Wills, Trusts & Estates Prof Blog

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

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Sunday, November 9, 2014

Wyly Brothers Held Liable as De Facto Trustees

GAVELAs I have previously discussed, the Wyly brothers were found liable for fraud in connection with an offshore trust scheme and ordered to pay disgorgement. The brothers were held liable for the actions of the trustees under the theory that they were de facto trustees. This de facto trustee argument has been rejected by courts, including the Supreme Court, in the past when the IRS has attempted to use it, but the SEC was able to successfully hold the brothers liable under the theory. One explanation for this change is that the  facts of this case created a very strong argument that the brothers were actually in control of the trust. The brothers, according to the court, dictated the decisions of the trustees and were never turned down. The court reasoned that the substance over form doctrine should control and act to hold the brothers liable.

See Steve R. Akers, Resurrection of "De Facto Trustee" Concept, Bessemer Trust, Nov. 2014.

November 9, 2014 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, November 8, 2014

Sherlock Holmes Public Domain Decision Stands

GavelAs I have previously discussed, the character of Sherlock Holmes was held to be public domain by the 7th circuit earlier this year. Sherlock Holmes author Arthur Conan Doyle’s estate appealed the decision.  On Monday, the Supreme Court of the United States decided to not hear the estate’s appeal, and ended the dispute over whether author Leslie Klinger had to pay and obtain a license from the estate to publish his Sherlock Holmes book.

See, Case of Sherlock Holmes Copyright Closes After US Supreme Court Refuses Appeal, The Guardian, Nov. 3, 2014.

November 8, 2014 in Current Affairs, Current Events, Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Friday, November 7, 2014

Federal Court Upholds Same-Sex Marriage Bans

Gay marriage

On Thursday, a federal appeals court in Ohio upheld the right of four states to ban same-sex marriage, contradicting prior rulings by appeals courts and almost certainly sending the issue to the Supreme Court. 

The decision, written by Judge Jeffrey S. Sutton, overturned lower court rulings in Kentucky, Michigan, Ohio and Tennessee that were in favor of same-sex marriage.  Judge Sutton dismissed the reasoning issued by other federal courts, which have held that barring same-sex marriage violates equal protection or due process clauses of the Constitution.

Dale Carpenter, a professor of constitutional law at the University of Minnesota, said “This is the circuit split that will almost surely produce a decision from the Supreme Court, and sooner rather than later,” “It’s entirely possible that we could have oral arguments in coming months and a Supreme Court decision by next summer.” 

Gay rights groups and lawyers for the plaintiffs in the affected states expressed their discontent with the decision, “We’re extremely disappointed for the families in these four states, but this decision highlights the need for the U.S. Supreme Court to right this injustice.” 

See Erik Eckholm, Court Upholds Marriage Bans In Four States, The New York Times, Nov. 6, 2014.

November 7, 2014 in Current Affairs, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 5, 2014

Fee Agreement Cannot Solely Rely on Statutory Schedule, Says Florida Court

GavelA Florida estate planning attorney will have to pay back his fees collected for estate administration services and cannot discharge the debt in bankruptcy due to his actions constituting breach of fiduciary duty, according to a Federal district court in Florida. The attorney became co-trustee of his deceased client’s trust, and then entered a fee agreement to perform administrative duties for the estate and trust as an attorney. The fee agreement stated that he would charge a fee according to the Florida Probate Code and the Florida Trust Code, but no specified amount or method of calculation.

In West v. Chrisman, the court held that even though the fees listed in the Florida statutes are presumably reasonable, the ambiguity of the fee agreement made it unenforceable and the attorney’s representation to his co-trustee that the statutory fees were required was a breach of fiduciary duty.

See Jeffrey Skatoff, Attorney Fee Computed Under Probate Code Schedule = Breach of Fiduciary Duty, Clark Skatoff, Nov. 5, 2014.

November 5, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, November 3, 2014

South Carolina Allows Intended Beneficiaries to Bring Malpractice Claims

WillThe issue of when an intended beneficiary can bring a malpractice lawsuit against the attorney who drafted the will that fails to provide for the beneficiary varies by states. Two main views that courts use in determining this issue are the Lucas rule and the narrower Florida-Iowa rule. The Lucas rule comes from a California case and allows intended beneficiaries to bring claims against the attorney either in tort or contract using a Balancing of Factors test. The Florida-Iowa rule limits liability and privity to beneficiaries that were intended by the intent of the testator expressed in the actual document, which does not cover those that are missing.

In Fabian v. Lindsay, the South Carolina Supreme Court adopted the broader Lucas rule, reasoning that the testator intends their estate planning to benefit the intended beneficiaries and that this broader rule helps enforce the testator’s intent.

See Jeffrey Skatoff, Estate Planning Malpractice: South Carolina Adopts Expanded Rule of Liability, Clark Skatoff, Oct. 31, 2014.

