Wills, Trusts & Estates Prof Blog

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

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Tuesday, April 21, 2015

Section 8 Eligibility Lost Due to Special Needs Trust Payments

Gavel2After receiving a $330,000 settlement for personal injury claims, 59-year-old Kimberly DeCambre became the beneficiary of a court-established special needs trust. DeCambre also received Supplemental Security Income, Medicaid, and a Section 8 housing voucher. Her Section 8 eligibility was revoked by the Brookline Housing Authority (BHA) due to trust disbursements in excess of $60,000 in one year. DeCambre sued the BHA claiming disability discrimination and due process violations. One of her arguments was that the BHA's determination was improper because if her settlement had been in a lump sum instead of in a trust it would not have counted as income.

In DeCambre v. Brookline Housing Authority, the U.S. District Court for the District of Massachusetts affirmed the BHA's denial of benefits finding the determination reasonable, but noted that "until the rules and regulations are clarified, public housing authorities should provide clear guidance and instruction for potential tenants with regard to their financial planning and spending."

See SNT Payments Cause Section 8 Ineligibility, Elder Law Answers, Apr. 13, 2015.

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

April 21, 2015 in Elder Law, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, April 20, 2015

U.S. Mint Ordered to Return Family's Rare Coins

Double EagleIn 2003, ten gold coins  were found by Joan Langbord in her  late father's safety deposit box. The Double Eagles, $20 coins minted in 1933 but not released, were confiscated from the Langbord family by Mint officials who assumed the never released coins must have been obtained illegally. The Langbords sued for return of the coins in 2006. A jury found for the government in 2011, and the family appealed.

In Langbord v. U.S. Dep’t of the Treasury, the Third U.S. Circuit Court of Appeals found that the coins should be returned to the family, because the government failed to comply with the 90-day filing deadline required under the Civil Asset Forfeiture Reform Act of 2000.

See Ashby Jones, Court Orders U.S. Mint to Return Famed Coins to Family, Wall Street Journal, Apr. 17, 2015.

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

April 20, 2015 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Saturday, April 18, 2015

Revocable Trust Trustor, Trustee, Beneficiary Allowed to Recover from Arizona's Residential Contractors’ Recovery Fund

GavelAfter problems with the construction of Krishna Pinnamaneni's home he filed a complaint under the Residential Contractors’ Recovery Fund requesting compensation. The Fund created by Arizona statute allows a "person injured" to recover when a contractor performs deficient work.

The work performed by the contractor was determined to be deficient by an administrative judge, but the Arizona Registrar of Contractors (ROC) denied Pinnamaneni's claim based on it being filed by someone that was not an "injured person." The real property that is the site of the home is owned by a revocable trust, which Pinnamaneni is the trustor, trustee, and beneficiary. The contract with the contractor was made by Pinnamaneni through his LLC, Pioneer Family Investments. The denial of Pinnamaneni's claim was affirmed by a superior court, and Pinnamaneni appealed.

In Pinnamaneni v. ROC, an Arizona appeals court reversed the superior court, and held that Pinnamaneni met the required definition of an "injured person" and that the "statute does not require contractual privity between an owner of property and the residential contractor as a prerequisite to recovery from the Fund."

Special thanks to Ike Devji for bringing this case to my attention.

April 18, 2015 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, April 16, 2015

Florida Permits Waiver of Homestead Rights with General Release Language

FloridaMay a surviving spouse waive his or her homestead rights with a warranty deed containing only “boilerplate general release language?”  Florida’s Fourth District Court of Appeals recently answered this question in Stone v. Stone, 157 So. 3d 295 (Fla. 4th DCA 2015).  In this case a disinherited heir, Ross, argued that the devise of property into a trust was invalid because his mother and decedent’s spouse, Alma, did not validly waive her homestead rights.

According to Florida law, if a decedent is only survived by his spouse and children the decedent can only devise a full fee interest in his homestead to his spouse, unless she waives her homestead rights.  Ross wanted his mothers’ waiver to be declared invalid because Florida law would permit him to inherit a “per stirpital” share of the homestead’s vested remainder.  The court upheld the validity of the waiver because Alma signed a warranty deed containing general release language.  Florida estate planners are divided over this ruling and have differing opinions on how specific the language needs to be in a waiver of homestead rights. 

See Elizabeth Bowers and George Karibjanian, Florida Homestead Rights Can Be Waived by Warranty Deed, Trusts & Estates, April 14, 2015.

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

 

April 16, 2015 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

PLRs Approve Beneficiary of GST-Exempt Trust Transactions

Gavel2In four similar Private Letter Rulings, the Internal Revenue Service determined that the proposed sale by two trusts of farmland to a beneficiary would not cause either trust to lose its Generation Skipping Transfer Tax exempt status, nor would it trigger any gift tax or estate tax consequences.  The practical effect of these rulings would “secure a commitment from IRS in advance of closing that it would not later assert the farm had been undervalued.”

See Four More PLRs Approve Transaction with Beneficiary of GST-Exempt Trusts, Charitable Planning, Apr. 13, 2015.

