Wills, Trusts & Estates Prof Blog

Trust Enforcement -- Who has standing?

Edward Halbach, Jr. (Walter Perry Johnson Professor Emeritus, School of Law, University of California, Berkeley) has recently authored an article entitled Standing to Enforce Trusts: Renewing and Expanding Professor Gaubatz’s 1984 Discussion of Settlor Enforcement, 62 U. Miami L. Rev. 713 (2008).

Here is a summary of his article:

The discussion in this essay examines questions of standing in the trust context, including standing to intervene in, as well as standing to initiate and maintain, enforcement proceedings (as comprehensively defined for these purposes). In the course of the discussion, attention is given at appropriate points to the rationale underlying restrictions on standing in trust-enforcement cases, and to the advantages and disadvantages of granting standing for various purposes to various categories of potential litigants. Because these potentially relevant considerations are most apparent and best introduced in the charitable-trust context, rules of standing are discussed first in that setting, then in the context of private trusts, and finally in regard to trusts that have both charitable and private purposes.

Montana and Community-Source Property

Charles W. Willey (Adjunct Professor, The University of Montana School of Law) has recently authored an article entitled Effect in Montana of Community-Source Property Acquired in Another State (and Its Impact on a Montana Marriage Dissolution, Estate Planning, Property Transfers, and Probate), 69 Mont. L. Rev. 313 (2008).

Here is an excerpt from the article's introduction:

When a domiciliary of Montana has an interest in real or personal property that was community property in the domiciliary's former state of residence, that property continues as community property in Montana. This is because: (1) the community property interest is a constitutionally protected, vested interest in the state of original acquisition; and (2) under Montana law it is presumed to continue to be community property at the time of the Montana domiciliary's death, and thus presumptively vested at that time. Under case law from most other jurisdictions (there is no such case law in Montana), the change of domicile to Montana is not a divesting event. Thus, the property being vested both at the time of original acquisition and at death, it must also be vested during the Montana domiciliary's lifetime. In other words, the move does not change the character of the property.

This doctrine applies not only to property that was community property at acquisition, but to any subsequently acquired property that can be traced back to the original community property. Thus, the doctrine also applies to property acquired from sale proceeds of the original property, property acquired using the “rents, issues, or income” of the original community property, and property acquired through an exchange of the original community property.

Filial Responsibility Laws -- Should children be responsible to care for their parents?

Allison Ross (Managing Editor 2007-2008, Elder Law Journal) has recently authored a Note entitled Taking Care of Our Caretakers: Using Filial Responsibility Law to Support the Elderly Beyond the Government’s Assistance, 16 Elder L. J. 167 (2008).

Here is a summary of her article:

Parents bear moral, legal, and ethical responsibilities to care for their children. However, once parents reach an age where they can no longer look after themselves, the duties of their adult children to support them is less clear. In this Note, Ms. Allison Ross examines U.S. criminal and civil filial responsibility laws, which require adult children to financially support their elderly parents, and analyzes why these laws are not actively enforced by reviewing current filial responsibility laws and their close relationship to Medicaid. Next, this Note demonstrates the economic need for filial responsibility laws and analyzes how to improve their enforcement. Finally, Ms. Ross proposes a model civil filial responsibility statute with effective enforcement procedures and powerful incentives.

MLK's Children Continue to Fight

Earlier on this blog, I have report on the various disputes among the children of Martin Luther King, Jr. and Coretta Scott King.

The children have not learned to just "get along" as recommended by another famous, although unrelated, King (Rodney).

Here are some of the details from Robbie Brown, Dr. King’s Children Battling Over Book, NY Times, Oct. 14, 2008:

• The new battle involves Coretta's estate.
• Bernice and Martin Luther III are refusing to turn over photos, letters, and other papers to the person (Barbara Reynolds) who is preparing Coretta's biography.
• Dexter has filed suit to force his siblings to comply.
• The publisher (Penguin) has indicated that if the author does not receive the requested material, it will terminate its $1.4 million book contract and demand return of a $300,000 advance.
• Bernice and Martin Luther III claim that Corretta did not want Barbara to prepare her biography.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Special Needs Planning increases in popularity

Special needs planning is a rapidly growing area of estate planning.

