Wills, Trusts & Estates Prof Blog

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

Sunday, December 28, 2008

Did Whitney Houston improperly use her dad's life insurance proceeds?

Houston_whitneySinger Whitney Houston is involved in lawsuit regarding the proceeds of her dad's (John Houston) life insurance policy.

John died in 2003 naming Whitney as the beneficiary of a $1 million life insurance policy.  According to the lawsuit, Whitney was supposed to use $723,000 of the proceeds to pay off the mortgage on John's condominium which is still occupied by John's wife (Whitney's step-mother).  The stepmother also claims that the balance of the proceeds should be paid to her.

The legal basis for the stepmother's claims is unclear.

See AP, Stepmother sues singer Whitney Houston over condo, life insurance money, Newsday.com, Dec. 17, 2008.

December 28, 2008 in Current Events, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Mary Pickford & The Oscars

Pickford_maryMary Pickford was a famous actress who won two Oscars for her work: best actress for Coquette (1929) and Lifetime Achievement (1976).

Mary died in 1979.  The two Oscar statuettes she received are now the center of dispute.  So too is an Oscar her husband, Charles "Buddy" Rogers, received when he won the Jean Hersholt Humanitarian Award (1976).

The Oscars are now in the hands of Kim Boyer, Virginia Patricia Casey, and Marian Stahl who inherited the statuettes through Rogers' second wife (Beverly).  They want to sell them to raise money.

The Academy of Motion Picture Arts and Sciences wants to block the sale claiming that the Academy is entitled to buy back the statuettes for $10 each.  Under current rules, recipients are bound by the $10 buy back rule but Mary won hers before the rule was enacted.  However, the Academy claims that she signed an agreement after she won her second Oscar agreeing to the $10 buy back for both awards.

On December 15, 2008, a Los Angeles jury agreed with the Academy deciding that the women are bound by Mary's agreement.

See AFP, Women barred from selling Mary Pickford Oscar, Yahoo!News, Dec. 15, 2008.

December 28, 2008 in Current Events, Intestate Succession, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, December 27, 2008

Are adopted adults considered "descendants"?

TexasIn the case of In re Ray Ellison Grandchildren Trust, 261 S.W.3d 111 (Tex. App.—San Antonio 2008, pet. denied, rehearing filed), Settlor established a trust for the “descendants” of his children.  A dispute arose as to whether descendants included the adopted children of his son who were adopted after reaching adulthood.  The trial and appellate courts agreed that these individuals were not within the class of individuals who would qualify as descendants.

The appellate court began its analysis by holding that “descendants” is not an ambiguous term and recognizing that it is well established under Texas law that extrinsic evidence is not admissible when a term is unambiguous.  The court also determined that merely because Settlor listed his descendants at the time he created the trust did not act to limit class membership to the listed individuals..

The court then turned its attention to whether adopted adults would be considered heirs under the intestacy statutes as they existed on the date Settlor executed the trust.  The court determined that although it was not bound by these statutes, that they provided evidence of the meaning of the term “descendants.”  Despite the fact that the statute provided that an adopted adult is the “son or daughter of the adoptive parents for all purposes,” the court held that this did not abrogate the “stranger to the adoption rule” because it lacked similar language contained in the statute governing the adoption of minors which stated that the term “descendant” includes adopted minors.  (Note that this statement is in direct contravention of a prior ruling of the Texas Supreme Court in Lehman v. Corpus Christi Nat’l Bank, 668 S.W.2d 687 (Tex. 1984).)

Comment:  The court’s opinion is puzzling and appears to distort the law to reach a decision which it thinks is “morally” correct.  The settlor used a term, “descendants,” which has a well-established legal meaning and is, as stated by the court, “not an ambiguous term.”  Id. at 118.  Accordingly, the adopted children are part of the class gift.  The court’s strained reading of historical statutes does exactly what the court states consideration of statutes cannot do, that is, to “control or defeat” the plain meaning of the terms of the trust.  Id. at 121.  However, because of allegations that the adoptions were done merely to give the adopted adults standing to demand an accounting, the court twists the law to exclude the children.  The court should not rewrite a trust merely because the settlor did not address the issue of adult adoptions and the court “thinks” the settlor would have excluded them.  As the court explained, but then did so nonetheless, “we must not redraft a trust instrument to vary or add provisions ‘under the guise of construction of the language’ of the trust to reach a presumed intent.”  Id. at 117.

Dissent:  The well-reasoned dissenting opinion of Justice Rebecca Simmons explains that this case is one where “bad facts make bad law” and that a court should not “neglect established precedent and impose [its] own intent” just because the adopted beneficiaries appear unworthy.  Id. at 128.  Justice Simmons recognized that even under the 1975 statute in effective in 1982, adopted adults were considered children for all purposes.

