Duke Blazes a New Trail in Estate Law

The California Supreme Court recently issued its long-anticipated decision in Estate of Duke¹; the decision immediately changes the way in which all state courts evaluate wills.  At issue was a rule established by the Supreme Court in 1965 that prohibited courts from considering evidence outside the four corners of a will to correct a drafting mistake.²  The court held that an unambiguous will may be reformed if clear and convincing evidence establishes that the will contains a mistake in the expression of the testator’s intent at the time the will was drafted and establishes the testator’s actual specific intent at that time.  

Changing 50 Years of Precedent

In a meticulously crafted, 35-page opinion, the court carefully explained how and why a unanimous court was reversing course from its prior precedent in Barnes.  Reaching all the way back to the 1870s to analyze the root of its decision in Barnes, the court noted that over time, judicial sentiment on evaluating extrinsic evidence has shifted.  In rejecting an argument that permitting reformation of unambiguous wills would cause too much uncertainty in estate planning, the court confronted the reality that some courts were already “essentially reform[ing] wills” under the guise of construing an ambiguity.³   The court concluded that to serve the paramount purpose of probate – to interpret and give effect to a person’s testamentary wishes – courts should be permitted to “reform” wills to correct mistakes.  In doing so, the court noted that its new rule meant wills would be treated no differently from other written documents when it comes to mistakes found in those documents.⁴ 

The court’s ruling also eliminates an inconsistency that may have had disparate socioeconomic impact.  It noted that the current regime of allowing reformation for trusts, but not wills, “appears to favor those with the means to establish estate plans that avoid probate proceedings, and to deny a remedy with respect to the estates of individuals who effect their plans through traditional testamentary documents.”⁵ The court’s observation reflects a common-sense understanding of the categories of documents trial courts are confronted with and the types of litigants associated with each.  Put simply, those with smaller estates are more likely to have unsophisticated wills, while those with more assets are more likely to invest in more sophisticated trusts.  The former scenario is precisely what appeared to be the case in Duke.  As the court observed, Duke creates a greater parity by allowing the reformation remedy for the pauper’s mistaken will document as well as the prince’s trust document. 

A High, Specific Bar

Duke doesn’t make reformation of an unambiguous will easy.  After all, in a will dispute, the testator – the best witness to testify regarding his own intent – is necessarily deceased.  The possibility of fraud by unscrupulous heirs can’t be ignored.  Giving a nod to the evidentiary concerns underpinning the statute of frauds and the statute of wills, the court imposed a “clear and convincing” standard for the reformation of wills.  That standard, higher than the normal “preponderance of the evidence” standard used in most civil disputes, is an effort by the court to exclude cases in which either the mistake or the true intent are difficult to ascertain.  Specifically, the litigant hoping to reform a will must now show clearly and convincingly:  (1) that there’s a drafting mistake and, (2) what the testator’s actual, specific intent for the property was at the time the testator executed the will.  In the opinion and in oral argument, the court acknowledged that, even with the heightened evidentiary standard, trial courts will sometimes reach the wrong result.  But the Duke court appears to be saying that the threat of admitting evidence that might occasionally lead to a wrong outcome at the trial court level is preferable to excluding all evidence, which certainly would result in a wrong outcome in some cases.

No Fear of the Floodgates

The Duke Court directly addressed the argument (often raised as a reason to deny a new remedy) that “allowing reformation will result in a significant increase in probate litigation and expenses.”⁶   The court noted that because of the rule allowing extrinsic evidence to find an ambiguity and resolve it, any additional amount of litigation is likely limited.  The court seems to take the (real world) position that the salient factor in estate litigation is the amount of money at stake rather than the availability of the precise remedy of reformation. In the court’s apparent view, the benefits of legal and social consistency outweigh the risk of increased litigation, and, as to those few remaining cases that support a reformation claim but not an ambiguity claim, the clear and convincing evidentiary standard will “help the probate court to filter out weak claims.”⁷ While the justices seem to tacitly acknowledge some increased litigation, they conclude that there’s a sufficient need for the new remedy and that they’ve installed sufficient safeguards to ameliorate abuse.

Takeaways 

Duke’s primary importance is in the newly available remedy of reformation for potential will beneficiaries suffering under an obvious mistake in the will.  After Duke, beneficiaries no longer have to contort their claims into an ambiguity theory, which may or may not be present.  Perhaps more significantly, these beneficiaries don’t have to agonize over whether the mistake in the will justifies initiating undue influence, elder abuse, or capacity claims – serious allegations that often destroy familial relationships and hurt the decedent’s reputation.  They can now assert the more gracious mistake claim and have the will reformed to the decedent’s true intent.

The lesson to those advising clients with significant assets is clear: if the client has a preference as to how property should pass at his death, he would be well-served to have testamentary documents professionally drafted.  The charities in Duke eventually prevailed, and the testator’s intent was eventually honored, but only after more than seven years of litigation and untold thousands in attorney’s fees. 

Endnotes

1. Estate of Duke, S199435 (July 27, 2015);

2. Estate of Barnes 63 Cal.2d 580 (1965) .

3. Duke, supra note 1, at p. 20. 

4. Ibid., at p. 25. 

5. Ibid., at p. 30.

6. Ibid., at p. 26.

7. Ibid., at p. 27.

 

Ryan Cunningham is an associate and Allon E. Levy is a shareholder and chairperson of the Appellate Practice Group, both at Hopkins & Carley in San Jose, Calif.