Written Instruction to Cancel Promissory Notes on Death Ineffective

Date:2/15/2002

Virginia made multiple loans to Edwin, who executed promissory notes to evidence the loans. Virginia kept the notes, and at some point before she died, she wrote an undated letter to Edwin stating that, because of her affection for him, she wanted him to mark each note “paid in full” upon her death. The letter was signed by her and was discovered in a sealed envelope in her safe. The letter was marked, “This is to be given to [Edwin]. This is very personal.” There was no evidence of when the letter was written.promissory note

The personal representative of Virginia’s estate sought payment from Edwin for the promissory notes, but Edwin refused. At trial, Edwin argued that the letter was evidence that Virginia had cancelled the obligations as a gift. The court agreed, calling the letter a gift causa mortis. View our newest post here.

But the Oregon Court of Appeals pointed out that under Oregon law, a gift causa mortis must satisfy four requirements:

It must be made in anticipation of impending death,

There must be donative intent,

There must be delivery of the gift to the donee,

The donee must accept the gift.

In this case, neither the letter nor the notes were effectively delivered to Edwin. And since there is no evidence of the date of the letter, there is no evidence that it was written in anticipation of impending death. The letter therefore is not an execution of a gift causa mortis.

The Court of Appeals reversed the probate court’s ruling and explained that such gifts, which are made during life but are only effective after death, are “disfavored by the law” because they are “liable to occasion fraud and are subject to many mistakes.” These four requirements act as a legal substitute for the execution of a formal will signed in front of competent witnesses.

Source:Estate of Bassett, OR App., 1-23-2002

Legal Lines

Court Holds Attorney Liable for Fees and Costs of Frivolous Lawsuit

Date:2/8/2002

Challenging a decedent’s estate plan has always been risky for the challengers, but a recent Mississippi Supreme Court ruling not only penalizes the disgruntled beneficiary who brought a frivolous suit, but also his attorney.

Nannie Mae Ross owned CDs jointly (with right of survivorship) with her daughter Maxine, who lived with her for more than 20 years. Maxine died in 1997, at which time Nannie Mae’s son Tony moved in with her until her death in 1998. Before his mother’s death, he performed chores for her and ran errands. She was 96 years old, and a home health nurse checked on her regularly. But Nannie Mae remained independent, though she used a walker and could not drive a car, until her death.

Before her death, Nannie Mae replaced the CDs with new CDs that she held jointly with Tony instead of Maxine. Tony later testified that he did not know these CDs had been issued in his name until he discovered them in Nannie Mae’s safe deposit box after her death. She was, according to Tony, “fiercely independent,” and did not discuss these issues with him.

Nevertheless, Maxine’s son Rodney decided to sue Tony for the proceeds of the CDs. He claimed that Tony unduly influenced Nannie Mae to replace Maxine’s name with Tony’s on the CDs. He offered no evidence to rebut Tony’s testimony, but confirmed that Nannie Mae was in fact extremely independent and preferred to conduct her own affairs.

The court dismissed Rodney’s case and ordered him to pay Tony’s attorney’s fees. In fact, the court decided that if Rodney could not pay the fees, his attorney would have to, since he should have known his client was brining a frivolous suit. Both Rodney and his attorney appealed the court’s holding that they were jointly and severally liable for attorney’s fees and costs, but they did not appeal the case’s dismissal.

The Mississippi Supreme Court agreed with the lower court and ordered Rodney and his attorney liable for the fees.