Conveyance of real property held in joint tenancy to revocable trust severs the joint tenancy. Helen Schardein bought a plot of land and took title as joint tenants with Dan Sickels. After suffering a stroke, Schardein conveyed her interest in the land to a revocable trust. After Schardein’s death, the land was sold, and Sickels and the trustee litigated their respective rights to the proceeds. The trial court and the intermediate court of appeals found that the conveyance to the trust severed the joint tenancy and that the trust was entitled to all the sale proceeds because Schardein had provided all of the consideration for the purchase. On appeal, the Supreme Court of Iowa in Grout as Trustee v. Sickels, 985 N.W.2d 144 (Iowa 2023), held that the conveyance to the trust did indeed sever the joint tenancy but that the trust was entitled to reimbursement from the sales proceeds for homeowner’s association dues and real estate taxes and that the remaining proceeds must be divided equally between Sickels and the trust.
Lack of privity does not bar a malpractice claim against the executor’s attorney. The New York intermediate appellate court upheld a malpractice verdict against the attorney for a removed executor, awarding damages to the substitute executor as the representative of the estate, in Betz v. Blatt, 180 N.Y.S.3d 599 (N.Y. App. Div. 2022). Although the defendant was not in privity with the estate—the client was the former executor—the existence of special circumstances, including the failure of the attorney to take any action to halt the former executor’s self-dealing, continuing to disburse funds to the former executor, and the failure to inform the court or opposing counsel of the former executor’s violation of fiduciary duties, subjected the attorney to liability.
Express language prevents amendment of revocable trust by agent under power of attorney. The settlor amended the settlor’s revocable trust in 2013 to provide outright distribution at the settlor’s death to the settlor’s children or their then-living descendants if the settlor’s spouse did not survive. In 2017, the settlor’s agent, under a power of attorney granting broad authority to the agent, amended the trust to require distribution of one of the children’s shares to the child’s supplemental needs trust, which provided for distribution to the child’s spouse on the child’s death. After the settlor’s death, distribution was made to the supplemental needs trust, and, upon the child’s death, the trust was distributed to the child’s surviving spouse. The child’s children brought a petition to invalidate the 2017 amendment and to distribute the trust under the 2013 terms. The district court found that the amendment was valid and on appeal the Court of Appeals of Minnesota reversed, in In re Eva Marie Hanson Living Trust, 986 N.W.2d 1 (Minn. Ct. App. 2023), holding that the trust terms stating that the right to amend or revoke is personal to the settlor and may not be exercised by “my legal representative or agent.” This provision unambiguously prevented the amendment by the agent.
Spendthrift provision governs self-dealing by beneficiary trustee. The trustee and the trustee’s spouse obtained a loan using as collateral part of the trust property in the amount of the value of the trustee’s one-third interest in the remainder. The trustee’s interest as beneficiary was subject to a spendthrift provision. After the borrowers defaulted, the lender began foreclosure proceedings. One of the other remainder beneficiaries was permitted to represent the trust and resist foreclosure. The trust prevailed and on appeal, the South Dakota Supreme Court affirmed in Plains Commerce Bank, Inc. v. Beck, 986 N.W.2d 519 (S.D. 2023). The court held that the spendthrift restriction meant that the trustee could not encumber the remainder interest and that the beneficiaries’ consents to the self-dealing were ineffective because they did not affect the spendthrift restriction.
Declaration of trust deemed sufficient to fund trust with real property. The settlor created a trust by agreement between the settlor and another person as trustee. The agreement recited the transfer to the trust of property on Schedule A, which listed the settlor’s home and its furniture as two separate items. After the settlor’s intestate death, the trustee petitioned for a ruling that the property on Schedule A was indeed trust property. The lower court granted the petition and the Supreme Court of Nevada affirmed in Matter of Living Trust of Davies, 522 P.3d 427 (Nev. 2022). The court held that the statute requiring a trust of real property to be evidenced by a written instrument signed by the trustee or a written instrument conveying the property and signed by the settlor does not require a conveyance by deed.
