Mediums to Invoke a Peaceful Means to Your Estate Planning Client’s End
Edited by Judith Stalk
Messages from the Other Side: Ways your estate planning can possess disgruntled relatives and friends to turn over a new leaf so your testator client doesn’t turn over in his grave.
Previous chapters in this series on Estate Conflict Management have addressed the great financial and emotional impact of court adjudicated estates conflicts. Earlier chapters have discussed the benefits and disadvantages of addressing conflicts either during the estate planning process or as soon as practical post-mortem, as well as the legal and ethical requirements of a meeting among all the players in order to resolve conflicts that arise during these two moments in time. This chapter focuses on alternative tools estate planners might consider building into estate planning documents in order to avert or reduce conflicts post mortem.
The will or trust is the last formal communication of the testator. Each is cold, impersonal and most often contain form language that conveys none of the testator’s thoughts or feelings. The post mortem period may find some family members in grief, confusion and in need of an explanation about the bequests of their deceased relative or friend. However the testator is no longer there to explain. Many attorneys strongly believe a “side letter” written by the testator but not intended to be a testamentary document, can provide peace to the family. The side letter expresses why the testator has decided to make the bequests he or she has made, and, in the words of one attorney, if written from the heart, can also bring understanding.2 Another attorney comments that his grandfather left his entire estate to his second wife. The grandfather also wrote a personal note for the children and grandchildren of the first marriage explaining his desire to take care of his second wife, and reiterating that he cared for his children and grandchildren of his first marriage. This allowed the attorney to understand and feel better about not receiving a gift from his grandfather.3
Another attorney warns it is that which is not said that leads to trouble. It is common for one of the adult children to become the primary care giver for the senior parent, who may by choice make special gifts to that adult child during the senior’s life time. When the senior dies leaving little to the care giver’s siblings, suspicions can flourish. “It’s the stuff in the dark, not on the table, that raises questions and makes others suspicious.” A personal note from the parent explaining the reason for gifts made to the care giver in gratitude can alleviate some of the misunderstanding after he passes. This attorney believes sharing information is more powerful and effective as a deterrent to conflict than a mediation provision in a trust or will.4
Benefits and Disadvantages of Mediation Provision in Estate Planning Documents
The opinions of attorneys around California are very diverse as to whether or not it is beneficial to include a mandatory mediation provision in estate planning documents. Typically a mandatory mediation provision requires that the parties to a dispute attempt to resolve the conflict before filing suit and that if they fail to mediate, the party who refuses to participate can not recover attorney fees in trial.
Many attorneys opine that the greatest benefit in having a mediation provision in estate planning documents is that it sends a message: If there are conflicts which arise after the death of the testator, it is the testator’s wish that those conflicts be resolved through mediation rather than litigation.
Some attorneys believe there is no down side to a mandatory mediation provision. Others believe that a mandatory mediation provision weakens a no contest provision because a mediation would provide the potentially contesting party a “free look” at the parties and issues. The “free look” assumes that party will not be attempting to resolve the conflict in good faith.
Some attorneys have suggested inserting the mandatory mediation provision into the no contest provision of estate planning documents. The effect, these attorneys say, is a conditional gift. “If you challenge these documents before first mediating, you lose your gift.”5 “This may put the fear of God into them.”6 Some attorneys believe that courts will enforce the testator’s intent to require mediation. Other attorneys believe such a provision is not enforceable as to any party who has not signed the estate planning documents, and that leaves only the trustee against whom the provision can be enforced.