Moral:  When making gifts to classes such as “children,” “grandchildren,” and “descendants,” settlors and testators should indicate whether adopted children are included and if adopted children are included, the age by which they need to be adopted to be included in the class.

December 27, 2008 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Top SSRN Downloads

Ssrn_2 Here are the top downloads from October 28, 2008 to December 27, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days

Rank Downloads Paper Title
1 433 2008 Federal Tax Update
Samuel A. Donaldson,
University of Washington - School of Law,
Date posted to database: October 28, 2008
Last Revised: October 28, 2008
2 128 Take the Money and Run - The Impact of the HEART Act on the Ultimate Estate Plan: Expatriation to Avoid U.S. Income, Estate and Gift Tax
Kathleen Macaulay,
University of Houston Law Center,
Date posted to database: November 9, 2008
Last Revised: November 20, 2008
3 118 Dead or Alive: An Investigation of the Incidence of Estate and Inheritance Taxes
Lily L. Batchelder, Surachai Khitatrakun,
New York University School of Law, The Urban Institute - Tax Policy Center,
Date posted to database: May 16, 2008
Last Revised: October 31, 2008
4 74 Valuation Discounting Techniques: Terms Gone Awry
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: October 20, 2008
Last Revised: October 20, 2008
5 67 Causation and Breach of Fiduciary Duty
Vicki Vann,
Monash University,
Date posted to database: February 27, 2008
Last Revised: February 27, 2008
6 59 Financing Reverse Exchanges and Safeguarding Exchange Proceeds
Bradley T. Borden,
Washburn University - School of Law,
Date posted to database: November 1, 2008
Last Revised: November 1, 2008
7 54 The Estate Tax Non-Gap: Why Repeal a 'Voluntary' Tax?
Paul L. Caron, James R. Repetti,
University of Cincinnati - College of Law, Boston College - Law School,
Date posted to database: November 5, 2008
Last Revised: November 6, 2008
8 50 Unconscionability in the Law of Trusts
David Horton,
Boalt Hall School of Law,
Date posted to database: October 8, 2008
Last Revised: October 8, 2008
9 48 Family Values, Inheritance Law, and Inheritance Taxation
Anne Alstott,
Harvard University - Harvard Law School,
Date posted to database: November 13, 2008
Last Revised: November 27, 2008
10 34 Replacing the Estate Tax with a Re-Imagined Accessions Tax
Joseph M. Dodge,
Florida State University College of Law,
Date posted to database: October 20, 2008
Last Revised: October 20, 2008

December 27, 2008 in Articles | Permalink | Comments (0) | TrackBack (0)

Friday, December 26, 2008

Riches to rags -- What may happen if you don't diversify

Silverton_nancyA basic tenant of investing is to diversify -- that is, don't put all your eggs in one basket.  Failure to diversify can have devastating consequences as Nancy Silverton recently learned.

The following excerpts are from Claudia Eller, A noted restaurateur's recipe for disaster, LA Times, Dec. 24, 2008:

[Nancy Silverton], [t]he La Brea Bakery founder and queen of L.A.'s restaurant scene is among the legions of investors who've lost their fortunes in the alleged $50-billion fraud attributed to New York financier Bernard L. Madoff.

The financial pain is bad enough, Silverton says, but what makes it worse is that she ignored the advice of her father and others who warned her to diversify her investments.

Instead, after walking away with a profit of more than $5 million from the sale of La Brea Bakery in 2001, Silverton put all of her money in a fund affiliated with a Beverly Hills advisor, who in turn entrusted the funds to Madoff. * * *

Silverton said she lost her entire nest egg, including her retirement fund and money she had set aside for her children and their educations.

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

December 26, 2008 in Current Events, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Planning during difficult economic times CLE


The American Bar Association Section of Real Property, Trust and Estate Law and the ABA Center for Continuing Legal Education are sponsoring a teleconference and live audio webcast on January 21, 2009 entitled Estate and Related Planning During Economic Turmoil.

Here is a description of this program:

The markets are in turmoil. Daily Dow movements make roller coasters look tame. Tax, business, economic, and investment matters have all become extraordinarily uncertain. Every aspect of estate planning has been affected, as well as ancillary planning implications.

There are, however, always silver linings in difficult times.  Now is the time to rethink your clients’ needs and plans to position them for future success. All aspects of estate planning should be reevaluated in the current environment.  This program will provide a review of various points and discuss several related topics and their impact on estate planning. No one program can be complete, but this one will at least stimulate ideas about addressing the issues estate planning attorneys currently face in helping their clients. Listeners will learn how to help their clients take control of their affairs in the current economic climate and be at a better place in the months and years ahead.

