Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, May 22, 2018

Texas Supreme Court: Incorporating the AAA Rules Does Not Delegate Arbitrability Issues to the Arbitrator

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-22/e75619d1-e498-43e8-8926-30bf70348a86.pngIn 2013, the Supreme Court of Texas in Rachal v Reitz found that arbitration clauses in trust documents may be enforced regarding claims by beneficiaries against trustees. The finding was based on the intent of the settlor, and that mutual assent was satisfied through the theory of direct-benefits estoppel.

Rule 7(a) of the Commercial Arbitration Rules of the American Arbitration Association (AAA) specifies that parties may decide that an arbitrator has the power to decide initial issues, such as "validity, enforceability, and scope of an arbitration agreement."

However, in  Jody James Farms, JV v. Altman Grp., Inc., the Texas Supreme Court held on May 11, 2018 that an incorporation of the rules of AAA did not send arbitrability issues to the arbitrator as between nonsignatories to an agreement. The Court refused to rules on the issue at it pertain to signatories.

"Arbitrators are generally inclined to keep claims and parties in arbitration where courts may be more unbiased on those issues. So, now, where the beneficiary or trustee does not sign the trust/will, the court will determine these issues and not the arbitrator. This may greatly impact the enforceability of arbitration clauses in trusts and wills in Texas."

See David Fowler Johnson, The Texas Supreme Court Holds That Incorporating The AAA Rules Does Not Delegate Arbitrability Issues To The Arbitrator for Signatories, Texas Fiduciary Litigator, May 18, 2018.

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

May 22, 2018 in Current Affairs, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

California Appeals to Save Assisted Death Law

California Attorney General Xavier Becerra filed an appeal on Monday against a ruling by a judge in Riverside County that overturned the state's assisted suicide law two years after the legislation passed it during a special session on health care funding. The law allows doctors to prescribe lethal medication to terminally ill patients with 6 months or less to live.

In the court document, Becerra claims that the reversal "contradicts both the deference owed the Legislature and an earlier finding by the same court that the act was within the scope of the special session."

See Taryn Luna, California Appeals to Save Assisted Death Law, The Sacramento Bee, May 21, 2018.

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

May 22, 2018 in Current Events, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Wednesday, May 16, 2018

California Assisted Death Law Overturned in Court

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-16/d8166c0f-dded-496e-87ec-dc8f8c79d616.pngThe California legislature passed the state's assisted death law in 2016 during a special session. The session was called specifically for health care funding shortages caused by Medi-Cal. A Riverside County judge on Tuesday ruled that it was improper to push through and pass the law during the special session. Those that were in the process of accumulating the life-ending drugs find themselves with, "the carpet ripped out from under their feet," according to Assemblywoman Susan Talamantes Eggman, the Stockton Democrat who carried the bill.

Stephen G Larson is the lead counsel for the group of doctors that sued to stop the law, citing that, "lack of protections in the law, including an inadequate definition of terminal illness and a provision exempting doctors who prescribe the lethal drugs from liability." The group also claimed that the passing of the law during the special session was inappropriate, an argument that the judge agreed with.

Proponents of the law are optimistic, however, because the judge's ruling is not based upon the legality of physician assisted suicide. Public polls have also shown that there is a "widespread approval" of the law across California.

See Alexei Koseff, California Assisted Death Law Overturned in Court, The Sacramento Bee, May 15, 2018.

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

May 16, 2018 in Current Affairs, Death Event Planning, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Sunday, April 15, 2018

Article CRI-Leslie: Musings on Plain Meaning, Absurdity and Capital Gain

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-04-15/e8c3d851-4d1b-4e79-98f1-285a3e72aece.pngJeffrey A. Galant & Dana L. Mark published an Article entitled, CRI-Leslie: Musings on Plain Meaning, Absurdity and Capital Gain, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

CRI-Leslie, LLC v Commissioner is a noteworthy case of first impression involving the interpretation of Internal Revenue Code Section 1234A. In CRI-Leslie the U.S. Tax Court and the Eleventh Circuit U.S. Court of Appeals held against capital gain treatment for proceeds received as a result of the cancellation of a contract involving the sale of property. However, the greater importance of these decisions may be the illustration of the methodology used by the courts to interpret the Internal Revenue Code. Or, more to the point, whether the courts were justified in relying on the plain meaning rule rather than the legislative history in determining what Internal Revenue Code Section 1234A means.

