estates
Do you have a will? Was your will executed formally? Do your parents have a will? Was their will executed in accordance with Ohio’s laws? What happens if your parent’s friend claims they are entitled to a portion of your parent’s estate because they have a handwritten note saying as much? Recently, the Ohio Supreme Court decided a case to help clarify Ohio’s laws regarding will execution.
In re Estate of Shaffer
Dr. Joseph Shaffer – a psychologist and part owner of successful sleep clinics – executed a formal will in 1967. Dr. Shaffer’s formal will instructed that if his wife were to pass away before him, his estate would pass through trust to his two sons. Dr. Shaffer’s wife, unfortunately, did pass away before him. On July 20, 2015, Dr. Shaffer also passed away. Dr. Shaffer’s formally executed will was admitted into probate in 2015.
In January 2016, Juley Norman – a friend and caretaker of Dr. Shaffer – filed a creditor’s claim against Dr. Shaffer’s estate claiming that she was entitled to a portion of his estate because of the care and services she provided to Dr. Shaffer before the end of his life. Ms. Norman attached a copy of a handwritten 3x5 notecard signed by Dr. Shaffer in 2006. No signatures other than Dr. Shaffer’s were present on the notecard, which read:
| Dec 22, 2006 |
| My estate is not |
| completely settled |
| all of my sleep network |
| stock is to go to |
| Terry Shaffer |
| Juley Norman for |
| her care of me is to |
| receive 1/4 of my estate |
| Terry is to be the |
| executor. |
| This is my will. |
| [signed by Dr. Shaffer] |
Zachary Norman, Juley’s son, filed an application asking the probate court to treat the notecard as a will and recognize his mother as a will beneficiary. At an evidentiary hearing to determine whether the notecard should be admitted as Shaffer’s will, Norman testified about her close relationship with Shaffer and the circumstances surrounding the notecard. She stated that only she and her son witnessed Shaffer write and sign the notecard and that Shaffer directed her son to keep it in a safe place. The probate court held, however, that there was not clear and convincing evidence that the notecard was intended to be Shaffer’s will.
Ohio's Sixth District Court of Appeals disagreed, overruling the probate court and allowing Juley to be added to the list of beneficiaries of Dr. Shaffer’s Estate. Dr. Shaffer’s son sought the Ohio Supreme Court’s discretionary review of the matter after the appellate court’s reversal.
In reaching its unanimous decision to reverse the court of appeals, the Ohio Supreme Court analyzed the relationships between three Ohio laws, as follows:
ORC § 2107.03 – Formal Will Making Requirements
Ohio law states that a document admitted to probate as a formal will must meet be:
- In writing;
- Signed at the end by the testator (or in some circumstances someone else at the testator’s direction); and
- Attested to and subscribed to by two or more competent witnesses who saw the testator sign the will.
The Ohio Supreme Court confirmed both lower courts’ decisions that Dr. Shaffer’s notecard cannot be considered a formal will. No witness signatures were present on the notecard and thus the only way to admit Dr. Shaffer’s will is through an exception in Ohio’s laws regarding will making formalities.
ORC § 2107.24 – Exception to the Formal Will Making Requirements
R.C. § 2107.24 provides a narrow exception to the formalities required in R.C. § 2107.03 and recognizes a will even though no witness has signed the purported will. A probate court must hold a hearing to examine whether an advocate of the nonconforming document establishes by clear and convincing evidence that:
- The decedent prepared the document or caused the document to be prepared;
- The decedent signed the document and intended the document to constitute the decedent’s will; and
- The decedent signed the document in the conscious presence of two or more witnesses.
This statute is central to the issue between the Normans and the Shaffers. The Ohio Supreme Court found that under this law, the court’s role is to determine whether a document should be admitted to probate, not to determine the validity of the will’s contents. Therefore, the Ohio Supreme Court found that the probate court should have admitted the will into probate based on the above requirements. Even though the specific bequests contained within the will may be stricken once the will is admitted, the 2107.24 evidentiary hearing is not the proper mechanism to determine the validity of the contents of the will.
However, the Ohio Supreme Court also analyzed Ohio’s “Voiding Statute” which eliminates any specific bequests to an interested witness to the will.
ORC § 2107.15 the “Voiding Statute”
Ohio’s “voiding statute” states that if a devise or bequest is made to a person who is one of only two witnesses to a will, the devise or bequest is void automatically. The witness, however, will be able to testify to the execution of the will, as if the specific devise or bequest to that witness had not been made.
Essentially, if a witness stands to take a portion of a testator’s estate under a will and if the validity of that will hinges on that witness acting as one of the two essential witnesses necessary to create a valid will, then that person’s interest under the will is void as a matter of law. This law does not control whether someone is competent to be a witness in order to establish a valid will, it only governs whether a devise or bequest in an already admitted will is valid. Therefore, this law comes into effect only after a will is determined to be valid and is admitted to probate.
The Ohio Supreme Court found that the voiding statute applies to witnesses under both R.C. § 2107.03 and § 2107.24. The Court held that Juley Norman could not take ¼ of Dr. Shaffer’s estate because she is one of the two witnesses required to establish a valid will, and thus Dr. Shaffer’s devise to her is void.
Conclusion
Sadly, Dr. Shaffer is no longer with us to tell the Ohio Supreme Court what his wishes were. The only people who can testify to the validity of the notecard stand to gain something from that notecard being admitted to probate. Dr. Shaffer may have intended to provide Juley with 1/4 of his estate, but he did not take the legal steps necessary to ensure that Juley would be a beneficiary of the will. Historically, others in Juley’s position have not been honest when it comes to claiming an interest in someone’s estate, which is why the law prohibits witnesses from also being beneficiaries of the will.
