Thursday, July 19, 2012

Reciprocal Wills and Contracts Between Spouses

In a case decided back in April, the Virginia Supreme Court again addressed whether reciprocal wills (which are essentially mirror images of each other) executed by spouses are irrevocable.  The case is Keith v. Lulofs (link here).

Often, spouses who have both have children from previous marriages both execute wills that are mirror images of each other, and typically provide that one's entire estate goes to the spouse, if they survive the decedent spouse, and if not, to the children from both marriages in equal shares (or in shares agreed upon by the spouses).  So, the first spouse dies, and then the surviving spouse changes his or her will to leave more, or everything, to his or her own children.  The children of the deceased spouse are none too happy about that, and when the surviving spouse dies, they claim that the couple had an agreement to keep their reciprocal wills unchanged.  This was essentially the situation in the Keith case.

The Court made clear that, under Virginia law, reciprocal, mirror image wills by spouses are not by themselves an agreement between the spouses to keep them unchanged.  Rather, it must be proved that the spouses actually had an agreement (a contract) to that effect.

The Court explains the legal and practical reasons for this being the rule, which for those reasons does make some sense.

If you and your spouse want reciprocal wills to be irrevocable and unable to be changed by the surviving spouse, they need to state that clearly in the wills or a separate document.  While such an agreement can be proved even if there is no written agreement saying that, this case shows how hard that can be.

Tuesday, July 17, 2012

Virginia's Augmented Estate and Elective Share

Virginia, like most states, has a statute which allows a surviving spouse to take an "elective share" of their deceased spouse's "augmented estate" in lieu of what the surviving spouse would otherwise receive under a will and through nonprobate transfers of assets, such as life insurance and bank and stock accounts with beneficiary designations.

The purpose of the statute is to prevent a husband or wife from disinheriting their spouse.  I find that many people do not know that, because of the augmented estate statute, they effectively cannot disinherit their spouse.

I leave it to others to talk about the public policy behind the statute.  But, the statute is not well-known, is difficult to apply in many cases, and can cause a great deal of conflict, particularly between a surviving spouse and stepchildren.

Under the statute, a surviving spouse who elects to take his or her share of the augmented estate gets one-third of the augmented estate if the decedent has children or their descendants, or one-half if there are no children.

The augmented estate is so named because it includes more than just the probate estate - some jointly titled bank and stock accounts, some life insurance, and even certain gifts made by the decedent within five years of death are included.  Certain assets are also expressly excluded, such as assets inherited by the deceased spouse and kept as separate property.

If the decedent tried to leave nothing to the surviving spouse (or less than what the spouse would get under the statute), the surviving spouse can (and must) file for the elective share within six months of the later of (1) the admission of a will to probate or (2) the qualification of the administrator of an intestate estate.  The filing is made in the circuit court clerk's office in the jurisdiction where the estate is probated.

A detailed explanation of the calculation, payment and finalizing of a surviving spouse's elective share claim is way beyond the scope of this blog post. Suffice it to say that disputes arise fairly often regarding the calculation of the augmented estate and whether certain assets are included or excluded.

Saturday, January 21, 2012

Mental Incompetency and Undue Influence: Not Easy Ways To Attack A Will

In two recent Virginia Supreme Court cases, both decided in the last year, the Court again demonstrates how difficult it is to attack a last will and testament on the basis of mental incompetency (or mental incapacity) and/or undue influence.

In the most recent, Weedon v. Weedon (link here)
, decided a little over a week ago, the trial court had found a last will and testament to be invalid on the basis of both mental incompetency and undue influence. The Virginia Supreme Court reversed that ruling. The facts of the case are lengthy and fairly complex (read the opinion in the link above), so I will not try to summarize them, other than to say it is one of the typical situations: Over time, one child becomes essentially in charge of a sole surviving parent’s life, both medically and financially, leading to conflict between that child and the other children, and of course, ultimately, a new will leaving everything to that child and disinheriting the others.

The Court also stated that legal assistant or paralegal, can assess the mental capacity of a client to make a will, an assessment the trial court (and no doubt many others) thought had to be made by the lawyer drafting the will.

The decision in Weedon was 5-2, with two justices dissenting, saying that since the trial court saw and observed the witnesses and their demeanor, and since there was credible evidence to support the trial court’s ruling, the trial court was in the best position to make rulings on the issues of incompetency and undue influence, and the appeals court should not overrule it (this gets into an appeals court’s standard in reviewing a trial court – which I won’t go into here).

The decision in Weedon shows yet again how hard it is to overturn a will based on undue influence. A few notable excerpts:

1. “[T]estimony that the beneficiary of the contested will...asked the siblings not to visit, was the only sibling who was talking to doctor, and isolated the testator is insufficient to prove undue influence by clear and convincing evidence.”

2. Quoting from an earlier case: “Not all influence is undue in the legal sense…. To be
classed as ‘undue’, influence must place the testator in the attitude of saying: ‘It is not my will but I must do it.’”

In the other case, Parish v. Parish, which was decided last year, the Virginia Supreme Court upheld a trial court finding that the testator was mentally competent to make a will, notwithstanding that he had suffered a traumatic brain injury at age 22 and had been declared incompetent to manage his own affairs in three different states by three different judges. The Court noted (again) that the mental capacity needed to make a will is different from, and much lower than, the capacity needed to manage business and personal finances:

Mental weakness is not inconsistent with testamentary capacity. A less degree of capacity is requisite for the execution of a will than for the execution of contracts and the transaction of ordinary business. One may be capable of making a will yet incapable of disposing of his property by contract or of managing his estate. Mental strength to compete with an antagonist and understanding to protect his own interest are essential in the transaction of ordinary business, while it is sufficient for the making of a will that the testator understands the business in which he is engaged, his property, the natural objects of his bounty, and the disposition he desires to make of his property. The condition of being unable, by reason of weakness of mind, to manage and care for an estate, is not inconsistent with capacity to make a will.

Both Weedon and Parish show what an uphill battle it can be to attack a will on the two most common theories – mental incompetency and/or undue influence. But, each case dependson its own facts and circumstances, and should be properly evaluated in light of the legal standards.