The Widow’s Rights When Cut Out of Her Husband’s Will

/0 Comments/in , , /by

A widow, or the widower, if the husband, is the only person able to demand a share in the deceased spouse’s estate despite a will leaving the widow little or nothing.  We refer to it as the Spousal Election.  The widow can either elect to take what is given under the husband’s will, or demand her rights under Connecticut General Statutes Section 45a-436 – Succession upon death of spouse. Statutory share.

The statutory share is the widow’s right to carve out of the husband’s probate estate a third of its net value, that third set aside in a trust, and the income from that trust paid to the widow for the rest of her life.  If the net estate, after all expenses, is $300,000, the spousal election portion would be $100,000.  The widow can demand the share of $100,000 be set aside.  The executor must create a trust of that $100,000 with its net income payable to the widow until her death.

A choice of the executor is to buy out the widow by paying the life use value of the income payments if paid up front.  A formula for determining that value is based on the widow’s life expectancy per actuarial charts.  One such chart used by the State of Connecticut’s Department of Social Services with a 70-year-old widow gives the following result:  $100,000 X 5% X the age factor of 3.4819 = $17,409.50.  Therefore, if the executor wanted to buy out the widow’s rights for payments from the trust value of $100,000, it would cost the estate $17,409.50.

Legislators have considered giving the widow, or widower if the husband is the survivor, a larger portion of the deceased’s estate.  But there has not been a change in the formula for many years.

By the way, no one else is given such an election against a will, not even a child cut out of a will of a parent.  Other places are more generous, for example Canada which gives a child a modest right to an inheritance in spite of the parent’s will.

In Terrorem Clause

/0 Comments/in , /by

I have used in terrorem clauses in a few wills of the many hundreds done over the last 40 years.  None ever challenged to date.  However, I did use an in terrorem clause in a will I was defending (not a will I drafted) to remove four named beneficiaries from inheriting under their mother’s will.  The beneficiaries did not seek a court decree on the basis of the clause, but did concede they would have lost.  Complicated – will contests usually are.  A most favorable deal was struck due to the clause.

There is no statute of which I am aware on the subject.  However, check out the Connecticut Estates Practice Series, Drafting Wills in Connecticut Third, 2017-2018 by Beck, Folsom, and Olin at Section 20:7 – Clause that will contest causes disinheritance.  Most helpful suggested clause I’ve read, and the commentary is helpful as well.  A point made in this item is that the exercise of the in terrorem clause can have unintended consequences.  Must be careful.  Must warn the testator when you draft the will of things that could go wrong.

Also, must warn the beneficiary of the consequences of challenging a will.  Connecticut courts have honored the clause and given the challenger nothing. Connecticut may have struck the right chord on in terrorem clauses.  We may have fuzzy law on them.  But it allows for us to take a reasoned approach to their use, and their abuse, and their unintended consequences.

Estate planning

What is required by law in order to collect fiduciary fees?

/0 Comments/in , , /by

Question: If I am an executor (or administrator, conservator, trustee, guardian or any other fiduciary in charge of assets), may I get paid for my work? And how much can I request?

Answer: Connecticut law on fiduciary fees has been steady for nearly 100 years. The best reflection of fees law is in the case of Hayward v. Plant, Volume 98 of the Connecticut Supreme Court reported decisions at Page 374 issued in 1923. Probate and Superior Court judges cite Hayward in just about every decision on fees. The basic guides in the case are clearly reflected in the latest Probate Court Rules of Procedure at Rule 39.2 – Task statement of fiduciary and attorney. When a fiduciary submits an invoice for services rendered, it should reflect nine (9) points. They are:

  1. Size of the estate;
  2. Responsibilities involved;
  3. Character of the work required;
  4. Special problems and difficulties met in doing the work;
  5. Results achieved;
  6. Knowledge, skill and judgment required;
  7. Manner and promptness in which the matter was handled;
  8. Time required; and
  9. Other relevant and material circumstances.

A simple way to appreciate Hayward and Rule 39.2 is to ask yourself if you have added value to the matter put in your charge. Have you added value? For example, consider the estate of a deceased uncle which consisted of 10 stocks, several of them in foreign corporations, along with a mortgage in default on a grocery store, plus miscellaneous bank accounts and other assets. You work hard to sort out all the aspects of all these assets. You collect a good amount of them into your hands as the executor of the uncle’s will. You have protected them. You may even have increased their values. You provide timely reports to the Court and, upon Court approval, you distribute them to the will’s beneficiaries. Clearly, you have added value and should be compensated for the results of your labors.

A bald and bare statement of “time required”, section 8 above, without explanation is not enough to convince a judge to approve your invoice statement. The judge must see the other eight (8) sections reflected somehow. It may not matter that you spent 100 hours on an estate if you have taken forever to process it, and lost half of it in poor decisions.

All that said, how much should you charge per hour for a job well done? Courts have approved fees of $25/hour for a modest estate even if successfully managed. On the other hand, Courts have approved the fees of laymen executors with rates as high as $150/hour for an estate over $2 million with all the above points covered.

Probate judges have told me they use a rough yardstick to measure whether a fiduciary’s invoice is fair and reasonable. If the invoices of the executor, the lawyer and the accountant total less than five (5%) percent of the gross taxable estate, then the judges will approve of them, barring objections from the estate’s beneficiary’s. For example, total fees under $5,000 for an estate of $100,000 will likely be approved. And total fees under $50,000 for an estate of $1 million will likely be approved. When the fees exceed the five (5%) percent test, judges want to see clear statements as to why. Your task statement covering the above nine (9) factors should make it clear to the judge. If the judge is not satisfied, your fee will be cut to what the judge deems fair under Hayward and Rule 39.2.

Tip: From the time you assume your duties as a fiduciary, keep clear records of what you do and how long it took you. Do your work on paper, and save all of it. Do not pay cash. Write checks. Your records will be worth gold to you at the end of the process.