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.
* ADOPTION: Statute deprives adopted children of remainder interest. The settlor created a lifetime trust
for his daughter with the remainder to her descendants. After creation of the trust and the settlor's death, strangers to the family adopted three of the daughter's children. In Miller v. Walker, 1999 WL 114404 (Ga. 1999), the court held that the statute severing the relationship between adopted individuals and their biological families did not deprive those children of property rights because the trust was created before the adoptions and the trust agreement evidenced the settlor's intent to exclude adopted-out persons.
* CONSTRUCTION: Extrinsic evidence regarding ambiguous will. The testator's will gave one-third of the residue to his niece "and/or" grandniece. In Estate of Massey, 721 A.2d 1033 (N.J. Super Ct. Ch. Div. 1998), the court determined that the gift was to the two named beneficiaries or, if one were deceased, all to the survivor. The court also stated that the very use of "and/or" "bespeaks negligence on the part of the drafter."
* DISCLAIMERS: Acceptance of result precludes ignoring disclaimer. A husband and wife executed reciprocal wills giving a charity $1,000,000 on the death of the survivor. The husband transferred $500,000 to the charity, and it executed a document confirming that the amount represented a partial satisfaction of the legacy. On the husband's death, his wife disclaimed her interest in his estate and the remainder of the legacy was paid to the charity in accordance with the fiction that by the disclaimer the wife predeceased her husband. On the wife's subsequent death, the charity claimed the entire legacy from her estate because she was the last to die. In Widener Univ., Inc. v. Estate of Boettner, 1999 WL 95524 (Pa. Super. Ct. 1999), the court held that the legacy was satisfied under the husband's will and that, having accepted the gift under the husband's will, the charity was estopped from claiming under the wife's will.
* DIVORCE: Divorce revokes gift in will made before marriage. The testator's will gave his residuary estate to a friend whom he later married and then divorced. In Estate of Forrest, 706 N.E.2d 1043 (Ill. Ct. App. 1999), the court held that the statutory provision revoking any testamentary gift to a former spouse revoked the gift in the testator's will even though the will was executed before marriage.
* FUTURE INTERESTS: Requirement of survival to time of distribution prevents acceleration. A husband and wife created a trust as part of their divorce settlement. After the wife's death, the trust's income was to be distributed among their children and, on the death of the last surviving child, the remainder to the surviving grandchildren and the descendants of deceased grandchildren. After the wife's death, the children renounced their interests under the trust. In Linkous v. Candler, 508 S.E.2d 657 (Ga. 1998), the court held that limiting the remainder to descendants who survive the children demonstrates intent to prevent acceleration of the remainder.
* LAPSE: Use of "and heirs" does not prevent lapse. A testator's will gave part of her residuary estate to her sister "and her heirs." The sister died one month before the testator, survived by her husband but by no descendants. In Estate of Straube, 1999 WL 68352 (Mo. Ct. App. 1999), the court held that the anti-lapse statute only applied in situations involving "issue" and that the phrase "and heirs" were words of limitation creating a fee simple and passed no interest to the sister's surviving spouse.
* REVOCATION: Evidence of consistent plan overcomes presumption of revocation if original will missing. A testatrix asked her lawyer to make revisions to her 1994 will which, like her previous will, left most of her estate to a friend. The changes that the testatrix requested did not change her basic estate plan. The lawyer prepared the new will but it was not executed. After the testatrix's death, the 1994 will, which had been in her possession, could not be found. In Estate of Cannon v. Ferguson, 1999 WL 47767 (Miss. 1999), the court held that the consistency of the testatrix's estate plan overcame the presumption that a will that cannot be located and that was last known to be in the possession of a testator is presumed to have been destroyed by the testator with intent to revoke.
* SLAYERS: Conviction of murder bars relitigation of guilt. A beneficiary of a life insurance policy was convicted of murdering the insured. The court held that the beneficiary was collaterally estopped from litigating the question of her guilt in an interpleader proceeding to determine ownership of life insurance benefits under the victim's policies. Zinger v. Terrell, 985 S.W.2d 423 (Ark. 1999). The court noted that acquittal in a criminal proceeding, however, does not bar later civil litigation related to a beneficiary's culpability.
