Wills, Trusts & Estates Prof Blog

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

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Thursday, October 16, 2014

New Case: McCarthy v. Taylor

TrustRequirement that amendments to trust be “in writing” does not require formal execution. Shortly before his death, the settlor/trustee of a revocable trust delivered to his attorney a copy of the executed trust agreement with certain provisions crossed out and substitute provisions he hand wrote above the strike outs. In a contest between an original beneficiary and the person benefited by the handwritten modifications, the trial court found with the aid of extrinsic evidence that the amendment provisions of the trust required only that they be in writing and that the modifications were valid amendments.

In McCarthy v. Taylor, the intermediate Illinois appellate court affirmed, holding that as a matter of law the requirement that an amendment be “in writing” does not require that the writing be a “formal legal document,” be signed, or explicitly state that it is an amendment of the trust.

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

October 16, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 15, 2014

Florida Breach of Trust Case

TrustA recent ruling by a Florida Appeals Court has recognized a breach of trust in a case that involved a trustee ignoring the settlor's written instructions on trust administration that were given before her death. Even though trust formalities were not followed when Lola Kritchman wrote a letter to her co-trustees instructing them to pay for the final two year's of college for Hunter Wolk, the grandson of her first cousin, the court found that the trustees decision to discontinue tuition payments after Kritchman's death was not good faith or prudent trust administration.

In Kritchman v. Wolk, the court held that the failure to follow Kritchman's instructions constituted a breach of trust and that the tuition payments should have been made.

See Jeffrey Skatoff, Trustee of Revocable Trust Sued for Failure to Follow Written Instructions, Clark Skatoff, Oct. 2, 2014.

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

New Case: In re Estate of Qualls

Gavel2Gifts violated terms of power of attorney requiring the agent to respect terms of the principal’s will in making gifts.  A power of attorney granted the agent, who was one of three beneficiaries of principal’s will, the authority to make gifts including to the agent but required that any gifts respect the terms of principal’s will.  The agent sold the principal’s home and deposited the proceeds in a payable on death account of which the agent and one of the two other will beneficiaries were the beneficiaries.  After the principal’s death, the third beneficiary of the will began a proceeding to have the sale proceeds returned to the estate.  The beneficiary prevailed and the Missouri intermediate appellate court affirmed, finding that the opening of the payable on death account was the making of a gift even though the principal was the owner of the account and that opening the account exceeded the agent’s authority because doing so dramatically decreased the interest of the third beneficiary of the principal’s will. In re Estate of Qualls, 436 S.W.3d 743 (Mo. Ct. App. 2014).

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

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

Tuesday, October 14, 2014

Mississippi Court Rules on No Contest Clause

WillAction brought with probable cause and in good faith did not violate no contest clause. In a case of first impression, the Mississippi Supreme Court held that a no contest clause in a will requiring forfeiture by a beneficiary who contests the admission of the will to probate cannot be enforced against a beneficiary who brings a contest in good faith and with probable cause, even though the clause itself includes language purporting to make it applicable whether or not the beneficiary acts in good faith with probable cause. Parker v. Benoist, No. 2012–CA–02010–SCT, 2014 WL 4243763 (Miss. Aug. 28, 2014).

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

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

Monday, October 13, 2014

Court Ruling Prompts Move to Shield IRAs

IRA 2

In June, the United States Supreme Court ruled that an inherited IRA is no longer a retirement account and is not protected from creditors under federal bankruptcy law.  Consequently, financial advisers and families are taking steps to shield IRA assets for children and other beneficiaries in case those heirs ever find themselves in bankruptcy proceedings. 

Advisers are urging clients to create a trust as the IRA’s beneficiary, or establish an IRA as a trust account while the owner is still alive.  “The prudent thing to do, if you’re concerned about the child’s or other beneficiary’s potential creditors, is not to leave the IRA outright to the child.” 

The challenge that then arises is identifying and employing the proper trust.  The type of trust to use depends on “how many beneficiaries, the tax goals, asset-protection goals, as well as many other variables.”

The Supreme Court did not specifically address surviving spouses who inherit an IRA, thus, their status remains uncertain.  Financial advisors recommend that spouses roll over an inherited IRA into one under their own name.

See Robert Powell, Court Ruling Sparks Rush to Shield IRAs, Wall Street Journal, Oct. 12, 2014. 

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

October 13, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

New Case: Irrevocable Trust Agreement of 1979

GavelA donor may seek relief from an alleged gift because of unilateral mistake. In Irrevocable Trust Agreement of 1979, 331 P.3d 881 (Nev. 2014), a case of first impression, the Supreme Court of Nevada held that the donor of an inter vivos gift may obtain relief from the gift, including rescission and reformation, if the donor can prove unilateral mistake by clear and convincing evidence.

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

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

Friday, October 10, 2014

Sherlock Holmes Estate Must Pay Attorney's Fees

HolmesAs I have previously discussed, the declaratory judgment that Sir Arthur Conan Doyle's literary character Sherlock Holmes is public domain was affirmed by the 7th Circuit. Leslie Klinger, author of In the Company of Sherlock Holmes, was also awarded attorney's fees in his successful non-infringement case. In ordering the fees be paid by the estate of Conan Doyle, Judge Richard A. Posner described the estate's practice of collecting licensing fees on an expired copyright and using book sellers to enforce the practice as an “unlawful business strategy.”

See Rita J. Yoon, Judge Posner Orders Sherlock Holmes Estate to pay Attorney's Fees for 'Form of Extortion,” Klinger v. Conan Doyle Estate, Ltd., The National Law Review, Oct. 4, 2014.

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

October 10, 2014 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Article on Estate of Adell

Kerry A. Ryan (Saint Louis University School of Law) recently published an article entitled, Valuation Lessons From Estate of Adell, 144 Tax Notes 1455 (Sept. 22, 2014). Provided below is the abstract from SSRN:

In Estate of Adell, the Tax Court determined that the correct value of a decedent’s interest in a closely held corporation was the figure reported on the original estate tax return. The court rejected alternative values as either using the incorrect valuation method or failing to account for the significant value of a key employee’s personal goodwill.

October 10, 2014 in Articles, Estate Planning - Generally, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 7, 2014

Lawsuit Over Auction of Rosa Park's Historical Items

AuctionAs I have previously discussed, items and artifacts belonging to civil rights leader Rosa Parks were auctioned in a private sale in August to the Howard G. Buffett Foundation, and will be placed in a museum. Now, the auction house in charge of the sale is suing the attorney for Parks' estate for misrepresenting the options for selling the items, and claims that they could have sold the items for a higher price if sold individually.

See Lorelei Laird, Lawsuit Says Former Lawyer for Rosa Parks Mishandled Her Estate, ABA Journal, Oct. 1, 2014.

October 7, 2014 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Annuity Battle in Ohio

GavelMultiple judges in Ohio have questioned the state's practice of penalizing Medicaid recipients living in nursing homes when their spouse purchases an annuity. The plaintiffs in the cases are arguing that the annuities meet federal requirements and that Ohio's practice is hurting seniors that are just trying to make ends meet. In one of the pending cases, the judge entered a preliminary injunction which ordered the state to comply with federal law.

See Encarnacion Pyle, Ohio Under Fire For Blocking Medicaid For Seniors Whose Spouses Bought Annuities, The Columbus Dispatch, Oct. 6, 2014.

October 7, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)