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P R O B A T E & P R O P E R T Y
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Keeping Current Probate
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, Claire G. Hargrove, Christopher L. Harris, and William P. LaPiana.
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.
ARBITRATION: Beneficiary not bound by arbitration agreement signed by trustees. The trustees of a QTIP trust opened an account at a brokerage firm through which the trust assets were invested. The customer agreement contained a provision providing for arbitration of disputes. The income beneficiary sued the trustees and the brokerage firm. The firm moved to compel arbitration. The appellate court affirmed denial of the motion, holding that the income beneficiary was not a third-party beneficiary of the customer agreement and that the trustees could not bind the beneficiary as her agent. Morgan Stanley DW Inc. v. Halliday, 873 So. 2d 400 (Fla. Dist. Ct. App. 2004).
COMMUNITY PROPERTY: Surviving spouse may enforce rights on an asset-by-asset basis. The decedent made transfers of community property before death. The surviving spouse then attempted to enforce her rights in the transferred assets even though she had received more than one-half the community property. In In re Estate of Miramontes-Najera, 13 Cal. Rptr. 3d 240 (Cal. Ct. App. 2004), the court held that the applicable statutory provision had codified previous case law, thereby allowing the surviving spouse to enforce her community property rights on an asset-by-asset basis.
CY PRES: Doctrine applicable to remainder interest in a trust. The testator’s will created a trust paying income to individual beneficiaries with the remainder to the “Dental Alumni Development Fund” of his alma mater. Before trust termination, the university closed its dental school and discontinued the fund. In Obermeyer v. Bank of America, N.A., 140 S.W.3d 18 (Mo. 2004), the court approved the use of the cy pres doctrine to give the remainder to the university to fund dental-related professorships. The court determined that cy pres could be applied to an outright gift and that the testator had a general charitable intent that could be carried out through the funding of the professorships.
DEVISE: Violation of zoning ordinance does not prevent devise. The testator’s will granted her son an easement over part of her land left to her daughters. The easement did not conform to local zoning ordinances. The court in In re Estate of Hurt, 681 N.W.2d 591 (Iowa 2004), held that the ordinance did not invalidate the devise because zoning ordinances apply only to the use of land and have no effect on alienability.
LAPSE: Alternative gift conditioned on primary beneficiary predeceasing applicable to invalidation of gift. An heir not mentioned in the testator’s will challenged the residuary gift alleging undue influence by the primary beneficiary. This gift was conditioned on the beneficiary’s survival, and the will provided an alternative gift to the other residuary beneficiaries. The heir’s challenge was dismissed for lack of standing because the alternative gift would apply if the gift to the primary beneficiary was invalidated. Thus, partial intestacy would not occur if the gift were set aside and the heir would receive nothing even if successful. In re Estate of Burger, 852 A.2d 385 (Pa. Super. Ct. 2004).
POSTHUMOUS CONCEPTION: Posthumously conceived child entitled to Social Security benefits. Almost a year after the father died, the mother used his sperm to conceive two children. Reversing the holding of the lower court, the court in Gillett-Netting v. Barnhart, 371 F.3d 593 (9th Cir. 2004), held that because the children were legitimate under state law and dependent on the father for support, they were eligible for Social Security insurance benefits.
WILL FORMALITIES: Computer-generated signature of the testator is effective. The testator prepared his will on his computer and affixed a computer-generated version of his signature to the document in the presence of two witnesses who signed the will. Because local law defines a signature as including “any other symbol of methodology executed or adopted by a party with the intention to authenticate a writing,” the court in Taylor v. Holt, 134 S.W.3d 830 (Tenn. Ct. App. 2003), held that the will was properly signed and entitled to admission to probate.
WILLS: Writing on pre-printed form does not make document holographic. The decedent attempted to execute a will that was contained on a pre-printed form. The document was notarized but there were no other witnesses. The court in In re Alleged Will of Ferree, 848 A.2d 1 (N.J. Super. Ct. App. Div. 2004), refused to probate the document as a holographic will because the handwriting did not show testamentary intent when taken apart from the printed form. The court also determined that the doctrine of substantial compliance did not apply to holographic wills.
RULINGS AND REGULATIONS
CHARITABLE GIFTS: IRS will carefully scrutinize gifts of easements to charities for which the charitable deduction is claimed. Notice 2004–41.
GIFT TAX: IRS concedes that payment of income tax by the grantor of a grantor trust is not a gift to the trust beneficiaries. If a trust requires that the grantor be reimbursed, then Code § 2036 applies and the full value of the trust’s assets will be includable in the grantor’s gross estate. Rev. Rul. 2004–64.
