148 Chapter 6 CONSTRUING WILLS • Softening doctrines: In addition, doctrines that soften the impact of ademption have arisen: (1) if the testator is owed an outstanding balance as a result of the transfer of the specific gift, the outstanding balance goes to the beneficiary; (2) if the specific gift was transferred while a conservator or durable power of attorney agent was acting for the testator, the beneficiary is entitled to the monetary equivalent of the net sale price. • Satisfaction: At common law, if a testator makes an inter vivos gift to his or her child, and the child is also a beneficiary in the testator's will, a rebuttable presumption arises that the inter vivos gift counts against the child's testamentary gift. Under the modern trend/UPC, if a testator makes an inter vivos gift to anyone who is also a beneficiary under his or her will, the gift does not count against the beneficiary's testamentary gift unless a writing evidences such an intent. • Exoneration of liens: At common law, if a specific gift is burdened with debt (a mortgage or lien), absent contrary intent expressed in the will, it is presumed that the beneficiary of the specific gift is entitled to have the debt completely paid off (out of the residuary clause) so that the beneficiary takes the gift free and clear of any debt. Under the modern trend, the beneficiary takes subject to the debt absent an express clause directing that the debt is to be satisfied before the gift is made. • Abatement: If at time of death the testator has made more gifts than he or she has assets, the doctrine of abatement states that residuary gift should be reduced first, general gifts second, and specific gifts last. I. ADMISSIBILITY OF EXTRINSIC EVIDENCE: GENERAL RULE A. Scope of chapter: The chapter is titled Construing Wills, and it focuses on wills. The modern trend, however, applies the will construction doctrines examined in this chapter to nonprobate instruments as well, particularly trusts and contracts with payable-on-death (P.O.D.) clauses. If your jurisdiction adopts the modern trend, remember that the scope of the chapter is not just the construction of wills, but rather the scope is the construction of wills, trusts, and other testamentary instruments. B. Admissibility—validity vs. construction: The key to analyzing whether extrinsic evidence should be admitted is to ask why the extrinsic evidence is being offered. If it is being offered to help determine the validity of a will (whether it was properly executed, whether the decedent had the requisite testamentary capacity, whether the decedent suffered from a defect in capacity, whether the will was properly revoked, and so on), the extrinsic evidence is admissible. If, how ever, the extrinsic evidence is being offered to help construe an admittedly valid will, the courts are reluctant to admit such evidence absent an ambiguity. Example: In Fleming v. Morrison, 72 N.E. 499 (Mass. 1904), Francis Butterfield properly executed a document that purported to be his will, leaving all of his property to Mary Fleming. At the time Francis executed the document, he told his attorney that the document was a "fake" made to induce Ms. Fleming to sleep with him. Although the document was clear on its face, the court admitted the offered extrinsic evidence because it went to the validity of the will—that Francis never intended the document to be his will and thus the document lacked testamentary intent. 150 Chapter 6 CONSTRUING WILLS 2. Extrinsic evidence: At common law, if an ambiguity is a patent ambiguity, extrinsic evidence is not admissible to help construe the ambiguity. 3. Latent ambiguity: A latent ambiguity is an ambiguity that is not apparent from the face of the will. Recourse to circumstances outside of the will is necessary to realize that there is an ambiguity. Often the latent ambiguity does not become apparent until the court attempts to give effect to the decedent's will and to determine who is to take what. 4. Extrinsic evidence: The very nature of a latent ambiguity is such that extrinsic evidence is necessary to establish the ambiguity. At common law, the courts admit extrinsic evidence to both establish and to help construe a latent ambiguity. 5. Construing vs. rewriting: Although a court takes extrinsic evidence to establish and help construe a latent ambiguity, as a general rule courts do not add words to a will or "rewrite" the will. The courts draw a subtle but very important distinction between construing wills and rewriting wills. As long as the extrinsic evidence clarifies the express language in the will, the extrinsic evidence is admissible and the court uses it to help it construe the ambiguity in the will. If, however, the extrinsic evidence is inconsistent with the language in the will or requires the court to add words to the will or rewrite the will, the court does not admit the extrinsic evidence. If the ambiguity cannot be resolved, the gift fails. 