More on Judicial Estoppel

February 11, 2020 § Leave a comment

Yesterday we looked at the majority opinion in the COA’s November, 2019, 5-4 decision in Carpenter v. Conway, which affirmed a chancellor’s dismissal of a complaint to set aside land conveyances based on judicial estoppel.

Today we turn our attention to Chief Judge Barnes’s dissent, in which she was joined by Westbrooks, McCarty, and J. Wilson:

¶20. I dissent from the majority’s conclusion that Guy Carpenter is judicially estopped from contesting the conveyances at issue. First, any representations Guy made as administrator of Terry’s estate are not binding on his and Terry’s minor son, Cole. Second, because the real property at issue descended to Terry’s heirs by operation of law, Guy did not benefit from his prior position in the probate proceedings. Accordingly, I would reverse the court’s judgment dismissing the complaint and remand for further proceedings.

¶21. “The purpose of judicial estoppel is to prevent parties from knowingly taking a position in one court that is contrary to a position that party has asserted in, and that has been accepted by, another court.” Clark v. Neese, 131 So. 3d 556, 562 (¶21) (Miss. 2013) (emphasis added). Guy instituted the probate proceeding as administrator of Terry’s estate, not as next friend of his minor son, Cole. While I find no Mississippi cases addressing this specific issue, other jurisdictions have determined that actions filed in an individual capacity and actions filed on behalf of a minor are legally separate and distinct, even if founded on the same action. In Lambdin v. Travelers Ins. Co., 150 So. 2d 636 (La. Ct. App. 1963), a
mother filed suit after her minor child sustained injuries from a soda bottle that shattered. The mother sued individually to recover for medical expenses, as well as in her capacity as tutrix of her child’s estate to recover for the child’s personal injuries. Id. at 637. Judgment was entered in favor of the mother on her individual claim, but the defendant prevailed on the mother’s claim on behalf of the child. Id. In considering whether the judgment awarded to the mother was “a conclusive determination of fault binding upon the defendant,” the Louisiana Court of Appeals held that the claim asserted by the mother individually, “although founded on the same cause of action, is in the eyes of the law separate and distinct from the claim asserted by the mother in her capacity as tutrix of the minor child.” Id. at 638. For a judgment on one judicial demand to be a conclusive determination of the same question involved in the determination of another judicial demand, not only must the demands be the same and founded upon the same cause of action—the demands must also be asserted between the same parties, [e]ach acting in the same capacity. Id.

¶22. In Chance v. Gibson, 99 S.W.3d 108, 109 (Tenn. Ct. App. 2002), an adult daughter and her mother sought to establish paternity and recover child support from Carl Gibson, who they alleged was the adult daughter’s birth father. The trial court dismissed the claim on the basis of judicial estoppel because the mother, in a prior divorce proceeding, sought and was awarded child support from her ex-husband, James Chance. Id. at 110. The Tennessee Court of Appeals held that the daughter was not precluded by judicial estoppel from pursuing her claims because she was not a party to the prior child-support action and “was a minor at the time the pleadings were filed.” Id. at 111.

¶23. Because Cole was a minor and not a party to the probate proceedings, any representations made by Guy in those proceedings cannot be imputed to Cole. Therefore, I find that Guy, as parent and next friend of Cole, is not judicially estopped from pursuing the current action against the Conways.

¶24. Furthermore, Guy did not derive any benefit from his prior position in the probate proceedings. The Mississippi Supreme Court has held that “[w]hen the party asserting the prior inconsistent position has not benefitted by the assertion, the doctrine [of judicial estoppel] should not be applied.” Gibson v. Williams, Williams &Montgomery P.A., 186 So. 3d 836, 846 (¶25) (Miss. 2016) (emphasis omitted); see also Donaldson v. Ovella, 228 So. 3d 820, 829 (¶24) (Miss. Ct. App. 2017) (finding that because the appellants had “not benefitted from their prior position, . . . their claims are not barred by judicial estoppel”). The majority addresses the “benefit” requirement for judicial estoppel by stating that Guy benefitted “when the chancellor closed the estate and he and his son received ownership of [Parcel 3].”

¶25. Terry died intestate; so any interest she had in real property descended to Guy, her husband, as an heir by operation of law. See Miss. Code Ann. § 91-1-7 (Rev. 2018). This Court has recognized:

[R]eal property descends directly to, and title vests in, the heirs at law to enjoy until the contingency arises when it may be needed to pay debts. Administration then covers only the decedent’s personalty and the realty is in no way involved unless and until the personalty becomes insufficient to pay the debts and expenses.

Prout v. Williams, 55 So. 3d 195, 204 (¶28) (Miss. Ct. App. 2011) (quoting Robert Weems, Miss. Practice Series: Wills & Admin. of Estates in Miss. § 2:13 (3d ed. 2003)); see also Barnes v. Rogers, 206 Miss. 887, 892, 41 So. 2d 58, 60 (1949) (holding that administration of the estate “covers only the personal property belonging to the estate[,] and the real property is no[t] . . . involved in the administration unless and until the personal property becomes insufficient to pay the debts and it becomes necessary to resort to the land for the payment of the debts of the estate”); Estate of Mace v. Gardner, 66 So. 3d 1265, 1268 n.1 (Miss. Ct. App. 2011) (noting that “by operation of law, in the absence of a will, title of real
property vests immediately in the heirs at law upon the owner’s death”) (citing In re Will of Wilcher v. Wilcher, 994 So. 2d 170, 176 (¶12) (Miss. 2008)).

¶26. The majority does cite Johnson v. Herron, 33 So. 3d 1160, 1166-68 (¶¶19-25) (Miss. Ct. App. 2009), which affirmed a chancery court’s finding of judicial estoppel because Johnson, the decedent’s son and co-administrator of his father’s estate, failed to include real property as an asset when his father’s estate was closed. In Johnson, this Court cited portions of Mississippi Code Annotated section 91-7-47(1) (Supp. 2008):

When an administrator or executor undertakes to close an estate:

he shall take all proper steps to acquire possession of any part [of the estate] that may be withheld from him, and shall manage the same for the best interest of those concerned, consistently with the will, and according to law. He shall have the proper appraisements made, return true and complete inventories except as otherwise provided by law, shall collect all debts due the estate as speedily as may be, pay all debts that may be due from it which are properly probated and registered, so far as the means in his hands will allow, shall settle his accounts as often as the law may require, pay all the legacies and bequests as far as the estate may be sufficient, and shall well and truly execute the will if the law permit. He shall also have a right to the possession of the real estate so far as may be necessary to execute the will, and may have proper remedy therefor.

Id. at 1167 (¶23) (brackets in original). We found that “Johnson had a duty to discover all of the assets of his father’s estate before he agreed to close the estate.” Id. The majority relies on Johnson and Mississippi Code Annotated section 91-7-47(1) (Rev. 2018) to conclude that Guy, as administrator of Terry’s estate, “had an affirmative duty to ‘take all proper steps to acquire possession of any part of . . . [the estate] that may be withheld from him . . . .” (Emphasis added) (ellipses and brackets in original).

¶27. However, looking at the omitted and edited portions of section 91-7-47(1) as cited in Johnson and the majority’s opinion, two crucial distinctions are revealed. First, the statute addresses the duty of the executor or administrator “with the will annexed.” Terry died intestate; therefore, this statute does not apply. Second, the statute provides that the executor or administrator cum testamento annexo [Fn 3] “shall have the right to the possession of all the personal estate of the deceased, unless otherwise directed in the will; and he shall take all proper steps to acquire possession of any part thereof that may be withheld from him.” Miss. Code Ann. § 91-7-47(1) (emphasis added). Any right to possession of the real estate is only “so far as may be necessary to execute the will, and may have proper remedy therefor.” [Fn 4] Id.

[Fn 3] Cum testamento annexo is a Latin term meaning “with the will annexed.” Black’s Law Dictionary 52 (10th ed. 2014).

