Sometimes a few simple words can have a huge impact on how estates are distributed. That was true in two recent cases involving the meaning of “personal effects” and “personal property.”

 

1. Do personal effects include mineral rights?

Most of you probably said no to that question, and you are right.

In the Etheridge case, the court interpreted the testator’s one-page, self-prepared will that gave the executor “all my personal effects.” It left the testator’s house to another person. Mineral interests were not mentioned, and the residuary estate went to the decedent’s heirs. Years later, royalty payments began and a dispute arose over ownership. The executor claimed the minerals were personal effects and the heirs disagreed.

The court stated that “personal effects” includes “articles bearing intimate relation or association to the person of the testator” such as clothing, jewelry, luggage, and similar items. The term does include mineral interests or real estate.

 

2. Does personal property include bank accounts?

Some of you said no, which is the wrong answer according to the Estate of Hunt opinion.

The case involved a dispute between the testator’s family and the testator’s life partner. The trial court granted summary judgment in favor of the life partner, awarding her the testator’s bank accounts as personal property. The appeals court affirmed, noting that personal property has a well-established and accepted legal definition as being all property that is not real property.

The term was considered unambiguous and to include both tangible personal property such as family photos and household contents as well as intangible personal property, including the bank accounts of the deceased worth close to $230,000.

 

3. Conclusion

Well drafted wills would have avoided the problems that arose in these two cases. Clients should seek professional help in drafting their estate plans and should seek qualified advice in interpreting will provisions that are unclear.

 

Steve Spitzer
Steve Spitzer, Managing Shareholder
sspitzer@rameyflock.com
www.rameyflock.com