Wednesday, August 20, 2014
New intestacy rules will go into effect in England and Wales October 1 of this year and may add additional incentive for U.S. investors with real estate properties in England or Wales to have a valid will in place. The new rules are part of the English Inheritance and Trustees’ Powers Act 2014. Under the new rules if an owner of real estate in England or Wales dies intestate the entire property will pass to a surviving spouse if there is one. If there are children as well as a spouse, then the rules do not change as much. However, the spouse will receive their share absolutely rather than as a life estate. If these outcomes are not agreeable with an investor’s intentions, then the good news is that foreign wills will be recognized as long as they are valid and executed in the individual’s country of domicile or continuous residence, or where the individual is a national.
See Richard Norridge, Mark Johnson & Gareth Thomas, Changes to Inheritance and Intestacy Rules in England and Wales May Affect Overseas Property Investors, Herbert Smith Freehills, Aug. 12 2014.
Tuesday, July 29, 2014
After the death of Truong Dinh Tran in 2012, the legal battle to distribute his $100 million wealth began and will likely continue for years. Tran left no will, and at least five women had children with Tran for a known total of 16 children. One of the women who is the mother of Tran’s children claims she was married to Tran and a court awarded her half of his estate in May, even though she filed as single on her tax returns. Now, roughly 30 heirs are battling it out over Tran’s millions.
See John Leland, Mr. Tran’s Messy Life and Legacy, The New York Times, July 24, 2014.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
Monday, July 21, 2014
When someone dies, their assets become the property of their estate. Before an estate can distribute assets to beneficiaries, each estate is obligated to pay all debts, costs, taxes and other liabilities due.
Yet who manages this? When writing wills, it is usual to appoint an executor to handle the tasks associated with an estate. Under “fiduciary duty,” executors are legally required to act with complete and transparent good faith while carrying out the deceased’s wishes.
If no will is written, a state’s probate court can appoint an administrator, who has the same powers as an executor. While there is a hierarchy of people who are asked to take on the role, nobody can be forced to be an executor or administrator unless they want to be.
When debt is passed on there are two key things to understand: (1) The debt does not die with the decedent, and must usually be paid; (2) nobody can inherit debt. If the estate does not have enough money to cover debt, lenders will write off their losses. With some rare exceptions, heirs are not liable for the deceased's debts. These exceptions include: surviving spouses in community property states, adult children of a late parent who could not pay for his or her long term care, and heirs legally responsible for managing the estate.
See Peter Andrew, What Happens to Card Debt When Someone Dies, Desert News, July 18, 2014.
Wednesday, July 2, 2014
Stewart E. Sterk (Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University) and Melanie B. Leslie (Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University) recently published an article entitled, Accidental Inheritance: Retirement Accounts and the Hidden Law of Succession, 89 N.Y.U. L. Rev. 165-237 (2014). Provided below is the authors’ abstract:
Americans currently hold more than $9 trillion in retirement savings accounts. Those accounts, together with the family home, are the principal source of wealth for most working and retired Americans. But when a retirement accountholder dies prior to exhausting retirement savings, what governs the distribution of the account? Most often, not the accountholder’s will or trust, but a one-page fill-in the-blanks beneficiary designation form that the accountholder filled out, typically without advice of counsel, when she or he opened the account.
When accountholders fill out beneficiary designation forms, they are focused on starting a new job or beginning to save for retirement, not on estate planning. Yet the accountholder’s beneficiary designations often trump express provisions in a will, trust instrument, prenuptial agreement, or divorce decree—documents prepared with inheritance in mind. Moreover, the accountholder may neglect to change the beneficiary designation to take account of changed life circumstances, causing his or her retirement assets to pass to a beneficiary he or she never would have chosen later in life. To make matters worse, although wills doctrine has developed a set of constructional rules to deal with changes of circumstance, those rules do not generally apply to beneficiary designation forms. The current legal framework often frustrates the intent of the accountholder.
This problem, which has already spawned a significant volume of litigation, will become exponentially worse over the coming decade, as more holders of substantial accounts reach the end of their life expectancy. Reform is critical. The financial intermediaries who currently draft beneficiary designation forms have little incentive to improve them because accountholders and employers are unlikely to choose providers based on the quality of their forms. Federal and state legislation is necessary to ensure that these assets are distributed consistently with accountholders’ intentions.
Thursday, June 12, 2014
James T.R. Jones (University of Louisville, Louis D. Brandeis School of Law) recently published an article entitled Intestate Inheritance and Stepparent Adoption: A Reappraisal, Real Property, Probate and Trust Law Journal, Vol. 48, 2013; University of Louisville School of Law Legal Studies Research Paper Series. Provided below is the abstract from SSRN:
Societal attitudes toward adoptions have shifted over time, and adoption statutes vary widely among U.S. jurisdictions. Unique challenges arise when drafting statutes that affect the intestate inheritance rights of adoptees. Drafters of uniform laws and state legislatures attempt to balance the goal of complete assimilation of an adoptee into an adopted family with the prevalence of remarriages and stepfamilies. This article analyzes the intestate inheritance rights of adoptees in stepparent adoptions generally, against the backdrop of Kentucky law. Noting that stepchildren deserve a well-considered examination of their intestate inheritance rights, this article offers suggestions for stepparent adoption statutes in Kentucky and nationwide.
