In short, yes. A will (or testamentary trust) may create a life estate in property without the magic words “for life” in a bequest a beneficiary.
In the case of Freeney v. Freeney, No. 170031 (Va. Apr. 12, 2018), the Virginia Supreme Court determined that a will’s residuary clause granted the testator’s wife a life estate by implication and not with any magic words. There, the testator made a will, which gave the residue of his estate to his second wife, Marjorie. That clause read, “It is my intention that she use the assets of my estate to provide for her health and support, and to continue providing for the health, support and education of my son SEAN [sic] while he is a minor, and in matters past the age of eighteen (18) at her discretion; and that upon her death any remaining assets of this estate pass to him, IN TRUST, per stirpes.” The will further limited the use of the residuary from being used for the benefit of three other family members. Some of those beneficiaries sued, arguing that this clause created a life estate in which they would share after Marjorie’s death. Both they and Marjorie agreed that the language was unambiguous, the meaning of which could be determined by a judge.
The circuit court held that the language did not create a life estate. The Virginia Supreme Court disagreed and reversed. Although a will is generally construed to pass the greatest estate which the language employed is capable of conveying, indicia of a contrary intent (such as restrictions on a beneficiary’s use of the estate and plans for its use after a first beneficiary dies), can manifest an intention to create a life estate by implication. Edwards v. Bradley, 227 Va. 224, 229, 315 S.E.2d 196, 199 (1984). On these facts, the Court found that “the residuary clause in this case places limitations on Marjorie’s use of the property during her life.” Freeney at 7. It concluded on this issue by holding that these “limitations on Marjorie’s ability to use the estate … demonstrates that the residuary clause grants Marjorie a life estate by implication in the residual property....” Id at 8.
In summary, a will or trust whose terms impair a primary beneficiary’s ability to use and dispose of the estate can demonstrate an intent to create a life estate without adding the magic words “for life” as qualifiers to a bequest.
On June 22, 2017, the Virginia Supreme Court published the following decision in Gelber v. Glock, Case No. 116500. The Court summarized the facts and holding of the case as follows:
In litigation concerning the real and personal property of a family matriarch which was transferred to one of her five children, the circuit court did not err in denying a summary judgment motion challenging the decedent's capacity to convey to one of her daughters her personal property in her personal capacity when she held it as trustee under her revocable trust. Nor did the court err in excluding from evidence certain tax assessment records offered as proof of the value of the decedent's home, or in striking the plaintiff's evidence on a claim for civil conspiracy. However, the circuit court did err in excluding from evidence declarations made by matriarch disavowing the property transfers and in granting the motion to strike the executor plaintiffs’ evidence on their claims for undue influence and promissory fraud. Because an award of attorney's fees to the defendant daughter was based on the ruling in her favor on her motion to strike, that award is vacated. The judgment of the circuit court is affirmed in part and reversed in part. This matter is remanded for a new trial consistent with this opinion.
There, Ms. Lemen's children lost part of the inheritance they expected from Mr. Reineck's estate because their mother (Ms. Lemen) and Mr. Reineck created durable financial attorney forms in favor of each other and then their respective children. After Ms. Reineck died, Mr. Reineck's POA controlled. It empowered his children to move his assets in and out of his estate. They moved most of his assets out because Mr. Reineck's will would have given some property to Ms. Lemen's children--something Mr. Reineck's children succeeded in avoiding. Note, Ms. Lemen's children had already received nearly all Ms. Lemen's property from her estate when she died. You can see the possibility for abuse here, though.
The EFM Lawyer.