JULY 26, 2010 VOLUME 17, NUMBER 23
Imagine a couple, each married for the second time. Perhaps each has children from a first marriage. Perhaps the couple has been married for years — even decades. They think of all the children as “their” children, even though they fully understand that the other spouse’s children are stepchildren.
One of the spouses — let us say the husband — dies. He leaves his interest in the family home, together with all the couple’s accumulated wealth, to his widow; his will specifies that on the second death all of the children share the estate equally. His children remain in contact with their stepmother for the next decade, though that contact lessens over time. When she dies, what happens to the home, the bank accounts and the remaining wealth?
This scenario plays out again and again. Most often, the deceased husband’s will is irrelevant. If the property all passed to the wife without restrictions, she is free to change her will, to transfer the property into trust, to spend it or even to give it away. But that is not always the case.
Ralph and Elaine Lawson married in 1971. They owned 12 acres of Iowa land as “joint tenants with right of survivorship.” They had three children between them: Ralph’s son and daughter Roger and Le Ann, and Elaine’s son Lonnie. Just to complicate things further, Ralph later adopted Lonnie.
In 1987 Ralph and Elaine signed identical wills. Each left everything to the other. On the second death, the wills provided that fifty percent of the combined estate would go to Lonnie, twenty percent each to Roger and Le Ann, and ten percent to the couple’s church. The wills contained an unusual provision: each included language that indicated the couple had agreed “that neither will change our will” without the other’s consent.
Ralph died first. The property passed to Elaine automatically because of the joint tenancy title, so Ralph’s will was not filed with the Iowa probate courts.
A few years later Elaine changed her estate plan. First she transferred the acreage to her son Lonnie, reserving a life estate for herself. Then she signed a new will, leaving the same proportions of her estate to Lonnie (50%), Roger (20%) and Le Ann (20%), but changing the church which would receive the remaining 10%. Shortly after that, Elaine died.
Roger and Le Ann sued to enforce the terms of their father’s and stepmother’s original wills. They alleged that the wills amounted to a contract, that Elaine’s transfer of the property to Lonnie violated that contract, and that the court should impose a trust upon the property to secure its return to the original beneficiaries. The trial judge reviewed the two wills and agreed with Roger and Le Ann.
The Iowa Court of Appeals upheld that ruling, ordering the imposition of a trust on the 12 acres. The language of Ralph’s and Elaine’s wills made it clear, according to the appellate judges, that their intent was to prevent the survivor from changing the estate plan by a new will or by transferring property during lifetime.
Lonnie argued, unsuccessfully, that the reciprocal wills should not prevent transfers of the acreage because it did not come into Elaine’s estate by virtue of Ralph’s will. The court dismissed that objection, noting that the language of the wills was broad enough to encompass any estate planning technique, whether it might be a will, a gift, or a living trust. The appellate judges also rejected Lonnie’s argument that his parents’ wills should not have been admitted to the court proceeding; the wills were not being admitted to probate, said the judges, but were being admitted to prove a contract. Consequently, the standards and requirements for admission were those governing contract documents rather than wills. Cunningham v. Lawson, July 14, 2010.
Would Arizona courts reach the same result? It is not completely clear, since the law of reciprocal wills (sometimes called mutual or contractual wills) is not well developed. What is clear in Arizona law is that reciprocal wills can be enforceable; what is less clear is whether they might prevent lifetime transfers of property by the surviving spouse.
One reason that the law is less than clear is that truly reciprocal wills are uncommon. Arizona’s probate code makes clear that the mere fact that wills are identical does not mean they embody a contract not to change the terms; in order to make the agreement binding it must be expressly stated in the wills or in a contractual document. Because that is uncommon, there is little law interpreting such terms.
What is more clear is that the question we hear so often is usually easy to answer. “Does my stepmother [or stepfather] have the right to leave the house she inherited from my dad [or mom] to her kids from her prior marriage?” Absent a clear contract not to change the will, or a trust provision prohibiting the transfer, the answer is likely to be: “I’m sorry, but yes.”
Suppose for a moment that you are trying to get your financial affairs in order. You have been married for many years, and your spouse is gradually losing the capacity to make financial or planning decisions. You are pretty sure you know what your spouse would want, but he (or she) is no longer able to articulate those wishes. Is there anything you can do?
