Friday, December 19, 2008

Searching For The Last Will

My wife's natural father is very sick. Her relationship with him sadly was distant by his choice. He has been remarried for 14 years or so. The issue is my wife does not feel comfortable asking his spouse if the father has a will. What occurs if he passes away and nothing is said about a will. This is an uncomfortable situation at a very difficult time. Before slipping into an unconscious state the father showed great regret for his choices towards his daughter. Henry, Kentucky.
Your wife's situation is common in cases where the parent remarries. The problem is often compounded by (a) distrust between the new spouse and the children of the prior relationship and (b) a financial disincentive on the part of the new spouse to produce a will if one exists bequeathing part of the estate to others. I think it's vital that your wife ask her father whether or not he has a last will (and, also, whether she is a beneficiary) before he passes away. Perhaps he is too ill to respond at this point.

Most states have a law in their probate code compelling persons in possession of the last will of a decedent to file it with the probate court after the death of the maker of the will. A quick check of the Kentucky probate code found no such statute, however, there is a Kentucky law stating that the court, "on being informed that a person has in his custody the will of a testator, may summon him, and, by proper process, compel him to produce it." Kentucky Stat. §394.160. When the father passes away, if there is no communication from the surviving spouse, check with the clerk's office for the probate court for the county in which the father resided at the time of his death. If a will was presented for probate, that is where it would be filed. If no will is filed, I think you need some sort of information about the existence of a will and who most likely possesses it in order to seek a court order compelling production of the will.

Thursday, December 11, 2008

Last Wills And Divorce

I frequently receive questions regarding the effect of divorce upon a last will. Most states have a provision in their probate code invalidating bequests to former spouses under certain circumstances. Below are samples from three states.
Florida Stat. §732.507. Effect of subsequent marriage, birth, adoption, or dissolution of marriage.--
* * *
(2) Any provision of a will executed by a married person that affects the spouse of that person shall become void upon the divorce of that person or upon the dissolution or annulment of the marriage. After the dissolution, divorce, or annulment, the will shall be administered and construed as if the former spouse had died at the time of the dissolution, divorce, or annulment of the marriage, unless the will or the dissolution or divorce judgment expressly provides otherwise.

California Probate Code § 6122. (a) Unless the will expressly provides otherwise, if after executing a will the testator's marriage is dissolved or annulled, the dissolution or annulment revokes all of the following:
      (1) Any disposition or appointment of property made by the will to the former spouse.
      (2) Any provision of the will conferring a general or special
power of appointment on the former spouse.
      (3) Any provision of the will nominating the former spouse as
executor, trustee, conservator, or guardian.

Texas Probate Code § 69. WILL PROVISIONS MADE BEFORE DISSOLUTION OF MARRIAGE. * * * (b) If, after making a will, the testator's marriage is dissolved, whether by divorce, annulment, or a declaration that the marriage is void, all provisions in the will, including all fiduciary appointments, shall be read as if the former spouse and each relative of the former spouse who is not a relative of the testator failed to survive the testator, unless the will expressly provides otherwise.
All three of these state probate provisions only apply to situation where the testator (i.e., maker of the will) was married at the time the will was made. It is not uncommon for an individual to intentionally make a bequest to a former. So long as the last will containing the bequest to said former spouse was executed AFTER the divorce was completed, these statutes do not invalidate them. What if the the decedent filed for divorce, did not change his last will while the divorce was pending, then died before the divorce became final? For the states of California, Florida, and Texas, to my knowledge the surviving spouse against whom a divorce action was pending at death still recovers any bequest made to her in the decedent's last will.

If you are faced with a set facts in the area of divorce and last wills not discussed above, leave a comment and I'll take a look at it (no guaranty I'll come up with an answer though).

Monday, December 1, 2008

The Probate Estate, What's in and What's out?

Reader Question: Do proceeds of an insurance policy pass under the will? Kevin.

Kevin, I hope you don't mind me taking your limited question and expounding further on the issue. In the vast majority of cases, life insurance proceeds pass to the beneficiary of the life insurance policy named in the policy by the owner of said policy. Usually, but not necessarily, the owner of the policy has insured his or her own life. However, it is possible and not unheard of for the owner of the policy to name his or her probate estate as the beneficiary of the life insurance policy. In this case, and only this case, the proceeds of the life insurance policy would be paid into the probate estate and distributed pursuant to the terms of the decedent's last will. Thus, the answer to your question lies in an examination of the policy for the identity of the named beneficiary.

What other types of assets pass outside of probate? Bank, brokerage and other financial accounts including 401(k) and IRA accounts pass outside of probate if they have a beneficiary named on form filed with the financial institution (for states with laws allowing beneficiary designation on financial accounts). See Uniform TOD Security Registration Act. Real estate that is jointly owned with right of survivorship also passes at death outside of probate to the surviving joint tenant. Several US states also allow TOD transfer of items of personal property other than securities.

This sometimes comes as shock to beneficiaries of the estate of a deceased individual. Let's examine a hypothetical to get a sense of the impact that TOD designation and joint ownership with right of survivorship can have on an estate. George is 57 years of age, married to his 2nd wife. They no children together but George has three children from a previous marriage. In his will George names his three children as the sole beneficiaries of his estate. His major assets are as follows: home jointly owned with wife (equity $150k), 401(k)--$100k, $20k in savings account, and motor vehicles worth $12k.

George dies and his will is filed in probate. Real property owned jointly by a husband and wife is assumed by the law to be held with a right of survivorship. Thus, the home passes to George's wife outside of probate. Further, George named his wife as beneficiary of his 401(k) plan. In total, only $40k in assets were listed in the inventory of George's estate. The burial cost $5k. Debts existed of $3k. The probate attorneys fees and costs were $6k. Further, surviving spouse was entitled to a forced share under state law of not less than $25k. That leaves $1000 to be split three ways between George's children. The example of Estate of George is not an uncommon one, unfortunately.