Keeping Current Probate

Probate & Property Magazine: Volume 27 No 04

Keeping Current—Probate Editor: Prof. Gerry W. Beyer, Texas Tech University School of Law, Lubbock, TX 79409, gwb@ProfessorBeyer.com. Contributors include: Dave L. Cornfeld, Kerri G. Nipp, 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

ADOPTION: Child adopted after parent’s death is still beneficiary of parent’s trusts. A husband and his wife had five biological children and one adopted child, a daughter. The husband created two lifetime trusts, one for the benefit of his “children,” who were defined as four of his living biological children, identified by name, and “any additional children born to or adopted by” the husband after creation of the trust, and the other for all six then-living children who were identified by name. His will created testamentary trusts the beneficiaries of which included children “legally adopted” at the date of his death. After his death, his widow surrendered her parental rights to her adopted daughter so that she could be adopted by another couple. The child’s adoptive parents then petitioned for compulsory accountings in the lifetime and testamentary trusts on the grounds that the child was a beneficiary of all of the trusts created by the husband. The surrogate ordered the trustees to account and the intermediate appellate court affirmed, holding that, under the language of the various trusts, the child was either mentioned by name or included in the definition of children and that her subsequent adoption was irrelevant. In re Svenningsen, 959 N.Y.S.2d 237 (N.Y. App. Div. 2013).

BANK ACCOUNTS: Rescission of pay on death designation appropriate even without wrongdoing by payee. After executing a will giving his estate to various family members, outright and in trust, the testator opened a payable on death account at a local bank naming his attorney as the beneficiary. At the testator’s death, the account held approximately one-third of his entire estate. The trial court ordered the attorney to return the funds to the estate, finding that the testator’s unilateral mistake in naming the beneficiary entitled the estate to the remedy of rescission. The intermediate appellate court affirmed, finding that the evidence supported the finding that the testator mistakenly believed that naming his attorney as beneficiary would result in the funds’ passing under the will and that rescission was appropriate even in the absence of evidence of any wrongdoing by the attorney. Stephenson v. Spiegle, 58 A.3d 1228 (N.J. Super. Ct. App. Div. 2013).

BENEFICIARY CONDUCT: Disqualification of abuser as beneficiary is not retroactive. In 2009, the Washington State legislature amended the state’s slayer statute to disqualify any person who financially abused the decedent from acquiring property from the decedent if the decedent was a vulnerable adult. The decedent died before the enactment of the statute but the contest over his will was in progress at the time of enactment. After conclusion of the contest, the personal representative filed a petition to disqualify the decedent’s widow as an abuser. The trial court denied the petition, finding that the “triggering event” for application of the statute was abuse occurring during the decedent’s life. The intermediate appellate court reversed, finding that the triggering event was the filing of the petition for disqualification, and the Supreme Court of Washington affirmed. The court explained that the triggering event is the abuser’s attempt to receive property and that vested rights are not impaired because the abuser’s rights to the decedent’s probate property vest only when probate is complete. In re Estate of Haviland, No. 86412-8, 2013 WL 992042 (Wash. Mar. 14, 2013).

GENERATION-SKIPPING TRANSFER TAX: GST tax-exempt trust cannot be terminated merely because current beneficiary does not have descendants. Ten years after a mother’s death, one of her daughters petitioned the court to terminate the trust created for her on the grounds that the trust was created to preserve the GST tax-exempt amount for the mother’s grandchildren and that, because she and her sister had no children nor ever would, the trust should be terminated under a state law that authorizes the court to direct deviation from the terms of a trust and to modify administrative or dispositive terms if the changes will further the purposes of the trust because of the existence of circumstances unknown to the settlor. The trial court granted summary judgment to the trustee, the daughter appealed, and the Indiana intermediate appellate court affirmed. The court found that the trust terms showed that the primary purpose of the trust was to provide for the daughter to whom the trustee had sole discretion to distribute income and principal for maintenance, health, education, and welfare. In addition, the daughter had a special testamentary power of appointment over any trust property remaining at her death and only unappointed property would pass to the mother’s other descendants. Kristoff v. Centier Bank, 985 N.E.2d 20 (Ind. Ct. App. 2013).

