Contracts to make a will are enforceable in Montana. A new decision from the Montana Supreme Court holds that a lawsuit to enforce a contract to make a will must be brought in the court of general jurisdiction, not in the probate court.
What is a Contract to Make a Will (and why would anyone make such a contract)?
A contract to make a will is an agreement among two or more parties regarding how at least one of them is going to devise property in their will. Contracts to make a will are found most commonly in agreements arising out of divorce, typically where one party agrees to leave property to the other (former) spouse, or more commonly to their children, upon death. Contracts to make a will are also sometimes found in closely held business arrangements, whereby each partner agrees to leave their interest in the business to the other partners. (In those closely held business arrangements, it is common for the business to have bought life insurance on the life of each partner, so the deceased partner’s family gets cash, and the remaining members of the business receive the business.)
Is a Contract to Make a Will Enforceable in Montana?
Yes, a contract to make a will is enforceable in Montana, so long as the contract complies with Montana law. Montana has adopted the Uniform Probate Code, and Montana’s version of the Uniform Probate Code on these contracts is found at Section 72-2-534.
72-2-534 Contracts concerning succession.
(1) A contract to make a will or devise or not to revoke a will or devise or to die intestate, if executed after July 1, 1975, may be established only by:
(a) provisions of a will stating material provisions of the contract;
(b) an express reference in a will to a contract and extrinsic evidence proving the terms of the contract; or
(c) a writing signed by the decedent evidencing the contract.
(2) The execution of a joint will or mutual wills does not create a presumption of a contract not to revoke the will or wills.
How is a Contract to Make a Will Enforced in Montana?
The Montana Supreme Court, in Estate of Cooney, 2019 MT 293, has held that a contract to make a will cannot be enforced in probate court, but must be brought in the district court of general jurisdiction.
The Decedent and his ex-wife entered into a marital property settlement agreement which provided that the Decedent was required to leave his real property to his children, in equal shares. The marital agreement was incorporated into the final divorce decree.
The Decedent’s will left all of his real property to one of his four children. Two of his children moved to invalidate the portion of the will leaving the real property to only one child, arguing breach of the agreement and fraud on the court. The trial court dismissed the action on subject matter grounds.
The Montana Supreme Court explained that a district court sitting in probate has limited, not general jurisdiction.
A district court sitting in probate has only the special and limited powers expressly conferred by statute; the court may not hear or determine any matters other than those under the statute or which are necessary to exercise its powers. The administration of an estate is “neither an action at law nor a suit in equity[;] it is a special proceeding.” We have held that district courts sitting in probate have jurisdiction to consider a claim on a contract for the sale of real estate where no real controversy over the claim exists, but do not have jurisdiction to consider matters equitable in nature. We have held also that a probate court does not have jurisdiction to decree specific performance of an oral contract.
Montana law is clear that a person may make a valid contract to dispose of his property by will. These contracts are known as succession contracts. Montana adopted the Uniform Probate Code (“UPC”) in 1974. It requires that any succession contract be in writing. Montana recognized succession contracts prior to its adoption of the UPC, but litigation focused primarily on questions involving oral contracts to devise property.
If a party to a succession contract fails to carry out the promise to make a valid will, courts of equity will grant relief in the nature of specific performance by compelling the personal representative, the heirs, devisees, or legatees to hold the property as trustees for the benefit of the promisee. This is not technical specific performance, since there is no attempt to compel the promisor to make a will. It is instead relief in the nature of specific performance, the purpose of which is to have the devisees, next of kin, or personal representative of the deceased promisor held as trustees of the property which the promisor had agreed to devise or bequeath, and to compel them to hold the legal title thereto for the benefit of the promisee cestui que trust [possessing equitable rights in the property]. We reaffirmed Erwin in Rowe v. Eggum, holding that an oral contract to make a will, when acted and relied upon, may be made the foundation of an action for relief in the nature of specific performance.
An “action” is a proceeding by which one party prosecutes another for the enforcement or protection of a right. The remedy of beneficiaries [in a breach of contract to devise property] is not a proceeding in the probate court . . . but an action in equity in a court of general jurisdiction. The equitable remedy of specific performance thus must be sought in a court of equity; it may not be administered by the probate court in a direct proceeding for that purpose.
As far as the “fraud on the court” claim, the Montana Supreme Court explained:
Fraud on the court involves concealment of facts by a person who was under a legal duty to make a full disclosure to the court. Fraud between the parties is not fraud upon the court. Fraud upon the court embraces only that species of fraud which subverts or attempts to subvert the integrity of the court itself. The Daughters’ allegations to the court in the present matter involve a breach of the Separation Agreement. If there was fraud, it was fraud by [the Decedent] during his lifetime when he did not honor his promise to [the ex-wife], not fraud on the probate court after his death.