By MATT CHANDLER
Buffalo Law Journal

Just hours after Michael Jackson moonwalked offstage for the last time, lawyers, relatives and other assorted "insiders" were jockeying over the King of Pop's will as they fought to lay claim to potentially hundreds of millions of dollars in assets and future royalties.

It is a scenario that is played out every day across Western New York-- - on a considerably smaller scale - and one that leaves the assets of the incapacitated or deceased person vulnerable to a drawn-out, contested legal battle.

Linda Stravalaci Grear, a lawyer who focuses on estate planning, says high-profile celebrity cases notwithstanding, successfully contesting a will is a relative rarity given the burden of proof required.

"There are only five grounds for contesting a will. You can't just contest a will because Mom and Dad left you out or they left so-and-so more than you," said the HoganWillig PLLC attorney.

Of the possible grounds for contesting a will - fraud, undo influence, duress, mistake and lack of mental capacity - those that she's seen cited most frequently are lack of mental capacity and undo influence. But estate planners stressed that overturning a will that has been properly filed with an attorney is rare, on any grounds.

An ounce of prevention

There are things people can do, Grear said, to minimize divisive battles once they become incapacitated or when they die, and to increase the chances that their wishes will be carried out.

"An informal thing people can do is to sit down and draft a letter of instruction to your family as to what your intentions are," she said. "I've had clients go so far as to walk through the house and put stickers on the back of items and say, ‘This is to go to so-and-so.' It certainly makes things a lot easier. Now, you can't legally enforce that, but it is more of a moral enforcement on the family."

On the formal side, Grear said, every adult, regardless of the size of the estate, should have a current last will and testament, a living will/health-care proxy and a document designating whom they wish to award power of attorney to, and when.

"The best thing to do to avoid squabbles over your estate is to plan ahead and not just put your head in the sand and assume everything will be fine," she said.

A recent Harris Interactive poll found that more than half of American adults do not have a valid will in place.

Though in Erie County, 68 percent of estates filed with the county last year had wills, county Surrogate Hon. Barbara Howe said she sees the painful results of people dying without getting their affairs in proper order every day.

"I can't tell you how many people have stood before me and said ‘Well, my late mother meant to change the will to provide for her grandchildren,' but the changes were never made," Howe said. "In those cases, I'm bound to the current situation (of the will). If there is no will, I am bound to go by what the law provides. I'm not permitted to take testimony, et cetera."

In addition to insuring that the three key estate-planning documents are filed, Grear said, people who anticipate that there may be a dispute over their estate can take steps to protect their wishes.

"If you expect that someone may contest your will, what we often suggest is putting in a no-contest clause, which basically says if anyone contests to the distribution of this will, they get nothing," she said. The law allows the testators, those filing a will, to be very specific as to how their assets will distributed, affording them an additional buffer to protect their final wishes.

Pick your agents carefully

Another critical element in the estate-planning process is the selection of a will executor. Phil Brothman, an estate-planning attorney with Harris Beach PLLC, said the selection of the executor is one of the early points he raises with his clients.

"We want them to understand the responsibility that goes with that," Brothman said. "It's not an honor, and in many families they look to the oldest child and that really isn't a criterion you should use."

As with the person chosen to have power of attorney, the executor of the will holds a powerful position in relation to an estate, and a duty that can be abused.

"The person, once they are approved as the executor, has to sign an oath that says he or she will carry out the terms of the will to the best of their abilities and they are legally obligated to do that," Brothman said. "And there are severe penalties if they don't do it."

"During my career, I've been involved in many will contests on both sides. The executor really has the upper hand, but that is not to say (overturning a will) can't be done."

The bottom line, say local estate planners, is to communicate early in the process and often with relatives and loved ones regarding your wishes and retain a lawyer to prepare and execute your estate-planning documents.

It's all relative

Money is frequently not the driving force behind the contesting of a will, sources said.

"It isn't always the big issue," Brothman said. "A couple of million dollars is maybe not worth fighting over, but to you or me, 10 or 20 thousand dollars may be. I've been involved in some hotly contested, nasty will contests that may be over the family dwelling, or some personal effects that really mean a lot to the individual."

