How to carry out the decedent’s wish — 101. I bet many of you have heard some variation of the following .
Aunt Lucy had no kids of her own but she had a bunch of nieces and nephews – seven of them in fact. She loved them all but she was particularly close to her niece Mary who helped out quite a bit during Aunt Lucy’s final years. Aunt Lucy regularly talked about how she wanted Mary to inherit the old family farm. When the time came, the family discovered that Aunt Lucy’s Will left all of her property and assets equally to her nieces and nephews and didn’t make any special provisions for Mary alone. Unfortunately Aunt Lucy’s statements didn’t change the Will. This meant that after Aunt Lucy’s death the family farm was owned by all the nieces and nephews together.
So is there any way to fix this? How can you carry out Aunt Lucy’s wishes when she failed to make the necessary provisions in her Will? Some of you may wonder if a court proceeding would do the trick, but our courts are not in the business of changing provisions in a Will. A court proceeding is appropriate if there is some ambiguity or conflict in the terms of the Will itself or if there is a question of the Will’s validity. None of these applies for Aunt Lucy’s Will.
However there is a solution which is pretty simple, provided we have the agreement and cooperation of all the nieces and nephews. As legal owners of the property, the nieces and nephews can execute a quitclaim deed in favor of Mary to transfer title to the property entirely to her. This transaction does not require any court approval or any court procedure, other than recording the deed. This is simply an independent action of the beneficiaries to fulfill the wishes of the Aunt Lucy notwithstanding the terms of the Will.
One caveat in this solution is that the valuation of the property is very important. The transfer in this case is a gift from all the other nieces and nephews to Mary. Under the tax law, each niece and each nephew can give Mary up to $13,000 worth of property in any given year; this is known as the annual gift tax exclusion. As long as the value of the property divided among all of the nieces and nephews is below the $13,000 annual exclusion, there is no gift tax concern. However, if the gift for each donor will exceed the annual exclusion, then you can always spread the gift out over several years with multiple deeds or you may also determine that a larger gift will not create tax issues for the donors.
OK that all works fine if everyone agrees, but what if you have that one nephew who doesn’t get along with Mary and won’t cooperate in the deed. In this case you may be out of luck unless Mary and/or the other beneficiaries are willing to work out some type of “settlement” with the nephew. Again the key is reaching some agreement between the beneficiaries. As long as the beneficiaries can all agree and as long as the gift tax consequences can be addressed, then we really can fulfill Aunt Lucy’s wishes. Of course all of this trouble can be avoided if we can just get people to update their Wills to reflect their wishes – get off the sofa Aunt Lucy!