A Strong Offense
A Stronger Defense
If you know that you have items of personal property with sentimental value, a little advanced planning on how those items will be divided upon your death may help avoid litigation. There are a number of ways this can be done. Drawing cards, a snake draft, blind drawings, auctions, and the “slice of cake” method are a few possibilities. Just pick a method. The Supreme Judicial Court of Maine‘s opinion in Estate of Ada Y. Greenblatt provides a good example of what might happen if you don’t – especially if your personal representative is one of the people who gets some of the property.
Ada Greenblatt’s will provided for a number of specific bequests and then provided that the remainder of her estate should be distributed to her brothers, sisters, and sister-in-law in equal shares, or if they are deceased, to their families, per stirpes. The will provided no further instructions on how to distribute Ada’s residuary estate.
Ada’s residuary estate consisted primarily of real and personal property. Many of the items of personal property had little monetary value, but did have sentimental value to family members. The personal representatives of Ada’s estate opted to distribute the items with sentimental value in kind. To accomplish this, the personal representatives gave the beneficiaries a list of each item with the appraised value of the item. From the list, the beneficiaries could select the items they wanted in order of their preference.
But, before the personal representatives sent that list to the beneficiaries, the personal representatives gave Ada’s only surviving siblings an opportunity to first select the items of personal property they wanted. The personal representatives didn’t tell the residual beneficiaries that the surviving siblings would get first pick. Here’s where the problem arose – one of the personal representatives was also one of Ada’s two surviving siblings and got first pick of the personal property.
As it happened, the personal representative/surviving sibling selected a mizrah valued at $100, but did not mark it as unavailable on the list given to the remaining beneficiaries. One of the remaining beneficiaries also selected the mizrah and was later informed that it was “unavailable” because it had already been selected. A lawsuit ensued.
The probate court found that, although the distribution of Ada’s personal property was “not perfect,” it was “not improper.” The Supreme Judicial Court of Maine agreed that the personal representatives did not breach their fiduciary duties to the beneficiaries in the way the personal property was distributed.
Personal representatives are subject to the duties of loyalty and impartiality. Although it was alleged that the personal representative/surviving sibling breached the duty of loyalty, it was not alleged that an act was not “solely in the best interests of the beneficiary.” Therefore, the gravamen of the complaint was that the duty of impartiality was breached.
In the estate context, the duty of impartiality generally applies if there are two or more beneficiaries with interests in an estate, and it requires a personal representative to act impartially in managing and distributing the estate property, giving due regard to the beneficiaries’ respective interests. Impartiality, however, does not mean equality.
In this case, the personal representatives had discretion to determine how to distribute residuary assets. The items to be distributed in kind were primarily items that belonged to Ada’s and the personal representative/surviving sibling’s parents. The court found here that it was reasonable and consistent with the best interests of the beneficiaries for the personal representatives to determine that the surviving family members in the nearest degree of kinship to Ada’s parents, who had grown up in the home with the items, should have the opportunity to select among the items before giving the same opportunity to the remaining residuary beneficiaries.