Wills, Trusts & Estates Prof Blog

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

Monday, April 28, 2008

Need an Organ? Don't Smoke Weed!!

MarijuanaTimothy Garon is suffering from hepatitis C and is in urgent need of a liver transplant.

Timothy was recently refused a spot on the transplant list because of his use of marijuana.  In fact, he was even arrested for growing marijuana in December 2007.

Here are some additional details from Gene Johnson, Medical marijuana patients denied a spot on transplant list, Seattle Times, April 26, 2008:

Because of the scarcity of donated organs, transplant committees such as the one at the University of Washington Medical Center have tough standards for deciding who should get them. Does a candidate have other serious health problems? Will he religiously take anti-rejection medicines? Is there good family support? Is the candidate likely to drink or do drugs? * * *

His case poses a new ethical consideration for those allocating organs, one that could become more common as a dozen states now have medical marijuana laws: When dying patients need a transplant, should it be held against them if they've used dope with a doctor's blessing?

Garon, who has been hospitalized or in hospice care for two months straight, said he turned to the university hospital after Seattle's Harborview Medical Center told him he needed six months of abstinence. The university also denied him, but said it would reconsider if he enrolled in a 60-day drug-treatment program.

This week, at the urging of Garon's lawyer, Douglas Hiatt, the university's transplant team reconsidered anyway, but it stuck to its decision.

Dr. Brad Roter, the Seattle physician who authorized Garon's pot use for nausea, abdominal pain and to stimulate his appetite, said he did not know it would be such a hurdle if Garon were to need a transplant.

April 28, 2008 in Current Events, Disability Planning - Health Care | Permalink | Comments (0) | TrackBack (0)

Insurance Beneficiary Murders Insured

TexasPrimary Beneficiary was convicted of Insured’s murder in the case of In re Estate of Stafford, 244 S.W.3d 368 (Tex. App.—Beaumont 2008, no pet. h.).

Accordingly, the proceeds of the policy were paid to Contingent Beneficiary under Texas Probate Code § 41(d) and Texas Insurance Code § 1103.151.

Primary Beneficiary appealed claiming that his conviction was not final because an appeal was pending.

The appellate court affirmed.  The court explained that the Code provisions do not require that the conviction be final before forfeiture occurs.

Moral:  A beneficiary accused of murdering the insured should put forth the best case possible at the trial level because forfeiture will occur even if the conviction is subsequently reversed on appeal.

April 28, 2008 in New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

The sale of an asset by a successor trustee does not cause ademption

California

A father created a self-trusteed revocable trust which made specific gifts of stock in a closely held corporation to his two sons.

After the father was adjudged to be incapacitated, the court appointed a professional conservator who was then appointed as the successor trustee.  The successor trustee sold the assets of the corporation.

The court in Brown v. Labow, 69 Cal. Rptr. 3d 417 (Cal. Ct. App. 2007), held that the gift of the stock was not adeemed by the sale because there was no evidence that the settlor intended an ademption in these circumstances and that the conservator had no authority to revoke the gift of stock without court approval.

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

Sunday, April 27, 2008

Structuring Trusts in Estate Planning

According to Len Costa, Trust is the word for inheritance riches, FT.com, April 26, 2008:

I recently heard from a private investor that inherited wealth is like driving a car and not having to pay for petrol. The benefactor provides a valuable boost but cannot determine how well the beneficiary steers or what his or her final destination will be.

This metaphor, extended slightly, underscores the value for many families of bequeathing large fortunes in trust: using a legal structure to transfer wealth may help shape outcomes by imposing guardrails and laying down some rules of the road.***

In many jurisdictions, fiduciary duties can be shared among, delegated to, or divided up among multiple trustees, including family members, a non-family adviser such as a lawyer, or a trust company (known in industry parlance as a corporate trustee).***

An increasingly popular strategy for encouraging meaningful engagement with trustees is to appoint beneficiaries as co-trustees, a role that can also help prepare inheritors for the responsibilities of wealth.***

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

April 27, 2008 in Trusts | Permalink | Comments (0) | TrackBack (0)

Nuncupative will invalid because not made in extremis

Texas

The decedent allegedly made an oral will while hospitalized for treatment of complications arising from a chronic condition.  Death came eighteen days after release from the hospital.

The court affirmed a summary judgment for the intestate heirs, holding that the statutory requirement that a nuncupative will be made “in the time of the last sickness of the decedent” had been construed to require the testator be “in extremis.”

The court explained that a testator suffering from a chronic condition is in extremis only in the final stages of the illness.  In re Estate of Alexander, No. 10-06-00360-CV, 2008 WL 256837 (Tex. App. 2008 Jan. 30, 2008).

(Note:  The 2007 Texas Legislature abolished the right of Texans to make oral wills.)

April 27, 2008 in New Cases, Wills | Permalink | Comments (1) | TrackBack (0)

Saturday, April 26, 2008

The “Middle Class” Wealthy

The following is from Keith Whitaker, Just Don't Call Them Rich, WSJ.com, March 5, 2008:

The key to riches in America, according to Alan Prince and Lewis Schiff, is not thinking like a millionaire but thinking like...a member of the middle class.***

Even Bill Gates, in a recent interview, couldn't bring himself to use the R-word to describe his own sumptuous condition. Part of the hesitation may be simple prudence: Wealth-holders know that assets can be fugitive. The subprime crisis has only reinforced this painful truth.***

Prince and Schiff focus on the more than five million American households with a net worth of $1 million to $10 million. True to form, the members of such "MCM" households, according to the authors' extensive survey, don't think of themselves as rich. They feel themselves to be "middle class."***

