A surviving spouse substantially complied with the rules for presenting a claim related to a contractual will but was not entitled to specific performance. Spouses executed reciprocal wills and an agreement not to revoke their wills without the consent of the other spouse. After the marriage relationship deteriorated, one of the spouses filed for divorce and made a new will expressly disinheriting the other spouse. The petitioner spouse died before the divorce was finalized. The surviving spouse offered the reciprocal will for probate, and the decedent’s child by a previous marriage offered the later will. The probate court admitted the later will but appointed the surviving spouse as the personal representative. The surviving spouse filed a motion seeking specific performance of the agreement that accompanied the earlier wills. The circuit court denied the motion finding that the surviving spouse had not properly presented a claim and that the surviving spouse was not entitled to specific performance because there was an adequate remedy at law. On appeal by the surviving spouse, the South Dakota Supreme Court, in Matter of Estate of Smeenk, 978 N.W.2d 383 (S.D. 2022), held that the surviving spouse had substantially complied with the notice requirement of the non-claim statute, S.D. Codified Laws § 29A-3-803(a), by filing the motion within the allotted time for presenting claims but that the surviving spouse failed to show the lack of a legal remedy. The primary asset of the estate was the decedent’s remaining interest in payments under a contract for deed, and the court found no evidence that the amount due at the decedent’s death could not be calculated and thus be the subject of an action at law.
A person under a conservatorship may make a will without court approval. The decedent was under a conservatorship at the time of executing the decedent’s will, drafted by the conservator, which devised the decedent’s estate to three persons unrelated to the decedent. One of the decedent’s heirs challenged probate of the will on the grounds that Colorado law, Colo. Rev. Stat. § 15-14-411(1)(g), states that a conservator may make, amend, or revoke a protected person’s will only with court approval and on notice to interested persons. In what it describes as a case of first impression, the Colorado Court of Appeals held in In re Estate of Davies, No. 21CA0295, 2022 WL 3093724 (Colo. App. Aug. 4, 2022), that the statute does not apply when the protected person properly executes the will notwithstanding the conservator’s assistance in drafting the will.
A no-contest clause cannot prevent a beneficiary from challenging the trust’s validity. In Slosberg v. Giller, 876 S.E.2d 228 (Ga. 2022), the Georgia Supreme Court held that the inclusion of a no-contest clause in the terms of a trust cannot prevent a beneficiary from challenging the validity of the trust even if the clause states that any beneficiary who does so forfeits all interests in the trust and theoretically would no longer have standing to bring a contest. The no-contest clause is not effective unless the trust is valid and therefore the beneficiary can be penalized only if the challenge is unsuccessful. The court leaves open the question of whether an unsuccessful challenge will not result in forfeiture if the beneficiary had probable cause for bringing the action.
A power of attorney must expressly grant the agent the authority to create a trust. The Massachusetts Supreme Judicial Court held as a matter of first impression in Barbetti v. Stempniewicz, 189 N.E.3d 264 (Mass. 2022), that an agent under a power of attorney may create a trust for the principal only if the power of attorney expressly grants the authority to do so. The court did not reach the question of whether the principal may delegate the authority to make a trust even with an express grant of authority in light of the requirement that the settlor intend to make a trust and have the capacity to do so.
A special needs trust terminated when beneficiary recovered from the injury. The beneficiary of a special needs trust properly created under Michigan law petitioned the court to direct the trustee to terminate the trust by reimbursing the state for the care provided and distributing the remaining trust property to the beneficiary. The trial court granted the petition because the beneficiary had recovered from the traumatic brain injury that was the source of the beneficiary’s disability. On appeal by the trustee, the intermediate appellate court affirmed in In re Special Needs Trust for Moss, No. 357836, 2022 WL 2760235 (Mich. Ct. App. July 14, 2022). The relevant Michigan statute, Mich. Comp. Laws § 700.412(2), allows termination of a trust because of circumstances the settlor did not anticipate if termination will further the settlor’s stated purpose or, if none is stated, the settlor’s probable intention. Because the stated purpose of the trust was to “supplement” the beneficiary’s quality of life on the assumption that the beneficiary would always be a disabled person, the beneficiary’s recovery was an unanticipated circumstance that fully justified termination.
