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.
- CONSTRUCTION: "Survivors" means surviving issue, not heirs. A testator's will left one-half of his estate to his brother "or to his survivors." The brother predeceased the testator and was survived by children of his first marriage and by his second wife, who later died intestate. Her heirs, children by her first marriage, claimed a portion of the testator's estate, maintaining that "survivors" should be construed as heirs. The court held that the term "survivors" was ambiguous but found no extrinsic evidence to show that the testator desired to favor his sister-in-law over his blood relatives and therefore construed "survivors" to mean "issue." Estate of Bernstein, 713 N.Y.S.2d 454 (Sur. Ct. 2000).
- CONTRACTUAL WILLS: Contract does not bar inter vivos disposition by survivor. A husband and wife executed reciprocal wills and a contract governing the disposition of property at death. After the husband's death, his children sued the widow, claiming she had improperly transferred property received under their father's will to her children. The court in Estate of Cammack, No. M1999-02382-COA-R3-CV, 2000 WL 1679492 (Tenn. Ct. App. 2000), held that the contract governed only disposition on death and did not limit the widow's rights in property acquired under her husband's will.
- CONTRACTUAL WILLS: Suit before the testator's death is premature. The wife's children sued her husband, alleging that his inter vivos transfers of property breached a contractual will between the husband and wife. The court in Meyer v. Shelley, No. 07-99-0470-CV, 2000 WL 1682511 (Tex. App. 2000), held that the suit for breach of contract was premature because the contract can be breached only when the husband dies leaving a will in violation of the contract. In addition, there was no evidence that the contractual will limited the husband's ability to dispose of the property during his lifetime.
- CREDITORS: Promissory note payable on death revoked by later will. A husband and wife made a promissory note payable on their deaths to the husband's sister. After the husband died, the wife made a will revoking all previous wills and codicils. After the wife's death, the sister presented the note as a claim against the wife's estate In Estate of Yorty, 761 A.2d 187 (Pa. Super. Ct. 2000), the court held that the note was a "testamentary device" and could not be construed as a contract to make a will. Accordingly, it was revoked by the wife's will.
- ELECTIVE SHARE: Permission to retain or acquire unproductive property does not preclude forced share statute. A surviving spouse was entitled to receive 3% of the market value of the trust principal in accordance with the state's unproductive property statute even though the trust contained language which authorized the trustee to acquire and retain unproductive property. Sauter v. Bravo, 771 So.2d 1213 (Fla. Dist. Ct. App. 2000).
- FAMILY LIMITED PARTNERSHIPS: Tax Court issues divergent opinions on whether the creation of FLPs triggers gift tax. In Shepherd v. Commissioner, 115 T.C. No. 30 (2000), the court found that the taxpayer made gifts at the time he transferred property to an FLP. In Estate of Strangi v. Commissioner, 115 T.C. No. 35 (2000), and Estate of Knight v. Commissioner, 115 T.C. No. 36 (2000), however, the court held that there was no gift on formation of a FLP.
- FIDUCIARY RESPONSIBILITY: Executor may rely on third party expertise without incurring liability. Local law authorizes an executor to retain professionals to aid in the administration of the estate without liability for their negligence as long as they are selected with reasonable care. An executor hired a bank to assist with administration and entrusted the bank with the preparation of the estate tax return. The bank omitted certain assets and the estate eventually paid a deficiency and interest to federal and state authorities. In Roberts v. Roberts, 536 S.E.2d 714 (Va. 2000), the court held that the executor was not liable for his "blind" adoption of the return. The court indicated that the executor's reliance was contemplated by the statute.
- LAPSE: Gift of residue to named persons to exclusion of others does not override anti-lapse statute. The testator's will gave his residuary estate to his three sisters by name, "to the express exclusion of any other person or persons." One sister predeceased the testator and her issue claimed her share of the residue under the state's anti-lapse statute. The court held that express exclusion language, absent an unequivocal alternate distribution, did not negate the anti-lapse statute. Kubiczky v. Wesbanco Bank, No. 27665, 2000 WL 1673070 (W. Va. 2000).