* SLAYERS: Statute precludes slayer from taking joint tenancy property. In Lakatos v. Estate of Billotti, 509 S.E.2d 594 (W. Va. 1998), the court held that the state's slayer statute applies to property held in joint tenancy by the slayer and the victim. Accordingly, the property passes as if the slayer had predeceased the victim.
* STATUTE OF LIMITATIONS: Termination of express trust begins running of statute. A beneficiary sued the trustee alleging breach of fiduciary duty in the trustee's dealing with a tender offer for a corporation. During litigation concerning the tender offer, the first trust terminated and the beneficiary transferred the assets he received to a revocable trust with the same trustee. In McCormack v. AmSouth Bank, N.A., 1999 WL 130265 (Ala. 1999), the court held that the statute of limitations for breach of fiduciary duty actions began to run on the termination of the first trust. The revocable trust was not a continuation of the fiduciary relationship of the first trust.
* TRUSTS: Spendthrift provision does not prevent finding of general power of appointment. A settlor gave
his daughter the power to appoint at death the principal of two trusts to "such person or persons" as she might choose. The trusts also prohibited the voluntary and involuntary alienation of the interest of any beneficiary. In Dickinson v. Wilmington Trust Co., 1999 WL 66530 (Del. Ch. 1999), the court held that the language of the power was general and that the spendthrift provision did not evidence an intent to limit the scope of the power.
* WILL INTERPRETATION: Meaningless language ignored. A testator's will gave his residuary estate to a named person "if she survives me, per stirpes," and if not, to his heirs. The named individual predeceased the testator. Estate of Johnson, 1999 WL 118639 (Minn. Ct. App. 1999) (unpublished), held that the clear requirement of survival made the phrase "per stirpes" meaningless. The heirs of the testator received the residue.
RULINGS AND REGULATIONS
* ADMINISTRATION EXPENSES: Interest on penalty for willful failure to disclose estate assets deemed deductible from estate as an administration expense. FSA 199908009.
* INTEREST: Interest on bank loan for estate tax payment may be deductible as administration expense if necessarily incurred in estate administration. PLR 199903038.
* MARITAL DEDUCTION: Failure of settlor to report creation of trust for spouse on gift tax return and make QTIP election precluded trust from qualifying for QTIP treatment. PLR 199903040.
* RETENTION OF POWER: Trust funding was completed gift although settlors retained power as co-trustees to distribute trust assets. PLR 199903025.
* VALUATION: No discount allowed for lottery winnings assigned to family limited partnership. TAM 199909001.
* Client relations. John J. Scroggin makes estate planning easier for clients and lawyers by using The Family Love Letter discussed in 13 Prac. Tax Law. 5 (1999).
* Crummey powers. Bradley E.S. Fogel examines the most recent attempt to limit the use of Crummey powers in The Emperor Does Not Need Clothes--The Expanding Use of "Naked" Withdrawal Powers to Obtain Federal Gift Tax Annual Exclusions, 73 Tul. L. Rev. 555 (1998).
* Dead person's statute. Shawn K. Stevens proposes abolishing The Wisconsin Deadman's Statute: The Last Surviving Vestige of an Abandoned Common Law Rule in 82 Marq. L. Rev. 281 (1998).
* Employee benefits. Kyle N. Brown and Dan Carpenter discuss Employee Benefit Issues Related to Workers in Alternative Work Arrangements in 24 J. Pension Plan. & Comp. 13 (1999).
* Florida probate law. Michael D. Simon and William T. Henessey provide a survey of Florida law in Estates, Trusts, and Guardianships: 1998 Survey of Florida Law, 23 Nova L. Rev. 119 (1998).
* Georgia probate law. James C. Rehberg provides a comprehensive summary of judicial and legislative developments in Georgia probate law in Wills, Trusts, and Administration of Estates, 50 Mercer L. Rev. 381 (1998).
* Grantor retained annuity trusts. David A. Handler argues Economically Zeroed-Out GRATs Produce the Best Results in Tr. & Est. 8 (Jan. 1999).