A trust amendment must substantially comply with the trust terms. Arkansas law, Ark. Code Ann. § 28-73-602, allows the settlor to amend a revocable trust in any way that substantially complies with a method of amendment included in the trust terms. The Arkansas intermediate appellate court held in Baker v. Baker, 646 S.W.3d 397 (Ark. Ct. App. 2022), that a document, the heading of which did not include the word “amendment,” did not substantially comply with the trust, which requires that any document amending the trust be titled “The [name of trust] Amendment,” even though the settlor satisfied the other three requirements for a valid amendment (i.e., signed, dated, and in writing).
The validity of a testamentary trust may be challenged after expiration of the time to challenge probate of the will. After admission to probate of the decedent’s will and appointment of the decedent’s two children as co-personal representatives, one of the children brought a petition seeking a determination of the validity of a testamentary trust, construction of its terms, and a declaration of the child’s rights as a beneficiary of the trust. The trial court granted the motion to strike the petition the decedent’s other child and the other beneficiaries of the trust brought on the grounds that it was not filed within the three-month statutory period for challenging the validity of a will that begins with receipt of notice of administration under Fla. Stat. § 733.212(3). The intermediate appellate court reversed in Gundlach v. Gundlach, 339 So. 3d 997 (Fla. Dist. Ct. App. 2022), holding that that the petition did not challenge the validity of the will and therefore the statute was inapplicable.
Trust modification statute does not confer right to jury trial. In Matter of Troy S. Poe Trust, 646 S.W.3d 771 (Tex. 2022), the Supreme Court of Texas held that Texas Property Code § 112.054 “does not confer a right to a jury trial in a judicial trust modification proceeding.” The court explained that the section discusses the court making the decision to modify in its discretion and there is no mention of a jury. The court remanded the case, however, for the appellate court to consider whether there may be a jury trial right under the Texas Constitution. The court refused to address this issue because it was not raised until the motion for rehearing in the lower court. Thus, whether a litigant may successfully demand a jury trial in a trust modification action remains uncertain in Texas.
IRS can seek collection from an executor rather than compromise with an estate. After the decedent’s death, the executor sought legal advice concerning a provision in the decedent’s will and miscalculated the estate tax owed. The estate received a notice of a deficiency but did not have the funds to pay the tax because the executor had transferred over $1 million to beneficiaries over six years. The executor transferred over 60 percent of those funds after he received the notice of the deficiency. The executor sought an offer-in-compromise, which the IRS declined, stating it could collect more from other sources. The Third Circuit in Estate of Kwang Lee v. Commissioner, 130 A.F.T.R. 2d 2022-5640 (3rd Cir. 2022), affirmed the Tax Court and agreed that the IRS did not abuse its discretion in rejecting the offer-in-compromise. The court noted that estate taxes take priority over other obligations, including the distribution of property to the beneficiaries, and that executors can be held personally liable for transferring property before satisfying a known estate tax. The court rejected the estate’s argument that its executor should not have been considered in the reasonable collection potential because more than three years had passed. In addition, reliance on professional advice did not excuse the executor. First, he relied on the counsel in preparing the returns, not distributing the assets. Second, there is no professional reliance defense when the executor has knowledge of the tax deficiency.
Court considered the Liechtensteinian Stiftung a foreign trust. While working abroad, the taxpayer formed an entity as a Stiftung under the laws of Liechtenstein. The Stiftung’s organizational documents stated that its purpose was to provide education and general support to the taxpayer and his children. The documents prohibited commercial trade. Liechtensteinian public filings confirmed the prohibition of commercial business. The IRS issued penalties for failure to report timely the entity as a foreign trust. After the taxpayer paid the penalties, he filed a refund action. The Fifth Circuit in Rost v. United States, 44 F.4th 294 (5th Cir. 2022), upheld the district court’s decision that the Stiftung was a foreign trust. The court noted that a trust is an arrangement where trustees take title to property for the purposes of protecting or conserving it for the beneficiaries, and whether an entity is a trust for tax purposes depends on a facts-and-circumstances test. Several facts supported the finding of the entity as a trust including the organizational documents, familial purpose, and lack of a business objective or commercial activity. Because any disputes concerning the Stiftung must proceed to arbitration under Liechtensteinian law, it is a foreign trust, not a domestic one.
