Wills, Trusts & Estates Prof Blog

Article on Will Contests

Joyce Moore (Shareholder, Langley & Banack, Inc.) recently published her article entitled Will Contests: From Start to Finish, 44 St. Mary's L.J. 97 (2012).  Here is the introduction to the article:  

The focus of this Article is primarily on the practical problems facing attorneys and courts when evaluating and proving up a will or trust contest. The focus extends further into the special procedural and evidentiary rules applicable to these actions, the use and misuse of summary judgment proceedings in these cases, and some observations regarding developing trends and strategies in will and trust contest litigation.

Threshold evaluation questions are the first issue this Article addresses. Section II explores these requirements, such as whether a potential contestant has standing, “unnatural dispositions” of estate property, recognition of “no contest” clauses, burdens of proof allocations, and other practical problems facing potential contestants. In sum, section II of this Article raises and addresses issues related to getting into the courthouse doors for a will or trust contest.

Section III takes the next pragmatic step in addressing potential grounds for will contests. The section does so by providing an in-depth analysis of the statutory requirements for a valid will, the issue of insane delusion, the requirements of testamentary capacity, and the possibilities of undue influence. Section IV further addresses the always-pertinent question of jurisdiction. Further, this section outlines the general rules of Probate and Trust Code jurisdiction.

Following the jurisdictional questions, section V addresses venue in probate and trust matters.

Section VI provides an important pleading checklist for practitioners. The checklist can act as a guide to ensure pleading defects do not arise. Section VI also makes note of “citation” and “notice” rules while also addressing various other points of interest that are vital to successful will and trust contests.

Section VII examines special discovery tools as outlined in the Probate Code that are crucial to the preparation of either side of a will contest. These tools include the use of a demand for delivery of a will, potential waivers, and pre-death filing of wills.

The next section addresses evidentiary issues that plague practitioners in will contests. The section not only addresses these issues, but also provides efficient ways to resolve many of the complex problems.

Building off section VIII, section IX focuses on pre-trial evidence rules, evaluating motions in limine and pre-trial conference orders, and the benefits of these proceedings for will contestants.

Section X addresses summary judgment rulings. The section lays out how to keep the summary judgment in perspective, the varying types of summary judgments, and effective responses to opposing parties' summary judgment motions.

Section XI touches on proponent's counter-attacks to will contests; some of these counter-attacks include utilization of the tort of tortious interference with inheritance rights, malicious prosecution, and more.

Section XII provides the practitioner with guidelines to make the most of the document execution process. While no process is perfect, these tools can potentially mean the difference between a probate litigator's dream and an estate planner's nightmare.

In summation, this Article strives to raise pertinent issues in will and trust contest litigation, provide pragmatic approaches to these issues, and thus provide guidance in handling these often-complex problems.

Elderly Man Gets a Light Sentence For Suicide Pact With Wife

In central California, a court recently sentenced George Taylor to two days in jail and probation for assisting his wife to commit suicide. Long ago, 86-year-old firefighter George Taylor and his wife had agreed to a suicide pact, but somehow George did not end up carrying out his end of the pact.  One of the odd things about the couple's agreement is that there did not seem to be an apparent reason they wanted to carry it out when they chose to.  Neither one was suffering from a terminal illness, and they were financially secure.  Forbes speculates that the court's light sentence may indicate an underlying philosophy that elderly people do have a right to die, even if assisted by a loved one. 

See Carolyn Rosenblatt, Is It Ever Ok To Assist An Elder to Commit Suicide?, Forbes, Jan. 26, 2013.

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

2012 Excellence in Writing Awards for Probate & Property Magazine Announced

The editors of Probate & Property magazine have recently announced the winners of the magazine's 2012 Excellence in Writing Awards.

The Trust & Estate winners are as follows:

• Best Practical Use Article -- Christopher R. Hoyt, Retirement Assets to a Surviving Spouse -- Rollovers and Portability Are Your First Choice, January/February 2012.
• Best Cutting Edge Article -- Gerry W. Beyer & Naomi Cahn, When You Pass on, Don't Leave the Passwords Behind: Planning for Digital Assets, January/February 2012.
• Best Overall Article -- Tiffany B. Carmona and Tye J. Klooster, Wandry v. Commissioner: The "Secret Sauce" Estate Planners Have Been Waiting For?, November/December 2012.

