Joint Wills: Enforceable Contracts

Take-Away: Apparently spouses are still adopting joint Wills in Michigan, much to my surprise. These documents often create considerable litigation after the death of the second spouse who thought that he/she could adopt a new Will. We have yet another decision from the Michigan Court of Appeals that obviously indicates that the surviving spouse did not understand, or appreciate, the significance of adopting a joint Will with his spouse.

Case: In re Estate of Louis Henry Bitto III, Michigan Court of Appeals, Nos. 339083 and 339507, Per Curiam decision (August 21, 2018.)

Facts: Louis and Judith executed a joint Will in 2005. Under the terms of that joint Will, on the death of one spouse, the surviving spouse was given a life estate in all of their assets. Upon the surviving spouse’s death the remaining assets were to be distributed to their 3 children and the Louis’ son, in shares of equal value. Judith died in 2006. In 2015 Louis adopted a new Will that add an individual residuary beneficiary, removed a child as residuary beneficiary, and named the ‘new’ individual beneficiary as personal representative of his probate estate. After Louis’ death when his 2015 Will was offered to probate a challenge to that admission was made which asserted that Louis’ 2015 Will was void (or invalid) because he had entered into a joint Will with Judith in 2005, which became subject to a binding contract upon Judith’s death in 2006. Key was the following provision in their 2005 joint Will:

“ALL of our estate, whether held jointly, severally, or as tenants in common, both real, personal and mixed, shall be held by the survivor of us with the right to income, rents or profits all of our property for the life of the survivor, and so much of the principal as the survivor may desire from time to time for his or her care and support with his or her sound discretion, and with the further right on the part of the survivor to sell and execute conveyances of, without authority or approval of any Court, any or all of the property, to invest and reinvest the same and to use the proceeds as he or she may deem property during the survivor’s lifetime for his or her care and support without being required in any manner to account therefore.”

Court Opinions: The probate court found that there was a ‘contract to make a Will’ between Judith and Louis which was legally enforceable on Judith’s death in 2006. As such, Louis’ effort to adopt a new Will in 2015 was a violation of that 2006 ‘binding contract’ thus rendering his 2015 Will invalid. The Court of Appeals affirmed the probate judge’s decision. The Court of Appeals found that the 2005 Will became irrevocable upon Judith’s death. As a result of being bound by their mutual agreement regarding their 2005 Will, Louis could not dispose of the ‘marital’ estate by means of the Will that he executed in 2015. Thus, the terms of the 2005 Will created a life estate in Louis after Judith’s death, “even though the surviving spouse could dispose of the estate’s property during his lifetime.” Consequently, the named beneficiaries of the 2005 joint Will could bring an action to compel the personal representative of Louis’ estate to specifically perform that ‘binding contract,’ in effect negating Louis’ 2015 Will.

Law: Michigan’s Estates and Protective Individual’s Code [EPIC] contemplates an enforceable contract with regard to making a Will, referred to as Contracts concerning succession. That short section of EPIC follows:

“2514. (1) If executed after July 1, 1979, a contract to make a will or devise, not to revoke a will or devise, or to die intestate may be established by 1 or more of the following:

Provisions of a will stating material provisions of the contract;
An express reference in a will to a contract and extrinsic evidence proving the terms of the contract;
A writing signed by the decedent evidencing the contract.

(2) The execution of a joint will or mutual wills does not create a presumption of a contract to not revoke the will or wills.

In its Bitto decision, the Court of Appeals found that the joint Will of Judith and Louis signed in 2005 contained the necessary provisions in the Will itself to satisfy the first requirement of MCL 700.2514 (a, above), so that there was no need to look to evidence outside the terms used in the 2005 Will for the probate judge to find that Louis’ 2015 Will was invalid.

Scope of MCL 700.2514: While the outcome in Bitto is not particularly unusual in itself, this short statute has produced some interesting decisions from the Michigan Court of Appeals over the past couple of decades with surprising results as the scope of the statute through judicial interpretation. A few examples follow:

