Four Reasons Your Will May Be Contested in Court

by Kelby Fischer

Keep your will from being contested - Estate Planning in Helena MTHaving an updated last will and testament is more important than ever. However, a will that is poorly drafted or not frequently updated can be vulnerable to contestation. What is contestation? It is the formal objection to a will’s (or trust’s) validity because it either: a) doesn’t reflect the wishes of the person who created the will, or b) because the will does not meet certain legal standards.

Will contests should be avoided at all costs. Not only can a contest derail your final wishes, but it can also rapidly deplete your estate and wreak emotional havoc on the family members left behind. Fear not. With proper planning, you can prevent a contest from happening.

Who can contest a will?

Will contests are usually brought on by individuals (who could be family members, close friends, or business partners) who believe they have been wrongly disinherited. However, not all of your family or friends have the ability to contest your will in court. They must have legal “standing” to file a lawsuit. Standing means that a person involved in a lawsuit will be personally affected by the outcome of the case.

The following people have the ability to contest a will in probate court:

  • Current beneficiaries that are named in the will
  • Previous beneficiaries who were disinherited but were included in a previous will
  • An individual not named in the will but who would be eligible to inherit property based on a state’s intestacy laws (typically a biological child or spouse)

If a will is successfully contested, then the court will declare the will invalid and “throw it out.” If there is a previous will, then the court will abide by its terms. If there are no other estate planning documents, the state’s laws of intestacy will decide who inherits what property. As you might expect, this can be a disastrous outcome for your intended beneficiaries.

Planning tip: Depending on your circumstances and goals, a trust can have superior benefits to a will; like offering better asset protection and enhanced privacy by keeping your personal information out of probate (a public process all wills must go through). If you’d like to learn more about the differences between trusts and will, and see what is a better fit for you, please contact the Law Office of Kelby R. Fischer today.

 

What Are the Legal Grounds for Contesting a Will?

If a person does have the legal standing to challenge your will, they must prove that the will is invalid due to one of the four reasons below:

  • The will is incomplete or faulty. Each state has specific laws that dictate how a will or trust must be signed in order for it to be legally valid. A will that has not followed these rules—signed without the proper number of witnesses, signatures missing, or omitting important text—could be contested.
  • Lack of mental capacity. Having the capacity to make a will means that the person understands (a) their assets, (b) their family relationships, and (c) the legal effect of signing a will. Each state has laws that set the threshold that must be overcome to prove that a person lacked sufficient mental capacity to sign a will.
  • The person making the will was unduly influenced into signing it. As people age and become weaker both physically and mentally, others may exert influence over decisions, including how to plan their estate. Undue influence can be exerted on the young and elderly alike. Undue influence is more than just nagging or verbal threats. It must be so extreme that it causes you to give in and change your estate plan to favor the undue influencer.
  • The will was procured by fraud. A will or trust that is signed by someone who thinks they are signing some other type of document or a document with different provisions is one that is procured by fraud.

How to Avoid a Will Contest

Considering the time and expense, will contests are something you’ll want to avoid at all costs. Not only would it jeopardize your final wishes but it also causes unnecessary and painful conflict among your loved ones during an already emotionally trying time. To avoid these disastrous and painful scenarios, consider the following:

  • Do not do it yourself! Even the smallest mistake can leave your wishes vulnerable to being contested by an unhappy relative or business partner. Only an experienced estate planning attorney will be able to help you create and maintain a plan that will discourage lawsuits.
  • Discuss your wishes with your family. It’s important to discuss your wishes with your family. You don’t have to discuss all of the intimate details of your estate plan, but letting beneficiaries know of your wishes and setting expectations for your agents can help avoid future will contests.
  • Don’t just disinherit wayward child(ren). Instead of completely disinheriting a beneficiary who may squander their inheritance or use it against your wishes, you can hold their inheritance in a lifetime discretionary trust, which would be overseen by a trusted individual or third party. Your beneficiary would then receive distributions over time instead of outright cash in a lump sum.
  • Keep your will up to date. Life changes—people are born and die, property is acquired, marriages happen, and your wishes may change. Your will is only effective when it reflects these changing circumstances. Having an updated will/estate plan that encompasses your current goals will be better at discouraging any future challenges.