That was the dilemma facing Ollie Phillips, an Indiana resident. His wife Donna no longer had capacity to sign estate planning documents — or to manage her own affairs if anything should happen to him. The couple had earlier signed durable powers of attorney naming one another as agents, and both had identical wills leaving everything to one another and, on the second death, to charity (Mr. and Mrs. Phillips had no children).
In early 2008, 18 months after Donna Phillips had been diagnosed as suffering from dementia, Ollie Phillips signed a new living trust and transferred all the couple’s assets into the trust’s name. The trust named Mr. Phillips as trustee and a friend, Elizabeth Shoemaker, as successor. It provided that all the couple’s money would be used for the benefit of Mr. and Mrs. Phillips until both had died and, after the surviving spouse’s death, everything would be transferred to Ms. Shoemaker. Mr. Phillips signed all of the documents using his wife’s power of attorney.
Did Ollie Phillips have the power to effectively change his wife’s estate plan using the power of attorney? The question would be moot if he had outlived his wife, but he did not — he died less than a year after setting up the trust.
Shortly after Mr. Phillips died, another friend was appointed as guardian of Mrs. Phillips’ person and estate. The new guardian moved to set aside the trust Mr. Phillips had created, but after two days of hearings the trial judge upheld the trust and ordered the guardianship estate to pay the trustee’s legal fees incurred in defending the trust itself.
The Indiana Court of Appeals agreed with the trial judge. Of particular interest to the appellate court was the evidence adduced at trial about Mrs. Phillips having told the lawyer who drafted the trust that Ms. Shoemaker was “like a daughter” to the couple. The judges also pointed out that Mrs. Phillips remained the sole beneficiary of the trust until her death, and that there was no evidence that the trust was being mismanaged in any way. Evidence that Mrs. Phillips had more recently said that she thought Ms. Shoemaker was “money hungry” was not sufficient to allow the guardian to revoke the trust. The appellate court also agreed that Ms. Shoemaker’s legal fees to defend the trust should be paid by Mrs. Phillips’ estate. Matter of Phillips, May 17, 2010.
Does the Phillips case stand for the proposition that an agent can change the principal’s estate plan using a power of attorney at any time? No, it certainly does not. But in a specific case, with some indication of the wishes of the now-incapacitated person, and with a broadly-drawn power of attorney, it might be possible to make at least some changes. Among the safeguards in this case: the fact that Mrs. Phillips, if she once again became able to make decisions, could change the trust, and the involvement of a lawyer who interviewed her and worked with her to try to figure out how much her capacity (and wishes) could be protected.
The popular conception of the probate process and the making of wills is colored by misinformation from a number of sources. Movies, books and plays provide much of the misunderstanding, building an expectation of “the reading of the will” in a lawyer’s office (it just doesn’t happen), regular will contests (they are quite rare) and regular revocation of wills. That last is especially rare, and so a recent case focusing on how one revokes a will, and what level of mental capacity it requires, is a legal gem.
Why don’t people revoke their wills more often? They do — but the nearly universal way one revokes a will is to sign a new will, which recites that any previous wills are no longer effective. It is especially rare to destroy an existing will without signing a new one. When that does happen, the person no longer has a will at all — and the state law of “intestate succession” takes effect, just as it would if there had never been a will.
So how does one revoke a will, if they are for some reason not inclined to sign a new one? There are any number of ways to do so, but the classic method is for the person to physically tear his or her own will into at least two pieces. What Bill Potts did was more elaborate: he drew lines through every line of text, applied Liquid Paper to the names of the beneficiaries he had listed in the will, wrote “void” over each paragraph, and then wrote “bastard” and “get nothing” next to some of the names. Just to make sure he had driven his point home, he later took the marked-up document to his insurance agent’s office and fed it to their shredder.
As an aside, Mr. Potts’ approach would have worked just fine under Arizona law, too. The statute in Arizona requires only that the testator (the person who signed the will in the first place) perform “a revocatory act on the will.” That includes burning, tearing, canceling, obliterating or destroying the will or any part of it. It does not include telling someone else to do any of those things, unless the testator is conscious and physically present at the time.
