Educational FYI's
Educational FYI's are written on topics that effect various aspects of estate planning and the laws that govern it. They are published and posted to this site when news worthy events happen that we feel you should be made aware of. The purpose of an Estate Planning Update is to bring important information to the financial advisors in the community. Our hope is that this information better equips you to assist your clients.
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2010 May Be a Good Year to Die
The Economic Growth and Tax Relief Reconciliation Act of 2001 provides that in 2010 the estate tax is repealed and there is no estate tax. Therefore, from a tax perspective, 2010 may be a very good year to die. But, we don't know for sure, as many experts expect Congress to act to prevent the repeal of the estate tax. This article written by Steve Hartnett, Associate Director of the American Academy of Estate Planning Attorneys spells out the process for getting a new estate tax measure passed in Congress and the impact of the delays.
$250 Recovery Payments to go to SS and SSI beneficiaries in May 2009.
The Sunday, September 9, 2007 issue of Parade magazine contains an article by Gail Sheehy on family caregiving. It will recount some of her own experiences as a spousal caregiver to her husband.
Roy R. Trudel, a Technical Director at the Center for Medicare and Medicaid Services ("CMS") recently opined that a state agency has the option of imposing a transfer penalty on an institutionalized spouse if the community spouse transfers protected resources after the institutionalized spouse's eligibility has been determined. Mr. Trudel's opinion, which is a reversal from statements made by previous CMS (HCFA) officials, came about as the result of an email exchange between elder law attorney Robert Mason of North Carolina and himself.
New Study Finds Changes Needed to U.S. Health System to Accommodate Needs of Boomers
The aging baby boom generation is likely to increase the nation's disabled population, and a study says the United States needs a better system to provide care for them. More than 40 million Americans currently have some sort of disability, the Institute of Medicine reported Tuesday.Senate Resolution Freezes Estate Tax for Two Years
Senate Resolution 21, 110th Cong. 1st Session, passed the Senate by a vote of 91 - 1.Why Can't a NY Lawyer Counsel FL Residents on NY Law?
This article from the ABA Journal summarizes the case of a NY licensed attorney wanting to give advise to FL residents about NY matters. It does a good job of summarizing FL's position on unlicensed practice of law in FL.Georgetown University Study on Medicaid Financing of Long Term Care
This article summarizes the role of Medicaid in financing long term care costs. The article also touches on how DRA will affect the ability of portions of the elderly population to get access to long term care.Estate Tax Repeal Vote Fail in Senate
Late Thursday, August 3, 2006, the Senate voted on an estate tax reform proposal that was came to close to full repeal and the republicans did not get the 60 votes they needed to pass it. The vote was 56-42!Article on Boomer Inheritances
This USA article highlights how inheritances by boomers are not meeting earlier projections. The reason behind this is the increased life expectancies of seniors and the higher then projected costs for health care.House Passes Bill to Raise Applicable Exclusion Amount to $5 Million
On Thursday, June 22, 2006, the House of Representatives passed legislation, by a vote of 269 to 156, that would raise the applicable exclusion amount to $5 million for an unmarried person and $10 million for couples. The marginal estate tax rate on estates up to $25 million would be set at the same tax rates that apply to capital gains -- now 15 percent but scheduled to rise to 20 percent in 2011. The marginal estate tax rate for estates worth more than $25 million would be twice the capital gains rate.The Section 7520 rate (used to calculate life and remainder interests) for June 2006 will be 6.0%. This is slightly higher than the May and April rates.
An Essay on Issues Involving the Older Driver
Eighty-six year-old George Weller's killing of 10 when he accelerated instead of braked at a Santa Monica, California market in July 2003 captured the public's attention dramatically. The Weller tragedy again reminded us that we face a growing problem: The aging process will in some way affect the driving habits and skills of most of our clients. Court intervention regarding older drivers is increasing in that probate judges address driving as fiduciary concerns for guardians and conservators. George Weller's court intervention came through the criminal bench as he was indicted on 10 counts of manslaughter in January 2004. Ideally, family members, health care providers, elder-law attorneys/estate planners and fiduciaries should assist aging loved ones/patients/clients in planning before driving skills decline and address what happens after the car is gone.Article of Interest on Intestacy
You may be interested in reviewing the article on the laws of intestacy in the various states.Insurance on Retirement Accounts Increased
The FDIC and Credit Union insurance coverage on retirement assets such as Individual Retirement Accounts and 401(k)s has recently been increased to $250,000 from $100,000.Equitable Estoppel Doctrine Not Available Where Medicaid Eligibility Worker Gave Wrong Advice
A State Medicaid eligibility worker advised the son of a beneficiary that her estate would not be subject to a claim after her death, and that if he wanted to preserve the family home all he needed to do was to state that his mother intended to return home. The worker was wrong.Photocopy of Will is Not "Duplicate Original"
After a decedent's death, his original 1987 will could not be located. However, a photocopy of that will was in his personal papers. There was no indication of any intent to revoke the will other than the fact that the original was missing.Personal Representative's Attorney Fees Chargeable Against Estate
The personal representative, in an estate administration contest, filed a seventh accounting and a request that the estate be closed. Family members objected, accusing the personal representative of conflicts of interest and failure to advise the beneficiaries about actions proposed to be taken by the decedent's partner (who was also a client of the personal representative). The personal representative retained counsel and the parties participated in extensive litigation resulting in the trial court removing the personal representative, denying requests for surcharge against him, and denying his request for payment of $589,441.28 in attorney's fees and costs.Constructive Trust Imposed on Proceeds of Property Sale Transferred to Joint Ownership
The agents under a durable power of attorney arranged for sale of real property (specifically devised in principal's will to her stepson) to agents' relatives for substantially less than the assessed value of the property. The proceeds were placed in bank accounts in joint names with agents. After the principal's death, the agents were appointed as personal representative of the principal's estate and stepson sued.Exception to Privileged Communications for Will Drafter Does Not Apply Where No Will Prepared
