Capacity to Execute a Will

Imagine a situation where a loved one dies and there is a contest over the validity of the Will. The question arises: What was the decedent's mental state in drafting the Will?

A typical, knee-jerk answer is that the decedent had a perfectly clear state of mind.

However, testamentary capacity doesn't require such a high level of clarity in communication and comprehension. Further, overstating a decedent's capacity might actually lead a trier of fact to become skeptical of the Will proponent, especially if other evidence exists that the decedent's mind wasn't as clear as stated.

When a Will is contested, the proponent has to prove that the decedent had the capacity to make the Will. Meeting that burden requires showing that the testator knew the nature and extent of their property, knew the natural objects of their bounty, and was aware of the contents of their Will. Age and sickness aren't determinative, and mental illness or failing memory do not preclude a decedent from having testamentary capacity to execute a Will. 

Cases on lack of capacity really come down to a he-said-she-said analysis. In one recent case in New York, an 83-year old woman executed her Will while in the hospital. A form in her records entitled "Adult Patient Without Capacity With Surrogate for DNR Order," stated, "I have determined tat the patient lacks capacity to make this decision," by reason of "dementia." The records also noted that the woman became disoriented during dialysis the day she was admitted.

Yet the woman's attorneys, whom she had known for years, said that her behavior at the time of executing the Will was similar to that in her prior interactions with them and indicative of a sound mind. Further, her medical records from the day the Will was executed said she was alert.

In this instance, the case didn't go to trial. The court said that the parties protesting the Will didn't provide sufficient evidence to raise a triable issue of fact that the decedent lacked testamentary capacity.

However,in an earlier case before the same court, a woman in her eighties executed her Will two years after suffering a debilitating stroke. A few months later she was found to be an incapacitated person under the state mental hygiene law. The court at that time said she needed one-on-one support and suffered from dementia. 

Like the case noted above, evidence was offered on both sides. The proponent offered evidence that the attorney and others said the decedent was able to speak normally and understood her surroundings. However, the parties objecting produced evidence from a guardianship proceeding and the testimony of a treating physician that the decedent lacked testamentary capacity.

In this case, the court decided the case should go to a jury.

What happens in matters like these really depends on the facts and circumstances of the individual case. But it's important to keep in mind that in order to prove capacity to execute a Will, it isn't necessary to demonstrate that someone who had challenges with verbal communication at the end of life or showed periods of confusion was of a perfectly clear state of mind. In fact, if you try to argue that too strongly, be aware that it might lead to skepticism on the part of the judge or jury.

How to Leave Your Home to the Kids

Deciding when and how to relinquish the family home can be one of the most challenging issues seniors face. For many, a home is their most valuable asset and a cornerstone of the wealth they would like to transfer to their family.

If you are one of AARP's estimated 87 percent of older adults who want to stay at home and "age in place," you may be planning to stay put as long as possible with the goal of transferring your house to your heirs after you die.

Here is a review of the ways you can go about leaving your home to your children:


Perhaps the simplest way to do this is to leave the house to designated heirs in your Will. After you die, the house will pass on to your named beneficiaries in probate. Your heirs will incur normal probate costs to administer the transfer, typically anywhere from 5 to 15% of the value. If more than one person inherits your home, they must decide jointly what to do with it. If one child wishes to keep the home while another wants his or her share of the proceeds, for example, the conflict could create an ongoing rift among siblings.


Other legal options, such as trusts, can reduce the costs and delays of probate. Establishing a Trust can simplify the process, lower the cost of transferring assets to your heirs, and allow you to cover certain expenses upfront. A trust can also help reduce family conflict as the Trustee can make distribution decisions himself. 

An irrevocable trust can even provide significant protection from all kinds of creditors, including medicaid claims and beneficiary's divorcing spouses. 

There are significant differences between revocable and irrevocable trusts, including cost, upkeep, and flexibility. There is a different type of trust used to solve each issue. Your circumstances are unique, and your trust-planning will be as well.


