Wills, Trusts & Estates Prof Blog

Appeals Court Rules Judge Erred In Granting A Discharge

A funeral director, Ralph Zentner, recently was convicted of overcharging clients on the caskets that he would give them for their loved one. He would provide them a cheap casket even though he charged them for the expensive caskets. He would also receive money to dispose of the ashes of loved ones, but would never complete his end of bargain. In the end, Zentner "pleaded guilty to one fraud charge involving 55 separate incidents." The judge in his case gave Zentner a conditional discharge, which means that following the completion of the condition there would no criminal conviction on his record at all. The condition was that he successfully complete his 18 month probation and make a $5000 charitable donation. 

An Appeals Court recently held that Judge Krinke at the lower court overstepped his bounds and blatantly refused to follow the court's precedent. The appeals court decided that Zentner should receive prison time for his actions and be made to pay a $5000 fine. The appeals court here ultimately made its decision because it determined that sentence that Judge Krinke gave Zentner was basically no punishment for the crime that he committed.

See Kevin Martin, Appeal Court Rules Judge Erred in Granting a Discharge to Bridge Funeral Home Director Who Swindled Clients, Calgary Sun, Nov. 22, 2012.

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

Hemsley Finally Laid to Rest

As I have previously discussed, a court ruled that Sherman Hemsley could finally be buried and so preparation began for his military funeral. Hemsley passed away from lung cancer this past July 24, 2012. His funeral was held on November 21, 2012 in El Paso, Texas. Friends and family gathered to remember the man, and ultimately remembered him most for the role he played on The Jeffersons, George Jefferson. For a man that spent his career making people laugh, he was remembered in the much the same manner. While the people gathered at his funeral were there to mourn, they could not help but laugh at the videos of George Jefferson. He was laid to rest at Fort Bliss National Cemetery. 

See Juan Carlos Llorca, Hemsley Remembered By Friends, Family At Funeral, MySanAntonio.com, Nov. 21, 2012.

Special thanks to Laura Galvan (attorney, San Antonio, Texas) for bringing this article to my attention.

Some Famous People Still Don't Plan for Their Estates

With as many cautionary tales that circulate about the trouble that can come from dying without a will, it is a wonder that the majority of Americans still don't have an estate plan.  Many smart and successful famous people fall into this category as well.  Below is a list of several famous people and what happened to their estates: 

Four of our country's leaders died without an estate plan--Presidents Lincoln, Johnson, Grant and Garfield. Lincoln's estate took two years to settle, even though he was even a practicing attorney before he took office. 

Sonny Bono: He left his third wife to manage claims from Cher and an alleged love child.  He did not set up a will or a trust before his untimely death in a skiing accident.  

Howard Hughes: This famous businessman, aviator, and philanthropist died intestate after a handwritten will found on a church official's desk was deemed forged.  His $2.5 billion estate was split among 22 cousins after much litigation. 

James Brown: James Brown tried to leave his $100 million to a special trust to benefit poor and need y children.  He did not discuss his wishes with his family, however, and failed to update his will while he was married to his fourth wife.  These mistakes left his money in limbo and ultimately only benefited legal teams. 

Elvis Presley: Elvis Presley actually had his estate plan in order when he died.  He not only had a will but also included a testamentary trust to provide for his family long after he passed away.  Even though many unscrupulous business partners tried to exploit his fame and fortune in attacks on the estate, his finances were handled appropriately because of tools he put in place. 

See Jim Moniz, Lessons of the Rich and Famous, WealthManagement.com, Nov. 21, 2012. 

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

People Want A Paper Copy of their Retirement Plan

While the financial services lobby has pushed Congress to "allow retirement plans to send out all legally required retirement plan documents electronically, unless the participant asks for paper," respondents of a recent survey has indicated that they prefer to receive a paper copy of the retirement plan versus an electronic copy. The survey, conducted by the Social Science Research Solutions (SSRS), determined that 75% of the people that responded to survey had a preference for a paper copy versus an online version. When it came to whether the person would be more likely to save a paper copy versus an electronic copy, 73% said they were more likely to save a paper copy and 70% said they were more likely to read that copy if it were in paper. Of those surveyed, 74% said that receiving a paper copy should be the default delivery option. 

See Rebecca Perron, Paper By Choice: People of all Ages Prefer to Receive Retirement Plan Information on Paper, Nov. 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.