SUPERWILL: Will revokes nonprobate arrangement by referring to asset. Under Washington law, the owner of a nonprobate asset can dispose of that asset by will, thus revoking the nonprobate arrangement, by specifically referring to the asset in the owner’s will. In Manary v. Anderson, 292 P.3d 96 (Wash. 2013), the Supreme Court of Washington held that the settlor and trustee of a revocable trust who retained the right to manage and live on real property transferred to the trust was an owner for purposes of the statute, that the real property was a nonprobate asset under the statute, and that the owner revoked the trust with regard to the real property by specifically devising the real property in the owner’s will; the statute does not require the testator to refer to the specific will substitute.

TORT CLAIMS. Property in revocable trust is liable for tort claims in suit filed before settlor’s death. The intermediate Ohio appellate court held that property held in a revocable trust is subject to tort claims against the settlor in a tort action filed, but not concluded, before the settlor’s death. Watterson v. Burnard, 986 N.E.2d 604 (Ohio Ct. App. 2013).

TORTIOUS INTERFERENCE: Statute of limitations is period applicable to claims to recover personal property. The Illinois Supreme Court held in Bjork v. O’Meara, 986 N.E.2d 626 (Ill. 2013), that plaintiff’s action for tortious interference with an expectancy was governed not by the six-month statute applicable to will contests but rather the longer period applicable to claims to recover personal property. The plaintiff was improperly denied discovery by the trial court, and the action did not relate to the decedent’s will but rather to alleged interference with a lifetime gift.

TRUSTS: Beneficiary of specific property sold by conservator is entitled to proceeds remaining at settlor’s death. The settlors created a revocable trust to terminate on their deaths, and the successor trustee was to distribute specific real property to their son, other specific property to their daughters, and the remainder to the daughters. After the father’s death, the mother’s conservator sold the real property given to the son under a court order to obtain funds to pay for the mother’s care. At the time of the mother’s death, the trust held only cash. The trial court ordered the cash distributed to the daughters under the clause disposing of the remainder of the trust property. The son appealed and the intermediate appellate court reversed, holding that the sale by the conservator adeemed the specific gift only to the extent the proceeds of the sale were used to support the settlor and that the son was entitled to the balance of the cash that could be traced to the sale of the property specifically given to him. In re Estate of Honse, 392 S.W.3d 511 (Mo. Ct. App. 2013).

LITERATURE

Ante-Mortem Probate. In his Note, Why Wait Until We Die? Living Probate in a New Light, 37 Okla. City U. L. Rev. 543 (2012), Taren R. Lord-Halvorson explores why only four states have embraced living probate statutes.

Charitable Gifts. Melanie B. Leslie suggests in Time to Sever the Dead Hand: Fisk University and the Cost of the Cy Pres Doctrine, 31 Cardozo Arts & Ent. L.J. 1 (2012), that perhaps the time has come to consider limiting the duration of restrictions on charitable gifts.

Conservation Easements. InExtinguishing and Amending Tax-Deductible Conservation Easements: Protecting the Federal Investment After Carpenter, Simmons, and Kaufman, 13 Fla. Tax Rev. 217 (2012), Nancy A. McLaughlin examines Carpenter against the backdrop of the legislative history of IRC § 170(h), state law, and public policy, offering suggestions on how best to comply with the extinguishment regulation given the Tax Court’s rulings in Carpenter and other relevant cases.

Digital Death. In her Comment, What Happens to Our Facebook Accounts When We Die?: Probate Versus Policy and the Fate of Social-Media Assets Postmortem, 40 Pepp. L. Rev. 185 (2012), Kristina Sherry explores the legal quandaries posed by “digital death,” a term linked to the fallout and uncertainty created in cyberspace by a human being’s passing.

ERISA. In her Comment, Safeguarding a Portion of the Retirement Nest Egg: ERISA and the Need for Regulations in Restricting Companies’ Ability to Recoup Overpayment of Pension Funds Made to Struggling Retirees, 33 Hamline J. Pub. L. & Pol’y 423 (2012), Samantha Valerius proposes legislative amendments to make recoupment procedures more equitable for retirees.

