Archive for the ‘Estates’ Category

Excessive Probate Fees: Keeping Organized

Tuesday, October 30th, 2012

We have previously suggested that many people can benefit from the avoidance of probate, we have also mentioned that record keeping can help to make estate administration easier on the personal representative. Murphy v. Prescott serves as an excellent example of why this is true.


In this case, the decedent died in 2005, leaving a $3 million estate. The assets of the estate was spread over stocks and bonds, retirement and personal banking accounts. In order to properly account for all of the assets the administrator had to hire an accountant and an attorney. The fees paid out totaled well over $100,000.


The accrual of fees and the subsequent lawsuit over them, including the appeal process succeeded in bleeding more money from the estate totals. The case did not conclude until April, 2012.


If there were better records of the assets of the estate then perhaps, this 7 year ordeal and the numerous fees associated with it could have been avoided. Additionally, had the estate been properly organized ahead of time and placed in a trust based estate plan, probate could have almost been completely avoided.


Wills Series Part XII: Reciprocal Wills

Tuesday, October 23rd, 2012

As stated in Part VI of this series, entitled “Beneficiary and Personal Representative,” married couples will often execute wills naming each other as both the personal representative and usually the primary beneficiary of his or her estate. Wills of this nature are generally called reciprocal wills.


The benefit of reciprocal wills is the assurance that your surviving spouse will receive the bulk, if not all, of  your estate after your death. This will-based set up can also allow for the creation of a more specific estate plan for the surviving spouse, once she becomes the sole owner of the former marital property.


Reciprocal wills are a relatively basic form of estate planning. Married couples have many other options including the use of trusts to potentially protect assets from probate, creditors, and estate taxes. The combination of trusts and pour-over wills is a powerful estate planning tool for married couples. For more on trusts, please refer to the Trusts Series of this blog. For more on pour-over wills, please refer to Part XI of this Wills Series.

Wills Part XI: Pour-over Wills

Tuesday, October 9th, 2012

Estate plans can often contain both wills and trusts. The majority of benefits are derived from the existence of the trust.  These can include such things as probate avoidance and potential estate tax avoidance. More information regarding trusts can be found in the Trusts Series of this blog. In order to take full advantage of all the benefits of a trust, as much of the donor’s property and assets as possible must be placed within the trust. Sometimes people die without having re-titled all their eligible property in the name of their trust, resulting in some property being part of the Donor’s probate estate.


In such instances, the pour-over will can be utilized to complete the funding of the inter vivos trust after the death of the donor. Pour-over wills are wills that contain provisions stating that the remainder of the assets and property owned by the testator / donor at the time of his death are not to be distributed to any heirs, but are instead to be “poured over” into the trust that he created while he was still alive.


This type of will allows the donor / testator to control the complete distribution of his assets through the trust he created without having to also worry about the distribution of assets through a will.


It should be noted that any property or assets that are “poured over” by the will into the trust will still need to be probated, therefore it is still important to transfer as much property into the trust during the lifetime of the donor as possible in order to keep his probate estate as small as possible, or eliminate it entirely.

Trusts Series Part VI: Spendthrifts

Tuesday, October 2nd, 2012

The primary purpose of a trust is to provide a monetary benefit to the named beneficiaries of that trust. There are instances however, where a beneficiary is not good at managing his finances or he has creditors who wish to access his interest in the trust. In order to protect the assets in the trust from the beneficiary’s poor financial decisions or his creditors, a spendthrift provision can be added to the trust.


Spendthrift provisions in trusts grant the trustee discretion over distributions of trust assets to the beneficiary, while granting no ability to the beneficiary to withdraw or access the assets in the trust at his own discretion. Without the ability to access the assets in the trust at any time, the beneficiary is not considered to have control over those assets. This lack of control creates a barrier between the beneficiary’s creditors the trust assets, making it extremely difficult for them to gain access to the trust assets in order to settle any of the beneficiary’s debts.


Generally speaking, it is more appropriate to include spendthrift provisions in trusts instead of wills. The devises given through a will should usually come without such a condition attached as it may unintentionally create a testamentary trust. For more information regarding wills and trusts please refer to the other blog posting on this site.

Wills Part X: Waiving the Spousal Elective Share

Tuesday, September 25th, 2012

In Part VIII of this series we covered disinheritance and the ability of a disinherited spouse to elect to receive their statutorily allowed spousal share. The spousal share is a portion of the estate of a decedent that can be taken by a spouse who is either left out of a will or given a nominal devise in the will.

The spousal elective share is not a guarantee however, there are instances in which spouses may agree to waive their reciprocal elective shares. In order to effectively waive a spousal elective share 3 criteria must be met:

1. The agreement must be in writing. Elective share waivers cannot be made by simple oral agreement, there must be a writing so that the agreement is perfectly understood by all parties involved.
2. The agreement must be signed by the party waiving the right to their elective share. This is to help ensure that the spouse making the waiver has read and understands the waiver.
3. There must have been fair financial disclosure. In order to make an informed decision as to what is being waived, a waiving spouse must know the full extent of their partner’s finances before making the decision to waive the right to the elective share.

While waiving the spousal elective share is possible it is difficult to do correctly. Beyond the three requirements, the agreement should be drafted by a competent attorney, it should be clear as to what the spouse is waiving, and the waiving spouse should be informed that they allowed to seek outside council from another attorney if they are having doubts or experiencing confusion regarding the agreement.

