Posts Tagged ‘Probate Code’

Can You Change Your Will By Writing On It?

NOVEMBER 18, 2013 VOLUME 20 NUMBER 44

So you have a will, and you want to make some changes. Can you just write in the new provisions? How about if you sign somewhere on the document?Can it be a copy of your will, or does it have to be on the original to be effective? Do you need witnesses?

The correct answer: don’t make changes that way. There are too many variables, too many interpretations, too many ways for those changes to just add cost to the probate of your estate while not effecting the result you intend. Talk to your lawyer, get changes made formally, and have a new will drawn up. Can it just be a codicil? Yes, but there is frankly almost no reason in this age of computerization to ever sign a codicil to your will — just sign a new will. One drafted by your lawyer.

Sometimes, though, time just gets away from you. If you want to make changes, you probably ought not wait until just before your 100th birthday. That’s probably the biggest mistake Jenny Travis (not her real name) made.

Ms. Travis had signed a will in 2002, and a codicil a few months later in 2003. In 2010 she had her caretaker call her lawyer, asking him to make a visit to review her estate plan.

The lawyer made a photocopy of Ms. Travis’ existing will and codicil, and went to her home to discuss them with her. During their meeting, he hand-wrote several changes in the margins of his copy of her existing will. As she described the changes, he scratched out two individuals’ names next to a bequest and wrote in two replacements. In another place he deleted a paragraph, and in another made modifications to the way a bequest would be handled. Another was changed from $10,000 to $42,000, again in the lawyer’s handwriting. Finally, the two charities who were scheduled to get the remainder of her estate in the 2010 will were crossed out and replaced with Ms. Travis’ brother.

At this point the lawyer had Ms. Travis sign her name by each of the changes, and he signed as a witness. Then he wrote a note to his secretary at the top: “Linda, do a codicil that changes” the affected sections of the 2002 will and 2003 codicil. He took the document back to his office with him, and a codicil was prepared. Unfortunately, though, Ms. Travis died six weeks after her lawyer’s visit, without ever having signed the new, formally prepared codicil.

Did those handwritten changes constitute a will or a codicil? Not according to the Pennsylvania probate office, which declined to admit the handwritten changes to probate (but did admit the 2002 will and 2003 codicil).

Ms. Travis’ lawyer appealed, and the Superior Court (the second-tier appellate court in Pennsylvania) viewed things differently. The appellate judges ruled that Ms. Travis’ changes might be a codicil to her will — and that the probate court should conduct a hearing to determine whether that was what she intended when she signed (and her lawyer witnessed) beside each change. One of the nine judges considering the case would have gone further — he would have ordered the handwritten notes admitted to probate without any further testimony. Still, it seems likely from the language of the opinion that the lawyer’s notes will ultimately be given effect — it will just have taken a trip to the appellate court and a delay of several years before the issue is resolved. In Re Estate of Tyler, November 13, 2013.

Assuming that Ms. Travis really did want to make the changes her lawyer wrote down, what might have been done differently to make sure her wishes were carried out? And would the same result be reached if Ms. Travis had lived and died in Arizona?

One obvious thing to consider would have been to make the changes earlier. By the time of her death Ms. Travis was 100 years old — if she had been thinking about making the changes for very long, she probably should have called her lawyer earlier. Perhaps, though, she had just recently made up her mind about the changes when she met with her lawyer.

Apparently Pennsylvania law permits changes to a will to be effective if written by someone else and signed by the person making the changes. It may not even have been necessary for her lawyer to sign as a witness (we don’t practice Pennsylvania law, so we might have gotten that wrong). The same is not true in Arizona — changes like those made by Ms. Travis’ lawyer would require her signature and two witnesses in Arizona. It’s not even completely clear that the changes would have been accepted then, since there does not seem to have been any indication in the written notes that the changes were intended to be a will or codicil, and they were made on a photocopy of her old will.

In Arizona it would have been better for the lawyer to write out a separate document describing what it was and the intended effect, and to have Ms. Travis sign it in front of two witnesses. Such a document would probably have been effective. Another alternative, since Arizona permits “holographic” wills, would have been for Ms. Travis to write out her changes in her own handwriting, and to sign that document (no witnesses would have been required) — though that creates plenty of opportunity for her to get the changes jumbled, or leave out portions or make mistakes. Presumably the lawyer, familiar with will drafting, would have had an easier time making the changes correctly.

