Wills, Trusts & Estates Prof Blog

New England School of Law Seeks T&E Visitor

The New England School of Law in Boston is looking for a visitor to teach Wills, Estates, and Trusts for the Fall semester only.
   

The teaching load is two courses per semester.
   

The New England School of Law is a very collegial institution with an emphasis on teaching.  It is located in the heart of downtown Boston.
   

Applicants or those seeking additional information should contact Professor Barbara Plumeri, Appointments Committee Chair, bplumeri@faculty.nesl.edu, by Feb. 25, 2008.

Steve Fossett Declared Dead

Earlier on this blog, I discussed Steve Fossett’s disappearance and his wife’s petition to declare him legally dead.  Yesterday (Friday, February 15, 208), he was declared legally dead.

According to Tammy Webber, Adventurer Fossett Declared Dead, AP, Feb. 16, 2008:

Cook County Judge Jeffrey Malak's declaration Friday at the request of Fossett's wife, Peggy V. Fossett, ended the legal limbo of his estate, said her attorney, Michael LoVallo. The judge heard testimony from Peggy Fossett, a family friend and a search-and-rescue expert before deciding there was sufficient evidence to declare him dead. * * *

LoVallo said his client would like to recover the remains "and really find out what happened." Plans are to resume a recovery search in the spring.

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

Charitable gifts reduced by proportional share of state and federal estate taxes

In Hale v. Moore, No. 2005-CA-001895-MR & 2006-CA-000662-DG, 2008 WL 53871 (Ky. Ct. App. Jan. 4, 2008), involving the estate of Claudia Sanders, the widow of Kentucky Fried Chicken founder Colonel Harland Sanders, the court required charitable beneficiaries (two colleges) to have their shares burdened by a proportional amount of state and federal taxes.

The court explained that Kentucky law does not exempt charitable gifts from being subject to reduction for transfer taxes unless the will expressly provides otherwise.  The will did not contain any specific language that the gifts to the colleges were to receive special treatment or be exempt from taxes.

Charitable deduction for faulty unitrust denied because the estate failed to file court proceeding to reform the trust

The court in Estate of Tamulis v. Commissioner, 509 F.3d 343 (7th Cir. 2007), refused to apply the substantial compliance doctrine.  The court explained that the taxpayer knew that reformation was needed and “had no excuse” for the failure to do so.  The court also stated that the reformation “requirement is not unimportant; it protects against efforts to bend trust law to get a tax benefit.”

Reasons Family Members Refuse to Donate Deceased Relatives’ Organs

According to ScienceDaily, Relatives Who Decline Organ Donations Face Conflict and Guilt, sciencedaily.com, Jan. 18, 2008:

Family members are sometimes unable to carry out their relative's wish to donate organs when they die, because of conflicting feelings between making a gift of life and protecting the body of the deceased, according to new research.***

Other factors included:

·         Circumstances at the time of death - people needed time to come to terms with the death of their relative, especially if their death was sudden or their body looked normal.

·         Lack of knowledge - some people said they did not have enough information about what organ donation involved.

·         The donation discussion - issues were raised around the timing and sensitivity of discussions between relatives and healthcare professionals.

·         Witnessing the observable ending of life - some people said they needed to be present when their relative's heartbeat stopped. That could not always happen if their relative was a donor.

Trusts: Duties, In Terrorem Clause, and Attorney Fees

Below is a discussion of Lesikar v. Moon, 237 S.W.3d 361 (Tex. App.—Houston [14th Dist.] 2007, pet. filed).

TRUSTS -- Trustee’s Exercise of Discretion

Under the terms of the trust, Trustee was instructed to use a designated portion of the property to fund a separate trust for Beneficiary.  Trustee refused to do so and Beneficiary obtained a judgment from the trial court instructing Trustee to fund the trust.  Trustee appealed alleging that the trial court interfered with his discretion as a trustee without a finding of fraud, misconduct, or abuse of discretion.

The appellate court recognized that a court “may not substitute its discretion for that of the trustee, and may interfere with the trustee’s discretionary powers only in the case of fraud, misconduct, or clear abuse of discretion.”  Lesikar at 366.  However, in this case, the trust directly instructed Trustee to fund the trust by using the mandatory term “shall.”  In other words, Trustee had no discretion not to fund the trust and thus it was proper for the court to order the funding.

Moral:  A trustee must follow the mandatory instructions the settlor gives in the trust and does not have the discretion to ignore those instructions.