A Testator consulted his long-time law firm about drafting a new will, but no new will was ever prepared. A few days later the Testator signed a new will prepared by another, unrelated law firm.Kaiser Commission Releases Report on the Impact of the Federal Deficit Reduction Act of 2005
The Kaiser Commission on Medicaid and the Uninsured has issued a report that summarizes the Medicaid provisions of the federal Deficit Reduction Act of 2005 (DRA) signed on February 8, 2006 and discusses the implications of the proposed changes. The changes would net projected reductions in Medicaid spending of $4.8 billion over the next five years and $26.1 billion over the next ten years.Genetic Link to Parkinson's Disease Found
A recent study has identified a single genetic mutation that accounts for more than 20 percent of all cases of Parkinson's disease in Arabs, North Africans and Jews. This is a major surprise, as genetics was thought to play a relatively minor role in the cause of Parkinsons disease. Although the mutation is rare in people with ethnic roots outside the Middle East, its discovery raises the prospect that undiscovered mutations may be major causes of Parkinson's in other groups.Drugs Effective in Treating Mild to Moderate Alzheimer's Disease
Three drugs -- Aricept, Razadyne, and Exelon -- may make some modest improvement in mental function for those persons suffering from mild to moderate impairment in mental functions due to Alzheimers disease. The finding come from a review of 13 studies of the drugs. The review appears in The Cochrane Library, a research journal.Commission Considers Separating LTC Component of Medicaid
The Medicaid Commission, which is looking into ways to improve the government program is mulling over the possibility of separating long-term care financing from Medicaid.Social Security Death Benefit Eliminated in Bush Budget Proposal
The $255 Social Security death benefit will be eliminated under the Budget proposal submitted to Congress on February 7, 2006 by the President. White House officials defended the proposals and estimated costs would be trimmed by $3.4 billion over the next decade with the elimination of the stipend. Congressional aides said Jo Anne Barnhart, the Social Security Commissioner, had told them during a closed-door briefing that the $255 one-time death benefit has become an administrative burden, since it is not paid in all cases. Mark Lassiter, a spokesman at the Social Security Administration, said the benefit "bears no relation to what a person's funeral expenses are or to any of workers' earnings levels. We believe that eliminating it is not going to cause an appreciable financial hardship to a survivor."New Findings on Cause of Alzheimer's Disease
If confirmed, several new findings on the origins of Alzheimer's disease could overturn prevailing theories on the cause of the disease. Scientists reporting in the Journal of Neuroscience said the neurodegenerative disease may be triggered when adult nerve cells, or neurons, try to divide.IRS Increases PLR Fees, In Some Cases Dramatically
New PLR User Fees
The IRS has released the 2006 Revenue Procedures outlining fees for Private Letter Ruling Requests. Continue on to see some of the outlined changes:
DC Circuit: Lawyers Exempt from Sending Gramm-Leach-Bliley Privacy Notices
The Gramm-Leach-Bliley Act has provisions which require "financial institutions" to send annual privacy disclosure notices. This applies to banks, brokerage houses, etc. The Federal Trade Commission had taken the position that this also applied to attorneys holding financial information. The American Bar Association filed suit for a declaratory judgment. The ABA won in the District Court. Now, the U.S. Court of Appeals for the District of Columbia has affirmed the District Court's judgment.Undernourishment Screening Tool
Undernourishment is one of the major risks to the good health of elders.IRS Releases December 7520 rate
The 7520 rate for December 2005 is 5.4%, up significantly from November's 5.0%. This rate is what is used to actuarially value life estates, remainder interests, etc. A higher 7520 rate makes some transactions, such as QPRTs more attractive, while some other transactions less attractive.Important Update from Leimberg re Trust-Owned Life Insurance
Steve Leimberg was kind enough to allow us to share the following e-newsletter regarding fiduciary liability for monitoring trust owned life insurance, You can find out more about the Leimberg e-newsletters by using the link at the end of this FYI.Leavitt Endorses Many of Governors' Medicaid Proposals
On August 2, Department of Heath and Human Services Secretary Mike Leavitt discussed various health topics in an interview with Associated Press editors and reporters. On Medicaid, Leavitt said that the commission he appointed to recommend ways to cut $10 billion from Medicaid over five years would "likely look" at proposals from the National Governors Association and determine that they "are pretty well thought-out ideas."Effect of the Federal Estate Tax on Family Farms and Small Businesses
Recent discussion of the federal estate tax has focused in part, on how it affects family farms and small businesses -- particularly the possibility that having to pay the tax might jeopardize those operations.Social Security and Medicare Trustees Release Annual Reports
Annual reports released from both the Social Security Administration and the U.S. Centers for Medicare Medicaid Services.Wealthy People Less Likely to Die in Pain
A University of Michigan study finds that wealthier elders are significantly less likely than poorer ones to suffer pain at the end of their lives.IRA Gifts to Charity Temporarily Unlimited
As part of the tax relief provided by Congress, unlimited donations of IRAs or pension plans to charities will be allowed for a short period of time.Groups Campaigning Against Repeal of Estate Tax
Anti-estate tax repeal groups have begun a campaign targeting moderate Democrats and Republicans in a campaign to retain the estate tax. The campaign is helped by the efforts of many major life insurance companies as well as charitable organizations.Spendthrift Trust Not Reachable for Debts Incurred by Beneficiary Acting as Trustee
Two testamentary trusts were created in the decedents will, one for the benefit of each of her sons. One son became trustee of both trusts, and proceeded to empty his brother's trust by investing in his own business, and thereafter failed to account to the other brother. The court entered a surcharge against the trustee-brother and forfeited the surety bond he had posted. The court then gave a judgment in favor of the surety against the defalcating trustee-brother.Final Regulations on Ordering Rules for Charitable Remainder Trusts Issued
The Internal Revenue Services has issued final regulations on the ordering rules of section 664(b) of the Internal Revenue Code for characterizing distributions from charitable remainder trusts (CRTs).Health Affairs Journal has published three articles about the Schiavo case and the costs of end-of-life care.
