Wills, Trusts & Estates Prof Blog

A Direction in a Trust to Pay the Settlor’s “legal debts” Does Not Include Debts Secured by Real or Personal Property

In a case of first impression, the Minnesota Supreme Court held that a direction in a trust agreement to pay the settlor’s “legal debts” on her death has the same meaning it has in a will.  Accordingly, the clause does not require the payment of debts secured by the settlor’s real or personal property.  In re Pamela Andreas Stisser Grantor Trust, 818 N.W.2d 495 (Minn. 2012).

 

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

Estate Planning For Those Living In Two States

If you spend part of the year in one state and part of the year in another, for estate planning purposes, it is important to designate which state is your legal residence.  The laws of your legal residence will dictate your estate planning, so choose the state in which it is more advantageous to die.  Some states have estate tax laws in addition to the federal estate tax law, so that is one thing you should check on.

If you own property in both states, your heirs may have to go through the probate process in more than one state.  One way to make the property transfer easier is to set up a trust that owns the real estate. It is also helpful to execute a Durable Power of Attorney and an Advance Medical Directive in each state that you live in. 

See How to Protect Your Estate While Living In Two States, CBS Boston, Oct. 19, 2012.  

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

Investor Pays Call Girls With Illegally Obtained Funds

Geoffrey H. Lunn created and operated an investment scheme with two other people: "Darlene Bishop of Odessa, Texas, and Vincent G. Curry of Las Vegas." Together the three operated an investment scheme worth $5.77 million. To make the scheme believable, Lunn created a false subsidiary of a real investment bank, Dresdner Bank. Lunn stated that he operated the company, known as Dresdner Financial, as the vice president and that he planned to acquire and purchase other banks. The three persons claimed that their program could easily turn a profit. In fact, the three claimed that they "could turn an investment of $44,000 into $2 million within 12 banking days." 

Unfortunately for their investors, the company was not real nor was their investment scheme. In fact, Lunn paid three call girls in Las Vegas at grand total of $848,500 using the investors money. Lunn claimed that he acted righteously, and that he gave the money to the call girls "so that they could have 'a better type of life.'" Lunn also used the investor's money to give another deserving person $1.3 million and his cohorts $650,000. The SEC, which has brought a lawsuit against the three, is seeking disgorgement, fines, and injunctions.

See Investors' $850,000 Goes to Call Girls, Courthouse News Service, Oct. 19, 2012.

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

Is the Supreme Court More Likely to Take the Windsor Case?

As I have previously discussed, a couple of days ago the Second Circuit Court of Appeals ruled that the provision in DOMA that defines marriage as being between a man and a woman violates the equal protection clause of 14th Amendment. I have also discussed that the Supreme Court of the United States will likely take and decide one of the many same-sex marriage cases that exist at the moment. Following the Second Circuit's ruling, some believe that the Court will most likely take the Windsor v. United States case as opposed to the other cases. Although it is certainly not out of the question that the Court might want to consider all of the same-sex marriage cases.

There are several reasons why the Court might be more likely to take the Windsor case. At this moment, there is a split between the circuit courts on a major issue of federal law. In this case, it is the Defense of Marriage Act. As in other cases, some believe that the key to having the Supreme Court affirm the ruling in Windsor will likely come from Justice Anthony Kennedy. In the past, Justice Kennedy has provided the necessary support to case that have held laws that were discriminatory against homosexuals to be unconstitutional. 

See John Schwartz, U.S. Marriage Act Is Unfair to Gays, Court Panel Says, New York Times, Oct. 18, 2012; see also Joe Palazzolo, Second Circuit's DOMA Decision: A Road Map for SCOTUS?, Wall Street Journal, Oct. 21, 2012.

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

Use Caution When Freezing Eggs

One can freeze human eggs to treat infertility, but the American Society for Reproductive Medicine recently urged caution for women hoping to pause a ticking biological clock.  The Society cited studies that found younger women are as likely to get pregnant if they use frozen eggs for their infertility treatment as if they used fresh ones. 

The pricey technology is not covered by insurance for elective reasons, but it is being marketed aggressively for women who are not ready for motherhood at this point, but want their frozen eggs as insurance for later. So, should otherwise healthy women freeze their eggs in case they are not ready for motherhood until their late 30s or later, when childbearing windows are closing?

The Society makes it clear that there is no guarantee on this procedure.  Eggs are more difficult to freeze than sperm because eggs contain a lot of water. It is not clear who is a good candidate for the procedure and if women who are storing their eggs are getting a false sense of security.  Anyone who considers egg freezing should seek counseling about their specific circumstances. 

See Freezing Eggs For Fertility Works, Caution Urged, The Examiner, Oct. 19, 2012. 

