Daily Development for Tuesday, December 7, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu

PROBATE; BENEFICIARY DEED: Under statute authorizing beneficiary deed, creating a revocable interest that becomes final only upon death of grantor, a deed stating that it was valid only upon death of the grantors, creating a life estate in the survivor of the grantors with a remainder to a stepchild, is a nullity for any purpose, since there can be no life estate in a survivor that is effective only upon “death of the grantor.”

Pippin v. Pippin, 2004 WL 2749812 (Mo App. 12/02/44)

The case is complicated by the fact that the makers of the deed, in 2000, wrote it in order to comply with a statute added in 1989, but repealed and replaced in 1995. In fact, the deed refers to the older statute on its face.

The property in question was owned solely by the Decedent when the deed was executed. Both Decedent and his spouse executed the deed, however, perhaps in order to establish a waiver of marital rights (that would have been the wrong way to do it) or perhaps by simple mistake. .

Under the old statute, a beneficiary deed could not be effective unless it stated that it did not take effect until the “grantor’s” death. Therefore, a recital deferring effectiveness until the death of the survivor of the grantors (husband and wife) was included. However, the drafter also purported to create a life estate in the survivor by such deed. As written, the court ruled, the deed was invalid, as to grant a life estate to the surviving spouse was a nullity when, by definition, the deed could not take effect until the both spouses, husband and wife, had passed away.

Under the revised statute, that took effect in 1995, the requirement appeared that a beneficiary deed could not take effect until the death of the “owner.” Had the drafter written the deed to comply with the requirements of the statute then in effect, it would have been valid; but,
All of this worked to the advantage of the surviving spouse, in fact, since she took the property in fee under the decedent’s will. The loser was her stepson, who had an apparently perfectly valid reversion that fell with the disallowance of the entire deed.

Comment 1: Two dissenters maintained that the contingency on the grant of the life estate to the surviving spouse should have been disregarded since the intent of the grantor was obvious. Wasn’t it?

Comment 2: How could this deed have been saved? Remember that it wasn’t valid as a beneficiary deed unless it was effective as of the date of the death of the “owner” - the decedent. Would it have been possible to read the grant to the stepson as a present grant from the owner of a future interest - a reversion - as of the time of Decedent’s death, and to disregard entirely the granting language of the deed with respect to the spouse, who had no interest to convey anyway? What harm would that have done?

Comment 3: Does son have a malpractice claim against the lawyer who botched up the deed? Of course, the stepson was not the lawyer’s client. See: Radovich v. Lock-Paddon, 41 Cal. Rptr. 2d 573 (Cal. App. 2d 1995). (Disappointed beneficiary of unexecuted will cannot sue attorney for malpractice based upon attorney's negligent failure to prepare will in a timely fashion or follow up to insure its execution in light of testator's illness and imminent death. ) That case was based in part on a lack of privity. But a DIRT commentator on that case had this to say:

Historically, the lack of privity between the lawyer and the beneficiary prevented malpractice actions against the lawyer. Most courts today seem to be recognizing that the beneficiaries of the estate are third party beneficiaries of the professional relationship between the lawyer and the testator.”

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