Wills, Trusts & Estates Prof Blog

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

Tuesday, January 29, 2008

Bypass Trust Basics Explained

According to Ronald Lipman, Bypass trusts can reduce couples' estate taxes, chron.com, Jan. 25, 2008:

Bypass trusts are usually created by married people as a way to save estate taxes.

Under current law, everyone can leave as much as $2 million free of estate taxes at death. Married persons can also leave each other an unlimited amount of money and property with no estate taxes.

Many married couples have simple wills and leave all their property directly to the other. Although no estate taxes are owed at the first spouse's death, this leaves assets stacked up in the estate of the surviving spouse.***

A bypass trust can sharply reduce this tax.***

Not all kinds of property are appropriate for a bypass trust, and not all bypass trusts are written the same.

Also, different rules may apply to non-United States citizens.

January 29, 2008 in Estate Tax, Trusts | Permalink | Comments (2) | TrackBack (0)

Posthumously conceived children are beneficiaries of a trust created by a “grandparent”

New_yorkA grandfather created lifetime trusts which gave the trustees discretion to sprinkle principal among his descendants during the life of his widow.  At her death, she has a special testamentary power of appointment among her husband’s descendants who are also the takers in default.  One of grandfather’s sons predeceased him by six months.

Using the son’s stored semen, his widow conceived and sons were born to her 3½ and 5½ years after her husband’s death.  The trustees brought a proceeding for advice and direction regarding the status of the posthumously conceived children.

The court held that both children were beneficiaries of the trusts because a “sympathetic reading” of the trusts indicated that the grandfather intended “all members of his bloodline to receive their share.”  In re Martin B, 841 N.Y.S.2d 207 (N.Y. Sur. Ct. 2007).

January 29, 2008 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, January 28, 2008

Texas Court Holds Contract Did Not Create Trust for the Care of an Animal


In Sarah v. Primarily Primates, No. 04-06-00868-CV (Tex. App. Jan. 16, 2008), Ohio State University contracted with Primarily Primates, Inc. (“PPI”) to accept ownership and care for 12 primates. Shortly after the primates’ arrival at PPI, two of them died, and a third escaped from a cage. Thereafter, several interested persons filed suit against PPI, requesting, among other things the creation of a trust and an award of damages in the amount of the full contract price to be held in trust and applied towards the acquisition of shelter and care at a suitable facility. The trial court held that the interested persons lacked standing to sue.

On appeal, the court considered Section 112.037 of the Texas Trust Code, which allows a trust to be created to provide for the care of an animal alive during the settlor's lifetime. Such trust may be enforced by a person appointed in the terms of the trust or, if a person is not appointed, by a person appointed by the court. The court ruled, however, that just because the Trust Code allows the creation of a trust to provide for the care of an animal, it does not necessarily mean that every contract relating to animals creates such a trust.

The Appellate Court held that because the contract between Ohio State University and PPI did not create a trust to provide for the care of the primates, appellants had no standing to bring their claims.

January 28, 2008 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Statute revoking provisions of a will in favor of an ex-spouse upon the testator’s divorce did not violate a ban on retroactive laws

New_hampshireThe testator executed a will leaving his estate to his spouse.  They divorced less than one year later and sixteen years thereafter, New Hampshire enacted its version of UPC § 2-508 which revokes testamentary provisions for a spouse on divorce.

The testator died seven years after the statute’s enactment and the ex-spouse petitioned for administration, alleging that the statute as applied to the testator’s will violated the state constitutional prohibition against retroactive laws.

In Estate of Sharek, 930 A.2d 388 (N.H. 2007), the court held that the statute was constitutional and that the ex-spouse had no vested right in the testator’s will.

January 28, 2008 in New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

The trustee’s fiduciary duty was paramount in determining the propriety of expenditures

New_york A grandfather created a testamentary trust directing the trustees to distribute to his granddaughter so much of the income and principal as the trustees determined to be advisable for her “proper support, education, maintenance and general welfare.”

The beneficiary’s father, as co-trustee, used trust funds to pay for the beneficiary’s secondary school tuition and certain medical expenses.  The beneficiary challenged those expenditures in an accounting proceeding.

The court reversed the approval of the expenditures holding that while the expenditures were authorized by the governing instrument, a hearing was required to determine whether the trustees acted in good faith and in furtherance of the beneficiary’s best interests.  In re Wallens, 9 N.Y.3d 117 (2007).

January 28, 2008 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, January 27, 2008

Would a T&E Professor Merit a $4.2 Million Condo?

NyuTo convince Catherine M. Sharkey to leave Columbia University, The New York University purchased for her a $4.2 million condo with 4,000 square feet overlooking Central Park.

The following is from Josh Barbanel, Recruiting With Real Estate, NY Times, Jan. 20, 2008:

The property records show that the foundation spent $4.2 million two weeks ago to buy an 80 percent interest in the turreted apartment. The foundation had $155 million in assets at the end of 2006 and it is dedicated to supporting N.Y.U.’s law school, including the hiring and retention of faculty members.

Ms. Sharkey and her partner, Ina Bort, who practices commercial and maternity law in New York, bought the remaining 20 percent interest in the apartment for $1.05 million, but the foundation provided them with a mortgage to cover $650,000 of their share of the purchase price for up to 30 years (unless Ms. Sharkey leaves the university before then).

John Beckman, an N.Y.U. spokesman, said that the university and its law school provide housing for a “very large percentage” of faculty members, but he could not recall the purchase of such an expensive apartment for other faculty members.