Of course it would have been wonderful if the lawyer could have returned to Ms. Travis’ home with a beautifully typed new will (again, just forget codicils) the next day and had her sign in front of two witnesses. It is unclear why that did not happen — whether Ms. Travis was unable to discuss her wishes shortly after the initial visit, or the lawyer’s secretary Linda was out sick the next day, or what else might have intervened. The central lesson: if you want to make changes to your estate plan, get to it promptly, and talk with your lawyer right away.

Posthumously Conceived Twins Denied Survivors Benefits

MAY 28, 2012 VOLUME 19 NUMBER 21
The United States Supreme Court doesn’t very often weigh in on Social Security rules, so when it does those of us in the elder and disability law community pay attention. Last week’s decision by the Court, interpreting Social Security regulations as applied to posthumously conceived children, addressed interesting questions of law, science and public policy.

Here are the bare facts: Robert and Karen Capato lived in Florida. Robert was being treated for esophageal cancer, and before chemotherapy and radiation treatment began the couple preserved a sample of Robert’s sperm. That way, Karen would be able to conceive another child (the couple had one child together already) by Robert even if his treatment left him infertile — or even if he died.

Robert Capato did die of cancer. Nine months after his death Karen became pregnant using his banked sperm. Eighteen months after Robert’s death she delivered twins.

Karen applied for Social Security survivors benefits for the twins. Citing Florida law on inheritance rights, the Social Security Administration denied the benefits (presumably the couple’s child conceived and born before Robert’s death qualified for benefits). The federal District Court agreed with Social Security, but the federal Court of Appeals reversed that decision and ruled in favor of Karen and the twins. The U.S. Supreme Court sided with Social Security, reversed the Court of Appeals and sent the entire case back for a final determination. Astrue v. Capato, May 21, 2012.

But what’s most interesting about the Supreme Court’s decision may be what it doesn’t decide. It does not rule that no child conceived and born after the death of the child’s father can ever receive Social Security benefits on that father’s work record. It does not bar careful planners from preserving future benefits for children born as a result of in vitro fertilization. Instead, it holds that the basic test is whether state law — usually the state law where the father dies — controls whether the posthumously conceived child is entitled to Social Security survivors benefits.

The Court unanimously ruled that Social Security is only available to survivors who are determined to be heirs of the deceased worker. In Florida, said the Justices, that would not include children conceived after the death of their father. Florida’s probate code expressly excludes after-conceived children, and Robert Capato’s will did not make reference to children who might be conceived after his death.

But does Florida law apply in this case? Probably — but the Justices left open the possibility that the trial judge could find otherwise after a new hearing. Interestingly, Karen Capato moved to New Jersey while pregnant with the twins, and she argued (unsuccessfully, so far) that New Jersey law should apply to the determination of paternity.

Can we infer the answers to some of the obvious questions you might ask? Perhaps — but not conclusively, of course.

If Florida changed its law to make posthumously conceived children entitled to intestate inheritance, would that change the result for the Capato twins? Probably not — but it should change the result for future Florida residents in similar circumstances.

If Robert Capato’s will had specifically mentioned the children he might have in the future, would that have changed the outcome? Hard to say, but tantalizingly interesting. Apparently, Robert and Karen specifically mentioned their intention to preserve sperm for future in vitro fertilization to the lawyer who prepared Robert’s will. Should he of she have included the unknown future children as beneficiary’s of Robert’s estate? Perhaps that would have changed the result.

What if Robert Capato had lived — and died — in Arizona? It’s not clear. Arizona’s probate code does not expressly define posthumously conceived children as either included or not included in the list of intestate heirs. No Arizona appellate case has decided the question, either (though there is at least one reported Arizona case involving the status of sperm intended to be preserved for possible future in vitro fertilization).

