Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Wednesday, July 30, 2014

Inherited IRAs Protected by Some States

IRC

Some investors that are lucky enough to benefit from a nonspousal inherited IRA are better off living in some states than others.  Alaska, Arizona, Florida, Missouri, North Carolina, Ohio and Texas are the only states where nonspousal inherited IRAs are safe from trustees seeking assets in the settlement of bankruptcy cases. 

The recent Supreme Court decision in Clark v. Rameker has the most immediate impact on consumer debtors and on financial advisors who recommend IRAs as estate planning tools.  Lawyers involved in bankruptcy proceedings must decide whether to proceed under a state or federal exemption.  “ There are some states that do protect inherited IRAs so the fact that they are not protected under the federal exemption doesn’t mean that states can’t create their own.  States can create their own exemptions if there is a reason to.”

See Cyril Tuohy, Nonspousal Inherited IRA Assets Protected in 7 States, Insurance News Net, July 29, 2014.

July 30, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 23, 2014

Long Running Breach of Trust Case Shows No Sign of Stopping

FloridaThe case is Siegel v. JP Morgan Chase Bank, and after passing the 10 year mark, it may be the longest running breach of trust suit Florida has ever seen. The case has seen multiple trials and appeals. Now, after JP Morgan Chase has emerged victorious in the latest trial in probate court, the case is headed to appellate court once again. The case involves the beneficiaries of the affluent art collector Dorothy Rautbord challenging distributions made from the trust by corporate trustee, JP Morgan Chase.

See Jeffrey Skatoff,  Breach of Trust Lawsuit in Florida Still Going Strong, Clark Skatoff, July 25, 2014.

July 23, 2014 in New Cases, Non-Probate Assets, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, July 21, 2014

Wells Fargo Terminated As Trustee

Wells fargo

On Thursday, a Circuit Judge in Wisconsin terminated Wells Fargo Bank as trustee of the Chester Bible scholarship trust, furnishing control to the Baraboo Community Scholarship Corporation (BCSC). 

For over a year, BCSC and Wells Fargo have disputed over the administration of the trust, which since 1991 has provided generous scholarships to Baraboo High School graduates.  Yet in recent years, Wells Fargo has raised its fees for administering the fund while decreasing scholarship awards. 

The judge agreed that BCSC would better serve future scholarship recipients since it is a nonprofit operated by volunteers who would administer the trust for free.  “It is no longer economic to continue the trust by Wells Fargo because it failed to administer the trust effectively,” wrote Judge Patrick Taggart.  Because of the legal battle, Wells Fargo charged nearly $27,000 in legal and accounting fees to the trust in 2013. Judge Taggart denied Wells Fargo’s request to have its attorneys’ fees be paid by BCSC.

See Ben Bromley, Judge Rules Against Bank in Trust Battle, Baraboo News Republic, July 19, 2014.

July 21, 2014 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, July 19, 2014

Oklahoma Gay Marriage Ban Overturned

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On Friday, a Federal appeals court ruled that Oklahoma must allow gay couples to wed.  A three-judge panel of the 10th U.S. Circuit Court of Appeals in Denver upheld a federal judge’s ruling striking down Oklahoma’s gay marriage ban, which had been approved by more than 75 percent of voters in 2004. 

The court put its 2-1 ruling on hold pending an appeal, thus same-sex couples will be unable to marry in Oklahoma for the time being.

“We are so grateful that the 10th Circuit understands what more and more people across this country are beginning to realize—that gay and lesbian people are citizens who should enjoy the same rights as straight people under the law.”  Proponents of gay marriage instantly planned rallies in Oklahoma City and Tulsa to celebrate their victory. 

Yet attorney’s for the clerk said they are considering their options, noting that changing the definition of marriage is a right belonging to Oklahoma residents, not a federal court.  “Every child deserves a mom and a dad, and the people of Oklahoma confirmed that at the ballot box when they approved a constitutional amendment that affirmed marriage as a man-woman union.”    

Friday’s decision comes after the same three-judge panel ruled in June that Utah’s ban on same-sex marriage violates the Constitution.  This was the first time an appellate court determined that last year’s U.S. Supreme Court decision striking down the Defense of Marriage Act meant states couldn’t deny gays the ability to marry.  That ruling is also on hold, as Utah’s attorney general has said he plans to appeal to the U.S. Supreme Court. 

See Sean Murphy and Nicholas Riccardi, US Appeals Court Tosses Oklahoma Gay Marriage Ban, My San Antonio, July 18, 2014.

July 19, 2014 in Current Affairs, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Florida Affirms Expansion of duPont Trust

GavelIn 2004, a Florida trial court modified the definition for beneficiaries under the duPont Trust. The Trust funded the Nemours Foundation, which assists “crippled children” and the elderly with medical care costs in Delaware. The court modified the trust to cover children under 18-years-old rather than 21, and included preventative care as a type of covered medical cost. The Attorney General of Delaware, Joseph Biden, III, attempted to intervene in the case last year in an attempt to set aside the part of the judgment that added preventative care.

