"Conscious Presence" in Witnessing a Will

In law school we learned that when someone witnesses another person execute a will, the witness has to be in the "conscious presence" of the signer.  We read cases about whether being in another room counts if the witness can see the signer as he or she signs the will.  Of course way back then no one could possibly imagine video conferencing.

Now that millions of people have Skype sessions routinely the question is bound to come up: if the witnesses are in a room thousands of miles from the signer of the will, but they are connected by video conference technology and can see and hear each other in real time, does that qualify as being in the conscious presence of each other so as to make the will signing legitimate?  The Court of Appeals in Ohio recently had this question before it in Whitacre v. Crowe  ( http://www.sconet.state.oh.us/rod/docs/pdf/9/2012/2012-ohio-2981.pdf).  The court concluded that under the Ohio definition of "conscious presence" video conferencing while signing a will was not permitted and invalidated the will.

The result was that the will, which had excluded three of the decedent's five children and named one of the remaining two as executor and the other as sole beneficiary, was revoked from probate, meaning the decedent died without a will.  In that case, the general laws of intestacy would go into effect.  Presumably the result would be that the five children will share equally in the estate, which is probably the reason for the lawsuit in the first place.

401(k) Contributions in Chapter 13

One question many people ask is, "can I continue to contribute to a 401(k) plan in Chapter 13."  The answer depends on where you live.  Depending on which federal judicial circuit you live in, contributions to a 401(k) might be allowed or they might not.  Utah is in the Tenth Judicial Circuit.  In the Tenth Circuit ongoing contributions to retirement accounts are not considered necessary living expenses and are therefore not allowed in Chapter 13.  In other words, the amount ordinarily contributed to a 401(k) plan must be diverted to the trustee for the benefit of creditors while one is in Chapter 13.

Separate from ongoing contributions is the question of whether loans from a 401(k) can continue to be repaid in Chapter 13.  In this case, courts are fairly unanimous in holding that repayment of existing loans as opposed to contributions is permissible in Chapter 13.

Disinheriting Someone

Occasionally it happens that a parent wishes to cut off a child from any inheritance.  Rarely one spouse wants to exclude the other.  The question arises, can that be done?

The answer is "yes" if the heir is a child or anyone besides a spouse.  In Utah a spouse is entitled to what he or she would receive if the decedent died intestate (without a will) even if the will says the spouse is to receive nothing.  This is called the spouse's elective share.  When it comes to anyone besides a surviving spouse a person is entitled to include or exclude whomever she sees fit.

Before deciding to exclude someone from a will, it's important to think through the reasons for wanting to do this.  Usually the person disappointed the decedent in some way, such as by dropping out of school, marrying the "wrong" person, becoming involved in drugs, crime or some other illegal or immoral activity.  Then think about the legacy you as the maker of the will that excludes this person will leave.  How will you be remembered by this person and any others who learn of the decision to exclude that person?  Is that a legacy you want to leave?

Distributing one's estate shouldn't be about rewarding or punishing anyone.  It's about giving away what you can't take with you.  You have no use for anything after you're dead; why should you care particularly who receives it or what they do with it?

Walk Away

One of the hardest things for many bankruptcy clients to do is just walk away from their house or car.  People form emotional attachments to both houses and cars, especially the former.  It's the place where the kids grew up, where there were good times and bad, the place that was always refuge from the storm.  But in bankruptcy the house might not be refuge; it might well be the cause of the storm.

The current economy has put a lot of homeowners under water with their mortgages, to where some owe twice as much as the house is worth.  Look at it objectively:  If you were buying a house, would you pay twice as much as it is worth?  But that's exactly what some people do when they reaffirm on the mortgage debt.

If you're filing bankruptcy and looking for a fresh start, look first at your mortgage.  The sensible thing might be just to walk away.

So You Want to Stay in Business With Your Ex-Spouse

It should seem obvious that if two people can't get along as husband and wife they can't get along as business partners.  Yet a recent case from New Jersey addressed the situation of former spouses who tried (and failed) to maintain their business relationship post-divorce.  In Mariello v. Mariello (http://www.judiciary.state.nj.us/opinions/a4044-10.pdf) the New Jersey Appellate Court held that a property settlement agreement (PSA) between the parties as part of the divorce was binding and the ex-wife, who became unhappy over how the rental properties were being managed, was not entitled to the usual remedy available to joint owners, that of partition.  Partition means the court equitably divides the property.  Here the appellate court found that the PSA had addressed the issue of partition and the parties had agreed not to partition in the event of a dispute.  The moral of the story is, be very careful about staying in business with an ex-spouse.

How Are Your Assets Titled?

When it comes to estate planning, how something is owned, i.e. how the title reads, is almost as important as what is owned.  Many people own property as joint tenants so that either of them can deal with the property.  This makes good sense from an administrative standpoint, but not necessarily from an estate planning standpoint.  Property held in joint tenancy automatically passes to the other joint tenant or tenants upon the death of one of the joint tenants.  This might or might not be what the parties had in mind.  For example, suppose Mom transfers her bank accounts into her and her sister's names so the sister can help Mom, who is getting older, deal with her bills.  Mom has a will that says that on her death the money will go to her children.  But when she dies the joint tenancy automatically transfers the accounts into the sister's name, regardless of what the will says.  If the sister wants to force the issue, the kids might be out of luck.

When planning your estate, always be aware of how your property is titled. 

Posthumously Conceived Children Can't Necessarily Get Social Security Benefits

The Supreme Court of the United States has just announced a fascinating decision.  In a unanimous opinion the Court sided with the Social Security Administration in holding that a child conceived posthumously (after the father's death), such as by way of preserved sperm, is not automatically entitled to Social Security benefits as a surviving heir unless the child is entitled to inherit from the father under state intestacy or inheritance law.  Simply put, such a child cannot rely solely on the fact that it is the genetic offspring of the father.  The child's right to receive benefits depends on whether state law would recognize the child as the father's child.  Since most state intestacy laws were enacted well before medical advances allowed for the preservation of the father's sperm and insemination of the mother by artificial means, this is an open question in most states that will require either legislative clarification or interpretation by each state's courts.

The case is Astrue v. Capato, docket number 11-159, opinion issued May 21, 2012.