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.
- ADEMPTION: Transfer to partnership destroys bequest. A testatrix devised real property to her grandson. Shortly before her death, she and her grandson created a partnership to which she contributed the real property. In Succession of Huguet, 708 So. 2d 1302 (La. Ct. App. 1998), the court held that, although the exchange involved in the creation of the partnership was not a sale, the transaction did accomplish a change in form because a partnership is an entity under Louisiana law. The bequest adeemed and the testatrix's interest in the partnership passed under the residuary clause of her will.
- ADOPTION: Adult adoption ignored if adoptee would receive double share. An aunt adopted her niece, causing the niece to become the remainder beneficiary of the aunt's portion of a life estate in real property created by the will of her father (the niece's grandfather). Under local law, the niece would also be the remainder beneficiary of her mother's share. In Unsel v. Meier, 1998 WL 213694 (Mo. Ct. App. 1998), the court held that the will evidenced the decedent's intent to treat his children and grandchildren equally and to recognize the adoption as giving the niece a double share would be contrary to that intent. The adoption, therefore, was a nullity with regard to the life estate.
- ANTI-LAPSE STATUTE: Law in effect at death controls. A decedent devised half of his estate to his long-time companion, who predeceased him. At the time the decedent wrote his will, the anti-lapse statute substituted the deceased devisee's heirs. A year before the decedent's death and while he was incapacitated, the statute was revised to pass a lapsed devise to the deceased devisee's issue. In Petersen v. Attema, 577 N.W.2d 407 (Iowa 1998), the court held that the statute in effect at the decedent's death governed. The decedent's incapacity was irrelevant because the lapse statute can be overridden only by contrary intent shown in the will, not by extrinsic evidence.
- CREDITORS: Attorney's fees assessed against personal representative have highest priority. A personal representative sued for breach of contract. The defendant prevailed and was awarded attorney's fees. In a case of first impression interpreting Florida's version of UPC § 3-805, the court held that the attorney's fees were a Class 1 claim against the estate because they would not have been incurred but for the affirmative action of the personal representative in bringing suit and because the personal representative rejected an offer of judgment. Teague v. Estate of Hoskins, 1998 WL 190403 (Fla. 1998).
- HEIR LOCATION: Contract to reveal inheritance for finder's fee subject to home solicitation statute. A commercial heir locating firm contracted with an attorney ad litem for a Texas decedent's estate to locate missing heirs for a 25% contingency fee. The firm located an heir in California. The heir signed an agreement assigning 25% of the inheritance to the firm, repudiated the agreement under California's home solicitation statute and collected the inheritance directly from Texas court. The court in In re Rhymer, 1998 WL 210805 (Tex. Ct. App. 1998), held that California law governed the suit between the firm and the heir. The agreement was subject to the statute and did not fall under an exemption for attorney's services.
- IN TERROREM CLAUSE: No forfeiture if challenge in good faith and based on probable cause. The court created a judicial exception to the enforceability of in terrorem clauses in Hannam v. Brown, 1998 WL 166592 (Nev. 1998). Medical evidence and the testator's removal as trustee of his inter vivos trust were sufficient to support the conclusion that the challenge to the trust was in good faith and based on probable cause.
- IN TERROREM CLAUSE: Will cannot dispense with excuse of good faith and probable cause. A decedent's will contained a no contest clause that purported to penalize a beneficiary for challenging the will, even if the contest were brought in good faith and with probable cause. In Willingham v. Willingham, 1998 WL 139555 (Tenn. 1998), the court held that the specific language of the will could not eliminate the good faith with prob-able cause exception to the enforcement of no contest clauses. Probable cause existed because the lawyer gave the contestant advice based on obsolete law.
- JOINT ACCOUNTS: Form of account conclusive. In Robinson v. Delfino, 1998 WL 155728 (R.I. 1998), the court held that opening a joint bank account is conclusive evidence of the intention to transfer to the survivor an immediate "joint beneficial possessory ownership right" in the balance remaining on the death of the depositor, absent evidence of fraud, undue influence, duress or lack of capacity.
