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.
ADOPTED ADULTS: Statute prevents adopted adults from receiving property. The settlor created an inter vivos trust that terminated on the death of his last surviving child, at which time the trust property was to be distributed to the issue of his children and if none, to his heirs, determined as if he had died at the time of trust termination. He also created a testamentary trust with the same terms but without the gift over. At the time of termination, the only issue of his children were two adopted daughters of his son who had been adopted as adults. Under Rhode Island intestacy law, there is no distinction between persons adopted as minors and those adopted as adults. The statute, however, provides that a gift in an instrument to children or issue of adoptive parents does not include a person over the age of 18 at the time of adoption. In Fleet Nat’l Bank v. Hunt, 944 A.2d 846 (R.I. 2008), the court held that the lifetime trust was distributable to the adopted children as heirs of the decedent, but because they were not issue of their parent under the statute, the testamentary trust failed and was distributable to the decedent’s heirs determined as of his date of death.
CONSTRUCTION: Extrinsic evidence of testator’s intent was sufficient to construe “spouse” to include surviving spouse. In its opinion in In re Trust Created by Agreement Dated December 20, 1961, ex rel. Johnson, 944 A.2d 588 (N.J. 2008), the court affirmed a judgment finding the list of permissible beneficiaries of a discretionary trust that included the testator’s children, their “spouses,” and their issue included surviving spouses of deceased children. The court agreed that the term “spouse” was ambiguous and that the probable intent of the testator could be ascertained by the use of extrinsic evidence including the testimony of the scrivener. Although most of the testimony should have been excluded as mere opinion, there was sufficient testimony relating to the testator’s direct statements to sustain the judgment of the lower court when combined with evidence of the testator’s overall estate plan, which included several other lifetime trusts.
DAMAGES: Statutory double damage provision for breach of trust not retroactive. After finding that the deceased trustee had misappropriated trust property, the trial court granted double damages under the Kansas Uniform Trust Code. The appellate court held that applying the double damage provision to acts that had occurred before the January 1, 2003, effective date of the Act violated due process and directed the court on remand to determine which acts took place before and which occurred after the enactment of the provision. McCabe v. Duran, 180 P.3d 1098 (Kan. Ct. App. 2008).
INTENTIONAL INTERFERENCE WITH INHERITANCE RIGHTS: Time limitation for a will contest also applies to intentional interference claim. The charitable beneficiary of the decedent’s prior will brought suit alleging intentional interference with an expectancy almost three years after the admission to probate of the decedent’s subsequent will, which gave nothing to the charity. State law provides a six-month period after a will is admitted to probate during which any interested person may contest the validity of the will. In In re Estate of Ellis, 887 N.E.2d 467 (Ill. App. Ct. 2008), the court dismissed the charity’s suit, holding that the legislature enacted the six-month limitation to provide finality in estate administration and that it therefore applied to any attack on an admitted will, including this tort action.
NO DISPUTE CLAUSE: In terrorem clause dealing only with distribution does not bar will contest. The decedent’s will provided that any bequest distributed to more than one beneficiary should be divided as the beneficiaries agreed and if they could not agree, as determined by the executor. Any “further dispute” disqualified the beneficiaries involved from any distribution. Two of the three beneficiaries brought a will contest that was unsuccessful. The executor then sought construction of the in terrorem clause. The court found no violation of the clause, noting that disposition is not the same as distribution and that a challenge to the will is a challenge to the disposition of the testator’s estate not to its distribution under the will. That distinction especially in light of the rule that in terrorem clauses are to be narrowly construed to avoid forfeiture was decisive. Harrison v. Morrow, 977 So. 2d 457 ( Ala. 2007).
PATERNITY: Court has authority to order exhumation of decedent’s body to obtain sample for genetic testing. The decedent’s daughter and personal representative of his estate appealed an order of the Probate Court requiring her to submit to genetic testing and if she refused to do so, ordering the exhumation of the decedent’s remains to obtain a sample for testing to resolve a claim by an individual to be the decedent’s child. The court held first that the appeal was interlocutory but could be heard under the “death knell” exception because if the estate has the right to prevent exhumation, that right will be lost forever unless the appeal is determined now and, second, that under the statutes defining the jurisdiction of the Probate Court, it has the authority to order exhumation of the decedent’s body for genetic testing and good cause to so order. In re Estate of Kingsbury, 946 A.2d 389 ( Me. 2008).