[Fn 4] The full text of the statute reads:

Every executor or administrator with the will annexed, who has qualified, shall have the right to the possession of all the personal estate of the deceased, unless otherwise directed in the will; and he shall take all proper steps to acquire possession of any part thereof that may be withheld from him, and shall manage the same for the best interest of those concerned, consistently with the will, and according to law. He shall have the proper appraisements made, return true and complete inventories except as otherwise provided by law, shall collect all debts due the estate as speedily as may be, pay all debts that may be due from it which are properly probated and registered, so far as the means in his hands will allow,shall settle his accounts as often as the law may require, pay all the legacies and bequests as far as the estate may be sufficient, and shall well and truly execute the will if the law permit. He shall also have a right to the possession of the real estate so far as may be necessary to execute the will, and may have proper remedy therefor.

Miss. Code Ann. § 91-7-47(1) (italicized language not quoted by Johnson or majority opinion).

¶28. It is unknown whether the citation to section 91-7-47(1) was critical to the holding in Johnson, as the Court concluded that the co-administrator had benefitted from a negotiated estate settlement agreement, [Fn 5] or if either party in that case raised the fact that real property descends by operation of law. But here, appellant’s counsel did raise the issue during the motions hearing, arguing:

There was no litigation of who owned certain property in the estate proceeding. The estate proceeding is commenced to cut off the claims of creditors and if there’s property to be devised or property to be dealt with, sometimes it’s listed in the inventory. Sometimes the inventories [are] improper or incorrect, but it doesn’t matter. As a matter of law, when someone dies, the land descends to where it goes if they die intestate.

(Emphasis added). This is a correct and pivotal statement of the law, and it cannot be ignored. Guy had no affirmative duty to identify the real property of the decedent unless the real property was required to pay the estate’s debts after the personalty was exhausted.

[Fn 5] Under the terms of the settlement agreement, Johnson received sixty-percent of the estate. A will was later discovered that left only fifty-percent of the estate to Johnson.

¶29. The majority contends that as administrator, Guy had the duty to ascertain the ownership of the real estate so that the ownership could properly be reported on the estate’s tax return. Supra at (¶13). However, there is no indication in the record that the estate was valued above $5,000,000 so as to require an estate tax return. Compare Miss. Code Ann. § 27-9-11 (Rev. 2017) (tying estate tax deduction to federal tax exclusion amount as codified in Section 2010 of Title 26 of the United States Code); and Miss. Code Ann. § 27-9-21 (Rev. 2017) (requiring executor to give notice to commissioner within sixty days where gross estate value exceeds exemption provided in section 27-9-11); and Miss. Code Ann. § 27-9-23 (Rev. 2017) (requiring executor to file estate tax return where gross estate exceeds amount of specified exemption in section 27-9-11) with 26 U.S.C. § 2010(c)(3)(A) (2018) (establishing the basic exclusion amount for a person dying in 2011 at $5,000,000). The fact that the estate (dealing only with the personalty) was “closed in a more timely fashion, and Guy’s ownership right to Parcel 3 was completely and definitively established” is hardly a benefit sufficient to apply judicial estoppel, considering there is no indication that there was ever any question as to his right to Parcel 3. The majority is, with respect, trying too hard to make the doctrine of judicial estoppel apply where it clearly does not.

Ins and Outs of Judicial Estoppel

February 10, 2020 § 1 Comment

Terry Carpenter Owned several parcels of property that had been conveyed to her by family members. She was diagnosed with terminal cancer, and her relationship with her husband, Guy, began to deteriorate and she conveyed two parcels — referred to as Parcels 1 and 2 — to her parents.

After Terry’s death in 2011, Guy was appointed administrator of her estate. Parcels 1 and 2 were not identified as estate property, and a judgment was entered closing the estate.

In 2016, Guy filed suit against Kenneth Conway, brother of Terry, who by then had become owner of the property, to set aside the conveyances of Parcels 1 and 2. The complaint was filed as next friend of Guy’s son alleging that Terry could not legally convey it without Guy’s signature because the property was part of the homestead, and Terry lacked mental capacity at the time of the conveyance.

Kenneth filed a motion to dismiss, and the chancellor did dismiss, finding that Guy’s claims were barred by judicial estoppel. Guy appealed.

In Carpenter v. Conway, a November 19, 2019, decision, the COA affirmed. Judge Tindell wrote the majority opinion:

¶7. In appealing the dismissal of his complaint, Guy asserts the chancellor erroneously found that judicial estoppel barred his claims. Although we review de novo a trial court’s grant or denial of a motion to dismiss, Trigg v. Farese, 266 So. 3d 611, 617 (¶9) (Miss. 2018), we review the application of judicial estoppel for abuse of discretion. Adams v. Graceland Care Ctr. of Oxford LLC, 208 So. 3d 575, 580 (¶13) (Miss. 2017). Thus, we must first determine whether the chancellor abused her discretion by finding that judicial estoppel barred Guy’s claims, and then we must review de novo whether the chancellor properly dismissed Guy’s complaint under Rule 12(b)(6). See id. at 579-80 (¶12); Rogers v. Gulfside
Casino P’ship, 206 So. 3d 1274, 1279 (¶9) (Miss. Ct. App. 2016).

¶8. As the Mississippi Supreme Court has explained:

Judicial estoppel precludes a party from asserting a position, benefitting from that position, and then, when it becomes more convenient or profitable, retreating from that position later in the litigation. Judicial estoppel has three elements: A party will be judicially estopped from taking a subsequent position if (1) the position is inconsistent with one previously taken during litigation, (2) a court accepted the previous position, and (3) the party did not inadvertently take the inconsistent positions.

Hinton v. Pekin Ins. Co., 268 So. 3d 543, 558-59 (¶62) (Miss. 2019) (citation and internal quotation marks omitted).

¶9. Regarding the first prong of judicial estoppel, Guy asserts that he has never been involved in a prior adverse proceeding with Kenneth. In Clark v. Neese, 131 So. 3d 556, 561-62 (¶21) (Miss. 2013), the supreme court “took the opportunity to clarify” its elimination of “the adverse-party requirement and overruled [its] prior judicial-estoppel opinions insofar as they included such a requirement.” As the Clark court explained:

The purpose of judicial estoppel is to prevent parties from knowingly taking a position in one court that is contrary to a position that party has asserted in, and that has been accepted by, another court. This purpose is served regardless of whether the inconsistent positions were taken in opposition to the same party.

Id. at 562 (¶21).

¶10. Even before the supreme court’s holding in Clark regarding the elimination of the adverse-party requirement, this Court determined in Johnson v. Herron, 33 So. 3d 1160 (Miss. Ct. App. 2009), that an estate proceeding could meet all the requirements necessary for judicial estoppel. In Johnson the decedent’s son by his first marriage and his niece by his second marriage acted as co-administrators of his estate. Id. at 1162 (¶7). The coadministrators and the decedent’s nephew by his second marriage entered into a settlement agreement to close the decedent’s estate and distribute his assets. Id. Almost three years after closing the estate, the son sought to contest the asset distribution. Id. at 1164 (¶10). As part of his requested relief, the son asked that the chancellor void deeds to certain pieces of real property and make him the sole owner of the properties. Id.

¶11. The chancellor in Johnson granted the niece and nephew’s summary-judgment motion after finding that judicial estoppel precluded the son from serving as co-administrator of his father’s estate, joining the petition to close the estate, and then filing a subsequent lawsuit to contest the asset distribution to which he had previously agreed at the estate’s closure. Id. at 1164-65 (¶13). On appeal, the son argued that judicial estoppel failed to apply because it required the parties to be involved in a prior adverse proceeding, and he contended that he had never been involved in such a proceeding with the niece and nephew. Id. at 1167 (¶21). In affirming the chancellor’s ruling, however, this Court agreed with the chancellor’s conclusion that, although the son and niece were both co-administrators of the decedent’s estate, the parties were still clearly in an adverse position as to the estate’s assets and their respective interests in those assets. Id.

