Wills, Trusts & Estates Prof Blog

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

Saturday, April 16, 2022

Florida Appeals Court Says No Fees and Costs Reimbursement To Personal Representative From Sale Of Homestead Property

Estate planningIn Lanford v. Phemister, the Florida Fifth District Court of Appeals "reversed a probate court's order permitting the personal representative fees and costs to be paid from proceeds of the sale of protected homestead property. . ." 

When Mary Lee Dillard ("Decedent") died in 2016, she left some personal property to her sister, but left the majority of her assets, including homestead real property to a testamentary trust. Decedent's sister, Billie Jo Schell was the primary beneficiary of the testamentary trust while the Kirk Family Charitable Trust was the contingent remainder beneficiary. 

Robin Phemister was appointed the personal representative of Decedent's estate as well as the trustee of the testamentary trust created in Decedent's will. 

The Florida probate court determined that "Decedent's home constituted exempt homestead property, and that constitutional homestead protections inured to Phemister, as testamentary trustee, for Schell's benefit." The Florida Probate court then authorized Phemister, as trustee, to sell the homestead property, and the property was eventually sold. 

Schell died in 2018 and the residuary of the Decedent's estate passed to the Kirk Trust. J. Scott Lanford was the trustee of the Kirk Trust. 

Phemister petitioned the court to disburse the proceeds from the homestead property's sale to pay for her fees. Lanford objected, arguing that the homestead sale proceeds could not be used to pay Phemister. The Florida probate court eventually awarded reimbursement of Phemister's costs and attorney's fees and Lanford appealed. 

The Florida Fifth District Court of Appeals reversed the decision following the well-established law that constitutionally protected homestead property is not subject to the expenses of estate administration. 

See Florida Appeals Court Says No Fees and Costs Reimbursement To Personal Representative From Sale Of Homestead PropertyProbate Stars, April 11, 2022. 

April 16, 2022 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Wednesday, March 30, 2022

Oregon ends residency rule for medically assisted suicide

In a settlement filed in the U.S. District Court in Portland, the Oregon Health and the Oregon Medical Board "agreed to stop enforcing the residency requirement and to ask Legislature to remove it from the law." 

The lawsuit challenged the constitutionality of the residency requirement for the law allowing terminally ill people to receive lethal medication. The lawsuit argued that the residency requirement violated the U.S. Constitution's Commerce Clause, "which gives Congress the right to regulate interstate commerce, and the Privileges and Immunities Clause, which forbids states from discriminating against citizens from other states in favor of its own citizens." Attorneys for Compassion & Choices also argued that the law is also unfounded because no other portion of their practice is affected by residency requirements. 

Advocates have stated that they will use the settlement to press other states with medically assisted suicide laws to also remove their residency requirements.

According to Kevin Diaz, an attorney with Compassion & Choices, the national advocacy group that sued over Oregon's requirement, "[t]his requirement was both discriminatory and profoundly unfair to dying patients at the most critical time of their life. . ."

On the other side, Laura Echevarria, who opposes such laws argues that a residency requirement is necessary to save Oregon from becoming the nation's "assisted suicide tourism capital."

According to attorneys at Compassion & Choices, the residency requirements create obstacles for patients and make their lives even more insufferable. This is especially true for patients in Washington who are seeking assistance in ending their lives. Although Washington has a similar law to Oregon's, it is much harder to find facilities willing to assist due to the large number of hospital beds that are in religiously affiliated health care facilities. 

According to Compassion & Choices, the hope is that people will be able to cross state lines in order to receive the help they are seeking, because they legal boundaries like a residency requirement should not cause them to suffer more than they already are. 

See Gene Johnson, Oregon ends residency rule for medically assisted suicide, Everything Lubbock, March 28, 2022. 