Here are some excepts from Rachel Emma Silverman, An Estate Plan Built for Special Needs, Wall St. J., Oct. 9, 2008:

Parents of children with special needs often face years of expensive care for their children. Now a growing number of financial-services companies, lawyers and financial planners -- often calling themselves "special-needs planners" -- are springing up to help parents provide for kids with disabilities, especially when parents are no longer alive to provide care. These professionals guide families through the intricate maze of federal and state programs for disabled individuals, and help set up trusts, insurance policies, retirement plans and estate-planning documents. * * *

More than 41 million Americans, or almost 15% of the population age 5 and older, have some type of disability, according to 2007 Census survey data. Some 6.2% of children ages 5 to 15, or 2.8 million kids, have disabilities, the Census Bureau found. And individuals with disabilities are living longer than ever before. That means that many disabled children will outlive the parents who support them. * * *

Experts often recommend that families create a "special needs" or "supplemental needs" trust as the centerpiece of their plan. Such trusts will provide funds to pay for certain expenses that enhance a disabled person's quality of life -- from residential treatment programs to movie tickets or haircuts -- while not cutting off access to government benefits, such as Medicaid or Supplemental Security Income (SSI), which is administered by the Social Security Administration. * * *

Funds transferred to a trust are not considered to be assets of the special-needs individual, as long as there's an independent trustee who controls distributions of the money and the disabled person can't just grab cash from the trust at will. A trust also insures that a qualified individual will be watching over the money * * *

Rules governing special-needs trusts are complicated and vary by state and by the source of the funds. * * *

It's also crucial for grandparents and other relatives to retool their own estate plans to leave gifts or inheritances to the special-needs trust, rather than to the person with disabilities directly, in order to preserve eligibility for government programs. Beneficiary designations on retirement accounts and life-insurance policies should also go to the trust.

Special thanks to Patrick S. Sylvester (Attorney & Counselor at Law, Sylvester Law Firm, PC) for bringing this case to my attention.

Estate of Evelyn A.J. Hall -- Update

Earlier on this blog, I reported on the controversy surrounding the Jolika Collection at the M.H. de Young Memorial Museum in San Francisco.

Here is a summary of some of the recent developments:

• The Ambassador of Papua New Guinea, Evan J. Paki, has written a lengthly letter to the Director of the Fine Arts Museums of San Francisco expressing his nation's concern with the potential break up of the collection.  Ambassador Paki makes it clear that New Guinea is not making any comments on the underlying lawsuits but urges all parties to consider the tremendous significance of the collection to New Guinea's cultural heritage.
• On October 2, 2008, a New York judge ruled that Sotheby's (an unpaid creditor) could take possession of 54 artworks.  The judge also placed a restraining order on the disposition of 99 other works.
• John Friede indicated that he will continue to work to keep the collection intact.
• A detailed discussion of this situation appears in Kate Taylor, A Collection of Tribal Art Is Embroiled in a Modern Family Feud, NY Times, Oct. 6, 2008.

Special thanks to Sam Singer (President, Singer Associates, Inc.) for bringing these developments to my attention.

Dead People Vote in Connecticut

One of the many consequences of ceasing to function as a carbon-based biological unit is that you are unable to cast a ballot in public elections.

However, this does not seem to be the case in Connecticut (and most likely in other states as well) as reported in Shawn R. Beals, Thousands Of Dead People On Connecticut's Voter Rolls, Courant.com, Oct. 6, 2008.

• Approximately 8,500 dead people are on the Connecticut voting rolls.
• Since the time of their deaths, approximately 300 decedents appear to have cast their ballots.
• State officials claim that the dead are not really returning to vote but instead blame the votes on clerical errors.
• State officials assert that none of the "dead votes" were the result of fraud.
• The Connecticut Secretary of State indicated a fear that by removing supposedly dead people from the rolls, some living people could also be removed causing disenfranchisement.
• A better system of notifying the keepers of voting rolls of voters deaths is needed.