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

The Psychological Side of Planning for Special Needs Children

While estate planning for special needs children tends to be more complicated in several aspects, one of the most difficult aspects of the financial decisions is the psychological side.  The psychological aspects come up when addressing where a special needs child should live or how to avoid broken relationships while planning for  a special needs child's affairs.  

Some parents are inclined to keep their children in a bubble, but this may not be the best thing for one's special needs child.  Managing tough decisions like this can wear on a couple.  The New York Times reports that some couples turn to religion to stick together. 

See Ron Lieber, The Psychic Toll Paid In a Special Needs House, The New York Times, Oct. 12, 2012. 

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

Overweight positions do not violate the trustee’s duty to diversify

In a complex opinion, the New York intermediate appellate court held that overweight positions in a diversified group of securities does not in and of itself violate the diversification requirement of the Prudent Investor Act.  The court also held that it was imprudent to retain a security, even though it was inception property, after it ceased to pay dividends because the purpose of the trust was to provide income to the current beneficiaries.  In re HSBC Bank USA, N.A., 947 N.Y.S. 2d 292 (N.Y. App. Div. 2012).

 

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

The World's Oldest Father

Mr. Ramjeet Raghav recently welcomed his second child into the world at the age of 96 on October 5th. The Times of India reported that Mr. Raghav was a bachelor for most of his life and practiced celibacy until he met his wife Davi about a decade ago. The couple decided that they wanted to try to have children and made the decision to start their family. The couple now has two sons. Mr. Raghav stated that the keys to his success was his faith in God. While the father of two believes that he is still healthly enough to have children, he has "asked [his] wife be to sterilised [sic] now." His primary reason is financial, as he does not believe that he has the finances to have more chidren and still give his sons the life that he wants for them. The man's age has not been confirmed by other news sources. His wife reportedly gave birth to a health baby boy 

See Ramjeet Raghav, 96-Year-Old Dad, Claims He Is World's Oldest New Father, The Huffington Post, Oct. 17, 2012.

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

Second Circuit Rules on Windsor Case

As I have previously discussed, the Second Circuit Court of Appeals in New York agreed to hear Edith Windsor's claim that the Defense of Marriage Act (DOMA) was unconstitutional on equal protection grounds. Now, the court has rendered its ruling and held that DOMA does violate the equal protection clause of 14th Amendment of the United States Constitution. In its ruling, the court noted that homosexuals should be entitled to heightened level of scrutiny based upon on a history of discrimination that homosexuals have suffered in this county, and because they are not in a strong enough political position to protect their interests from potential discrimination at the hands of the majoritian public. The court also highlighted the fact that DOMA is "'an unprecedented breach of longstanding deference to federalism.'" Provided here is a copy of the court opinion in Windsor v. United States.

See Terry Baynes, Appeals Court Rules Against Defense of Marriage Act, Reuters, Oct.18, 2012; Patricia Hurtado and Bob Van Voris, Marriage Law Violates Same-Sex Couple Rights, Court Says, Bloomberg, Oct. 18, 2012.

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

Arthur Beetson's Will

The Queensland Rugby Player, Arthur Beetson, drafted two different wills in 2000. The two wills were the product of "two homemade will kits,...witnesses by the same people, both name the same executor and both left his estate equally to the same six beneficiaries." So, what is the difference between the wills? Well, Mr. Beetson wrote one of the wills in Old English and the other is plain English. Put another way, all of the words "hereby" were replaced with "do" and all of the words "forthwith" were replaced with "will." Otherwise the two wills are identical. When Mr. Beetson gave the two wills to his executor, the executor believed that he had received the original and a copy of the same will. The problem for the executor soon became determining which will Mr. Beetson signed last. The judge in this case determined that the wills should be read together as one document.

See Amy Remeikis, Artie's Will Tackles Language Barrier, Brisbanetimes.com, Oct. 16, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

8th Circuit Rules that City Can Ban Funeral Protests

The full 8th Circuit reversed the decision of the court below, ruling that a Missouri city can ban funeral protests.  In 2007, the city of Manchester passed a law making it illegal for groups to protest within an hour and 300 feet of a burial or funeral service.  The law still allowed picketing along the procession route.  In 2009, the Westboro Baptist Church filed a lawsuit, claiming that the law violated its right to free speech because it was too vague.  

A federal judge ruled that the First Amendment protects peaceful funeral protests, and in October 2011, a three-judge panel of the 8th Circuit affirmed.  In a rehearing en banc, the 11-judge court unanimously reversed the federal judge's ruling, saying that Manchester's protest restrictions are limited enough in scope to avoid a First Amendment violation. 

See Joe Harris, Full 8th Circuit Tosses Fight to Protest Funerals, Courthouse News Service, Oct. 17, 2012. 

