Solution
New York law permits a person making her estate plan to cut a pre probate deal with the person who will be cut out. More specifically, this includes before the testator’s or parent’s death or lack of capacity. This means that the person to be cut out can be dealt with directly by the testator or parent during the testator’s or parent’s life and on the testator’s own terms. There are many benefits to this. First, the person being cut out is required to deal directly with the testator or parent during the testator’s life – rather than fighting with siblings after the testator has died. The strategy can reduce family strife after the decedent has died. The commonly asked “why question” in connection with the testator’s estate plan, is answered during the testator’s life, i.e. by the parent, rather than in the court room in the context of a 1404 hearing. There is immediacy. In fact, the person cut out of the estate receives his funds (the carrot absent the string) first and before all those sharing in the estate. There is certainty. Attorney’s fees and the substantial costs of litigation are curtailed or eliminated.
Mrs. Cook and Her Niece
Here is how the rule evolved from the thoughtful estate planning efforts of a widow. In the early 1920s the Court of Appeals decided In re Cook’s Will 244 NY 63, a case which arose in Washington County. Mrs. Cook was an elderly widow of wealth and decided to make a will disposing of her property to charities. Her only heirs and next of kin were a sister, a niece and two nephews. They all were all adults and not close with her. In preparing for the disposition of her property, she wrote to her niece as follows:
Dear Katherine:
In making my will, it was my intention to bequeath you something. After consideration, it occurred to me that it will give me greater pleasure to give it now, and you to receive it now, and in doing so I am asking you if you would be willing to sign and receipt an agreement, agreeing that in consideration of this gift now, that you agree that you will not at any time contest or join with others in contesting my will. The same conditions apply to your (2) brothers, who must also sign such an agreement. *** Kindly let me have full names and addresses of your brothers.
Her niece’s reply indicated that she was glad to receive the gift from her Aunt as her brothers and herself were trying to secure a home for their respective families. Having failed to state, however, anything about contesting the will, another letter followed on February 8, 1924, written by G.E Knowlton, on behalf of Mrs. Cook, where he stated:
Dear Mrs. Russell:
Mrs. Robert H. Cook has handed me your letter of January 21st in which you state that you would appreciate a gift from her, but you do not say that you will refrain from contesting her will.
May I ask you to be good enough to advise Mrs. Cook as to your attitude in this matter.
A few days afterwards her niece replied:
Dear Aunt Julia:
I am sorry that I omitted to state in my letter that I would agree to the agreements mentioned in your letter. I both appreciate and agree to those conditions.
Thereafter, her niece signed and sent to Mrs. Cook the following agreement:
Dated March 5, 1924.
Received from: Francis Julia Cook
….Dollars
As a gift from her and in consideration of this gift, I agree that I will not at any time contest or join with others in contesting her Will.
The court was confronted with the question: Having received the advances or gifts under the circumstances, can these heirs and next of kin of Mrs. Cook now contest her will?
Despite these writings they tried to do so. They alleged that Mrs. Cook was incompetent, and that her will was procured by fraud and undue influence. In upholding the validity of the agreements not to contest Mrs. Cook’s will, the court held that agreements not to contest another’s will are not void as against public policy. Further, the court stated that agreements made between heirs and next of kin after the death of the decedent have always been found valid when made in good faith. Agreements made before the death of the testator regarding the future disposition to be made of the estate are akin to those implied in the taking of a legacy bequeathed upon the condition stated in the will that no contest shall be made.
The rule in New York, is that where a distributee in consideration of a gift from the family member (testator/decedent) during her lifetime, has agreed not to challenge the decedent’s will, he shall not file objections. The central element of the rule is that by contracting with the decedent for the present day benefit, the distributee divests himself of legal standing to challenge the will.
The effective solution is an arrangement structured as a deal or a contract. The deal is that the distributee receives present day benefit (payment) in exchange for the agreement not to the challenge the parent’s will on death. The problem person or child is required to contract away, relinquish and waive the right to challenge the decedent’s will. The approach is well founded in New York law such that it must be considered as an alternative to years of potential litigation between the disinherited distributee and the estate after the testator has died.
There are some important steps to be followed to avoid litigation. The proper approach is significant because the ultimate arbiter of the validity of the agreement will be the Surrogate Judge after the testator has died and the distributee attempts to get out of the agreement. It is recommended that experienced and strong lawyers be involved in the process. To this end, it is important to have the distributee represented by his own lawyers. He should not be represented by the decedent’s lawyers. If money is an issue, the gift can include payment of the distributee’s legal fees under certain circumstances. The process should be considered as one involving the negotiation of a contract or in the planning context, similar to negotiation of a waiver of a spousal right of election.
As was the case for Mrs. Cook, when done correctly a pre mortum and pre probate gift to a problem person or child can be efficacious and highly successful strategy to avoid estate litigation.