Author: Drew Skjoldal

In recent weeks, we’ve seen the effects of COVID-19 (“Coronavirus”) on our economy and society in many ways. In sports, as of the date of this writing, the National Basketball Association has suspended its season and many NCAA tournaments are scheduled to be played without fans in the arenas. In academics, colleges and universities have cancelled spring semesters, extended breaks, and arranged to hold classes online. In arts, many music concerts are being cancelled. And, travel and vacations are being disrupted throughout the country and worldwide.

In all of these situations, there may be a contract in place to provide for various products and services that will no longer be provided. Naturally, the question arises: since there is a contract in place, is the party who fails to fulfill its obligations in breach of contract and therefore liable to pay damages?

While the answer to this question is surely different for every contract and situation, one determining factor may be whether the contract contained a “force majeure” clause. A force majeure clause is a contract provision that excuses a party’s performance of its obligations under a contract when certain circumstances beyond the party’s control arise, making performance inadvisable, commercially impracticable, illegal, or impossible. These clauses are often found in the “boilerplate” sections of contracts and are not often closely scrutinized or negotiated when the contract is written. However, with Coronavirus making an increasingly significant impact on our economy, it is likely that many people and businesses will be requesting that their performance under their contracts be excused because fulfilling the terms of the contract is no longer practical or possible.

If you’ve had a cancellation, you are well-advised to read your contract, and if you have questions on its enforceability, please contact one of the attorneys at Lynn, Jackson, Shultz & Lebrun.

A fellow attorney at our law firm recently went to a Corb Lund concert in Rapid City, South Dakota. She invited me to listen to Corb’s song, S Lazy H, which is a ballad about a man’s experience growing up on a ranch, and his sister’s desire to sell the land for real estate development upon their parents’ deaths, rather than keep it in the family. Being from a ranching community myself, and having the privilege of working with many ranchers in my law practice, this song brought many real-life examples to mind. This song, S Lazy H, is a great musical depiction of a very common scenario that plays out in many ranch families. There is often a child who has put many years of sweat-equity into the ranch, working alongside his or her parents to keep the family business going, and attempting to transition the business down to the next generation. Then, there are often siblings who left the ranch to pursue other things and do not have the same practical or emotional connection to the land. If the parents of these siblings have not done proper estate planning, conflict in probate court is likely. The child working on the ranch (the “on-ranch heir”) will justifiably feel entitled to receive the ranch as an inheritance, while the child who is not working on the ranch (the “off-ranch heir”) will often wish to receive the fair-market value of the ranch and its real property in cash. The on-ranch heir will then often be forced to either sell a portion of the ranch or take on debt to buy out the off-ranch heir’s interest in the land, causing considerable hardship for the ranching operation.

The problem described above and portrayed in S Lazy H is common, but also can be prevented fairly easily. A good estate planning attorney will be able to help the family by talking through their succession plan and suggesting potential solutions.

I could say much more on this topic, but I will leave the storytelling to Corb Lund. I hope you enjoy it as much as I have.

Listen here.

The South Dakota Supreme Court recently considered whether a probate court proceeding on a petition for finding of intestacy erred because it did not first consider whether to admit a copy of the will to probate. The appellant argued that the “decision to grant the Appellees’ petitions for intestacy before determining whether the will [she] proffered was entitled to probate deprived [her] of her day in court and her ability to prove that the will may have been valid.” However, the South Dakota Supreme Court found that appellant “ignores the fact that she, as the proponent of the copy of [decedent]’s will found in the safe-deposit box, had ‘the burden of establishing prima facie proof of due execution’ of that document” and affirmed the probate court’s findings.

Background

The case of In re Estate of Fox, 2019 S.D. 16, stemmed from the death of a man who called off an intimate relationship of over twenty years but never made a new will. A year and a half before his death, the decedent met with his attorney to discuss his estate plan, and the decedent informed his attorney that he no longer was intimate with Ms. Herstedt, who was provided for under his will. His attorney advised him that if the decedent wanted to make sure that Ms. Herstedt did not recover from his estate, he should revoke his will in writing and physically dispose of the will. So, while sitting at his attorney’s desk, the decedent handwrote a document to revoke his will, stating “I hereby revoke all prior wills and codicils ever made or executed by me,” which the decedent signed in front of his attorney and his attorney’s secretary. The decedent’s attorney maintained the original hand-written revocation.

