Is the Law Ambiguity Ambiguous? Clarifying a Confusing Bequest

Gift planners suffer heartburn over various situations, but one is at the top of the list: a long-awaited and significant bequest, expressed in language that is open to various, and contradictory, interpretations. Sometimes these documents arrive while the donor is living. In other cases, the Notice of Probate is the first sign of trouble.

This hypothetical tale—based on real cases—brings the problem into perspective and enumerates factors that will play into a charity’s action plan in ambiguity cases.

Sally is the Director of Gift Planning at the Society of the Holy Spirit, a religious charity. For years, Joanne Brahms has been one of the Society’s most generous supporters and has repeatedly promised a large bequest. She recently completed her will, in which the operative clause (“Gift Language”) reads as follows:

I leave my home to my dear friend Wolfgang “Moe” Zart, my personal property to my niece Viv Aldi and all the rest and residue of my estate to the Society of the Holy Spirit to be used for its general purposes.

Sally knows that the “rest and residue” consists of bank accounts and stock worth in the $10 million range, as well as a near-worthless condominium in an undesirable building. She also knows from talking with Joanne that she intends to leave only her household effects and her car to her niece, yet Sally is uneasy with the broad term “personal property,” which could easily embrace the financial accounts as well.

If a probate court adopted that reading of the Gift Language, Ms. Aldi would be a rich young woman, leaving the Society “out in the cold” with nothing more than a condominium of little value.

Summoning her courage, Sally called Brahms to express her concern. Joanne reassured Sally that the language of the will would accomplish her intention to provide a gigantic bequest to the Society. Brahms refused to draft a clarifying codicil, citing the death of her estate planning attorney as a major impediment. Brahms died three years later. She never changed her will.

Does the Society Get the Windfall Bequest?

Maybe and maybe not. As with so many of these issues, state law controls.

Many courts would award the Brahms fortune to the niece on the basis that “personal property” has a clear and established meaning and includes financial accounts. The so-called “plain meaning rule,” a staple of will interpretation for centuries, would support this counter-intuitive result. (Our hypothetical is based in part on the Maryland case of Emmert v. Hearn, 309 Md. 19 (1987), where the court adopted a similar position).

But Don’t Courts Look to “Extrinsic Evidence” Where the Will Is Ambiguous, as It Is Here?

Certainly, ambiguity is one of the main reasons that courts look “outside” the testamentary document for clarification of the decedent’s intent. However, ambiguity—like beauty—is in the eye of the beholder and, ironically, the meaning of “ambiguity” is itself quite ambiguous.

Historically, courts have found two types of ambiguities in wills:

• “Patent” ambiguities are those evident from a reading of the will itself. This would be the situation if a testator left “one-third (1/3%) of my estate to my best friend Joseph Smith.” Does he mean .33% (what the will says) or 33 1/3% (more like it for a best friend)?
• “Latent” ambiguities refer to provisions that become troublesome only when one considers facts extraneous to the will itself. An example of this would be a case in which a testator left a bequest to “my nephew” without specifying which of his three nephews he meant.

Older cases tend to permit “extrinsic evidence” in cases of latent, but not patent, ambiguity. (The resolution of patent ambiguities seemed to proceed on a case-by-case basis, usually by applying one-size-fits-all “rules of construction.”)

CCK TIP:  A modern, but by no means universal, trend is to permit the consideration of extrinsic evidence to clarify any ambiguity, latent or patent.

So, Where Does That Leave the Society?

Recalling that this is only a hypothetical, we still believe that the outcome would be dependent on state law, involving both statutes and prior decisions. The uncertainty results from these considerations:

1. It is not clear that the Gift Language is ambiguous.

Although other states have declined to follow the Emmert decision, there is a good argument that “personal property” is a well-defined and precise term, at least in the context of estate litigation, if not in popular usage.

If courts start looking to extrinsic evidence to ferret out idiosyncratic meanings of everyday expressions, do we risk opening the floodgates to a torrent of probate litigation concerning clear and unambiguous wills?

2. If the court finds the will ambiguous, how will it resolve the case?

The Society would argue that the will contains a “latent” ambiguity because once we realize the nature of the estate in question, it becomes clear that the “rest and residue” of the estate is worthless if the niece gets all the personal property including the financial accounts. The Society would suggest that Ms. Brahms certainly did not intend the residuary gift provision in her will to be an empty gesture.

At that point, if the court agreed to consider extrinsic evidence, the Society might still have a problem. From what we know, the only evidence of the intent of the residuary clause is the conversations between Sally and the decedent. (Remember that the drafting attorney is deceased).

Even though Sally is an “interested” witness, she has an impeccable reputation for honesty. Can she testify and save the bequest for the charity? Back to state law.

3. The “Dead Man’s Statute” may prevent Sally from testifying.

Some states still have versions of the “Dead Man’s Statute,” which prevents a party from giving self-serving testimony about communications from a now-deceased person. Where in force, the rule applies in probate proceedings and might bar Sally’s testimony in our hypothetical. “Death having closed the lips of one party, the law closes the lips of the other.”  Estate of Cunningham, 94 Wash. 191 (1917).

CCK POINT TO PONDER

If Sally’s testimony were the only means to the resolution of ambiguity, would a court allow her to appear even if a Dead Man’s Statute applied? The answer is no, but if the Society of the Holy Spirit had business records (in the form of gift planning files) that memorialized the gist of the Joanne-Sally conversations, those might well be admissible. Note: Legitimate business records would be those made at or near the time of the conversations and not documents created much later, even if based on good and accurate memories.