NOVEMBER 15, 2010 VOLUME 17 NUMBER 36
When we help you plan your estate our goal is to figure out who you would want to be in charge of your finances and personal affairs, who should receive your assets and in what proportion, and what you want done at a future time when you are unable to take care of things yourself. Our purpose is to figure all of that out and reduce it to writing -- and to assure that your wishes are clearly and legally expressed. That is why we ask you all of those annoying questions about what should happen if your heirs or agents should die before you. That is why we spin out those disturbing scenarios of multiple deaths and incapacities, of family break-ups and failures.
There is a point at which it no longer makes sense to try to figure out every eventuality, and we recognize that we will not cover every conceivable sequence and circumstance. There are principles of probate law that help fill in the blanks for common issues -- but sometimes they are not obvious, or do not seem quite right. Then the probate court may have to interpret a will or trust, or figure out the legal effect of the document.
A simple illustration of this principle arises in the Florida probate court interpretation of Cecelia Lorenzo. Her will was properly drawn up, and it was clear. Half of her estate was to pass to her brother, and the other half to her sister's husband. If either of those recipients died before her, she directed that the deceased beneficiary's share should go to his wife. That seems obvious, and easy to interpret.
The problem with Ms. Lorenzo's will did not appear obvious at the time it was written. Later, but before her death, both her brother and her sister-in-law died. That meant half of her estate was supposed to pass to one of two people who were no longer living.
Long-standing principles of construction almost addressed the problem. Under the laws of Florida (the same rules apply in Arizona), if the will does not provide otherwise a deceased beneficiary's share passes to the named beneficiary's children if he or she dies before the will's signer. One catch: that principle only applies if the named beneficiary is a relative (in Florida's case, that means "descended from the testator's grandparents").
So, to recap: Ms. Lorenzo's will left half of her estate to her brother, who was surely descended from Ms. Lorenzo's grandparents. Her brother died after the will was signed but before Ms. Lorenzo died. Her will said that in that event her brother's half of the estate was instead to go to her sister-in-law -- who was not descended from Ms. Lorenzo's grandparents. Does that mean that the two children of Ms. Lorenzo's brother (and his wife) receive the brother's share, or not?
The probate court said yes, the niece and nephew should share half of Ms. Lorenzo's estate. The Florida Court of Appeals said no, and reversed the probate judge's holding. Because the will named Ms. Lorenzo's sister-in-law in the event that her brother predeceased her, the bequest was to a person who was not a blood relative. That meant the bequest lapsed as a result of the deaths of Ms. Lorenzo's brother and sister-in-law, and her entire estate passed to her sister's husband, who had been named to receive the other half. Lorenzo v. Medina, November 10, 2010.
That might have been Ms. Lorenzo's intention, but it seems unlikely. If the scenario had been reversed, with her brother-in-law and her sister dying before her, the result would have been the opposite -- and it is hard to imagine that she intended opposite results in the two scenarios. More likely, she (and her lawyer) just didn't think through every permutation, and then she didn't update her will after the deaths of her brother and sister-in-law.
The court opinion doesn't tell us how old Ms. Lorenzo's will was at the time of her death. We are left to speculate about how long she had known of the deaths of her brother and sister-in-law, and whether she had ever considered what effect their deaths had on her own estate plan. But there is another lesson to be learned from Ms. Lorenzo: it is a good idea to update your estate plan every five years or so, just to be sure your intentions are not overtaken by family circumstances.