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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: Real estate subject to contract did not adeem. When the decedent died, specifically devised real property was subject to a contract of sale. In Kelley v. Neilson, 727 N.E.2d 82 (Mass. App. Ct. 2000), the court held that the gift did not adeem because the decedent still had title to the property at death. A beneficiary takes title subject to the equitable duty to convey on payment of the purchase price and is entitled to the proceeds of sale.
ADEMPTION: Roll-over of pension accumulation did not cause ademption. A testatrix's will made a specific bequest of her "pension from [her employer]." At her retirement, she withdrew her pension accumulation and rolled it over into an IRA. The court held that the bequest did not adeem because the gift was of the accumulated investments in the plan, those investments were contained in the IRA, and the roll-over was analogous to a change in form rather than substance. J ohnston v. Estate of Wheeler, 745 A.2d 345 (D.C. 2000).
BENEFICIARY DESIGNATION: Change given effect despite lack of writing. Although the decedent repeatedly requested a change of beneficiary form to change the beneficiary of his IRA from an individual to his estate, the form did not arrive before death. The court held that the decedent had substantially complied with the provisions for changing the beneficiary even though no writing existed. Estate of Golas, 751 A.2d 229 (Penn. Super. Ct. 2000).
DISCLAIMER: Disclaimer not a fraudulent transfer. In Essen v. Gilmore, 607 N.W.2d 829 (Neb. 2000), the court held that the "relation back" doctrine (under which a properly made disclaimer "relates back" to the creation of the disclaimed interest) means that a disclaimer is not a transfer and therefore cannot be a fraudulent transfer under the state's version of the Uniform Fraudulent Transfer Act.
DIVORCE: Separation agreement does not waive rights as beneficiary. A husband and wife entered into a separation agreement waiving pension rights and rights in each other's estate. The agreement was incorporated into their divorce decree. In East v. PaineWebber, Inc., 748 A.2d 1082 (Md. 2000), the court held that the wife did not lose her status as beneficiary of the husband's IRA by virtue of the agreement. The pension and estate provisions were irrelevant and the general waiver did not apply to expectancies without specific language to that effect.
ELECTIVE SHARE: Discretionary interest counted against elective share. In Estate of Karnen, 607 N.W.2d 32 (S.D. 2000), the court held that a surviving spouse's discretionary interest in income and principal in a credit bypass trust would be counted against the elective share, even though the spouse was highly unlikely to receive anything from the trust.
GIFT TAX: Annual exclusion not available for debt forgiveness. The court in Stinson Estate v. United States, No. 99-3333, 2000 WL 681009 (7th Cir. 2000), denied the annual exclusion for the taxpayer's forgiveness of a debt because the gift was not of a present interest.
MALPRACTICE: Claim may involve more than will. The decedent's estate plan included a will, a revocable trust and various deeds. After the decedent's death, a child of the decedent sued the drafting lawyer for malpractice. In Bullis v. Downes, No. 206276, 2000 WL 381869 (Mich. Ct. App. 2000), the court allowed the suit to continue even though the malpractice could not be proved only by reference to the will. The elimination of the privity barrier in suits by will beneficiaries applied to beneficiaries of estate plans, regardless of the documents involved.
PRIVILEGE: Lawyer must testify about creation of inter vivos trust. An executor proposed to depose the lawyer who had drafted the decedent's lifetime trust. In Morgan v. Pendleton, No. CV 990171903, 2000 WL 486934 (Conn. Super. Ct. 2000), the court held that the exception to the common law attorney-client privilege that allows a lawyer to testify in will disputes applies to inter vivos trust disputes.
SLAYERS: Slayer's family allowed to take. The husband obtained life insurance for his wife under his employer's group policy. The policy provided that death benefits for the wife would be paid to the husband, but to his relatives if he were deceased. The husband killed his wife and then committed suicide. The husband's siblings claimed the proceeds of the policy on the wife's life. The court in Diep v. Rivas, 745 A.2d 1098 (Md. 2000), allowed the siblings to take despite the slayer rule because they did not take "through or under" their brother but rather in their own right as contingent beneficiaries. (Note: This case reverses the lower court opinion reported in November/December 1999.)
