Wills, Trusts & Estates Prof Blog

Texas Estate Planning and Probate Drafting CLE

TexasBar CLE presents the 20th annual Estate Planning and Probate Drafting Course.  The course will be presented live in Dallas on Oct. 29 & 30 and will be presented by video in Houston on Dec. 2 & 4.

Course highlights include:

• Forms from Around the State: When and How to Use Them (and When Not to)
• Drafting to Win: Winning the Will Contest on the Front End
• How to Undo What the Client Has Done
• Pleadings, Discovery Requests for Will Contest, Trust Disputes, and Fiduciary Litigation
• Electronics and Paperless Impact on the Drafting Process

Various Madoff Relatives Face Lawsuits from Madoff Bankruptcy Trustee

Irving Picard, the court appointed Bernard Madoff bankruptcy trustee, plans to sue two of Madoff's sons, a brother, and a neice for negligence and breach of fiduciary duty in their roles as part of Madoff's business.  According to Picard, these individuals received more than $150 million dollars from Madoff's business.  These lawsuits are part of Picard's quest to recover money for victims of Madoff's ponzi-shceme, and follow a lawsuit against Madoff's wife.

See Joanna Chung, Madoff family members facing lawsuit, Fin. Times, Sept. 27, 2009; see also my prior post.

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

Alternative Reproductive Technologies Create Posthumous Heirs & Legal Problems

Charles P. Kindregan, Jr., (professor of law, Suffolk University) has posted on SSRN his article entitled Dead Dads: Thawing an Heir from the Freezer, 35 William Mitchell L. Rev. 433 (2009).

The abstract of the article is below:

In Dead Dads: Thawing an Heir from the Freezerthe author examines the difficult legal problems created by the growing practice of using the cryopreserved gametes of deceased persons to conceive a posthumous child. The law has long recognized the legal parental status of a man whose fetus is in utero in his wife's pregnancy at the time of the father's death, but developments in reproductive science has now made it possible to conceive a child after either a parents' death. This has been made more complicated by the use of assisted reproduction by unmarried persons, its growing use by same-sex couples and the developing marketplace for stored sperm, eggs and embryos. The science of preserving sperm or embryos by cryopreservation is a fact, and research is improving the preservation of eggs as well. However, the law has been slow to deal with the post-death conception of a child. An optional section of the Uniform Parentage Act, the new A.B.A. Model Act Governing Assisted Reproductive Technology (2008) and new additions to the Uniform Probate Code (2008) signal an attempt to change this, but except for a California statute and minor efforts by other jurisdictions, states have not attempted to deal with this by statute. Instead, the courts have had to struggle with the issued in the context of social security rights, disputes over the ownership of cryopreserved embryos, or the interpretation of gratuitous transfer instruments. The author argues that there is no legitimate reason for treating posthumous children differently from other children, although recognizing that legislatures should enact laws to deal with issues such as efficiency in timely estate distribution.

This article was drafted before and does not examine the recently proposed amendments to the Uniform Probate Code dealing with posthumous reproduction and which if enacted by the states would comply with the author's urging support for uniform legislation on the subject.

Illinois Court Declines to Invalidate Religious Marriage Condition Placed on Inheritance

In re Feinberg, 2009 Ill. Slip Op. 106982 (SC Sept. 24, 2009): The Illinois Supreme Court decided whether to invalidated an inheritance condition based on marrying within the Jewish faith.  Below is the case summary for the case provided by the Supreme Court of Illinois:

Max Feinberg, who died in 1986, left a wife, Erla, two adult children, and five grandchildren. He had executed a will that created trusts from which his widow would receive income during her lifetime. At her death, the trust assets were to be combined, and half of these assets were to be held in trust for the benefit of the grandchildren during their lifetimes, provided they had not married out of the Jewish faith, in which case they were to be “deemed deceased” on the date of such a marriage. Shares of such “deceased” grandchildren would revert to the settlor’s two children. Between 1990 and 2001, all of the five grandchildren married.

Distribution of decedent’s assets did not go according to this original plan, however, because Max also gave his widow a limited lifetime power of appointment as to his descendants which she exercised in 1997. Instead of lifetime trusts, she directed that, at the time of her death, fixed $250,000 sums be given to each of her two children and to each of her five grandchildren. She provided, however, that, as to the latter, her husband’s religious-restriction clause must be complied with. Erla died in 2003. By this time, although all the grandchildren had married, only one had complied with the religious restriction.

This situation resulted in several different proceedings which were consolidated in the circuit court of Cook County. The religious-restriction clause was invalidated there as contrary to public policy, and the appellate court affirmed.

