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KEEPING CURRENT - PROBATE
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.
DISCLAIMER: Disclaimer deemed irrevocable even though no prejudice to beneficiaries would result if the disclaimer were revoked. During a prolonged will contest, the decedent’s grandson and others named in the decedent’s will disclaimed their interests to show, as stated in the disclaimer, their conviction that the will was the product of undue influence. Seventeen years later, the grandson sought to revoke his disclaimer. The grandson argued that because no estate distributions had been made, no prejudice would result to the other beneficiaries. In In re Ciaffoni, No. 1112 WDA 1999, 2001 WL 1403025 (Pa. Super. Ct. 2001), the court held that the plain language of the statute making the disclaimer "binding upon the disclaimant" made the disclaimer irrevocable.
DISCLAIMER: Trust conditioned on survival was not created. A decedent’s trust provided for the creation of a QTIP trust if her husband survived her. The residue of the trust passed outright to three named nieces. The husband was given a power of appointment over the QTIP trust, the three nieces were named as residuary takers, and a fourth niece was the taker in default. The husband disclaimed his interest in the QTIP trust and was treated as having predeceased the decedent under local law. The fourth niece argued that the trust remainders accelerated. In Richey v. Hurst, 798 So. 2d 841 (Fla. Dist. Ct. App. 2001), the court held that the husband’s constructive death meant that under the terms of the trust the QTIP trust was not created and the entire trust passed to the three residuary takers.
ESTATE TAX: Retroactive increase in estate tax deemed not unconstitutional. A provision of the Omnibus Budget Reconciliation Act of 1993 increased the estate tax rate on taxable estates over $3 million to 55% from 50%. This increase was retroactive to the beginning of 1993. The court in NationsBank of Texas N.A. v. United States, 269 F.3d 1332 (Fed. Cir. 2001), held that this increase did not violate the separation of powers doctrine or the Apportionment Clause, was not a prohibited criminal ex post facto law, was not a taking under the Fifth Amendment, did not violate due process, and was not contrary to equal protection principles.
FIDUCIARY DUTY: Executor’s attempt to disclaim sole asset of estate for selfish reasons deemed breach of duty. The decedent’s will left her probate estate to her husband. At her death, the probate estate consisted only of her interest in the estate of her mother. The decedent’s son as executor of his mother’s estate attempted to disclaim the estate’s interest in the decedent’s mother’s estate and thus increase his and his siblings’ share of their grandmother’s estate. The disclaimer was disallowed, and in a separate action the attempt to disclaim was held to be a breach of fiduciary duty. In re Estate of Reichert, No. 120126, 2001 WL 1398579 (Del. Ch. 2001).
GRANTOR RETAINED ANNUITY TRUSTS: Gift tax liability may not be reduced by provision for spouse. The court in Cook v. Commissioner, 269 F.3d 854 (7th Cir. 2001), held that the spousal interests that the taxpayers created in their GRATs were not entitled to gift tax exemptions because the interests were not qualified interests. The interests were not fixed and ascertainable and violated the applicable durational requirements.
HOLOGRAPHIC WILLS: Name written at beginning of a notebook containing alleged holographic will is not a signature on the will. In Kidd v. Gunter, 551 S.E.2d 646 (Va. 2001), the court held that the decedent did not sign her alleged holographic will. The document was a notebook in which the decedent wrote instructions for the disposition of her property as well as other information. Her name appeared only where she had written it in a pre-printed box on the inside cover of the journal. The court held that a signature in that location usually indicates ownership of the journal and therefore was not a signature to the decedent’s final testamentary disposition. Accordingly, the journal could not be admitted to probate as the decedent’s will.
MALPRACTICE: Extrinsic evidence is not admissible to show that the will did not carry out the deceased client’s intent. A wife sued her husband’s lawyers, alleging that his will did not carry out his instructions regarding her bequest. In Henkel v. Winn, 550 S.E.2d 577 (S.C. Ct. App. 2001), the court affirmed the lower court’s dismissal of the action, holding that even if the wife could maintain an action for malpractice as a disappointed beneficiary, extrinsic evidence would not be admissible to show that the lawyers did not carry out the husband’s instructions.
PRETERMITTED HEIRS: Omitted heirs are not entitled to reach property in revocable trusts. In Robbins v. Johnson, 780 A.2d 1282 (N.H. 2001), the court held that the state’s pretermitted heir statute, which gives an intestate share to certain descendants not mentioned in a decedent’s will, does not apply to a lifetime revocable trust used as a will substitute.
REVOCATION OF WILL: Lost will may revoke prior will even though lost will is not eligible for probate. The decedent’s daughters offered evidence from their father’s lawyer, the lawyer’s secretary, and a witness tending to prove that the decedent had executed a will after the will offered for probate and that this subsequent will contained a clause revoking all previous wills. The subsequent will could not be found after the decedent’s death. The court in In re Will of McCauley, 554 S.E.2d 13 (N.C. Ct. App. 2001), held that, although not entitled to probate, the subsequent will was sufficiently established to revoke the prior will.
REVOCATION OFWILL: Will need not identify future spouse to be in contemplation of marriage and thus avoid automatic revocation. The decedent’s will left everything to one of his eleven children and directed that it was made "in contemplation of my marriage" and that the will not be revoked by operation of law. Seven years after executing the will, the decedent married, later divorced, and then died. In Evans v. Palmour, 553 S.E.2d 585 (Ga. 2001), the court held that to avoid revocation by operation of law, the will need only be made in contemplation of the event of marriage and need not refer to a marriage to a specific person.
UNDUE INFLUENCE: Fraud may be evidenced by circumstantial evidence. In Crittell v. Bingo, 36 P.3d 634 (Alaska 2001), the court held that undue influence of a testator may be shown by circumstantial evidence of fraud in the procurement of the challenged will.