- POWER OF ATTORNEY: Agent may not revoke trust. A son attempted to revoke his mother's revocable trust using a power of attorney she granted him seven years before creating the trust. In Muller v. Bank of America, N.A., 12 P.3d 899 (Kan. Ct. App. 2000), the court held that he lacked the power to revoke. The trust contained no language either allowing or forbidding an agent to modify the trust. This fact, coupled with his mother's failure to execute a new power of attorney granting him the power to revoke after creating the trust, compelled a finding that he lacked the power to revoke.
- PROFESSIONAL RESPONSIBILITY: Lawyer owes no duty to previous beneficiary. A testator's daughter sued the lawyer who drafted a new will and trust for the mother that disinherited the daughter. The daughter claimed conflict of interest, because the lawyer had previously represented the daughter, and tortious interference with inheritance rights. The court rejected both claims, holding that a lawyer owes no duty to a previous beneficiary, even one who is a client, to oppose a testator in changing a will and that drafting a will in accordance with a testator's instructions is not tortious conduct. Chase v. Bowen, 771 So.2d 1181 (Fla. Dist. Ct. App. 2000).
- TRUSTS: Change of status notice insufficient because of format. The statutorily required notice of a change in trust status under California law must contain a notice of the state's 120 day statute of limitations period for contesting the trust in 10 point boldface type or the "reasonable equivalent." In Harustak v. Wilkins, 100 Cal. Rptr. 2d 718 (Ct. App. 2000), the court held that a notice set forth in 12 point type but not in boldface was not a "reasonable equivalent" because it failed to stand out from the rest of the notice, which was also in 12 point type.
- WILL VALIDITY: Dispensing power not applicable if will not executed. The decedent left several documents, including a "will" consisting of four typewritten pages. The text was followed by "a large segment of blank page" and the signatures and attestation were on a page separate from any text. In Estate of Sky Dancer, 13 P. 3d 1231 (Colo. Ct. App. 2000), the court held that the will was not valid and that it could not be admitted to probate using a statutorily granted dispensing power because the statute did not apply to a will that was "not executed at all."
RULINGS AND REGULATIONS
- CHARITABLE REMAINDER UNITRUST: Division of joint CRUT into two separate CRUTs approved. PLR 200045038.
- ESTATE TAX FILING: IRS issues proposed regulations to provide automatic filing extension for estate tax return. Prop. Reg. § 10.6511-00.
- GENERATION-SKIPPING TRANSFER TAX: Grand-fathered exemption from GST tax not lost when trusts are divided pursuant to court order. PLR 200045028.
- MARITAL DEDUCTION: IRS approves splitting QTIP trust into two QTIP trusts and permitting the assignment of income to be treated as coming from only one of the trusts to minimize gift tax effect of I.R.C. § 2519. PLR 200044034.
- Charitable gifts--CRT vs. private foundation. For a comparison of options, see Roger D. Silk's Charitable Remainder Trusts vs. Selling Assets and Funding a Private Foundation, Tr. & Est. 36 (Oct. 2000).
- Charitable gifts--debt-encumbered land. Terry L. Simmons suggests new approaches in How to Make Charitable Gifts of Debt-Encumbered Real Estate Attractive to Your Clients Without Mentioning the Estate Tax, Tr. & Est. 20 (Oct. 2000).
- Conflicts of interest. James R. McCall argues that the probate court rulings were in error in Endangering Individual Autonomy in Choice of Lawyers and Trustees--Misconceived Conflicts of Interest Claims in the Kamehameha Schools Bishop Estate Litigation, 21 U. Haw. L. Rev. 487 (1999).
- Creditor protection trusts. Karen E. Boxx discusses avenues of attack for creditors of onshore self-settled spendthrift trusts in Gray's Ghost--A Conversation About the Onshore Trust, 85 Iowa L. Rev. 1195 (2000).
- Dynasty trusts. Merwin Grayson III offers A Comparison of Dynasty Trusts in Alaska, Delaware and Ohio from the Perspective of the Ohio Practitioner, 27 N. Ky. L. Rev. 669 (2000).
