Keeping Current—Probate

Keeping Current—Probate offers a look at selected recent cases, tax rulings and regulations, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.

Cases

Advance Directives

Standard for revocation is clear and convincing proof. The Oklahoma Supreme Court in In Re Guardianship of L.A.C , No. 120500, 2024 WL 442442 (Okla. Feb. 6, 2024), held that under the express language of the statute governing revocation of advance health care directives, an incompetent or incapacitated person retains the right to revoke or modify his or her advance directive and that given the policy of the statute to allow persons to control their own health care, the standard of proof required is clear and convincing evidence. The Chief Justice dissented on the grounds that the policy issues require the standard to be only a preponderance of the evidence.

Conditional Wills

Language referring to survival of surgery creates conditional will. In Estate of Rick, NO. 2023-CA-0391, 2024 WL 412253 (La. Ct. App. Feb. 5, 2024), the Louisiana intermediate appellate court held that a holographic will beginning “If I don’t make it through this open hea[r]t surgery . . . .” creates a conditional will (a “suspensive condition” in Louisiana terms) and is not entitled to probate because the testator survived the surgery and died 18 months later.

Contracts

Continued cohabitation is sufficient consideration for enforcement of contracts to make gifts at death. The decedent and the decedent’s unmarried partner (the couple was engaged for more than 10 years before decedent’s death but never married) executed a series of agreements in which the decedent promised that the partner would receive designated property at the decedent’s death. The decedent died intestate, and the surviving partner brought an action to enforce the agreements. In Tremblay v. Bald, No. 2023-0022, 2024 WL 332101 (N.H. Jan. 30, 2024), the Supreme Court of New Hampshire held that continued cohabitation was sufficient consideration to create binding contracts.

Elective Share

Probate property poured over to existing trust is subject to spouse’s elective share rights. The decedent’s will poured over the probate estate to the decedent’s unfunded revocable trust. The will made no provision for the decedent’s surviving spouse, but the surviving spouse is entitled to more than the elective share entitlement as a beneficiary of the trust. The surviving spouse asserted the elective share right, which the probate court granted. On appeal by the estate, the Supreme Court of Wyoming affirmed in Matter of Estate of Tokowitz, 541 P.3d 446 (Wyo. 2024). The court held that the surviving spouse’s interest as a beneficiary of the trust has no relevance to the entitlement to the elective share and that the property passing to the trust is disposed of by will and thus subject to the elective share right.

Negative Wills

Limited gift in will prevents taking by intestacy. The decedent devised $5 to the decedent’s daughter, stating it was the decedent’s desire that “this is all she is to receive from me.” The will also made a specific devise of all tangible personal property to decedent’s spouse but lacked a residuary clause. In In re Estate of Bebout, No. 584 MDA 2023, 2024 WL 47939 (Pa. Supr. Ct. Jan. 4, 2024), the court held that under 20 Pa. Cons. Stat. § 2101(b), a decedent may make a negative will and that the language of the decedent’s will shows that the decedent intended the daughter to receive nothing more than the devise of $5, thereby preventing the daughter from sharing in the partially intestate estate.

Trust Amendment

Substantial compliance does not excuse failure to deliver amendment to trustee. Florida law allows an amendment or revocation of a revocable trust by substantial compliance with the method specified in the trust terms. In Grassfield v. Grassfield, 381 So. 3d 628 (Fla. Dist. Ct. App. 2023), the Florida intermediate appellate court held that where the trust terms require the delivery to the trustee of an amendment executed and acknowledged by the settlor, substantial compliance is not accomplished where the amendment is not delivered to the person who is co-trustee with the settlor. Unlike the Uniform Trust Code, the Florida statute does not allow amendment by any method showing the settlor’s intent where the specified method is not made “exclusive.”

Trust Contests

Time bar applies to actions not directly contesting trust amendments. California law bars actions by beneficiaries to contest trusts brought more than 120 days after the beneficiaries receive the statutory notice required on the happening of certain events such as a revocable trust’s becoming irrevocable. The California intermediate appellate court in Hamilton v. Green, 316 Cal. Rptr. 3d 632 (Cal. Ct. App. 2023), held that the time-bar applies to actions for tortious interference, conversion, breach of fiduciary duty, and accounting where the plaintiffs would have no interest in the trust unless a trust amendment were invalidated and where they received proper notice.