What about the laws of intestate succession in other states? Well, we’re not qualified or inclined to render legal opinions about other state laws. But we will note that the Supreme Court specifically pointed to the intestacy laws of several states as dealing with posthumously conceived children. Among the states with some treatment of the question (in addition to Florida) the Court included California, Colorado, Georgia, Idaho, Iowa, Louisiana, Minnesota, New York, North Dakota, South Carolina and South Dakota. There is no mention of New Jersey law — the law Karen Capato would like to apply to the twins’ claim.

Want to read the entire opinion — or even listen to the oral argument before the Supreme Court? Look to the excellent Oyez multimedia website maintained by the IIT Chicago-Kent College of Law.

Missing Will Presumed Revoked, But Codicil Partially Reinstates It

MAY 14, 2012 VOLUME 19 NUMBER 19
In Arizona (as in most other states) there is an important rule about wills: if the original document was in the possession of it’s signer, and it can not be found after the signer’s death, then there is a presumption that it was destroyed. Not only that, but the presumption is that the signer destroyed it, and that he intended to revoke his will by doing so. Arizona’s statute on missing wills is pretty clear. What is less clear is how to apply the statute in real cases with individualized facts.

The logic of the presumption is pretty clear. One can revoke one’s will by committing a “revocatory act” upon it, according to a different section of Arizona’s probate code. So if tearing up, or burning, your will is sufficient to revoke it, well, if it has gone missing the system is simply going to presume that that’s what you did.

Of course people lose their original wills all the time. Sometimes surviving relatives or friends know what became of the original. Sometimes it doesn’t make very much difference (if, for instance, the will simply leaves everything to family members in the same proportions they would receive if there had not been a will at all — or if there are no assets in the decedent’s name, everything having been transferred into a living trust, or placed in joint tenancy, or spent). Sometimes everyone can agree that the loss was accidental, and that a copy should be admitted to probate. Sometimes none of those things are true.

Take the case of Warren Alexander (not his real name). When he died, at age 94, his original will could not be found. What could be found was a copy of the will, a copy of three codicils he had signed over the years, and the original of his fourth codicil. The fourth codicil contained some changed language and, as is usually the case when lawyers draft codicils, added a line at the end that said he was otherwise republishing (readopting might be a more familiar term) his original will.

What does that mean? Does it depend on the sequence of events? Assuming that Warren actually destroyed his original will and intended to revoke it, would it make any difference whether that was before or after he signed the fourth codicil?

The Arizona probate court hearing the case decided that the codicil was valid (the original had been found, after all, and it was properly executed). Because it contained language incorporating at least some of the provisions of the original will, those provisions were still valid as well. The fourth codicil was admitted to probate.

Family members would inherit Warren’s estate if there had not been a valid will at all. One of them appealed the probate court’s ruling, but the Arizona Court of Appeals agreed with the probate judge’s decision. According to the appellate judges, the probate judge had not admitted a missing will to probate — he had admitted a codicil that incorporated some or most of the terms of that missing will. In fact, observed the Court of Appeals, the codicil really was a will; although we think of codicils as amending wills, they are themselves testamentary instruments with all the power and effect of a will. Estate of Andreson, May 4, 2012.

What does Warren’s probate tell the rest of us about what we should do? A few suggestions come to mind:

  1. Keep track of original documents. Some of them are not themselves important (though the rules may vary from state to state). The deed to your house, for instance — in Arizona, it is not important to keep that original, provided that it has been recorded. Your living trust is generally still valid even if the original can’t be found. But it would be good to keep all the original documents in one place.
  2. If you really do want to revoke your will, do it by signing a new will rather than tearing up your old one. And for goodness’ sake, talk to a professional. The small cost of involving a lawyer will be saved many times over by your heirs and devisees.
  3. Periodically review your documents, and go looking for originals. If you can’t find them, ask your lawyer to redo them and sign new originals.
  4. Rather than amending a will four times you probably want to consider just redoing the whole thing. That reduces the number of documents you have to keep track of, it reduces the likelihood of inadvertent errors, and it simplifies your estate planning. It also probably costs no more than successive codicils (lawyers don’t usually charge by the word, despite the jokes we have all heard).

