Frank W. Streng, Esq. Partner McCarthy, Fingar, Donovan, Drazen & Smith, L.L.P. 11 Martine Avenue White Plains, NY 10606-1934 914-946-0134 (fax) 914-946-3817 ext. 256 (voice) e-mail: fstreng@mfdds.com web: www.mfdds.com	Gary E. Bashian, Esq. Partner Bashian, Enea & Sirignano 235 Main Street White Plains, NY 10601 914-946-5100 (voice) 914-946-5111 (fax) e-mail: garybashian@aol.com
Joseph M. Accetta Esq. Law Assistant Surrogate's Court 140 Grand Street White Plains, NY 10601 914-995-3727 (voice) e-mail: jaccetta@courts.state.ny.us

Westchester County Bar Association – Trusts & Estates Section

Strategies for Avoiding a Will Contest . . . But Winning if you Can’t

June 10, 2002

A. What is Defensive Estate Planning?

· Attorney’s Perspective

· Ethical Considerations

· Attorney-Client Privilege

· Who is your client

· Actual or Potential Conflict of Interest

· Irreconcilable conflicts of interests

· Reconcilable conflicts of interests

· Exoneration by multiple clients with full disclosure

· Engagement Letters

· Ethical considerations

· Financial considerations

· Representing One or More member of “Dysfunctional” Families

· Dysfunctional – Webster defines it as “impaired or abnormal functioning”

· Examples of Dysfunctional Families

· “Bad families with No Parental Control”: No one likes each other, including the parents

· “Bad families with Parental Control”: No one likes each other, but the parents are able to require members of the family to act with propriety and respect

· Good Family with Bad Marriage: Children seem to respect each other, but parents hate each other

· “Good Families that are Broken through Divorce”

· “Good Families that are Broken through Remarriage (with children from second marriage)

· “Good Families that are Broken through Remarriage (without children from second marriage)

· “Good/Bad Families” on the Death of the Survivor Parent: Throw out the Family Rule Book and Become Super Dysfunctional

· “’Good Families” that have Very Good Actors in which One or More members Hate Each other

· Client’s Goal: Hiring you to protecting integrity of client’s decisions in estate plan (e.g., preparing will where client cuts out distributees or makes so-called unequal distributions)

B. Representation of Client in Different Factual Scenarios and Options for Counsel

1. Scenario #1. Dad is deceased and Mom, age 78, is in poor health and has 4 children. #1 child, who is 1 of 4 children, is closest to Mom, both physically and emotionally. Mom wishes to give all of her property to #1 child, and you are engaged by Mom but #1 child arranges for the initial meeting.

:

· Your engagement as counsel

· Separation between Mom and #1 child

· Attorney-client privilege

· Joint representation issues

· Diligence in legal work

· Detailed interview with memoranda

· Detailed description of assets and liabilities

· Discussion with client as to nonprobate assets, including joint assets and intentions of client as to whether #1 child is the intended beneficiary of joint account

· Note: POA account v. joint account; joint account v. Totten trust account

· Obtaining copies of existing and prior wills/trust agreements/power of attorney forms/health care proxies

· Satisfying yourself that client has capacity and is not subject to undue influence

· Sending drafts of instruments with letters of explanation

· Dealing with Mom, and Mom alone, as to drafts and redrafts

· Supervision of execution

· No shortcuts

· Exclusion of #1 child from room for will execution

· Other estate planning

· Living will/health care proxy

· Durable power of attorney

· Revocable trusts

· Attorney’s Perceived Resistance of Revocable Trusts

· Client’s perspective: attorneys have self-interest in assuring probate through earning a huge percentage fee in estate

· Client’s Misperceptions

· Revocable trusts always avoid probate

· Assets cannot pass through revocable trust unless asset is transferred to trust

· Revocable trusts avoid estate and other taxes

· Tax neutrality of revocable trusts

· Advantages of revocable trust re procedural and substantive obstacles to “will contest”

· Revocable trusts as “continuing” will

· Effect of client managing financial matters through all-inclusive features of brokerage account for trust

· Mechanics of Creation of Trusts – EPTL 7-1.17

· To be effective lifetime trust must be in

o Writing

o Executed by the creator and at least one trustee

o Acknowledged or executed in the presence of two witnesses

· Grantor can be sole trustee

· Oral trusts not recognized in statute

· Amendment/Revocation is effective if in

o Writing

o Executed by the person authorized to amend or revoke

o Acknowledged or executed in the presence of two witnesses

o Notice of amendment or revocation shall be delivered to at least one other trustee

§ Effective date the date of execution

§ Failure to give notice does not make invalid

§ No liabilities for actions of trustee prior to actual notice

· Funding of Lifetime Trust

o Valid as to assets transferred to trust

o Transfer is not accomplished by “recital of assignment, holding or receipt in the trust instrument:

o Transfer is accomplished through “written assignment describing the assets with particularity” or, in the case of “real estate, stocks, bonds, bank and brokerage accounts and the like” a recording of deed or “completion of registration of the asset”

· Additional procedural obstacles for challenging validity of revocable trusts, or transfers to trusts

