Wills, Trusts & Estates Prof Blog

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

Wednesday, November 1, 2017

John McLaughlin's Estate Gets an Annuity Decision

Disneys-cinderella-and-her-evil-stepmotherJohn Joseph McLaughlin, who died in 2016, most likely did not intend for his former spouse, Christina Vidal, to benefit from life insurance annuities purchased prior to their marriage after their divorce in 2010. In 1996, before their marriage, McLaughlin designated Vidal as the beneficiary of two annuity contracts. In an antenuptial agreement, the pair agreed that upon divorce, a $1 million asset transfer from McLaughlin to Vidal would suffice as a division of the marital assets. Elizabeth McLaughlin, John McLaughlin’s niece and executor of the estate, sought a declaration from a federal district court in D.C. holding that the annuities should pass to the estate, not Vidal.

The district court agreed with Elizabeth and ruled that the prenuptial agreement had effectively revoked Vidal’s right to any income from the annuities. Looking to specific language in the prenup, the court noted that the “parties manifested their intent to vitiate beneficiary designations made before the agreement, like those of the annuities here.”

See John McLaughlin's Estate Gets an Annuity Decision, ThinkAdvisor, October 31, 2017.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

November 1, 2017 in Current Events, Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Sunday, October 29, 2017

Article on Waiting for the Other Shoe

Shoe_DropsRuss Willis recently posted an Article entitled, Waiting for the Other Shoe, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:

Last year in Estate of Dieringer v. Commissioner the Tax Court disallowed a large portion of a claimed estate tax charitable deduction for the transfer of the decedent's controlling interest in a closely-held stock to a private foundation, where the corporation redeemed the stock at a steep discount from its reported estate tax value. The logic of the decision is arguably flawed, and the 9th Circuit federal appeals court may reverse, but the executor's troubles may be far from over.

October 29, 2017 in Articles, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, New Cases, Wills | Permalink | Comments (0)

Thursday, October 26, 2017

Clergy Housing Tax Exemption The Times Square Of Religion And Taxation

Braveheart1370473231In a suit brought by the Freedom from Religion Foundation, Judge Barbara Crabb has once again declared IRC §107(2) unconstitutional. This specific section of the code allows ministers of the gospel to exclude rental allowances from their gross income. Recent coverage of the decision has overstated the scope of Crabb’s ruling and deserves rectification.

See Peter J. Reilly, Clergy Housing Tax Exemption The Times Square Of Religion And Taxation, Forbes, October 15, 2017.

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

October 26, 2017 in Current Events, Estate Planning - Generally, New Cases, Religion | Permalink | Comments (0)

Wednesday, October 25, 2017

Court Rejects Effort to Avoid Settlement Agreement

Dd48da1480d9eb0e36a0134bfb833542Disputes involving wills and estates are typically settled through mediation. Mediation has a number of benefits over taking these issues to court including reduced expenses, more certain results, and less time spent waiting for assets to be distributed to beneficiaries. In Texas, another benefit of mediation is the reluctance of the courts to overturn settlement agreements. In Lawson v. Collins, the Austin Court of Appeals rejected an attempt to challenge a mediated settlement agreement and binding arbitration following the initial mediation. Despite the challenger’s argument that she acted under duress and was coerced, the court held that the agreement and the arbitration were both valid.

See Michael Young, Court Rejects Effort to Avoid Settlement Agreement, Texas Probate Litigation, October 19, 2017.

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

October 25, 2017 in Estate Planning - Generally, New Cases | Permalink | Comments (0)

Tuesday, October 24, 2017

Article on Case Note. Estate Law--Summary Distribution of Small Estates: In re Estate of Coborn

Jackson-wyoming-wallpaper-1Jennie Boulerice recently published an Article entitled, Case Note. Estate Law--Summary Distribution of Small Estates: In re Estate of Coborn, 17 Wyo. L. Rev. 59 (2017). Provided below is an abstract of the Article:

This case note argues that the Wyoming Supreme Court was correct in holding that Wyoming Statute § 2-1-205 authorized a district court to order summary distribution of real property located in other Wyoming counties based on the court's expository legislation reasoning and policy reasons. The background section begins with a brief overview of estate succession and an explanation and history of the relevant statute, Wyoming Statute § 2-1-205. Additionally, the background section discusses the legal theories that the Wyoming Supreme Court relied on to reach its conclusion. This section also offers a brief overview of relevant legal principles, such as split estates. The principle case section discusses the facts, procedural history, the court's reasoning, and the holding of In re Estate of Coborn. The analysis section explains why the court was correct in its holding with respect to the expository legislation reasoning and policy reasons. Finally, the case note explains a few likely implications of the court's decision for estate distribution in practice.

October 24, 2017 in Articles, Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Tuesday, October 17, 2017

State Law on After-born Children Leads to Revocation of a Will

Download (1)A number of states have enacted statutes that serve to revoke a decedent’s will, in whole or in part, if the decedent’s life-circumstances later change in specific ways. Hobbs v. Winfield, a recent case out of Georgia, highlights such a scenario. Alphonzo Hobbs executed a valid will in 1989 and died in 2007. In the interim, Hobbs had three children outside of marriage. The Supreme Court of Georgia held that because Hobbs did not draft the will with a consideration of future children, it was not valid under Georgia law. Hobbs’s assets passed under Georgia’s  intestacy scheme. Because laws may vary drastically from state to state, it is important to seek out professional advice to make sure a previously valid will remains intact after death.