The settlor and the beneficiaries may modify the trustee replacement provisions through agreement. The settlor and the beneficiaries agreed to modify an irrevocable trust to add terms allowing a majority of the adult beneficiaries to remove and replace the independent trustee after the settlor’s death or incapacity. After the settlor’s death, the beneficiaries removed and replaced the independent co-trustees. The removed trustees challenged the modification on the grounds that they could be removed only by the court under 20 Pa. Cons. Stat. § 7766 (similar to U.T.C § 706) on request by the settlor or the beneficiaries. The lower courts agreed with the trustees, but on appeal, the Pennsylvania Supreme Court reversed in In re Trust Under Deed of Garrison, 288 A.3d 866 (Pa. 2023). The court held that the statutory provision for modification or termination by agreement of the settlor and the beneficiaries, 20 Pa. Cons. Stat. § 7740.1 (similar to U.T.C. § 411), authorizes an agreement to modify a trust to allow beneficiaries to remove a trustee.
The court may remove the trustee of land trust under common law. The beneficiaries of a Florida land trust moved for a temporary injunction removing the trustee based on the removal provisions in the Fla. Stat. § 736.0706 (closely based on U.T.C. § 706). The trial court granted the motion and removed the trustee. On appeal, the intermediate appellate court affirmed on other grounds in Freeman as Trustee of Fiddlesticks Land Trust, 352 So. 3d 452 (Fla. Dist. Ct. App. 2022), holding that although the statute expressly provides that its provisions do not apply to land trusts, the trustee may nonetheless be removed under the common law.
Estate generally not allowed to deduct a settlement payment from the value of the gross estate or as an administrative expense. The decedent was predeceased by her husband, who made her the beneficiary of a qualified terminable interest property trust. After her death, the estate litigated whether the income from the trust property had been properly distributed to the decedent during her lifetime. The estate settled and agreed that the trust would pay the estate a $9.2 million settlement. The settlement agreement attributed about two-thirds of that payment to undistributed income claims and the rest to various commissions and fees. The Tax Court in Estate of Kalikow v. Comm’r, T.C. Memo 2023-21, held that the settlement amount did not reduce the value of the gross estate under I.R.C. § 2044. In addition, the estate could not deduct the settlement payment as administrative expenses, except for one particular agreed-upon commission.
The Tax Court applied tax affecting in valuation of corporate stock. The taxpayers petitioned the Tax Court to redetermine a deficiency in their federal gift tax return. The taxpayers, a married couple, owned stock in the Biltmore Company, a family business and S Corporation. The gifts at issue involved voting class stock to the taxpayers’ children and nonvoting stock to their grandchildren in trust. The Biltmore Company operates a tourism company whose main feature is the Biltmore House. The evidence showed that over many years, the taxpayer, their children, and their grandchildren crafted a culture of keeping the company in the family through regular business meetings to teach each generation as well as with shareholder agreements. The Tax Court accepted the taxpayers’ testimony that they had no intention to sell the assets of the Biltmore Company or their ownership interests. In Estate of Cecil v. Comm’r, T.C. Memo 2023-24, the Tax Court held that the facts and circumstances of this case allowed for tax affecting at a rate of 17.9 percent. This means in determining the value of the interest in the company, a corporate tax rate was assumed at 17.9 percent, even though the individual owners pay tax on pass-through income. The court also accepted a 20 percent discount for lack of control and rates of 19 percent, 22 percent, and 27 percent for lack of marketability.
Payments to female companions are considered gifts and payments to stepchildren under a prenuptial agreement are not deductible under I.R.C. § 2053(a)(3) as claims against the estate. The decedent, a wealthy lawyer and businessman, had been married four times, had numerous female companions to whom he made large payments, and had multiple children from several relationships. At the time of his death, the decedent and his wife were estranged. However, he had multiple female companions in the years before he died to whom he made large payments of money which he did not report to the IRS. The estate did not report these payments as taxable gifts. The estate also did not report payments to children and family members in the years before his death as taxable gifts. The decedent’s widow and stepchildren engaged in litigation in state court after his death concerning their rights under the prenuptial agreement. The estate settled. The settlement allowed the widow to remain in certain property for five years, and payments were made to the stepchildren. The estate deducted as claims against the estate the appraised value of the widow’s right to reside in the property and the payments made to the stepchildren. The IRS also issued a penalty for failure to timely file, even though the estate tax return showed no tax due at the time of death due to a payment made when the estate requested an extension. The Tax Court in Estate of Spizzirri v. Comm’r, T.C. Memo 2023-25, held that the estate failed to meet its burden that the decedent’s sizeable payments to his family and friends were not gifts. The court noted that the estate’s failure to call the majority of the recipients to testify could give rise to an adverse inference that, had they been called, their testimony would not have supported the estate’s claim that these were payments for care and companionship services. Further, the checks did not indicate that they were meant as compensation, the decedent did not issue or file any Forms 1099 or W2 and did not report these payments on his personal tax returns. The Tax Court denied the deduction under I.R.C. § 2053(a)(3) for the bequests to the widow’s children and the value of her right to reside in the property. The court held that as stated in the modification to the prenuptial agreement, they were testamentary gifts “in lieu of any other rights” which may be available to the widow as the surviving spouse. The Tax Court also disallowed a deduction for repairs to real estate, stating that the delayed maintenance had been accounted for in the valuation of the properties. Finally, the court upheld a penalty for late filing even though the amount due on the date for payment was zero because the estate had remitted an overpayment before the filing deadline.