SLAYERS: Tenant by entirety entitled to life estate. A husband was convicted of murdering his wife. He then claimed an interest in the proceeds of the marital home, which had been owned as tenants by the entirety. In Estate of Mathew, 706 N.Y.S.2d 432 (N.Y. App. Div. 2000), the court held that he was entitled to the commuted value of his life estate in one-half the proceeds. Although the common law of New York prevents a slayer from profiting by the crime, a statute prevents a conviction from causing a forfeiture, leading to the life estate result that ultimately passes all of the property to the victim's estate.
TRUSTS: Trustee's creditors may not reach trust property despite deed defect. Local law requires that a deed provide certain information to give notice of the trust character of the transfer; describing the grantee as a trustee is inadequate. In Lagae v. Lackner, 996 P.2d 1281 (Colo. 2000), the court held that a non-conforming deed did not allow the trustee's creditors to reach trust property to satisfy the trustee's debts because the creditors did not rely on the deed in extending credit.
DEDUCTION: Interest on loan to pay deferred estate tax deemed deductible. PLR 200020011.
GIFTS: Payment by QTIP trust of excessive fees to trustees who were the surviving spouse's children with the consent of the surviving spouse deemed taxable gifts to the extent of the excess. TAM 200014004.
LIFE INSURANCE: Provision in partnership agreement restricting insured partner from exercising any incident of ownership over policy deemed effective to prevent inclusion in insured's gross estate. PLR 200017051.
POWER OF APPOINTMENT: Taxpayer's power as a personal representative to distribute income to beneficiary of a decedent's estate not includable in taxpayer's gross estate. The power was held in a fiduciary capacity and was not a general power. PLR 200013012.
Animals. In Pet Animals: What Happens When Their Humans Die?, 40 Santa Clara L. Rev. 617 (2000), Gerry W. Beyer explains how to provide for non-human family members.
Asset protection. Randall J. Gingiss argues for the elimination of asset protection trusts as a way to avoid creditors in Putting a Stop to "Asset Protection" Trusts, 51 Baylor L. Rev. 987 (1999). J. Ben Vernazza discusses when a settlor may still exercise control over trust assets in The Independent Protector in Overseas Trusts, J. Asset Protection 54 (Jan. 2000).
Body disposition. Tanya K. Hernandez explores the movement away from family control of mortal remains to a preference for the decedent's wishes in The Property of Death, 60 U. Pitt. L. Rev. 971 (1999).
Conditional gifts. Jeffrey G. Sherman argues for elimination of a decedent's ability to control the conduct of beneficiaries In Posthumous Meddling: An Instrumentalist Theory of Testamentary Restraints on Conjugal and Religious Choices, 1999 U. Ill. L. Rev. 1273.
Grantor trusts. Milford B. Hatcher Jr. and Edward M. Manigault discuss Using Beneficiary Guarantees in Defective Grantor Trusts, 92 J. Tax'n 152 (Mar. 2000).
GST tax. In Trust Modification Proposed Regulations and Other Significant GST Tax Developments, 92 J. Tax'n 212 (Apr. 2000), Carol A. Harrington, Carlyn S. McCaffrey, Lloyd Leva Plaine and Pam H. Schneider suggest that the proposed regulations are still unnecessarily restrictive.
Guardianship. Using traditional contractual principles, Paul F Stavi discusses T he Nexum: A Modest Proposal for Self-Guardianship by Contract, a System of Advance Directives and Surrogate Committees-at-Large for the Intermittently Mentally Ill, 16 J. Contemp. Health L. & Pol'y 1 (1999).
Hubert regulations. In her article, Beverly R. Budin suggests that Final Hubert Regulations Will Require Review of Many Estate Plans, 92 J. Tax'n 225 (Apr. 2000).
