February 2013 Example Ten-point Answers to Virginia Essay Questions
FEBRUARY 2013 - QUESTION 9 – VIRGINIA BAR EXAMINATION
Mr. Wilson, a resident of Dinwiddie County, Virginia, died on December 26, 2011. Four children, John, Rob, Sally and Mary, survived him. Following Mr. Wilson's death, his safe deposit box at Dinwiddie Bank was opened and inventoried. It contained Mr. Wilson's Last Will and Testament, three sealed envelopes, and one savings account passbook evidencing an account with Dinwiddie Bank to which was attached a photocopy of the bank's signature card.
The envelopes were individually addressed to Rob, Sally and Mary respectively. Each envelope contained a United States Government Bond payable to Bearer. Rob's envelope contained a bond in the principal amount of $150,000, the bond in Sally's envelope was for $90,000, and the bond in Mary's envelope was for $75,000. Additionally, each envelope contained a letter from Mr. Wilson to the appropriate child, each dated November 1, 2011, stating: "The enclosed Bond is a gift for Christmas."
Mr. Wilson's savings account had a balance of $50,000. Mr. Wilson had established it in January 2011 in the names of "Mr. Wilson and John Wilson, joint tenants with right of survivorship." The copy of the signature card had both Mr. Wilson's and John's signatures in two places, once to establish their signatures for account purposes and once next to a statement reading: "JOINT ACCOUNT WITH SURVIVORSHIP."
Mr. Wilson's will dated December 1, 2011 contained a specific provision stating that John was to receive nothing from the estate and further stating that the $50,000 joint savings account in the name of Mr. Wilson and John was not to pass to John, but be divided equally among Rob, Sally and Mary. There were a number of specific bequests variously to Rob, Sally, and Mary but no specific bequests of the bonds contained in the sealed envelopes. The residue of Mr. Wilson's estate was also to be divided in equal shares among those three children.
At a hearing on the probate of Mr. Wilson's will, Rob, Sally and Mary each testified that Mr. Wilson had informed them that he intended to make gifts to each of them of certain bonds that he had instructed Sally to put in his safe deposit box. Sally testified that she had always been an authorized user to enter Mr. Wilson's safe deposit box and that on November 1, 2011, at Mr. Wilson's request, she entered that box and delivered all of the subject bonds to Mr. Wilson. According to Sally, Mr. Wilson dictated to Sally the letters later found in the envelopes. She typed them, addressed the envelopes, and gave them to Mr. Wilson who placed the letters and bonds in the envelopes and sealed them. Mr. Wilson then said to Sally, "Since you have access to my safe deposit box, put these envelopes back in there," which she did. She testified he later said to her, "Don't forget those envelopes I told you to put back in my safe deposit box. Come Christmas, I want you, Rob, and Mary to have them." She further testified that, because Mr. Wilson became terminally ill just before Christmas, the family delayed their Christmas celebration to be with him during his final illness and that, as a consequence, she never got around to handing out the envelopes before he died on the day after Christmas.
John testified concerning the joint account. He stated that he executed the signature card at his father's request and acknowledged that all of the money placed in the account had belonged to Mr. Wilson. None of the other children had any knowledge of the account, although Sally had seen the passbook in the safe deposit box. No other testimony was received.
(a) What are the arguments pro and con that the Government Bonds are either the property of Rob, Sally and Mary, or that they are assets of Mr. Wilson's residuary estate, and what is the most likely outcome?
(b) Should the savings account be divided equally among Rob, Sally and Mary as specified in Mr. Wilson's will?
FEBRUARY 2013 - QUESTION 9 – EXAMPLE ANSWER #1
Part A - Arguments With Respect to the Government Bonds
It is most likely that the probate court will determine that the government bonds are all property of Rob, Sally, and Mary respectively.
Arguments that the Bonds are Property of the Children
The government bonds are arguably the property of the children on the basis that they were validly delivered to the children. To complete a transfer of title to an asset, there must be intent, acceptance, and delivery of title. Acceptance may be assumed by silence or passage of time. Delivery is completed either by physically handing the necessary document to the recipient, or symbolically. The transferor's intent is necessary in determining whether delivery occurred or not, because even where physical delivery did not occur, if it is clear that the transferor intended for the recipient to receive it, delivery may be have been made.
