By: Anne M. Hamilton
Clients often recite horror stories of estate litigation, asking that a clause be included into their estate planning document to prevent issues in their own estate. A clause such as, “I have attempted to provide fairly for members of my family by this my Last Will and Testament. If any action shall be taken by a beneficiary in a court to contest or set aside my Will, any beneficial interest of that person under my Will shall be forfeited,” sounds intimidating, but if you reside in Indiana such a clause is not legally binding as Indiana does not recognize such “in terrorem” clauses. Thus, a beneficiary may contest a will or trust without jeopardizing his or her interest in the will or trust.
How can you then be assured that your estate will not be the subject of litigation? The easy answer – you can’t; however, steps can be taken to reduce the chance of litigation. Listed below are a few common scenarios that raise red flags for possible litigation and possible steps to be taken to minimize the risk:
- Is one child treated differently than his or her siblings? Often estate litigation can be avoided by treating people of the same degree of relationship equally. However, trouble may not be avoided if you distribute your personal property equally to your children without specific direction as to who inherits the silver, the china, the jewelry and other personal property. Countless fights among children of decedents occur over the distribution of personal property. Childhood memories and long held resentment bubble to the surface as mom’s or dad’s personal items are divided and distributed. Occasionally it is necessary to direct the personal representative to intervene in order to determine the ultimate recipient of an item of personal property.
- Loaning money or making a gift to one child without a provision in your will or trust addressing the gift or loan is another red flag for potential trouble. If Child A received a gift of $50,000 for the down payment on a house and Child B did not receive a comparable gift, Child B is sure to feel treated unfairly if there is not an equalization provision under the parent’s will or trust. An easy solution is to include language in the estate planning document treating the $50,000 gift to Child A made during the parent’s lifetime against the inheritance Child A receives at the parent’s death. This is referred to as an advancement clause.
- Another area ripe for litigation is a change in an estate plan involving a second or subsequent spouse and children from a prior marriage, and a new will. Suppose the much younger second wife encourages her husband, recently diagnosed with Alzheimer’s disease, to change his will. The change to the will reduces the share the husband’s children previously were to receive. Changes to a will in this situation should be carefully reviewed with an attorney and steps establishing capacity of the husband should be taken and well documented. The likelihood of a long and protracted will contest is almost guaranteed when you combine a recent health diagnosis, a new family member, and a change to an estate plan.
- Lastly, don’t delay. Plan ahead. Waiting until your death bed to dispose of property is a sure way to invite trouble.