In Charitable Planning in a Rising Interest Rate Environment, 50 Est. Plan. 32 (2023), Sanford Schlesinger and Andrew Auchincloss explore the role of interest rates in charitable planning, focusing on the IRC § 7520 rate used to determine the present value of future cash flows. The authors suggest that practitioners should be more alert to changes in interest rates when they are low and compare the available rates over a three-month period to maximize discounts. They also discuss how higher interest rates affect different charitable giving strategies.
In A Digital Market Emerges: An Analysis of the Difficulties Investors of Cryptocurrency Face in and Beyond the Probate Context, 36 Quinnipiac Prob. L.J. 153 (2023), Shelby Ross explores the issues surrounding cryptocurrency and its distribution in probate and provides recommendations for reform. Her note includes a background of cryptocurrency, problems with accessing cryptocurrency accounts, current regulations, compliance issues, and proposals for solutions to address these challenges
In A New Gold Rush: How Trust Law Can Incentivize Prudent Cryptocurrency and Increase State Revenue, 36 Quinnipiac Prob. L. J. 171 (2023), Nathanael Scaniffe advocates for incentivizing cryptocurrency estate planning in Connecticut with the creation of a new class of trusts, Cryptocurrency-Specific Asset Protection Trusts (APTs), to address the “cryptocurrency intestacy problem.” The author suggests that the Connecticut General Assembly should adopt Cryptocurrency-Specific APTs to promote cryptocurrency estate planning, protect against the inefficient handling of cryptocurrency assets, and bring additional business to the state.
In Beyond Moribund: The Case for Repeal of K.S.A. 59-505, 92 Kan. Bar J. 24 (2023), Tim O’Sullivan argues that the Kansas law that provides a surviving spouse with a right to elect a 50 percent interest in specific real property the deceased spouse owned is problematic and inequitable. O’Sullivan suggests that the statute should be repealed and that the Kansas Spousal Elective Share Act, which comprehensively protects surviving spouses from impoverishment, should be the sole spousal elective share provision in Kansas law.
In Complex Estate Planning Strategies for High Net Worth Clients, 34 J. Int’l Tax’n 43 (2023), Andrew Bechel and Eric Kaplan explain how “current high gift, estate, and generation-skipping transfer tax exemptions scheduled to be reduced by half on January 1, 2026” has led to a shift in more complex estate planning strategies. These strategies include a combination of traditional estate planning, asset protection techniques, and complex trust strategies to reduce potential tax burdens and increase asset protection from creditors. They conclude with a case study illustrating the practical application of these strategies.
In Conspiracy Theory Belief and the Case for Abolishing Insane Delusion Doctrine, 16 Univ. St. Thomas J.L. & Pub. Pol’y 516 (2023), Payton Yahn explores the growing impact of QAnon’s influence on wills jurisprudence and the correlation among belief, sanity, and public policy. She questions “how can we distinguish conspiracy belief from other unpopular beliefs, especially in areas where evidence is necessarily scarce.” Finally, Yahn argues that the insane delusion doctrine should be abolished because it is overinclusive and other will-contest grounds can address the conspiracy problem without carrying the same risks.
In Testamentary Restrictions on Marriage: A Reexamination of In re Estate of Feinberg in Light of Obergefell v. Hodges, 16 Univ. St. Thomas J.L. & Pub. Pol’y 481 (2023), Christian Poppe analyzes the conflict between the right to marriage and testamentary freedom. In the case of In re Estate of Feinberg, the testator’s will sought to restrict the beneficiary’s marriage rights. The Illinois Appellate Court and Illinois Supreme Court had differing opinions. Poppe argues that the appellate court’s decision invalidating the provision was correct, considering the firm public policy favoring an individual’s right to choose the individual’s marriage partner.