Federal Housing Programs That Offer Assistance for the Elderly
A number of federal housing programs provide assistance, including rent subsidies, mortgage insurance, and loans and grants for the purchase or repair of homes, to low-income renters and homeowners.Vote for Estate Tax Repeal Delayed; Senator Kyle Prepares Amendment to H.R. 8
Aides to several key Senators have announced that there will be no vote of estate tax repeal in the Senate until after all the relief for the hurricane victims has been secured and the rebuilding in Louisiana, Mississippi and Alabama begins. Therefore, we can expect that nothing should happen for at least several weeks.Qualified Roth Contribution Programs Gain Attention
Beginning in 2006, 401-K retirement plans may be amended to permit employees to designate some or all of their contributions as Roth contributions pursuant to a "qualified Roth contribution program." Contributions to a qualified Roth contribution program are made on an after-tax basis, but distributions (including earnings) are tax-free.Greenspan Rejects Estate Tax Repeal
On June 21, 2005, Federal Reserve Chairman Alan Greenspan testified before the Senate Banking, Housing and Urban Affairs Committee, during which time he reiterated his opposition to tax-cut proposals that increase the deficit and made clear that this opposition applies to proposals that repeal or drastically reduce the estate tax without fully offsetting the costs.Illinois Governor OKs Modification of Estate Tax
On August 2, 2005, Illinois Governor Rod Blagojevich (Dem.) signed legislation (HB 1570, now PA 94-0419) that changes the credit for estate and inheritance taxes paid to other states. The new law eliminates one option of the options previously available as to how the credit is calculated for taxes paid to other states.Alzheimer's Disease Symptoms Reversed in Mice
Mice with memory loss have had their condition reversed, a discovery that should help refine the search for a cure for Alzheimer's disease and other dementias.Will Effectively Exercised Power of Appointment Even Though Not Admitted to Probate
Father (who died in 1981) established a living trust that divided into survivor's and family shares, with the former giving his surviving wife a general testamentary power of appointment and the latter giving her a power of appointment exercisable by will, deed, conveyance, bill of sale, gift or any other written instrument. If Mother did not exercise the powers of appointment, the survivor's trust would pour into the family trust, which would in turn be distributed unequally among daughter, granddaughter and grandson. Mother executed a will in 1985 purporting to appoint the entire trust corpus of both trusts; the survivor's trust was appointed outright to daughter and the family trust in equal shares among daughter, granddaughter and grandson; Mother died in 1997. Relying on advice of counsel, the trustee and family members decided not to seek probate of Mother's will.Will's Assertion of Mistreatment by Disinherited Child is Not Grounds for Invalidity
Decedent's will specifically disinherited his only child and some of his grandchildren "by reason of their ... treatment" of him. Son challenged the will, claiming that it was improperly executed, and also that the decedent had operated under "an insane delusion that four of his grandchildren did not care about him."Disclaimer Reformed to Avoid GST Tax
Daughter signed disclaimers of her interests in her mother's property in two different states. After the disclaimers were completed, she learned that her mother's GST exemption was only $650,000 and that the disclaimed property would be subject to the tax. She signed an affidavit indicating that she had disclaimed by mistake, and sought reformation of one or both disclaimers. State high court rules that reformation of the two disclaimers is permitted, and remands to the trial court for entry of an order authorizing the reformation.April 2005 section 7520 rate released
The IRS has released the Applicable Federal Rate for the month of April, 2005. Each month the Service surveys interest rates and publishes the rate that is applicable for gift calculations. The rate for April is 5.0%. The rate for March was 4.6%.An elderly woman was befriended by a law student, who helped her to transfer over $90,000 (in several transactions) to the law student, allegedly because the woman wanted to help her with tuition. The woman's nephew, who had power of attorney, discovered the transactions and moved to secure conservatorship and set aside the transactions.
Undue Influence and Constructive Fraud Claims Should Have Been Submitted to Jury
After her husband became ill, an elderly woman who had never managed finances during their married life summoned her children to meet with her and to help decide how to handle the family ranch and other properties. After the family discovered that her husband had incurred $54,000 in credit card debt the children agreed to take responsibility for that debt in return for their mother transferring shares of stock in the ranch to them; she made transfers of substantially all of the stock based on that understanding.Malpractice Claim May Be Brought By Successor Fiduciary Against Agent of Prior Fiduciary (CA)
During the pendency of a will contest, an attorney was appointed as administrator of a decedent's estate. He hired another law firm to assist with complicated tax issues. At some point, the administrator wrote to the tax lawyers confessing that he had misappropriated substantial funds from the estate; the tax lawyers initially attempted to help him borrow money to repay the estate, but ultimately wrote to him (in February) indicating that they withdrew from further representation and advising him to secure other assistance. In May the administrator died; the tax lawyers turned their file over to another attorney in July. In September the deadline ran out for filing IRS form 843, which would have extended the time for claiming a tax refund by three years. In November, after resolution of the will contest, a new executor was appointed and he brought a malpractice action against the two groups of tax attorneys. Both law firms argued that the plaintiff lacked privity with them, since they had been hired by the original administrator, and the trial court granted judgment for the defendants. The intermediate state appellate court affirmed, and the estate appealed to the state Supreme Court. That court now reverses, finding that the state probate code gives a successor fiduciary all the powers that his or her predecessor would have, impliedly including the power to bring an action such as the one here.Power of Attorney, Lacking Gift-Giving Authority, Does Not Authorize Gifts to Agent
Mother, suffering from mild dementia, executed a general power of attorney in favor of her son--the power of attorney did not include any language specifically authorizing gifts. Shortly thereafter she moved in and lived with him, and after about eight months moved to a nursing home. At the time of her move to the nursing home the son, using his power of attorney, transferred all her real property, stocks and other assets to himself. The mother died a little over a year later, leaving a will that devised all her assets equally to her son and daughter. After securing appointment as executor of the estate, daughter filed suit to recover the remaining assets, arguing that the purpose of the original conveyance was solely to protect the assets from being depleted by nursing home expenses and that with the mother's death they should be re-conveyed to her estate. Trial court ordered reconveyance and on appealed. Intermediate state appellate court affirms, noting that without a specific gift-giving provision in the power of attorney, a gift to the agent "carries with it a presumption of impropriety and self-dealing." In order to overcome that presumption, the recipient of the gift must make "the clearest showing of intent" on the part of the principal; evidence that the mother in this case trusted her son more, wanted him to manage her money, and may even have been fearful of her daughter did not meet that high standard of evidence.The plaintiff, who had been seeking to provide cash for his daughter to pay anticipated estate taxes, established an irrevocable life insurance trust in 1991 and paid $300,000 in premiums for a $4.2 million second-to-die policy. The insurance agent's projections, assuming a 10% return, showed no further premium payments would be required. The ILIT Trustee, a CPA, sought independent advice which indicated that the initial premium payment would need to earn a 24% return for 28 years to cover all premiums, but the settlor instructed him to follow the insurance agent's direction.
