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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: Specific devise of property that testator did not own at the time of will execution does not adeem. A husband and his wife conveyed all of their interest in real property to a charitable foundation. They subsequently executed wills making specific bequests of the same property to the same foundation. The couple and their son brought a negligence action against the foundation and the various attorneys and accountants involved with its creation and operation. After the deaths of the husband and the wife, the foundation and the professional defendants moved to dismiss the negligence action, arguing that even if the estates recovered the real property it would pass under the wills to the foundation. The court in In re Estate of Frank, 189 P.3d 834 (Wash. Ct. App. 2008), affirmed summary judgment for the defendants, holding that ademption applies only to property owned by a testator at the time a will is written.
BENEFICIARY'S RIGHTS: Beneficiaries of revocable trusts do not have constitutionally protected interests. Livesay v. Carolina First Bank, 665 S.E.2d 158 (N.C. Ct. App. 2008), rejected the argument that the application of a statute making property held in a revocable trust, which was created before the statute's effective date, subject to the settlor's debts is an impermissible retroactive alteration of vested rights. The court held that because a revocable trust is a will substitute, the beneficiaries of the trust have expectancies rather than vested rights and therefore they have no constitutionally protected interests.
CONDITIONAL GIFT: Religious restriction on the beneficiaries' marriages deemed contrary to public policy. The testator created a trust for his descendants, which provided that if any beneficiary other than testator's child marries "outside the Jewish faith," the beneficiary would be deemed to be dead as of the date of the marriage. The co-executors of the testator's will sought to have several cases brought by a grandchild challenging their administration of the testator's estate dismissed because the grandchild had married outside the Jewish faith. In In re Estate of Feinberg, 891 N.E.2d 549 (Ill. App. Ct. 2008), the court invalidated the provision regarding marriage as being contrary to public policy, citing Restatement (Third) Trusts § 29 cmt. j.
COURT-APPROVED ESTATE PLAN: Court approval of conservatee's estate plan prevents postmortem challenge. Under local law, the court exercised substituted judgment to approve an estate plan on behalf of a conservatee that effectively disinherited conservatee's son. After the conservatee's death, the son sued his sister who was the trustee of the lifetime trust approved in the substituted judgment proceeding. The court in Murphy v. Murphy, 78 Cal. Rptr. 3d 784 (Ct. App. 2008), held that the son's action was barred by collateral estoppel, his claims of undue influence, fraud, and conflict with a prior testamentary agreement all having been determined in the prior action.
LOST WILL: Presumption that a lost will last in the possession of testator has been revoked not superseded by UPC. The court In re Estate of Conley, 753 N.W.2d 384 (N.D. 2008), held that the common law presumption that a lost will last in the possession of the testator is presumed to have been destroyed by the testator with the intent to revoke it is part of the law of North Dakota, even though it is not part of the Uniform Probate Code provisions adopted by the state. In accord with provisions governing presumptions in civil cases generally, for the lost will to be admitted to probate, the presumption must be rebutted by the preponderance of the evidence.
NO CONTEST CLAUSE: Challenge by a guardian ad litem is not voluntary and thus does not trigger forfeiture. A trust included a no contest clause stating that any beneficiary who "voluntarily" participates in any proceeding attacking the trust or the related pourover will would forfeit his or her interest. In Safai v. Safai, 78 Cal. Rptr. 3d 759 (Ct. App. 2008), the court held that a minor appearing in a proceeding attacking the validity of the trust by his guardian ad litem did not appear "voluntarily" and therefore was not subject to the no contest clause.
POWER OF ATTORNEY: Agent's failure to make gifts desired by principal is basis of claim for intentional interference with an expected gift. A father gave his son his power of attorney. Shortly before the father's death, his son discovered a copy of the father's notes regarding changes in his will, which the father had sent to an attorney. One of the notes in the father's handwriting directed his son to effect the changes in the will whether "legal or not." The unaltered will was admitted to probate over the caveat of the father's other two sons. The two sons then brought an action claiming among other grounds for recovery intentional interference with a gift. The court in Morrison v. Morrison, 663 S.E.2d 714 ( Ga. 2008), reversed the lower court's summary judgment for the agent and held that the tort claim was properly based on the agent's failure to use his authority before the father's death to make the requested gifts.
