ADDRESSING NON-PROBATE ASSETS IN SIMPLE ESTATE PLANNING
When I first began drafting wills for clients fifteen years ago, I thought paragraphs confirming the intention of the testator relative to non-probate assets like joint bank/investment accounts was a commentary on the obvious and excesses verbiage meant to add a few pages to otherwise basic documents and maybe make the client feel better about their bill.
After all, my own grandfather whose education ended with graduation from the eighth grade in 1913, went to work, raised a family, and disposed of his own estate, without consulting with an attorney via a series of inter-vivos joint tenancies with his children that permitted him to completely avoid probate. His children were treated equally, got along well, knew of his plans, and accepted them in advance; however, not all families have it so good and as contests continue to arise out of basic dispositions like joint accounts, I am giving their treatment more scrutiny and asking clients more questions to confirm and sometimes publish their intentions.
In the absence of contrary instruction from client’s paragraphs like the following have become part of my drafting boilerplate:
“I hereby confirm my intention that the beneficial interest in all property, real, personal or mixed, tangible or intangible (including joint checking or savings accounts) which is registered or held, at the time of my death, jointly in the names of myself and any other person or persons (excluding any tenancy in common), shall pass by right of survivorship or operation of law and outside of the terms of this will to such person or persons, if he, she or they shall survive me. To the extent that my intention may be defeated by any law or rule of court, I hereby give, devise and bequeath all such beneficial interest in all such jointly held property to such other person or persons who shall survive me, "
Although a joint account conclusively establishes the rights as between a joint tenant and the bank, it is always open to the estate of a deceased joint tenant to prove that there was no intention to create a gift, ( the joint interest in the account), to the surviving tenant." Desrosier v. Germain, 12 Mass. App. Ct. 852, 855-856 (1981); see also Miles v. Caples, 362 Mass. 107, 114 (1972); Ball v. Forbes, 314 Mass. 200, 203-204 (1943) (The contract with the bank takes the place of delivery ordinarily required to complete a gift). For example it can be shown that the original owner did not intend to make a present and completed gift, and merely jointed the account for convenience purposes only, allowing the joint tenant to maintain bank accounts, pay bills, write checks, ect. see Miles v. Caples, 362 Mass.107, 115 (1972). The intent of the decedant at the time of the creation of the joint account is a “pure question of fact." Descrosiers v. Germain, 12 Mass. App. Ct. 852, 856 (1981). Eliminating such questions of fact at the drafting table should be the practioner’s goal.
There are two stages in the administration of an estate where this question of fact can be raised: at the initial probate of the will – in the form of a contest over it, or upon the filing of objections to the Administrators/Executors final account in the estate charging that the fiduciary failed to take charge of an asset that should be included in the estate for distribution to the heirs or legatees.
In my own estate planning interviews with client’s, non-probate assets are reviewed with probate assets to estimate the total estate for potential tax planning and distribution but my questions regarding joint accounts and the testators creation and intent with regards to their ultimate disposition have taken on new seriousness in light of contests over the disposition of these types of assets particularly when the client presents with details like:
· Lopsided account jointing favoring one child over the other children because the benefitted child has undertaken more of the burden of their care than the others and has paid bills for the parent from these assets;
· Joint accounts created with non-family members who have been care takers for the client whether or not they have paid bills with these assets;
· Reports from the client that their children have a horrible relationship and are inclined to quarrel with each other over estate dispositions or any favor granted to one but not the other;
· Second marriages where the adult children of the child object and do not approve of the new spouse.
Typically, the burden on proving a testator’s intent relative to the creation of a joint account rests with the party objecting to the will or the account; however, in cases where the joint account holder holds a power of attorney for the testator, or is a trustee or other type of fiduciary with or for the decedent, the burden shifts to the fiduciary “only where the fiduciary has benefitted in a transaction or actually taken part in the questioned transaction ( the creation of the joint account or nominal consideration transfer), Cleary v. Cleary, 427 Mass. 286, 295 (1998), Rempelakis v. Russel, 65 Mass. App. Ct. 557, 563 (2006).
Heirs or legatees seeking to disturb the ownership of jointly held assets need to show fraud, undue influence or that the non-probate accounts were created for the convenience of the testator only and that the decedent had no donative intent to gift an interest in these accounts to the joint tenant and that the assets should be charged to the executor/administrator and allocated within the probate estate. In my own practice, I have begun, where it is necessary, to add language specifically referencing the accounts and any reasons the client may give for their disposition in the will itself to eliminate any questions of fact.
Where the personal fortunes of heirs in an estate are precarious, battles over seemingly obvious things like the ownership of joint accounts are not rare but probable; particularly where the objectors in an estate view their inheritances as the last great fortunes they may ever receive in their own lifetimes: the results are vicious, expensive, and destructive of future family relationships. Addressing non-probate dispositions in the client’s will and taking careful notes of their comments regarding them can preserve their intentions, eliminate costly “questions of fact" in court, and avoid permanent damages within families.