Sunday, June 8, 2014
Ann Aldrich drafted her will on a pre-printed form making only specific bequests of realty, financial assets, and an automobile to her sister and, if her sister did not survive, to her brother. Her sister predeceased leaving Aldrich real property and cash which she deposited in an investment account. Aldrich died without ever changing her will to make a disposition of the property received from her sister. A construction proceeding took place to determine the disposition of the property not mentioned in the will. The trial court entered summary judgment for the personal representative whose position was that the will disposed of the after-acquired property. The intermediate appellate court reversed.
In Aldrich v. Basile, the Florida Supreme Court affirmed, holding that the intention of the testator as expressed in the will controls the legal effect of the gifts in the will and does not allow the court to reform the will to create a residuary clause where none exists. Accordingly, the property not covered by the will passes by intestacy.
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.
Thursday, May 22, 2014
It is both sad and complicated when a young person dies unexpectedly. Scott Wilson was only 23 when he was killed in a car crash and died without a will. His divorced parents agreed that he should be cremated but could not agree what should be done with his ashes. Wilson’s father asked that the ashes be divided equally between each parent while his mother objected to dividing his remains due to religious reasons.
In Wilson v. Wilson, the Florida Fourth District Court of Appeals decided that Wilson’s ashes were not property and could not be divided between the parents. The court based their decision on the reasoning that human ashes should be treated like a human body, which is not property, and that this was an issue to be resolved by the state’s legislature through the probate code.
See Brett Clarkson, Son’s Ashes Can’t be Divided Between Feuding Mom and Dad, Court Rules, Sun Sentinel, May 21, 2014.
Friday, May 16, 2014
Legal mistakes made during ones lifetime can create many problems at death. Provided below are three court cases, in which legal mistakes triggered unnecessary litigation after death.
- Selzer v. Dunn. “No buy-sell agreement means no sale.” In this case, two co-business owners in Texas purchased $2 million life insurance policies on each other’s lives. When one of the business owners passed, the proceeds were paid to the surviving shareholder. However, the family of the deceased wanted the surviving owner to surrender the insurance proceeds in return for stock, but the owner refused. The court held the owner was not required to purchase decedent’s stock. There was neither an oral agreement nor an implied trust.
- Aldrich v. Basile. “A DIY last will and testament is DOA in Court.” Ms. Adrich failed when she created her own will. Her pre-printed forms failed to indicate who would inherit her estate and after her death, her brother asserted he should inherit the bulk of her estate as her intent was clear. Her nieces argued there was no valid will and therefore they should receive the residue of the estate by law. The Florida Supreme Court held for the nieces.
- PHL Variable Insurance Company v. Bank of Utah. “The consequences of lying.” A $5 million life insurance policy was issued on William Close. When he died, the insurance company refused to pay the death benefit and refund the premiums paid because Mr. Close had lied on various material questions in the life insurance application. The court agreed that no death benefit should be paid.
See Steve Parrish, Legal Mistakes That Haunt After Death: Three Cases, Forbes, May 13, 2014.
Wednesday, May 14, 2014
The 1965 Israeli Inheritance Law was amended by the Ministerial Committee for Legislation which would give same-sex couples the same inheritance rights of heterosexual couples. Justice Minister Tzipi Livni advanced the bill stating, “Israeli society today is advanced and much more accepting. Families in 2014 are much more diverse than they were in the 60s, and so it is only right that relevant legislation should change accordingly.”
In March the committee authorized a bill allowing same-sex couples and single parents to seek surrogacy services in Israel. Although the bill has not been approved, it would overturn current Israeli law, under which only heterosexual couples are permitted to pursue surrogacy within the country.
See Itamar Sharon, Commmittee Okays Inheritance Between Same-Sex Couples, The Times of Israel, May 12, 2014.
Tuesday, May 13, 2014
As I have previously discussed, concern over lack of supervision of the public administrator’s office in Nye County, Nevada caused citizens to speak out. Now, it has been discovered that the former public administrator for Nye County, Bob Jones, has been working on at least one estate. Jones resigned his position as public administrator over three years ago. Jones’ continued involvement in the estate was discovered by County Commissioner Dan Schinhofen, when he asked questions about still open cases from nearly five years ago, and was told that Jones had the file in question. District Attorney Brian Kunzi has expressed concern over this development.
See Mark Waite, Former Public Administrator ‘Spaced’ on $200,000, 2009 Estate Case, Pahrump Valley Times, May 9, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.