Wills, Trusts & Estates Prof Blog

UK Government Decides Not to Regulate Will Writing

The Legal Services Board protects the interests of consumers in the United Kingdom by overseeing legal regulations.  After a two year investigation, the Legal Services Board recommended that the Ministry of Justice regulate will writing after finding “people’s lives were being ‘seriously damaged’ by incompetence or misdemeanor when drafting wills.”

The Ministry of Justice agreed that there is room for improvement, but rejected the notion that regulations were the right solution.  Although the Government will explore other options to increase consumer confidence in will writing services, the risk of consumers being left with unsuitable wills with no recourse still remains.

See Samuel Dale, Govt Rejects Calls to Regulate Will Writing, Money Marketing, May 15, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

IRS Does Not Include Trust Decanting Rules In Guidance Plan

Recently, tax analyst Marie Sapirie has published an article highlighting the fact that there are no trust decanting rules in the 2012 and 2013 priority guidance plan. According to attorney advisor of the Treasury Office of Tax Legislative Counsel, Catherine Hughes, the omission of the rules was a consequence of the IRS's failure to publish the trust decanting rules in time for the priority guidance plan.  

See Kelly Humke, Tax Notes Article by Marie Sapirie: "ABA Meeting: Trust Decanting Rules Still Getting IRS Attention", Wealthstrategiesjournal.com, May 14, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Renown Con Man Found Dead

Con man Billie Sol Estes, 88, was found dead in his Dallas home. He died of natural causes. Estes was notorious because he committed fraud on many farmers in Texas. As a result, the farmers suffered serious financial harm. Estes secured loans with fictional collateral and swindled all of the money. Consequently, he was convicted of fraud and served time in prison. However, once released Estes was picked up and convicted for fraud a second time. Although he was accused of other instances of tax fraud the indictment was eventually dismissed.

See William Barrett, Swindler Billie Sol Estes, Dead At 88, Is Remembered In Verse, Forbes, May 14, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Elderly Woman Prompts Guardianship Reform After Spending $100,000 to Prove Her Competence

Sophie Paulos, 91, spent three months and $100,000 trying to protect her independence.

The process began when two of her daughters suspected the third daughter of taking advantage of Paulos while her health was deteriorating.  After an investigation by the Adult Protective Services, Paulos had to pay $30,000 for a court-appointed guardian ad litem she never wanted.  She then hired her own attorney to fight the guardianship process and paid over $70,000 for this second lawyer and related legal expenses.

These outrageous costs have prompted proposed measures to reform the guardianship system such as shortening time periods for which to hold hearings and forcing those that initiate guardianship proceedings to sign affadavits.  Although these measures have gained support from organizations like AARP, judges and lawyers across Texas see any changes to the current system as unnecessary roadblocks.

See Andrea Ball, Woman’s Costly Court Battle Prompts Call for Reform of Guardianship System, Austin American-Statesman, May 12, 2013.

Gray Divorce Considerations

Divorces involving older clients (gray divorces) are on the rise.  A few important points to consider following a gray divorce include how to divide the retirement account and what to change concerning the estate plan. 

Pension plans can be divided using a Qualified Domestic Relation Order (QDRO).  A Separate Interest QDRO divides a pension plan by setting aside one spouse’s share, in essence treating the non-participant spouse as if he or she had also been an employee.  It is important to note if the retirement plan is already in pay status, because most plans won’t allow a separate interest if participants are already collecting from the plan. 

A Shared Interest QDRO bases the pension share of the non-participant spouse on the life expectancy of the participant spouse.  Again, it is important to note the pay status of the retirement plan, because “most shared interest plans will not allow the participant spouse to name a survivor beneficiary if one was not named upon retirement, nor can the participant spouse cancel a survivor benefit if one was provided for when the plan went into pay status.”

Under the Massachusetts Uniform Probate Code, divorce will revoke wills, life insurance, trusts, and bequests to relatives of an ex-spouse.  But following a divorce, the best practice is to go ahead and update the will as well as the durable powers of attorney and heath care proxies.

See Andrea Dunbar, Gray Divorce: Retirement Accounts and Estate Planning, Massachusetts Divorce Law Monitor, May 13, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Mother of Heirs to the Doris Duke Fortune Ordered to Explain her Big Spending

Daisha Inman has allegedly blown over $1 million of her children’s $60 million inheritance since 2010. 

Daisha Inman was married to Walker Inman Jr., the nephew of tobacco heiress Doris Duke.  Following his death, the Duke fortune is now held in trust for their twin children. 

Inman “has been ordered to appear in court next month to answer charges that she’s treated their trust funds as a personal piggy bank.”  Inman asserts she has never touched their trust funds and points the finger towards the Citibank and J.P. Morgan trustees who administer her children’s accounts.