Trust Jurisdiction

No personal jurisdiction over out-of-state trustee where administration is not in forum state. In Luongo v. Luongo, 306 A.3d 610 (Me. 2023), the Maine Supreme Judicial Court affirmed the dismissal of claims against a non-resident co-trustee for lack of personal jurisdiction. Maine’s statute governing personal jurisdiction over a trustee, 18-B Me. Rev. Stat. § 202(1), (2) (identical to U.T.C. § 202(a), (b)), provides that a trustee is subject to personal jurisdiction if the trustee accepts the trusteeship of a trust having its principal place of administration in the state or moves the principal place of administration to the state. The trust in question was governed by Massachusetts law and the principal place of administration has always been there. The long-time residence in Maine of the settlor and the other co-trustee is irrelevant.

Tax Cases, Rulings, and Regulations

Sham Trusts

Couple incarcerated for criminal tax crimes does not escape civil fraud penalties or deficiencies in income tax. The taxpayers created a complex system of purported trusts and transferred all their business and personal property to the multiple trusts. The husband held himself out as an expert in trusts and the taxation of trusts and marketed similar arrangements to others. The couple filed joint tax returns for the years at issue, but of the many years the numerous trusts existed and on one occasion, only one trust filed a tax return. The federal district court convicted the couple of filing false tax returns and aiding and abetting the filing of false tax returns. Following the criminal investigation, the IRS issued a notice of deficiency in the couple’s federal income tax and civil fraud penalties. The taxpayers challenged the deficiency in Tax Court. In Aldridge v. Commissioner, T.C. Memo 2024-24 (2024), the court sustained the determination of deficiencies and fraud penalties. The court held the income from the trusts attributable to the petitioners. The court noted that the trusts lacked economic substance and that the taxpayers’ relationship with their property did not differ in any material way before and after they created the trusts. With respect to the fraud penalties, the court noted the taxpayers were college educated, aware of their obligations under the tax law, and possessed the financial knowledge and business background to understand and comply with their obligations. Instead of complying with their tax obligations, they established a bogus trust arrangement to hide their assets, did not report the income they received from the trusts, and even claimed the earned income credit intended to assist low-income taxpayers.

Trusts

A delinquent taxpayer does not have to possess title to a piece of property for a nominee lien to attach. The taxpayer’s parents transferred a shopping mall to a trust for one dollar during the taxpayer’s divorce proceedings and after the IRS filed several multi-million-dollar federal tax liens against the taxpayer. The Third Circuit in United States v. Hovnanian, 133 A.F.T.R.2d 2024-673 (3d Cir. 2024), upheld the federal district court’s order of sale of the mall to satisfy a third-party nominee lien. A review of the state law regarding third-party nominees showed that the factors weighed heavily against the taxpayer. First, the trust paid nominal consideration. Second, the timing of the transfer suggests the parties meant to circumvent tax liabilities and provide funds to the taxpayer. Third, the taxpayer had a close relationship with the trust, as he was co-trustee from the time the property was transferred to the trust and his children were named beneficiaries. Finally, although the taxpayer never held title to the property, he exercised substantial control over it after it was transferred to the trust. The tenants considered the taxpayer their landlord. He made decisions about the property’s expenses, usually without input from his co-trustee, he used his personal account to pay the property’s expenses, and he comingled profits with his personal assets and used them to pay his personal expenses.

Literature

Charitable Gifts

In Strings Are Attached: Shining a Spotlight on the Hidden Subsidy for Perpetual Donor Limits on Gifts, 56 Loy. L. A. L. Rev. 1169 (2023), Roger Colinvaux explains how donor limits can harm charitable gifts. He reveals that 66 percent of the $525 billion net assets of the top 100 charities in the United States are subject to these limits, leaving charities with only 34 percent control over their assets. This lack of control leads to various harms, including imposing compliance costs and undermining public interest, charitable autonomy, and operational funding. Colinvaux suggests tax reforms that enable donors to retain limits on their gifts yet allieviate the burden on charities and the community caused by dead-hand control.

Digital Property

In Estate Planning for Cyber Property—Electronic Communications, Cryptocurrency, Non-Fungible Tokens, and the Metaverse, 16 Est. Plan. & Cmty. Prop. L. J. 1 (2023), Gerry W. Beyer and Kerri Nipp explore the growing significance of digital assets as a category of personal property within estate planning. The authors aim to educate estate planning professionals about the importance of planning for administering digital assets so that fiduciaries can locate, access, and properly dispose of them. Further, the authors explain how the Revised Uniform Fiduciary Access to Digital Assets Act operates and provide guidance on planning techniques, including sample forms for incorporation into estate planning documents.

