Articles Posted in Probate Litigation

When a beneficiary under a will has died before the testator has passed away, the devise to the beneficiary is known as a lapsed gift.  In some cases, this may complicate the probate administration proceedings.  In a July 25, 2017 Tennessee estate case, the Court of Appeals reviewed a dispute involving a provision of the decedent’s will bequeathing the residue and remainder of her estate to her former husband, who had predeceased her. contract

The will at issue was executed in 1991.  When her husband died in 1996, the decedent never revoked the 1991 will.  The decedent passed away in 2012, and the husband’s children and the former stepchildren of the decedent claimed entitlement to the residuary estate by virtue of Tennessee’s anti-lapse statute.  Conversely, the executrix of the estate argued that such a disposition was inconsistent with the decedent’s intent.

In Tennessee, the intent of the person making the will is the most important factor in will interpretation cases, and it is primarily ascertained from the words of the will itself, read in the light of the surrounding and attending circumstances.  Evidence outside the will may be admissible to show the circumstances surrounding the testator when she executed her will and to resolve any ambiguity in the will as to the testator’s intentions.  However, evidence is inadmissible to add to, vary, or contradict the language used in a will.

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In some estate cases, the court is called upon to determine the ownership and distribution of certain assets that may not typically be subject to probate, such as insurance policies, retirement accounts, and other accounts with named beneficiaries.  In an April 17, 2017 case from the Court of Appeals of Tennessee, the parties’ disagreement concerned annuities and insurance policies paid for by the decedent.  After the trial court ruled that the assets should be transferred to the estate and the decedent’s grandchildren, the executor appealed.gavel

The decedent in the case was survived by her two sons, one of which was the executor of her last will and testament.  The will provided that the sons were to share equally in the decedent’s residuary estate.  Before her death, the decedent had taken out insurance policies on the grandchildren’s lives, but no beneficiary was named in them.  In addition, certain annuities paid for with the decedent’s money were listed in the executor’s name and had never been owned by the decedent.

On appeal, the court first considered the matter of the insurance policies on the grandchildren.  Although no beneficiary was listed on either policy account, the trial court ordered that each of the grandchildren be named as the owner of their respective policy.  However, the appeals court held that there was no legal basis to support the result.  Without any designated beneficiaries on the insurance policies at the time of the decedent’s death, the court explained that the policies were subject to probate and are to be distributed in accordance with the terms of the will.  Accordingly, the appeals court reversed the lower court’s decision transferring the policies to the grandchildren, and it ordered that they be transferred to the estate.  The policies are then subject to distribution as part of the residuary estate, to be divided equally between the two sons.

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A legal challenge to the validity of a will may only be brought by a person who, if successful, would benefit under the terms of another will or the applicable intestacy law.  In In re Estate of Bostic (Tenn. Ct. App. Dec. 6, 2016), the Court of Appeals of Tennessee reviewed whether the decedent’s sister had standing to contest his will during probate administration, and whether the trial court erred in finding that she was estopped from bringing her claim after she entered the decedent’s will into probate as the executor.library

In In re Estate of Bostic, the decedent’s will bestowed his house, personal property, and $25,000 to a friend, $12,000 to each of his grandsons, and the residue of the estate to his sister.  The decedent’s sister was appointed as the executor of his estate upon his passing.  The sister also filed a petition challenging the bequest to the decedent’s friend as a product of undue influence, alleging that they had a confidential relationship, that the decedent was in a weakened mental and physical condition, and that the friend was involved in the creation of the decedent’s will.  In response, the friend denied the allegations and also filed a motion for the court to remove the decedent’s sister as the executor.

The trial court granted the motion and appointed a new administrator to carry out the provisions of the decedent’s will.  The trial court also dismissed the will contest, finding that although the sister did have standing in the matter, she was estopped from contesting the will because she had introduced it into probate and affirmed its provisions when she received her appointment as the executor.  On appeal, the sister argued that the dismissal was in error because she learned of the alleged fraud after the will had been offered for probate.  The estate argued that she lacked standing to challenge the will.