Special Needs, Elder Law, Wills, Trusts, Estates & Tax Blog

Readers of this blog may enjoy examining the excellent materials on the Special Needs, Elder Law, Wills, Trusts, Estates, & Tax Blog prepared by Lawrence Friedman of FriedmanLaw in Bridgewater, New Jersey.

In a recent post, Mr. Friedman discusses contracts with care facilities.  Here is the opening paragraph of his post:

While it always is dangerous to sign any contract without first consulting a lawyer, it is especially risky to sign papers provided by a nursing home, assisted living facility, or other care center upon a loved one’s admission.  First, you likely will be under substantial stress and not in a frame of mind to give the contract the deliberate attention needed.  Second, care facility contracts typically contain jargon foreign to lay persons.   I can almost guaranty that you’d be surprised to learn all the obligations you undertake when signing as ”responsible party” for a nursing home or assisted living resident.

More on Betty May Harris Case

As I have previously discussed, Betty May Harris bequeathed her large fortune to her next door neighbor instead of her niece because she believed that her family was only trying to obtain her wealth and place her in a home. I also discussed that a judge determined that Harris' most recent will was valid. Harris was compelled to change her will when her niece, Coralie Hart, ransacked her home to locate Harris' will. Hart took the will and a number of other financial documents without Harris' knowledge. Mrs. Hart also sought to become her guardian and to appoint her son-in-law, Mr. Swindells, to be the "financial manager to the person and estate of Mrs. Harris." When Mrs. Harris heard of her niece's actions, she was shocked and became concerned about her niece's intention. She wrote a new will, revoking the will that bequeathed her estate to Hart. The will left her estate to her friend, Mrs. Gray. Mr. Gray helped his Mrs. Harris write a new will and obtained the assistance of two neurologists to help determine whether Mrs. Harris had the testamentary capacity she needed to write a will.

Needless to say that did not stop Hart from challenging the will, claiming that her aunt did not have the testamentary capacity to revoke her first will and write a new one. In addition, Hart claimed that her aunt was having delusions that her family was out to get her and her money. The court disagreed and held that to have a delusion, it must be "a fixed and incorrigible false belief which [the testatrix] could not be reasoned out of." In other words, the belief must be unreasonable. The court determined that Hart's conduct made Harris' beliefs appear reasonable under the law. 

See Bernadette Carey, Australia: Valid Suspicions or Obvious Delusions? An Important Distinction For The Purposes of Assessing Testamentary Capacity, cbp Lawyers, Jan. 14, 2013.

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

February 13: First Paralegal eLearning Session on Trust Funding

On February 13, The ABA Section of Real Property, Trust and Estate Law and the ABA Standing Committee on Paralegals is hosting a 60-minute session on trust funding.  This session is part of the eLearning paralegal program I have previously discussed.  Paralegals, legal support staff, young lawyers, legal educators, and students are all encouraged to attend.

Please click here for more information or to register. 

Powerball Winners Have A Big Heart

Last year, Powerball winners Mark and Cindy Hill pledged to use their portion of the winnings for a good cause.  Instead of keeping all of the proceeds for themselves, they will improve Mark's hometown, Camden Point.  Specifically, they plan to move the downtown firehouse to the site of the town's baseball field.  They will then relocate the baseball field further away from the highway to protect the kids. 

See Mark and Cindy Hill, Powerball Winners, Use Jackpot to Help Town of Camden Point, Huffingtonpost.com, Jan. 24, 2013. 

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

Family Still Fighting Over Sir Peter Ustinov's Estate

Sir Peter Ustinov was a double-Oscar winning actor who passed away in 2004 at 82.  He starred in movies such as Spartacus, Death on the Nile and Logan's Run.  Sir Peter was married three times and had four children.  At the time of his death, it was estimated that he was worth tens of millions.  Since his last will was written 36 years before his death, judges ruled that he died intestate.

The battle over his estate is still going as Igor Cloutier von Ustinov, his son with his second wife, brough proceedings in a bid to freeze out his stepmother. Igor is trying to prove that since his father set up trusts, his estate should be handed to his offspring in spite of the court's ruling that revoked the will. 

