Presentation Transcript

1. Construction of wills If a primary goal of trusts and estates law is to carry out donor intent, we need principles for situations in which donor intent is not obvious Mistaken or ambiguous language (previous class) Death of beneficiary before death of testator Changes in property after execution of a will
2. Construction of a will:The stale will Events may occur after the execution of a will that make a will “stale.” A beneficiary might die between the execution of the will and the death of the testator. What happens to the beneficiary’s bequest? After execution of the will, the testator might dispose of a piece of property that was part of a bequest. What does the intended beneficiary of that piece of property receive?
3. Avoiding default rules Just as wills are drafted to avoid the default rules of intestacy, specific provisions of wills are designed to avoid other default rules The matter of stale wills involves a number of default rules that well-drafted wills will anticipate Common law default rules Statutory default rules that supersede the common law rules
4. Death of beneficiary before death of testator Recall that when someone dies intestate, the share of a predeceased heir apparent either Falls to the heir apparent’s descendants or If the heir apparent left no descendants, then the share is divided by the remaining heirs Today, we consider what happens when a beneficiary of a will devise predeceases the testator
5. Common law rules* Prior death of beneficiary=>lapse of gift Beneficiary’s specific (my car) or general ($10,000) gift falls to the residue Lapsed residue or share of the residue passes by intestacy (no-residue-of-a-residue rule) Lapsed share of a class gift ($10,000 to the children of A) is divided among surviving members of the class Voided gifts are treated as lapsed gifts E.g., beneficiary dies before will is executed, or the beneficiary is a dog or cat *Antilapse statutes override common law
6. Estate of Russell (1) Illustrating the default rules: Russell, p.359 What were the facts in Russell? March 18, 1957 I leave everything I own Real & Personal to Chester H. Quinn & Roxy Russell Thelma L. Russell She also left a gold piece and diamonds to her niece, her intestate heir
7. Estate of Russell (2) Estate of Russell Russell Petition for Probate Slide Chester H. Quinn Thelma Russell Georgia Hembree VOID ?? Roxy
8. Estate of Russell The court identified two potential ambiguities The identity of Roxy Russell—extrinsic evidence demonstrated that Roxy was an Airedale Did Thelma intend to leave the residue in equal shares to Chester and Roxy, or did she intend Chester to take the entire residue and take care of Roxy (essentially creating a precatory or honorary trust, pp. 562, 585)? The court mentioned an address book, p. 360—on her address book, Thelma had written, “Chester, Don’t let . . . Georgia [the plaintiff] have one penny of my place if it takes it all to fight in Court” (note 14, p. 361) Nevertheless, the court concluded that there really was no ambiguity in the language for the residue, after paraphrasing it to leave “equal shares” to Chester and Roxy (see n16, p.362)
9. Is there any way to get the lapsed gift to Chester? Prior death of beneficiary=>lapse of gift Beneficiary’s specific (my car) or general ($10,000) gift falls to the residue Lapsed residue or share of the residue passes by intestacy (no-residue-of-a-residue rule) Lapsed share of a class gift ($10,000 to the children of A) is divided among surviving members of the class Voided gifts are treated as lapsed gifts E.g., beneficiary dies before will is executed Treat it as a class gift (class gift rule trumps no-residue rule) Not a great argument, but see Iozapavichus, n2, p378)