6. Latent ambiguity doctrines: A number of latent ambiguity scenarios arose with such frequency that specific ambiguity doctrines were developed to deal with them. a. Equivocation: An equivocation is where the language in the will fits more than one object or person equally well. The court takes extrinsic evidence to determine which of the objects or people was the intended object or person. Example: Professor's will provides as follows: "I leave $1,000 to my favorite research assistant, Mr. Brown." During the course of his teaching career, the professor had two research assistants named Mr. Brown. The court will take extrinsic evidence to determine which Mr. Brown was the intended beneficiary. Resolving which Mr. Brown is the appro-priate recipient does not require the court to add any words to the will, only to construe the ambiguous identification that is express in the will. b. Misdescription: Misdescription arises where the description of an object or person in the will appears fine on the face of the will, but when the court goes to apply it, no object or person matches the exact description, but one exists that almost matches the description. The classic example of a misdescription is a typographical error when numbers or names get inverted. i. Mechanics: Consistent with the courts' general rule that they do not rewrite wills, courts take extrinsic evidence to establish the misdescription and to determine which words in the will to strike, but courts do not insert any words to correct the description. The court strikes the misdescription and then looks to see if the remaining words adequately describe the object or person so that the clause in the will can be given effect. ii. Example: The decedent's will reads, "I give my house at 432 Tuxedo Blvd. to my cousin Lisa." The decedent does not own the house at 432 Tuxedo; she owns the house at 234 Tuxedo Blvd. Applying the misdescription doctrine, the court takes the extrinsic 152 Chapter 6 CONSTRUING WILLS believe the effect of adopting the reformation doctrine will be any different. Moreover, by requiring clear and convincing evidence of both the mistake and its effect upon the testator's intent, the high threshold should help to control any potential increase in the number of will contests. 5. Example: In Arnheiter v. Arnheiter, 125 A.2d 914 (N.J. Super. 1956), the testatrix's will directed her executor to sell her interest in "304 Harrison Avenue" and to use the proceeds to establish trusts for her nieces. But the testatrix did not own any interest in 304 Harrison Avenue either at the time the will was executed or at her death. At the time she executed the will and at her death, she owned a one-half interest in 317 Harrison Avenue. The court applied the mis-description doctrine, admitting extrinsic evidence to establish the misdescription, striking the misdescription, and then construing the ambiguity as referring to the only property on Harrison Avenue in which she had an interest—317 Harrison Avenue. 6. Scrivener's error doctrine: Where there is clear and convincing evidence that there was a scrivener's error, and clear and convincing evidence of its effect upon the testator's intent, extrinsic evidence is admissible to establish and correct the mistake. The doctrine of scrivener's error is a new doctrine that was adopted for the first time in 1998 in the Erickson case. a. Example: In Erickson v. Erickson, 716 A.2d 92 (Conn. 1998), the testator executed a will leaving the residue of his estate to Dorothy, and two days later he married her. Under the state's laws, however, if after making a will a testator gets married, the marriage automa tically revokes the will unless the will expressly provides for the marriage. The testator died without changing his will, and his children from his first marriage invoked the statute to void the will, thereby taking a share of his estate through intestacy. Dorothy, the testator's wife, offered extrinsic evidence to establish the attorneys erred in having the will executed two days before the marriage and not expressly acknowledging the impending wedding in the will. The testator's children opposed admission of the evidence on the grounds that there was no ambiguity in the will. The court adopted the scrivener's error doctrine, ruling that if there is clear and convincing evidence of the scrivener's error and clear and convincing evidence of its effect upon the testator's intent, the evidence should be admitted. b. Scope: The Erickson case arguably raises more questions about the scope of the doctrine than it answers. Is the case an aberration or the wave of the future? Is the doctrine limited to cases involving the validity of the instrument, or does it also apply to construction cases? Is the doctrine limited to situations where it can be applied without rewriting the will, or will it open the doors to courts rewriting wills to correct scrivener's error? Will the doctrine be applied only to instruments that were validly executed but are invalid for other reasons, or will it also be applied to wills that were not validly executed because of the scrivener's error? Will the doctrine be limited to situations where the scrivener is an attorney, or will it apply regardless of who the scrivener is (for example, the writer of a holographic will)? 7. Other examples of reformation: Although the cases are fairly isolated, a handful of cases have ignored the traditional rule that courts do not correct mistakes and have corrected drafting mistakes by attorneys. Most have done so simply based on the equities of the case and the evidence of the mistake, without articulating a broad doctrine to explain or justify their actions. An exception is the doctrine of probable intent adopted by New Jersey. Probable intent: The doctrine of probable intent provides that if an unforeseen change in circumstances occurs after a will is executed that is not provided for in the will, and the 154 Chapter 6 CONSTRUING WILLS the gift may violate the Rule against Perpetuities. Whatever the reason, if a gift fails and it is not "saved," it falls in a cascading scheme. 