Sir Peter's son in law, Malcolm Rennie, says he doubts there is much left to fight for since Ustinov was successful at such a high level and everybody wanted a piece of him.  Malcolm speculates that the bulk of the estate has gone to the lawyers.

The battle over the estate has been going on for over five years, since the judges ruled that his last-written will was invalidated when he married Lady Helene.  This judgment opened the door for her to claim a share of his estate.  Igor is now claiming that the trusts his father set up reserve a sizable slice of Sir Peter's assets for his children. Sir Peter's other three children have all been involved in the legal battle as well.

See Sir Peter Ustinov's Estate May be Lost on Legal Fees in Bitter Family Feud, The Telegraph, Jan. 24, 2013. 

Guardianship Changes May Be Working In Nebraska

Chief Justice Michael Heavican, the top judge in Nebraska, stated that the recent changes in the oversight of guardians and conservators in Nebraska "has exposed cases of theft and misuse of funds" and provided more protection for those under conservators. Even with this success, some guardians have decried that new requirements are too strict for spouses who are guardians. 

See Martha Stoddard, Nebraska Chief Justice: Guardianship, Juvenile Probation Initiatives Show Success, Ohama.com, Jan. 18, 2013.

Elder Abuse Leads To Jail

According to Sokolove Law, "[t]he California Attorney General announced that the former director of nursing at a hospital in the Kern Valley Healthcare District was sentenced to three years in state prison for the "convenience drugging" of elderly patient including one who ended up dying." Gwen Hughes, the director of nursing, pled "no contest" to the charges against her. The state accused Hughes of ordering that 23 elderly patients be placed on psychotropic medication even though they did not need the medicine. Hughes apparently gave the medicine to her patients that she thought "were noisy, prone to wandering, or were argumentative." The vast majority of these patients suffered from Alzheimer's or dementia. Hughes ordered the director of the hospital's pharmacy to give the patients the drugs even though they did not have a prescription for them. The state determined that the drugs that were given hastened at least three of the patient's deaths. All of the patients suffered at least some adverse physical reactions. 

See Elder Abuse Leads to Jail for Nursing Director, Sokolove Law, Jan. 16, 2013.

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

Gifting LLC Units

If a couple who owns a large estate, estimated at $20 million, in publicly traded securities and income-producing real estate would like to bequeath their estates to their children without incurring a large estate tax and provide some of their estate to a charity of their choice, they might want to consider establishing a LLC. Once established the couple could transfer $6 million of their publicly traded securities and income producing real estate to the LLC in exchange for LLC units. In this instance, a cautious appraiser might only value LLC at $4.2 million. The couple might want to keep the remainder of their stock as liquidity. The couple might then want to transfer most (about 99%) of their LLC units to a CLAT (Charitable Lead Annuity Trust). An advisor would probably recommend that the couple take "a 6.01% payout rate and 25-year term of the CLAT."Under these circumstances, the couple would be able to claim 100% of their transfer-tax charitable deduction.

The CLAT would provide $252,420 a year to the charity of the couple's choice. "Because of the discount to the initial value, the underlying LLC portfolio will only need to generate a 4.207% annual return to satisfy the charitable distribution." The LLC should provide enough funds to the CLAT's annuity payments. Following the end of CLAT's term, the CLAT then distributes the remaining LLC units to couple's heirs. 

See Gift of LLC Units, Charitable Planning, Jan. 19, 2013. 

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

There Is Still Time To Take 2012 Charitable IRA Rollover

As I have previously discussed, the American Taxpayer Relief Act of 2012 maintained an old tax deduction that allows individuals who are 70 and a half years or older to exclude up to $100,000 of income. For a taxpayer, there are certain requirements that one has to meet. 

• This exclusion only applies to IRA owners
• The taxpayer must directly transfer the donation from his or her IRA to a "qualified" charity as defined by Section 170(b)(1)(A). Under this option, the taxpayer is allowed to credit the amount that he or she transfers against the IRA's required minimum distribution. 
• The absolute deadline to take this exclusion is January 31, 2013. If the taxpayer makes the transfer in this month, the taxpayer can elect to treat the rollover has occurring in 2012.

See Reminder: Still Time To Make 2012 Charitable IRA Rollover, Charitable Planning, Jan. 18, 2013.