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Probate administration typically includes categorizing assets and property for distribution. Such decisions may lead to disputes among the beneficiaries, as in In re Estate of Fletcher (Tenn. Ct. App. May 23, 2016), appeal granted (Sept. 23, 2016). The Court of Appeals of Tennessee in that case decided an issue that arose during probate proceedings regarding the ownership of a certificate of deposit titled in the decedent’s name. The case raised an interesting question concerning property classification and the manner in which a tenancy by the entirety in bank funds can be terminated.signing check

In Fletcher, the decedent and his wife had refinanced the mortgage on their home before his death. With the proceeds from the refinancing, the spouses opened a joint checking account with rights of survivorship at a bank. The decedent withdrew the money to fund a certificate of deposit that was solely in his name. When the decedent passed, his wife filed a petition to probate his will. Under the decedent’s last will and testament, the wife was to receive all of his tangible personal property. The remainder of the estate was to be divided equally among his four adult children from a previous marriage. The children contended that the CD was an estate asset because it was entitled solely in the decedent’s name, while the wife argued that since the funds used to purchase the CD were derived from a joint marital account, they should pass to her outside probate.

A tenancy by the entirety is a form of property ownership unique to married persons. Under this form of ownership, each party owns the whole, and on the death of one of the parties, the survivor takes no new title or estate because the survivor is in possession of the whole from its inception. In Tennessee, a tenancy by the entirety can be created in a deposit in a bank. Under the current laws, states are split on whether a withdrawal by one spouse divests the ownership of the other spouse, or whether the ownership is preserved.

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In order to initiate probate proceedings and bring a claim against an estate, the party must have standing in the court where the motion is filed. A recent appeal, In re Estate of James Kemmler Rogers (Tenn. Ct. App. Oct. 17, 2016), illustrates the complications that may arise when the decedent resided and conducted business in two states before his death. When a purported creditor of the decedent filed a petition to open probate in Tennessee, the decedent’s surviving children objected. Without ruling on whether the petitioner had standing, the trial court denied probate. The petitioner then requested review by the appeals court.map

In Rogers, the decedent was employed in the cattle business and moved quite frequently. In 2007, he resided on a portion of the appellant’s farm in Tennessee, where, in lieu of rent, the parties agreed the decedent would perform handyman duties. In 2012, after being injured in a car accident, the decedent moved back to California to be near his family. At the time of his death, the decedent did not own property, vote, or maintain any services in Tennessee, and his estate was admitted to probate in California. However, the appellant also filed a petition to probate the estate in Tennessee, alleging that she was a creditor of the estate. Finding that the decedent resided in and was domiciled in California at the time of his death, the trial court found there was no basis for primary or ancillary probate in Tennessee.

Courts use the doctrine of standing to determine whether a litigant is entitled to pursue judicial relief as to a particular issue or cause of action. The proper focus of a determination of standing is a party’s right to bring a cause of action, and the likelihood of success on the merits does not factor into such an inquiry. To establish constitutional standing, as was the issue in Rogers, a party must show a distinct and palpable injury, a causal connection between the alleged injury and the challenged conduct, and evidence that the injury is capable of being redressed by a favorable decision of the court.

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Antenuptial agreements, also known as prenuptial agreements, can be useful if they are drafted and executed correctly. In a recent opinion, the Court of Appeals of Tennessee examined the validity of an antenuptial agreement during the settlement of the deceased wife’s estate in the case of In re Estate of Hillis (Tenn. Ct. App. Feb. 25, 2016).two-hearts-1312984-640x480

In Hillis, the surviving husband challenged the validity of a 1992 antenuptial agreement presented to him by his wife on the day before their wedding. The antenuptial agreement provided that each party waived all claims of inheritance, descent, and distribution with respect to the parties’ private and real property accrued by virtue of the marriage. The antenuptial agreement, however, did not include any financial or asset disclosures from the husband or wife. The husband signed the antenuptial agreement without the advice of an independent lawyer or knowledge of the value of the wife’s bank accounts, investments, or business interests. Following a bench trial, the lower court ruled that the antenuptial agreement was invalid because it did not include the required disclosures about the wife’s assets, and because it contained contradictory provisions. The wife’s son appealed the decision.

In Tennessee, antenuptial agreements are binding if they are entered into freely, knowledgeably, and in good faith, without exertion of duress or undue influence upon either spouse. Antenuptial agreements must meet this standard whether they are contested during either marital dissolution or probate. A party seeking to enforce such an agreement can demonstrate that the antenuptial agreement was entered into knowledgeably if each party was provided with a full and fair disclosure of the nature, extent, and value of the other spouse’s holdings.