March 30, 2022 in Death Event Planning, Disability Planning - Health Care, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Monday, March 14, 2022

Tax Court in Brief: Estate of Levine v. Commissioner | Split-Dollar Life Insurance and Estate Planning

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose. For a link to the podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.
One of the cases recently covered in Tax Court in Brief is Estate of Levine v. Commissioner.
Below is a summary of the case and the issues of law examined and decided on in the case: 
Short Summary: This case involves a split-dollar life insurance estate-planning arrangement. Marion Levine (Levine) entered into a transaction in which her revocable trust paid premiums on life insurance policies taken out on her daughter and son-in-law that were purchased and held by a separate and irrevocable life-insurance trust that was settled under South Dakota law. Levine’s revocable trust had the right to be repaid for the premiums. Decisions for investments within the irrevocable life-insurance trust, including for its termination, could be made only by its investment committee, which consisted of one person—Levine’s long-time friend and business partner. Levine died, and the policies had not terminated or paid out at that time as her daughter and son-in-law were still living. The question was what has to be included in her taxable estate because of this transaction: (1) the value of her revocable trust’s right to be repaid in the future (i.e., $2,282,195), or (2) the cash-surrender values of those life-insurance policies at the time of Levine’s death (i.e., $6,153,478)?
Primary Holdings:
  • The split-dollar arrangement in this case met the specific requirements of the Treasury Regulations. The policies in question were purchased and owned by the irrevocable trust, not Levine, and the arrangement expressly gave the power to terminate only to the trust’s investment committee. Thus, neither IRC Section 2036(a)(2)—the general “catch-all” statute for estate assets—nor Section 2038—the “claw-back” provision for certain estate assets transferred before death—do not require inclusion of the policies’ cash-surrender values because Levine did not have any right, whether by herself or in conjunction with anyone else, to terminate the policies.
  • As such, and as of her death, Levine possessed a receivable created by the split-dollar life insurance, which was the right to receive the greater of premiums paid or the cash surrender values of the policies when they are terminated.
  • Contrary to the Commissioner’s position, the transaction was not merely a scheme to reduce Levine’s potential estate-tax liability and there was a legitimate business purpose. There was nothing behind the “transaction’s façade” that would suggest that appearance of the express written terms of agreement and arrangement do not “match reality.”
  • Pursuant to applicable state law, the trust’s investment committee—albeit one person—owed fiduciary duties to the trust and beneficiaries other than Levine, Levine’s daughter, and son-in-law, and the evidence illustrated that the written agreements afforded Levine no power to alter, amend, revoke or terminate the irrevocable trust such that its assets should be included in Levine’s estate pursuant to Sections 2036(a)(2) or 2038.
  • The only asset from the split-dollar arrangement that Levine’s revocable trust owned at the time of her death was the split-dollar receivable.
Key Points of Law:
  • Irrevocable life-insurance trusts are typically used as a vehicle to own life-insurance policies to reduce gift and estate taxes. If done properly, a life-insurance trust can take a policy out of its settlor’s estate and allow the proceeds to flow to beneficiaries tax free. Split-dollar life-insurance trusts are a tool to remove death benefits from a settlor’s taxable estate—or at least defer payment of any tax owed.
  • Split-dollar arrangements entered into or materially modified after September 17, 2003 are governed by Reg. § 1.61-22. A split-dollar life-insurance arrangement between an owner and a non-owner of a life-insurance contract in which: (i) either party to the arrangement pays, directly or indirectly, all or a portion of the premiums; (ii) a party making the premium payments is entitled to recover all or a portion of those premium payments, and repayment is to be made from or secured by the insurance proceeds; and (iii) the arrangement is not part of a group-term life insurance plan (other than one providing permanent benefits). Id. § 1.61-22(b)(1)-(1)(iii).
  • Gifts of valuable property for which the donor receives less valuable property in return are called “bargain sales.” The value of gifts made in bargain sales is usually measured as the difference between the fair market value of what is given and what is received. However, the Treasury Regulations provide a different measure of value when split-dollar life insurance is involved. See Reg. § 1.61-22(d)(2).
  • There are two different and mutually exclusive regulatory regimes applicable to split-dollar insurance trusts—called the “economic benefit regime” and the “loan regime”—and that govern the income- and gift-tax consequences of split-dollar arrangements. These two regimes determine who “owns” the life insurance policy that is part of the arrangement. The general rule is that the person named as the owner is the owner. Non-owners are any person other than the owner who has a direct or indirect interest in the contract. However, if the only right or economic benefit provided to the donee under a split-dollar life-insurance arrangement is an interest in current life-insurance protection, then the donor is treated as the owner of the contract. This is the economic-benefit regime.
  • Where a split-dollar life insurance trust meets the requirements of Treas. Reg. § 1.61-22 the IRS and the courts must look to the default rules of the Code’s estate-tax provisions to figure out how to account for the effect of the split-dollar arrangement on the gross value of the particular estate.
  • The Code defines a taxable estate as the value of a decedent’s gross estate minus applicable deductions. See 26 U.S.C. § 2051. Section 2033 provides that a decedent’s gross estate includes the value of any property that a decedent had an interest in at the time of her death. Sections 2034 through 2045 identify what other property to include in an estate.
  • For example, Section 2036(a) is a catchall designed to prevent a taxpayer from avoiding estate tax simply by transferring assets before the taxpayer’s death. Pursuant to the related Treasury Regulations, “[a]n interest or right is treated as having been retained or reserved if at the time of the transfer there was an understanding, express or implied, that the interest or right would later be conferred.” Treas. Reg. § 20.2036-1(c)(1)(i). Similarly, Section 2038 allows for a “claw-back” into a decedent’s estate the value of property that was transferred in which the decedent retained an interest or right—either alone or in conjunction with another—to alter, amend, revoke, or terminate the transferee’s enjoyment of the transferred property.
  • Both sections 2036 and 2038 include an exception for transfers that are “a bona fide sale for an adequate and full consideration in money or money’s worth.” 26 U.S.C. § 2036(a), §2038(a)(1).

