Wills, Trusts & Estates Prof Blog

Columbia University's Journalism School

The students of Columbia University's Journalism School often write articles which touch on estate planning issues.

Here are a few of the recent articles:

• A way to care for your pet, even after your death by Ibby Caputo
• When it comes to wills, how strange can you get? by Erline Andrews
• To cremate or not to cremate? Results are now in: Yes by Andi Balla

Also see the discussion of this service by Neil Hendershot on the PA Elder, Estate & Fiduciary Law Blog.

Wicked Estate Lawyer Relinquishes Law License

The State Bar of Texas announced yesterday (May 4, 2007) that a Texas lawyer whoin one case failed to properly disburse assets to people named in a will and commingled assets with his own money. He also failed to account for how he distributed the money and property, despite a court order.

In another case, the bar association said, [the lawyer] withdrew money from an estate and deposited it in his own bank account.

"The funds were then spent or otherwise exhausted by [the lawyer] and not utilized for the benefit of the estate," the association said.

[The lawyer] and his family also lived in the home of a deceased client from 1987 to 2002 and deposited money from the sale into his own bank account, the bar said.

See Tony Plohetski, Austin lawyer accused in estate theft cases gives up law license, American Statesman (Austin, Texas), May 5, 2007.

Special thanks to Prof. Wayne Scott (St. Mary's University School of Law) for bringing this article to my attention.

Fourth Circuit upholds the Constitutionality of the Virginia Viatical Settlement Act

On April 30, 2007, the United States Court of Appeals for the Fourth Circuit decided the case of Life Partners v. Morrison holding that the Virginia Viatical Settlement Act was Constitutional.

Here is an excerpt from the case:

We decide, in this case of first impression, whether the Virginia Viatical Settlements Act, Va. Code Ann. § 38.2-600, et seq., which regulates viatical settlements with insureds who are residents of Virginia, is saved from the dormant Commerce Clause of the U.S. Constitution by the McCarran-Ferguson Act, 15 U.S.C. §§ 1011, 1012, as a state law that "relates to" the regulation of the business of insurance or as a state law enacted "for the purpose of regulating the business of insurance." * * *

On appeals by both parties, we conclude that the sale of life insurance policies by terminally ill patients directly and substantially affects the business of insurance and that the Virginia Viatical Settlements Act "relates to" such business and was enacted "for the purpose of regulating" such business. The McCarran-Ferguson Act thus saves the Virginia Act from preemption of the Commerce Clause and renders it constitutional.

Special thanks to Matthew B. Bogin (Rockville, Maryland) for bringing this case to my attention.

Indiana Law Updates

Here are summaries of two recently enacted Indiana bills as provided by the Indiana legislature:

Senate Bill 0212:

Electronic documents as estate property. Requires a person who electronically stores the documents or information of another person who is deceased to give the personal representative of the estate access to, or copies of, the decedent's stored documents or information. Prohibits a custodian from destroying or disposing of the documents or information of the deceased person for two years after the custodian receives: (1) a request for access to the electronically stored documents or information from the personal representative; or (2) a court order.

House Bill 1508:

Probate and trust matters. Provides that a trust is entitled to certain property tax deductions for real property owned by the trust if the property is occupied by an individual who has a beneficial interest in the trust, would be considered the owner of the property if the property were a life estate, and otherwise qualifies for the deduction. Specifies that the trust entitled to a deduction is not required to file a statement to apply for the deduction if certain conditions are met. Provides that when a court has not directed notice by rule, the default certified or registered mail option is replaced by the option to provide notice by first class postage prepaid mail. Specifies that the notice provided by the clerk of the court to an heir, a devisee, a legatee, or a creditor when letters testamentary or of administration are issued shall be served by certified mail. Provides that a will can be admitted to probate more than three years after the decedent's death if the will is presented for probate less than 60 days after: (1) another will previously offered for probate is denied probate; or (2) the probate of another will previously admitted to probate is revoked. Authorizes the use of an affidavit to obtain the information necessary to determine whether the value of a decedent's gross probate estate is low enough to allow the estate to be administered summarily. Provides immunity from civil liability to a person who provides information in good faith reliance upon the affidavit. Increases the maximum gross value of a probate estate that may be summarily distributed and closed upon the filing of an affidavit from $25,000 to $50,000. Specifies that the personal representative has the right to take possession of all the property of the decedent, without exception. Removes a provision under which the personal representative is not authorized to possess property subject to the surviving spouse and family allowances. Provides that the notice requirements applying to hearings on filed estate accountings also apply to a hearing on a petition for a court to decree the final distribution of an estate. Requires notice to be given by certified mail when a petition for the appointment of a guardian * * *

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

A judge cannot exercise a power of appointment

The testatrix’s will gave to those who cared for her at the end of her life a “fair contribution” of cash assets remaining in her estate as determined by the judge having jurisdiction of the administration of the estate.  The lower court struck the provision for uncertainty.

