Rewriting a Will After Death

Dave and Molly have been married for many years.  They have an estate worth $1.5 million which includes their home, bank and brokerage accounts and life insurance.  They have three adult children: Manny, Moe and Jack.  Manny and Moe are successful businessmen who are financially secure.  Jack, though, was born with Down’s Syndrome and is moderately impaired.  Although he is able to communicate with others and can engage in a number of activities, he is unable to work and will never be able to support himself.  In addition to the love of his family, Jack is supported by Supplemental Security Income (SSI) and Medicaid.

Recognizing Jack’s limitations, Dave and Molly execute a will which sets aside a share for Jack in a trust to pay for “his health, education, maintenance and support.”  In order to ensure that he receives enough to provide for his care, they leave one-half of their estate to him and name him as a one-half beneficiary of their life insurance policy.  When they die, Jack’s SSI and Medicaid are jeopardized as he cannot have more than $2,000 in his name.  The receipt of life insurance proceeds alone gives him more than this amount.  The trust is considered his money, too, as it is for his health, education, maintenance and support.   These terms make the trust a support trust and are counted by the government as his own.

Despite the shoddy planning, Jack’s benefits can be saved.  Over the past few decades, the law has developed to allow for what is known as a reformation.  Reformation allows for a “rewriting” after death of wills and beneficiary designations which were not properly established.

In essence, the Court has the ability to reform a will, as well as the beneficiary designation of non-probate assets.  The Court may do so under the doctrine of probable intent. In New Jersey, the seminal case for reformation  is IMO Estate of Branigan, 129 NJ 324, 609 A. 2d 431 (1992). In this case, the Supreme Court of New Jersey stated that the doctrine of probable intent permitted the reformation of a will by dividing a single qualified terminal interest property trust into two such trusts, as the alteration did not change any substantive disposition request under the will, and it effectuated the Testator’s desire to achieve maximum estate tax savings. In doing so, it was noted that “in ascertaining subjective intent of testator under the doctrine of probable intent, the Courts will give primary emphasis to Testator’s dominant plan and purpose as they appear from the entirety of the will when read and considered in light of surrounding facts and circumstances; so far as the situation permits, the Court will ascribe to testator those impulses which are common to human nature and will construe the will so as to effectuate those impulses.” Id at 324.

The principle of reformation, set forth in Branigan, applies to other means of post-mortem distribution as well as to wills. Many courts have previously recognized the doctrine of probable intent as to trusts and other non-testamentary instruments. Moreover, in 2005, the State of New Jersey revised its probate laws to accept relevant and significant portions of the Uniform Probate Code. In this instance, N.J.S.A. 3B:1-1 expanded the definition of the “governing instrument” subject to its control. Specifically, it states, “’Governing instrument’ means a deed, will, trust, insurance or annuity policy, account with the designation “pay on death” (POD) or ‘transfer on death’ (TOD), security registered in beneficiary form with the designation “pay on death” (POD) or “transfer on death” (TOD), pension, profit-sharing, retirement or similar benefit plan, instrument creating or exercising a power of appointment or a power of attorney, or a dispositive, appointive, or nominative instrument of any similar type.”

Thus, after the deaths of Dave and Molly, their Wills can be reformed to convert the support trust into a Special Needs Trust which allows for funds to be set aside in a manner which benefits Jack but preserves his government benefits.  The beneficiary designation of their insurance can be changed so that the share allocated to Jack can be transferred into his reformed trust.  By utilizing this doctrine, deficient estate planning can be rectified to preserve the intent of Dave and Molly, and to protect Jack.

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