1. Specific gifts: If a specific gift fails, it falls to the residuary clause, if there is one, or otherwise to intestacy. 2. General gifts: If a general gift fails, it falls to the residuary clause, if there is one, or otherwise to intestacy. 3. Residuary gift: If a residuary gift fails completely, it falls to intestacy. 4. Part of residuary gift: If there are multiple takers in the residuary clause, and the gift fails as to one or more of them but not as to all of them, the jurisdictions are split as to what happens to the part of the residuary clause that fails. a. Common law: Under the "no residue of a residue" rule, if part of the residuary clause failed, that part falls to intestacy. Rationale: The common law visualizes the residuary clause as a safety net. If a specific gift or general gift fails, it falls, and the residuary clause is there to catch it. If the residuary clause fails, however, there is no safety net below the residue; it falls to intestacy. If only part of the residuary clause fails, there is still no safety net below it. If part of the residuary fails, that part falls to intestacy. b. Example: In Estate of Russell, 444 P.2d 353 (Cal. 1968), the testator's valid holographic will provided in pertinent part as follows: "I leave everything I own Real & Personal to Chester H. Quinn & Roxy Russell." The testator's heirs offered extrinsic evidence to prove that Roxy Russell was a dog. The court ruled that the fact that Roxy Russell was a dog was a latent ambiguity, and extrinsic evidence was admissible to establish that fact. Dogs, how ever, are not eligible beneficiaries, so the gift to Roxy failed. The gift to Roxy was in the residuary clause. The court applied the "no residue of a residue" rule and held that Roxy's half fell to intestacy to the testator's heirs. Court's treatment of admissibility of extrinsic evidence: Many would argue that the court's treatment of the admissibility of extrinsic evidence constitutes the majority modem trend approach. The court repudiated the plain meaning rule and the patent-latent distinction and ruled that extrinsic evidence is admissible to help construe a will anytime there is an ambiguity. An ambiguity is any express language in a will that is reasonably susceptible to two or more interpretations. Just because an ambiguity exists in the will, not all extrinsic evidence is admissible. Only extrinsic evidence that is consistent with one of the possible reasonable interpretations of the ambiguity is admissible. The court held that the express words of the will were not reasonably susceptible to the interpretation that Chester's extrin-sic evidence attempted to put on them and that the extrinsic evidence in question should not have been admitted. c. Modern trend/UPC approach: The modern trend reasons that if the testator included a residuary clause, the testator's intent was for all of the testator's property to pass via the will and for nothing to pass through intestacy. As long as any part of the residuary clause is valid, that part catches whichever part of the residuary clause fails. Rule statement: If part of the residuary clause fails, the other part catches it. The part that fails is distributed among the other beneficiaries in the residuary clause. UPC §2-604(b). 156 Chapter 6 CONSTRUING WILLS 5. Contrary intent: The anti-lapse doctrine is based on presumed intent. If the beneficiary is related closely enough to the testator and is survived by issue, the testator is presumed to have preferred that the gift go to the issue of the predeceased beneficiary rather than fail. This presumption is a rebuttable presumption, but the contrary intent must be expressed in the will under most anti-lapse statutes. a. Low threshold: Most courts and/or statutes have created a very low threshold for what constitutes an express contrary intent. The general rule is that (1) any express words of survival or (2) any express gift-over in the will to another beneficiary in the event of the first beneficiary's death constitutes a sufficient "express contrary intent" to bar application of the anti-lapse doctrine. b. Criticism: Increasingly wills are boilerplate documents. The boilerplate language typically includes an express survival requirement: "[T]o, if he/she survives me." If the express survival requirement is simply part of the drafting lawyer's form will, it arguably should not be sufficient to bar anti-lapse. The testator did not expressly request the language, and even if the testator read the will before executing it, the average testator has no idea that the express survival requirement has the effect of knocking out the anti-lapse doctrine. c. UPC: The 1990 version of the UPC agrees with the criticism of the general rule and provides that mere words of survival ("if he survives me" or "my surviving issue"), without more, are not sufficient to constitute an express contrary intent barring application of anti-lapse. UPC §2-603(b)(3) (1990). Criticism: The 1990 version of the UPC has been heavily criticized by commentators and practicing attorneys alike for imposing the UPC's presumptions as to what an individual would want over the express words of the testator's own will, thereby exposing practicing attorneys to an increased potential for malpractice claims when drafting such clauses. d. Example: In Allen v. Talley, 949 S.W.2d 59 (Tex. App. 1997), the testator devised all of her property "to my living brothers and sisters, John Allen, Clause Allen, Lewis Allen, Lera Talley, and Juanita Jordan, to share and share alike,..." John, Lewis, and Juanita prede ceased the testator, each survived by issue who survived the testator. The court held that the use of the word living constituted an express contrary intent barring application of anti-lapse. 