¶12. Based on the holdings in both Clark and Johnson, we find that all the requirements for judicial estoppel have been met in the present case. We first note that, like the son in Johnson, Guy asserts on appeal that neither he nor his son has ever been involved in a prior adverse proceeding with Kenneth. As discussed, however, this is no longer a requirement for finding judicial estoppel. Clark, 131 So. 3d at 561-62 (¶21).

¶13. As administrator of Terry’s estate, Guy had an affirmative duty to “take all proper steps to acquire possession of any part of . . . [the estate] that may be withheld from him . . . .” Miss. Code Ann. § 91-7-47(1) (Rev. 2018). [Fn 2] Further, he had a duty to “ascertain whether the decedent was the sole owner, joint owner[,] or tenant in common” of the real estate. Robert E. Williford & Samuel H. Williford, Mississippi Probate and Administration of Estates § 8:3 (3d ed. 2019). Such a determination “is essential if the existence and nature of the ownership is to be correctly reported on the estate tax return.” Id.; see also Miss. Code Ann. § 91-7-157 (Rev. 2018) (“An executor or administrator shall pay all taxes that may be due on real and personal property belonging to the estate.”). In fulfilling his role as administrator, Guy never raised the claims he now seeks to assert—that Parcels 1 and 2 belonged to Terry’s estate and that he and his son possess an ownership interest in those parcels as tenants in common. Instead, Guy maintained during the probate proceedings that Parcel 3 alone comprised his and Terry’s homestead. By maintaining this position, Guy had no adverse claims to contend with during the probate of Terry’s estate. Thus, the estate was closed in a more timely fashion, and Guy’s ownership right to Parcel 3 was completely and definitively established. After benefitting from the position he maintained during the probate proceedings, Guy now adopts a contrary argument in the current litigation and asserts for the first time that Terry actually owned all three parcels of land when she died and that he and his son are tenants in common. Because the record clearly reflects that Guy has taken a
position in the current litigation that is contrary to the one he took in the prior probate proceedings, we find the first requirement of judicial estoppel has been met.

¶14. The second prong of judicial estoppel requires the court to have accepted the party’s prior position. Hinton, 268 So. 3d at 558-59 (¶62). By entering the order to close Terry’s estate, the chancellor effectively accepted Guy’s representation that Terry owned only Parcel 3 at the time she died. We therefore find this prong has also been met.

[Fn 2] As the dissent correctly points out, by operation of law, Parcel 3 descended to Guy and the couple’s minor son upon Terry’s death. See Miss. Code Ann. § 91-1-7 (Rev. 2018). Thus, Guy was not required to open an estate except to ensure that Terry’s other assets would in fact transfer to her next of kin, which were Guy and the couple’s minor son. See Miss. Code Ann. § 91-1-11 (Rev. 2018). And since Terry had already conveyed Parcels 1 and 2 to her parents prior to her death, Guy had a duty on behalf of Terry’s heirs to raise any claims to those parcels during the probate proceedings. See Miss. Code Ann. §§ 91-7-47(1) & -93 (Rev. 2018).

¶15. Relevant to the third requirement for judicial estoppel, Guy contends that his current and previous positions were not intentionally inconsistent but that his previous position was, at most, simply “incomplete.” When discussed within the context of a bankruptcy proceeding, this Court has explained:

A debtor’s non-disclosure is inadvertent only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment. Moreover, it is the debtor’s burden to prove that her non-disclosure was inadvertent. The question is not whether the debtor subjectively knew at the time of her bankruptcy that she had a legal duty to disclose the claim in her bankruptcy proceeding. Rather, a debtor is deemed to have had knowledge of her claim so long as she was aware of the facts giving rise to it.

Rogers, 206 So. 3d at 1280 (¶11) (citations and internal quotation marks omitted).

¶16. Here, Guy makes no assertion that he was somehow unaware of Parcels 1 and 2 at the time he probated Terry’s estate. In fact, Guy admits his prior knowledge of Parcels 1 and 2 and states that he withheld his current claims regarding these parcels during the probate proceedings based on his attorney’s advice. As administrator of Terry’s estate, however, Guy possessed a duty to discover and inventory all her assets before he sought or agreed to the estate’s closing. Miss. Code Ann. § 91-7-93 (Rev. 2018). He also had a duty to determine the nature of Terry’s ownership interest in her real property. See Williford & Williford, Mississippi Probate and Administration of Estates § 8:3. Guy represented to the chancellor that Parcel 3 was the only real property Terry owned at the time of her death, the chancellor relied on his representation, and Guy benefitted when the chancellor closed the estate and he and his son received ownership of the parcel. We therefore find no merit to Guy’s claim now that his inconsistent positions were unintentional.

¶17. Based on the record and applicable caselaw, we find no abuse of discretion in the chancellor’s determination that all three requirements for judicial estoppel were met. We therefore find no error in the chancellor’s dismissal of Guy’s complaint under Rule 12(b)(6). Because we affirm the chancellor’s judgment on this ground, we decline to address Guy’s remaining assignment of error on appeal.

Chief Judge Barnes wrote an interesting dissent that we will look at tomorrow.

Crossroads Blues

January 27, 2020 § 5 Comments

Robert Johnson of Mississippi is widely credited as being one of the most influential blues guitarists ever. Eric Clapton, Keith Richards, and Jimi Hendrix, to name a few, idolized him and tried to imitate his technique. He died in Greenwood on August 16, 1938, at age 27, poisoned by another man with whose wife Johnson was romantically involved.

His estate was not opened until 1989, when his son, Claud, petitioned the court to be named executor. But Claud could not benefit from his father’s musical heritage because he had never been adjudicated Johnson’s son.

Claud retained the law firm of Kitchens & Ellis to represent him in an action to be declared Johnson’s son and heir, and in all subsequent legal matters Claud would have. They entered into a contingency fee contract that included an assignment of 40% of all revenue Johnson would receive, including royalties, commissions, profits, etc., from his father’s music. After Claud succeeded in being declared Johnson’s heir, the law firm received its 40% from Claud. Kitchens & Ellis later assigned its rights to the Kitchens Law Firm, P.A.

And then Claud died on June 30, 2015. His estate was opened, and the estate continued to receive revenue from the music of the late bluesman, but did not pay Kitchens its 40%. On October 20, 2016, Kitchens filed a motion asking the court to authorize and direct the executor to turn over the 40%, and to make an accounting. The executor responded that the claim was barred because Kitchens had not probated a claim. A special chancellor ruled that the claim was not barred, and ordered the executor to deliver the funds and to account. The estate appealed.

In Estate of Johnson v. The Kitchens Law Firm, P.A., decided by the COA on August 27, 2019, the court affirmed, holding that the claim did not have to be probated. Judge Corey Wilson wrote the unanimous opinion, Lawrence not participating:

¶13. Claud’s estate first contends that the chancery court should have dismissed Kitchens’s motion to authorize and direct executor because Kitchens’s claim is time-barred. Pursuant to section 91-7-151:

All claims against the estate of deceased persons, whether due or not, shall be registered, probated and allowed in the court in which the letters testamentary or of administration were granted within ninety (90) days after the first publication of notice to creditors to present their claim. Otherwise, the same shall be barred and a suit shall not be maintained thereon in any court, even though the existence of the claim may have been known to the executor or administrator.

(Emphasis added). Section 91-7-149 provides the requisite procedures for probating a claim against a decedent’s estate. Miss. Code Ann. § 91-7-149; In re Estate of Lingle, 822 So. 2d 320, 322 (¶12) (Miss. Ct. App. 2002).

¶14. It is undisputed that Kitchens did not register and probate any claim against Claud’s estate in accordance with the procedural requirements of section 91-7-149. It is also undisputed that Kitchens did not probate any claim against Claud’s estate within ninety days of the first publication of notice to creditors, which occurred on September 2, 2015. But Kitchens contends that it “was not required to probate a claim because the funds due [to] it, now and in the future, are not now, nor have they ever been, part of [Claud]’s estate.” We agree.