A third option is to deed your home to a beneficiary, before your death, with or without retaining a life-estate. This solution is the least costly option, but comes with a number of significant issues. One major issue is that after such a transfer you would lose full control over the the home, including the ability to unilaterally refinance or sell the home. If you transferred the home without retaining a life-estate, you would also lose the legal right to continue to live in the home. For these reasons and others, transferring your home before your death is generally not the best option. 

Before you plan to leave a home to someone, you should talk to them to find out if they really want it. If they don't have any intention of living in the home and don't want the responsibility of managing real estate, you should look at other less burdensome options.

Have a conversation with your kids, evaluate your own needs, and then consult with an attorney who will help you determine which option best fits your unique circumstances. 

New Law Allows Individuals to Create Special Needs Trusts

Buried in a new federal law is a tiny change that will now allow individuals to set up their own special needs trusts. The sum total of the change is two words - "the individual" - intended to correct a more than 20-year-old error. The change is called the Special Needs Trust Fairness Act.

Authorized under the Omnibus Budged Reconciliation Act of 1993, special needs trusts protect assets and allow an individual to maintain eligibility for governmental benefits such as Supplemental Security Income (SSI) and Medicaid. 

Prior to the law being enacted, a person with a disability under the age of 65 would, in most cases, have to spend down to reach $2,000 or less in assets before becoming eligible for Medicaid and other governmental benefits. The individual would have to remain at that asset level to continue receiving benefits.

Under the 1993 law, a disabled individual's assets in a special needs trust are disregarded in evaluating the individual's assets for the purposes of obtaining government benefits. At death, the state that provided for the person's care would be repaid out of the assets remaining in the trust. 

But here's the issue. The law allowed parents, grandparents, legal guardians and courts to create such trusts. So what happens to individuals with disabilities who don't have living parents or grandparents? Previously, their only option was to go to court to have a special needs trust created on their behalf.

Now, under the new law, individuals can create their own special needs trust.

This is a huge relief, because individuals can avoid the extra time and costs incurred from going to court. But it's still essential to have an attorney draft the trust property and make sure it's customized to your needs and those of your loved ones.

Estate Planning Options for Blended Families

The dynamics of a blended family, defined as one where at least one spouse has at least one child from a prior marriage or relationship, can complicate financial and estate planning because no off-the-shelf plans apply.

It's important to contact your estate planning attorney to ensure complete review of all personal and economic aspects of your family and a resulting plan that works for everyone involved. 

From designing account beneficiaries to updating Wills and Trusts, it takes attention to detail to ensure specific wishes are carried out properly. Effective, collaborative planning can address the family's needs and goals while building trust and helping everyone move forward together.

A good place to start is with reviewing and updating beneficiary designations for life-insurance policies and retirement accounts. That's a simple way to ensure that the proper beneficiaries are noted on all accounts and the proceeds from those accounts end up going to the correct individuals.

While any estate planning must be done on a case-by-case basis, the following are options to consider for blended families:

Reciprocal Wills

Some blended families use reciprocal Wills, where the assets pass outright to the surviving spouse, as their primary estate plan. They do this for the sake of simplicity and to keep their estate planning costs at a minimum. 

But this type of plan comes with some serious disadvantages. One issue is that it does not provide a great deal of comfort when there are children from a prior marriage, because the first spouse to die has no guarantee that the surviving spouse will provide for his or her children when the surviving spouse ultimately dies.

There are several ways the surviving spouse can defeat the intent of the deceased spouse even without changing his o her Will, including making gifts of assets during his or her lifetime, changing beneficiary designations, and re-titling assets as joint with a right of survivorship with his or her own children or even a new spouse, potentially leaving nothing to pass under his or her reciprocal Will.

Another major disadvantage of a reciprocal Will is that it is revocable. That means the surviving spouse can change it to favor his or her own children charities, or a new spouse. The surviving spouse also could deplete the estate by overspending and incurring debt, leaving nothing for the children of the deceased spouse. 

Non-reciprocal Wills

An option that does not require reliance on and trust in the surviving spouse is to have each spouse create a non-reciprocal Will, or Wills that are not exactly the same and don't leave the estate outright to the surviving spouse. Under this approach, each spouse could leave a percentage or dollar amount to the surviving spouse and a percentage or dollar amount to be divided equally between his or her own children, but not the children of the other spouse. 

