Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Fall 2007, Volume 6, Number 4
by Gary F. Casaly, Special Counsel
Intestate succession, discussed in the last installment to this article in Vol. 6, No. 2, seems like a simple-enough thing. And it is, for the most part. Essentially, the state tells you where your property will go if you fail to say it in your own words. Now, I’m going to switch gears a little and discuss wills. I’m not going to discuss how to draft a will, but rather some interesting laws that can upset, change the application of, or even redirect testamentary dispositions under wills. I think you’ll be surprised by some of the strange things that can happen when certain laws are applied to what otherwise would be a simple testamentary disposition.
Do We Have a Will at All?
On my refrigerator at home is a little magnet. It says, “Where there's a will . . . I want to be in it!” It’s kind of cute . . . you’re expecting something else as the punch line. But “being in” a will presupposes that there is a will. In this regard, remember that a marriage will wholly revoke a will (unless there are recitations in the instrument that it was made in contemplation of the marriage), leaving the decedent to die intestate. Intestacy, as discussed before, will provide for the spouse, but not necessarily to the same degree that a will would have done. So, a simple “I do” can devastate one’s estate planning.
A divorce on the other hand will not revoke the entire instrument, but it will revoke those provisions that were made for the benefit of the spouse. (Apparently the legislature thought this rule might be a bit too harsh when the parties “fell back in love,” and the relevant statute tells us that provisions for the spouse that are revoked by reason of a divorce “shall be revived by the testator’s remarriage to the former spouse.”)
There are other ways to “not have a valid will” — like improper execution or not having the required witnesses, or tearing the instrument up in the backyard because you’re sick and tired of dealing with your relatives — but we don’t need to get into those issues right now. Suffice it to say that with no will intestacy will prevail. But sometimes there is “partial” intestacy, or at least an “unexpected” result upon the effect of the will based upon the manner in which it is witnessed. Where a beneficial devise or legacy is made to a subscribing witness or to the husband or wife of such witness the devise or legacy is void unless there are two other subscribing witnesses to the will who are not similarly benefited thereunder. If there is a residuary clause that can “catch” the voided gift, it will fall into that residue and be distributed thereunder (but not to the witness or spouse if also named therein); otherwise it will pass by intestacy.
Waiver of Will
Assuming we have a valid will, and the gifts thereunder are not voided either by reason of divorce or on account of who the subscribing witnesses were, let’s start the journey concerning testamentary dispositions with the spouse’s right to waive a will. I briefly referred to this right at the beginning of this article (Vol. 6, No. 2). If ever there was a concept more poorly understood, it is the subject of waiving the will. Its misunderstanding stems from the fact that at one time the misunderstanding was correct, but no more. What’s entailed in waiving the will, what does it accomplish, and what’s the big misunderstanding about it?
Within six months of the probate of a will the surviving spouse is entitled to “waive” it. The documentation is a simple waiver, signed by the surviving spouse and filed with the probate court within the applicable period.
Why would a surviving spouse want to waive a will, and is it a good idea or ill-advised? These questions can only be answered within context. A hypothetical will provide the context that we need.
A widow has been substantially cut out of her deceased husband’s will: although he died with an estate of about $3,000,000 the husband gave his wife only $150,000 and gave the rest to the children of his first marriage. Because it was a second marriage the husband felt that this was fair and that his offspring should be the primary beneficiaries of his estate.
The widow is unhappy with this result and considers waiving the will. Is this a good idea?
The decision to waive the will depends upon what results that action will succeed in accomplishing. Some conveyancers think that waiving the deceased partner’s will results in the surviving spouse succeeding to the same amount of property that he or she would have succeeded to had the deceased spouse died intestate. If this conception were correct then waiving the will would be the obvious avenue that the widow should pursue because she would thereupon succeed to one half of the deceased partner's estate, or in this case $1,500,000, which would be ten times more than she would have taken under the will. But the conception is wrong! A reading of the relevant statute, G.L.c. 191, §15, bears this out. The statute presently says:
The surviving husband or wife of a deceased person . . . within six months after the probate of the will of such deceased, may . . . [waive] any provisions that may have been made in it for him or her . . . and if the deceased left issue, he or she shall thereupon take one third of the personal and one third of the real property; and if the deceased left kindred but no issue, he or she shall take twenty-five thousand dollars and one half of the remaining personal and one half of the remaining real property; except that in either case if he or she would thus take real and personal property in an amount exceeding twenty-five thousand dollars in value, he or she shall receive, in addition to that amount, only the income during his or her life of the excess of his or her share of such estate above that amount, the personal property to be held in trust and the real property vested in him or her for life, from the death of the deceased.
