Wills, Trusts & Estates Prof Blog

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

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Wednesday, February 25, 2015

Minassian v. Rachins: Appointment and Actions of Trust Protector Found Proper

GavelIn a recent Florida breach of fiduciary duty against a trustee, the settlor’s revocable trust continued after his death for the benefit of his widow, who was sole trustee and sole beneficiary during her life. At her death, separate shares for the settlor’s children were to be created from the remaining trust property. The children brought an action against the trustee claiming breach of fiduciary duty and the trustee moved to dismiss on the grounds that the children were not beneficiaries because the trust ended at her death and the children were beneficiaries only of the trusts to be created then.

The trial court denied the trustee’s motion on the grounds that the trust terms were ambiguous on the children’s status.  The trustee then appointed a trust protector under trust terms authorizing her to do so. The trust protector was authorized to amend the trust to correct ambiguities and drafting errors that defeat the settlor’s intent as determined by the trust protector. The protector then amended the trust to make it clear that the trust terminates on the widow’s death at which time new trusts are created for the children out of any remaining trust principal. The trial court granted the children’s motion to invalidate the amendments made by the trust protector.

In Minassian v. Rachins, the intermediate Florida appellate court reversed, holding, first, that the trust protector provision is valid because authorized by state law, and, second, the amendment did further the settlor’s intent as shown by extrinsic evidence including an affidavit by the trust protector who was the original drafter of the trust.

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

February 25, 2015 in New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 24, 2015

Time Limit on Admitting Will to Probate Defeated Only if Will Knowingly Withheld

WillBy statute, Kansas requires a will to be filed for probate within six months of the testator’s death.  However, state law imposes on a person who knowingly withholds a will from submission for probate the attorney’s fees, costs, and damages sustained by innocent beneficiaries and then states that “such will” may be admitted to probate “as to any innocent beneficiary” if the probate petition is filed within 90 days after the beneficiary had knowledge of and access to the will.

In Estate of Strader, 339 P.3d 769 (Kan. 2014), the Kansas Supreme Court held that the exception applies only to a will knowingly withheld and therefore reversed the admission to probate of a will which could not be found at testator’s death and was then discovered four and one-half years after the testator’s death in the files of the successor firm to the firm that had drafted the will.

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

February 24, 2015 in Estate Administration, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Monday, February 23, 2015

Personal Representative's Lawyer Doesn't Have Duty to Successor

GavelThe beneficiary of an estate succeeded in removing the personal representative and having himself appointed as the successor. He then sued the law firm who had represented his predecessor for professional negligence and breach of fiduciary duty relating to duties owed to the estate and to himself as a beneficiary. The trial court granted summary judgment for the law firm because the firm owed no duty to the estate.

In Estate of Cabatit v. Canders, the Supreme Judicial Court of Maine affirmed, holding that whether or not an attorney owes a duty of care to a successor personal representative depends on the existence of an attorney-client relationship unless an exception applies. The court then adopts a “modified multi-factor balancing test” under which the first inquiry is whether the transaction was intended to benefit the beneficiary. Here the facts lead to one conclusion: because the successor personal representative was represented throughout the probate proceeding by attorneys with no connection to the law firm representing the personal representative, which in addition had informed him that they did not represent him, the grant of summary judgment was affirmed.

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

February 23, 2015 in Estate Administration, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Sunday, February 22, 2015

Trust Clause Cannot Bind a Non-Beneficiary

Gavel2After the death of the settlor of a lifetime trust, two beneficiaries sued the trustee alleging self-dealing arising from the trustee’s sale at below market value of real estate held in the trust to himself and his wife as tenants by the entirety.  The trustee moved to compel arbitration based on a trust term requiring controversies between parties to the trust agreement, including beneficiaries, be submitted to arbitration.  The motion was denied and the trustee appealed.

In Diggs v. Lingo,the Tennessee intermediate appellate court affirmed.  Because the trustee’s spouse is a necessary party but was not a party to the trust agreement, she cannot be bound by the arbitration clause and the beneficiaries cannot be forced to arbitrate disputes with her. While the beneficiaries could be compelled to arbitrate their claims against the trustee and try their claims against his spouse, such a result would defeat the purpose of arbitration.

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

February 22, 2015 in New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, February 21, 2015

Trust Beneficiaries Not Bound by Arbitration Clause

GavelIn a recent Mississippi Supreme Court case, trust beneficiaries were not bound by a clause in an agreement between the trustee and an investment advisor.  The trustee and an investment advisor entered into a Wealth Management Agreement (WMA) requiring mediation and then arbitration of disputes between them.  The WMA contains a clause expressly excluding the conferring of rights or remedies on persons other than the signatories. The beneficiaries filed suit against the trustee and investment advisor alleging breach of duty to manage prudently the trust assets.  The trustee and advisor moved to stay, pending arbitration.

In Pinnacle Trust Co., L.L.C. v. McTaggart, the trial court denied the motion and the Mississippi Supreme Court affirmed on appeal, holding that the WMA expressly excluded non-signatories and that the trust beneficiaries could not be beneficiaries of the WMA which they neither signed nor knew existed. In addition, their rights arise not from the WMA but from the trust terms themselves.

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

February 21, 2015 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, February 19, 2015

Third Party Beneficiary Prevails In Case

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A Richmond lawyer is responsible for $603,409.10 after preparing a will that failed to provide the fully intended bequest to the Richmond Society for the Prevention of Cruelty to Animals (RSPCA). 

In 2003, Alice L. Cralle Dumville asked James B. Thorsen to prepare a will for her that would keep her estranged husband from receiving any of her estate.  In an oral contract, Thorsen agreed to draft the will that would leave all of Dumville’s property to her mother and, if her mother predeceased her, to the RSPCA.  Dumville’s mother died in 2007 and Dumville died in 2008.  Thorsen subsequently sought to have the will interpreted to leave the entire estate to the RSPCA, but a Chesterfield County judge concluded the will left only tangible personal property to the society. 