See Tax Court in Brief: Estate of Levine v. Commissioner | Split-Dollar Life Insurance and Estate PlanningFreeman Law: Tax Court in Brief (2022). 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

March 14, 2022 in Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, New Cases, Non-Probate Assets | Permalink | Comments (0)

Monday, February 21, 2022

Mississippi Supreme Court: No Liability For Bank That Reasonably Relied On Apparent Authority Of Attorney Over Conservatorship

Estate planningIn Newsome v. Peoples Bancshares Inc., the Mississippi Supreme Court "affirmed the dismissal of claims against a bank in connection with a conservatorship because substantial evidence supported the findings that an attorney possessed apparent authority to authorize disbursements from the conservatorship account." 

In 2010, Marilyn Newsome was appointed conservator of her daughter, Victoria Newsome, stemming from a medical malpractice claim. The Mississippi chancery court ordered that a portion of Victoria's settlement proceeds be deposited in a separate account for all costs related to constructing a special needs home for Victoria. The chancery court then placed McNulty (the attorney who petitioned to open the conservatorship) in charge of overseeing the construction.

Shortly after, Marilyn went to the Bank and set up the conservatorship account, which she designated herself as the sole authorized signor for the account. For the disbursements, McNulty drafted and filed the order, delivered it to the bank, and the Bank issued the cashier's check pursuant to the order—without Marilyn's signature. Marilyn later brought suit against the McNulty, the Bank, and others. Marilyn and McNulty ultimately settled, but Marilyn pursued her claim against the Bank. 

The Mississippi chancery court found that "the Bank reasonably relied on McNulty's apparent authority to its detriment, and it dismissed Marilyn's claim against the bank.

The elements to determine the existence of apparent authority under Mississippi Law are as followed: 

  1. acts or conduct by the principal indicating the agent's authority
  2. reasonably relied by a third party upon those acts or conduct; and
  3. detrimental change in position by the third party as a result of such reliance

The Mississippi Supreme Court ruled that McNulty "possessed apparent authority under Mississippi law to act on Marilyn's behalf were factually supported." 

See Mississippi Supreme Court: No Liability For Bank That Reasonably Relied On Apparent Authority Of Attorney Over Conservatorship, Probate Stars, February 10, 2022. 

