Friday, July 13, 2012

The Spendthrift Clause

Question: My son is mired in debt, ex-wife, the whole 9 yards. I wish to leave him money in my estate but fear it will just go to his creditors. How do I leave something for my son in my last will? Or do I need a trust? Tom (Tampa, FL USA)
Tom, you are facing a rather common situation in today's world. You are correct to be concerned about leaving a bequest to your son in your last will. The typical method for dealing with this situation is to create a testamentary trust in companion to your last will. The bequest to your son shall be made not directly to him but, rather, to the trust created for his benefit. The trick is to draft the trust in such a fashion that your son's creditors cannot reach the assets of the trust. This is generally done with a spendthrift clause, which "restrains both voluntary and involuntary transfer of a beneficiary’s interest". Florida follows the Uniform Trust Code in regard to the enforceability of spendthrift clauses against creditor collection actions. Of particular note in your case is Florida Trust Code Section 736.0503, Exceptions to spendthrift provision. Subsection (2)(a) grants an exception to the enforce of a spendthrift clause against a "beneficiary’s child, spouse, or former spouse who has a judgment or court order against the beneficiary for support or maintenance." If you son's ex-spouse has a judgment for either child support or spousal support, she will be able to obtain "an order attaching present or future distributions" from the trust. I hope the foregoing has been helpful. Please seek further advice for a local attorney.

Tuesday, September 6, 2011

Resident of Ohio, Vacation Property in Minnesota--Two wills?

Question: I previously executed a will that only disposes of my vacation home in Minnesota. I now wish to execute a will for all my other property. Can I have two separate wills, one for the Minnesota property and another for all my other property?
Answer: When revocable trusts are used to pass on testator's property after death (also known as a living trust), it's not uncommon to create separate living trusts for various parcels of real property owned by the testator. However, separate wills is not standard. Most last will forms (such as the sample last will at explicitly revoke all prior last wills. I see no reason to have two separate wills under the facts related above. The only fact pattern I have run across where it is common for a testator to have two wills is the situation where he or she lives in the United States but owns real property outside of the United States.

Under the fact pattern given in the question, the typical setup is for the testator to create one will disposing of all property. At death where a decedent who lives in one state but owns real property in another, two probate estates are created: one in Minnesota just for the real property decedent owned in that state and a second estate in Ohio for the remainder of decedent's property. The fact that the will was executed in Ohio (i.e., the decedent's state of residence) according to that state's probate code will not prevent its admission into probate court in Minnesota for disposition of the real property in that state.

Wednesday, August 24, 2011

Probating A Will Executed In Another State

Question: My mom is a resident of North Carolina. She is visiting me in New York. She is not feeling well and is also 96 years old. I have her will from Florida, where she used to live, do I need a new will for North Carolina?
Answer: The requirements for execution of a last will are nearly identical in both Florida and North Carolina as both statutes are based upon the Uniform Probate Code.
Florida: Section 732.502 Execution of wills.--Every will must be in writing and executed as follows:
(1)(a) Testator's signature.--
1. The testator must sign the will at the end; * * *
(b) Witnesses.--The testator's: 1. Signing, * * * must be in the presence of at least two attesting witnesses.
(c) Witnesses' signatures.--The attesting witnesses must sign the will in the presence of the testator and in the presence of each other.

North Carolina: Section 31‑3.3. Attested written will.
(a) An attested written will is a written will signed by the testator and attested by at least two competent witnesses as provided by this section.
* * *
(c) The testator must signify to the attesting witnesses that the instrument is his instrument by signing it in their presence or by acknowledging to them his signature previously affixed thereto, either of which may be done before the attesting witnesses separately.
(d) The attesting witnesses must sign the will in the presence of the testator but need not sign in the presence of each other.
A written last will properly attested by two witnesses according to the laws of Florida should generally be valid in North Carolina; however, you would need to take the document to a North Carolina lawyer for a legal opinion. Some states restrict who may serve as a witness to a last will (such as disqualifying beneficiaries) but North Carolina's statute on this point is very broad. See Section 31-8.1.

Another issue is whether a will made self-proving in Florida under that state's law is admissible as such in North Carolina. A self-proving will is one admissible without further evidence and usually signifies that the testator and witnesses' signature on the document are attested under seal by a notary. The generic format for a North Carolina self-proving will is found in Section 31‑11.6. I note that the suggested format in the statute has a blank for the state in which the document was executed before a notary, which leads one to believe North Carolina law envisions last wills executed in other states qualifying as self-proving in North Carolina. Again, a NC lawyer must review the document to give you a legal opinion. What is the consequence if the Florida last will does not qualify as self-proving in North Carolina? An affidavit from one or more of the witnesses to the will's execution must be located and affidavits obtained for probate of the will.

Wednesday, June 23, 2010

The Pitfall of Specific Bequests

Question: I own a valuable vintage auto that I wish to leave my nephew but only if there is enough money in my estate to take care of my wife. Can I do that with an online last will? Stan, California.
Response: When a last will bequeaths a specific item of property to a designated beneficiary, we call that a specific bequest. The problem presented by your question is that the standard language of specific bequests are that the devisee takes without any qualifiers (i.e., red corvette to my nephew James Jones). To accomplish the result you desire, the specific bequest of the vintage auto to your nephew should be conditioned on the size of the marital estate with your wife (if she survives you) being of a certain size. I'm not aware of any online last will template containing such language. The® last will form does not allow for conditional specific bequests. I suggest you retain a lawyer to custom draft this provision of your last will.

One additional trap to keep in mind with last wills is that specific bequests of an identifiable item of personal property only apply to that item (i.e., the specific vintage auto you name in the will). For instance, if you leave a 1966 red Corvette to your nephew but later sell it and acquire a 1967 Ford Thunderbird which is owned at death, the specific bequest to your nephew will not transfer from the Corvette to the Thunderbird meaning the specific bequest of the vintage auto fails under this example. See Section 2‑606 of the Uniform Probate Code.

Friday, December 11, 2009

Intestate Succession--Laws of US States

Over at my commercial website, there is a page with links and excerpts of the intestate succession laws of the 50 states plus the District of Columbia. These laws are used to determine who inherits in cases where the decedent dies without a valid will. At the bottom of the page for each state is a comment text box. Feel free to leave a question there about the intestate succession laws for that state. If there are sufficient fact stated in a concise manner, I'll try to answer the question.