Wills, Trusts & Estates Prof Blog

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

Monday, August 31, 2015

In Canada, Bequests In A Will May Be Voided If Against Public Policy

CanadaWhen Harry Robert McCorkill died, he left a bequest in his will to an organization that was devoted to the cause of white supremacy. As a result, his sister challenged the gift by invoking the Canadian rule that gifts in a will that are against public policy may be voided. In McCorkill v. Streed, the court held that the gift was against public policy and voided the gift. The court stated that "against public policy" was to be construed as embodying the morals of the time and may be read as prohibiting gifts against the interest of society. Based on the prevailing anti-discrimination attitude, embodied in Canadian law and constitution, the gift was void because it provided funds to an organization whose sole aim was discriminatory.

See Stan Rule, Gifts Void Against Public Policy: McCorkill Estate, Rule of Law Blog, August 23, 2015.

Special thanks to Jim Hillhouse for bringing this article to me attention.

August 31, 2015 in New Cases, Weblogs, Wills | Permalink | Comments (0)

Thursday, August 27, 2015

Historical Society Denied Standing To Bring Suit Over Historic Island Charitable Trust

Article PictureGardiner’s Island is something of a throwback to a time past due to the preservation of the island's historical character by generations of the Gardiner family. However, a trust set up by a family member to ensure the island remained pristine is now embroiled in controversy after accusation of mismanagement by the local historical society. The society claimed the trustees were misusing the assets and sought a court order forcing the trust to return to it's purpose of historical preservation. But a New York appellate court has denied the society standing stating the group was not a named beneficiary and did not have a "special interest" to give them standing. As a result, only the Attorney General of New York may bring the suit against the trust to enforce its purpose and, as of now, has shown no inclination to take action.

See John T. Brooks & Jena L Levin, No Standing to Enforce a Charitable Trust, Wealth Management, August 25, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

August 27, 2015 in Current Affairs, New Cases, Trusts | Permalink | Comments (0)

Tuesday, August 25, 2015

Estate Tax Implications For Fractional Art Ownership

Article PictureFor years, the IRS denied a estate tax valuation discount to works of art that had split ownership and other restrictions on sale. However, a recent Tax Court and 5th Circuit Court of Appeals ruling has upended this restriction with valuation discounts now being offered in spite of the seeming restrictions in section 2703. The Tax Court applied a flat %10 valuation discount but this approach was rejected by the 5th Circuit which agreed in principle with allowing a discount but did not outline a method to determine the amount. Going forward, new rules and regulation will have to be developed but they could wind up giving a large estate tax saving to any pieces of work that are inherited between multiple heirs.

See Marjorie W. Hornaday & Ronald D. Spencer, Art Law on Estate Tax on Inherited Collections, Artnet News, August 23, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

August 25, 2015 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Monday, August 24, 2015

9th Circuit Ruling Creates Potential Marriage Penalty

IRS LogoBruce Voss and Charles Sophy, unmarried domestic partners, each filed a home mortgage interest deduction on jointly owned properties under §163(h)(3) reaching the maximum allowed deduction. However, the IRS challenged the deductions saying that they were subject to the joint filing limit imposed on married couples and assessed new taxes. The ruling was challenged by the taxpayers and the tax court sided with the IRS before the case was appealed to the 9th Circuit Court of Appeals. In Voss v. Commissioner, the court held that each taxpayer was allowed to take the maximum deduction for a total of $2.2 million in deductions between them rather than the $1.1 million cap the IRS proposed. As a result, a de facto penalty is imposed on married high earners that are capped at the same deduction level as an unmarried couple filing separately for the home mortgage interest deduction.

See Laura Saunders,  Another Reason Not to Get Married, Wall Street Journal, August 21, 2015.

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

August 24, 2015 in Estate Planning - Generally, Income Tax, New Cases | Permalink | Comments (0)

Tuesday, August 18, 2015

Restoration And Disgorgement Are Not Mutually Exclusive Remedies Against A Trustee

GavelA corporate trustee was found to have violated the duty of care in investing trust funds in a single commercial building and to have engaged in self-dealing by arranging loans from its affiliates to the trust and receiving loan fees and mortgage interest from the trust. The trial court awarded the beneficiaries restoration damages but refused to award disgorgement or make an adjustment for inflation and then deducted income distributed from the amount awarded. The intermediate appellate court reversed the refusal to adjust for inflation and to deduct distributions but affirmed the refusal to award disgorgement. In Miller v. Bank of America, N.A., the New Mexico Supreme Court reversed and remanded for recalculation of the damages holding that under state law disgorgement is mandatory and that disgorgement and restoration reflect separate remedial principles which are not mutually exclusive.