PRETERMITTED CHILDREN: Express exclusion of one child does not prevent unmentioned children from taking. The decedent’s will stated he was not married and had only one child and five siblings and then stated his intention to exclude the child and his siblings from taking anything under the will. In fact, at the time he wrote the will, the decedent had five other living children. In In re Estate of Livsey, 183 P.3d 1038 (Okla. Civ. App. 2008), the court held that the language of the will was not the sort of “strong and convincing” language necessary to exclude the five unmentioned children and thus they took under the pretermitted heir statute.
SPENDTHRIFT RESTRICTION: Spendthrift clause does not prevent transfer of remainder. The decedent’s will created a trust giving income and a maximum of all of the corpus in the trustee’s discretion to the widow and the remainder to the decedent’s two children, A and B. No provision was made for death of a child before the widow and in fact one child predeceased the widow. The trust contained language preventing any beneficiary from alienating his or her interest and making it immune from creditors’ claims. The court held that one-half of the trust property should be distributed through the deceased child’s will to his widow, holding that in the absence of any condition precedent, the remainder was vested, that the possibility that the entire corpus might have been consumed by distributions to the widow did not change that result, and that the spendthrift provision did not prevent transmission of the remainder through the deceased beneficiary’s estate. In re Townley Bypass Unified Credit Trust, 252 S.W.3d 715 ( Tex. App. 2008).
WILLS: Check issued to decedent before death and cashed afterwards is cash owned at death. The decedent’s will gave his surviving spouse one-half of cash owned at death including bank accounts, certificates of indebtedness, and “in any other form.” Under authority granted by a general power of attorney, the decedent’s wife picked up a dividend check issued to the decedent by an LLC in which he owned an interest. The check was dated the next day, but the LLC routinely allowed shareholders to collect their dividend checks after 2 p.m. on the day before the payable date. The decedent’s wife endorsed the check for deposit and it was deposited the next day, two hours after the decedent’s death. The court in In re Succession of Templet, 977 So. 2d 983 (La. Ct. App. 2007), held that the expansive definition of cash in the will clearly showed that the decedent intended the check to be classified as cash owned at death.
WILLS: Division into shares does not prevent class gift. The testator’s holographic will gave his estate to “my nieces and nephews and to [his wife’s] nieces and nephews” and an unrelated person identified by name. The will went on to direct division of the estate into 15 equal shares and stated that the nieces and nephews and the nonrelative were each to receive one share. The testator later wrote a holographic codicil that removed the nonrelative and two nephews from the will. The court construed these provisions as creating a class gift so that the nieces and nephews (other than the two nephews removed by the codicil) living at the testator’s death divided the estate. In re Estate of Womack, No. 07-07-0446-CV, 2008 WL 2223196 ( Tex. App. May 28, 2008).
WILLS: Probate of will does not bar tort and fraud claims. After the decedent’s will was admitted to probate over the objections of two of his children, they sued the decedent’s third child alleging intentional interference with a gift based on the failure of the third child, who was the decedent’s agent, to carry out the decedent’s written instructions to him and fraud based on the third child’s statements in the mediation of the probate case. The court in Morrison v. Morrison, 663 S.E.2d 714 (Ga. 2008), held that the tort claim stated a cause of action, that the requested constructive trust was the proper remedy for the alleged breach of fiduciary duty in failing to carry out the written instructions, that statements made in the course of the mediation proceeding were not privileged, and that none of the claims were barred by res judicata or collateral estoppel.
CHARITABLE LEAD UNITRUST: IRS issues sample CLUT forms. Rev. Procs. 2008-45 (inter vivos) and 2008-46 (testamentary).
CHARITABLE REMAINDER TRUST: Division of a CRT into separate trusts for each beneficiary is permissible. Rev. Rul. 2008-41.
FORM 706: Late QTIP and reverse QTIP elections allowed although GSTT allocation is subject to automatic allocation rules. PLR 200825032.
GENERATION-SKIPPING TRANSFER TAX: Bona fide settlement among beneficiaries of a grandfathered GSTT trust will not “ungrandfather” the trust. PLR 200823003.
PRIVATE TRUST COMPANY: IRS solicits comments on a proposed revenue ruling on the income and transfer tax consequences of family members creating a private trust company to serve as the trustee of trusts in which family members are the settlors and beneficiaries. Notice 2008-63.
RESTRICTED MANAGEMENT ACCOUNT: When valuing an interest in a RMA for gift or estate tax purposes, no discount will be allowed for restrictions the RMA agreement imposes. Rev. Rul. 2008-35.
RETAINED LIFE ESTATES: IRS issues Final Regulations on the amount of GRATs and similar interests that are includable in the grantor’s estate if the grantor dies during the term. The Regulations provide that Code § 2036 (not § 2039) will control. TD 9414.