· Contrasts of Will Contests v. Trust Contests

· Lack of identified procedural remedies in trust contests

· Challenging client’s capacity in execution of documents that results in transfer to revocable trusts

2. Scenario #2. Same facts as 1 above. But now, after you have engaged in initial work for Mom on Will, Power of Attorney, Health Care Proxy, Mom may be mentally incompetent and #1 child retains you for “Medicaid Planning” and related services

· What is Medicaid planning

· Planning to assure that Mom becomes eligible for Medicaid and that part or all of Mom’s assets is sheltered from payment to health care providers/nursing home

· Planning Options

· Conventional (if Mom competent to act on her own):

· Rule of halves: making outright gifts through use of prescribed monthly rate – Westchester rate for 2002 is currently $7,138 per month

· Possible transfer of residence with retained life estate

· Tax consequences for planning recommendations

· Options on “gifting” to #1 child

· Outright v. trust

· Nonprobate: Joint v. Totten trust

· If Mom not competent to act on her own

· Does the durable power of attorney form have gift powers beyond statutory form (i.e., gift tax exclusions)?

· If gift powers exist, can #1 child, as agent, make gifts to herself

· If gift powers do not exist, extra legal options for family unit acting together

· Medicaid planning under Article 81

· Interrelationship with Will Contest, Medicaid Planning and Article 81

· Medicaid Planning

· Did Mom transfer assets to #1 child with the intention of gifting assets to child?

· Was #1 child acting as a type of agent, thereby encouraging other children to commence proceeding against child?

· Preparing Will/Revocable Trust Agreement for Client with Diminished Capacity and/or Client who is the subject of Article 81 proceeding

· Same considerations as above for estate plan

· Video type Will/Trust Executions

· Possible Use of Psychologists/Psychiatrists/Other Medical Providers to Establish Client’s Capacity

C. How to Win a Will Contest: Perspectives of Petitioner, Objectant and Court

· Petitioner’s Perspective

· Petition for probate and for Preliminary letters

· Requirements for Attorney-Fiduciary under SCPA 2307-a

· Issuance of citation

· Need for appointment of Guardian ad Litem for persons under a disability

· Marshalling of assets and other matters incident to estate

· Objectant’s Perspective

· Petition for temporary letters (SCPA 901)

· If preliminary letters granted, consider a petition to revoke

· if Will is facially (arguably) improper

· if proper grounds under SCPA 711 or 719

· If preliminary letters not sought, then possibly seek temporary letters

· Petition to compel production of Will (SCPA 1401) for prior instruments

· Pursuant to SCPA 1412(4)(b), take whatever actions necessary to make sure that “papers and records of the decedent” are properly preserved by the preliminary executor

· Options on Return date of Probate Citation

· Objectant’s Perspective

· Conduct examination of attesting witnesses pursuant to SCPA 1404

· Defer date for objections to probate until conclusion of examination of witnesses

· Permits attorney and client to make studied decision as to whether to object to probate

· If there is an in terrorem clause (EPTL 3-3.5), puts off decision as to possible forfeiture of client’s interest that may be caused by unsuccessful objections to probate

· Pursuant to local rule of Surrogate's Court, Westchester County, expense of transcripts of examinations of witnesses are paid by estate

· Defers other CPLR discovery devices until after objections are filed and issue is joined

· 1404 examinations are to take place at Surrogate's Court pursuant to Rule 207.28, unless the Court otherwise provides; and usually cannot be conducted until personal jurisdiction is complete

· File objections to probate and to the issuance of letters

· Grounds for objections to probate of will

· Due execution

· Consider not filing objection if it cannot be arguably supported based upon 1404 examinations

· Testamentary Capacity

· Fraud

· Undue Influence

· Demand for jury trial

· Permits immediate use of CPLR discovery devices

· Objectant generally pays for transcripts of depositions, including examinations of attesting witnesses

· Objections to issuance of letters

· Grounds generally under SCPA 711 and 719

· For Attorney-fiduciaries, see SCPA 2307-a

· If there is a person under a disability adversely protected by the Will and represented by a Guardian ad Litem (GAL), work closely with GAL

· Consider options as to status of parties, e.g., is the spouse a distributee or not?

· Petitioner’s Perspective

· Make sure probate proceeding is aggressively prosecuted

· Interview attesting witnesses and make sure they are available for SCPA 1404 examinations

· If you want to expedite the proceeding, seek a discovery order

· If you have not yet gotten preliminary letters, seek them

· Make sure that your client is doing his/her/its job as fiduciary, i.e., ignore Will contest and administer the estate

· Make sure records of the decedent are preserved

· If a beneficiary under contested Will is also a petitioner, make sure that, at all times, your client is acting properly

· Court’s Perspective

· Notice of Objections Filed: Before discovery can begin, a citation for notice of objections filed must be obtained from the Court and served upon all beneficiaries under Will whose interest are adversely affected by objections (SCPA 1411; Rule 207.27); conduct discovery after return date of citation

· Document production

· Pursuant to local rule, duces tecum subpoenas for medical records are returnable at Surrogate's Court