In NIL (Name, Image, or Likeness) Revenue and its Income Tax Implication, 50 Est. Plan. 07 (2023), Ken Milani shares the tax implications of college athletes who receive compensation for their name, image, or likeness under the National Collegiate Athlete Association’s new policy. In addition, Milani highlights the need for athletic programs to provide tax and financial advice for their student-athletes who may need more experience in preparing and filing tax returns.
In Post-Pandemic Estate Planning: Analyzing the Recent Changes in Remote Notarization Laws, 45 Seattle Univ. L. Rev. 741 (2022), Matthew Fiedler describes the benefits and drawbacks of using remote technology in the post-pandemic era. He also reviews the current legal requirements for notarizing estate planning documents in Washington compared to other states. Lastly, he emphasizes the movement toward digitalization in estate planning law, which encompasses implementing remote notarization laws in over 23 states and introducing the Uniform Electronic Wills Act.
In The Evolution of the Uniform Simultaneous Death Act and Its Shortcomings, 16 Univ. St. Thomas J.L. & Pub. Pol’y 464 (2023), Emily Gootzeit explores how the Uniform Simultaneous Death Act (USDA) was created to address legal issues when multiple individuals die simultaneously; however, the original version had some problems. To address these issues, the Uniform Probate Code proposed reforms, including the 120-hour survival rule, but the reformed USDA still lacks essential components such as guidance on life-assisting technology. Gootzeit suggests potential solutions to these problems by amending or revising the reformed USDA to guide courts and avoid unfair results.
In The Future of Testamentary Capacity, 79 Wash. & Lee L. Rev. 609 (2022), Reid Weisbord and David Horton explore how state guardianship systems have undergone significant reform to protect those with cognitive, intellectual, or developmental disabilities, and lawmakers are currently experimenting with supported decision-making as an alternative to guardianship. But the legal system’s treatment of individuals with disabilities concerning testamentary capacity remains trapped in the past. The authors analyze several unresolved doctrinal issues, including whether testators have due process rights to participate in competency adjudications and the relationship between supported decision-making and will-making.
In Misadventures in Subtrust Allocation: When a Good Estate Plan Goes Bad, 65 Orange Cnty. L. 46 (2023), Hon. Glen Reiser (Ret.) explains how revocable living trusts have become America’s most common estate plan tool since the 1960s. A well-crafted estate plan, however, may still fail in family situations where beneficiaries are unequal or sub-trust allocation is absent.
In Creditors’ Rights in Property Subject to a Beneficiary’s Right of Withdrawal, 57 Real Prop. Tr. & Est. L. J. 139 (2022), S. Alan Medlin and F. Ladson Boyle explain how estate plans often include withdrawal powers for tax and non-tax reasons. These powers are usually limited for tax purposes to prevent beneficiaries’ creditors from accessing trust property. Uniform statutes such as the Uniform Trust Code and the Restatement (Third) of Trusts guide the treatment of creditor rights in such cases. This article explores the reasons for creating these withdrawal powers and associated planning considerations.
District of Columbia adopts the Uniform Electronic Wills Act. 2022 D.C. Laws 24-296.
Maine modernizes its version of the Uniform Probate Code and enhances provisions addressing revocable transfer on death deeds. 2023 Me. Legis. Serv. Ch. 4.
New York updates statutes to account for natural organic reduction, that is, the accelerated conversion of human remains to soil. 2023 Sess. Law. N.Y. Ch. 34.
South Dakota authorizes a trust enforcer to appoint an individual or a corporate fiduciary as a co-enforcer. 2023 S.D. Laws SB 95.
West Virginia passes the West Virginia Private Trust Company Act to regulate private trust companies. 2023 W. Va. Laws H.B. 3272.
Wyoming authorizes the remote witnessing of wills. 2023 Wyo. Laws Ch. 170.
Wyoming creates a method for registering digital assets. 2023 Wyo. Laws Ch. 174.
Wyoming prohibits certain insurers from discriminating against living organ donors. 2023 Wyo. Laws Ch. 93.
Wyoming provides for revocation of probate and nonprobate transfers by divorce or annulment. 2023 Wyo. Laws Ch. 140.