Georgia—Recent Developments. Mary F. Radford describes selected cases and significant legislation from June 1, 2011, through May 31, 2012, that pertain to Georgia fiduciary law and estate planning in her article, Wills, Trusts, Guardianships, and Fiduciary Administration, 64 Mercer L. Rev. 325 (2012).

GRAT Reform. Samuel R. Scarcello compares President Obama’s plan with other potential proposals and offers an alternative solution in his Comment, Transfer Taxes in Flux: A Comparison of Alternative Plans for GRAT Reform, 107 Nw. U.L. Rev. 321 (2012).

Guardian Decision-Making. In their article, Surrogate Decision-Making Standards for Guardians: Theory and Reality, 2012 Utah L. Rev. 1491, Linda S. Whitton and Lawrence A. Frolik address the two theoretical reference points used to frame how guardians should make decisions for incapacitated persons—the substituted judgment standard and the best interest standard.

Guardian Fees. Catherine Seal and Spencer Crona examine prospective standards and new strategies for arresting and reversing the decline in courts’ statutorily mandated services for those at-risk persons whose interests and well-being the courts are charged with protecting in their article, Standards for Guardian Fees, 2012 Utah L. Rev. 1575.

Guardian of the Estate. Robert B. Fleming and Rebecca C. Morgan review the standards for guardians of the estate when making financial decisions in their article, Standards for Financial Decision-Making: Legal, Ethical, and Practical Issues, 2012 Utah L. Rev. 1275.

Guardian’s Role in Determining Residence. Naomi Karp and Erica Wood argue in Choosing Home for Someone Else: Guardian Residential Decision-Making, 2012 Utah L. Rev. 1445, that by making surrogate residential decisions and providing consent for transitions from one setting to another, guardians are a key piece in the puzzle for policymakers in designing a workable system for long-term supports and services and in facilitating the drive toward community-based options.

Guardian’s Role in Health Care Decisions. In Standards for Health Care Decision-Making: Legal and Practical Considerations, 2012 Utah L. Rev. 1329, Kim Dayton explores the guardian’s role in making, or assisting the ward to make, health-care decisions and provides an overview of existing standards and tools that offer guidance in this area.

Guardians and the Court. Mary Joy Quinn and Howard S. Krooks explore The Relationship Between the Guardian and the Court, 2012 Utah L. Rev. 1611.

Guardianship Committees. In their article, Creating and Sustaining Interdisciplinary Guardianship Committees, 2012 Utah L. Rev. 1667, Julia R. Nack, Carolyn L. Dessin, and Thomas Swift describe the multiple national conferences since 1988 that have spearheaded the process of guardianship reform, filtering it through to the states, and discuss efforts to implement reform in Ohio.

Guardianship. A. Frank Johns proposes person-centered planning as a solution to the problems in guardianship in his article, Person-Centered Planning in Guardianship: A Little Hope for the Future, 2012 Utah L. Rev. 1541.

Medicare. Daniel P. Kessler explains why broad, fundamental reform is necessary to make Medicare sustainable and concludes that fundamental change in the form of premium support is the best alternative. Reforming Medicare, 65 Tax L. Rev. 811 (2012).

Nebraska—Transfer on Death Deed. John M. Gradwohl examines why the objectives of the statutory transfer of real property on death deed form fared so poorly in the Nebraska legislative arena in Legislative Enactment of Standard Forms, 91 Neb. L. Rev. 273 (2012).

Personal Narrative. In The Will as Personal Narrative, 20 Elder L.J. 355 (2013), Karen J. Sneddon seeks to reconceptualize this most personal of legal documents as a personal narrative rather than as a pure property disposition document.

Pets. In her Note, Revisiting Roxy Russell: How Current Companion Animal Trust and Custody Laws Affect Elderly Pet “Guardians” in the Event of Death or Incapacity, 20 Elder L.J. 411 (2013), Paige Dowdakin analyzes the existing legal protections for displaced companion animals and the effect on elderly pet owners.

