Keeping Current—Probate offers a look at selected recent cases, tax rulings, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
Gift of proceeds from sale of specific property is a specific bequest. The decedent’s inter vivos trust made a series of general bequests of sums of money and then granted the decedent’s nieces and nephews a six-month option to purchase any real estate the decedent owned at death. Any property not purchased was to be sold and the proceeds divided among the nieces and nephews surviving the settlor and the children of those who predeceased. The nieces and nephews brought a declaratory judgment proceeding seeking a declaration that the provision created a specific bequest so that the sale proceeds would belong to them. The trustee and other beneficiaries opposed, contending that the provision was a demonstrative bequest and should be treated as a general bequest so that the proceeds of the sale would be available proportionately to all beneficiaries of general bequests. The trial court granted summary judgment to the defendants in the declaratory judgment proceeding, and on appeal the Illinois intermediate appellate court reversed in Bruno v. Knippen, No. 2-22-0164, 2023 WL 2155408 (Ill. App. Ct. Feb. 22, 2023), holding that the language created a specific bequest because it gave a fund to be created by the sale of identified real estate.
Removal of impediment does not affect existing common law marriage. The District of Columbia Court of Appeals held in In re Estate of Jenkins, 290 A.3d 524 (D.C. 2023), that if a couple makes an express mutual agreement “in words of the present tense” to be married and the agreement is followed by cohabitation, even though there is a known or unknown legal impediment to the marriage at the time, removal of the impediment does not affect the agreement so long as the couple continues to cohabit.
An executor owes no duty to estate creditors. The Supreme Court of Texas in its opinion in Austin Trust Co. v. Houren, 664 S.W.3d 35 (Tex. 2023), held that an independent executor does not owe fiduciary duties to the creditors of the estate. In this case, it meant that the validity of releases of the estate executed by beneficiaries of trusts created by the testator’s exercise of a power of appointment is judged under general contract law.
Change of beneficiary accomplished through substantial compliance. The insured attempted to change the beneficiary of life insurance from the insured’s estranged spouse to their children by faxing the form the insurer provided showing the change of beneficiary in the insured’s handwriting but lacking the insured’s signature and date. The insurer sent a letter to the insured stating the form needed to be signed and dated, but there was no evidence that the insured received this letter. The trial court issued a declaratory judgment in favor of the children, and, on appeal, the Arkansas Supreme Court affirmed in James v. Mounts, 660 S.W.3d 801 (Ark. 2023). The court held that by completing and returning the form and in light of the evidence that the insured had not received the letter regarding the absence of a signature and date, the insured had substantially complied with the contractual requirements for changing the beneficiary.
Putative spouse rather than legal spouse has community property rights. The decedent’s first marriage was never dissolved, making the second marriage a nullity. Under Louisiana Civil Code art. 96, a null marriage produces “civil effects” in favor of a party contracting in good faith including the application of the community property regime. In Succession of Burns, 354 So. 3d 1197 (La. 2022), the Louisiana Supreme Court overruled precedent and held that a surviving putative spouse who acted in good faith is the sole surviving spouse for purposes of succession to community property.
Disinheritance in a will extends to the trust receiving the pour-over property. The decedent executed a pour-over will and revocable trust which, after receiving the pour-over, would terminate on the decedent’s death and be distributed outright to the decedent’s four children. The trust could be amended by “a signed writing.” Approximately 18 months later, the decedent executed a new will disinheriting one of the children. The decedent did not amend the trust to reflect the disinheritance. After the decedent’s death, the personal representative brought a declaratory judgment action seeking confirmation of the disinheritance. The court in IMO Amelia Noel Living Trust, No. 2020-1107-SEM, 2022 WL 3681269 (Del. Ch. Aug. 16, 2022), aff’d, 293 A.3d 1000 (Del. 2023), held that the will amended the trust to effect the disinheritance; to hold otherwise would fail to carry out the decedent’s testamentary intent.
