11 Jun 2015

I am cut out of the Estate! Now what?

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When a loved one dies, the trauma of the death is bad enough, but then the distribution is revealed and the terms come as a shock to the beneficiaries. Image this … daughter Judy gets everything and the rest of the family gets little or nothing. Worse yet, a “No Contest” clause has been added to scare the family or friends into not challenging the Will. How could this happen? Sadly, when it comes to money, people are greedy. Even if their reasons were valid, they usually do not communicate those reasons – leaving a lot of hurt feelings.

But what if something does not seem right and you suspect foul play?
You do have options. You should first have an attorney review the terms of the Will, but most important, you need to understand the process to contest it. Arizona has a statute governing the validity of no-contest provisions in wills, but there is no statute expressly covering similar provisions in trusts. In order to contest a Will in Arizona, you must prove that the deceased person either:
• Lacked the testamentary capacity to execute a will
• Was under undue influence
• Executed the will as a result of fraudulent misrepresentation
• Executed the will by mistake
• Or the Will does not meet the legal formation requirements

These terms and conditions sound complex and full of legal jargon, but their meanings are actually pretty simple. Let’s look at each of these things individually.

Testamentary Capacity
Testamentary Capacity is a legal term that simply means the person creating the Will must be 18 years or older. The person must also have the mental capacity to create the Will, meaning your loved ones understood what they are creating and understood the property issues and assets involved. If any of these elements are not met, the Will may be contested.

Undue Influence
A Will may be contested if a third party has influenced the mind of the creator. This tends to be a bit of a gray area, but in general, the court may explore the following questions:
• Did the 3rd party fraudulently misrepresent himself or herself?
• Was the Will created in haste and without careful consideration?
• Was the creation of the Will kept secret from other beneficiaries?
• Were those beneficiaries instrumental in preparing the Will?
• Was the Will consistent with prior versions of the Will?
• Was the Will consistent with the creator’s lifestyle and family views?
• Was the creator susceptible to undue influence?

Let’s take, for example, a daughter who is caring for her mother, who is experiencing a bit of dementia — in short, is not of sound mind. The daughter believes she has a greater right to inherit her mother’s assets than her siblings, due to her caregiving. So, she influences mom to change the terms of the will to provide her with the lion’s share of the estate and reduce the amount her siblings or other beneficiaries should receive.

In this case, the other siblings or potential beneficiaries can contest the Will, however, it is up to them to provide proof that the mother was not of sound mind and didn’t understand what she was doing. They must also prove undue influence.

Another situation, which is unfortunately becoming too prevalent, is when a homecare person takes advantage of a person under their care and convinces them to make them a beneficiary.

Fraud by Misrepresentation
A will may be contested or invalidated if fraud by misrepresentation is involved. Fraud by misrepresentation means that a beneficiary made false representation of material fact (lied) and knew he or she lied in order to induce the person to change the will in his or her favor. The lie caused the creator to make the Will different that is would have been without the misrepresentation. That sounds complicated, but here a simple example. Let’s assume a son lies to a parent about his financial status telling the parent that he has no money and is worried about his financial future, when in fact he is very well off and is concealing his assets. Based on that lie, the parent changes his or her will to favor that child above the children or other beneficiaries.

Mistake
A mistake in the creation of the Will can allow it to be challenged and set aside. This is rather rare, since it generally means something like the husband signed the wrong document — his wife’s Will rather than his own, for example.

Formation Requirements
Wills many be created or formed only under certain circumstances:
• The person must be age 18 and of sound mind
• The Will must be signed by the person or signed by a designated representative who signs in the presence of the person
• The Will must be signed by two witnesses, who must witness the actual signing by the person or his or her representative
• The person must have the intent to execute his or her Will

No Contest Clause
A “No Contest” clause is a legal provision that states that if a beneficiary challenges any portion of the Will, he or she will be disinherited. These clauses however are not always clearly written and might leave the door open for a challenge. Also, the statute governing wills in Arizona provides that a no-contest provision is “unenforceable if probable cause exists” for the challenger to file the contest. In other words, if there is “smoke” about a possible challenge, the court won’t close the door to hear whether there is “fire.” That means, if you might be able to really prove fraud, or undue influence, or if a mistake is made, the No Contest clause may not be able to stop you.

If you believe the circumstances surrounding the formation or execution of another’s Will are questionable, please contact me immediately to determine your rights. Time is often critical in this issue so do not delay if you feel a friend or family member’s Will should be reviewed as part of its probate.

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