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Attorney fees must come from whole estate

Is the “appropriate” amount of litigation in a probate matter encouraged by requiring that a prevailing party’s attorneys fees come from the estate as a whole, rather than a share of it? Or does such a rule promote overlitigation or free-riding?

It does not matter, the Wisconsin Court of Appeals held on Jan. 31; whatever rule may provide the best incentives, sec. 879.37 only allows for fees to be awarded from the estate as a whole.

Theodore Becker died in 2000, leaving his entire estate to his mother. However, his mother had predeceased him, and no closely related heirs-at-law were living.

One group of paternal heirs (the “Baskin Group”) incurred $179,000 in attorney fee and costs, primarily related to two issues: (1) establishing that paternal heirs, as well as maternal heirs, were entitled to share in the estate; and (2) establishing which individuals were in fact paternal heirs.

Another group of paternal heirs did not retain counsel and did not contribute to the litigation.

After the circuit court determined that the paternal heirs were entitled to recover, and that the fees incurred by the Baskin Group were reasonable, necessary, and fair, the court awarded them the fees they requested, from the estate as a whole.

One member of the Baskin Group, Stephen Bloom, appealed, arguing that the fees should be awarded out of the paternal heirs’ distributive share, but the court of appeals affirmed, in a decision by Judge Burnie Bridge.

The parties argued at length in their briefs whether different interpretations of the statute would promote overlitigation, or free-riding on the part of some beneficiaries, but the court resolved the issue by looking only at the plain language of the statute.

The statute provides, “Reasonable attorney fees may be awarded OUT OF THE ESTATE to the prevailing party in all appealable contested matters… (emphasis added by court.)”

The court concluded, “the plain meaning of ‘out of the estate’ references the estate as a whole, rather than a subset of the estate.”

Construing the phrase, “out of the estate,” as Bloom suggested, the court concluded, would require reading the phrase as meaning “out of either the estate as a whole, or any part thereof.”

The court acknowledged that its holding could produce inequitable results in some cases. However, the court determined that it was for the legislature to change the statute, rather than a court.

Accordingly, the court affirmed the award of attorney fees and costs from the estate as a whole.

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