Strategies for Avoiding a Will Contest . . . But Winning if you Can’t

by Frank W. Streng on 06/10/2002

Frank W. Streng, Esq. Partner McCarthy, Fingar, Donovan, Drazen & Smith, L.L.P. 11 Martine Avenue White Plains, NY 10606-1934 914-946-0134 (fax) 914-946-3817 ext. 256 (voice) e-mail:   web: www.mfdds.com www.mfdds.comfstreng@mfdds.com	Gary E. Bashian, Esq. Partner Bashian, Enea & Sirignano 235 Main Street White Plains, NY 10601 914-946-5100 (voice) 914-946-5111 (fax) e-mail:   garybashian@aol.com
Joseph M. Accetta Esq. Law Assistant Surrogate’s Court 140 Grand Street White Plains, NY 10601 914-995-3727 (voice) e-mail:   jaccetta@courts.state.ny.us

 

 

 

Westchester County Bar Association – Trusts & Estates Section

Strategies for Avoiding a Will Contest . . . But Winning if you Can’t

 

June 10, 2002

 

 

NOTES

 

INTRODUCTION:

 

 

• What is Defensive Estate Planning?

 

 

 

• • • Attorney’s Assignment: Representing One or More member of “Dysfunctional” Families – assume that your client’s family is dysfunctional

   

  • • Dysfunctional – Webster defines it as “impaired or abnormal functioning”

   

  • • Examples of Dysfunctional Families (after death scenarios)

   

• • • “Bad families with No Parental Control”: No one likes each other, including the parents

   

  • • “Bad families with Parental Control”: No one likes each other, but the parents are able to require members of the family to act with propriety and respect

   

  • • Good Family with Bad Marriage: Children seem to respect each other, but parents hate each other

   

  • • “Good Families that are Broken through Divorce”

   

  • • “Good Families that are Broken through Remarriage (with children from second marriage)

   

  • • “Good Families that are Broken through Remarriage (without children from second marriage)

   

  • • “Good/Bad Families” on the Death of the Survivor Parent: Throw out the Family Rule Book and Become Super Dysfunctional

   

  • • “’Good Families” that have Very Good Actors in which One or More members Hate Each other

   

• • • • Client’s Goal: Hiring you to protecting integrity of client’s decisions in estate plan (e.g., preparing will where client cuts out distributees or makes so-called unequal distributions)

     

 

• • • • • Your engagement as counsel
          • • Separation between Mom and #1 child

           

          • • Attorney-client privilege

           

          • • Joint representation issues

           

       

      • • Diligence in legal work
          • • Detailed interview with memoranda

           

          • • Detailed description of assets and liabilities

           

          • • Discussion with client as to nonprobate assets, including joint assets and intentions of client as to whether #1 child is the intended beneficiary of joint account
              • • Note: POA account v. joint account; joint account v. Totten trust account

               

           

          • • Obtaining copies of existing and prior wills/trust agreements/power of attorney forms/health care proxies

           

          • • Satisfying yourself that client has capacity and is not subject to undue influence

           

          • • Sending drafts of instruments with letters of explanation

           

          • • Dealing with Mom, and Mom alone, as to drafts and redrafts

           

          • • Supervision of execution

           

          • • No shortcuts

           

          • • Exclusion of #1 child from room for will execution

           

          • • Other estate planning

           

          • • Living will/health care proxy

           

          • • Durable power of attorney

           

          • • Revocable trusts
              • • Attorney’s Perceived Resistance of Revocable Trusts

               

              • • Client’s perspective: attorneys have self-interest in assuring probate through earning a huge percentage fee in estate

               

              • • Client’s Misperceptions
                  • • Revocable trusts always avoid probate

                   

                  • • Assets cannot pass through revocable trust unless asset is transferred to trust

                   

                  • • Revocable trusts avoid estate and other taxes

                   

                  • • Tax neutrality of revocable trusts

                   

               

              • • Advantages of revocable trust re procedural and substantive obstacles to “will contest”

               

              • • Revocable trusts as “continuing” will
                  • • Effect of client managing financial matters through all-inclusive features of brokerage account for trust

                   

               

              • • Mechanics of Creation of Trusts – EPTL 7-1.17

               

           

       