April 16, 2015 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Iowa Case Explores Issues of Sex, Consent, Dementia

GavelOpening statements were heard last week in an Iowa criminal case that is exploring a question that is still unresolved in the scientific community of whether, when, or how dementia patients can consent to sex.  Henry Rayhons is charged with third-degree felony sexual abuse for allegedly having sex with his wife in her nursing home room last year. Rayhons' wife had severe Alzheimer's and doctors had recommended that Rayhorn no longer engage in sexual relations with her. Rayhorn denies having sex on the day charged and has said that his wife continued to ask for sexual contact.

Experts are split on the issue, with some saying that continued sexual relations is healthy for dementia patients and that safeguards can be put in place by nursing home staff to ensure the individual understands what is happening and is not being harmed. Other experts say that they are unable to consent and their desires are a primal response absent the understanding needed to give consent.

See Pam Belluck, Sex, Dementia and a Husband on Trial at Age 78, New York Times, Apr. 13, 2015.

Special thanks to Lewis Saret and Adam T. Uszynski (Meier, Bradicich & Moore, LLP, Victoria, Texas) for bringing this article to my attention.

April 16, 2015 in Elder Law, New Cases | Permalink | Comments (1) | TrackBack (0)

Social Media Accounts Included in Bankruptcy

FacebookIn a Chapter 11 reorganization of CTLI, LLC, social media accounts became the core of the dispute. CTLI had been doing business as Tactical Firearm and incurred a debt to purchase a building so the business could expand to include an indoor firing range in Katy, Texas. The Debtor was ordered to release a Facebook and Twitter account to the creditor, but the owner argued that the accounts were personal and not business property.

In In re: CTLI, LLC, Chapter 11, Debtor,the U.S. Bankruptcy Court, S.D. Texas, Houston Division held that the accounts in question were business property and that a business' social media accounts are included in the company's bankruptcy estate. The court further found that the required transfer of the accounts did not violate privacy rights.

Special thanks to Joseph Jacobson (Law Offices of Joseph Jacobson, Dallas, Texas) for bringing this case to my attention.

April 16, 2015 in Estate Planning - Generally, New Cases, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Saturday, April 11, 2015

Overturning Wills Created Under Suspect Circumstances

WillsAn incident from Florida offers excellent instruction on how to combat a will created when the testator suffered diminished capacity and was being unduly influenced. In this case, the Testator began to suffer from dementia but married a year later in spite of his worsening condition. Predictably, his new bride took action to change the will to leave the entire estate to herself and exclude the husband’s daughter. Using evidence such as recorded phone calls, mental history of the deceased, recent financial decisions and other documentation the family was able to have the will overturned. This goes to show that prudent action by the potentially wronged beneficiaries in suspect situations can pay off if a problem emerges at probate.

See Tom Nawrocki, Overturning a Suspect Will: A Case Study, Life Health Pro, Apr. 6, 2015.

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

April 11, 2015 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, April 10, 2015

A Joint Trust Cautionary Tale

Trust3Joint trusts may fail in their purpose of being convenient, and create more headaches when the terms of each trust and assets segregated at the death of the first spouse is unclear. A private letter ruling illustrates possible problems that may occur, which involved the failure to segregate trust assets between the family trust and the survivor's trust based on erroneous advice from a previous estate attorney.  After the surviving spouse's death the estate was seeking to exclude the family trust assets from the estate.

In  PLR 201429009, the IRS allowed the family trust assets to be excluded, because the new attorney  backed up the correction of the problem through accounting and forensic financial review.

See John P. Dedon, Joint Trusts – Helping or Hurting? re: Estate Planning, The National Law Review, Apr. 9, 2015.

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

April 10, 2015 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, April 9, 2015

Court Holds State Can Recover from SNT

Gavel2In Herting v. California Dep’t of Health Care Services, Cal.App.Ct., No. H040220 (6th Dist., March 27, 2015), a California appeals court held that the state can recover $400,000 from a first-party special needs trust established for a beneficiary under the age of 55. 

When Alexandria Pomianowski was injured in a car crash at age 19, she received a $1,424,019.39 settlement that was subsequently placed into a first-party special needs trust for her benefit. Alexandria died several years later, with over a million in the trust.  The Department of Health Care Services was quick to file a $417,812 claim for Medicaid reimbursement against the trust. 

Alexandria’s mother, overseer of the trust, petitioned the court to terminate the trust and deny the Department’s reimbursement claim.  The trial court granted the petition to settle the trust, yet also granted the Department’s claim.  In upholding the trial court’s decision, the Court of Appeals determined that the language in the state and federal laws preventing recovery for services provided to under 55-year-old Medicaid beneficiaries “apply to recovery from the aid recipient’s estate, whereas the Department’s claim was made pursuant to the statutes governing special needs trusts and the terms of the trust at issue.”

See State Can Recover From SNT Even Though Beneficiary is Under 55 Years Old, Elder Law Answers, 2015.   

April 9, 2015 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)