The Shaffer case illustrates why it is important to consult with an attorney to ensure that your wishes will be carried out as you intend and your estate plan is in order. If you want to change your will, an attorney will ensure that the new provisions are in accordance with Ohio law. Doing so can keep your family and friends out of court.
Useful links: The Ohio Supreme Court's slip opinion In re Estate of Shaffer.
Tags: estates, wills, Estate Planning, Ohio Supreme Court
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Unfortunately, the death of a farmland owner can create conflict within a family. Often, transition planning by the deceased could have prevented the conflict. Such is the case in a family disagreement that ended up before Ohio’s Third District Court of Appeals. The case pitted two brothers against one another, fighting over ownership of the family farm.
When their mother passed away in 2006, the five Verhoff siblings decided to sell the family farm. Two of the brothers wanted to purchase the farm, but one of them was also the executor of the estate. The estate’s attorney advised the executor brother that he should not buy the land directly from the estate due to his fiduciary duties as executor. The attorney recommended that the executor wait and purchase one-half of the farm from the other brother after it was transferred from the estate to the other brother.
Following a series of discussions between the two brothers, the executor brother sent half of the farm’s purchase price to the other brother and issued the farm’s deed to the other brother. Over the next eight years, the two brothers shared a joint checking account used to deposit rental income from the farmland and to pay for property taxes and utilities on the property. But when the executor brother asked the other brother for a deed showing the executor brother’s half-interest in the farm, the other brother claimed that the executor brother did not have an ownership interest. The money rendered by the executor brother was a loan and not a purchase, claimed the other brother. The other brother then began withholding the farm rental payments from the joint checking account. The relationship between the two brothers broke down, and in 2016, the executor brother filed a lawsuit to assert his half-ownership of the farm and his interest in the rental payments.
At trial, a jury found that the brothers had entered into a contract that gave the executor brother half ownership of the farm upon paying half of the purchase price to the other brother. The trial court ordered the other brother to pay the executor brother half of the current value of the farm and half of the rental income that had been withheld from the executor brother. The other brother appealed the trial court’s decision. The court of appeals did not agree with any of the other brother’s arguments, and upheld the trial court’s decision that a contract existed and had been violated by the other brother. Two of the arguments on appeal raised by the other brother are most relevant: that Ohio’s statute of frauds required that the contract be in writing and that the contract was illegal because an executor cannot purchase land from an estate.
A contract for the sale of land should be in writing, but there are exceptions
Ohio’s “Statute of Frauds” provides that a contract or sale of land or an interest in land is not legally enforceable unless it is in writing and signed by the party to be charged. The other brother argued that because there was no written agreement about the ownership of the farm, the situation did not comply with the Statute of Frauds and could not be enforceable. However, the court focused on an important exception to the Statute of Frauds: the doctrine of partial performance. The doctrine removes a verbal contract from the writing requirement in the Statute of Frauds if there are unequivocal acts of performance by one party in reliance upon a verbal agreement and if failing to enforce the verbal agreement would result in fraud, injustice, or hardship to that party who had partly performed under the agreement.
Based upon evidence produced by the executor brother, the appeals court agreed with the trial court in determining that an oral contract did exist between the two brothers and that the executor brother had performed unequivocal acts in furtherance of the verbal contract. The court explained that the executor brother had endured “risks and responsibility” by giving the other brother money with the expectation that he would receive rental income from the farm and own a one-half interest in the property. An injustice would occur if the verbal contract was not enforced because of the Statute of Frauds, as the other brother would receive a windfall at the executor brother’s expense, said the court. The court concluded that because the doctrine of partial performance had been met, the writing requirement in the Statute of Frauds should be set aside.
Did the executor brother violate his fiduciary duties by purchasing the land?
The other brother also claimed that the verbal contract was illegal because the executor brother made a sale from the estate to himself. According to the other brother, the sale violated Ohio Revised Code section 2109.44, which prohibits fiduciaries from buying from or selling to themselves or having any individual dealings with an estate unless authorized by the deceased or the heirs.
The court pointed out, however, that the executor brother did not buy the farm from the estate. Instead, the executor brother purchased the farm through a side agreement with the other brother who purchased the farm from the estate. The court noted that this type of arrangement could be voidable if other heirs challenged it. But since no other heirs did so, the court determined that the executor brother had not violated his fiduciary duties to the estate and allowed the side agreement to stand.
Estate and transition planning can help prevent family disputes
Imagine the toll this case took on the family. It’s quite possible that parents can prevent these types of conflicts over what happens to the farm when they pass on. An initial step for parents is to determine which heirs want to transition into owning and managing the farm, and what their future roles with the farm might be. This often raises other tough questions parents must face: how to provide an inheritance to children who don’t want the farm when other children do want the farm? Must or can the division of assets be equal among the heirs? What about other considerations, such as children with special issues or not having heirs who do want to continue the farm? These are difficult but important questions parents can answer in order to prevent conflict and irreparable harm to the family in the future.
The good news is that there are legal tools and solutions for these and the many other situations parents encounter when deciding what to do with the farm and their assets. An attorney who works in transition planning for farmers will know those solutions and can tailor them to a family’s unique circumstances. One agricultural attorney I know promises that there’s a legal solution for every farm family’s transition planning issues. Working through the issues is difficult, but identifying tools and a detailed plan for the future can be satisfying. And it will almost certainly prevent years of litigation.
The text of the opinion in Verhoff v. Verhoff, 2019-Ohio-3836 (3rd Dist.) is HERE. For more information about farm estate and transition planning, be on the lookout for our soon-to-be released Farm Transition Matters law bulletin series or catch us at one of our Farm Transition Planning workshops this winter.
Tags: farm transition planning, Estate Planning, statute of frauds, contracts, fiduciary duties, estates
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