Thorsen was sued for malpractice and agreed the will did not incorporate Dumville’s intentions regarding the disposition of her property.  However, he argued that the RSPCA was not an intended third-party beneficiary of his legal services contract, effectively barring the malpractice claim. 

The case was heard in November and the judge adopted the RSPCA’s reasoning that Dumville wanted everything to go to her mother and wanted everything to go to the SPCA in the event her mother predeceased her.  Furthermore, the RSPCA met Virginia’s stringent test for a third party to have standing.

Thorsen and his firm have filed a notice of appeal, indicating they will ask the Supreme Court of Virginia to review the lower court’s decision. 

See Peter Vieth, Botched Will Cost Lawyer $600,000, Virginia Lawyers Weekly, Feb. 9, 2015.

Special thanks to Ada-Marie Aman (Law Office of Ada-Marie Aman) for bringing this article to my attention.

February 19, 2015 in Estate Administration, Estate Planning - Generally, Malpractice, New Cases, Wills | Permalink | Comments (1) | TrackBack (0)

Scaife Trustees Must Account for 20 Years of Trust Transactions

Gavel2As I have previously discussed, the children of late billionaire Richard Mellon Scaife allege that their father misused trust funds from a trust created by their grandmother that is now empty in their suit against the trustees. Per a consent decree filed last week, the trustees must file with the court a detailed accounting of the trust that covers a 20 year period by June 1.

See Rich Lord, Judge Orders Scaife Trust Fund Accounting by June 1, Pittsburgh Post-Gazette, Feb. 12, 2015.

February 19, 2015 in Current Affairs, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 18, 2015

Travis County Probate Judge Holds Gay Marriage Ban Unconstitutional

Gay marriage

Travis County Probate Judge Guy Herman ruled yesterday that the Texas ban on same-sex marriage was unconstitutional; however, the county will not yet issue marriage licenses to gay couples. 

Herman made the ruling as part of an estate fight where Austin resident Sonemaly Phrasavath sought to have her eight-year relationship to Stella Powell deemed as a common law marriage.  When Powell died intestate last summer, Travis County courts became involved in the battle over Powell’s estate between Phrasavath and two of Powell’s siblings.

Last year, a federal judge declared Texas’ same-sex marriage ban unconstitutional but stayed his own ruling.  The case is now being considered by the U.S. 5th Circuit Court of Appeals.

 See Wire Reports, Travis County Won’t Issue Same-Sex Marriage Licenses After Austin Judge Rules Texas’ Ban Unconstitutional, The Dallas Morning News, Feb. 17, 2015.

February 18, 2015 in Current Affairs, Estate Planning - Generally, Intestate Succession, New Cases | Permalink | Comments (0) | TrackBack (0)

Friday, February 13, 2015

New Case: Dahl v. Dahl

Scales of justice 2In Dahl v. Dahl (2015), the Utah Supreme Court held that a trust is not a Domestic Asset Protection Trust (DAPT). 

Dr. Charles Dahl and Ms. Kim Dahl were married for nearly eighteen years. On October 23, 2002, Charles executed a trust instrument called The Dahl Family Irrevocable Trust that named Charles as Settlor and his brother C. Robert Dahl as Investment Trustee. Nevada State Bank was named as Qualified Person Trustee.  The trust named Nevada as the domicile in its choice of law provision.

On October 23, 2002, Charles transferred 97% of Marlette Enterprises, L.L.C., a Utah limited liability company, to the Trust, keeping 1% for himself and 1% for each of the parties’ two children.  As of December 31, 2002, the LLC owned brokerage accounts with a total value of $935,996.

On June 20, 2003, Charles and Kim jointly deeded their primary residence to the Trust. 

Charles filed for divorce on October 24, 2006 and the Decree of Divorce was entered July 20, 2010. Kim subsequently sought a share of the Trust assets, which she claimed were marital property.  Specifically, she argued that the Trust was null and void, that the Trust was revocable as a matter of law, that she was a settlor of the Trust, and that she was entitled to an accounting from the Trust.  The parties filed cross-motions for summary judgment, and the district court granted the Trust Defendants’ motion, dismissing Kim’s claims

On appeal, the Utah Supreme Court determined that Utah has a strong public policy interest in the equitable division of marital assets and that Utah state law should apply to the trust even though the stated choice of law in the trust was Nevada. The court said that the trust was clearly intended to be a DAPT.

Special thanks to Steve Oshins (Oshins & Associates LLC) for bringing this case to my attention.

February 13, 2015 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Federal Judge Orders Alabama to License Gay Marriages

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A federal judge in Mobile, Alabama ruled on Thursday that the local probate judge cannot refuse to issue marriage licenses to same-sex couples, potentially adding some clarity to a judicial squabble that has shaken Alabama for almost a week. 

The order by Judge Callie V. S. Granade of Federal District Court came after a brief hearing and prompted cheers and crying in the halls of the probate court.  The ruling was the first in this case with a probate judge as a defendant and was seen by lawyers for the gay couples who brought the case as a clear signal to probate judges around the state what their duties were. 

In a straightforward order, Judge Granade restated an earlier finding that Alabama’s ban on same-sex marriage was unconstitutional and concluded that if the couples before her “take all steps that are required in the normal course of business as a prerequisite to issuing a marriage license to opposite-sex couples, [the probate judge] may not deny them a license on the ground that plaintiffs constitute same-sex couples.”

See Campbell Robertson, U.S. Orders Alabama to License Gay Unions, The New York Times, Feb. 12, 2015.

February 13, 2015 in Current Affairs, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)