Note that Prof. Sharkey is not a senior faculty member -- she graduated from law school in 1997 and has been teaching for only five years.  I wonder what fancy digs their senior faculty receive and whether  such perks go to their T&E faculty?

January 27, 2008 in Teaching | Permalink | Comments (1) | TrackBack (0)

Living Wills in Nigeria


Ademola Oladimeji Okeowo  (Matrix Solicitors, Abuja, Nigeria) has recently posted on SSRN an article entitled 'Living Will' and the Nigerian Law: The Need for Legislative Intervention.

Here is an abstract of this article:

Withdrawal and limitation of life support in the intensive care unit is common, although how this decision is reached can be varied and arbitrary. Inevitably, the patient is unable to participate in this discussion because their capacity is limited by the nature of the illness and the effects of its treatment. Physicians often discuss these decisions with relatives in an attempt to respect the patient's wishes despite evidence suggesting that the relatives may not correctly reflect the patient's desires.

Advance decisions, commonly known as 'Living Wills', have been proposed in developed countries as a way of facilitating the maintenance of an individual's autonomy when they become incapacitated. Others have argued that legalizing advance decisions is euthanasia by the back door. Some other persons, including my humble self disagree with this submission. A Living Will is not an instrument of euthanasia, but a request in advance to doctors not to give certain medical treatments. In fact, a Living Will, need not block treatment, but could specify that doctors must continue treatment until the patient is dead, regardless of pain or suffering.

In October 2007 in England and Wales, advance decisions became legally binding as part of the 2005 Mental Capacity Act. This has been the case in the USA for many years. The purpose of the present review is to examine the concept of Living Will vis-à-vis Nigerian laws with a view to determining the practicability of same in our jurisdiction.

January 27, 2008 in Articles, Death Event Planning | Permalink | Comments (0) | TrackBack (0)

Saturday, January 26, 2008

Top SSRN Downloads

Ssrn_2 Here are the top downloads from November 27, 2007 to January 26, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank Downloads Paper Title
1 114 Dealing with Postdeath Events
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: November 8, 2007
Last Revised: November 8, 2007
2 84 Valuing Art in an Estate
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: November 8, 2007
Last Revised: November 8, 2007
3 63 Conservation Easements: Perpetuity and Beyond
Nancy A. McLaughlin,
University of Utah - S.J. Quinney College of Law,
Date posted to database: December 12, 2007
Last Revised: January 11, 2008
4 11 'Living Will' and the Nigerian Law: The Need for Legislative Intervention
Ademola Oladimeji Okeowo,
Matrix Solicitors,
Date posted to database: December 4, 2007
Last Revised: January 14, 2008

January 26, 2008 in Articles | Permalink | Comments (0) | TrackBack (0)

California Legislature Considering Pet Trust Bill

CaliforniaAt one time, California was a leader in the pet trust field when it passed Probate Code § 15212 providing that "[a] trust for the care of a designated domestic or pet animal may be performed by the trustee for the life of the animal, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration."

Although this statute authorizes trusts for the benefit of pets, it does not make them enforceable. In other words, pet trusts are merely honorary -- the trustee may carry out the trust if he or she wants to but is not obligated to do so.  Almost all modern pet trust statutes, as well as the UPC and UTC, make them enforceable.

The California legislature is now considering SB 685 which would modernize its pet trust statute and make them enforceable.  Here is an excerpt from the Legislative Counsel's Digest of the bill:

This bill would repeal the provisions regarding domestic or pet animal trusts and would provide instead that a trust for the care of a designated domestic or pet animal is for a lawful noncharitable purpose  and terminates when no living animal  on the date of the trustor's death  is covered by the trust,  unless otherwise provided in the trust and subject to certain requirements. The bill would require a court to liberally construe a pet trust to bring it within the bill's provisions, to presume against an interpretation that would render the disposition a mere request or an attempt to honor the pet, and to carry out the general intent of the trust. The bill would provide an order of disposition of trust property upon termination of the trust and would provide authority for the court to name a trustee and to transfer trust property, as specified.  This bill would permit a person interested in the welfare of the pet animal or any nonprofit charitable organization whose principal activity is the care of animals to apply to the court for appointment as trustee or for removal of a trustee. The bill would provide a process for an accounting of the trust, to be waived if the value of the pet trust assets do not exceed $5,000. The bill would require termination of a trust for the care of a covered domestic or pet animal that has a life span of 21 years of age or greater when that animal dies. 

January 26, 2008 in New Legislation | Permalink | Comments (0) | TrackBack (0)

Friday, January 25, 2008

Brooke Astor Update

Astor3As you may remember, there has been an ongoing controversy surrounding Brook Astor’s estate.

Here is an update from Ianthe Jeanne Dugan, As Battle Rages Over Astor Fortune, Crumbs for the Staff, Wall St.J., Jan. 12, 2008, at A1, concerning Astor’s employees’ allegations that they were wrongfully cut out of the socialite’s will:

For 41 years, Steven Hamor groomed the lawns and flower gardens of Brooke Astor's seafront estate[.]***

Mr. Hamor had health insurance, assurances of retirement income and $50,000 promised to him in the will of the heiress to a fur and finance fortune.***

Now the Hamors say they are struggling to pay their bills. Mr. Hamor, along with his sons and most of Mrs. Astor's staff in Maine and New York, was fired before the famed socialite died in August at the age of 105.***

The dismissals cut most workers out of Mrs. Astor's will, which stipulated they be in her employ when she died.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

January 25, 2008 in Current Events, Wills | Permalink | Comments (1) | TrackBack (0)