Writing Wisconsin's New Probate Code

Wisconsin's New Probate Code

By Howard S. Erlanger

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The new Wisconsin Probate Code - effective Jan. 1, 1999¹ - is a comprehensive revision of the substantive law of probate, as contained in former chapters 851, 852, 853, and 861 of the code.²These chapters cover definitions and general provisions (chapter 851); intestacy (chapter 852); wills (chapter 853); and family rights (chapter 861). As part of the revision, new chapter 854 was created, which contains general rules applicable to all transfers at death.

The New Probate Code - Effective Jan. 1, 1999 - contains several provisions that will be important to estate planners, no matter what size estates they handle. Among its important provisions, the new code sets out default provisions to answer questions that often result from inadequate drafting or execution of documents.

A brief history of the new code

The last comprehensive revision of the substantive provisions of the probate code occurred in the late 1960s,³during the period that the original Uniform Probate Code (UPC) was being written and promulgated. The drafters of the 1969 Wisconsin Probate Code were in touch with the UPC drafters, and Wisconsin adopted many provisions that were similar or identical to those in the 1969 UPC. Wisconsin is not, however, considered to be a "UPC state." In the 1980s, a major revision of the UPC was undertaken by the Joint Editorial Board of the UPC, and a new UPC was promulgated by the National Conference of Commissioners of Uniform State Laws in 1990⁴ - creating the "1990 UPC."⁵ Because of the close ties between Wisconsin probate law and that of the UPC,⁶ in 1992 the State Bar Real Property, Probate, and Trust Law Section created a committee to study the UPC revisions, consult with practitioners, and recommend changes for Wisconsin.

The committee compared extant Wisconsin provisions to each UPC provision, proceeding from a presumption that the UPC should be considered to be the better rule of law. In the end, however, the committee determined that in some cases the Wisconsin provision should be retained, and in others that the new rule should be a modified version of the UPC provision. After more than five years of work, the committee - referred to in this article as the "Drafting Committee" - completed a proposal that was introduced in the Legislature in January 1998,⁷ passed in April, and signed into law in May 1998.

Although the new code is heavily influenced by the 1990 UPC, there are numerous and substantial differences; hence Wisconsin cannot be said to have adopted the UPC. The major themes orienting the committee's work were, however, in concert with those of the UPC:

• The Probate Code should focus on implementing the intent of the transferor;
  
  
• Probate rules should, whenever possible, provide uniformity and consider current public expectations;
  
  
• The rules relating to the distribution and interpretation of probate and nonprobate transfers should be similar;
  
  
• The Probate Code should consider the complexity of modern families; and
  
  
• The deferred marital property election should be simplified.

This article summarizes the major changes embraced in the new Probate Code, identifies potential problems with respect to retroactivity and federal preemption, and concludes with a word on how the new code might affect the everyday practice of trusts and estates in Wisconsin.

Focus on the transferor's intent

The Wisconsin Probate Code, like those of other states, is based on two important policies: 1) protection against fraud and coercion; and 2) implementation of the transferor's intent. In large part, these policies can be pursued together; for example, the formalities of will execution serve to protect against undue influence, and by so doing help guarantee that a will truly represents the testator's desires. Yet they also are in tension - if the law emphasizes protection through formalities, then some wills that genuinely reflect the testator's intent will not be admitted to probate, merely because they do not meet those formalities.

Even though there are strong arguments to be made in favor of the protective function of will formalities, to a great extent the public has rejected this function. Each year, more and more property is passed to survivors through nonprobate means: living trusts, life insurance and pension beneficiary designations, joint tenancy, survivorship marital property, joint and payable-on-death bank accounts, and the like. While all these nonprobate methods have some formalities, in virtually all cases there are substantially fewer than for wills. In addition, disputes regarding nonprobate transfers almost always focus on the substance of the transaction and the transferor's intent, rather than on whether formalities of transfer have been met.