TRUSTS -- In Terrorem Provision

Beneficiary sued Trustee for breach of fiduciary duty.  Trustee then claimed that Beneficiary forfeited her share of the trust because the trust contained an in terrorem clause.  The appellate court determined that the trial court was correct in not reaching the issue because Trustee’s motion for an interlocutory summary judgment was not timely filed.

In what is most likely dicta, the court concluded that even if the Trustee’s motion had been timely filed, Beneficiary’s conduct would not have triggered a forfeiture.  The court explained that the right to challenge a fiduciary’s actions is an inherent part of a trust relationship and thus such conduct is insufficient to trigger a forfeiture.

Moral:  A no contest clause will not prevent a beneficiary from bringing a breach of fiduciary claim against the trustee.  It would be against public policy to permit the settlor to trigger a forfeiture when a beneficiary merely seeks to enforce the trust as written and assure that the trustee obeys the trustee’s fiduciary duties.

TRUSTS -- Attorney Fees

Trustee appealed the trial court’s award of attorney fees to Beneficiary under Texas Trust Code § 114.064 and the Texas Declaratory Judgments Act.  The court explained that the grant or denial of attorney fees is within the discretion of the trial court and the court’s judgment will not be reversed unless there is a clear abuse of discretion showing that the decision was so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.

The appellate court carefully reviewed the evidence and found that Beneficiary had failed to segregate the fees due to this cause of action from other causes of action and did not offer evidence that segregation was not necessary.  Accordingly, the court reversed the award of attorney fees and remanded the issue to the trial court for reconsideration.

Moral:  When requesting attorney fees, it is important to segregate the fees associated with the cause of action at bar from other causes (or show that such segregation is not necessary because they are significantly intertwined).

Medicaid and Estate Planning

Rick B. Weaver (Attorney at Law, Shannon, Gracey, Ratliff & Miller, L.L.P.) has recently published his article entitled How Medicaid Planning Affects Other Issues, 71 Tex. B.J. 110 (2008).

Here is an excerpt from his article:
   

Many clients are wary of making large gifts because they believe their children will pay income tax on the gifts. While this is clearly not going to occur, clients who wish to make significant gifts in order to trigger the five-year look-back period do need to consider additional income taxes that may be paid by their children on the income earned by these gifted assets following the gifts. In most cases, the children are in a higher tax bracket than their parents. Over a number of years, the difference in the brackets can make a large difference in the overall tax paid by the family. Recent extensions in the look-back period from three to five years have given families incentive to make gifts earlier in an elderly client’s lifetime. This will only increase the potential negative income tax effect of these gifts.

Using Legal Documents from Unknown Sources - Tempting But Dangerous

When preparing a legal document for a client, a family member, or a friend, it may be tempting to go online and download a form on the appropriate subject matter. One website that offers such services at no charge is docstoc.com. “Docstoc is a user generated community for sharing professional documents” which “allows users to upload their documents for all the world to share.”

   

However, choosing this route is risky and in some cases may even lead to legal malpractice. First, the drafter may have omitted or unintentionally misstated the many state-specific statutorily required provisions. Second, the document may not incorporate the most recent legislative amendments. Additionally, as with any sample forms, an attorney must ensure that the document is customized to the needs of his or her client.
   

Nonetheless, these sample documents may provide useful guidance or a "starting point" for the drafter.
   

While docstoc.com contains a fair number of wills and trusts materials, I would approach this and similar sites with extreme caution. An attorney should always independently research the applicable law and tailor the document to the client's situation.

   

Note that my comments are not meant to be a reflection on the quality of these websites from a technical perspective.  For example, the docstoc.com site appears to be extremely well-constructed and contains lots of useful and "fun" material unrelated to the practice of law.

Challenge Filed to Colorado's Ban on Same-Sex Marriage

According to Dan Frosch, 2 Sue to Void Ban on Same-Sex Marriage, NY Times, Feb. 14, 2008:

A lesbian couple * * * are seeking to overturn Colorado’s constitutional ban on same-sex marriage, in what is thought to be the first challenge to the 2006 ballot initiative that established it.

The couple, Kate Burns and Sheila Schroeder, * * * filed a motion with the court claiming that Amendment 43, which defines marriage as the union of one man and one woman, violated their constitutional right to equal protection. The measure was approved by 55 percent of Colorado voters 15 months ago.

Happy Valentine's Day

Wishing you and your special someone a very Happy Valentine's Day,

Gerry

Captain America Update

Earlier on this blog, I have discussed the death of Captain America, the contents of his will, and his replacement.

