Appeals Court Upholds Exempt Property Allowance, Defeating Disinheritance Provision in Will

A recent decision by the Michigan Court of Appeals is making waves in the probate and estate planning community. In a self-proclaimed issue of first impression, the Court in In re Estate of (Shelby Jean) Jajuga [1] upheld a sole surviving, disinherited child’s claim to exempt property in her deceased mother’s probate estate.

In a case out of Clare County, Michigan, the sole surviving adult child of the decedent was disinherited in her mother’s will, a will that was reaffirmed in a later will amendment, or codicil. The disinheritance provision in the will was very clear: the disinheritance was not for lack of love but because the children had already received compensation and per the testator it was not in their best interest that they received anything further. Beneficiaries other than the children were instead provided for in the will.

Disinherited Child Claims Exempt Property Allowance Under Statute

Following the mother’s death, the surviving child claimed exempt property allowance under the probate code [2]. The personal representative, who was not the child, denied the allowance. The child then filed a petition with the probate court claiming that the personal representative had refused to pay the preempt property allowance. The child claimed certain property from the estate under the statutory allowance which included a car, a tractor, or in the alternative, $14,000 in cash. The estate argued that the child was not entitled to exempt property under the statute because the child was specifically disinherited in the will.

Court Upholds Exempt Property Allowance Claim

The probate court held that, as an issue of first impression (meaning that the issue had never been addressed by the Michigan appeals courts), the child was entitled to the exempt property requested. The probate court concluded that a testator cannot preclude a child from taking exempt property through a disinheriting provision in a will. The court relied on legal interpretation as well as general public policy, specifically that the exempt property statute is for the protection of souses and children and should be liberally construed, opining that the children’s rights to exempt property are equal to those of a surviving spouse.

The estate appealed. The Michigan Court of Appeals received the case, agreeing that their was an issue of first impression. The Court rejected that the sole focus should not be the testator’s intent as the statute overrides the intent when it comes to statuary protections including exempt property. The Court even addressed the definition of “entitled” (along with other terms found in the statute), finding that the Michigan Legislature’s use of the word establishes a statutory right to a mandatory transfer of exempt property, not merely a priority right. The Court also sided with the probate court that an adult child does not have an inferior right to exempt property when compared to a surviving spouse.

The Court concluded that it would have been “prudent” for the Michigan Legislature to specifically detail the way in which a disinheritance in a will affects a child’s claim to exempt property but furthered that it is not the Court’s role to do so, even though the statute is silent. The Court upheld the probate court’s decision that the child had the right to the exempt property.

Effect on Estate Planning

The Jajuga decision is appears to be a correct interpretation of the exempt property law without further guidance from the Michigan Legislature. Yet it is another example of courts needing to address laws that should have been drafted with more clarity and less room for conflict in the first place. That said, estate planners are best to heed this decision: that a testator cannot completely disinherit children with just a will. For those testators looking to plan around this decision, the use of trusts will be essential, in taking assets out of the probate estate. GJR