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

Washington Supreme Court Makes Ruling on Estate Tax

On Thursday, the Washington Supreme Court decided that Washington's estate tax would not apply to married couples who used a certain estate planning trust prior to 2005.  The Department of Revenue spokesman estimated that this decision would cost the state $47.6 million during the current biennium for refunds of taxes that were paid and others that would not be collected.  After the first adjustments are made, he still estimates that the decision will cost the state $5 million a year. 

See Wash. Court Ruling on Estate Tax Will Cost $50M, The News Tribune, Oct. 18, 2012. 

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

New Woman takes "Richest Woman in The World" Title

Analiede Gallardo de English has turned 25 and is now able to receive her rightful inheritance worth over $50 billion.  Assuming this fortune crowns her as the richest woman in the world.  The Gallardo family fortune was passed down the family line, travelling through Switzerland and Europe before landing in the Republic of Panama.  It is one of the largest fortunes in the world, exceeding over $50 billion in cash assets and 35 privately held major corporations.  In addition to inheriting the cash assets, Sra. Gallardo English is also now the sole owner and undisputed president of all of the privately owned corporations throughout the world.  

Over the years, many have tried to steal Sra. Gallardo English's fortune, so she has been caught up in several probate court disputes and almost killed three times.  Her cash holdings have been tied up by shady Panama banking officials and a high powered legal team is working to liberate those assets.  Once the money is free from the control of Panama bankers, it will be placed into a United States account so that Sra. Gallardo English can have full access to her account.  

When asked what she would do with her wealth, Sra. Gallardo English said she would give it to a lot of charities in Panama.  She wants to give to children and education and she is determined to make the life of all Panamanians better.  

See Panamanian-Swiss Billionairess Analiede Gallardo de English Assumes the Title "Richest Woman in The World" with Assets Exceeding $50 Billion Dollars, Yahoo!News, Oct. 15, 2012. 

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

Strict Compliance With Execution Statute Required

The probate court admitted to probate a will that was signed by the testator and a notary public, relying on a statute which states that in the context of an abbreviated probate proceeding, due execution is presumed and the will may be admitted upon the “verified statement” of anyone with personal knowledge reciting facts showing due execution.  Affidavits were presented by persons who witnessed the decedent sign the will or heard her state that she had “finalized” her will. The D.C. Court of Appeals reversed, holding that the abbreviated procedure was not a substitute for due execution which requires that two witnesses sign the will in the presence of the testator.  In re Estate of Henneghan, 45 A.3d 684 (D.C. Cir. 2012).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

CLE on Wills, Estates, and Probate

The Real Estate, Probate, and Trust Law Section of the State Bar of Texas will co-sponsor a 6.75 hour CLE with an 3.5 hr ethics credit on January 25, 2013 entitled, 14th Annual Buiding Blocks of Wills, Estates and Probate Course. Provided below is a description of the event:

This basic course is a perfect introduction for those just starting out, as well as a great refresher for more experienced attorneys. This year's highlights include the following in-depth panel discussions:

• Basic Estate Planning 
• Elder Law Planning and Issue Spotting 
• Starting an Estate and Trusts Law Office
• Probate Procedures and Alternatives 
• Administration and Settlement of Estates

Sharia Law and English Wills

Recently, it appears that solicitors in England have received invitations to attend seminars to train them how to write wills based upon Shari'a law. Most conservative groups have no problems with this because it will give more people the opportunity to freely determine how they want to get their affairs in order.

However, not all groups within England are in agreement. These groups believe that the introduction of Sharia law will make it so that the law will not apply equally to all citizens. For example, even though the Qur'an permits women to inherit, it is possible that some households might prohibit muslim women from inheriting from their male family members or drafting their own wills. According to Archbishop Cranmer, "[t]here are manifest gender and generational differences in Shari'a inheritance which are antithetical to human rights and equality."

Now, Great Britain and its government are at crossroads. Some recognize that the introduction of Shari'a law into Great Britain is inevitable and is currently happening. The Prime Minister of Great Britain is opposed to the use of Shari'a law, especially because many Muslim women oppose it and it is "antithetical to many notions of British values."

See Archbishop Cranmer, Lawyers Retrained for Sharia-compliant Wills, Blogspot: Cranmer, Oct. 16, 2012.

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

Couple Files for Bankruptcy After Winning Popcorn Lung Case

Eric and Cassandra Peoples, a couple from Carthage, Illinois claimed that the butter flavoring used in popcorn and other artifical snack foods caused Mr. Peoples' bronchiolitis obliterans, more commonly known as "popcorn lung." The disease is caused by the toxic gas that diacetyl, an ingredient in the artifical butter flavor, produces when heated. Constant and regular exposure to the toxic gas "can cause lung problems such as shortness of breath and wheezing." In the awarding the large sum of money to the couple, the jury took note of the medical testimony that was offered in the trial. The doctors who testified on behalf of the Peoples noted that Mr. Peoples would likely need a double-lung transplant at some point in his life.

