Tom Clancy was a prolific scrivener of action novels. Upon his death at age 66, he left a substantial estate. His Will divided his estate into three shares – one share to his wife, one share for his wife to use during her life (with the remainder to go the daughter of their marriage), and one share to go to his children from previous relationships. Weeks before he passed away, Clancy executed a Codicil to his Will which included the following sentence: “No asset or proceeds of any assets shall be included in the Marital Share of the Non-Exempt Family residuary Trust as to which a marital deduction would not be allowed if included.”
Assets that are subject to the unlimited marital deduction are removed from the spouse’s estate and not subject to estate tax in the estate of the deceased spouse. At the death of the surviving spouse, these assets would be included in the surviving spouse’s estate and potentially subject to estate tax at that time. Clancy’s wife argued that this language meant the assets left to her outright and in trust qualified for the unlimited marital deduction and therefore are not subject to estate tax. If this interpretation is correct, only the assets of the third trust for the four children from previous relationships would be subject to estate tax in the amount of approximately $12 million.
The four children argued this interpretation was not correct and that the share held in trust for Clancy’s wife and his daughter with her should be included in Clancy’s estate. The increase in the size of estate would cause the estate tax to be increased to approximately $16 million. However, each share would be subject to one-half of the liability. So, if the wife’s interpretation is correct, the estate tax would be $12 million, but it would all be payable by the children. If the children’s interpretation is correct, the estate tax would be $16 million, but $8 million would be owed by the wife and $8 million owed by the children. Either way, the assets left to Clancy’s wife and in trust for her will be subject to estate tax in her estate when she passes away.
After years of litigation, recently a confidential settlement between the wife and children has been reached. We likely will never know how the tax liability was agreed to be split between the family members. We also don’t know whether the IRS will agree with this settlement or choose to challenge the family’s agreement. We do know there were substantial legal fees paid as the result of this ambiguity and that a rift has arisen in the family that may have been otherwise avoided had Clancy’s intent been more clearly expressed in his Codicil.
Litigation also arose in the estate of Bonnie Jean Pease. Approximately seven months before her death, while Bonnie was serving time in a penitentiary, she executed a holographic Will. A holographic Will is a Will that is typically drafted without the assistance of an attorney and is totally in the handwriting of the decedent. The Will disinherited her mother, her brother, Brian, and her sister, Beverly. The Will designated her friends Lisa and Lynn Schock as the executors of her estate. Her Will explained why she was disinheriting her mother, brother, and sister, indicated she wanted to leave a share for her remaining brother, Douglas, expressed her desire to leave funds for the care of her bird “Cocky,” and instructed the Schocks to use a share of the estate to fund litigation against South Dakota and the South Dakota Women’s Prison for injustices she believed had occurred.
Pease wrote as follows:
Hence, I give all my belongings to Lisa and Lynn Schock contingent on them giving a share to my brother Douglas Dean Hubert and for Cocky’s new keeper mom search, and making some arrangements for litigation start monies to correct injustices at SDWP in Pierre.
The probate court had an evidentiary hearing to interpret the Will. The court held that the Will appointed the Schocks as executors and the explanatory language combined with the specific devises – when read together – “indicate[d] no desire to give the Schocks anything.” The court ruled that Bonnie intended for the Schocks, as executors, to only provide for the care of her pet bird, to fund the litigation against the State and prison, and distribute the remainder to Douglas Hubert. The Schocks appealed, contending that the Will gives them a conditional gift. Furthermore, they contended the probate court disregarded the sentence in the Will stating: “I owe Lisa and Lynn Schock for their amazing precious support of me and Cocky from 2010 to and through the end of my life.”
The South Dakota Supreme Court reversed, holding that Bonnie intended to make a gift to the Schocks, provided they would give a share of the gift to Douglas and use a portion to fund the care for Cocky and the litigation. The court stated “[o]ur inquiry is limited to what the testator meant by what [she] said, not what we think the testator meant to say.” The court held the language unequivocally gives all of Bonnie’s belongings to the Schocks with further instructions as to what to do with the assets.
Sometimes the ambiguity in question is not in the Will or trust, but in the law governing administration of estates. Singer Prince died without any estate plan. His estate, estimated at $300 million, is tied up in litigation over the identity of his heirs. Shortly after his death, dozens of individuals came forward claiming to be related to Prince. DNA tests were done and none of the tests supported their claims. As a result, the judge denied their claims.
The remaining litigation pits Prince’s six recognized relatives against the daughter and granddaughter of Prince’s late “brother,” Duane J. Nelson, Jr. (“Junior”). Duane J. Nelson, Sr., Prince’s father, recognized Junior as his son, even though he was the child of someone else. Nelson, Sr. was named as father on Junior’s birth certificate. Nelson, Sr. called Junior his son, but he never adopted Junior, never lived together as parent and child, and never provided financial support for Junior during childhood.
The question remaining for the probate court is whether Minnesota law (where Prince lived at the time of his death) recognizes a non-genetically related “brother” (who was never adopted) as a valid heir. Junior’s relatives contend that a son is a son, even without the genetic relationship, as long as the father and son treated each other as parent and child. Prince’s recognized heirs argue that Minnesota law relating to the determination of heirs is limited to defined categories of genetic relationship, adoption, and births created by assistive technology. Minnesota law does contain defined categories where a parent-child relationship is clearly recognized, but does not clearly state that a parent-child relationship cannot be established otherwise. So the litigation continues.
All this estate litigation relating to ambiguity demonstrates that a proper estate plan should be drafted that clearly expresses the creator’s intent. The attorneys at our firm strive to assure that the Wills and trusts we draft clearly express the desires of our clients. We also encourage communication between family members so that our clients’ wishes do not come as a surprise to family members – or, where such communication is not possible, that our clients document their intent, desires, and reasoning behind decisions, so it can be later shown to family members. As a member of the American Academy of Estate Planning Attorneys, our firm is kept up-to-date with information regarding all types of estate litigation and ways to minimize such litigation. You can receive more information about a complimentary review of your clients’ estate plans by calling our office at (408) 356-9200 or (831) 476-2400.