- OMITTED SPOUSE: Prenuptial agreement effectively waives rights. In 1988 the decedent executed a will leaving her property to her nephew and his wife. She later married and then died without having changed her will. Her surviving husband made a claim against her estate as an omitted spouse. The court in Kellam v. Dutton, 706 So. 2d 1179 (Ala. 1997), rejected the husband's claim because the spouses had signed a prenuptial agreement waiving "all rights" in each other's estates.
- PRINCIPAL AND INCOME: Depreciation reserve is principal even if no depreciation occurs. The trustee created a reserve for depreciation of real property that did not actually depreciate in value. In Stahl v. Wells Fargo Bank, 73 Cal. Rptr. 2d 667 (Cal. Ct. App. 1998), the court held that although the creation of the depreciation reserve was in the trustee's discretion, the statute provides that the reserve, once established, is principal and thus the trustee has no power to reallocate the reserve to income even if no depreciation occurs.
- REVOCATION OF TRUSTS: Agent may revoke trusts. A beneficiary gave an agent a power of attorney that included the power to revoke trusts. In Franzen v. Norwest Bank, 1998 WL 175846 (Colo. 1998), the court held that the agent had the power to revoke even though the document did not refer to a specific trust. (This rule was later changed by statute.)
- REVOCATION OF WILLS: Invalid revocation results in partial intestacy. A husband and wife executed a joint will and later tried to amend it by obliterating a portion of the residuary clause and substituting different beneficiaries. In Hansel v. Head, 706 So. 2d 1142 (Ala. 1997), the court held that the substitution failed as an unattested codicil. Normally, the will would have been effective as written. The obliterated portion could not be read, however, and thus the portion of the residue disposed of by the obliterated words passed through intestacy.
- SELF-PROVING AFFIDAVIT: Signature on affidavit substitutes for missing signature on will. A testatrix did not sign her will but did sign the self-proving affidavit. In Hickox v. Wilson, 496 S.E.2d 711 (Ga. 1998), the court held that the will was validly executed because the will and the affidavit were stapled together and the testimony of the witnesses indicated that the testatrix's failure to sign the will was an oversight.
- TAX LIEN: Government must file proper notice of tax lien to prevail over prior perfected creditors when claiming against a decedent's estate. United States v. Estate of Romani, 118 S. Ct. 1478 (1998).
- TAX LIEN: Tenancy by entireties property not sub-ject to federal tax lien for debt of one spouse. Craft v. United States, 140 F.3d 638 (6th Cir. 1998).
- TRUST ACCOUNTS: No right of survivorship between beneficiaries. The decedent created a trust account naming two individuals as beneficiaries. One beneficiary died two weeks before the decedent. In Matter of Wozniak, 1998 WL 248847 (N.Y. App. Div. 1998), the court held that the account belonged one-half to the surviving beneficiary and one-half to the decedent's estate.
- VALUATION: Fractional interest and lack of marketability discounts may not be used to value prop-erty held by spouses as joint tenants with rights of surviviorship. Estate of Young, 110 T.C. No. 24 (1998).
RULINGS AND REGULATIONS
- CHARITABLE DEDUCTION: Corporate transaction (issuance of new class of stock for outstanding class of stock) to facilitate charitable lead trust approved. PLR 9819031.
- GIFT TAX: Gratuitous transfer to a family member of a nonstatutory stock option is completed gift on the later of (1) the transfer, or (2) the time when the donee's right to exercise the option is no longer conditioned on the performance of services by the donor. Rev. Rul. 98-21.
- Advance Directives. Recent articles focusing on advance directives include Rebecca J. O'Neill, Surrogate Health Care Decisions for Adults in Illinois_Answers to the Legal Questions That Health Care Providers Face on a Daily Basis, 29 Loy. U. Chi. L.J. 411 (1998); and Alan D. Lieberson, Commentary: Advance Medical Directives_1998: A Medical View, 12 Quinnipiac Prob. L.J. 305 (1998).
- Elective Share. In Electing Against the Will_The DNI Problem for Spousal Shares, 88 J. Tax'n 164 (1988), Kenneth M. Hart discusses conflicting prece- dents and the possible consequences of recent legislation.