Now the couple has filed for Chapter 7 Bankruptcy, less than a decade after receiving a $20 million verdict. In particular, the jury awarded such a large sum money to offset the expensive costs of that surgery that Mr. Peoples would likely need. Now the money is gone. The couple apparently owes more than $600,000 in debt, the majority of which belongs to their mortgage.

See Popcorn Lung Couple, Eric And Cassandra Peoples, Files For Bankruptcy, Huffington Post, Oct. 16, 2012.

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

Celebrity Estate Planning Mistakes

As I have previously discussed, celebrities tend to make as many estate planning mistakes as non-celebrities. Here are some more celebrity estate planning mistakes:

• Sonny Bono: He failed to write a will before he died unexpectedly. He also fathered an child out of wedlock, who sought part of his father's estate. His ex-wife managed to also stake a claim to part of Bono's estate. If there is lesson here to learn, a person might want to consider writing a will because a person can never know when they will die even if that person is young.
• Jimi Hendrix: This lesson could also be learned from the death of Jimi Hendrix, who died without a will also. Because he lacked a will, his father and his adopted daughter received his entire estate through the intestacy laws instead of his brother who was close to Hendrix. 
• Stieg Larsson: The lesson above could be more disastrous when the testator has a significant other that is not relative because they are not married. This happened to the writer of The Girl With the Dragon Tattoo, Stieg Larsson. Larsson passed away without writing a will, which prevented his girlfriend of 32 years from inheriting a portion of his estate. In the end, his father and brother inherited his estate.
• Marlon Brando and Princess Diana: If a person wants to give a piece of property to someone, a person might want to consider placing his desires in writing within a will. In Marlon Brando's case, he promised Angela Borlaza that she would give her the house she lived in and continued employment in his company. Unfortunately, he never provided it in writing and so she had to settle with his estate. In Princess Diana's case, she did place it in writing, but not the proper form of writing. So, her wish to give her sons and godchildren 100,000 pounds each did not come to fruition, and her godchildren did not receive their inheritance. 
• Warren Burger: The former Chief Justice of the Supreme Court of the United States found himself with a good amount of avoidable estate tax liability because he tried to write his own will. The lesson here is that a person might want to consider having a qualified estate planning attorney write his or her will. Even attorneys, who do not specialize in estate planning, can make small mistakes that could cost a person a good amount of money.
• Florence "FloJo" Griffith Joyner: The Olympic sprinter had a will but failed to inform anyone on the whereabouts of her will. Therefore, a person might want to consider keeping his or her will in a safe place that his or her loved ones can locate following that person's death.
• Heath Ledger: The late-actor forgot to update his will following the birth of his daughter. Thus, a person might want to strongly consider updating his or her will, especially following a major life event.
• Michael Jackson: The late-singer had a pour-over will that placed of his assets within a trust, but he failed to fund it with assets. So, the lesson here to learn is that a person might want to consider funding the trust that he or she wants to create. 
• Doris Duke: The tobacco heiress left an estate worth more than $1 billion. She nominated her butler to be the executor of her estate, which proved to be a mistake because the butler's spending was questionable. The judge removed the executor, but a high court placed him in that situation. So, a person might want to be careful about who that person selects to be an executor. 
• Leona Helmsley: The billionaire heiress left a vast majority of her estate, $12 million, to her dog Trouble. Her grandchildren were upset with their grandmother and so they challenged the will on the basis that their grandmother was not competent to write a will. The lesson here is that if a person wants to write a will or a trust that outside the ordinary, then that person might want to take a mental competency test.
• Etta James: The family of this blues singer fought her spouse and son to the singer's mental competency; therefore, the person needs to understand that it is important to sign a power of attorney.

See Erik Carter, What We Can Learn From Celebrity Estate Planning Gone Wrong, Forbes, Oct. 17, 2012.

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

Woman is Cleared of Benefit Fraud After Proving She Spent Inheritance on Cats

A court recently ruled that Marlene Howes was not guilty of benefit fraud.  She was accused of concealing her inheritance from the Department for Work and Pensions so that she could continue to claim and receive pension credits for seven years.  

She argued that it never even occurred to her that she needed to declare the money.  After her mother died, she left the money in trust for her 14 Persian cats and few kittens so that they could have the best of everything.  

Mrs. Howes was able to present bank records whoing that she did indeed only spend the inheritance on the cats, so the District Judge found the defendant credible, accepting that she did not think she was being dishonest. 

See Woman Who Spent  £50,000 on Cats Cleared of Benefit Fraud, The Telegraph, Oct. 9, 2012. 

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

CLE on Planning Techniques For Large Estates

Save the date for April 17-19, 2013.   This is the weekend that the ALI will be hosting a CLE entitled Planning Techniques For Large Estates.  The CLE will be at the Montelucia Resort and Spa in Scottsdale Arizona and will be available by webcast in addition to the live course. 

Please click here to register.