Wills, Trusts & Estates Prof Blog

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

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Wednesday, October 29, 2014

Glove Box Trust Amendment Invalid

TrustA recent case decided by the Supreme Court of Missouri serves as a reminder of the importance of following formalities when amending a trust. In Rouner v. Wise, the court affirmed the finding that a letter detailing changes to a trust left in the glove box of his car was not a valid amendment. Dr. Conklin had intended his letter to amend his trust and include his two step children in addition to his two children from a previous marriage. Conklin wrote the letter out of fear that he would die while on a road trip. However, once he got home, he did not make a valid amendment to his trust at any time during the remaining seven years of his life.

See Laura A. Bentele, Rouner v. Hudson—Cautionary Tale re Trust and Estate Plans from the Missouri Supreme Court, The National Law Review, Oct. 15, 2014.

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

October 29, 2014 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 28, 2014

Notification of Parental Rights Over Facebook Held Invalid

Baby ComputerMany estate planning concerns revolve around a desire to provide for family and the next generation, which often means children. It may seem obvious that to plan for children, one must know who their children are, but sometimes the issue gets complicated. In a recent custody battle in Oklahoma, the case turned on whether a Facebook message amounts to adequate notice of the existence of a child.

The Oklahoma Supreme Court held that a pregnant teen mother who sent a Facebook message to the father of her unborn child to inform him that she was pregnant, did not adequately notify him for purposes of later terminating his parental rights and making arrangements for the child to be adopted.

See Jacob Gershman, Court: Facebook Not a Valid Way for Mom to Tell Dad She's Pregnant, The Wall Street Journal, Oct. 17, 2014.

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

October 28, 2014 in Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Monday, October 27, 2014

Venue Clause in Pension Plan Affirmed by Sixth Circuit

GavelA Kentucky district court dismissed the claims of a former employee regarding termination of enhanced compensation benefits under his pension plan. The case was dismissed due to a clause in the pension plan that set the venue for all claims in a specific Iowa court. The employee appealed, and through an amicus brief the U.S. Department of Labor (DOL) sided with the employee based on the argument that ERISA and venue selection clauses are incompatible.

In Smith v. AEGON Cos. Pension Plan,the Sixth Circuit affirmed the lower court and held the venue selection clause enforceable. The court noted that this was the majority opinion for courts that have faced this issue and that a prohibition on venue clauses for ERISA-governed pension plans was an issue for Congress.

See Stacey Cerrone & Russell L Hirschhorn, Sixth Circuit Declines Deference to DOL and Enforces Venue Selection Clause, The National Law Review, Oct. 24, 2014.

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

October 27, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Protection of Trust Information in Divorce

SecretMany otherwise private financial matters can quickly become public in divorce proceedings. However, trusts are often used to ensure privacy and often include information on multiple individuals. In a California divorce case, the wife requested family trust documents from her husband. The trial court granted the husband's protective order, and ruled that only information directly related to the husband was discoverable and that third party and general trust asset information were not to be turned over to the wife, and thus would be redacted.

In In re Marriage of Williamson, The Second District Court of Appeal affirmed the trial court's grant of the protective order, limitations of required disclosure of the trust information, and the protection of third party privacy.

See Luke Lantta, How Much Information About A Trust Must Be Disclosed In A Divorce?, Bryan Cave, Oct. 1, 2014.

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

October 27, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, October 25, 2014

Trust Reformation

IRC

In Private Letter Ruling 201442046 (Oct. 17, 2014), the Internal Revenue Service held that a reformation of a trust to correct scrivener’s errors triggered remainder interests to be completed gifts and consequently, a trust’s assets would not be included in a grantor’s gross estate upon his death.  Furthermore, the reformation would not cause any current or future beneficiaries to make a gift to any other trust beneficiaries.

Grantor and his wife met with an attorney to discuss estate planning for their four children.  The couple decided to use grantor retained annuity trusts (GRATs), including a 4-year term GRAT and a 15-year term GRAT.  To grantor established both GRATS by making gifts of stock to each GRAT.  Under the 4-year GRAT, the grantor would receive an annuity for 4-years, and the remaining assets would pass to a Children’s Trust.  The second GRAT was similar, but after the 15 years, the Children’s Trust would be the remainder beneficiary. 

The grantor subsequently hired an accountant to prepare Form 709 and report the date of transfers to the GRATs.  The accountant notified the grantor that the Children’s Trust contained language making the Trust revocable by the grantor, thereby defeating the grantor’s intent in creating the GRATs. 

The grantor retained a second attorney to reform the Trust under state law and filed a petition in state court to request reformation of the Trust to correct mistakes under scrivener’s errors.  The court approved the petition and ordered the reformation should be effective. 

See Dawn S. Markowitz, State Court Trust Reformation, Wealth Management, Oct. 22, 2014.