¶15. “Section 91-7-151 has no application to a suit for possession of property by virtue of ownership.” Maxwell v. Yuncker, 419 So. 2d 580, 583 (Miss. 1982). When Claud entered the contract in 1991, he agreed to

[s]et over and assign unto said firm of Kitchens & Ellis, causes of action or rights in the amount of forty percent (40%) of any and all sums of money or other benefits which they may recover or obtain for me by virtue of, or arising from, my biological relationship to the late Robert Johnson . . . .

(Emphasis added). “A valid assignment in Mississippi is a transfer of rights or property from one party (the ‘assignor’) to another (the ‘assignee’), in which the assignor intends to vest in the assignee a present right in the thing assigned.” 1 Donald Campbell, Jeffrey Jackson & Mary Miller, Encyclopedia of Mississippi Law § 7:1 (2018). Thus, pursuant to the contract, Kitchens is the rightful owner to the funds that it claims. In other words, the funds are not, and never were, part of Claud’s estate—they are merely being wrongfully withheld, contrary to the assignment, by the estate. Because the funds are not a part of Claud’s estate, Kitchens was not required to probate its claim. See Maxwell, 419 So. 2d at 583 (holding sections 91-7-149 and 91-7-151 have no application where appellant’s claim was not for a specific money demand due or to become due but rather was an inchoate and contingent claim involving the ownership of specific property). The special chancellor therefore did not err by declining to dismiss Kitchens’s claim as time-barred under section 9-71-151. This assignment of error lacks merit.

A parting thought: It costs nothing to probate a claim, even when you aren’t required to do so.

Power of the POA

November 25, 2019 § 1 Comment

It sometimes happens that a client comes bearing process with a complaint attached alleging that he has a POA (power of attorney) and is guilty of self-dealing. “But,” he explains, “look at the POA. It clearly says right here that I have ‘full authority to handle, in his exclusive discretion, all matters and things in which [the principal] may be interested, in either business or personal affairs.'” He looks at you almost confidently, but certainly hopefully.

That was an element of the litigation between the estate of Dorothea Kolf and her surviving husband, Peter. The couple had executed a pre-marital agreement that provided each would own and surrender any claim to the other’s assets that predated the marriage. Peter, however, acting under a broad-power POA, withdrew some money from Dorothea’s accounts after she became cognitively incapacitated. A chancellor ordered him to repay into the estate the funds he had not used expressly for her benefit, and Peter appealed.

In Kolf v. Authement, Ex Rel. Estate of Kolf, handed down October 22, 2019, the COA affirmed on the chancellor’s ruling that Peter had misused the POA. Here is what Judge Barnes had to say for the court on point:

¶12. Alternatively, Peter argues that he had authority under the general power of attorney (POA) to withdraw the IRA funds. As stated, Dorothea executed the POA on August 7, 2008, naming Peter as her attorney-in-fact for financial purposes. The POA granted Peter “full authority to handle, in his exclusive discretion, all matters and things [in] which [Dorothea] may be interested, either business or personal affairs.”

¶13. The issue before us on appeal is whether the chancery court erred in awarding the IRA funds to Dorothea’s estate. Because the funds were Dorothea’s separate property under the terms of the Agreement, thereby making them a future estate asset, any authority that Peter may or may not have had to withdraw those funds under the POA is irrelevant. Moreover, an agent’s authority under a POA “does not permit the attorney-in-fact to engage in undisclosed, self-dealing activities.” West v. Johnston (In re Estate of Johnson), 237 So. 3d 698, 707 (¶23) (Miss. 2017).

“It is fundamental law that an agent owes his principal absolute good faith and fidelity, and he cannot in the exercise of his authority as agent acquire property or interest therein rightfully belonging to his principal without full disclosure and free consent of his principal.” McKinney v. King, 498 So. 2d 387, 388 (Miss. 1986). If disputed, the attorney-in-fact’s actions must be shown to be within the principal’s intent when granting the power of attorney, in the best interests and for the benefit of the principal, and in accord with the duty of good faith owed by the attorney-in-fact to the principal. Any property or interest obtained in violation of the attorney-in-fact’s fiduciary duty “thereby is voidable by, and may be set aside by the principal or his estate.” Id. In re Estate of Johnson, 237 So. 2d at 707 (¶22).

There was substantial evidence that the transfer of the IRA funds was not done with Dorothea’s “free consent.”

Unsurprisingly, the court ruled that the duty of good faith and fair dealing trumps the powers of the POA, no matter how broad and comprehensive they might be. And that’s pretty much the result that you can expect in every similar case. You can tell your client that.

More than Known Creditors

August 5, 2019 § Leave a comment

MCA 93-7-145 is the statute that requires publication of notice to creditors in an estate matter. A prerequisite to publication is the filing of an affidavit by the fiduciary.

Most lawyers with whom I come into contact call that affidavit “The Affidavit of Known Creditors.”

But that is a misnomer, and a dangerously misleading one at that, because it is not at all an affidavit stating only the creditors who are known; the statute requires that the fiduciary must make “reasonably diligent efforts to identify persons having claims against the estate,” and make affidavit of those efforts.

In Estate of Petrick, 635 So. 2d 1389, (Miss. 1994), the Mississippi Supreme Court stated:

“From a reading of this statute it is clear that an administratrix has four responsibilities: (1) she must make reasonably diligent efforts to ascertain creditors having claims against the estate and mail them notice of the 90 day period within which to file a claim; (2) she must file an affidavit stating that she has complied with the first subsection; (3) she must publish in some newspaper in the county a notice to creditors explaining that they have 90 days within which to file claims against the estate; and (4) she must file proof of publication with the clerk of court.”

In Petrick the court affirmed a chancellor’s ruling allowing the untimely $6,220 claim of a medical firm whose status as a claimant should have been reasonably known to the fiduciary, but the fiduciary did not include the firm in her affidavit and did not send it notice.

Another flaw in the fiduciary’s actions was that she published notice to creditors first, and filed her affidavit a month after beginning publication. The court in Petrick stated that publication may be done only after the affidavit is filed.

A previous post on point is at this link.

 

The Burden to Rebut the Presumption of Undue Influence

May 22, 2019 § Leave a comment

Marquan Stover filed a contest to probate of his great aunt’s second codicil to her will, claiming that it was the product of undue influence. Following a hearing, the chancellor found no undue influence and dismissed his contest. Stover appealed, and the COA affirmed on May 8, 2018. He filed a petition for cert, which was granted.

In Stover v. Davis, handed down April 25, 2019, the MSSC reversed and remanded, holding that the chancellor had applied the wrong legal standard. Justice Beam wrote the opinion:

¶11. “The sole issue in a will contest is devisavit vel non, [Fn 3] or will or no will.” Trotter v. Trotter, 490 So. 2d 827, 833 (Miss. 1986). The proponent of the will has the burden of proof of the will’s validity, and this burden of proof stays with the proponent throughout the trial. Harris v. Sellers, 446 So. 2d 1012, 1014 (Miss. 1984). The proponent makes a prima facie case of validity when the will and record of probate are admitted into evidence. Id. At that point, the burden shifts to the contestant to produce evidence challenging the will’s validity. Clardy v. Nat’l Bank of Commerce of Miss., 555 So. 2d 64, 66 (Miss. 1989).

¶12. The contestant raises a presumption of undue influence by showing the existence of a confidential relationship between the testator and a beneficiary under the will, along with suspicious circumstances. Croft v. Alder, 237 Miss. 713, 723, 115 So. 2d 683, 686 (1959). Suspicious circumstances may include the testator’s mental infirmity or direct involvement of the beneficiary in the confidential relationship in preparing or executing the will. Id. at 686. When a presumption of undue influence arises, then the proponent of the will bears the burden to rebut the presumption with clear and convincing evidence that the will was not the result of undue influence. In re Estate of Dabney, 740 So. 2d 915, 921 (Miss. 1999) (citing Croft v. Alder, 237 Miss. 713, 115 So. 2d 683, 686 (1959)). To rebut the presumption, the proponent must show three things: “(a) good faith on the part of the beneficiary, (b) the testatrix’s full knowledge and deliberation of the consequences of her actions, and (c) the testatrix received the advice of a competent person disconnected from the beneficiary and devoted wholly to him.” Id. at 921 (citing Murray v. Laird, 446 So. 2d 575, 578 (Miss. 1984)).

