Real Property, Trust and Estate Law Journal - 2015

Real Property, Trust and Estate Law Journal - 2015

Spring 2015, Vol 50, No 2 (Full PDF)
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Airbrushed Heirs: The Problem of Children Omitted from Wills
Adam J. Hirsch
This Article addresses rules designed to protect children from unintentional disinheritance. The Article examines the problem in the abstract and in the concrete, assessing the merits of the twin theories-mistaken omission and failure to account for changed circumstances-on which lawmakers predicate rules to protect omitted children, as well as exploring the extant legislative variants of those rules. The Article concludes that current legislation (including the Uniform Probate Code) is insensitive to the problem's complexities and proposes legislative revisions-among them, the substitution of transient for permanent presumptions in some cases-or, in the alternative, a switch to discretionary rules. In the course of addressing the problem's ramifications, the Article also undertakes the first-ever empirical study of individual attitudes toward inheritance by children whom fathers are unaware they have.

Trust Protectors: Why They Have Become "The Next Big Thing"
Lawrence A. Frolik
Settlors are increasingly naming trust protectors, particularly for trusts that may endure for many years because of the possible need to amend the trust in light of changing laws and changing circumstances. Trust protectors have also become popular for trusts with beneficiaries who have an intellectual disability that may prevent them from enforcing their beneficial interest in the trust. The selection of a protector, the powers to be granted the protector and the standard of care required of the protector require thoughtful consideration. This Article also discusses the origin of trust protectors, their current statutory basis, and the few existing cases that analyze the legal status and role of a trust protector.

Orange Barrel Litigation: Revisiting Temporary Loss of Access Claims Caused By Construction
Matthew Holt
This Article addresses whether business owners who lose income as the result of public construction projects that cause a temporary loss of access to their business should be entitled to compensation from the governmental entity that instituted the construction project. The Article provides a brief summary of Fifth Amendment claims and examines whether the government has engaged in a taking by temporarily limiting access to the business during a road construction project. The Article concludes that courts should allow businesses to be compensated when there has been a financial loss as a result of that loss of access.

Spring 2015, Vol 50, No 1 (Full PDF)
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Preserving Inherited Exclusion Amounts: The New Planning Frontier
Austin W. Bramwell & Leah Socash
Portability has forced estate planners to reconsider how they plan for married couples. But the impact of these rules stretches beyond married couples to affect surviving spouses who choose to remarry. In essence, these rules have created a whole new area of planning—deceased spousal unused exclusion preservation planning—that did not previously exist. This Article examines this new field in detail and the advantages and disadvantages of its various techniques.

Bankruptcy Protection of Retirement Plan Beneficiaries After Clark v. Rameker
Karen K. Suhre, Courtney M. Vomund & Christopher R. Hoyt
The Supreme Court’s recent decision in Clark v. Rameker held that a non-spouse beneficiary’s interest in an inherited IRA was not exempt from the beneficiary’s bankruptcy estate. This Article explores the rationale of the Supreme Court and the impact of this holding on other types of tax-favored retirement plans and accounts received by beneficiaries.

The Use of Declaratory Judgments to Test the Enforceability of No-Contest Clauses
Joseph J. Viviano
Generally, a no-contest clause is enforceable and will be triggered the moment a beneficiary challenges any provision of the will or trust. However, the Uniform Probate Code provides for a key exception—a no-contest clause is unenforceable if probable cause exists for contesting the will. While there is no equivalent provision in the Uniform Trust Code, many states have applied the Probate Code’s exception to trusts. Under this exception, if a beneficiary has probable cause to contest the trust, he will not forfeit his beneficial interest. Thus, a prudent beneficiary would want to be certain that probable cause exists before contesting a trust that includes a no-contest clause. The author argues that the best way for a prudent beneficiary to achieve this certainty is to seek a declaratory judgment determining whether he has probable cause prior to contesting the trust itself. This method would allow a beneficiary to have a court declare he has sufficient probable cause to contest the trust without triggering the trust’s no-contest clause and risking forfeiture of his beneficial interest.

