Applying the Antilapse Statutes

Take-Away: An antilapse statute provides for an alternate gift if the intended recipient of the gift dies prematurely. The Estates and Protected Individuals Code provides antilapse statutes for both Wills and for Trusts, and for beneficiary designations, all of which are closely aligned but can be slightly different in effect when implemented.

Background: An antilapse statute is generally a rule of construction that is used with regard to a Will or Trust, where the testamentary instrument is silent when the individual named as the beneficiary predeceases the testator or settlor and the Will or Trust does not expressly address that situation when the beneficiary does not survive. EPIC refers to them as substitute gifts when the named beneficiary does not survive until the distribution event (or date.) The premise behind an antilapse statute is that by making a Will, or a Trust, the decedent clearly intended to not have their estate pass under the applicable intestate succession laws. Therefore, if a named beneficiary in a Will (or Trust) predeceases the testator or settlor, or does not survive long enough to satisfy a condition attached to the distribution of the bequest, then a presumption is applied that the testator/settlor would have wanted the deceased beneficiary’s bequest/gift to pass to that deceased beneficiary’s descendants. This rule of construction is based on an observation that had the named beneficiary survived the testator (or settlor) and promptly died, that beneficiary’s descendants would have inherited the same asset. Consequently, the antilapse statute supplies an alternate beneficiary, or substitute gift, when the Will (or Trust, or beneficiary designation) is silent with respect to the condition of the beneficiary surviving the testator/settlor.

Survivorship: It is important, then, to look for words of survivorship in a testamentary instrument, which addresses the question ‘who takes?’ if the beneficiary does not survive. Only when the instrument is silent with regard to survivorship, as a generalization, will the antilapse statute then be applied to answer that ‘who takes?’ question. However, this is frequently not very clear, as the antilapse statutes can be obtuse (not to mention turgid!). For example, with regard to Trusts, EPIC provides:

• For purposes of section 2701, words of survivorship attached to a future interest are not, in the absence of additional evidence, a sufficient indication of an intent contrary to the application of this section [applying antilapse principles.] Words of survivorship include words of survivorship that relate to the distribution date or to an earlier or an unspecified time, whether those words of survivorship are expressed in condition-precedent, condition-subsequent, or another form. [MCL 700.2714(1) (c).]
• If a governing instrument creates an alternative future interest with respect to a future interest for which a substitute gift is created by subdivision (a) or (b), the substitute gift is superseded by the alternative future interest only if an expressly designated beneficiary of the alternative future interest is entitled to take in possession or enjoyment. [MCL 700.2715(1) (d).]

(Did I mention turgid reading? Yes, I guess I did.)

Wills: EPIC’s specific statutes that deal provide antilapse protection to a Will are MCL 700.2601 (describing an alternate devise) and 700.2603 (substitute gifts.) Trusts: EPIC’s sections that deal with the application of antilapse principles to a Trust are MCL 700.2713 through 700.2716.

Beneficiary Designations: EPIC’s antilapse principles applied to beneficiary designations are MCL 700.2708 through 700.2710. These various statutes are similar, but not exactly the same.

Michigan Decision: In a fairly recent Michigan Court of Appeals decision, the Court construed the phrase used in a Trust ‘if he is then surviving’ to refer to the date of distribution, not the date of the settlor’s death. Under the Michigan statute [MCL 700.2714(1) (a)] without more, that would create an alternate gift in surviving descendants. However, the Court found that the alternate gift did not take effect because the Trust instrument provided that the failed distribution ‘shall lapse notwithstanding any law to the contrary.’ In re Estate of Bullock, Michigan Court of Appeals, Nos 33865, 339781 (August 21, 2018.)

Recent Antilapse Decision: An interesting recent decision where a state’s highest court got involved to interpret its antilapse statute is Norwood and Patelliro v. Barclay, Personal Representative of the Estate of Josephine Mary Damico, Supreme Court of Alabama, #1180281 (October 18, 2019). The Court’s decision gives you an idea of how applying an antilapse statute can keep your head spinning.

Facts: Josephine left a 1993 Will in which she provided: “I direct that all items of my estate, whether real, personal, or mixed, wheresoever situated and howsoever held, of which I shall die seized and possessed or to which I may be entitled to at the time of my death, I give, devise and bequeath to my sister SARAH FRANCES COX.”

Josephine’s Will also provided: “I have intentionally omitted all my heirs who are not specifically mentioned herein, and I hereby generally and specifically disinherit each, and any and all persons whomsoever claiming to be or who may be lawfully determined to be my heirs at law, except as otherwise mentioned in this will.”

Josephine died in 2017.  Her sister, Sarah, had died before her. The personal representative (PR) of Josephine’s estate petitioned to have the Will admitted to probate. Sarah’s two daughters, Norwood and Patelliro (for ease of reference, Josephine’s nieces) petitioned as Sarah’s sole surviving children entitled to receive Josephine’s estate, claiming that Alabama’s antilapse statute (modeled on UPC 2- 603 the same as Michigan’s statute) applied to the situation, thus entitling the nieces to Josephine’s entire estate.