Arizona Probate Court Changes Coming in 2012

DECEMBER 19, 2011 VOLUME 18 NUMBER 43
It is not exactly a secret that the Arizona probate court system has been widely criticized over the past two years or so. The Phoenix-area newspapers have been filled with stories about alleged abuses of the probate process. Many of those stories have focused on practices in the guardianship and conservatorship systems, which in Arizona are controlled by the probate courts. During last year’s Arizona legislative session a number of changes were adopted; most of those take effect on January 1, 2012.

At the same time the legislature was acting, a committee of the Arizona Supreme Court was considering many of the same (or similar) changes. The courts have now released their final changes; some of them will take effect on February 1, 2012, and some on September 1, 2012. We will describe some of those changes, and what effect they are likely to have on existing and future clients, in a later newsletter. For now, we focus on the changes adopted by the legislature. They include:

  1. Fiduciaries are now expressly required to consider costs when making decisions about how to act, and to make reasonable decisions to limit those costs. The notion of a cost/benefit analysis, which we all apply to business and personal decisions in our own lives, has been adopted for guardianship, conservatorship, probate and trust administration proceedings. See Arizona Revised Statutes section 14-1104.
  2. Unreasonable litigants — including those who repeatedly file the same kinds of pleadings despite successive decisions against them — can now be prevented from running up probate costs, and can even be charged with some or all of the costs they do incur. The probate court has the express power to prohibit further court filings by an unreasonable party, and to summarily deny repetitive motions without requiring others to answer or argue. See Arizona Revised Statutes sections 14-1105 and 14-1109. The court rules which become effective a month later, incidentally, include a concept of “vexatious conduct” that is similar but somewhat more expansive.
  3. Arbitration of probate disputes is encouraged — but not (yet) required. Mediation and other forms of alternative dispute resolution are also permitted. See Arizona Revised Statutes section 14-1108.
  4. Guardians, conservators and attorneys must now provide written information about their fees — how they are going to be calculated and at what rate or rates — at the beginning of their involvement. Failure to do so will mean that they are not permitted to collect fees from the ward in a guardianship or conservatorship proceeding. The probate court has been given wider latitude to determine when a professional fee is reasonable and necessary. See Arizona Revised Statutes section 14-5109. Another fee-related change: attorneys are not permitted to wait until the conclusion of a case (or some later event) to submit their bills. Any bills not submitted within four months of the services are waived. See Arizona Revised Statutes section 14-5110.
  5. It should be easier for the subject of a guardianship or conservatorship — or his or her family — to seek appointment of a new guardian and/or conservator. This change reflects the legislature’s concern that even when family members are unable (or unsuitable) to serve, they should have some say in selecting the fiduciary. There are limits on how often the ward and family members may ask for changes, and the court retains the final say on any substitution, but the statutory changes will probably lead to more changes of fiduciary, at least in contentious cases. See Arizona Revised Statutes sections 14-5307 and 14-5415. The notion that family members — even family members who can not themselves serve — should have a greater say in selecting and monitoring guardians and conservators is sprinkled through other sections of the new law.
  6. Although most of the new law deals with guardianship and conservatorship changes, there are a few changes in probate proceedings and at least one in trust administration matters. The principal change for trusts: the beneficiary of a trust has the ability to direct appointment of a new trustee — at least if the trust was originally established by the beneficiary. See Arizona Revised Statutes section 14-10706. This section will not apply — at least not directly — to trusts established by someone else for the benefit of the beneficiary. It will apply to self-settled special needs trusts and other irrevocable trusts established by the beneficiary.

What effect will the statutory changes have on guardianship and conservatorship practice? It is hard to be certain until there is more experience. A few likely effects, including some that might be categorized as unintended consequences:

  • The cost of probate court proceedings is likely to go up in most cases. This is a paradox, since one of the original motivations behind the changes was to control costs, and especially legal fees. In some very expensive cases in recent years, that might well be the effect. In the vast majority of cases, however, increased requirements and a higher burden on fiduciaries and their attorneys will likely result in at least a small increase in costs.
  • There are likely to be fewer private fiduciaries willing to get involved in difficult or contentious cases. That, in turn, is likely to mean an increase in caseloads for the Public Fiduciary in each county. Not only will the Public Fiduciary see an increase in cases, but it is likely that the complexity of the average Public Fiduciary case will increase.
  • Some private professional fiduciaries may leave the field, or change their practices significantly. We predict (on the basis of no empirical data whatsoever) that another paradox is likely to be an increase in the number of licensed fiduciaries — and that both the average case load and the professional training and experience of private fiduciaries may well be lower in future years.