Burden of Proof: The party who seeks specific performance of the contract to leave property pursuant to a Will carries the burden to prove the terms of that contract. In re McKim Estate, 238 Mich App 453 (1999).
New Will Could be Vaild, But Also a Breach of Contract: The survivor can execute a new Will, but the survivor’s joint Will that was executed with another who died earlier, will result in a binding contract that the probate court can order to be specifically performed thus, in effect, negating the survivor’s later Will. “The contract, rather than the Will itself, becomes irrevocable by the survivor after the death of a party.” In re VanConett Estate, 262 Mich App 660 (2004.) The way I interpret the VanConett decision is that the survivor’s subsequent Will might be enforceable as it relates to ‘new’ assets acquired by the survivor after the first spouse’s death, but assets that both spouses owned at the time of the first spouse’s death (‘our estate’) would presumably be the subject of the binding contract that a probate court can subsequently order to be specifically enforced. In short, a Will that is made pursuant to a contract may actually be revoked, but that revocation may itself constitute a breach of contract which then can be specifically performed by order of the probate court. The ability to adopt a new Will arguably will turn on the interpretation of the terms of the ‘binding contract’ as to what is, and what is not, covered, e.g. ‘our property that we currently own’ vs ‘any property that either of us owns at any time.’
Valid Will of One Party: A single, Will, signed by two testators may operate as the valid Will of one of them but be ineffective as the Will of the other testator. In re Estate of White, 260 Mich App 416 (2004.) In this case there was some evidence that the Will was not signed in the presence of two witnesses by the wife. The probate judge found that the Will was “joint and reciprocal, but not mutual. The Will, while signed by both spouses, was not mutual because it did not express a mutually acknowledged promise, consideration or obligation between the testators that the Will was irrevocable.” The Will was invalid to the wife, who died first, so she was treated as dying intestate by the probate judge. The Court of Appeals then added its own ‘two cents’ on the topic: “A will, although jointly executed by two persons, is not a contract, strictly speaking, since it is subject to change and represents simply a statement of the wishes of the testators as they exist at the time of execution. A Will jointly executed by two testators containing reciprocal bequests may be, under some circumstances, sufficient evidence to establish a contract to make the testamentary dispositions contained in such a Will. The mere fact alone that two identical Wills are made by a husband and wife does not suffice to establish an oral agreement to make mutual reciprocal Wills, each binding the other.” In sum, because ‘the Will did not express a mutually acknowledged promise, consideration or obligation between the testators that the Will is irrevocable, it was only joint and reciprocal, but not mutual.’ Nor were any of these terms, used in the Bitto joint Will, but a different resulted than in
Joint Assets: An agreement to execute mutual Wills was extended to jointly owned assets by the parties. “The survivor of the contracting parties can dispose of assets subject to that agreement, unless expressly restricted from doing so.” In re Leix Estate, 289 Mich App 574 (2010). This decision seems to imply that jointly held assets are ‘fair game’ by the survivor, unless the implied contract that arises from the execution of mutual Wills expressly prohibits disposing of the former jointly held asset. It makes you wonder, however, if the survivor can even sell the former jointly held asset if the jointly owned asset is deemed to be subject to a binding contract that arises from the execution of mutual Wills, i.e. the beneficiaries of the Joint Will could claim to be third-party beneficiaries of that contract who could step forward to stop the survivor’s sale of the former joint asset.
Claims Against Decedent’s Estate: A claim against the decedent’s estate for rent that was to be paid by a devise in the decedent’s Will was treated as a claim (or devise) based upon an agreement to make a Will or make a devise in the Will. In re Estate of Derousie, No 302818, 2012 Mich App LEXIS 974 (May 17. 2012). Also, in Navarro v Andrews, No 311612, 2014 Mich App LEXIS 1813 (Sept. 25, 2014), the claimant asserted an entitlement for compensation for services rendered to the decedent which triggered a discussion by the Court of Appeals if that claim was also governed by the terms of MCL 700.2514- accrued compensation being treated as a devise. Being an old attorney, I always interpreted devise to mean the transfer of real estate on death, and a bequest to cover the disposition of cash or personal property on death. But, as noted, I am old and presumably out of touch these days.
Contracts to Convey Property: In an interesting case, a father’s sold Mackinac Island commercial and residential real estate on land contract to his children. The children claimed that they were to also receive all of the family money that was used to operate those island commercial real estate properties and the family’s historic residence, if they agreed to purchase the real estate on land contract from their father on the terms negotiated. In 2003 the father changed the terms of his 1996 Will; the father’s wife was given a life estate in his money, historic residence and real property under that Will. The probate judge used MCL 700.2514 to dismiss the claims of the father’s children. The Court of Appeals agreed with the probate judge that MCL 700.2514 applied to the children’s claims; because indefinite or ambiguous oral statements were made by their father to one of the children, those statements “could not be considered as forming a specific and definite agreement that courts should enforce…Even if definite contract terms could be ascertained [by those discussions], the contract would have been made to transfer properties and money to the children upon their father’s death…Petitioners stated that the agreement was to convey the properties, rather than to bequeath, devise, or make a will, thereby rendering MCL 700.2514 inapplicable…. [But] , petitioners testified that they expected to receive a substantial amount of money and all the properties on Mackinac Island upon Eugene’s [the father’s] death. Because MCL 700.2514 concerns ‘contracts to make a …devise’ it clearly applies to the circumstances of this case.” So while the children were sought to enforce an oral contract between themselves and their father when they agreed to purchase real properties from him on land contract, and their expectation to receive money, the Court used MCL 700.2514 to dismiss their claim, which (i) requires a writing, and (ii) dealt with a cash devise, as the legal basis to dismiss the children’s breach of contract. In re Arbib Estate, 28004, 2009 Mich App LEXIS 1839 (September 8, 2009).

Conclusion: When in practice I always steered clear of joint Wills or mutual Wills for several reasons. (i) I was concerned that my clients would not really understand what a joint Will was and what it actually meant. (ii) probate judges tend to take a fairly liberal interpretation when they apply MCL 700.2514 as indicated in Arbib, or when not to apply the statute, as in White. (iii) As indicated by Bitto, clearly the surviving spouse felt that the control that he was given over the marital assets during the balance of his over-life was equivalent to a general power of appointment over those assets, and thus his rights were broad enough to enable him to adopt a new Will, which was obviously not the case in the opinion of the Courts. While Mr. Bitto could give away the assets subject to the binding contract with his late wife, he could not bequeath the same assets that he could have given away. (iv) Finally, I continue to be concerned that the rules of contract construction govern joint Wills, as opposed to the rules of Will construction, which are not always the same. While the spouses might feel that they have adopted a Will, in reality they have adopted a contract; but the instrument does not say that it is a ‘contract’ just a ‘Will.’ Hence the magnitude of confusion that stems from the execution of a joint Will.