A Strong Offense
A Stronger Defense
It can be frustrating to an executor and other beneficiaries of an estate when one of the beneficiaries causes unnecessary cost to the estate. Wills and some state statutes sometimes provide a way to reduce that beneficiary’s testamentary share of the estate. These provisions are often couched in terms of the executor having “discretion” to reduce a beneficiary’s share. But, as the Georgia Court of Appeals explained in In re: Estate of Hazel Williams Helms, discretion doesn’t mean that an executor can arbitrarily reduce a difficult beneficiary’s testamentary share of an estate. As we have previously seen in the context of a court applying the doctrine of set off, if someone is going to get less than that to which they are entitled under an estate, there needs to be specific evidence proving a specific amount to back up the reduction.
The will of Hazel Williams Helms provided that Jan Helms Rowell was to receive 50 percent of the residue of the estate. The administrator of the estate offered a Final Settlement of Accounts and Approval of Distribution Plan that reduced by $61,684 the assets to be received by Rowell allegedly “based upon [her] previous actions regarding estate assets and cost to the estate.” That’s a pretty specific dollar amount for a reduction. The probate court approved the plan, but Rowell contended that there was no evidence to support that specific deduction in her testamentary share and the appellate court agreed.
The probate court made a number of findings that Rowell had acted improperly with respect to the estate prior to the probate court’s appointment of an administrator, but the administrator never pursued a forensic accounting to determine what – if anything – Rowell had done with estate funds. In fact, other than some testimony that Rowell had provided backup and checks evidencing $26,400 of estate funds spent by Rowell on non-estate or partially non-estate expenses prior to the administrator’s appointment, there was no testimony as to Rowell’s purported use of estate funds or as to the cost to the estate of Rowell’s purported acts or omissions.
In reducing Rowell’s share, the administrator relied upon the former Georgia statute that applied to this estate which permitted the administrator “[t]o compromise, adjust, arbitrate, bring or defend actions on, abandon, or otherwise deal with and settle claims in favor of or against the estate or trust as the fiduciary shall deem advisable[.]” Although the administrator was vested with discretion in pursuing claims on behalf of the estate, it does not follow that the administrator could arbitrarily choose an amount to reduce Rowell’s share based upon a possible claim against Rowell. And, while a probate court may “hear evidence upon any contested question” and thereby reduce a beneficiary’s share, the probate court must still receive evidence showing the basis for reducing the value of a beneficiary’s testamentary share.
Because the decedent intended through her will for Rowell to receive half of the estate and the administrator proposed to distribute less than half of the value of the remainder to Rowell with no showing how the administrator arrived at the specific amount of reduction, the case was sent back to the probate court for a determination of the appropriate amount, if any, of such a reduction.
Thus, an executor who is empowered to and wants to reduce a beneficiary’s share needs to have evidentiary backup for the specific reduction. If the amounts in dispute and the value of the estate justify it, a forensic accounting should be considered. But bank records, attorney’s invoices, and basic documentary evidence may be sufficient.