Trustee has standing to question dismissal. The beneficiaries’ first attempt to remove the trustee and the successor trustee was ineffective because it did not conform to the terms of the trust; the second attempt was successful. In Caputo v. Moulton, 204 N.E.3d 1009 (Mass. App. Ct. 2023), the court held that the trustee, but not the successor trustee, had standing to seek declaratory relief regarding the first dismissal because the trustee needed to know whether the trustee was the actual trustee for the period between the failed and the successful removal attempt. In addition, the question of the beneficiaries’ potential violation of the trust’s no-contest clause was of no import because the person to whom the forfeited property would have passed promised to distribute it to the beneficiaries in proportion to their interests in the trust.
The trustee did not act impartially in defending a trust amendment benefiting trustee’s children. The third and final amendment to the settlor’s inter vivos trust substituted the settlor’s sibling for two of the settlor’s children as successor trustee, changed the dispositive provisions on the settlor’s death to disproportionately benefit one child, and made pecuniary gifts to the successor trustee’s two children. After the settlor’s death, litigation between the two children over the validity of the amendment ended with both children agreeing it was not properly executed. The court appointed a private fiduciary as the successor trustee. One of the children then compelled the settlor’s sibling to account as successor trustee and the trial court surcharged the trustee the full amount of the trust assets paid for attorney fees. The appellate court affirmed in Zahnleuter v. Mueller, 305 Cal. Rptr. 3d 474 (Cal. Ct. App. 2023), holding that the trustee did not act impartially in defending an amendment that changed the trust’s dispositive provisions to benefit the trustee’s children.
Lost will admitted to probate although no proof of the will’s fate. The nominated executor offered for probate a copy of the decedent’s will. The trial court admitted the will to probate and the objectants appealed, arguing that the court erred in holding that the presumption of revocation that arises when a will last known to be in possession of the testator cannot be found after death cannot be overcome where the proponent offers multiple theories of the will’s location. The Virginia intermediate appellate court affirmed in Glynn v. Kenney, 884 S.E.2d 259 (Va. Ct. App. 2023), holding that because under Virginia case law the proponent of a lost will need not prove what happened to the will, lack of proof of the will’s fate does not prevent the proponent from overcoming the presumption of revocation by clear and convincing evidence.
Transferee liability for unpaid estate taxes can be triggered when a beneficiary receives property from a trust after the date of death. The taxpayer died with an estate of almost $200 million; an inter vivos trust held the majority of those assets. The IRS audited the estate tax return and asserted a deficiency which the estate agreed to pay through I.R.C. § 6166 installment payments. Eventually, the estate quit paying the installment payments and declared the trust depleted. When more than $10 million in estate taxes remained unpaid, the United States sued several of his heirs for transferee liability under I.R.C. § 6324(a)(2). The Ninth Circuit in United States v. Paulson, 68 F. 4th 528 (9th Cir. 2023), reversed the district court and held the heirs were responsible for the estate tax through transferee liability. The court rejected the heirs’ argument that personal liability for unpaid estate taxes is imposed only on those who receive or have property included in the gross estate on the date of the decedent’s death; the argument would exclude those who receive property from the estate at any point after the date of the decedent’s death. The court held that I.R.C. § 6324(a)(2) imposes personal liability for unpaid estate taxes on those who receive estate property anytime after the decedent’s death as long as it is within the applicable statute of limitations.
Appellate court affirms numerous charges stemming from fraud and tax evasion. The taxpayer had ongoing issues with the IRS for over a decade. He stopped filing personal returns despite receiving a W-2. He later purchased luxury vehicles using the refunds from fraudulently filed Form 1041s, but the government seized them. The Eighth Circuit in United States v. Kock, 66 F.4th 695 (8th Cir. 2023), upheld his convictions for failure to file a tax return, making false claims against the United States, and wire fraud, stating that there was sufficient evidence that the taxpayer knew the returns were false and that he had an intent to deceive the IRS. For example, the taxpayer told the car salesman handling the purchase of the vehicles that he was using money from the sale of a business to purchase the cars. The court also rejected the taxpayer’s defense that the IRS should have acted with greater diligence and caught the scheme.