6. Scope: The traditional and still majority approach applies the lapse and anti-lapse doctrines to wills only. Under the modern trend, however, a few states have statutes that apply the doctrines to most of the will substitutes—trusts, insurance policies, and contracts with payable-on-death clauses generally, but not joint tenancies. 7. Spouses: The general rule (and UPC approach) is that anti-lapse does not apply to spouses. a. Rationale: One possible reason spouses are excluded is that although the norm is for the issue of the predeceased spouse to also be the issue of the testator, this is not always the case. Worst case scenario: The norm is for the gift to a spouse to be the residuary clause. If the spouse predeceases, the gift lapses and fails. If a residuary clause fails, the gift falls to intestacy where the testator's issue take. On the other hand, if anti-lapse applies to spouses and the spouse predeceases, the spouse's issue take the residuary gift. Where all of the issue are the issue of both spouses, the ultimate takers are the same regardless of whether anti-lapse applies. Where, however, the predeceased spouse has issue who are not issue of the 158 Chapter 6 CONSTRUING WILLS a. Description of beneficiaries: Typically a gift to multiple beneficiaries refers to them either collectively (as a group) or individually by name. Where the reference is to the beneficiaries collectively, that argues in favor of finding that the testator intended the gift to be to a class gift. Where the testator identifies each of the beneficiaries by name, that argues against finding that the testator intended the gift to be a class gift. b. Description of gift: Typically a gift to multiple beneficiaries describes the gift either in the aggregate or in separate shares. Where the gift is described in the aggregate, that argues in favor of finding that the testator intended the gift to be a class gift. Where the gift is described in distinct shares, that argues against the finding that the testator intended the gift to be a class gift. c. Common characteristic: Intrinsic to the notion of a class gift is that there is something special about those individuals that separates them from other individuals—that they share a common characteristic that distinguishes them and separates them from everyone else. If they all share a common characteristic, that argues in favor of finding that the testator intended the gift to be a class gift. If there is no common characteristic, that argues against finding that the testator intended the gift to be a class gift. Prevalence: Even where there is a common characteristic, if there are others who share the same common characteristic and they are not included in the gift, some courts have con-cluded that their exclusion from the gift cuts against a finding that the testator intended the gift to be a class gift. d. Overall testamentary scheme: This factor asks whether, in light of everything else the testator tried to do with his or her property, it makes more sense to apply a right of survivor ship to the gift (that is, to find that the gift is a class gift). This factor is extremely fact sensitive. The court has to take the totality of the testator's testamentary scheme into consideration. Sometimes this factor sheds no insight into the testator's possible intent with respect to the specific gift in question. But two aspects of the testator's estate plan should be examined in particular under this factor. i. Express right of survivorship: A number of courts have held that if there is a gift in the will to multiple individuals that has an express right of survivorship in the gift, the failure to include an express right of survivorship in another gift to multiple individuals indicates that the testator did not intend for the latter gift to be a class gift. The counterargument, however, is that the testator thought it so obvious that the latter gift was a class gift that he or she thought there was no need to include an express right of survivorship. ii. Alternative takers: It is always important to determine who would take the failed gift if it were not a class gift. Once that is determined, the courts analyze whether there is anything about the testator's overall testamentary scheme that indicates that the testator would not want that person to take the property in question. If so, that argues in favor of finding that the testator intended the gift to be a class gift. 3. Factors, not requirements: The four factors the courts focus on are only factors. All four do not have to be satisfied for the court to conclude that the testator intended the gift to be a class gift. The more factors that cut in favor of finding that the testator intended a class gift, the better. But in the end, it is a question of testator's intent, and the factors are relevant only to the extent 160 Chapter 6 CONSTRUING WILLS to an individual and a class separately. The Restatement of Property (1940) says the opposite: The gift is presumed to be a single class composed of the individual and the subclass. Go figure. 