In this case, the children may argue that all three elements have been met. According to Sally's testimony, Mr. Wilson instructed Sally to retrieve the bonds. At his dictation, Sally wrote the letters to each of Rob, Sally, and Mary, expressing that the bonds be given to them as a Christmas present. Mr. Wilson placed the letters and bonds in the envelopes, sealed them, and instructed Sally to place them in the safe deposit box. In these matters, Sally was acting as Mr. Wilson's agent. He had authorized her to work on his behalf, her actions benefited him by complying with his wishes, and he had control over her actions in preparing the letters and bonds.
Importantly, Mr. Wilson informed Rob, Sally, and Mary of his intent to gift them certain bonds that would be placed in his safe deposit box. This is evidence both of Mr. Wilson's intent and of acceptance. It shows Mr. Wilson's intent because he positively stated that the bonds should be gifts to the children. Further, the children were on notice of his intent to gift the bonds to them and therefore their silence could be deemed acceptance.
Further, because the government bonds were negotiable instruments payable to bearer, Mr. Wilson did not have to make any changes to them or indorse them. When a negotiable instrument is payable to bearer, any person that is in possession of the instrument may lawfully redeem it.
Arguments that the Bonds are Assets of the Residuary Estate
It may be argued that the bonds are assets of the residuary estate because Mr. Wilson failed to deliver the bonds, and that the children could not have accepted the bonds.
According to this argument, delivery did not occur because Sally placed the bonds in the safe deposit box, not in the possession of the recipients. If Sally were acting as agent to Mr. Wilson, that could mean that delivery would not occur until the children as recipients actual received the bonds. This argument should fail because, as indicated above, Mr. Wilson's intent was clear that the bonds be delivered to the children, and the substantial step was already taken of placing them in the safe deposition box.
According to the acceptance argument, the children could not accept the bonds because the time was not yet ripe to do so. None of them had received the bonds, and therefore could not be said to have accepted by their acquiescence over time. According to this reasoning, to imply acquiescence from silence in the period before a gift is given goes beyond the scope of law. This would fail, however, on the basis that the bonds were constructively delivered already as discussed above.
However, the better view is that the bonds were delivered and are the property of Rob, Sally, and Mary because it best meets the intent of Mr. Wilson and substantial steps were taken to effectuate delivery.
Part B - the Savings Account
The savings account should not be divided equally among Rob, Sally and Mary. Rather, the savings account should transfer to John alone.
For accounts of joint ownership, the law prefers ownership in common instead of ownership with rights of survivorship. Where, however, the instrument that creates an account expressly states that it is created as a joint account with rights of survivorship, then it is properly a joint account with survivorship rights as long as the all the account owners create the account at the same time and in the same instrument. In a joint account with rights of survivorship, a decedent's share passes to the surviving owner(s), instead of any testate or intestate takers, as a form of nonprobate transfer. This form of nonprobate transfer takes precedence over a testate decedent's preferences expressed by will.
Here, Mr. Wilson created the account with John as "joint tenants with right of survivorship." Thus, at the time of the account creation, the necessary indication was present to enable this to be a joint account with rights of survivorship. If, in the alternative, they had created the account in their names as joint tenants only, then the law would construe this as a tenancy in common. Further, the signatures on the signature card next to the statement "JOINT ACCOUNT WITH SURVIVORSHIP" included both Mr. Wilson's and John's names.
The joint savings account is therefore properly an account with survivorship rights in John. Mr. Wilson's expressed intent in the will that the account should not pass to John cannot defeat this. The joint account is a nonprobate asset, meaning that it is not part of the probate estate and is not governed by Mr. Wilson's will.
As a result, the proceeds of the account should pass to John as survivor, not equally divided among Rob, Sally, and Mary.
FEBRUARY 2013 - QUESTION 9 – EXAMPLE ANSWER #2
(a) Government Bonds
Rob, Sally, and Mary have a strong argument in their favor to assert that the Government Bonds are their property and are not assets of Mr. Wilson's residuary estate.
The Government Bonds represent intervivos gifts transferred by Mr. Wilson during his lifetime. A valid gift transfers title. However, to be valid, the intervivos (meaning, during one's lifetime) gift must be accompanied by a donative intent, must be validly delivered, and it must be validly accepted.
