Keeping Current Probate
Keeping Current-Probate offers a look at selected recent cases, rulings and regulations, literature and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
- CHARITABLE GIFTS: Liberal interpretation prevents lapse. A decedent' s will made a gift to a university dental school. Eight months before the decedent' s death, the university's board of trustees voted to close the dental school as of December 31, 2001. The residuary beneficiary under the will claimed that the gift to the dental school lapsed. In In re Estate of Lind, 734 N.E.2d 47 (Ill. App. Ct. 2000), the court held that the gift vested at the decedent' s death. Because the dental school had no legal status independent of the university, the gift was interpreted as being to the university for the benefit of the dental school.
- CHOICE OF LAW: Trustees deemed personal representatives for long-arm jurisdiction. As part of a Massachusetts divorce settlement, a man agreed to make a will under which he left no less than two-thirds of his estate to the children of the marriage. He died a resident of New Hampshire with most of his assets in a revocable trust under which those children would receive only about one-sixth of the property. In Nile v. Nile, 734 N.E.2d 1153 (Mass. 2000), the court held that the trustees were personal representatives for purposes of the long-arm statute and that the trust property was subject to the agreement.
- CONTRACT TO DISCLAIM: Agreement to renounce superseded by later will. A father and son made an agreement by which the father sold his interest in their partnership to his son and the son agreed to renounce any share in his father's estate. The father subsequently executed two wills that benefited the son. When the later of the wills was offered for probate after the father's death, his son objected. In Estate of Prime, 710 N.Y.S.2d 810 (Sur. Ct. 2000), the court held that the father unilaterally waived the requirement that his son renounce when the father executed a new will after making the agreement. Thus the son had standing to challenge the will.
- DISCRETIONARY TRUST: Property immune to creditor attack. A former spouse brought a creditor's bill for past due child support against the debtor's interest in a trust created by the debtor's father. The trust authorized the trustees to make distributions to the debtor and his issue as the trustees determined to be in the best interest of the beneficiaries. The children of the marriage were emancipated. In Doksansky v. Norwest Bank Nebraska, N.A., 615 N.W.2d 104 (Neb. 2000), the court held that because the debtor could not require the trustees to make distributions to satisfy his debt, he did not have an interest in property that could be reached by the creditor's bill.
- DIVORCE: Automatic revocation on divorce must be overcome by writing. Washington law automatically revokes beneficiary designations of a former spouse on dissolution of the marriage by creating the fiction that the former spouse predeceased the decedent. In Mearns v. Scharbach, 5 P.3d 29 (Wash. Ct. App. 2000), the court held that the fiction can be overcome only by a written redesignation of the ex-spouse as a beneficiary.
- GROSS ESTATE: Full value of home used by same-sex couple included in the estate of the partner who had title to the home. The surviving partner was unable to prove contribution to the purchase and did not demonstrate to the court' s satisfaction that the survivor had a resulting trust in one-half of the home. Scott v. Commissioner, No. 99-3216, 2000 WL 1277343 (7th Cir. 2000).
- IN TERROREM CLAUSES: Probable cause defined. In Estate of Shumway, No. CV-99-0391-PR, 2000 WL 1310578 (Ariz. 2000), the court interpreted Arizona's version of UPC § 2-517 which prevents enforcement of an in terrorem clause if there is probable cause to believe the will is invalid. The court concluded that probable cause requires evidence that would lead a reasonable person, properly informed and advised, to conclude that there is a substantial likelihood a will contest would succeed.
- INSANE DELUSION: Alaska announces standard. The court in Estate of Kottke, 6 P.3d 243 (Alaska 2000), delineated the test for an insane delusion. The belief must have absolutely no foundation in fact and must be totally devoid of reason. Either the will must be the product of the delusion (without which the will would have been materially different) or the delusion must materially affect the will by rendering the testator incapable of understanding the extent of his or her property, the natural objects of his or her bounty or the nature of the testamentary act.
