Insurance As Evidence Of Ownership

December 10, 2014

Authored by: Luke Lantta

When a will contains a catch-all bequest of all “personal property” without a specific list or identification of the decedent’s personal property, disputes can arise whether the decedent actually owned particular property, whether the property was joint property with the decedent’s spouse, or whether some entity in which the decedent held an interest actually owns the disputed property.  As shown in the recent Arizona case of Keland v. Moore (unpublished), a little advance planning concerning some valuable property possibly could have avoided this estate litigation.

Kristi Keland and her husband, Tres, lived on a ranch owned by an LLC, which the couple controlled.  When Kristi died, she was survived by Tres.  Kristi’s will bequeathed her personal property to her sisters.  Kristi’s and Tres’ home contained some valuable Native American baskets.  One of Kristi’s sisters claimed that those baskets were Kristi’s personal property and subject to distribution to Kristi’s sisters under the will.  Tres claimed, however, that the LLC owned the baskets because the LLC maintained an insurance policy for household personal property in the ranch.  That insurance document along with Tres’ testimony ended up being sufficient evidence that the LLC owned the baskets and they were not Kristi’s personal property.

When you individually, jointly, or through an entity own valuable property, such as the Native American baskets, it is probably a good idea to better document or explain ownership in your estate planning documents than was done here.  Assuming that a general casualty policy is sufficient evidence of ownership is a dangerous way to rely on a distribution of your property consistent with your intent.