REPRODUCTIVE MATERIAL: Intent of the donor controls postmortem disposition of sperm. In In re Estate of Kievernagel, 83 Cal. Rptr. 3d 311 (Ct. App. 2008), the court held that the intent of a gamete donor controls the disposition of frozen gametes after the donor's death. The decedent and his wife agreed to attempt to have a child through IVF, and, in preparation for the procedure, the decedent donated sperm for preservation. The decedent signed the fertility center's standard agreement on which he indicated that on his death his sperm was to be discarded (the other choice was to donate it to his surviving spouse). After the decedent died in an accident, his wife as administrator petitioned for distribution of the sperm to her. The decedent's parents opposed the petition. The court denied the wife's petition finding that the signed agreement was determinative.
REVOCATION OF TRUST: Joint revocable trust is mutual and contractual and therefore cannot be amended by sole surviving settlor. Two beneficiaries of a revocable trust jointly created by husband and wife brought a declaratory judgment action to invalidate amendments wife made after husband's death. Using the same criteria applied to wills, the court in Mangels v. Cornell, 189 P.3d 573 (Kan. Ct. App. 2008), found that the trust was "joint and contractual" and therefore could not be amended by only one of the settlors.
SURVIVORSHIP ACCOUNT: Creation of joint accounts with survivorship rights after execution of a will cannot alter the will. After executing a will that divided her probate estate equally among her children, the testatrix created several joint bank accounts with rights of survivorship with herself and one of her children as the joint holders. After the testatrix's death, the other children challenged the exclusion of the joint accounts from the probate estate. The court In re Estate of Piet, 949 A.2d 886 (Pa. Super. Ct. 2008), held that to apply the presumption of ownership in the surviving joint holder would revoke the preexisting will in a manner not allowed under the will revocation statute.
TRUSTEES: Doctrine of de facto trustee recognized. In the course of a divorce action, the court appointed a professional guardianship agency as the trustee of a trust the husband had created for his children. In an earlier case, the court held that the divorce court lacked jurisdiction to appoint a trustee. The agency then began proceedings to appoint a trustee to protect the children's assets. The husband opposed the agency's action, maintaining that after the court's decision the agency had no authority to do anything about the trust. The court in In re Irrevocable Trust of McKean, 183 P.3d 317 (Wash. Ct. App. 2008), held as a matter of first impression that, because the agency assumed the office of trustee under color of right and in good faith, the doctrine of de facto trustee applied to validate the agency's actions as if it were the trustee.
VALUATION: Thirty-five percent discount of family limited partnership interest allowed. In Gross v. Commissioner, T.C. Memo 2008-221, the court approved a 35% discount in valuing limited partnership interests for gift tax purposes because the taxpayer carefully constructed the business transactions and the gifts.
ESTATE TAX: Interest paid for hardship extension to pay estate tax under Code § 6161 is not deductible for estate income tax purposes. Instead, the interest should be deducted for estate tax purposes as an administration expense. CCA 200836027.
GENERATION-SKIPPING TRANSFER TAX: Erroneous and unnecessary election of GSTT to non-GSTT trust on Schedule R was void and a nullity. This resulted in an automatic allocation to other trusts subject to GSTT. PLR 200838022.
MARITAL DEDUCTION: Estate allowed to correct QTIP election to reduce tax to zero when estate made mathematical error on return. Apparently, in the year after death, when the return was due, the applicable exclusion amount was increased, and the estate used an increased amount instead of the amount for the year of death. PLR 200832011.
Agent Compensation. The difficulty of ascertaining the amount of compensation that is "reasonable" for an agent acting under a power of attorney is highlighted in Helen W. Gunnarsson, What's a POA Agent Worth?, 96 Ill. B.J. 389 (2008).
Agent Liability. In The Perilous World of POA Agents, 96 Ill. B.J. 398 (2008), Helen W. Gunnarsson explains how even "good" agents have a difficult time complying with statutory requirements and fiduciary duties as they carry out the often thankless job of handling a disabled principal's financial needs.
Apportionment—Changing Rules by Trust. In Unifying the Rules for Wills and Revocable Trusts in the Federal Estate Tax Apportionment Arena: Suggestions for Reform, 62 U. Miami L. Rev. 767 (2008), Ira Mark Bloom advocates for a change in mandatory laws that currently prohibit or limit a decedent's options in changing default apportionment rules by revocable trusts.
Apportionment— Maryland. In her recent article, Pfeufer v. Cyphers : Giving the Testator's Pen Too Much Might—The Unintended Tax Consequences of Innocent Apportionment Language, 67 Md. L. Rev. 758 (2008), Heather R. Pruger contends that the court should have more directly addressed the conflict that resulted between its construction of the testator's directive that any inheritance taxes for diverse classes of legatees be paid without apportionment and the legislature's intent in establishing preferential treatment for exempt legatees.