UNRELATED BUSINESS TAXABLE INCOME: IRS issues Final Regulations on tax effect of UBTI on charitable remainder trusts. The UBTI is generally exempt from federal income tax for distribution purposes but is subject to a 100% excise tax. TD 9403.
Charitable Trusts. In Agency Costs, Charitable Trusts, and Corporate Control: Evidence from Hershey’s Kiss-Off, 108 Colum. L. Rev. 749 (2008), Jonathan Klick and Robert H. Sitkoff use the 2002 Hershey incident to investigate empirically:
(1) the agency costs that are inherent in the charitable trust form; (2) the shortcomings in supervision of charitable entities by the state attorneys general; and (3) the comparative merits of takeovers versus monitoring by controlling shareholders in minimizing agency costs in corporate governance.
Cy Pres. In The Low Road to Cy Pres Reform: Principled Practice to Remove Dead Hand Control of Charitable Assets, 58 Case W. Res. L. Rev. 97 (2007), Rob Atkinson offers a rapidly available set of strategies for removing deadhand control that may be deployed immediately in certain cases.
Durable Powers of Attorney. Linda S. Whitton examines the lessons learned over more than three decades, highlighting best practices and legislative trends in her article, Durable Powers as an Alternative to Guardianship: Lessons We Have Learned, 37 Stetson L. Rev. 7 (2007).
Financial Abuse—The Bankruptcy Escape. A brief map to the terra incognita of bankruptcy and suggested directions to consider and pitfalls to avoid are offered by Richard Aaron in Bankruptcy to Thwart Responsibility for Financial Abuse of the Elderly, 9 Marq. Elder’s Advisor 299 (2008).
Financial Abuse—Dementia. Matthew A. Christiansen provides information and guidance to elderly persons and their families so they can prepare for the onset of dementia and avoid or mitigate the potential for experiencing a tragic fate in Unconscionable: Financial Exploitation of Elderly Persons with Dementia, 9 Marq. Elder’s Advisor 383 (2008).
Guardianship. The conflicting roles that a guardian faces when trying to make decisions in the name of the ward is explored by Lawrence A. Frolik in his article, Is a Guardian the Alter Ego of the Ward?, 37 Stetson L. Rev. 53 (2007).
Long-term Care. In Choices for Care: Consumer Choice and State Policymaking Courage Amid Medicaid’s Shifting Entitlement to Long-Term Care, 9 Marq. Elder’s Advisor 269 (2008), Tracy Bach seeks to answer questions and discuss financially sustainable solutions to long-term care that will be necessary for the country’s health and well-being.
Mediation—Generally. An exploration of the opportunities available to a testator who seeks to be proactive by arranging for mediation of estate disputes before they arise is found in Lela P. Love and Stewart E. Sterk, Leaving More Than Money: Mediation Clauses in Estate Planning Documents, 65 Wash. & Lee L. Rev. 539 (2008).
Mediation—Same-Sex Couples. X. Brian Edwards argues that (1) mediation can be used to create a plan of action and enforcement of donative wishes contained in the testamentary plans of committed same-sex couples; and (2) mediation can be used to solve problems and issues that are likely to arise between the surviving partner and surviving blood relations, thus preserving the deceased partner’s donative intent in his Note, True Donative Freedom: Using Mediation to Resolve the Disparate Impact Current Succession Law Has on Committed Same-Gender Loving Couples, 23 Ohio St. J. on Disp. Resol. 715 (2008).
Medical Futility. Thaddeus Mason Pope provides a comprehensive review of futility cases over the 25-year period from 1983 to 2008 and argues that courts have generally neither prohibited nor punished the unilateral refusal of life-sustaining medical treatment in Involuntary Passive Euthanasia in U.S. Courts: Reassessing the Judicial Treatment of Medical Futility Cases, 9 Marq. Elder’s Advisor 229 (2008).
North Dakota —Slayer Statute. In The New North Dakota Slayer Statute: Does It Cause a Criminal Forfeiture?, 83 N.D. L. Rev. 997 (2007), Bradley Myers examines the new law’s consistency with general principles of equity and principles of law.
Prudent Investor Rule. In Did Reform of Prudent Trust Investment Laws Change Trust Portfolio Allocation?, 50 J.L. & Econ. 681 (2007), Max M. Schanzenbach and Robert H. Sitkoff investigate the effect of changes in state prudent trust investment laws on asset allocation in noncommercial trusts.
Publicity Rights. The existence of a descendible right of publicity in New York State at the time of Marilyn Monroe’s death is explored by John C. Fuller in his Casenote, Like a Candle in the Wind: Shaw Family Archives, Ltd. v. CMG Worldwide, Inc. and the Flickering Recognition of Marilyn Monroe’s Right of Publicity in New York, 15 Vill. Sports & Ent. L.J. 299 (2008).
