Wills, Trusts & Estates Prof Blog

Georgia Court Explains How To Acquire An Emergency Guardianship

There are not many cases on point explaining what it takes to acquire emergency guardianship. St. Joseph’s Hospital located in Savannah, Georgia petitioned the court for an emergency guardian for Claudine Farr. The hospital was seeking the guardian to assist Farr’s discharge. The petition included test results, affidavits from doctors, and other documentation stating that Farr was incapacitated due to her severe Parkinson’s disease.

In In the Interest of Farr, the court determined that to acquire emergency guardianship there must be an actual emergency. The court interpreted the plain meaning of the statute that states the petition for an emergency guardian should include not only the circumstances surrounding why an emergency guardian should be appointed, but also an emergency situation that is "immediate and poses a substantial risk of death or serious injury, illness, or disease." In this case the hospital just wanted to transfer the patient to another facility. Under the statute, the transfer did not qualify as an emergency. Had the hospital been seeking a guardian the outcome may have been different.

See Luke Lantta, Georgia Appellate Court Clarifies What it Takes For an Emergency Guardianship, Bryan Cave Fiduciary Litigation, Jun. 11, 2013.

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

Article on In re Gilmore

Andrew C. Thompson (New York Law School, J.D. 2013) recently published an article entitled, In re Gilmore, 57 N.Y.L. Sch. L. Rev. 637 (2012-2013). Provided below is a portion of his introduction: 

In In re Gilmore, the New York State Appellate Division, Second Department, considered a very complex after-born child issue: whether a testator's biological children, who were born before the execution of a will, whose existence was unknown to the testator at the time of the will's execution, and who became known to the testator prior to his death, can qualify as after-born children within the meaning of EPTL 5-3.2. Allowing these children to qualify would require courts to recognize a new common law exception to EPTL 5-3.2 for after-known children--that is, biological children whose existence the testator realized only after the execution of her will. Arguably, after-known children are comparable to the existing common law adoption exception, which permits children adopted by the testator after the execution of her will to qualify as after-born children even if the child was born before the execution of the will. However, despite the similarities between adopted children and after-known children, the Second Department in Gilmore refused to recognize after-known children within the meaning of EPTL 5-3.2.

This case comment argues that the Second Department incorrectly grounded its ruling in a plain meaning interpretation of EPTL 5-3.2 when it should have premised its holding on an analysis of Gilmore's intent. The Second Department's plain meaning interpretation of EPTL 5-3.2 deprives the lower courts of the flexibility to equitably distribute a parent's assets to her children in a manner that is most in harmony with the overall intent of the testator. While the early statutory and common law origins of EPTL 5-3.2 demonstrate that it is designed to avoid inadvertent or accidental disinheritances of children, another important purpose of the statute is to achieve an equitable distribution of a parent's estate that is consistent with the parent's presumed intent. Thus, rather than imposing a strict rule excluding all after-known children from the protection of EPTL 5-3.2, the solution should be to give the courts a framework with enough flexibility to carry out the intent of the testator. By permitting the courts to either include or exclude after-known children from inheriting a portion of the parent's estate based on the particular circumstances of each case, such a framework would more effectively allow the testator's intent to remain the focus of asset distribution under the will.

This case comment will first introduce the factual and procedural history that led to the Second Department's decision in In re Gilmore. It will then proceed by examining the legislative history and judicial precedent behind EPTL 5-3.2, demonstrating how nineteenth-century interpretations of the after-born statute have focused primarily on preserving the intent of the testator. The third section of this comment will demonstrate how early twentieth-century cases, while straying from the conclusions reached in nineteenth-century cases, nevertheless consistently retained the testator's intent as the primary focus of the analysis. The fourth section will explore how a series of amendments to the statute, beginning in 1966, aimed at ensuring that a will comports with the final wishes of the testator. Finally, this comment will show how the Second Department's recent decision in In re Gilmore departed dramatically from the historical purpose of the statute by imposing a strict rule that disregards testator intent.

South Dakota Supreme Court Revoked Disclaimer Used To Obtain Medicaid

The Supreme Court of South Dakota ruled that a son could not withhold assets from his mother suffering from dementia for Medicaid purposes. In 2008, Arline Shipman was moved to a nursing home because of her dementia. However, social services revoked Arline’s admission to a nursing home due to her resources. It was only after Eugene, Arline’s husband, paid out over $100,000 in nursing home health care costs that Arline became eligible for long term Medicaid aid.

