When someone dies, the distribution of their assets is hopefully determined by a clear and legally binding will. If not, the assets come under control of the state, and a probate court will decide how best to distribute them.
The ways that children of a first marriage can contest a will fall into several scenarios. However, in order to do so, a person must have “standing.” Typically, a person has standing in two situations, explains nj.com in its recent article, “Can children from a first marriage contest a will?”
One way is when the individual is the decedent’s heir at law and would inherit under the laws of intestacy if the will were declared invalid. Another way a person could have standing, is if there were a prior will in which the person is a named beneficiary, and the prior will would be reinstated, if the subsequent will were set aside.
For example, in Mississippi, probate laws take blended families into consideration. If a person dies without a will and has descendants, like children or grandchildren who are not descendants of the surviving spouse, then several things would happen. The surviving spouse would inherit a child’s share of the estate. The descendants from outside the marriage would then inherit the remainder of the estate in equal shares.
Let’s say George and Gracie were married and had baby Benny. After George and Gracie divorce, George marries Phyllis. If George dies intestate—without a will—then Benny would inherit one-half of his estate. If George dies with a will, Benny has standing to challenge the validity of the will.
As a practical matter, Benny should only challenge the will, if he’d stand to inherit more under intestacy than under the will, and he has a valid challenge justifying that the will be set aside.
The four most common challenges to a will are lack of capacity, improper execution, fraud and undue influence/duress.
It’s not uncommon for will contests to be successful. However, it really depends on the facts and circumstances of each specific case. For example, Benny would have a much tougher time proving undue influence, if John and Phyllis were similar in age and married for 30 years prior to George’s death, than if Phyllis was 50 years younger than George, and he had some level of dementia.
Reference: nj.com (December 11, 2018) “Can children from a first marriage contest a will?”
When a person contests a will, they’re arguing that the will isn’t valid. A will can be contested because an individual claims that the deceased person didn’t possess the required capacity to make a will, was unduly influenced or insane, made a more recent will, or there was fraud, duress or forgery. A will can also be contested because it contains technical flaws.
The Carroll County (MD) Times’ article, “Contesting a will is difficult; only an ‘interested party’ is eligible,” explains that to be eligible to contest a will in Maryland, you must be an “interested party.” This means you’re named in the will or would have been eligible to inherit by law, if the deceased hadn’t written a will.
In Mississippi, contested wills are heard by the Chancery Court. Chancellors are tasked with hearing and deciding contested cases. They direct the actions of personal representatives (executors) and pass orders for administering an estate.
The person contesting a will has the burden of proof, meaning that she must show that the will isn’t valid. Other interested parties aren’t required to prove that the document is valid, but they may be called to testify, if they were present or involved when the deceased person made the will or signed and executed it.
Make no mistake: challenging a will is difficult. Courts regard a will as an expression of the deceased person’s wishes, and since he’s not around to tell the court, “No, that’s not what I meant,” judges are hesitant to make changes in the will as written.
This is a good reminder to be certain your will says what you want it to say. If it doesn’t, work with a qualified estate planning attorney to have revisions made or codicils (additions that modify or explain provisions in the will) added to reflect your intent accurately.
If a will is successfully contested, the estate is then treated as if the deceased died without a will or intestate. This doesn’t guarantee that the challenger will get some of the estate, because it’s based on where she is in the line of succession set out in state intestacy laws. If a person dies without a will, priority in the distribution of his estate will be as follows in Mississippi:
- First, to the children and the descendant’s of children who died prior to the deceased individual (Under Mississippi’s laws of intestacy, a spouse is treated like a child as far as his or her share of the estate is concerned);
- Second, to the decedent’s father, mother, brothers, sisters, and descendants of brothers and sisters who predeceased the deceased individual;
- Third, to the grandparents and uncles and aunts.
If none of the relatives listed above exists, succession continues to any blood relatives of the highest degree defined by Mississippi law.
In the event there’s no qualifying relative, the estate goes to the State of Mississippi. If the deceased was on Medicaid, the assets of the deceased may be required to be paid to the State of Mississippi Division of Medicaid.
Reference: Carroll County (MD) Times (November 23, 2018) “Contesting a will is difficult; only an ‘interested party’ is eligible”
It’s not uncommon for an elderly parent to go to the bank to add a child to his or her bank account “in case something happens to me.”
The reason why most parents do this, is to give their child access to their money during an emergency. It sounds like it should be a pretty easy process. With proper planning, it can be. However, parents should know that simply making a child the joint owner of a bank account (or investment account or safe deposit box) can have unintended consequences. Sometimes this isn’t the best solution during a family crisis.
As Kiplinger’s recent article, “The Trouble with Joint Bank Accounts ‘Just in Case’” explains, the vast majority of banks set up all of their joint accounts as “Joint with Rights of Survivorship” (JWROS). This type of account ownership typically says that upon the death of either of the owners, the assets will automatically transfer to the surviving owner. However, this can create a few unexpected issues.
If Mom’s intent was for the remaining assets not spent during the family crisis to be distributed by the terms of a will, that’s not happening. That’s because the assets automatically transfer to the surviving owner. It doesn’t matter what Mom’s will says.
Remember that adding anyone other than a spouse could create a federal gift tax issue, depending on the size of the account. Anyone make a gift of up to $15,000 a year tax-free to whoever they wish, but if the gift is more than $15,000 and the beneficiary isn’t the spouse, it could trigger the need to file a gift tax return.
For example, if a parent adds a child to their $500,000 savings account, and the child predeceases the parent, half of the account value could be included in the child’s estate for tax purposes. The assets would transfer back to the parent, and, depending on the deceased’s state of residence, state inheritance tax could be due on 50% of the account value. In some states, the tax would be 4.5%, which would mean a state inheritance tax bill of more than $11,000.
However, if Mom’s intent in adding a joint owner to her account is to give her son access to her assets at her death, there’s a better way to do it. Most banks let you structure an account with a “Transfer on Death,” or TOD. With a TOD, if the beneficiary passes before the account owner, nothing happens. There’s no possibility of a state inheritance tax on 50% of the account value. When the account owner dies, the beneficiary has to supply a death certificate to the bank, and the assets will be transferred. These assets are transferred to a named beneficiary, so the time and expense of probating the will are also avoided, because named beneficiary designations supersede the will. This is the same for pensions, IRAs and life insurance policies.
Setting up an account as TOD doesn’t give the beneficiary access to the account, until the death of the account owner. Therefore, the change in titling isn’t considered a gift by the IRS, which eliminates the potential federal gift tax issue.
There’s no such thing as a joint retirement account because IRAs, 401(k)s, annuities, and the like can only have one owner—it’s not possible to make someone a joint owner. However, if a parent becomes incapacitated, they still often would like their child to have access to all their assets, in addition to their bank accounts. The answer for these is a financial power of attorney. This is a document that lets one or more people make financial decisions on your behalf. This document should be drafted by a qualified estate planning attorney.
It is important to understand that many financial institutions require a review process of a financial power of attorney appointment. The bank’s legal department may want to review the document before allowing the designated person to make transactions. This can take several weeks, so be sure that all financial institutions where you have accounts have a copy of your executed financial power of attorney. Have it in place before it’s needed.
Talk to your estate planning attorney about what you’re trying to do and let her guide you. Planning in advance will make things much easy for your loved ones, in case of an emergency.
Reference: Kiplinger (November 14, 2018) “The Trouble with Joint Bank Accounts ‘Just in Case’”