The Bottom Line on Will Contests

Will and trust contests are on the rise. Putting together an estate plan that is designed to head off challenges will go a long way to giving you and your loved one’s peace of mind.

While it is easy to assume that a will or trust signed in an attorney’s office is valid, this is not always the case. Attorneys who do not specialize in estate planning may be unfamiliar with the formalities required to make a will or trust legally valid in their state. Therefore, it is important for you to work with an attorney who is familiar with the estate planning laws of your state. Ensuring that an estate plan is protected against these legal grounds is particularly important if you wish to disinherit or favor one part of your family.

My office can help you create and maintain an estate plan that will be difficult to overturn. Give me a call today.

What You Need to Know about Buy-Sell Agreements

by Kelby Fischer

Business Attorney or Lawyer in Helena Montana Help with Buy Sell AgreementIf you are a business owner, you probably worry about your bottom line, employee retention, and health insurance premiums, but have you also considered what will happen to your business if you are in an accident? What if your business partner gets divorced and your partner’s ex-spouse is awarded part ownership of the business and wants to make decisions affecting it? Every business should lay out a plan for what will happen if certain events occur to its owners—death, divorce, incapacity, retirement, or the sale of the owner’s interest to another person. Unfortunately, most business owners do not have a business succession plan in place to address these events, risking substantial harm to the business.

A buy-sell agreement is a crucial part of a business succession plan. A buy-sell agreement is a binding agreement between business owners that sets out what will happen to the business if certain triggering events occur. Here are seven things you should consider before entering into a buy-sell agreement for your business:

  1. It is never too early to create a buy-sell agreement. Buy-sell agreements should be discussed as soon as business owners decide to form a business. When the business is first formed, the owners may work with a lawyer to create customer contracts and bylaws or a business operating agreement. This is the perfect time to discuss some of the more challenging issues. In the beginning, when everyone is excited about the business, co-owners should talk about what should happen if one of the owners cannot (or does not want to) continue in the business. It is important to address these issues early, while the owners can remain objective, rather than waiting until they are wrapped in emotion or angst after a triggering event.
  2. Identify and address triggering events. Discuss possible scenarios with your partners. What will happen in the event of an accident or the death of one of the partners? What if an owner gets divorced—will the partner’s ex-spouse attempt to exert control? The partners should also consider other common scenarios, for example, what should happen when one of the owners wants to retire, leave the business, start a new business, or even file for personal bankruptcy. How can the business owners prevent these events from disrupting the business’s day-to-day operations or devaluing the business? The buy-sell agreement should address each of these triggering events.
  3. Establish a valuation method. When an owner wants to leave the business, the owners may use different methods to value the business, resulting in different opinions regarding the amount the departing owner should receive. Establishing the valuation method in the buy-sell agreement allows the owners to agree on how to value the business in advance. This reduces conflict because the owners have already agreed on the method for calculating a reasonable price for the shares. The valuation method will depend on the type of business. For example, a business with real estate holdings may use real estate appraisals to determine asset value, whereas a business with more complicated assets may need to use a market-based, income-based, or total-asset approach.
  4. Determine funding methods for the buyout. It is important to discuss not only how price is determined, but also who can and cannot be a buyer and how the sale will be funded. The agreement should specify methods the buyer can use to fund a buyout of the departing owner if a triggering event occurs. Will the buyer have enough cash, or will loans be needed? Should the business owners purchase life or disability insurance policies to fund the buyout? Will the owners allow an installment agreement for a purchase of shares? Funding is the key to enabling a member to smoothly exit a business.
  5. Structure the buyout. There are several ways to structure a buy-sell agreement. The most common structure involves creating an agreement for the remaining business owners to purchase the shares of the departing owner. Other buy-sell agreements may have terms providing for a repurchase of the exiting member’s shares by the company itself or the sale of the departing member’s shares to another person who is not currently an owner of the business. Some buy-sell agreements are a hybrid of these approaches.
  6. Remove emotion. A big incentive for entering into a buy-sell agreement early is the ability to remove emotion from the equation when an event such as a disagreement, death, divorce, or incapacity occurs, leading an owner to pursue a sale of the owner’s interest. If the owners are able to rationally discuss possible scenarios and exit strategies before an emotional triggering event occurs, they can refer to the agreement itself and focus on the company’s best interests rather than on their own self-interest when it does occur.
  7. Consult the experts. As with most business decisions, owners who wish to enter into a buy-sell agreement should consult both tax advisors and business lawyers. A sale of an owner’s shares or repurchase by the business can be structured to minimize taxes. It is recommended that business owners discuss the valuation and buyout plans with their tax advisor. Business owners should also consult with a business lawyer to determine the optimal buy-out strategies and create a legally binding agreement.