GIFT TAX: IRS proposes regulations to capitulate to Walton v. Commissioner, 115 T.C. 589 (2000). The regulations would provide that a unitrust amount or annuity payable for a specified term of years to the grantor, or to the grantor’s estate if the grantor dies before the expiration of the term, is a qualified interest under Code
§ 2702 for the specified term. Prop. Reg. 163679–02.
RECIPROCAL TRUSTS: Although trusts created by a husband and a wife may have identical provisions, they can nonetheless have substantial differences that prevent the application of the reciprocal trust doctrine. Consequently, neither trust would be included in the husband’s or wife’s gross estate. PLR 200426008.
TRUST REFORMATION: IRS allows an estate tax charitable deduction after a trust is reformed to add a distribution of income requirement left out through a scrivener’s error. PLR 200425027.
Adoption by Estoppel. In WWII: The Stepparent War—The Use of Equitable Estoppel to Prevent a Stepparent from Denying Paternity in Connecticut, 17 Quinnipiac Prob. L.J. 131 (2003), Kimya Bush explains how the courts have applied equitable estoppel when a stepparent has made a representation of support that has been relied on by the child or a biological parent.
Capacity. Older Clients with Diminishing Capacity and Their Advance Directives, 39 Real Prop. Prob. & Tr. J. 107 (2004), are the focus of A. Frank Johns’s article, which examines revisions to Model Rule of Professional Conduct 1.14.
Charitable Trusts. Jennifer L. Komoroski argues that there are situations in which the power of the state attorney general should be limited in The Hershey Trust’s Quest to Diversify: Redefining the State Attorney General’s Role When Charitable Trusts Wish to Diversify, 45 Wm. & Mary L. Rev. 1769 (2004).
CRATs. In Charitable Remainder Annuity Trusts: Why the Internal Revenue Service’s Approach Needs Revision, 54 Syracuse L. Rev. 739 (2004), Kent C. Kiffner discusses contradictions between the text and application of the Code by the IRS.
Cremation. In Who’s Watching the Cryptkeeper?: The Need for Regulation and Oversight in the Crematory Industry, 11 Elder L.J. 425 (2003), Keith E. Horton analyzes the existing federal and state regulations that govern the industry.
ERISA. In ERISA and the Law of Succession, 65 Ohio St. L.J. 185 (2004), T.P. Gallanis recommends that the courts should incorporate portions of the Restatement (Third) of Property: Wills and Other Donative Transfers and the Uniform Probate Code into federal common law to resolve the inequitable results that often occur when ERISA preempts state law in the areas of survivorship, antilapse, revocation on divorce, revocation by homicide, and the elective share.
Exculpatory Clauses. In The Grizzle Bear: Lingering Exculpatory Clause Problems Posed by Texas Commerce Bank, N.A. v. Grizzle , 56 Baylor L. Rev. 253 (2004), Holland A. Sullivan discusses how this case affects self-dealing by trustees.
Forced Share. Thomas A. Pasquesi explores When Can a Disabled Surviving Spouse Renounce a Will, 92 Ill. B.J. 310 (2004), and recommends that a guardian for a disabled surviving spouse should be able to renounce the will even if the share under the will is larger than the forced share, if the surviving spouse has sufficient indepen-
dent means of support.
HIPPA. In Are Statutory Health Care POAs HIPPA-Compliant?, 92 Ill. B.J. 302 (2004), Helen W. Gunnarsson concludes that the Illinois’s statutory form is adequate and that additional language to make the form HIPPA-friendly is not necessary and, in fact, could actually cause problems as a prohibited compound authorization.
Homestead. Ryan P. Rivera analyzes State Homestead Exemptions and Their Effect on Federal Bankruptcy Laws, 39 Real Prop. Prob. & Tr. J. 71 (2004), and discusses proposals to amend the federal exemption to enhance uniformity among the states.
Inheritance. In Someday All This Will Be Yours: Inheritance, Adoption, and Obligation in Capitalist America, 79 Ind. L.J. 345 (2004), Hendrik Hartog discusses how courts have applied contract concepts to probate cases.
New Mexico. David M. English provides an overview of the New Mexico adoption of the UTC in The New Mexico Uniform Trust Code, 34 N.M. L. Rev. 1 (2004).
New York. A discussion of changes in New York trust and estate law caused by legislation and case law is found in Elizabeth A. Hartnett, Estates and Trusts, 54 Syracuse L. Rev. 1051 (2004).