Testamentary Effect of Trust Provision Requires Compliance With Will Formalities - Arnold v. Davis
A decedent (the widow of country music recording artist Jim Reeves) had established a trust to hold her considerable assets, though her capacity to sign or approve of a trust was later called into question. When she died while conservatorship proceedings were pending, the court granted an interpleader request and ordered that all her trust assets and all income from sale of her late husband's music and real estate holdings be paid to an administrator while the validity of the trust was resolved.A victim that was vulnerable to exploitation made a videotaped statement to police officers two days before she died and a statement to a social work supervisor shortly before her death.
As the testatrix lay dying in a hospital bed, a lawyer relative contacted a long-time associate and asked him to visit her at the hospital to help her prepare a will. The relative also provided the lawyer with details about the testatrix' estate plan, including her intention to leave him (the lawyer relative) a significant bequest. The drafting lawyer, the lawyer relative and the testatrix all met together at the hospital, and the drafting lawyer prepared a will and supervised its execution. After the testatrix' death a will contest was filed, with the result that $620,000 was made unavailable to the residual beneficiaries (the opinion does not relate the particulars of the will contest or the identity of any contestant, or indicate how much of the $620,000 was attorney's fees incurred in defense of the will and how much a payment to contestants).
Legal Malpractice in Estate Planning Case Runs From Discovery - Watkins v. Hedman, Hielman & LaCosta
An attorney prepared a complicated estate plan for a married couple. The wife advised the attorney that they wanted to make sure their trusts were and remained revocable, that they minimized estate taxes, and that they avoided probate. The attorney never consulted with the husband, but sent documents home with wife and had her staff witness and notarize them upon return, even though they had never spoken with husband."Direct Lineal Descendants" in Old Trust Does Not Include Adopted Children - McGehee v. Edwards
Several trusts were established in 1929, 1930 and 1931. Each trust limited benefits to the "direct lineal descendants" of the settlor or the settlor's parents. Although state law was amended in 1978 to presumptively include adopted children in the terms "issue" or "descendant," the new law by its terms did not extend to prior trusts. The trustees of the trusts, concerned about potential liability for their determination of the approximately 142 trust beneficiaries, filed an action to determine "who are, or may be direct lineal descendants ... and specifically whether children born out of wedlock" would be beneficiaries. Counsel for one beneficiary answered, asking the court to also determine whether adopted children would qualify, whereupon the trial court appointed guardians ad litem for "persons adopted by lineal descendants, persons born out of wedlock to lineal descendants, persons born to lineal descendants through assisted conception, and legitimate minor beneficiaries and parties unknown."The guardian of person and estate filed a petition requesting compensation for services as guardian. The ward died before hearing on the petition, and guardian filed a second petition seeking additional compensation. Almost two years after the ward's death, the trial court summarily denied the compensation requests. The Florida Court of Appeals reverses the denials, noting that no one objected to the compensation requests, the guardian was not given notice of the pending denial of compensation, and the trial court did not conduct a hearing into the reasonableness or propriety of the fees. The summary denial "violated the guardian's right to due process of law."
Before a husband began chemotherapy treatment he arranged for freezing and storage of semen in case he became sterile. The treatment was unsuccessful and husband died within two months. In-vitro fertilization, begun ten months after his death, was successful and twins were born eighteen months after his death. The wife thereupon filed for Social Security Survivor's benefits for the children, and was denied by the Social Security Administration, an Administrative Law Judge, and a Federal District Court Judge.
State Must Permit Payment of Taxes on Special Needs Trust Termination - Stell v. Boulder Co. DSS
A self-settled special needs trust was established for the benefit of an SSI recipient who also received Medicaid benefits. The SNT provided that upon termination (by death of beneficiary, for instance), funeral, burial, and administrative expenses, and taxes would be paid first, and that the state Medicaid agency would then be required to submit a claim for reimbursement before the trust would repay Medicaid expenses. The Department of Social Services disqualified the trust and the beneficiary appealed.Probate Court's Removal of Fiduciary in Six Cases Upheld - Guardianship of Monus
A professional fiduciary, who is the director of a faith-based social service agency, had served as guardian, conservator or trustee for a number of years in six separate cases. The amounts involved in the estates varied from about $13,000 to about $210,000. In each case inventories were filed late or not at all, accountings were sporadic and incomplete, and requests were made for approval of expenditures after the fact. The probate court determined that the fiduciary had violated his obligation to account fully, and removed him from all six cases.Prior to establishment of a guardianship, a ward had signed and funded a revocable living trust. Prior to her death, the guardianship court had authorized the trustee to sell her home, and directed that the proceeds be held in the trustee's attorney's trust account. After the ward's death, the trustee sought and gained court approval to pay burial expenses, but when the trustee requested authority to pay the trustee's attorney (which would have exhausted the remaining proceeds), the guardianship court refused and directed instead that the trustee pay fees to the guardian and the guardian's attorney, plus previously unpaid court fees associated with the guardianship. The trustee appealed, and the Florida Court of Appeal reversed and remanded for further proceedings.