April 15, 2018 in Articles, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Friday, March 23, 2018

Seventh Circuit Considers Diversity Jurisdiction in Trust Dispute

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-03-23/d6fe4a2a-42f9-4171-92eb-b04bbd65e7c4.pngIn Doermer v. Oxford Fin’l Group, Ltd., No. 17-1659 (7th Cir. Mar. 7, 2018), Plaintiff Richard refused to play well with sister, Kathryn, in a family dispute over which sibling owned what property. He had, in fact, previously sued Kathryn regarding a family foundation in Doermer v. Callen, 847 F.3d 522 (7th Cir. 2017). In Doermer v. Callen, the Seventh Circuit upheld a lower court’s dismissal of the action on the grounds that Richard did not have capacity to bring a derivative action under Indiana Law. In Doermer v. Oxford, Richard instead filed suit against a financial advisor and two of three trustees of a family trust. The Seventh Circuit again affirmed a dismissal of the case on substantially the same grounds: Richard did not have capacity to bring the action on behalf of the trust.

See Seventh Circuit Considers Diversity Jurisdiction in Trust Dispute, The National Law Review, March 12, 2018.

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

March 23, 2018 in Current Events, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Wednesday, March 21, 2018

Argument Analysis: Legal Questions, Practical Concerns at Play in Post-divorce Life Insurance Case

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-03-20/ce786001-86b9-4d0e-9bbc-d735babf67f0.pngMark Sveen and ex-wife, Kaye Melin, divorced in 2007. Sveen passed away in 2011 with Melin still named as the beneficiary of his life insurance policy. There was no provision in the pair’s divorce settlement that addressed Sveen’s policy and no other evidence, except a statement from Melin, indicating his beneficiary preference. Minnesota passed a law in 2002 that serves to remove an ex-spouse as a beneficiary of a life-insurance policy upon divorce. In Sveen’s case, this meant the payout went to his children rather than Melin. Melin challenged Minnesota’s law, arguing that it violates the contracts clause of the Constitution. The contracts clause prohibits the states from enacting legislation “impairing the obligation of contracts.” After an hour of oral argument and probing queries by the justices, it remains unclear as to which party the court will favor. 

See Amy L. Howe, Argument Analysis: Legal Questions, Practical Concerns at Play in Post-divorce Life Insurance Case, SCOTUSblog, March 19, 2018.

Special thanks to Paul M. Cathcart, Jr. for bringing this article to my attention. 

March 21, 2018 in Current Events, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Saturday, March 17, 2018

Article on Here We Go Again: A Third Legislative Attempt to Protect Polluting Iowa CAFOs from Neighbors’ Nuisance Actions

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-03-16/daf1a477-e031-454a-8efd-d05120e1e91b.pngN. William Hines recently published an Article entitled, Here We Go Again: A Third Legislative Attempt to Protect Polluting Iowa CAFOs from Neighbors’ Nuisance Actions, Property, Land Use & Real Estate Law eJournal (2018). Provided below is an abstract of the Article:

Twice during the past twenty years the Iowa Supreme Court struck down attempts by the Iowa General Assembly to grant confined animal feeding operations (CAFOs) immunity from liability for nuisance harms inflicted upon their neighbors. In both cases the challenged statutes were found by the Court to be regulatory takings – unconstitutional extinguishment of neighbors’ private property rights without just compensation.

In April, 2017 the Iowa General Assembly tried for a third time to confer on Iowa CAFOs a privileged status in state nuisance law. New Iowa Code 657.11A, however, did not try a third time to grant CAFOs immunity from nuisance suits. Instead, it provided for caps on the compensatory damages a winning plaintiff could be awarded against a CAFO found to be causing a legal nuisance. The new compensatory damages caps are not seriously inconsistent with conventional Iowa nuisance law, but at several points Iowa Code 657.11A raises puzzling questions about exactly how the legislature intended the new law to operate.

