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Diminished Capacity Equals Diminished Revenue

April 1, 2021
Diminished Capacity Equals Diminished Revenue

A Few Suggestions for Gift Planners Regarding Diminished Capacity and Duress Claims

It’s inevitable.  Even though gift planners try very hard to encourage donors to consult with estate planners, the fundraiser is often a major part of that process.  Contrary to what some lawyers might say, this is not the end of the world.  As long as the gift planner doesn’t get into the dark crevices of the tax world, some well-intentioned advice is probably harmless and often helpful.  (Clearly, conflict of interest and duress issues should always be on the gift planner’s radar.)

One lament that gift planners occasionally hear from testators-to-be goes like this:  “I am going to leave your organization a big gift, but I am so afraid that my [children, relatives] are going to contest the will and say that I was incompetent, or pressured, or something like that.”  What’s a gift planner to do?

Sympathy?  Yes!  Reassurance?  Without a doubt.  Encourage the donor to consult with counsel?  Absolutely, and maybe even repeat that several times.  But while the gift planner is repeating that advice, she may want to plant some seeds on what the donor asks the lawyer to do.  We have a few ideas on that, summarized below.  It’s interesting that many lawyers will stop after the first technique that we list.  However, it’s the next few that get really intriguing.

#1. The No-Contest Clause in Diminished Capacity and Duress Claims

Here’s the tried and true method.  “Anyone raising a challenge to this will shall take nothing under it.”  Fair enough, but the problem is that such provisions are often ineffective.  Judges will bend over backwards to avoid enforcement of such a muzzling threat, especially if there seem to be good reasons for questioning the will.

#2 The Explanatory Clause

In some cases, it may be beneficial to have the disinheriting testator explain the rationale for the division of her property as part of the text of the will.  It’s unorthodox, but a good rationale that is right there in the will can be a serious disincentive to a potential challenger.  It goes without saying that such an insertion can also provide powerful evidence of competence.  If this route is chosen, it should be done in a separate section of the will, devoid of legalese.

#3 I’m Ready for My Close-Up, Mr. DeMille

A picture is worth a thousand words, and a video explanation of the provisions of the will from the testator’s own mouth can be quite compelling.  Some judgment is needed here.  If the star of the video looks to be in extremis, or is obviously reading the explanation off cue card, this would not be the best option.

#4 Let’s Do A Retake of That Close-Up

Some lawyers like to combine #3 with an actual video of the signing ceremony.  The same cautions apply, but the actual conditions under which the will is executed is clearly a very relevant part of any claim of duress.  It is axiomatic that such a video would not replace the self-authenticating provisions that can be added to the will under the law of nearly every state.  It is equally clear that no one from the charity should appear in any such cinematic production, nor should they be off-camera in the “green room” or its equivalent.

#5 The Testamentary Film Institute

Just like a criminal case, it is important to have procedures in place to show that the video was not edited (no “post-production”) and that the chain of custody is clear and secure.  One way to address those issues might be to engage a reputable company that has substantial experience in video depositions.  It is even better if the company would likely be familiar with the eventual probate court.  This undertaking will cost some money and obviously does not need to be done on a routine basis.  However, where there is a real and present danger of a challenge, the investment may well be worth it.

#6 Expert Witnesses for Diminished Capacity and Duress Claims?

Elderly people tend to pick elderly witnesses.  The problem with that is, of course, is subsequent availability.  A witness who has died, or become incompetent, is the functional equivalent of no witness at all.  Younger (and local) witnesses who have some ongoing knowledge of the testator are best.  It could also help if one or more of the witnesses was a doctor, a nurse, a psychologist or similar.  Testimony from such a person can be compelling.

#7 Ante-Mortem Probate

A few states have specific statutes that provide for pre-death judicial declaration of the validity of a will, to include the competence of the testator.  We have also seen a few examples of the clever use of garden-variety declaratory judgment procedures to achieve much the same result.

The downsides of this approach are (1) a subsequent change to the will renders the declaration useless and (2) an adverse ruling is always possible.  Still, in a given case, it is an option, albeit one of the nuclear variety.

#8 The Serial Signer

Another rarely-used but effective method is serial re-execution.  This technique relies on the universal principle that if the latest will is determined to be invalid, the one before that comes into play, and so on.  Should a future claim of duress or incompetence be anticipated, it may be possible to have the testator re-execute the same will every six months, or every year.

This approach would require a challenger to prove that at each of the times the will was signed, the conditions purportedly invalidating it were present.  Needless to say, this makes the plaintiff’s burden in a will challenge exponentially more daunting and also presents a serious disincentive to the contingent fee lawyer hoping to resolve a case with minimal discovery.