10. Lapsed shares of the residue in Indiana “Consequently, when a will does not specifically provide for an alternate recipient in case of failure of a residuary devise, the testator's intent as expressed in the will (e.g., case 7, p. 365) determines whether the failed devise is inherited under the rules of intestacy or goes to an alternate residuary devisee. In the absence of an expression of the testator's intent, the failed residuary devise passes as intestate property.” 642 N.E.2d 548, 552 (Ind. Ct. App. 1994) (emphasis added) Most states have eliminated the no-residue-of-a-residue rule—lapsed share either falls to the residue or to the intended beneficiary’s heirs (under an anti-lapse statute)
11. Antilapse: Case 4 (p. 364) T T devises entire estate: one-half to B, one-half to A. B dies before T, leaving a child, C. Tdies. What happens to B’s share? Common Law: B’s share lapses and passes by intestacy. A and Cshare B’s lapsed share, so A gets ¾ of the estate, C gets ¼ of the estate. B A State has eliminated the “no-residue-of the-residue” rule: B’s share, as a residuary devise to A and B, goes to A, so A gets the entire estate. ¾ Estate C Entire Estate State has adopted an applicable antilapse statute: C takes B’s share, so A gets ½ of the estate, Cgets ½ of the estate. ½ Estate ¼ Estate ½ Estate
12. Antilapse: Case 5, p. 364 T devises home to niece, A, and residue to B. A dies before T, leaving a child, C. Tdies. What happens to A’s share? T Sibling Common Law:A’s share lapses and falls into the residue. B takes Home Residue A B UPC: As a descendant of T’s grandparents, Afalls within the required relationship of the antilapse rule. Therefore, C takes the home. C Some antilapse statutes: If the statute only applies to T’s descendants, then the antilapse statute is not applicable, the devise lapses, and the house falls into the residue, to go to B. Home to B Home to B Home to C
13. Indiana’s anti-lapse statute If a devise of real or personal property, not included in the residuary clause of the will, is void, is revoked, or lapses, it shall become a part of the residue, and shall pass to the residuary devisee (note the implied no-residue-of-a-residue rule). Whenever any estate . . . shall be devised to any descendant of the testator, and such devisee shall die during the lifetime of the testator . . . leaving a descendant who shall survive such testator, such devise shall not lapse, but the property so devised shall vest in the surviving descendant of the devisee as if such devisee had survived the testator and died intestate. Ind. Code 29-1-6-1(g)
14. Antilapse: Case 6, p.365(Case 4 with a twist) T devises entire estate: one-half to B, one-half to A, “but if A or B or both do not survive me, then I give such predeceasing child’s share to my friend F.” B dies before T, leaving a child, C. T dies. What happens to B’s share? T F ½ Estate B A Antilapse statute states a default rule: Because T has provided expressly for the possibility of B predeceasing T, the antilapse statute does not apply. F receives one-half of the estate. ½ Estate C
15. Antilapse: Case 7, p. 365 T A B C D E ½ Estate ½ Estate T devises entire estate: “to my living brothers and sisters, A, B, C, D, and E, to share and share alike.” A, B, andC die before T, leaving descendants. Tdies. What happens to A, B, and C ’s shares? Issue: Do the terms “living” and “share and share alike” express a condition of survival, precluding application of the antilapse statute? Allen v. Talley (1997):Terms indicate requirement of survival, antilapse statute does not apply, Dand E take the entire estate.
16. Antilapse: Case 8, p. 365 T A B C D E 1/5 Estate 1/5 Estate T devises entire estate: “to my brothers and sisters, A, B, C, D, and E, to share and share alike.” A, B, andC die before T, leaving descendants. Tdies. What happens to A, B, and C ’s shares? Issue: Does the term “share and share alike”, by itself, express a condition of survival, precluding application of an antilapse statute? 1/5 Estate 1/5 Estate 1/5 Estate Estate of Kuruzovich (2002):“Share and share alike” does not express contrary intention, antilapse statute applies. D and E, and descendants of A, B, and C each take 1/5 of the estate.