On January 18, 2012, Fleming & Curti, PLC, will host a training session for our clients who act as guardian, conservator or personal representative. We will invite fiduciaries who are not our clients, as well. Those in attendance will likely include both family members handling a single case and professional fiduciaries with large and complicated case loads; both kinds of fiduciary will need to know what the changes mean for them. We will cover both these legislative changes and the Supreme Court’s changes in rules and accounting requirements (and forms). If you are interested, you can pre-register by calling Yvette in our office (520-622-0400) and leaving your name and e-mail address. We will be sending out formal invitations in the upcoming week.

Arizona Court of Appeals Orders Review of Fees in Guardianship

DECEMBER 13, 2010 VOLUME 17 NUMBER 38
Arizona’s probate court system — and particularly the guardianship and conservatorship arenas — have been embroiled in public controversy for the past year. A series of essays by a prominent Phoenix newspaper columnist has taken the entire system to task over allegations of excessive fees being paid to guardians, conservators and attorneys. A few cases have made particularly compelling reading, with total fees of hundreds of thousands of dollars being charged to individuals caught up in the system.

One of those stories involved R.B. Sleeth of Phoenix. One of his two sons initiated a guardianship and conservatorship proceeding in late 2007. Of particular concern was the possibility that Mr. Sleeth might marry, and his son doubted both his capacity to enter into a marriage and the motivations of the woman with whom his father lived.

Whatever the merits of those arguments, the ensuing proceedings were bitter and protracted. The son seeking guardianship had a lawyer, Mr. Sleeth had a lawyer, and his future wife also retained an attorney. In the heat of the proceedings the probate court appointed another lawyer as Mr. Sleeth’s guardian ad litem, and she reported to the court on what she thought ought to be done.

Contested hearings were held in March and April, 2008, but even after the probate court appointed Mr. Sleeth’s son as his guardian, conservator and trustee the lawyers continued to spar over his proper care, the possibility of his marriage and the management of his estate. Another round of hearings was held in October of that year, and in December, 2008, the judge removed Mr. Sleeth’s son as guardian (leaving him as conservator and trustee) and appointed an independent, professional fiduciary.

By October, 2009, Mr. Sleeth had married, the court had appointed a new conservator and trustee, and Mr. Sleeth’s son had submitted his attorney’s billings for approval by the court. Fees and costs for the nineteen months totaled $270,213.36. The probate judge ultimately approved the billings (though reduced by $5,515.00), over the vigorous objections of Mr. Sleeth and his new wife.

In addition to the fees charged by Mr. Sleeth’s son’s lawyers, fees of $142,499.69 were requested (and approved) by Mr. Sleeth’s own lawyer, and another $38,508.67 (also approved) by the court-appointed guardian ad litem. In total, Mr. Sleeth’s estate was subjected to bills for attorney’s fees and costs of $445,706.72. Since his estate had been valued at about $1.4 million, this meant that about one-third of his entire estate would be paid to lawyers.

The Arizona Court of Appeals reviewed the approval of the fees of lawyers for Mr. Sleeth’s son. The court noted that no one had appealed the other two attorney’s fees, so they were not before the appellate judges. With regard to the fees charged to the guardian/conservator/trustee, though, the appellate court was clear: the trial judge needed to review them more closely.

Arizona’s probate code governs guardianship, conservatorship and trust administration proceedings as well as decedent’s estates. That code and the rules adopted by the courts to implement it are clear: the fees charged by lawyers in probate proceedings must be “reasonable.” What is less clear is what “reasonable” might mean in particular circumstances.