7. Anti-lapse and class gifts: Both anti-lapse and the class gift doctrine can be applied to save a lapsed gift to a class member, but the doctrines save the gift in favor of different takers. With anti-lapse, the saved gift goes to the issue of the predeceased beneficiary. With the class gift doctrine, the saved gift goes to the other members of the class. The overwhelming majority of states and the UPC apply anti-lapse first to class gifts. UPC §2-605 (1969). If anti-lapse cannot save the gift, then apply the class gift doctrine. Exception for void gifts: A number of states do not apply anti-lapse to class gifts where a member of the class is dead at the time the will is executed (some apply the exception only if the testator also knows the party is dead when the will is executed). ffl. CHANGES IN TESTATOR'S PROPERTY A. Introduction: A will is executed inter vivos but does not take effect until the testator dies. In between, changes in the testator's property can create a number of construction issues. Most of the doctrines that have developed to deal with the more common scenarios turn on the type of gift involved. 1. Characterization of gift: A testator can make three basic types of gifts: a specific gift, a general gift, or a residuary gift. Which type of gift a devise is, ultimately, is a question of testator's intent. The issue is often very fact sensitive and open to debate. Nevertheless, there are fairly well-accepted definitions for the different types of gifts that reduce the debate over the characterization of most gifts. 2. Specific gifts: A specific gift is a gift where the testator has a specific item in mind when he or she makes the gift, typically an item that he or she currently owns. The testator intends for that specific item, and arguably only that specific item, to satisfy the gift. Almost invariably the gift is modified by the word my. Example: If the will says, "I give my car to Alice," the gift is construed as a specific gift of the car that the testator owned when he or she executed the will. 3. General gifts: A general gift is a gift of a general pecuniary value that is satisfied by using any item that fits the description of the gift. a. Example: The classic example of a general gift is a gift of money. If the will says, "I give $ 1,000 to Bill," the gift is construed as a general gift. The testator is making a pecuniary gift of $ 1,000. Any $ 1,000 will do—no specific bills were intended. A general gift is measured by any means the testator selects. For example, if the will says, "I give a 1995 Saturn GLS to Cindy," that gift would probably be construed as a general gift. If the testator owns a 1995 Saturn GLS when he or she dies, that car is used to satisfy the gift. If the testator does not have an item that matches a general gift in his or her estate at the time of his or her death, the executor has a legal duty to purchase an item that matches the general gift and give it to the beneficiary. b. Demonstrative gifts: Demonstrative gifts are general gifts from a specific source, for example, if the wills says, "I give Dave $1,000 from my checking account at Wagon Wheel Bank." The gift starts out looking like a general gift ($1,000), but then it looks 162 Chapter 6 CONSTRUING WILLS court to consider extrinsic evidence as to the decedent's intent when she sold the apartment building. Pursuant to the identity approach, the court refused to consider the extrinsic evidence. Wasserman took nothing. Will substitutes: As the Wasserman case shows, the modern trend is for courts to apply ademption to the will substitutes, particularly inter vivos revocable trusts. C. Avoidance: Because ademption is such a harsh doctrine, courts have developed a number of avoidance doctrines (varying from jurisdiction to jurisdiction) to justify not applying ademption where one might think it would otherwise apply. 1. Incomplete disposal: If any part of the specific gift remains in the testator's estate when the testator dies, first and foremost the beneficiary is entitled to receive whatever is left of the specific gift. 2. Avoidance doctrines: There are three principal avoidance doctrines. a. Characterize gift as general, not specific: The ademption doctrine applies only to specific gifts. Where the wording of a gift is ambiguous, if the beneficiary can convince the court that the gift is a general gift, the executor has a legal duty to go out and acquire the item to satisfy the gift, thereby avoiding ademption. b. Change in form, not substance: The "change in form, not substance" doctrine provides that if the item that is the subject of the specific gift is in the estate but has suffered a change that goes to its form, but not its substance, the court should give the beneficiary the item. This doctrine gives some flexibility to the ademption doctrine. If the change is not that significant, ademption should not apply because the item arguably