A close reading of the above statute clearly indicates that the surviving spouse does not take an intestacy share. Although it is true that prior to 1957 the surviving spouse (subject to certain limitations) was entitled upon waiving the will to take what he or she would have taken had the deceased spouse died intestate, that belief fails to take into account the various amendments to the statute since then. The statute was substantially revamped in 1957 and, due to the fact that it has not been amended to keep pace with the intestacy statute (except once in 1964), the effect has resulted in a significant disparity in the distribution of an estate in the case of intestacy and in the case of the waiver of the will. First, because there are children in this case, the amount the surviving spouse would be entitled to take if the will is waived is capped at one-third, while under the situation of intestacy he or she would presently share in one-half of the estate. (If there were no children, but only next of kin along with the spouse, the spouse would be entitled to $25,000 plus one-half of the remainder of the estate, while under the intestacy laws in such a case the spouse would be entitled to $200,000 plus one-half of such remainder.)
Second, in the case of intestacy the interest acquired is an absolute one, while in the case of the waiver of a will the distribution is partially outright and partially in the form of a life interest.
The tables below illustrate the differences.
Spouse’s Share Where There are Issue
Waiver of the Will
One Half of the Estate
One Third of the Estate
Absolute Interest Acquired
$25,000 Outright and Life Interest in Remainder
Spouse’s Share Where There are
No Issue But Next of Kin
Waiver of the Will
$200,000 Plus Half of Remaining Real and Personal Property
Half of the Estate
Absolute Interest Acquired
$25,000 Outright and Life Interest in Remainder
The waiver of the will gives a somewhat surprising result as to the interest that the surviving spouse takes. But the waiver has other consequences. In Belknap, Newhall’s Settlement of Estates and Fiduciary Law in Massachusetts, Lawyers Cooperative Publishing Company (Fifth Edition, 1994), §20:3 the author summarizes these consequences in an almost poetic way:
It is in the havoc that it works on the rest of the will that the devastating effects of a waiver become apparent. Where the testator has set up a complicated framework for distributing the estate, a waiver by the surviving spouse completely upsets it and leaves only shattered fragments to be reassembled by the court.
The question of pretermitted children in the situation of a will is governed by G.L.c. 191, §20. And although there is a one-year limitation imposed upon the issue to make their claim within that period or be barred thereafter from doing so (see Chapter 479 of the Acts of 1969, effective in 1971), it seems that the issue generally is addressed by Massachusetts Conveyancers' Association Title Standard No. 50.
A pretermitted (or omitted) child or issue of a deceased child will take what the child (or issue) would have taken if the testator had died intestate.
When would a child (or such issue) be considered “pretermitted”? The fact that a child is not mentioned in a will does not mean that the child is a pretermitted child entitled to take under the statute. The omission, if “intentional and not occasioned by accident or mistake” will prevent that child from taking under the statute. The “accident or mistake” that the statute contemplates is that committed during or associated with the transcription of the will. A mistake of fact or law — for example, a belief that the child is dead — will not result in the omitted child taking under the statute. The mistake must be in the preparation of the instrument itself and not in the gathering of the information necessary to draft it.
Class gifts in a will can also redirect where title goes upon death. Spotting a class gift in the will and knowing how the law is applied to it is sometimes not that obvious. For example, in Cross, v. Cross, 324 Mass. 186, 85 N.E.2d 325 (1949) a devise to “my son Thomas . . . and to my son William . . . share and share alike, or to the survivor of them” was deemed to create a tenancy in common between Thomas and William, who both survived the testator, with the court noting that the words “to the survivor of them” did not create a joint tenancy but were used in the will to indicate a class gift:
[The respondents] argue that the testator’s words are appropriate for the creation of a joint tenancy, and that at [the testator’s] death Thomas and William became vested with a remainder as joint tenants. We cannot adopt this argument. To begin with, the expression ‘share and share alike,’ standing alone, would create a tenancy in common. [Citations omitted.] The general principal being that a will speaks as of the time of the testator’s death, [citations omitted] we think that the purpose of the later words ‘or to the survivor of them’ was to provide for the contingency where only one son might be living at that time. In such case the surviving son was to take all.
