January 30, 2019

Lapsed Residuary Gift

Occasionally a will names as an individual as a beneficiary who does not survive the testator. For example, Tom writes a will and names his friend Ben as a 20% residual beneficiary of his estate. Ben dies before Tom and there is no clause in the will that states what happens to Ben's 20% interest should he predecease Tom. The following issue arose in a recently decided published appellate opinion in California. 

The case originated in Contra Costa County Superior Court.

Estate of Stockird (2018) _______ CA4th _______

"Cheryl D. Stockird died, leaving a handwritten will that transferred "all my property and everything I may be entitled to inherit" to her life partner, John L. Aguirre, Sr., and an aunt related by marriage, Patricia Ambrose. The will did not include alternative provisions for disposition of the shares if either gift lapsed. Ambrose died before Stockird."

"On February 3, 2014, Stockird executed a holographic will, which provided in its entirety as follows:
"I Cheryl Denise Stockird declare this as my last will. I am single and I have no children. I hereby leave all my property and everything I may be entitled to inherit to:
"65% John L. Aguirre Sr.
"35% Patricia Ambrose
"I sign this on February 3, 2014.
"[Signature: Cheryl D. Stockird.]"
Aguirre was Stockird's long-time life partner. Ambrose, who was not related by blood to Stockird, had been married to Stockird's predeceased maternal uncle. Ambrose died in June 2014.
Stockird died in January 2015. Stockird's will was admitted to probate, and Aguirre was appointed administrator with will annexed."

"After Stockird died, her will was admitted to probate. Aguirre petitioned the probate court for an order declaring he is entitled to Stockird's entire estate as the sole surviving residuary beneficiary under Probate Code section 21111, subdivision (b) (§ 21111(b)). Stockird's half brother, Bruce Ramsden, filed a petition arguing the lapsed gift to Ambrose must instead pass to Stockird's estate under section 21111, subdivision (a)(3) (§ 21111(a)(3)). Ramsden then asserted that as Stockird's only surviving heir, he is entitled to distribution of Ambrose's share under the laws of intestacy.

The probate court agreed with Ramsden and entered an order transferring the residuary gift that would have passed to Ambrose to Stockird's estate."

The court of appeal reversed, finding that "the plain language of the statute and the clear intent of the Legislature to abolish the no residue of a residue rule and avoid intestacy, we conclude the 35 percent lapsed gift does not go to Stockird's estate under section 21111(a)(3), but, subject to determination of the reformation petition filed by Ambrose's descendants, must pass to Aguirre under section 21111(b)."