In Joseph R. Biden, III v. John S. Lord et al., a Florida appeals court denied the intervention because it would harm original parties to the case, and would not protect the Delaware beneficiaries. The modifications to the trust have provided over $111 million of financial support for preventative care to Delaware beneficiaries.

See Anya Van Veen, Biden Loses Bid to Reduce Benefits to “Crippled Children” and the Elderly in duPont Trust Case, Clark Skatoff, July 17, 2014.

July 19, 2014 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, July 18, 2014

Fourth Circuit Rejects Equitable Estoppel Claims for Life Insurance Coverage

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Leslie Moon, the widow of a deceased employee, claimed that her husband’s employer’s actions resulted in Mr. Moon’s failure to convert his life insurance to an individual policy following the onset of his disability.  The Fourth Circuit rejected fiduciary breach and equitable estoppel claims for life insurance coverage by Mrs. Moon.  The Court determined that Mrs. Moon failed to establish that the employer was a fiduciary of the life insurance plan because the employer’s alleged failure to alert Mr. Moon that he was no longer covered  under the plan and its continued acceptance of Mr. Moon’s premium payments constituted administrative functions.  Furthermore, the plan was administrated by a third party.  Moon v. BWX Techs., Inc., No. 13-cv-1888, 2014 U.S. App. LEXIS 12525 (4th Cir. July 2, 2014).

See Todd Mobley, Fourth Circuit Rejects Widow’s Claim for Equitable Relief, Mondaq, July 17, 2014.

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

Thursday, July 17, 2014

Family Can Sue Over Son’s Missing Heart

Broken heartWhen a marine’s body was returned to his family from Greece, not all of him was returned. Somehow during an autopsy is Greece, his heart was missing. The family sued the United States, Greek Officials, and the hospital in Athens that performed the autopsy for negligence. A Federal district judge ruled that while the foreign defendants are immune from the family’s lawsuit, the United States is not. The family hopes that by pursuing their case against the United States they will be able to find out what happened.

See Associated Press, Judge Upholds Lawsuit Over Marine’s Missing Heart, The Detroit News, July 15, 2014.

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

July 17, 2014 in New Cases | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 15, 2014

Woman Faces Claims from Bank for Withdrawing Funds From Joint Account

TheftWhen a grandmother and her son wanted to open multiple bank accounts, they added the granddaughter to the accounts to help manage them. The granddaughter happened to be an employee of the bank. After the son died, the grandmother went to the bank to move the funds totaling over a million dollars into an account under the grandmother’s name alone. Instead of freezing the account to resolve the issue, as the bank told the grandmother would happen, the bank called the granddaughter who with the help of a bank teller transferred approximately half of the funds into her own account. The grandmother sued, and the bank settled with the grandmother and then went after the granddaughter.

In Columbia Bank v. Turbeville, a Florida appeals court reversed the trials court dismissal of the banks' claims against the granddaughter. The court held that the bank could bring claims of equitable subrogation, conversion, and breach of fiduciary duty. This ruling means that this case can go to trial with the bank bringing the claims against the granddaughter.

See Jeffrey Skatoff, Joint Bank Account Holder Removes the Money – What Happens, Clark Skatoff, July 13, 2014.

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

Monday, July 14, 2014

Deathbed Will Case to be Decided Soon

WillJoseph Herb O’Brian died minutes after allegedly dictating a new will to a friend’s attorney and signing with an “X”. The new will left everything except $10,000 to that friend, Kenneth Pawlowski. The validity of the will has been argued in court for the last three years. O’Brian’s stepson, who was left the remaining $10,000, and O’Brian’s brother claim that O’Brian lacked capacity to execute the death bed will and are alleging fraud. A decision in this long disputed case is expected within the next three months.

See Andy Furillo, Final Wishes of a ‘Good Man’ or Deathbed Fraud? Judge to Rule in Probate Case, The Sacramento Bee, July 13, 2014.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

July 14, 2014 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, July 13, 2014

IRS Penalty for Late Filing Affirmed Despite Taxes Paid on Time

GavelAs I have previously discussed, last year the Federal Claims Court held an estate liable for a late filing penalty, which occurred due to the executor relying on legal advice to delay the filing until the surviving spouse became a U.S. citizen and qualified for a marital deduction. Even though the return was filed late, the estimated taxes, which covered the taxes due, were paid before the penalty period was reached. The decision by the Federal Claims Court was appealed.

In Estate of Liftin v. U.S., the United States Court of Appeals for the Federal Circuit affirmed the penalty assessed for filing late. The 25% penalty applied by the IRS was the same penalty that would have been applied if no payment had been made.

See Roger Russell, Estate Liable for Late-Filing Penalty Despite Timely Payment of Taxes, Accounting Today, July 9, 2014.

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

July 13, 2014 in Estate Administration, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)