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In a recent opinion released by the Tennessee Court of Appeals, In re: Estate of Warren Elrod, the court reviewed a decision of the probate court finding that the stepchildren of the decedent and his biological son were entitled to an equal distribution of the decedent’s individual retirement account (IRA), a non-probate asset. The biological son of the decedent sought to collect the proceeds as the sole heir at law, since there was no living beneficiary listed in the IRA agreement. However, the decedent’s two stepchildren argued that the IRA proceeds should be distributed equally among the three of them, since the decedent’s will provided that they equally share the decedent’s real and personal property.OLYMPUS DIGITAL CAMERA

The decedent executed the IRA Adoption Agreement in 2010, designating his wife as the beneficiary. The IRA provided that if she did not survive the decedent, the IRA would be distributed among the decedent’s “children.” The decedent’s wife died in 2011, however, and the IRA beneficiary was not updated before the decedent’s death in 2013. In his Last Will and Testament, the decedent divided the majority of his assets, as well as the residue of his estate, among his two stepchildren and biological son equally. The Will did not define “children” or “child” for the purposes of the Will, nor did it specifically address the IRA or designate a beneficiary.

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A recently released opinion by the Tennessee Court of Appeals, In re Estate of Leonard Malugin, addressed the issue of testamentary capacity and undue influence in a will contest case. The decedent’s daughter challenged the 2006 Will and 2012 Codicil of the decedent, arguing that he lacked the testamentary capacity to execute either document and that the will was executed under undue influence.will-and-testament-2-1541651-639x960

The decedent and his wife executed reciprocal wills in 1995, in which they divided their estate equally among their five children. Since they did not approve of their daughter’s husband, her 1/5 share of the estate was to be placed in a trust, and she would only receive the assets if she divorced her husband. In 2006, the decedent executed a new will, revoking all prior wills. The 2006 Will bequeathed $1,000 to his daughter and the remainder of the estate to be divided equally among his other four children. The 2006 Will did not mention the decedent’s wife, who was still alive at the time it was executed. In August 2012, the decedent executed a codicil to his will, removing one of the executors named in the prior will and ratifying his 2006 Will. The decedent died in 2013, and his daughter brought an action contesting the 2006 Will and 2012 Codicil. After a bench trial, the trial court found that the decedent had the testamentary capacity and was not unduly influenced.

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WillThe Tennessee laws regarding wills and estates can be complicated, especially given the types of disputes that can arise after an individual passes away. The potential for will challenges can be reduced if a qualified estate attorney is retained to provide estate planning needs. This was not the case in a recent Court of Appeals case that involved ex-spouses, hand-written will changes, and missing witnesses.

In The Matter of the Estate of Dennis R. Woolverton, the trial court heard testimony in a will contest from only two of the three witnesses to a holographic, or handwritten, will. The underlying facts of the case were not disputed. The decedent died, unmarried, at the age of 51. While the decedent had been married, he and his former wife had obtained a divorce several years before his death in 2012. The decedent’s only living family member, his sister, believed that he died without a will and accordingly filed a probate matter.

In a dramatic turn of events, the decedent’s ex-wife then intervened in the matter, claiming she was the beneficiary of the decedent’s estate and assets. She produced a copy of a document she claimed was the last will and testament of her ex-husband. In the document, the decedent allegedly acknowledged that he was no longer married to his former wife, but wished for her to inherit all of his property, including monetary assets and retirement funds. In the purported will, he specifically stated that he did not want his sister or her family present at his funeral.

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typewriterWills, estate plans, and trusts can undergo many changes before they become effective. In some situations, parties may wish to change the terms of an estate planning instrument but do not fully carry out the changes. In a case involving the distribution of assets from a revocable trust, the Tennessee Court of Appeals at Jackson held that a trust had not been modified prior to the grantor’s death.

Frye v. Kimball arose out of a dispute between trust beneficiaries regarding two trusts formed by their late parents. The trusts contained a significant amount of real estate holdings, rental properties, and lease payments. Each trust, one entitled with the husband’s name and one with the wife’s name, was given one-half interest in each of the parties’ real estate assets.

The underlying trusts both provided that upon the death of one of the original trustees, the successor would be designated in the following order:  1. The surviving spouse, 2. The son, 3. The daughter. The trust documents further provided that upon the death of both the grantor and the surviving spouse, the assets would be distributed in a certain manner. The grantors’ son would receive 70% of the estate, including certain farm land. The daughter was to receive 20% of the estate, including the property upon which she lived. Additionally, the daughter’s descendant was to receive 10% of the residuary estate.

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