After Mr. Potts died the individuals named in the will sought to admit a copy to the Arkansas probate courts. They argued that Mr. Potts had suffered from “insane delusions” at the time he tried to revoke the will, and that his revocation was ineffective.
The trial in probate court primarily focused on Mr. Potts’ belief that his late wife might have had an affair with one of the beneficiaries named in his will, that another might have stolen a gold bracelet belonging to his wife. A psychiatrist testified that those beliefs were the product of a “delusional disorder.” The trial judge found that Mr. Potts’ belief about his wife’s infidelity was probably wrong, and that his poor hearing and irascible nature probably contributed to a misunderstanding about the bracelet, Still, ruled the judge, the will beneficiaries had not met their burden of showing that Mr. Potts lacked testamentary capacity when he revoked his will, and therefore the revocation was effective. Bill Potts died intestate.
The Arkansas Court of Appeals agreed, and upheld the probate court’s ruling. The appellate court spent some time considering whether there was sufficient evidence that Mr. Potts had the level of capacity needed to write a will — the same standard that would be applicable to determining whether he had the capacity to revoke a will. Although Mr. Potts frequently claimed, for example, that he had no relatives, the appellate court agreed that he probably meant that he had no surviving close relatives. Meanwhile, he could identify some, perhaps most, of his remaining distant relatives, and he just didn’t know where they lived, or even whether they were still alive.
“The evidence clearly showed that Bill was an irascible, angry, suspicious, controlling, profane and difficult man for most of his adult life,” wrote the appellate judges. That, however, was not enough to find his will revocation invalid. He had the capacity to revoke his will, and presumably he would have had the capacity to sign a new will — if he had known who he wanted his estate to go to. Heirs of Goza v. Estate of Potts, February 17, 2010.
Contrary to public perceptions, will contests are actually rare. In fact, few wills are written in such a way that anyone would benefit from a contest — most wills leave property to the same people who would inherit if there was no will. When there is a will contest, however, the two most common grounds are allegations of (1) lack of testamentary capacity, or (2) undue influence exerted by someone. A recent Texas case highlights the differences between those two allegations.
Evelyn Marie Reno died at age 81. She had been married twice, and left three children from her first marriage and one daughter from the second. The youngest child, Jan LeGrand, did not get along well with her half-siblings. Relationships between Ms. Reno and the three children from her first marriage were also strained — at least partially because two of them had initiated a guardianship proceeding (which was later dismissed) against their mother.
Ms. Reno spent the last year of her life in a nursing home. Ms. LeGrand visited her regularly, paid all her bills, and kept her location a secret from her half-siblings. At some point in the year before she died, Ms. Reno asked her daughter to help her prepare a new will disinheriting her other three children and leaving her entire estate to Ms. LeGrand.
The will was prepared (by Ms. LeGrand), and signed in Ms. Reno’s nursing home room. The witnesses were a hospice worker and chaplain, and the notary public was a nursing home employee. Ms. LeGrand was asked to leave the room while the three non-family members discussed the will and watched her sign it.
After Ms. Reno’s death the will was filed with the probate court by Ms. LeGrand. The three half-siblings proposed an earlier will, which left most of the estate to the four children equally.
The Probate Court ruled that Ms. Reno lacked testamentary capacity at the time the last will was signed, and that she was subjected to undue influence by her daughter. The earlier will (and a codicil) were instead admitted to probate.
The Texas Court of Appeals analyzed the findings of the Probate Court, and modified the basis for its findings — while not changing the result. The evidence, according to the appellate court, showed that Ms. Reno DID have testamentary capacity. Though she was often confused, the two witnesses and the notary agreed that the will was signed on a good day. Evidence of confusion and occasional disorientation on days before and after the will signing was not enough to overcome the testimony that she knew what she was signing, who her children were and what she intended to do at the time she signed the will.
The appeals judges agreed with the Probate Court, however, on the subject of undue influence. A key part of the evidence considered by the Court of Appeals: the fact that the will was actually prepared by Ms. LeGrand. As the Court wrote: “the fact that LeGrand personally prepared teh will without the intervention of an atotrney or other third party is significant.”