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

August 18, 2015 in Estate Administration, New Cases, Trusts | Permalink | Comments (0)

Monday, August 17, 2015

Court Refuses To Reform Testamentary Trust On Request Of Beneficiaries

GavelThe current income beneficiary and her adult children, the presumptive remainder beneficiaries (takers in default of her exercise of a power of appointment) of a testamentary trust created more than eighty years ago by the will of the income beneficiary’s father petitioned the Delaware Court of Chancery for an order changing the trust’s administrative provisions to make it a directed trust, that is, one in which the trustee would take direction from an investment advisor, a position which would be held by two of the income beneficiary’s adult children. In effect, the corporate co-trustee would carry out administrative functions. The will had been admitted to probate in New York and in 2001 the co-trustees, the income beneficiary, and a bank obtained the permission of the New York and Delaware courts to move the trust’s situs to Delaware with the income beneficiary and the Delaware affiliate of the original corporate trustee as co-trustees. In In re Trust under Will of Flint, the Court of Chancery denied the petition, finding that drastically changing the role of the corporate trustee was contrary to the testator’s intent and could not be justified solely by the consent of the beneficiaries

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

August 17, 2015 in New Cases, Trusts | Permalink | Comments (0)

Sunday, August 16, 2015

Equitable Adoption Deemed Relevant Only If The Decedent Dies Intestate

GavelA grandniece filed a caveat to her great-aunt’s will, alleging that she had been equitably adopted after the will was made. The probate court admitted the will to probate, but held that the grandniece was entitled to an intestate share as a child under state law which revokes a will on the testator’s marriage, the birth of a child to the testator, or the testator’s adoption of a child, to the extent necessary to give the child or spouse an intestate share. In Johnson v. Rogers, the Supreme Court of Georgia affirmed admission of the will to probate but reversed the award of the intestate share, holding that the doctrine of equitable (or virtual) adoption is relevant only when the alleged adoptive parent dies intestate.

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


August 16, 2015 in New Cases, Wills | Permalink | Comments (0)

Saturday, August 15, 2015

Purported Contract To Devise Does Not Prevent Admission Of The Will To Probate

GavelIn the case of In re Estate of Attea, the decedent was a member of a Roman Catholic religious order and had taken a vow of poverty. Pursuant to that vow, she executed a will leaving all of her property to the order. Three years after execution of the will, the decedent was involved in a motor vehicle accident in which she was severely injured and received a substantial settlement. Twelve years after the accident, the decedent executed a new will leaving her estate to her relatives, the order, and other Roman Catholic charitable institutions. The order moved for summary judgment denying probate on the grounds that the will violated the vow of poverty the decedent had taken. All other parties opposed the motion. The court denied summary judgment, holding that the alleged contract had no effect on the validity of the will.

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

August 15, 2015 in New Cases, Wills | Permalink | Comments (0)

Friday, August 14, 2015

Qualified Beneficiaries Of Revocable Trust Are Entitled To Information For Period Before The Settlor’s Death

GavelThe settlor created a revocable trust for the benefit of all of his children with the two children of his second marriage as trustees. After the settlor’s death, the non-trustee beneficiaries learned that $1.8 million had been transferred out of the trust in the eighteen months before the settlor’s death. They began a proceeding to require the trustees to give them information on the transfers, such as whether the settlor had initiated them. The trial court granted summary judgment to the trustees because state law provides that while the settlor of a revocable trust is alive “beneficiaries other than the settlor have no right to receive notice, information or reports” from the trustees. In Tseng v. Tseng 352 P.3d 74 (Or. Ct. App. 2015), the intermediate appellate court reversed, holding that the statutory prohibition applies only while the settlor is alive and that after the settlor’s death, the qualified beneficiaries are entitled to information necessary to protect their interests which in this case was information on whether the settlor made, approved, or ratified the transfers.

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

August 14, 2015 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Wednesday, August 12, 2015

California Supreme Court Makes Big Change For Will Contests

Gavel 2In Estate of Duke, the California Supreme Court changed the rules for altering a will after the death of the testator. Before Duke, only an ambiguous will could be amended by the court using extrinsic facts. Now a court may alter an unambiguous will if there is clear and convincing evidence that the testator had specific intent to make a bequest that mistakenly omitted when the document was drafted and executed. This change, as the court noted, puts wills construction on the same level as trusts which, in California, have long been alterable using extrinsic evidence. The court expressed doubt the change will provoke a torrent of lawsuits because suits are usually based on the size of the estate rather than availability of legal routes to challenge a gift. Going forward, the results of this change will be watched nationwide as other states potentially consider a similar change.

See Ryan D. Cunningham & Allonn E. Levy, Duke Blazes a New Trail in Estate Law, Wealth Management, August 11, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

August 12, 2015 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)