For an update on recent developments, see the posting entitled Cap is Dead; Long Live Cap! on Neil E. Hendershot, Esq.'s (Attorney at law, Goldberg Katzman, P.C., Adjunct Professor, Widener University School of Law) PA Elder, Estate & Fiduciary Law Blog.  Pay particular attention to Neil's conclusion of the life lesson that these comic book storylines can teach us, that is, "how we can retool, rethink, resolve, reorient, reinvent, restore, restart, and reintroduce ourselves."

A free market approach to organ shortage

The following is from John Stossel, How Much Is Your Kidney Worth?, nysun.com, Jan. 17, 2008:

Why are so many people so hostile to free markets?***

Why is selling an organ "radical"? Banning the sale of kidneys kills thousands of people a year. That should be considered "radical."***

Every day, about 17 Americans die while waiting for a transplant.

Yet plenty of Americans would give up a kidney if they could just be paid for their trouble and risk.***

So giving someone a kidney is a good deed, but selling the same kidney is a felony.***

The Kidney Foundation fears that poor people would be "exploited."*** To say the poor are too desperate to resist a dangerous temptation is patronizing.

Los Angeles Probate Files Tell the History of Women’s Inheritance Rights

Kristine S. Knaplund (Professor of Law, Pepperdine University School of Law), has recently published her article entitled The Evolution of Women's Rights in Inheritance, 19 Hastings Women's L.J. 3 (2008).

Here are excerpts from the conclusion to her article:

The probate files are a rich source of information about the lives of women and men in Los Angeles as it transitioned and grew into a major city. The availability of land and the use of promissory notes allowed the industrious the opportunity to save money and leave an estate to their families and friends. Ten women left estates over $10,000 in 1893 dollars, compared with twenty-two men. Of these, one woman began as a maid from Ireland who ended up being the richest woman dying in Los Angeles in 1893, with an estate of over $285,000. ***

These files demonstrate that, in some ways, Los Angeles in the 1890s was ahead of other parts of the country in women's rights. For example, men in Los Angeles routinely named their wives as executrix of the estate, unlike those in Pennsylvania. Relatively few men tied up legacies to a wife or daughter in a trust or a life estate, choosing instead to give the beneficiary fee simple rights to the property.

Organ and Tissue Donor Registry in Illinois

According to Kartikay Mehrotra, Organ-donor list grows to 3.2 million, pantagraph.com, Jan. 24. 2008:

More than 3 million people have signed up for Illinois’ 2-year-old organ and tissue donor registry.

Since the new list was created in 2006, prohibiting survivors from changing the deceased’s donor wishes, more than half of the 6 million registrants cut out from the donor program are back.***

Previously, the final decision remained with the person’s family.***

Although 3.2 million people have signed up for the new registry, nearly 4,500 people are still waiting for organs in Illinois.***

To sign up for the first-person organ/tissue registry, call the Organ and Tissue Donor Program Office at (800) 210-2106 or visit www.lifegoeson.com.

Retirement Distribution Rules Guide Updated

Seymour Goldberg has recently updated his book, The Advisor's Guide to the Retirement Distribution Rules, for Circular 230 and the Pension Protection Act of 2006.

Here is a description of this book:

In this competitive environment it is important to add value to your practice. A knowledge of retirement distribution planning is a subject that can enhance your practice. This is especially true today because many of your clients have accumulated considerable amounts of wealth in their retirement accounts. These retirement accounts can be transferred to your clients' heirs and can provide for decades of growth for these tax deferred accounts. This practical guide that explains many of the retirement distribution rules will help you achieve this knowledge. Your clients and their heirs need this vital information. This knowledge will help both you and them.

This guide includes coverage of such issues and materials involving:

1. What rules apply if you die before your required beginning date?
2. What rules apply if you die after your required beginning date?
3. What happens if you die and have multiple beneficiaries of your retirement account?
4. How do the heirs of your retirement account take advantage of the separate share rules?
5. If you die and fail to receive your entire required minimum distribution for the year of death, what happens to the unpaid required minimum distribution?
6. Why is a spousal rollover important in distribution planning?
7. What action should a surviving spouse beneficiary take and when?
8. What happens if a surviving spouse erroneously rolls over a required minimum distribution?
9. When must required minimum distributions commence from a Roth IRA?
10. What penalty applies to an erroneous rollover?
11. If a beneficiary subsequently dies after the death of the IRA owner, what happens?
12. May a beneficiary in pay status name a successor beneficiary?

This guide not only provides an analysis of the retirement distribution rules but also illustrates by specific examples how the retirement distributions rules work. Over sixty examples are covered in this guide.

