
- The testator understood the business in which he or she was engaged, the effect of his or her act in making the will, and the general nature and extent of his or her property;
- The testator knew his or her next of kin (the "natural objects of his bountyĒ); and
- The testator had sufficient memory to collect in his or her mind the elements of the business to be transacted and to hold them long enough to at least perceive their obvious relation to each other and to form reasonable judgment about them.
In order to prove that a will is not valid because it was executed as the result of the exertion of undue influence on the testator, the contestant has the burden of proof to show:
Other potential grounds for a will contest are forgery, insane delusion, improper execution of the will, and fraud.
- The existence and exertion of an influence;
- The effective operation of such influence subverted or overpowered the mind of the testator at the time of execution of the will; and
- The will executed would not have been executed but for such undue influence.
Obtaining the testatorís medical records is critical to any will contest to evaluate and to establish the testatorís mental capacity and susceptibility to undue influence at the time of execution of the will. A forensic psychiatrist can also be important in interpreting these medical records. The testatorís financial records are often critical in assessing the testatorís ability to handle his financial affairs, his knowledge as to the nature and extent of his property, and any evidence that the testator was being financially exploited. Depositions of the attorney (if any) who drafted the will, the witnesses and notary to the Will, and any caregivers of the testator are essential.
Whether you are contesting a will or are defending a contested will, it is important to have a full legal team experienced in the unique evidentiary issues, rules, strategies, and necessary expert witnesses to effectively assess and litigate a will contest.
For more information on will contests, or on other estate litigation, trust and fiduciary litigation, guardianships, or closely-held business litigation handled by the firm, visit the firm website, www.srllp.com, where you may download two available white papers on will contests:
The Impact of the American Taxpayer Relief Act of 2012 (ATRA) on Estate Planning
By Ryan A. Randall
On January 1, 2013, Congress passed the American Taxpayer Relief Act (ATRA), and shortly thereafter, President Obama signed the bill into law on January 2, 2013, ending what many had worried would lead to falling off of the "fiscal cliff," being the scheduled radical reduction in estate tax and gift tax exemptions, and significantly higher estate tax and gift tax rates. With the passing of this important legislation, it is prudent to understand how these new laws may impact your personal estate planning.
Highlights of the American Taxpayer Relief Act (ATRA)
The following is a summary of the significant provisions of ATRA:
- Sets a permanent 40% top tax rate for estate, gift and generation-skipping transfer (GST) taxes in excess of the exemption amount
- Unifies estate and gift tax exemptions and currently sets these exemptions, as well as the generation-skipping transfer (GST) tax exemption, at $5.25 million per individual
- Makes permanent "portability" possible by allowing the surviving spouse to elect to add the unused exclusion of the decedent to the surviving spouseís exclusion, meaning that married couples currently can pass $10.5 million of assets without the worry of gift or estate taxes
Increase in the Annual Gift Tax Exclusion
In addition to the changes brought about by the American Taxpayer Relief Act (ATRA), the annual gift tax exclusion amount was increased to $14,000.00 per designee beginning January 1, 2013. This is an inflation-adjusted increase from $13,000.00 in 2012. Married couples may combine their annual gift tax exclusion amounts, which allows them to make tax-exempt gifts totaling $28,000.00 per designee.
Planning Beyond 2013
For many individuals who may have delayed estate planning due to the uncertainty that existed in 2012, now is the time to implement new estate plans, given the apparent stability in rates and exemptions for the foreseeable future. Even if estate taxes are not a primary focus or an issue for individuals, proper estate planning can be essential in offering protection from creditors and divorcing spouses, as well as offering protection to children and beneficiaries. Additionally, a well-developed estate plan can provide benefits in income tax planning, which is now particularly important for individuals who find themselves in higher tax brackets. Finally, proper planning is essential to small business owners who wish to do business succession planning to determine how their business will be controlled after their death, as well as which family members or business associates will benefit from and carry on the business.
Reviewing Existing Plans
Equally important to the planning process is the necessity of evaluating current family dynamics and changes in relationships which might affect the choices which individuals have made in existing documents, including whom they wish to appoint to make decisions for them under their health care power of attorney or general durable power of attorney, to act as guardians of their minor children or as trustees of their trusts, or to act as executors of their estate.
Another important issue in evaluating existing estate plans is the need to adequately review the often overlooked status of beneficiary designations on joint accounts with right of survivorship, insurance policies, and retirement accounts. The failure to properly coordinate these designations with the estate plan can cause assets to be distributed to persons which the individual did not intend, in a manner inconsistent with the overall estate plan, due to an incorrect or out-of-date beneficiary designation or account styling. This can also lead to estate tax and income tax implications that were unintended.
