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Monthly Archives: May 2016

Add Probating Your Will to Your Bucket List

Susan G. Thatch, Ante-Mortem Probate in New Jersey—An Idea Resurrected?, 39 Seton Hall Legis. J. 331 (2015).

Ante-mortem probate addresses a glaring deficiency with the post-mortem probate model prevalently used in the United States. In post-mortem probate contests the key witness—the testator—is deceased, leaving the courts with only indirect evidence of the testator’s capacity and freedom from undue influence. The relative ease with which individuals dissatisfied with the testator’s choice of beneficiaries may manipulate this indirect evidence encourages spurious will contests. In ante-mortem probate the testator executes a will and then asks for a declaratory judgment ruling that the will is valid, that all technical formalities were satisfied, that the testator had the required testamentary capacity to execute a will, and was not under undue influence. The beneficiaries of the will and the heirs apparent are given notice so they may contest the probate of the will. In addition to providing greater certainty to the testator of the will’s validity, the procedure makes will contests less likely. But ante-mortem probate is not without its price: The ante-mortem process may be extremely disruptive to the testator and the testator’s family. The testator may not wish to disclose the contents of the will nor to face the potential embarrassment that may occur if testamentary capacity is litigated. It involves additional costs and may raise due process and conflict of laws problems.

Susan G. Thatch’s article concisely discusses the advantages and disadvantages of implementing an ante-mortem probate statute in New Jersey and, by analogy, in any state. The article focuses on the debate of whether allowing ante-mortem probate is useful to testators or harmful to families by reviewing the ante-mortem probate model currently used by five states, as well as other models which scholars have suggested. The article takes the view that if the suggested statute is implemented, it should supplement instead of supplant traditional probate options already available to New Jersey citizens. Figuring out the best way to ensure peace of mind for the testator while fully considering the arguments for and against an ante-mortem probate statute forms the foundation of the article.

The article describes three principal models suggested for successfully structuring and implementing ante-mortem probate—the contest model, the conservatorship model, and the administrative model. Although all currently enacted state enabling statutes adopt the contest model, Ms. Thatch explains how each of the models operate and the benefits and disadvantages of each one. Overall, all of the models allow a court to determine if “the testator had adequate testamentary capacity and was free from undue influence” while the testator is still alive. The difference between the models is the extent to which beneficiaries and heirs are required to be notified and represented. By examining both the model currently used and those suggested by scholars, Ms. Thatch provides a comprehensive look at how New Jersey could structure its statute.

Ms. Thatch then analyzes the statutes in the five states where ante-mortem statutes is available—North Dakota, Ohio, Arkansas, Alaska, and New Hampshire. All of the states have statutes based on a variation of the contest model. Ms. Thatch acknowledges that North Dakota, Ohio, and Arkansas, states that have allowed ante-mortem probate since the 1970s, have reported a low usage of the ante-mortem probate procedure. However, Ms. Thatch explains that North Dakota and Ohio practitioners reported that it was valuable to have the statute available.

The article addresses how implementing an ante-mortem procedure in New Jersey would help practitioners have a valuable probate tool available to them. Although Ms. Thatch describes the current alternatives available to safeguard a testator’s intent, such as video-recording the will execution ceremony, creating an inter-vivos trust, using an inter-vivos transfer, and adding a no contest clause, the article explains why all of these options are not enough to ensure that the testator’s capacity will not be contested or that a beneficiary or heir will not claim undue influence.

In addressing the reasons for allowing ante-mortem probate, the article mentions the risk presented by the growing demographic of elderly citizens. Elderly citizens are at a greater risk of either being taken advantage of or having guardians inappropriately allocate or dispose of assets. Testators might benefit from having these pre-death probate disputes handled by ante-mortem probate. Additionally, ante-mortem probate can help ensure that the testator’s intent is not frustrated if the testator decides to depart from “deeply held societal values” when distributing assets. However, the article also mentions that the downside of allowing ante-mortem probate is that it can create family strife. The testator can determine whether the benefits of ante-mortem probate would exceed the potential difficulties. Because there are arguments for and against ante-mortem probate, the New Jersey Law Revision Committee will take into consideration the area of law and practitioners’ opinions before deciding whether the statute would be useful to testators and practitioners in New Jersey.

As a long-time advocate of ante-mortem probate, I highly recommend this article. Ms. Thatch makes well-reasoned arguments for allowing ante-mortem probate after considering both the value the statute could provide to testators and practitioners and the implications that may arise from its use.

[Special thanks to the outstanding assistance of Elizabeth Nanez, J.D. Candidate May 2016, Texas Tech University School of Law, for her assistance in preparing this review.]

Cite as: Gerry W. Beyer, Add Probating Your Will to Your Bucket List, JOTWELL (May 25, 2016) (reviewing Susan G. Thatch, Ante-Mortem Probate in New Jersey—An Idea Resurrected?, 39 Seton Hall Legis. J. 331 (2015)), https://trustest.jotwell.com/add-probating-your-will-to-your-bucket-list/.

Honoring Decedents’ Wishes—Non-Probate Devices Included

Melanie B. Leslie and Stewart E. Sterk, Revisiting the Revolution: Reintegrating the Wealth Transmission System, 56 B.C. L. Rev. 61 (2015).

Two years ago, my friend Myra1 died of cancer. She was survived by her husband Scott and their six-year old daughter Isla, as well as her parents, siblings, and many nieces and nephews. As Scott tried to make sense of his wife’s death, he was somewhat comforted by the knowledge that her pension and life insurance would cover the mortgage and keep their daughter in the only school she had ever known—the school where her mother had taught kindergarten.