Although the probate judge had ruled that the fees charged to the guardian were reasonable, the appellate judges ordered him to reconsider, and to particularly pay attention to at least these concerns:

  1. One important element of determining reasonableness, according to the appellate court, is whether the representation ultimately benefits the ward. It is not enough to show that the lawyer was “successful” in the proceedings. Even though his son prevailed (at least temporarily), the probate judge was directed to consider whether the proceedings were “excessive or unproductive.” Both the fiduciary and his attorney have a duty to make a cost-benefit analysis, and to review it regularly, to determine whether it is appropriate to continue the legal proceedings.
  2. The time records included a number of instances of what the appellate judges thought looked like “block billing” which required further review. Although most time records are kept in tenths of an hour, and many lawyers impose a minimum of .1 or .2 hours for most time entries, the appellate judges were troubled by the large number of time records listing a string of activities and posting a .5 or 1.0 hour bill. The failure to separate out multiple activities into individual listings makes it difficult to determine whether those time entries should be approved, according to the court.
  3. Although the court did not find that improper entries were included in the time records, it did direct the probate judge to consider whether charges for such items as copying, faxing, emailing and file maintenance were appropriate for billing, or were really clerical work that would normally be part of the lawyer’s overhead.

Sleeth v. Sleeth, December 9, 2010.

Much has been written about problems with legal fees in court proceedings involving guardianship, conservatorship and trust administration. The Arizona Supreme Court has created a committee to review (among other things) billing practices and rules. Three judges of the Arizona Court of Appeals demonstrated this past week that they don’t need a committee to tell them how to determine the reasonableness of fees — existing probate law gives them (and the probate courts) the tools to regulate fees in contentious probate proceedings.

Draft Will Is Almost (But Not Quite) Admitted to Probate

SEPTEMBER 20, 2010 VOLUME 17 NUMBER 29
There is a lot of mythology, misunderstanding and just plain confusion about wills and probate. Sometimes the reported cases don’t help clarify what makes a will valid, when it is subject to challenge or even what might be a will.

The general rule is clear, and ancient. The Parliament of England adopted the Statute of Wills in 1540, and a version of its requirements can still be found in every U.S. state. One of the most important principles from the Statute of Wills: a valid will must be in writing, and must be signed by two witnesses. That is still the law in most common law jurisdictions, and it is certainly the law in Arizona.

But wait. Perhaps you have heard about “holographic” wills; they do not have to be witnessed at all. The basic rule in states which permit holographic wills (Arizona is one) is that the material provisions must be in the handwriting of the person, and signed. You can see those rules might amount to a lawyer’s field day — what are “material provisions,” and how are courts supposed to interpret the incomplete or even contradictory provisions of a handwritten document?

Then there are “nuncupative” wills. They are not permitted in Arizona at all, but some states allow them. They are oral statements of the wishes of someone on their deathbed. In states recognizing nuncupative wills, they may be limited to items of personal property like jewelry, small amounts of cash or even items with no economic value. You might (depending on which state you are living — and dying — in) be able to say “I want my dad’s pocket watch to go to Harry” but not “I want Harry to have my $100,000 T-Bill.”

The Uniform Probate Code, promulgated by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and adopted in 19 states (including Arizona) provides some new ways to let people express their wishes — and, arguably, to increase legal fees in some cases. Under recent amendments to the Uniform act, a will that is unsigned or not signed properly could still be a valid document if it can be shown by clear and convincing evidence that the individual intended it to be treated as a will. We should stop a moment to point out that although Arizona adopted the Uniform Probate Code back in 1973, the more recent revisions have not been adopted. Arizona still requires all wills (except holographic wills) to be witnessed by two people.

When might the new section of the Uniform Probate Code be useful? How about the sad case of Louise Macool, who died in New Jersey in 2008?

Mrs. Macool’s husband of forty years had died just a month before she made an appointment to see her long-time lawyer. She brought along a handwritten note to tell the lawyer what she wanted. Her old will left everything to her late husband’s seven children equally (she had no children of her own, but had helped raise his children). Her note said, cryptically, “get the same as the family Macool gets — Niece — Mary Rescigno” and some other changes she wanted to discuss.

Mrs. Macool explained the note to her lawyer. She wanted to add her niece, Mary Rescigno, to her will, along with another niece. While she was still in his office, the lawyer picked up his dictation equipment and dictated a will for her review and signature. Then she left the office to go to lunch; she would make an appointment to review the will after her attorney’s staff had transcribed it and he had a chance to review it for accuracy.

