ESTATE PLANNING: Lapsed Bequests?

2012-10-14T00:00:00Z ESTATE PLANNING: Lapsed Bequests?Christopher W. Yugo Estate Planning
October 14, 2012 12:00 am  • 

 Q: My father recently sold his Illinois home and intends to move to Indiana. His will provides that his home goes to my brother. Since he sold his home, should he amend his will? Is there anything else he needs to worry about if he moves to Indiana?

A: A couple of things jump out at me. First, you indicated your father intends to move to Indiana. You didn’t say that he has moved to Indiana. If he resides in Illinois, you should probably consult an Illinois attorney to determine what effect that selling the home will have on his will. However, this is how the folks on this side of the border might handle this situation:

Since the will makes a specific bequest of a residence that the testator no longer owns, it is likely a lapsed bequest. However, you should take a good look at the will to determine what happens.

For example, the will may say something along the lines of “I bequest my residence to Bobby." If the will generically refers to a “residence” and he subsequently buys another one, that new home may go to your brother. This may or may not be your father’s intent.

On the other hand, if the will specifically identifies the residence such as “my residence located at 123 Happy Lane” and the testator no longer owns it when he passes, the bequest will lapse. However, you should still check the will to see what it says on the issue.

I suppose if your father sells the residence and separates the money from the rest of his wealth rather than commingling it, your brother could argue the funds were set aside to satisfy the bequest.

For example, if your father sells the home and then buys a CD with the proceeds at a bank that he has no relationship with and keeps the CD completely separate and never touches it, your brother might try to argue that CD represents the residence and should belong to him at the time of death.

I haven’t researched the issue, but I would think that your brother’s argument would be met with skepticism. However, if presented with favorable facts, a smart attorney might be able to make a good argument why your brother should receive the funds. Never underestimate the ability of a skilled attorney with a couple of favorable facts.

Another important issue relates to your father’s state of residence. Remember that each state has its own probate laws, so determining where your father actually lives is really important. If your father takes up permanent residence in Indiana, the issue is easy to resolve. On the other hand, if he spends part of the year in your Indiana home and part of the year staying with your brother in Illinois, the issue is a little murkier. Personally, I like to look at tax returns to determine a decedent’s residence. However a number of things can be used to establish residency.

Finally, if your father does move to Indiana, a validly executed Illinois will should be valid in Indiana. However, I suggest that he sit down with an Indiana attorney just to make sure.

Opinions are solely the writer's. Christopher W. Yugo is an attorney in Crown Point. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Yugo’s information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate-planning specialist.

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