Case Trends and Technical Formalities

Posted on: Sunday, January 13th, 2013

Doug Chalgian

The topic for this post was triggered by my end of year clean up. During that process, I go through piles of things I think are interesting and have set aside. In doing so I pulled out five unpublished Court of Appeals cases that relate to the issue of the treatment of testamentary documents which fail to meet formalities (some woefully so) normally associated with their execution. This is far from an exhaustive review of the cases, but enough, I thought it was worth a discussion.

Following are the cases from my pile in order of most recent first:

In Re Gwendoline Louis Stillwell Trust. November 2012. Decedent/Settlor created a revocable trust. She also instructed a grandchild to deliver an envelope to the Trustee in the event of her death. In that envelope were several pages of handwritten, dated, but unwitnessed and unsigned instructions altering the disposition of her estate from what was provided in her Trust. The trial court held that the notes were amendments to the trust and that decision was upheld by the Court of Appeals.

The decision of both courts relied heavily on the language of the trust which granted the settlor the ability to modify the trust by written instrument delivered to the trustee. The fact that the document was not signed and not delivered until after death did not prove to be obstacles to the result. This case is a good example of what appears to be the expanding scope of the movement started by MCL 700.2503. It also suggests that trust agreements may be even more vulnerable than wills, notwithstanding the fact that the Michigan Trust Code offers no provision comparable to MCL 700.2503.

In Re Leach. October 2012. The trial court upheld certain documents which purportedly conveyed a remainder in real estate to X as wills. The trial court granted the relief on summary disposition. The Court of Appeals remanded for an evidentiary hearing on the issue of intent, and specifically requiring the Court to make a finding that the evidence could sustain the burden of proof: clear and convincing.

This case is interesting because it seems to suggest that summary disposition is not appropriate to make a finding in favor of a non-complying document under MCL 700.2503, but also because it addresses (briefly) the interplay between capacity and intent.

In Re Estate of Waller. November 2011. This case upholds a handwritten prenuptial agreement which was signed on the date of the marriage, and which included no disclosure of the parties’ respective assets or debts. The surviving spouse contested the validity of the document and lost.

The point here is again, a handwritten document is given full effect. It is also noteworthy in that it suggests that notwithstanding the perception of the family law bar, the formalities generally associated with the execution of a prenuptial agreement in order for it to be upheld are not so firm as they might believe.

In Re Daniel Mannes. October 2011. Decedent died leaving a will. She also had handwritten notes that altered the disposition of a certain investment Account. The handwritten notes were admitted as valid holographic wills but the interests of the beneficiaries of the notes were dismissed due to the timeliness of their action. The Court of Appeals reversed the trial court on the dismissal of the claim of the beneficiaries of the notes, upheld the notes as testamentary documents.

The case is bogged down in side issues about a pending divorce and timeliness of the action, so the Court of Appeals never addressed the factual basis for finding that the notes could be treated as holographic codicils (the party who would have contested that finding apparently dropped the issue on appeal). For the purposes of this post, the point is only that this is another case upholding notes as testamentary instruments.

Estate of Annette K. Boyle. September 2011. Decedent’s will specifically identified the Property in dispute as part of her estate and in fact Decedent held title to the property at the time of her death. The Property was listed on the estate inventory of the estate but with a notation that the decedent “agreed to transfer” this Property to Son. Residuary beneficiaries objected to this notation and to the Petition, filed by Son seeking the Court to order the PR to convey the property to him. Son had some good facts in his favor including testimony that the Decedent referred to the property as Son’s property, that the property tax statements were sent to Son, and that Son paid the taxes. Respondent residual beneficiaries argued that the will was unambiguous.

After a bench trial the property was awarded to Son under a constructive trust theory, and that decision was upheld by the Court of Appeals.

This case speaks to the broad reach of the remedy of “constructive trust” often, I suggest, underutilized in litigation. But the case also offers an example of the clear language of a testamentary document, in this instance a will, to be circumvented by facts that suggest that notwithstanding the plain language of the document, the intent of the Decedent was otherwise.

Conclusion. So what does it mean? As is often the case, bad news for planners is good news for litigators. Because these cases do not necessarily hinge on the statutory language of MCL 700.2503, they appear to merely reflect a trend away from holding fast to enforcement of clear testamentary documents, and allowing parties who believe a decedent intended something else to get a foot in the door. The remedy of constructive trust seems most well suited for these cases, as it is equitable and accordingly allows the party seeking deviation from the documents to avoid the traditional rules of ambiguity and extrinsic evidence

mm By: Doug Chalgian
Doug Chalgian

Posted in Estate Planning , Financial Exploitation , Financial Exploitation , Litigation , Vulnerable Adults , Will & Trust , Wills & Trusts Litigation