In reaching a different result, the Illinois Supreme Court found that the issue is not Max’s original scheme of lifetime trusts for the grandchildren, but the distribution which was authorized by Erla, giving out fixed sums at the time of her death. The supreme court declined to hold the religious-restriction clause void. The grandchildren had no vested interests and Erla had merely created a condition precedent that operated on the date of her death to determine who was qualified to take. The supreme court said Erla was free to make a distribution in favor of grandchildren whose lifestyles were approved of over other grandchildren who made choices which were disapproved of.

The judgment of the appellate court was reversed, and the cause was remanded to the circuit court for further proceedings.

For a discussion of this case, see Christopher Wills, Ill. high court OK's 'Jews only' inheritance, AP, Sept. 24, 2009.  The article notes that because the will provided for inheritance based on marriage status at the time of Erla's death, the provision did not attempt to control marriage choices or act as an incentive for divorce.  The ruling did not address whether the religious marriage restriction would be valid under other circumstances.

Special thanks to Lynne M. Bahrami (J.D. Candidate, University of North Carolina) and William P. LaPiana(professor, New York Law School) for bringing this case and article to my attention.

Illinois Will Repository Statute

Helen W. Gunnarsson (Highland Park, Illinois attorney and writer) explains the operation of the new Illinois law authorizing the creation of a repository for attorneys to deposit original wills for long-lost clients in Illinois’ New Will Repository Law, 97 Ill. B.J. 330 (2009).

More on Assisted Suicide Guidelines in England

As previously noted, the top prosecutor in England released factors his department would use in deciding whether to prosecute under the country's assisted suicide ban.

These guidelines were ordered after noteworthy assisted suicide cases forced the issue to the forefront:

• At 23, a paralyzed rugby player ended his life at Dignitas Clinic in Switzerland.
• A  woman with multiple sclerosis asked the courts to decide whether her husband would be prosecuted for accompanying her to Dignitas.

According to one source, the guidelines were expected to make clearer the distinction between assisting a suicide and encouraging a suicide. Time will tell if this expectation was fulfilled.

See John Arlidge and Sarah-Kate Templeton, The farewell of an assisted suicide, TimesOnline, Sept. 20, 2009; Sarah-Kate Templeton and David Leppard, Campaigners win the fight to legalise assisted suicide, TimesOnline, Sept. 20, 2009.

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

Acceptable Nontax Purposes for Family Limited Partnership Investments

Prof. Wendy Gerzog (University of Baltimore School of Law) has published her article entitled Miller: Effective FLP Line Drawing, Tax Notes, Vol. 124, No. 12 (2009).  The abstract is below:

Miller is a decision on family limited partnerships (FLPs) with effective line drawing. The case is particularly helpful to distinguish the types of investment activities that constitute an acceptable nontax purpose under the Bongard criteria. The opinion further provides some guidelines on the factors of age, health, and FLP payment of estate tax liabilities to determine the applicability of section 2036 and its bona fide sales exception.

Organ Donation: Opt-Out, Mandated, or by I-Phone?

Most U.S. states use an opt-in approach for organ donation.  Alternatives include the opt-out and the mandated approaches, which could motivate U.S. citizens who would like to be an organ donor to make their intent known:

• Opt-out: Citizens are presumed to consent to organ donation unless they opt-out.  This approach, also called presumed consent, is used in some European countries and can result in significantly higher donation rates.
• Mandated Approach: Used in Illinois, individuals renewing their driver's license are required to answer yes or no when asked if they want to be an organ donor.  The sign-up rate in Illinois is 60%, higher than the national average of 38%.

As previously noted, Steve Jobs, following his liver transplant, expressed hope that all can be generous organ donors.  Richard Thaler, in his article Opting in vs. opting out, NY Times, Sept. 26, 2009, responded to Jobs' public statement:

Here is a challenge to Mr. Jobs: Why not create a Web site — and a free app for the iPhone — that lets people sign up as organ donors in their home states?

How an Illinois estate planner can survive changing times

In Winning at Darwin’s Game, 97 Ill. B.J. 420 (2009), Katarinna McBride (Beerman Swerdlove, LLLP, Chicago, Illinois) explains how changes in federal law, plus the Illinois estate tax which is decoupled from the federal tax schedule and the new Illinois virtual representation statute “present survivor-style challenges and opportunities to estate planners.”

Here is the conclusion to her article:

Estate planning practitioners have developed new armor against economic hazards and shrinking sources of business. In addition to successfully focusing on local law, they have adapted and are focusing on marketing the other valuable aspects of estate planning, including asset management, disability planning, dispute avoidance for estates and trusts, discord avoidance in business arrangements, and alternate asset protection methodologies.

It seems that estate-planning practitioners have survived the most unfavorable variations to their environment. They are winning at Darwin's game.

