Wills, Trusts & Estates Prof Blog

Use of home care contracts on the rise

According to Maureen Salamon, Who should pay for mom and dad's care?, CNN.com, Aug. 20, 2008, the use of home care contracts, especially between parents and children, is on the rise.

Under these arrangements, a child moves in with a parent and provides care.  The child is not paid but instead receives an enhanced share of the parent's estate when the parent dies.  These arrangements should be carefully documented to reduce the chance of family disputes after the parent dies.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

Evil Kentucky probate lawyer disbarred for life

The Supreme Court of Kentucky has recently agreed with the Kentucky Bar Association's recommendation to permanently disbar Richard Kip Cameron from the practice of law due to various ethical breaches including one including his service as a court-appointed conservator.

Cameron was appointed as the conservator of the Estate of Troy Perry and thereafter collected funds belonging to Perry.  Cameron was late in filing annual reports for two years and was later replaced.  The replacement conservator discovered that Cameron "double-charged the estate by charging both a Conservator fee and a private attorney fee, and misappropriated and converted to his own use money that belonged to Mr. Perry."  When a complaint was later filed, he did not respond which is deemed an admission of guilt.

Note that Cameron had been given a prior opportunity to remedy his conduct and receive a lighter punishment (suspension for 181 days with 60 days thereof probated).

See Kentucky Bar Association v. Cameron, 2008-SC-000316-KB (Sept. 24, 2008).

Special thanks to Patrick S. Sylvester (Attorney & Counselor at Law, Sylvester Law Firm, PC) for bringing this case to my attention.

Nursing Homes -- "Unsafe at any speed"?

The following excerpts from Robert Pear, Violations Reported at 94% of Nursing Homes , NY Times, Sept. 30, 2008, paint a very bleak picture of nursing home life for their 1.5 million residents.

More than 90 percent of nursing homes were cited for violations of federal health and safety standards last year, and for-profit homes were more likely to have problems than other types of nursing homes, federal investigators say in a report issued on Monday.

About 17 percent of nursing homes had deficiencies that caused “actual harm or immediate jeopardy” to patients, said the report, by Daniel R. Levinson, the inspector general of the Department of Health and Human Services.

Problems included infected bedsores, medication mix-ups, poor nutrition, and abuse and neglect of patients. * * *

The inspector general said 94 percent of for-profit nursing homes were cited for deficiencies last year, compared with 88 percent of nonprofit homes and 91 percent of government homes. * * *

Deficiency rates varied widely among states. The proportion of nursing homes cited for deficiencies ranged from 76 percent in Rhode Island to 100 percent in Alaska, Idaho, Wyoming and the District of Columbia.

The average number of deficiencies also varied, from 2.5 deficiencies per nursing home in Rhode Island to 13.3 per home in Delaware.

Gifts of LP Interests Under Attack

Steve Akers (Bessemer Trust) recently published his article entitled Tax Court opinion on the case Holman v. Commissioner.

Here is the synopsis of his article:

A retired Dell employee and his wife created an FLP to hold some of their Dell stock, intending to make gifts of limited partnership (or LP) interests, and they made gifts of most of their LP units six days later. They made subsequent annual exclusion gifts about two months later (at the beginning of the next calendar year) and one year after that. The agreement contained commonly used transfer restrictions, restricting transfers of LP interests without approval of all partners, and giving the partnership the right to purchase non-permitted assignments at the fair market value based on the right to share in distributions (i.e., considering discounts) of those assignee interests. The Tax Court rejected the IRS argument that the gift of LP interests six days after the partnership was created was an indirect gift of a proportionate part of the assets contributed to the partnership (i.e., without a discount). The court also concluded that transfer restrictions in the agreement must be ignored under §2703 in valuing the transfers.   

The case was tried well over two years ago. In light of the long delay, planners have been anxiously waiting to see how the Tax Court deals with the IRS’s “integrated transaction ” theory for attacking gifts of LP interests soon after (or in some cases, months after) an FLP has been formed.

Another Heath Ledger Update

As discussed earlier today on this blog, Heath Ledger's will was drafted before the birth of his daughter, Matilda, and left his entire estate to his parents and siblings.  Nonetheless, his family has decided to allow the entire estate estimated at $20 million to pass to Matilda.

In a new development reported in Ledger's Life Insurance Co: Suicide = No Cash, TMZ.com, Sept. 29, 2008, Heath's life insurance company (ReliaStar) is refusing to pay on his $10 million policy claiming that his death was a suicide, rather than as the result from an accidental overdose of drugs as the New York City Medical Examiner concluded.  The policy provides that the company would only return the premiums paid, rather than the proceed amount, if the death is the result of Heath's suicide.

The named beneficiary of the policy is a trustee for the benefit of Matilda.  The trustee has now filed suit against ReliaStar claiming it is acting in bad faith in not paying the policy.  Not only is ReliaStar claiming suicide, but it also has a back up argument that Heath lied on his application by not revealing his use of prescription drugs and prior use of illegal drugs.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for being the first of many readers to bring this development to my attention

Distribution of life insurance proceeds after convicted murderess acquitted on retrial

Elicia Hughes was accused of murdering her husband (Brian) who was found shot to death on June 3, 2004.  The alleged motive for the murder was because of his marital infidelity as well as to collect life insurance proceeds.