Grayson M.P. McCouch argues that recent Tax Court decisions treating “the discounted value of the partnership interest received by the decedent on formation of the partnership should be treated as partial consideration and allowed as an offset against the amount included in the gross estate” is misguided in Family Limited Partnerships, Bona Fide Sales, and Inadequate Consideration, 47 ACTEC L.J. 247 (2022).
In his Note, Intellectual Heirs Property: Why Certain Musical Copyrights Should Be Included in the Heirs Property Reform Movement, 29 J. Intell. Prop. L. 418 (2022), Austin Weatherly argues that the heirs property reform movement should broaden its scope to include musical copyrights that are inherited by the same methods that create heirs property in the real property context.
In Married, With Children at Death, 47 ACTEC L.J. 131 (2022), Emily S. Taylor Poppe reports the results of her “modern empirical assessment of dispositive preferences when a decedent is survived by a spouse and a descendant of the marriage.” She explains that intestate schemes may not “capture the preferred allocations of many individuals.”
In Narrative Capacity, 100 N.C. L. Rev. 1073 (2022), James Toomey argues for a new doctrine of capacity under which the law would recognize personal decision-making if and only if it is linked by a coherent narrative structure to the story of the decisionmaker’s life. Moreover, his article offers a test for determining which decisions meet this criterion and explains how the doctrine would work in practice.
Jonathan G. Blattmachr and Martin M. Shenkman discuss “the potential income tax disadvantages of non-grantor trusts and how they might be avoided or mitigated” in Flexible Beneficiary Trusts: Reducing Income Tax on Non-Grantor Trusts, 47 ACTEC L.J. 301 (2022).
Kaity Y. Emerson and Kevin Bennardo address the validity of pet euthanasia provisions in pet owners’ wills in Unleashing Pets from Dead-Hand Control, 22 Nev. L.J. 349 (2022).
Andrew Gilden’s article, Endorsing after Death, 63 Wm. & Mary L. Rev. 1531 (2022), closely examines the growing body of posthumous endorsement law and sets forth a new framework that better respects both the agency of the deceased as well as the continuing bonds among the deceased, their fans, and their families.
In his review of 443 recent probate administrations from San Francisco, California, David Horton sheds new light on the causes and consequences of probate litigation in Probate Litigation, 2022 U. Ill. L. Rev. 1149 (2022).
Danny Fein “emphatically defends perpetual trusts and recent state-level repeals of the Rule Against Perpetuities” in A Defense of Perpetual Trusts, 47 ACTEC L.J. 215 (2022).
Mitchell M. Gans hypothesizes how the Supreme Court of the United States might deal with modern tax proposals such as taxing the increase in value of property before the owner sells it in Progressive Taxation and a Conservative Supreme Court: Reading the Tea Leaves, 47ACTEC L.J. 283 (2022).
Camille M. Davidson explains the issues that arise when a testator devises property as tenants in common in To My Children in Equal Shares: The Flaw of Estate Planning When Property Is Devised to Beneficiaries as Tenants in Common, 47 ACTEC L.J. 187 (2022).
In The Intergenerational Equity Case for a Wealth Tax, 90 U. Cin. L. Rev. 735 (2022), Daniel Schaffa asks whether there are measures that might offer redress to a generation for the costs imposed on it by its predecessors and finds that a one-time wealth tax is a promising option.
California clarifies the law regarding the parentage of children born as the result of assisted reproduction techniques. 2022 Cal. Legis. Serv. Ch. 159.
Delaware modernizes the law regarding the creation, regulation, operation, and dissolution of domestic statutory trusts. 2022 Del. Laws Ch. 381.
Michigan excludes certain personal property held in trust from the Rule Against Perpetuities. 2022 Mich. Legis. Serv. P.A. 154.
New York enacts provisions governing supported decision-making by people with intellectual, developmental, cognitive, and psychosocial disabilities. 2022 Sess. Laws News of N.Y. Ch. 481.
North Carolina authorizes remote electronic notarization. 2022 N.C. Laws S.L. 2022-54.
