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Wills

Contractual Wills

Breach While One Contracting Party Still Alive

    Meyer v. Shelley, 34 S.W.3d 619 (Tex. App.—Amarillo 2000, no pet. h.).

    Husband and Wife executed a contractual will.  Wife died.  Husband then executed a new will and began dissipating the assets subject to the contractual will.  Beneficiaries of the contractual will brought suit against Husband.  The trial court dismissed the suit finding that the lawsuit was premature.

    The appellate court agreed.  The court began with a discussion of the basic rules applicable to contractual wills focusing on the general rule that the survivor has the right to revoke the contractual will but that doing so in a manner which changes the disposition of the property subject to the contract may result in liability for breach of contract after the survivor dies.  A will speaks from the time of a testator’s death.  Because Husband has not yet died, it is not possible to ascertain the property which would be controlled by the contractual will.  In addition, the contractual will did not limit Husband’s power to use or dispose of the property received from Wife.  Consistent with earlier Texas cases, the court indicated that there cannot be a breach of the contract until Husband dies without performing as he promised.  He could always revoke the new will and execute a will with the same disposition plan as the contractual will.

    Moral:  Contractual wills should be avoided.  Other estate planning techniques, such as a trust, will provide greater certainty and predictability in carrying out a client’s intent.

Wills

Contractual Wills

Declaratory Judgment While One Contracting Party Still Alive

    Meyer v. Shelley, 34 S.W.3d 619 (Tex. App.—Amarillo 2000, no pet. h.).

    Husband and Wife executed a contractual will.  After Wife’s death, Beneficiaries of the will sought a declaratory judgment to determine the validity and enforceability of the contractual will and their rights, if any, under the will.  The trial court dismissed the petition without reaching the merits.

    The appellate court reversed.  The court held that the validity of a contractual will may be determined under the Texas Declaratory Judgment Act even though one of the testators (Husband) has not yet died.

    Moral:  The court may issue a declaratory judgment on issues regarding a contractual will even if one of the testators is still alive.