Christopher Stoneman Estate Planning Articles

IV - Probate

It would take a while to come up with a legal topic which has engendered as much discussion as the pro’s and con’s of what is known as “probate,” the long-standing procedure by which some at least of the material, earthly affairs of a decedent are “wound up:”  his assets gathered in, his debts discharged and his remaining property distributed in accordance with his wishes or as state law prescribes.  In this article, painting with rather a broad brush, we will consider some important aspects of probate  – at first glance a complex but, so some would maintain, a relatively benign, procedure in its Vermont incarnation, at least when compared with certain other jurisdictions which shall remain nameless.  In the next article we will take a look at the pluses and minuses of avoiding probate.  For those who wish to take an in-depth look at the exasperatingly jumbled provisions of Vermont law with roots in some cases going back to the 18th century,* a recent article by Professor Stephanie Willbanks of the Vermont Law School** should be most helpful.  Such a review will also give ample ammunition to those who, after comparing Vermont law with the Uniform Probate Code, now in force in a substantial number of states, may conclude that major changes are long overdue.
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*  E.g., surviving spouses’ dower and curtesy rights in their deceased spouse’s real property, originally enacted in 1787.
**  Stephanie J. Willbanks, Parting is Such Sweet Sorrow, But Does It Have to be So Complicated?  29 VT. L. REV. 895 (2005).                                                          
     1.  Perhaps the first thing to note is that probate is concerned with the  estate of a decedent which, in the probate arena, means the composite of all those items, whether real property or tangible or intangible personal property, which the decedent alone holds directly in his own name.  Excluded, therefore, and not subject to probate court supervision, are those items which fall into one or other of the following categories:

     - property owned jointly by the decedent with one or more other persons, with right of survivorship (WROS)*.   If one or more such co-owners (joint tenants) survive the decedent, the property in question passes automatically to the survivor(s) by operation of law.  In the absence of survivors (i.e., on the death of the last to die) it is probate property in that decedent’s estate.
     - trusts in which the decedent has enjoyment interests (generally known as beneficial or, sometimes, as equitable interests), and trusts in which he has no such interest but merely holds legal title as trustee for the benefit of others.
     - property over which the decedent holds a power of appointment (POA),** whether or not he exercises it.  But note that if the POA is testamentary (i.e., is exercisable only by its holder’s will), its fruits, the appointive property, will go unharvested and pass to the taker(s) in default, unless the decedent-holder of the POA  not only leaves a will which is duly admitted to probate (an unadmitted will is a dispositive nullity), but also satisfies any conditions imposed by the donor of the POA as to the manner of exercise (typically, a requirement that the POA be specifically identified).    
   - payments under policies of insurance on the decedent’s life or pension plans where the decedent has named one or more beneficiaries to take at his death.  But if no named beneficiary survives the decedent, those proceeds will fall into the probate estate.    
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*  Not to be confused with co-ownership under a tenancy in common, where there is no survivorship element and each tenant is the owner of his own separate interest.  A decedent’s tenancy in common interest is indeed probate property.
**  An invaluable estate-planning device discussed under Article IX  below.

     Although as these examples illustrate, there are occasions when items owned by a decedent or titled in his name do not themselves become subject to probate, there may well be cases where the existence of such nonprobate property will affect the administration of the probate estate. Thus a will may provide, sometimes unintentionally, that all estate and other transfer taxes arising at the decedent’s death, whether attributable to property passing under or outside the will, are to be charged against and paid from the decedent’s residuary estate.  The recipient of a potentially taxable nonprobate item will receive it free and clear of taxes while the hapless taker of the decedent’s residuary estate will wind up picking up the tab for the other’s share of the tax.  Not necessarily a result likely to foster an entente cordiale between the two parties!

     2.  Probate is not only concerned with estates which are disposed of  by will.  It is equally applicable where a decedent dies wholly or partially intestate.  The test is whether the property of the decedent is probate property, not whether he took steps to direct its devolution.  If there is no will, the court will decree distribution of the estate in accordance with the Vermont intestacy statute, which provides differing rules depending upon the relationship of the decedent to those who survive him.*

     3.     Not surprisingly, the jurisdiction of the Vermont probate court does not extend to real property or to tangible personal property which is located outside Vermont, even though such property may be owned by a decedent who was domiciled in (a resident of) Vermont at his death.  Since the situs of such property is beyond the reach of Vermont courts (just as Vermont real estate owned by, say, a Massachusetts resident is beyond the jurisdiction of the Massachusetts probate court), an ancillary (secondary) estate administration is necessary in the state where the land is situated.  This will require the appointment of an ancillary executor or administrator by the appropriate “foreign” court.
     If, however, the well-advised Vermont decedent has taken timely steps to change the nature of his holding by, for example, placing his out-of-state real property in a corporation or partnership (which thereby becomes the record holder of the property), the decedent’s Vermont probate estate will include the decedent’s stock or partnership interest, an item of intangible personal property, and not the underlying real property.  Accordingly, the need for ancillary probate will have been eliminated.

     4.  Although a decedent may leave a will which purports to dispose of his entire probate estate, Vermont law comprises a number of provisions whereby the surviving husband or wife of the decedent may waive the presumably less generous will provisions for his or her benefit and “take against” the will – that is to say, may elect to take a share of the decedent spouse’s probate estate without regard to the terms of the will.  The extent of this “elective” share varies, depending on the particular facts of each case.**

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*  Sometimes dubbed a “parliamentary” will.  See Professor Willbanks’ article cited above for a detailed dissection of the intestacy provisions.
**  In some states – not, however in Vermont – the longer the decedent and the surviving spouse have been married, the greater the surviving spouse’s elective share.

     5.  To make a will in Vermont a prospective testator must be “of age,” namely, 18 years old. The valid execution of a will requires two disinterested witnesses, both in the line of sight of each other and of the testator at the time of signing.  The same rule applies to revisions of an existing will by a supplementary instrument which is known as a codicil.
     The revocation of a will (except by what the statute describes as “by implication of law”*) is to be done by a written document executed with the same formalities as a will or by “burning, tearing, canceling or [obliteration] with the intention of revoking it,” whether by the testator himself or by someone under his express direction.  It is reassuring to know that, whatever its other consequences, the clumsy person’s accidental spilling of coffee on his will will not wreak disinheritance.
     And finally, however great the temptation may be to have the last word, it is probably unwise to use one’s will as the vehicle for libeling one’s beneficiaries or, a fortiori, those whom one is deliberately excluding from one’s bounty.  Actionable defamation may indeed be committed from the grave and it is the beneficiaries who will ultimately foot the bill for the testator’s intemperance!

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*   The prime example of this would involve bequests and devises to the testator’s spouse from whom the testator is subsequently divorced.                                                            

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