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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.
ACCOUNTINGS: Agreement of majority of beneficiaries does not have effect of judicially approved accounting. The trust agreement provided that approval of the trustee's accounting by a majority of the income beneficiaries would "have the same effect" as if a court having jurisdiction over the trust had approved the accounting. The court in Vena v. Vena, 899 N.E.2d 522 (Ill. App. Ct. 2008), held that this provision is unenforceable because it is not an effective mechanism for enforcing a trustee's fiduciary duties. First, the responsibility is too diffuse. Second, the provision gives the trustee too much control over the process by, for example, presenting the accounting only to a group of beneficiaries a majority of whom the trustee considers most likely to approve the accounting.
ACCOUNTINGS: Settlor's attempt to relieve trustee's duty to account deemed ineffective. A husband and his wife jointly created a revocable trust. The husband died first, and under the trust terms, one-half of the property was divided into two trusts. The surviving spouse had a general power of appointment over one and a special power of appointment over the other, was sole income beneficiary during her life, and had the discretion as the trustee to distribute up to the entire principal for her health, maintenance, or support. A son of her husband was a taker in default of the exercise of either power if he outlived the surviving spouse. The trust also contained language purporting to prevent the trustee from being required judicially to account. The court affirmed the lower court's order requiring the trustee to account and held that the son had a future interest in the trust that entitled him to demand an accounting and that the language eliminating the duty to account was of no effect. Johnson v. Johnson, 967 A. 2d 274 (Md. Ct. Spec. App. 2009).
DUTY TO INFORM: Trustee has duty to inform beneficiary of settlor's revocation of the trust. UPC § 7-303 requires the trustee to keep the beneficiaries of the trust "reasonably informed of the trust and its administration." Over a sole dissent, the court in JP Morgan Chase Bank, N.A. v. Longmeyer, 275 S.W.3d 697 (Ky. 2009), held that the identical provision of Kentucky law imposes on the trustee of a revocable trust a duty to inform the beneficiaries of the revocation of the trust under circumstances that could indicate the exercise of undue influence on the settlor. The duty exists even though the trustee honored the revocation, entered into a custodial agreement with the new trustee, and notified the beneficiaries of the revoked trust only after the new trustee terminated the custodial agreement.
IN TERROREM PROVISION: Action for accounting and removal of executor is not a challenge to will. The testator's will contained an in terrorem clause applicable to any beneficiary who contested the validity of the will, whether or not in good faith and with or without probable cause. In Sinclair v. Sinclair, 670 S.E.2d 59 (Ga. 2008), the court held that a beneficiary is entitled to ask for a declaratory judgment to determine whether a proposed course of action would violate an in terrorem clause and that, because an action for an accounting and removal of the executor was not a challenge to the validity of the will, the action did not violate the in terrorem clause.
SAME-SEX MARRIAGE: Iowa authorizes marriage between same-sex partners. The Iowa Supreme Court in Varnum v. Brien, 763 N.W.2d 862 (Iowa 2009), held that the Iowa statute banning same-sex marriage is unconstitutional as a violation of equal protection.
TAX APPORTIONMENT: Will's reference to transfer taxes does not override statutory apportionment of GST tax. The testator's will apportioned "transfers, estate, inheritance, succession, and other death taxes" against the residue. In In re Estate of Denman, 270 S.W.3d 639 (Tex. App. 2008), the court was faced with deciding if the tax apportionment clause applied to GST tax. After holding that the apportionment of GST tax is governed solely by Code § 2603(b), which requires a "specific reference to the tax imposed by this chapter," the court examined federal precedents and held that a reference to "transfer taxes" was not a specific reference to GST tax so that statutory apportionment to the property constituting the generation-skipping transfer would apply. The court stated that it was not considering the question of whether the devisee might have a claim under state law for reimbursement from the residuary estate if it could be shown that the testator's "clear intent" was for the devisee to receive the full value of the bequest.
TRUST INTERPRETATION: Abolition of no-residue-of-a-residue rule applies to revocable trust used as will substitute. In In re Estate of Zilles, 200 P.3d 1024 (Ariz. Ct. App. 2008), the court held that the judicial abolition of the no-residue-of-a-residue rule in a case concerning a will also applies to a revocable trust that disposes of property at the settlor's death. The court relied heavily on the provisions of Restatements (Third) of Property (§ 5.5 cmt. p) and of Trusts (§ 25(2) and § 25 cmt. e(1)), which state that the rules governing wills should generally apply to revocable trusts used as will substitutes.