Hiscock Barclay partner Catherine Wettlaufer described a case that illustrates that point to the extreme. "I have a case where two brothers are fighting over VCR tapes of Julia Child," she said. "It's bizarre.

"I've been practicing for almost 25 years, and in the early years of my practice, it was unheard of for anyone to contest a will," Wettlaufer added. "But as the economy has changed and lawyers have made people feel as though they are sometimes entitled to something, I've seen more and more challenges to wills."

Mary Dee Martoche, chief clerk of the Erie County Surrogate's Court, said it's a myth that wills are contested only when there's a million-dollar estate at stake.

"If you have a million dollars, it is easier to give away $50,000 of it than if you have $1,000 and somebody wants you to give away $100," she said.

"Sometimes, the less you have, the more important it is to you," said Martoche. "The size of the estate has little bearing on how hard people fight if they want to object for something."

A major part of protecting the wishes of a loved one as health problems arise is simply understanding what assets they have and where they are located. Laurie Menzies, a partner in the Cheektowaga law firm Pfalzgraf Beinhauer & Menzies, said that can pose a real challenge when dealing with a generation of clients who were raised with the belief that financial affairs are a private matter, not to be discussed openly.

She related the story of a client who had stock certificates in a safety deposit box. They'd belonged to her husband, who had passed away 17 years earlier. At 93, the client prepared to enter an assisted-living facility, unaware of the value of the stock certificatess. Menzies discovered that the woman was sitting on $1.3 million in stocks.

"She didn't think she could afford assisted living, and I got to tell her she could afford to go wherever she wanted," Menzies said. "Unfortunately, it leaves her very little time to use and enjoy that money, because she didn't know what she had."

Power-of-attorney law changes next month
Driven by the case of a retired stockbroker whose estate was virtually liquidated by two relatives to whom he assigned power of attorney shortly before his death, New York state lawmakers revised the power-of-attorney statute, implementing changes intended to insert some checks and balances into the New York General Obligations Law.

                 

In January 2000, George Ferrara's grandson, having power of attorney, transferred more than $800,000 of Ferrara's assets, including $300,000 in cash, to himself. Three weeks later, Ferrara died, and the Salvation Army, to whom Ferrara had bequeathed his entire estate in his will, was left in the cold when it discovered that the bulk of his assets were gone.
The revised power-of-attorney law is set to go into effect on Sept. 1; the Senate approved a six-month extension to allow estate planners more time to prepare for the changes.
Among the key revisions:
• An agent may no longer designate a new beneficiary for the subject's life-insurance policy or retirement plan.
• Gifts to individuals and charities can be made by an agent, a maximum of $500 per calendar year for any beneficiary.
• The document is presumed to award "durable" power of attorney unless otherwise specified.
• A monitor can be appointed to oversee the agent possessing power of attorney.
Lawyer Catherine Wettlaufer says the revised law will have a significant impact on the execution of the power of attorney.
"As with any type of sweeping change, there are some very good things about it and there are some things that are open that I think are going to cause some problems for practitioners," said the Hiscock & Barclay LLP attorney.
"The Ferrara case addressed that there are tax and economic reasons why it may make sense to do gifting. Now, there's a major-gifts rider that is an attachment that has to be executed simultaneously with the power of attorney that covers all of the various parameters of gifting - which is a protection so that there isn't just a blanket permission to gift."
While Wettlaufer sees that as a good thing, she is concerned about some of the ambiguity in the new law, particularly when it comes to naming a monitor to oversee the agent in charge.
"The question is, who would you name?" she asks. "Is that person compensated? Would we have lawyers writing themselves in as agents and running up significant bills checking out the agent? Would we have children supervising other children?"
While those issues will likely play out in the months after the new law takes effect, people who currently have a valid power-of-attorney document will be grandfathered in and will not have to draft a new one.

By the numbers
Erie County probate statistics for 2008:
• 2,985: Probate proceedings
• 48: Objections filed in those proceedings
• 5,630: Proceedings to initiate a new estate
• 3,830: Number of those cases where a will existed (68 percent)
• 845: Voluntary administrations, or filings for estates of less than $30,000 where no real estate was involved

source: Erie County Surrogate's Court