Richardson received a life estate interest in a home that had been owned by the decedent. At the termination of the life estate, the property would transfer to the decedent’s children. The decedent’s amended trust stated that Richardson had to maintain the property, pay taxes and insurance, and pay for “[a]ny other reasonable and customary fees that would normally accompany property.” When the decedent died, the home was subject to a mortgage. The trustee, Gardner, asked the superior court to determine who should pay for the mortgage’s interest and principal, Richardson or the children. In August 2009, the court ruled that the children would pay the principal but that Richardson had to pay the 6% interest.
In May 2010, Richardson sent a letter to Gardner purporting to disclaim her interest in the life estate retroactively as of September 2008. Gardner petitioned the court to declare that Richardson owed all mortgage interest and other expenses associated with the home. He argued that A.R.S. § 14-10013(B) prohibited Richardson from disclaiming her interest because she had already accepted the life estate interest. Gardner also sought to remove Richardson as a beneficiary and reduce her distribution to offset unpaid interest amounts. After cross-motions for summary judgment, the superior court agreed with Gardner and Richardson appealed.
The Court of Appeals unanimously affirmed. Section 14-10013(B)(1) bars “disclaimer of an interest in property” if the “disclaimant accepts the interest sought to be disclaimed.” Although the statute defines “disclaim” as “the refusal to accept an interest,” it does not define “accept.” A.R.S. § 14-10002(3). The Court therefore examined “the facts of the case to determine whether Richardson’s conduct constitutes acceptance of the life estate.” The Court explained that “acts of possession and control” will be “conclusive evidence of acceptance” unless the person “contemporaneously and objectively manifest[s] an intent to disclaim.” Also relevant to acceptance is whether a devisee fails to “renounce or disclaim . . . within a reasonable time period.”
In this case, several facts demonstrated that Richardson accepted the life estate before attempting to disclaim. She physically occupied the home, paid utilities and taxes, and made “repeated and affirmative statements” asserting a right to possess and control the home. Other messages from Richardson prior to her disclaimer reflect that she understood the home had a mortgage and interest expenses. Because A.R.S. § 14-10013(B)(1) bars disclaimers made after acceptance, the Court held that Richardson’s disclaimer was ineffective.
Judge Gould authored the unanimous opinion; Judges Gemmill and Swann concurred.
Posted by: Joseph Roth