  • • • • To be effective lifetime trust must be in
          • • Writing

           

          • • Executed by the creator and at least one trustee

           

          • • Acknowledged or executed in the presence of two witnesses

           

       

      • • Grantor can be sole trustee

       

      • • Oral trusts not recognized in statute

       

      • • Amendment/Revocation is effective if in
          • • Writing

           

          • • Executed by the person authorized to amend or revoke

           

          • • Acknowledged or executed in the presence of two witnesses

           

          • • Notice of amendment or revocation shall be delivered to at least one other trustee
              • • Effective date the date of execution

               

              • • Failure to give notice does not make invalid

               

              • • No liabilities for actions of trustee prior to actual notice

               

           

       

      • • Funding of Lifetime Trust
          • • Valid as to assets transferred to trust

           

          • • Transfer is not accomplished by “recital of assignment, holding or receipt in the trust instrument:

           

          • • Transfer is accomplished through “written assignment describing the assets with particularity” or, in the case of “real estate, stocks, bonds, bank and brokerage accounts and the like” a recording of deed or “completion of registration of the asset”

           

       

• • • • • Additional procedural obstacles for challenging validity of revocable trusts, or transfers to trusts
          • • Contrasts of Will Contests v. Trust Contests

           

          • • Lack of identified procedural remedies in trust contests

           

          • • Challenging client’s capacity in execution of documents that results in transfer to revocable trusts

           

       

• Scenario #2.

 

 

Same facts as 1 above. But now, after you have engaged in initial work for Mom on Will, Power of Attorney, Health Care Proxy, Mom may be mentally incompetent and #1 child retains you for “Medicaid Planning” and related services

• • • What is Medicaid planning
      • • Planning to assure that Mom becomes eligible for Medicaid and that part or all of Mom’s assets is sheltered from payment to health care providers/nursing home

       

   

  • • Planning Options
      • • Conventional (if Mom competent to act on her own):

       

      • • Rule of halves: making outright gifts through use of prescribed monthly rate – Westchester rate for 2002 is currently $7,138 per month

       

      • • Possible transfer of residence with retained life estate

       

      • • Tax consequences for planning recommendations

       

      • • Options on “gifting” to #1 child
          • • Outright v. trust

           

          • • Nonprobate: Joint v. Totten trust

           

       

      • • If Mom not competent to act on her own

       

      • • Does the durable power of attorney form have gift powers beyond statutory form (i.e., gift tax exclusions)?
          • • If gift powers exist, can #1 child, as agent, make gifts to herself

           

          • • Consider cases and the effect of self-dealing (they don’t work)

           

          • • If gift powers do not exist, “extra legal” options for family unit acting together

           

       

       

      • • Medicaid planning under Article 81

       

      • • Interrelationship with Will Contest, Medicaid Planning and Article 81

       

      • • Medicaid Planning
          • • Did Mom transfer assets to #1 child with the intention of gifting assets to child?

           

          • • Was #1 child acting as a type of agent, thereby encouraging other children to commence proceeding against child?

           

       

      • • Preparing Will/Revocable Trust Agreement for Client with Diminished Capacity and/or Client who is the subject of Article 81 proceeding
          • • Same considerations as above for estate plan

           

       

   

• • • Detailed interview with memoranda

   

  • • Detailed description of assets and liabilities

   

  • • Discussion with client as to nonprobate assets, including joint assets and intentions of client as to whether #1 child is the intended beneficiary of joint account
      • • Note: POA account v. joint account; joint account v. Totten trust account

       

   

  • • Obtaining copies of existing and prior wills/trust agreements/power of attorney forms/health care proxies

   

  • • Satisfying yourself that client has capacity and is not subject to undue influence

   

  • • Sending drafts of instruments with letters of explanation

   

  • • Dealing with Mom, and Mom alone, as to drafts and redrafts

   

  • • Supervision of execution

   

  • • No shortcuts

   

  • • Exclusion of beneficiary from room for will/trust execution

   

  • • Other estate planning

   

  • • Living will/health care proxy

   

  • • Durable power of attorney

   

  • • Revocable trusts

   

• • • Video type Will/Trust Executions

   

  • • Admissibility is assured, subject to proper evidentiary submission, but should you use them

   

