Practical Pointers from Practitioners

Contributing Author: Bri Loughlin, Winstead PC, 401 Congress Ave., Suite 2100, Austin, TX 78701.

Acceptance-of-Benefits Doctrine in Texas

It has long been the rule in Texas that one cannot accept the benefits of a will while simultaneously contesting its validity. When faced with a will contest, a will’s proponent can assert an acceptance-ofbenefits defense establishing that the contestant is estopped from contesting the will because he has accepted a benefit under it. In response, the contestant may rebut such evidence by showing that the acceptance is consistent with seeking to set the will aside.

Consider the following scenario. Early in the estate administration process, an executor offers to make a very small, partial distribution to an estate beneficiary. The proposed distribution is insignificant compared to the ultimate distribution that the beneficiary would be entitled to under the will or intestacy laws. Does acceptance of such distribution preclude the beneficiary from contesting the will? In Estate of Johnson, the Supreme Court of Texas clarified the acceptance-of-benefits doctrine with specific attention to the effect of acceptance of partial distributions. 631 S.W.3d 56 (Tex. 2021).

Dempsey Johnson executed a will containing specific bequests and a residuary to be divided between his three daughters (Lisa Jo Jones, Tia MacNerland, and Carla Harrison). In addition to a residuary interest, Johnson bequeathed MacNerland a mutual fund account and one-half of a bank account. Johnson appointed Jones to serve as his independent executor (the Executor). After Johnson’s death, the Executor transferred the mutual fund account to MacNerland, and MacNerland assumed ownership of the account. The mutual fund account, valued at over $143,000, made up approximately 10 percent of Johnson’s estate.

Three months later, MacNerland contested Johnson’s will, alleging that Johnson lacked testamentary capacity when he executed the will or did so under undue influence. The trial court dismissed MacNerland’s will contest based on the Executor’s acceptance-ofbenefits defense.

MacNerland appealed and argued that the trial court misapplied the acceptance-of-benefits doctrine, as her contest was “consistent” with her acceptance of the mutual fund account such that the acceptance did not preclude her from contesting the will. MacNerland’s position was that her acceptance of the mutual fund account was consistent with her contest of Johnson’s will because, win or lose the contest, MacNerland was entitled to more than the benefit she had accepted under the will. MacNerland drew support for her position from Holcomb v. Holcomb, an appellate court decision suggesting that a contestant may challenge a will if the benefits accepted are worth less than those to which the contestant is entitled under the challenged will or by intestacy. 803 S.W.2d 411, 414 (Tex. App. 1991). In addition to the court of appeals in Johnson, at least one other Texas appellate court previously endorsed Holcomb. In In re Meeker, the Court of Appeals allowed a beneficiary to pursue pre-suit discovery to determine whether the beneficiary would receive greater benefits than those he had accepted. 497 S.W.3d 551, 554-55 (Tex. App. 2016).

Relying on Holcomb, the court of appeals reversed the trial court and held that MacNerland did not receive anything that she would not also receive if there was no will and therefore her acceptance of the mutual fund account was not inconsistent with her will contest.

The Texas Supreme Court overruled Holcomb and rejected the suggestion that a will contestant may accept benefits under a will based on a hypothetical claim to greater benefits should a court declare the will invalid. The Court clarified that the test for determining whether a contestant’s acceptance of benefits is consistent with a contest does not depend on the value of the benefits and is not determined by a comparison of benefits under a will versus benefits under laws of intestacy. Rather, the test is whether the contestant has an existing legal entitlement to the benefit other than under the will. If no entitlement exists except for the testator’s bequest, then the contestant’s acceptance of such benefit is inconsistent with a claim that the will is invalid and such claim is precluded by the acceptance-of-benefits doctrine. The beneficiary of a will must adopt the whole contents of the instrument or forgo all benefits under the will to seek to have it set aside.

A beneficiary who has been offered a partial distribution from an estate should be careful. If there is any chance that the beneficiary may want to contest the will, the beneficiary should not accept any assets from the estate, even if the proposed distribution is a small portion of the overall amount that the beneficiary would ultimately be entitled to receive. An executor should not be under the impression that he can offensively preclude a will contest by making a partial distribution to an unwitting beneficiary. An acceptance-of-benefits defense may not be effective if the beneficiary did not have knowledge of some material fact at the time of acceptance. In addition, a beneficiary’s acceptance of benefits under a will does not preclude the beneficiary from bringing breach of fiduciary duty claims against an executor or seeking to have an executor removed.

Published in Probate & Property, Volume 36, No 4 © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.