A Tale of Two Cities’ Preservation Laws
Garreth A. DeVoe
This Article highlights the age-old struggle of weighing a city’s need for preserving its unique physical identity against its desire for economic development by comparing New Orleans’s Vieux Carre and Charleston, South Carolina’s historic district. The author examines key zoning law cases surrounding these two cities and suggests ways other cities can protect their distinctive identity.

50th Anniversary Editor Retrospectives
S. Alan Medlin, Robert M. Wilcox, Amy Morris Hess, Robert C. Paul, James R. Burkhard, & Alexander R. Arpad
This spring the ABA Real Property, Trust & Estate Law Journal celebrates the publication of its 50th volume. Publishing fifty volumes is a milestone achievement, and to celebrate, the current editorial staff asked past professional Editors in Chief to recount their time with the Journal.

Fall 2015, Vol 49, No 3 (Full PDF)
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A New Lease on Death
Tanya D. Marsh
Changes in the American funeral industry have sparked a new category of land use—a business where funeral goods and services are sold, but human remains are not embalmed, stored, or displayed. The author has named this new land use a “retail funeral establishment.” Many of these establishments are seeking to locate in retail areas, particularly multi-tenant shopping centers across the country. This new land use raises challenges for real estate attorneys regarding whether retail funeral establishments are permitted in retail developments pursuant to public and private land use controls.

When The Rubber Meets The Road: A Discussion Regarding A Trustee's Exercise Of Discretion
Ivan Taback & David Pratt
States have different rules concerning when a trustee has “abused” his discretion and, relatedly, whether, and to what extent, a trustee acting under a particular discretionary power is permitted to decant a trust. Invariably, the trustee needs some level of discretion, which depends on the state law applicable to the trust. This Article analyzes the recent trends in the judicial and legislative treatment of grants and exercises of absolute discretion and the standard of care that courts generally apply to a trustee’s exercise of discretion. It then addresses the manner in which the states’ trust decanting rules differ vis-à-vis discretionary standards, and includes a survey of each state’s laws regarding the review of a trustee’s exercise of discretion.

Trust Decanting: A Sale Without Gain Realization
Jason Kleinman
This Article describes why decanting or modifying a trust cannot be a taxable event for trust beneficiaries. The Internal Revenue Service and trust law practitioners assume the contrary and focus on determining which events are taxable. Their perspective takes for granted that a property’s material modification gives rise to its deemed sale for tax purposes. This premise should not hold true for trusts. A tax on gain requires the identification of an owner who derives the gain. Property that is not owned should not be taxable even if it is materially modified. Trusts are such a property interest because they are not owned by any person. This principle is implicit in the laws applicable to trusts and beneficiaries, which make trusts taxable on their retained income because it is impractical to determine which beneficiary will ultimately derive this income. The perspective advanced in this Article should provide practitioners with a freer hand to undertake trust decantings and clarify the common law for determining when property modifications are taxable.

Usury And Loan Transfers
Roger Bernhardt & Alex Volkov
This Article is primarily concerned with the effect of transferring a mortgage loan from its originating loan broker to a group of small investors when that loan was—at its inception—usurious. However, because the rules applicable to that situation are not confined to mortgage law, we begin with a general explanation of usury rules before dealing with the particular real estate loan transaction mentioned.

Intestate Intent: Presumed Will Theory, Duty Theory, And The Flaw Of Relying On Average Decedent Intent
Rebecca Friedman
When an individual dies with only a surviving spouse and a surviving parent, the majority of intestacy statutes give the bulk of the decedent’s property to the spouse and only a small portion to the parent. When an individual dies with only a surviving parent and a surviving sibling, the majority of intestacy statutes give all of the decedent’s property to the parent and nothing to the sibling. The author argues that these property distribution schemes do not accurately reflect intestate intent. The author outlines steps that statute drafters should take to revise intestacy statutes so they effectuate intestate intent with regard to these two property distribution schemes.