The program will highlight: estate planning, charitable planning, closely held business planning, financial planning, special needs planning, and matrimonial planning.

The program will cover the following topics:

  • Short-term rolling versus long-term GRATs and the implications to GRAT immunization
  • Late allocations of GST Exemption
  • Valuation and discounts – impact of market conditions and whipsaw on distributions from GRATs/IDITs
  • Power to adjust – issues when addressing trust portfolio declines.
  • How to control what can be controlled, instead of worrying about what cannot.
  • The necessity of a team approach – involving multiple advisers to achieve better results, especially since the playing field has changed in so many disciplines so rapidly.

December 26, 2008 in Conferences & CLE | Permalink | Comments (0) | TrackBack (0)

Passage Graves Explained

Passage_graveThe following excerpts are from Passage graves from an astronomical perspective, EurekaAlert.com, Dec. 18, 2008:

Passage graves are mysterious barrows from the Stone Age. New research from the Niels Bohr Institute at the University of Copenhagen indicates that the Stone Age graves' orientation in the landscape could have an astronomical explanation. The Danish passage graves are most likely oriented according to the path of the full moon, perhaps even according to the full moon immediately before a lunar eclipse. The results are published in the scientific journal Acta Archaeologica. * * *

There is a significant concentration of orientations towards east/southeast as seen from within the passage grave. It can be interpreted that the passage graves are oriented according to the winter sunrise. But researchers think it more likely that they are positioned according to the rise of the full moon, for example, the first full moon after the spring equinox.

The calculations show, that in the period from 3.300 to 3.100 BC there was an over frequency of 50 percent in the number of lunar eclipses that could be seen in Denmark. And the exciting thing was that the pattern indicated that it could fit with the rise of the full moon immediately before a lunar eclipse.

How the Stone Age people had known that a lunar eclipse would come after a full moon is unknown, but astronomer Per Kjærgaard Rasmussen explains, that if one had observed a lunar eclipse there is a very strong likelihood that another lunar eclipse would come either 12 months or 18.6 years later.

The passage graves had been used for burials and the orientation of the entrance is concentrated towards the full moon points to a ritual practice that involved the moon.

Special thanks to Mary Sue Donsky (NYC College of Technology, Department of Law and Paralegal Studies ) for bringing this article to my attention.

December 26, 2008 in Death Event Planning | Permalink | Comments (0) | TrackBack (0)

Caught in the legal recession? - ABA Journal Survey Results

AbaEarlier on this blog, I posted a request from the American Bar Association to invite readers to participate in a survey being conducted by ABA Journal about the legal job market and the current state of the economy.

The results of the survey are now reported in Stephanie Francis Ward, 14,307 Lawyers Predict the Future, ABA J. Law New Now, Jan. 2009.  Interestingly, 19% of the respondents expect to lose their jobs by the end of 2009.

December 26, 2008 in Current Events | Permalink | Comments (0) | TrackBack (0)

Thursday, December 25, 2008

Happy Holidays!!


December 25, 2008 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 24, 2008

Unconscionability in the Law of Trusts


David Horton (Lecturer in Residence, Boalt Hall) has written an article entitled Unconscionability in the Law of Trusts, 84 Notre Dame L. Rev. (2009).

Here is an abstract of the article:

This Article claims that trust law should recognize the unconscionability defense. It begins by noting the symmetry between trust and contract defenses and the broad consensus among courts and scholars that trusts are contracts. It sketches the leading rationales for why courts enforce promises between private actors: the theories that free exchange allows parties to maximize welfare and exercise free will. It then argues that neither concept justifies upholding a contractual term if informational defects prevent one party from observing that it sharply deviates from her ex ante desires. It asserts that the unconscionability doctrine strikes down contractual terms that suffer from precisely that defect.

The Article then explains how the unconscionability doctrine could serve the same purpose in trust law. It discusses why the policies underlying freedom of testation depart from those behind freedom of contract and provide less support for a laissez-faire regime. It then challenges the unarticulated but intuitive notion that controls in the trust-creation process are sufficient to align an instrument's text with a settlor's intent. It reveals that corporate fiduciaries, trust mills, and a revitalized do-it-yourself movement have spawned "procedurally suspect" trusts: those created without attorney involvement and laden with complex terms. It then examines three common but controversial "substantively suspect" terms - exculpatory, no contest, and arbitration clauses - and shows how a trust-specific unconscionability doctrine would improve outcomes in cases.

December 24, 2008 in Articles, Trusts | Permalink | Comments (0) | TrackBack (0)