In In re McSwain, 946 So. 2d 417 (Miss. Ct. App. 2006), the court reversed holding that the provision created a special power of appointment.  However, the court also held that a judge could not exercise the power because it required an “arbitrary” decision and remanded for a finding of whether the testatrix reposed a special confidence in the office of chancellor in the absence of which the power could be delegated to a person able to exercise it.

Creating wills and powers of attorney deemed to be the unauthorized practice of law

The testarix asked her friend, an insurance agent, to help draft her will.  The friend filled in the blanks in a computer generated generic will which the testatrix executed.  The friend was named executor.

In Franklin v. Chavis, 640 S.E.2d 873 (S.C. 2007) , the court found that the testatrix was not involved in drafting the document and did not review it.  The court held that the friend had acted as more than a scrivener and had engaged in the unauthorized practice of law.  The friend also drafted a power of attorney for the testatrix which did not involve filling in blanks in a form and this too was the unauthorized practice of law.  The court also determined that the friend could not receive compensation for acting as the executor.

Interesting Pennsylvania Cases

Neil E. Hendershot of the Harrisburg, Pennsylvania law firm of Goldberg Katzman, P.C., who authors the PA Elder, Estate & Fiduciary Law Blog has recently reported on two trust litigation cases which are instructive to practitioners who exercise authority granted from their clients under circumstances where they (the clients, that is) evidence signs of diminished capacity.  For a discussion of these interesting cases, see

• Trust Dispute in Allegheny Co OC Court (04/30/07)

• Allegheny Co Trust Acts Questioned (05/01/07)

More Poetry -- Trustee Style

Here is a great poem about why you should "just say no" if anyone asks you to serve as a trustee:

The trustee’s job, I think, does not afford him such a happy lot.
In return for modest fees, he’s subject to a constant squeeze.
And written in the trustee’s bible is the rule: “You’re always liable.”
In view of his how can it be, that anyone would be trustee?

See Daniel M. Schuyler, 56 NW. U.L. Rev. 177, 189 (1961).

New Blogs Join Law Professor Blogs Network

Several new blogs have recently joined the Law Professor Blogs Network (http://www.lawprofessorblogs.com):

Administrative Law Prof Blog, edited by Drury Stevenson (South Texas) & Cynthia Quinn (Hawaii)

http://lawprofessors.typepad.com/adminlaw
   

Civil Procedure Prof Blog, edited by Jeremy Counseller (Baylor) & Rory Ryan (Baylor)

http://lawprofessors.typepad.com/civpro
   

International Environmental Law Prof Blog, edited by William Burns (Santa Clara) & Richard Caddell (Wales)

http://lawprofessors.typepad.com/intlenvironment
   

M&A Law Prof Blog, edited by Steven Davidoff (Wayne State)

http://lawprofessors.typepad.com/mergers
   

Poverty Law Prof Blog, edited by Ezra Rosser (American) & Lowell Hull (Notre Dame)

http://lawprofessors.typepad.com/poverty/

Toast to the Jolly Testator Revisited

Earlier on this blog, I posted a poem entitled Toast to the Jolly Testator attributed to Lord Neaves.  It now appears that there is a second part of the poem, less often reproduced, which pokes fun at the "jolly testatrix" who makes her own will.  Here is the poem in its entirety:

Ye lawyers who live upon litigants' fees,
And who need a good many to live at your ease,
Grave or gay, wise or witty, whate'er your degree,
Plain stuff or Queen's Counsel, take counsel of me.
When a festive occasion your spirit unbends,
You should never forget the Profession's best friends;
So we'll send round the wine and bright bumper fill,
To the jolly testator who makes his own will.

He premises his wish and his purpose to save
All dispute among friends when he's laid in the grave;
Then he straightaway proceeds more disputes to create
Than a long summer's day would give time to relate.
He writes and erases, he blunders and blots,
He produces such puzzles and Gordian knots,
That a lawyer, intending to frame the thing ill,
Couldn't match the testator who makes his own will.

