Reminders That Planning Requires Attention to Details

1/23/2020

By: Marshall H. Peterson, Esq.

Two recent cases in probate law highlight the importance of thorough planning.  Clients of Kennerly, Montgomery & Finley benefited from both cases and current and future clients should note the lessons to be learned. 

First, An Exception to the Real Estate Vesting Rule

In In Re Estate of Nichols, 2018 WL 1443017 (Tenn. Ct. App. Mar. 22, 2018), two daughters were provided bequests under their father’s will. The balance of the estate—the residuary—was directed to another beneficiary. The executor claimed that there were not sufficient liquid assets to satisfy the bequests, and that the real estate–the great majority of the residuary estate value–was untouchable as a source of funding. The general rule is that real estate vests in the beneficiary upon the testator’s death and therefore is not part of the probate estate.  The Court of Appeals in this case established an exception to the real estate vesting rule. The result is that the daughters received their bequests, and now, the rule for all estate administrations is that the bequests are funded before the residuary—even if that residuary is real estate.

Second, The Importance of Proper Will Execution

A will is not effective until the testator dies and the probate court admits it to probate.  A will must be properly executed for the probate court to validate it as a will.  The standard for execution of a will is subject to long-standing safeguards.  Among those safeguards is the requirement that at least two witnesses be present when the testator executes the document and that the witnesses and the testator are in the sight and presence of each other. The witnesses are not only affirming that the testator signed the will, but also that the testator appeared to know it was intended as a will, that no one was coercing the signing, and that the testator appeared to have the requisite capacity.

To expedite estate administration, a lawyer-drafted will often involves an affidavit—a sworn statement—affirming the witnesses were present and the circumstances appeared appropriate for a will signing. The affidavit is not part of the will but is prepared as an additional document to be submitted to the court with the will.   The affidavit is presented in lieu of the witnesses appearing to testify as to the proper execution of the purported will.

In In Re Estate of Morris, 2015 WL 557970 (Tenn. Ct. App. Feb. 9, 2015), beneficiaries who were left out of the purported will contended that the document was invalid as a will because the document was not witnessed. The Court of Appeals agreed.  The decedent Morris signed a document that looked like a will, and the document was supported by an affidavit, but no witnesses signed the will.  The consequence of the Morris will being invalidated is that Mr. Morris died intestate, meaning he had no will, and the estate’s assets passed equally to the decedent’s heirs in accordance with state law on intestacy. Those intestate takers included the omitted beneficiaries.

Lessons to be Learned

Estate planning requires thinking through the most effective ways to accomplish objectives, followed by careful implementation. Seek professional help. Your estate reflects your legacy. A lifetime of accumulation given in dedication to loved ones and favored causes warrants taking time to get proper advice and follow-through.  Without appropriate planning, you run the risk of your intentions falling by the wayside.

At Kennerly Montgomery & Finley, we have expertise and experience in trusts and estates, charitable giving, employee benefits, business succession planning, real estate, intellectual property, debtor/creditor, family law, business structures, and asset protecting, among others. We can handle all these issues in litigation, but we prefer to help clients plan and follow-through to avoid litigation and have assurance that their plans and dreams will be implemented.

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