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.

October 25, 2014 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, October 24, 2014

Jim Thorpe Remains in Jim Thorpe

Jim Thorpe

In an unusual case involving a dispute between the family of the legendary Native American athlete and a small Pennsylvania town named after him, a federal appeals court ruled that the remains of Jim Thorpe can remain in Jim Thorpe, Pa. 

The story began in 1953 when two Pennsylvania towns agreed to merge into one town named Jim Thorpe and erect a memoJrial in his honor.  The late athlete was from Oklahoma and likely never visited the area.  In exchange, Mr. Thorpe’s widow, Patricia, allowed the corpse to be buried there.  However, the descendants of the star football player protested that he should be reburied on Sac and Fox tribal land in Oklahoma along with other family members. 

Four years ago one of Mr. Thorpe’s sons filed a lawsuit in federal district court in Pennsylvania seeking the town to surrender the body.  While a trial court sided with him last year, a three-judge panel of the Third U.S. Circuit Court of Appeals disagreed saying the Native American Graves Protection and Repatriation Act “was not intended to be wielded as a sword to settle familial disputes within Native American families.”

See Jacob Gershman, Court: Remains of Jim Thorpe Can Remain in Jim Thorpe, The Wall Street Journal, Oct. 23, 2014.

October 24, 2014 in Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 21, 2014

Minor Beneficiary May Disclaim Without Gift Tax

 TaxesIn a recent Private Letter Ruling, a taxpayer who is a beneficiary of two trust that were created prior to taxpayer's birth may severe her interest in discretionary payments and contingent beneficial interest. The minor beneficiary intended to to disclaim any right to beneficial interest within nine months of the age of majority, and the IRS concluded in Private Letter Ruling 2014400071 that as long as all other applicable laws are followed the disclaimer may successfully be made without creating federal gift tax liability.

See Debra Doyle, Disclaimers of Distribution Rights Aren't Transfer to Gift Tax, Wealth Management, Oct. 10, 2014.

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

October 21, 2014 in Estate Planning - Generally, Gift Tax, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, October 20, 2014

R&B Singer's Estate Goes to Widow

Pendergrass

Suburban Philadelphia Orphans’ Court Judge Stanley Ott decided that the widow of R&B singer Teddy Pendergrass will retain control over his estate after rejecting a will submitted by the singer’s son.  The judge stated that a will dated in May 2009 and submitted by Theodore “Ted” Pendergrass II was “fraudulent” and called his testimony, “wholly lacking in credibility.” 

Contrastingly, the judge found testimony by the singer’s wife, Joan, and other witnesses “highly” credible and ruled the will dated in March 2009 giving Joan Pendergrass most of the estate will stand.

Pendergrass’ son “respectfully disagrees with the court’s ruling and is considering an appeal.”

See Associated Press, Judge Rules Teddy Pendergrass’ Widow To Retain Control Over Estate, The Huffington Post, Oct. 16, 2014.

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

October 20, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, October 19, 2014

Las Vegas Ready for Same-Sex Weddings

CoupleAs I have previously discussed, the 9th circuit struck down the same-sex marriage bans of Nevada and Idaho earlier this month. Leading up to the decision, Las Vegas was gearing up for same-sex weddings. The city known for high wedding volumes and large variety of wedding options, including of course an Elvis impersonator officiant, was ready to facilitate legal same-sex marriages even before the ruling. The county had already changed their marriage licenses to be gender neutral, and individual chapels made sure their photographers knew how to take to perfect wedding day photos when both members of the couple are wearing white wedding dresses.

See Kimberly Pierceall, Land of Chapels Ready for Gay Weddings, The Fresno Bee, Oct. 8, 2014.

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

October 19, 2014 in Current Affairs, Current Events, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Saturday, October 18, 2014

New Case: In re Theresa Houlahan Trust

TrustLimitations does not begin to run even though trust property consists only of a claim against the trustee. The Supreme Court of New Hampshire reversed the grant of summary judgment for a successor trustee in an action alleging that the predecessor trustee violated his fiduciary duty by transferring all of the property of Trust 1 of which he was a trustee to Trust 2 of which he was settlor and trustee. The trial court granted the successor trustee’s motion for summary judgment on the ground that the action was barred by the statute of limitations which requires actions against a trustee for breach of trust be brought within three years of the termination of the beneficiary’s interest in the trust.

In re Theresa Houlahan Trust, citing Restatement (Third) of Trusts § 2, comment i and the Reporter’s Notes, the court held that Trust 1 did not cease to exist when all of its property was transferred to Trust 2 because Trust 1 held a chose in action against the trustee. The court remanded the case for trial on the remaining issues of both fact and law.

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

October 18, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (1) | TrackBack (0)