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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.
DEEDS: Grantee may sign grantor’s name as amanuensis. A father conveyed the family home in joint tenancy to himself and his daughter who was also his caretaker. The daughter signed the father’s name to the deed at his direction. The daughter was her father’s agent but the power of attorney did not grant her the power to convey property to herself as a gift. The court held that the deed was valid because the daughter acted as an amanuensis, performing a merely mechanical function in signing her father’s name. The evidence was sufficient to rebut the presumption of invalidity arising from the daughter’s status as an interested party. Estate of Stephens, 49 P.3d 1093 (Cal. 2002).
ESTATE TAX DEDUCTION: Estate may deduct claims valued as of date of taxpayer’s death even though claims later settled for substantially less. Estate of O’ Neal v. United States, No. CV-97-J-2189-S, 2002 WL 31174125 (N.D. Ala. July 31, 2002).
GIFT TAX VALUATION: Significant discount allowed for stock’s lack of marketability and voting rights. In Okerlund v. United States, 53 Fed. Cl. 341 (2002), the court approved a discount of 45% from the freely traded value of the stock because the stock lacked voting rights and was difficult to market because of the company’s closely held character.
MALPRACTICE: Attorney potentially liable if will fails to identify pretermitted heirs . The testator’s will left his estate to the two daughters of a predeceased son. The testator did not inform the drafter of the existence of children of another predeceased child who were awarded shares under the applicable pretermitted heirs statute. The legatees under the will sued the drafter. The court held that an attorney does not have a duty to investigate a client’s family tree beyond information the client supplies, but if the will does not identify all of the testator’s heirs because of the attorney’s substandard professional performance, the disappointed legatees may sue in negligence or contract. Leak-Gilbert v. Fahle, 55 P.3d 1054 (Okla. 2002).
NONMARITAL CHILD: Putative child may prove status independently of parentage act. Local law provides that parentage may be established for purposes of intestate succession under the state’s Parentage Act, which requires that the putative child bring a parentage action within one year of reaching the age of majority. In In re Estate of Palmer, 647 N.W.2d 13 (Minn. Ct. App. 2002), the court held that a putative child may prove parentage for purposes of intestate succession by clear and
convincing evidence regardless of
the statute of limitations in the Parentage Act.
PROFESSIONAL RESPONSIBILITY: Representation of husband and wife in estate planning does not necessarily void post-nuptial agreement. The husband hired an attorney to prepare a post-nuptial agreement. The attorney sent the couple an engagement letter stating that he represented only the husband, and the agreement recited that the wife, a licensed attorney, was acting as her own attorney. The agreement provided that the couple’s individual businesses, assets, and debts were to be separate property. Later, another lawyer in the attorney’s firm represented both spouses in creating an estate plan. In In re Marriage of Friedman, 122 Cal. Rptr. 2d 412 (Cal. Ct. App. 2002), the court held that the wife’s signature on the post-nuptial agreement waived any potential conflict of interest and that the dual representation during the estate planning process did not void the agreement.
SLAYERS: Slayer retains one-half of joint tenancy property . A husband killed his wife and then committed suicide. Under local law, a slayer has no right of survivorship in joint tenancy property held with the victim. In Williams v. Thomann (In re Estate of Thomann), 649 N.W.2d 1 (Iowa 2002), the court held that the statute operated to sever the jointly held property, which thus allows the slayer’s proportional interest to pass through his estate.
SLAYERS: Slayer’s family members take under life insurance policy on slayer’s life. A husband killed his wife and then committed suicide. The wife was the named beneficiary of an insurance policy on his life. Because the husband did not name contingent beneficiaries, his brothers would receive the proceeds under the terms of the policy. In In re Estate of Foleno ex rel. Thomas v. Estate of Foleno, 772 N.E.2d 490 (Ind. Ct. App. 2002), the court held that the brothers, rather than the wife’s estate, are entitled to the proceeds. The court declined to impose a constructive trust in favor of her estate because to do so would not further the policy of preventing the slayer or the slayer’s heirs from benefiting from the victim’s property.