Sadly, Mrs. Macool never saw the draft will. Within the hour after she left her lawyer’s office she died.

The lawyer’s staff prepared the draft will, apparently not knowing of Mrs. Macool’s death. Relying on the Uniform Probate Code language, Ms. Rescigno then asked the probate court to admit the unsigned document as Mrs. Macool’s last will.

The probate court heard a day of testimony and argument, then declined to admit the draft document as a will. The probate judge agreed that Mrs. Macool’s intent in meeting with the lawyer was to change her will to include Ms. Rescigno, but decided that some sort of signature was required on the document.

The New Jersey appellate court agreed with the result, but not the reasoning. Requiring a signature on the document would make it essentially a duplication of the holographic will provisions, ruled the appellate judges. Mrs. Macool’s draft will could be admitted to probate if she had had a chance to review it and indicate that it reflected her wishes. Her handwritten notes, meanwhile, did not amount to a holographic will — they would need her signature.

The trial judge had declined to admit the draft document to probate as Mrs. Macool’s will, but he had agreed that Ms. Rescigno’s lawyer should be paid from Mrs. Macool’s estate. New Jersey’s probate rules expressly authorize payment of attorney’s fees for someone who “had reasonable cause” for even a failed contest. Ms. Rescigno’s lawyers had submitted bills totaling $34,433; the probate judge had cited his personal “policy reasons” in reducing the fee by about 15%.

Even though her lawyers had been unsuccessful the appellate court approved of the payment to Ms. Rescigno’s counsel. In fact, they reversed the probate judge’s reduction of the claimed fees. According to the appellate court, there was no indication that the hourly rates were unreasonable our out of line with prevailing rates, or that the claimed hours were not actually worked. In Re Probate of Alleged Will of Macool, September 16, 2010.

Conservator May Be Able To Act As Successor Trustee

AUGUST 16, 2010 VOLUME 17 NUMBER 26
Let’s say you have created a revocable living trust, and you have named yourself as trustee. You also name your two children as successor trustees, to act together upon your death or incapacity. Two years later you become incapacitated; because of a dispute between your two children about who should handle assets outside the trust, the probate court names a local bank as your conservator. Now who handles your trust — the bank, or your children?

Before we answer that question, let us complicate it. You are also the beneficiary of a trust set up by your late husband — and you are trustee of that trust, as well. About half of the assets the two of you owned are included in each of the two trusts. Your husband’s trust names you as trustee (now that he is deceased) and names the two children as successor trustees if anything should happen to you. Does your conservator have any authority over that trust?

Those were precisely the questions faced by a probate judge in South Dakota when Evelyn Didier became incapacitated. The bank appointed as her conservator asked the court to clarify that it had control over both trusts as well as Ms. Didier’s non-trust assets. The judge agreed, and Ms. Didier’s daughter Barbara Didier-Stager appealed.

Court appointment of a conservator does not amount to appointment of a successor trustee, argued Ms. Didier’s daughter. In fact, appointment of a conservator proves the incapacity that triggers a change in trustees — resulting in the son and daughter taking over as successor trustee of their mother’s trust. As to their father’s trust, the successor trustee provisions are triggered by the conservatorship in the same way — though our simplified version of the facts described above fails to clarify that the successor trustees of that trust were actually Ms. Didier-Stager and another local bank — different from the bank acting as Ms. Didier’s conservator.

South Dakota, like Arizona, has adopted the Uniform Probate Code — though South Dakota’s version has been updated more recently and is more current. The Code includes provisions about guardianship and conservatorship (though now those sections have been set aside as a separate uniform law, the Uniform Guardianship and Protective Proceedings Act). Those uniform laws permit the judge in a conservatorship proceeding to enter orders related to the protected person’s estate plan.

So, reasoned the South Dakota court, the probate court could permit Ms. Didier’s conservator to do anything that Ms. Didier herself could have done before becoming incapacitated. Her own trust was revocable and amendable — if she had wanted to do so, she could have changed the successor trustee at any time. She could have named the bank that was ultimately appointed as her conservator. Consequently, the court could allow her conservator to assume the powers of successor trustee over that trust.