CHARITABLE DEDUCTION: IRS approves trust charitable income tax deduction as a result of the exercise of a limited power of appointment. PLR 200906008.
GENERATION-SKIPPING TRANSFER TAX: IRS reallocates erroneous GST tax allocation on estate tax return of first spouse to die. PLR 200910004.
POWER OF APPOINTMENT: IRS determines that the decedent owned a general power of appointment under a pre-October 21, 1942, will. The parties agreed that the decedent had a power of appointment, but not that it was general and that it was exercised. By determining that the power was general, the entire trust estate was included in his gross estate. TAM 200907025.
REFORMATION OF TRUST: IRS approves proposed judicial reformation of trust to eliminate possible interpretation of a power of appointment for a GST tax-exempt trust as being a general power. PLR 200910003.
SPLIT-DOLLAR LIFE INSURANCE: IRS approves private split-dollar agreement between the settlors and an insurance trust holding second-to-die policy on the settlors. PLR 200910002.
Apportionment. Developments in the law governing the apportionment of estate taxes between probate and nonprobate assets is the topic of Ira Mark Bloom's article, Unifying the Rules for Wills and Revocable Trusts in the Federal Estate Tax Apportionment Arena: Suggestions for Reform, 43 Real Prop. Tr. & Est. L.J. 447 (2008). In A Comment on Unification, 43 Real Prop. Tr. & Est. L.J. 499 (2008), Grayson M.P. McCouch examines Prof. Bloom's proposals in the broader context of the unification of rules applicable to wills and will substitutes.
Assisted Suicide. In Can Legalization Improve End-of-Life Care? An Empirical Analysis of the Results of the Legalization of Euthanasia and Physician-Assisted Suicide in the Netherlands and Oregon, 16 Elder L.J. 333 (2009), Dr. Jackson Pickett uses empirical data from these two jurisdictions to analyze the effects of legalization on end-of-life care and suggests some goals that any future legalization should seek to accomplish.
California . David Hortin sketches the history of the "care custodian" provision, examines the Law Revision Commission's tentative recommendations, and concludes that dubious consequences may result in his article, The Uneasy Case for California's "Care Custodian" Statute, 12 Chap. L. Rev. 47 (2008).
Connecticut . Frank S. Ganz argues that the privacy and policy concerns involved in probate matters outweigh the minimal public interest in probate cases and explores potential solutions in his article, Privacy in Probate Court: Why Connecticut Should Seal the Record, 22 Quinnipiac Prob. L.J. 136 (2009).
Disposition of Bodily Remains. Properly preserved human remains might yield valuable information, for ourselves and our posterity, explains Thomas A. Robinson in Stop! Are You Sure You Want to Throw Grandpa's Body Away? , 63 U. Miami L. Rev. 37 (2008).
Georgia . In Wills, Trusts, Guardianships, and Fiduciary Administration, 60 Mercer L. Rev. 417 (2008), Mary F. Radford describes selected cases and significant legislation from the period of June 1, 2007, through May 31, 2008, that pertain to Georgia fiduciary law and estate planning.
Idaho . Jennifer E. Levy examines the historical development of trusts to see how Idaho's far-reaching noncharitable purpose statute fits into the overall scheme of purpose trust jurisprudence and suggests ways to amend and improve the Idaho Code to prevent abuse of the statute in her article, Idaho's Noncharitable Purpose Trust Statute: Leaping over Age-Old Trust Laws in a Single Bound, 44 Idaho L. Rev. 801 (2008).
Illinois . In Illinois Estate Tax Planning in 2009 and Beyond, 97 Ill. B.J. 80 (2009), Gary R. Gehlbach and Emily R. Vivian explain that "[f]or persons dying in 2009 and later, the Illinois Estate tax is further decoupled from (but still tethered to) the federal estate tax. . . . This article discusses the options and makes the case for an Illinois QTIP."
Nebraska . Colleen E. Medill studies the post-distribution experience of former participants in the retirement plan sponsored by the state of Nebraska for state employees in her article, The Retirement Distribution Decision Ten Years Later: Results from an Empirical Study, 16 Elder L.J. 295 (2009).
