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The Montana Estate Lawyer

Thursday, June 24, 2021

When a Will and a Contract Conflict

A Last Will and Testament devises one’s property after their passing. Great weight is given to this document; Wills have formalities that other documents don’t, hinting to its importance. But what happens when a devise in a Will contradicts a formerly executed contract? 

This issue was litigated recently in Ohio. In this case, Twila entered into a partnership agreement in 1986 with her husband and another couple. The partnership agreement contained a provision that stated: “To protect and preserve the family character of this Partnership, each of the undersigned partners agree to have prepared and to execute a last will and testament so as to ensure that his or her interest in this Partnership will, upon his or her death, pass to and vest in his or her surviving spouse. Each partner, who shall ultimately become a surviving spouse, further agrees to have prepared and execute a last will and testament so as to vest his or her interest in this Partnership in his or her children (lineal descendants). Should any partner neglect or fail to execute such last will and testament, so as to ultimately cause his or her partnership interest to pass to and vest in an individual, who is not a spouse or lineal descendant of these partners, then upon such event, the Partnership shall be liquidated and dissolved forthwith.” 

Twila’s husband later passed away and she inherited his portion of the partnership interest. In 2014, Twila executed a Will that named her grandson, Jeffrey, as the beneficiary of her estate. The Will did not specifically mention the partnership interest. However, Twila’s estate planning attorney testified that it was her intent to devise the partnership interest to Jeffrey via the Will. Twila’s son, Roger, objected to this and filed a claim in the probate case. The trial court ruled for Roger; Jeffrey appealed. 

Jeffrey’s arguments were that he was a lineal descendant, as Twila’s grandson. In the alternative, he argued that the court should have dissolved the partnership pursuant to the terms of the contract. The court here disagreed with Jeffrey’s arguments, stating that the partnership agreement specifically stated children, not just lineal descendants. And the word children has a plain meaning. As to his second argument, the partnership agreement only called for dissolution if the partnership interest passed to an individual who wasn’t a spouse or lineal descendant. This wasn’t the case – both Jeffrey and Roger were Twila’s lineal descendants. So, dissolution of the partnership interest wasn’t warranted. 

Importantly, the court cited various cases and said that contract law controls over testamentary law. If a contract specifically addresses the disposition of certain property, the terms of the contract will control the property versus the property’s disposition in a Will. In this case, Roger won and received the partnership interest. The lesson here is it is important to not only know what property one has, but to read any contracts that deal with that property so as to put a complete and legally correct estate plan in place. 

Jon 

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