Recent Case Highlights the Importance of Clarity and Follow Through In Avoiding Family Disputes
The recent Wisconsin Court of Appeals decision In the Matter of the Living Trust of Margaret Sheedy and Patrick Sheedy highlights not only the importance of clear drafting, but also follow through in avoiding family disputes in estate planning. The case involves a dispute between six siblings regarding the treatment of their parent’s cabin in two successive trusts. The first trust, drafted in 1995, in essence divided the cabin between all of the sisters, while a subsequent 2004 trust directed the cabin to be distributed to only one child as a specific bequest. That trust was later further amended, changing the distribution to back to shared interest to be divided between the children. The 2004 did not indicate whether it was intended to revoke the 1995 trust. Although the parents created both trusts together, one parent completed four amendments to the 2004 trust after the death of the other parent. It was not clear from the 2004 trust whether one of the grantor parents had the ability to amend the trust following the death of the other.
At the time of the surviving parent’s death in 2012, the cabin was titled in the name of the 1995 trust, and it was unclear which of the trusts or trust amendments governed its disposition. A group of the siblings argued that it was the 1995 trust that controlled the cabin’s disposition because of the title. Unsurprisingly, the sibling who was to receive the cabin outright under the 2004 trust argued that, though that trust did not explicitly revoke the 1995 trust, the 2004 controlled.
Ultimately the Court of Appeals concluded that the 2004 trust revoked the 1995 trust, the cabin title to the 1995 trust was not dispositive, and the surviving parent was able to amend the 2004 trust after the death of the first grantor. The sisters are to share the cabin equally. However, the real lesson from the Sheedy case is that each of the disputes between the siblings could have been avoided had the trust documents been explicit about their intentions. The language of the 2004 trust could have easily stated it was revoking the 1995 document. A simple addition could have also confirmed the ability of a surviving grantor to amend the document. The additions of these two sentences might have helped avoid prolonged litigation between siblings after the death of their parents. Additionally, the dispute about the ownership of the cabin property by the trust could have been avoided by follow-through on updating the title after the 2004 plans were in place.
If you have questions about estate planning, please contact a member of the Stafford Rosenbaum Trust and Estates team.