New York . In her note, Aiding Avarice: The Inequitable Results of Limited Grounds for Spousal Disqualification Under EPTL Section 5-1.2, 23 St. John's J. Legal Comment. 843 (2008), Jessica Baquet asserts that, in this area, New York law is in dire need of reform.
Posthumously Conceived Children. Kristine S. Knaplund discusses posthumously conceived children and inheritance with a careful look at the additional issues raised when the mother, not the father, is the predeceased parent in Legal Issues of Maternity and Inheritance for the Biotech Child of the 21st Century, 43 Real Prop. Tr. & Est. L.J. 393 (2008).
Psychology. The types of control exerted through wills and other testamentary documents are discussed by Ronald Chester in his article, The Psychology of Dead Hand Control, 43 Real Prop. Tr. & Est. L.J. 505 (2008).
Revocable Trusts. Alan Newman's article, Revocable Trusts and the Law of Wills: An Imperfect Fit, 43 Real Prop. Tr. & Est. L.J. 523 (2008), notes the increased use of revocable trusts as will substitutes and discusses the corresponding trend to use the law of wills to address issues that arise in the use and interpretation of revocable trusts.
Suicide. In his article, A Gift Worth Dying For?: Debating the Volitional Nature of Suicide in the Law of Personal Property, 45 Idaho L. Rev. 93 (2008), Adam J. Mac- Leod addresses the enforceability of gifts of personal property made conditional on acts of suicide and the attendant debate that has surfaced in the last three decades over the volitional nature of suicide.
Tortious Interference with Inheritance Rights. The latest in a nationwide survey and analysis of the tort is presented by Diane J. Klein in River Deep, Mountain High, Heir Disappointed: Tortious Interference with Expectation of Inheritance—A Survey with Analysis of State Approaches in the Mountain States, 45 Idaho L. Rev. 1 (2008).
Unmarried partners. In Frontiers of Succession, 43 Real Prop. Tr. & Est. L.J. 419 (2008), Thomas P. Gallanis analyzes succession issues for unmarried partners by looking at three frontiers of succession law: geography, biology, and procedure.
Unworthy heirs. Anne-Marie Rhodes writes about the ways in which inheritance statutes disqualify an heir based on behavior and about succession law's role in supporting the social order in her article, On Inheritance and Disinheritance, 43 Real Prop. Tr. & Est. L.J. 433 (2008).
Arkansas clarifies the passage of disclaimed property. 2009 Ark. Acts 346.
Arkansas enacts Final Disposition Rights Act of 2009. 2009 Ark. Acts 402.
Arkansas increases the amount of time creditors of an estate have to present their claims to the personal representative. The time was increased from three months to six months after the date of first publication of the notice. 2009 Ark. Acts 217.
Colorado authorizes "designated beneficiary agreements." Two individuals (either opposite sex or same sex) may now sign an agreement for various estate planning matters such as wills, property purchases, medical decisions, and life-insurance that names each other as the beneficiary (or agent, survivor, and so on). This agreement is then recorded. 2009 Colo. Legis. Serv. ch. 107.
Nebraska modifies Uniform Principal and Income Act. The changes primarily deal with the handling of marital deduction trusts. 2009 Neb. Laws 80.
New York modernizes power of attorney law. For example, (1) the agent must sign and date the power of attorney and the agent's signature must be acknowledged; (2) if the principal wants the agent to have the authority to make gifts, additional requirements must be met such as the principal initialing a provision granting gift-making authority plus the execution of a "statutory major gifts rider," which must be acknowledged and have two witnesses; and (3) third parties must accept a power of attorney that uses the statutory form unless they have reasonable cause; it is unreasonable to refuse to honor the power of attorney merely because of a lapse of time or because the third party wants its own form to be used. 2008 N.Y. Laws 644.
Ohio adopts Revised Uniform Anatomical Gift Act. 2008 Ohio Laws File 164.
South Dakota enhances rules governing support and mandatory trusts. 2009 S.D. Sess. Laws 262 (S.B. 127).
Vermont authorizes same-sex marriage. Vermont is now the first state to recognize same-sex marriage via legislative action rather than court decision. 2009 Vt. Laws No. 3.
Wyoming enacts Revised Uniform Anatomical Gift Act. 2009 Wyo. Sess. Laws 97.Return to Probate & Property Magazine