17. Antilapse: Case 9, p. 366 Wilma T devises Blackacre “to my son Sidney if he survives me,” residue to his wife Wilma. Sidney dies before T, leaving a child, C. Tdies. Who takes Blackacre? T Issue: Do the words “if he survives me” evidence an intention that Sidney’s descendants should not be substituted for Sidney? Blackacre Sidney Majority Rule: An express requirement of survivorship, such as “if he survives me,” evidences an intention that Sidney’s descendants should not be substituted for Sidney. Wilma takes Blackacre. Debby UPC §2-603(b)(3): The term “if he survives me” is not a sufficient expression of contrary intent. Antilapse statute applies. Debby takes Blackacre. Blackacre
18. What were the facts in Ruotolo v. Tietjen, p. 367 John N. Swanson executed a will leaving one-half of the residue of his estate “to Hazel Brennan of Guilford, Connecticut, if she survives me.” Hazel Brennan was the testator’s stepdaughter Hazel died 17 days before John According to CT’s antilapse statute, the gift to Hazel would fall to her descendants, and she had a surviving child, Kathleen Did the conditions on the gift (“if she survives me”) override the antilapse statute?
19. Ruotolo v. Tietjen Ruotolo v. Tietjenp. 367 Wife First Husband John Hazel “to Hazel…if she survives me” Application of anti-lapse statute?? Kathleen
20. What did the court conclude in Ruotolo? Why? The words “if she survives me” are not sufficient to override the antilapse statute. Antilapse statutes are intended to be liberally construed to prevent unintended disinheritance—the statutes “should be given the widest possible sphere of operation” (p. 369) Words of survivorship are often boiler-plate language—testators should state their intent to defeat the antilapse statute explicitly or provide for an alternative devise (p. 370) If the devise lapsed, it would descend according to the rules of intestacy, but state law presumes that testators want their entire estate to be governed by the will (p. 371) And the will has a residuary clause, whose purpose is to avoid having any of the estate be governed by rules of intestacy
21. Lessons fromRuotolo v. Tietjen If you don’t provide a well-drafted will, your clients’ wishes may be thwarted by a bad court decision And this was a bad decision—The testator conditioned the gift to his step-daughter on her having survived him, and the other half of the residue was to be divided among four persons, including the step-daughter’s child Rather than ignoring the conditional words (“if she survives me”), the court should have ignored CT’s no-residue-of-a-residue rule to avoid the gift passing through intestacy (note 3, p. 373)
22. Drafting for lack of survival “to A if A survives me, but if A does not survive me, to B if B survives me, and if both A and B do not survive me, to be added to the residue of my estate.” Page 373, note 4
23. Class gifts (Restatement) Testator leaves a gift and uses a class label (e.g., to my nieces and nephews)—it’s a class gift Unless the language or the circumstances indicate that the beneficiaries are to take as individuals. Testator leaves a gift and names beneficiaries individually without reference to a class label—it’s not a class gift. Testator leaves a gift and names beneficiaries individually, but also uses a class label—it’s presumed not to be a class gift. The presumption can be overcome if the language or circumstances indicate that a class gift is intended.
24. What were the facts inDawson v. Yucus?, p. 376 Nelle Stewart devised her interest in her late husband’s family farm to two nephews on her husband’s side of the family, each taking ½ of her interest in the farm “believing as I do that those farm lands should go back to my late husband’s side of the house” One nephew predeceased Nelle. Since the antilapse statute did not reach relatives on the spouse’s side of the family, any gifts to the nephew would fall into the residue— Unless the gift to the nephews was a class gift
25. Dawson v. Yucus Dawson v. Yucus p. 376 Nelle Stewart Frank’s Brothers and Sisters Frank Stewart Class gift?? Other Cousins Stewart Wilson Gene Burtle “One-half (1/2) of my interest…to Stewart Wilson…and One-half (1/2) of my interest to Gene Burtle….”
26. Did Nelle create a class gift? She named the two beneficiaries individually, leaving the number of beneficiaries fixed—looks like individual gifts On the other hand, she indicated that she wanted the farm to remain on her husband’s side of the family—that makes it look like a class gift Why did the court settle on individual gifts? Nelle had created a survivorship gift for the residue, so she knew how to set up a class or survivorship gift There were other nephews/nieces who were left out and who were natural members of the class Under Restatement, presumption of individual gifts would be overcome
27. Antilapse and class gifts: Case 10, p. 379 T A B C Residue Blackacre S T’s Husband and Sister C die. T executes a will – Blackacre “to my sisters”; residue to Stepson, S. Sister A dies. T dies.
