There is an art to estate planning. The art comes from seeing how estates are administered and what types of probate disputes arise. While nearly any attorney can draft a will, it’s the probate attorney that sees the big picture. These lessons are learned from legal battles, many of which carry on for years–if not decades.
The Farms v. Star Creek Co., No. 06-22-00081-CV (Tex. App.–Texarkana Aug. 2, 2023), case provides an opportunity to consider problems that can arise when a will includes a problematic residuary clause. This type of language can lead to certain parties receiving an inheritance while others are left without, potentially creating disparities and disagreements among beneficiaries. This is why these clauses are often at the heart of probate litigation cases.
Facts & Procedural History
This case involves a husband and wife. The wife died in 2001. Her will provided that her husband would get the residue of her estate “to do with as he desires.” It then said the property passes to her son.
Before he died, the husband ended up transferring property to himself and putting some property into his legal entity.
Reading the above, you can probably see what the eventual probate litigation involved. The “to do with as he desires” language in the wife’s will is not clear.
The “Do With As He Pleases” Language
There are two possible interpretations of the “to do with as he desires” language. One would mean that the husband and his heirs get the property. The other means that the wife’s son gets the property.
Outright Ownership with Reciprocal Will
In this scenario, the “to do with as he desires” language in the wife’s will could be interpreted as granting her husband full ownership of the property upon her death. This would mean that the husband has complete control over the property, including the ability to transfer it to his own entity. The will might be understood as conveying the residue of the estate to the husband without any limitations or conditions, giving him the freedom to use and dispose of the property as he sees fit.
Life Estate with Successive Interest
Alternatively, the language in the will could be interpreted to grant the husband a life estate in the property. A life estate gives someone the right to use and benefit from a property during their lifetime, but ownership reverts to another party (in this case, the wife’s son) upon the life tenant’s death. This interpretation suggests that the husband’s control over the property was limited to his lifetime, and after his death, the property would pass to the wife’s son as specified in the will.
The Probate Court Proceedings
The probate litigation involved several different court hearings and causes of action. One such proceeding involved a jury determining that the wife had only granted a life estate to the husband and when the husband died, the property passed to the wife’s son. The rest of the court hearings were consistent with this jury finding.
The crux of these legal battles involves the interpretation of a seemingly innocuous phrase in the wife’s will: “to do with as he desires.” This language is ambiguous and one would think that the drafter of the wife’s will would have noted the issue even without the benefit of hindsight.
Wills are intended to provide clarity and ensure the orderly distribution of assets upon a person’s passing. Ambiguities or vague language, as with the language in this case, can open the door to protracted legal disputes and family tensions (which is why mediation can help with probate cases).
The dispositive terms of the will are usually at issue in these types of cases. This is evidenced by this case which involved language used in the residuary clause of the will. Residuary clauses in wills are intended to capture all assets not specifically mentioned earlier in the will. These clauses are designed to provide a catch-all provision, ensuring that any property not explicitly bequeathed finds a rightful heir.
The will’s reference in the residuary clause to the husband’s authority to act “as he desires” raises fundamental questions about the nature of ownership and control.
Probate Litigation Involving Residuary Clauses
These disputes are very common. In some cases, a single phrase or word can alter the entire course of events, determining who inherits property and how the deceased’s intentions are carried out. In cases where wills are open to interpretation, courts are tasked with divining the testator’s true wishes.
Examples of equally problematic residuary clauses abound, illustrating the potential pitfalls of ambiguous language that can result in the will being declared invalid. Consider a case where a testator specifies that “any remaining assets shall be distributed among my surviving family members as they see fit.” While this might be intended to empower beneficiaries, it can lead to disputes about what constitutes a “surviving family member” and how the distribution process should be executed.
Another scenario could involve a residuary clause that stipulates, “All remaining property shall be divided in accordance with the family’s best interests.” Although the testator’s intention might be to allow flexibility for future contingencies, such language leaves room for differing interpretations of what constitutes the family’s best interests and who holds the authority to make such determinations.
Here are several additional examples of residuary clauses that can result in problems:
- “The remainder of my estate shall go to my immediate family.” This type of clause might lead to disputes over who constitutes “immediate family,” potentially including extended family members or individuals with varying degrees of relation.
- “Any leftover assets should be distributed based on the wishes of my closest friends.” While the intention might be to involve friends in the decision-making process, this wording could raise questions about which friends are considered “closest” and how their collective wishes should be assessed.
- “My remaining estate shall be used for charitable purposes.” This clause lacks specificity about the intended charitable beneficiaries or how the assets are to be utilized, leading to potential disagreements about the allocation and purpose of the charitable funds.
- “If my spouse is no longer alive at the time of distribution, the remainder shall go to my children.” This wording introduces uncertainty, as the occurrence of a condition (spouse’s death) may not be clearly defined or easily ascertainable.
- “The remainder shall be shared among my employees.” Without specifying which employees, this clause might result in legal challenges from various individuals who worked for the deceased at different times.
- “The residue shall be disposed of at the discretion of my executor.” While executors typically act in good faith, this wording provides them with significant leeway, potentially leading to disagreements among beneficiaries regarding the fair distribution of assets.
- “If my spouse is deceased, and if none of my children are alive, then the residue shall be given to my siblings, but only if they are not minors.” Complex contingencies can introduce confusion, particularly when multiple layers of conditions need to be satisfied before distribution.
- “The remainder shall be divided equally among my surviving children at the time of my passing.” This clause might not account for future children born or adopted after the will was drafted, leading to unequal distributions among siblings.
- “The residue will be given to my grandchildren in trust for their future education.” This wording might raise questions about when and how the trust will be administered and whether it accommodates grandchildren born after the will was created.
- “Any remaining assets shall be divided based on the stock market performance at the time of distribution.” This type of clause can introduce uncertainty and may lead to legal disputes over market values and interpretations of market conditions.
The lesson from these examples is clear: residuary clauses should leave no room for doubt. Expressing intentions with specificity can avert legal entanglements and ensure that one’s assets are transferred in alignment with their desires. Relying on vague language is likely to result in litigation, as seen in the “to do with as he desires” phrase, as it can inadvertently expose loved ones to unnecessary complexities and conflicts.
This case underscores why it is important to carefully consider one’s estate plan and the language used in the estate planning documents. Estate planning attorneys can help spot and anticipate potential ambiguities and draft wills that withstand legal scrutiny. This is particularly true with respect to the dispositive provisions of the will, such as residuary clauses.
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