I Can Help

A buy-sell agreement should be among every business’s foundational documents. While creating a properly structured buy-sell agreement involves numerous considerations, the key provisions should address triggering events, valuation, buyout method, and how the buyout will be funded. A buy-sell agreement will help ensure that your business can withstand the inevitable twists and turns ahead. Contact my office today to set up an appointment if you need assistance with a buy-sell agreement or other important documents for your business.

 

Thirteen Estate Planning Terms You Need to Know

by Kelby Fischer

Estate planning…

… is an incredibly important tool, not just for the uber wealthy or those thinking about retirement. On the contrary, estate planning is something every adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate on to when you pass away.

While it should be at the top of everyone’s to-do list, it can be an overwhelming topic to dive into. To help you get situated, below are some important terms you should know as you think about your own estate plan.

Assets

Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.

Beneficiary

A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.

Distribution

A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.

Estate

All assets and debts left by an individual at death.

Fiduciary

A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith.

Funding

The process of transferring (re-titling) assets to a trust. A trust will only avoid probate at the trustmaker’s death if it is fully funded, meaning it contains all of the decedent’s assets.

Incapacitated/Incompetent

Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.

Inheritance

The assets received from someone who has died.

Living probate

The court-supervised process of managing the assets of an incapacitated person.  Conservatorship is another term used for this process.

Marital deduction

A deduction on the federal estate tax return, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.

Settle an estate

The process of winding down the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to beneficiaries) after someone dies.

Trust

A fiduciary relationship in which one party, known as the trustmaker or settlor, gives another party, known as the trustee, the right to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement, outlining how the trust assets will be distributed to the beneficiary.

Will

A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. A will can also contain the nomination of guardian for minor children.

 

If you have any additional questions about estate planning, or would like to consult an estate planning professional, please contact my office. I can make sure you have a comprehensive plan that is tailored to your unique needs and goals.

Probate: Is it really that bad?

by Kelby Fischer

Probate Helena Montana

One of the topics I am most frequently asked about by estate planning clients is probate.

  • What is it?
  • Why is it necessary?
  • How much does it cost?

These are questions I answer on a weekly basis.

Simply put, probate is the court-supervised process of administering a decedent’s estate, ensuring any outstanding obligations of the decedent are taken care of, and ultimately distributing the decedent’s property out the intended heirs or beneficiaries. As daunting as that may sound, we Montanans are lucky because probate here is not nearly as expensive or arduous as it is in some other states. Where the decedent lived will determine where their property will be probated, so if they lived in Montana then their estate will need to be probated here.

One thing to keep in mind is that probate only applies to the transfer or disposition of probate property. Importantly, property owned in joint tenancy, or that which has a valid transfer on death (TOD) or pay on death (POD) designation typically does not need to pass through probate. Rather, those types of assets transfer to the named beneficiaries as an operation of law upon the decedent’s death.

