The Lawletter Vol 37 No 4
It generally recognized that whether an individual dies intestate, or especially if he or she dies testate, escheat of the decedent's assets to the State is viewed as an absolutely last resort for the distribution of an estate. See 27A Am. Jur. 2d Escheat § 12 "Generally; escheat disfavored." Yet, in the recent Nevada case, In re Estate of Melton, 272 P.3d 668 (Nev. 2012), the result was escheat despite the fact that the testator, William Melton ("Bill"), left two wills.
Bill executed a formal will in 1975 under which he devised most of his estate to his parents, with small portions of the estate going to his brother, Larry J. Melton, and to two of his cousins. He indicated in this will that his daughter, Vicki Palm ("Vicki"), was to receive nothing. Bill also left the following handwritten letter, which he had sent to his friend, Alberta Kelleher ("Susie"), in 1995:
I am on the way home from Mom's funeral. Mom died from an auto accident so I thought I had better leave something in writing so that you Alberta Kelleher will receive my entire estate. I do not want my brother Larry J. Melton or Vicki Palm or any of my other relatives to have one penny of my estate. I plan on making a revocable trust at a later date. I think it is the 15 of [M]ay, no calendar, I think it[']s 5:00 AM could be 7:AM in the City of Clinton Oklahoma.
Lots of Love
/s/ William E. Melton
AKA Bill Melton
[Social security number]
Id. at 671-72.
Susie died in 2002, thus predeceasing Bill, who died in 2008. During the administration of Bill's estate, the existence of his daughter (and only known child), Vicki, was discovered. Prior to the discovery of the 1975 will, Vicki had argued that the 1995 letter did not qualify as a holographic will and that the estate therefore passed to her by intestate succession. After the 1975 will was found, Vicki argued that the 1995 letter was a valid will (but that it was ineffective because Susie had predeceased Bill) and that it revoked the 1975 will, thereby giving Vicki the entire estate as Bill's sole heir at law.
Bill's half sisters, seeking to uphold the 1975 will, argued that the 1995 letter was not a valid will but that if it was valid, it did not revoke the 1975 will. They further argued that even assuming that the 1995 letter was a valid will that revoked the 1975 will, the revocation had to be disregarded under the doctrine of dependent relative revocation, by which a subsequent will, which has no testamentary effect, does not revoke a prior will if it is shown that the testator intended that such revocation be conditioned on the effectiveness of the later will.
The State of Nevada argued that the 1995 letter was a valid will that revoked the 1975 will. The State argued that it succeeded to the entire estate by escheat on the basis that under the Nevada Probate Code, disinheritance clauses were enforceable even when an estate passed by intestacy. Therefore, in the State's view, the estate escheated because Bill, by the 1995 letter, had disinherited all of his relatives.
The district court ruled that the 1995 letter was a valid will but that the disinheritance clause therein was unenforceable. The district court also held that the 1995 letter revoked the 1975 will, with the doctrine of dependent relative revocation having no application, because (1) Nevada courts had not dealt with the doctrine, and (2) even if the doctrine were recognized in Nevada, it would not apply under the facts of the case. Therefore, the district court concluded that the estate passed by intestate succession, with Vicki entitled to the entire estate.
The Supreme Court of Nevada dealt with the appeal as raising a series of issues, which the court resolved in turn:
(1) The court concluded that the 1995 letter was a valid will and that the disinheritance clause contained therein was enforceable. The writing, in the court's view, manifested Bill's testamentary intent in that he referenced his mother's death and stated that he "'had better leave something in writing.'" Id. at 674.
(2) The court held that because both the 1975 will and the 1995 letter attempted to affect the same property, the instruments were inconsistent and that, therefore, barring the application of the doctrine of dependent relative revocation, the 1975 will was revoked under the doctrine of revocation by implication.
(3) The court decided that the doctrine of dependent relative revocation reflected sound policy and therefore was properly recognized under Nevada law. However, the court held that the doctrine did not apply under the facts of the case. The court reasoned that the objective of the 1995 letter did not fail, in that the disinheritance clause contained therein was enforceable and applied to Bill's half sisters. Since there was no clear evidence that the disinheritance clause was conditioned upon Susie's receiving the estate, there was no basis for the contention that Bill would not have wanted the 1975 will to be revoked had he known that Susie would predecease him. Moreover, the court observed that even if it could be said that the objective of the 1995 letter failed, the provisions of the 1975 will and the 1995 letter were completely different, which rebutted any claim that Bill would have wished for the revocation of the 1975 will to be disregarded.
(4) The court rejected Vicki's contention that because she was a surviving blood relative of the testator's, the requirement under Nevada Revised Statutes section 134.120 that escheat can apply only if "the decedent leaves no surviving spouse or kindred" had not been satisfied. The court rejected Vicki's "cramped" interpretation of this provision, because it is commonly understood that when a disinheritance clause is enforceable as to intestate property, a disinherited heir is treated, as a matter of law, to have predeceased the testator.
Thus, after a rather entangled analysis, the unusual result of escheat carried the day.