Settling an Estate: When Executors Should Take a Second Look at the Will

Certain provisions in the will may raise questions. What should executors watch out for?

If you're serving as the executor of a loved one's estate, it may not be enough to read the provisions of their will and follow what it says to the letter. Big external events for example, the will maker's divorce, a beneficiary's death, or the sale of property may significantly affect how you distribute property under the will. Here are some tips for executors dealing with these situations and more. (For tips on figuring out if a will passes legal muster, read Nolo's article Settling an Estate: Does the Will Appear Valid?)

The Will Maker Got Divorced

In most states, if someone gets divorced after making a will, any gifts the will makes to the former spouse are automatically revoked. The divorce may also revoke appointment of the ex-spouse to serve as executor of the will. The rest of the will is still valid.

If the will you're working with leaves gifts to the deceased person's ex-spouse and your state's law voids these gifts you should proceed as if the former spouse had not survived the will maker. The property left to the former spouse will go to the alternate beneficiary named in the will or, if there's no alternate, to the residuary beneficiary.

If the death occurred while the couple was still married but seeking a divorce, in most states these laws have no effect on the will even though that's probably not what the deceased person would have wanted. If the couple were permanently separated, however, that might be enough to revoke the will.

The Spouse Wants More

Every state makes some effort to ensure that a surviving spouse doesn't end up with an unfairly small share of the couple's property. As a result, a person making a will can't completely disinherit a spouse against the spouse's wishes, no matter what the will says. (A spouse can give up his or her rights in a waiver or prenuptial agreement, however.)

States protect surviving spouses in three different ways:

• Traditional spousal share. In most states, a spouse who didn't inherit much under the will can go to court and claim a substantial portion of the deceased spouse's estate.
• Share of the augmented estate. In some states, a surviving spouse can claim a share of the couple's combined property.
• Community property. In the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), laws protect spouses by giving them ownership of half the couple's property before death.

Most spouses are satisfied with the way the will is written and don't rock the boat. Even if the will doesn't leave them much, they may have inherited other assets (retirement accounts or jointly owned real estate, for example) outside of the will. Or they may already own plenty of property and approve of the deceased spouse's plan to leave the lion's share of his or her assets directly to others their children, for example.

A Child Wants More

Unlike spouses, children have no automatic right to inherit. A parent can explicitly disinherit a child or simply not leave the child any property. If, however, it looks like a child was unintentionally omitted from a will (the legal term is "pretermitted"), a judge can give that child a share of the deceased parent's property. This issue typically crops up when the will was made before the child was born or adopted, and the parent simply didn't get around to making a new will including the new child.

Some states give the overlooked child the same amount of property he or she would have received had there been no will. Although states vary on how this is figured, it is typical to give half to the surviving spouse and divide the other half among the children.

Beneficiaries Have Died

If the will leaves property to someone (a beneficiary) who died before the will maker did (or soon after), you must figure out who inherits the property. Sometimes the will tells you; in other cases, you must look to your state's law.

Survivorship requirements. Many wills state that beneficiaries cannot inherit unless they live for a specific amount of time after the will maker dies. This time is called a "survivorship period" and commonly ranges from about five to 60 days. If neither the will nor state law imposes a survivorship period, then surviving even an hour longer than the will maker is enough to inherit. In that case, the property goes to the deceased beneficiary's estate. If, however, the will maker and the beneficiary appear to have died simultaneously, special rules apply.

Alternates named in the will. If the will names alternates for the beneficiaries, it's clear what happens to property if the first-choice recipient doesn't meet the survivorship requirement: The alternate gets it.

If there's no alternate beneficiary. If the will does not name an alternate beneficiary, or the alternate beneficiary has died, you have something called a "lapsed" or "failed" gift. Depending on state law and how the will is written, the property will go to either 1) the residuary beneficiary named in the will, 2) the primary beneficiary's descendants under your state's "antilapse" law, or 3) the deceased person's heirs under state law, as if there were no will.

Residuary gifts. The residuary beneficiary inherits everything that passes under the will but isn't specifically left to another beneficiary. If the will named more than one residuary beneficiary, and one of them died before the will maker, in most states the surviving residuary beneficiaries inherit the deceased beneficiary's share unless the will directs otherwise.

The Lawyer Who Drafted the Will Inherits Property

Lawyers figure in an embarrassing number of cases involving inappropriate gifts from elderly and infirm clients. These gifts may be void under the law of your state. Even if state law doesn't expressly make such a gift ineffective, a bequest to a lawyer always raises a red flag. The lawyer may have exerted undue influence over the will maker, making it possible to have the probate court void the gift if the executor or a family member protests.

Property Has Been Given Away or Sold

A long time may pass between the time a will is signed and the death of the person who signed it. As a result, by the time death occurs, the person may own a very different collection of property. For example, a will maker may have sold a house and moved into an apartment, traded in an old car for a new one, and taken money out of stocks and put it into CDs. Resolution of this issue will depend on whether your state has adopted the set of laws called the Uniform Probate Code (UPC).

Beneficiaries Have Already Gotten Their Inheritance

Beneficiaries aren't supposed to get a double share. So if the will maker, while still alive, gives them their inheritances, the beneficiaries aren't supposed to later inherit under the will, too. But how to know whether or not the will maker meant a lifetime gift to take the place of a will provision? In general, the law presumes that a lifetime gift is not meant to replace a will provision. If, however, there is clear evidence to the contrary for example, a written statement this presumption can be overcome. Once again, it's not something you want to fight about in court. Much better to get beneficiaries to agree to a fair solution.

The Will Maker Gave You Different Instructions

As you go through the deceased person's papers, you may find notes or lists that seem to set out intended beneficiaries. Or the deceased person may have given you oral instructions that supplement or even contradict his or her will. These notes, lists, and oral requests are probably not legally binding. (In some states, however, memos that leave personal property and are referred to in the will are a legal part of the will.) But it's always possible that the inheritors under the formal, witnessed will may decide to honor the deceased person's wishes.

For more information about settling an estate, see The Executor's Guide: Settling A Loved One's Estate or Trust, by Mary Randolph, J.D. (Nolo).