One attorney is reluctant to insert a mandatory mediation provision in estate planning documents for tactical reasons. When he is defending a claim by a contesting party, his preference, before mediating such a contest, is that the contesting party should assume the considerable expense and risk of the courts by having to file a petition. The contesting party should be made to “put up or shut up” before the trust or estate should be required to defend such a claim. Having a mandatory mediation provision “ties the hands of the trustee and manages the estate from the grave.”7
Another attorney recounts the dispute between three sisters as to which of them should be successor trustee of their father’s estate. The presence in the trust document of both no contest and mandatory mediation provisions expressed the father’s manifest desire that his daughters peaceably resolve conflicts involving his estate through mediation had no beneficial effect.8
A thorough search on Lexis for appellate cases adjudicating the enforceability of a mandatory mediation provision in a will or trust document revealed no such cases in California or any other state. When such a case arises, the court will have to consider the competing public policy interests of supporting the last wishes of a testator for the non-litigious resolution of claims verses enforcing a provision against a party who is not a signatory to an agreement. However, if the contesting party claims that the testator was under undue influence, lacked capacity or there was fraud in the creation of the estate planning documents, the court will likely grant a hearing in order to determine the validity of the underlying testamentary documents, not withstanding the presence of a mandatory mediation provision or no contest provision.9
A Westwood estate planning attorney always inserts a mandatory mediation provision in the no contest clause. As of this writing he is not sure if it is enforceable as none of his clients have died.10
“If a person wants to contest a trust or will, whatever you put in the document will not prevent some people from contesting.” Another attorney believes “This condition will invite conflict. You tell a beneficiary ‘If you don’t like it, mediate it.’ Without such a provision the message is, ‘If you don’t like it, you won’t get anything.’”11
Incentivizing the Contesting Party
One attorney suggests adding a clause to the no contest provision such that a failure to mediate is deemed to be a contest; and as a result of failing to mediate, any gift otherwise provided lapses.
Another attorney recommends using a voluntary mediation provision framed to incentivize contesting parties to accept the gift or face a significant delay in distribution. He recommends language such as, “If you have any complaint about the amount of your gift under this document, or the manner in which the personal representative of this estate has administered the trust or estate, you shall not receive your distribution sooner than 300 days after date of death of the testator. If you acknowledge that you are completely satisfied with the gift and administration you will receive the gift within 180 days from date of death.” Claims are all about distribution as soon as possible.12
Another attorney believes the best deterrent to a will or trust contest is a gift from the decedent to the possible contesting party. To create an incentive, the gift needs to be substantial enough to deter the probable contesting party from acting due to the risk of forfeiting the gift. In addition the testator should authorize the trustee to defend any claims. The attorney believes the contesting party’s dual incentive to resolve the claim before litigation is the risk of losing the gift and the knowledge that the distribution will be reduced by the attorney fees paid by the estate in defending the claim.
Attorneys and other estate planners have the opportunity to be proactive in offering new choices to their estate planning clients. These alternatives have the potential of preserving more of the testator’s financial estate and better preserving family harmony and the relational estate among the survivors. Lighting the way to a middle ground from the underground.
We are all deeply indebted to the many attorneys who shared their expertise and wisdom for this chapter. In addition to the hundreds of attorneys and other estate planning professionals who have participated in the Estate Conflict Management workshops, many more attorneys have contributed through interviews and during meetings of the ABA committee on Emotional and Psychological Issues in Estate Planning. Thank you very much.
To view previous chapters visit our homepage and mouse over Library and Estate Conflict Management Series for a menu of the series.
- 1. Copyright 2009 by Paul Fisher
- 2. Attorney KP during committee meeting of the ABA’s Emotional and Psychological Issues in Estate Planning, 6-12-09
- 3. Attorney MW during committee meeting of the ABA’s Emotional and Psychological Issues in Estate Planning, 6-12-09.
- 4. Interview with attorney ME.
- 5. Attorney at Estate Conflict Management workshop for Sacramento County Estate Planning Council.
- 6. Attorney at the Fresno County Bar Association workshop.
- 7. Interview with attorney PG.
- 8. Attorney JH during committee meeting of the ABA’s Emotional and Psychological Issues in Estate Planning, 6-12-09.
- 9. Interview with attorney/Pepperdine law professor KK.
- 10. Interview with attorney KW.
- 11. Attorneys at Alameda County Bar Association workshop.
- 12. Interview with attorney EY