28. Changes in property after execution of will:Ademption by extinction What happens if I leave my house in Indianapolis to one of my children in my will, but I sell the house before I die and move to a new home in Florida? Under the traditional rule, my child would be out of luck because the bequest was a specific one—this is the “identity” theory of ademption by extinction. Under the modern “intent” theory of ademption, my child might still take if the child could show that I intended my home in Florida to replace the one in Indianapolis in the will. Or my child might take the cash value of the Indianapolis home if the child could show that such was my intent.
29. What were the facts in Anton? (p.381) After marrying for the second time, Mary Anton and her new husband received land from his daughter for a homestead. They built a duplex and lived in it. After Mary’s husband died, she became sole owner of the duplex, and in her will, she bequeathed half of her interest in the duplex to the step-daughter. She bequeathed the other half to a son from her first marriage. She left the residue of her estate to the son and a daughter from her first marriage The daughter, Nancy, also managed her financial affairs under a durable power of attorney
30. What were the facts in Anton? Mary needed nursing home care because of Huntington’s Chorea As expenses mounted for the nursing home, her daughter sold Mary’s assets to cover the costs Ultimately, Mary’s daughter sold the duplex for $133,263. At the time of Mary’s death, $104,317 remained.
31. In re Estate of Anton In re Estate of Anton,p. 381 Mary First Wife First Husband Herbert Residue Duplex Gretchen Nancy Robert Aug. 2003 Dec. 2003 1976 1981 1998-2003 1986 Herbert dies. Mary executes a will: duplex to Gretchen and Robert; residue to Robert and Nancy. Mary has car accident, in nursing homes for the remainder of her life. Nancy becomes attorney-in-fact. Nancy sells Mary’s assets, apart from duplex, to pay for care. Nancy sells duplex. Mary dies. ~$104,000 remains
32. What should happen to the $104,317? What are the options? Under the identity theory, the duplex was a specific devise, and it adeemed when the daughter sold it. The $104,317 falls into the residue of the estate But Mary was not aware of the sale. Can we assume that Mary intended to deny the step-daughter her bequest? Under Iowa’s “modified intention theory,” involuntary removals of property from the estate are not adeemed (pp. 382-383) But should the actions of the attorney-in-fact be attributed to Mary? Ohio had said yes; Kansas had said no (pp. 383-384)
33. Anton and ademption, p.385 Ademption by extinction applies when T had knowledge of the transaction T realized the effect of the transaction on the estate plan T had an opportunity to revise the will What about the fact that Mary knew her duplex might be sold to cover her expenses? Wouldn’t she have approved of the sale had she been competent? The discussion with her daughter took place five years before the sale Remote future contingencies are not enough to cause testators to rewrite their wills
34. Anton and ademption, p. 386 The court concluded that the home did not adeem, and the step-daughter should take ½ of the $104,317. In some states, the step-daughter and the son would have been entitled to ½ the sale value of the duplex But would Mary have wanted her daughter to take nothing? Very likely, she wanted to return the land that the step-daughter had given Mary and her husband on which they built the duplex Once the land was gone, Mary probably would have favored her own daughter over her step-daughter
35. Problems, pp. 388-389 A is entitled to the Rolls Royce under UPC comment UPC comment doesn’t answer other motor vehicle hypotheticals A is entitled to Whiteacre if it is a “mere replacement.” In Fletcher, T had executed a codicil after selling Whiteacre without mentioning the devise and the codicil assigned all property to the residue, so there was ademption. Court also mentioned delay between the two transactions and one was investment property while the other was a residence Wendy takes nothing under common law identity theory. Under UPC, it would be very difficult for Wendy to rebut the presumption of ademption