Keeping Current Probate

Volume 26 No. 4

Keeping Current—Probate Editor: Prof. Gerry W. Beyer, Texas Tech University School of Law, Lubbock, TX 79409, gwb@ProfessorBeyer.com. Contributors: Dave L. Cornfeld, Kerri Griffin, Claire G. Hargrove, and Prof. William P. LaPiana.

Keeping Current—Probate offers a look at selected recent cases, rulings and regulations, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.

CASES

DIVORCE: Interest in will or revocable trust of living person is not subject to distribution in divorce. In a case of first impression, the Vermont Supreme Court held that an interest in a revocable trust created by a living settlor or an expectancy under a will is not property subject to equitable distribution on divorce. The court also held, however, that the likely receipt of future inheritances or trust assets is a factor to be considered in determining the application of equitable distribution. Billings v. Billings, 35 A.3d 1030 (Vt. 2011).

LAPSE: Inclusion of lapsed gifts in residuary clause overrides anti-lapse statute. The testator’s will defined his “residuary estate” to include “lapsed gifts.” The will made specific gifts to the testator’s two children both of whom predeceased, leaving issue who survived the testator. The residuary beneficiary was the testator’s spouse. The spouse petitioned for a construction of the will and the probate court found the Texas anti-lapse statute applied to the devises to the children. The intermediate appellate court reversed, holding that the inclusion of “lapsed gifts” in the definition of the residuary estate was sufficient to prevent the application of the anti-lapse statute. Lacis v. Lacis, 355 S.W.3d 727 (Tex. App. 2011).

MARITAL DEDUCTION: Property transferred to partnership is not eligible for marital deduction. In Estate of Turner v. Commissioner, 138 T.C. No. 14 (2012), the Tax Court determined that the marital deduction could not be used to offset gifts the taxpayer made to a family limited partnership during his lifetime.

WILL VALIDITY: State of situs of real property may independently determine validity of nonresident’s will. The testator died domiciled in Illinois. An Illinois court denied the testator’s will probate because the document was not properly executed. The document was then offered for probate in Indiana where the testator owned real property. The Illinois public administrator moved to dismiss the petition, the motion was denied, and on appeal the intermediate Indiana appellate court affirmed, holding that the Full Faith and Credit Clause did not obligate Indiana to deny probate to a will disposing of real property in Indiana and validly executed under Indiana law, which had been denied probate for lack of due execution in the state of the testator’s residence. In re Estate of Latek, 960 N.E.2d 193 (Ind. Ct. App. 2012).

WILLS: Negative will expressly disinheriting named heirs held effective. The testator executed a formal attested will leaving the bulk of his estate to his parents. He subsequently made a holographic codicil giving a small portion of his estate to a friend. After his mother’s death, the testator wrote a letter to the friend mentioned in the codicil, which purported to give his entire estate to the friend, and expressly disinherited his brother and daughter. The friend predeceased the testator. When the testator died, he was survived by his daughter and two half-sisters. In a comprehensive opinion, the Nevada Supreme Court affirmed the lower court judgment of escheat, holding that the letter was a valid holographic will that revoked the formal will by inconsistency and completely disinherited testator’s brother and daughter because state law had overturned the common law prohibition of negative wills. In addition the court held that the doctrine of dependent relative revocation although part of the law of Nevada did not apply in this case to undo the revocation of the formal will. In re Estate of Melton, 272 P. 3d 668 (Nev. 2012).

RULINGS AND REGULATIONS

GIFTS:Completed gift occurs when a donor transfers property to the donor’s children even though the donor retains a testamentary limited power of appointment over the trust. This represents a significant change in the position of the IRS. It was previously believed that this type of transfer would not result in a completed gift because the donor had retained a testamentary special power of appointment. CCA 201208026.

PENALTIES: IRS rules that a decedent’s estate is liable for penalties for the decedent’s failure to file reports of foreign trusts. CCA 201208028.