See Julia Marsh, Mom of Twin Duke Fortune Heirs Ordered to Court after Allegedly Blowing $1M of their Inheritance, New York Post, May 8, 2013.

24th Annual Estate Planning and Probate Drafting Course

The State Bar of Texas is presenting the 24th Annual Estate Planning and Probate Drafting Course in Houston, TX on October 24-25, 2013.  The course provides 13 hours of MCLE credit, including 2 hours of ethics.  A description of the course is below:

Course Highlights

• Decanting panel
• Drafting for Trust Modifications and Private Letter Ruling Requests
• Pretrial Drafting for Will Contests, Guardianship Disputes and Fiduciary Litigation
• Drafting Fiduciary Powers for Trust Protectors and Independent Trustees
• Drafting for Marital Deduction Planning in 2013

Course Amenities

• Coffee and breakfast provided each morning
• Lunch provided both days
• Complimentary wireless Internet connection in the meeting room
• Convenient access to electrical connections - bring your laptop!
• Networking Social on Thursday night

For those that can’t make it to the live course, a video replay will be shown in Dallas, TX on November 21-22, 2013.

Coming Back From The Dead

In Zimbabwe during his own funeral Dama Zanthe sat up in his coffin. Funeral attendees noticed body movement and were shocked. Luckily, Zanthe woke up before his body was transferred to the funeral parlor that afternoon. Shortly after the incident, he was taken to the hospital and stayed for two days before his release. There have been a few reported incidents in Zimbabwe of the revitalization of the dead. 

See 'Dead' Man Woke Up During Own Funeral In Zimbabwe, Witness Says, Huffington Post, May 14, 2013.

Special thanks to Steve Gonzalez (Attorney at Law, Crikiel & Associates, P.C.) for bringing this article to my attention.

Adoption at Retirement

Recently, New York Times reported there is a growing number of retirees that have decided instead of relaxing during retirement to become parents. More specifically, retired people have turned to adoption. For some retirees this is their second go around at parenting, but for others this is their first time. Some of the retired individuals reason they will be successful parents because of their life experiences and accumulated knowledge. The adoptions are not only for infants,but also include adults. 

See Morgan Yuan, Growing Trend Sees Older Adults Choosing Parenthood At Retirement, Wealth Strategies Journal, May 15, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Marine Painting Worth Thousands

A man who inherited a painting from his deceased father took it to an Antiques Roadshow. The paper work to the painting found in his father’s desk indicated Francis L. Silva painted the artwork, but the man was unsure of the paintings worth. He was pleasantly surprised when the marine painting was valued at $250,000. Silva was a self-taught painter known for his marine paintings. 

See Antiques Roadshow: Man Inherits Painting worth a Boatload, OnAol.com, May 14, 2013. 

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

Article About Using Remainder Trusts For Transfers

Michael Duffy (Goldman Sachs Strategic Wealth Advisory Team Member, Atlanta, Georgia) recently published an article entitled, Using Remainder Purchase Marital Trusts to Transfer Works of Art, Probate & Property, May /Jun., 2013 at 60. Provided below is the introduction to the article: 

Art collectors routinely ask their tax advisors about strategies that will allow them to make inter vivos completed gifts of some or all of their artwork to remove the art (and any future appreciation) from their taxable estates while at the same time permitting them to retain possession of the art until a later date-which they most often describe as "until the death of the surviving spouse."

The main obstacle to engaging in such strategies is the IRS's ability to include the transferred works in a decedent-collector's taxable estate by invoking IRC Sec.2036(a), which requires inclusion in the gross estate if the decedent-collector retained possession and enjoyment of the art and there was no bona fide sale for adequate and full consideration in money or money's worth. 

Mays v. Porter Provides Guidance on Proving Undue Influence

The Kentucky Court of Appeals recent decision in Mays v. Porter “gave us some guidance on what evidence is sufficient under Kentucky law to set aside a deed based on undue influence."  Liddia Porter sought to set aside a deed conveying her home to Terry and Brenda Mays claiming she was coerced into signing the deed through undue influence.  The trial court held that the deed was the result of undue influence, but not by Terry and Brenda Mays.  Liddia’s husband Charles Foster unduly influenced her to execute the deed by not permitting her to ask questions while their attorney prepared the deed and by exerting physical force over Liddia to the point where she feared for her safety.  The Kentucky Court of Appeals determined this evidence was sufficient to show Liddia would not have executed the deed absent the undue influence of her husband.

See Luke Lantta, Evidence of Undue Influence in Kentucky, Bryan Cave Fiduciary Litigation, May 14, 2013.

