Authored by: Paul J. Sowell, Esq.
The importance of careful drafting of estate planning documents cannot be overstated. The case of In re Gullo, N.Y.L.J., July 6, 2009, P. 37 (Sur. Ct., Suffolk co.) is representative of what can go wrong when an estate planning scrivener drafts imprecisely.
The petitioner in the case, Paula Gullo, received the following bequest under the decedent’s Will:
“I give, devise and bequeath to my daughter, PAULA GULLO, a life estate in 78 Bartlett Drive, Manhasset, New York, or any other principal residence which I may own at the time of my death. The life estate includes the right to remain and reside in the said premises for as long as she wishes, so long as it remains her principal residence…. The life estate will include the responsibility for all carrying charges on the property, including, but not limited to, taxes, insurance, heating, maintenance, and repairs. If for any reason my said daughter declines the life estate, or if she decides to vacate the house the property shall be sold and the net proceeds disbursed in accordance with Article FIFTH of my will….”
A life estate conveys exclusive ownership of the land during the lifetime of the life tenant, subject only to certain well-defined limitations or duties. The petitioner sought approval by the court to purchase the property at its current appraised market value, less the value of her life estate and the value of improvements she made to the property. It appears from the language of the bequest that the decedent intended to convey to his daughter a life estate. In fact the term “life estate” appears a number of times in the text of the bequest. But the court sided with the respondent in the case who argued that the language limiting the bequest ‘for as long as she wishes, so long as it remains her principal residence’ made it a fee on limitation which is a lesser interest than a life tenancy.
The court held while it appears that all interested parties have been treating petitioner’s interest as a life estate, and in spite of the repeated use of that term by the testator, the definition of petitioner’s interest in the property following the words ‘life estate‘ in Article Fourth is the language employed where the bequest is a ‘fee on limitation’. Accordingly, it is the determination of this court that petitioner is in possession of a fee on limitation and is not entitled to a credit for the value of a life estate upon her purchase of the property.”
This case shows how careful the drafting attorney must be. Merely using a legal term without taking into account the context may lead to unintended consequences, including as in this case, unnecessary and costly estate litigation.