The executor of a will is responsible for settling the decedent’s financial affairs and distributing the assets, among other duties. Disagreements may arise if the beneficiaries do not agree with the decisions of the executor. In some situations, the dispute is litigated in probate court, where a judge can order the appropriate action, as illustrated in a March 22, 2018 Tennessee estate case.
In the case, a deceased father had bequeathed an annuity to each of his two daughters in his will, with the residual of the estate to be transferred in a trust, of which the income would be paid to his wife. However, according to the final settlement submitted by the executors of his estate, the net amount to be distributed from the probate estate was approximately $8,700. Since that amount was not enough to purchase and fund the beneficiaries’ $75,000 and $50,000 annuities, the executors sought to divide only the $8,700 between them. The beneficiaries filed an objection, requesting the court to order the sale of a portion of the decedent’s real property, which was valued at over $3 million, in an amount sufficient to fund their annuities. The probate court agreed, and the executors appealed the matter.
In Tennessee, when a testator bequests property to beneficiaries, known as legacies, without indicating the source from which they are to be paid, and then disposes of the rest of the estate in a mass residuary clause, the legacies are considered a charge on the residuary. An executor may utilize a decedent’s real property if the personal property is insufficient to pay for the decedent’s obligations. Furthermore, the probate court has jurisdiction to sell a decedent’s real property.
On appeal, the court held that the gifts of the annuities to the beneficiaries are charges on the residuary estate, consisting of both the deceased’s personal property and his real property. The court went on to note the contradictory position that the trustees could sell the real property to fund the residuary trust or pay other obligations but refuse to sell the real property to fund the annuities, which are charges on the real property.
The court emphasized that the basic rule in construing a will is to ascertain the intent of the decedent and carry out his wishes unless it contravenes some rule of law or public policy. In this case, the decedent clearly intended to leave annuities to the beneficiaries, as specified in the will. These annuities are legacies that, in turn, act as charges on the decedent’s real property. The court held that the intent of the decedent to fund the annuities from his estate, which includes his real property, was not against public policy or law. Accordingly, the court found that there was no error in ordering the executors to sell the real property of the deceased to satisfy charges against the real property, i.e., the beneficiaries’ annuities.
If you are seeking experienced representation in a probate or trust administration dispute, the Nashville attorneys at Martin Heller Potempa & Sheppard have the skill and knowledge to assist you. We can provide guidance on subjects such as estate planning, family law matters, trust creation, probate litigation, and other legal areas. Schedule your consultation today by calling our office at (615) 800-7096 or completing our website contact form.