Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, December 19, 2014

The Importance of Consistent Estate Planning

Tax3An important lesson in coordinating all accounts and estate planning tools to match estate planning goals was illustrated in a recent Private Letter Ruling. A trust was created which named charities to receive donations from the trust. There was not enough funding for the charitable contributions, but the trust was named as a beneficiary of an IRA. A state court approved the taxpayer's petition to reform the trust so the funds from the IRA to the trust and then from the trust to the charities would be direct bequests from the IRA to the charities.

In  Private Letter Ruling (201438014), the court's grant of the reformation for the purpose of beneficial tax treatment was not allowed, and the IRA distribution to the Trust would be income. Additionally, the donations would not be deductible because gross income was not required under the trust terms to be used to make the donations.

See Joseph Tamburello, Coordinate Your IRA Beneficiary Designation With the Terms of Your Estate Plan, The National Law Review, Dec. 18, 2014.

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

December 19, 2014 in Estate Planning - Generally, Income Tax, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

James Dean Twitter Lawsuit Dismissed

James DeanAs I have previously discussed, the estate of iconic actor James Dean filed a lawsuit against Twitter in February to gain ownership of the Twitter handle @JamesDean, which was being used by an unknown user as a fan page. The suit has been dismissed without prejudice and without any explanation given in the notice. However, previous court documents and statements by the parties infer that the estate was having difficulty identifying and locating the person behind the @JamesDean account and thus could not serve the individual with notice of the suit. Despite the dismissal, the estate is taking steps to take over the @JamesDean handle as an official page, and the estate's representation said the previous Twitter account was removed.

See Tim Evans, James Dean Estate Drops Lawsuit Against Twitter, Indy Star, Dec. 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.

December 19, 2014 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Thursday, December 18, 2014

New Case: Willingham v. Matthews


In Willingham v. Matthews, a husband killed his wife and then took his own life.  Under Alabama’s slayer statute, the slayer is not entitled to any benefits under the victim’s will or as beneficiary of any non-probate property, and the victim’s estate and non-probate property is distributed as if the slayer had predeceased the victim. Ala. Code § 43–8–253. The wife’s personal representative brought an action for a declaration that the slayer’s estate would be distributed as if the slayer had predeceased the victim, which would mean that the husband’s estate and at least some non-probate property would pass to his wife’s estate and moved for summary judgment. The court held that under the plain meaning of the statute its provisions applied only to the disposition of the estate of the victim.  Willingham v. Matthews, No. 1130890, 2014 WL 4666962 (Ala. Sept. 19, 2014).

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

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

Germany's Tax Exemption for Family Businesses Ruled Unconstitutional

Tax2As I have previously discussed, Germany's inheritance tax exemption for family operated companies was challenged in Germany's Constitutional Court. The court held yesterday that the current inheritance tax breaks for the family businesses are unconstitutional because they fail to give equal treatment to individuals and companies. The current exemption rules will continue for now, as lawmakers have a deadline for remedying the problem of mid-2016. However, lawmakers may be able to create a system that is more limited than the current rules that still offers some tax breaks to these companies.

See Reuters, German Court Declares Tax Breaks for Family-Run Firms Unconstitutional, The Economic Times, Dec. 17, 2014.

December 18, 2014 in Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 17, 2014

New Case: Ferguson v. Critopoulos


In Ferguson v. Critopoulos, the Alabama Supreme Court held that a will beneficiary met the burden to show that the decedent provided for spouse outside the will.  The decedent’s will, executed nine years before his second marriage, gave his residuary estate to his first spouse who predeceased him, and made her three children alternate beneficiaries.  After her death, he remarried but did not change his will. His surviving spouse then claimed an omitted-spouse’s share under a statute giving an intestate share to the spouse “unless it appears from the will that the omission was intentional or the testator provided for the spouse by transfer outside the will and the intent that the transfer be in lieu of a testamentary provision be reasonably proven.” Ala. Code § 43–8–90. The trial court held that the intent was not proven, and the supreme court reversed, setting out guidelines for determining when a transfer outside of a will is in lieu of a testamentary provision. In this case, the testator changed the beneficiary of insurance policies and retirement accounts to the new spouse and considered changing his will but did not, all of which showed that the testator provided for the spouse outside of the will. Ferguson v. Critopoulos, No. 1130486, 2014 WL 4666935 (Ala. Sept. 19, 2014).

December 17, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Workers' Comp Worth 23 Years of Benefits to Widow Affirmed

GavelAfter her husband died from injuries caused by a 30 feet workplace fall, Doloreza Taluri, was awarded permanent partial disability benefits of $959, 175. The award was calculated based on 1,225 weeks of benefits. The employer of Taluri's husband, Arberia L.L.C., challenged the award because Mr. Taluri only survived for 4.5 hours after his fall and argued that the benefits should be limited to one week.

