Lawrence W. Waggoner

Reformation of Wills on the Ground of Mistake: Change of Direction in American Law?

Wills cannot be reformed on the ground of mistake. That was the traditional rule: An unambiguous provision in a will could not be reformed, no matter how persuasive the evidence was that the provision mistakenly expressed the testator’s true intention. Courts backed the anti- reformation rule up with a no-extrinsic-evidence rule, a rule that precluded evidence contradicting the plain meaning of the text.In Estate of Duke, P.3d (No. S199435, slip op. Cal. July 27, 2015), the California Supreme Court overturned the traditional anti-reformation rule and held that a will can be reformed on the ground of mistake. In reaching its conclusion, the court relied extensively on John H. Langbein & Lawrence W. Waggoner, Reformation of Wills on the Ground of Mistake: Change of Direction in American Law?, 130 U. Pa. L. Rev. 521 (1982). That article also formed the basis for the reformation rule adopted in the Restatement (Third) of Property: Wills and Other Donative Transfers § 12.1 (2003). The Restatement’s reformation rule, in turn, formed the basis for the reformation rule in the Uniform Trust Code § 415 and the Uniform Probate Code § 2-805. Full disclosure: The authors of the law review article served as Reporters for the Restatement and played a part in adding the will-reformation rule to the Uniform Trust Code and the Uniform Probate Code. Before the California Supreme Court decided Estate of Duke, the Massachusetts Supreme Judicial Court, in Flannery v. McNamara, 738 N.E.2d 739 (Mass. 2000) (4-to-2 decision), refused to adopt the Restatement’s reformation rule, but the New York court in Estate of Herceg, 139 Misc. 2d 201, 747 N.Y.S.2d 91 (Sur. Ct. 2002), adopted it.

Federal Taxation of the Assignment of Life Insurance

The most litigated estate tax issue concerning life insurance is whether the proceeds should be included in the insureds gross estate. This question is usually governed by section 2042 of the Internal Revenue Code of 1954, the estate tax provision directed specifically at life insurance. This Article deals with the treatment of various types of transactions concerning life insurance. One interesting and currently controversial problem is what amount should be included in the insureds gross estate if he gives away a policy within three years of his death but the assignee, not the insured, pays the post-assignment premiums that become due. This Article will explore that issue, along with others arising from the assignment of life insurance, and suggest some solutions.