The American Taxpayer Relief Act (ATRA) has significantly impacted tax planning for individuals in the estate planning process. There are a number of important issues beyond estate and gift tax planning which all individuals should address and periodically review in order to secure their future and the future of their family and loved ones.
Ryan A. Randall, ranked as a Five Star Professional by Texas Monthly Magazine, concentrates his practice in Estate and Tax Planning, Asset Protection Planning, and Business Succession Planning.
WRONGFUL DEATH AND SURVIVAL ACTIONS
By Joseph E. Legere
Over the years, having litigated a number of catastrophic tort claims, I have frequently been asked by clients, as well as by students in my tort class at Collin College, to explain the difference between a Wrongful Death Claim and a Survival Claim. I explain the difference between these two claims as follows:
A Survival cause of action is something that belongs to the deceased for damages that he or she suffered before they passed away.
A Wrongful Death cause of action does not belong to the deceased but instead belongs to the surviving spouse of the deceased, a child of the deceased, or a parent of the deceased.
The deceased personís heir or the personal representative of their estate may bring a Survival claim. The claims that may be asserted are claims that the deceased person could have asserted had he or she survived. For instance, if a person was injured in a car accident due to the negligence of someone else and died a few hours later from those injuries, then their heir or their personal representative could assert a claim for the medical bills incurred and the pain and suffering that the person endured from the time of injury to the time of death. This is just an example of a portion of the damages that the personal representative of the estate or the heir of the deceased could assert. Any damages recovered pursuant to a survival claim are subject to the debts of the estate.
The damages recovered under a Wrongful Death claim are to compensate the surviving spouse, child or parent of the deceased for their loss. These damages typically include loss of financial support, loss of inheritance, mental anguish, and the loss of the relationship. Any damages recovered under a Wrongful Death claim are personal to the Plaintiff, and are not subject to the debts of the deceased.
Both the Wrongful Death claim and the Survival claim typically have a two-year statute of limitations. There are a few exceptions to this limitation, which can best be addressed with an attorney on a case-by-case basis.
In some instances, it is preferable to assert only a Wrongful Death claim as opposed to a Survival claim, assuming you are a surviving spouse, child or parent of the deceased and are also an heir of the deceasedís estate. Whether you have an individual claim and/or are an executor or administrator of an estate which holds a potential claim relating to the Decedentís death, it is important to consult with an attorney regarding the decision as to whether to assert a Wrongful Death Claim, a Survival Claim, or both claims, as well as to the viability and value of these claims.
Joseph E. Legereís practice is concentrated in Will Contests, Trust Litigation, Guardianship Litigation, Fiduciary Litigation, and Catastrophic Tort Claims. For more information regarding Mr. Legereís litigation practice, please visit The Attorneys page at www.srllp.com.
Enforcing Beneficiary Rights
By P. Keith Staubus
Although trusts are designed to operate without any court supervision, trust beneficiaries have the right to file suit to enforce the express terms of the trust, as well as to enforce the legal duties owed to them by the trustee, referred to as "fiduciary duties.Ē Among these fiduciary duties owed to each beneficiary (including "remainder beneficiariesĒ who have only a future right to income or principal distributions) are the following:
Duty of full disclosure
Duty to account
Duty to keep and maintain accurate trust records
Duty of loyalty (including the duty not to self-deal)
Duty to make the trust property productive
Duty to reasonably exercise their discretion
Beneficiaries to whom any of these duties have been breached have legal remedies which they can have enforced by a District Court, or in a larger county by a "Statutory Probate CourtĒ (such as Dallas, Tarrant, Collin, Denton, Harris, Bexar or Travis Counties). Some of these court-ordered remedies include the following:
Compelling the trustee to take an action
Enjoining the trustee from taking an action
Ordering the trustee to pay back money or to restore property
Ordering the trustee to provide a detailed accounting
Suspending or removing the trustee
Denying the trusteeís compensation
Awarding a judgment against the trustee for actual and punitive damages
Having the Court supervise the trust and oversee all transactions
In addition, beneficiaries can invoke the power of a court to seek an increase in the amount of their distributions from the trust, to modify the terms of the trust, or to terminate the trust and have the trust assets distributed outright. When a trust owns an interest in a limited partnership or a limited liability company, the trust litigation may involve claims against the general partner or managers of those entities, in addition to the trustee.
The fiduciary duties imposed on trustees have been described as one of the highest duties imposed by law. Trust beneficiaries have significant remedies, and the court has extremely wide latitude in enforcing those duties, and in awarding attorneys fees to such beneficiaries incurred in enforcing those rights.
For more information on trust litigation, please visit the firm website, www.srllp.com, where you may download a white paper entitled "Trust Code Toolbox for Locking Down the Runaway Trustee.Ē