Wills, Trusts & Estates Prof Blog

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

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Wednesday, September 3, 2014

Homestead Exception Demystified

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In the recent case, Friscia v. Friscia, the Florida probate court and the Florida Second District Court of Appeal encountered a situation involving a homestead, divorce, marital settlement agreement, a second spouse, and a life estate.  Needless to say, the issues were confusing.  However, the court was able to clearly reach a clear, articulable decision. 

In this case, the second wife Nora, is the surviving spouse of Vincent Friscia (Decedent), and the personal representative of the Decedent’s estate.  Robin Friscia is Decedent’s former wife and mother of Decedent’s two kids, Nicholas and Thomas.  When Decedent and former wife divorced in 2008, the couple entered into a marital settlement agreement (MSA) that was incorporated into a final judgment.  The MSA provided for the division of the marital home and granted the former wife exclusive use and possession of the home until the parties’ youngest child graduated from high school.  Because the marital home was to be listed for sale and the proceeds divided equally, the former wife also got the option to buy out the Decedent’s interest in the home.

Decedent died in 2011 while he was married to his second wife.  When he died, his son Nicholas was still in high school and living in the former marital home with the former wife.  Thomas subsequently asked the Florida probate court to determine the homestead status of the former marital home.  Thomas claimed the home was Decedent’s homestead, and the title to Decedent’s interest in the property went to Decedent’s sons and to the second wife.

Over the second wife’s objection, the Florida Probate court resolved that Decedent owned the marital home as a tenant in common with the former wife, and his interest was entitled to homestead protection.  Thus, the former wife and the second wife each owned a one half interest in the former marital home as tenants in common, with the second wife having a life estate.

See Anya Van Veen, Florida Homestead, Divorce, Second Spouses, and Life Estates, Clark Skatoff, Sept. 2, 2014.  

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

Saturday, August 30, 2014

New Case: Parker v. Benoist

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A recent case from the Supreme of Mississippi held that forfeiture provisions in wills in Mississippi are enforceable unless the will contest has been founded upon probable cause and made in good faith. 

This decision comes after siblings Bronwyn Benoist Parker and William Benoist litigated the will of their father, who granted significantly more property to William and less to Bronwyn than a previous will executed in 1998.  Bronwyn alleged William had unduly influenced their father, who was suffering from dementia and drug addiction, into creating a new will, which included a forefeiture clause that revoked benefits to any named beneficiary who contested the will.  

The Supreme Court of Mississippi held that Bronwyn had sufficiently shown that their suit was brought in good faith and founded upon probable cause.  Thus, the Court reversed the decision of the Chancery Court, allowing Bronwyn to inherit in accordance with her father’s 2010 will.  Parker v. Benoist, 2014 WL 4243763 (Miss.)

Special thanks to Howard M. Zaritsky for bringing this case to my attention.

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

Friday, August 29, 2014

Understanding Probate Court Litigation

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A recent case decided by the Georgia Court of Appeals serves as an important reminder that probate court litigation differs procedurally from other types of litigation.  Thus, when confronted with a will contest or other probate proceeding, it is best to consult with someone who specializes in that type of fiduciary litigation. 

In In re Estate of Loyd, an heir of Virginia Childs Loyd, Jack attempted to object to a petition to probate the will on grounds of undue influence.  The trial court dismissed Jack’s caveat as untimely and the appellate court subsequently agreed. 

After the petition to probate the will was filed, the probate court ordered heirs to file any objections to the petition within 13 days.  The executor sought to dismiss Jack’s caveat as untimely and it was dismissed because Jack missed the deadline. 

Although this was a short amount of time to answer, the court was persuaded by Jack’s argument that he was away from his residence and had no actual knowledge of the petition.  He was therefore barred from challenging the will.

See Luke Lantta, In Georgia, The Time to File A Caveat May Be Short And Unforgiving, Brian Cave Litigation, Aug. 27, 2014.

