Leave Nothing to Chance in Estate Planning

It is common for estate planning documents to leave assets to a child or children. Good estate planning documents should, however, include language to plan for the possibility that a child may pass away before his/her parent. A recent case decided by the Court of Appeals of Michigan highlights the importance of planning for the death of a child.

In re: Estate of Eugenie Dietrich was decided on October 17, 2017. The case involved the interpretation of a March 8, 1989 Will. In this Will, Eugenie Dietrich left her entire estate to her husband. The Will provided for the possibility that Eugenie’s husband might not survive Eugenie, and in that instance, left her entire estate to her two sons (who were identified by name in the Will), to be divided between them in equal shares, share and share alike. One of Eugenie’s sons predeceased her, and the Will was silent as to what would happen in that circumstance. The issue then became whether (a) the surviving son would receive the entire estate, or (b) the estate would be divided into two shares, one for the surviving son and the other to be divided among the deceased son’s children.

Eugenie’s surviving son argued that Eugenie’s Will created a class gift, because Michigan law provides that class gifts are to be divided among the class in definite proportions, with each share being dependent on the ultimate number of people in the class. Class gifts are generally given to a class of persons, with the number of people in the class being uncertain at the time but to be ascertained at a future time. Class gifts often involve “groupmindedness” – the person making the gift is looking to the class of people as a whole, rather than the class members as individuals.

The children of Eugenie’s deceased son argued that, because Eugenie identified her sons by name in her Will, she intended to make a gift to each son individually rather than as a class. Further, because there was no language in the Will that required either son to survive in order to inherit, the gifts should be seen as individual gifts. When a person makes individual gifts in Michigan without providing for the possibility that a beneficiary might predecease him or her, it is presumed that the person making the gift intended that “future eventualities which would change the plan as written should be taken care of by the law.” Also, Michigan has what is known as an “anti-lapse” statute which creates a presumption that a person would want the descendants of certain family members to receive that family member’s bequest in the event that the family member predeceases the person creating the gift.

The Court of Appeals ruled that Eugenie’s Will did not create a class gift to her sons. Rather, she made individual gifts to each of her two sons. Because Eugenie failed to provide for the possible death of one or both of her sons, Eugenie was presumed to intend for the provisions of Michigan law to govern in that circumstance. The result was that Eugenie’s surviving son was entitled to half of the estate, and the other half was split evenly among the children of Eugenie’s deceased son.

This litigation could have been avoided by including language in Eugenie’s Will which clearly outlined her intent in the event that one of her sons predeceased her. Because the document was silent, two presumptions had to be read into the document. While these presumptions may have accomplished exactly what Eugenie intended, it is possible that they did not.

Being as clear as possible, and attempting to address as many contingencies as possible in your estate planning reduces the chance that your estate will need to be litigated, and can potentially save a significant amount of money and stress for your heirs. Litigation like this takes a significant amount of time – this decision from the Court of Appeals was not handed down until nearly three years after Eugenie’s death, and followed what was a more than six-month ordeal in the Probate Court.

This case also reiterates the importance of updating an estate plan following significant life events, such as births and deaths in your immediate family. While the case does not clearly discuss when these types of events occurred in Eugenie’s life, nor whether Eugenie had the capacity to amend her estate planning documents after these events, there were at least two major life events that should have caused Eugenie to think about amending her Will – the death of her husband and the death of her son. Had she revisited her Will after either of these events, this litigation may have been avoided.

The estate planning attorneys of Andrews Scheuerle + Huss, PLLC strive to cover as many contingencies as possible when preparing estate planning documents. We also stress the need to review and revisit estate plans following major life events.

If you would like to discuss your estate planning needs, please feel free to contact us today.

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