After their father became incapacitated, his children from a prior marriage filed an action to prevent his wife from taking charge of or dissipating his assets, which were largely held in a self-settled trust naming some of the children as successor trustees. As settlement of that matter, the parties agreed that the children would take over as trustees, that the wife would continue to make care decisions for the husband, and that the husband's trust would pay $25,000 per month to the wife for his care -- and specifically directing that the wife would not be a trustee. Some time later the children became concerned that the money was not in fact being used for their father's care, and sought an accounting from his wife. She successfully objected, arguing that the settlement agreement specifically precluded a finding of a trust relationship, and that they could have (but did not) required an accounting as part of the settlement.
A law firm secured a $300,000 judgment against its former bookkeeper for embezzlement. The bookkeeper's mother gave the law firm a brokerage account check for $60,000 (for reasons not clear from the record). The law firm, now aware of the fact that the brokerage account was titled in joint tenancy between mother, bookkeeper and mother's other child, executed against the account. The mother intervened in the garnishment proceeding and argued that she was the sole contributor to the account, that her two children were joint tenants only as a matter of convenience, and that she had not intended to make a gift.
Post-Nuptial Agreement Does Not Violate Public Policy - Bratton v. Bratton case
A year after his marriage, a medical student hand-wrote and signed a letter indicating that he promised never to be the cause of a divorce, and if he ever did he assigned 50% of his assets and 50% of his future earnings to his wife. Two months later the couple signed a more formal post-nuptial agreement, drafted by an attorney (the parties disputed whether the attorney represented the husband or the wife), which made a similar provision if the husband "was guilty of statutory grounds for divorce."Interest Accrues on Pecuniary Devise Despite Pendency of Will Contest - Estate of Holan Case
The decedent's will left the family farm to one son, but subject to that son's payment of a percentage of the appraised value of the farm to each of the decedent's other children over a fifteen year period with interest. Other children sought introduction of a later will, but the probate court ultimately found that will to be the product of undue influence and the South Dakota Supreme Court affirmed.The Section 7520 rate for November 2004 is 4.2%.
A father established a testamentary trust for the benefit of his son, which included a spendthrift provision. The trust gave the trustee discretion to distribute or withhold all income and up to $1,200 per year of principal, and the trust language indicated that the discretion should be exercised "for the comfortable support and maintenance" of his son. The trustee secured a court order authorizing payment of a fixed amount each month to the son, increasing that amount over several years as his condition declined.
After an auto accident injured an already-disabled benefits recipient, his mother successfully sought court approval to establish a special needs trust with the $115,377.56 of net proceeds from a lawsuit. The trust and its establishment apparently satisfied the Social Security Administration, and his SSI benefits continued to be available. The State, however, determined that establishment of the trust was a disqualifying transfer for Connecticut's SSI supplement program and terminated his benefits.
Debt of the Elderly and Near-Elderly 1992-2001
American families with a family heads who are age 55 or older had approximately the same level of debt payments relative to income and of debt levels relative to assets in 2001 as they did in 1992, according to a new report by the Employee Benefit Research Institute. In terms of retirement security, the EBRI report noted that, on the whole, the new data are positive that most older families did not appear to be overburdened by debt in 2001. However, there has been an increase in the percentage of heavily indebted families -- defined as those with debt payments exceeding 40 percent of income -- especially for family heads in the two oldest groups (ranging from 5 to 10 percent of all near elderly and elderly families).Parents executed wills and powers of attorney naming one of four children as personal representative, sole devisee and agent. At the death of second parent to die, virtually all of parents' assets had allegedly been diverted to the favored child. The disinherited children filed an action for intentional interference with an expectancy, and the favored child / personal representative moved to dismiss on grounds that probate proceedings provided an adequate remedy.
A daughter and granddaughter of elderly woman filed competing petitions for appointment as the woman's guardian. The daughter requested appointment of a temporary guardian, alleging an emergency. At the hearing, the granddaughter acknowledged that she had loaned or transferred over $450,000 to herself using a power of attorney, but alleged that the transfers and purchase of an annuity were for Medicaid planning purposes. When specifically challenged about a $100,000 annuity (on which she had collected a commission on purchase, and naming her children as beneficiaries), the granddaughter characterized her failure to list it as an asset of her grandmother's estate as a "scrivener's error."
An elderly woman moved from her home state to an assisted living center near her granddaughter, who lived in another state. Her granddaughter, who is an attorney, was an agent in the elderly woman's power of attorney. Granddaughter was also named as the sole beneficiary of her estate. Shortly after the move she began to "slip," and when she learned that her granddaughter had expressed concern about her drinking she became more antagonistic. An old drinking friend made contact with the grandmother and began living with her, though not paying any rent or contributing to her expenses, and allegedly increased her alcohol use.
Uniform Trust Code Does Not Permit Termination of Spendthrift Trust - Estate of Somers case
A trust provided for payment of $100 / month each to two grandchildren of trustor, with remainder on their death to go to charity. The trust contained a spendthrift provision preventing the alienation of grandchildren's interests. Nearly fifty years after the trustor's death, the trust corpus had grown to $3.5 million. Grandchildren and remainder beneficiary entered into agreement to terminate trust and to distribute $150,000 to each of the grandchildren and the balance to the remainder beneficiary. The corporate trustee declined to act on the agreement, and charity and grandchildren filed a joint petition to terminate the trust.An elderly woman, with the assistance of her long-time attorney, created a will, a charitable trust and a power of attorney naming a personal friend as executor, trustee and agent. Some years later, after significant deepening of dementia and at the instigation of a caretaker who was disgruntled with the agent's refusal to change her to the day shift, the woman visited an attorney selected by her family members and revoked the prior planning documents and executed new documents naming those family members as the agents, trustees and executors.