In When a Frozen Egg or Pre-embryo Is Negligently Lost or Destroyed, 111 Ill. B. J. 4 (2023), Whitney Barr explores how courts are grappling with the complex issues surrounding the treatment of biological material with the potential for life and what possible remedies are available for individuals whose eggs or embryos have been destroyed due to negligence. As the assisted reproductive industry grows, the law must evolve to address egg freezing and negligence liability.
Martin Shenkman provides specific examples of how estate planners can tailor an estate plan for clients of the Bahá’í Faith in Estate Planning for Bahá’í Clients, 50 Est. Plan. 04 (2023).
In A Will and a Way to Discriminate?, 111 Ill. B. J. 5 (2023), Christian Ketter argues that the Illinois case of In re Feinberg, which enforced a will provision conditioning a gift on the beneficiary marrying within a specified religious faith, places courts in a “constitutionally untenable position” because it forces courts to allow “discrimination of a protected class and effect disinheritance of a potential beneficiary on that basis.”
In Tax Considerations in Designing and Administering Directed Trusts and Divided Trusts, 50 Est. Plan. 11 (2023), Brad Dillon and Todd Mayo consider the tax implications when designing and administering directed trusts and divided trusts. For example, the change in trust officials, such as appointment, resignation, or changes in domicile or relationship with the settlor, can have significant tax consequences, including gift, estate, generation-skipping transfer, and state income taxes.
In Who’s the Boss? Fiduciary Liability and Directed Trusts, 57 Real Prop., Tr. & Est. J. 3 (2022), Timothy Ferges, Melisa Dibble, Adam Ansari, and Daniel Ebner explain how directed trusts are becoming increasingly common and the lack of uniform fiduciary standards among the states causes uncertainty about liability. This uncertainty includes questions about the “fiduciary duty of trust directors towards beneficiaries, the potential absolution of trustee’s liability if a nonfiduciary trust director is involved, and whether a trust can be structured to avoid fiduciary accountability altogether.” Courts will likely address these uncertainties in the future, but practitioners must consider potential drafting issues when advising their clients on directed trusts.
In A New Feudalism: Selfish Genes, Great Wealth, and the Rise of the Dynastic Family Trust (DFT), 55 Conn. L. Rev. 19 (2022), Eric Kades warns how repealing the Rule Against Perpetuities in most of the United States will exacerbate inequality as the ultra-wealthy use DFTs to ensure socioeconomic privilege for their descendants forever. Kades argues that this situation severely threatens American values and proposes a simple solution: preserving the Rule Against Perpetuities.
In Fiduciary ESG Investing: Navigating the New Frontier, 57 Real Prop., Tr. & Est. J. 3 (2022), Jennifer Goode and Andrea Kushner suggest that a fiduciary of a trust, private retirement plan, or charitable nonprofit should not avoid environmentally, socially, and governance-related investments but should instead approach ESG strategies with the same thoughtful analysis as any other investment approach. If the ESG strategy does not sacrifice the beneficiaries’ overall return and is part of a well-diversified portfolio with reasonable risk and return attributes, it will likely fulfill the fiduciary’s duties of loyalty and care.
In Why Foreign Asset Protection Trusts are Ultimately More Protective Than Domestic Asset Protection Trusts, 50 Est. Plan. 20 (2023), Eric Kaplan explains the many benefits associated with asset protection trusts and suggests creating a foreign APT for enhanced protection for four main reasons: “(1) the increased ability of the settlor to retain benefit and control; (2) the foreign APT is less likely to be an automatic target in litigation against the settlor; (3) the foreign element will likely impact a creditor’s decision on pursuing assets; and (4) the foreign element is ultimately more protective.”
In Going Beyond the Grave: A Defense of a Right to a Funeral, 15 Wash. Univ. Juris. Rev. 335, Michael Morris highlights the existence of Hart Island, the largest mass grave in the United States, where over a million marginalized individuals have been buried without individual grave markers or funerals. He argues for the recognition of a right to a funeral, emphasizing the importance of community and dignity in the burial process, and discusses legislative proposals to address this issue.
