by: Patrick A. Randolph, Jr.m
Professor of Law
UMKC School of Law
randolphp@umkc.edu

DEEDS; WILLS; PRIORITY: Gift deed executed and recorded transferring land to children takes priority over the terms of an unprobated will executed simultaneously with the deed.

Giefer v. Swenton, 928 P.2d 906 (Kan. App. 1996).

A father, prior to death, executed a deed granting one-seventh interests in the family farm to each of his seven children. A simultaneously executed will and a subsequent will, both unprobated, attempted to devise the same property to the children; but the will, unlike the deed, contained the requirement that one son would have the right to buy the interests of all other children for a specified price. The father never actually relinquished control of the deed, but three years after executing it directed his daughter to record the deed at a time when he was ill and thought himself near death. The daughter recorded the deed and returned it to him. After this event, the father executed a second will with some changes from the first, but renewing the devise to the children and the condition favoring the one sone. The father continued to live on the farm and enjoy all the profits from it until he died. After the father's death the family did not elect to probate either of the wills, The son attempted to acquire the land at the stipulated price, as witnesses made clear had been the father's express intent all along. One child refused to sell to the chosen son her one-seventh interest. The trial court concluded that the deed to her and her siblings was invalid because undelivered.

On appeal, held: Reversed: The Kansas Court of Appeals found that the inter vivos deed carried with it a presumption of validity, that the recording of the deed was presumptive of evidence of its delivery, that the transfer of the property without consideration was evidence that a gift had been intended and that the existence of the unprobated wills did not overcome any of those presumptions and conclusions. Consequently, there was no obligation to sell to the chosen son the interests conveyed by deed, regardless of the intent of the unprobated wills.

Comment 1: The Court of Appeals, of course, had the option to leave the factual findings of the trial court undisturbed. It elected not to do so because (1) it concluded that deeds and wills are of such "divergent purposes" that they should not be construed together even if executed as part of the same transaction; and (2) it credited testimony of the daughter who recorded the deed that the father intended to make an inter vivos conveyance to avoid probate, and new what he was doing.

Although the court of appeals may have been correct technically, the editor would have done things differently. This was a family wealth transfer. The evidence was inherently ambiguous. The father's true intent, all agreed, was to have the property subject to the son's option right. The father's probable intent in executing the deed was based upon misinformation that the execution of the deed as he did was the only way to avoid probate. (The father could have inserted the son's purchase option and his own life estate on the deed and still have avoided probate.) But the father's intent, taking into account his actions regarding the will, his retention of the deed and his retention of the land, was really a hopeless muddle. The trial court's ruling more directly facilitated the father's intent here, and there really is no way of being certain that the deed was valid, as everything depends upon the father's intent. Under the circumstances, the court of appeals would have been wiser had it simply affirmed the lower court without opinion. There was an adequate basis to conclude that the statutory presumption of delivery from recording was overcome.

Comment 2: The case is a model of the kinds of problems that arise from amateurish attempts by farmers to avoid probate. This farmer relied upon his own judgment and that of his daughter. Others rely upon "quack" remedies suggested in books or on poorly prepared accountants or other financial advisors. (Undoubtedly there are some inadequate lawyers involved as well.)

This activity is prompted in large part by the fact that, historically, many probate attorneys (and perhaps probate courts) have charged fees based upon a percentage of value rather than actual cost. Although one can make the argument that it is appropriate for large estates to pay the costs of a system that also benefits small estates (which get a bargain rate), in the modern era the value of these farmsteads often is so high that fees based upon percentage are unwarranted even by this argument. (The editor never agreed with the argument anyway.) The editor understands, however, that percentage fee devices aren't the norm in many areas anymore. Perhaps the bar would do well to explain this to the farmers. These family wealth transactions need lawyering more than ever. It is up to the bar to get the word out that legal and court costs will not destroy the farm, and to let farm families know that adequate and valuable estate planning is available at reasonable cost.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Walter at the ABA. (312) 988 5260 or stacywalter@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.