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As we have stressed time and again, procedural correctness is of paramount importance in the context of estate planning. In this way, estate planning is not unlike family law, as both areas depend heavily on attention to minute details as they facilitate their respective outcomes. Lately, we have discussed numerous cases which deal with procedural principles governing the enforcement of wills under current Maryland law.
For the most part, the cases we’ve referenced have been relatively recent, but we’ve also touched on older cases which establish core precedents. In this post, we will discuss a somewhat older case, Shump v. Wannall (2016), which introduced a key principle relating to residuary clauses in wills which direct that assets be transferred to trusts following other primary distributions. Let’s examine this case in its entirety.
Facts of the Case
In April of 2013, the will which ultimately came under judicial scrutiny was drafted. The testator (D. Lynne Crawford) created a “residuary clause” which stated that a portion of the estate (whatever remained after certain initial distributions to beneficiaries) be directed to a trust. However, although that clause was properly constructed within the will document itself, the trust referenced in the clause wasn’t created simultaneously. The trust wasn’t created until a period of time later – around 3 weeks.
Because the trust referenced in the residuary clause wasn’t established at the same time as the will itself, the validity of the clause came under challenge. An argument was made that the clause ran afoul of the relevant law, Maryland Estates and Trusts Code Section 4-411, which had been interpreted strictly to require simultaneous execution of both will and trust.
The clause was initially rendered invalid and then went before the appellate division.
Holding & Post-Holding Analysis
After review, the appellate division (Court of Special Appeals of Maryland) concluded that the strict interpretation of the relevant law undermined the validity of the residuary clause. This meant that the executor of the will wasn’t obligated to direct the remaining assets in the estate to the trust referenced in the clause. In Maryland estate law, the impact of this opinion is twofold: it reinforces the strict interpretation of Section 4-411 which places a firm “simultaneity requirement” on residuary clauses which have a pour over effect, and it limits the definition of “simultaneous” or “contemporaneous” by stating that these terms don’t encompass trusts created within a “reasonable period of time” after the execution of the will itself. Wills with residuary clauses for pour over trusts must have evidence that any given trust was created at the same time, or extremely close; 3 weeks later is therefore not close enough.
Again, these technical details might not seem significant to laypeople, but we can see quite easily the usefulness of such expertise in this type of situation. Clearly, the testator intended to transfer certain assets to the trust, but this technical rule prevented the obvious intentions of the testator from being carried out. If the will had been executed properly – which required full grasp of the underlying rules – then the testator’s intentions wouldn’t have been thwarted. This is where the expertise from a qualified estate planning attorney comes into play.
Contact the Murphy Law Firm for More Resources
To learn more about the potential effects of residuary clauses in wills, drafting a new will, modifying a trust document, or any other related estate planning matter, contact one of the estate planning attorneys at the Murphy Law Firm today by calling 240-219-1187.
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