Wills, Trusts & Estates Prof Blog

Don't Swear at the Dead

A well-mannered person does not swear, especially when someone is in earshot.

But, what if the only "person" in earshot is deceased?  You might think, "Dead men and women cannot hear."  This may be true, but, nonetheless, you should refrain from cursing in front of corpses, especially if you live in Nevada and operate a funeral home.

Under Nev. Rev. Stat. § 642.480, it is unprofessional conduct for a funeral director to use "profane, indecent or obscene language in the presence of a dead human body."

Brain Dead Boy Kept "Alive" to Preserve Organs

On Thursday (July 28, 2005), a lightning strike killed a Boy Scout troop leader instantly and left teenage Scout, Ryan Collins, brain dead.  The accident took place during an outing in the Sequoia National Park in California.

Although legally deceased, Ryan's family kept him on a ventilator until Friday night to preserve Ryan's organs for transplantation.

See Juliana Barbassa, Lightning Strike Kills Boy Scout, Leader, Associated Press (July 30, 2005).

Fecundity & Trust Investment

An interesting approach to trust investments is detailed by James P. Garland, the president of The Jeffrey Company in Columbus, Ohio, in his article Long-Duration Trusts and Endowments, J. Portfolio Management (Spring 2005).

Here is an informative excerpt from Mr. Garland's article:

The primary objective of most endowment funds, and of many long-duration trusts, is to provide spendable cash for their owners and beneficiaries for a very long time.  Given this objective, the most important point to consider in evaluating the health of endowments and trusts is their fecundity.  Fecund means "fruitful or fertile," and cash withdrawals from a portfolio are effectively its fruit.  Fecundity is a measure of the spendable cash that a fund can provide today without unduly threatening its ability to provide similar amounts--adjusted for inflation--in the future.

The UTC and the Settlor's Intent

In The Intention of the Settlor Under the Uniform Trust Code: Whose Property Is It, Anyway?, 38 Akron L. Rev. 649-705 (2005), Associate Professor of Law Alan Newman of the University of Akron School of Law focuses on the interface between the UTC and the settlor's intent.

Prof. Newman demonstrates that:

the Uniform Trust Code has taken modest steps towards accommodating the interests of trust beneficiaries when those interests will not be served by strict adherence to the settlor's intent as set forth in the terms of the trust. In other respects, consistent with the common law, the UTC continues to honor the settlor's intent. Finally, in some respects the UTC provides greater protection to the settlor's intent than under common law

Another Diversification Case

A reader of this blog, who wishes to be uncited, pointed out to me the recent case of Wood v. U.S. Bank, N.A., 160 Ohio App. 3d 831, 2005-Ohio-2341, and made the following observations:

The decision is notable for a few reasons.  First, it involves a little-litigated issue regarding trustee investment:  Does a trustee have a duty to diversify the assets of a trust when the language of the trust authorizes retention of a specific asset, namely stock in the corporate trustee?  Second,* * * the case involves a noteworthy corporate trustee.  Third, the opinion has a fair amount of discussion regarding a trustee's duties under the prudent investor rule. Finally, the opinion was written by an appeals court judge (Mark Painter) who is a leader in Ohio in the plain English movement.  He maintains a Web site-- http://www.judgepainter.org.

My reader continues,

If I may, the opinion has several other interesting sidelights.  The decedent is described as a "prominent Cincinnati attorney with estate-planning experience." * * * The corporate trustee is the successor institution to one of Cincinnati's old line banks--represented locally by one of Cincinnati's old line law firms.  Despite the decedent's supposed expertise and the involvement of the trust department of an old line local bank, the decision noted that there was some confusion concerning which of two sets of estate planning documents were actually operative at the decedent's death.

America's Cup

The America's Cup racing competition has a very interesting history underpinned by trust law.

The competition is called the America's Cup because, as stated on the America's Cup website,

In 1851, a boat named America won the 100 Guinea Cup given to the winner of a race around the Isle of Wight. The winners, members of the New York Yacht Club, donated the trophy to the Club, to be held as a ‘challenge’ trophy. Thus was born the America’s Cup, named after the boat, not the country.