In Guardianships vs. Special Needs Trusts and Other Protective Arrangements: Ensuring Judicial Accountability and Beneficiary Autonomy, 72 Syracuse L. Rev. 423 (2022), A. Johns, Robert Dinerstein, and Patricia Dudek acknowledge the complexity of decision-making for individuals with disabilities or older adults when it involves formal arrangements like guardianships and trusts. The authors aim to simplify these options and to provide the necessary support for individuals to thrive while maintaining as much autonomy as possible.
In Federal Transfer Taxes and the Protean Irrevocable Trust, 85 Alb. L. Rev. 1 (2022), Kent Schenkel questions the expanding practice of allowing donors to modify even an irrevocable trust based on post-transfer events. Schenkel argues that this ability exacerbates wealth inequality and undermines democratic institutions. Instead, he suggests imposing transfer tax penalties on certain trust modifications to address these issues.
In Consideration of Mediation and Arbitration Provisions in Wills and Trusts, 92 Kan. B.J. 26 (2023), Tim O’Sullivan and Wyatt Hoch explore the use of alternative dispute resolution, such as mediation and arbitration, in estate planning and trust disputes in the United States. They examine the historical context of ADR, its increasing popularity, and the enforceability of mandatory ADR provisions in wills and trusts.
In Incremental Change in Wills Adjudication, 49 Fla. St. Univ. L. Rev. 883 (2022), Mark Glover explores how many states have incorporated incremental changes instead of the UPC’s comprehensive reform in the context of wills adjudication. With variation in what states choose to modify, Glover aims to analyze the different state approaches to help guide policymakers in implementing their desired changes.
In The Tax Impact and Planning Opportunities of the NIL Rules on Student-Athletes, 50 Est. Plan. 20 (2023), W. Dowis, R. Harris, and Gloria Stuart discuss the new name, image, and likeness law changes for student-athletes and the importance of managing this unique opportunity to help a student-athlete achieve financial success.
In It’s Not OK, Boomer: Preventing Financial Power-of-Attorney Abuse of Elders, 82 Md. L. Rev. 181 (2023), Genevieve Mann argues that the current approach of leaving a power of attorney unregulated leaves elders at extreme risk of abuse. Instead, she proposes a comprehensive solution that includes agent supervision and a centralized power-of-attorney registry to detect and prevent abuse without excessively burdening agents or elders.
In Perpetuities in an Unequal Age, 177 Nw. Univ. L. Rev. 1477 (2023), Jack Whiteley argues that complexity and the lack of understanding among lawyers and the public was a central reason behind the elimination of the Rule Against Perpetuities. This complexity allowed financial industries successfully to advocate for removing the Rule, despite its intended purpose of preventing dynastic wealth and increasing the economic inequality in our country. He highlights the Rule as a lesson of how the complexity of inheritance law can have negative consequences if not well understood by the public.
In The Slayer Rule: An Empirical Examination, 48 ACTEC L.J. 201 (2023), Fredrick Vars provides the first empirical study to analyze the slayer rule’s critical assumptions. For example, the study suggests that the slayer rule should not apply to assisted suicide, self-defense, or killings due to mental illness. Survey respondents, however, want to see the slayer rule include circumstances like elder abuse and neglect. Additionally, the study supports converting the slayer rule from a mandatory law to a default rule that individuals can opt out of in their wills. These findings highlight the need for reform to align public opinion with current legislation.
In Death by Deduction: Section 2508 and the Decline of State Death Taxes, 48 ACTEC L.J. 103 (2023), Jeffrey Cooper explores why the § 2058 deduction has had minimal influence on shaping estate tax policies. He examines the factors contributing to this limited impact, analyzes how states responded to the implementation of § 2058, and highlights the potential benefits of modifying certain aspects of estate tax laws to maximize benefits available under § 2058.