Prior to his passing, the decedent, who was unmarried and without children, informed some of his siblings and their spouses about the revocation of his will and his desire to make sure that his estate went to them. After the decedent’s passing, a diligent search of his home was conducted, turning up no wills. However, the decedent’s next of kin discovered a key and a lease agreement for a safe-deposit box, where the next of kin and his partner, whose name was still on the safe-deposit box lease, found a copy of his will which predated his handwritten revocation. Under the copy of the will, Ms. Herstedt was to take something; under the handwritten revocation and South Dakota’s intestacy statutes, Ms. Herstedt was to take nothing from the decedent’s estate. Accordingly, Ms. Herstedt filed a petition for probate of the will.

Dueling Petitions

Though Ms. Herstedt filed a petition for probate of the will, the only will that she recovered was not an original, which, under South Dakota law, gives rise to a presumption that the will was revoked. Shortly thereafter, the decedent’s next of kin filed petitions for adjudication of intestacy. After an appeal by Ms. Herstedt relating to a revocation of letters of personal representative to her, the fight returned to the probate court.

Once back in the probate court, the decedent’s next of kin moved to schedule a hearing on their petitions for adjudication of intestacy. At that hearing, the probate court considered testimony regarding the decedent’s actions and statements prior to the handwritten revocation, at which point the probate court entered findings of fact and an order of intestacy. Ms. Herstedt appealed, arguing that she was deprived of her day in court and ability to prove that the copy of the will that she filed with her petition for probate was valid.

Legal Standards

Under South Dakota law, SDCL § 29A-3-407, petitioners who seek to establish intestacy have a burden of proof to so establish, as do petitioners who seek admission of a will to probate, as do petitioners who seek to prove that a will was revoked. The statute ends by stating: “If a will is opposed by a petition for a declaration of intestacy, it shall be determined first whether the will is entitled to probate.”

Pursuant to SDCL § 29A-3-402(d), if an original will is not available to be admitted to probate, “the contents of the will can be proved by a copy of the will and the testimony or affidavit of at least one credible witness that the copy is a true copy of the original, and the will may be admitted to probate if the court is reasonably satisfied that the will was not revoked by the testator.” Further, under South Dakota law, SDCL § 29A-2-502(a), a handwritten document (holographic) is valid if the signature and material portions of the document are in the testator’s handwriting. Finally, “when a careful and exhaustive search fails to produce the original will, a presumption arises that the will has been revoked.”

The Conclusion

The South Dakota Supreme Court ultimately held that because Ms. Herstedt did not have a copy of the will to admit to probate, and because the court ultimately found that the will Ms. Herstedt sought to admit to probate was revoked, Ms. Herstedt could not establish that the copy of the decedent’s will was entitled to probate. She “failed to overcome the presumption that the will had been revoked for the same reason that she failed to prove that a copy of [the decedent]’s will was valid.”

Ms. Herstedt did not affirmatively present evidence attempting to prove the validity and non-revocation of the will in question. And, in light of the fact that the probate court had ample evidence on which to find that the decedent’s will had been revoked, the Supreme Court of South Dakota affirmed the finding that Ms. Herstedt had not attempted to have a valid will admitted to probate in light of the evidence of revocation.

The Takeaway

As the decedent’s lawyer in this case advised, if someone seeks to revoke a will without replacing the will with a new one, it is best to revoke the former will expressly and destroy the original will and all copies of the same. While the best practice would be to revoke the old will by executing a new one, that may not always be possible, and if there are copies of the revoked will still floating around after your death, someone who stands to gain from the old will may try to prove that it was your true intention.

The Trust and Estate Planning team at Lynn Jackson can help you traverse this and other legal issues to prevent such legal battles from arising after your passing.

Clients often come into my office for estate planning meetings and tell me they wish to avoid probate. Often, these clients have had a bad experience with a long, expensive, and emotionally charged probate proceeding that occurred after the death of a parent or other family member. Other times, clients have a negative opinion of probate that has been formed through receiving information from friends and family that is not always entirely accurate. In this article, I will explain what probate is, discuss some of the advantages associated with avoiding probate, and describe how this can be accomplished. It should also be noted that all of the information in this article will focus on South Dakota law.