Andrew Lloyd Webber says he won't make his children wealthy

Andrew Lloyd Webber, the famous British composer of musicals such as Cats and Phantom of the Opera, is reportedly worth approximately $750 million.  Nonetheless, it appears that he will not be leaving most of his fortune to his five children.

Here is an excerpt from Bethany Sanders, Andrew Lloyd Webber's kids won't inherit his money, ParentDish.com, Oct. 12, 2008:

[H]e doesn't plan on giving his fortune to his kids when he dies.  Instead, the king of musicals will likely be donating the money toward helping kids around the world succeed in the arts. "(A will) is one thing you do start to think about when you get to my age. I don't think it should be about having a whole load of rich children and grandchildren. I think it should be used as a way to encourage the arts."

Special thanks to Sara Hudman (J.D. May 2008, Texas Tech University School of Law) for bringing this article to my attention.

Will Washington join Oregon in authorizing assisted suicide?

On November 4, 2008, Washington voters will decide whether to enacted Initiative 2000, the Washington Death with Dignity Initiative.

A huge battle is being waged between the opposing sides as to whether Washington should become the second state to approve assisted suicide.  Here are some details of the conflict as reported in Ads target Washington voters mulling assisted-suicide law, CNN.com, October 11, 2008:

• Martin Sheen is featured in ads opposing the initiative claiming it is a "dangerous idea."
• Supporters respond with an ad showing a widow pleading to let individuals who are suffering gain control over their deaths.
• Over $3.5 million has been raised by both sides combined.
• Polls show the initiative winning by 57% to 33% with 10% undecided.
• The biggest opposition is by religious groups, especially the Catholic Church.
• In 1991, Washington voters rejected a similar measure.  A big difference is the patients must self-administer the fatal drugs under the new proposal while doctors could have administered the lethal drugs under the prior proposal.

Wealth Strategies Journal Posts New Articles

The following articles have now been posted on the Wealth Strategies Journal and are available for download:

• Planning Through Economic Turmoil, by Martin M. Shenkman
• Choices: “Recent Tax Guidance on Private Trust Companies, Family Co-Trustees and Distribution Committees: Notice 2008-63,” by Donald Kozusko
• IRS Announces That Substituion Power Does Not Cause Inclusion of Trust Property In Estate, by Jeanne L. Newlon
• Tax and Asset Protection Motivations for Acquiring a Florida Domicile, by David Pratt and Lisa Stern
• Selling a CRT Income Interest, Keep the Pros, Eliminate the Cons, by Roger D. Silk and Evan D. Unzelman
• The IOLI, SPINLIFE, STOLI Transaction, What Is It And Is It Good For Your Client?, by David A. Wexler
• Stripping in Private: Planning with Stripped Installment Notes, by Alexander Bove
• Ethics of Email, by Thomas E. Spahn

Top SSRN Downloads

Here are the top downloads from August 14, 2008 to October 13, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank	Downloads	Paper Title
1	119	Tax Court FLP Confusion: Mirowski Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: July 22, 2008 Last Revised: July 22, 2008
2	82	Toward a Model Law of Estates and Future Interests Benjamin Barros, Widener University - School of Law, Date posted to database: August 22, 2008 Last Revised: September 21, 2008
3	81	Fiduciary Mechanics Robert Flannigan, University of Saskatchewan, Date posted to database: August 23, 2008 Last Revised: August 30, 2008
4	79	How Low Can You Go? Some Consequences of Substituting a Lower AFR Note for a Higher AFR Note Jonathan G. Blattmachr, Bridget J. Crawford, Elisabeth O. Madden, Milbank, Tweed, Hadley & McCloy LLP, Pace University - School of Law, Author - affiliation not provided to SSRN, Date posted to database: July 19, 2008 Last Revised: July 19, 2008
5	71	Testamentary Fragmentation and the Diminishing Role of the Will: An Argument for Revival Kent D. Schenkel, New England School of Law, Date posted to database: May 8, 2008 Last Revised: May 8, 2008
6	66	A Malthusian Analysis of the So-Called Dynasty Trust William Turnier, Jeffrey Lynch Harrison, University of North Carolina School of Law, University of Florida - Fredric G. Levin College of Law, Date posted to database: October 3, 2008 Last Revised: October 3, 2008
7	57	From the Greedy to the Needy Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: September 16, 2008 Last Revised: October 2, 2008
8	48	Durable Powers as an Alternative to Guardianship: Lessons We Have Learned Linda Whitton , Valparaiso University - School of Law, Date posted to database: August 11, 2008 Last Revised: August 21, 2008
9	44	Bringing Trusts & Estates to the Front and Center of Legal Education Bridget J. Crawford, Pace University - School of Law, Date posted to database: September 19, 2008 Last Revised: September 19, 2008
10	37	Review of Graetz & Shapiro, Death by a Thousand Cuts: The Fight Over Taxing Inherited Wealth Karen C. Burke, Grayson M.P. McCouch, University of San Diego School of Law, University of San Diego School of Law, Date posted to database: August 22, 2008 Last Revised: August 23, 2008