- Elective share statutes. After exploring Utah's recent revisions, Terry S. Kogan recommends improvements in Piercing the Façade of Utah's "Improved" Elective Share Statute, 1999 Utah L. Rev. 677.
- Family limited partnerships. Larry Brickner offers a new approach to asset protection, management, and consolidation in Family Limited Partnerships and Charities: The Newest Planning Technique?, Tr. & Est. 49 (Oct. 2000).
- Gross estate. Wendy C. Gerzog argues that the 1990 case of Gradow v. United States is still good law in Why Gradow is Still Correct, 89 Tax Notes 551 (2000).
- Home security trust. Kenneth A. Ziskin shares his strategy for better tax results in The Home Security Trust-Better Than a QPRT on Steroids, Tr. & Est. 66 (Oct. 2000).
- IRAs. For a discussion of allocating IRA distributions, read Jeremiah W. Doyle's IRA Distributions to a Trust After the Death of the IRA Owner-Income or Principal?, Tr. & Est. 60 (Sept. 2000).
- Probate avoidance. Nathaniel W. Schwickerath explores probate reform in Public Policy and the Probate Pariah: Confusion in the Law of Will Substitutes, 48 Drake L. Rev. 769 (2000
- Retirement plans. Howard B. Edelstein and F. Weldon Baird discuss strategies for maximizing net worth in Nonqualified Retirement Plans Take on Increased Importance in Estate Planning, Tr. & Est. 49 (Sept. 2000).
- Texas. Gerry W. Beyer and Jerry Frank Jones discuss recent Texas case law and legislation in Probate and Trusts, 53 SMU L. Rev. 1229 (2000).
- Trustees. Judge Robert Mahealani M. Seto and Lynne Marie Kohm explore trustee representation and accountability in Of Princesses, Charities, Trustees, and Fairytales: A Lesson of the Simple Wishes of Princess Bernice Pauahi Bishop, 21 U. Haw. L. Rev. 393 (1999).
- Trusts and international law. George L. Gretton discusses the problems trusts cause for the comparatist in Trusts Without Equity, 49 Int'l & Comp. L.Q. 599 (2000).
- Trusts for disabled children. Gail C. Eichstadt offers guidance to parents of disabled children in Using Trusts to Provide for the Needs of an Adult Child with a Disability: An Introduction to Family Concerns for Lawyers and a Primer on Trusts for Parents, 45 S.D. L. Rev. 622 (2000).
- Valuation. Russell Stanaland discusses Valuation Discounts After Estate of Nowell v. Commissioner: A Clear Formula for Reducing Estate Taxes, 30 Golden Gate U. L. Rev. 679 (2000).
- California expands duty of trustee to keep beneficiaries reasonably informed of the trust and its administration. A trustee who fails to provide the necessary information will be liable for all damages, attorney's fees and costs caused by the failure unless the trustee made a reasonably diligent effort to comply. 2000 Cal. Legis. Serv. 34.
- California provides that certain actions will not constitute a will contest unless expressly identified in a no-contest clause as a violation of the clause. 2000 Cal. Legis. Serv. 17.
- California revises law relating to contractual wills. 2000 Cal. Legis. Serv. 17.
- Hawaii authorizes trustees to divide trusts for administration or tax purposes. 2000 Haw. Sess. Laws 48.
- Hawaii raises value of small estates entitled to special treatment from $60,000 to $100,000. 2000 Haw. Sess. Laws 48.
- Illinois requires Department of Public Health to prepare and publish Spanish language versions of health care disability planning forms such as powers of attorney and advance directives. 2000 Ill. Pub. Acts 91-789.
- Michigan revises priority order for the payment of estate creditors. 2000 Mich. Pub. Acts 177 (West).
- Minnesota modernizes use of separate writing identifying bequests of tangible property. 2000 Minn. Legis. 362.
- Ohio permits deeds of real property to contain transfer on death provisions. 2000 Ohio Laws 161.
- Virgin Islands enacts the Uniform Anatomical Gift Act. 2000 V.I. Sess. Laws 6354.
Keeping Current-Probate Editor: Professor 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.