[Fn 3] Devisavit vel non means “he (or she) devises or not.” Devisavit vel non, Black’s Law Dictionary (10th ed. 2014). “An issue directed from a chancery court to a court of law to determine the validity of a will that has been contested, as by an allegation of fraud or testamentary incapacity. Id.

¶13. As the Court of Appeals recognized, the chancellor made no findings on whether a confidential relationship had existed between Robinson and Davis or whether a presumption of undue influence arose. Stover, 2018 WL 2110017, at *24. Yet the Court of Appeals held that, even if a presumption of undue influence had arisen, Davis rebutted it, because clear and convincing evidence existed in the record to satisfy the three-prong test. Stover, 2018 WL 2110017, at *27. We disagree. The record shows that the chancellor found that Davis had made a prima facie case of the will’s validity and that Stover had not met his burden to show that the second codicil was the product of undue influence. The chancellor misstated the burden of proof as preponderance of the evidence when the burden for a presumption of undue influence is clear and convincing. See In re Estate of Dabney, 740 So. 2d at 921 (citing Croft, 115 So. 2d at 686). Further, the record does not show the burden-shifting scheme set forth above. If a presumption of undue influence had, in fact, arisen, then Stover did meet his burden, and Davis, the proponent of the will and codicils, bore the burden to rebut the presumption with clear and convincing evidence.

¶14. As the chancellor rightly found, Davis’s submission of the will and the record of probate and its receipt into evidence established a prima facie case of the will’s validity. But Stover’s proof raised a presumption of undue influence, because he showed that Davis was in a confidential relationship with Robinson when the second codicil was executed and that the second codicil had been executed under suspicious circumstances.

¶15. Because Davis was Robinson’s duly appointed conservator, a confidential relationship was established. We have held that “[a] conservator stands in the position of a trustee, has a fiduciary relationship with the ward and is charged with a duty of loyalty toward the ward.” Bryan v. Holzer, 589 So. 2d 648, 657 (Miss. 1991). While the existence of a conservatorship alone is not immediate grounds for undue influence, the courts should not take lightly the role, power, trust, and influence of the conservatorship relationship between the person or ward and his or her conservator. Wards deserve the most meticulous judicial scrutiny in situations such as this to ensure the ward’s protection. When a confidential relationship exists, coupled with suspicious circumstances, the proponent of the will bears the burden of rebutting the presumption by clear and convincing evidence.

¶16. Suspicious circumstances were shown by the undisputed evidence that Robinson suffered from dementia. A conservatorship had been established for Robinson in 2006, and Davis, who stepped into the role of conservator after Myers died, was directly involved in the preparation of the will. Davis testified that she discussed the will with Robinson. Davis reminded Robinson of the deaths of a named beneficiary and the executrix, and the changes made in the codicil were both to Davis’s benefit. Davis called Attorney Moss on her own cell phone to initiate the process of procuring the second codicil. Given that these facts were uncontested, the burden shifted to Davis to prove, by clear and convincing evidence, “(a) good faith on the part of the beneficiary, (b) the testatrix’s full knowledge and deliberation of the consequences of her actions, and (c) [that] the testatrix received the advice of a competent person disconnected from the beneficiary and devoted wholly to him.” In re Estate of Dabney, 740 So. 2d at 921(citing Murray, 446 So. 2d at 578).

¶17. Because the chancellor erroneously did not recognize that a presumption of undue influence had arisen, the chancellor made no findings of fact on the three-part test for determining whether Davis had rebutted the presumption by clear and convincing evidence. Instead, the chancellor found that Stover had not met his burden. But Stover had, in fact, met his burden of production, resulting in the burden’s shifting to Davis to rebut the presumption with clear and convincing evidence. Because the evidence was such that the chancellor reasonably could have found either that Davis had rebutted the presumption or that she had not, we reverse the decisions of both courts and remand to the chancery court for factfinding on whether Davis rebutted the presumption by clear and convincing evidence.

The Limits of In Terrorem

May 21, 2019 § 1 Comment

Back in 2014, the MSSC tacked on a good faith exception to in terrorem clauses in wills and trusts. The case was Parker v. Benoist, and you can read a post about it at this link.

Fast forward to 2019, and the in terrorem issue was once again before the appellate courts, this time the COA, and this time with a peculiar set of facts.

Joan Roosa, widow of Colonel Stuart Roosa, an astronaut on the Apollo 14 moon mission, executed her will in 2002. She followed with two codicils in 2004 and 2007. The 2002 will bequeathed her estate among all of her children and grand children. The 2007 codicil left everything to her daughter Rosemary. The 2002 will included an in terrorem clause.

The original will was admitted to probate, and shortly after Rosemary submitted the two codicils. The other children and grandchildren (led by Joan’s son Christopher) contested the validity of the second codicil charging that Rosemary had exercised undue influence. They also contended that Rosemary had triggered the forfeiture provision of the in terrorem clause.

A jury was empaneled to consider the issue of devisavit vel non as to the second codicil. It returned a verdict finding it not to be valid.

On the issue of forfeiture, the chancellor ruled that Rosemary had acted in good faith and denied the request that she be deemed to have forfeited her bequest under the will.

Christopher appealed on several issues, but for our purposes we will focus on the chancellor’s ruling on the forfeiture.

The COA affirmed in Estate of Roosa: Roosa v. Roosa, decided April 23, 2019. Judge McCarty wrote the opinion for the court:

¶8. The chancery court found that Rosemary should not forfeit her share of her mother’s estate due to attempting to probate the second codicil. Christopher argues that the forfeiture provision should be enforced against Rosemary because she did not act in good faith when submitting the second codicil for probate. In response, Rosemary argues that submitting a codicil for probate is not contesting the will, so the forfeiture provision is not triggered at all. Alternatively, Rosemary contends that the forfeiture provision is not applicable since she submitted the second codicil in good faith.

¶9. An in terrorem clause in a will acts to frighten a beneficiary that any benefit they might receive will be forfeited if they contest or otherwise dispute the validity of the will. See Taylor v. Rapp, 124 S.E.2d 271, 272 (Ga. 1962). Joan’s will contained just such a forfeiture provision. It read in relevant part:

If any beneficiary hereunder shall contest the probate or validity of this Will or any provision thereof, or shall institute or join in (except as a party defendant) any proceeding to contest the validity of this Will or to prevent any provision thereof from being carried out in accordance with its terms (regardless of whether or not such proceedings are instituted in good faith and with probable cause), than all benefits provided for such beneficiary are revoked and such benefits shall pass to the residuary beneficiaries of this Will (other than such beneficiary) in the proportion that the share of each such residuary beneficiary bears to the aggregate of the effective shares of the residuary.

¶10. The forfeiture clause explicitly states that “regardless” of whether a beneficiary starts proceedings “in good faith and with probable cause” that they will be forfeited from benefitting under the estate. During the life of the litigation, the Mississippi Supreme Court declared forfeiture provisions like this unenforceable as a matter of law. See Parker v. Benoist, 160 So. 3d 198, 205 (¶15) (Miss. 2015). The Court held that “[a] strict interpretation of no-contest provisions in wills would hamper courts’ goal of determining what is, once and for all, the will of the testator,” and that “[a] bona fide inquiry into the validity of the will should not be defeated by language contained in the will itself.” Id. at 206. As a result, if a will contained a forfeiture provision, it also had to have a requirement that it would only be enforced if it had a good faith exception. Id.