Nonmarital Children. Kate Schuler advocates allowing nonmarital children to prove paternity, even if exhumation of the purported father is required, in The Liberalization of Posthumous Paternity Testing—Expanding the Rights of Illegitimate Children, 17 Quinnipiac Prob. L.J. 150 (2003).
Posthumous Conception. Laurence C. Nolan discusses the challenges in determining how to respond to the needs of posthumous children who are conceived after a parent’s death in Critiquing Society’s Response to the Needs of Posthumously Conceived Children, 82 Or. L. Rev. 1067 (2003). In addition, Michael K. Elliott explains the difficulty succession law has encountered with these children and recommends that they be addressed by will or through legislation in Tales of Parenthood from the Crypt: The Predicament of the Posthumously Conceived Child, 39 Real Prop. Prob. & Tr. J. 47 (2004).
Revocation of Wills. Frederic S. Schwartz outlines Models of Will Revocation, 39 Real Prop. Prob. & Tr. J. 135 (2004), and recommends that courts adopt the token-deletion model so that the testator’s intent is more likely fulfilled.
Sanist Wills. Pamela R. Champine considers whether the observed discrimination in the application of the testamentary capacity doctrine may be explained as a product of sanist prejudice in A Sanist Will?, 46 N.Y.L. Sch. L. Rev. 547 (2002–2003). On a parallel track, Heather S. Ellis contends that the goal is to combat sanism and pretextuality by raising the bar in civil probate hearings in “ Strengthen the Things That Remain”: The Sanist Will, 46 N.Y.L. Sch. L. Rev. 565 (2002–2003). A detailed analysis of both Perlin and Champine’s theories is set forth by Claire B. Steinberger in Therapeutic Jurisprudence: The “Sanist” Factor—An Interdisciplinary Approach, 46 N.Y.L. Sch. L. Rev. 573 (2002–2003).
State Estate Tax. In State Estate Taxes After EGTRRA: A Long Day’s Journey into Night, 17 Quinnipiac Prob. L.J. 317 (2004), Jeffrey A. Cooper, John R. Ivimey, and Donna D. Vincenti discuss various state responses to decoupling and the eventual effect on estate taxation.
Survival Actions—Texas. Randal A. Kauffman explores Survival Actions: Who Has Standing to Represent an Estate?, 67 Tex. B.J. 440 (2004).
Transsexuals. In Denying Classification: Intestacy Issues for Transsexual Surviving Spouses, 82 Or. L. Rev. 1155 (2003), Melissa Aubin explores the legal situation of transsexuals that defies the familiar categories that underpin intestacy law.
Trusts. In Mandatory Rules in the Law of Trusts, 98 Nw. U. L. Rev. 1105 (2004), John H. Langbein directs attention to and explores the rationale for important recent developments in American trust law.
Viatical Settlements. Anna D. Halechko warns of the possibilities for deception in Viatical Settlements: The Need for Regulation to Preserve the Benefits While Protecting the Ill and the Elderly from Fraud, 42 Duq. L. Rev. 803 (2004).
Will Validity. Nicole M. Reina advocates Protecting Testamentary Freedom in the United States by Introducing into Law the Concept of the French Notaire, 46 N.Y.L. Sch. L. Rev. 797 (2002–2003), to uphold wills that courts might otherwise deem invalid.
Delaware modifies how the surviving spouse’s elective share is determined. In particular, both real and personal property will be governed by the law of the situs of the property. 2004 Del. Laws 271.
Delaware updates total return unitrust provisions. 2004 Del. Laws 270.
Illinois enacts comprehensive Anatomical Gift Act. 2004 Ill. Laws 93–794.
Illinois expands standby adoptions. Illinois deleted the prior requirement that standby adoptions are effective only if the parent is terminally ill. 2004 Ill. Laws 93–732.
Louisiana expands methods that a donor may use to make anatomical gifts. 2004 La. Acts 872.
Louisiana modifies its laws governing estate and inheritance tax. 2004 La. Acts 884.
Michigan adopts the Uniform Principal and Income Act. 2004 Mich. Legis. Serv. 159.
Missouri adopts the Uniform Trust Code. 2004 Mo. Legis. Serv. No. 175 (Vernon’s).
Ohio permits living wills to also contain anatomical gifts. 2004 Ohio Legis. Serv. File 100.
Oklahoma enacts Family Wealth Preservation Act, which allows settlors of revocable and irrevocable trusts to protect corpus and income from creditors. 2004 Okla. Sess. Law Serv. 509.
Vermont modernizes law governing advance directives and related matters. 2004 Vt. Acts & Resolves 162.