In re Estate of Anderegg, 360 S.W.3d 677 (Tex. App.—El Paso 2012, no pet.).
Testator’s will provided the all debts and expenses should be “paid out of my estate.” Both the trial and appellate courts held that this statement was sufficient to alter the statutory abatement order provided in Probate Code § 322B. Thus, Testator’s debts are to be paid pro rata from all estate property. The courts rejected the argument that Testator’s language was too general to alter the statutory order.
Moral: Many wills contain boilerplate language requiring debts and expenses to be paid out of the estate. There is now authority that this language is sufficient to trump the normal abatement order. Accordingly, every will should contain an express statement describing how the testator wants debts and expenses to be paid, e.g., via the statutory order, pro rata, or in some other way.
Testator’s will stated that Beneficiary was to received “all monies I may have at the time of my death, be they in the form of cash, checking accounts or savings accounts, all stocks, bonds, annuities, etc., and any accounts I may have with [named institutions] or others.” Both the trial and appellate courts held that Beneficiary was entitled to a lump sum death benefit and an income tax refund.
The appellate court explained that the death benefit and tax refund are relatively liquid financial assets of the same basic type described. The court found it significant that Testator included the abbreviation “etc.” in the list meaning that additional, unspecified similar items were to be included in the gift and that the list was not meant to be exclusive (expressio unius est exclusio alterius).
Moral: Attempts to define a gift of money and similar items are fraught with interpretation problems. Thus, the drafting attorney must exercise great care or consider a different way of achieving the client’s goal such as naming pay on death payees.
Executors were removed from office for gross misconduct under Probate Code § 149C(a)(2), (5). The trial court refused to charge the estate for their attorney’s fees in defending the removal action. The appellate court affirmed because Executors did not defend the action in good faith as is required before the court can burden the estate with their attorney’s fees under Probate Code § 149C(c).
The court reviewed the evidence and found that is was more than sufficient to support a finding that the defense was in bad faith. For example, Executors used a credit card they found in the decedent’s safe to charge their personal expenses even though the judge instructed them not to borrow money from the estate. In addition, they continued to make personal charges even after their attorney told them not to do so. One of the executors even admitted that she knew her actions were wrong.
Moral: An executor who acts inappropriately and with notice that the actions are wrong, cannot later defend a removal action and expect the estate to cover his or her attorney’s fees.