Probate Series Part III: Informal v. Formal

Tuesday, September 18th, 2012

The adoption of the Massachusetts Uniform Probate Code (MUPC) in Massachusetts has created many changes in the rules and procedures of estate administration. One of the main changes in the area of probate is the split between the formal and informal probate processes. Where there was once just probate, there are now two forms of estate administration and the use of either one will depend largely on the size of the estate and the complexity of its administration.


As the name indicates, informal probate is the less complicated form of estate administration under the new law. It allows for the administration of a will and the distribution of assets according to that will with little to no court intervention in the process. On the other hand, formal probate is used when the probating of a will is more complex, the estate is relatively large, or there are issues that need to be decided by a probate judge. Because of the added court participation, formal probate is usually a longer and more costly route.


One of the benefits of the MUPC is the ability to shift from one form of probate to the other. If a complication arises in the administration of an estate in informal probate, it can shift to formal probate in order to remedy the situation and then return to informal once it is resolved. Likewise, if an estate starts in formal probate and all issues involved have been settled, the estate can be moved into informal probate for the duration of the administration of the estate.

Wills Part IX: The No-Contest Clause

Tuesday, September 11th, 2012

As mentioned in the last two parts of this weekly series, will contests are an annoying and potentially costly consequence of improper execution or the creation of a pretermitted heir. There are a few ways to help limit the possibility of a will contest, the simplest and most straight-forward being the no-contest clause.

No-contest clauses, also know as in terrorem clauses, can be used to dissuade will contests by establishing penalties for those who would consider making such contests. These penalties can include the complete revocation of any devise made to a beneficiary if they decide to institute a will contest.
Of course, for a no-contest clause to work, you must “bait the trap,” so to speak. For example, if you completely disinherit a child from your will, it may make sense for him to challenge it. If he succeeds in having the will thrown out he may inherit a share of your estate through the laws of intestacy. So if you completely disinherit him, he has nothing to lose by challenging the will. But if you leave him a small amount in your will – you decide based on the circumstances what constitutes small – he actually does have something to lose by challenging the will. He may decide to simply take the amount you have left him and forego challenging the will.

For more information regarding will contests refer to Part VII of this series, entitled “Will Contests.”

Trusts Series Part V: Pet Trusts

Tuesday, September 4th, 2012

Over the past several decades the issue of caring for pets after the death of their owner has arisen in the field of estate planning. People often worry about how their pets will be cared for after they pass, and this can lead them to make unusual estate planning decisions. Perhaps the most famous case of over-the-top pet planning involved Leona Helmsley and her Maltese dog, Trouble.


Ms. Helmsley, an incredibly wealthy businesswoman, left a $12 million trust fund to be used to care for Trouble. This amount was eventually lowered to $2 million. While noteworthy and maybe even comical, this is an excellent example of the love that people have for their pets and the lengths that they will go to in order to provide for them.


The average person does not have the means to create a $2 million trust to care for their dog, but that does not mean that a pet trust is not permitted. Massachusetts has no official statutes relating to the creation of a trust for the care of a pet after its owner’s death.  However, this does not prevent the creation of one.


The creation of a pet trust may still be accomplished so long as the property held by the trust is not of an unreasonable amount and the provisions in the trust make it clear that the funds within the trust are to be used for the care and comfort of the pet. It would also be beneficial to name a trustee who is fully aware of the provisions in the trust and is willing to take the pet into his or her home after you have passed.

Wills Part VIII: Disinheriting and the Pretermitted Heir

Tuesday, August 28th, 2012

Family relations are not always congenial. Because of this, there will be times that a testator will want to write a person out of his will. The intentional exclusion of a person from a will is called disinheriting. Disinheriting a person in a will excludes them from receiving any portion of the testator’s estate. Disinheritance can often lead to a will contest by the disinherited party. For more information regarding this please refer to Part VII of this series, entitled “Will Challenges.”

Whether intentionally excluded or merely forgotten about, a person who is not named as a beneficiary under a will, but would have received through intestacy, is called a pretermitted heir. In most cases, this pretermitted heir will either be a child or a spouse. Under Massachusetts law, a spouse who is intentionally disinherited in a will may choose to receive the elective share. The elective share is a portion of the estate which is calculated based on the overall size of the testator’s estate. This elective share is calculated and then given to the spouse prior to the distribution of the rest of the estate established by the will.

Probate Part II: The Probate Estate

Tuesday, August 21st, 2012

This part in the series will focus less on what is in a decedent’s probate estate and more on what isn’t.


As a general rule, anything devised through a will, or given through intestate distribution is considered the probate estate, but there are certain transfers that avoid this distinction. These transfers include:


  1. Trusts – trusts made during the decedent’s lifetime can be used as instruments of probate avoidance and any asset or property placed in the name of that trust can be transferred according to the wishes of the decedent. For more information regarding trusts please refer to the Trusts Series of this blog.
  2. Marital Property – generally, property owned jointly with a spouse will automatically transfer directly to the surviving spouse without the need to pass through probate.
  3. Payable on Death Accounts (PODs) – accounts containing POD provisions will be automatically transferred to the beneficiary named in that provision once proof of death of the original owner of the account is furnished to the financial institution.
  4. Life Insurance Proceeds – much like PODs, life insurance proceeds will automatically be paid to the named beneficiary as soon as proof of death of the insured is furnished.


These represent just a few examples of the types of transfers and will-substitutes that automatically avoid probate. The utilization of these instruments, as well as other estate planning tools can be a powerful way of avoiding the probate process.