Tenancy in Common. Faith Rivers considers the effect of the partition of property held by heirs as tenants in common especially in the African-American community in Inequity in Equity: The Tragedy of Tenancy in Common for Heirs’ Property Owners Facing Partition in Equity, 17 Temp. Pol. & Civ. Rts. L. Rev. 1 (2007).
Tennessee —Uniform Trust Code. In Exploring the Tennessee Uniform Trust Code, 38 U. Mem. L. Rev. 489 (2008), C. Shawn O’Donnell emphasizes departures from established common law, identifies substantial deviations from the UTC, attempts to explain the rationale underlying these deviations, and examines the official comments that supplement the Tennessee version of the UTC.
Wills. An argument that the patchwork process of transferring property interests at death is needlessly ponderous and inefficient is made by Kent D. Schenkel in Testamentary Fragmentation and the Diminishing Role of the Will: An Argument for Revival, 41 Creighton L. Rev. 155 (2008).
Wisconsin—Summary Probate Procedures. In his Comment, A “Simple” Probate Should Not Be This Complicated: Principles and Proposals for Revising Wisconsin’s Statutes for Probate Summary Procedures, 2008 Wis. L. Rev. 575, Mark T. Johnson analyzes the current Wisconsin summary probate statutes and examines recent controversies and confusions.
Alabama adopts the Revised Uniform Anatomical Gift Act. 2008 Ala. Laws 453.
Alaska approves the Revised Uniform Anatomical Gift Act. 2008 Alaska Sess. Laws 100.
Arizona limits the authority of a statutory surrogate. A surrogate who is not the patient’s agent or guardian may not decide to withdraw the artificial administration of food or fluid to the patient. 2008 Ariz. Legis. Serv. 281.
California modernizes its pet trust statute. 2008 Cal. Stat. 168.
Delaware authorizes trusts for animals and noncharitable purposes. 76 Del. Laws 254 (2007).
Florida clarifies the liability of a trustee who is required under the terms of the trust to follow the directions of another trustee. 2008 Fla. Laws 76.
Florida creates limitations periods for actions against a trustee for breach of trust. Depending on the conduct of the trustee and the knowledge of the beneficiary, the limitations periods range from 10 to 40 years after the trust ends. 2008 Fla. Laws 76.
Florida enhances likelihood of a donor’s intent to make an anatomical gift being fulfilled. 2008 Fla. Laws 223.
Florida imposes duty on a trustee to notify certain beneficiaries if a claim or defense based on a breach of trust is made against a trustee. 2008 Fla. Laws 76.
Florida revises designation of health care surrogate form. 2008 Fla. Laws 223.
Hawaii enacts Revised Uniform Anatomical Gift Act. 2008 Haw. Sess. Laws 122.
Maryland allows a landlord to evict a deceased tenant under specified circumstances with a summary ejectment proceeding. 2008 Md. Laws 504.
Michigan enacts Personal Property Trust Perpetuities Act. This Act excludes certain personal property held in trust from the rule against perpetuities and similar rules that potentially affect the duration of trusts. 2008 Mich. Pub. Act 148.
Minnesota authorizes transfer on death deeds. 2008 Minn. Laws 341.
Mississippi enacts Revised Uniform Anatomical Gift Act. 2008 Miss. Laws 561.
Missouri approves Revised Uniform Anatomical Gift Act. 2008 Mo. Legis. Serv. S.B. 1139.
New Hampshire enacts Qualified Dispositions in Trust Act. 2008 N.H. Laws 374.
New Hampshire updates trust protector and trust advisor provisions of its version of the Uniform Trust Code. 2008 N.H. Laws 374.
Ohio allows a trustee to give a beneficiary a redacted copy of the trust instrument omitting information the trustee deems irrelevant to the beneficiary’s interest under certain circumstances. 2008 Ohio Laws File 112.
Ohio permits a settlor to designate which state’s law will govern the administration of the trust. 2008 Ohio Laws File 112.
Oklahoma revises the procedures applicable to creditors’ claims. 2008 Okla. Sess. Laws 326.
Rhode Island modernizes creditors’ claims procedures. 2008 R.I. Pub. Laws 307.
Rhode Island requires decedents to support their children until age 18. A decedent’s child support obligations now survive the decedent’s death and are given a high priority. 2008 R.I. Pub. Laws 298 & 314.
South Carolina provides that if an attorney-client relationship exists between a lawyer and a fiduciary, communications between the lawyer and the fiduciary are privileged unless waived by the fiduciary. 2008 S.C. Acts 211.
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