Guardianship

In #FreeBritney: The Importance of Public Access to the Guardianship System, 30 Cardozo Arts & Ent. L. J. 245 (2022), Cecily D’Amore highlights how the #FreeBritney movement has spotlighted much-needed attention on the guardianship practice. Britney Spears’s case has raised awareness about exploitation under conservatorships, but many individuals who lack fame face similar risks. The lack of public information about guardianship has hindered progress in reform efforts. D’Amore suggests that each state should publicly disclose its guardianship cases and establish guardianship databases. States can promote accountability through these measures and have the necessary data for meaningful guardianship reform.

Heirs Property

In Beyond Institutions: Analyzing Heirs Property Legal Issues and Remedies through a Black History Lens, 22 U. Md. L.J. Race, Religion, Gender & Class 148 (2022), Heidi Kurniawan delves into the loss of Black-owned land in the South. She frames her article around a powerful exposé in 2019 of Melvin Davis and Licurtis Reels of North Carolina, who faced imprisonment for resisting eviction from land inherited without a will. This heartbreaking story highlights how heirs property, with deep roots in Black history, disproportionately affects Black and low-income Americans, contributing to the loss of millions of acres of land over decades. Considering the historical challenges these marginalized landowners face, Kurniawan emphasizes the need for thoughtful legislative reform.

Heirs Property

In Property Rich and Money Poor: An Analysis of the Uniform Partition of Heirs Property Act and Discussion of Its Benefits Through a Nationwide Implementation, 24 Loy. J. Pub. Int. L. 63 (2023), Elise Gibbens examines the Uniform Partition of Heirs Property Act (UPHPA), to help families who inherit land over generations but do not have clear ownership titles. The lack of a clear title makes the landowners vulnerable to losing their land because of legal disputes. Though the UPHPA has proven benefits in states where it has been adopted, Gibbens advocates for nationwide adoption as the optimal solution.

Heirs Property

In The Anticommons Intersection of Heirs Property and Gentrification, 76 Vand. L. Rev. 1561 (2023), Emma White explores the pressures on Black landowners that have often resulted in fragmented ownership through heirs property. This division of ownership has often left minority neighborhoods vulnerable to gentrification and eventual loss of land. White points out problems in the Uniform Partition of Heirs’ Property Act (UPHPA) and suggests reforms to address the root cause of property fragmentation. She proposes a new uniform act that combines principles of the UPHPA and solutions to the tragedy of the anticommons to prevent the involuntary displacement of these communities.

Heirs Property

In The Heirs Property Dilemma: How Stronger Federal Policies Can Help Narrow the Racial Wealth Gap, 27 N.C. Banking Inst. 320 (2023), Kendall Bargeman delves into how the lack of a clear title, particularly in Black communities, inhibits access to financial assistance after environmental disasters like flooding. FEMA has broadened documentation requirements, but challenges persist, leaving heirs property owners with limited access to aid. Bargeman argues that FEMA’s current approach is insufficient and proposes alternative solutions to resolve heirs property challenges before disaster strikes.

Iowa—Insane Slayer

In Avoid a Fight over Blood Money: The Iowa Legislature Should Take Action to Amend Its Slayer Statute to Ensure That Even the Insane Slayer Does Not Inherit, 109 Iowa L. Rev. 439 (2023), Natalie Risse explores the legal issues that arise when slayer statutes lack provisions for cases involving legally insane perpetrators. In a recent federal court case in Iowa, the court allowed an insane perpetrator to inherit under the slayer statute. Risse advocates that amending the slayer statute is crucial to upholding its rationale, honoring the victims, and respecting surviving families, friends, and other beneficiaries of the victim.

Prisoner Fees

In Get Out of Jail Free? A Survey of Pay-to-Stay-Statutes Through a Constitutional Lens, 16 Est. Plan. & Cmty. Prop. L. J. 219 (2024), Sarah McClure investigates the long-standing practice of states imposing pay-to-stay fees to cover prison expenses, highlighting how these fees have often left released prisoners with significant debt. Further, she explores how proper estate planning is rarely a solution to protect inmates from these fees, often leaving families in a cycle of poverty. Ultimately, McClure argues that the pay-to-stay fees violate the excessive fines clause of the Eighth Amendment and that a total repeal of these fees could facilitate smoother prisoner reentry into society and reduce recidivism.

South Carolina—Irrevocable Trusts

In What Do You Mean “Irrevocable?,” 35 Mar S.C. L. 40 (2024), Meagan MacBean explores “irrevocable” trusts, traditionally understood as trusts that cannot be altered. The South Carolina Trust Code, however, allows for modifying trusts to accommodate legal changes or family dynamics, providing flexibility for settlors, beneficiaries, and trustees. This evolution is generally beneficial, but MacBean recommends that attorneys inform their clients about the potential of modification and whether they would like to draft against future modification preemptively.

