TRUSTS AND ESTATES

Adventures in Probate:
Hand-Written Wills and
Dying Intestate

John McKindles

March 2011

More Articles on Dealing with Trusts and Estates

In addition to being an interesting and challenging case, the factual landscape of this article underscores the importance of structuring estate plans, properly funding them, monitoring them and seeking guidance as circumstances change.

Years ago I crafted an estate plan, including a living trust, for a widow (I’ll call her “Wanda”) who had two adult sons, "Bert" and "Ernie," whom she named as successor co-personal representatives (PRs) and successor co-trustees.

Wanda owned her home free and clear, and it was titled in the trust. She also had about $700,000 in liquid assets.

When Wanda passed away in 2008, the liquid assets were equally divided between Bert and Ernie, with each receiving about $350,000. Nothing was done with the house title.

Ernie had special needs, and a guardianship and conservatorship was established for him. The county Public Fiduciary was appointed as his guardian/conservator, and the fiduciary managed Ernie’s $350,000 for the relatively short time that Ernie survived his mother before he, too, died – leaving no estate plan.

Meanwhile, Ernie’s brother, Bert, had placed his $350,000 in a bank account and named two charities – his church and the Public Broadcasting System (PBS) – as “payable on death” (POD) designees. His only other written instructions with regard to his estate were written in pencil on a piece of scratch paper:

“1/2 of my estate to go to PBS. 1/2 to go to Church. No others. All others left out on purpose. Church to manage will.”

Bert signed and dated his crude but valid hand-written will. Two months later, he passed away.

At the time of Bert’s death, Wanda’s house was still owned by her trust, with no surviving trustees or beneficiaries. Ernie’s $350,000 was in his account managed by the public fiduciary. And Bert’s $350,000 was in his bank account.

At that point, Bert’s church approached me for advice and direction, and they took the following steps:

1. The church asked Bert’s bank to make the POD distribution of Bert’s $350,000, divided equally between the church and PBS.

2. The church, in “managing” Bert’s estate per his expressed wishes, opened probate and submitted to the court Bert’s hand-written instructions as a “holographic will” (i.e., a will that has been entirely handwritten and signed by the testator).

3. On behalf of Bert’s estate, the church filed a claim with the Public Fiduciary for Ernie’s $350,000, under the law of intestate succession (a person is deemed to have died “intestate” if they left no valid will). The Public Fiduciary submitted a final conservatorship accounting and a conversion to a probate for Ernie, with Bert’s estate as sole heir. The inventory and appraisement for Bert’s estate reflected Ernie’s $350,000 and the house titled in trust.

4. The church sought a court order determining that Wanda’s house was properly contained in Bert’s estate, in order to secure title insurance for its sale.

5. The church, as the PR of Bert’s estate, equally distributed between the church and PBS the liquidated estate assets of Ernie’s $350,000 and the proceeds from the sale of the house.

In addition to being an interesting and challenging case, this factual landscape underscores the importance of structuring estate plans, properly funding them, monitoring them and seeking guidance as circumstances change. These assets were ultimately used as Bert intended, thanks in no small part to the absence of a third party to challenge the validity of Bert’s hand-written will. If such a challenge had been initiated, the delay in processing this matter would probably have been dramatically extended, at a significant cost to Bert’s estate (and, ultimately, to the church and PBS).

Even though you aren’t “Bert,” it is nonetheless wise to review your estate plan with a qualified professional from time to time, so that you can be assured that the assets you worked hard to acquire will be used as you intend. ●

The events described above are based on an actual legal matter in which John McKindles, as of the date of this article, continued to represent the church in its administration of the decedent’s affairs. The names attributed to the parties involved in the matter are fictitious.