In Arberia v. Industrial Commission of Ohio, an Ohio appeals court upheld the benefits because Mr. Taluri was entitled to the benefits before he died, the calculation was based on medical evidence, and the amount of time Mr. Taluri actually survived the injury was irrelevant.

See Sheena Harrison, Widow of Ohio Construction Worker Due 23 Years' Worth of Comp Benefits: Court, Business Insurance, Dec. 10, 2014.

December 17, 2014 in New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Argument Over Ownership Resolved With Proof of Insurance

InheritanceAfter the death of Kristi Keland, a probate dispute arose between her sister Henni and her husband Tres over who would receive a collection of Native American baskets. Henni argued that she was left the baskets in her sister's will, which left Kristi's personal property to her sisters. Tres argued that the baskets were not Kristi's property, but his, because they were owned by Indian Rock Land & Cattle, LLC, which was controlled by Kristi and Tres.

In Keland v. Moore, an Arizona appeals court in an unpublished opinion held that Tres provided sufficient evidence of ownership of the baskets by providing an insurance policy held by the LLC which covered the valuable baskets, in addition to his testimony.

See Luke Lantta, Insurance as Evidence of Ownership, Bryan Cave Fiduciary Litigation, Dec. 10, 2014.

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

December 17, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 16, 2014

New Case: Fabian v. Lindsay


In Fabian v. Lindsey, the Supreme Court of South Carolina held that a third-party beneficiary has a cause of action for the lawyer’s error in defeating client’s intent.  

After the death of the decedent’s surviving spouse, one-half of the trust property was given to the children of his surviving spouse and the other half to his brother if he survived the decedent, which he did; if he did not, one-quarter to brother’s child and one-quarter to Erika, the child of another brother who predeceased the decedent. The brother died a few weeks after decedent and by the terms of the trust half of the trust remainder passed through his estate to his child. Erika would receive nothing even though two of the three trustees, including the widow and the decedent’s financial advisor, agreed that the trust failed to carry out the decedent’s intent to treat his brother’s child and Erika equally. Erika brought a proceeding to reform the trust, which ended with her accepting a settlement in which she specifically did not release any malpractice claims against the firm that drafted the trust.  She then brought an action for malpractice and breach of contract against the law firm that drafted the trust instrument.  The trial court granted the defendants’ motion to dismiss for failure to state a claim, but on appeal the Supreme Court of South Carolina reversed, recognizing for the first time a cause of action in both tort and contract by a third-party beneficiary of an estate planning document against a lawyer whose drafting error “defeats or diminishes the client’s intent.” Two justices concurred in the recognition of the tort action but not of the contract action; and they and another justice stated that the burden of proof, not discussed by the majority opinion, should be clear and convincing evidence. Fabian v. Lindsey, No. 27460, 2014 WL 5462562 (S.C. Oct. 29, 2014).

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

December 16, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, December 15, 2014

New Case: In re Estate of Scherer


The Supreme Court of Wyoming refused to recognize the doctrine of equitable adoption on the plain meaning of Wyo. Stat. § 2-4-104, which provides that “stepchildren and foster children and their descendants do not inherit.”  The court also supported its conclusion by noting that one of the purposes of the probate code is to simplify and clarify the administration of the law, which the complexity inherent in applying the concepts of equitable adoption would undermine. In re Estate of Scherer, 336 P.3d 129 (Wyo. 2014).

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

December 15, 2014 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Saturday, December 13, 2014

Coordinating Estate Plans With Shareholder Agreements


The Virginia Supreme Court recently provided a reminder of the importance for small business owners to synchronize their estate plan with a shareholder agreement or other corporation, partnership, or limited liability company agreements.  In Jimenez v. Corr, 2014 Va. Lexis 153 (Oct. 31, 2014), the Court addressed whether the disposition at death of the shareholder’s stock in a closely held corporation was governed by the deceased shareholder’s will and trust agreement or the corporation’s shareholder agreement.

Here, the deceased shareholder’s estate planning documents consisted of a pour-over will and separate trust agreement.  The trust agreement provided for an equal division and distribution of the deceased shareholder’s assets to her children at her death, subject to an exclusion option for one of her sons to purchase her shares in the corporation.  The deceased shareholder was also a party to a Shareholder’s Agreement with respect to her shares in the corporation.  Although the agreement provided for a mandatory purchase of a deceased shareholder’s share by either the corporation or remaining shareholders, there was an exception allowing a deceased shareholder to convey his or her shares to a member of the shareholder’s immediate family. 

At the time of the shareholder’s death her son and son-in-law were serving as co-trustees of the trust.  The Court held that although all the beneficiaries of the trust were members of the deceased shareholder’s immediate family, the Shareholder’s Agreement prevented the deceased shareholder from bequeathing her stock by way of trust unless both the trustees and beneficiaries qualified as immediate family.

See Rebecca Bowen, When Estate Plans and Shareholder Agreements Collide, JD Supra Business Advisor, Dec. 9, 2014. 

December 13, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)