¶11. Rosemary’s will contained the exact same forfeiture provision that the Supreme Court held unenforceable in Parker. Id. at 203 (¶9). As a result, the chancery court found that “as a matter of law the [forfeiture] clause in this case is unenforceable because it fails to contain a good faith exception.” This does not delete the forfeiture provision but instead reforms it to include an exception for good faith actions by beneficiaries. Id. at 205-06 (¶¶12-15).

¶12. The first question we must resolve is whether the forfeiture clause even applies to Rosemary. Her argument on appeal is that it cannot be applied since she did not contest the will per se but instead only submitted the second codicil for probate. However, the plain language of Joan’s will captures more conduct than simply contesting the will. The forfeiture clause applies when any beneficiary tries to “prevent any provision [of the will] from being carried out in accordance with its terms . . . .” The second codicil Rosemary submitted to probate dramatically changed the amounts her siblings would take under their mother’s will (among other significant changes). Under the express language of the forfeiture provision in Joan’s will and the specific nature of the second codicil, we find that the forfeiture provision is applicable to Rosemary.

¶13. This does not end the inquiry, as we must determine whether Rosemary acted in good faith in submitting the second codicil for probate. In Parker, our Supreme Court noted that the evidence was sufficient for it to determine good faith and probable cause, rather than remand for the chancery court to conduct an inquiry. Id. at 206-07 (¶16). Likewise, we will determine if sufficient evidence supports Rosemary’s claim that she submitted the second codicil in good faith and based on probable cause. In the context of a will contest, “[p]robable cause exists when, at the time of instituting the proceeding, there was evidence that would lead a reasonable person, properly informed and advised, to conclude that there was a substantial likelihood that the challenge would be successful.” Id. at 206 (¶15) (quoting Restatement (Third) of Property: Wills and Other Donative Transfers § 8.5 cmt. c. (2003)). “The determination of good faith and probable cause should be inferred from the totality of the circumstances.” Id.

The court went on to analyze the facts and concluded that Rosemary had acted in good faith, affirming the chancellor.

This case is a reminder of two points: (1) that an in terrorem clause is enforceable if it includes a good faith provision; and (2) that if an in terrorem clause does not include good faith language the court will reform it to include a good-faith exception.

The Effect of Termination of Parental Rights on Wrongful Death Beneficiary Status

March 6, 2019 § Leave a comment

DeForest filed a petition in chancery court to have himself declared to be the sole wrongful death beneficiary of his father, Underhill, who had been killed in a trucking accident in Mississippi. DeForest’s petition was contested by Underhill’s brother, Alexander, who took the position that DeForest’s claim was defeated by the fact that Underhill’s parental rights to DeForest had been voluntarily terminated in Michigan in 1983 as part of an adoption action filed by Underhill’s ex-wife seeking to allow the child’s step-father to adopt him. The statute under which the TPR was made included this language:

” … an adopted child is no longer an heir at law of a parent whose rights have been terminated under this chapter … “

The chancellor rejected Alexander’s argument, ruling that Mississippi law governed, and that our law provides that TPR does not preclude his ststus as wrongful death beneficiary. The trial court relied on the case of Estate of Jones v. Howell, 687 So.2d 1171 (Miss. 1996). Alexander appealed.

The MSSC affirmed in Alexander v. DeForest, decided January 31, 2019. Citing Howell, Justice Coleman’s opinion upheld the chancellor’s ruling:

¶14. In Howell, the Court was faced with a similar scenario wherein Warren County Chancery Court held that the decedent’s natural son, who had been adopted by another man, was a wrongful death beneficiary. Howell, 687 So. 2d at 1173. The Court explained that it had

previously addressed the issues now before this Court in Alack v. Phelps, 230 So. 2d 789, 793 (Miss. 1970), and Warren v. Foster, 450 So. 2d 786 (Miss. 1984). In [both cases], this Court held that an adopted child could inherit from his natural parent or parents. Moreover, in Alack, this Court held than an adopted child could bring a wrongful death action for his natural father’s death.

Id. The decedent’s natural son, Samuel Howell, had been adopted by the natural mother’s new husband; the adoption had occurred in Louisiana. Id. at 1174. The Court summarized the appellant’s arguments as follows:

The Estate argues that when we read [Mississippi Code Annotated Section] 11–7–13 (Mississippi’s wrongful death statute) in pari materia with[Mississippi Code Annotated Section] 93–17–13 (Mississippi’s adoption decree statute), we must conclude that the legislature intended that Samuel Howell Clinton’s rights to bring a wrongful death action for his natural father’s death be terminated at the time of adoption. Further, the Estate argues that this Court is obligated under the Full Faith and Credit Clause, Article I, Section 4, of the United States Constitution to apply Louisiana’s adoption law to the case sub judice. Specifically, the Estate argues that because Samuel Clinton Howell was adopted in Louisiana, we must look to Louisiana law to determine whether or not an adopted child can inherit from his natural parent. Under Louisiana decisional law, the Estate contends, a child who has been given up for adoption cannot inherit from his natural parent or parents. See Simmons v. Brooks, 342 So. 2d 236 (La. App. 4th Cir. 1977).

Id. The Court then thoroughly addressed the issue and argument presented. Relevant to the instant case is the following:

When dealing with the issue of adopted children bringing wrongful death actions for the death(s) of their natural parent(s), this Court has looked to Mississippi case law which holds that an adopted child can inherit from his natural parent(s). See, e.g., Sledge v. Floyd, 139 Miss. 398, 104 So. 163 (1925). This Court, by analogy, has cited our law allowing adopted children to inherit from their natural parents and applied the inheritance rule to wrongful death situations and, thus, allowed an adopted child to bring a wrongful death action for the death of his or her natural parent. See, e.g., Alack. We also note that none of the statutes in question, i.e., Section 11–7–13 or Section 93–17–13, specifically prohibits an adopted child from bringing a wrongful death action for his natural parent’s death. In fact, Section 93–17–13 only goes so far as to take away the natural parent’s and sibling’s right to inherit from, and bring a wrongful death action for the death of, a child given up for adoption. McLemore [v. Gammon], 468 So. 2d [84, 84] (Miss. 1985). Section 93–17–13 does not expressly take away the adopted child’s rights to inherit from the natural parent or to bring a wrongful death action for the natural parent’s death.

Moreover, Section 11–7–13 does not distinguish between the types of children entitled to bring a wrongful death action for the death of a parent, i.e., natural or adoptive. The statute provides that the suit may be brought “in the name of a child for the death of a parent.” Miss. Code Ann. § 11–7–13 (1972). While Samuel Clinton Howell was not Jones’ legal child, he certainly was his biological and natural child. Mississippi’s wrongful death statute allows an illegitimate child to bring a wrongful death action for the death of his parent provided the child complies with Section 91–1–15 of the Mississippi Code of 1972. It would be illogical to conclude that the legislature would allow an
illegitimate child, who might have never had any interaction at all with his parent or have ever been recognized by the parent, to bring an action for that parent’s wrongful death, and yet conclude that the legislature would then prohibit a child who had lived with the natural parent and was later given up for adoption from bringing a wrongful death action for the natural parent’s death.

The Estate also argues that the Louisiana adoption of Samuel Clinton Howell took the form of a termination of parental rights as to Jones. The Estate offers Miss. Code Ann. § 93–15–109 for the proposition that the chancery court can terminate an adopted child’s right to inherit from his or her natural parents. The Estate’s reliance upon Section 93–15–109 is misplaced because the cited statute, although not factually applicable in this case, does not specifically divest an adopted child of his right to bring a wrongful death action for a natural parent’s death.

Id. at 1176-77. The Court has squarely addressed a nearly identical issue, and in that case held that the natural son was a wrongful death beneficiary, despite the fact that the state where the adoption and termination of parental rights occurred prohibited him being considered a wrongful death beneficiary.

 

Process to Determine Wrongful Death Beneficiaries

March 5, 2019 § Leave a comment

When you file an action to determine wrongful-death beneficiaries, which type of process is proper: MRCP 4 or 81?