It is important to note that in Cross the individuals — Thomas and William — were mentioned by name in the will. This ordinarily would discount the possibility of a class gift. However, the language “to the survivor of them” was latched on by the court to find that a class gift existed. But the subject of class gifts can take an interesting twist, particularly when the gift appears in the residuary clause, even where the residuary devisees are identified by name and the “survivor” language is absent. A determination of where the title goes in such a case depends on a consideration of multiple factors. First, if the deceased residuary devisee is a child or other blood relation to the testator, and that person leaves issue surviving the testator, G..L.c. 191, §22 will control the situation. That statute says this:
If a devise or legacy is made to a child or other relation of the testator, who dies before the testator, but leaves issue surviving the testator, such issue shall, unless a different disposition is made or required by the will, take the same estate which the person whose issue they are would have taken if he had survived the testator.
This statute will trump all situations and will force the title down to the issue of the deceased person, even if the devisees are considered to be a class. But what if G.L.c. 191, §22 is not applicable? What happens to the gift then? Where does the title go? G.L.c. 191, §1A(5) seems to provide the answer. It says:
Where there is a residuary gift to two or more legatees or devisees and the share of one or more of them totally fails for any reason, such share or shares shall pass to the other residuary legatees or devisees proportionately.
This statute is in response to court decisions that had held that a devise in the residuary clause to multiple persons that failed because it was not covered by G.L.c. 191, §22 and was not a gift to a class would go by intestacy. (If the failed gift was in another section of the will then it would fall into the residuary clause, but if the gift itself is in the residuary clause it has nowhere to “fall” except into intestacy.) In effect the statute makes all residuary gifts class gifts, whether the beneficiaries are specified by name or simply identified and characterized as a group. But watch it here! The statute was not enacted until the 1970’s and therefore would apply only to wills probated thereafter. Wills probated before that time would be governed by the prior law.
The provisions of G.L.c. 191, §22 can creep into a title in another way and whisk the title in a different direction, virtually unnoticed. Let’s take the simple (or maybe not so simple) question of a disclaimer under a will, which is governed by G.L.c. 191A. I won’t endeavor to examine disclaimers in depth here (that’s the subject of another article on the horizon), but one example of the disclaimer statute’s impact, when coupled with G.L.c. 191, §22 may surprise you. Imagine a will that states that A, B and C will get the testator’s bounty upon his death. All three beneficiaries survive the testator, but A disclaims his gift. The “knee-jerk” reaction might be that A’s action results in B and C sharing the gift between themselves. This may be the case; but it may not. G.L.c. 191A, § 7 tells us that (with certain exceptions):
Such [disclaimed] interest shall pass in the same manner as if the beneficiary had died immediately preceding the event determining that he, she or it is the beneficiary of such interest, and that such interest is indefeasibly vested. The interest in property disclaimed shall never vest in the beneficiary.
Note that the statute does not state that the property shall be divided up as though the beneficiary never existed; it states that the title is distributed as though the beneficiary immediately predeceased the testator (or, more accurately, the “event” that determines that title is vested). If A in our example had children and A was a “blood relation” of the testator A's title would not inure to B and C, but rather A’s issue. A’s issue, however, would not be listed in the testator’s petition for probate because, although they take by reason of the disclaimer statute, they are not “heirs” of the testator. An affidavit identifying them would likely resolve the problem, but spotting the problem in the first place is just another twist.
Many times a will contains a provision something like this: “I leave my property to X, and upon her death to Y and Z, share and share alike.” Where’s the title? One suggested reading of the provision, particularly based upon the use of the language that “upon her death” title shall go to Y and Z, is that title is in abeyance — that is, X has the life estate but Y and Z must “wait” for X to die before succeeding to their gift. Is this the right interpretation? In other words during X’s life do Y and Z have anything to sell? The answer is “yes.” Remainders are generally deemed vested and, when they follow a life estate, are generally not considered to be postponed until the time of the termination of that estate. In this regard, it is said in Newhall, Settlement of Estates, The Lawyers Cooperative Publishing Company, (Fourth Edition, 1958), §356:
Such phrases as “at her decease” or “upon her decease” and similar phrases referring to the taking effect of the remainder, are held to refer to the time of distribution rather that the time of vesting.