CLE on Discretionary Distributions

The Illinois State Bar Association is offering a 1 MCLE Hour teleseminar entitled, Discretionary Distributions: A Practical Guide to Planning, Drafting, and Administering - A National Perspective on November 27, 2012. The keynote speaker at the event is Jeremiah W. Doyle, IV. Below is a description and highlights of the event as provided by the Illinois State Bar Association: 

One of the difficult decisions in a trust is when to make a discretionary distribution.  It is difficult for the settlor of the trust to confer that (often broad) discretion on a fiduciary.  It’s difficult for a trustee because the standards established by law or by trust documents are often vague and that vagueness leads to substantial tension with beneficiaries who want more.  It’s difficult for the planner and draftsman because the client often has an uncertain sense of what the standards for distributions should be in the first instance and client’s decision may shift over time over time.  All of these difficulties combine to make discretionary distributions a source of contention and potentially litigation and liability.  This program will provide you with a real-world guide to establishing and drafting distribution standards, and provide you tips on administration and how to avoid disputes with and among beneficiaries. 

Highlights

• Practical guide to discretionary distributions in trusts – establishing standards and making judgments for planners, draftsmen and fiduciaries
• Interpreting trust documents to discern objective, measurable standards for discretionary distributions
• Statutory and common law framework for discretionary distributions
• Understanding “HEM” – health, education and maintenance – standards and how they operate in practice
• How discretionary distributions are treated by corporate v. individual trustees
• Balancing the tension between income beneficiaries and beneficiaries with remainder interests

Wife Learns Husband Divorced Her Eight Years Before His Death

A woman from New York, Vivian Pitt Dowers, learned after the death of her husband, David Dowers, that he unilaterally filed for divorced eight years before his death. The move would ensure that his wife could not receive money from his pension or life insurance payout. Vivian had no idea that David had filed for divorce. She maintained that they lived happily together until his death. She only learned that he had filed for divorce after looking through his belongings. This is when she discovered that he filed for divorce in 2002. In the divorce papers, David filed for an "uncontested" split claiming that Vivian abandoned him over their mutual financial problems. He further claimed that she moved to Canarsie following thier split. He claimed that he had properly served her with the divorce papers at an address in Canarsie. In response to this discovery, Vivian obtained a lawyer fought the divorce. A court ruled that the divorce was fraudulent over the protests of David's children from a previous marriage. 

If the court would have ruled the divorce legal, then the children would have inherited everything from their father's estate, including his life insurance policy and pension money. 

See New York Woman Reportedly Learns Husband Divorced Her Eight Years Before His Death, FoxNews.com, Nov. 19, 2012.

Tolkien's Estate Sues Hobbit Producers

The estate of J.R.R. Tolkien has brought suit against the producers of the new feature film, The Hobbit. The film in production is based upon the book by Tolkien. To promote the movie, the producers released gambling games and online video games.

The estate brought suit and gave two basic arguments against the producers. First, the estate claimed that the producers violated the copyright licensed to them by the estate. Tolkien's estate claimed that the sale of the film rights to Warner Bros. "only included limited merchandising rights to use characters, places, objects and events referenced in The Lord of the Rings and The Hobbit." The estate asserted that the sale only included tangible property and did not include electronic or other intangible rights. They claim that those rights still belong to the estate. Second, the estate contended that the use of the license to promote gambling and other online games has caused "irreparable harm" to Tolkien's "'reputation and the valuable goodwill generated by his works.'" The estate is seeking $80 Million in compensatory damages and an injunction against Warner Bros.

See Alison Flood, Tolkien Estate Sues Hobbit Producers Over Video and Gambling Games, The Guardian, Nov. 20, 2012.

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

Texas Attorney Receives Probation For Misappropriation of Her Family's Estates

Michelle Valicek, a recently disbarred San Antonio attorney, received probation after she pleaded no contest to a charge that she had misappropriated funds from several of her family member's estates. The prosecutor on the case, Joanne Woodruff, reported that Valicek had stolen money from the estates and used it to purchase "an expensive house, a car and piano for herself." As a result of the case, Valicek voluntarily relinquished her license to practice law. She ultimately admitted that she made some mistakes in managing her grandmother's and her grandmother's nephew's estate. 

The judge probably agreed with Valicek and sentenced her to 10 years of probation. The judge could have sentenced her to ten years in prison. Now that the case is over, there are still a lot of questions that need to be asked. The primary one is where did half a million dollars that is gone from the estate go? There were also a number of questionable deals made by Valicek. For example, a neighbor of one relative noted that Valicek sold a relative's house for much less than what it was worth. If Valicek seeks to have her license restored she will need to wait five years after her probation is complete. At that time she will be 69 years old.

See Brian Mylar, Disgraced SA Lawyer Given Probation in Estate Case, KSAT.com, Nov. 20, 2012.

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

Happy Thanksgiving

Happy Thanksgiving!!

Survey Says: Americans Not Giving As Charitably

World Vision conducted their 5th annual survey on annual giving, and survey says that Americans are less likely to give a charitable gift around thanksgiving and christmas than they were last year.  

World Vision is a Washington based Christian Relief and developed organization that polled 1,012 U.S.adults and 1,000 Canadians over the age of 18.  The survey also showed that about 59% of respondents will spend less money on holiday presents as a result of the current economic climate. 