It can be difficult to determine at the time the Will is made the amount needed to provide for the spouse and an appropriate amount to go to the children, so this type of estate plan requires monitoring and updating over time.

Life Insurance

A third alternative is to purchase life insurance to provide for the surviving spouse or the children of the first spouse to die. The advantage with using life insurance is that it guarantees, as long as the policy is active, that the children will receive something upon the death of their parent. Life insurance policies tend to become increasingly expensive as you grow older, however.

Life insurance provided by an employer can be used, but there are limits to the amount an employer provides. Also, coverage usually terminates when employment ends and may become unavailable if an employer files for bankruptcy. Therefore, relying solely upon employer-provided life insurance may not be the best alternative.

Testamentary Trusts

Creating a testamentary trust that becomes irrevocable upon the death of the first spouse meets the dual goals of providing for the surviving spouse during his or her remaining lifetime and then, upon the death of the surviving spouse, passing the remaining assets to the children of the first spouse to die.

Under this approach, a trustee will have to be appointed. Common options include the surviving spouse, a child of the first spouse to die, a third-party or a trust company. Appointing the surviving spouse or a child of the deceased spouse has a greater risk of creating family friction, and therefore a third-party or a trust company might be more appropriate.

Whichever option you choose, any estate plan should remain dynamic and adapt to change when necessary, particularly given the added complexities of a blended family.

Remarriage is a Reminder to Revisit Your Estate Plan

Approximately forty percent of marriages are remarriages for at least one partner. When you remarry, you should review numerous issues related to your estate plan.

For older people, the main focus may be ensuring that your adult children or grandchildren have an inheritance. Without proper planning, a new spouse could receive assets that were originally intended for children and grandchildren.

Here are some important elements to review in order to protect everyone's interests when you remarry:

Check the titling of your assets.

Who gets your assets when you die depends on how the assets are titled -- not on what you say in your will. If an asset is titled as a joint tenancy with rights of survivorship, tenancy by the entirety, or community property with rights of survivorship, it will go automatically to the surviving owner. That means you have to retitle the assets if you don't want them to pass to the surviving joint owner. 

Revise your beneficiary designations.

When a person dies, many retirement accounts automatically pass to the person's spouse, unless the spouse has signed a waiver or disclaimer. This is true even if the person's will and prenuptial agreement state otherwise. Be sure you know where your retirement accounts will go if something happens to you. You should also review the beneficiary designations on life insurance policies, annuity contracts, and bank or brokerage accounts.

Update your power of attorney and health care proxy.

Make sure you update your power of attorney and other health care directives if you want to change who you list as your agent. Also, make clear who you want as your guardian, which will make it easier for your new spouse or another relative to care for you if you become ill.

Put certain assets into a trust.

Many people who remarry provide in their will that certain of their assets will pass into a trust for the surviving spouse after they die. The trust will commonly pay income to the second spouse for the rest of his or her life, and when that spouse dies, the assets will go to the first spouse's children.

Oftentimes, such a trust is called a "Qualified Terminable Interest Property" trust or QTIP. One advantage of a QTIP trust is that all the property in the trust is treated as having gone to your spouse for estate tax purposes, so there is no estate tax on the assets at the time of your death.

In the trust, your spouse will likely want investments that generate income, while your children will favor growing the principal. It is important to specify how the assets are to be invested. Otherwise, you risk having your spouse and your children arguing about it. A possible solution is to create a "unitrust" that will pay the spouse a percentage of the total assets each year - that way everyone benefits if the assets are appreciating.

One caveat to creating a QTIP trust is if your new spouse is significantly younger than you are and could possibly outlive your children. In that case, it might be better to protect your children's interests by buying a life insurance policy with your children (or a trust for them) as the beneficiary.

Consider buying long-term care insurance.

If one spouse requires expensive nursing home care, the other spouse may be legally required to pay for it. Few things can drain a child's potential inheritance faster than paying for a step-parent's expensive medical care. Long-term care insurance is a great way to solve this problem before it happens.