Judge Sonia Sotomayor and Wills, Trusts, and Estates

With the nomination of Judge Sonia Sotomayor (United States Court of Appeals for the Second Circuit) for the United States Supreme Court, much has been made of her opinions addressing a variety of issues but little has been written about the way she has handled cases dealing with wills, trusts, and estates issues.

Here is a memo on this issue prepared by Kyle Wolf (J.D. Candidate, Texas Tech University School of Law):

Below are a few noteworthy cases the Second Circuit Court of Appeals decided regarding Wills, Trust, Estates, and Tax issues.  Sonia Sotomayor was present on the court for all of these holdings; however, she is not necessarily the author of the court’s opinion.  Surprisingly there are very few opinions concerning these issues.  Apparently the Second Circuit is much more involved in business and securities issues. 

In Weinstein v. Cadman Towers, Inc., the court affirmed the lower court’s decision; the court quoted prior case law when it stated, “[A]n administratrix or executrix of an estate may not proceed pro se when the estate has beneficiaries or creditors other than the litigant.”  307 F. App’x 529, 529 (2d Cir. 2009).     

In Janis v. Commissioner, the court addressed the issue of “whether the fair market value of . . . artwork upon which the estate tax was calculated also constitutes the cost basis of the property for income tax purposes when it [artwork] was later sold.”   469 F.3d 256, 257 (2d Cir. 2006).  The court held that “it does where, as here, the taxpayers do not challenge the accuracy of the method used to calculate the fair market value of the works of art upon which the estate tax was calculated.”  Id.

The court addressed the tax implications of trust investment-advice fees in a case that eventually reached the Supreme Court.  The court affirmed the lower court’s decision and held that “trust’s investment-advice fees are subject to the two-percent floor of [26 U.S.C.] § 67(a) and therefore not fully deductible in arriving at adjusted gross income.”  William L Rudkin Testamentary Trust v. Commissioner, 467 F.3d 149 (2d Cir. 2006).  The Supreme Court granted certiorari and affirmed the court’s conclusion; however, the Supreme Court used different reasoning.  See Knight v. Commissioner, 552 U.S. 181 (2008).  Chief Justice Roberts authored the Court’s opinion.  Id. 

The court reversed a lower court’s conclusion in United States v. Sprint Equities NY, Inc., 92 F. App’x 841 (2d Cir. 2006).  Here the court relied on case law to help it determine whether a constructive crust was created in favor of the U.S.  Id.  The court concluded that some of the elements of a constructive trust were not satisfied, therefore, the lower court erred when it concluded a constructive trust was created for the U.S.  Id.