February 18, 2020 REAL PROPERTY, TRUST & ESTATE LAW

Defective Catastrophe Clauses in Wills: Paths to Reform

Adam J. Hirsch

Download the PDF of this article

This article highlights defective catastrophe clauses as a distinct problem in inheritance law and offers the first policy analysis of the issue.

The Duke debacle. In 1984, a 72-year-old testator prepared a holographic will that bequeathed his entire estate to his wife. In the event the testator and his wife were to “die at the same moment,” the will provided that his estate was instead to go in equal shares to two charities. In 2002, the testator’s wife died. Thereafter, he told a representative of one of the charities that he was “leaving his estate” to both charities. The testator died in 2007 with an estate worth more than $5 million. Discovered in his safe deposit box, the testator’s unaltered handwritten will was submitted for probate. The will contest, Radin v. Jewish National Fund (Estate of Duke), 352 P.3d 863 (Cal. 2015), pitted the two named charities against the testator’s two nephews, his heirs under the state intestacy statute. The California Supreme Court announced a judicial remedy new to the state, the remedy of “reformation.” The court ruled that an unambiguous will may be reformed if clear and convincing evidence establishes that the will contains a mistake in the expression of the testator’s intent at the time the will was drafted and also establishes the testator’s actual specific intent at that time. The sufficiency of the evidence was never tested in Duke because the parties settled the case before further proceedings took place.

Historically, lawmakers have allowed courts to correct some sorts of mistakes within wills but not others. Mistakes concerning facts that affect the terms of an estate plan are traditionally deemed irremediable, but courts can correct mistakes concerning the content of a document a testator executed as a will to the extent of striking material that the document was not supposed to include. Traditionally, though, courts cannot restore to a will material left out by mistake.

The remedy for mistake proclaimed in Duke arises against this background. But what does the court mean by a “mistake in expression,” which Duke renders remediable? Regrettably, the court nowhere defined the term. Most courts agree that a “mistake in expression” was subject to correction by recourse to extrinsic evidence under rules of construction, rather than the law of mistake.

James Henderson distinguished mistakes “in the inducement” from ones “in the expression,” which included mistakes that “concern the content and meaning of the language in the instrument.” See James A. Henderson, Jr., Mistake and Fraud in Wills—Part I: A Comparative Analysis of Existing Law, 47 B.U. L. Rev. 303, 312 (1967). Henderson restricted the concept of “mistakes in expression” to scriveners’ errors and erroneous uses of descriptive terms.

The model lawmakers adopted Henderson’s scheme when they drafted rules for the reformation of wills and trusts in 2003, although they proposed to change existing law by allowing reformation of all sorts of mistakes, however classified. According to Restatement (Third) of Prop.: Wills & Other Donative Transfers § 12.1 (Am. Law Inst. 2003), “a donative document . . . may be reformed to conform the text to the donor’s intention if it is established by clear and convincing evidence (1) that a mistake of fact or law, whether in expression or inducement, affected specific terms of the document; and (2) what the donor’s intention was.”

The reformation remedy announced in Duke appears ill-fitted to the facts of the case. The only evidence of a mistake emerged from testimony summarized by the lower court that the testator had declared he was “leaving his estate” to the two charities named in his will, contrary to the formulation of the catastrophe clause. What could account for this assertion? The court focused on the possibility that the testator intended the catastrophe clause from the beginning to cover the contingency that his wife should not be alive when he died, whether they died simultaneously or not. If that were true, then “[the testator’s] intent was inartfully expressed . . . and thus there is a mistake in the will that . . ., if proved by clear and convincing evidence, would support reformation of the will to reflect [the testator’s] actual intent.” Estate of Duke, 352 P.3d at 880.

The court in Duke collapsed inartful expression with clerical error as characteristics of a will eligible for reformation. The court asserted a power to correct wills that not only fail to say what they are supposed to say, but also appear not to mean what they are supposed to mean.

Antecedent cases. The drafting error seen in Duke has arisen repeatedly in the case law. In one line of cases, courts have construed catastrophe clauses narrowly, refusing to apply them in instances where the primary beneficiary instead predeceased the testator. In a second line of cases, courts have read catastrophe clauses broadly to cover a predeceasing beneficiary. This approach is known as the gift-by-implication doctrine, a rarely applied and somewhat obscure rule courts invoke to find an unstated bequest where “it cannot be supposed that any other intention existed in the mind of [a] testator.” William H. Page, Page on the Law of Wills § 30.18, at 153 (Jeffrey A. Schoenblum Ed., Rev. Ed. 2003 & Supp. 2017).

Still other courts have deemed defective catastrophe clauses latently ambiguous in light of the circumstances. Following established rules applicable to the clarification of ambiguous wills, these courts have admitted extrinsic evidence to determine testamentary intent.

This array of cases makes clear the dilemma faced by courts when presented with defective catastrophe clauses. Strict application of existing law demands the result reached by a majority of high courts: The plain-meaning rule applies, and courts cannot update wills on a testator’s behalf to reflect changed circumstances.

Paths to reform. The matter could be tackled broadly by building flexibility into the law of lapse or, more broadly still, into the general law of all changed circumstances for wills. Historically, those laws have operated mechanically in most states. However, there is reason to mistrust this expansive approach. One danger is that courts will trade errors stemming from inflexible rules for errors stemming from a rule that is overly flexible, not in defective catastrophe clause cases, but in other cases where intent is harder to reconstruct. The difficulty is that decedent testators cannot take the stand to report how they would have preferred to update their estate plans. Another concern is that a flexible rule would raise decision costs, making more wills subject to litigation in the shadow of adjudicative uncertainty. The rule would create opportunities for strike suits, a perennial problem in this area of law.

The other possibility is to respond to the problem narrowly, avoiding recourse to unreliable evidence. By following catastrophe clauses as a loadstar, lawmakers can refine their existing rules of construction for lapse—still applying a mechanical rule, still barring extrinsic evidence, but looking within the four walls of a will for hints about how intent would likely have evolved. Lawmakers have already adopted this strategy for crafting default rules of construction applicable to other changed circumstances, as in the case of pretermitted spouse statutes.

ABA REAL PROPERTY, TRUST & ESTATE LAW SECTION

This article is an abridged and edited version of one that originally appeared on page 339 of Real Property, Trust and Estate Law Journal, Winter 2018 (52:3).

For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.

WEBSITE: americanbar.org/rpte

PERIODICALS: Probate & Property, bimonthly magazine; Real Property, Trust and Estate Law Journal, published three times per year; e-Report, seasonal e-newsletter.

CLE AND OTHER PROGRAMS: Watch out for RPTE’s monthly CLE webinars; for more information, please visit our website.

RECENT BOOKS: The Irrevocable Life Insurance Trust, 4th ed.; Tax, Estate, and Lifetime Planning for Minors, 2d ed.; From Handshake to Closing, 3d ed.; Asset Protection Strategies, vol. 1, 2d ed.; Handbook of Practical Planning for Artists, Art Collectors, and Their Advisors, 2d ed.

Entity:
Topic:

Adam J. Hirsch

Adam J. Hirsch is a professor of law at the University of San Diego.

Published in GPSolo, Volume 37, Number 1, January/February 2020. © 2020 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association or the Solo, Small Firm and General Practice Division.