Attorney Not Liable for Failure to Undo Estate Plan - DiStefano v. Milardo case
Client, a serious alcoholic, utilized the services of an attorney to establish a trust, will and power of attorney. After several institutionalizations, she approached the attorney to undo her plan, and particularly to remove her son as agent, trustee and personal representative. The attorney reminded her that she had established her plan precisely to protect against her own mismanagement, and did not take steps to unravel her planning. A year later (and after another institutionalization for alcoholism and depression), she revoked the trust and power of attorney on her own, and then sued her attorney for malpractice, alleging that his failure to undo her estate plan was the proximate cause of alleged losses from theft by her agent.AFRs for October 2004 Announced
The Section 7520 rate for October 2004 is 4.4%Trust Amendment Effective Even Though Unsigned by Trustee - Godley v. Valley View State Bank case
A trust provided that the trustor retained the power to amend, and that amendments became effective upon delivery to the trustee. The trustor signed a trust amendment which removed her stepchildren as remainder beneficiaries (and named caregivers in their stead), and named a corporate trustee (effectively resigning as trustee). The attorney who prepared the amendment then sent it to the corporate trustee for acceptance and signature. The corporate trustee did not immediately sign the amendment, and two weeks later the trustor died; thereafter, the corporate trustee declined to serve as trustee and returned the original, unsigned amendment to the attorney.Bush Renews Call for Privatization of Social Security
In his acceptance speech at the Republican National Convention, President Bush promised major changes in American society's most basic pillars: its health care system, pension plans, tax code and workplaces. Revising the Social Security system to give younger Americans the option of investing part of their tax contribution would be the most dramatic piece of his second-term domestic agenda. "We must strengthen Social Security by allowing young workers to save some of their taxes in a personal account," Bush said in his prepared speech, "a nest egg you can call your own and government can never take away." The president made a similar proposal four years ago, but political resistance, a budget deficit, and other priorities blocked his efforts.Greenspan Again Calls for Social Security and Medicare Fix
Federal Reserve Chairman Alan Greenspan again took aim at the pending Social Security and Medicare crises, asserting that retirees will face "abrupt and painful" choices if Congress does not act swiftly. Greenspan acknowledged that addressing the problem by raising payroll taxes was problematic as this would make it harder for employers to hire new workers. The 78-year old Fed chairman has said that he favors raising the age at which full Social Security benefits are delivered to retirees.Utah Tops List of Best Places to Die
Geography determines much about an individual's final days: the kind of care received, where he or she will get it, and how much a decedent can pass on to heirs. This Forbes article ranks the states top to bottom. On top: Utah. At the bottom: IllinoisTax Proposals from Republican and Democratic Campaigns
As the Presidential campaign heats up, a few details have emerged on how the incumbent and the challenger would approach federal income taxes. Here's a thumbnail review.IRS Wins Victory in Thompson FLP Case
The Third Circuit Court of Appeals has upheld the IRS Tax Court victory using an IRC 2036 attack. Unfortunately, bad facts (death bed FLP) make for bad case law. We will reconcile this case with the recent taxpayer victory in the appeal of the Kimbell case in an upcoming memo to members. In the meantime, we have attached a copy of the Third Circuit opinion. Finals briefs are due from the Department of Justice today on the appeal of the Strangi case, so we will see whether that court follows the logic of Kimbell or Thompson within a few months.HCFA Transmittal 64 Tables for Medicaid Planning Available on the Web
A useful resource for Medicaid Planning with annuities and life estates is the HCFA Transmittal 64 Tables, but these are often difficult to find. The link below will take you to the Tables on the Centers for Medicare and Medicaid Services website.Tax Fraud Promoters Associated with "We the People" Convicted
Seven individuals associated with a tax fraud group known as "We the People" were convicted May 4, 2004 on various federal charges related to the promotion of bogus tax shelters that falsely promised to limit exposure to federal income taxes.The section 7520 rate for August 2004 is 4.8%.
Law Firm Ordered to Comply with IRS Summonses
Jenkens and Gilchrist Ordered to Comply with IRS SummonsesVarious States Address Estate Taxes
On April 27, 2004 the Virginia Senate approved a tax plan passed by the Senate Finance Committee the night before that would cap at $950 million the amount the state reimburses localities for "car tax" relief and would reinstate the Virginia estate tax.For purposes of determining the present value of an annuity, an interest for life or a term of years, or a remainder or a reversionary interest, Revenue Ruling 2004-66 indicates the charitable federal midterm rate under section 7520 for July 2004 is 5.0%; up 0.4% from the June rate of 4.6% and up 1.2% from the May rate of 3.8%.
IRS Offers Tips for Accurate Schedule K-1 Filing
Correct filings can prevent unnecessary notices when IRS matches K-1 income reports to the recipients' tax returns. For tax year 2002, approximately 25 million Schedule K-1 forms were filed reporting over $1 trillion in income to partners, shareholders and some trust beneficiaries. A matching program to ensure all Schedule K-1 income is being reported is critical to IRS tax administration policies.The Service has released the Applicable Federal Rates for June 2004. The 7520 rate, used to value life estates, remainder interests, etc., is 4.6%. This is a substantial increase from the 3.8% rate in effect in April and May 2004.