So, too, it is said in Moynihan, Introduction to the Law of Real Property, West Publishing Company (1962), Chapter 5, Section 17:
Words which are conditional in form but which express nothing more than the law implies will not make the remainder contingent. Thus, if A devises to B for life and from and after B’s death to C in fee it might be argued that B’s death is a condition precedent to C’s remainder. But the words “from and after” are construed to refer to the time of enjoyment of possession by C, not to the time of the vesting of C’s interest. The courts universally apply a presumption in favor of construing a limitation as creating a vested rather than a contingent interest, and also a presumption in favor of early vesting rather than late vesting. Hence, when an instrument creates a life estate in B and then provides for a remainder in C “at B’s death,” or “when B dies,” or “in the event of B’s death” such language will not be construed as making the remainder contingent.
We’ve seen how death can redirect title. But when title ends up where it ultimately goes it sometimes has “baggage” accompanying it. Like a suitcase, this baggage has to be “unpacked” or the traveler (in this case the title) will be weighed down. This baggage consists of the following pieces of luggage:
- Death tax liens – state and federal
- Rights of creditors – both of the deceased and those generated by the estate
- Rights of legatees
Death tax liens are gone after ten years. They can be disposed of earlier by way of releases, affidavits or, in certain cases, proof of payment of the tax due. The releases are in the form of the 792 (federal) or M-792 (state). The affidavits are sanctioned by statute (G.L.c. 65C, §14 or Title Standard (Nos. 3 and 24). For deaths occurring between January 1, 1997 and December 31, 2002, the period during which Massachusetts estate tax was “coupled” with the federal estate tax, it was necessary for the affidavit simply to declare that no federal estate tax return was required to be filed; for deaths on or after January 1, 2003, the affidavit must state that there is no requirement for the filing of either a federal or Massachusetts estate tax return. Forms for these affidavits can be downloaded from Stewart’s website. Go to Forms > Forms & Affidavits and scroll down to Tax Affidavits.
Another way of addressing the death tax lien is to demonstrate that the tax shown on an estate closing letter has been paid. In the case of federal taxes this is done by filing the original cleared check (or a copy and an affidavit) in the amount shown on the estate tax closing letter. See Title Standard No. 3. In the case of state estate taxes the requirement is the same, except that the applicable title standard (No. 24) also imposes a requirement that the property be listed in the probate inventory.
There are two special rules that should be mentioned regarding the elimination of estate tax liens on particular pieces of property. On the federal level, property that is transferred by a survivng joint tenant (or tenant by the entirety) after the other joint tenant has died will be divested of the estate tax lien. This rule does not apply to property passing through probate. See the discussion in Fall River Savings Bank v. Callahan 18 Mass.App.Ct. 76, 463 N.E.2d 555 (1984).
On the state level, and in connection with what has been commonly referred to as gifts in contemplation of death, where a person conveys property to another and the deed is recorded before the grantor’s death and does not disclose “an intention that [the conveyance] take effect in possession or enjoyment at or after the [the grantor’s] death,” the lien arising by reason of the grantor’s subsequent death will be divested as to that property when the transferee conveys to a bona fide purchaser for adequate consideration. See G.L.c. 65C, §14 and Title Standard No. 24.
The rights of creditors in connection with the estate of the deceased must be examined on two levels: the creditors of the deceased (persons the deceased owed money to) and the creditors generated by the estate (persons servicing the estate, such as lawyers, accountants and personal representatives). The first category, at least as to deaths after January 1990, is disposed of (i.e., time-barred) one year after date of death (before then, one year after the bond was filed). There’s one exception to this rule: Claims for medical assistance (Medicaid) can be filed within the one-year period or within four months of the giving of the fiduciary’s bond.