In his Note, It Sure Can Get Cold in Des Moines: Why the Iowa Legislature has Remained Frozen on Transfer on Death Deeds for Real Property, 108 Iowa L. Rev. 901 (2023), Mark Hart explains how the Iowa legislature has repeatedly failed to pass the Real Property Transfer on Death Act, preventing Iowans from transferring real property outside of probate upon death. Hart compares how neighboring states implemented similar legislation and advocates for Iowa to do the same.
In Trust Alteration and the Dead Hand Paradox, 48 ACTEC L.J. 147 (2023), Jeffrey Pennell and Reid Weisbord explore how the repeal of the Rule Against Perpetuities and the expanding ability for fiduciaries to modify trusts, has led to an increase in the concentration of private wealth and the rise of perpetual trusts as an effective tool for dynastic estate planning. This intergenerational wealth transmission plays a role in wealth inequality, and trust alteration rules will only amplify this effect.
In Wills for Heroes Provides First Responders with Estate Planning Documents, 25 Lawyers J. 1 (2023), Joanne Parise explains how volunteer attorneys, witnesses, and notaries provided their services for a Wills for Heroes event at the Penn Hills No. 7 Volunteer Fire Department on March 25, 2023. Within six hours, they provided nearly 30 first responders and their families with fully executed estate planning documents.
Arizona permits remote witnessing of electronic wills provided the witness is physically in the United States and requires electronic wills to be readable as text. 2023 Ariz. Legis. Serv. Ch. 32.
Arkansas adopts the Uniform Community Property Disposition at Death Act. 2023 Ark. Laws Act 582.
Arkansas allows for the decanting of trusts. 2023 Ark. Laws Act 293.
Arkansas authorizes domestic asset protection trusts. 2023 Ark. Laws Act 291.
Arkansas increased Rule Against Perpetuities time period from 90 to 365 years after the interest’s creation. 2023 Ark. Laws Act 719.
Colorado adopts the Uniform Community Property Disposition at Death Act. 2023 Colo. Legis. Serv. Ch. 30.
Idaho enacts Uniform Electronic Wills Act. 2023 Idaho Laws Ch. 104.
Idado modernizes law relating to advance directives. 2023 Idaho Laws Ch. 307.
Indiana authorizes pre-mortem probate. 2023 Ind. Legis. Serv. P.L. 38-2023.
Kansas adopts the Uniform Trust Decanting Act. 2023 Kan. Laws Ch. 48.
Kansas passes the Donor Intent Protection Act to provide remedies if a charitable donee does not follow the donor’s restrictions on the use of the donation. 2023 Kan. Laws Ch. 45.
Maryland allows non-spouses to register as a domestic partnership and obtain specified benefits of marriage. 2023 Md. Laws Ch. 647.
Maryland enacts the Maryland Trust Decanting Act. 2023 Md. Laws Ch. 715.
Maryland establishes the Affordable Life, Wills, and Estate Planning for Seniors Grant Program within the Maryland Legal Services Corporation to provide grants to fund estate planning services for eligible seniors. 2023 Md. Laws Ch. 776.
Minnesota passes the Uniform Electronic Wills Act. 2023 Minn. Sess. Law Serv. Ch. 21.
Nevada prohibits discrimination against a living organ donor in a policy or contract of life insurance, life annuity, or health insurance. 2023 Nev. Laws Ch. 6.
North Dakota authorizes remote notarization. 2023 N.D. Laws H.B. 1083.
Tennessee passes The Small Estate Probate Act to provide a simple procedure to probate estates valued at $50,000 or less. 2023 Tenn. Laws Pub. Ch. 297.
Washington adopts the Uniform Partition of Heirs Property Act. 2023 Wash. Legis. Serv. Ch. 6.
Wyoming establishes a procedure whereby individuals can register their digital assets with the secretary of state. 2023 Wyo. Laws Ch. 174.
Wyoming permits will witnesses to be remote. 2023 Wyo. Laws Ch. 170.
