Interpretation of a Will

Santa Clara County Superior Court

Words matter. Words in a will matter more you could say. This brings us to the story of a recent unpublished appellate decision regarding the interpretation of a will.  This stemmed from a trial court decision in Santa Clara County Superior Court. Case # PR128527.

The late Ethel Josephine Hinz penned a will entirely in her own handwriting. The holographic will read, in its entirety, as follows:

"I, Ethel Josephine Hinz; aka as E.J. Hinz; declare that this will, is my only and last testament. 

"I, name my son, Lester F. Hinz, Jr., as sole heir and executor to manage estate affairs. 

"In the event of any challenges to said estate, I hereby authorize said Executor to dispense the amount of $1.00, one dollar, to any claimant. 

"I am confident that my son, as Executor, will also subscribe to my wishes, along lines that were discussed previously and privately in the past. A simple cremation, without ceremony is the wish of Ethel J. Hinz."

Since the value of the estate exceeded $10M, there were naturally interested parties in this matter. These parties included Lester's wife and two grandchildren of Ms. Hinz (Lester passed away after his mother). The three of them composed the heirs of Ms. Hinz's estate.

The crux here revolved around the phrase "I, name my son, Lester F. Hinz, Jr., as sole heir and executor to manage estate affairs." The trial court invalidated the will as it found that extrinsic evidence could not resolve the ambiguities regarding the aforementioned phrase. The will was found to be ambiguous because it was not clear if Ms. Hinz intended for Lester to be the sole beneficiary or was acknowledging that Lester was her sole child. Due to extrinsic evidence not yielding a clear answer of what Ms. Hinz meant, the trial court invalidated the will. Therefore, Ms. Hinz's estate passed by intestate succession to her heirs, i.e. Lester's wife and her Ms. Hinz's two grandchildren. However, Lester's wife appealed the decision to the 6th District Court of Appeal. On appeal, the trial court's decision was reversed. 

The majority opinion found that the will was unambiguous, i.e. the only interpretation of the word "heir" as used in the will was "beneficiary." Therefore, the Court of Appeal found the will to be valid and instructed the trial court to award 100% of Ms. Hinz's estate to Lester's wife.          

For reference, if you use a $10M valuation figure, the trial court would've awarded the estate as follows:

1. Lester's wife - $5M
2. Ms. Hinz's grandchild - $2.5M
3. Ms. Hinz's grandchild - $2.5M

Following the appellate court's ruling, the distribution would go

1. Lester's wife - $10M
2. Ms. Hinz's grandchild - $0
3. Ms. Hinz's grandchild - $0

Kind of a big difference.

Granted, Ms. Hinz's grandchild can always appeal this decision to the CA Supreme Court or petition for a re-hearing.

Ambiguous Terms in a Trust - Extrinsic Evidence

Occasionally a person will write a trust with an ambiguous distribution clause. That is, the clause is open to reasonable multiple interpretations. The determination of the rightful beneficiary is obviously paramount because no distribution can be made until the right beneficiary is determined. Absent a settlement agreement, you cannot just split the inheritance between the two beneficiaries.

California law says that in such a situation, extrinsic evidence can be introduced to construe the ambiguous clause. Ike v Doolittle (1998) 61 CA4th 51. Extrinsic evidence is documentation found outside the instrument in question used to determine intent or construction of the instrument. For example, this could be written statements made by the person in the past.

The following example is how an ambiguous clause in a trust could be resolved.

Alf Melmac was an avid surfer who dreamed of catching that perfect wave. All of Alf's free time was dedicated to surfing along the long and beautiful California coast. Alf was quite wealthy so he decided to write a trust after hearing about the drawbacks of probate. Alf was also quite philanthropic and decided to bequeath his entire estate to his favorite surfing spot. 

The problem was that Alf used the term "Surf City, U.S.A." when designating the sole beneficiary of his trust (he wrote the trust himself). In particular, two cities in California lay claim to such a nickname, Santa Cruz and Huntington Beach.  

In light of the ambiguity, extrinsic evidence was needed to ascertain which "Surf City, U.S.A." was the rightful beneficiary of Alf's estate, Santa Cruz, CA or Huntington Beach, CA. Amongst Alf's personal effects were journals talking about his many surfing experiences while in Santa Cruz. He also mentioned running in Santa Cruz's annual Wharf to Wharf fun run held on the last Sunday in July. While he had surfed Huntington Beach, he had surfed Santa Cruz far more times. Thus, Alf's estate was distributed to Santa Cruz, CA instead of Huntington Beach, CA.   
 
A real life example of a person writing an ambiguous distribution clause occurred in Estate of Black (1962) 211 Cal.App.2d 75. In that case, Coral Williams of Los Gatos, CA wrote a holographic will with the following clause:

"To The University of Southern California known as The U.C.L.A. My entire Estate for Educational purposes.”

Whoops. 

Naturally the case was litigated between the two schools, i.e. the University of Southern California and the University of California, Los Angeles.