The creditors in the second category, which includes those persons servicing the estate, have a longer period in which to file claims and the period begins at a later time. This second category is many times overlooked. Essentially, these creditors have a period of six years from the giving of the bond to file their claims. This makes sense, of course, because they’re servicing the estate and, unlike creditors of the deceased, have no idea what their claims will be until a longer period of time has expired. Like other creditors, these creditors can force a sale of property, even if it has been conveyed to a purchaser. See G.L.c. 202, §20A. In any event, the threat that these claimants pose can be eliminated by filing and having approved a final account in the estate.
Another bit of baggage that can weigh down a title to real estate coming through a will comes in the form of legacies. These are pecuniary gifts, generally of money, that are scattered throughout the will. Under G.L.c. 197, §17 there is no time limit within which a proceeding can be brought to enforce the right to a legacy, but the statute states that “the real estate of the testator shall not be liable to be sold for the payment of a legacy by the executor or other representative of the estate either under a power in the will or under license or order of court, or as a result of, such proceeding unless it is filed in the probate court within six years of the testator’s death.” Again, and somewhat similar to the claims by creditors created by the estate, a six-year period is set aside during which proceedings that could have an impact on the title to real estate can be instituted. The six-year period here runs from the time of the testator’s death, as opposed to the filing of the fiduciary’s bond. In any event, during this period the title to real estate is vulnerable, so it is important to establish that the legacies have been paid, which is generally accomplished by the filing and allowance of a final account.
Unloading the Baggage
With all of this baggage, how can one deal with real estate during these waiting periods that occur while the estate is being administered? One method is by filing and getting allowed a final account. This is not always practicable, or possible, because some claims against and rights in the estate cannot be finalized early on in the administration of the estate. For example, while attorneys and accountants and other servicers of the estate are performing their tasks they are unable to determine what their charges will be. It’s sort of a chicken-and-egg thing: we need to get a final account allowed in order to bypass the unexpired periods during which claims and proceedings against the estate can be made, but we can’t pay them (and therefore get an accounting as to them) because they are not yet liquidated amounts.
The chicken-and-egg loop can be broken by obtaining either a license from the court permitting a sale of real estate or employing a power of sale in the will, if there is one. Either of these methods will insulate the title to the real estate from these potential impediments, and will essentially “unload the baggage.”
Licenses to Sell
Although there are various ways in which to obtain court approval for the sale of real estate, there are essentially two types of licenses to sell. One, the most familiar, is that which the court issues pursuant to G.L.c. 202, §19. This statute, states:
The probate court may, upon the petition of an administrator, administrator with the will annexed, or executor filed within one year after the date of the giving of the executor’s or administrator’s bond . . . license him to sell the whole are any part of the real estate or any undivided interest therein belonging to the estate of the deceased, in such manner and upon such notice as the court orders . . . .
A license issued under this statute is a general license to sell. Technically, its issuance is not conditional upon a particular set of circumstances (although the court can impose them). Note the one-year limitation during which the petition for the license must be filed. The license is sought in cases where it is advantageous to “move” real estate immediately after the estate has been opened. This one-year limitation should not be confused with the one contained in G.L.c. 204, §8 that provides that no license “shall be in force for more than one year.” The limitation in the first statute addresses when the license can be applied for; the limitation in the second statute governs when the license, once issued, can be exercised. The second statute, as we shall see, gets confused sometimes with the exercise of a power of sale under the will itself. I will address — and hopefully dispel — this confusion in the discussion below concerning powers of sale.
The other main statute under which a license could be issued is G.L.c. 202, §1. This statute does not contain any limitation on the time during which the license can be petitioned for. It is a license that is sought and can be issued “if the personal property of a deceased person is insufficient to pay his debts, legacies and charges of administration.” So, when we say “you can’t get a license after the first year,” the statement is not entirely true, where a license under this second statute is the type for which the petition is made.
A few things should be said about licenses, both of which revolve around the protection they provide, particularly in connection with liability of the administrator or executor who seeks them. First, G.L.c. 215, §9A states that if no appearance or objection was made against the granting of the license to sell, or if one was made but was later withdrawn, “[t]he acts of an executor . . . performed after the entry of the decree . . . authorizing him to sell . . . shall be valid to the same extent as if said appeal period had expired without an appeal . . . .” This statute prevents upsetting the acts taken pursuant to a license even if a later appeal overturns it.
