For a long time, courts have upheld the “estoppel by acceptance of benefits” rule that a person cannot simultaneously accept benefits under a will and contest that will’s validity. Some courts have attempted to amend or narrow the rule to the point of inoperation. In a recent judgment, the Supreme Court of Texas eviscerated the trend.
Trevino v. Turcotte
In Trevino v. Turcotte, 564 S.W.2d 682, 685 (Tex. 1978), the Supreme Court of Texas reaffirmed the longtime rule of estoppel by acceptance. The Court analyzed a complex estate litigation case and the standing of two objectors to the will. Salita executed two wills, one in 1948 and another in 1960, as well as four codicils to the 1960 will. The will was admitted to probate, and Edgar Turcotte acted as one of the three executors of her estate. Edgar inherited and accepted his $1 million inheritance, despite being entitled to $5 million in her earlier will. When he passed away, his children and heirs of his estate brought a will contest seeking to have the 1960 will ruled invalid, thus entitling them to the $5 million through Edgar’s estate.
The court examined the doctrine of estoppel by acceptance. Specifically, they considered whether acceptance by an original beneficiary prevented their own heirs from contesting the will. The Supreme Court of Texas decided the issue by assessing the purpose of the rule of election and estoppel:
[It] is based upon equity and public policy. It is designed to prevent one from embracing a beneficial interest devised to him under a will, and then later asserting a challenge of the will inconsistent with the acceptance of benefits.
Ultimately, the court ruled that Edgar had accepted the will by taking the $1 million distribution. A beneficiary can not elect to accept the benefits given to them by a will, then retain a claim that would defeat or prevent the operation of the will. The court refused to shield Edgar’s heirs from his acceptance. It claimed that doing so would be inequitable and against public policy. Estoppel extends to the heirs of the original elector, and thus their claims were dismissed.
Holcomb v Holcomb
Nearly a decade and a half later, the Court of Appeal in Holcomb v. Holcomb, 803 S.W.2d 411, 412 (Tex. App. 1991) misinterpreted the holding in Trevino by applying a different view of the inconsistency. In a similar case, siblings Sid and Anitainherited different amounts from their father’s estate. Their father bequeathed Anita a lesser share. She accepted a portion of this share, yet contested the testamentary instrument’s validity. Despite the straightforward facts, the Court of Appeal denied Sid’s claim that his sister was estopped from inheriting. The majority believed that estoppel applied if the “challenge of the will [is] inconsistent with the acceptance of benefits”. By focusing on the inconsistency, the Court believed that Sid had to show that Anita had received benefits to which she would not be entitled under the will or the laws of intestacy. The Court concluded that since Anita’s acceptance was not of greater value than her entitlement, it was consistent with her claim. She was not estopped from contesting the will.
Holcomb’s Impact: McDaniel and Meeker
Others have tried to use this erroneous opinion to quash legitimate estoppel claims. This approach has had mixed results.. The Court in Matter of Est. of McDaniel, 935 S.W.2d (Tex. App. 1996) heard arguments that beneficiaries could contest a will if they received only a small part of what they would otherwise receive. Rejecting this argument, the Court of Appeal declared that Holcomb‘s holding was “an inaccurate statement of Texas Supreme Court precedent on this issue.” McDaniels restated the proper test set out in Trevino and Wright v. Wright, 154 Tex. 138, 274 S.W.2d (1955): “He who accepts a benefit under a will must adopt the whole contents of the instrument.”
Nonetheless, recent Courts of Appeal have accepted will contesters’ arguments against estoppel and endorsed Holcomb. In re Meeker, 497 S.W.3d (Tex. App. 2016), the testator’s son Alan filed a petition for deposition and subpoena to investigate his father’s mental capacity despite previously accepting the will in court and taking its benefits. The dissent would have dismissed this claim, citing Trevino and McDaniel. His arguments were overruled by the majority who upheld Holcomb‘s reasoning.
Estate of Johnson
In the recent case In the Estate of Johnson, 2019 WL 5704109, (Tex. App. Nov. 4, 2019), the Texas Court of Appeal again reviewed a trial court’s decision on the standing of an objecting beneficiary. The decedent Dempsey Johnson executed a will and devised his estate to his three daughters, Tia, Lisa Jo, and Carla. He bequeathed his mutual fund and half of a bank account to Tia, which amounted to approximately $150 000 of his $1.5 million estate. Tia promptly accepted the mutual fund’s transfer. Soon thereafter, she contested the will on the grounds of Johnson’s lack of testamentary capacity and undue influence exerted by Lisa Jo. The trial court estopped her claim. Tia appealed.
The Court of Appeal ruled in Tia’s favor, finding that Lisa Jo failed to raise estoppel as an affirmative defense. Citing Holcomb, Justice Richter determined that Lisa Jo had to demonstrate that Tia accepted benefits inconsistent and over the ones to which she would be entitled. With this erroneous reasoning, the Court of Appeal ruled that Tia accepted a lower amount than her entitlement and her claim could go forward.
Supreme Court of Texas: Restating the Law
The Supreme Court of Texas accepted the appeal and took the opportunity to end the line of cases following Holcomb. Est. of Johnson, 631 S.W.3d (Tex. 2021) clarifies the state of Texas law on will contest estoppel. The Supreme Court referred to Wright v Wright, which specifically stated that estoppel does not depend upon the value of the benefits and is not determined from the comparison of what the distribution would have been without a will. Holcomb misinterpreted Trevino. The “inconsistency” in question is the acceptance of the will’s bequests and contesting its validity, not an inconsistency in the value taken and the entitlement(s). Taking any amount of money devised by a will is inconsistent with later claims of undue influence or lack of testamentary capacity.
The Court clarified other types of litigation following an election to take devised property. For instance, estoppel by acceptance of benefits does not stop the beneficiary from challenging the executor’s conduct, seeking the executor’s removal, or enforcing the will’s terms and forcing distribution. These claims are not inconsistent since they seek to enforce the will. A beneficiary is simply barred from accepting property bequeathed by the will, then claiming that the will is invalid. If the beneficiary accidentally or unknowingly accepts the transfer of property, they may still take steps to reject the benefits, including attempting to return it or asserting the acceptance was involuntary. By accepting the benefits of the will, and having made no attempt to return them, Tia was estopped from challenging the will she elected to accept. Her claim was dismissed.
Takeaways for estate litigators, executors, and beneficiaries
In Johnson, the Supreme Court ended the deviation created by Holcomb. While returning the doctrine of estoppel to normalcy, the decision in Johnson gives some insight for estate practitioners expecting or planning a will contest:
- Beneficiaries should not accept the transfer of any probatable assets if they plan to contest the will.
- If beneficiaries accept a transfer but soon realize they wish to contest the will, they should do whatever possible to return the assets before petitioning the court
- However, beneficiaries may choose to take on non-probatable assets or those not disposed of in the will since these choices are not inconsistent with a future contest.
- It is conceivable that a beneficiary accepts the benefits from one will while contesting the validity of another, if the wills govern different assets and were executed separately.
- An executor may choose to give an early partial distribution if they expect a will contest may surface. An acceptance of the distribution will impede a beneficiary’s ability to litigate the will’s execution.