  • • Possible Use of Psychologists/Psychiatrists/Other Medical Providers to Establish Client’s Capacity

   

  • • Be careful

   

 

1. 1. How to Win a Will Contest: Perspectives of Petitioner, Objectant and Court

 

• • • Marshalling of assets and other matters incident to estate

   

  • • Administer the estate irrespective of litigation

   

• Objectant’s Perspective

 

 

 

• Petition for temporary letters (SCPA 901)

 

 

• If preliminary letters granted, consider a petition to revoke
  • • if Will is facially (arguably) improper

   

  • • if proper grounds under SCPA 711 or 719

   

 

 

• If preliminary letters not sought, then possibly seek temporary letters

 

 

• • • Petition to compel production of Will (SCPA 1401) for prior instruments

   

• • • Pursuant to SCPA 1412(4)(b), take whatever actions necessary to make sure that “papers and records of the decedent” are properly preserved by the preliminary executor

   

• Options on Return date of Probate Citation

 

 

• • Objectant’s Perspective

 

 

 

 

 

• • • Consider options as to status of parties, e.g., is the spouse a distributee or not?

   

 

• • Petitioner’s Perspective

 

• • • If you have not yet gotten preliminary letters, seek them

   

  • • Make sure that your client is doing his/her/its job as fiduciary, i.e., ignore Will contest and administer the estate

   

  • • Make sure records of the decedent are preserved

   

• • • If a beneficiary under contested Will is also a petitioner, make sure that, at all times, your client is acting properly

   

• Court’s Perspective

 

• • • Notice of Objections Filed: Before discovery can begin, a citation for notice of objections filed must be obtained from the Court and served upon all beneficiaries under Will whose interest are adversely affected by objections (SCPA 1411; Rule 207.27); conduct discovery after return date of citation

   

• • • Document production
      • • Pursuant to local rule, duces tecum subpoenas for medical records are returnable at Surrogate’s Court

       

   

• • • Depositions
      • • 3 and 2 rule – Unless there are “special circumstances”, discovery limited to the period of three years before and two years after the execution of Will (Rule 207.27)

       

      • • Attesting witnesses out of state: Pursuant to SCPA 508 and Rule 207.22, the Court may direct testimony to be taken outside of the state by a commission

       

   

• • • Bills of Particulars
      • • Generally, the petitioner is entitled to bill as to those objections in which the objectant has the burden of proof

       

      • • See Rule 207.23 for further details

       

   

• • • Summary Judgment Motions

   

• • • Place burden on objectant to flesh out objectant’s case, if one exists

   

  • • With volume of cases, summary judgment motions are getting greater sympathy from Surrogates

   

  • • CPLR 4519 (death man statute) problems do not help movant on summary judgment motion

   

• • • Objections on lack of due execution
      • • Submit transcripts of 1404s and other examinations

       

   

• • • Objections on lack of testamentary capacity, undue influence and fraud

   

  • • Make motion after the end of discovery

   

  • • More difficult motion: do not make unless your case is compelling

   

• • • Settlement Options

   

• • • Factors:
      • • Non probate and gifted assets

       

      • • Estate tax apportionment

       

      • • Distributions under the intestacy statute

       

      • • Distributions under the elective share statute

       

      • • Interest of beneficiaries under prior Wills

       

      • • Appointment of executors and trustees

       

      • • Interest of persons under a disability and working with GAL

       

      • • Outright share or trust share for spouse

       

   

• • • Types of Settlements:

   

  • • Admit propounded Will to probate, subject to lump sum payment to objectant

   

  • • Deny probate to propounded Will, admit prior Will to probate, subject to lump sum payment to petitioner

   

  • • Revise testamentary scheme to accommodate interests of petitioner and objectant

   

  • • Pursuant to SCPA 1411(6), settlement is binding on all persons under propounded Will who has not appeared upon service of the citation upon the filing of objections

   

• • • Trial

   

• • • In jury trial, case is not scheduled for trial until the filing of a note of issue and statement of readiness and an order framing issues

   

• • • In court trial, you need to file a note of issue and statement of readiness and statement of issues

   

• • • Consider possible withdrawal of jury demand to compel court trial if you are the objectant and have asked for a jury trial (SCPA 503(b))

   

• • • Critically evaluate your case

   