Suicide Kit Is a Controversial Purchase

Dr. Phillip Nitschke, founder and director of a pro-euthanasia group, teaches individuals how to die peacefully and at their own will with the aid of a suicide drug-testing kit (pictured). The kit contains the drug Nembutal, which is used by vets in Britain to euthanize animals. 

See Farah Masters, Graying Britain looks to assisted suicide reform, Reuters, Sept. 21, 2009.

Woman Who Owns Bulk of Marilyn Monroe's Estate Barely Knew Her

When Marilyn Monroe died, she was single and childless, but she did have a will.

• Monroe signed a will one year before her death.
• She left $100,000 in trust to care for her mother, who was institutionalized for mental illness the majority of her life.
• Monroe left half of her estate to her acting coach, Lee Strasburg.
• Lee Strasburg remarried after Monroe's death, and after his death, his estate and Monroe's estate passed to his widow, Anna.
• Anna, who was 40 years younger than Lee and may have met Monroe once, currently holds the bulk of Monroe's estate.
• Monroe's estate is ranked as the 8th highest income producing estates according to Forbes.

See Kristen Marks, What's Happened to Marilyn Monroe's Estate?, Sept. 24, 2009.

Use of Trusts In Medicaid and non-Medicaid Asset Protection

Bradley E.S. Fogle (professor of law, St. Louis University), Jr. has published his article entitled Scylla and Charybdis Attack: Using Trusts for Medicaid Planning and Non-Medicaid Asset Protection, 35 Am. C. of Trust & Estate Counsel 45 (Summer 2009).  The editor's synopsis of the article is below:

Trusts are frequently an important part of both Medicaid planning and non-Medicaid asset protection.  Despite the superficial similarities between the two areas, there are important differences.  The 2006 changes to the Medicaid qualification rules have exacerbated these differences.  For this reason, the careful planner should be familiar with both Medicaid planning and non-Medicaid asset-protection rules.

Vermont Adopts Uniform Trust Code

New law in Vermont adopts the Uniform Trust Code.  2009 Vt. Laws No. 20.  The state legislature's website provides a detailed summary of the act, including the following excerpt:

This act modernizes and codifies the laws governing testamentary and inter vivos trusts. The act adopts the Uniform Trust Code in large measure, drawing from common law sources as well as existing statutory law, but has been modified in part to reflect current Vermont legal principles. The act provides a set of basic default rules that govern voluntary trusts. However, because the act is a set of default rules, the terms of a trust instrument will govern even if the terms are inconsistent with the act.

Vermont Legislature, Summary of the 2009 Acts: Act 20.

Washington Expands Slayer Statute

New legislation in Washington state expands the slayer statute to include someone who participates, either as a principal or an accessory before the fact, in the willful and unlawful financial exploitation of a vulnerable adult.  2009 Wash. Legis. Serv. Ch. 525 (West).

The Creighton University Law Review announces the third annual multidisciplinary symposium on Friday, April 16, 2010, at Creighton University School of Law in Omaha, Nebraska. The Law Review is soliciting papers to be presented at the symposium, which will explore the theme of moral, religious, and ethical perspectives in estate planning, including issues affecting wills, trusts, estates, and taxation. Authors from legal or social science perspectives are invited to submit papers for discussion at the symposium.

Interested authors must submit their papers to the Law Review by December 15, 2009. All papers should be accompanied by an abstract of 250 words or less. Authors of selected papers will be notified by January 15, 2010, and they will be invited to present their work at the symposium on Friday, April 16, 2010. Travel expenses up to $500 and all lodging expenses for presenters will be reimbursed by the Law Review.

Qualifying papers will be published in the third issue of the Creighton Law Review, which is devoted to the symposium.

Papers should be submitted, preferably in electronic form, to:
Patrice Ott
Senior Lead Articles Editor
Creighton University Law Review
Creighton University School of Law
2500 California Plaza
Omaha, NE 68178
patriceott@creighton.edu

Papers may also be submitted through the Express-O service.

Analysis of UPC Provisions Concerning Assisted Reproduction: Class Gifts and Intestacy

Sheldon F. Kurtz (professor of law, University of Iowa) and Lawrence W. Waggoner (professor of law, University of Michigan) have published their article entitled The UPC Addresses the Class-Gift and Intestacy Rights of Children of Assisted Reproduction Technologies, 35 Am. C of Trust and Estate Counsel J. 30 (Summer 2009). The editor's synopsis of the article is below:

Recent years' advances in assisted reproduction technology have enabled the conception of children in ways in addition to the traditional way.  The Uniform Probate Code was amended last year to address the status of children born from assisted reproductive technologies for intestacy and class-gift purposes.  This article discusses the relevant UPC provisions and offers several hypothetical cases to show how they operate.  The article concludes expressing the hope that states will consider the new UPC approach.

