While driving down Route 1 in Pensylvania a few weeks ago with the radio blaring, I heard a new commercial for a software program I recognized, Legal Zoom at legalzoom.com. The program is supposed to replace lawyers in most cases and give anyone the ability to write his or her own Will. It is an attempt to save money in the tight economy and, after all, who would not want to save money.
The Legal Zoom people announced that their programs had been drafted by real lawyers and that real lawyers who had been consulted to validate the programs stated they tested the Wills and the Wills worked.
The reason I repeat this, in what to me was a humorous experience, is that people still think that a Will is the only way or at least the primary way to transfer wealth to the people they want to receive it on death. Wills are certainly very significant in the estate planning process but they are far from the only way that wealth is transferred. A Will can technically be valid but not accomplish what the Will maker intended. Joint titling and beneficiary designations also matter.
The observation regarding joint titling was again confirmed in a Pennsylvania Supreme Court case decided March 25, 2010, “In Re: Alice G. Novosielski, Deceased,” 2010 Pa. LEXIS 795 (Pa. March 25, 2010), where a jointly titled account was challenged as being inconsistent with a previously executed Will and Codicil. The Supreme Court decided that, unless fraud or other conditions are present, joint titling wins over the Will.
Think of it this way. Many people who write wills also own bank accounts, stocks, bonds, mutual funds and real estate jointly titled with others as joint tenants with right of survivorship or (if they are married) as tenants by the entireties.
When the Will says that property will be split equally, Will maker’s forget that the Will concerns only property that is titled in their individual name and that has no beneficiary. This point must constantly be emphasized or the intent of the Will maker could be lost.
Novosielki along with a similar case, “In Re: Estate of Amelia J. Piet, 2008 Pa. Super 72, 949 A.2d 886 (2008), were watched closely by estate planners. The conflict was between Pennsylvania’s Multiple-Party Accounts Act (“MPAA”) and Wills.
The question was, when a Will maker dies dividing property among her heirs but also leaving a major portion of her estate jointly titled with one of them in a joint account established after her Will was signed, should the presumption be in favor of the joint account holder or the estate.
Alice Novosielski had executed a Will leaving everything after her husband’s death to be divided equally among her sisters or their heirs if her sisters did not survive. Five years later she signed a Codicil not changing the equal division among her sisters’ heirs. Four days after signing the Codicil, she signed papers creating a Treasury Direct account with $500,000 in the name of “Alice G. Nosielski or Thomas V. Proch.” Thomas was her nephew and power of attorney. Depending on whether Thomas was an equal beneficiary or the surviving co-owner of the joint account, he would inherit either one-tenth or four-fifths of his Aunt’s estate.
The Multiple-Party Accounts Act provides that “Any sum remaining on deposit at the death of a party to a joint account belongs to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent at the time the account is created.”
The Pennsylvania Superior Court, the second highest Pennsylvania Court, would have found in favor of the estate. The Pennsylvania Supreme Court reinstated the common understanding that joint titling trumps the Will.
Here is what all of this means for the average person.
First. When drafting an estate plan – or a Will – remember that the joint titling of accounts and property can have a lopsided effect and cause one or more of your beneficiaries to receive more than the others.
Second. If you intend to have the joint owner or a beneficiary inherit more than your other beneficiaries, make that intent clear.
Third. If you want everyone to inherit equally, then adjust your plan to accomplish this.
Finally, note than you are not likely to be able to make these adjustments from a form book or a computer program so be prepared to give your plan some thought. Seek help if needed.