WILL VALIDITY: Unwitnessed will admitted under harmless error statute. A married couple met with an attorney to discuss a draft of a joint will. After approving several changes, the husband asked if the draft could serve as his will until the final version was prepared. The attorney assured him it would work if the husband and wife signed it and the attorney notarized it. The couple signed and the attorney notarized, but there were no witnesses. On returning home, the wife tore up her husband’s prior will at his request. The husband died before executing the final version of the new will. In In re Estate of Hall, 51 P.3d 1134 (Mont. 2002), the court held that the new will could be admitted to probate as the husband’s will despite lacking witnesses, because the facts met the requirements of the harmless error statute, that is, clear and convincing evidence showed that the husband meant the document to be his will.
WILLS: Constructive trust will not be imposed in favor of beneficiaries of unsigned will. A testator executed several estate planning documents in her attorney’s office, but she never signed her will, although two witnesses signed the will and the self-proving affidavit. In Allen v. Dalk, 826 So. 2d 245 (Fla. 2002), the court refused to impose a constructive trust to benefit the beneficiaries named in the will. The will was invalid without the testator’s signature and could not be given effect through a constructive trust.
WILLS: Gift of residue implied to prevent intestacy. A married couple executed reciprocal wills leaving all the first-to-die’s estate to the survivor and to certain named nieces if both husband and wife died simultaneously. There was no other disposition of the residue. After the wife’s death, the husband made a new will that left the estate to the nieces should the husband and wife die simultaneously, but it made no other provision for the residue. In Painter v. Coleman, 566 S.E.2d 588 (W. Va. 2002), the court held that the residue passed under the second will to the nieces because to construe the wills otherwise would make it a nullity.
CHARITABLE GIFT: Satisfaction of charitable beneficiary’ s interest in estate by use of IRA while gifts subject to tax are satisfied with other assets approved. The assignment of the IRA did not trigger taxable income to the estate or charity. PLR 200234019.
CHARITABLE REMAINDER UNITRUST: Reformation to correct scrivener’s error regarding valuation date does not disqualify trust from CRUT treatment. PLR 200233005.
LIFE INSURANCE: Family reverse split-dollar life insurance technique not effective to avoid estate tax. A person holding a right to current life insurance protection may not use inappropriately high current term insurance rates, prepayment of premiums, or other techniques to confer policy benefits, other than current life insurance protection, on another party. These techniques may not be used to understate the value of these other policy benefits. 2002-36 I.R.B. 481 (Aug. 16, 2002).
MARITAL DEDUCTION: Lifetime power of surviving spouse to appoint trust property to the decedent’s descendants precludes trust from qualifying for marital deduction as a QTIP trust. The IRS rejected the argument that a savings provision in the trust cured the defect. TAM 200234017.
Beneficiary Designations. Steven B. Gorin discusses the effect of final regulations that liberalize payment options, both during the lifetime of plan participants and after their deaths in New Rules Provide Opportunities and Traps Regarding Beneficiary Designations for IRAs and Retirement Plans, 58 J. Mo. B. 194 (2002).
Body Disposition. Al W. King III discusses cryonics issues and what estate planners need to know about the process in Freezers— Our New Coffins?, Tr. & Est. 8 (Aug. 2002).
Business Interests. Marc S. Bekerman and Steven S. Kirkpatrick focus on the challenges fiduciaries face when dealing with minority interests in Administration of a Business Interest Held by an Estate or Trust, 28 Est. Plan. 536 (2001).
Capacity. In The Varying Standards of Client Capacity, 90 Ill. B.J. 451 (2002), Helen W. Gunnarsson discusses the different capacities an individual must possess to execute a will, convey property, and make medical
Caretaker Claims. In Illinois Supreme Court Cares for Caretakers, 90 Ill. B.J. 392 (2002), Helen W. Gunnarsson discusses the recent case of In re Estate of Jolliff, which upheld the Illinois statute that provides close family members who serve as caretakers with priority claims for compensation against the estate under specified circumstances even if the decedent had not agreed to pay the caretaker.
Conservation Trusts. To learn more about conservation trust funds, read Marianne Guerin-McManus, Conservation Trust Funds, 20 UCLA J. Envtl. L. & Pol’y 1 (2001/2002).
E-Wills. Christopher J. Caldwell addresses the dilemma of modern technology and traditional will execution methods in Should E-Wills Be Wills: Will Advances in Technology Be Recognized for Will Execution?, 63 U. Pitt. L. Rev. 467 (2002).
