Avoidable Estate Planning Mistakes: Giving Directly When A Judgment Exists Against Beneficiary
A drafting attorney overlooking minutiae can undermine even the most thoughtful estate plan. One recent Cecil County example of this problem is seen in the Estate of Theresa Sposato. Mrs. Sposato passed away on June 9, 2015. Her last will was executed on July 16, 2013.
In the July 2013 will, Mrs. Sposato attempted to disinherit her son Anthony and his children by treating them as predeceased. Clearly, Mrs. Sposato’s intent was to leave nothing to Anthony and any individuals claiming through Anthony. Mrs. Sposato died owning Century Development Company, Inc. in her name alone. In her will, she left all of her interest in Century Development Company, Inc. to her other son, Charles. According to court filings, the Century Development Company was valued at $292,129.05, including $121,688.19 in certificates of deposit and a life insurance policy valued at $170,440.86. The Company had ceased doing business years before.
Several months before Mrs. Sposato signed her will, Anthony had obtained a judgment against Charles for $258,150.68 in the Circuit Court of Baltimore City. See Anthony Sposato vs. Charles F. Sposato, Case No. 24C12002360. On April 28, 2017, Anthony filed a limited exception to the distribution of his mother’s estate with the Cecil County Orphans’ Court. Anthony, acting as a creditor and not as a disinherited son, intervened in the estate and requested that the Court order distribution to Anthony as a creditor in lieu of allowing the inheritance to Charles.
Ultimately, Charles conceded the funds in a filing dated January 30, 2018. Absent Anthony’s Baltimore City Circuit Court judgment, Charles had other creditors that would have become apparent by asking the right questions. See May 30, 2015 Baltimore Sun Article detailing other cases filed against Charles Sposato.
Had the attorney drafting Mrs. Sposato’s will taken a moment to search the names of the parties on the Maryland Case Search website, the judgment could have been discovered and Mrs. Sposato’s wishes could have been effectuated with trust planning. The Estate probably incurred litigation expenses needlessly. A simple trust could have dissuaded Anthony from pursuing the funds from the Century Development Corporation. The fight between the brothers, however, is probably not over. The judgment is not marked satisfied even after application of the inherited funds, likely due to the accrual of interest. Anthony can attempt to pursue the funds wherever located. In fact, records indicate that the Baltimore City judgment was registered with the Clerk of Courts in Monroe County, Florida, where Anthony resides.
At the very least, an estate planning attorney should inquire about the financial health of intended beneficiaries. Where questions exist, the attorney should search appropriate court records to determine whether active judgments exist.