By Kent Berk on May 5th, 2022 in Probate, PROBATE LITIGATION, WILL CONTESTS
On January 13, 2022, the Arizona Court of Appeals provided an excellent illustration of intestate succession when it decided In the Estate of Dougherty. In doing so, the Court also clarified when an adopted person may inherit through their birth parents. While this decision does not provide some new, earth-shattering precedent, it does hammer down Arizona’s intestate succession procedure when the decedent’s descendants are the only surviving heirs.
When someone dies without a will, or other estate plan, that person has died “intestate.” Intestate succession is the statutory process for distributing an intestate decedent’s estate. Arizona has a comprehensive intestate succession process, which Dougherty discusses at length.
In Dougherty, Klifton Hoyer was the decedent, Verle Dougherty’s, natural grandson. Verle died intestate and had 3 children: Steven, Larry, and Lorna. Larry and Lorna predeceased (died before) Verle. Larry left four surviving heirs and Lorna was survived by Klifton, who had been adopted by his step-mother as a child. Steven served as personal representative of the Estate.
The Appellate Court was asked to solve the question of how much of Verle’s estate Klifton was entitled to receive. It answered by affirming the probate court’s ruling that Klifton was entitled to 2/15 of Verle’s Estate instead of 1/3 as argued by Klifton. This Article will discuss Dougherty, its implications, and provide some key takeaways.
The Probate Court issues an Inheritance Order determining Klifton has a right to inherit from his birth mother.
At the case’s outset, the probate court first had to resolve the question of whether Klifton could inherit as an intestate heir. Steven, as personal representative, petitioned the probate court to issue an order determining whether Klifton was entitled to inherit through his mother, Lorna, because Klifton was adopted. The probate court ruled Klifton was entitled to inherit through Lorna as a matter of law.
Klifton’s step-mother was married to his natural father. Arizona law allows adopted children to, “inherit from or through” both natural and adoptive parents, when the child is adopted by a stepparent spouse of a birth parent. A.R.S. § 14-2114(B). In an attempt to comply with the statute, the probate court issued an inheritance order stating that, “[Klifton] is entitled to inherit the share of his mother, [Lorna], in the intestate [e]state of [Verle].”
The motion to clarify the inheritance order.
A year after the inheritance order was issued entitling Klifton to inherit, the issue became one of quantification. Steven, as personal representative, filed a motion to clarify the inheritance order and for a determination of the share to be distributed to Klifton.
Klifton argued that the court’s language in the inheritance order meant he was entitled to the same share Lorna would inherit if she were alive, which was 1/3 of Verle’s Estate. In response, Verle’s Estate—joined by Larry’s four children—argued the inheritance order’s language deviated from Arizona’s intestate succession laws. As such, Klifton could not inherit 1/3 of the Estate, but was entitled to only a 2/15 share.
The Probate Court clarifies Arizona’s intestate succession scheme.
In Arizona, when a decedent is survived only by their descendants, their intestate estate passes to the descendants by representation per capita at each generation. A.R.S. § 14-2106. If a predeceased descendant has surviving issue, then the remaining shares are combined and distributed in the same manner at the next generation.
For example, if Larry, Lorna, and Steven were all alive when Verle died, then they would each be entitled to a 1/3 intestate share. Since Larry and Lorna predeceased Verle and were represented by surviving descendants, their shares are combined and then divided equally per capita among the surviving descendants at the next generation. This means that 2/3 of Verle’s Estate is divided among Larry’s four children and Klifton equally, which entitled Klifton to a 2/15, or 13.33% share of Verle’s Estate. See Figure 1 below for an illustration of by representation per capita distribution as applied to the Dougherty Estate.
In accordance with these rules, the probate court ruled on Steven’s motion to clarify, specifying that Klifton is entitled to a 2/15 share. In doing so, the court chastised the inheritance order’s language and rejected Klifton’s interpretation of it. Notably, the court declined to adopt an ‘“interpretation … that is not allowed under the law.’” Klifton then appealed.
Ambiguous inheritance orders must be interpreted in accordance with the law.
Klifton wanted 1/3 of Verle’s Estate. The chief issue in Dougherty was whether the inheritance order stating that, “[Klifton] is entitled to inherit the share of his mother, [Lorna], in the intestate [e]state of [Verle],” was consistent with Arizona law. Upon plain reading of the inheritance order, it could be implied that the probate court ruled that Klifton could inherit Lorna’s 1/3 share. And that was what Klifton argued. While admitting the order was ambiguous, the Appellate Court rejected that argument and held that inheritance orders must be interpreted in alignment with Arizona’s probate laws. Specifically, the court interpreted the order to mean that the “inheritance order most plausibly meant that Klifton was entitled to inherit through his mother, by representation.”
As mentioned above, Arizona follows a ‘by representation per capita’ system to distribute intestate estates if there are only surviving descendants. Klifton essentially argued for a per-stirpes structured distribution to support his position that he was entitled to a 1/3 share of Verle’s Estate. In contrast to Arizona’s well-defined per representation system, under per stirpes, a surviving descendant is entitled to inherit the entire portion that would have gone to their ancestor, in this case Klifton’s mother, Lorna.
Klifton also argued that the initial judge who issued the inheritance order intended to convey him a share different than what he was entitled to under Arizona law. He posited that the order was not ambiguous because it did not cite the statute that defines “by representation.” As a result, he argued the judge did not want the personal representative to follow that statutory scheme.
The Appellate Court held that the probate court correctly ruled on Steven’s motion to clarify the inheritance order that Klifton was entitled to a 2/15 share of Verle’s Estate. The court further ruled the inheritance order provided a guide for the personal representative to calculate Klifton’s share rather than an order specifying what share Klifton, in fact, was entitled to receive. Elaborating on its conclusion, the court noted that it is not the probate court’s duty to list every single statute that may be applicable in administering estates.
Appeals must have merit.
Notably, the Appellate Court issued sanctions against Klifton for asserting a meritless position on appeal. An appellate court may issue sanctions if an appeal is filed that “any reasonable attorney” would believe “is completely without merit.”
Klifton had no legal basis for his appeal. When asked by the probate court, Klifton’s counsel admitted that the only basis for its position that Klifton was entitled to 1/3 was that the inheritance order stated that Klifton was entitled to inherit “the share of his mother,” without any other good-faith basis to support its position. Ironically, the Appellate Court pointed out that Lorna was not entitled to anything because she predeceased Verle and that a literal interpretation of the inheritance order’s language would render Klifton with no inheritance.
Key Takeaways From Dougherty:
- The Dougherty opinion is a memorandum decision, not a published opinion, so it has limited precedential effect.
- Arizona Court of Appeals clarifies the bounds of when an adopted child may inherit through a natural parent.
- Attorneys representing clients in probate litigation must interpret orders in accordance with corresponding statutory law.
- Arizona intestate succession follows a representation per capita at each generation system to determine distributive shares of an intestate estate.
- Appeals must have merit.