February 21, 2022 in Estate Planning - Generally, New Cases | Permalink | Comments (0)

Wednesday, February 2, 2022

North Dakota Supreme Court: Holographic Will Not Valid When Material Portions Not Proven To Be In Decedent’s Handwriting

Estate planningIn Estate of Beach, the North Dakota Supreme Court "upheld the decision of the district court denying the admission of a holographic will to probate." 

The decedent, Skip Beach, was survived by seven siblings and one daughter. Clark Beach, the brother of the decedent, filed a petition to probate a holographic will, which read: 

My Last Will and Testament 

Skip Beach 

I leave to Clark Beach 

Everything I own 

P.S. Bury me in Carlyle 


At the hearing, Clark presented testimony from seven witnesses, who testified that "the signature and all portions of the document were in the decedent's handwriting." 

The court denied the petition for formal probate of the holographic will after finding that although the the signature "Skip Beach" was the decedent's signature, the clause "Everything I own" was not in the decedent's handwriting. 

The court reasoned that it did not have to accept the witness testimony as credible simply because the witnesses testified that the will was written in the authentic handwriting of the decedent. Further, "Clark beach not only had the initial burden of proof to show due execution of the purported holographic will, but he also had the burden of persuasion. . ." 

The North Dakota Supreme Court determined that "the district court did not clearly err in finding that the material portions of the purported holographic will were not in the testator's handwriting."

See North Dakota Supreme Court: Holographic Will Not Valid When Material Portions Not Proven To Be In Decedent’s Handwriting , Probate Stars, January 11, 2022. 

February 2, 2022 in Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0)

Tuesday, February 1, 2022

The Uniform Trust Code’s qualified-beneficiary concept confuses yet another court

Estate planningIn the matter of the Colecchia Family Trust, The litigation was focused on an irrevocable, income-only/use-only trust "under which the equitable property rights of remaindermen had vested ab initio." The Massachusetts Court of Appeals had to decide whether trustees were accountable to the remaindermen during the lifetimes of the current beneficiaries. The Court ultimately found that they were not. 

According to Charles E. Rounds, there are two major reasons why the Court made the wrong decisions: 

First, equitable non-possessory property rights in the remainder in corpus had vested ab initio. Second, the trustees had had a background overarching enforceable equitable duty to act in the interests of all beneficiaries, not just the current ones. See Massachusetts UTC §105(b)(2).

Apparently the Uniform Trust Code's qualified-beneficiary concept has been an issue for multiple courts, including the Appeals Court in Massachusetts. 

See Charles E. Rounds, Jr., The Uniform Trust Code’s qualified-beneficiary concept confuses yet another court, JD Supra, January 1, 2022. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.



February 1, 2022 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (1)

Monday, January 3, 2022

What will happen to Jeffrey Epstein’s $27.5M New Mexico ranch?

Estate planningNow that Jeffrey Epstein is dead, many are wondering what will become of the Zorro Ranch. The Zorro Ranch owned by Epstein is located near Santa Fe, New Mexico. The billionaires Zorro Ranch is known for being "shrouded in secrecy," but now that Epstein is gone new secrets may come to light. 

However, as of now, only Jeffrey Epstein and his accusers "know the dark details of what went on there. . ." An investigation by Nexstar's KRQE shed light on just how bizarre Epstein's operation was. 

KQRE's Gabrielle Burkhart asked New Mexico State Land Commissioner, Stephanie Garcia Richard, "To your knowledge, what was that land being used for?" Garcia Richard responded by saying, "[o]ne can only speculate and I have to tell you, Gabrielle, that my staff. . .you know this has been a difficult topic for us to tackle. . .Thinking about what state land might have been used for has been, you know, has been difficult." 

Almost immediately after Garcia Richard took office in 2019, she canceled a decades-long lease agreement the state had with Epstein for nearly 1,300 acres of grazing land.

According to records in Santa Fe County, portions of the Zorro ranch changed ownership "according to a mysterious deed filed in 2020." In the deed, ownership of Zorro Ranch was transferred from Epstein's company to Love and Bliss, a non-profit church for $200. 

Love and Bliss church are the same people that filed a fraudulent warranty deed in Florida for Epstein's Palm Beach mansion. 