See Warren S. Hersch, World Vision Survey: Americans are Less Charitable This Year, LifeHealthPro, Nov. 20, 2012.

Report on Joint Tenancy

British Columbia Law Institute recently published a Report on Joint Tenancy, BCLI Rep. no. 66.  The abstract available on SSRN is below: 

Some of the common-law rules governing joint tenancy are not in keeping with present-day circumstances. This report makes numerous recommendations for the reform of the law of joint tenancy to remove some of its more anachronistic features and allow this very popular way of holding land to better serve contemporary society. In particular, it addresses the mechanics of severance of joint tenancy and the rigidity of rules that make it impossible for joint tenants to hold unequal shares in proportion to their financial contributions to the acquisition of jointly owned property, or to add or substitute joint tenants.

Man Dies From Chiefs' Disappointing Season

A Missouri man's obituary read, "Loren G. "Sam" Lickteig passed away on November 14, 2012 of complications from MS and heartbreaking disappointment caused by the Kansas City Chiefs football team." To his family, Lickteig was a die hard Chiefs football fan and a jokester about the teams disappointing season. So, his daughters thought that it would be a fitting to make sure their father had the last laugh about the team's recent failures. Now, the news of this man's obituary has spread across the nation. Check out the video provided by CNN here.

See Man's Obit Blames Death on Football Team, WIBW.com, Nov. 19, 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.

Estate Planning Lessons Learned, Part 3

Mike Ditka, Head Coach of the Super Bowl XX Champion Chicago Bears, recently suffered from a stroke in November of 2012. While Ditka is thankfully expected to recovery from this ordeal, we can still take a lessons from his illness. 

The most obvious lesson that this incident reminds us about is that estate planning is not only used to determine what happens to our property after we die. Many people are under the delusion that the only document that they need is a will. However, that is not case. It is important to remember that a person should also plan for incapacity. A will alone does not provide for incapacity. In the absence of instruction, a probate court will likely "appoint a conservator or guardian to make financial and health decisions for" him or her. Now, a person can avoid the extra costs and paperwork with the courts by creating a durable power of attorney, which allows them to appoint someone to step-in and make decisions when that person is no longer able to. This type of incapacity could occur when a person has a stroke like Mike Ditka had. Thus, it is important to get ones affairs in order here so that there can be someone to take care that person's affairs should they become incapacitated.

See Evan Guthrie Law Firm, Estate Planning: Lessons Learned From Mike Ditka, JD Supra, Nov. 20, 2012.

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

Unjust Disposition

On an interesting note, testators have the right to write a will that creates what some may consider to be an unjust disposition. Past courts have stated that if a testator "has the capacity to make a will, he many make it as unjust as revenge can dictate."

See Heirs of Goza v. Estate of Potts, 374 S.W.3d 132 (Ark. Ct. App. 2012), Westlaw Headnote of the Day, Nov. 20, 2012.

Special thanks to Darlene Murphy (Texas Tech University School of Law, J.D. Candidate 2013) for bringing this article to my attention. 

Judge Perrin Guilty

As I have previously discussed, Judge Heather Perrin was accused a defrauding a former client by drafting a will that left a portion of his estate to her daughters instead of his nieces. The jury deliberated for less than four hours and returned a guilty verdict. Following the guilty verdict, the judge ordered Judge Perrin to relinquish her passport, and she "was remanded on continuing bail until November 28 for sentencing." Reports from the courthouse stated that Judge Perrin was visibly upset and shocked when the jury verdict was read aloud. She could possibly receive a maximum of five years in prison. According to BreakingNews, Perrin is the first judge in Ireland's history to be convicted of a crime as serious as the one that Judge Perrin committed. At the moment, she is still a presiding judge. In Ireland, judges can only be removed by a decision of the Olreachtas.

See District Court Judge Shocked By Guilty Verdict In Deception Case, BreakingNews.ie, Nov. 20, 2012.

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

Article on Testamentary Formality

Mark Glover (Professor of Law, LSU Law Center) recently published his article entitled The Therapeutic Function of Testamentary Formality, 61 Univ. of Kansas L. Rev. 139 (2012).  The abstract from the article available on SSRN is available below: 

Therapeutic jurisprudence is concerned with the psychological consequences of the law. This article uses this burgeoning field to analyze one aspect of the estate planning process, namely the formalities of will-execution. The article first identifies the positive and negative psychological consequences of the formalities that require valid wills to be written, signed, and witnessed. Although the analysis suggests that, when coupled with a rule of strict compliance, these formalities can negatively affect the testator’s psychological wellbeing, the article ultimately concludes that testamentary formality serves an overall therapeutic function. The article then examines various reforms of the law of wills, such as the proposals to reduce the formality of will-execution and to relax the law’s insistence on strict literal compliance, to determine whether these proposals bolster or diminish testamentary formality’s therapeutic function. The article argues that these proposals have important therapeutic ramifications, which policymakers should consider when evaluating whether to implement reform.

