Patton v. Fulmer
2016 Ark. App. 260
| Ark. Ct. App. | 2016Background
- Decedent John M. Fulmer died in 2010 leaving a 1980 will that bequeathed his wife a formulaic marital share (50% of the adjusted gross estate as finally determined for federal estate tax purposes, less aggregate marital deductions) and created a residuary trust for the remainder.
- Nonprobate assets (life insurance, annuities, jointly held property) totaling about $1.547 million passed to the widow, Dorothy Fulmer, outside probate; the probate estate consisted mainly of two investment accounts valued at about $2.475 million.
- The probate account balances appreciated by roughly $400,000–$500,000 during administration.
- The trial court concluded no federal estate tax applied to decedents dying in 2010 (due to EGTRRA/2010 Act issues) and thus awarded Fulmer 50% of the adjusted gross estate ($2,011,455) plus 50% of the appreciation, effectively giving her ≈85% of the estate and leaving the residuary trust ≈$464,455.
- The Pattons (residuary beneficiaries) sought construction of the will, argued the widow’s marital bequest should be reduced by amounts passing to her outside probate (yielding a $464,455 bequest), and sought accounting/repayment for distributions the executrix made.
- The court excluded extrinsic testimony from the will drafter and a tax expert; on appeal the Arkansas Court of Appeals reversed the will construction and appreciation award, remanded for recalculation, and affirmed the evidentiary exclusions.
Issues
| Issue | Plaintiff's Argument (Pattons) | Defendant's Argument (Fulmer) | Held |
|---|---|---|---|
| Proper construction of will: how to compute spouse's 50% share | "50% of adjusted gross estate, less marital deductions allowed" means subtract amounts that passed to spouse outside probate (so wife’s probate bequest = ~$464,455) | The 50% should be computed without deducting nonprobate transfers because no federal estate tax applied in 2010, so spouse gets 50% of adjusted gross estate (~$2,011,455) | Reversed trial court: will requires using tax definitions in will; spouse’s bequest is 50% of adjusted gross estate less marital deductions for property passing to spouse outside the will; probate bequest = ~$464,455 (remand for distribution) |
| Effect of 2010 federal estate tax gap on will language | Tax-law gap does not change testator’s text: will’s tax terms are defined by the Internal Revenue Code as of date of death and marital deductions allowed must be subtracted even if no estate tax was payable | Trial court: because estate tax was not in effect at death, marital deductions were not necessary and spouse should receive 50% of adjusted gross estate | Court of Appeals: trial court erred by focusing on absence of estate tax; must apply will’s definitions and subtract marital deductions allowed, regardless of whether estate tax was payable |
| Allocation of appreciation of probate assets | Appreciation should be allocated according to the corrected bequest: wife is entitled to appreciation attributable to her $464,455 interest; remainder goes to residuary trust | Wife had been awarded half of appreciation based on trial court’s larger marital share | Reversed award of half the appreciation; remanded to calculate appreciation attributable to the corrected probate bequest and distribute remaining appreciation to residuary trust |
| Admission of extrinsic testimony (will drafter and tax expert) | Pattons sought to admit drafter and tax expert to explain testamentary intent and tax-law impact | Fulmer argued testimony unnecessary because will is unambiguous; drafter was counsel of record; expert testimony untimely and not helpful | Affirmed exclusion: will is unambiguous so extrinsic evidence not allowed; exclusion of drafter and expert testimony was not an abuse of discretion |
Key Cases Cited
- Bailey v. Delta Trust & Bank, 359 Ark. 424 (court must construe unambiguous will by plain language)
- Hanna v. Hanna, 273 Ark. 399 (testator’s intent is as expressed in the instrument)
- Angel v. Angel, 280 Ark. 21 (construction should effect testator’s intent to provide specified distributions to relatives)
- Standridge v. Standridge, 298 Ark. 494 (reversal that affects other matters requires remand for consistent proceedings)
- Patterson v. Odell, 322 Ark. 394 (rules on witnesses and testimony)
- Summers Chevrolet, Inc. v. Yell County, 310 Ark. 1 (evidentiary rulings reviewed for abuse of discretion)
- Williams v. Ingram, 320 Ark. 615 (expert testimony excluded if not helpful to trier of fact)