Epstein's estate has taken court action against Love and Bliss, as their fraudulent deeds have clouded the Estate's ability to sell their properties. 

The Zorro Ranch is listed for $27.5 million and according to representatives of the estate, funds from the sale will go toward the regular administration of the estate. 

See Gabrielle Burkhart & Allison Giron, What will happen to Jeffrey Epstein’s $27.5M New Mexico ranch?, Everything Lubbock, January 2, 2022. 

January 3, 2022 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Thursday, December 30, 2021

Ring v. Harmon (2021)

Estate planning
In Ring v. 
Harmon, the Court of Appeal in California considered "an alleged loan scheme to drain equity out of a house held in a probate estate." 

When Awana Ring was 80 years old, she lost her daughter Vickie Atiyeh. Vickie left Awana a house when she passed away. According to Awana, her son and grandson developed a scheme to "swipe much of the equity in the house—an inside job without outside help. "

Awana's son Scott and grandson Zachary collaborated with a loan broker to pushed Away to be appointed as personal representative of Vickie's estate, and then baited Away into taking out a predatory loan at a rate of 10.99 percent. "Scott and Zachary took the loan proceeds for themselves while the loan broker received fees and an income stream on the loan." 

Although the San Bernardino County Superior Court found that Awana only had claims as a personal representative of Vickie's estate, since it was in that capacity that she received the loan. However, the Court of Appeal found that Awana's "dual position" as both personal representative and beneficiary was a "special circumstance that justified allowing her to sue based on her beneficial interest in the estate." 

See Ring v. Harmon (2021) (Cal.App.5th). 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this Case to my attention.

December 30, 2021 in Elder Law, Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Sunday, December 19, 2021

Article: Nova Scotia (Attorney General) v. Lawen Estate: Case Comment

Jane Thomson recently published an article entitled, Nova Scotia (Attorney General) v. Lawen Estate: Case Comment, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article: Estate planning

Case comment on Nova Scotia (Attorney General) v. Lawen Estate in which the Nova Scotia Court of Appeal overturned an application judge's finding that testamentary freedom was a right protected under s.7 of the Charter of Rights and Freedoms. Additionally, the Court casts doubt on whether anyone involved in the administration of an estate, or a beneficiary of one, could bring a Charter challenge to legislation interfering with testamentary autonomy, based on public interest standing.

This is a pre-copy edited, post-peer reviewed version of the contribution accepted for publication in Estates, Trusts & Pensions Journal. Reproduced by permission of Thomson Reuters Canada Limited.


December 19, 2021 in Articles, New Cases | Permalink | Comments (0)

Wednesday, December 8, 2021

A Texas woman was found dead 2 days after she signed a $250,000 life insurance policy, and her husband has been charged with her murder

PoliceChristopher Collins, a Texas man was recently charged with murder after his wife, Yuan Liang, was found dead just days after the couple took out a life insurance policy. 

Collins told police that he "suspected" that his wife was killed by intruders, however, the house was strangely not ransacked. Liang was found dead in the couple's home just two days after the couple signed a $250,000 life insurance policy. 

Surveillance footage from the gym showed Collins "pacing around" the gym for 45 minutes, but only working out for 5 minutes before he called the police from the gym's cafe. When police searched a gym locker, they uncovered Liang's wallet—which Collins had reported missing—and a cosmetic bag.

Collins told police that Liang sent him a text message about a person outside of their home while he was at the gym. Collins further stated that he lost contact with his wife shortly after she reported the "suspicious male" outside of their home. 

Although Collins told police that the couple did not have a life insurance policy, officers who searched the home found a piece of paper evidencing a life insurance policy for $250,000. 

Collins did not appear in his first scheduled court appearance due to "mental health reasons." It is unclear how Collins intends to plead. Collins is currently being held on a $150,000 bond. 

See Katie Balevic, A Texas woman was found dead 2 days after she signed a $250,000 life insurance policy, and her husband has been charged with her murder, Yahoo News, November 27, 2021. 

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

December 8, 2021 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)