Wills, Trusts & Estates Prof Blog

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

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Monday, April 21, 2014

Ensuring Donor's Intent is Followed


In a recent post, Bryan Cave Fiduciary Litigation details a Georgia State case in which a family made a $1.5 million dollar donation to a church and later sued for breach of fiduciary duty because of the church's failure to build a church per the donation.  

A practical implication from the case, according to Luke Lantta, is: If a donation is made for a specific use, consider putting a time limit on it. 

At the trial level, the case was dismissed. A new suit was initiated seeking to impose a charitable trust on the original donation and the donors second suit survived a motion to dismiss. 

See Luke Lantta, Collateral Estoppel Did Not Bar Claim For Implied Charitable Trust, April 17, 2014. 

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

April 21, 2014 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, April 20, 2014

Undue Influence by Some Beneficiaries Invalidates Only the Portions of Will Benefitting Those Beneficiaries


The testator’s will gave his estate to five friends and expressly excluded his family.  Two family members filed objections to the will and the jury found that the testator had capacity but that three of the five beneficiaries exercised undue influence over the testator and thus the court invalidated the entire will.  On appeal, the intermediate appellate court reversed in part and remanded, holding that the gifts to the beneficiaries who were not found to have exercised undue influence were valid because the portions of the will that were the product of undue influence could be invalidated without harming the other beneficiaries or violating the testator’s general intent.  In re Estate of Kremer, 12–1662, 2014 WL 251908 (Iowa Ct. App. Jan. 23, 2014).

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

April 20, 2014 in New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, April 18, 2014

The Administration of a Trust Is Sufficient to Give Courts of the State Where the Trustee Is Located Jurisdiction Over a Beneficiary Residing in Another State


The original trustees of an Illinois land trust created in 1959 were located in New York.  In 1983, those trustees were replaced by an Illinois trustee.  The substitution of trustees was approved in writing by an overwhelming majority of the beneficiaries of the trust.  In 2013, the trustee brought an action in Illinois to reform the trust agreement and one beneficiary, a resident of New York who had approved the substitution of trustees in 1983, objected, alleging that the Illinois court could not exercise personal jurisdiction over him. The trial court agreed, the trustee appealed, and the intermediate Illinois appellate court reversed, holding that the Illinois long arm statute’s grant of personal jurisdiction to the Illinois courts over a non-resident beneficiary of a trust administered in Illinois satisfies the due process requirements of the federal constitution.  Kaufman v. Barbiero, 999 N.E.2d 764 (Ill. App. Ct. 2013).

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

April 18, 2014 in Estate Administration, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, April 17, 2014

Actions of a Trustee as Manager of Entity in Which Trust Holds an Interest Will Be Judged by Corporate Standards


The settlor created trusts for the benefit of family members which held minority interests in entities carrying on various family businesses.  The settlor’s son was the trustee of nine of the trusts which were Sub S trusts and managed the entities with his brother. Some of the beneficiaries sued the trustee alleging breach of trust and the trial court granted summary judgment to the trustee.  On appeal, the judgment was reversed and remanded.  The Georgia Supreme Court granted certiorari and reversed the intermediate appellate court holding that with regard to the entities, the trustee is to be held to a corporate fiduciary standard because the settlor did not give the trustee control over the entities and because the trusts held minority interests in the entities.  Rollins v. Rollins, No. S13G1162, 2014 WL 819500 (Ga. Mar. 3, 2014).

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

April 17, 2014 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 16, 2014

Possibility That an Accident Victim Would Have Died in a Year Subsequent to Year of Death When Estate Taxes Would Have Been Lower Is Not a Pecuniary Injury


The decedent died from injuries sustained in a motor vehicle accident.  In the subsequent wrongful death suit, the plaintiffs asserted, among other claims, one for economic damages equal to the difference between the federal estate tax paid in the decedent’s estate and the substantially smaller tax that would have been paid had the decedent, who was 91 years of age at death, had died in the following year.  The trial court granted the defendants’ motion to dismiss the estate tax claim, the intermediate appellate court reversed, and the Supreme Court of New Jersey reversed and reinstated the trial court’s judgment, holding that under state law, the estate taxes are neither contributions to heirs the decedent was prevented from making nor a pecuniary loss.  Beim v. Hulfish, 83 A.3d 31 (N.J. 2014).