Intestate distribution. Susan N. Gary reviews the policy and legal considerations behind intestacy statutes and proposes an expansion of the definitions of parent and child in Adapting Intestacy Laws to Changing Families, 18 Law & Ineq. 1 (2000).
Malpractice. Anne E. Thar explains how Nice Guys Finish Last in Wills and Estate Planning, 88 Ill. B.J. 235 (2000), and suggests protection methods.
Older clients. For a practical approach to addressing the physical changes elderly clients face, read Michael P. Sullivan's Communicating More Effectively with Older Clients, Tr. & Est. 58 (Apr. 2000).
Remainders. Ronald H. Jensen analyzes the Estate and Gift Tax Effects of Selling a Remainder: Have D'Ambrosio, Wheeler and Magnin Changed the Rules?, 4 Fla. Tax Rev. 537 (1999).
Right-to-die. Bruce Jennings shares his perspective on The Liberal Neutrality of Living and Dying: Bioethics, Constitutional Law, and Political Theory in the American Right-to-Die Debate, 16 J. Contemp. Health L. & Pol'y 97 (1999).
Simultaneous death. Keith A. Pagano explores the history and evolution of the USDA and its related tax issues in Simul et Semel: Estate Planning Principles and the Uniform Simultaneous Death Act's Corresponding Tax Consequences, 14 Quinnipiac Prob. L.J. 449 (2000).
Total return trusts. Patricia R. Beauregard and Jessie A. Gilbert review The New Environment in Connecticut for the Investment and Management of Trust and Charitable Assets, 14 Quinnipiac Prob. L.J. 419 (2000).
Transfer on death. With an emphasis on Georgia law, Carl Jackson Spence discusses the nontestamentary transfer of securities in Probate: Uniform Transfer on Death Security Registration Act, 16 Ga. St. U. L. Rev. 283 (1999).
Trust companies. Robert H. Franke, Gregory A. De-Felice and Jack Eastman share their observations and 10 Tips for Making a Successful Trust Company, Tr. & Est. 33 (Apr. 2000).
Trust income. With a focus on Texas law, W. Michael Wiist discusses Trust Income: Separate or Community Property?, 51 Baylor L. Rev. 1149 (1999).
Virtual adoption. Rebecca C. Bell explores the theories of virtual adoption and the impact on inheritance rights in Virtual Adoption: The Difficulty of Creating an Exception to the Statutory Scheme, 29 Stetson L. Rev. 415 (1999).
Alaska imposes 1000 year limit on powers of appointment not presently exercisable because of a condition precedent. 2000 Alaska Sess. Laws 17.
Idaho provides for the establishment and maintenance of a will registry by the secretary of state. 2000 Idaho Sess. Laws 181.
Iowa revises laws applicable to probate and trust practice. 2000 Iowa Legis. Serv. 2518.
Maine requires that signatures on a durable power of attorney be made in person and not by electronic means, notwithstanding any law validating electronic or digital signatures. 2000 Me. Laws 711.
Maryland enacts the Uniform Principal and Income Act. 2000 Md. Laws 292
Maryland revises law relating to small estate administration. 2000 Md.Laws 118.
Maryland updates law regarding advanced directives. 2000 Md. Laws 553.
Michigan revises wills, intestacy, trusts, and estate administration laws. 2000 Mich. Pub. Acts 54.
Virginia permits settlors to elect to have trusts not governed by the Rule Against Perpetuities by including an express provision in the trust. 2000 Va. Acts 714.
West Virginia enacts Health Care Decisions Act. 2000 W. Va. Acts 4144.
Wisconsin enacts procedures for informal administration of estates and summary procedures for settling estates. 2000 Wis. Legis. Serv. 94.
Keeping Current-Probate Editor: Gerry W. Beyer, Professor, St. Mary's University School of Law, One Camino Santa Maria, San Antonio, TX 78228-8603, email@example.com. Contributors include Alexandra F. Caradimitropoulo, Dave L. Cornfeld, William P. LaPiana and Theresa A. Sutton.