The goal of every estate plan for a blended family is to create a perfectly balanced result. Failing to do so can become a recipe for disaster.
A gentleman we will call RC had his share of challenges in life, one of which was surviving combat on the battlefield. Unfortunately, his surviving family members later found themselves in courtroom combat while administering his estate after his passing.
As a young man, RC entered the military and served with distinction in Vietnam. He became a husband and father of six children. The marriage eventually broke down, and he and his wife lived effectively separated for 20 years before divorcing. During that period of separation, RC relocated to Connecticut, where he met Inger, with whom he developed a close relationship. RC and his wife eventually finalized their divorce. He and Inger lived in Connecticut for a time before relocating to North Carolina, where they married in 2013.
RC maintained his legal residence at the family farm in Tennessee. By 2015, his decline in mental acuity had become noticeable. During that year, RC met with a Tennessee attorney and explained that he had been diagnosed with dementia and wished to prepare a Last Will and Testament. RC candidly told the attorney that he was concerned Inger might attempt to influence him and “reshape” his estate plan. The attorney prepared the Will in accordance with RC’s wishes. Sure enough, Inger later contacted the attorney several times to have the terms of the Will changed. RC, however, never authorized any changes, and the document remained intact. The funds in various financial accounts were to be divided among several beneficiaries, including Inger and two of RC’s daughters.
RC’s mental decline continued. In 2018, he became lost while driving from Tennessee to North Carolina, a trip he had made numerous times before. In 2019, RC instructed his attorney to prepare a durable power of attorney appointing someone to act on his behalf if he became unable to handle his affairs independently. Before accepting the assignment, the attorney conducted an informal mental examination to confirm that RC possessed sufficient mental capacity to execute the document. Satisfied that RC understood the transaction, the attorney prepared the power of attorney naming Inger as RC’s agent. The attorney also cautioned Inger not to use the power of attorney to engage in self-dealing.
Tension later developed between Inger and RC’s children. During a visit to the farm, Inger stated that RC needed someone to care for him and suggested that RC’s daughter, Laurie, should take on that responsibility. Laurie explained that her own health problems made that impossible. Inger and RC then returned to North Carolina. When the children later attempted to contact RC by phone, Inger informed them that he did not wish to speak with them. The children subsequently learned that Inger had arranged for RC to reside in a residential healthcare facility in North Carolina without discussing the matter with them or allowing them to participate in selecting a facility. RC did not see his children again before his death the following year.
RC’s son, whom we will call Jeff, had been nominated in the Last Will to serve as executor of the estate. After RC died, Jeff filed the petition to open the estate and submitted the Will for probate. As executor, Jeff began gathering information about RC’s assets to distribute in accordance with the Will’s terms. To his dismay, Jeff discovered that ownership of several financial accounts had been changed within the year before RC’s death from being solely owned by RC to being jointly owned by RC and Inger. The estate attorney explained that the Will controlled only those accounts titled solely in RC’s name. Jointly owned accounts automatically became the property of the surviving owner.
Jeff filed suit against Inger, alleging that she had exercised undue influence over RC and violated the confidential relationship between them as husband and wife, as well as the principal-agent relationship under the power of attorney. Inger defended the lawsuit with several arguments. She established proof that RC had previously gifted $20,000 to a son-in-law, $100,000 to one daughter, and $50,000 to another daughter in 2019. The account from which those checks were written contained proceeds from the sale of RC’s farm property and was jointly titled in both RC’s and Inger’s names. Inger testified that she filled out the checks while RC personally signed them. In effect, Inger argued that the funds in the account belonged to her just as much as they belonged to RC.
Inger further contended that the probate proceeding itself was unnecessary because she already knew RC’s wishes concerning his children and intended to honor them without court involvement. Her argument implied that RC intentionally chose to provide gifts to his family during his lifetime while allowing the remaining funds to pass directly to Inger through survivorship rights attached to the joint accounts, effectively rendering the Will meaningless because no solely owned accounts remained under its control.
After hearing all the proof, the trial judge announced his ruling. The judge observed that RC’s Will had been prepared during the early stages of his dementia and that Inger had unsuccessfully attempted several times to change its provisions. The judge also recognized the friction that arose between Inger and the children, including the lack of telephone contact during RC’s final months and the decision to place him in a care facility without informing the children. The court further noted that during the later stages of RC’s life, Inger held his power of attorney and was made co-owner of his financial accounts.
At that point, the ruling took a dramatic turn. The judge emphasized that Inger had never actually signed any documents on RC’s behalf under her power of attorney. The judge found this fact critical. Jeff’s legal argument centered on the claim that, once Inger obtained power of attorney, she owed RC a fiduciary duty and could not engage in self-dealing. The judge explained that under Tennessee law, because Inger had never exercised the power of attorney by signing documents for RC, the only remaining issue was whether she exercised “dominion and control” over RC to such an extent that he was incapable of making independent decisions when he changed the bank accounts into joint ownership.
Because no proof showed that Inger exercised dominion and control over RC at the time the accounts were retitled, the law presumed that RC acted of his own free will. As a result, the Last Will did not affect the bank accounts because they were jointly owned with Inger. A Will controls only assets titled solely in the decedent’s name and only if no beneficiary designation exists directing the assets elsewhere upon death. In RC’s case, the Will controlled none of the financial accounts. Inger, as surviving owner, became the sole owner of those accounts regardless of the Will’s provisions.
RC could have achieved his estate planning goals in a very different manner, one that would have avoided leaving such a sour taste among surviving family members. Before marrying Inger, he could have created a trust and transferred the farm and other intended assets into it. The trust could have directed that upon RC’s death, the farm or the proceeds from its sale would pass to his children. At the same time, the trust could have provided that assets acquired jointly during the marriage would benefit Inger exclusively. Through proper planning, RC could have protected both his children and his wife without creating the animosity and distrust that ultimately overshadowed the final years of his life. An estate plan for a blended family, when properly concocted, can become a delight to all.
