Beyond The Will, Client Compass

Under the umbrella of probate litigation falls guardianship and conservatorship disputes, Will and trust contests, fights over family real estate and whether or not a gift was actually meant to be a gift. The most basic and streamlined approach to not only mitigating but also avoiding probate litigation is planning ahead. Plans may include full, comprehensive estate plans, simple transfers of real estate, implementation of protective measures in the event of incapacity, or documentary evidence of supposed gifts.

Protective Measures:

As parents age, conversations should occur regarding the protections in place in the event of their incapacity. The discussion surrounding guardianships and conservatorships in the age of “Free Britney” can be challenging and somewhat taboo. Many individuals are apprehensive about relinquishing financial and health care decision-making powers to their children or family members. However, these choices are critical to avoiding litigation between family members down the road. As parents age and are no longer able to make decisions for their health and well-being, children are often left with the burden of deciding who is appropriate to serve in those decision-making capacities. These decisions, often made whilst parents undergo significant medical treatments or health deterioration, welcome family strife and disagreement.

Planning ahead and working with a parent on nominating their guardian and conservator now, while they have the autonomy and decision-making capacity to do so, may prevent obligations for the children and sibling disputes. This nomination may occur in the individual’s last Will and testament, durable power of attorney and/or their health care proxy.

Agents:

On the topic of fiduciaries, parents may also appoint today a health care agent and/or durable power of attorney for tomorrow’s decisions. Health care agents can be created through the execution of a health care proxy. A parent will likely find comfort in the idea that health care decision-making powers typically do not vest in their agent until that parent is deemed incapacitated or unable to make decisions by a doctor. In contrast, a durable power of attorney typically retains their decision-making powers over finances the moment the principal signs the document. There are various options to consider when making decisions for attorney-in-fact. Again, it is critical to establish these agents before situations create conflict between children and family members. For example, a conversation should be had before you agree to take over dad’s bill paying and become subject to criticism and possible litigation from your sibling.

Establishing Wills and Trusts:

Establishing a Will before one’s death allows a testator (the person creating a Will) the opportunity to control and communicate their wishes for their personal and real property. The testator is also able to nominate their personal representative or the individual charged with administering the estate upon the testator’s death. By creating a Will, children and family members are no longer at the mercy of the intestate statutes established in Massachusetts. They are instead enabled to follow the provisions of the Will when distributing property and winding up affairs. The nominated personal representative also has priority to serve as such and the Court appointment is generally automatic (pending objections from interested parties). Without this nomination from the testator, family members typically fight over who is best suited for the job, leading to litigation and expensive contests. Even better is the creation of a trust, which avoids court oversight altogether. Whether in a trust or a Will, it is imperative that provisions are clear and unambiguous to avoid litigation in the future. Vague and outdated terms regarding the disposition of property often lead to lengthy contests regarding interpretation. If you have questions or need clarification regarding a certain provision, ask parents now while they have the opportunity to explain.

Transfers of Real Estate and Gift Making:

Transfers of real estate during parents’ lifetimes also open the doors for litigation if the transfers include complicated provisions and varying percentages. Before transferring 90% of real property to one child and 10% to another, think about the consequences of that choice. Is the 10% intended to allow that child access to the property? Are you hoping the child will obtain 10% of the rental income? Be clear when creating ownership shares in varying percentages. Forcing the children to interpret your underlying intent in the future is not only burdensome but creates the possibility of a dispute between siblings.

The final mechanism in mitigating the risk of litigation is documenting gifts made or received. Just because dad tells you that someday he wants you to have his baseball card collection does not mean he has gifted that collection to you and you now own it. If dad truly does intend to gift that collection to you, put something in a signed writing or ask him to make that gift in his estate planning documents. Nothing welcomes probate litigation quite like a dispute over a collection of baseball cards.