The 1990 UPC dramatically reduces the formalities of will making, allowing, for example, any document to be admitted as the decedent's will - irrespective of compliance with any formalities - as long as there is clear and convincing evidence that the document was intended to be that person's will.⁸ The Drafting Committee concluded that the effect of so substantial a relaxation in will formalities was too uncertain, and opted instead to wait and see how those changes work out in other jurisdictions that have recently adopted them. The committee did, however, reduce some of the formality surrounding will execution:

• While under prior law two witnesses had to sign the will in the presence of the testator and in the presence of each other, the new code allows the witnesses to sign individually, within a reasonable time after witnessing either the testator's signing or his or her acknowledgment of the signature.⁹ Note that the purpose of the new provision is not to encourage sloppiness in the execution of wills; rather, it is assumed that careful practitioners will use the same formalities as before. However, the new rules will serve to make it somewhat easier to admit a will when the person executing the will was not aware of the formalities or was unable to comply with the strict witnessing requirement of the prior law.
  
  
• Under prior law, a witness (or his or her spouse) who also was a beneficiary under the will was absolutely barred from receiving an amount greater than that which would be received under intestacy - even if the witness's participation was innocent and there was no evidence of wrongdoing. Under the new code, this limit on the rights of "interested witnesses" is presumed to apply, but it is subject to rebuttal with evidence that the testator intended the witness to receive the full transfer.¹⁰

The new code also facilitates admission of wills by adopting an optional procedure to preclude a challenge based upon failure to comply with execution formalities. At the time of - or subsequent to - execution of the will, the testator and witnesses may execute an affidavit attesting that the formalities were complied with. This procedure, which is recognized in a majority of states, is determinative on questions of compliance with the formalities.¹¹

The Drafting Committee also decided that there was at least one type of transfer - that of individual items of tangible personal property - for which the formalities should be greatly reduced. Under the new code, a testator can indicate in the will that he or she might leave a separate written statement directing that various items of tangible personal property - for example, jewelry or heirlooms - be distributed to specified beneficiaries. This statement must be signed and dated, but it need not be witnessed, and it can be created or revised after the execution of the will.¹²This procedure "legalizes" what has been a common informal practice. However, drafters should remember that one advantage of the informal practice was that is was likely to be used only in situations where conflict regarding the items transferred was unlikely. Legalization of the procedure does not substantially change the risks associated with it.

Finally, the new code decreases the formality surrounding some aspects of will construction. Under the traditional law of wills, a will can be interpreted only using information contained "within the four corners of the document." The new code abrogates this rule as it applies to many issues of will construction, and generally allows admission of extrinsic evidence to prove intent in those instances. The code does not, however, adopt a general rule allowing reformation of errors in wills.

Provide uniformity and consider current public expectations

Over the past several decades, there have been successful innovations in the law of trusts and estates in other jurisdictions, and many worthwhile suggestions from commentators in scholarly journals. The UPC attempts to embody the best of these, and the Drafting Committee in turn adopted most of them. In considering whether to adopt a change, the committee was sensitive to the principle that, whenever possible, it is desirable that probate law be uniform across states. Uniformity will become more important as people become even more mobile; already it is not unusual for a person to have lived in several states, or to own real estate in more than one state. Changes that only affect wills or intestacy are discussed in the present section; changes that speak more to the unification of the law of probate and nonprobate transfers will be taken up in the following section.

With respect to intestacy, three noteworthy changes are made primarily for updating and uniformity:

• If there are no takers among the parents or the descendants of the parents, then more remote relatives (that is, the descendants of the grandparents - aunts, uncles, cousins) are split into maternal and paternal groups, with the takers in each determined separately.¹³ This contrasts with the "next-of-kin" approach taken in the former code.
  