Also important to the court’s analysis: Ms. LeGrand had sole access to Ms. Reno for more than a year (during which time their mother’s whereabouts were not shared with the other three children). During that time, noted the Court of Appeals, Ms. Reno was completely dependent on Ms. LeGrand for bill-paying, care management and personal contact.
A more subtle distinction is drawn by the appellate judges with regard to Ms. Reno’s declining mental status. Though her condition at the moment of signing the will did not support the allegations of lack of testamentary capacity, her growing confusion and periodic mental weakness made her susceptible to undue influence.
Finally, the Court of Appeals notes that the will prepared by Ms. LeGrand for her mother was a complete shift from her prior wills. In each of those she made specific bequests to her four children and thirteen grandchildren, plus hospitals, her church and her pastor. The last will, however, left everything to one daughter — and this significant change in her dispositive plan was yet another indication of undue influence.
Though family members often confuse the concepts of testamentary capacity and undue influence, the legal analysis of the two different approaches to will contests is well-developed. It is also important to note that not every attempt to talk someone into making a new will is automatically subject to challenge. As the Reno court opined, in somewhat dry legalistic language: “One may request, importune, or entreat another to create a favorable dispositive instrument, but unless th eimportunities or entreaties are shown to be so excessive as to subver the will of the maker, they will not taint the validity of the instrument.”
The difference between “lack of testamentary capacity” and “undue influence” is legalistic, to be sure, but it is more than just academic. Interestingly, the Texas Court of Appeals noted that there is a difference in the burden of proof borne by the parties in the two different kinds of cases. In a case alleging lack of testamentary capacity the proponent of the will has the burden of proving that the testator understood what she was doing. In an allegation of undue influence, the challenger carries the burden of proof.
That means that each side in Ms. Reno’s case met their burden of proof. That is, Ms. LeGrand showed that her mother understood what she was doing, but the other three children demonstrated that Ms. LeGrand unduly influenced their mother. Estate of Reno, December 18, 2009.
You would like to make sure that your children get along after you are no longer around to tell them to behave, wouldn’t you? Although you may not anticipate any disagreements, you know that money can change relationships, and you have seen how the death of a parent can interfere with sibling relationships. Perhaps you have considered including a “no-contest” provision in your will or trust, and you wonder: Would that help maintain family harmony?
The name lawyers usually apply to such no-contest provisions is revealing. We call them “in terrorem” clauses — meaning that they are intended to terrorize anyone who would otherwise receive a share of the estate from filing any contests. But do they actually work? They can, but they seldom do. Why not?
The primary reason is simple. Say your plan is to leave everything to your three children, in equal shares. Since that is exactly what would happen if you had no will (or trust — in terrorem provisions can be used in trusts, too), there is no incentive for any of them to contest your estate plan anyway. No one else would receive anything even if your documents were successfully challenged, so there is simply no need to include a no-contest clause.
Maybe your plan is different. Say one of your children has already received a significant share of your property, or you disapprove of his or her life choices. You want to disinherit that child, and you want to make sure he or she does not contest your plan. In this situation the in terrorem provision is not going to make much difference — since the disinherited child receives nothing anyway, providing that they will be disinherited if they contest the documents is not much of a deterrent.
All right. Let’s say you really want to make the point. You agree to leave a small share of your estate — perhaps a few thousand dollars — to the disfavored child, and then include an in terrorem provision. Will this work?
It might. Obviously, the beneficiary who is slated to receive something but who will lose it for contesting will have to think twice about filing any objections. You should know, however, that Arizona law (like the law of a number of other states) limits the effectiveness of the provision. If your disgruntled heir has “probable cause” to file an objection — even if he or she is ultimately unsuccessful — the in terrorem provision will not be enforced. (For one illustration of how this might work, consider the 2000 Arizona Supreme Court case of Matter of Shumway, which we described in an “Editor’s Note” to our 1999 article on the Court of Appeals decision in the same case.)
We do not include many no-contest clauses in wills and trusts we draft for our clients. They probably do no harm, except that they would leave our clients with a false sense that they had protected against family conflicts. If conflict avoidance is important to you, we need to come up with a better plan — like including a requirement that any contest be submitted to arbitration or mediation. We can discuss specific ideas for your particular situation.