The late Mr. Didiers trust was a different matter, however. Ms. Didier herself did not have the power to change the trustee, and so her conservator could not exercise that power on her behalf. That trust would have to be dealt with separately, and the Supreme Court ordered the case remanded to the probate judge to determine what to do about Mr. Didier’s trust. Conservatorship of Didier, June 30, 2010.

Does this mean that Mr. Didier’s successor trustees automatically take over, instead of Mrs. Didier’s conservator? Probably not. Other provisions of the Probate Code give the probate judge authority over trust administration, and if it appears that there is some reason not to allow the named successors to become trustee there will presumably be an order to that effect. But it does change the discussion from a choice between blindly following the document or giving Mrs. Didier’s conservator power to do anything she could do. Instead, the probate court will have to determine which approach is most consistent with the trust, with proper administration, and with the best interests of the trust’s beneficiaries.

The Uniform law actually goes quite a bit further today than the 1974 version originally adopted in Arizona (though Arizona has updated portions of the law several times). Reviewing the statute in the context of the Didier case highlights some of the changes. Among the powers given to conservators by the “new” Code (as adopted in South Dakota, for instance) is the power to “make, amend, or revoke the protected person’s will.” (See Section 411(a)(7) of the Uniform Guardianship and Protective Proceedings Act.) Court approval is required, but the very notion of a conservator changing the protected person’s estate plan might strike some as dangerous.

Legislative Changes II

JULY 4, 1994 VOLUME 2, NUMBER 1

In last week’s Elder Law Issues, we told you about various changes to Arizona law made during the most recent session of the state Legislature. This week we will attempt to explain the significance of a single piece of new legislation, the Revised Arizona Probate Code.

This year’s adoption of an updated version of the Uniform Probate Code did not change most provisions of the existing probate law. Several new provisions, however, promise to be beneficial for most elderly Arizonans.

“POD” and “TOD”

It has long been possible to hold bank accounts as “payable on death” to another person. Usually, the acount title will look something like “Mary Jones POD Susie Jones.” Such an account avoids the necessity of probate altogether (since the account goes to Susie Jones automatically on Mary Jones’ death). At the same time, Mary Jones avoids the risks she would have run if she had placed the account in joint tenancy with Susie.

Unfortunately, it has not been possible to hold stocks, bonds, mutual funds and brokerage accounts in a similar fashion. That has meant that people with modest estates are required to go to the trouble and expense of establishing living trusts if they wish to avoid probate without placing stocks and bonds in joint tenancy with their children.

Beginning January 1, 1995, stocks, bonds, mutual funds and brokerage accounts can be held in “transfer on death” (TOD) accounts. This form of account title will work just like POD accounts at banks, and should be very attractive to the modestly well-off older person who does not wish to establish a living trust. With the new law, it is even possible to name a “substituted beneficiary” who will receive the account if the first beneficiary is deceased.

Right of Survivorship

Most married couples hold all or most of their property in joint tenancy. This permits the property to pass to the surviving spouse without having to go through the probate process, and real estate agents and title companies routinely recommend joint tenancy on all real estate.

Unfortunately, there are some modest income tax benefits to holding property (particularly investment property) as community property. The trade-off has been that property titled as community property must be probated on the first death, and the cost of probate often erased any tax benefit.

Now married couples will be able to have it both ways. They can hold property as “community property with right of survivorship,” avoid probate and still get the income tax benefit at the first death.

Other Changes

Without becoming too technical, there are a number of other changes to the probate laws designed to make the process more logical and consistent with modern views. For instance, step-children are treated as more like natural children in some circumstances. Divorce now has the effect of revoking all the provisions of a deceased spouse’s will, trust, life insurance policy or other benefit for the ex-spouse (unless the decedent made it clear he intended to leave things to his ex in spite of the divorce). Slightly larger estates can avoid the probate process altogether. And several archaic common-law principles have been limited or abolished outright.

As always, we welcome general inquiries on behalf of patients, residents and clients. We will try to help caregivers and health care providers determine whether further legal assistance is needed, and provide general information about the effect of the law on the elderly and disabled.

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