Elder Abuse. Judge Patrick T. Murphy of the Circuit Court of Cook County sets forth suggestions on how to prevent elder abuse in Helen W. Gunnarsson, Stepping Up the Fight Against Elder Abuse, 96 Ill. B.J. 339 (2008).
Filial Responsibility. An in-depth analysis of filial responsibility laws is made by Allison E. Ross in her note, Taking Care of Our Caretakers: Using Filial Responsibility Laws to Support the Elderly Beyond the Government's Assistance, 16 Elder L.J. 167 (2008).
Joint Representation. A primer on the joint representation of multiple clients, particularly husbands and wives, in the same estate-planning matter is presented by John R. Prince in his article In Honor of Professor John Gaubatz: The Fundamentals of Ethically Representing Multiple Clients in Estate Planning, 62 U. Miami L. Rev. 735 (2008).
Litigation. Jonathan G. Battmachr discusses how litigation relating to the administration of estates and trusts might be reduced by careful planning before the property owner's transfer of wealth during his or her lifetime or at death in Reducing Estate and Trust Litigation Through Disclosure, In Terrorem Clauses, Mediation and Arbitration, 9 Cardozo J. Conflict Resol. 237 (2008).
Marketing. An introduction to the fundamentals of marketing for trusts and estates attorneys, an analysis of the current marketing activities by the majority of attorneys, and an explanation of how trusts and estates attorneys can improve the marketing of their services are provided by Michael R. McCunney and Alyssa A. DiRusso in Marketing Wills, 16 Elder L.J. 33 (2008).
Montana —Community Source Property. In his article, Effect in Montana of Community-Source Property Acquired in Another State (and Its Impact on a Montana Marriage Dissolution, Estate Planning, Property Transfers, and Probate) , 69 Mont. L. Rev. 313 (2008), Charles W. Willey presents a thorough discussion of this topic.
New York —Case Update. Martin W. O'Toole surveys New York's recent case law in Trusts and Estates, 58 Syracuse L. Rev. 1191 (2008).
New York —Posthumous Children. In Dead Hand Problem: Why New York's Estates, Powers and Trusts Law Should Be Amended to Treat Posthumously Conceived Children as Decedents' Issue and Descendants , 21 Quinnipiac Prob. L.J. 267 (2008), Robert Matthew Harper addresses whether, and to what extent, New York law should be amended to treat posthumously conceived children as the legal, as well as biological, issue and descendants of their deceased parents.
New York —Tenancy by the Entirety. Kathleen Reilly focuses on issues that arise when a slayer and the victim have concurrent ownership of property as tenants by the entirety in her note, Making a Killing in Real Estate: Solving the Mystery of Murder's Effect on Tenancy by the Entirety in New York—A Legislative Solution, 82 St. John's L. Rev. 1203 (2008).
Nonprobate Transfers. Grayson M.P. McCouch explains the growing importance of nonprobate transfers, contending that reformers have recently embraced a policy of "unifying the law of wills and will substitutes" in Probate Law Reform and Nonprobate Transfers, 62 U. Miami L. Rev. 757 (2008).
Standing. Edward G. Halbach Jr. examines questions of standing in the trust context, including standing to intervene and standing to initiate and maintain enforcement proceedings in Standing to Enforce Trusts: Renewing and Expanding Professor Gaubatz's 1984 Discussion of Settlor Enforcement, 62 U. Miami L. Rev. 713 (2008).
Tortious Interference. Irene D. Johnson traces the development of the tort in her article, Tortious Interference with Expectancy of Inheritance or Gift—Suggestions for Resort to the Tort , 39 U. Tol. L. Rev. 769 (2008).
Tributes to John T. Gaubatz. The University of Miami Law Review published a Gedenkschrift honoring John T. Gaubatz (1942–2007), 62 U. Miami L. Rev. 673 (2008), which includes memorials from leading scholars and practitioners as well as a compilation of estate planning articles, including what might be the final work of Prof. Gaubatz, A Narrative of Butler v. Wolf Sussman, Inc. , 62 U. Miami L. Rev. 707 (2008).
Undue Influence. In Can Religious Influence Ever Be "Undue" Influence? , 73 Brook. L. Rev. 579 (2008), Jeffrey G. Sherman traces the history of mortmain statutes and suggests a rule declaring that all relationships between a testator and her religious or spiritual advisor are per se "confidential relationships" for purposes of litigating a will contest.
California revises statutes governing no contest provisions. 2008 Cal. Legis. Serv. 174.
New Jersey adopts the Revised Uniform Anatomical Gift Act. 2008 N.J. Sess. Law Serv. 50.
New York revises provisions governing the accounting of trust income. 2008 N.Y. Laws 408.Return to Probate & Property Magazine