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

Asset Protection Seminars May Not Give the Best Advice

Asset protection seminars could end up being a scam. Typically, in these seminars, the presenter will stir up fear about gold-diggers filing frivolous lawsuits to get your money.  Then the presenter offers a solution that always leads to a family limited partnership or an asset protection trust in a favorable jurisdiction. 

In reality though, asset protection is better dictated by each individual's objectives and circumstances. One key concern surrounding asset protection is implementation costs.  A certain approach may provide you with a bullet-proof solution, but it could cost a large amount to implement. Insurance is one potential asset protection solution that is fairly low-cost for most of the population. 

See Todd Ganos, Beware of Asset Protection Scams, Forbes, Jan. 20, 2013. 

Fun With Estate Planning

Please click here for a fun comic related to estate planning!

Some Helpful Points on Estate Planning in 2013

Steven J. Fromm, an attorney in estate, probate, tax and business law, recently blogged about some of the more important federal estate tax law changes made at the conclusion of last year.  

• Federal estate and gift tax exemption is now permanently at $5,000,000 with annual inflation adjustments.
  • It is important to note that this is only applicable at the federal level, not at the state level.  So estate tax planning for most people will now be focused on minimizing state inheritance taxes.  

• Once assets are above the exemption threshold, the estate tax rate is 40%.  

• The exemption for lifetime gifts and transfers at death are now unified.  So if you use your exemption during your lifetime, it is not available when you die. 

• Portability is now permanent.  This allows a surviving spouse to use an exemption that a deceased spouse did not use before his or her death. 
  • Fromm stresses that portability should be looked at as a fallback position where there was no estate planning done. 
  • There are some limitations and concerns with portability that should be considered, especially in a second marriage.
  • Portability does not save the GST exemption.  Where grandchildren and future generation s are part of an estate plan, portability will not save the unused GST tax exemption of the first spouse to die.  In these cases, using a dynasty trust is the better course of action. 

• Annual donee exclusion: This is not party of the tax-law changes, but it is a traditional tool that allows for annual tax-free gifts of $14,000 in 2013.  Taxpayers can now give up to $14,000 to as many people as they want each year without using up their unified credit or paying a gift tax. 

• Capital gains on appreciated assets will now be taxed at 20% rate for taxpayers with income above certain thresholds.  Capital gains below these thresholds will still be taxed at the 15% rate. 
  • Fromm notes an important tax basis rule here: "Taxpayers who receive appreciated property by a lifetime gift take a carryover basis, while beneficiaries who receive assets at the decedent's death get a step up in basis to the date of death value of such assets received."

• Other notes: 
  • Create an estate plan that addresses your unique situation.
  • In younger families, beyond planning associated with taxes, it is important to set up a guardian for children and setting up a trust for protection of their assets and with an appropriate distribution scheme.
  • Those with second marriages may want to seek help to stay on top of special considerations that apply to them in estate planning. 
  • Special needs trusts may be appropriate for those with disabled children
  • Using an experienced estate planner is the best way to consider different strategies and make a plan that is right for you.

See Steven J. Fromm, Estate Planning 2013: Now What? A Must Read For Everyone, Philadelphia Estate and Tax Attorney Blog, Jan. 21, 2013. 

Taxpayers Erroneously Reported Billions In Non-cash Charitable Contributions

A report from the Treasury Inspector General for Tax Administration (TIGTA) revealed that the IRS has not a good job making sure that taxpayers are complying with the reporting requirements for non-cash charitable contributions. According to Accounting Today, "[a]n estimated 273,000 taxpayers claimed approximately $3.8 billion in potentially erroneous noncash charitable contributions in tax year 2010, which resulted in an estimated $1.1 billion reduction in tax." While taxpayers can deduct noncash charitable contributions, if the taxpayer incorrectly reports the assets they could be receiving tax refunds that they are not entitled to take.The IRS has accepted several recommendations from the TIGTA, which include clarifying reporting requirements and expanding the procedure that the IRS uses to examine tax returns that claim noncash contributions.

See Michael Cohn, Taxpayers Reported Billions in Potentially Erroneous Noncash Charitable Contributions, Accounting Today, Jan. 15, 2013.

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

Having Trouble Trusting Your Kids With Their Large Gifts?

