10 Ways to Lawsuit-Proof Your Estate #10

FORBES Magazine online blog, The Best Revenge – by Ashlea Ebeling, has an excellent article called 10 Ways to Lawsuit Proof Your Estate that covers a lot of the advice that we at Ainer & Fraker, LLP give to our clients. Please read the entire article by clicking on the following link: 10 Ways to Lawsuit-Proof Your Estate. In our final installment, we’ll examine Part 10 – Spell out any Disinheritance

“If you’re disinheriting a son, spell it out in your will, making it clear it’s intentional. But don’t give a reason for disinheriting a child that might be challenged, particularly one a court might decide was against “public policy”. (For example, I am disinheriting junior unless he divorces his wife.) ” ~ Ashlea Ebeling, 10 Ways to Lawsuit Proof Your Estate

Ainer & Fraker, LLP Analysis The issue of disinheriting a son or daughter is an issue that requires a lot of thought and care. As stated in the article – the Disinheritance must be Intentional or the Probate Court will conclude that you didn’t really mean to disinherit your child. California’s Pretermitted Heir Statutes, found in California Probate Code Sections 21620-21623, state that, in order for the disinheritance to be effective:

The decedent’s failure to provide for the child in the decedent’s testamentary instruments was intentional and that intention appears from the testamentary instruments. (Section 21621)

This means that the same document that disinherits a child must make it clear that the disinheritance was intentional. Failure to meet this or other statutory criteria, the Court will rule that:

The omitted child shall receive a share in the decedent’ s estate equal in value to that which the child would have received if the decedent had died without having executed any testamentary instrument. (Section 21620)

In other words:  to disinherit a child, you have to (1) mean it and (2) say that you mean it in the testamentary documents. For these reasons, competent legal counsel should always be consulted before attempting to disinherit a child.

10 Ways To Lawsuit-Proof Your Estate #9

FORBES Magazine online blog, The Best Revenge – by Ashlea Ebeling, has an excellent article called 10 Ways to Lawsuit Proof Your Estate that covers a lot of the advice that we at Ainer & Fraker, LLP give to our clients.

Please read the entire article by clicking on the following link: 10 Ways to Lawsuit-Proof Your Estate.

Today, we’ll examine Part 9 – Include a “no contest” clause

“No contest clauses, also known as “in terrorem” clauses are generally valid and are an effective tool in preventing estate fights, especially if there is intrigue to start. A typical clause says that if any beneficiary of the will contests the validity of the will or any provision of the will, he of she forfeits his interest. You must leave something of value to the folks you expect to stir up trouble to make it work.”

~ Ashlea Ebeling, 10 Ways to Lawsuit Proof Your Estate

Ainer & Fraker, LLP Analysis

No Contest Clauses can be very effective in deterring an estate fight, but they must be used with caution.

In some cases, they can be used to cut both ways – helping someone take money from an estate improperly.

In one estate we are familiar with, a distant relative of Mom & Dad convinced Mom & Dad to leave 80% of the estate to them, instead of to son.  Son and Grandchildren were left only 20% of the Estate.

Son believed that this was a result of undue influence, but risked triggering the No Contest Clause if he did not prevail.

Due to recent changes in the No Contest Clause law in California, the bar to successfully challenge based on undue influence (or other direct contests) has been raised.

California’s No Contest Clause, found in Probate Code Section 21310-21315, makes it very difficult to file a direct contest without “probable cause.

Typical of the Legislature, no precise definition of Probable Cause is provided in the Probate Code.

Absent clear guidance from the Courts, it remains difficult to determine which challenges will be found to trigger a No Contest Clause, and which will not.

Competent legal counsel should always be consulted before considering the use of No Contest Clauses in Estate Planning.