The donation of the trophy was not outright, but rather was in trust, to be "preserved as a perpetual Challenge Cup for friendly competition between foreign countries."

This trust instrument detailed the workings of the competition and is available by following this link.

International Trust & Tax Planning Summit

The International Trust & Tax Planning Summit sponsored by IBC USA Conferences Inc. is scheduled for October 26-28, 2005 at The Biltmore Hotel in Coral Gables, Florida.  This conference is described as:

the leading conference of its kind for trust and tax planning professionals. [They] have assembled an internationally recognized faculty of experts from the Bahamas, Bermuda, Canada, England and Wales, France, Germany, Grand Cayman, Jersey, Liechtenstein, Mexico, Panama, Switzerland and the United States who fully understand that trust professionals have never been under more pressure to maintain their competitive edge. With an emphasis on jurisdictional case studies and recent judicial interpretations, this year's program explores the latest issues affecting the trust industry. Some of the topics addressed include: The Complexities of Charitable Giving, Appropriate Use of Foundations, Developments in Tax Evasion/Avoidance, Reporting Requirements, Transfer Tax Issues, New Cases in Civil Law Jurisdictions, International Matrimonial Matters and much more.

Multiple-Party Accounts -- Booklet for Clients

The ACTEC Foundation has produced an informative brochure entitled Joint Accounts: Dangers and Alternatives.  The booklet states

This pamphlet is designed to increase general understanding of multiple-name deposit accounts. Its goal is to equip readers with information needed to enable them to choose the type of multiple-name account best suited to their circumstances and purposes. It is hoped it will serve to reduce post-death disputes among depositors' survivors over checking, savings and CD balances in accounts bearing more than one name.

Coke and Failure to Diversify

Somewhere deep in the vaults of SunTrust Bank, lies the formula for Coke.  SunTrust also serves as the trustee of a trust originally established in 1947 with Coke stock.  Some of Coke's executives are on SunTrust's board of directors.

The trust beneficiaries are concerned about the trust's failure to diversify and have "begged" the bank to do so.  But, the bank has steadfastly refused.

On May 31, 2005, the beneficiaries filed suit in federal court (Hitz v. SunTrust) claiming that SunTrust has mismanaged the trust and has a conflict of interest.

See Jarrett Banks, Suntrust's Close Ties to Coke Land Bank in Court, Corporate Legal Times, Aug. 1, 2005.

See also Jill Lerner, Coca-Cola heirs sue SunTrust, Atlanta Journal-Constitution, June 12, 2005.

Warning -- Watch Out for Bank Drones

When I discuss joint accounts (and other types of multiple-party accounts) with students in class or with attorneys at CLE presentations, I emphasize the importance of the estate planning attorney doing an inspection of all account agreements to make certain they reflect the client's intent.  Attorneys admit that they do not do this for a variety of reasons such as the hassle, time, and subsequent fees.  Instead, they rely on what the client tells them about the account.  I warn about the folly of this approach relying on fact patterns as stated in cases or from other people's memories.

Well, today -- it happened to Margaret and me!  We went into a local bank (which shall remain nameless) to open an account.  Without asking us what type of ownership we wanted, the new accounts officer preselected "multiple-party account without right of survivorship."  She then explained that this meant that when one of us dies, the other owns all funds in the account.  I explained that this was incorrect and that instead the box next to "multiple-party account with right of survivorship" should be checked.

The clerk expressed dismay with my statement, insisted that I was incorrect, and explained that this box is only used if there we wanted to designate a person to own the account after we both died.  I politely demanded that she redo the forms with the survivorship boxed checked and after checking with her supervisor, she did so.  She then admitted that she had only been opening accounts for two weeks and that, "I learn something new every day."

I am concerned about all the accounts she opened in the past two weeks for individuals who really wanted the survivorship feature who now have non-survivorship accounts.  I wonder if she will go back, locate the incorrect accounts, and call all the depositors back into the bank to executed new account contracts.  I doubt it ----