Proper Planning Can Reduce Financial Sting, Even If Emotional Sting May Remain

Proper Planning Can Reduce Financial Sting, Even If Emotional Sting May Remain 

Charles Kuralt, the CBS TV Journalist and On the Road reporter said, “The love of family and the admiration of friends is much more important than wealth and privilege.” It is ironic that, when he died at age 62 of complications from Lupus, he had two families competing for his love, and more importantly, his wealth.

Charles had a wife in New York, Suzanne “Petie” Baird Kuralt, and two daughters from a previous marriage. He also had a thirty-year intimate relationship with Patricia Shannon and her family, who lived in Montana.

Charles’ New York will, drafted in 1994, left all his estate to Suzanne and his two daughters. In 1997, in a gift transaction disguised to look like a sale, Charles transferred his cabin and twenty acres in Madison County, Montana, to Patricia. He promised her he would also leave an additional ninety acres bordering the Big Hole River to her.

Charles had planned a trip to go to Montana to execute a transaction to transfer the remaining ninety acres to Patricia. He fell ill immediately before the trip and, while in the hospital, wrote the following letter to Patricia:

“June 18, 1997

Dear Pat:

Something is terribly wrong with me and they can’t figure out what. After cat-scans and a variety of cardiograms, they agree it’s not lung cancer or heart trouble or blood clot. So they’re putting me in the hospital today to concentrate on infectious diseases. I am getting worse, barely able to get out of bed, but still have high hopes for recovery … if only I can get a diagnosis! Curiouser and curiouser! I’ll keep you informed. I’ll have the lawyer visit the hospital to be sure you inherit the rest of the place in MT, if it comes to that. I send love to you & [your youngest daughter] Shannon. Hope things are better there!

Love, C.”

Charles passed away while in the hospital and no formal documents were ever executed transferring the remaining ninety acres to Patricia. After his death, Suzanne probated Charles’ will to transfer his New York assets to her and Charles’ daughters and filed a petition for an ancillary probate in Montana to handle the ninety acres. Patricia filed a competing petition for probate of the ninety acres, alleging the letter Charles sent her was a codicil to Charles’ 1994 will and that it was effective to convey the ninety acres to her. A court battle ensued. The Montana court eventually held that the letter was in fact a holographic codicil to Charles’ will and that it specifically devised the Montana property to Patricia. To add salt to the wound, the court held that under the terms of the Will, the residuary estate (which was left to Charles’ children), was responsible to pay the estate taxes associated with the Montana property. The taxes were estimated to exceed $300,000 and would come from his children’s inheritances even though they did not benefit from the Montana property.

Knowingly or unknowingly, Charles got his wish that Patricia receive the property in Montana and that his wife and children receive everything else. It is unknown whether Charles intended for his children to have to bear the burden of paying the estate taxes associated with the Montana property received by Patricia, but it is not likely that he intended that part of the result.

Had Charles consulted with an estate planning attorney, even though it would have been embarrassing to do so, he could have saved all his loved ones the agony and expense of litigation after his death. He also could have structured the transaction so that his children would not have been liable for payment of the estate taxes after his death. If the attorney was only representing Charles, he would not have had to disclose the relationship with Patricia to Suzanne. While the planning would not have eased the pain of betrayal, it could have reduced or eliminated the need for litigation in Montana and the sting of the tax bill to his daughters. It is even possible the transaction could have been completed while he was alive, which may have eliminated the need for a probate proceeding in Montana.

While in the end the battle over Charles’ wealth (and the betrayal) may have cost Charles the love of his wife and daughter, his story does teach us several important estate planning lessons:

1. The use of a will requires a probate after death;

2. If property is located in more than one state, more than one probate proceeding may be required;

3. In most states it is possible to amend a will through the use of a hand-written document, although judges in other jurisdictions may have come to a different conclusion as to whether Charles’ letter was in fact a codicil to his will;

4. Seemingly meaningless provisions in a will, such as a tax allocation clause, can have dramatic impact on what a beneficiary receives;

5. While an estate planning attorney could not have spared his wife and children the pain of learning of Charles’ betrayal after he died, a properly drafted will or trust could have avoided some or all of the litigation challenging the codicil, avoided probate proceedings in one or both states, potentially avoided the imposition of the estate tax, or at the least, assure that his children did not end up paying the taxes on the property that passed to Patricia.

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