Second, another statute, G.L.c. 202, §38, eliminates a dilemma that an executor or administrator faces when selling property of the estate. The dilemma was highlighted in Onanian v. Leggat, 2 Mass.App.Ct 623, 317 N.E.2d 823 (1974), where an executor, who agreed to sell the decedent’s real property to a person for a certain price subject to the issuance of a license to sell, was not excused, by virtue of executor’s duty of obtaining the highest possible price, from performing on such agreement when a higher offer was received. The executor found himself “between a rock and a hard place”: If he honored the contract he’d be sued by the devisees who insisted that the higher offer be pursued; if he accepted the higher offer he’d be sued by the purchaser under the agreement.
Two years after Onanian the legislature passed the statute, that provides:
After the entry of a decree authorizing or licensing an executor, administrator, guardian , conservator or trustee to sell real estate at a public or private sale, provided: (a) the notice of the petition for license to sell real estate and of the time and place appointed for hearing, the same shall have been given by publication at such times and in such newspapers as the court orders, and (b) there shall have been no appearance entered against such sale prior to the entry of the decree or where such appearance shall have been entered and withdrawn prior to the entry of the decree, notwithstanding the fact that an appeal may have been taken prior to the expiration of the period allowed for an appeal therefrom, it shall be conclusively presumed that the amount of the advantageous offer stated in said petition for license to sell real estate is the highest possible price obtainable for the real estate described in such petition and that the executor, administrator, guardian, conservator, or trustee has fully satisfied his fiduciary duty to obtain the highest possible price for such real estate.
A sale made under a license cannot thereafter be assailed as having failed to bring the highest price possible. It should be noted that neither Onanian nor the statute have anything to do with the baggage — the title is protected whether sold under license or pursuant to a power of sale — but rather with the personal liability of the fiduciary.
Power of Sale under Will
This brings us directly to the question of sales made pursuant to a power of sale in a will. One might wonder at the outset why a power of sale in a will would be exercised when, by obtaining a license, the same result is achieved and additional protections, discussed above, inure. First of all, it has been said that “it is considered a good reason for refusing such license, that the power already exists [in the will].” Going v. Emry, 16 Pick. 107. Second, as noted, sales under a general license are limited to specified statutory time periods. So sales under a power become important to understand.
Two famous letters in 1912 between George A. Sawyer and John C. Gray discussed powers of sale in a will. Essentially, Mr. Sawyer posed three questions to Mr. Gray:
- Does the deed of an executor under a general power of sale convey a good title to land, free from the claims of creditors of the estate and of persons claiming under the will?
- Can the executor exercise the power even if there is sufficient personal property on hand to pay debts and legacies?
- Can the power be exercised after the period for which a license to sell can be obtained?
Mr. Gray answered all questions in the affirmative. These correspondences have since been cited by courts and other authorities to validate sales under such powers. Mentioning the letters here is of historical significance, but some the specific aspects of the power of sale in a will must be more fully explored.
First and foremost, if there is no power to sell, the fiduciary cannot make a sale without a license. The situations of “no power” would exist in the case of an administrator — there’s no will — and where the executor is not vested with such a power — there’s none in the will. So where we see a fiduciary making such a sale we must first find the power under which he or she is acting.
Once we find the power — if there is one — we need to see what it says. If the power permits the fiduciary to “sell” this does not include the power to mortgage. Loring v. Brodie, 134 Mass. 453. If the power includes the authority to sell, that does not permit the fiduciary to give the property away. Clune v. Norton, 306 Mass. 324. Sometimes, however, there is a power of sale, but words as such are not so used. For example, ordinarily one sees language that pulls no punches and states flat out that the fiduciary has a power to “sell.” But other language will also confer a power to sell upon the fiduciary. The classic phrase is “invest and reinvest,” but other verbiage, stating that the property is “to be invested,” or authorizing the fiduciary to “manage and invest” has been held to also include a power of sale as well. See Boston Safe Deposit & Trust Co. v. Mixter, 146 Mass. 100, 15 N.E. 141 (1888), Harvard College v. Weld, 159 Mass. 114, 34 N.E. 175 (1893). Language that the trustee has “powers of investment” would likewise include a power to sell.