Due to the substantial amount of money spent on nursing home costs, Arline’s husband disinherited her from his will. Arline’s attorney drafted a document disclaiming any inheritance from Eugene. After Eugene’s death, Arline’s guardian ad litem petitioned the court for half of his estate citing South Dakota law.   

In Shipman v. South Dakota, the court held that Arline was entitled to receive half of the estate because it was her elective share, not fulfilled by the spousal support for her nursing home care. Moreover, the court revoked the disclaimer stating it would be in Arline’s best interest and that the beneficiaries under the will would not be prejudiced. The court reasoned that the disclaimer was being used as an estate-planning tool to obtain Medicaid.

See Jeff D. Gorman, Widow With Dementia Must Get Inheritance, Courthouse News, Jun. 12, 2013.

Bank Not Responsible For Fiduciary Gone Rogue

Recently, an Ohio court answered the question of whether the law allows a principal to hold a bank responsible for money that the principal entrusted to a fiduciary that swindled the money. A fiduciary opened an estate account, and gave a bank manager documents indicating he was the executor. Subsequently, he opened a trust account. The fiduciary also showed the bank employee paperwork indicated that he was the successor trustee. The trustee in this case then stole over a million dollars from the estate and trust accounts. The bank was put on notice of the fiduciary relationship. As a result, the Ohio Uniform Fiduciaries Act, which provides protection to the bank applies. 

In Estate of Barney v. PNC Bank, N.A., the court affirmed the district court’s decision and held the bank was not responsible to pay for the fiduciary’s breach of duty. The court reasoned that because the beneficiaries could not draw a reasonable inference that the bank acted in bad faith or had knowledge of the fiduciary's behavior the exceptions to the Fiduciaries Act did not apply. 

See Luke Lantta, Bank Not Liable To Beneficiaries For Individual Fiduciary's Breach of Fiduciary Duty, Bryan Cave Fiduciary Litigation, Jun. 4, 2013.

Same Sex Couples in Germany Granted Same Tax Benefits as Married Heterosexual Couples

Same sex couples have won a few victories in Germany. Recently, the highest court in Germany ruled that same sex couples can receive the same tax benefits as married heterosexuals. The ruling did not please a group of conservatives supporting Chancellor Angela Merkel who is up for reelection in three months. In August of last year, Merkel refused to allow same sex couples receive the same tax benefits enjoyed by married heterosexual couples. However, her democratic supporters were anxious to grant same sex couples with equal tax benefits. Foreign Misiter Guido Westerwelle describes his feelings regarding the change in the law saying the holding shows that the law is finally catching up with society and its changes. That is not the only change in German law. This past February, the Constitutional Court held that a member of a civil union could adopt their partners child. This law will be effective in 2014.

See Scott Roberts, Angela Merkel Told to Equalise Tax Benefits for Gay Couples in Constitutional Court, Pink News, Jun. 6, 2013. 

Hospital Accused of Scheming to Take Money From Millionaire Huguette Clark

Recently, a suit was filed in court by Huguette Clark's relatives alleging that the hospital that treated Clark was scheming to take money from Clark's $300 million dollar estate. Clark was admitted to Beth Israel Medical Center in 1991 when she was found in her apartment very ill. She was treated for skin cancer and subsequently stayed at the hospital despite not having a medical basis to do so.

Huguette Clark died at age 104 after living in Beth Israel Medical Center in Manhattan for twenty years. During the twenty-year stay, Clark was approached for donations to the hospital. In fact, she gave over four million dollars in cash donations, a painting worth six million dollars, and left another million to the hospital after death. Moreover, the nurses tending to Clark received roughly twenty eight million dollars in gifts, and the doctor’s families were given an additional three million dollars. If that wasn’t enough, Clark was also charged $800 a day to stay at the hospital. The hospital spokesperson released a statement claiming that the individuals bringing the lawsuit are distant relatives with whom Clark did not associate. Further, the press that this suit is receiving is concerning because Clark chose to live a very private life. The hospital administration values private philanthropy and is grateful for Clark’s contributions. 