Physician-Assisted Suicide. In her Note, Physician Assisted Suicide: Debunking the Myths Surrounding the Elderly, Poor, and Disabled, 10 Hastings Race & Poverty L.J. 145 (2013), Anne Marie Su argues that the inadequacy of data showing that PAS will lead to abusive circumstances combined with the importance of PAS in end-of-life care suggests that flat bans should no longer be allowed, at least on the grounds that PAS is a threat to vulnerable groups.

Public Policy. The major theme of Martin D. Begleiter’s article, Taming the “Unruly Horse” of Public Policy in Wills and Trusts, 26 Quinnipiac Prob. L.J. 125 (2012), is determining the appropriate public policy for wills and trusts. What is the test for whether something is (or should be) or is not (or should not be) public policy? Where does public policy come from?

Sharia-Compliant Wills. To ensure that Sharia-compliant wills are also in line with state law, practitioners will likely face certain challenges. In Sharia-Compliant Wills: Principles, Recognition, and Enforcement, 57 N.Y.L. Sch. L. Rev. 259 (2012/13), Omar T. Mohammedi seeks to identify and address such challenges.

South Dakota—Grantor Trusts. Beau C. T. Barrett argues in Grantor Trusts in South Dakota: Preserving a Planning Tool to Maintain the State’s Trust Friendly Status, 58 S.D. L. Rev. 89 (2013), that estate planners must understand the advantages and disadvantages of grantor trusts and be prepared to advocate for their preservation to maintain their availability and to promote South Dakota’s flourishing trust industry.

Termination of Small Trusts. In The Trustee and the Spendthrift: The Argument Against Small Trust Termination, 48 Gonz. L. Rev. 163 (2012/2013), Philip J. Ruce ponders the point at which a corporate trustee should close a small trust for being uneconomical.

Texas—Attorney’s Fees. In Getting Paid in Probate Court, 44 St. Mary’s L.J. 425 (2013), Robert J. Augsburger navigates the Texas Probate Code, Texas Property Code, and current case law to provide a road map for attorneys to obtain fees earned and retain monies earned while assisting others in a time of need.

Tortious Interference with Inheritance Rights. In Torts and Estates: Remedying Wrongful Interference with Inheritance, 65 Stan. L. Rev. 335 (2013), John C. P. Goldberg and Robert H. Sitkoff examine the nature, origin, and policy soundness of the tort of interference with inheritance, arguing that the tort should be repudiated because it is conceptually and practically unsound.

Undue Influence. In Canceling Deeds Obtained Through Fraud and Undue Influence, 39 W. St. U. L. Rev. 129 (2012), Blair J. Berkley addresses the common family situation in which an elder has a long-standing will or trust leaving his or her real estate in equal shares to his or her children. When the elder becomes infirm, one of the children (or other relative or friend) moves in with the elder to provide care and companionship. The elder then executes a deed conveying all or most of his or her real estate to the caregiver and the other children sue to cancel the deed.

Zoning and Elderly Healthcare. A. Kimberly Hoffman and James A. Landon explore zoning practices and policies relating to nursing homes in residential zoning districts in Zoning and the Aging Population: Are Residential Communities Zoning Elder Care Out?, 44 Urb. Law. 629 (2012), and argue that exclusionary zoning practices can act as a barrier to providing quality health care.

LEGISLATION

Arkansas modernizes the form of notice required when a small estate is distributed without administration. 2013 Ark. Acts 230.

Nebraska extends the ability of powers of appointment holders to bind permissible appointees and default takers even when a conflict of interest exists. 2013 Neb. Laws 38.

South Dakota strengthens its anatomical gift donation laws by requiring the Department of Public Safety to publicize how to make such gifts and to create a donor registry. 2013 S.D. Laws HB 1217.

Virginia authorizes the personal representative of a deceased minor to have access to certain digital accounts such as e-mail, social networking, and blogs. 2013 Va. Acts 369.

Virginia enacts the Uniform Real Property Transfer on Death Act. 2013 Va. Acts 390.

Virginia grants successors who are handing an estate via a small estate affidavit the ability to endorse and negotiate negotiable instruments such as checks and drafts. 2013 Va. Acts 68.

Wyoming clarifies that a trustee, for the trust, has an insurable interest in the settlor and individuals in whom the settlor would have had an insurable interest. 2013 Wyo. Sess. Laws 178.

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