Retirement Planning Will contest: Could it happen to you?

By Eva Stark, JD, LL.M.

eople often expend significant any person who would have inherited the likelihood of success for a will time and financial resources under state law if the testator had contest. Pto put a will and overall estate died without a valid will. A challenger plan in place. Despite these efforts, may rely on a variety of legal theories. Recognizing red flags. a small percentage of wills may be For example, he or she may Statistically, few wills are contested, challenged or contested. A will argue that the testator lacked but circumstances may exist contest could tie up assets in court testamentary capacity or was that pose an increased risk for a proceedings for a long time and, if subject to delusion at the time will contest. The nature of the successful, may result in undesired the will was executed. He or she desired distribution structure and outcomes. may argue that the testator was family dynamics are important to An experienced estate planning team under undue influence or possibly evaluate. A will contest may be can help recognize the potential for even duress by a certain child, the more likely if a beneficiary could a will contest, minimize risks, and surviving spouse, or another person. view the distribution structure as ensure that assets will be distributed A challenger may argue that fraud or “unfair” or has difficulty accepting according to the intent of the forgery may have occurred, or that it as the intent of the testator. testator (the person who died leaving formal requirements for executing a This could occur if similarly a will or testament in force). valid will were not met. situated beneficiaries receive disproportionate shares, or when a While no estate plan can be made What is a will contest? distant relative or a friend who is not challenge-proof, an experienced a relative receives a larger share at A will contest is a formal attack on estate planning team may help the expense of a child or other close a will that may generally be brought recognize risks, minimize incentives relative. Generally, a will contest may by a person mentioned in the will or for potential challengers, and reduce also be likely in situations where a

SMRU 1831911 | Exp. 10/11/2021 testator has a surviving spouse and • The disposition he or she is a disgruntled relative considering children from a previous relationship, making. a challenge to the will but may also or when children may be estranged discourage unforeseeable—but from the testator, siblings or Recording the signing of potentially legitimate—challenges relatives. the will. that could arise. Even in a state The drafting attorney may where no-contest clauses are Discussing the plan with recommend that the signing of the generally enforceable, a no-contest family. will be video-recorded. Prior to clause may not always achieve its Sharing the provisions of an estate signing the will, the attorney might intended benefit. A no-contest plan with family members and ask the testator a series of questions clause will also not work against explaining why specific decisions or have the testator explain why an individual who is excluded as a were made will often make it less certain decisions were made. beneficiary under the will. Ironically, likely that a distribution scheme will Recording the signing of the will may in certain situations, a no-contest be challenged. Including provisions help prove testamentary capacity, clause may lead to additional in the will explaining certain decisions negate duress or undue influence, litigation as questions may exist as could also be considered in lieu of or and show that the document was to whether a certain challenge falls in addition to discussing the plan with properly executed. under the no-contest clause. family. No-contest clause. Proving testamentary A “no-contest” clause or “in capacity. terrorem” clause is a provision in a Where an estate plan is established will that either leaves nothing or a or changed later in life or during an nominal sum—often just one dollar— illness, it may make sense to obtain to any beneficiary who unsuccessfully proof of testamentary capacity. challenges the will. No contest The attorney drafting the will might clauses are not enforceable in certain test an individual for testamentary states as a matter of public policy. A capacity through a series of no-contest clause may discourage questions or may recommend that the client obtain a medical evaluation. This could help negate Eva Stark, JD, LL.M., joined The Nautilus Group arguments that the testator lacked in 2014 to assist with the development of estate and capacity. Although the requirements business plans. She also performs advanced tax vary by state, testamentary capacity research. Eva graduated summa cum laude with a BS in economics and finance from The University is a different and arguably lower of Texas at Dallas. She earned her JD, with honors, standard than contractual capacity from Southern Methodist University, where she and generally only requires that the served as a student attorney and chief counsel at testator be generally aware of: the SMU Federal Taxpayers Clinic. She received her • What assets he or she has; LL.M. in taxation from Georgetown University Law Center. Prior to joining Nautilus, Eva worked in • Who makes up or who is a private practice in tax controversy, business law, and member of his or her family; and litigation.

This material includes a discussion of one or more tax related topics. This tax related discussion was prepared to assist in the promotion or marketing of the transactions or matters addressed in this material. It is not intended (and cannot be used by any taxpayer) for the purposes of avoiding any IRS penalties that may be imposed upon the taxpayer. The Nautilus Group® is a service of New York Life Insurance Company. Nautilus, New York Life Insurance Company, its employees or agents are not in the business of providing tax, legal or accounting advice. Individuals should consult with their own tax, legal or accounting advisors before implementing any planning strategies. The cash value in a life insurance policy is accessed through withdrawals and policy loans, which accrue interest at the current rate. Loans and withdrawals will decrease the cash surrender value and death benefit. SMRU 1831911 Exp. 10/11/2021