Learning Lessons From Real Cases

Learning Lessons From Real Cases

I am repeatedly advising clients that an estate plan’s purpose is likely to fail if the plan is not maintained. Continued attention to proper titling of your assets is vital. A case recently decided in the Florida District Court of Appeal (First District), illustrates my advice perfectly. The decision in the case of Estate of Kester tells us that Mrs. Kester, a widow, executed a Will-based estate plan with her attorney, dividing her probate estate equally among her 5 children.

Outside of that plan, however, Mrs. Kester made changes to some of her assets. She changed the beneficiary designation on an annuity by removing 2 of her children as beneficiaries, and she made one of her daughters, “G” (who was also named as one of the Personal representatives of the estate), either a joint owner or a pay-on-death beneficiary of other accounts.

After Mrs. Kester’s death, “G” took sole possession of those accounts pursuant to the changes her mother had made, and also distributed the annuity pursuant to the recently-changed beneficiary designation. The two children that Mrs. Kester had removed as beneficiaries from the annuity account filed a lawsuit, claiming that “G” had exercised undue influence upon Mrs. Kester, and had breached her fiduciary duty to the estate and beneficiaries by failing to distribute the entire estate equally among the children.

The decision in the appellate court primarily concerns whether it had been shown in the trial court that undue influence had been exercised by “G.” (The court held that it had not, and reversed the trial court’s decision.)

My point in discussing this case is not to talk about undue influence, but to again emphasize that jointly-owned assets and assets that have beneficiary designations are not governed by your Will or Trust. I frequently tell clients to think of their Will as a letter to the Probate Court. I sometimes act out the reading of a letter: “Dear Judge, this is how I would like my probate assets distributed. I am aware that you will ignore anything I owned that has a beneficiary designation, that is owned by my trust, or is owned by me and a joint owner.” My hope is that this dramatization will help clients remember that only their probate assets (assets that are owned in a person’s name individually, without any beneficiary designation) are governed by their Will.

I suspect that Mrs. Kester did not fully appreciate this point. How sad that is for her. Because although we will never know her actual intentions — whether she wished all of her assets to be distributed among her children equally, or whether she really only wanted her probate assets divided equally — one thing we can be sure of is that it was not her intention that her children fight over her assets in court!

Sheryl J. Manning, PL.
1104 Ponce de Leon Blvd
Coral Gables, Fl 33134
(786) 804-3456 Direct Line
(305) 445-3721 Receptionist

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