What Is the Tokowitz Problem? & Why Should I Care? How an Unfunded, or Under-funded Tr. Can Upset an Estate Plan

• Citation: Vol. 48 No. 1 Pg. 26
• Year: 2025
• Pages: 26

What is the Tokowitz Problem? And Why Should I Care? How an Unfunded, or Under-Funded Trust Can Upset an Estate Plan No. Vol. 48 No. 1 Pg. 26 Wyoming Bar Journal February, 2025

By Stefanie M. Milam and Nathan W. Olin

In the Matter of the Estate of Neal Tokowitz (Matter of Est. of Tokowitz, 2024 WY 5, 541 P.3d 446 (Wyo. 2024)) serves as a significant warning to estate planning attorneys, highlighting problems that arise when pourover wills are relied upon to fund trusts. Tokowitz illustrates how an unfunded or underfunded trust can derail an estate plan leading to unintended disputes, delays, expenses, and potential attorney malpractice.

Summary of the Facts of the Tokowitz Case

Neal and Carol Tokowitz were married for 30 years, and each had children from prior marriages. Mr. Tokowitz's estate plan included a revocable trust and a pourover will. A pourover will is a safety net in estate planning to transfer assets that were not transferred to a client's trust during life. Formal probate of the pourover will may be required to "pour over" the assets into the trust for disposition under the terms of the trust. If trusts are properly funded, the pourover will serves little purpose.

The central issue in this case was that Mr. Tokowitz's trust remained unfunded during his lifetime and the pourover will provided the residuary of the estate be distributed to his trust, with no provisions for the benefit of his surviving spouse, Carol. Complications arose when Mr. Tokowitz died. A Wyoming probate was required to pour over the assets into Mr. Tokowitz's trust. The pourover will was probated in the District Court of Park County, Wyoming, and Carol claimed an elective share against the estate. Under Wyo. Stat. Ann. § 2-5-101(a), if a married person deprives the surviving spouse of more than the elective share of the property to be disposed of under the will, the surviving spouse may elect to receive one-half (1/2) of the property if there are no surviving children of the deceased or if the surviving spouse is also a parent of any of the surviving children of the deceased. The elective share is one-fourth (1/4) of the property if the surviving spouse is not the parent of any surviving children of the decedent.

The Court granted Carol a one-fourth (1/4) elective share of Mr. Tokowitz's probate estate. Mr. Tokowitz's Personal Representative and Trustee, the appellants, appealed the decision.

Legal Issues Addressed by the Wyoming...