Scott’s comfort was short-lived. Although Myra did have a pension and life insurance, neither Scott nor their daughter were the beneficiaries. When Myra began working as a school teacher many years ago, she designated her mother and only nephew at the time as the beneficiaries of her life insurance and state pension. Years later, she married Scott and had a daughter together, but never updated her beneficiary designations. She simply forgot. But she also believed that because she did not have a will, Scott would inherit everything she owned and use it to take care of their daughter. She was wrong. Although Scott inherited her very modest intestate estate, her pension and life insurance benefits went to her mother and oldest nephew instead of Scott—her intended beneficiary and intestate heir.2 The family was torn apart and Isla has had almost no contact with her maternal relatives since her mother’s death.

In their article, Revisiting the Revolution: Reintegrating the Wealth Transmission System, Professors Melanie B. Leslie and Stewart E. Sterk illustrate the law’s failure to address the problems created by the proliferation of non-probate instruments. This failure has deprived intended beneficiaries, like Scott, of assets that the decedent intended them to take and has also enabled wrongful takers, including former spouses, to receive assets that the decedent clearly did not want them to have.

Many individuals hold the bulk of their assets in non-probate instruments, such as retirement accounts, life insurance contracts, payable on death (POD) bank accounts, and revocable trusts. These instruments are not governed by wills law doctrines or the default rules of intestacy—rules that aim, among other goals, to honor decedent’s likely intent. Yet, the law does little to effectuate (and sometimes even frustrates) the decedent’s intent when her assets are held in non-probate instruments. As Leslie and Sterk demonstrate, these non-probate instruments have led to a fragmented and uncoordinated wealth transfer system in which donors, lawyers, and beneficiaries often lack accurate and complete information. They have also increased both the likelihood of error when creating an estate plan and the risk that wrongful takers of assets held in non-probate devices will squander them before their rightful beneficiaries have an opportunity to claim them.

Leslie and Sterk remind us that these problems were not unforeseen. They note that thirty years ago Professor John Langbein cautioned that non-probate transfers would create some potential challenges but he was optimistic that these would be addressed by lawmakers and financial intermediaries. Yet, they have not been. Leslie and Sterk’s examination of the beneficiary forms provided by insurance companies demonstrate that these forms are rarely designed to carry out the donor’s intent. In fact, they are often downright confusing—even to experts like Leslie and Sterk. In addition, state legislators have failed to extend wills law doctrines that are designed to effectuate the decedent’s intent (such as anti-lapse statutes, revocation-upon-divorce rules, and doctrines dealing with spouses and children omitted from a will) to non-probate assets.

In Leslie and Sterk’s view, the benefits of avoiding probate are sufficiently advantageous that we should not throw the baby out with the bath water. Consequently, they focus on reforms that would allow donors to continue to transfer wealth outside of the probate process while also ensuring that non-probate transfers accurately reflect the donor’s intent. For example, they recommend the creation of statutory forms for non-probate transfers to ensure donors understand the transfers they are making. They also recommend that states require custodians of non-probate assets to notify the decedent’s spouse and children of their existence and that they wait thirty to sixty days before distributing the assets to the designated beneficiaries to ensure that they are not dissipated before the intended takers have an opportunity claim them.

Their most important proposal, in my view, is one that some states and the UPC have adopted, but not fully. Leslie and Sterk propose extending all of the wills law doctrines designed to carry out decedent’s intent to non-probate instruments. Although some states apply certain intent-furthering doctrines (like revocation-upon-divorce) to both probate and non-probate instruments, they have not extended all of these doctrines to non-probate devices. Had the rule dealing with an omitted spouse in a will (UPC 2-301) applied to Myra’s pension and life insurance, Scott would have received Myra’s entire pension and life insurance, as she wished.

Leslie and Sterk’s most controversial reform is probably their recommendation to grant executors and administrators authority to alter the decedent’s non-probate transfers when they believe the transfers would thwart the decedent’s overall estate plan. Such power risks increased litigation from beneficiaries who receive less after the executor’s or administrator’s adjustments than under decedent’s designation (as Leslie and Sterk acknowledge). It could also take us down a dangerous road that, in my view, is best avoided. It is quite challenging for neutral factfinders in a courtroom with clear evidentiary rules to determine a decedent’s wishes. I think it would be more difficult, maybe impossible, for an executor or administrator (who is often a family member or friend) to objectively ascertain decedent’s wishes even if she lacks a financial interest in the disposition of assets.

One of Leslie and Sterk’s reforms directly addresses the problem of forgetful donors. They propose creating a nationwide voluntary registration system that would list each individual’s nonprobate transfers. Anytime a registered individual (again, registration is voluntary) attempts to make a transfer, the financial intermediary would remind her about her past designations. This reminder might be all some individuals need to help them coordinate their non-probate transfers and incorporate them into their overall estate plan. Other donors, like Myra, might benefit from an annual email reminder to check their beneficiary designations to make sure they reflect their wishes.

My initial reason for selecting this article as a Jotwell read was personal as I saw firsthand how a nonprobate transfer tore a family apart. However, the reforms Leslie and Sterk recommend are sure to help carry out the intentions of countless decedents even when they chose to avoid probate.

  1. The name of the decedent and her family members have been changed to protect their privacy. []
  2. Myra was a state employee. As such her benefits were not governed by the federal Employee Retirement Income Security Act of 1974 (ERISA) which would have entitled Scott, as her spouse, to at least half her pension. []
Cite as: Solangel Maldonado, Honoring Decedents’ Wishes—Non-Probate Devices Included, JOTWELL (May 9, 2016) (reviewing Melanie B. Leslie and Stewart E. Sterk, Revisiting the Revolution: Reintegrating the Wealth Transmission System, 56 B.C. L. Rev. 61 (2015)), https://trustest.jotwell.com/honoring-decedents-wishes-non-probate-devices-included/.