is still in the estate. Moreover, where the change is merely one in form, not substance, the testator would not have thought it necessary to revise his or her will because he or she would have assumed that the "new" item was still the same old item subject to the specific gift. i. Example: Testatrix's will provides that she gives her "checking account at Megabank to Alice." Thereafter, testatrix grows tired of the endless fees at Megabank and moves the checking account to Wagon Wheel Bank where she gets truly free checking. When testatrix dies, Alice should take the checking account at Wagon Wheel Bank because moving the checking account from one bank to another is merely a change in form, not substance. ii. Example: Testatrix's will provides that she gives her "checking account at Megabank to Alice." Thereafter, testatrix closes the checking account and puts all the funds into a certificate of deposit to get a better return on her money. If testatrix were to die without changing her will, most courts would hold that the gift is adeemed—the change is one of substance, not form. c. Construe at time of death: The general rule is that a will should be construed relative to the circumstances surrounding the testator at time of execution. If testator's will says, "I give my car to Alice," the gift is construed to be a specific gift of the car that testator owned at the time he or she executed the will. If testator sold the car and purchased a new car, under a strict application of the ademption doctrine, the specific gift is adeemed. If, however, the beneficiary can persuade the court to construe the gift at time of death, the beneficiary would take the car that the testator owned at time of death. 164 Chapter 6 CONSTRUING WILLS change when they state that the new version of the UPC creates a "mild presumption" against ademption. 1. Replacement property exception: The UPC expressly provides that where a testator owns property at death that was acquired to replace property that was a specific gift in his or her will, the beneficiary of the specific gift gets the replacement property. UPC §2-606(a)(5). 2. Outstanding balance doctrine: The UPC expressly adopts the outstanding balance doctrine. Whether the property is transferred voluntarily or involuntarily, if the testator is owed money at time of death as a result of the transfer of the property subject to the specific gift, the outstanding balance is given to the beneficiary of the specific gift. UPC §2-606(a)(l)-(3). 3. Testator's intent approach: If neither the replacement property doctrine nor the outstand ing balance doctrine apply, the UPC provides that the beneficiary of the specific gift is entitled to money equal to the value of the specifically devised property as of the date of its disposition if the beneficiary can establish (a) ademption would be inconsistent with the testator's plan of distribution, or (b) that the testator did not intend for ademption to apply. UPC §2-605(a)(6). 4. Conservatorship exception: The UPC also adopts the modern trend exception that if the property subject to the specific gift was transferred during conservatorship or by an agent acting under a durable power of attorney for an incapacitated principal, the ademption doctrine does not apply. UPC §2-605(b). 5. Extrinsic evidence: With the adoption of the replacement property doctrine and the testator's intent doctrine, the UPC has opened the ademption doctrine up to extrinsic evidence to a much greater extent than the avoidance/exceptions/softening doctrines. These latter doctrines are much narrower in scope, and the nature of the evidence that would be relevant is much more in line with the traditional common law preference for "circumstances surrounding the testator"—evidence that is hard to fabricate. Public policy considerations: The UPC approach is willing to accept increased costs of administration and increased potential for fraud for the sake of trying to ascertain the testator's true intent. To date, not many jurisdictions have adopted the new version of the UPC. H. Stocks: Gifts of stock are challenging because of the nature of stock. With most forms of property, the owner has exclusive control over the property so that any changes in the property are largely within the owner's control. With stock, that is not the case. The corporate entity, and even other corporate entities, can influence the stock owned by the testator through stock splits, stock divi-dends, mergers, acquisitions, and so on. 1. Common law: The traditional, common law approach focuses on whether the gift of stock is a specific or general gift. If the gift of stock is specific and the change is due to a stock split, the beneficiary takes the additional shares. If the gift of stock is a general gift, the beneficiary does not take the additional shares following a stock split. 2. Modern trend: The modern trend rejects the separate vs. general gift analysis, reasoning that even if the gift of stock is a general gift, the intent was to give a percentage interest in the company. The only way to give the intended percentage interest is to take into consideration stock splits and to give the beneficiary the increased number of shares to achieve the desired percentage interest in the company. 