Texas—Deportation Trust

In The Texas Deportation Trust: Protecting the Equity of Immigrants Working Towards the American Dream, 16 Est. Plan. & Cmty. Prop. L. J. 265 (2024), Orlando Oropez explores the historical context of immigration, the deportation process, and the impact of deportation on immigrants’ property rights. He contends that noncitizens who have established themselves in the United States and accrued assets deserve the opportunity to safeguard their wealth while pursuing the process of becoming a naturalized citizen. Oropez advocates for implementing a deportation trust in Texas with potential recommendations to facilitate its effective use.

Texas—Forced Ownership

In Forced Ownership: Enough to Make a Texas “Laughing Heir” Cry, 16 Est. Plan. & Cmty. Prop. L. J. 165 (2023), Bradford Yock explores the effect of forced ownership and the current interpretation of the “passage of title upon intestacy.” Current laws disclaiming inheritance are unsatisfactory, so Yock highlights the need for lawmakers to change the rules and clarify that heirs shouldn’t be forced into ownership without first having the right to renounce.

Texas—Foster Care

Homeless, Hopeless, and Helpless: How Attorneys Ad Litem Can Help Foster Youth Aging Out of the System, 16 Est. Plan. & Cmty. Prop. L. J. 303 (2024), Maddie Royal advocates for an amendment to the role of attorney ad litem and proposes assigning additional responsibilities to ensure foster youth receive proper support and advocacy. The aim is to improve foster youth transition out of the system and decrease negative outcomes such as homelessness and incarceration. Through a comprehensive examination of the foster care system, personal stories, and proposed solutions, Royal explains how attorney ad litems could fill the critical need for foster youth aging out of the system.

Texas—Trustees

In Trustees’ Ability to Retain and Compensate Attorneys in Texas, 16 Est. Plan. & Cmty. Prop. L. J. 97 (2024), David Johnson offers practical advice for trustees navigating the process of retaining and compensating attorneys for trust administration, helping them understand their rights and available options.

Unclaimed Digital Assets

In Unclaimed (Unowned) Digital Assets: Addressing the Legal Implications of Absent or Unknown Ownership, 16 Elon L. Rev. 221 (2024), Vladimir Troitsky explains a growing issue of unclaimed digital assets with estimated millions of dollars’ worth of cryptocurrencies sitting in dormant crypto wallets. These unclaimed digital assets present a variety of complex issues in determining ownership and intellectual property rights. Troitsky examines the applicability of existing legal concepts for unowned assets and specific problems when applying these conventional legal concepts to digital assets. Finally, he offers potential solutions that address the challenges of digital assets without an owner.

Undue Influence

In The New Undue Influence, 2024 Utah L. Rev. 231 (2024), David Horton and Reid Weisbord explore a rising trend of “probate attorneys general” combating elder abuse by arguing a “new undue influence.” The authors thoroughly assess this phenomenon by analyzing nearly 7,000 probate and trust cases from California, leading the way in this emerging movement. Through their analysis, they saw a higher success rate for challengers but also a heightened risk of duplicative litigation and procedural inconsistencies. Therefore, Weisbord and Horton ultimately recommend reforms that could help policymakers harness the benefits of the new undue influence while minimizing the costs.

Legislation

Indiana requires insurance on property subject to a transfer-on-death-deed to remain effective after the named insured dies for (1) a maximum period of 60 days following the transfer, (2) a minimum period of 30 days if the insurance policy had an expiration date less than 60 days following the death of the insured, or (3) until the transferee obtains an insurance policy for the transferred property. 2024 Ind. Legis. Serv. Pl. 2-2024.

Michigan provides for a cost of living adjustment for determining the intestate share of a surviving spouse, the homestead allowance, exempt household property, the family allowance, the amount qualifying for the small estate administration, and other amounts as specified in the legislation. 2024 Mich. Legis. Serv. P.A. 1.

Nebraska enacts the Uniform Community Property Disposition at Death Act. 2024 Nebr. Laws L.B. 83.

New Hampshire adopts the Uniform Real Property Transfer on Death Act. 2024 N.H. Laws Ch. 1.

New Jersey grants partners in a civil union the right to inherit in the same manner as a spouse. Additionally, (1) a surviving spouse will not be entitled to an elective share of a decedent’s estate where either the decedent or the surviving spouse has filed an action for divorce and (2) where one of the parties to a divorce action dies during the pendency of the action, a court will maintain the jurisdiction to render an equitable distribution of the property between spouses. 2023 N.J. Sess. Law Serv. Ch. 238.

South Dakota makes provisions for electronic and remote notarizations. 2024 S.D. Laws SB 211.