See Ryan Grenoble, Were Huguette Clark's Donation to Beth Israel Part of a Hospital Plot to Game the Elderly Heiress, Huffington Post, May 30, 2013.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

The Supreme Court of Canada Refused to Hear Sperm Donor Case

In Vancouver, Olivia Pratten failed in her attempt to have the Supreme Court hear her case regarding sperm donation and access to information on the donor. Her argument was that kids conceived through donated sperm should have the same options as children who are adopted.  Since 1996, adopted children have been able to learn information about their biological parents. Children are able to access medical history and other information. She took on the case to have the law get on board with different reproductive processes. Pratten stated "This is an area that has no legislation on it, and there's more people who are conceived this way." The B.C. Supreme Court agreed holding that anonymous sperm donors could be “harmful to the child”. However, the B.C. Court of Appeals overturned the lower courts ruling. Pratten appealed to the Supreme Court of Canada to interfere, but the court said it would not hear the case. 

See Olivia Pratten Sperm Donor Case Won't Be Heard By Supreme Court, HuffPost British Comumbia,  May 30, 2013.

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

Florida Court Dismissed Suit Claiming that Florida Statute Abolished Common Law Right

Louis Steinmetz is the beneficiary of a spendthrift trust worth millions. Wells Fargo is the trustee of the trust. If the trust distribution would be accessible to creditors, Steinmetz will not be able to receive distributions. Steinmetz secured a loan of $350,000 for an LLC. He was the personal guaranty on the loan. However, Stienmetz was unable to pay the loan and defaulted. As a result, Wells Fargo made no distribution to Steinmetz. The loan lender is suing Wells Fargo claiming that Florida state law violates the state constitution. Specifically, that the state law gets rid of the “common law” right to secure a judgment against any interest that the debtor has and provides no alternative.

In Robert Zlatkiss and Linda Zlatkiss v. All America Team Concepts, LLC. (5th Dist., Case No. 5D12-3324, May 31, 2013), the court held that the Florida state law did not get rid of the common law right. The court reasoned that spendthrift trusts were around long before the statute was enacted. Therefore, the court dismissed the suit. 

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

Florida Court Held Mutually Corresponding Promises Have Consideration

A wealthy mother threatened to disinherit her children. As a result, her son and daughter made an oral promise to divide whatever was inherited from their mother's estate equally. The mother died leaving a will that disinherited son and named her daughter as the sole beneficiary of the estate. When the son went to enforce the promise his sister refused to honor their agreement claiming it failed for lack of consideration. 

In Ferguson v. Carnes, the court held that the “mutually corresponding promises” were sufficient consideration. The court reasoned that the promise between the siblings to split their inheritance equally meant that each person was giving up the possibility to inherit more so that each would get something. 

Ferguson v. Carnes, No. 4D12-54, 2013 WL 1316345 (Fla. Dist. Ct. App. Apr. 3, 2013).

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

Tenth Circuit Allows Foreclosure on Purchase-Money Resulting Trust

The U.S. Tenth Circuit Court of Appeals recently published an opinion concerning government foreclosure of property titled in the name of a trust.

In U.S. v. Tingey, the government wanted to foreclose on federal tax liens on a ski cabin titled in the name of the Douglas E. Brown Family Trust.  Brown and his wife owed the government taxes, but not the trust.  However, the district court permitted the foreclosure after finding “that the Browns were the beneficial owners of the cabin because Brown had a purchase-money resulting trust (PMRT) arising from his having purchased the cabin and then conveyed it to the Family Trust.”

U.S. v. Tingey, No. 12-4000, 2013 WL 2321656 (10th Cir. May 29, 2013).

Ohio Court Says Funeral Luncheon is a Reimbursable Expense

Lunch for mourners after a funeral is typical in many traditions. Recently, an Ohio court decided if lunch following a funeral was a reimbursable expense. In 2011, Kathy Campbell died. Her will appointed Joan Torzewski as the executrix of the estate. Campbell’s will indicated that all funeral expenses should be paid out of her estate. Joan’s siblings were reimbursed $1,800 dollars for a funeral luncheon they had paid out of pocket for. Joan claimed that the lunch was a critical part of the funeral ceremony because of Polish tradition. The reimbursement was challenged. 

In re Estate of Kathy M. Campbell, a case of first impression, the Ohio intermediate appellate court held that the cost for a funeral luncheon is a reimbursable funeral expense under the Ohio law. The court reasoned that under the Ohio Revised Code 2117.25  the lunch was not excluded from being considered a funeral expense. Additionally, the lunch was a reasonably incurred expense because people ordinarily include a luncheon following a burial.