- JOINT TENANCY: Intent alone is not sufficient to terminate. A decedent supplied all the funds for a certificate of deposit that was issued in joint tenancy with a son. The decedent wanted to terminate the joint tenancy but could not because the son would not surrender possession of the certificate. The decedent filed a petition to terminate the tenancy but died while the case was pending. The court held that the joint tenancy remained intact because intent alone is not enough to cause a termination. Burkholder v. Burkholder, No. 22942, 2000 WL 987832 (Mo. Ct. App. 2000).
- MULTIPLE ORIGINALS: English and Hebrew versions treated as one document. The testator, a domiciliary of New York, executed two wills while in Israel. One will was in Hebrew, the other in English. The wills mirrored each other. The Hebrew will was admitted to probate in Israel. The Surrogate held that the wills should be treated like duplicate originals and that both versions should be admitted to original probate in New York. Estate of Rosenak, 710 N.Y.S.2d 813 (Sur. Ct. 2000).
- POWER OF ATTORNEY: Gifts by agent permitted even in absence of express authorization. In Estate of Pruitt v. Commissioner, T.C.M. 2000-287, the court held that the decedent's gross estate did not include the value of gifts made by the decedent's agent under a durable power of attorney, although the power did not include express language authorizing the gifts. Applying local law, the court determined that the decedent intended to include the power to make irrevocable gifts.
- PROFESSIONAL RESPONSIBILITY: No duty to beneficiaries of unexecuted will. In March a testator retained a lawyer to prepare a new will. The draft was not prepared until May, when the testator was too ill to execute it. Beneficiaries under the draft sued the lawyer for negligently failing to prepare the document in a timely manner. In Babcock v. Malone, 760 So. 2d 1056 (Fla. Dist. Ct. App. 2000), the court affirmed the lower court's dismissal of the complaint.
- SLAYERS: Preponderance of the evidence sufficient to support imposition of constructive trust. Under state law, the usual standard for the imposition of a constructive trust is clear and convincing evidence. In Hopwood v. Pickett, No. 97-059, 2000 WL 1190793 (N.H. 2000), the court held that a constructive trust may be imposed on a slayer based on a preponderance of the evidence because there is no challenge to record title or other settled property arrangement.
- STANDARD OF CARE: Corporate fiduciary's failure to diversify led to surcharge. In Matter of Saxton, 712 N.Y.S. 2d 225 (App. Div. 2000), the court determined that a bank trustee's failure to diversify despite repeated requests by the beneficiaries was a breach of trust. The court also indicated that the capital gains tax, which would have been paid had the investment been sold at the proper time, must be considered in the damage computation.
- STANDARD OF CARE: Non-professional trustees held to ordinary prudence. Trustees invested the entire principal of a trust in municipal bonds. When the trust terminated, some of the remainder beneficiaries sued, claiming that the trustees had violated their fiduciary duty by failing to diversify. The court in Law v. Law, 753 A.2d 443 (Del. 2000), held that non-professional trustees are held to ordinary prudence and, given the intent of the settlor, the trustees' investment strategy was proper.
- WILLS: Notary may be attesting witness. The testator's will was signed by one witness who then signed the self-proving affidavit along with a notary. In Estate of Friedman, 6 P.3d 473 (Nev. 2000), the court held that the notary could qualify as an attesting witness if the notary signed in the presence of the testator.
RULINGS and REGULATIONS
- CRT FORMS: IRS intends to revise sample forms for charitable remainder annuity trusts and charitable remainder unitrusts. The new forms will reflect changes to the applicable law. Notice 2000-37.
- CRT POWER OF TRUSTEE: Grantor may retain lifetime and testamentary power to change charitable beneficiary of a charitable remainder trust and to distribute to charity during life. PLR 200034019.
- CRT PROPERTY: Grantor may transfer retirement plan stock to charitable remainder trust. PLR 200038050.
- CRT TRUSTEES: Donors may be sole trustees of charitable remainder unitrust if terms of the trust require objectively ascertainable market value of assets. PLR 200029031.
- ESTATE TAX DEDUCTION: Payments to a charity in settlement of a dispute about the interpretation of a codicil and pour-over trust allowed as an estate tax deduction. PLR 200032010.
- GRATs & GRUTs: Final regulations prohibit grantor retained annuity trusts and grantor retained unitrusts from using their own notes to make required payments to the grantors. Treas. Reg. 25.2702-3, as amended by T.D. 8899.