1. What is Probate?

Probate is the court process of proving the validity of a will and distributing assets in accordance with the will’s provisions. Probate also occurs when you die without a will and you have assets in your name alone. In summary, probate involves having the court appoint a “personal representative” (South Dakota’s term for executor), who will then gather all of a deceased individual’s assets, determine any liabilities that need to be paid, and distribute the remaining assets out to the heirs or other beneficiaries (also called devisees) named in the will. Typically, probate takes eight months to a year to complete. One of the reasons that probate takes so long is that, after starting a probate, we have to wait four months for potential creditors to make any claims they may have against the estate.

In South Dakota, if an individual owns more than $50,000 worth of assets or any interest in real property, in his or her name alone, at the time of his or her death, a probate proceeding will be necessary to transfer these assets out of the decedent’s name and into the name of the decedent’s heirs. A trust can help avoid probate, since assets can be transferred to the trust prior to death and then transferred to the beneficiaries through the administration of the trust after the individual’s death rather than through the probate process. Also, beneficiary designations and transfer-on-death or payable-on-death designations can be used to avoid probate.

It is worth mentioning that probate often is not as bad as many believe. In South Dakota, for example, our access to the court system is very good. Hearings can be scheduled on the court calendar fairly quickly, and costs and attorney’s fees are often substantially lower than in other jurisdictions. If a probate is uncontested, it can be administered informally, which means that no court hearings are required. Also, probate is a process that provides transparency for heirs and ensures that all of your final bills get paid in a timely fashion.

2. Estate Tax Planning

In the past, avoiding estate tax was a major concern for many people. This is because, compared to current estate tax exemption levels, the amount that each person could pass at their death without incurring an estate tax bill was very low. For example, in 1997, each individual could only pass $600,000 at their death free of estate tax. In 2017, each individual can pass $5.49 million. Now that this exemption level has risen dramatically, few individuals need complex trusts designed to avoid estate tax liability. However, agricultural producers should keep in mind that the value of real property has also risen significantly, making it important for agricultural families to discuss estate tax with their Certified Public Accountant and their attorney. An appraisal may be needed to determine the fair market value of their land and to determine if more complex estate planning is appropriate.

3. Privacy

Many clients wish to avoid probate because they value privacy. Probate proceedings are a matter of public record. This means that a third-party could attend all of the hearings in open court, get a copy of a will, and gain knowledge about all of the assets that an individual owned at the time of their death. I have found that clients involved in agriculture are especially motivated by privacy, and seek to avoid probate for this reason. South Dakota’s trust statutes surpass other jurisdictions in their ability to maintain privacy, and many clients choose to take advantage of this protection.

4. Complex issues with a child or other beneficiary

Using a will and going through probate may not be ideal for individuals with children or other beneficiaries that cannot or should not receive a large amount of assets at once. For example, when an individual has a child with specials needs, the sudden influx of assets may disqualify the child from receiving assistance from government programs. In these cases, a special needs trust should be carefully drafted to ensure that the beneficiary continues to receive benefits.

Also, clients often choose to use a trust to delay distributions to children or other beneficiaries that lack the age or maturity to handle money. For example, if a couple with young children passes away, and such couple does not have a trust set up, their children will receive all of the assets in a bulk payment as soon as they turn 18. With a trust, these distributions could be held until the children are older and are more equipped to handle finances. Also, if a child has substance abuse issues or financial problems, clients often wish to hold such child’s inheritance in trust for the child’s lifetime and direct the trustee to make distributions for the child’s benefit.

5. Conclusion

Speaking to an attorney that practices in your jurisdiction is the best way to determine the type of estate plan that will work best for you. I always advise people that even if they choose another attorney, they should avoid using online forms and trust packages sold by out-of-state companies. Unfortunately, we often see such “do-it-yourself” lawyering turn into a big mess that takes much more time and expense to clean up after the individual passes away.

This article is not intended to be legal advice, and does not create an attorney-client relationship between the author and the readers. Please contact Drew Skjoldal in Spearfish, South Dakota, at dskjoldal@lynnjackson.com or 605-722-9000 for more information.