Matthew DeForest filed a Petition for Determination of Heirs-at-Law and Wrongful Death Beneficiaries after his father died in a trucking accident. Joe Alexander, the father’s brother, filed a contest asserting several defenses, among them that the court did not have personal jurisdiction over him because the proper process was not used. The chancellor ruled for DeForest, finding that “Matthew Bryan DeForest is the sole and only heir-at-law of the decedent for the purposes of the wrongful death action.” Alexander appealed.

In Alexander v. DeForest, decided January 31, 2019, the MSSC affirmed. Justice Coleman wrote for the unanimous court (Waller not participating):

¶7. In his first issue, Alexander argues that DeForest’s petition should have been dismissed pursuant to Rule 12(b)(4) for lack of personal jurisdiction because process was insufficient. According to Alexander, he should have been served process consistent with Mississippi Rule of Civil Procedure 81(d)(1) as opposed to Mississippi Rule of Civil Procedure 4(b).

¶8. Alexander argues that the chancery court’s judgment is void because it never had personal jurisdiction over him due to DeForest’s failure to serve him with a Rule 81 summons. Alexander explains that “An action to determine heirship is governed by Rule 81(d)(1) for which a summons substantially conforming with Mississippi Rule of Civil Procedure Form 1(D) should issue to known and unknown respondents.”

¶9. DeForest caused Alexander to be personally served with a summons via certified mail. The summons stated that a response must be mailed or delivered within thirty days from the date of the delivery. However, the record also contains another summons. The second summons is a summons by publication addressed to “The Unknown Wrongful Death Heirs, Executors, Administrators, Devisees, Legatees, or Statutory Beneficiaries . . . of Jeff Underhill, Deceased, and Any and All Persons Claiming to be a Wrongful Death Beneficiary of Jeff Underhill, Deceased.” The body of the summons contained the following statement:

“The only other respondents other than you in this action are Jeanne Elizabeth Tyler, Joe Alexander, Sam Underhill, Tyler Alexander, and Luke Underhill.” Additionally, the summons required anyone claiming to be a wrongful death beneficiary “to appear and defend against the Petition filed by Matthew Bryan DeForest against you in this action 9:30 A.M. on the 21st day of October, 2016, . . . .” DeForest’s position is that, cumulatively, the personal summons and summons by publication gave Alexander sufficient notice as required by law.

¶10. We hold that in the instant case, the Rule 4 summons was sufficient, as the instant matter to determine wrongful death beneficiaries is not one of a determination of heirship as contemplated by Rule 81. In Long v. McKinney, 897 So. 2d 160, 175-76 (¶ 67) (Miss. 2004), we explained,

“Although there is no specific mandated procedure for the identification of wrongful death beneficiaries, a chancery court may make such determinations; those persons bringing the wrongful death action, together with their counsel, have a duty to identify the beneficiaries, and they should do so early in the proceedings.” Further, the Court has explained on several occasions that a “wrongful death action is not part of the estate of the deceased, and only those individuals listed in the wrongful death statute may bring this independent cause of action.” Pannell v. Guess, 671 So. 2d 1310, 1313 (Miss. 1996) (citing Partyka v. Yazoo Dev. Corp., 376 So. 2d 646, 650 (Miss. 1979)).

¶11. Though there is much terminology overlap and mirroring of language between a determination of heirs for the purpose of an estate and a determination of wrongful death beneficiaries, the only possible issue before the chancery court at the time was a determination of wrongful death beneficiaries, which is a different animal than a determination of heirship as governed by Mississippi Code Section 91-1-29. A determination of wrongful death beneficiaries does not require a Rule 81 summons; therefore, the Rule 4 summons DeForest caused to be served on Alexander was sufficient for the chancery court to obtain jurisdiction.

My thoughts:

  • Plenty of lawyers do not appreciate the difference between an action to determine heirs in an estate and an action to determine wrongful death beneficiaries that is outside an estate. The former is a R81(d)(1) matter, and the latter is a R4 matter. I have had to send lawyers back to the drafting table time after time because they mix up the two. And although there is some overlap between the laws of heirship and the law of wrongful-death beneficiaries, the two are actually different.
  • Before you go diving off into a chancery action to determine wrongful-death beneficiaries, the following is required reading: MCA §§ 91-1-1 and 3 (descent and distribution); MCA § 11-7-13 (wrongful death actions); UCCR 6.10 (petitions in chancery to compromise settlements); and Long v. McKinney, cited above. Only after you grasp all of that in combination should you file your petition.
  • In this case, DeForest made his job more difficult by casting his pleading as one to determine heirs and wrongful-death beneficiaries. It not only opened him to the defense of bad process, but probably caused some consternation to the chancellor who nonetheless plowed ahead and found DeForest to be “the sole and only heir-at-law of the decedent for purposes of the wrongful death action,” a correct, if confusedly worded,  conclusion no doubt dictated by DeForest’s confusing prayer for relief. DeForest should have filed two different pleadings, one for determination of heirship and one for determination of Wrongful death beneficiaries, with two different processes.

Alexander also argued that DeForest’s claim to be sole wrongful-death beneficiary was defeated by the fact that his father’s parental rights had been terminated by judgment of a Michigan court. We’ll explore that intriguing proposition in a later post.

Big Changes Proposed for Probate

January 7, 2019 § 2 Comments

Secretary of State Hoseman convened a group to study and propose revisions to our estate and other fiduciary laws. Here is the summary provided by his office generally outlining the proposed statutory changes:

Revisions to Title 91 of the Mississippi Code governing estates and trusts will update statutory language and processes to provide clarity and ease of use for Mississippians. New statutes will be incorporated recognizing nonprobate transfers, ancillary and foreign administration, abatement, disclaimer of property interests, and revocation of probate and nonprobate transfers following divorce.

• Mississippi Real Property Transfer on Death Act “Transfer on Death Deed”: Enact a new statute to provide for nonprobate transfers of real property at death.

Example: John prepares before his death a transfer on death deed leaving his home to his two children so that his heirs may avoid probating the estate for purposes of transferring ownership of the family home. John’s transfer on death deed must be recorded, is only effective after his death, and is revocable at any time before his death.

• The Uniform Estate Tax Apportionment Act of 2003: Repeal Sections 27-10-1 through 27-10-25, the Uniform Estate Apportionment Act, and replace with the updated 2003 Uniform Estate Tax Apportionment Act under Title 91. The version of Uniform Estate Tax Apportionment Act previously adopted in Mississippi was originally drafted in the 1960s. In the last 50 years or so, people are using a revocable trust as a substitute for will and are using other forms of ownership to transfer assets at death. The federal estate tax provisions have also been substantially revised. The current version of the Uniform Estate Tax Apportionment Act recognizes these changes and provides detailed provisions for the apportionment of estate taxes when a decedent’s will or revocable trust does not provide for apportionment of estate taxes.

Examples: John executed a revocable trust during his lifetime. The revocable trust includes all of the provisions for the disposition of John’s property and provisions for the apportionment of estate taxes, if any, to various property. John’s will provides that all of his probate property is to be distributed to his revocable trust after his death. Unlike the previous version of the Uniform Estate Tax Apportionment Act, the more recent version of the Act makes it clear that the apportionment of estate taxes under the terms of the revocable trust will be respected.

John died without a surviving spouse. John’s executor filed a federal estate tax return reflecting a $1,000,000 federal estate tax liability. John’s will did not have provisions stating which assets should be used to satisfy the federal estate tax liability. Fifty percent (50%) of the assets includible in the taxable estate were owned by John at his death (“Probate Assets”) and Fifty Percent (50%) passed outside of probate by beneficiary designation, rights of survivorship or were held in his revocable trust (“Nonprobate Assets”). Generally, under the Uniform Estate Tax Apportionment Act, $500,000 of the estate taxes will be apportioned ratably to the Probate Assets and $500,000 ratably to the Nonprobate Assets. The Uniform Estate Tax Apportionment Act has provisions for payment of the estate tax and the process for collecting the apportioned estate taxes from the persons receiving the Nonprobate Assets.