In re Estate of Kathy M. Campbell, No. WD-12-028, 2013 WL 1385635 (Ohio Ct. App. Apr. 5, 2013).

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

A Surviving Spouse is a Necessary Party to a Will Contest

When Virgil Becker died his will gave his entire estate to his youngest daughter by his second marriage. Becker's will left nothing to his widow, his ex-spouse, or his daughters by the ex-spouse. Washington law provides rules for judicial and nonjudicial settlements of estate contests and define interested parties to include all those beneficially interested in the estate.  

In re Estate of Becker, the Washington Supreme Court held that a surviving spouse who is not a beneficiary of the will of his or her deceased spouse is a necessary party to the settlement of a will contest because if the will is invalid, the surviving spouse would receive half the probate estate either through in intestacy or the omitted spouse statute.

In re Estate of Becker, 298 P.3d 720 (Wash. 2013)

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

Virginia Supreme Court Held Slayer Statute Incudes Persons With Mental Illness

As I have previously discussed, on December 7, 2009, Carolyn Osman died from strangulation. She left behind three kids all of which were beneficiaries to her estate. However, one of her sons Michael Osman caused her death. Osman suffered from paranoid schizophrenia and strangled his mother. He confessed to causing her death and was found not guilty by reason of insanity. 

In Osman v. Osman, the court held that a beneficiary found not guilty by reason of insanity is disqualified under slayer’s statute. The Supreme Court of Virginia held that son was disqualified from taking a share of the decedent’s estate under Virginia’s slayer’s statute. 

Osman v. Osman, 737 S.E.2d 879 (Va. 2013).

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

Supreme Court Ruling Reminds People To Update Beneficiary Forms

Recently, the U.S. Supreme Court emphasised the importance of keeping up with your beneficiary designation form. In 2008, Warren Hillman died. He had a insurance policy valued at $124,558.03 that his ex wife Judy Maretta, and current wife were fighting over.

In Hillman v. Maretta, The Supreme Court held that Judy Maretta was entitled to all of the insurance proceeds.The court stated that the beneficiary designation form was not updated after Hillman was diagnosed with leukemia. Some states have laws protecting spouses from these types of mistakes. Even though Virginia does have this protective statue, the life insurance policy was part of a program for federal employees. The Federal Employee's Group Life Insurance Act of 1954 regulates these policies. The act indicated that the proceeds must be paid according to the beneficiary designation form. If the policy holder does not have one the policy is paid out through intestacy. The Supreme Court ruled that the act preempts the Virgina state law that protects spouses from these mistakes.

See Deborah L. Jacobs, Supreme Court Favors Ex-Wife Over Widow In Battle For Life Insurance Proceeds, Forbes, Jun. 3, 2013.

Unrecoverable Legal Malpractice Claim

The Kansas Supreme Court recently heard a case about legal malpractice resulting in excessive estate tax liability. The testator secured an attorney to draft a will and other documents. After the testator died, her estate was valued at $39.5 million. However, the estate taxes owed on the estate were almost $22 million. The personal representative brought an action against the decedent’s attorney and others alleging negligence, breach of fiduciary duty, and breach of contract resulting in payment of estate taxes that could have been minimized by proper planning.   

In Jeanes v. Bank of America, the court held that because the cause of action accrued at the decedent’s death, it could not qualify as a survival claim and therefore could not be pursued by the personal representative. Therefore, the claim for legal malpractice is not recoverable.

Jeanes v. Bank of America, NA, 295 P.3d 1045 (Kan. 2013).

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

66-Year-Old Case Over Land & Honor

Today fourth generation petitioners are arguing a 66-year-old case over land ownership. In 1947, right before India declared its independence as a country, Biseshwar Singh filed suit against Har Govind Rai. The dispute arose over a plot of land that both families claim to own. Singh states that his family has spent over 2 million rupees over the 66 years in this legal battle. The land in dispute is worth only 15,000 rupees. However, now the families claim the dispute involves honor and status in the community. There are millions of pending cases in the India district courts. Moreover, there is a problem with judge vacancies. Lawyers from both sides speculate that the solution will have to come from a settlement agreement that does not seem likely. 

See Panta Bihar, India Bihar Families Fight for 66 Years Over a Plot of Land, BBC News India , May 27, 2013.