Happy Columbus Day!

Happy Columbus Day!

Although today is a federal holiday (e.g., no regular mail delivery) many of us still need to report to work.  I'm off to class in just a few minutes ----

Agent’s Failure to Make Gifts Desired by Principal is Basis of Claim for Intentional Interference with an Expected Gift

A father gave his son his power or attorney. Shortly before the father’s death, his son discovered a copy of the father’s notes regarding changes in his will which father had sent to an attorney. One of the notes in the father’s handwriting directed his son to effect the changes in the will whether “legal or not.” The unaltered will was admitted to probate over the caveat of the father’s other two sons. The two sons then brought an action claiming among other grounds for recovery intentional interference with a gift.

The court in Morrison v. Morrison, 663 S.E.2d 714 (Ga. 2008), reversed the lower court’s summary judgment for the agent and held that the tort claim was properly based on the agent’s failure to use his authority prior to father’s death to make the requested gifts.

A Specific Devise of Property the Testator Did Not Own at the Time of Will Execution Does Not Adeem

In Washington, a husband and his wife conveyed all of their interest in real property to a charitable foundation. They subsequently executed wills making specific bequests of the same property to the same foundation. The couple and their son brought a negligence action against the foundation and the various attorneys and accountants involved with its creation and operation. After the deaths of husband and wife, foundation and the professional defendants moved to dismiss the negligence action arguing that even if the estates recovered the real property it would pass under the wills to the foundation.

The court in In re Estate of Frank, 189 P.3d 834 (Wash. Ct. App. 2008), affirmed summary judgment for the defendants, holding that ademption applies only to property owned by a testator at the time a will is written.

Connecticut Supreme Court Rules that Civil Unions Unconstitutional, Same-Sex Marriage will be Allowed

In Kerrigan v. Commisioner, the Connecticut Supreme Court ruled that same sex couples have a constitutional right to marry.

The court announced that sexual orientation is a quasi-suspect class under the Equal Protection clause of the state constitution, and therefore it is entitled to a heightened level of scrutiny. The court said that same sex couples suffer a constitutional harm, and that a separate but equal scheme of civil unions did not pass constitutional muster. In its decision, the court emphasized that civil unions are not equal to marriage even though they share all of the same rights. The name itself was enough to offend Equal Protection. Marriage has a long history in our culture, but civil unions are a recent construct. Therefore, the civil union scheme created in fact not an equal institution, but an inferior one.

Court Approval of a Conservatee’s Estate Plan Prevents a Post-Mortem Challenge

Pursuant to local law, the court exercised substituted judgment to approve an estate plan on behalf of a conservatee which effectively disinherited conservatee’s son. After the conservatee’s death, the son sued his sister who was the trustee of the lifetime trust approved in the substituted judgment proceeding.

The court in Murphy v. Murphy, 78 Cal. Rptr. 3d 784 (Cal. Ct. App. 2008), held that the son’s action was barred by collateral estoppel, his claims of undue influence, fraud, and conflict with a prior testamentary agreement all having been disposed of in the prior action.