166 Chapter 6 CONSTRUING WILLS 3. Abatement: If the testator gives away more in his or her will than he or she has to give, the doctrine of abatement provides for which gifts are to be reduced first. a. General approach: The general approach, based upon testator's presumed intent, is that the residuary clause is reduced first, then general gifts, and specific gifts last. This order is based on the assumption that the more precise the nature of the gift, the more important it must have been to the testator. Criticism: Often the testator presumes that the residuary clause will be the biggest gift and saves it for the most important beneficiary. Where the testator is married, typically the residue is left to the surviving spouse. Reducing the residuary gift first arguably is incon-sistent with the testator's overall testamentary scheme in such situations. b. Minority approach: Some states' abatement statute adopts the general approach, but then includes a provision giving the courts the flexibility to alter the order of abatement where it appears inconsistent with the testator's overall testamentary wishes. Careful attention must be paid to the wording of each abatement statute to see if the legislature has granted the courts such flexibility. Quiz Yourself on CONSTRUING WILLS 42. Anna wants to leave her velvet pink couch to the nice lady who works at the local pastry shop in Beverly Hills. Anna fondly refers to her as "Mrs. Sugar," and the woman at the pastry shop has grown to adore the name and answers to it when Anna comes in. Anna dies one night after overeating at a Hollywood party. Her properly executed will devises "my pink velvet couch to Mrs. Sugar." The real name of the woman who works at the pastry shop is Mrs. Jones. A woman named Patty Sugar comes forward and claims she is entitled to the pink velvet couch because she is Mrs. Sugar. Mrs. Jones wants to offer as evidence a birthday card that Anna gave to her a few months before she died addressed to "Mrs. Sugar." Is the evidence admissible, and who takes the couch? 43. While being treated at the New Beginnings rehabilitation center in Malibu, Chandler forms a close friendship with a woman named Jennifer. A week after his discharge from the center, Chandler dies. His properly executed will devises "$100,000 to Jennifer from New Beginnings." There are five women named Jennifer enrolled at New Beginnings, and all five claim the money. What result? 44. Rachel's properly executed will states, "my engagement ring to my sister Monica, if she survives me, everything else to Phoebe." Monica dies, survived by two sons, Ross and Joey. Thereafter, Rachel dies. Who gets the ring? _ 45. Homer, a single father, has a will that states, "all of my property to my children." Homer has three children, Bart, Lisa, and Maggie. Tragically, Bart dies in a skateboarding accident. Upon hearing of Bart's death, Homer has a heart attack and dies. Bart is survived by two children, Crusty and Bob. Who takes Homer's estate? _________________ 168 Chapter 6 CONSTRUING WILLS rather the gift go to the issue of the predeceased beneficiary, unless there is a contrary intent expressed in the will. Here, Monica predeceases Rachel, so the gift lapses unless it can be saved by anti-lapse. The requisite degree of relationship between testator and beneficiary depends on the wording of each state's statute, but most states cover siblings. If the statute covers descendants only, anti-lapse does not apply. Assuming Monica meets the statute's degree of relationship requirement, she is survived by issue. Unfortunately, there is an express contrary intent that blocks the anti-lapse doctrine. The express phrase "if she survives me" has been construed by the courts applying the common law approach as an express intent that anti-lapse not apply. Under the modern trend/UPC approach, however, such an express survival clause is not sufficient to constitute an express intent that anti-lapse not apply. Under the modern trend/UPC approach, the court would apply anti-lapse and give the ring to Monica's issue, Ross and Joey. 45. When Bart dies before Homer, Bart's gift lapses and the gift fails. There are two ways a failed gift can be saved—by anti-lapse or by the class gift doctrine. In most jurisdictions, anti-lapse applies to class gifts, so check for anti-lapse first. Under anti-lapse, there must be a lapse, the predeceased beneficiary must meet the statutory degree of relationship requirement (varies by jurisdiction), the predeceased beneficiary must have issue who survive the testator, and there must be no express intent in the written instrument that anti-lapse not apply. Bart's death before Homer, the testator, constitutes a lapse. Bart is Homer's son, so he meets the degree of relationship requirement in every state. Bart has issue who survive Homer, Crusty and Bob. And there is no express intent in the will that anti-lapse should not be applied. Crusty and Bob take Bart's share. Maggie takes one-third; Lisa takes one-third; and Crusty and Bob split one-third (one-sixth each). If the jurisdiction does not apply anti-lapse to class gift, the class gift doctrine may save the gift for the other members of the class. Whether a gift constitutes a class gift depends on the testator's intent. Where that intent is not clear, the courts typically look at four factors: (1) how the beneficiaries are described—by name or by group; (2) how the gift is described—in the aggregate or in