Kansas City Lawyer Accused of Felony Forgery and First Degree Murder

Susan Elizabeth Van Note is a Kansas City lawyer accused of forging a durable power of attorney and killing her millionaire father.  A Clay County probate judge has removed her as the personal representative of her father's estate.  She has pleaded not guilty to felony forgery and first-degree murder in Boone County, and she is currently free on a $1 million cash bond.  

Her father, William Van Note, died in October 2010 when doctors removed him from life support after an intruder shot him and his long-time girlfriend, Sharon Dickson.  Four days after the shooting incident, Susan presented Doctors with a durable power of attorney that gave them the permission they needed to remove William from life support.  Now she is being charged with forging that power of attorney.

Three days after Susan was chaged with killing her father, Andrew Dickson, Sharon's son, Andrew Dickson, asked the probate court to remove Van Note as the estate's executor. At that point the judge suspended her from the role, and scheduled the hearing that has now confirmed she is no longer the personal representative of her father's estate.

William's estate is worth at least several million dollars. He was preparing to marry Dickson after two decades together.  Provided she outlived him, she was his first choice as personal representative and his principal beneficiary.

Prosecutors have yet to announce a motive in William's killing, but The San Francisco Chronicle seems to suggest that it could be related to Susan's financial troubles.  In September 2009, Susan filed for bankruptcy in federal court and her mother has also had legal troubles.

See Alan Scher Zagier, KC Lawyer Charged in Dad's Death Loses Will Fight, SFGate, Nov. 20, 2012.  

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

Caramadre and His Employee Plead Guilty

As I have previously discussed, philanthropist and lawyer Joseph Caramadre and his employee Raymour Radharkrishnan were indicted on a great number of counts for using fraudulently obtained information from terminally ill clients to make profit on death benefit annuities. Now, both men have pleaded guilty to two of the counts, wire fraud and conspiracy. Both men admitted to doing exactly what they were accused of doing. They were accused of "stealing the identities of terminally ill patients, lying to them, and lying to insurance companies to make millions in profits for themselves and dozens of other investors." The sentencing phase is scheduled to begin in February. Both men could receive 10 years in federal prison. 

See Jim Taricani, Philanthropist Pleads Guilty to Cheating the Terminally Ill, NBC 10, Nov. 19, 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.

Business Partner Loses Teazars In Will Dispute

Shaun Russouw was the business partner of the late-owner of a South African gentleman's club, Lolly Jackson. He claims that the club, Teazers, was suppose to be left to him. The dispute over the ownership of the club occurred when someone discovered that Jackson left two different wills. One of the wills left most of the estate to his widow, Demi Jackson. The second will, which Russouw claims to be the correct will, left the business, property, and a green Lamborghini to him. Russouw further claimed that Lolly Jackson told him that he would receive the business and his car if anything happened to him.

A Durban High Court ruled in favor of the widow, reasoning that any deal between the two business partners was personal and not binding. Judge Pillemer also criticized Russouw for diluting facts surrounding the business relationship between the two men. Jackson died in 2010 from a gunshot wound.

See Sapa, Jackson Had Two Wills: Durban Teazers Boss, Times Live, Nov. 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.

Estate Tax Boomerang?

As I have previously discussed, many are wondering about whether Congress will act in time to prevent the Bush tax cuts from expiring. If the tax cuts expire, the lifetime estate and gift tax exemption will fall to $1 million and the estate tax rate will increase to 55%. Some experts think that this outcome is likely, but there are those who believe that while Congress will fail to act in time, they will likely pass some form of estate tax relief retroactively. As I have previously discussed, these other experts still believe that the estate tax provision that provides for portability will likely to continue through 2013.What is still at risk, however, are the gifts that were made in preparation of the estate tax exemption falling to the $1 Million mark. It is important to remember that from the estate planning perspective, it is better to pass property as a lifetime gift than allow the property to pass through the probate process. The reason for this is because it allows the wealthy to pass assets that are likely to appreciate in value. After the gift is made, any appreciation is still tax-free for the person making the gift. The problem for these people is that President Obama's financial proposals for the next year do not look like it will be too favorable to the wealthy. If a person would like to examine the Green Book, he or she can download it here.

This does not apply to the vast majority of people. These people are more likley use the  annual gift tax exemption, which is set to increase to $14,000 starting next year.

See Deborah L. Jacobs, Will The Estate Tax Boomerang As We go Over the Fiscal Cliff?, Forbes, Nov. 15, 2012.

Special thanks to Deborah L. Jacobs (Senior Editor, Forbes Media) for bringing this article to my attention.