While many people assume that probate is something to be avoided at all costs, in reality probate has many benefits as well. Perhaps the most significant of these is the fact that once the probate process has been completed, there can no longer be any future claims against the estate. If probate is not completed properly, it is possible that a creditor or other person believing they have some interest in the estate could show up well after the estate is settled and make a claim against the estate. Completing the probate process is a relatively inexpensive way to prevent such a scenario from happening.

How complex a given probate matter will be depends on many different factors. If you find yourself appointed the personal representative of a loved one’s estate, don’t panic. Rather, get the help of an experienced probate lawyer who can assist you through the probate process, help you deal with creditor claims, and ensure that the decedent’s estate is probated correctly.

Six things to think about when choosing a Personal Representative in your Will

by Kelby Fischer

Six things to think about when choosing a Personal Representative in your Will

Picking a personal Representative for your will

One of the most important decisions you will make when having your Will drafted is deciding who will serve as the Personal Representative. The Personal Representative is the person who is legally responsible for ensuring that a probate is opened, your assets are properly distributed pursuant to the terms of your Will, and that your estate is closed within the statutory time period. Obviously, there is a considerable amount of responsibility that accompanies acting as a PR. Below are a few considerations to keep in mind when making your decision.

  1. Think about the most responsible person you know. This may be a family member or a close friend. Ideally, this individual can handle basic financial matters and is organized enough to meet deadlines imposed by the court.
  2. Will your PR be around when you die? Choosing a PR who is your age or even a bit younger
    can be beneficial, especially as you get older.
  3. Location is important too. If your estate will need to be liquidated, i.e. assets sold or otherwise disposed of, consider someone who lives nearby in order to minimize their travel costs while arranging to sell your assets.
  4. While it may seem obvious, your Personal Representative must be eighteen years old.
  5. Serving as a Personal Representative can be stressful. Choosing someone who is mature and levelheaded will ensure that your probate is handled quickly and efficiently.
  6. Perhaps most importantly, you should ask if the individual(s) you have in mind are actually willing to serve as your Personal Representative. After all, the best candidate in the world won’t be of much use if they refuse your appointment.

With these considerations in mind you will be much better prepared when you meet with your estate planning attorney. Even after you’ve had your Will drafted or updated you should check in with your attorney every few years to make sure your choice of Personal Representative is still the best fit for you and your situation.

When Should a Personal Representative Use a Probate Attorney?

by Kelby Fischer

Estate Planning Attorney_Helena_ Probate Attorneys_Kelby R. Fischer,Attorneys at Law Helena MT 59601

The short answer is: most of the time.

The slightly longer answer is: whenever you have questions or need assistance in settling an estate.

If you are a Personal Representative or Executor of a decedent’s estate, there is a good chance you have recently lost someone you loved. This can be a confusing and stressful time, and help may be very welcome during these situations.

Here are just a few reasons to use a probate lawyer:

  • If the decedent owned a business a probate attorney can assist with the valuation and sale of the business.
  • If there are family members who are going to contest the will a probate attorney can advise and represent the Personal Representative through the process.
  • If the estate is insolvent or does not have enough money to pay all of the decedent’s debts you should get advice from a probate lawyer before paying any of the creditors.
  • If the estate is large and owes federal or state taxes, you should retain legal and tax counsel.
  • A probate attorney can advise you when the decedent’s property is transferred through contracts, living trusts, transfer on death (T.O.D./P.O.D.) designations or joint ownership.
  • To help you navigate all of the various requirements under the Montana Uniform Probate Code.

Remember, the main reason to retain an attorney who specializes in probate is to help settle the estate as quickly, easily, and inexpensively as possible. The cost of hiring a probate attorney is an expense of the estate, and thus is paid out of the estate, not your own pocket.