August 2007 "Unbreakable Wills & Trusts"

PLANNING FOR WEALTH & SECURITY
By attorneys Jennifer & Jeff Hawkins

UNBREAKABLE WILLS & TRUSTS

A dispute in a deceased person’s family can be a heart wrenching experience for the surviving family members. Many folks wish to make wills and trusts that discourage family members from fighting about their wealth after they die. They want to make sure that their wills and trusts are “unbreakable.” Practically speaking, however, no attorney can guarantee that a will or trust will be unbreakable.

The typical language used in wills and trusts to discourage contests says that a beneficiary will lose his or her inheritance if he or she contests the will or trust. Sections of wills and trusts that provide such discouragements, called in terrorum clauses, can protect wills and trusts from some challenges. The big question is whether all challenges should be prevented.

Four major kinds of will and trust contests appear in the courts from time to time:

1. Testamentary Incapacity: The contestant argues that the deceased person didn’t know what he or she was doing when the will or trust was made because of dementia or other mental weakness.
2. Undue Influence: The contestant argues that someone exerted improper, controlling influence over the deceased person when the will or trust was made.
3. Fraud: The contestant argues that the deceased person’s signature was forged on the will or trust or the will or trust was otherwise based on a lie.
4. Mistake: The contestant argues that the deceased person made a mistake when the will or trust was made.

Unfortunately, these kinds of bad things really do happen to some people when they make their wills and trusts. Therefore, an in terrorum may discourage a deceased person’s family from seeking justice against a thief or correction of an error that should be corrected.

The Indiana legislature has decided not to enforce in terrorum clauses for these reasons. The General Assembly has prohibited the use of such clauses in both the Indiana Probate Code and the Indiana Trust Code as follows:

Indiana Code § 29-1-6-2. Noncontesting provisions prohibited. If, in any will admitted to probate in any of the courts of this state, there is a provision or provisions providing that if any beneficiary thereunder shall take any proceeding to contest such will or to prevent the admission thereof to probate, or provisions to that effect, such beneficiary shall thereby forfeit any benefit which said will made for said beneficiary, such provision or provisions shall be void and of no force or effect.

Indiana Code § 30-4-2.1-3. Forfeiture of benefits. A provision in a trust that provides, or has the effect of providing, that a beneficiary forfeits a benefit from the trust if the beneficiary contests the trust is void.

People wanting to protect their wealth from will and trust contests can take steps to protect their estate plans. An estate planning and administration specialist can design an estate plan to withstand a contest. Anyone can still challenge a well planned estate, but solid planning makes challenges awfully difficult to win.

THIS ARTICLE IS NOT LEGAL ADVICE. ALWAYS CONSULT AN ATTORNEY DIRECTLY BEFORE RELYING UPON THIS ARTICLE OR CHANGING AN ESTATE PLAN.