August 29, 2014 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (1) | TrackBack (0)

The Most Litigated Will in History

Girard CollegeA Philadelphia Court of Common Pleas recently considered a request from the trustees of the Stephen Girard Trust, a charitable trust that created Girard College, to end the school’s residential and high school programs. Girard College was originally created through the detailed will of Stephen Girard to educate, house, clothe, and feed orphan boys. Over the years, the school has developed and changed away from Girard’s original intent for the school. The school now allows minority and female students. However, the Philadelphia court’s decision denied the trustees' request to cut the requested programs due to how inconsistent the changes would be to the intent reflected in what the court described as “the most litigated will in history.”

See Katherine C. Pearson, The Latest Ruling on “The Most Litigated Will in History,” Elder Law Prof Blog, Aug. 28, 2014; Neil E. Hendershot, Philadelphia Court Upholds Stephen Girard’s Intentions, PA Elder, Estate & Fiduciary Law Blog, Aug. 27, 2014.

August 29, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, August 23, 2014

Man Found Guilty of Manslaughter Cannot Indirectly Inherit from Victim

JailA Brooklyn appeals court has extended the rule that blocks individuals from inheriting from a person if they are responsible for that person’s death. Brandon Palladino is currently serving a 25 year sentence for manslaughter after pleading guilty to strangling his mother-in-law, Dianne Edwards. Edwards left her entire estate to her daughter, Palladino’s wife. A year later, Edward’s daughter died leaving her inheritance from her mother to Palladino. The court found that indirect inheritance is also not available to the guilty party, and Palladino will not be inheriting the $250,000 when he finishes his prison term.

See Oren Yaniv, Killer Denied Bid to Inherit $250,000 from Estate of Mother-in-Law He Strangled, New York Daily News, Aug. 21, 2014.

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

August 23, 2014 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, August 21, 2014

California Judge Resolves Final Issue in Anna Nicole Smith Lawsuit

Anna Nicole SmithAn Orange County federal judge has put an end to two decades of litigation over the will of J. Howard Marshall. Marshall and Anna Nicole Smith were married for 14-months when Marshall died leaving his entire estate, valued at $1.6 billion, to his son, E. Pierce Marshall. The ensuing legal battle that made it to the Supreme Court of the United States twice, was centered around Smith’s challenge of Marshall’s will. Both Smith and Marshall’s son are deceased and their estates have been continuing the lawsuit since their deaths.

On Monday Judge David O. Carter resolved the final issue in the lawsuit by denying Smith’s estate their request for sanctions against Marshall’s son’s estate, and noted that it was time for the lawsuit to end after lasting 20 times longer than Marshall and Smith’s marriage.

See Associated Press, Anna Nicole Smith’s Estate Loses Bid for Millions, My San Antonio, Aug. 19, 2014.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.

August 21, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 20, 2014

Article on Bankruptcy Law and Retirement Assets

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Albert Feuer (Law Offices of Albert Feuer) recently published an article entitled, The Supreme Court Disregards ERISA and Goes Farther Astray in Applying Bankruptcy Law to Retirement Assets, 33 Tax Management Weekly Report 995 (July 2014). Provided below is the abstract from SSRN:

The Supreme Court decided in Clark v. Remaker, 573 U. S. (Slip Opinion No. 13-299, June 12, 2014) the extent of the bankruptcy exemption for “Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.” This bankruptcy fund exemption applies whether the debtor chooses to use the federal or state law bankruptcy exemptions. 

The Court decided that the bankruptcy fund exemption did not apply to the beneficiaries of an individual retirement account (“IRA”), although the Court appeared to suggest that a spousal beneficiary may obtain the protection to the extent those benefits become part of the surviving spouse’s individual IRA. The Court’s implicit addition of the phrase “debtor’s created” at the start of the exemption is based on its unexamined assumption that otherwise the phrase, “Retirement funds to the extent that those funds are in,” would be rendered “superfluous.” 

The Court asserted that three factors showed that an IRA beneficiary has no interest in retirement funds: (1) IRA beneficiaries, unlike the initial owners, may not make contribution to IRAs, although this is not true after owners attain the age of 70½, so perhaps no IRA owners over the age of 70½ are entitled to the bankruptcy exemption; (2) IRA beneficiaries, unlike the initial owners, must begin taking distributions regardless of their retirement, although IRA owners may take distributions regardless of their retirement, so perhaps no IRA owners are entitled to the bankruptcy exemption; and (3) IRA beneficiaries, unlike the initial owners, may obtain their benefits without incurring a tax penalty prior to attaining the age of 59½, so perhaps no IRA owners over age 59½ are entitled to the bankruptcy exemption. 

