In In the Estate of Johnson, a child of the decedent accepted over $143,000 from the decedent’s estate and then decided to challenge the will due to mental capacity and undue influence. No. 20-0424, 2021 Tex. LEXIS 426 (Tex. May 28, 2021). The trial court ruled that the child could not accept a benefit under the will and then challenge the will and dismissed the child’s claim. The court of appeals reversed, holding that the child did not receive anything that the child would not also receive if there was no will, and therefore, she was not inconsistent and was not estopped from bringing her will contest. The court held that the executor “failed to satisfy her burden, as the Will’s proponent, by failing to demonstrate that [MacNerland] accepted greater benefits than those to which she was entitled under the Will or intestacy laws.” Id. The Texas Supreme Court accepted the will proponent’s petition for review and reversed the court of appeals.
The Supreme Court held that the contestant first had the burden to prove that he or she had a sufficient interest in the estate. Once the contestant meets that burden, the burden shifts to the will’s proponent to provide evidence of an affirmative defense to preclude the contestant from proceeding with his or her claim. An affirmative defense that the will’s proponent can raise is the acceptance-of-benefits doctrine. The Court describes that defense as follows:
The acceptance-of-benefits doctrine bars a party from contesting the validity of a will while enjoying its benefits. It arises out of equity’s aversion to a claimant who seeks to exploit irreconcilable positions. Equity does not permit the beneficiary of a will to grasp benefits under the will with one hand while attempting to nullify it with the other. A contestant may rebut the doctrine’s applicability by showing that she did not accept the benefit through the will. The law does not deprive a contestant of standing when she otherwise has a present legal right to the benefit. That is, if the contestant is otherwise presently entitled to the accepted benefit, then her acceptance of it is not inconsistent with suing to set aside the will. For example, a contestant who accepts a bank account payable to the contestant upon the decedent’s death or as an assertion of her interest in a community estate does not act inconsistently with a will contest because she does so through means other than the will. In such a case, there is no inconsistent position justifying estoppel because the contestant does not seek to nullify the will while she simultaneously enjoys its benefits.
Id. The Court then rejected the theory that “a will contestant may presently accept benefits under the will based on a hypothetical claim to greater benefits should a court declare it invalid.” Id. The Court stated:
We rejected the idea more than sixty years ago in Wright v. Wright. As we explained in that case, the test for determining whether a contestant’s acceptance of benefits estops her from bringing a will contest “does not depend upon the value of the benefits,” “[n]or is it to be determined by comparing them with what the statutes of descent and distribution would afford the beneficiary in the absence of a will.” Rather, the doctrine asks whether the contestant has an existing legal entitlement to these benefits other than under the will. If there is no existing entitlement save for the testator’s bequest, then the contestant’s acceptance of it is inconsistent with a claim that the will is invalid.
Id. The Court also stated that this bright-line test would not harm a beneficiary that accepts a benefit without sufficient knowledge of the facts:
MacNerland argues that an opportunistic executor could offensively deny a would-be will contestant’s claim by partially distributing the estate to an unwitting beneficiary to avoid a will contest. The doctrine sufficiently accounts for this concern, however, by requiring that a beneficiary voluntarily accept the benefit. If a beneficiary or devisee lacks knowledge of some material fact at the time of acceptance, she may take steps to reject the benefit. MacNerland did not attempt to return the mutual fund account to the estate or assert in this case that her acceptance of the account was involuntary.
Id. The Court, thus, reversed the court of appeals and affirmed the trial court’s dismissal of the suit.
Interesting Note: This case highlights the danger that an estate beneficiary has when offered assets from the estate. If the beneficiary has any notion that he or she may want to contest the will, the beneficiary should not accept the asset. Otherwise, the beneficiary will face an acceptance-of-the-benefits defense by the will’s proponent. There are exceptions to the defense, primarily when the beneficiary accepts the asset without knowing material facts and the beneficiary later attempts to return the asset. There may be other defenses as well, such as duress. In any event, the acceptance-of-the-benefits defense only precludes a beneficiary from challenging the will, the beneficiary can still sue the executor for breaching duties and/or seeking to remove the executor.
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Texas Supreme Court Holds That A Beneficiary May Not Accept Any Benefit From A Will And Then Later Challenging The Will - JD Supra
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