* International law. Jack R. Fay discusses Where are the Best Places to Minimize Trust and Estate Taxes? A Worldwide Comparison from Afghanistan to Zimbabwe in 47 Oil & Gas Tax Q. 543 (1999).
* Intestate succession. Frances H. Foster studies the possibility of using judicial discretion in determining heirs in Towards a Behavior-Based Model of Inheritance?: The Chinese Experiment, 32 U.C. Davis L. Rev. 77 (1998).
* Nebraska probate law. Chad C. Thompson criticizes the Nebraska Supreme Court's holding that an exempt property allowance is an indefeasibly vested right in an adult emancipated child in Nebraska Supreme Court Changes Will Drafting by Not Allowing Disinheritance of Adult Children in In Re Estate of Peterson, 32 Creighton L. Rev. 733 (1998).
* Pension planning. Gary Kleinman et al. discuss retirement planning in Defined Contribution Plans and Pension Planning: An Empirical Analysis, 24 J. Pension Plan. & Comp. 32 (1999); Ruth Wimer describes how to couple employee stock ownership plan retirement benefits with S corporation status in S Corporations and ESOPs: A Marriage Made in Heaven, 24 J. Pension Plan. & Comp. 49 (1999).
* Roth IRAs. Jolie Howard analyzes whether Roth IRAs will be effective in encouraging additional savings in The Roth IRA: A Viable Savings Vehicle for Americans?, 35 Hous. L. Rev. 1269 (1998); Alvin D. Lurie explains why Roth IRAs Are Too Taxing for Most Clients in 24 J. Pension Plan. & Comp. 73 (1999).
* Social Security benefits. Gloria J. Banks examines Traditional Concepts and Nontraditional Conceptions: Social Security Survivor's Benefits for Posthumously Conceived Children in 32 Loy. L.A. L. Rev. 251 (1999).
* Tax legislation. Bernard Barnett et al. provide an overview of recent federal tax law changes in 1998 Tax Legislation: "The Child of TRA 1997," Tr. & Est. 72 (Jan. 1999).
* Valuation of FLPs. Frank J. Cavaliere and Howell Lynch address The Looming Showdown over FLP Valuations for Transfer Tax Purposes in 13 Prac. Tax Law. 37 (1999).
* Valuation. John B. Huffaker and Edward Kessel address valuation issues in Estate Tax Valuation and the Impact of Death--Evolution of the Judicial View, 90 J. Tax'n 108 (1999).
* Valuation. Joseph R. Oliver and Charles A. Granstaff discuss how Disclosure Sets a Time Limit on IRS Gift Revaluation in Prac. Tax Strat. 4 (Jan. 1999).
* Arkansas expands type of evidence needed to show distribution of a decedent's estate. 1999 Ark. Acts 122.
* Idaho extends time limit for filing a petition by a surviving spouse who wants an elective share. 1999 Idaho Sess. Laws ch. 73.
* Nebraska changes provisions relating to the Nebraska Uniform Custodial Trust Act. 1999 Neb. Laws L.B. 62.
* South Dakota revises provisions regarding the appointment of special administrators for probate. 1999 S.D. Laws H.B. 1092.
* South Dakota updates rules regarding disclaimers by heirs and will beneficiaries. 1999 S.D. Laws H.B. 1102.
* Utah amends probate code, including provisions regarding elective shares. 1999 Utah Laws S.B. 55.
* Utah enacts provisions to protect trust beneficiaries from unintended taxation because of powers to obtain distributions from the trust. 1999 Utah Laws S.B. 201.
* Wyoming adopts Uniform Prudent Investor Act. 1999 Wyo. Sess. Laws. ch. 105.
Keeping Current--Probate Editor: Gerry W. Beyer, Visiting Professor, Santa Clara University School of Law, 500 El Camino Real, Santa Clara, CA 95053. Contributors include: Dave L. Cornfeld, William P. LaPiana, Bridget Lovett and Steven Lovett.
Probate & Property Magazine is published six times annually and is included in section members' annual dues.