LITERATURE

Advance Directives. Ruth F. Maron argues in her Note, Who Has a Will to Live?: Why State Requirements for Advance Directives Should be Uniform(ly Revised), 24 Regent U. L. Rev. 169 (2011/2012), that states should reevaluate existing legislation for advance directives, adopt uniform standards for durable powers of attorney, living wills, dispute resolution, and registration that apply to health-care providers, and include the disabled and elderly populations in the legislative process.

Arbitration Clauses. In Enforceable Arbitration Clauses in Wills and Trusts: A Critique, 26 Ohio St. J. on Disp. Resol. 627 (2011), Stephen Wills Murphy identifies the myriad issues that courts and legislators should look to as they consider these clauses and provides a framework for more thoughtful and deliberate consideration of the issue.

Arkansas—Homestead Exemption. In his Note, Property Law—Homestead Exemption—A Beneficiary Interest Can Support a Homestead Exemption in Arkansas and a Look at Other Interests Sufficient to Support a Homestead Exemption, 34 U. Ark. Little Rock L. Rev. 173 (2011), Seth Williams discusses the protection afforded by the homestead exemption to immediate family members after the death of the head of the family by ensuring that they can continue to live in the home.

Charitable Lead Annuity Trusts. Paul S. Lee, Turney P. Berry, and Martin Hall outline the benefits of CLATs as an estate planning tool in Innovative CLAT Structures: Providing Economic Efficiencies to a Wealth Transfer Workhorse, 37 ACTEC L.J. 93 (2011).

Clawback. James P. Spica claims that existing law “is sufficient to prevent the computations hypothesized by proponents of the claw-back” in Future Perfect: How Tense and Mood Will Have Declawed the Claw-Back, 46 Real Prop. Tr. & Est. L.J. 475 (2012).

Client Due Diligence. Kevin L. Shepherd offers practical insights that reflect a sensitivity to implementing the risk-based approach in The Gatekeeper Initiative and the Risk-Based Approach to Client Due Diligence: The Imperative for Voluntary Good Practices Guidance for U.S. Lawyers, 37 ACTEC L.J. 1 (2011).

Elective Share. In Community Property v. the Elective Share, 72 La. L. Rev. 161 (2011), Terry L. Turnipseed argues that the elective share is so flawed that it should be jettisoned in favor of community property.

European Union. In Of Charities and Clawbacks: The European Union Proposal on Successions and Wills as a Threat to Charitable Giving, 17 Colum. J. Eur. L. 447 (2011), Aaron Schwabach provides a look at these different traditions and examines the relevant inheritance law provisions of EU member states, the United Kingdom, and the United States.

Georgia—Survey. In Wills, Trusts, Guardianships, and Fiduciary Administration, 63 Mercer L. Rev. 385 (2011), Mary F. Radford describes selected cases and significant legislation from June 1, 2010, through May 31, 2011, that pertain to Georgia fiduciary law and estate planning.

Holistic Estate Planning. Emily E. Beach contends that the crux of holistic estate planning, and the reason for its great success in anticipating and preventing postmortem family conflict, is its encouragement of full and frank communication among family members in Nudging Testators Toward Holistic Estate Planning: Overcoming Social Squeamishness on the Subjects of Money and Mortality, 26 Ohio St. J. on Disp. Resol. 701 (2011).

Illinois—Business Trusts. Asalya Akhmerova and William Price discuss the wisdom of Illinois joining the 32 other states with business trust statutes in Should Illinois Have a Statutory Business Trust Act?, 100 Ill. B.J. 164 (2012).

Illinois—Testamentary Conditions. A discussion of why the Illinois Supreme Court was correct in deciding the condition precedent was valid, despite its lack of explanation for such a conclusion, is found in Natalie Lorenz’s Casenote, Reaching from the Grave? The Validity of Testamentary Conditions Precedent Restricting Marriage in Illinois: In re Estate of Feinberg, 919 N.E.2d 888 (Ill. 2009), 36 S. Ill. U. L.J. 183 (2011).

Inheritance. In her Comment, Death Comes to Us All, But Through Inheritance, the Rich Can Get Richer: Inheritance and the Federal Estate Tax, 4 Est. Plan. & Comm. Prop. L.J. 173 (2011), Meggie Orgain “demonstrates the historical development of inheritance options, examines the harmful effects a generous inheritance may have on American ideology, and explores why America may benefit from the absence of inheritance.”

