Brown & Associates - Attorneys & Counselors at Law, P.L.L.C.

IS IT A WILL OR A TRUST OR A CONTRACT?
(6/10/01)

In upcoming columns, I'll talk about the effect of the Recent Tax R.E.L.I.E.F. Act (or RELIEFA). Since this can be dreadfully boring (not to mention only slightly less amusing than reading instructions on a TV dinner), I thought I would lighten things up a little this week.

What Is It?

I never cease to be amazed at the many new and strange experiences I encounter in the practice of law. Recently, a colleague in California, David Diamond, sent me an instrument and asked "What is it?". The document was type written except for signatures and dates and read exactly as set forth below:

I, JOHN DOE, being of sound mind, bequeath to my daughter, JANE DOE, a gift, inter vivos of my real property located at ADDRESS.

That under the law of contracts of this state the following Residuary Clause I impose to pass my property, my residuary estate, to my daughter, JANE DOE. That I pass my residuary estate, located at ADDRESS, that all of the residuary estate and its contents remain in the trust of my daughter JANE DOE.

1. That I am of age and mentally competent.
2. That is it my intent, and so exists at the signing this document, that I am claiming my passing of my residuary estate as a gift to my daughter JANE DOE.
3. That by my signing this documents before these witnesses, I affirm I am handing over this residuary estate, to my daughter JANE DOE as a gift.
4. That she is solely responsible for taxes on said gift.
5. That at such time she feels she can no longer handle the responsibilities required, she shall place at her decression the property shall pour over into a trust. at the property time the property shall be sold and the monies shall be divided equally among my four sibblings. (1) JIM DOE, (2) BOBBY DOE, (3) SAM DOE, (4) JANE DOE

But in the event of my recovery, this document becomes invalid.
[Signature of JOHN DOE] dated: 01-02-01.
Witnessed by: [signature of family friend] Dated: 01-02-01
[Signature of Jane Doe] 01-02-01

The four children named above are the children of JOHN DOE, not withstanding the use of the word "sibbling". JOHN DOE has a 1987 attorney-prepared Will leaving $3,000 each to BOBBY DOE, SAM DOE and JANE DOE (with a "no contest" clause) and the balance of his estate to JIM DOE. The only probate asset appear to be a $4,000 bank account and the real property at ADDRESS. JOHN DOE did not "recover". The document was signed at the hospital and JOHN DOE stayed in the hospital until a few days before he was released to go home to die in March. JANE DOE lived with JOHN DOE at ADDRESS for the last 12 years, taking care of him and doing all of the house and yard work. She survives on her SSI. JIM DOE has petitioned the Court for probate of the 1987 Will and is threatening to evict JANE DOE from ADDRESS. The hearing is set for two days hence.

Why am I sharing this bizarre document with you? Because it isn't much different from many of the documents I see throughout the year. For some reason, people are quick to hire a plumber to fix a leaky faucet or a mechanic to change their oil, but they think they can prepare their own wills or trusts. If it were that easy, there wouldn't be so many attorneys. Unfortunately, I usually see these documents after the person is dead when it is too late to correct the errors.

David couldn't decide if this was a gift, a trust for Jane Doe (for her life or until sale), a Will, or what? One attorney friend thought it might be a "gift causa mortis" (a gift in view of pending death). In a "gift causa mortis," a person in imminent danger of death gives property away, but if he or she lives the gift is revoked. In most states, such a gift only applies to personal property, not real property, so that was out.

Another thought it might have created a "constructive trust" under which JANE DOES would receive the property, but would hold it subject to the rights of her brothers.

One thought JOHN DOE was trying to make a Will that would avoid probate by including a current transfer or contract. This would be treated the same as a revocable trust.

Another, Jay Goldenberg, said it reminded him of Charles Kuralt, who led such an interesting life "On the Road". Charles sent a letter to his beloved companion saying he would have his lawyer make sure she received the rest of his Montana property. Charles didn't live and his attorney didn't make it to the hospital. The Montana Supreme Court held that the letter was a "Will" and gave Charles' Montana property to his companion.

If JANE DOE was my client and would lose her rights to ADDRESS under the 1987 Will, I would argue the instrument was a Deed that conveyed ADDRESS to her or, if that wouldn't fly, I'd argue it was a Will since it completely disposes of JOHN DOE's property and appears to meet all the statutory requirements. JANE DOE would lose the bounty of her father's good will since a witness to a Will cannot take under that instrument, which means she wouldn't get ADDRESS, but at least she would receive her 1/4 of the estate as her intestate share. In my view, a part of a pig is better than none.

The point I'm trying to make is that sometimes we try to save a few dollars and wind up hurting ourselves or those we love. Most of us wouldn't try to replace the engine in our car or build a computer from a thousand myriad parts. It is even more dangerous to write your own testamentary instruments. The cost of a will or trust is insignificant compared with the expenses the DOE family will incur in the current court case. Next week I'll talk with you about a mundane and boring topic-the Tax R.E.L.I.E.F. Act.

To return to the Strategic Planning Articles click here.