shares; (3) whether the beneficiaries share a common characteristic; and (4) the testator's overall testamentary scheme. Here, Homer described the beneficiaries as a group—"my children"—which favors a class gift. Homer described the gift in the aggregate—"all my property"—which favors a class gift. The beneficiaries share a common characteristic—they are all Homer's children, and there is no evidence Homer has any other children who were excluded—which favors a class gift. And Homer's overall testamentary scheme appears to have been to leave all his property to his children, which arguably favors a class gift here. Most likely, the gift will be construed to be a class gift, and under the right of survivorship that is built into each class gift, Bart's share goes to the other members of the class, Maggie and Lisa (one-half each), if the jurisdiction does not apply anti-lapse to class gifts. 46. Justin's gift of "my custom-made red leather pants" constitutes a specific gift. He intends for one specific item to satisfy that gift. When he burns the pants, the question is what effect, if any, that has on the gift. Under the traditional common law approach to ademption, there was an irrebuttable presump tion that by disposing of the item subject to the specific gift before he died, Justin intended to revoke the gift. Under ademption, Britney takes nothing. Because of the harshness of the ademption doctrine, however, many jurisdictions have developed avoidance doctrines. One such doctrine is the "change in form, not substance" doctrine. Under that doctrine, the beneficiary can argue that the gift, changed slightly in form but not in substance, is still in the testator's estate. Here, though, Justin burned the pants. Although there is another pair of custom-made leather pants in Justin's estate, they are a different pair, not the same pair that has changed slightly. Under the traditional, strict approach to ademption, Britney probably fails on her "change in form, not substance" argument and she takes nothing (though if she can convince the court that the change from red to off-white is merely a change 170 Chapter 6 CONSTRUING WILLS ** If your jurisdiction follows the modern trend, the courts have generally repudiated the plain meaning rule. Extrinsic evidence is admissible if there is an ambiguity, latent or patent. If you see a possible ambiguity, lead with the rule statement for what constitutes an ambiguity: The language in question in the will must be reasonably susceptible to two or more interpretations. **" Assuming an ambiguity exists, only extrinsic evidence that is consistent with one of the possible reasonable interpretations is admissible, and the courts favor evidence of the circumstances surrounding the testator at time of execution as opposed to alleged oral declarations (easy to fabricate). *• Even where extrinsic evidence is admissible to help construe a will, as a general rule the courts do not rewrite wills; they only construe the ambiguous language. What constitutes "construing" and what constitutes "rewriting" is sometimes a very difficult question. The interpretation desired by the claimant must not vary too far from the express words of the will, or it is subject to being called a rewrite, not a mere construction. *" The scrivener's error doctrine is a new doctrine. Only one case has adopted and applied the doctrine so far, and that case can be spun a number of different ways, so a whole plethora of questions remains. Changes in the beneficiary «• Core wills material—lapse/anti-lapse/class gifts/failed gifts. These doctrines constitute some of the most tested material in the course (lapse in particular, because it is a great overlap issue). *• However you conclude on the lapse issue, be sure to check to see if it affects your analysis of another issue raised by the fact pattern. (Examples: overlap between lapse and the per capita doctrine, or lapse and the advancement doctrine.) *• Watch for the more subtle ways to raise the lapse issue: the beneficiary dies before the will is executed (lapse vs. void, common law vs. modem trend); or the beneficiary dies after execution of the will, but then the testator executes a codicil; or the beneficiary survives the testator but is treated as if he or she predeceased the testator for one reason or another. •s" If you have a lapse issue, be sure to raise and discuss anti-lapse. The final element, no express contrary intent, is a particularly tricky element. Watch for an express contrary intent expressed in an instrument other than the instrument making the gift. Such an expression of contrary intent is not enough to knock out anti-lapse. «•• Failed gifts can also be saved by the class gift doctrine. If you see a gift to more than one individual, you should pause and ask whether the gift constitutes a class gift. •*• Focus on the four factors in analyzing whether the gift is a class gift: how the gift is described, how the beneficiaries are described, whether the beneficiaries all share a common characteristic; and the testator's overall testamentary scheme. •s1 Remember these are just factors, not requirements. Three is probably good enough to qualify the gift as a class gift, and sometimes two is all that it takes. Whether a gift is a class gift or not is a rather soft, fact-sensitive issue. Be prepared to make detailed, fact-sensitive arguments.