Once language is found that supports the power the questions comes down to its exercise. One question is how long does the power endure? Technically, a power of sale contained in a will is unlimited in time. However, there are circumstances where the power can be considered “stale” or exhausted. For example, if a final account has been filed and allowed in the estate of the decedent it is generally agreed among conveyancers that the power of sale has thereby terminated as it is evident that its purposes have been fulfilled. In this regard, it is said in Crocker’s Notes on Common Forms, Little, Brown & Company (Seventh Edition, 1955), §923:
It has ordinarily been assumed that, in the absence of special provisions, and executor’s power to sell is for the payment of debts, expenses of administration or taxes and that the power continues until such have been paid. [Citations omitted.] The above cases show the desirability of obtaining a release of power in appropriate cases, where, for instance, no final account shows payment of such matters.
Moreover, some commentators have suggested that the power is limited to, and can be exercised only in connection with (and will expire upon) the payment of debts, expenses of administration, death taxes or distribution regarding the estate, and cannot be utilized merely to strip devisees of their title. See Park, Massachusetts Practice, Real Estate Law, with Forms, West Publishing Co. (Second Edition, 1981), §748 and Crocker, Notes on Common Forms, Little, Brown & Company (Seventh Edition, 1955), §923. On this principal it could be stated that even in an estate where no final account has been allowed the power would lapse if a significant period of time — the period during which such debts, expenses of administration, death taxes must be paid — has expired. It has been held, however, that a power of sale might last as long as twelve or fifteen or even twenty-six years, but in each case there were specific reasons for these decisions — primarily the fact that the testator’s will required such a conclusion. The point is that the one-year period that applies to licenses does not apply to powers of sale under the will.
Once we determine whether there’s a power and how it can be exercised, we have an ancillary question — who can exercise it? The question seems almost perplexing, for the “obvious” answer is the executor. However, there might be a successor or substitute fiduciary and the question becomes whether they can exercise the power to sell. The law is set out in Mayberry v. Carey, 268 Mass. 255, 167 N.E. 281 (1929):
The general rule is, that the duties of an executor, resulting from the nature of his office, and charged upon him as executor, devolve on an administrator cum testamento annexo [with the will annexed], where the authority is not necessarily connected with a personal trust or confidence resposed (sic) in him by the testator.
In Mayberry the testator's will gave the executor a power to sell and contained the following language: “Whenever in this will I have used the word 'executors,' I include their survivor, and the remaining sole executor in case one does not qualify, and any administrator or administrators with the will annexed.” However, it does appear that the court gave any particular weight to this language, and it would appear that such language is unnecessary in order for the successor fiduciary to be vested with the power.
Also, if there are multiple executors and one of them dies or resigns the powers will vest in the remaining fiduciaries, unless the will provides otherwise. Park, Massachusetts Practice Real Estate Law, with Forms, Section 748, states:
When a power of sale is given to an executor in a will, the power attaches to the office, and can be exercised by the executors or the survivor of them until the purposes for which was given are effectuated . . . . (Emphasis added).
What if the executor makes the sale but fails to mention the power in the will under which he or she is acting? In Gould v. Mather, 104 Mass. 283 (1870) a deed from an executrix did not specifically mention the power, though it was contained in the will. The court said that the execution of the power is purely a question of intention and the intention is to be gathered from the whole instrument. The court said:
All the authorities agree that it is not necessary that the intention to execute the power should appear by express terms or recitals in the instrument. It is sufficient that it shall appear by words, acts or deeds, demonstrating the intention. (Citation omitted.) [The executrix] in this deed professes to convey land which belonged to the estate of Ozias H. Mather. She does it in the capacity of executrix of his last will, which is equivalent to saying that she is acting under his last will and refers to that will as containing the authority under which she acts.