Testators are good, but a feeling more tender
Springs up when I think of the feminine gender!
The testatrix for me, who, like Telemaque's mother,
Unweaves at one time what she wove at another;
She bequeaths, she repeats, she recalls a donation,
And ends by revoking her own revocation;
Still scribbling or scratching some new codicil,
Oh! success to the woman who makes her own will.

'Tisn't easy to say, 'mid her varying vapors,
What scraps should be deemed testamentary papers.
'Tisn't easy from these her intention to find,
When perhaps she herself never knew her own mind.
Every step that we take, there arises fresh trouble:
Is the legacy lapsed? Is it single or double?
No customer brings so much grist to the mill
As the wealthy old woman who makes her own will.

Special thanks to L. Paul Hood, Jr. for bringing the latter verses to my attention.

An action against the trustees would violate a no-contest clause

Several descendants of William Randolph Hearst brought an action under Cal. Prob. Code 21320 to determine if their proposed action against the trustees of the Hearst’s testamentary trust alleging that the trustees had violated their fiduciary duties would violate the no-contest clause in Hearst’s will.

In Hearst v. Ganzi, 52 Cal. Rptr. 3d 473 (Ct. App. 2006) , the court held that the proposed contest based solely on the duty to treat beneficiaries impartially conflicted with trust provisions giving the trustees discretion to treat income and remainder beneficiaries differently.

New Wyoming Laws

Wyoming has recently enacted the Wyoming Unitrust Act which authorizes the creation of or the conversion of an income trust to a unitrust (2007 Wyo. Sess. Laws 154) and has revised its law governing spendthrift trusts (2007 Wyo. Sess. Laws 155).

Agents did not breach their fiduciary duty by selling specifically devised land

The testatrix’s will devised the house and surrounding real estate which she had received under her second husband’s will to his son and the remainder of her estate to her children by a prior marriage.

Acting under a durable power of attorney, her children sold the undeveloped portion of the real estate to one of their children’s friends at less than the appraised value, deposited the proceeds in a joint account with themselves and the testatrix, and paid for her nursing home care from the account.

After her death, the step-son sued. In Stewart v. Sewell, 215 S.W.3d 815 ( Tenn. 2007) , the court held that the devise adeemed by extinction under the law in effect when the testatrix died and that the agents acted properly.

New Virginia Laws

Virginia has recently adopted the Revised Uniform Anatomical Gifts Act (2007 Va. Legis. Serv. 92 (West)) and has clarified the trustee’s duty to inform and report to the beneficiaries (2007 Va. Legis. Serv. 254 (West)).

Credit union negligent in allowing an agent to pledge account funds

A principal and his agent under a power of attorney granting extensive authority over banking transactions opened a joint account at a credit union.  The principal was the sole source of the funds in the account.  Later, the agent pledged the accounts as security for personal loans to agent on which he eventually defaulted and credit union took ownership of the funds.

In Bryant v. Community Choice Credit Union, No. 05CA0910, 2007 WL 177671 (Colo. Ct. App. Jan. 25, 2007), the court held that because the credit union noted the power of attorney in its records, it knew that the agent was a fiduciary for the principal and therefore breached its duty of care in allowing agent to use the accounts for himself and that an action for conversion would also be available.

Acceptance of legacy does not prevent contest

The testator’s will gave son $10,000 and son challenged the will alleging undue influence by his sister who was the principal beneficiary.  The trail judge dismissed the suit when the son failed to appear at a pre-trial conference. Son then accepted the $10,000 bequest and appealed the dismissal.

The court in In re Estate of Davis, 915 A.2d 955 (D.C. 2007), ordered the suit reinstated, holding that a single failure to appear at a pre-trial conference did not justify dismissal.  The court also held that the son’s acceptance of the bequest did not prevent him from carrying on his suit.

New Utah Laws

Utah has recently adopted the Revised Uniform Anatomical Gifts Act (2007 Utah Laws 60) and the Advance Health Care Directive Act (2007 Utah Laws 3).

New South Dakota Laws

South Dakota has recently adopted the Revised Uniform Anatomical Gifts Act (2007 S.D. Sess. Laws 197) and has revised the law governing living wills including the statutory form (2007 S.D. Sess. Laws 75).