Donative intent necessitates a present intent to immediately be bound, even if the donor maintains possession of the gift for the donor's lifetime. In this case, the facts indicate that the November 1, 2011, letter that accompanied each bond stated that the bonds were a gift for Christmas. The facts further indicate that Mr. Wilson and Sally had a detailed exchange about the bonds, pursuant to which Mr. Wilson informed her of his intent to make gifts to each of Rob, Sally, and Mary, and that he instructed Sally to put the bonds in his safe deposit box. Thus, such communications clearly demonstrate Mr. Wilson's present intent to be immediately bound, and the fact that the bonds were not deliverd until after he died does not unravel the donative intent.
In addition to donative intent, the donor must validly deliver the intervivos gift. In this case, the facts indicate that he entrusted Sally to put the envelopes with the bonds in the safe deposit box, to which he knew she had access. Even though the envelopes never reached the children until after Mr. Wilson's death, the facts suggest that Mr. Wilson accomplished a valid delivery by granting Sally access to his safe deposit box, in which he left the actual bonds. In general, a gift is validly delivered if the item itself is handed over or if something that represents the item is handed over. In this case, the bonds were payable to bearer, meaning that they were payable to whomever was in possession of the bonds. Even though the bonds themselves where in Mr. Wilson's safe deposit box, delivery was effective the moment that Mr. Wilson communicated his intent to be bound and gave them to Sally to guard until Christmas.
Lastly, to have a valid intervivos gift, there must be valid acceptance. A donee can accept by silence, so short of an express rejection, almost any action constitutes valid acceptance. Here, Sally put the envelopes in the safe deposit box with the intent of handing them out at Christmas. But for Mr. Wilson's death, she would have done so. Thus, there is nothing in the facts to indicate that any of the children have rejected the intervivos gift.
Despite these seemingly strong arguments, there is an argument that delivery was never effected, and, therefore, the bonds should pass through Mr. Wilson's residuary estate. After all, if a gift is not valid, it does not pass title, and, thus, title would remain with Mr. Wilson.
To support this assertion, the key facts are that the bonds were in fact never delivered to the children until after Mr. Wilson's death. Despite the fact he may have had the donative intent to convey title to the bonds when he wrote the letters and talked with Sally, the fact remains that the bonds were in his safe deposit box and were never actually or symbolically handed over to the children until after his death. As such, title never passed to the children, and, instead, remained with Mr. Wilson, meaning that they should pass through his residuary estate.
In addition, the facts indicate that it was Mr. Wilson's intent to pass title at Chrismas and not upon the date of the letter - November 11, 2011. Thus, one could argue that no donative intent existed at the time that the letters were written. This argument is likely unsuccessful, however, because the facts indicate that Mr. Wilson died one day after Christmas, and thus the donative intent, if not effective when the letters were written, became effective one day before he died, on Christmas Day.
It is worth noting that the fact that the December 1, 2011, will did not mention the bonds is of no import. Had the bonds been gifts after the will, then perhaps there would be an ademption by satisfaction analysis, meaning an analysis as to whether the bonds were meant to be in satisfaction of some other legacy in the will or whether they were meant to be merely gifts. However, because the conveyance of the bonds and the accompanying letters came before the will, no such analysis is pertinent to the determination of whether Mr. Wilson passed title to the bonds to his three children.
(b) Savings Account
The savings account should not be divided equally among Rob, Sally, and Mary as specified in Mr. Wilson's will.
The facts indicate that the savings account was created as a joint account with survivorship rights between Mr. Wilson and John Wilson. Such joint accounts are considered nonprobate assets, or will substitutes, which do not pass by probate and are not descendible or devisable. Instead, by operation of law, one joint tenant's interest will pass automatically to the other upon the former's death.
In this case, the facts indicate that both Mr. Wilson and John Wilson effected a valid joint savings account by signing the signature card in two places - once to establish their signatures for account purposes and once to maninfest their intent to make it a joint account with rights of survivorship. The facts further indicate that nearly 12 months after the joint account was created, Mr. Wilson drafted a will that sought to undue the right of survivorship and instead devise the balance of the account to Rob, Sally, and Mary. Such attempt was ineffectual to cut off John's survivorship rights. To do so, Mr. Wilson would have had to terminate the joint account with the bank prior to his death by proper means. In this case, his mere attempt to discredit the joint account via his will is ineffective, and John will inherit the full $50,000 balance pursuant to his right of survivorship.