By Eileen Moore
It is a common fact pattern: an aging mother has two children — a daughter who lives with her and takes her to all of her appointments, and a son who lives in another state and only sees her on holidays. Earlier in her life, the mother had a will that divided her estate evenly between her two children. But, in the year before her death, the mother decides she wants to give her entire estate to her daughter.
The daughter drives the mother to an attorney, and a new will is prepared disinheriting the son. Six months later, the mother dies. The son learns, for the first time, that he was disinherited and files a will contest claiming his mother lacked capacity to change her estate plan. The lawsuit drags out for two years. The son and daughter each offer competing medical opinions about their mother’s capacity. The best person to attest to mom’s capacity (mom) is deceased. Her son and daughter are forced to rely on the fading memories of individuals involved in her care. They both incur significant legal fees. Ultimately, there is a diminishment of their mother’s estate and an irreparable breakdown in the relationship between the daughter and the son. Stories like this can be prevented. And family counseling is not the only solution. Indeed, many states have adopted premortem validation statutes that enable testators and settlors to proactively take steps to prevent a will or a trust contest from arising after death.
Depending on the states’ laws, the premortem validation statute provides a judicial validation or a nonjudicial procedure for validating a will or a trust. Three states have judicial validation statutes applicable only to wills: Arkansas, North Carolina and North Dakota. Four states have judicial validation statutes applicable to wills and trusts: Alaska, Nevada, New Hampshire and Ohio. Finally, two states have nonjudicial validation statutes: Delaware and South Dakota.
Premortem validation may be a useful tool for any testator or settlor who suspects her will or trust will be challenged after her death. By implementing the premortem validation procedures, the testator or settlor can ensure a contest action will be brought while she is alive to defend her capacity and likely deter a meritless challenge.
In many states (including Indiana), a will or a revocable trust cannot be proved invalid prior to the death of the testator or settlor because the document is not yet final and, therefore, the issue of its validity is not yet ripe. Premortem validation statutes avoid this obstacle. Many of the statutes rely on long-established declaratory judgment laws and principals to validate a will or revocable trust. For example, Nevada’s Declaratory Judgment Act allows a testator or settlor to bring an action on any question of construction or validity.
Typically, premortem validation statutes require that a testator or settlor provide notice to interested parties, including a spouse, children and any intestate heirs. North Carolina’s judicial validation statute, applicable only to wills or codicils, requires the petitioner to “produce the evidence necessary to establish that the will or codicil would be admitted to probate if the petitioner were deceased.” If an interested party “contests the validity of the will or codicil, that person shall file a written challenge to the will or codicil before the hearing or make an objection to the validity of the will or codicil at the hearing” (N.C. Gen. Stat. Ann. § 28A-2B-1).
At this time, only two states (Delaware and South Dakota) have nonjudicial premortem validation statutes. South Dakota’s nonjudicial validation procedure applies only to trusts. Delaware’s statutes apply to wills, trusts and exercises of powers of appointment. Under both states’ statutes, an individual wishing to contest the validity of an instrument must do so within a period of time (established by statute) after he receives the instrument and other required notice. In these states, a will or trust will only be filed in court if an interested person brings an action challenging its validity. Of course, this option may be especially attractive to a testator or settlor looking to avoid the possible embarrassment of a public court action.
At this time, Indiana does not have a premortem validation statute. Indiana law, however, does provide an option to a testator or settlor wishing to discourage a will or trust contest. Effective July 1, 2018, Indiana adopted legislation permitting the enforcement of “in terrorem” (also known as “no contest”) clauses. Such clauses typically provide that a beneficiary, who initiates a proceeding to contest a will or a trust, shall forfeit the benefit which the instrument made for the beneficiary. Under Indiana law, there is an exception to enforcement of such clauses if a court finds that a beneficiary’s action was brought in good faith.
Notwithstanding the benefits of such clauses, the inclusion of such a clause may be seen by a beneficiary (who receives less than the amount he perceives is rightfully his) as a red flag that the testator or settlor was influenced to make certain distributions. Further, such a provision will not deter a beneficiary who has been disinherited. Finally, a beneficiary’s discovery of such clauses typically occurs after the testator or settlor died and, therefore, is unavailable to defend her action.
The Indiana State Bar Probate Review Committee is now considering the issue of whether Indiana should adopt a premortem validation statute. Even if such a law is adopted, it may not be a feasible option for every client. Certainly, many clients will want to avoid facing family controversy during their lives or the public nature of a legal proceeding. Regardless of whether premortem validation or inclusion of a no-contest clause is available or appropriate, estate planning attorneys should continue to utilize techniques to assist their clients in taking steps to avoid a will or trust contest.•
• Eileen Moore — [email protected] — is a partner in Ice Miller’s trusts and estates group. Opinions expressed are those of the author.