  • • Withdraw objections that you cannot support, such as due execution on a lawyer supervised execution

   

  • • Consider CPLR 4519 and how it impacts on petitioner or objectant

   

  • • Consider expert witnesses and whether your expert knew the decedent

   

  • • Consider relevancy of financial transactions with decedent on objections and effect of such evidence

   

 

 

 

• Make sure probate proceeding is aggressively prosecuted

 

 

 

• Interview attesting witnesses and make sure they are available for SCPA 1404 examinations

 

 

 

• If you want to expedite the proceeding, seek a discovery order

 

 

 

 

• If there is a person under a disability adversely protected by the Will and represented by a Guardian ad Litem (GAL), work closely with GAL

 

 

 

 

• Objections to issuance of letters
  • • Grounds generally under SCPA 711 and 719

   

  • • For Attorney-fiduciaries, see SCPA 2307-a

   

 

 

 

 

• Permits immediate use of CPLR discovery devices
  • • Objectant generally pays for transcripts of depositions, including examinations of attesting witnesses

   

 

 

 

 

• File objections to probate and to the issuance of letters

 

 

 

• Grounds for objections to probate of will
  • • Due execution

   

  • • Consider not filing objection if it cannot be arguably supported based upon 1404 examinations

   

  • • Testamentary Capacity

   

  • • Fraud

   

  • • Undue Influence

   

 

 

 

• Demand for jury trial

 

 

 

 

• Conduct examination of attesting witnesses pursuant to SCPA 1404

 

 

 

• Defer date for objections to probate until conclusion of examination of witnesses
  • • Permits attorney and client to make studied decision as to whether to object to probate

   

  • • If there is an in terrorem clause (EPTL 3-3.5), puts off decision as to possible forfeiture of client’s interest that may be caused by unsuccessful objections to probate

   

 

 

 

• Pursuant to local rule of Surrogate’s Court, Westchester County, expense of transcripts of examinations of witnesses are paid by estate

 

 

 

• Defers other CPLR discovery devices until after objections are filed and issue is joined

 

 

 

• 1404 examinations are to take place at Surrogate’s Court pursuant to Rule 207.28, unless the Court otherwise provides; and usually cannot be conducted until personal jurisdiction is complete

 

 

 

 

• Petitioner’s Perspective

 

 

 

 

• Petition for probate and for Preliminary letters

 

 

 

• Requirements for Attorney-Fiduciary under SCPA 2307-a

 

 

 

• Issuance of citation
  • • Do not delay on account of missing waivers and consents if you sense a problem; have citation issue and file waiver when you get it

   

 

 

 

• Need for appointment of Guardian ad Litem for persons under a disability

 

 

 

• Preliminary letters
  • • Assured under SCPA 1412

   

  • • Control the estate as part of your strategy in will contest

   

  • • If you delay and end up with an actual or potential application for temporary letters, you may be involved with “haggling” a less than satisfactory solution to obtain preliminary letters, including a bond or other restrictions

   

 

 

 

 

• Representation of Client in Different Factual Scenarios and Options for Counsel

 

 

 

 

•  
  

   

  Dad is deceased and Mom, age 78, is in poor health and has 4 children. #1 child, who is 1 of 4 children, is closest to Mom, both physically and emotionally. Mom wishes to give all of her property to #1 child, and you are engaged by Mom but #1 child arranges for the initial meeting.

• Scenario #1.

 

 

 

 

• Attorney’s Perspective for New Client Assignment

 

 

 

• Ethical Considerations
  • • Attorney-Client Privilege

   

  • • Who is your client

   

  • • Protecting communications

   

  • • Benefits of protecting communications from client’s point of view in protecting integrity of estate plan

   

  • • Actual or Potential Conflict of Interest

   

  • • Irreconcilable conflicts of interests (send the client elsewhere)

   

  • • Reconcilable conflicts of interests
      • • Exoneration by multiple clients with full disclosure

       

   

  • • Engagement Letters

   

  • • Ethical considerations (effective 3/1/2002, an engagement letter is necessary if amount will exceed $3,000

   

  • • Financial considerations (loss leader concept)

   

 

 

 

 

• Estate Planning To Avoid Litigation – a how to

 

 

 

• Probate Litigation Practice and Procedure