Quite often we see revocable living trusts fail because individuals do not understand the importance of changing ownership of assets to the trust. In most cases that means the unnecessary expense of a probate proceeding that could have been avoided. Sometimes the effects are more dramatic, as in a recent case decided by the Arizona Court of Appeals.
Warren Parker, Jr., bought real estate in the Phoenix area in 1983. He was married, but his wife Ruth Parker signed a “disclaimer deed” indicating that she made no claim to the property. Three years later Mr. Parker created a trust for his separate property, providing that on his death it would pass to his five children by his first wife. He also signed a deed transferring the property into the name of the trust.
A decade later he signed and recorded another deed transferring the property out of the trust and back into his own name individually. He never got around to moving the property back into the trust’s name, though when he died in 2004 his will left the property to the trust.
By that time Mrs. Parker was in a nursing home. She used Arizona’s summary probate proceeding for small parcels of real property to make the claim that she was the proper recipient of the real estate. She claimed, erroneously, that her husband had died without a will. Then she sold the property to a third party, who on the same day re-sold to yet another buyer.
Mr. Parker’s children cried foul. They filed his will and challenged Mrs. Parker’s sale, arguing that she had never owned any interest in the property and could not convey it. On the face of things, they were right — the proceedings transferring title to her could easily have been set aside. Unfortunately, the buyer had relied on her apparent ownership, and the courts (both trial and appellate) agreed that Mr. Parker’s children could not recover the property. Estate of Parker, Feb. 26, 2008.
Why would Mr. Parker have ever transferred the property out of the trust’s name and into his own name individually? The court opinion does not explain, but it would be reasonable to guess that he sought to place a mortgage on the property, or refinance an existing mortgage, and that the lender required the property to be in his own name. That happens too often, and the lender has no incentive to help the property owner to transfer the title back to the trust after the transaction is over.
Is the problem solved by Mr. Parker’s children bringing suit against their step-mother to recover the value of the property? It may be, and in fact they have filed such a suit. But remember that she is in a nursing home — it may well be that there are no assets to recover.
What does Mr. Parker’s experience teach us? At least two lessons: it is easy to undo even the carefully crafted estate plan, and beneficiaries are well advised to act quickly to protect their interests.
Laura Carnese had suffered a stroke, and (as it turned out) had only a few weeks to live. A friend and relative by marriage, Charles Carnese, happened to be a lawyer; he arranged for a former associate, attorney Anthony J. Barker, to visit with Ms. Carnese and help her prepare a new will. The will prepared by Mr. Barker was signed just weeks before Ms. Carnese’s death in November, 1999.
Ms. Carnese’s will was admitted to probate, but her heirs challenged its validity. Their case was settled, but the estate paid them a total of about $620,000; the distributions to the beneficiaries named in her will were correspondingly reduced.
Two of those beneficiaries sued Mr. Barker, alleging that the will challenge was his fault. They argued that he had made an implied promise to Ms. Carnese to prepare a will which would be invulnerable to any legal challenge, and that they were the intended beneficiaries of that promise. Among the errors they alleged he had committed were his failure to:
ask Ms. Carnese why she had decided to distribute her assets as she had, so that he could testify about her wishes at any later trial.
tell Ms. Carnese that his relationship with her relative (and beneficiary) could result in his independence being challenged.
urge Ms. Carnese to seek counsel from a truly independent attorney.
interview his client before learning about her alleged wishes from Mr. Carnese, his colleague.
investigate Ms. Carnese’s physical, mental and emotional status at the time she signed the will.
make a video or audio recording of his interview with Ms. Carnese.
The trial judge dismissed the lawsuit after finding that Mr. Barker did not owe any duty to the devisees to make the will invulnerable to challenge. The Oregon Court of Appeals disagreed, and reinstated the case. According to the appellate court, Mr. Barker did owe the will beneficiaries a duty to follow any promise he had made for their benefit, and the preparation of estate planning documents necessarily implies a promise to “act in a professionally competent manner.”