November 3, 2014 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, November 2, 2014

Court Refuses to Declare Zorro Public Domain

GAVELAs I have previously discussed, the 7th circuit declared earlier this year that the character of Sherlock Holmes is public domain. However, an intellectual property case with similar facts regarding the character of Zorro did not come out the same.  After Zorro Productions Inc. (ZPI) inherited Zorro related rights, they began licensing use of the character, which resulted in projects such as the Zorro film that starred Antonio Banderas. Playwright, Robert Cabell, brought suit seeking declaratory judgment from a Washington district court that his play “Z—The Musical of Zorro” was not an infringement of rights held by ZPI. Due to the plays production taking place in Germany, the case was dismissed for lack of jurisdiction resulting in Zorro failing to join Sherlock Holmes in the public domain.

See Eriq Gardner, Judge Nixes Playwright’s Bid to Free ‘Zorro’ From Intellectual Property Grip, The Hollywood Reporter, Oct. 29, 2014.

November 2, 2014 in Current Affairs, Current Events, New Cases | Permalink | Comments (0) | TrackBack (0)

Family of Marvin Gaye Survive Summary Judgment Motion

Marvin_GayeAs I have previously discussed, Robin Thicke and Pharrell Williams have brought a lawsuit seeking declaratory judgment against the family of Marvin Gaye that their song Blurred Lines did not infringe on the family’s rights to Gaye’s Got to Give It Up.  The California district court denied Thicke and Williams’ summary judgment motion on Thursday, finding that the Gaye Family has enough of a case to move forward. This is expected to be an exciting case, as already shown by Thicke’s confessions of drug use and public lies in his deposition.

See Eriq Gardner, Judge Rejects Bid of Robin Thicke, Pharrell Williams to Win ‘Blurred Lines’ Lawsuit, The Hollywood Reporter, Oct. 30, 2014.

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

November 2, 2014 in Estate Administration, Music, New Cases | Permalink | Comments (0) | TrackBack (0)

Saturday, November 1, 2014

Denial of Social Security Survivor Benefits for Same-Sex Widow Challenged in Court

Gavel-marriageKathy Barker legally married her wife Sara in 2010 in Massachusetts. Sara died from cancer in 2012 and Barker now lives in Texas. Barker applied for and expected to get Social Security survivor benefits, but was denied benefits by the Social Security Administration due to the fact that Texas does not recognize same-sex marriage. Texas is currently one of 18 states that do not recognize same-sex marriages. Last week, Lambda Legal filed suit in a federal court in Washington, D.C. arguing that the policy is unconstitutional.

See Kenneth Jost, Supreme Court Keeps a Widow Waiting, Jost on Justice, Oct. 26, 2014.

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

November 1, 2014 in Current Affairs, Current Events, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Friday, October 31, 2014

$44 Million Legal Bill Upheld


The top appeals court in New York has granted a $44 million bill for legal work that lasted less than five months, rejecting an argument that lawyers for a real estate entrepreneur’s wealthy widow had a “Svengali-like influence” on her.

The New York Court of Appeals also ruled that Graubarb Miller lawyers do not have to return $5 million in gifts they received from Alice Lawrence, saying this claim was made too late.

Taken up by Alice Lawrence’s estate after her death in 2008, the battle over the $44 million legal bill concerns a contingency-fee arrangement that she entered into with the Manhattan law firm.  The battle centered around the executor of her husband’s estate and control of his real estate holdings. 

In hopes of saving money, Lawrence agreed to pay the firm 40 percent of any future recovery.  Within five months, the litigation settled for $111 million.  Flabbergasted at paying Graubard the $44 million fee, new litigation ensued.

Yet, in reversing the Appellate Division ruling, the Court of Appeals said Lawrence was bound by the agreement, “She was a competent and shrewd woman who made a business judgment that was reasonable at the time, but which turned out in retrospect to be disadvantageous.”

See Martha Neil, Top NY Court Says Widow’s Estate Must Pay Lawyers $44M for Less Than Five Months’ Work, ABA Journal, Oct. 29, 2014. 

October 31, 2014 in Estate Planning - Generally, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Thursday, October 30, 2014

Leroy Hill Coffee Goes to Children Despite Will

CoffeeAfter the death of Leroy Hill, of Leroy Hill Coffee Co., in 2009, his widow and adult children from a previous marriage began a legal battle over the inheritance of the company and the family farm.  His children argued that their inheritance in the company and farm was agreed upon by their mother and Hill as part of their divorce agreement and that the agreement invalidated Hill’s will, which left the company and farm to his second wife. The children’s suit was successful and their award of the inheritance was recently affirmed by the Alabama Supreme Court.

See Brendan Kirby, Supreme Court Affirms Ruling in Family Feud, Clears Way for Children’s Inheritance of Coffee Empire, AL.com, Oct. 17, 2014.

October 30, 2014 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)