Legally Speaking: Learning from others’ mistakes

Legally Speaking: Learning from others’ mistakes

By Linda Toga

THE FACTS: As part of their Medicaid planning, over 10 years ago my parents transferred their house to my brother Joe. They did not put my name on the deed because I had filed for bankruptcy. However, the understanding was that at some point after their deaths, Joe would sell the house and give me half of the net proceeds. My parents died two years ago without ever applying for Medicaid. Joe did not try to sell the house because he said the housing market was soft. Instead, he rented the house to a friend. Unfortunately, Joe and I did not have a good relationship, and he recently died without having sold the house. His will provides that his entire estate, including the house, passes to his wife and son.

THE QUESTION: Can I contest Joe’s will to get my share of the proceeds from the eventual sale of my parents’ house?

THE ANSWER: The short answer to your question is “No.” You cannot contest the probate of Joe’s will because you lack standing. The only people in a position to contest a will are those people in line to inherit under the intestacy statute. In other words, only those people who would inherit if there was no will have standing to contest the probate of a will. Under the intestacy statute, spouses, children and parents of the decedent have priority over siblings. Since Joe was married at the time of his death and had a child, they would inherit his entire estate even if he died without a will. Since you are not in line to inherit, you cannot contest Joe’s will.

However, you may be able to approach this from a different perspective. If you have evidence that your parents’ intent was that you receive a share of the proceeds from the sale of their house, and that they transferred it to Joe alone because of your bankruptcy, you may be able to claim an interest in the house under the theory of a constructive trust. You would not be contesting the probate of Joe’s will but, instead, trying to show that the transfer of the house to Joe was not an outright gift.

If you can show that your parents transferred the house to Joe with the expectation that he hold an interest in the house in trust for your benefit in the future, you may be able to recover from Joe’s estate the value of your share of the house.

If your parent’s plan was that the house be sold after their deaths and the proceeds split between you and Joe, they should have transferred the house into an irrevocable trust, rather than outright to Joe. Such a trust would have addressed your parents’ concerns about Medicaid without creating the problem you now face. Language could have been included in the trust to address your bankruptcy and protect your share of the proceeds from your creditors. An experienced estate planning attorney could have easily insured that your parents’ wishes were honored and that both you and Joe benefited from the sale of their house.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate and estate administration, real estate, small business service and litigation from her East Setauket office.