Presumption That a Lost Will Last in the Possession of Testator Has Been Revoked Not Superseded by UPC

The court In re Estate of Conley, 753 N.W.2d 384 (N.D. 2008), held that the common law presumption that a lost will last in the possession of the testator is presumed to have been destroyed by the testator with the intent to revoke it is part of the law of North Dakota, even though it is not part of the Uniform Probate Code provisions adopted by the state. In accord with provisions governing presumptions in civil cases generally, for the lost will to be admitted to probate, the presumption must be rebutted by the preponderance of the evidence.

Doctrine of De Facto Trustee Recognized

In the course of a divorce action in Washington, the court appointed a professional guardianship agency as the trustee of a trust the husband had created for his children. In an earlier case, the court held that the divorce court lacked jurisdiction to appoint a trustee. The agency then began proceedings to appoint a trustee to protect the children’s assets. The husband opposed the agency’s action maintaining that after the court’s decision, it had no authority to do anything with regard to the trust. The court in In re Irrevocable Trust of McKean, 183 P.3d 317 (Wash. Ct. App. 2008), held as a matter of first impression that because the agency assumed the office of trustee under color of right and in good faith that the doctrine of de facto trustee applied to validate the agency’s actions as if it were the trustee.

Joint Revocable Trust is Mutual and Contractual and Therefore Cannot be Amended by Sole Surviving Settlor

In Kansas, two beneficiaries of a revocable trust jointly created by husband and wife brought a declaratory judgment action to invalidate amendments wife made after husband’s death. Using the same criteria applied to wills, the court in Mangels v. Cornell, 189 P.3d 573 (Kan. Ct. App. 2008), found that the trust was €œjoint and contractual€ and therefore could not be amended by only one of the settlors.

A Challenge by a Guardian ad litem is Not Voluntary and Thus Does Not Trigger Forfeiture

In California, a trust included a no contest clause stating that any beneficiary who “voluntarily” participates in any proceed attacking the trust or the related pour over will would forfeit his or her interest. In Safai v. Safai, 78 Cal. Rptr. 3d 759 (Cal. Ct. App. 2008), the court held that a minor appearing in a proceeding attacking the validity of the trust by his guardian ad litem did not appear “voluntarily” and therefore was not subject to the no contest clause.

The Creation of Joint Accounts with Survivorship Rights After Execution of a Will Cannot Alter the Will

In Pennsylvania, after executing a will which divided her probate estate equally among her children, the testatrix created several joint bank accounts with rights of survivorship with herself and one of her children as the joint holders. After the testatrix's death, the other children challenged the exclusion of the joint accounts from the probate estate. The court In re Estate of Piet, 949 A.2d 886 (Pa. Super. Ct. 2008), held that to apply the presumption of ownership in the surviving joint holder would revoke the preexisting will in a manner not allowed under the will revocation statute.

Beneficiaries of Revocable Trusts do not have Constitutionally Protected Interests

In Livesay v. Carolina First Bank, 665 S.E.2d 158 (N.C. Ct. App. 2008), a North Carolina Appellate court rejected the argument that the application of a statute making property held in a revocable trust which was created before the statute’s effective date subject to the settlor’s debts is an impermissible retroactive alteration of vested rights. The court held that because a revocable trust is a will substitute, the beneficiaries of the trust have expectancies rather than vested rights and therefore they have no constitutionally protected interests.

Transplant waiting list tops 100,000 -- possible solution offered

The following excerpts are from LifeSharers, U.S. Transplant Waiting List Hits 100,000 -- America Needs Two Waiting Lists, Not One (Oct. 7, 2008):

The waiting list for organ transplants in the United States has topped 100,000 people.  America needs two transplant waiting lists, according to LifeSharers, a national network of organ donors:  the ‘A’ list for registered organ donors and the ‘B’ list for people who have not agreed to donate.

As of 5:14 p.m. on October 7, there were 100,024 people on the national transplant waiting list, according to the United Network for Organ Sharing, which administers the waiting list and establishes rules for allocating donated organs.