Man Dies in Court Fighting Wrongful Foreclosure, Wells Fargo Now Being Sued for Wrongful Death

On December 19, 2012, Larry Delassus, 62, died of heart disease during a court hearing at which he was fighting Wells Fargo’s wrongful foreclosure of his Hermosa Beach condominium.  Deborah Popovich, the estate administrator, is now suing the bank for wrongful death among other charges for forcing the ailing Delassus to needlessly appear in court.

The complaint states that Delassus always made timely mortgage and property tax payments, but Wells Fargo falsely claimed Delassus owed over $13,000 in back taxes, a bank error that really should have been attributed to his neighbor.  Wells Fargo then doubled Delassus’s mortgage payments and then foreclosed on his condo when he was unable to afford the higher payments.  Wells Fargo could have caught this mistake by “verifying his property’s tax identification number with the county” and still foreclosed “even after the county treasurer had confirmed that his property taxes were current and paid.”

Popovich claims that Delassus “succumbed to the pressure of fighting Wells Fargo and the heartbreak of losing his home” and that “Wells Fargo and its agents should be held accountable for their negligent wrongful and malicious actions.”

See Matt Reynolds, Elderly Man Allegedly Dies in Court Fighting Wells Fargo ‘Wrongful’ Foreclosure, AlterNet, May 14, 2013.

Minnesota authorizes same-sex marriage

Starting August 1, 2013, same-sex couples may legally marry in Minnesota.

Governor Mark Dayton signed the enabling legislation on Tuesday, May 14, 2013 after the bill easily passed the Minnesota House by a vote of 75-59.

Minnesota is the 12th state to authorize same-sex marriage.

See David Bailey, Minnesota Senate passes same-sex marriage bill, NBCNews.com, May 13, 2013 and AP, Minnesota governor signs same-sex marriage bill, CBSNews.com, May 14, 2013.

Hamel v. Hamel Examines the Interplay Between Broad and Specific Trust Provisions

The Kansas Supreme Court recently interpreted a trust instrument where the broad powers granted to a trustee conflicted with a specific trust provision.

Arthur L. Hamel gave his trustees broad power to control and administer trust property, but included a specific provision in the trust instrument concerning farmland held in the trust.  Based upon an appraisal by the trustees, Dennis Hamel was to have a three-year option to purchase the farmland following Arthur’s death.  Dennis agreed to buy the farmland for $244,000 to be paid over six years.

Despite the broad powers granted to the trustees, the Kansas Supreme Court “determined that the trustees lacked authority to sell the farm to Dennis under the terms of this contract for deed.”  Arthur clearly intended for the farmland to be disposed of within three years.  Therefore, the six-year contract violated the specific provision found in the trust instrument.

See Luke Lantta, When the General Powers Granted to a Trustee Conflict with a Specific Trust Provision, Bryan Cave Fiduciary Litigation, May 10, 2013.

Ariel Castro Won’t Escape Child Support

The Cleveland kidnapper is legally required to pay child support after a paternity test revealed he fathered the daughter of one of his captives.

Even if Castro had set up a domestic asset protection trust (DAPT), under Ohio’s new “family-friendly” statute, child support is an exception creditor allowed to access the trust.  However, if Castro had set up a DAPT in a different jurisdiction, such as Nevada or Utah, child support is not afforded special status and Castro may have been off the hook. 

Ohio clearly won’t be letting Castro profit from his crimes in any way.  His estate will likely find its way to the victims, whether it be by an assignment of assets arising out of a 2004 written confession, garnishment of property arising out a civil suit, or perhaps criminal restitution.  The victim that now has to raise his child may receive preferential treatment when it comes to the division of his assets.

See Scott Martin, Ohio’s New Asset Protection Law Won’t Shield Cleveland Kidnapper, The Trust Advisor, May 12, 2013.

Bankruptcy Appellate Panel Takes A Stand Against Fraud

The Bankruptcy Appellate Panel of the U.S. Tenth Circuit Court of Appeals made it clear that committing fraud to avoid making payments to creditors will not be tolerated. Debtor owned a failing printing company and a substantial portion of a real estate company. Debtor also owed millions in loans and was trying to avoid paying his creditor on the personal guarantee by transferring his assets to his wife who then moved the assets to an offshore trust. Following the transfer the debtor filed for voluntary bankruptcy relief.

In re Kendall, the court held that the transaction had seven of the eleven fraud indicators. The court mentions that looking at the totality of the circumstances the transaction was fraudulent and affirmed the lower court ruling. In addition to the fraud indicators, the court mentions the significance of the location of the offshore trust. The trust is located in a place known for asset protection.   