As I have previously discussed, some taxpayers who took advantage of the high unified credit this past year are now regretting their decision. Some of these donors are worried that they made a mistake gifting a great amount of wealth to their children. According to the Wall Street Journal, "[w]ealth transfer to younger generations is the biggest concern among clients of U.S. Trust, Bank of America's private wealth management unit." One solution for parents is the use of a "quiet" trust. This type of trust will essentially keep the person who is set to inherit the vast sum of money in the dark about their inheritance. For example, some of these trusts are set to tell the beneficiaries of the trust's existence at a certain age. These trusts are only legal in about 13 states, but 19 other states have rules that imply that those types of trusts are permitted. During the recent rush to make gifts, the demand for quiettrusts increased. 

To some degree, these trusts are considered controversial because they interfere with a trustee's duty to report to the beneficiary of the trust. In quiet trusts, the donor specifies who the trustee will report to on all matters involving the trust. This type of trust is also controversial because many feel that it is wrong to hide gifts from the person that is receiving the gifts. Some argue that if a parent wants to keep secrets from their children, it might be a sign that there are other problems with the family that should be addressed. Even if a person decides to use a quiet trust, they probably should not keep his or her children in the dark for too long. A person should pick a reasonable age to let the beneficiary know. 

See Kelly Greene & Arden Dale, Can You Trust Your Kid With $5.25 Million?, Forbes, Jan. 18, 2013.

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

The End of an Estate Planning Era

Some estate planning attorneys believe that the passage of the American Taxpayer Relief Tax Act of 2012 (ATRA) marked the end of an era. The new law made the $5 million unified credit permanent, solving most of the uncertainty that has shadowed estate planning for the past decade. The uncertainty and the possibility of the unified credit decreasing created a lucrative business for estate planners. Many taxpayers rushed to take advantage of what many considered to be a once in a lifetime offer, and lawyers worked overtime to fill that order. Now that's over. With the unified credit set at $5.25 million (after the adjustment for inflation), almost no one has to worry about the estate tax. That means that the once lucrative business is over, and attorneys in this field will probably need to re-adjust. In addition, some attorneys are beginning to feel the backlash from clients who are concerned that they gave too much in their haste to take advantage of high unified credit. Soon, attorneys will begin the process of filing gift tax returns for the past year. With all of gifting that occurred at the end of the year, it is certain that by IRS audits of those returns will likely turn up some interesting techniques that attorneys used to pack more into the unified credit. We shall see what the future holds for our profession as we move into 2013.

See Deborah L. Jacobs, Morphing Into The New Age of Estate Planning, Forbes, Jan. 15, 2013.

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

CTE Found in Former NFL Players While They're Still Living

UCLA conducted a pilot study where they scanned the brains of five former NFL players and found images of the protein that causes football-related brain damage.  This discovery marks the first time researchers have identified signs of chronic traumatic encephalopathy (CTE) in living players, and should be a big step towards being able to diagnose this disease in living patients.  

Dozens of former players, including 34 former NFL players, have been diagnosed with CTE after death. Currently, posthumous examination of the brain is the only way to confirm the disease.  CTE is a neurodegenerative disease linked to dementia, memory loss and depression, and it is triggered by repeated head trauma.  The disease is caused by a buildup of tau, an abnormal protein that strangles brain cells as it builds up.

Funded by a $100,000 grant from the Brain Injury Research Institute, UCLA researchers used a patented brain-imaging tool to examine 59-year-old Fred McNeill (former Vickings linebacker), 64-year-old Wayne Clark (former backup quarterback), and three other unidentified players. The scan lit up for tau in all five former players and the protein was concentrated in areas controlling memory, emotions and other functions--consistent with the pattern found in CTE brains studied after death. This study could open up new areas for CTE research as well as new areas for discussion about need for mandatory testing for this disease. 

See Steve Fainaru and Mark Fainaru-Wanda, CTE Found in Living ex-NFL Players, ESPN.com, Jan. 22, 2013. 

New Dates! Estate Planning After the American Taxpayer Relief Act of 2012

Due to overwhelming demand, Estate Planning After the American Taxpayer Relief Act of 2012 will be rebroadcast two times beyond the original January 25 date. The two additional dates are: 

Monday, January 28, 2013: 2 p.m. to 3 p.m. Eastern

Tuesday, January 29, 2013: 2:30 p.m. to 3:30 p.m. Eastern

Please click on the date you choose for more information or to register.