Under probate law, a probate court will identify the assets of the deceased, decide on the payment of taxes and other expenses, and distribute the property among legal heirs as provided in the will. Most matters handled by probate courts, such as admitting wills and assigning executors, are standard and uncontested. Any legal contest that arises due to a person’s death or mental incapacity will be filed in a probate court and can be categorized as probate litigation. This process involves court battles among those still living over issues such as guardianship and conservatorship, powers of attorney, patient advocate designations, and living wills.
Probate litigation can refer to a number of situations. Common examples include:
Challenges to the validity of a will;
Suits regarding the wording or construction of wills and trusts;
Contests over whether a guardian should be appointed for an individual who has not executed a power of attorney;
Trust modification or reformation law suits;
Suits brought to terminate a trust because the trust’s purpose has become impracticable; and
Suits by beneficiaries against a fiduciary for failing to act in accordance with the law or a legal document.
Probate is also an opportunity for creditors to file claims against an estate. The executor can contest these claims during the probate process.
High-risk factors for probate litigation include sibling rivalry, second marriages, and dysfunctional families. Individuals who marry multiple times without a pre-nuptial agreement are likely to incite probate litigation. A pre-nuptial agreement is a primary way to avoid probate litigation at death. Many people wrongly believe they own their assets as separate property when in reality it may have converted to community or marital property. Preferably before but even after marrying, the spouses should create a nuptial agreement delineating the proper ownership of their assets rather than leaving family members to fight over these matters at death. Life insurance trusts are often the best way to separate the interests of the deceased spouse’s children from the surviving spouse and provide for both of them.
A non-standard estate plan, such as those that omit a child, treat children differently, create overly detailed trusts, or make gifts to mistresses all increase the odds for probate litigation at death. A poorly appointed fiduciary (the trustee of a trust or the executor of an estate) also can lead to probate litigation. This situation typically occurs when the fiduciary is a poor communicator, is unskilled at following instructions, procrastinates, is untrustworthy, is susceptible to the influence of others, is disorganized, or lacks common sense. The likelihood of probate litigation also increases when two parties have been named to act together as co-fiduciaries.
Executors and trustees are entitled to reasonable compensation. If the estate planning document does not explicitly set out a compensation rate for an executor or trustee, they may be permitted to claim what they believe to be “reasonable” compensation. If a beneficiary or creditor does not believe that the amount of compensation is reasonable, they can complain to the probate court and litigate the matter.
Even if there is a valid challenge to an estate, most states have a strict statute of limitations. The probate court will not proceed with a claim that surpasses the legal limit. Thus, seeking legal counsel as soon as possible is highly recommended for individuals who want to contest an estate.
Given the nature of probate court, emotions are high and interactions are tense, meaning that probate litigation can greatly disrupt familial relationships. While not all estate-related contests can be prevented, good planning can reduce a large portion of probate litigation.