See Michelle Soto, State Law on After-born Children Leads to Revocation of a Will, The National Law Review, October 12, 2017.

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

October 17, 2017 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0)

Friday, September 29, 2017

JPMorgan Ordered to Pay More Than $4 Billion To Widow and Family

Dbpix-hack-facebookJumboMax Hopper, a former American Airline executive, is credited with pioneering an innovative reservation system for the massive airline. When he died in 2010 without a will, his estate was valued at more than $19 million. JPMorgan Chase & Co. was charged with independently and impartially dividing and distributing Hopper’s assets between the appropriate beneficiaries. Instead, the bank took an egregious amount of time to release interests in furnishings, jewelry, art, and the 900 bottles of wine and 6,700 golf putters left in the estate.

This lapse led to a lawsuit spearheaded by Hopper’s wife, Jo Hopper, and two stepchildren. A Dallas jury found that the bank’s actions constituted a breach of fiduciary duty and fraud. Most surprising however, is the $4 billion in punitive damages they awarded to the family. In response to the verdict, Jo Hopper stated: "The nation’s largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they’re too powerful to be held accountable.”

See Thomas Korosec, JPMorgan Ordered to Pay More Than $4 Billion To Widow and Family, Bloomberg, September 26, 2017.

Special thanks to Cassandra L. Hill, Jim Hillhouse (Professional Legal Marketing (PLM, Inc.), & Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

September 29, 2017 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Professional Responsibility | Permalink | Comments (1)

Thursday, September 28, 2017

Waiting for the Other Shoe

F6b170f28abd909b187cb856c3cd3ed9--children-play-children-booksAt the time of her death in 2009, Victoria Dieringer held the majority of both nonvoting and voting stock in Dieringer Properties Inc. (DPI). DPI managed residential and commercial properties primarily located in the Portland, Oregon area. These stock holdings comprised the bulk of Dieringer’s estate, which she left to a number of charities in trust through a pour-over provision in her will. Dieringer intended for the gifts to these charities to be funded through sale of the corporate stock. DPI redeemed the stock to fund the trust, but did so at substantially reduced rates relative to its reported value. Despite this, the trust executor reported the decedent’s stock at its full value on the estate tax return and sought a charitable deduction reflecting the reported value. The Tax Court held that this was not allowed and assessed a tax deficiency and penalty of over $5 million. The case is on appeal, but it looks as though tumultuous times are ahead for the executor.

See Russell A. Willis III, Waiting for the Other Shoe, taxnotes, September 18, 2017.

Special thanks to Russell A. Willis III, J.D., LL.M., director, The Greystocke Project, for bringing this article to my attention. 

September 28, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, New Cases, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Tuesday, September 26, 2017

MetLife Stuck Between Wife and Girlfriend in Benefit Battle

161020102345-metlife-retires-snoopy-540x304A federal judge, in Metro. Life Ins. Co. v. Teixeira, refused to allow Metropolitan Life Insurance Company to remove itself from a litigation triangle between the company and a decedent’s wife and girlfriend. Metlife filed with the court in 2016 anticipating the court would make the determination as to whether the company owed the wife or the girlfriend $40,000 from the decedent’s life insurance policy. The decedent-insured named his wife as the beneficiary of the policy over the phone. Later, he changed the beneficiary to his girlfriend via another phone call. This was in violation of Metlife’s own policies requiring beneficiary designations to be done in writing. Part of the cause for the judge’s refusal to dismiss Metlife stemmed from the company’s atypical handling of the situation that leaves it open to liability for negligence.

See Jacklyn Wille, MetLife Stuck Between Wife and Girlfriend in Benefit Battle, BNA Convergence, September 11, 2017.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

September 26, 2017 in Current Events, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Tuesday, September 5, 2017

Constructive Trusts Can Catch Wayward Trust Assets

CinderellaThe California Court of Appeals, in a case styled Higgins v. Higgins, invoked the powers of a constructive trust to recover misappropriated assets. Maria Higgins, along with her husband, created the Higgins Family Trust in 1994. By 2007, Maria’s husband had passed and Maria, now 91, was suffering from cognitive decline. In 2009, as Maria continued worsen mentally, she added her step-son, Clive, as a joint account holder to her checking and savings accounts that were held by the trust. Clive was diagnosed with cancer in 2012 and became unable to attend to his stepmother’s finances. To remedy the deficiency, Clive named his wife, Lupe, as an account holder on a set of new created accounts.

After Clive’s death, Lupe placed the accounts in her name. When Maria died, Lupe distributed $10,000 to each of Maria’s eight grandchildren and treated the remaining funds as her own. Clive’s brother, Arthur, who was the successor trustee of the Higgins Family Trust, filed suit to recover the funds. At the trial court level, the judge held that Lupe had the right to do what she wished with the funds since Clive named her a joint account holder. The appellate court disagreed, held that Lupe’s repudiation of the trust was unjust, and ordered a constructive trust.

The Higgins case serves as a reminder to trustees to appropriately title trust accounts in order to make sure trust assets pass to the intended beneficiary.

See Jeffrey S. Gavin, Constructive Trusts Can Catch Wayward Trust Assets, Trust on Trial, May 15, 2017.

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

September 5, 2017 in Current Events, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)