As we make our way into a new year, it’s a good time to ask what trends we’re likely to see in 2020 in the world of estate litigation. Three main trends stand out in my mind: litigation over increasingly broad no contest clauses, an increase in contested guardianship and conservatorship litigation, and the advent of litigation over electronic wills.
Litigation Over Increasingly Broad No Contest Clauses
I predict that in 2020, we’ll see increased litigation over the scope and enforceability of no contest clauses, also referred to as in terrorem clauses. In short, no contest clauses are provisions contained in wills or trusts that provide that if a litigant commits conduct that falls within the scope of the clause, he is prohibited from inheriting via the will or trust. The conventional no contest clause sought to penalize contests to the validity of wills or trusts. If the contest was successful, then the will or trust was declared invalid, thereby eliminating the enforceability of the no contest clause contained within the will or trust. But if the contest failed, the unsuccessful litigant would forfeit any inheritance he may have otherwise stood to receive under the will or trust (except if certain conditions applied, such as the doctrine of good faith and probable cause). In short, no contest clauses traditionally applied just to contests to the validity of wills and trusts.
In recent years, estate planning attorneys have been drafting no contest clauses much more broadly to apply to a wide array of actions separate and apart from contests to the validity of wills and trusts. For example, some no contest clauses claim to be triggered by contests to beneficiary designations or joint account designations, transactions that are wholly separate from the making of a will or trust. Moreover, some no contest clauses claim to apply to actions to remove a trustee for misconduct. Others seek to encompass failures of a trust beneficiary to “cooperate” with a trustee.
There are potential problems with these expansive no contest clauses. First, these clauses could be inserted by unscrupulous fiduciaries or beneficiaries who acted improperly in convincing the testator or settlor (the person making the will or trust) to include those provisions in the first place, largely to aid and abet the unscrupulous person in getting away with his conduct by making it much harder for a wronged party to challenge that person’s actions. Second, because the expansive no contest clauses try to encompass activities other than contests to the validity of a will or trust, there’s not an opportunity for a contestant to avoid their effect if he’s successful in impeaching the validity of the will or trust. Third, there can be a tenuous connection (or no connections at all) between the conduct triggering the no contest clause and the will or trust instrument. For example, a contest to a beneficiary designation in a life insurance policy does not mean a contestant is challenging a trust, yet a broadly worded no contest clause could seek to disinherit that person from taking under the trust.
As no contest clauses expand in their scope, we can expect to see increased challenges to them based on public policy grounds, equitable principles of law, and on the basis that (in some instances) they seek to control, via will or trust, nontestamentary transfers in a manner inconsistent with the statutory regime governing nontestamentary transfers. Many states will likely make new law in the coming years on these issues.
Increase In Contested Guardianship And Conservatorship Litigation
I’ve seen a notable increase in recent years in the number of family members who are willing to petition for guardianship and conservatorship over a relative when a driving force for such is to ensure that the relative does not fall under the influence of an unscrupulous person and change his estate plan as a result. I expect this trend to continue in 2020.
Traditionally, if a person was worried that his relative would change his estate plan to his detriment, that person would wait until the relative passed away and then challenge the new will or trust. Many people are being more proactive today and working to try to ensure that a changed will or trust does not arise in the first place. If a person is worried about meddling family or friends trying to unduly influence their relative into altering his estate plan, making gifts, or changing beneficiary designations or the titling on financial accounts, that person can petition for guardianship and conservatorship as a pre-emptive measure (assuming the person isn’t already serving as agent under the relative’s financial power of attorney). As more elderly persons have much higher wealth to their names than persons decades ago, this practice has become increasingly common.
One issue that may temper a societal-wide rush towards pursing this remedy is the fact that if an elderly person is the subject of a guardianship and conservatorship petition, that elderly person could always try to change his estate plan to disinherit the petitioning person. Therefore, potential petitioners should exercise caution and think through the possible consequences before rushing forward with a guardianship and conservatorship petition.
Litigation Over Electronic Wills
Electronic wills have been a hot topic in 2019, and the 2020 Heckerling Conference the other week featured numerous discussions of issues raised by electronic wills. In short, “electronic wills” are wills that can be signed electronically and potentially witnesssed electronically too. While few states make provision for electronic wills currently, that will likely change in 2020 as the Uniform Law Commission is encouraging states to adopt the Electronic Wills Act.
As with every new type of technology and new legal regime, when there are more issues to fight about, there will be more litigation. Electronic wills increase the scope of issues that could be litigated, and also increase the complexity of them. For example, proposed legislation legalizing electronic wills in certain states contains various requirements about where the witnesses can and can’t be located, who is a qualified custodian of the electronic will, etc. These are all new things to litigate over. Also, given that most of the records will be electronic, litigators will now have to contend with issues like authenticating electronic records, dealing with metadata, potentially proving the chain of custody of the electronic information, etc. All of this adds to the complexity and cost of litigation. So is it even worth it? Are electronic wills a solution in search of a problem? Maybe. But it’s a safe bet that as states move to authorize electronic wills, we’ll see an expanded scope of issues over which to litigate.