Travis R. Weaver has published his article, “Michigan or Bust: The Disastrous Result When Conflicting Choice of Law Provisions Constrain Right of Survivorship Agreements,” in the Texas Tech Estate Planning & Community Property Law Journal, where it is available for download.  The abstract reads as follows:

The purpose of estate planning is to provide an individual with a definite way of giving possessions to another when the individual in question dies. Estate planners prepare documents to give individuals some peace of mind and to assure them that their possessions go exactly where they intend upon death. Now, imagine a world where an individual creates a legally valid document, having full intention of passing assets to someone close to him, but instead of following such intentions, the court decides to distribute the individual’s assets to someone else. Traditionally, Texas follows the intentions of the testator; however, a recent Texas court decision, McKeehan v. McKeehan, threatens to overturn the guarantee of all past and present estate plans.

Dale McKeehan, a top executive at Ford Motor Company, retired after nearly four decades of service in the company’s International Development Sector. As one can imagine, being an executive at Ford certainly comes with perks. Along with a generous salary, Ford offered a substantial money market program for purchasing Ford credit debt securities. Dale retired in 1998, and he moved to Texas to enjoy the cattle country and the sunshine. The money market account was left to accumulate funds for another ten years, and the newly remarried executive enjoyed the decade in relative solitude.

Unfortunately, in 2008, cancer reared its ugly head, and Mr. McKeehan embarked on a mission to create an accelerated estate plan. At this point, he visited a local attorney to determine the distribution of his estate. Logically, Dale McKeehan first decided what to do with the largest piece of his estate, which, surprisingly enough, was the money market account. At the beginning of his illness, Dale arranged a meeting between his Texas banker and the manager of a bank in Michigan, where his money market account was located. The purpose of the meeting was to add his current wife to the money market account. Dale assumed that the account would pass by a right of survivorship to his second wife, as is provided by law in Michigan. At the time of the signing, Dale and his wife were domiciled in Texas. Sadly, soon after the meeting at the bank, Dale passed away; shortly thereafter, the probate proceedings ensued.

During the probate matter, two major issues arose. First, Dale’s children from a previous marriage—the children stood to inherit half of the testator’s property by right of survivorship—claimed that Dale’s money market account was included in the non-testamentary property; their stepmother, Dale’s widow, disagreed. Second, while the money market account originated under Michigan Law, when Dale decided to add his wife to his account, and when Dale died, he and his wife were domiciled in Texas.

Clearly, Dale intended to pass his entire account to his second wife through right of survivorship. However, in Texas, Texas law governs agreements involving joint accounts when the owner of the account is a Texas domiciliary. Instead of following Texas’s public policy, the court distributed the jointly held assets to the second wife by right of survivorship, departing from fifty years of Texas case law precedent!

This Comment delves into the issues presented by McKeehan v. McKeehan, and it explores two non-Texas solutions to this type of issue. The ultimate purpose of this Comment is to use background information from McKeehan, combined with current statutory language, to forge a hybrid rule, which effectively solves this issue.

Download full article at Michigan or Bust: The Disastrous Result When Conflicting Choice of Law Provisions Constrain Right of Survivorship Agreements.

 

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.