As indicated in the famous letters between George A. Sawyer and John C. Gray, a sale under a power contained in a will “insulates” the title from the claims of creditors — even those who have filed claims in the estate — and also will protect it from the rights of persons claiming under the will. This is an interesting point. A will, of course, speaks as of, and is effective upon, death. A gift in the will to a devisee vests title instantly in that person upon death (although a probate is necessary to “prove” that the will is in fact the last will and testament). So, in exercising a power of sale in a will (or for that matter, acting under a license to sell) the executor essentially strips title from the devisee (as well as protecting it from creditors and claims of legatees). The devisee, of course, cannot complain because the gift is subject to the paramount power that the testator included in the will, but the concept sometimes doesn’t “sit well” with conveyancers. Sometimes the overzealous conveyancer may want to use the “belt and suspenders” approach — get the devisee to join in the conveyance — when purchasing property from an estate, but this may be ill-advised. Once the devisee joins in the conveyance with the executor, a question arises: who’s the seller, the executor under the power or the devisee? The answer to this question is crucial, for it is by way of the exercise of the power that the executor is able to divest the title and free it of the claims of creditors and others claiming under the will. (A deed from the devisee would be subject to the baggage that I’ve noted before.) The executor in exercising the power essentially creates a “fund” against which creditors can make their claims, and it is this fund (the conversion of real estate to money) that permits the title to be “cleansed” because, in the hands of the executor, it serves as a substitute for the land and is held by the fiduciary to satisfy claims as they may be presented . If the devisee joins in the conveyance the baggage may not be “fully unloaded,” as it is unclear whether the funds are the devisee's or are being held by the fiduciary. Belts and suspenders are good when your pants are falling down, but when used in connection with a sale from an estate it clouds the question as to the identity of the seller. It is better to have the executor alone give the deed so that questions concerning baggage are disposed of.
When it comes to powers of an executor, something should be said about the Statutory Optional Fiduciary Powers that are provided for under G.L.c. 184B, §2. These are powers that can be incorporated by reference and thereby give to the executor powers that otherwise would be custom-drafted in connection with the preparation of the will. It is important therefore to make sure that all the powers are acceptable in regards to the particular estate (although the statute provides that the incorporation can be done “subject to exceptions”). It is important to note, in this regard, that the statute provides that “[a]n attorney at law preparing a will or trust who uses a term defined in this chapter shall furnish to the testator or settlor a copy of the section of this chapter by which the term is defined.”
The statute contains many powers, including the power to sell and to mortgage, among others, and provides that the powers “may be given to the fiduciary in a will or trust by specific reference thereto in said will or trust.” A mere recital that the executor “shall have all those powers enumerated as Statutory Optional Fiduciary Powers as set forth in G.L.c. 184B, §2” would be sufficient.
Sometimes there is a question as to whether an executor or an administrator has properly exercised a power, whether it be one contained in a will or by way of a license. There may be some question as to the verbiage used in the will or the time during which the executor has acted — or whether the fiduciary had any power at all (as where an administrator purports to sell property without the benefit of a license). These issues can be “fixed” by applying to the court for a ratification of a doubtful act of the fiduciary. The relevant statute is G.L.c. 204, §24 and it provides that if the authority or validity of an act or proceeding of the probate court or of a person acting as executor, administrator, guardian, conservator, receiver, commissioner or other fiduciary officer appointed by the probate court, or trustee is drawn in question the court may, upon petition of any interested party ratify the acts of that fiduciary, provided that the court could have authorized the act in the first instance upon due proceedings.
This is a very important statute to keep in mind. If the court could have authorized the act in the first instance it can ratify the act.
In the first part of this article (Vol. 6, No. 2) I discussed how title can pass by intestacy. In this installment I explored how title can pass by testamentary disposition. But death can jettison title in a direction that has nothing to do with the estate of the deceased. In the continuation of this article in an upcoming newsletter I will discuss tenancies under which parties hold their title — and some of the discussion will amaze you. You’ll see!
1 For this reason alone, it is generally agreed among conveyancers that even if a deed is accepted from the devisee that the executor should join in the conveyance if for no reason other than exhausting the power. See Swaim, Crocker’s Notes on Common Forms, Little, Brown & Company (Seventh Edition, 1955), §A30. [Back to Text]
2 Mayo v. Merritt, 107 Mass. 505. [Back to Text]
3 Bayley v. Sloper, 263 Mass. 534, 160 N.E. 275. [Back to Text]
4 Johnson v. Tracey, 326 Mass. 628, 88 N.E.2d 157. [Back to Text]