Should You Destroy Previous Wills?

Posted on June 8, 2011 by Bryan Howard

A previous article discussed the subject of maintaining your original Will in a safe location. A related question is whether you should destroy prior versions of your Will.

There are at least two very good reasons for destroying prior versions of your Will. First, beneficiaries who received a greater bequest under a prior Will might see your prior Will and have their feelings unnecessarily hurt. Or worse, they may decide to challenge the later Will.

The second reason for destroying prior Wills is to eliminate potential confusion. One decedent whose Estate I represented left numerous holographic wills, some of which did not have a date. In addition to uncertainty over which Will had been executed last, there was some concern that he lacked testamentary capacity when he prepared some of his Wills. Beneficiaries who would have fared better under prior Wills were active participants in protracted litigation regarding his Estate. If prior versions of the Will had been destroyed, the beneficiaries who were eliminated by the latest Will would not have known that they had been named in previous Wills.

There is one circumstance where it is advisable to maintain the most recent version of your Will. If there is any potential that one or more persons will challenge your Will, maintenance of the prior Will may be helpful, especially if the challenger fared no better under the prior version of your Will. I have been involved in two lawsuits involving disinherited children where the prior Will was useful. The disinherited children claimed that their parent either lacked testamentary capacity, or was unduly influenced by their siblings to prepare a Will that disinherited the child. In both lawsuits, the decedent had instructed their attorney to hold on to the prior version of their Will. In both cases, the decedent had made a conscious decision to disinherit a child due to their disappointment with the child. These decisions had been made when there was no question about the parent’s legal capacity. The maintenance of the prior Will made it easier to ward off the challenge by the disappointed child. If the original of the prior Will had not been maintained, there would have been a strong presumption that the prior Will had been destroyed or revoked. Fortunately, the original of the prior Will was produced. Because the prior Will also disinherited the child, the court did not even need to consider the disinherited child’s claim.

In summary, if there is any potential of a Will challenge, you should consider instructing your estate planning attorney or another trusted advisor to maintain the original of your prior Will. You should give them instructions to produce the Will only in the event of a Will challenge. If there is no potential for a Will challenge, you should destroy prior Wills in order to avoid potential confusion and hurt feelings.
 

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Tax Relief Act of 2010 - Part 7 - Making Gifts to Tennessee QTIP Trusts

Posted on June 3, 2011 by Bryan Howard

This is the seventh article of a series dealing with the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“Act”). For the first six articles, see:

Part 1 – Charitable IRA Rollovers
Part 2 – Estate Tax/Carryover Basis Election for 2010 Decedents
Part 3 – Temporary $5 Million Estate Tax Exemption
Part 4 – Temporary $5 Million Gift Tax Exemption: Use it or Lose It
Part 5 – Gifting Without Making Yourself a Pauper
Part 6 – Making Gifts Without Paying Tennessee Gift Taxes

Part 5 discussed methods for maintaining access to cash flow from gifted assets. Part 6 discussed methods for avoiding Tennessee gift taxes. This article will discuss a method for combining the concepts discussed in Parts 5 and 6.

A Tennessee QTIP Trust allows you to make a completed taxable gift for federal gift tax purposes without paying Tennessee gift taxes. The reason you do not pay Tennessee gift taxes is because the trust qualifies for the Tennessee gift tax marital deduction. This is not a new technique. We have been using it for 12 years. There has always been a difference between the federal gift tax exemption and the Tennessee gift tax exemption. However, due to the higher federal gift tax exemption, we plan to establish more Tennessee QTIP Trusts in 2011 and 2012 than all prior years combined.

Another appealing feature of a Tennessee QTIP Trust is the spouse’s access to cash flow from the trust. A lot of our clients would make no gift at all or would make a much smaller gift if they could not obtain access to cash flow.

Tennessee QTIP Trusts do not provide cash flow for your children.  If one of your objectives is to increase cash flow for your children, you should consdier other techniques, perhaps in conjunction with a Tennessee QTIP Trust.

In summary, if you would like to take advantage of the temporary $5 million federal gift tax exemption but are unwilling to pay Tennessee gift taxes or need to maintain indirect access to cash flow, you should consider establishing a Tennessee QTIP Trust.
 

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Where Should You Keep Your Original Will?

Posted on June 2, 2011 by Bryan Howard

I highly recommend that my clients keep their original Will in their lockbox because the original must be located in order to probate the Will. It is possible to probate a copy of the Will. Generally, you can only probate a copy if no one objects.

If the first person to find your Will does not like its provisions, they might “lose” the Will because they will fare better if you do not have a Will. If the Will is lost, those who would have fared better will find it very difficult to overcome the presumption that the Will was revoked.

The attached case of two stepchildren against their stepfather, Janice Davis Boelter and Richard Davis v Jackie Curtus Reagan et al, demonstrates the problem. The decedent’s will gave her entire estate to her two children, leaving nothing for her husband (who was not the father of her children). After her death, her children were unable to find her Will, which had been executed 16 years prior to her death. The Will may have legitimately been lost. However, it is also possible that her second husband found the original Will and discarded it because he didn’t like its provisions.

Because the children were unable to locate the original Will, the estate was administered as if the decedent did not have a Will. This meant that the husband received a significant share of the Estate.

I have been involved in another case where a Will could not be found. There was a suspicion that the Will had been fraudulently destroyed by a person who had access to the decedent’s records after the decedent had become mentally incapacitated. No one could prove that the Will had been fraudulently destroyed because it is very difficult to prove a negative.

So what should you do with your original Will? Assuming you choose to keep your own original, you should put it in a lockbox and not allow those who would fare poorly under the Will to have access to your lockbox. Some of my clients leave their original Will with a trusted advisor such as a CPA, attorney or banker.  In addition to making sure that your original Will is retained in a safe location, you should periodically confirm that your original Will is still where you want it to be.

Another possible solution is to use a funded Revocable Trust as the document that disposes of your assets following your death. An original of your Revocable Trust does not need to be produced for any reason. A copy of the Revocable Trust will suffice to allow your successor Trustee to distribute the assets in the trust, even if the original cannot be located. 

The reason for having a Will is to make sure that your assets are distributed in accordance with your wishes.  It would be a shame for your plans to be thwarted due to a lost Will.
 

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