The Oregon Supreme Court, however, disagreed with the state’s intermediate appellate court. The high court ruled that there was no evidence that Mr. Barker made specific promises to Ms. Carnese about preparation of her will. According to the Justices, the law should not impute an agreement to prepare a will that is “invulnerable to a will contest so as to achieve [Ms. Carnese’s] plan to maximize gifts to residuary beneficiaries.” The trial judge’s dismissal of the lawsuit against Mr. Barker was affirmed. Caba v. Barker, October 19, 2006.
James Marier was married to his wife Kathleen for twelve years, until the couple divorced. As often happens, Mr. Marier continued to maintain a good relationship with his step-daughter, Tracy Marks. Her children called Mr. Marier “Grandpa Jim,” and he continued to spend holidays with his ex-wife, his step-daughter and the grandchildren.
Mr. Marier had a 401(k) retirement plan through his work, and after his divorce named his mother as its primary beneficiary. Later, after a visit from his sisters, he decided to break from his family altogether, and he wrote a will naming his step-daughter as personal representative and primary beneficiary. He also decided to change the beneficiary to leave his 401(k) plan to Ms. Marks.
Mr. Marier filled out the change of beneficiary form, listing Ms. Marks as his primary beneficiary. In the space marked “relationship” he apparently wrote in something, but then covered the entry with white-out. The form as sent to the plan administrator left the space blank. The administrator, in turn, mailed the form back to Mr. Marier with a note that he needed to complete empty space, and noting that “white-out is not accepted.”
Unfortunately, Mr. Marier’s health was declining rapidly by that time. When the form arrived he had just undergone surgery for a brain tumor, and the form was never returned to the 401(k) administrator. Mr. Marier did call the administrator’s office at one point, and asked who was named as his beneficiary; the individual who spoke with him looked at a scanned copy of the form and assured him that his step-daughter was his primary beneficiary.
When Mr. Marier died, the 401(k) administrator initially determined that the last beneficiary designation was improper and began the process to pay the plan balance to Mr. Marier’s mother’s conservator. Ms. Marks objected, arguing that she had been properly named as beneficiary. The administrator then decided that the failure to fill in the relationship line was “not a material omission,” especially since previous beneficiary designation forms on file adequately identified her, but turned to the courts to determine who should receive the account balance.
The trial court found that the 401(k) plan required that the form be properly completed, and ordered the money paid to Mr. Marier’s mother. The Eighth Circuit of the U.S. Court of Appeals disagreed, however, ruling that the plan’s decision to accept the form as being in substantial compliance, even though the administrator then turned the matter over to the courts, was sufficient to leave the account to Ms. Marks. Marks v. Irwin Bank & Trust, October 19, 2006.
Sarah Ann Ester Straw went to her lawyer, N. Frank Lanocha, to have a will prepared. According to Mr. Lanocha, she wanted to leave the bulk of her estate to the lawyer’s daughter, Teresa Lanocha-Sisson. He prepared a will that did exactly that—in fact, it left $1,000 to Mr. Lanocha’s wife Teresa W. Lanocha, $2,000 to area charity Chimes, Inc., and the balance of the estate to Mr. Lanocha’s daughter.
There is a well-recognized ethical rule, however, that prohibits lawyers from writing themselves or family members into wills. There is an exception when the will is being prepared for a family member of the lawyer, but Ms. Straw had no familial relationship with Mr. Lanocha, his wife or daughter. There is a second exception for bequests that are not “substantial,” but the will Mr. Lanocha prepared clearly did not fit within that exception.
When Ms. Straw died and her will was submitted to probate, the judge assigned to the case was troubled by Mr. Lanocha’s conduct. A complaint to the Attorney Grievance Commission initiated a proceeding seeking to discipline Mr. Lanocha.
The Maryland Court of Appeals (the state’s highest court—equivalent to the Supreme Court of most other states) ultimately agreed that Mr. Lanocha had behaved improperly. The only sanction for his misbehavior, however, was a public reprimand—Mr. Lanocha’s ability to continue practicing law was not affected, and his daughter was not required to give up her claim to Ms. Straw’s estate.