Nieces’ Claim: The nieces claimed that they are entitled to inherit their deceased mother’s share of Josephine’s estate, based upon Alabama’s antilapse statute. They also claimed that the same antilapse statute operated to disinherit Josephine’s other nieces and nephews (through other predeceased siblings), which prevented Josephine’s estate from escheating to the State of Alabama. While Josephine had other nieces and nephews who survived her, the nieces claimed that they should not take any part of their aunt’s estate, due to (i) the antilapse statute; and (i) the disinheritance provision in Josephine’s Will.

PR’s Claim: The PR responded that Josephine’s estate should pass through intestacy, and thus by default under Alabama’s escheat statute to the State of Alabama. Specifically, the Will unambiguously represented Josephine’s intent to disinherit all of her heirs, except her sister Sarah. In sum, the application of Alabama’s antilapse statute would be contrary to Josephine’s intent.

Probate Court:  The probate judge, who described the express disinheritance language in Josephine’s Will as a ‘contrary intention indicated by the Will,’ found that the Alabama antilapse statute did not apply and that Josephine clearly disinherited her nieces, sufficient to ‘contrary (contradict?) the effects of the antilapse statute.’ Therefore, the probate judge found that Josephine, by virtue of the clear language used in her Will, disinherited all of her nieces and nephews, contrary to the antilapse statute, which then resulted in intestacy and escheat of Josephine’s estate to the State of Alabama.

Alabama Supreme Court: The Supreme Court reversed the probate judge’s decision. The Court applied Alabama’s antilapse statute. The Court stated that the main issue before it was whether a ‘contrary intention (e.g. the express disinheritance provision)…indicated by the Will prevents the default application of the antilapse statute.’ In reaching its conclusion, the Court made several findings:

Presumed Intention: The antilapse statute is effective as a rule of construction that is designed to carry out presumed intention: “In effect, Section 2-603 declares that when a testator devises property ‘ to A (a specified relative)’, the testator (if he or she had thought further about it) is presumed to have wanted to add: ‘but if A is not alive (120 hours after my death) I devise the property in A’s stead to A’s descendants (who survive me by 120 hours.’”  .

Presumed Intestacy if Statute Does Not Apply: If the antilapse statute does not apply, then Josephine’s estate cannot be disposed of by her Will and it would pass through intestacy.

Creation of a Will Presumes Intent to Avoid Intestacy: When a testator undertakes to make a Will of all her property, she did not intend to die intestate as to any of it or during any period of time. Thus, a presumption arises from the mere existence of a Will that the testator intended to avoid an escheat of her estate to the state.

Escheat is Disfavored: The law does not favor escheat, because society prefers to keep real property within the family as most broadly defined, or within the hands of those whom the deceased has designated. Any doubt whether property is subject to escheat is resolved against the state.

Broad Scope Applied to Antilapse Statutes: The Restatement (Third) of Property: Wills and Donative Transfers, Section 5.5, notes that antilapse statutes should be given the widest possible sphere of operation and should be defeated only when the trier-of fact-determines that the testator wanted to disinherit the entire line of descendants headed by the deceased devisee

Disinheritance Language is Not Binding: Although Josephine’s Will expressly disinherited all of her heirs with the exception of her sister, her Will was executed while that sister (Sarah) was living. In arriving at the proper meaning of Josephine’s Will, the terms used should be interpreted in the light of the contingencies the testator could foresee. Josephine could foresee that is she devised her entire estate to her sister Sarah; Sarah could thereafter devise it, upon her death, to her own issue, i.e. the nieces. Moreover, Josephine could foresee that, if Sarah predeceased her, as happened, the nieces would inherit Sarah’s share pursuant to the antilapse statute. If Josephine wanted to prevent her nieces from inheriting her estate, she ‘could’ have included language in her Will preventing the application of the antilapse statute. Josephine gave no indication in her Will that the antilapse statute should not apply.

Re-write the Will: In effect, the Court decided to re-write Josephine’s Will. While the Court used the words ‘could have’ in its decision, it really meant that she ‘should have’ written in the Will her intent to not have the antilapse statute apply if Sarah died before her. My guess is that the Court strained its interpretation of the antilapse statute in a way to avoid an escheat of Josephine’s estate, so the outcome was driven more by avoiding an escheat, rather than an reasonable interpretation of Josephine’s Will.

Conclusion: I do not agree with Alabama’s Supreme Court in its decision, other than its motive to avoid an escheat.  Apparently Josephine’s statement of intent in her Will “I have intentionally omitted all my heirs who are not specifically mentioned herein, and I hereby generally and specifically disinherit each, and any and all persons whomsoever claiming to be or who may be lawfully determined to be my heirs at law” was not enough to overcome the application of the antilapse statute. The Court felt that Josephine needed to go even further by also adding to her disinheritance provision ‘including any antilapse statute that might otherwise apply.’ While I understand the Court’s desire to avoid an escheat to the state [no one thinks of the state as their heir], I think the Court’s decision makes it that much more difficult to avoid the application of the antilapse statute. In sum, if a testamentary instrument desires to effect disinheritance, at least in Alabama, the testator/settlor probably also needs to expressly say in the instrument that their intent is to not have the antilapse statutes apply.