What Parents Promise

Posted on: Monday, July 8th, 2019

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Clients often tell us that their parents promised them that when they die, everything will be divided evenly among the children.  Then, when they die, they find out that there is an asset, a bank account or piece of real estate, that goes to one of the children, individually.

In the recent Michigan Court of Appeals case of In Re Estate of William Patrick McNeight, Dad held a family meeting before his death, and told his children that everything would be divided among them equally.  He prepared a will that likewise said everything would be divided equally.

But when Dad died, it turned out that there was one retirement account that was left to just one child by beneficiary designation.  The other children protested, and started a lawsuit.  They were able to show that the paperwork at the financial institution at which the IRA was held had gone through several changes, and that the financial institution was itself confused about their own rules and protocols.  But in the end, the court refused to change the outcome, leaving the beneficiary designation on the disputed retirement account in tact.

The case offers a lesson in one reality of probate litigation.  Families often believe that everything will be divided equally, and that is often what the deceased parent intended.  But paperwork matters.  In most cases, a written beneficiary designation or other testamentary document will trump oral promises; and what’s in a will or trust will not, without a specific reference to the contrary, overcome a beneficiary designation or other non-probate arrangement.

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