Wills, Trusts & Estates Prof Blog

Probate Judge May Have Enabled Fraud on the Elderly

Elderly individual Marie Long had a stroke in 2005 and subsequently came under the protection of Lindsay Ellis, a probate court judge, who appointed Sun Valley Group as Marie’s guardian. Marie was worth $1.3 million in 2005, but now she depends on taxpayers for support.

Judge Ellis allowed Sun Valley Group use all of Marie’s funds. Ellis also suggested that Sun Valley Group sue two attorneys, Gitre and Raynak, for driving up fees by repeatedly objecting to the drain on Marie’s account.

In reality, Gitre and Raynak worked for free to try to protect Marie. They were hired by Marie's sisters and  filed a lawsuit claiming that Sun Valley had a duty to investigate if the Arizona Department of Veterans Services could have helped Marie. ADVS would have served as Marie’s guardian for $75 a month because she was the widow of a veteran, a fraction of the $183,000 paid to Sun Valley for guardian fees. Gitre and Raynak also claim that Sun Valley breached its fiduciary duty by self dealing and charging unreasonable fees.

In the end, Marie got nothing. Ellis dismissed Marie’s claim, saying that she can’t sue due to her incapacity. Ellis further found that Gitre and Raynak had no legal standing to sue for breach of fiduciary duty. Finally, Ellis found that Marie’s sisters also did not have standing to sue Sun Valley.

However, Marie may have some good news. The court commissioner who inherited the case found that Ellis did not approve the final $104,000 that Sun Valley and its attorneys claimed they were owed. Perhaps Marie will get at least this back.

See Laurie Roberts, Probate Court Asked to Sanction Attorneys in Marie Long Case, The Arizona Republic, April 10, 2010.

Review of 'Gifts: A Study in Comparative Law'

Iris J. Goodwin (associate professor of law, University of Tennessee) has written and published a book review of Gifts: A Study in Comparative Law, which was written by Richard Hyland (distinguished professor, Rutgers Law) and published in 2009.

The following is the first paragraph of the book review:

Richard Hyland has written a masterpiece of comparative law scholarship.  Gifts: A Study in Comparative Law (2009) is a work certain to become a landmark in the extraordinary interdisciplinary conversation about gift giving that has been building in Hyland's crescendo throughout much of the preceding century.  Hyland begins the book with the admission that it took him twenty years to complete it.  In an era in which law review articles get shorter with each issue and the 800-word op-ed piece is the vehicle of choice for considered debate about major public issues, the idea of anyone devoting such a staggering amount of time to a single project is difficult to contemplate, notwithstanding the resulting two-inch-thick volume in 8-point type.  A mere cursory perusal of the book, however, reveals a massive work of such erudition that the length of time Hyland devoted to his endeavor seems neither surprising nor, indeed, unreasonable.  This work not only manages to do yeoman's work for the practicing attorney--providing six chapters that survey and compare the essential aspects of the substantive law of gifts in three common law and five civil law jurisdictions--but is also likely to change the terms of future discussions about the gift among comparativists and other scholars in the humanities and social sciences.  

Iris J. Goodwin, Book Review: Gifts: A Study in Comparative Law, 44 Real Prop., Trust & Estate L.J. 823 (2010).

Indiana Supreme Court Busts Insurance Agency for Unauthorized Practice of Law

Starting in 1995, United Financial Systems Corporation (UFSC) marketed and sold estate planning services, including wills and trusts. Once a client agreed to the estate planning work, a UFSC assistant would gather the information and send it to an outside counsel. Outside counsel would send the work back to the assistant who presented and “managed” the plan as well as sold the client insurance products. 

The Indiana Supreme Court found this to be the unauthorized practice of law and ordered UFSC to stop these practices. The Court also ordered the firm to refund fees to post-2006 clients. The Court did not like:

• That the plan was not sold by a licensed attorney
• That the assistant made more in fees than the outside counsel
• That the client did not have contact with the outside counsel

Tips for avoiding the unauthorized practice of law:

• Don’t charge fees for services that involve the drafting of legal documents
• Make sure that the attorney actually drafting the documents interacts with the client

See Roccy DeFrancesco, Insurance Agency Busted for the Unauthorized Practice of Law, The Wealth Preservation Institute, April 23, 2010. 

Special thanks to Jim Hillhouse (Wealth Counsel) for bringing this to my attention.

Rule Against Perpetuities: An Interest too Remote Cannot Not be Severed, Making Deed Void

Kerr v. Bauer, 222 P.3d 1117 (Or. Ct. App. 2009): A deed purported to convey the grantor’s real property to her sons, in trust, to provide a “place of rest, recreation and recuperation” for her children, grandchildren, and “descendants.” There was no time limit on the trust nor any ultimate vesting of any interest in the realty and, therefore, the trust violated the Rule Against Perpetuities.

On appeal from a decree severing the children’s interests from those of the more remote generations and thus reforming the trust to remove the perpetuities violation, the Oregon intermediate appellate court reversed. Oregon’s version of the USRAP makes reformation of instruments predating enactment of the uniform act optional with the court. Here reformation by severance was not appropriate because the deed expressed the grantor’s intent to benefit all of her beneficiaries equally, making a severance which preserved only the children’s interest contrary to her intent.

Book Review: Immortality and the Law

Christopher Caldwell has written a review on Ray Madoff’s Immortality and the Law: The Rising Power of the American Dead.