Family Turmoil Might Split Billion Dollar Foundation

As I have previously discussed, the legal battle between the William Davidson's widow and son versus Jonathan Aaron, co-executor of Davidson's estate and president of the William Davidson foundation, and wife Mary is expected to continue in Delaware once the suit is filed. Allegedly, Jonathan Aaron fabricated a family dispute to gain exclusive control of half the foundations assets.

Currently, the foundation cannot be managed because of the board members 2-2 gridlock. As a result, the foundation cannot govern itself or distribute any assets because of this impasse. 
Aaron, was attempting to split the foundation’s$1 billion in reported assets. 

 

Aaron's petition to split was unsuccessful because the court held that the case has to be heard where the foundation is incorporated. Aaron's salary for serving as board president is the reason for the lawsuit. 

Aaron currently receives $125, 000 annually, but the foundation calls for his base salary to be paid on a sliding scale of from a $180,000 range to $600,000 depending on the total assets in the foundation. The two sides are currently mounting their defenses. 

See Chad Halcom, Court Records Show Foundation of Davidson Family Dispute, Crains Detroit, May 26, 2013.

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

Parent- Child Relationship Can Be Proven Through Equitable Adoption

A parent-child relationship may be shown by equitable adoption. Donald held plaintiff out to be his son for over 60 years. In 2000, plaintiff attempted to use his birth certificate to obtain a passport, but found that the record of plaintiff’s birth was different than an official copy. It soon came to light that Donald had adopted the plaintiff. Although Donald believed that it was a legal adoption, there were no legal documents on the adoption. Even after the discovery, Donald continued to hold the plaintiff out to be his son. This suit was brought about because Donald signed a will claiming he did not have any children shortly before he died. That will is being contested because of alleged fraud and undue influence. 

In DeHart v. DeHart, the Illinois Supreme Court held that a parent-child relationship could be proved not only under a contract to adopt, but also under an equitable adoption theory. The putative child must show by clear and convincing evidence an intent to adopt on the part of the putative parent or a mistaken or fraudulent holding out of the child as the parent’s natural child in the context of a “close enduring familiar relationship.”

DeHart v. DeHart, 986 N.E.2d 85 (Ill. 2013)

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

Washington Court Deems A Resident's Asset Protection Trust Invalid

As I have previously discussed, a few state legislatures have constructed asset protection trust statutes that permit a grantor to create a trust that is shielded from the grantor’s creditors even though the grantor is be a beneficiary. Recently, a court in Washington addressed the issue concerning asset protection trust. In 2008, a Washington resident created an Alaska asset protection trust. He created the trust because of a failing market and serious financial hardship. 

In re Huber, the court held that the funding of the trust was considered fraudulent under the Bankruptcy Code. Moreover, the court held the trust was not valid because of the Conflict of Laws provision. The effects of this disputed analysis mean that every self- settled spendthrift trust made by a Washington domiciliary would be invalid no matter what circumstance. The court reasoned that the trust had a significant relationship with Washington, which had negative public policy on asset protection trusts. Some speculate that absent the fraud the outcome of the case may have been different.

See Gideon Rothschild and Daniel S. Rubin, Alaska Asset Protection Trust Deemed Invalid Under Washington Law, WealthManagement.com, May 23, 2013.

Sperm Donor Has No Parental Rights

Recently, a court in Florida addressed whether a sperm donor who donated sperm the "do-it-yourself" way, is entitled to receive parental rights. A.A.B and S.C. were in a serious relationship. They wanted to have a child so they asked S.C.'s brother, B.O.C., to be the sperm donor. B.O.C. did donate his sperm to impregnate A.A.B. after three tries the "do-it-yourself" way. However, a few years later A.A.B and S.C. had a bitter break up and A.A.B. refused to allow S.C. to see the child. Subsequently, B.O.C filed a cause of action to determine paternity and visitation.

In A.A.B. V. B.O.C.,Jr., the court held that the fact that the sperm donor conceived the child the old fashioned way did not automatically rule out the use of section 742.14 that the donor of sperm shall relinquish all parental rights. The court explained that there was an agreement that B.O.C. would only be the sperm donor. Even though there was no written contract, all of the parties agreed to the terms for over five years. Therefore, A.A.B and B.O.C. were not a "commissioning couple". As a result, because the facts indicate that B.O.C was only a sperm donor he does not have any parental rights to the child. 

A.A.B. V. B.O.C.,Jr., 2D11-6273 (Fla. 2d DCA 2013).

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