- Agriculture. For an overview of tax and estate planning developments, read Roger A. McEowen's Recent Developments in Estate Planning Impacting Farmers and Ranchers, 5 Drake J. Agric. L. 57 (2000).
- Disabled children. Ronald T. Staebell explores the unique planning concerns of parents of developmentally disabled children in Securing the Future of a Child With a Disability, Tr. & Est. 39 (Aug. 2000).
- ERISA. For an in-depth discussion of retirement plans, see Regina T. Jefferson's Rethinking the Risk of Defined Contribution Plans, 4 Fla. Tax Rev. 609 (2000).
- Forced shares. Alan Newman explores Incorporating The Partnership Theory of Marriage Into Elective-Share Law: The Approximation System of the Uniform Probate Code and the Deferred-Community-Property Alternative, 49 Emory L.J. 487 (2000).
- Life insurance. Jeffrey W. Hatchman looks into the future in 21st Century Estate Planning for Split-Dollar Life Insurance, 92 J. Tax'n 30 (Jul. 2000).
- Minors. Jay A. Soled et al. discuss the pitfalls of the Uniform Transfers to Minors Act and offer ways for Curtailing a Child's Access to Custodial Accounts to Avoid a 21-Year-Old Millionaire in 92 J. Tax'n 106 (Aug. 2000).
- Nonmarital children. M.C. Mirow examines a favorable tax loophole for transfers to non-marital children in Bastardy and the Statute Of Wills: Interpreting a Sixteenth-Century Statute With Cases and Readings, 69 Miss. L.J. 345 (1999).
- Nonmarital partners. Marissa J. Holob argues for the extension of intestacy laws to meet the growing population of domestic partners in Respecting Commitment: A Proposal to Prevent Legal Barriers From Obstructing the Effectuation of Intestate Goals, 85 Cornell L. Rev. 1492 (2000). Ted R. Ridlehuber suggests a variety of tools for Comprehensive Wealth Management Planning for Unmarried Couples, Tr. & Est. 28 (Aug. 2000).
- Powers of appointment. Peter B. Tiernan offers flexibility to estate planners in The Tax Consequences of Including Nongeneral Powers of Appointment in Trust Instruments, 92 J. Tax' n 35 (Jul. 2000).
- Professional responsibility: Michael H. Wald urges estate planners to practice competently in Of Malpractice, Ethics, and the Simple Will, 63 Tex. B.J. 534 (2000).
- Trustees. Shelley Thompson suggests that learning beyond your specialty will help grow your trust administration and investment management business in The Case for Multi-Disciplinary Training, Tr. & Est.41 (Aug. 2000).
- California expands methods of establishing contractual wills and revises rules regarding in terrorem provisions. 2000 Cal. Legis. Serv. ch. 17.
- Delaware fixes the Delaware Tax Trap relating to powers of appointment and the Rule Against Perpetuities. 2000 Del. Laws ch. 397.
- Hawaii enacts Uniform Disclaimer of Property Interests Act. 2000 Haw. Sess. Laws Act 43.
- Maryland revises small estate administration procedures. 2000 Md. Laws ch. 118.
- Michigan lists priority order for payment of claims. 2000 Mich. Legis. Serv. P.A. 177 (West).
- New Jersey enacts Revised Durable Power of Attorney Act. 2000 N.J. Sess. Law Serv. ch. 109.
- North Carolina revamps computation of the surviving spouse's elective share. 2000 N.C. Sess. Laws 178.
- Ohio updates statutes relating to ademption, rights of a surviving spouse and multiple party accounts as well as enacting tax curative provisions. 2000 Ohio Laws File 161.
- Rhode Island amends limited guardianship and guardianship of adults provisions. 2000 R.I. Laws ch. 00-427.
Keeping Current-Probate Editor: Gerry W. Beyer, St. Mary's University School of Law, One Camino Santa Maria, San Antonio, TX 78228-8603, email@example.com. Contributors include: Dave L. Cornfeld, William P. LaPiana, Theresa A. Sutton and Theresa York.