I was recently honored to be published in the semi-annual newsletter of the Trusts and Estates Section of the Virginia State Bar (That is not an endorsement of the positions taken of course or of me in general) on an interesting (well, to me, enough to publish an article about it!) subject: No-contest clauses in wills and trusts. I’ll have to try to hunt up a copy of the newsletter available.
My article is concerned with these clauses which punish those who contest a will or trust provision with loss of whatever bequest in given to that beneficiary if they lose the contest. The Commonwealth is surprisingly strict on these clauses, giving them full force and effect, albeit perhaps reluctantly (one of my points in the new case the Supreme Court of Virginia just decided on them is that neither the trial nor appellate courts seemed eager to use the clause to defeat the bequest challenged or in this case allegedly challenged) but most states have a probable cause standard – the clause has no power if there was probable or reasonable cause to believe the contest had legal merit. (Some states allow a challenge if there is an allegation of forced documents or similar fraud.)
So I propose another law (I perhaps have more bill ideas than some legislators!):
“A provision in a will or trust or similar document purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.”
It’s based on a provision in the Uniform Probate Act (a proposed law by the Commissioners for Uniform State Laws) and is the law in for example Arizona.
Seems to me that no contest clauses can serve a useful purpose to discourage frivolous litigation by disappointed parties who did not get from a relative what they wanted or expected. BUT it also hinders access to courts and that is a biggie for me. So I could support this law in Virginia and have asked several delegates and senators to consider it.
The second idea is not mine. The article was written by attorney John T. Midgett. But it describes a reform of the augmented estate.
What? My readers are asking…well read on
You might have heard the saying: You can’t disinherit your spouse. The reason you cannot is the augmented estate (at the ancient English common law it was called dower and curtesy and it said one third for the surviving widow but one half for the surviving widower) which is now a statute that provides for one-third of the estate to the surviving spouse (whichever gender) at the election of that spouse. The spouse however has to renounce any bequest under the will or trust. As the disclaimers at the end of commercials say: Restrictions may apply!
What Midgett calls for is a 50% augmented estate (of both spouses’ estate) but he would make it a sliding scale based on years married and also allow more effective ways for an incapacitated spouse to make the election. I think this is wise policy although I am not entirety convinced.
Delegate Jay Leftwich seems to have made this a bill in HB 231 for the consideration of the Virginia General Assembly.
HB 231 Augmented estate; elective share of surviving spouse.
SUMMARY AS INTRODUCED:
Augmented estate; elective share of surviving spouse. Revises provisions of the Code related to the elective share of the surviving spouse of a decedent dying on or after July 1, 2017 to track revisions made to the Uniform Probate Code by the Uniform Law Commission. The bill calculates the elective share of the surviving spouse as a graduated percentage, taking into account both spouses’ assets and the length of marriage. Under current law, the surviving spouse is awarded 50% of the estate if there were no children and 33.3% if there were children. The bill also clarifies the process by which the elective share is to be claimed and provides instructions for the valuation of assets to encourage uniformity in the method of calculation of the elective share.
I also asked the same group of solons to consider this bill, too. I would like to see more concern about divorce laws but this is the beginning of a start. And Delegate Leftwich is a Republican from Hampton Roads (Chesapeake) area!
Now that my readers know a lot more about estate planning than they wanted to, perhaps even these issues can show intent to do sound government that does not cost gobs of money, set up new programs or nakedly advance progressive agendas.
Article written by: Elwood "Sandy" Sanders