Trusts as Retirement Plan Beneficiaries CLE

The American Bar Association Section of Real Property, Trust and Estate Law and the ABA Center for Continuing Legal Education are sponsoring ateleconference and live audio webcast on February 20, 2008 entitled Avoiding Retirement Plan Disasters: Trusts as Beneficiaries and Creditor Protection for IRAs.

Here is a description of this program:

Retirement plans can be a large part of a client’s estate. Proper planning is essential for clients and their beneficiaries to achieve the maximum use of these assets.

This presentation will focus on:

• Why use a trust as beneficiary?
• How inherited IRAs may be exposed to creditors
• What kinds of trusts qualify for maximum stretch of required minimum distributions
• Why a QTIP trust may become an IRA disaster!
• How the beneficiary designation form must be properly integrated with the trust
• What must be done after death to properly administer or fix the trust

Pennsylvania Survey Sheds Light on Organ Donor Shortage

The following is from David Wenner, Medical society surveys non-organ donors, www.pennlive.com, Feb. 8, 2008:

About 20 percent of Pennsylvania drivers who aren't organ donors say they want to be one but just haven't gotten around to it.

The Pennsylvania Medical Society, which wants people to be donors, recently surveyed non-donor licensed drivers to find out why they're not donors. It found 42.6 percent of them hadn't considered being an organ donor. Another 37.5 had considered it but don't feel comfortable being a donor.

The medical society is stressing that 98,000 people in the United States are waiting for transplants, and many will die because no organ becomes available.

Pennsylvania allows people to register to be a donor and have it indicated on their driver's license. People can do so online at www.dmv.state.pa.us.

Willingness to Save May Prove Lifesaving

According to Dave Undis, Personal Responsibility Can Fix the Organ Shortage, opednews.com, Jan. 14, 2008:

More than half of the 98,000 people on the transplant waiting list in the United States will die before they get an organ, and the shortage of organs gets worse every year.  If you want to increase your chances of getting a life-saving organ transplant should you ever need one, you can either exercise a little personal responsibility or hope that the transplant bureaucracy will take care of you.
   

You can increase your chances of getting an organ transplant if you ever need one by agreeing to donate your own organs when you die.  This trade is offered by a group called LifeSharers.  Members agree to donate their organs when they die, and they give fellow members “first dibs” on them.  Non-members can have a member’s organs if no member who is a suitable match for them wants them.  You can join at http://www.lifesharers.org or by calling 1-888-ORGAN88.  Membership is free and open to everyone.  No one is excluded due to any pre-existing medical condition.  LifeSharers has over 10,000 members, with members in all 50 states and the District of Columbia.

"How to Build and Manage an Estates Practice" Second Edition Released

Daniel B. Evans has recently authored the second edition of his classic book entitled How to Build and Manage an Estates Practice.

Here is the publisher's description of the book:

Specifically tailored to the unique needs of the estates and trusts lawyers, this updated second edition of "How to Build and Manage an Estates Practice" focuses on making your practice better. Written as a "book of ideas," you'll find guidance on marketing, effective client communications, fee agreements, and ethics, including the updates to the American Bar Association's Model Rules of Professional Conduct. Whether you're a solo practitioner or a lawyer at a large firm, you'll find the tools you need to make a difference.

Authored by Daniel B. Evans, a veteran attorney focusing on the areas of estate planning and estate and trust administration, this edition highlights constructive ways to apply ideas that have worked for him to your own practice. Organized logically, the book starts with deciding what kinds of clients you want, to finding those clients, to choosing clients and establishing fee agreements, to doing the actual legal work.

Inside, you'll find:

• Strategies in defining your practice to bring focus and growth
• The best ways to communicate with your clients
• How technology and ethics have changed the practice area
• Analysis of the Department of the Treasury Circular 230 issued in 2005
• Innovative ideas for finding new clients
• Ethics issues, including the challenges of marital and inter-generational representation
• Fee agreements, including ideas on alternative billing in estate planning, administration, and litigation
• Optimum strategies and practical ideas for billing
• Tips on hiring personnel
• Sample forms, checklists, and questionnaires, such as an Estate Planning Questionnaire, Estate Administration Schedule, and Will Execution Instructions, are included on an accompanying CD

Court Rules Royal Wills Can Be Inspected

According to Duncan Campbell, Accountant lifts veil from royal wills, guardian.co.uk, Feb. 9, 2008:

A 53-year-old Jersey accountant who believes he may be the son of Princess Margaret and 12th in line to the throne yesterday won a landmark ruling which opens the door for the inspection of the wills of members of the royal family, ending nearly a century of secrecy.