Under the Court’s analysis beneficiaries of the tax qualified plans subject to the provision, i.e., those plans that are not ERISA pension plans with broad coverage (another section, which the Court ignored, protects a debtor’s interest in such ERISA plans), are not eligible for the bankruptcy fund exemption because they are subject to the three above conditions. As with IRAs, it is not clear whether spousal beneficiaries may obtain the protection to the extent those benefits become part of the surviving spouse’s individual IRA. 

The phrase “retirement funds to the extent that those funds are in” has a significance without the addition of any words that is consistent with the legislative history of the phrase, the other bankruptcy provisions, and ERISA. In particular the coverage of the exemption section is limited to (1) the tax-qualified plans that meet the definition of ERISA pension plans without its exclusions, such as those for government or church plans, (2) IRA assets, other than those derived from tax-qualified plans that do not meet the first criterion. Under this analysis the bankruptcy fund protection would be available to the participants and beneficiaries of such non-ERISA pension plans. The bankruptcy exemption for benefit payments and benefit funds associated with an ERISA pension plan with broad coverage that the Supreme Court approved in Patterson v. Shumate, 504 U.S. 753 (1992), also applies to participants and beneficiaries who are both protected by ERISA.

August 20, 2014 in Articles, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Widow of Former Navy Seal Sues Estate Planning Attorney

Gavel3Taya Kyle, the widow of former Navy Seal and American Sniper author, Chris Kyle, is suing her estate planning attorney. The suit was filed in Dallas County last week. Kyle claims that her attorney and trustee of her family trust, Christopher Kirkpatrick, acted negligently with regards to the services he provided her and her late husband. Kyle also alleges that Kirkpatrick failed to inform her that he had a conflict of interest, which was an impediment to his representation of her and her husband. The estate of Chris Kyle is also a plaintiff in the lawsuit.

See David Lee, ‘American Sniper’s’ Widow Sues Her Attorney, Courthouse News Service, Aug. 18, 2014.

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

August 20, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 19, 2014

New Case: In re Indenture of Trust Dated January 13, 1964

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Improper assignment is not a basis for trustee liability.  A trust beneficiary assigned his interest in the trust for the benefit of other beneficiaries, even though the trust terms contained a valid spendthrift provision prohibiting voluntary and involuntary alienation, in exchange for a cash payment from the trust.  The trustee made distributions in accord with the assignment. Twelve years later, after the trust’s termination, the assignor brought an accounting action. In affirming summary judgment for the trustee and another beneficiary, the intermediate Arizona appellate court held that the trustee was not liable for payments made in accord with an invalid assignment, that the assignor was not entitled to an accounting because he was no longer a beneficiary, and that in any event the assignor’s action was barred by laches.  In re Indenture of Trust Dated January 13, 1964, 326 P.3d 307 (Ariz. Ct. App. 2014).

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

August 19, 2014 in Estate Planning - Generally, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, August 18, 2014

New Case: The Woodward School for Girls v. City of Quincy

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Failure to take inflation into account is breach of duty of prudence.  The trial court held that the trustee of a perpetual charitable trust had breached the duty of prudence by investing the fund solely in bonds and awarded damages based on what the portfolio would have been worth had the trustee followed specific investment advice it had sought but ignored.  The Massachusetts Supreme Judicial Court affirmed the finding of breach of the duty to invest prudently, holding that the failure to invest to protect the principal of the fund from erosion in value because of inflation “alone” was sufficient to constitute a breach.  The court affirmed the use of unrealized gains as a measure of damages but remanded for further hearing on the amount of the unrealized gains that must consider not the ignored advice but rather what the prudent investor should have done in the specific situation. The court also held that the action sounded in tort rather than contract but that the usual rule for award of pre-judgment interest in tort actions does not apply and that the trial court properly awarded interest from the date of the last breach.  The Woodward School for Girls v. City of Quincy, 469 Mass. 151 (2014).

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

August 18, 2014 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)