Four of the seven judges agreed that Mr. Lanocha should be let off lightly. They believed his insistence that he had never heard of the rule prohibiting lawyers from writing themselves or family members into wills—though two other Maryland lawyers had been suspended from the practice of law indefinitely for naming themselves as beneficiaries as recently as 2003. Besides, reasoned the court majority, Mr. Lanocha had told Ms. Straw that she needed independent legal advice before leaving anything to his family, and she had insisted that he prepare the will anyway.
Judge Alan Wilner, one of the seven judges deciding Mr. Lanocha’s fate, would have gone further. He noted that no one had asked Ms. Lanocha-Sisson if she would be willing to disavow any inheritance; he suggested that without that sanction Mr. Lanocha should be indefinitely suspended. Judges Dale Cathell and Lynne Battaglia would have suspended Mr. Lanocha from the practice of law regardless of whether his daughter declined the inheritance.
Mr. Lanocha had a prior record of sorts, having been reprimanded for other violations in 2001. He had also been challenged by the Federal Trade Commission for violation of Fair Debt Collection Practices Act provisions in 1996, and ordered to pay $50,000 in penalties.
A Florida court found Alvarado Kelly incompetent in 1960, and appointed a guardian to manage his property. Fifteen years later Mr. Kelly moved to a facility in Mississippi operated by Sarah Cuevas; he lived in that facility until his death twenty five years later. After his death Mr. Kelly’s brother William and Ms. Cuevas became embroiled in a legal dispute involving the courts of both states.
Mr. Kelly had signed a will while he lived in Mississippi, and he had named Ms. Cuevas as executrix (what we in Arizona would call “personal representative”). Shortly after his death Ms. Cuevas filed the will for probate with the Mississippi courts, gave notice to William Kelly as the next of kin, and secured a court order appointing her as executrix and finding the will to be Mr. Kelly’s valid will.
William Kelly then filed a proceeding in the Florida courts. He acknowledged that there had been a finding in Mississippi, but he argued that it was invalid both because he had not actually participated and because his brother had never been a resident of Mississippi.
William Kelly argued that since his brother had been adjudged incompetent and the Florida courts had never given specific permission for him to relocate to Mississippi, he remained a resident of Florida for the rest of his life. He also insisted that the will was invalid because Ms. Cuevas had exercised undue influence.
Ms. Cuevas filed a motion to dismiss the Florida probate, but the Florida court agreed with William Kelly that her appointment by the Mississippi court was invalid. A Florida bank was appointed as personal representative of Mr. Kelly’s estate and authorized to collect his assets.
The Florida Court of Appeals reversed the probate court’s decision, however. In doing so, it relied partly on the U.S. Constitution, which requires the courts of each state to give “full faith and credit” to the courts of sister states in most situations.
In this case, ruled the appellate court, Ms. Cuevas had given William Kelly notice of the pending Mississippi proceedings, and an opportunity to file pleadings and present his argument that any proceedings should be in Florida. When the Mississippi court admitted Mr. Kelly’s will to probate it made a determination that he was domiciled in Mississippi; if William Kelly disagreed with that conclusion he needed to make his argument in Mississippi, rather than just filing his own proceeding in Florida. Cuevas v. Kelly, March 26, 2004.
Mr. Kelly’s probate proceedings provide an interesting illustration of the “full faith and credit” clause of the Constitution, and of its application to probate proceedings. It also demonstrates that it is unwise to ignore the proceedings in another state, hoping to later file a competing action in a more friendly jurisdiction.
December, 2005, update: In a related case in the Mississippi courts, that state’s Court of Appeals ruled that probate proceedings were proper in Mississippi. William Kelly, the decedent’s brother, had argued in the Mississippi proceedings that there was no jurisdiction for a probate there, since (he insisted) all of Alvarado Kelly’s assets necessarily belonged in Florida where he had resided when he had last been competent to select a residence. The Mississippi chancery court (where probate proceedings are tried) had ruled that it would be “impossible” to imagine that Alvarado Kelly had lived in Mississippi for thirty years without accumulating clothing or other personal items. His death in Mississippi, coupled with the existence of any assets at all, gave Mississippi courts jurisdiction over his estate, and the Court of Appeals agrees that those probate proceedings were properly initiated. In the Matter of Estate of Kelly, December 6, 2005.
