Most estate plans include a will that is integrated into a trust package. When the settlor or grantor of the trust passes away, the intended beneficiaries need to locate the estate planning documents to effectuate the intent of the decedent.
This post examines the effect of a missing or “mystery” will on a well thought out estate plan. When a will is missing or cannot be located following the settlor’s death, the entire estate plan is at risk and the decedent’s wishes may not be followed.
The relationship between a will and a trust is important in an estate planning package. Not all estate plans contain a trust. If the decedent’s estate does not contain real property, then a trust may not be necessary.
The purpose of a trust is primarily to avoid going through the estate administration process in a local probate court. A trust is a private document that does not proceed through a probate court unless a separate trust action is initiated.
Most often, trusts are funded with real estate in order to avoid the probate administration process and to make it simpler for the trustee and the trust beneficiaries to transfer real estate upon the death of a settlor. Other assets sometimes funded into a trust include brokerage and bank accounts, stocks, and business interests.
A trust also is routinely funded with personal property through what is known as a “pour over will”. In a “pour over will”, every asset of the decedent “pours over” into the decedent’s trust. Therefore, although “old fashioned”, wills are very important to an estate plan.
When estate planning documents go missing, the core objective of the settlor’s intent is placed at risk. Preparing and executing the estate plan is the initial phase of the estate planning process; the next phase, however, is just as important: providing the fiduciaries [the trustee, for example] with easy access to the estate planning documents.
Sometimes, a settlor does not want the beneficiaries to know her intentions; other times, the fiduciary and the beneficiary are the same person; there are many types of estate plans. Regardless, when the settlor dies, the fiduciary needs to know how to access the estate plan to begin administration of the trust estate.
If a person dies without an estate plan, that person dies intestate. A decedent whose fiduciaries cannot locate the decedent’s estate plan essentially dies intestate. Our law firm has experienced several cases where a will or other component of an estate plan does not surface until the estate administration is well underway.
A will that pops up mid-administration is not optimal; such situations present a false start to the estate administration process. Distributions may have occurred that will need to be clawed back. Feelings get hurt; dreams get crushed. And if a court determines that a newly discovered will is valid, it must be given full force and effect.
Perhaps the most recent example of a “mystery will” involves the Zappo entrepreneur Tony Hsieh [pronounced Shay] who died in 2020 during the pandemic amid mysterious circumstances. At the time of his death, Hsieh was presumed to have died intestate because no estate planning documents were located, until recently.
When a person dies intestate, a probate estate must be opened in the county of the decedent’s residence at the time of his death. So it was when Hsieh died in Las Vegas and no one could produce a will or other estate planning documents. He as worth an estimated half a billion dollars.
Then, out of the blue, a mystery will suddenly appeared at the probate court and at the law offices of two previously unrelated probate attorneys; the lawyers had been named as co-personal representatives of Hsieh’s estate. The estate, by then, had been administered for several years by Hsieh’s father, as an heir at law under Nevada’s laws of intestacy.
Hsieh’s mystery will had many strange features. For example, while only two witnesses are required in Nevada, the will was purportedly witnessed by four individuals that apparently do not exist; no one can locate these individuals.
Another feature of the recently manifested mystery will is a robust in terrorem clause: if anyone challenges the will, they are disinherited. This places significant risk on Hsieh’s father’s decision to litigate the validity of his son’s mystery will.
For her part, the probate judge presiding over the multi-year, multi-million dollar will contest has indicated that despite its oddities, Hsieh’s will passes initial muster pursuant to applicable Nevada probate law.
Right here in Oakland County, another example of a mystery will surfaced during the estate administration of Aretha Franklin. In that case, Aretha’s hand written notes were located literally between the couch cushions in her Bloomfield living room. These writings were used to establish her testamentary intent and were compared to the provisions of her drafted but unexecuted will.
Like the estate of the Zappo’s founder, Aretha’s multi-document will contest was protracted and costly. In the end, years following her death, an Oakland County probate court jury found that the hand-written documents constituted a valid holographic will.
Another example of a mystery will that foiled the settlor’s intent was Howard Hughes’ estate, litigated for over three decades in Nevada [and Texas]. In the Hughes estate, over 40 wills were submitted and each were ultimately determined to be false. Thus, Hughes was deemed to have died intestate: without an estate plan.
The whole idea of an estate plan is to have the settlor decide who receives the objects of her bounty rather than the probate laws of the state where the settlor dies. For most people who have worked hard to build an estate worth passing to the next generation, dying intestate is not an option.
As can be seen from the above examples, however, sometimes even the best laid plans run amok due to a failure to follow through. Care must be taken to ensure that the settlor’s fiduciaries know where the written estate plan can be located so that it can be properly administered.
When a settlor dies, if his estate has been properly planned, his personal representative and/or trustee will know exactly what is expected to happen next. Knowing what will happen next depends on a properly written estate plan.
Whether the settlor utilized a trust to avoid the cost and delays of probate court, or whether the settlor utilized a will, the value of a properly drafted and executed estate plan cannot be over-emphasized. Proper planning includes making sure that the settlor knows where to locate the will or trust after the settlor’s death. While family members may think they know what the settlor intended, it is the written instruments that count.
Our law firm does not recommend spreading multiple copies of an executed estate plan to several family members. This is because if an amendment needs to be made to the plan, it becomes difficult to retrieve the superseded versions of the plan. The best practice is to select a trusted fiduciary, and keep that fiduciary papered with all developments, including amendments to the will or trust.
If you or a family member are in need of an estate plan, contact our office to schedule a free in-person consultation. We can learn about the specifics of your situation, and discuss the appropriate estate planning options.
Post #319
estate plan | intestate | mystery will | Aretha Franklin | Howard Hughes | Tony Hsieh
