In short, no. Virginia does not recognize the doctrine of judicial instructions, which permits an award of attorney’s fees from the estate when beneficiaries must ask a court to clarify ambiguity in a will or trust. Even if this were recognized, such an award would be improper when the beneficiaries have asserted the language of the testamentary instrument is clear and unambiguous throughout the litigation.
Also in the case of Freeney v. Freeney, No. 170031 (Va. Apr. 12, 2018), the attorneys for the remainder beneficiaries argued that the circuit court also erred by failing to award attorney’s fees under the doctrine of judicial instructions. That is, “[if] judicial instructions are needed to interpret an ambiguous will or trust, all expenses of that litigation, including attorney’s fees, are to be paid by the estate.” W. Hamilton Bryson, Bryson on Virginia Civil Procedure Section 14.04 at 14-15 (5th ed. 2017). This doctrine had not been recognized by the Virginia Supreme Court previously. See DuPont v. Shakelford, 235 Va. 588, 596 (1988). The Court declined to do so in Freeney. Moreover, the Court opined that even if it had decided to recognize the doctrine, it would not have awarded fees to the plaintiff beneficiaries here because they had argued, even stipulated, that the language of the residuary clause at issue was plain and unambiguous.
In summary, the doctrine of judicial instructions does not apply in Virginia to compel an estate to pay attorney’s fees to construe the language of an ambiguous will or trust. So if you must sue to have a judge interpret a will or a trust, you will be paying your own attorney's fees.
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.
While we were away, the Virginia Supreme Court issued an interesting opinion about local taxes Loudon County was charging the duty free store at the Dulles airport. The ruling is good news for travelers who like to take advantage of tax-free deals at the airport:
Dulles Duty Free v. County of Loudoun 08/24/2017 Upon review of an airport-based "duty free" seller's challenge to a county's imposition of a Business, Professional, and Occupational License tax on a substantial portion of its sales – made to departing passengers as they board flights bound for destinations outside the United States – the Import-Export Clause of the Constitution of the United States, Article I, § 10, cl. 2, bars the county from imposing the tax on these sales. The judgment of the circuit court is reversed and the matter is remanded for calculation of the refund due to the taxpayer.
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 Virginia Tax Commissioner issues public rulings that indicate their position on tax law. On February 2, 2016 the commissioner issued ruling 16-2. There, the IRS notified Virginia that it should have received a tax return from the taxpayer in question. Virginia asked that taxpayer for a Virginia return. After receiving no response, Virginia issued the taxpayer a bill for what it estimated to be their tax liability. The taxpayer finally responded, arguing they were not a Virginia resident and not liable for Virginia income tax. The delinquent assessment was affirmed because the taxpayer missed the deadline to respond. Again, "timing is everything" when it comes to income taxes.
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