Inheritance Systems. Shelly Kreiczer-Levy offers an analysis of the American common law and civil law systems of inheritance in Inheritance Legal Systems and the Intergenerational Bond, 46 Real Prop. Tr. & Est. L.J. 495 (2012).

Insurable Interest. Mary Ann Mancini and Caitlin L. Murphy review the state of the law on insurable interests and examine the effect of these developments on practitioners who use life insurance as an estate planning tool in The Elusive Insurable Interest Requirement: Are You Sure the Insured Is Insured?, 46 Real Prop. Tr. & Est. L.J. 409 (2012).

Joint Tenancies. In The Paradoxes of Joint Tenancies, 46 Real Prop. Tr. & Est. L.J. 483 (2012), John V. Orth scrutinizes the unique and paradoxical nature of the joint tenancy that results from the fact that each joint tenant owns both a part and the whole of the subject estate.

Life Insurance. Richard Kagan and Jon Gallo provide A Short, Practical Private Placement Life Insurance Primer: Or Why Estate Planners Need to Understand Things Like Facultative Reinsurance, 37 ACTEC L.J. 165 (2011).

Long-Term Care. In his Comment, Marc Gregory Cain addresses The Effects of the Patient Protection and Affordable Care Act on Medicaid: Will Seniors Have More Long-Term Care Options and an Easier Application Process?, 4 Est. Plan. & Comm. Prop. L.J. 127 (2011).

Massachusetts—Uniform Probate Code. Kent D. Schenkel highlights and explains some of the changes wrought by the Massachusetts version of the UPC that are likely to affect typical will and trust drafting as well as the estate planning practice in general in Planning and Drafting Basics Under the New Massachusetts Uniform Probate Code, 16 Roger Williams U. L. Rev. 535 (2011).

Nonmarital Children. In Mother’s Baby, Father’s Maybe!—Intestate Succession: When Should a Child Born Out of Wedlock Have a Right to Inherit from or Through His or Her Biological Father?, 22 Colum. J. Gender & L. 531 (2011), Camille M. Davidson suggests that each of the 50 states should adopt legislation allowing intestate distribution when clear and convincing evidence determines that a father is the genetic parent of a child and when there has been no formal adoption of the child.

Ohio—Dynasty Trusts. John H. Martin addresses whether the dynasty trusts that can be created under current Ohio law are attractive to settlors and beneficiaries in The Dynasty Trust in Ohio: A Short, Rigid, or Uncertain Reign, 43 U. Tol. L. Rev. 53 (2011).

Posthumous Conception. In his Comment, Over My Dead Body: The Legal Nightmare and Medical Phenomenon of Posthumous Conception Through Postmortem Sperm Retrieval, 34 Campbell L. Rev. 181 (2011), Devon D. Williams suggests the need for legislation to protect all parties involved and to resolve what happens to a child conceived and born from postmortem sperm retrieval as it relates to probate, class gifts, Social Security, and legal status in general.

Professional Responsibility. McKen Carrington and Christopher Ogolla call “for standards of professional responsibility among estate planners that are specific enough to allow them to assist clients with transferring property without potential ethical violations” in Fame, Family Feuds, Lack of Estate Planning, and Ethical Misconduct in the Administration of the Billion-Dollar Legacy of Bob Marley, 4 Est. Plan. & Comm. Prop. L.J. 53 (2011).

Prudent Investing. In Travels Along the Efficient Frontier . . . Toward a New Duty of Loyalty, 4 Est. Plan. & Comm. Prop. L.J. 79 (2011), Gregory T. Holtz explores the changing landscape in trustee investing and “how the parties of today’s fiduciary relationships can and should respond.”

Psychology of Estate Planning. Mark Glover analyzes the psychological consequences of estate planning in A Therapeutic Jurisprudential Framework of Estate Planning, 35 Seattle U. L. Rev. 427 (2012).

