## Facts

- J. Scott Gardner died owning a Prescott, Arizona residence held in his revocable living trust.
- The trust granted Marlene Richardson a life estate in the residence and left the remainder interest to Gardner’s two children.
- The trust required Richardson to maintain the home as if it were her own and to pay taxes, utilities, homeowners-association fees, insurance, and other reasonable and customary costs associated with the property.
- At Gardner’s death, the residence was subject to a mortgage of about $205,330.
- Wayne K. Gardner, as trustee/personal representative, filed a declaratory-judgment action to determine who must pay mortgage principal and interest: Richardson (life tenant) or the remaindermen (the children).
- In August 2009, the superior court ruled that Richardson must pay a reasonable rate of mortgage interest (finding 6% reasonable), while the remaindermen must pay the mortgage principal because they would receive the property at the end of the life estate.
- After Gardner’s death, Richardson lived in the residence for nearly two years.
- During that period, Richardson paid taxes and utility bills connected to the home.
- Richardson acknowledged in writing that she was responsible for at least part of the mortgage-related expenses.
- Richardson treated the home as her exclusive residence, refused to allow the remaindermen access to the property, and communicated to the trustee that she intended to live there until her death.
- After the court ruled she was responsible for mortgage interest, Richardson sent the trustee a letter dated May 21, 2010 attempting to disclaim her life estate “effective” September 23, 2008.
- The superior court held the disclaimer ineffective under A.R.S. § 14-10013(B)(1) because Richardson had accepted the life estate and its benefits, and Richardson appealed.

## Issues

1. Whether Richardson’s conduct—nearly two years of occupying the home, excluding the remaindermen, paying property expenses, and acknowledging mortgage-related responsibility—constituted acceptance of the life estate that barred disclaimer under A.R.S. § 14-10013(B)(1).
2. Whether a disclaimer that purports to be retroactive can be effective after the beneficiary has already accepted the interest or benefits of the interest.

## Decision

- The Arizona Court of Appeals, Division One, affirmed.
- Richardson’s attempted disclaimer was barred and ineffective under A.R.S. § 14-10013(B)(1) because she accepted the life estate and benefits of the life estate before attempting to disclaim.
- Richardson remained responsible for mortgage interest and the other expenses associated with the life estate, and the remaindermen remained responsible for mortgage principal as previously allocated by the superior court.

## Legal Principles

- Under A.R.S. § 14-10013(B)(1), a disclaimer is barred if, before disclaiming, the beneficiary accepts the interest or a benefit under it.
- Acceptance may be shown by conduct inconsistent with refusing the interest, including continued possession and use of the property granted by the interest.
- Exclusive occupancy and control of property, combined with excluding others who hold future interests, can evidence acceptance of a life estate.
- Paying expenses tied to the property (such as taxes and utilities) and acknowledging financial obligations connected to the interest support a finding of acceptance.
- A beneficiary cannot avoid the statutory bar by attempting a later disclaimer that states an earlier “effective” date; once acceptance occurs, the right to disclaim is barred.

## Conclusion

In *In re Estate of Gardner*, the court held that Richardson could not disclaim a trust-granted life estate after she had lived in the property for nearly two years, exercised exclusive possession, paid property expenses, and acknowledged mortgage-related responsibility; that conduct constituted acceptance under A.R.S. § 14-10013(B)(1), making her later retroactive disclaimer ineffective and leaving her responsible for mortgage interest and other life-estate expenses.


In re Estate of Gardner, 283 P.3d 676 (2012)