The introduction to the review follows:

Two rough principles have governed the way we think about our duties to dead people. The first is summed up in G.K. Chesterton’s aphorism: “Tradition is the democracy of the dead.” The second is: “You can’t take it with you.” To put it crudely, while society has let dead people “vote” (in that it respects their traditions), it has not let them own property (since there would be no point to it). Things are changing, though, in the US. To judge from Immortality and the Law, a sparkling polemic by the Boston College law professor Ray Madoff, US courts and lawmakers have recently made a number of bad decisions that have turned this arrangement upside down. We hold the wisdom of previous generations in ever lower esteem. But, Madoff convincingly argues, we are granting the dead ever more elaborate property rights, which are crowding out the rights of the living.

For the rest of the favorable review, see Christopher Caldwell, Immortality and the Law, FinancialTimes.com, April 26, 2010; see also my previous blog on the publication of this book.

Styron's Family Allowed to Control E-book Rights

Contracts between authors and publishers did not specifically mention e-books until about fifteen years ago.  As a result, legal battles have arisen over the right to publish electronic editions of older books.  

Publishers typically claim e-book rights, claiming that “in book form” clauses include the right to publish digital versions.  Despite this, Random House is releasing the rights to several of the deceased William Styron’s books without a fight.  Styron’s family will give these rights to Open Road Integrated Media, who has promised to revive Styron’s legacy and introduce new readers to his older books. Open Road has also agreed to split equally the profits from the e-books with Styron’s family, which is twice the amount that most publishers give authors for rights to e-books.

The question now is whether or not this has paved the way for "other authors to take their e-books away from traditional publishers."  Motoko Rich, Random House Cedes Some Digital Rights to Styron Heirs, NY Times, April 25, 2010.

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

Estate Planning for Clients Suffering From Multiple Sclerosis & Parkinson's Disease

Rosalind Kalb, PhD, Nicholas LaRocca, PhD, Alessandro Di Rocco, MD, Mary Hughes, MD, and Martin M. Shenkman, CPA, MBA, PFS, JD, have written an outline-style article entitled Psychological and Emotional Impact of Chronic Illness on Estate Planning: Case Study Comparing and Contrasting Multiple Sclerosis and Parkinson’s Disease.

The article first outlines the definition and symptoms of Multiple Sclerosis and Parkinsons's Disease, which is essential information for estate planners trying to relate to and work with people diagnosed with these illnesses. Next, the article outlines the emotional and cognitive issues that can arise when a person is suffering from one of these illnesses. Finally, the article outlines special considerations that arise when providing estate planning services to an individual suffering from Parkinson's or MS, such as:

• Planning shorter meetings
• Planning for the effects the illness has had on the client's ability to write
• Recognizing that family members may be exerting undue influence on the client
• Helping the client come to terms with the need for estate planning
• Addressing special estate planning issues that might arise as the client's illness progresses
• Paying attention to how a client's religious beliefs impact planning

The article concludes as follows:

With what will often prove a modest effort and time commitment, general estate planning can be tailored to provide considerable sensitivity, protection and even encouragement to those struggling with the challengesof chronic illness. We should invest our hearts and minds fully in the pursuit of helping those living with disease — simply because it is the compassionate and human thing to do.

Death of Settlor of Revocable Trusts is a Change in Ownership

Steinhart v. County of Los Angeles, 223 P.3d 57 (Calif. 2010): The California Supreme Court held that a “change of ownership” allowing a taxing jurisdiction to reassess real property for purposes of taxation occurs at the death of the settlor of a revocable inter vivos trust which contains the settlor’s home even though the trust continues and gives a beneficiary the right to live in the home for life. When that beneficiary dies, the home is to be sold and the proceeds distributed to other beneficiaries. Because the settlor held the entire equitable estate in the residence, ownership of the residence was transferred at the settlor’s death.

Constructive and Resulting Trusts Book

Hart Publishing recently published Constructive and Resulting Trusts, ed. Charles Mitchell (2010).

The publisher's description of the book is below:

Constructive and resulting trusts have a long history in English law, and the law which governs them continues to develop as they are pressed into service to perform a wide variety of different functions, for example, to support the working of express trusts and other fiduciary relationships, to allocate family property rights, and to undo the consequences of commercial fraud. However, while their conceptual flexibility makes them enormously useful, it also makes them hard to understand. In the twelve essays collected in this volume, the authors shed new light on various aspects of the law governing constructive and resulting trusts, revisiting current controversies, bringing new historical material to the fore, and offering new theoretical perspective.

Watch Out for Medical Identity Theft

The Web Nurse Blog reports that medical identity theft is on the rise.  Medical identity theft occurs when someone uses your identity for health insurance or treatment reasons and in the process, changes your medical records regarding blood type, allergies, and even gender.

Because it is difficult to correct your medical records, the Web Nurse Blog offers the following tips for protecting yourself from medical identity theft:

• Request and review copies of your medical records.
• Obtain a Medical Information Bureau report, which is complied annually and lists all people who applied for disability, health, or life insurance in the last seven years.
• Obtain an Explanation of Benefit report that lists benefits paid on your behalf.
• Review bills, notices, and statements. 
• Protect your medical information.  For example, ensure that your social security number is different than your insurance ID number.
• Be aware that hospital personal may be involved in identity theft.  

Estate planners drafting documents relating to medical treatment should be aware of potential abuses of information contained in these documents and should limit, as much as possible, information that is sensitive to identity theft.

See The Web Nurse Blog, The Ultimate Guide to Health Insurance Theft - A Growing Problem, April 27, 2010.