Keeping Current: Probate

Probate & Property Magazine: Volume 27 No. 06

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: Adoption of adult entitled to full faith and credit. A beneficiary of a Florida trust adopted an adult under Pennsylvania law, which, unlike Florida law, does not require notice of an adoption to financially interested parties. The other trust beneficiaries sought a declaratory judgment excluding the adoptee as a potential beneficiary and obtained summary judgment in their favor. The Florida intermediate appellate court reversed, holding that the Pennsylvania adoption decree was entitled to full faith and credit and that there was a genuine issue of material fact as to the settlor’s intent for adult adoptees to be beneficiaries. Dennis v. Kline, 120 So. 3d 11 (Fla. Dist. Ct. App. 2013).

ADOPTION: Adoption of parent severs relationship of child to grandparent. Before the decedent’s death, his biological daughter, an adult, was adopted by her stepfather. The decedent died intestate and the daughter would have been an heir but for the adoption. The personal representatives brought a proceeding requesting that $25,000 be distributed to daughter’s own daughter, decedent’s biological grandchild. The trial court granted the request for partial distribution and the decedent’s son, his only other heir, appealed. The Missouri intermediate appellate court reversed, holding that the daughter’s adoption also ended her child’s legal relationship to her biological grandfather. In re Brockmire, No. ED 99103, 2013 WL 2484534 (Mo. Ct. App. June 11, 2013).

POWER OF ATTORNEY: Agent opening joint account with principal deemed to violate fiduciary duty. An agent under a durable power of attorney closed the principal’s bank accounts and opened new accounts in the name of the agent, the co-agent, and the principal as joint tenants with rights of survivorship. The power of attorney authorized the agent to make gifts to herself in the amount of the gift tax annual exclusion. After the principal’s death, one of the agents withdrew the funds. The principal’s siblings began an action to recover the funds from the agent and her husband and received a summary judgment against both parties. The intermediate appellate court affirmed for the agent for all sums in excess of the annual exclusion, reiterating established Missouri law that opening the joint account with rights of survivorship was a gift to the agent, that any authority given an agent to make gifts must be in writing, and that powers of attorney are strictly construed. The court reversed as to the agent’s husband, finding that there were issues of fact as to whether he benefitted from the funds. In re Estate of Lambur, 397 S.W.3d 54 (Mo. Ct. App. 2013).

TORTIOUS INTERFERENCE: Relevant statute of limitations is the one applicable to claims to recover property. In Bjork v. O’Meara, 986 N.E.2d 626 (Ill. 2013), the Supreme Court of Illinois held that the statute of limitations applicable to actions for tortious interference with an expectancy is the six-year statute applicable to actions to recover property and not the six-month statute applicable to will contests.

TRUSTS: Compliance with trust terms governing withdrawal of assets not necessary for trustee who is also sole beneficiary. After the death of her husband, the wife became sole trustee and sole beneficiary for her life of the trust created by her husband. The trust terms gave the trustee the authority to pay the wife “so much of the trust principal, even to its complete exhaustion” as she might request in writing to the trustee. Before her death, she withdrew all of the trust property, and after her death, several remainder beneficiaries of the trust sued her estate on the grounds that she had violated her fiduciary duty by withdrawing all of the trust property without first making a written request to herself as trustee. The trial court granted summary judgment to the estate, and a divided intermediate appellate court affirmed, holding that the trust terms allowed her to withdraw all of the trust property and that requiring her to make a written request to herself for the withdrawal would be requiring the performance of a vain act contrary to law. Scanlon v. Scanlon, 993 N.E.2d 855 (Ohio Ct. App. 2013).

TRUSTS: Spendthrift limitation is constitutional. The beneficiary of a spendthrift trust personally guaranteed a loan of $350,000 to the business of which he was a principal, assuring the lenders that he was the beneficiary of a trust worth in excess of $6.8 million. The business defaulted and the trustee refused to pay on the guarantee because of the spendthrift limitation in the trust. The lenders sued, alleging that the Florida statutes that recognize the enforceability of spendthrift provisions violate the guarantee of equal access to the courts contained in the Florida Constitution, claiming that the statutes abolished a common right to execute a monetary judgment against any beneficial interest held by the debtor. The trial court granted summary judgment to the trustee, and the intermediate appellate court affirmed, holding that the validity of spendthrift limitations was recognized long before the adoption of the statutes; the statutes do not abolish a common right but rather recognize it. Zlatkiss v. All America Team Concepts, LLC, No. 5D12-3324, 2013 WL 2359108 (Fla. Dist. Ct. App. May 31, 2013).

TRUSTS: Environmental preservation easement does not create a charitable trust. Private landowners granted an agricultural preservation easement to the relevant state agency. Some years later, they sought and received permission to erect a creamery on the land. A community association of local residents sued for an order prohibiting operation of the creamery alleging standing under state law that gives standing to “any interested person” to enforce a charitable trust. In a case of first impression, the Maryland Court of Appeals upheld summary judgment denying the order holding that the easement was not a charitable trust. Long Green Valley Ass’n v. Bellevale Farms, Inc., 68 A.3d 843 (Md. 2013).