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

April 16, 2014 in Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

IRS Gives Guidance on Same-Sex Marriage Recognition for Retirement Plans

RingsThe IRS has issued guidance on the effect the Windsor decision has on marriage recognition for retirement plans. In light of Windsor striking down Section 3 of DOMA, the question arose of how retirement plan benefits that hinge on the recognition of a legal marriage should be handled.

In Notice 2014-19, qualified retirement plan administrators must amend retirement plans to recognize legal marriages of same-sex couples as of June 26, 2013. However, retroactive recognition prior to that date is not required.  Recognition can be limited to couples that are domiciled in states that recognize their marriage for plans dated June 26 – Sept. 16, 2013, but all valid marriages must be recognized after Sept. 16, 2013, even if the couple is no longer domiciled in a state that recognizes the marriage.

See Alistair M. Nevius, Guidance Issued on Application of Windsor to Retirement Plans, Journal of Accountancy, Apr. 7, 2014.

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

April 16, 2014 in New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 15, 2014

Disclaimer by a Beneficiary Is a Transfer for Medicaid Purposes


The testator’s will created a trust for his surviving spouse giving her income for life and authorizing the trustee to invade principal for the surviving spouse and their issue for health, education, maintenance, and support.  The trust also gave the trustee the power to terminate the trust should further administration become impractical.  On termination, the trustee was to pay the trust property to the income beneficiary.  The trustee terminated the trust under this provision and the surviving spouse then renounced any interest in the trust property which was delivered directly from the trust to the couple’s son and daughter.  The surviving spouse applied for Medicaid benefits approximately 13 months after the termination of the trust.  In a case of first impression, a Pennsylvania court upheld a determination by an administrative law judge disqualifying the spouse from benefits for a period of time, holding that the renunciation was a transfer of assets for Medicaid purposes.  Schell v. Department of Public Welfare, 80 A.3d 844 (Pa. Commw. Ct. 2013).

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

April 15, 2014 in New Cases, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Monday, April 14, 2014

Interest on Damages for Improper Discretionary Distributions Payable Only from Date of Beneficiary’s Death


The trustee was found liable for making improper discretionary distributions of principal to the sole life income beneficiary of the trust.  The trial court awarded prejudgment interest at the statutory rate from the date of each principal invasion and the intermediate appellate court affirmed. On appeal by the trustee, the Supreme Court of Georgia reversed, holding that interest could be awarded only from the date of the life income beneficiary’s death because had the improperly distributed assets remained in the trust, any interest they would have earned would have been distributed to the life beneficiary.  Reliance Trust Co. v. Candler751 S.E.2d 47 (Ga. 2013).

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

April 14, 2014 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, April 11, 2014

Estate of Rick Nelson Settles Over Digital Downloads


The estate of Rick Nelson recently settled with Capitol Records.  The heirs filed suit in 2011, alleging that the record company was not paying all royalties owed, including those for digital downloads.  The estate’s attorney said all issues have been amicably resolved and that this case could be precedent-setting in the area of digital downloads and streaming.

Nelson is best known for his songs “Travelin’ Man” and “Poor Little Fool” and his role in the television series “Ozzie and Harriet.”  He died in a plane crash in 1985 at the age of 45.

See Ricky Nelson Heirs Reach Settlement with Capitol Records, Beverly Hills Courier, Apr. 8, 2014.

April 11, 2014 in Music, New Cases | Permalink | Comments (0) | TrackBack (0)

Thursday, April 10, 2014

Article on Estate Tax Valuation


Kerry A. Ryan (Saint Louis University School of Law) recently published an article entitled, Tax Court Sends Message on Valuation in Richmond, Tax Notes, Vol. 142, No. 12, March 24, 2014.  Provided below is the abstract from SSRN:

In Estate of Helen P. Richmond, the Tax Court determined the proper value for estate tax purposes of a minority interest in a family-owned corporation holding mostly appreciated securities. The court also sustained an accuracy-related penalty against the estate, finding that it used an unsigned draft report by a noncertified appraiser as the basis for the stock valuation reported on Form 706.

April 10, 2014 in Articles, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)