If your clients are rich, the likelihood of a will being contested grows. So make sure they create wills that leave minimal room for interpretation.
No strategy can guarantee that an estate remain litigation-free, but the following strategies reduce the likelihood of litigation:
Include an in terrorem clause in wills: Such a clause states that any beneficiary who contests the will automatically forfeits their gift. This can be an effective deterrent to litigation, because the beneficiary challenging the will automatically loses their gift or inheritance. For an in terrorem clause to be effective, the beneficiary’s gift must be valuable enough to merit serious consideration about pursuing litigation.
Have proof of capacity: If your client writes a will and his mental fitness is questionable, ensure he take a capacity test. In addition, ask the lawyer drafting the will to make notes about that person’s mental state and capacity. And, if older clients revise their wills significantly – either to include or disinherit family members, or to substantially increase or decrease gifts – ensure they take a capacity test.
Communicate: Often, family members litigate because they don’t believe the will reflects the true intentions of the testator. It’s essential the testator communicate with heirs and beneficiaries about intentions for distribution of the estate.
Have a professionally mediated family meeting: Sometimes called a family conference, such a meeting between the testator, his beneficiaries and other estate-planning professionals is one way to keep everyone informed. The meeting advises the beneficiaries of the testator’s intentions and seeks input in developing the estate plan. At the end of the family conference, the mediator invites beneficiaries and the testator to sign an agreement not to contest the will.
Impossible to bulletproof
Can you bulletproof your client’s will? Not really, say most lawyers, because the more complex you make the will more likely it is to be challenged.
There’s also one other factor: the client is dead, says Felice Kirsh, a partner with Schnurr Kirsh Schnurr Oelbaum Tator LLP. “You cannot control things from the grave.”
Creating trusts and structures adds to complexity and cost of administrating it, which can be justified if the estate in the tens of millions, but that comes with emotional risks. Putting a trust company in charge sends the message your client doesn’t trust her children to oversee the money.
Read: How estates get ruined
Estate lawyer Ian Hull says he’s trying to draft so-called “poison pill” clauses into wills that trigger a lesser bequest or penalty if there’s a court challenge. But some of his fellow lawyers aren’t yet convinced the technique will stand up over time.
Even giving away the bulk of the estate in life may not work. Take Albert Latner, a successful Toronto real estate developer who gave each of his four children $150 million in a “velvet handshake” – distributing their inheritance while he was still alive. Alas, a few years later the family brother and sister fought against father and brother in a series of litigations. It’s unclear if the battle is over.
Complexity can also backfire. While the courts can’t invalidate an entire will, they can redraft it to reapportion assets, which is why it’s better to settle the family feud proactively.
A well-drafted will with thoughtful provisions, backed perhaps by a video offering some insight into the decisions and attesting state of mind might also hold sway, says Justice David Brown, former Toronto estates court jurist. “It wouldn’t be a legal document but it might be of interest in some cases. We expect police to [film] statements, so why not?”
Parts of this story originally appeared on capitalmagazine.ca