  
• In a second departure from the next-of-kin approach, the rights of relatives to take under intestacy are now limited to the descendants of the grandparents; if there are none, then the intestate estate escheats to the state.¹⁴
  
  
• Finally, in unusual situations, a testator might want to provide that if the will should be inadequate and part or all of the estate should pass by intestacy, certain persons should be disinherited. The new code codifies this rule.¹⁵

The new code also makes a change that is "out of synch" with the UPC; it reverts to a rule of strict per stirpes for determining the rights of issue under intestacy.¹⁶

With respect to wills, changes primarily directed towards updating and uniformity include:¹⁷

• Clarification of the rights of the surviving spouse in situations where the decedent's will predates the marriage. Under the former code, marriage either had no effect on the will (if, for example, there was any provision for issue), or revoked the will in its entirety. Following the UPC, unless there is sufficient evidence that the omission from the will was intentional, the surviving spouse receives an intestate share in that portion of the estate not willed to issue.¹⁸
  
  
• Modification of the rights of children who were mistakenly omitted from the will.¹⁹ The new rules are partly based upon the UPC, but retain several features of prior law, including an expanded discretionary power in the court to determine the most likely intent of the testator and to modify the will accordingly.²⁰
  
  
• Clarification of what happens when a subsequent will or codicil does not obviously revoke the previous instrument, by creating rebuttable presumptions about the status of the previous will.²¹
  
  
• Clarification of the circumstances under which a previously revoked will can be "revived," by creating rebuttable presumptions about the testator's intent.²² The thrust of these provisions is to allow a prior will to be revived if that is the testator's intent.
  
  
• Codification of the doctrine of "incorporation by reference," which applies when a will seeks to include a separate document that does not itself meet the will execution requirements.²³

Integrate rules of probate and nonprobate transfers

The execution of wills is one area in which the UPC moved dramatically to integrate the rules relating to probate and nonprobate transfers. Nonetheless, as noted earlier, the Drafting Committee kept many of the formalities surrounding wills, in spite of the fact that most nonprobate transfers can be arranged much more informally.²⁴ But in other areas, the Drafting Committee thought it best to try to merge the law of probate transfers and nonprobate transfers.²⁵To a great extent this meant applying well-established probate "rules of construction" to the nonprobate arena, and in some cases resolving differences that existed in prior law between the law of intestacy and the law of wills. The new code includes an entirely new chapter, Chapter 854, that collects the new general rules applying to all transfers at death.²⁶ These include:

• Creation of a 120-hour (five day) survivorship requirement for all transfers that require the recipient to survive in order to take.²⁷Under prior law, there was a 72-hour survivorship requirement for intestacy, but survival by an instant sufficed for other transfers that required a person to survive.²⁸ In addition, beneficiaries under a revocable trust are now explicitly required to survive in order to take.²⁹
  
  
• Creation of definitions for three different modes of representation - [strict] per stirpes, modified per stirpes, and per capita at each generation - which apply when there is a provision for a person's issue, and two or more of the person's issue have predeceased.³⁰
  
  
• Extension of the "anti-lapse" rules, which apply when a named beneficiary has predeceased and no contingent beneficiary is named, from probate to nonprobate transfers.³¹
  
  
• Integration of the rules on the status of adopted persons.³² Under the prior law, there were differences between rules regarding transfers under intestacy and other transfers.
  
  
• Consolidation of the rules regarding the recipients of class gifts, and where necessary, extension to nonprobate transfers.³³
  
  
• Creation of a single disclaimer statute, replacing the two that existed under prior law, and reconciling variations between them.³⁴
  
  
• Creation of a single "slayer statute," reconciling six scattered statutes.³⁵
  
  
• Modification of the rules regarding the effect of divorce on the decedent's estate plan, and extension of these rules to nonprobate instruments.³⁶
  
  
• Extension of other probate rules to cover all nonprobate transfers, which primarily will be trusts. These include rules relating to: ademption - regarding what happens if a specific item is left someone, but the item is not owned at death;³⁷advancement - regarding the effect of lifetime gifts on transfers at death;³⁸ abatement - regarding the reduction of transfers when assets are insufficient to cover them;³⁹nonexoneration of liens on specific transfers;⁴⁰ and no-contest clauses.⁴¹

All these rules essentially serve as presumptions; they yield to evidence - including extrinsic evidence - of contrary intent. Some of the statutes require that this evidence relate to interpretation of words in the document, but other times the evidence can be completely extrinsic.

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