New Arkansas Laws

Arkansas has recently adopted the following Acts:

• Uniform Estate Tax Apportionment Act.    2007 Ark. Acts 276.
• Uniform Statutory Rule Against   Perpetuities.  2007 Ark. Acts 240.

Britain's Wealthy Getting Richer

According to Richard Woods, Super-rich treble wealth in last 10 years, Times Online, April 29, 2007, the rich are getting richer in Britain.

The 260% rise in the wealth of Britain’s richest contrasts with a 120% average wealth increase for the population as a whole. Britons have benefited from the booming housing market but, unlike the super-rich, have done less well with their financial investments.

As the prime minister prepares to leave Downing Street, one legacy is a nation that has become a haven for the international super-rich. The number of billionaires living in Britain has surged to 68, up from 54 last year. About a third are from overseas and only three of the wealthiest 10 billionaires were born here [Britain].

The richest are Lakshmi Mittal, the Indian-born steel magnate now worth £19.25 billion, and Roman Abramovich, the Russian oil tycoon valued at £10.8 billion.

“They have come for the tax, the social circles and the security,” said Philip Beresford, the compiler of the list. “At first they were concentrated in London but now they are snapping up country estates.”

Complex rules on residency and domicile status mean the super-rich from overseas can, as one accountancy expert put it, “avoid paying virtually any tax in Britain apart from council tax”. Beresford added: “There’s the cluster effect. Russians have followed Abramovich, Indians are following the Mittals and Swedes are following the Rausings.”

Special thanks to Prof. Joel C. Dobris of the University of California-Davis for bringing this article to my attention.

Scott Finally Beamed Up

As discussed several times before on this blog [here, here, and here], on July 20, 2005, the actor James Doohan passed away at age 85.  Mr. Doohan is well-known for his portrayal of the chief engineer, Scotty, on the Enterprise, a starship traversing the universe in the television and movie Star Trek franchise.

After several delays, the rocket launch to send some of his cremains into space took place on Saturday, April 28, 2007.  According to Wendy Brundige, Beam Me Up, Scotty, ABC News, April 28, 2007, the launch was a success and include the cremains of about 200 people.  However,

Saturday's launch is a suborbital mission, meaning the spacecraft -- and the remains onboard -- reach the outer reaches of the atmosphere and fall back to Earth.

"We launch his remains into space and return them so there's a keepsake of a little bit of Scotty who has flown to space," Chafer said.

But Chafer said another portion of Doohan's ashes will fly on a future mission, when they will be released into orbit.

Disinheritance -- English Style

For an interesting discussion of the English approach to disinheritance, see Sally Hamilton, With the best will in the world . . ., The Observer, April 29, 2007.

Here are a few excerpts from the article:

Wills can be challenged in court by disappointed would-be beneficiaries, and they can be declared invalid for a host of reasons - not least 'undue influence' or if the will writer was not of sound mind. Even inappropriate use of legal 'gobbledegook' or loss of the original copy are reasons for a will to be declared invalid. The most cunning plans to disinherit can fail if it can be argued that you have ignored your 'moral obligations' to family members. The result could be changes to your will and even an ugly family feud. * * *

There are five main ways for a will to be challenged, with additional rights available under the Inheritance (Provision for Family and Dependants) Act 1975, which allows certain people to be given 'reasonable provision' from a will.

Ms. Hamilton then lists these reasons as follows:

• Forgery or fraud
• Undue influence
• Testamentary capacity
• Knowledge and approval
• Due execution

In addition:

Certain people omitted from a will - known as 'disappointed beneficiaries' - can make a claim under the Inheritance Act 1975, which says everyone has a moral obligation to look after a spouse, children or other dependants that they have supported in some way for at least two years before their death. In some circumstances, this can include mistresses.

Special thanks to Prof. Joel C. Dobris of the University of California-Davis for bringing this article to my attention.

Anna Nicole Smith Update

The court in the Bahamas is going to permit Dannielynn's father, Larry Birkhead, to leave the country with Anna Nicole Smith's daughter.

A custody dispute between Dannielynn's biological father (Larry) and her biological grandmother (Virgie Arthur) is still ongoing but it is going to be a court in the United States that will make the final decision.

The Bahamian court also updated Dannielynn's birth certificate to add Larry's name as the father and remove Howard K. Stern's name who had claimed to be Dannielynn's father.

The court also ordered Anna's mother to pay $3,000 to Birkhead in legal costs.

See AP, Bahamas court says Birkhead may leave with baby, CNN.com, April 27, 2007.