RULINGS AND REGULATIONS

ESTATE TAX: Right to receive life insurance policy dividends is not an incident of ownership. Accordingly, the policy is not includable in the decedent’s gross estate. PLR 201328030.

GIFT TAX: If the fair market value of a self-canceling note on the date of transfer is less than the fair market value of the stock purchased, the difference in value is a gift. CCA 201330033.

TRUSTS: A self-settled irrevocable trust with income to the settlor for life with a limited testamentary power of appointment over the corpus deemed a grantor trust as to both income and corpus. PLR 201326011.

TRUSTS: Mexican land trust deemed not a trust for United States tax purposes and is a disregarded entity. Rev. Rul. 2013-14.

LITERATURE

Capacity. Robert Whitman advocates a uniform test for capacity when an attorney prepares an estate-planning package in Capacity for Lifetime and Estate Planning, 117 Penn St. L. Rev. 1061 (2013).

Elder Law. In their article, “Elder Law” and Conflicts of Interest in the United States and Canada, 117 Penn St. L. Rev. 1191 (2013), James H. Pietsch and Margaret Hall argue that confronting the issue of conflicts is an important step in the coherent development of elder law (perhaps within a rubric of law, policy, and aging).

Farmland Inheritance. Hannah Alsgaard explores the reasons why, even in our modern society, farmland is generally inherited by sons rather than daughters, ultimately proposing that women must be groomed to farm to rectify the vast gender disparity in the ownership and management of family farms. Rural Inheritance: Gender Disparities in Farm Transmission, 88 N.D. L. Rev. 347 (2012).

Fiduciary Duties. Linda S. Whitton examines the importance of understanding agent duties and conflicts of interest, both for drafting a power of attorney that meets a principal’s objectives and for providing guidance to the agent who will act under its authority. Understanding Duties and Conflicts of Interest—A Guide for the Honorable Agent, 117 Penn St. L. Rev. 1037 (2013).

Kentucky—Uniform Statutory Trust Act. Thomas E. Rutledge provides a detailed analysis in The Kentucky Uniform Statutory Trust Act (2012): A Review, 40 N. Ky. L. Rev. 93 (2013).

Marriage. By analyzing a Tennessee bigamy case, a New York same-sex marriage case, and the growing cultural trend toward cohabitation over marriage, Lynne Marie Kohm discusses how and why marriage best protects vulnerable parties as they age in Why Marriage Is Still the Best Default in Estate Planning Conflicts, 117 Penn St. L. Rev. 1219 (2013).

Mental Disabilities. Michael L. Perlin leads a discussion of the possible effect of the Convention on the Rights of Persons with Disabilities on the application of guardianship laws in “Striking for the Guardians and Protectors of the Mind”: The Convention on the Rights of Persons with Mental Disabilities and the Future of Guardianship Law, 117 Penn St. L. Rev. 1159 (2013).

Michigan—Medicaid Estate Recovery. Alexandra Smith recommends modifying Michigan’s current Medicaid estate recovery program in her Note, Widening the Gap Between Rich and Poor: Issues and Recommendations for the Implementation of Michigan’s Medicaid Estate Recovery Law, 90 U. Det. Mercy L. Rev. 141 (2012).

New York—After Born Children. In his Comment, In re Gilmore, 57 N.Y.L. Sch. L. Rev. 637 (2012/2013), Andrew C. Thompson, argues that the court erred by incorrectly grounding its ruling in a plain meaning interpretation of N.Y. Est. Powers & Trust Law § 5-3.2 when it should have premised its holding on an analysis of Gil- more’s intent.

Ohio—Domestic Asset Protection Act. In his Comment, Viability of Ohio Domestic Asset Protection Trusts: A Review of the Proposed Ohio Legacy Trust Act, 39 Ohio N.U. L. Rev. 329 (2012), Brandon Beck explores the burgeoning movement in Ohio to adopt the DAPT statute and argues DAPTs are not a viable asset protection strategy.

Partial Intestacy. Adam J. Hirsch explores the problems that arise when a will does not dispose of an individual’s entire estate causing partial intestacy in Incomplete Wills, 111 Mich. L. Rev. 1423 (2013).

Posthumously Conceived Children. In her Note, Social Security Survivor Benefits: Why Congress Must Create a Uniform Standard of Eligibility for Posthumously Conceived Children, 54 B.C. L. Rev. 821 (2013), Alycia Kennedy urges that Congress should enact a uniform standard of Social Security eligibility for posthumously conceived children requiring (1) before death, the deceased father agreed in writing to be responsible for and support a child conceived with his frozen sperm, and (2) the child is conceived within four years of the father’s death.