IRS Releases Form 8855, Election to Treat Trust as Estate
New Form 8855, Election to Treat a Qualified Revocable Trust as Part of an Estate, has been released. Instead of having to write a statement as outlined in the IRS regulation under IRC Section 645, we should now use this form to make this election.Attorneys' Fees Award Against Losing Party in Trust Contest Upheld
Mother/son team unduly influenced a demented multimillionairess to modify three trusts of which she was settlor, naming son as successor trustee and changing the trusts' ultimate distribution to substantially benefit the mother and son. Several months later the former trustee filed a petition for appointment of a guardian ad litem for the settlor. After setting aside the changes, the trial court ordered the mother and son to repay the trusts all of their legal fees (which had been paid from trust assets) but declined to order payment of the prior trustee's or the trust beneficiary's attorneys' fees and costs.Long-Term Care Insurance Costs Rising
The cost of long-term care insurance costs is rising. As the relatively young industry matures, more customers are filing claims, and companies have begun to realize the market is not as profitable as they thought it would be. And the industry faces more challenges as the baby boomers age.Corruption in Financial Services Industry
Benchmark Financial Services conducts investigations on behalf of pensions and others who feel they have been treated poorly by money managers, pensions consultants or brokers. The work is somewhat legal in nature but frequently focuses upon little-known business practices which may be commonplace in the securities or money management industries but are, on occasion, especially harmful.Medicare Premium Changes for 2004 Announced
The Department of Health and Human Services (HHS) announced Thursday, October 16, 2003, the 2004 rates for the Medicare Part A deductible and Part B monthly premium amounts paid by beneficiaries. The Medicare Part B monthly premium will be $66.60 in 2004, $7.90 more than 2003 and a 13.5% increase. This is the third-highest increase ever. The largest premium increase was in 1988, at 38.5%, followed by 1993, when the jump was 15.1%. The Part B premium covers physician services, hospital outpatient care, durable medical equipment and other services outside hospitals.Center for Medicare Advocacy Promotes Purchase of Medigap Policies
Judith Stein, the Director of the Center for Medicare Advocacy is concerned that the cost sharing responsibilities for Medicare beneficiaries continue to increase. Two of the expenses which most all Medicare beneficiaries will need to meet will see increases. The inpatient hospital deductible will increase $36, to $876. Most significantly, the monthly Part B premium will increase almost 15%, from $58.70 per month in 2003 to $66.60 per month in 2004.Social Security COLA, Etc. Changes for 2004 Announced
On October 16, 2003, the Social Security Administration announced that Social Security and Supplemental Security Income benefits will increase 2.1% in 2004, up from last year's 1.4% increase. The 2.1% increase will begin with benefits that Social Security beneficiaries receive in January 2004. For SSI beneficiaries, the increased payment will begin December 31. For Social Security beneficiaries, the average monthly benefit amount for all retired workers will rise from $903 to $922; for a couple, from $1492 to $1523. The maximum federal SSI monthly payment to an individual will rise from $552 to $564. For a couple, the maximum federal SSI payment will rise from $829 to $846.An attorney prepared will naming himself as executor and directing residue to a foundation to "promote education, historical restoration and preservation, ecological, geological and the environmental projects" in several surrounding counties. The attorney and his wife were named as trustees of the foundation. The decedent's heirs at law objected that the will was the product of undue influence by the attorney, and the state Attorney General intervened to protect the interests of the potential beneficiaries of the foundation. After settlement negotiations the Attorney General and the heirs entered into an agreement and submitted it for approval. The attorney / draftsman / executor / trustee objected and the probate court approved the settlement over that objection.
Spousal Impoverishment Rules Proposed for Veterans Nursing Home Care
The U. S. Department of Veterans Affairs has proposed to amend VA's medical regulations by modifying provisions regarding how it computes copayments for extended care services provided to veterans. This proposal enhances the protection of veterans' spouses by not counting certain assets as available resources for computing these copayments.The November 2003 issue of Trusts & Estates magazine has a few articles which may be of interest to you.
State Medicaid Director Survey on Annuities
The National Association of State Medicaid Directors, the Annuities Workgroup, has released a report, "The Role of Annuities in Medicaid Financial Planning: A Survey of State Medicaid Agencies."How Primary Care Doctors Can Spot Elder Abuse and Neglect
Elder neglect and abuse have many clinical presentations ranging from the overt appearance of bruises and fractures, to the subtle appearance of dehydration, depression, and apathy. The risk factors are varied and may be categorized by victim or perpetrator. Dependency, on the part of the victim or perpetrator, and caregiver stress are frequent common denominators in abusive situations. Dr. Jeffrey Levine examines the latest research on this widespread and largely undiagnosed problem in the United States.Medicare Web Site Unveils Quality Measures for Home Health
On November 3, 2003, the U. S. Centers for Medicare & Medicaid Services published quality data for the approximately 7,000 home health agencies certified by Medicare. The mandatory Home Health Quality Initiative uses 11 measures to assess the quality of care home health agencies provide. The measures gauge improvement in patients' mental health, mobility, and ability to dress, bathe and meet other basic needs, as well as the incidence of medical emergencies.IRS Releases Materials to Keep Pension Plans Eligible for Favored Status
The Internal Revenue Service released new materials, including a CD-ROM, to help small businesses and plan administrators understand how to keep employee retirement plans eligible for tax-favored status. These materials, in various formats, explain the IRS programs available to assist employee-retirement plan administrators navigate the complex tax laws. The CD-ROM, which includes video clips, is an excellent reference tool for tax practitioners and plan sponsors, says the IRS in a press release, as well as for businesses that maintain plans for their employees.IRS Releases Important IRA PLR
In PLR 200343030, the taxpayer died at age 71. His IRA listed the beneficiary of the IRA as his estate. The taxpayer's will left his estate to his three children.Medicaid Planning Numbers for 2004
The Center for Medicare and Medicaid Services (CMS) has released the following figures for 2004 Medicaid planning purposes.Consumer Reports Article on LTCI is Largely Negative
If you cant take care of yourself when youre old, there are plenty of resources from which to choose: home-health services, adult day-care centers, assisted-living facilities, or nursing homes. Finding the money to pay for such help, however, presents a dilemma.Medicaid Directors Ask CMS to Close Annuity Loophole
Directors of State Medicaid Agencies have authored a report asking CMS to close the loophole allowing use of annuities in Medicaid planning. They claim the use of annuities has deprived federal and state coffers of as much as $1 billion per year.Power of Attorney Creates Confidential Relationship, Presumption of Undue Influence