Elicia was convicted in January 2007 and sentenced to life in prison.  The conviction was overturned because the judge concluded that prosecutors improperly used "the race card" when selecting the jury.  Elicia was acquitted in the retrial.

During this process, the fate of hundreds of thousands of dollars of life insurance proceeds hung in the balance.  With regard to a $250,000 policy from Primerica Insurance, the proceeds were paid directly to her because Elicia was not a suspect at the time of payment.  $50,000 of a MetLife policy will go to Elicia's attorneys to defray her legal expenses with the rest passing into Brian's estate.

In the style of the O.J. Simpson situation, Brian's family have filed a civil wrongful death case against Elicia and have also sued Primerica claiming that the company should not have paid the proceeds to Elicia.

See Jimmie E. Gates, Lawyer who won widow's acquittal will reap $50,000, Clarion Ledger, Sept. 28, 2008.

Heath Ledger Update

As reported earlier on this blog, Heath Ledger's will was drafted before the the birth of his daughter, Matilda, and left his entire estate to his parents and siblings.

According to Wendy Caccetta, Heath Ledger's Matilda to get the lot, Perth Now, Sept. 27, 2008, Heath's family has decided to allow the entire estate estimated at $20 million to pass to Matilda despite the provisions of Heath's will.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this development to my attention.

Top SSRN Downloads

Here are the top downloads from July 31, 2008 to September 29, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank	Downloads	Paper Title
1	1125	A Guide to Starting Social Security Benefits Richard L. Kaplan, University of Illinois College of Law, Date posted to database: August 4, 2008 Last Revised: August 26, 2008
2	109	Tax Court FLP Confusion: Mirowski Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: July 22, 2008 Last Revised: July 22, 2008
3	76	Revocable Trusts and the Law of Wills: An Imperfect Fit Alan Newman, University of Akron - School of Law, Date posted to database: April 8, 2008 Last Revised: May 2, 2008
4	72	Fiduciary Mechanics Robert Flannigan, University of Saskatchewan, Date posted to database: August 23, 2008 Last Revised: August 30, 2008
5	70	How Low Can You Go? Some Consequences of Substituting a Lower AFR Note for a Higher AFR Note Jonathan G. Blattmachr, Bridget J. Crawford, Elisabeth O. Madden, Milbank, Tweed, Hadley & McCloy LLP, Pace University - School of Law, Author - affiliation not provided to SSRN, Date posted to database: July 19, 2008 Last Revised: July 19, 2008
6	68	Testamentary Fragmentation and the Diminishing Role of the Will: An Argument for Revival Kent D. Schenkel, New England School of Law, Date posted to database: May 8, 2008 Last Revised: May 8, 2008
7	60	Toward a Model Law of Estates and Future Interests Benjamin Barros, Widener University - School of Law, Date posted to database: August 22, 2008 Last Revised: September 21, 2008
8	41	Durable Powers as an Alternative to Guardianship: Lessons We Have Learned Linda Whitton , Valparaiso University - School of Law, Date posted to database: August 11, 2008 Last Revised: August 21, 2008
9	33	Fathers of Conscience: Mixed-Race Inheritance in the Antebellum South Bernie D. Jones, Suffolk Law School, Date posted to database: June 3, 2008 Last Revised: June 3, 2008
10	33	Review of Graetz & Shapiro, Death by a Thousand Cuts: The Fight Over Taxing Inherited Wealth Karen C. Burke, Grayson M.P. McCouch, University of San Diego School of Law, University of San Diego School of Law, Date posted to database: August 22, 2008 Last Revised: August 23, 2008

Leona Helmsley Update

You may remember that earlier on this blog I discussed the  Last Will and Testament of Leona M. Helmsley in which Leona left her dog, Trouble, to her brother (Alvin).  She also left $12 million to the Leona Helmsley July 2005 Trust.  This is a "pet trust" for Trouble's care.  The exact terms of this trust are unknown because the trust was create inter vivos (while Leona was alive) and is not required to be placed on the public record.  "Mission statements" indicating her non-binding directions to the trustees explain her strong intent to provide for dogs.

On April 30, 2008, Manhattan Surrogate Judge Renee Roth reduced amount in the pet trust to $2 million with the $10 million balance passing to Leona's charitable foundation.  As far as I can determine from reports, the foundation is not yet awarding grants.

For a detailed discussion of this situation with extensive background information, see Jeffrey Toobin, Rich Bitch -- The legal battle over trust funds for pets, New Yorker, Sept. 29, 2008.

Special thanks to Adam Hirsch (William and Catherine VanDercreek Professor of Law, Florida State University) for bringing this article to my attention.

Greece changes law to permit cremation

On September 26, 2008, the highest court of Greece approved the government's request to legalize cremation.  The petition was opposed by the Orthodox Church which believes that cremation is contrary to its resurrection beliefs.

The court also approved guidelines regarding the disposition of cremains.  They must be scattered at least 1.5 miles from the shore, outside inhabited areas, or at crematoriums which have built gardens or fountains for that purpose.

See AP, Ruling Allows Cremation, NY Times, Sept. 27, 2008.