- Estate Tax. In Lifting the Shroud Obscuring Estate of Hubert: The Logic of the Income and Estate Tax Treatment of Estate Administration Expenses, 3 Fla. Tax Rev. 637 (1998), Joseph M. Dodge critiques the doctrinal basis for the Supreme Court's decision in Commissioner v. Estate of Hubert and explores the proper income and estate tax consequences of estate administration expenses.
- In Terrorem Provisions. In The Fine Art of Intimi- dating Disgruntled Beneficiaries With In Terrorem Clauses, 51 SMU L. Rev. 225 (1998), Gerry W. Beyer and others examine the historical development of in terrorem provisions and propose a comprehen- sive statute.
- Malpractice. Suzzanne K. Guidara delineates how beneficiaries can circumvent the privity requirement in Ferguson v. Cramer: Denying Estate Beneficiaries Standing to Sue in the Absence of Privity, 12 Quinnipiac Prob. L.J. 343 (1998).
- New York Estate Tax. Nancy O'Hagan analyzes recent reforms in estate tax law in New York Lifts Death Tax Penalty, 25 Fordham Urb. L.J. 135 (1997).
- Non-Marital Partners. Mary Louise Fellows and others explore the issue of recognizing committed partners as heirs under intestacy law, in Committed Partners and Inheritance: An Empirical Study, 16 Law & Ineq. J. 1 (1998).
- Trusts. Aaron W. Brooks discusses the role of a trustee who suspects fraud by a beneficiary in The Trustee's Balancing Act: Impartiality When a Beneficiary Goes Bad, 86 Ill. B.J. 22 (1998).
- Undue Influence. In Undue Influence in Louisiana: What it Was, What it Is, What it Might Be, 43 Loy. L. Rev. 443 (1997), Julia Cowan Spear discusses the development of and controversies in Louisiana undue influence law.
- Will Drafting. In Points to Ponder For That "Simple Will," Prac. Law., Mar. 1998, at 43, Mark Bekerman discusses the not so simple issues to be considered when advising a client who wants a simple will. LEGISLATION
- Georgia enhances probate court procedures and training of probate judges. 1998 Ga. Laws 892 & 987.
- Kansas permits conservator to make gifts of conservatee's property with court permission. 1998 Kan. Laws 113 (West).
- Kentucky enacts Uniform Simultaneous Death Act and Uniform Testamentary Additions to Trusts Act. 1998 Ky. Laws 314 (West).
- Maryland enacts the William H. Amoss Organ and Tissue Donation Act of 1998. 1998 Md. Laws 1.
- Ohio clarifies living wills and Do Not Resuscitate protocols. 1998 Ohio Laws 142.
- Oklahoma amends statutes regarding home equity conversion mortgages during probate. 1998 Okla. Sess. Law Serv. 132 (West).
- Vermont authorizes the formation of independent trust companies. 1998 Vt. Acts & Resolves 98.
- Virginia amends provisions regarding court appointment of trustees. 1998 Va. Acts ch. 392.
- Washington creates procedure to permit testamentary dispositions of nonprobate assets. 1998 Wash. Legis. Serv. ch. 292 (West).
- West Virginia revises short form settlement of a decedent's estate. 1998 W. Va. Laws H.B. 4310.
- Wisconsin enacts comprehensive revisions to probate statutes. 1998 Wis. Legis. Serv. 188 (West)
- Wisconsin prohibits probate filing fees based on the value of the deceased's property that is not subject to administration. 1998 Wis. Legis. Serv. 83 (West).
- Wisconsin revises statutory durable power of attorney form. 1998 Wis. Legis. Serv. 233 (West)
Keeping Current_Probate Editor: Gerry W. Beyer, Professor, St. Mary's University School of Law, One Camino Santa Maria, San Antonio, TX 78228. Contributing editors: Dave L. Cornfeld, Vionette Douglas, William P. LaPiana and Kendra Lashawn McCartney.
American Bar Association 750 N. Lake Shore Dr., Chicago, IL 60611 312/988-5000 email@example.com
Copyright American Bar Association. All rights reserved.
Probate & Property Magazine is published six times annually and is included in section members' annual dues.