See Jay Adkisson, Tenth Circuit Affirms Fraudulent Transfer Judgment Against Debtor's Wife and Her Cook Islands Trust , Forbes, May 12, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Senator Coburn Supports Death Master File

Senator Tom Coburn from Oklahoma recently stated that he would be in support of a proposal that would provide "federal agencies greater access to the Social Security Administration Death Master File (DMF)." The proposal, which was introduced by the Obama Administration, would hopefully help the government "prevent stolen identity refund fraud crimes."

See William Hoffman, Coburn Pledges Support for Administration Proposal on Death Master File, 2013 TNT 90-5, May 8, 2013; see also, Senator Coburn Supports Death Master File Proposal, Wealth Strategies Journal, May 9, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Governor Signs Indiana Budget

As I have previously discussed, the Indiana Legislature passed their budget, which contained a provision that would eliminate the state inheritance tax. Now, Governor Mike Pence signed the budget, which would make that provision the law in the State of Indiana.

See Dan Carden, Pence Signs Two-Year Indiana Budget, NWI Politics, May 8, 2013.

Special thanks to Sean J. Fahey (Hall Render Killian Heath & Lyman, P.C.) for bringing this article to my attention.

Article on Testamentary Restraints on Marriage

Ruth Sarah Lee (Harvard Law School, J.D. 2012) recently published an article entitled, Over My Dead Body: A New Approach to Testamentary Restraints on Marriage, 14 Marq. Elder's Advisor 55 (Fall 2012). below iProvided s the introduction to her article:

Money is a tool that can be wielded from the grave. The dead-hand may attempt to distribute money to shape the affairs, and influence the choices of the living. It is not uncommon to find deeds or wills that try to shape the behavior of the beneficiary by conditioning a grant, devise, or bequest on a potential beneficiary’s conduct. While not every conditional gift is designed to influence the beneficiary’s behavior, many are devised for that very purpose. Behind these gifts are different motives from different testators - whether it is a desire for control, benevolent paternalism, or even revenge. This article, specifically, turns to the problem of restraints on marriage. Testators (usually parents) write wills prohibiting, penalizing, or requiring marriage to one of a particular religious faith or ethnicity as an attempt to shape the beneficiary’s (usually the child’s) romantic decisions.

In addressing these restraints on marriage, many courts have taken a “reasonableness” approach. Even cases that do not explicitly take a “reasonableness” approach--but argue purely in terms of balancing public policy goals--tend to use language shaded with “reasonableness” rhetoric. A complete (total or general) restraint of marriage is a restraint that prohibits the beneficiary to benefit from the will if he marries anyone at any time. A partial restraint of marriage is, in contrast, limited in time or applicable to a specific class of persons.

However, the “reasonableness” approach has several serious shortcomings, and fundamentally focuses on the incorrect issue. The test suffers from at least four major problems: (1) it ostensibly questions the testator’s intent while ingenuously claiming that it does not; (2) it is empirically unsound; (3) it fails to take into account whether the restraint is actually consequential to the beneficiary; and (4) it produces unjustifiably inconsistent results based on geography and time.

Given these four problems with the “reasonableness” approach, a discussion and recommendation of a new approach is warranted. Thus, four principle alternative approaches are considered in this article: (1) a blanket prohibition of all marital restraints, most noticeably promulgated by Professor Jeffrey G. Sherman; (2) a blanket allowance of all marital restraints centered on the value of honoring testator intent; (3) a case-by-case balancing approach used by the court in In re Estate of Feinberg, 919 N.E.2d 888 (Ill. 2009)[hereinafter Feinberg II]; and (4) the possibility of pursuing a new test that does not suffer from the same shortcomings as the Reasonableness Test.

This article proposes a new test--the Coercion Test--as a possible alternative for courts to consider in handling testamentary restraints on marriage. If we are worried that the deed or will forces the donee to surrender to an “unreasonable” marriage or a life of loneliness, we should examine the extent to which the donee is actually influenced by the grant. In other words, instead of focusing on the donor’s “reasonableness”, courts should focus on the donee’s need. The donee’s need--the juxtaposition of his current financial position, how much he would stand to gain, and how much he needs the gain, with how much he would have received under intestacy--will show how much coercion or pressure the donee is actually experiencing from the will.

The discussion closes with a comparison between the proposed Coercion Test and the other alternative methods. The article concludes that the Coercion Test will maintain the advantages found in the other alternatives, while avoiding many of the disadvantages, and is therefore one of the most sensible approaches to marital restraints. The Coercion Test is a sensible approach because it avoids all four of the major problems with the Reasonableness Test, provides more respect for testator’s intent than a blanket prohibition, is more protective of public policy than a blanket allowance, and provides more consistent results than a case-by-case balancing approach. Most importantly, the Coercion Test addresses the crux of the public policy problem: whether an individual is being forced into, or out of, marriage.