Gideon Rothschild, Esq., partner, now retired, with the New York City law firm Moses & Singer LLP. He is a past chair of the Real Property Trust & Estate Law Section of the American Bar Association. MosesSinger.com/gideon-rothschild
In my last blog, I discussed the potential for conflict in “blended” families—families with stepchildren and their parents/stepparents—in regard to wills and trusts. Similarly, conflicts can arise as a result of warring siblings or a caretaker’s undue influence…or where a spouse or children are cut out of the will. Such conflicts, when coupled with mental incapacity, can lead to years of litigation over a trust or will.
One possible way to reduce the potential for conflict is to include a “no-contest” clause in the instrument. Such a clause provides that whoever contests the validity of a will or trust will receive nothing. That person will be treated as if he/she died before the person who actually died—and as if that person contesting the will or trust had no descendants, thus ensuring that nothing goes to his immediate family either. But not every state enforces such no-contest clauses, and those that do construe them narrowly. Furthermore, if someone is disinherited entirely, there is no disincentive to bringing a challenge. One way to discourage the beneficiary from bringing a challenge is to make the bequest big enough that he wouldn’t want to jeopardize it by risking that he would forfeit the entire bequest.
There are several legal theories that people who contest the validity of a will or trust rely on. Two of these involve claims of undue influence and/or incapacity. The result of these challenges, generally brought after the grantor/testator dies, is dependent on the evidence the challenger can present—that is, medical records and/or testimony of third parties. The greatest impediment to succeeding with such a challenge is that the principal witness is deceased. His testimony would be invaluable to demonstrate that no undue influence or mental incapacity existed. Without such testimony, the court is left to determine the validity of the will or trust through medical records and expert opinions as well as testimony by other witnesses to reconstruct the facts that existed at the time the document was executed.
A few states have recently enacted laws that permit a person to validate his will or trust while he is still alive (and arguably competent). This procedure, known as premortem validation, would enable a person who has concerns about a challenge to his testamentary wishes to bring a proceeding before his death. That could head off a lengthy will or trust contest after he is gone. It could also allow those who would otherwise initiate a challenge to do so while the grantor is living so that the court can determine first hand whether there is any undue influence or incapacity.
A premortem proceeding would enable a first-hand review of the testator/grantor’s capacity and the circumstances surrounding the execution of the document. At least eight states have authorized lifetime validation of wills—Alabama, Alaska, Arkansas, Delaware, North Carolina, New Hampshire, Nevada and Ohio. Delaware and South Dakota allow for premortem validation of trusts. The procedures vary by jurisdiction. With respect to the premortem validation of a will, it would appear that only a testator who resides in a state that allows for such premortem validation can avail themselves of that option. However, in the case of a trust governed under the law of a state that provides for such validation, the grantor should be able to obtain validation regardless of where he resides. Once the will or trust is validated by the court, it cannot later be challenged upon the testator’s death unless the testator made some changes after the court acted (although some states may permit minor modifications).
Some of these premortem statutes require a judicial proceeding, the results of which are made public. Some, however, do not. Delaware’s statute, for example, provides for a nonjudicial trust validation procedure in which notice of the trust is sent to interested parties. Only if a beneficiary files a challenge with the court within a specified notice period (120 days) will there be a judicial procedure in court. Thus, if a beneficiary does not file within the notice period the trust will not be subject to subsequent challenge.
These procedures provide the benefit of avoiding expensive and drawn out challenges after death.