“If UNOS allocated organs first to registered organ donors, more people would donate and thousands of lives would be saved every year,” says David J. Undis, Executive Director of LifeSharers. * * *

Every year, Americans bury or cremate 20,000 transplantable organs.  And every year, over 8,000 Americans die because there aren’t enough organs for everyone who needs one.

Allocating organs first to organ donors will also make the transplant system fairer. * * *

People who want to donate their organs to other organ donors * * * can join LifeSharers.  LifeSharers members agree to offer their organs first to other members when they die, if any member is a suitable match.  Membership is free at www.lifesharers.org or by calling 1-888-ORGAN88.  There is no age limit, parents can enroll their minor children, and no one is excluded due to any pre-existing medical condition.

Dead Men Reproduction -- What should be done?

Browne Lewis (Assistant Professor of Law, Cleveland-Marshall College of Law) has recently posted on SSRN her article entitled Dead Men Reproducing: Responding to the Existence of Afterdeath Children.

Here the syllabus of her article:

Medical advances currently available permit dead men to reproduce. Sperm can be successfully stored for at least ten years. Therefore, a man's heirs may be created years after his death. Recently, this event has gone from a possibility to a reality. More and more women are choosing to conceive children using the sperm of their dead husbands or boy friends.

Widows of soldiers killed in the wars in Iraq and Afghanistan have conceived children through artificial insemination using their dead husbands' sperm. The process of creating afterdeath children can occur in two contexts. Scenario One - Prior to going to war, the man has his sperm extracted and placed in a sperm bank. If the man does not return from the war, his wife or girl friend uses his stored sperm to create his child. Scenario Two - The man is killed in the war. His wife or girl friend has the doctor harvest sperm from his dead body. Then, she uses that sperm to conceive his child. Either scenario results in the existence of an afterdeath child that needs financial support.

The law has not kept pace with the reproductive technology. Hence, when the mothers of the posthumously conceived children file social security surviving children claims on behalf of their children, the claims are often rejected. The children are denied benefits because the agency is not equipped to deal with "survivors" who did not exist at the time that the insured worker died. The resolution of these Social Security cases often turns on the manner in which the children are classified under the states' intestacy systems. If the child is eligible to inherit under the intestacy system, the child is entitled to social security survivor's benefits.

The legal issue examined in this article is: whether a posthumously conceived child should have the opportunity to inherit from his or her father. The resolution of that issue is important because the existence of posthumously conceived children has the potential to impact the distribution of a man's estate. If the man dies with a validly executed will leaving his estate to his children, the question becomes whether or not posthumously conceived children should be included in the definition of "children". In the event that a man dies without a will, the question to be resolved is whether or not posthumously conceived children should be considered heirs under the intestacy system.

As long as the possibility exists for dead men to reproduce, the courts and the legislatures must take steps to deal with the rights of the resulting children. Any system put in place must balance the interests of the state, the existing heirs, the decedent, and the posthumously conceived child. To guarantee a fair balance, state legislatures must give posthumously conceived children the opportunity to inherit from their deceased fathers. Nonetheless, the opportunity to inherit should not be a right to inherit. Consequently, the legislatures should only give posthumously conceived children the chance to inherit if they satisfy certain conditions.

Lack of Control and Marketability Discounts for Tiered Partnership Interests

Steve Akers (Bessemer Trust) wrote an analysis of the case of Astleford v. Commissioner. 

Here is his synopsis of the case:

This gift tax case allows lack of control and marketability discounts for tiered partnership interests.  An FLP owned a 50% interest in a real estate general partnership and various other real estate tracts.  An approximate 20% absorption discount was allowed for valuing a 1,187 acre tract in the general partnership.  The FLP’s 50% interest in the general partnership was valued as a partnership interest rather than as an assignee interest.  Even so, a 30% combined discount for lack of control and marketability was allowed for the 50% interest in the general partnership.  An approximate 17% lack of control and 22% lack of marketability discount (for a seriatim discount of about 35%) was allowed for valuing gifts of 90% of the limited partnership interests (three 30% gifts in 1996 and 1997).