There are many things that can be done to avoid protracted litigation over estate assets. Here are a few suggestions:
1. Treat Siblings Equally. Litigation can be avoided most of the time by treating people with the same degree of relationship equally. However, decisions get more complicated with multiple marriages. Another area of dispute may occur if one child predeceases his or her parent. The default rule is that a deceased child’s share goes to his or her kids. If estate planning documents mirror the default rules, there is very little for heirs to gain by fighting.
2. Decide Who Gets What. Direct important items of personal property to the specific person who should receive it. These directives may be contained in a will, trust, or by a list (referred to as a "personal property memorandum") attached to either document.
3. Keep Track of Loans and Advances. Specify whether any loans are to be forgiven or repaid at death. If a loan must be repaid, then it may be identified as an "advancement", and counted against the share distributed to an heir.
4. Transfer a Business with a Contract. A business may be transferred to an heir by contract, rather than by will or trust. Contracts are generally harder to contest than a will or trust.
5. Check Ownership of Assets. A will can only direct the distribution of property owned by the person who signed the will. Jointly owned property goes to the surviving joint owner, and other assets with a specific beneficiary will be distributed that person - regardless of the what the will says.
6. Get Your Own Lawyer. It’s common for one lawyer to draft estate planning documents for a couple and perhaps even more family members. But if the lawyer represents someone other than the testator (the person writing the will), trouble can result. For example, if a lawyer represents both the testator and a second spouse — the children from a first marriage may contest the documents by claiming that the lawyer had a conflict of interest.
7. Consider a Corporate Executor. A professional trustee or executor is expensive, but there’s less chance of fights among siblings.
8. Establish Mental Capacity to Sign Documents. One of the most common allegations in estate litigation is that the testator lacked the mental capacity to sign his or her will. Proper witnessing of documents will prevent most problems related to claims of incapacity. If the testator's capacity is in doubt, one way to counter a claim is to be evaluated by a physician before signing documents. The document signing procedure may also be recorded with video or audio equipment, but it should be carefully controlled so as not to generate more evidence for people who want to fight.
9. Include a "No-Contest" Clause. No-contest clauses are also known as "in terrorem" clauses. A typical no-contest clause says that if any beneficiary of the will contests the validity of the will or any provision of the will, he or she forfeits his interest. No contest clauses are not fully enforceable in Michigan due to statutory restrictions on their use. However, putting one in a will or trust may cause enough fear on the part of a beneficiary to make it work.
10. Spell Out Any Disinheritance. Disinheritance of a beneficiary should be explicit rather than by omission. It is not necessary to provide a reason for disinheriting a beneficiary.
11. Don’t Delay. Deathbed estate planning is almost always a recipe for trouble. Claims of incapacity and undue influence are more common in such situations.
John P. Tamboer, attorney
Estate Planning Law Group
5088 Corporate Exchange Blvd.
Grand Rapids, MI 49512