This essay reviews the background of Iowa Code 657.11A, closely examines the wording of the new law, and suggests how various interpretations of its terms might lead an Iowa court to rule differently on its constitutionality. Also discussed are a couple of novel provisions in the new law that are seemingly inconsistent with traditional Iowa nuisance law and with longstanding Iowa law governing joint ownerships.

March 17, 2018 in Articles, Estate Planning - Generally, New Cases, New Legislation | Permalink | Comments (0)

Friday, March 9, 2018

Article on The Badger State's Take on Regulatory Takings: Murr and Wisconsin

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-03-08/945a34ec-46ca-4ed6-8e89-df7598d7bada.pngDavid Wenthold recently posted an Article entitled, The Badger State's Take on Regulatory Takings: Murr and Wisconsin, Property, Land Use & Real Estate Law eJournal (2018). Provided below is an abstract of the Article:

This comment gives a clear picture of the current state of the regulatory takings doctrine, emphasizing the need for state courts and legislatures to set up structural protections to preserve the rights of private landowners. Specifically, Part II discusses the fascinating origins and background of the Takings Clause and the regulatory takings doctrine. Part III discusses the regulatory takings doctrine as it was structured prior to Murr. Part IV provides background analysis of the regulatory framework and Wisconsin’s regulatory takings law that undergird Murr. Part V describes the factual background of the case, discusses the arguments of the parties, and analyzes the Supreme Court’s landmark opinion. Part VI analyzes the general reaction to this landmark decision, provides direction for Wisconsin courts in their handling of the post-Murr regulatory takings doctrine, and discusses the Wisconsin Homeowners’ Bill of Rights. Part VII concludes with a brief overview and presents an important takeaway from Wisconsin’s reaction to Murr.

March 9, 2018 in Articles, Current Events, New Cases | Permalink | Comments (0)

Tuesday, February 27, 2018

Two Court Rulings Highlight Divorce Planning Loopholes

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-02-27/ab777af6-124b-487d-a32d-ff3174ac2458.pngCareful drafting and continual monitoring of estate documents are critical to avoiding future pitfalls, especially in cases involving divorce. Two recent court cases serve as a paradigm for this need. In the first case, the Connecticut Supreme Court held that decanting was authorized in a divorce action. This effectively allowed the husband, who was the beneficiary of a 1983 trust established by his father, to transfer the trust assets into a new trust that prevented his wife from reaching them. In a New York case, the decedent named her ex-husband as executor and beneficiary of her estate. The alternate for both positions was the ex-husband’s father. Under New York law, an ex-spouse may not serve as an executor or beneficiary. The New York court held that this disqualification did not apply to the ex-husband’s father.

See Michael S. Fischer, Two Court Rulings Highlight Divorce Planning Loopholes, Financial Advisor, November 27, 2017.

February 27, 2018 in Estate Administration, Estate Planning - Generally, New Cases, Trusts, Wills | Permalink | Comments (0)

Thursday, February 15, 2018

IRAs and 401(k)s Are Safe from Judgments - For Now

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-02-13/ca73aba8-382d-4c3f-894d-6ff473dc0e73.pngA judgment debtor who confessed judgments in favor of a bank in excess of $100,000 failed to make any payment on the acknowledged debt. Following this failure to pay, the bank initiated proceedings to collect. In the course of these proceedings, the debtor confessed that he had made significant additions to his IRA, 401(k), and a 529 plan after the initial judgment. The total contribution to the three plans was approximately $92,000. The bank argued that these conveyances were fraudulent and subject to reversal and execution. When the Court of Appeals heard the case, considering only the transfers to the 401(k) and IRA, it held that the conveyances to the IRA and 401(k) were not subject to reversal after looking at the relevant statutes. The logical question following this holding is how far the opinion may be stretched to the detriment of the judgment creditor. Based on this court’s reasoning, a judgment debtor could feasibly purchase exempt property, like firearms or a home, with non-exempt assets like cash, thereby converting previously non-exempt assets into exempt assets.

See R. Bruce Wallace, IRAs and 401(k)s Are Safe from Judgments - For Now, Lexology, February 6, 2018.

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

February 15, 2018 in Current Events, Estate Planning - Generally, New Cases | Permalink | Comments (0)