May 26, 2008 (Original publish date) • By Dennis Beaver
We are constantly told of the importance in having a will and estate plan, and yet, so often, little thought goes into fine-tuning — the careful drafting — of these documents which have the power to literally destroy a family.
Today’s story is a good example of a loving father who wanted to be as fair as possible to his sons, but one critical issue was overlooked at the time his will was prepared.
Robert and David — one year apart — grew up on their family’s 160 – ranch, located close to California’s incredibly beautiful State Route 198 near the Central Coast. Their father, who had only a ninth-grade education but good business and common sense, provided well for his family and sent both sons to college. One became a community college teacher, the other an accountant. The brothers are now in their early 60s.
“There have always been two very large, older, country homes on the ranch: the one we all grew up in and the other where the foreman and his family lived,” Robert explained. “About 30 years ago, Dad asked my brother Dave to move back home with his family, to live in the foreman’s house and help him and mom manage business operations. He told Dave — verbally, nothing in writing — that if he stayed there, maintained the property, paid $500 in monthly rent and helped care for him and mom as they got older, the house and the fenced acre on which it sits would be his after 20 years, just like a mortgage,” Robert explained.
“He, his wife and their two kids moved from the nearby city to the country, and for all these years whenever I visited them with my wife and our two sons, it was as if time went backwards. These were some of the happiest moments in all of our lives. It was as if he and I were kids again, growing up on the ranch.
“Dave was true to his word, keeping both homes in excellent condition. He made repairs — some costly — always making those $500 a month in rental payments to Dad. He and his wife took wonderful care of mom and dad. Our parents lived into their 90s.”
For a moment I wondered why Robert was in my office. Then he handed me his parent’s trust and will documents, which were drafted 15 years before their father passed away. The relevant paragraph stated: “Upon the death of the last of us to survive, we direct the family ranch to be equally divided between our two sons.”
At first glance, that seemed fair. But then, a second look revealed what was left out of the will.
What about the house that Dave and his family have lived in for all these years? If it’s Dave’s, then how do you handle the 50-50 gift the will provides? If the brothers agree to simply sell the ranch, will there be an equal division of sale proceeds, or will one get more than the other?
“In the minds of Dave and his wife, they had a contract with Dad. Dave hasn’t said much, but his wife has started to complain that an equal division, according to the will, is unfair and that they are entitled to more than half,” Robert explained.
“She feels they are entitled to be paid the value of the house in addition to their half of the property, which would mean they would probably get $200,000 more than I would. Of course, the will does not address any of these issues. What do you suggest we do?”
Money can destroy families, especially at times like these. Poorly drafted wills or trust documents become an engraved invitation to a lawsuit. So many people lose sight of what matters. Family matters. Love matters. Money is important, but is a relatively small amount more in your pocket worth the loss of close family members?
“When all is said and done, you are going to put well over a million dollars in your bank account. Is that going to make you happier than you are now or change your lifestyle in any real way?” I asked.
“I’ll buy a new car, but aside from that, no, it will just make our retirement easier. It isn’t enough money to change our lives,” he replied.
“Now, let’s say that you insist on the 50-50 division as the will states. What would your father say today, if these facts were presented to him? Would he tell your brother to forget it, or give him credit for all that he’s done these many years? Finally, if a million dollars will not make you happier, would an extra $200,000 have any effect at all?” I asked.
Before answering, I explained that, legally, while most agreements dealing with real property have to be in writing, there are exceptions to the rule. One of which, as here, is when you have an oral agreement and one of the parties has performed his part of the agreement. Under these circumstance, a court would likely honor the agreement.
I added that they both needed to work together, since they were now joint owners of a valuable property.
My reader took a moment to think it over. Before he answered, it was clear he was keeping something from me, judging by his body language.
“Someone close to you has an agenda and wants you to insist on that 50-50 division, am I right?” He nodded.
“It is your wife,” I said. Robert nodded again. “You feel torn between wanting to do what your wife wants, and what you deep down know is fair.”
He vigorously shook his head in agreement. “It really is their house. I knew this all along and figured after reading your column for 10 years, that’s what I would hear from you. If my wife yells at me, I’ll just blame it on you,” he said with a laugh.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.