Postmortem Reproduction. In his Note, Late Fathers’ Later Children: Reconceiving the Limits of Survivor’s Benefits in Response to Death-Defying Reproductive Technology, 15 Vand. J. Ent. & Tech. L. 983 (2013), Jeffrey W. Sheehan explores some of the possible unintended consequences of postmortem reproduction in light of legislation drafted long ago and suggests minor alterations to the rules governing survivor’s benefits eligibility intended to preserve the program’s social insurance function as reproductive technology transforms life after death from a hope or a fear into a choice.

Restatement (Third) of Property: Wills and Other Donative Transfers. John H. Langbein discusses Major Reforms of the Property Restatement and the Uniform Probate Code: Reformation, Harmless Error, and Nonprobate Transfers, 38 ACTEC L.J. 1 (2012). Lawrence W. Waggoner explains What’s in the Third and Final Volume of the New Restatement of Property That Estate Planners Should Know About, 38 ACTEC L.J. 23 (2012).

Rule Against Perpetuities. In his article, A Uniform Perpetuities Reform Act, 16 N.Y.U. J. Legis. & Pub. Pol’y 89 (2013), Scott Andrew Shepard proposes and explains a Uniform Perpetuities Reform Act through which rule-abolishing states can make targeted changes.

Scotland—Beneficiary Unworthiness. John MacLeod and Reinhard Zimmerman explore how Scottish law addresses inheritance by beneficiaries who have killed the decedent in their article, Unworthiness to Inherit, Public Policy, Forfeiture: The Scottish Story, 87 Tul. L. Rev. 741 (2013).

Social Security Reform. Reid K. Weisbord examines the problem of benefit misuse within the Social Security representative payee system, identifies shortcomings in the current legal framework for policing the payee’s conduct, and proposes legislative reform in Social Security Representative Payee Misuse, 117 Penn St. L. Rev. 1257 (2013).

Supported Decision Making. Employing supported decision making in lieu of guardianship, or integrating it into the guardianship system, has the potential to promote the self-determination of persons with intellectual and cognitive disabilities consistent with international and national legal norms as Nina A. Kohn, Jeremy A. Blumenthal, and Amy T. Campbell explain in Supported Decision-Making: A Viable Alternative to Guardianship?, 117 Penn St. L. Rev. 1111 (2013).

Uniform Trust Code. In his article, The Mandatory Disclosure Provisions of the Uniform Trust Code: Still Boldly Going Where No Jurisdiction Will Follow—A Practical Tax-Based Solution, 82 Miss. L.J. 597 (2013), John Spencer Treu argues that these provisions have failed to achieve uniformity and, as such, have failed to achieve their primary purpose.

LEGISLATION

Alabama modernizes unitrust income rules. 2013 Ala. Acts 336.

Alaska authorizes designation of agent to control remains. 2013 Alaska Sess. Laws 45.

Alaska enhances creditor protection for retirement plans. 2013 Alaska Sess. Laws 45.

Alaska expands power of appointment provisions. 2013 Alaska Sess. Laws 45.

California prohibits certain “bad” parents from inheriting from their intestate children. 2013 Cal. Legis. Serv. 39.

Colorado limits the liability of a trustee for holding a life insurance policy. 2013 Colo. Legis. Serv. 190.

Connecticut adopts comprehensive rules of procedure for probate of estates, fiduciary accountings, and management of contested probate matters. Probate Court Rules of Procedure (effective July 1, 2013).

Connecticut determines who may access a safe deposit box after the death of the owner. 2013 Conn. Acts 212.

Connecticut specifies when a child conceived and born after the death of a married parent may inherit. 2013 Conn. Acts 301.

Florida updates power of attorney statutes. 2013 Fla. Laws 90.

Florida voids most client to lawyer gifts if they are not related. 2013 Fla. Laws 172.

Maryland specifies when a child conceived and born after the death of a parent may inherit. 2013 Md. Laws 644.

Minnesota enacts a statutory form for multiple-party accounts. 2013 Minn. Sess. Law Serv. 36.

Nevada authorizes a personal representative to terminate a decedent’s e-mail and social networking accounts. 2013 Nev. Laws 325.

Nevada authorizes Physician Orders for Life-Sustaining Treatment. 2013 Nev. Laws 417.

New Hampshire updates advance directive laws. 2013 N.H. Laws 224.

North Carolina modernizes inheritance laws as they relate to children born out of wedlock. 2013 N.C. Laws 198.

Oregon enhances its version of the Uniform Trust Code. 2013 Or. Laws 529.

Texas authorizes trust decanting. 2013 Tex. Sess. Law Serv. 699.

Texas prohibits disclaimers to avoid child support arrearages. 2013 Tex. Sess. Law Serv. 689.

Texas revises statutory durable power of attorney form. 2013 Tex. Sess. Law Serv. 700.

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