Top SSRN Downloads

Here are the top downloads from July 28, 2009 to September 26, 2009 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank	Downloads	Paper Title
1	236	Protecting Trust Assets from the Federal Tax Lien Bryan Camp, Texas Tech University - School of Law, Date posted to database: June 24, 2009 Last Revised: August 3, 2009
2	122	Jorgensen: A Familiar FLP Story Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: July 6, 2009 Last Revised: July 6, 2009
3	87	Global Trends and Constraints on Tax Policy in the Least Developed Countries Allison Christians, University of Wisconsin Law School, Date posted to database: August 11, 2009 Last Revised: September 11, 2009
4	86	Estate Planning Implications of the Right of Publicity Paul L. Caron, University of Cincinnati - College of Law, Date posted to database: July 1, 2009 Last Revised: September 9, 2009
5	58	The Effects of Donor Standing on Philanthropy: Insights from the Psychology of Gift-Giving Reid K. Weisbord, Peter DeScioli, Government of the United States of America - United States Court of Appeals for the Third Circuit, Chapman University Economic Science Institute, Date posted to database: July 16, 2009 Last Revised: August 13, 2009
6	47	2009 Texas Legislative Update: Intestacy, Wills, Trusts, and Related Matters Gerry W. Beyer, Texas Tech University School of Law, Date posted to database: July 23, 2009 Last Revised: July 23, 2009
7	29	Sticky Copyrights: Discriminatory Tax Restraints on the Transfer of Intellectual Property Bridget J. Crawford, Mitchell Gans, Pace University School of Law, Hofstra University - School of Law, Date posted to database: August 25, 2009 Last Revised: September 21, 2009
8	18	Outliving Civil Rights Nina A. Kohn, Syracuse University - College of Law, Date posted to database: August 8, 2009 Last Revised: August 11, 2009
9	15	Body, Body, Who Gets the Body? The Resolution of Bodily Remains Cases James T.R. Jones, University of Louisville - Louis D. Brandeis School of Law, Date posted to database: June 13, 2009 Last Revised: September 17, 2009
10	11	Ethical Challenges in Representing Families in Family Limited Partnerships Mary F. Radford, Georgia State University - College of Law, Date posted to database: August 24, 2009 Last Revised: August 24, 2009

The Ethics of Representing Families When Creating Family Entities

Mary F. Radford (Professor of Law, Georgia State University College of Law) has published her article entitled Ethical Challenges in Representing Families in Family Limited Partnerships,  35 Am. C. of Trust & Estate Counsel J. 2 (Summer 2009).  The editor's synopsis of the article is below:

This article discusses the complicated lawyer-client representation issues raised when a family entity (such as a limited partnership or LLC) is created.  The article also addressed the issue, and material risks, associated with the multiple representation of the entity, the general partner(s) and the limited partner(s)-including when such multiple representation might not be expected or intended (at least by the lawyer).  Depending on state law, and the entity involved, some attorneys may be surprised to learn that the creation of the entity might force them in the future to withdraw from representing everyone in the family.

Vermont Adopts Uniform Prudent Management of Institutional Funds Act

Vermont has enacted the Uniform Prudent Management of Institutional Funds Act.  2009 Vt. Laws No. 9.  A excerpt from a summary of the new law provided by the state's legislature is posted below:

This act adopts the Uniform Prudent Management of Institutional Funds Act (UPMIFA), which was drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) over a period of four years and was ultimately recommended for enactment by state legislatures in 2006. UPMIFA is designed to replace the existing Uniform Management of Institutional Funds Act (UMIFA), approved by NCCUSL in 1972.

Both investment in assets and expenditure for charitable purposes have grown exponentially in the 35 years since UMIFA was drafted; asset management theory and practice have also advanced. UPMIFA, as an update and successor to UMIFA, establishes a more unified basis for charitable fund management than UMIFA. To date, 30 states have adopted UPMIFA, and 16 more have introduced the act in 2009.

Vermont Legislature, Summary of the 2009 Acts: Act No. 9.

Illinois Enacts Convenience Account Act

The state of Illinois has enacted the Banking Convenience Account for Depositors Act.  The relatively short provision becomes effective on January 1, 2010.  Among other things, the act provides for the creation of convenience accounts and lays out certain liabilities of banking institutions with regard to convenience accounts.  Banking Convenience Account for Depositors Act, Pub. L. No. 096-0123.

Special thanks to Jeffrey Gottlieb (attorney, Illinois) for bringing this statute to my attention.