Common Estate Planning Disputes

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 Common Estate Planning Disputes

Estate planning disputes arise when an estate plan, articulated in a last will and testament, is executed, following the death of the owner of the estate (the “decedent”). Sometimes a dispute may come up during the planning of the estate. In either case, it is important to have a solid estate plan.

A complete estate plan should cover all the details of a person’s assets and reflect careful thought. Of course, circumstances can change and they may not be reflected in the estate plan. However, it is still important to try to create an estate plan that allows for adjustments if there are changes in a person’s life.

Despite good estate planning, there is still the possibility that disagreements will develop. Below are some of the types of disagreements regarding an estate that are seen more frequently:

  • Disputes over property distribution:
    • For instance, disputes can develop when the decedent expressed an intention to change a last will and testament or other document so that a certain person would receive certain property, but did not in fact change the documents to reflect their changed intentions;
    • Conflicts where the beneficiaries of assets in a will believe that the assets have been distributed unequally or not as expected by certain parties;
  • Disputes as to the validity of a will or the estate plan: For example, interested parties may claim that the will was not made or executed properly;
  • Conflicts with the estate executor or administrator:
    • An executor is the person appointed by a court to manage an estate and effect the plan as provided in a will or other relevant documents after a person passes away. Conflicts may come up because the executor engages in some form of mismanagement of the estate, including possible fraud;
    • Some interested parties may be dissatisfied with the executor and the manner in which the executor was chosen;
  • Issues involving sudden incapacitation or disability on the part of the decedent:
    • An interested party may allege that the decedent was coerced into making a change to their will by someone exerting undue influence; or
    • An interested party may allege that the decedent in general did not understand what they were doing when they made their estate plan or changed it, because they were not competent.

There are certain types of family issues that can cause disputes during the execution of the estate plan. Rivalries among siblings and later marriages of the decedent can cause disagreements among the various parties who stand to inherit or believe they should and someone else should not. Adult children may be dismayed if a sizable bequest is left in a will to a later spouse who is not their mother or father. Also, some siblings may believe that those mentioned in a will, and those who are not, have not been treated as the decedent wanted.

A decedent’s last will and testament often provides for how much of the decedent’s estate is to be distributed, but a will is not the only instrument of estate planning. Many issues of distribution can be managed through means other than a written will. Planning how to make good use of other financial instruments and tools can be part of a good estate plan.

For example, some of the following are instruments for passing certain kinds of property outside of a will:

  • Life insurance: The proceeds of life insurance policies pass directly to named beneficiaries and not through a will;
  • Annuities: With an annuity, the owner can designate a beneficiary and whatever remains of the annuity passes to the designated beneficiaries upon the owner’s death;
  • Bank accounts POD: A person can set up their bank accounts, checking, savings, money markets, CDs and savings deposits so that named beneficiaries receive the money in the account upon the death of the owner;
  • Investment accounts TOD: Comparable to bank accounts that are POD, investment accounts can be set up so as to transfer upon death (TOD). Again the owner designates beneficiaries for stocks, bonds and brokerage accounts and the assets in these accounts transfer to designated beneficiaries upon the death of the owner;
  • Property held as joint tenancy: Married couples often own their primary residence as a joint tenancy with the right of survivorship. This means that upon the death of one spouse, the other becomes the sole owner and there are no tax or other financial consequences. Any number of people of any relationship can own property in joint tenancy, not only married couples;
  • Living trust: The assets in a living trust also pass directly to the designated trustees and are not governed by a will. Remember, however, that if a person makes a living trust the beneficiary of other assets, such as IRA and 401(K) accounts, the details must be worked out for each type of asset, because, for example, the IRAs and 401(K) accounts must have beneficiaries that are real people and not a trust.

What Are Some Remedies for Estate Planning Disputes?

There are a variety of possible remedies for the disputes and disagreements listed above. It will depend on the particular dispute. It may also depend on who is involved. There are likely to be a number of parties to any dispute over the will, because there may be multiple inheritors interested in the outcome.

Some commonly used remedies for estate planning disputes may include the following:

  • Removal of the executor: In the case of a dispute involving the executor, it may be necessary to have the executor removed by the court and replaced with someone on whom the parties agree. It can be challenging to find an executor with whom none of the interested parties are dissatisfied. A neutral third party can be a good choice, someone who does not stand to inherit;
  • Litigation of the will dispute: In order to do this, a person must have standing, or be listed as one of the inheritors of the decedent in their will or otherwise have grounds in law for making a claim. Litigation may result in:
    • An award of damages: A party may receive monetary damages if they can prove they have experienced a financial loss because of mismanagement of estate moneys, or some other issue;
    • Redistribution of property: In the event that property was incorrectly distributed, a court may rule that it should be distributed again correctly, according to the wishes of the decedent as laid out in their will or other controlling documentation;
  • Elective Shares: If one spouse leaves another spouse out of their will, the spouse who was left out can file with the Probate Court for an elective share of their spouse’s estate. This does not make the entire will invalid. But it does mean that the spouse will still be able to claim a share of the estate.
    • In North Carolina, for example, a spouse who takes an elective share will get a percentage of the estate based on the length of the marriage. The spouses of marriages that lasted for 5 years or less will get a smaller share. The spouses of marriages that lasted more than 15 years get the maximum share allowed by law. This type of resolution is a matter of state law and the law varies from state to state, but most states make some kind of similar allowance for spouses who are disinherited in the wills of their partners;
  • Mediation: Mediation is an alternative dispute resolution process that is increasingly popular for resolving disagreements. A neutral third-party mediator is selected, possibly by a court or executor and the mediator holds a meeting of the interested parties. Hopefully, the parties work out a resolution that is universally acceptable.

It may be possible to resolve a dispute in an informal manner. Sometimes lawyers talking on behalf of clients can negotiate resolutions that are acceptable to all parties. This kind of resolution may be faster and less expensive than a mediation or lawsuit. This, of course, may be more likely to work when the dispute is fairly minor.

Do I Need a Lawyer for Assistance with Estate Planning Matters?

An experienced estate planning lawyer can help avoid disputes by setting up a sound estate plan. When considering the distribution of one’s property following death, it is important to be thorough and consider the range of assets in the estate. If a person passes away without a will and without estate planning, the distribution of their property is left to the law of the state in which the person resided and the probate court. This can result in a very unsatisfactory end, especially in the case of larger, more complex estates involving large amounts of valuable property.

Good estate planning can help avoid disputes and a distribution of assets that is less than satisfactory. You may want to hire an estate planning lawyer to help you plan how your estate should be distributed. The attorney is thoroughly informed about estates, wills, trusts and other means of passing property after death in the state where you live and can devise a plan that meets your particular needs.


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