Authors: Attorney Thomas S. Vercauteren & Attorney Elizabeth L. Spencer

Phone: 608-575-0945 or 608-257-0945

Email: tvercauteren@hbslawfirm.com, espencer@hbslawfirm.com

While often overlooked in the context of a probated estate, attorney fees and costs may be available to the prevailing party of a contested matter.

Recently, in Hartshorne v. Hurkman, 2016AP387 (Aug. 9, 2017), a three judge panel for the District 2 Court of Appeals held that the nonfamily beneficiaries in a will were entitled to attorney fees because they prevailed on an appealable contested matter, even though the parties reached a settlement. In Hartshorne, the decedent died with a will and three codicils, one of which left portions of real property to three nonfamily members. The decedent’s family members, acting as personal representatives, objected to that codicil. The nonfamily member beneficiary then brought action claiming the personal representatives had a conflict of interest and challenged the appraised value of the property previously determined by the personal representatives’ appraiser. The value from the appraisal would provide positive tax benefits for the estate (and therefore also the family residual beneficiaries), but significant negative consequences for the nonfamily beneficiaries. After several court hearings and a partial settlement, the nonfamily beneficiaries requested that the estate pay their attorney fees and costs related to the issues that were settled. The probate court denied the request, stating that because the parties never went to trial, there was no appealable contested matter. The appeals court reversed, noting that the nonfamily beneficiaries achieved a significant benefit in a claim against the estate and that a trial is not required for a party to prevail.

While most estates will not run into this exact probate scenario, the question of who pays the legal fees and costs may arise in a variety of probate scenarios. In most legal disputes, each party pays for his or her own attorney fees and costs and the winning party is not entitled to recover the fees and costs from the losing party. However, Wisconsin statutes provide for certain actions in which the prevailing party’s fees and costs may be shifted to the losing party. In probate proceedings, fees and costs may be awarded in certain limited situations with the estate often held responsible for payment.

Attorney Fees

In the event of a contested probate matter, reasonable attorney fees may be awarded to the prevailing party out of the assets of the estate. However, there are limitations to such awards. Attorney fees are only available: (1) to prevailing parties in appealable contested matters; (2) to an unsuccessful proponent of a will if the party was named as the personal representative in the will; or, (3) to an unsuccessful proponent of a will if the party was named as personal representative of another document propounded as the last will of the decedent. The award of such fees is discretionary and the parties need to have been acting in good faith. Even if a party meets the statutory requirements for attorney fees the judge may conclude that an award is not warranted or may evaluate the reasonableness of the fees and award a lower amount than requested.

Attorney fees may also be awarded in an action by any interested person who has reason to believe that the estate inventory failed to include all of the property and the personal representative has failed to secure the property and has not taken steps to secure the property. If the action is successful, the interested person will be reimbursed form the estate for reasonable expenses and attorney fees. However, the award may not be in excess of the value of the property that was originally left off the inventory and is now secured.

Costs

Similar to attorney fees, costs may be awarded to the prevailing party in appealable contested matters. To award such costs, the court must render judgment and state who is receiving the costs, who is paying the costs, and a list of items making up the amount awarded. Unlike attorney fees in contested probate matters, they may be paid by the losing party. Any costs awarded are taxed by the register in probate.

Costs are also available in will contests. If an unsuccessful proponent of a will propounded the document in good faith and was named as the personal representative in the document, she may be awarded costs. Similarly, costs may be awarded to an unsuccessful contest of a will if they are named as personal representative in another document propounded to be the will of the decedent. However, the court is not required to award costs even if there is a finding of good faith. In the event that the court finds undue influence on the part of the proponent, good faith may not be asserted.

Probate proceedings are often unexpected events that may turn costly. Knowing the applicable fee shifting provisions may assist in relieving the financial strain placed upon the beneficiaries of decedents.