VALUATION: Tax Court allowed 60% discount for fractional interests in timberland. Baird v. Commissioner, T.C. Memo. 2001–258, 82 T.C.M. (CCH) 666 (2001).
Rulings and Regulations
CHARITABLE DEDUCTION: A trust may deduct share of charitable contribution made by partnership of which the trust is a partner even though the trust contained no authority for the trust itself to make charitable donations. FSA 200140080.
CRUMMEY TRUSTS: Lapse of power of withdrawal is a release for income tax purposes. PLR 200147044.
EXTENSION OF TIME TO PAY: Modifications to the forms taxpayers use to request an automatic extension of time to pay income, gift, and GST taxes may be made because confusion arises under current forms and instructions. CCA 200140079.
SPLIT GIFTS: Election to split gifts for gift tax purposes also applies to deemed gifts of the amount of generation-skipping transfer tax imposed on the gifts. TAM 200147021.
Conditional Gifts. Wendy C. Gerzog examines Contingencies and the Gift Tax, 93 Tax Notes 977 (2001), and recommends solutions to the problems that will arise if the estate tax repeal stands.
Disclaimers. Adam J. Hirsch provides a thoughtful analysis of the new uniform act in Revisions in Need of Revising: The Uniform Disclaimer of Property Interests Act, 29 Fla. St. U. L. Rev. 109 (2001).
Domestic Violence. Thomas H. Shepherd discusses how probate codes should deal with family violence and inheritance in It’s the 21st Century—Time for Probate Codes to Address Family Violence: A Proposal That Deals with the Realities of the Problem, 20 St. Louis U. Pub. L. Rev. 449 (2001).
Fiduciary Duties. Dominic J. Campisi discusses fiduciary duties that are often overlooked at a trustee’s peril in Two Fiduciary Duties That Are Often Overlooked, Tr. & Est. 58 (Sept. 2001).
Forced Shares. For a discussion of spousal elections to avoid accidental or intentional inheritance, read Tracy Dawn Cobb’s North Carolina’s New Elective Share Statute: Much Ado About Nothing?, 36 Wake Forest L. Rev. 759 (2001).
Legal Education. Edward D. Spurgeon and Elizabeth J. Mustard explain Integrating Tax and Elder Law into Elder Law and Tax Courses, 30 Stetson L. Rev. 1375 (2001), by reviewing law school casebooks and related materials as well as making recommendations on coverage.
New York. For a review of recent changes in the trust and estate law in the state of New York, see John C. Welsh’s Estates and Trusts, 51 Syracuse L. Rev. 457 (2001).
Offshore Trusts. Joseph M. Erwin and Barbara R. Hauser discuss offshore asset protection trusts in International Estate Planning, 35 Int’l Law. 545 (2001).
South Africa. Learn how South African intestate succession can be made easier through a reform of customary law in Andrew P. Kult’s Intestate Succession in South Africa: The "Westernization" of Customary Law Practices Within a Modern Constitutional Framework, 11 Ind. Int’l & Comp. L. Rev. 697 (2001).
Spendthrift Trusts— Self-Settled. Self-settled spendthrift trusts can frustrate the bankruptcy process for creditors. Michael Sjuggerud offers advice in Defeating the Self-Settled Spendthrift Trust in Bankruptcy, 28 Fla. St. U. L. Rev. 977 (2001).
Spendthrift Trusts— Statutory. Statutory spendthrift trust protection can shield debtors from their bankruptcy creditors. Steven J. Oshins and Christopher M. Riser explain how in Scheffel v. Krueger: The Effectiveness of Statutory Spendthrift Trust Protection, Tr. & Est. 12 (Oct. 2001).
Tax Reform. Richard R. Gans explains how to prepare tax-effective estate plans in Waiting for Estate Tax Repeal: What Do You Tell Your Clients in the Meantime?, 75 Fla. B.J. 67 (Nov. 2001).
California amends domestic partnership law to permit domestic partners to make health care decisions under certain circumstances. 2001 Cal. Legis. Serv. ch. 893.
California includes cemetery plots in the type of property that may pass by intestate succession. 2001 Cal. Legis. Serv. chs. 436 & 516.
California requires actions based upon the marital liability of a deceased spouse to be commenced within a one-year period under most circumstances. 2001 Cal. Legis. Serv. ch. 702.
Illinois authorizes Internet sales of a decedent’s real property. 2002 Ill. Legis. Serv. 92–097.
New Jersey creates "kinship legal guardianship," an alternative to traditional guardianships of minors. The caregiver receives certain parental rights, but the birth parents retain the right to consent to adoption, the obligation to pay child support, and the right to have some ongoing contact with the child. 2001 N.J. Sess. Law Serv. ch. 250.
New York expands parties entitled to notice of the filing of objections to documents offered for probate to include those whose interests would be affected by the outcome of the proceeding. 2001 N.Y. Laws ch. 393.
North Carolina establishes a central registry for advanced health care directives. 2001 N.C. Sess. Laws 2001–455.
Ohio eliminates the requirement that anatomical gift designations made on driver’s licenses or state identification cards be witnessed. The legislature retained the witnessing requirement for regular anatomical gift cards. 2001 Ohio Laws 73.
Ohio removes the requirement that powers of attorney be witnessed in order to be recorded. 2001 Ohio Laws 59.
Keeping Current—Probate Editor: Professor Gerry W. Beyer, St. Mary’s University School of Law, One Camino Santa Maria, San Antonio, TX 78228–8603, gwb@ProfessorBeyer.com. Contributors include Mark A. Cevallos, Dave L. Cornfeld, William P. LaPiana, and Theresa York.