The ruling by the court of appeal was welcomed by campaigners for greater transparency about royal affairs. It emerged during the hearings that Princess Margaret, who died in 2002, left an estate worth nearly £8m.***

The current arrangement, whereby the wills were kept secret, was the result of a clandestine ruling by the then president of the family division, Dame Elizabeth Butler-Sloss, following top-secret representations from the then attorney general, Lord Goldsmith, and the royal solicitors, Farrer's.

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

Anna Nicole Smith -- One Year Later

Last Friday (February 8, 2008) was the first anniversary of the death of Anna Nicole Smith. 

According to Tosheena Robinson-Blair, Bahamas Remembers Anna Nicole Smith, AP, Feb. 9, 2008:

Anna Nicole Smith's lawyer-turned-companion recalled her in worshipful terms Friday at a memorial in the Bahamas * * *.

Howard K. Stern, speaking to dozens of people gathered at the cemetery where Smith and her son are buried, said there was "nobody stronger, nobody smarter, nobody more compassionate, nobody funnier and certainly nobody more beautiful" than the former model and actress. * * *

Birkhead and Dannielynn attended the memorial service at the pink-walled Lakeview Memorial Gardens along with dozens of Smith's friends from the United States and the Bahamas. * * *

An inquest to establish the formal cause of death has proceeded fitfully since it began last month because of efforts to bring witnesses from outside the Bahamas. It is scheduled to resume next month.

Organ Trade Scandal in India

According to CNN.com, Amit Kumar has recently been accused of “buying, coercing and outright stealing kidneys from poor Indians.”

One of his alleged victims said that Kumar lured him into the house and drugged him. The next thing the victim remembers is waking up in pain and discovering that his kidney was gone.

Kumar was apprehended in Nepal with wads of cash totaling over $250,000.

James Brown Update

Earlier on this blog, I discussed the controversy surrounding James Brown’s estate. Here are more recent developments from Lynnley Browning, Suit Tangles Issue of James Brown’s Estate, NYTimes.com, Feb. 8, 2008:

Mr. Brown’s estate was already the subject of a raft of lawsuits and squabbling involving his children, grandchildren, children whose paternity has been asserted but not yet proved, three wives and a companion who says she was his fourth wife.

Now, a lawsuit filed Tuesday by two court-appointed trustees of his estate accuses his longtime business managers, including a retired judge, of stealing millions of dollars from Mr. Brown. The suit, filed in South Carolina state court, also accuses the law firm of Greenberg Traurig, one of its lawyers, and a South Carolina bank of breach of fiduciary duty, negligence and conspiracy to defraud the legendary soul singer. * * *

The lawsuit filed by the two trustees of Mr. Brown’s estate, Adele J. Pope and Robert L. Buchanan Jr., both lawyers, focuses on one of the three former managers, David G. Cannon, accusing him of siphoning at least $10 million since 1999.

The complaint also states that Mr. Cannon may have forged Mr. Brown’s signature to obtain a 40 percent interest in royalties from the James Brown dancing doll, an interest worth $95,000. * * *

Some of Mr. Brown’s heirs hope to turn his estate in Beech Island, S.C., into a lucrative Graceland-style tourist mecca. His songs also continue to produce royalties.

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

Top SSRN Downloads

Here are the top downloads from December 12, 2007 to February 10, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank	Downloads	Paper Title
1	83	Conservation Easements: Perpetuity and Beyond Nancy A. McLaughlin, University of Utah - S.J. Quinney College of Law, Date posted to database: December 12, 2007 Last Revised: January 11, 2008
2	34	In Their Own Hand: An Analysis of Holographic Wills and Homemade Willmaking Stephen Clowney, U.S. Court of Appeals for the Third Circuit, Date posted to database: January 15, 2008 Last Revised: February 6, 2008
3	34	GST Qualified Severance Regulations: Final and Proposed Marc Chorney, Author - Affiliation Unknown, Date posted to database: December 9, 2007 Last Revised: December 9, 2007
4	22	Child Labour: The Partial Fiduciary Accountability of Parents Robert Flannigan, University of Saskatchewan, Date posted to database: January 6, 2008 Last Revised: January 6, 2008
5	16	'Living Will' and the Nigerian Law: The Need for Legislative Intervention Ademola Oladimeji Okeowo, Matrix Solicitors, Date posted to database: December 4, 2007 Last Revised: January 14, 2008
6	13	The Human and Economic Dimensions of Altruism: The Case of Organ Transplantation Richard A. Epstein, University of Chicago Law School, Date posted to database: February 3, 2008 Last Revised: February 3, 2008