Fiduciary Duties. Amanda K. Esquibel explores the trustee–beneficiary relationship in Fiduciary Duties: The Legal Effect of the Beneficiary’ s Retention of Counsel on the Fiduciary Relationship, 33 Rutgers L.J. 329 (2002).
Gramm-Leach-Bliley Act. Aaron W. Brooks and Megan G. Heeg discuss the necessity for certain attorneys to provide privacy disclosure notices in The Gramm-Leach-Bliley Act: Does It Apply to You?, 90 Ill. B.J. 412 (2002).
Posthumous Children. The effect of modern reproductive techniques on the determination of heirs is discussed by Amy L. Komoroski in After Woodward v. Commissioner of Social Services : Where Do Posthumously Conceived Children Stand in the Line of Descent?, 11 B.U. Pub. Int. L.J. 297 (2002).
Racial Trusts. Trust theory and the historical significance of Soko Bukai v. YWCA of San Francisco are discussed by Brant T. Lee in A Racial Trust: The Japanese YWCA and the Alien Land Law, 7 Asian Pac. Am. L.J. 1 (2001).
Reformation. In My Will Be Done: Accommodating the Erring and the Atypical Testator, 80 Neb. L. Rev. 387 (2001), Pamela R. Champine advocates permitting the testator to elect, perhaps in a separate authorization instrument, whether a court may reform the testator’s will and under what circumstances.
SEP-IRAs. Alvin J. Golden examines the Sixth Circuit’s Lampkins v. Golden decision and its potential effect on state authority to regulate SEP-IRAs in Piercing Shield Laws to Garnish SEP-IRAs, Tr. & Est. 51 (Aug. 2002).
Surrogacy. Colette Archer explores inheritance issues regarding surrogacy in Scrambled Eggs: Defining Parenthood and Inheritance Rights of Children Born of Reproductive Technology, 3 Loy. J. Pub. Int. L. 152 (2002).
Undue Influence. Mark R. Siegel explores Undue Influenced Trust Revocations, 40 Duq. L. Rev. 241 (2002).
Uniform Trust Code—Ohio. David M. English explains how adoption of the UTC would change Ohio trust law in The Uniform Trust Code (2000) and Its Application to Ohio, 30 Cap. U. L. Rev. 1 (2002).
Uniform Trust Code—Rights of Beneficiaries. Julia C. Walker addresses beneficiaries’ rights under the UTC in Get Your Dead Hands Off Me: Beneficiaries’ Right to Terminate or Modify a Trust Under the Uniform Trust Code, 67 Mo. L. Rev. 443 (2002).
Unitrusts. Helen W. Gunnarsson discusses recent Illinois legislation that permits a standard principal and income trust to be converted into a total return trust in New Law Will Help Trustees Avoid Hobson’ s Choice,
90 Ill. B.J. 448 (2002).
California includes domestic partners in its intestate distribution scheme. The surviving domestic partner will receive the same share of the deceased partner’s separate property as would a surviving spouse beginning July 1, 2003. 2002 Cal. Legis. Serv. ch. 447.
California updates provisions relating to transfers to instrument drafters and revises the certificate of independent review. 2002 Cal. Legis. Serv. ch. 412.
Illinois revises law for public guardians of disabled adults. 2002 Ill. Legis. Serv. P.A. 92-840.
New York changes statutory references from “natural parent” to “birth parent.” 2002 N.Y. Sess. Laws ch. 312.
North Carolina modifies formula for calculating estate tax on estates with property in more than one state. 2002 N.C. Sess. Laws 87.
South Carolina enacts Estates and Probate Reform Act. Among other things, this Act raises the mandatory distribution age under the Uniform Gifts to Minors Act to age 21, provides for reasonable compensation for an agent serving under a durable power of attorney, enhances protection for third parties accepting an agent’s authority, enacts an antilapse provision for revocable trusts, and provides that a divorce automatically revokes provisions in favor of the ex-spouse in revocable trusts created by the other former spouse. 2002 S.C. Acts 362.
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 Dave L. Cornfeld, Christian J. Hack, William P. LaPiana, and Alicia Pierce.