To help draw their class portrait, Messrs. Prince and Schiff offer a few high-profile MCM examples, like Bruce Spector, the backer of PinnacleCare, and Edward Goldman, the founder of MDVIP, both "concierge" medical-care providers.***

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

April 26, 2008 in Estate Planning - Generally | Permalink | Comments (1) | TrackBack (0)

Top SSRN Downloads

Ssrn_2 Here are the top downloads from February 26, 2008 to April 26, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

1 347 Deduction Ad Absurdum: CEOs Donating Their Own Stock to Their Own Family Foundations
David Yermack,
New York University - Stern School of Business,
Date posted to database: February 24, 2008
Last Revised: March 29, 2008
2 151 Empty Promises: Settlor's Intent, the Uniform Trust Code, and the Future of Trust Investment Law
Jeffrey A. Cooper,
Quinnipiac University School of Law,
Date posted to database: February 6, 2008
Last Revised: March 17, 2008
3 95 Perpetuities, Taxes, and Asset Protection: An Empirical Assessment of the Jurisdictional Competition for Trust Funds
Robert H. Sitkoff, Max M. Schanzenbach,
Harvard Law School, Northwestern University - School of Law,
Date posted to database: April 2, 2008
Last Revised: April 2, 2008
4 86 The [Fiduciary] Duty of Fidelity
Robert Flannigan,
University of Saskatchewan,
Date posted to database: March 14, 2008
Last Revised: March 14, 2008
5 81 Caregiving and the Case for Testamentary Freedom
Joshua C. Tate,
Southern Methodist University - Dedman School of Law,
Date posted to database: March 25, 2008
Last Revised: April 25, 2008
6 75 Rector and Gore: Two Recent Flp Cases
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: March 4, 2008
Last Revised: March 4, 2008
7 50 Serve the Cheerleader - Serve the World: Representation in Estate and Trust Proceedings and under the Uniform Trust Code and other Modern Trust Codes
Martin D. Begleiter,
Drake University Law School,
Date posted to database: January 9, 2008
Last Revised: January 9, 2008
8 41 Text and Time: A Theory of Testamentary Obsolescence
Adam J. Hirsch,
Florida State University College of Law,
Date posted to database: April 9, 2008
Last Revised: April 11, 2008
9 40 More is Not Always Better than Less: An Exploration in Property Law
Daphna Lewinsohn-Zamir,
Hebrew University - Faculty of Law,
Date posted to database: March 4, 2008
Last Revised: March 12, 2008
10 37 Disclaimers and Defined Value Clauses: Christiansen
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: April 8, 2008
Last Revised: April 8, 2008

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

Friday, April 25, 2008

Charitable Trusts -- India, U.K., and U.S. Compared

Taru Jain (Advocate, Supreme Court of India0 has recently posed an article on SSRN entitled Charitable Trusts: A Comparative Study of India, United Kingdom and the United States.

Here is an abstract of the article:

Trusts are an important institution to be studied in law for various reasons. Both jurisprudentially as well as from a perspective of taxation, trusts affect the making of rules. From a practical perspective, trusts are also an essential attribute for people to make things work and charitable trusts are one such type of trust, which have become increasingly common in todays world.

This paper seeks to examine the position and legal standpoint of a charitable trust across India, United Kingdom and United States.

April 25, 2008 in Articles, Trusts | Permalink | Comments (0) | TrackBack (0)

Survey shows earners feel more secure about their wealth than heirs

According to Thomas Kostigen, Sophisticated Investor, marketwatch.com, April 15, 2008:

Most wealthy people earn their money, and because they earned it they feel more secure about keeping it. That's what a new survey reveals about wealth and values.

PNC Wealth Management conducted the survey of people with more than $500,000 of investable assets.***

"An overwhelming number of affluent Americans earned their wealth and are more likely to feel secure during challenging economic times compared to peers who inherited their money," according to PNC.***

A couple of things separate the earners from the inheritors: First, earners were in control of making their money, and therefore feel more confident about preserving it or making even more. Second, earners likely took large risks to achieve wealth. As we all know, as risk increases, so does return. Accordingly, earners are likely more comfortable with the concept of risk.***

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

April 25, 2008 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Removal of Executor & Return of Fees

TexasIn In re Estate of Miller, 243 S.W.3d 831 (Tex. App.—Dallas 2008, no pet. h.), attorney was named as the independent executor of his great-uncle’s will.

Before being appointed by the court, he entered into a fee agreement with Beneficiary that include provisions for Attorney to receive a contingency fee.

After being appointed, Attorney hired himself as the attorney for the estate.

Attorney was not a beneficiary of the will nor was he entitled to a fee under the terms of the will.

Attorney filed the inventory over one year late.

Later, he sold some of the estate property taking almost $100,000 in “compensation.”  (Note that experts testified that Attorney’s services were worth about $5,000).

Beneficiary filed an ancillary action to have Attorney removed as the executor alleging that Attorney grossly mismanaged the estate.  For example, Attorney lent estate money to one of his other clients and did not pay property taxes causing the property to be scheduled for foreclosure.

The trial court agreed, removed Attorney, and ordered him to reimburse the estate for the fees he received.

Attorney appealed and the appellate court affirmed.

The court reviewed Attorney’s actions and found that they amounted to gross mismanagement of the estate under Texas Probate Code § 149C.  For example, he unnecessarily delayed performing the administration of the estate, he improperly made excessive fee payments to himself, he lent estate property to a client without receiving a promissory note or collateral, and he did not make property tax payments.

Moral:  An attorney serving as a personal representative should not mismanage the estate.  The attorney should not charge excessive fees, make late filings, drag out the administration of the state, lend estate property to others, or otherwise breach fiduciary duties.

April 25, 2008 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)