Stepchildren and Stepparents. Terin Barbas Cremer proposes a statute consisting of a series of factors that courts can use to determine whether a parent-child relationship existed between the stepparent and stepchild for intestacy purposes in Reforming Intestate Inheritance for Stepchildren and Stepparents, 18 Cardozo J.L. & Gender 89 (2011).

Testamentary Distribution of Nonprobate Assets. An examination of the inherent differences between life insurance policies and IRAs and why such distinctions require IRAs be treated differently than life insurance policies by not allowing testamentary changes to IRA beneficiaries is made by Ashley L. Haskins in her Note, Estate and Probate Law—Testamentary Disposition of Non-Probate Assets: Whether IRAs Are Comparable to Life Insurance Policies and Whether Testators Should Be Able to Change an IRA Beneficiary by Will. Nunneman v. Estate of Grubbs, 2010 Ark. App. 75, __ S.W.3d __, 34 U. Ark. Little Rock L. Rev. 153 (2011).

Testamentary Freedom. Irene D. Johnson proposes to restore testamentary freedom “to those who wish to propound non-traditional estate plans” in There’s a Will, But No Way—Whatever Happened to the Doctrine of Testamentary Freedom and What Can (Should) We Do to Restore It?, 4 Est. Plan. & Comm. Prop. L.J. 105 (2011).

Texas—Assisted Reproduction. In her Comment, The Inheritance Mess with Texas ART Children: The Simple Fix, 4 Est. Plan. & Comm. Prop. L.J. 151 (2011), Julie C. Fletcher suggests amendments to the Texas Probate Code to protect ART children for intestacy purposes.

Texas—No Contest Clauses. In Will Contests in Texas: Did the Codification of the Good Faith and Probable Cause Exception Render In Terrorem Clauses Meaningless?, 63 Baylor L. Rev. 906 (2011), Ryann Lamb reveals that the legislature’s failure to elaborate on the limited language used to codify this exception leaves several questions open to interpretation by Texas courts.

Texas—Posthumous Conception. Allison Stewart Ellis makes an in-depth analysis and recommendation for modifying the Texas statutes in her Comment, Inheritance Rights of Posthumously Conceived Children in Texas, 43 St. Mary’s L.J. 413 (2012).

Trust Protectors. In The Case Against the Trust Protector, 37 ACTEC L.J. 77 (2011), Alexander A. Bove Jr. argues that the law should presume that a trust protector is a fiduciary bound by “all the duties and liabilities associated with the position, unless and to the extent the facts and circumstances, and not solely the trust instrument, dictate a different conclusion.”

Trusts. Wendy S. Goffe provides a comprehensive review of a wide variety of “unusual” trusts designed to meet specific estate planning needs in Oddball Trusts and the Lawyers Who Love Them or Trusts for Politicians and Other Animals, 46 Real Prop. Tr. & Est. L.J. 543 (2012).

Voice in Wills. In Speaking for the Dead: Voice in Last Wills and Testaments, 85 St. John’s L. Rev. 683 (2011), Karen J. Sneddon examines voice in wills, highlighting five opportunities that enable the drafter consciously to craft a persona that appropriately injects the individual’s voice into the will while ensuring that the will continues to be both substantively accurate and operative.

Will Contests. In Will Contests—Prediction and Prevention, 4 Est. Plan. & Comm. Prop. L.J. 1 (2011), Gerry W. Beyer discusses how to anticipate a will contest and a wide range of techniques ranging from the simple to the complex to reduce the likelihood of its success.

LEGISLATION

Indiana allows copy of a power of attorney to be as effective as the original under certain circumstances. The general assembly also recommended that the legislative council assign a committee to study powers of attorney. 2012 Ind. Legis. Serv. 42.

Iowa enacts physician orders for scope of treatment legislation. 2012 Iowa Legis. Serv. 2165.

Massachusetts enacts the revised Uniform Anatomical Gift Act. 2012 Mass. Legis. Serv. 39.

South Dakota modernizes the law regarding public trust companies. 2012 S.D. Sess. Laws 1045.

Utah enacts the Uniform Disposition of Community Property Rights at Death Act. 2012 Utah Laws 168.

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