Saturday, August 2, 2014
Melanie B. Leslie (Yeshiva University, Cardozo Law School) and Stewart E. Sterk (Yeshiva University, Cardozo Law School) recently published an article entitled, Revisiting the Revolution: Reintegrating the Wealth Transmission System (July 2014), Boston College Law Review, Vol. 56, 2015; Cardozo Legal Studies Research Paper No. 434. Provided below is the abstract from SSRN:
Thirty years ago, John Langbein published The Nonprobate Revolution and the Future of Succession. The article celebrated testators’ newfound ability to avoid the expense and delay of the probate-court system by holding assets in a variety of nonprobate devices, such as retirement and bank accounts with beneficiary designations and revocable trusts. Although Langbein highlighted problems the revolution might generate, he predicted they would be resolved.
Since then, significant problems have indeed developed. First, wills law doctrines designed to effectuate intent of testators have not been universally extended to nonprobate transfers. Second, the fragmentation of the wealth transmission process has created co-ordination problems that did not exist when almost all of a decedent’s assets passed through the decedent’s probate estate. This has increased the opportunities for attorney error. Even when attorneys get it right, rogue clients can easily undermine a carefully constructed estate plan, and the law does not always allow courts to correct these errors. Third, the nonprobate system increases the potential for wrongful takers to dissipate assets before rightful beneficiaries have an opportunity to make claims to those assets.
As we explain, neither lawyers, financial institutions nor the legal system have successfully resolved these issues. We advance several proposals that might ameliorate the costs of the nonprobate system, such as conferring broader power on estate executors to coordinate nonprobate assets, and a voluntary registration system that would reduce the risk of inadvertent conflicts among wealth transmission documents.