• Affidavit of Successor: Amend Section 91-7-322, commonly referred to as the Small Estate Affidavit, to clarify the definition of successor and to increase the value of the probate estate to $100,000. This statute allows the transfer of personal property without the necessity of probate when the decedent’s probate estate is $100,000 or less.

Example: John dies leaving an estate, not including real estate or exempt property, which totals $60,000. Thirty days after John’s death, his spouse, Jane, would be able to present an affidavit to anyone possessing John’s personal property or owing a debt to him and have the property or payment of a debt transferred to Jane without the necessity of a probate proceeding.

• Fiduciary Transfer of Negotiable Paper: Amend Section 91-7-255 to permit a fiduciary to negotiate paper belonging to the estate without court approval and to update the standard of care applicable to the fiduciary. Often a fiduciary may need to enter into a transaction quickly to prevent a decline in value of stocks, bonds and other investments or to diversify investments when investments are too concentrated in a single investment.

Example: John’s son, Jim, becomes the court-appointed executor. Through his appointment Jim is granted the ability to trade or sell stocks, transfer any notes, convert certificates deposit and make other financial decisions necessary for the preservation of the probate estate. Jim is held to the same standard of care applicable to a trustee.

• Property Not to be Removed from State: Repeal Section 91-7-257 as this Section is no longer applicable. Often a will of a Mississippi resident designates a child or children living in another state as executor. In order to preserve or protect assets belonging to an estate, such as jewelry, silver, car, personal effects and other items of value from the decedent’s personal residence, an executor may need to remove the property for safekeeping during the administration of the estate.

• Foreign Personal Representatives and Ancillary Administration: Repeal Section 91-7-259, Foreign Fiduciaries, Lawsuits and Debts, and enact Foreign Personal Representatives and Ancillary Administration to provide a clear process for foreign personal representatives and ancillary administration. This amendment will bring Mississippi current with every other State in the nation.

Example: John is a resident of Alabama and dies in Alabama; however, John owns property in Mississippi. Ancillary administration law provides a clear process for John’s executor of his Alabama estate to collect and distribute the Mississippi property since he has already been appointed in another jurisdiction’s court of law. John’s executor will file in Mississippi the admitted will and his letters testamentary or letters of administration to begin the ancillary administration in Mississippi.

• Abatement: Enact a new statute to provide a statutory order of abatement when devises and bequests of the decedent must be used in order to settle the decedent’s debts, and no order has been provided in the will. Sections 91-7-91, 91-7-191, 91-7-195, 91-7-199, 91-7-261, and 91-7-271 will be amended to conform to the new enactment.

Example 1: John dies with a will that leaves his hunting land worth $100,000 to Jim and $100,000 cash to Jane. The residue of his estate ($50,000) is left to Jim and Jane equally. A creditor has a claim for $150,000. Unless John’s will provides otherwise, under current law, Jim gets the $100,000 hunting land, and Jane receives nothing. There is no residue to divide between Jane and Jim. Under the proposed bill, the result is the same, because Jane’s general bequest abates prior to Jim’s specific devise.

Example 2: John dies with a will that leaves his home worth $100,000 to his daughter, Jane; his hunting land worth $50,000 to his son, Jim; $5,000 to each of his two nieces; and his remaining property worth $40,000 equally to Jane and Jim. A creditor has a claim for $50,000. Unless John’s will provides otherwise, under current law, Jane gets the $100,000 home, Jim gets the $50,000 hunting land, and the nieces receive nothing. There is no residue to divide between Jane and Jim. Under the proposed bill, the result is the same because residuary and general legacies abate before specific bequests and devises.

Example 3: John dies with a will that leaves his hunting land worth $100,000 to Jim and his stock in his business worth $100,000 to Jane. The residue of his estate ($100,000) is left to Jim and Jane equally. A creditor has a claim for $150,000. Unless John’s will provides otherwise, under current law, Jim gets the $100,000 hunting land, and Jane receives $50,000. There is no residue to divide between Jane and Jim. Under the proposed bill, both Jim’s and Jane’s specific legacy would abate equally without regard to the distinction between real estate and personal property, so they would both receive $75,000.00.

• Creditor Rights With Respect to Beneficial Interests in Trusts: Repeal the Family Trust Preservation Act (Sections 91-9-501 through 91-9-511) and enact Article 5 of the Uniform Trust Code so that the language and defined terms are the same as currently provided for in the Mississippi Trust Code. Some specific new issues are addressed as follows:

Example: John sets up a revocable trust. Under Article 5 of the Uniform Trust Code, John’s assets in the revocable trust would be subject to the claims of creditors.

Example: Jane sets up a life insurance trust on her life for her son with withdrawal rights. Jane’s payments to the trust are not subject to her son’s creditors unless the son decides to withdraw the money and compromise the life insurance policy. The fact that the son does not contribute to the trust does not mean it’s self-settled.

• Muniment of Title: Amend Section 91-5-35 to allow a will to be admitted to probate as a muniment of title by filing a signed and sworn petition signed by either the personal representative or the spouse and beneficiaries of real property and to increase the value of the probate estate to $100,000. This statute allows the transfer of real property without the necessity of probate when the decedent’s probate estate is $100,000 or less.

Example: Jane dies leaving a will devising real property located in Mississippi to her son, Jim. If Jane’s estate, not including real estate or exempt property, totals $100,000 or less, the transfer of property is the only reason the will would need to be probated, and all Jane’s debts have been satisfied, Jim may file a sworn petition in chancery court asking the court to recognize the will as valid solely to transfer the real property without
the necessity of probate.

• Vouchers, 3 Appraisers, and Inventory: Remove requirements regarding vouchers and an appointment of three appraisers when conducting an inventory. Provide that an inventory may not be required if waived in the will. Amend Sections 91-7-93, 91-7-95, 91-7-109, 91-7-117, 91-7-135, 91-7-141, 91-7-277, 91-7-291, and 91-7-297. Repeals 91- 7-111, 91-7-113, 91-7-115, 91-7-137, 91-7-139, 91-7-279.

• Uniform Disclaimer of Property Interest Act: Repeal Sections 89-21-1 through 89-21-17) the prior version of the Uniform Disclaimer of Property Interests Act adopted in Mississippi in 1994 and replace with the current version as last revised or amended in 2010. The more recent version of the Uniform Disclaimer of Property Interests Act addresses not only disclaimers of property but also disclaimers of powers over property and disclaimers of powers held in a fiduciary capacity. It also addresses different types of interests in property, including interests in jointly-held property. The provisions of the more recent version of the Uniform Disclaimer of Property Interests Act provide much more detail on the form of the disclaimer, delivery of the disclaimer and the effect of the disclaimer.

• Example: In John’s will, John designates his brother, Bob, as executor of his estate and trustee of a trust for his surviving spouse. The terms of the testamentary trust provide that John’s wife is entitled to all of the income of the trust during her lifetime. Bob is also given the power, in his discretion, to invade principal for the benefit of the surviving spouse and John’s descendants. The power to make distributions to the descendants
would prevent the trust from qualifying for the federal estate tax marital deduction. In the interest of all of the beneficiaries of the trust and to qualify the trust for the federal estate tax marital deduction, Bob can disclaim the power to make discretionary distributions to John’s descendants during the lifetime of John’s surviving spouse.

• Revocation by Divorce: Enact new statute to provide for automatic revocation of probate and nonprobate transfers upon divorce.

Example: John provided for his wife, Jane, in his will. John also named Jane as the beneficiary of his IRA and life insurance policies. John and Jane divorce, but John forgets to remove Jane from his IRA and life insurance policies. Under this law, all provisions for a former spouse in probate and nonprobate transfers, like a will, trust, IRA, insurance, payable on death account, etc. will be automatically revoked.

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