After her husband of 28 years died, an ailing widow moved into her daughter's home. One week later daughter made an appointment with an attorney for the widow to have new estate planning documents executed. The lawyer met with the widow and the daughter's husband, then immediately prepared a power of attorney naming the son-in-law as her agent. The son-in-law took widow to nearby funeral home to sign and notarize the document. Two weeks later the widow signed a will prepared by the lawyer disinheriting her other children and leaving everything to the daughter she was living with. On her death eight months later, the widow's other children objected to the admission of the will, arguing fraud, lack of capacity and undue influence. After a jury trial court dismissed the fraud allegations, the jury found for the will proponents on capacity issue. However, the jury found for the objectors on the issue of undue influence.Missing Will Raises Presumption of Destruction With Intent to Revoke (Remington v. Roberson)
A decedent died in a nursing home, where he had lived for ten months. His personal papers did not include the original of his 1997 will, but a copy was among his possessions. Also among his possessions was a note apparently in the decedent's handwriting and signed, but not dated. Arkansas law recognizes holographic wills.Adoption May Be Challenged After Finality Because Adoptive Parents Did Not Take Custody
After a mother quarreled with her ex-husband over child support, they agreed that he would relinquish all parental rights and she would not pursue any arrearages. With the consent of the mother and ex-husband, the mother's parents then adopted the couple's child. The child continued to live with the mother, who also lived with her parents for a considerable time. After the mother remarried and quarreled with her parents, they took custody of the child and announced that they would curtail or cut off the mother's visitation rights. The mother then sought to set the adoption aside, even though it had been final for almost five years. (nice family, huh)Will Directing Distribution of Assets Held in Revocable Living Trust Has No Effect (Wright v. Rains)
A trustor established a revocable living trust naming a number of family and friends as beneficiaries after his death. The trustee of the trust was a national brokerage house. Seven years later, the trustor signed a new will leaving all his stock in the national brokerage house to friends with whom he had been living for several months. The trustor did not own any stock in the brokerage house, the trustee did. When the trustor died, the friends successfully sought the introduction of his will and then demanded distribution of all trust assets to themselves as executors of his estate. When the brokerage house refused, the friends brought suit to compel distribution, brokerage house counterclaimed and trust's remainder beneficiaries responded.Personal Representative and Counsel Not Entitled to Extraordinary Fees (Venis v. Greenspan)
A state statute provides for sliding fee for personal representatives, based on the size of the estate. In an $8.3 million dollar estate, the Personal Representative and his attorney sought fees beyond the statutory $206,460 and $177,345, respectively, for "extraordinary services" of satisfying a claim against the estate, taking responsibility for holding estate securities, obtaining appraisals, resolving a claim in a bankruptcy proceeding, satisfying a mortgage and transferring title on the decedent's residence, selling horses, managing and leasing two warehouses and handling a charitable pledge. The Probate court found that the services were not extraordinary and denied the additional fee request.IRS Acquiesces to Walton GRAT Decision
Notice 2003-72 announces that the IRS will follow the Tax Courts decision in Walton v. Commissioner holding that section 25.2702-3(e), Example 5, of the Gift Tax Regulations is invalid.IRS Issues Summer 2003 Statistics of Income Bulletin
The IRS Summer 2003 Statistics of Income Bulletin - almost 300 pages of tax statistics - is now available.IRS Announces Pension Plan Limitations for 2004
Many of the pension plan limitations will change for 2004. For most of the limitations, the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. Furthermore, several limitations, set by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), are scheduled to increase at the beginning of 2004.IRS Increases Standard Mileage Rates for 2004
The IRS has released the optional standard mileage rates for 2004 for employees, self-employed individuals, or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes and expanded the business standard rate option so that more businesses may now be eligible to use the standard mileage rate.Tax Professionals to Send Some Returns to Different IRS Centers Than Last Year
The Internal Revenue Service is urging tax professionals to be aware of changes that will affect where they send tax returns and payments for clients in 10 states starting in 2004. The changes are a result of redistributing workload among the ten IRS processing centers to provide better service.IRS Releases November 7520 Rate
The Service has released the applicable federal rates for November 2003. The rate to be used to value life estates and remainder interests, the 7520 rate, will be 4.0%. This is down somewhat from October's 4.4%.Robert Abrams, founder and CEO of myziva.net, has completed a comprehensive study of our nation's Nursing Homes. He distributed his findings September 24, 2003, at the NASPAC National Conference in Washington, D.C.
750,000 Small Businesses To Update Retirement Plans
Approximately 750,000 small and mid-size businesses using "off-the-shelf" retirement plan documents must update their plans by Sept. 30, 2003, to maintain the tax benefits. Businesses that act after the deadline must pay a compliance fee to avoid loss of tax benefits.Bill Introduced for Above-the-Line Deduction of LTC Premiums
Insurance trade groups, health care trade groups and groups representing older Americans are supporting a bill that would create an "above-the-line" income tax deduction for individual long-term care insurance premiums. The bill, introduced by Nancy Johnson, (R-Conn.) and Earl Pomeroy, (D-N.D.) would start by offering a 25% LTC insurance premium deduction. If enacted as written, the bill would phase in a 100% deduction by 2008, according to a summary released by Johnson and Pomeroy.IRS Small Business Resource Guide CD
The IRS is proud to announce the availability of its new Small Business Resource Guide CD-ROM for 2003. It has a new look and enhanced navigation features, and is now available for order from the IRS website.A patient, age 81, was fatally injured while under anesthesia and died without ever regaining consciousness. The estate of the patient brought suit for wrongful death (for benefit of surviving children) and also for patient's own injuries. The trial court awarded $125,000 to each child for wrongful death, over $45,000 for medical and funeral bills, and $450,000 to the estate for patient's "loss of enjoyment of life." Defendant appealed only the award for the patient's own injuries.
The Service has released the June 7520 rate of 3.6%. The Applicable Federal Rates for other purposes also are listed below.
A plaintiff sued hip prosthesis manufacturer for products liability and settled for $256,000 with no itemization of the basis for the settlement. Medicare, which had paid over $140,000 in medical expenses in connection with plaintiff's hip surgery, submitted a claim against the lawsuit proceeds. When settlement proceeds were distributed without satisfying Medicare's claim, Medicare filed lawsuits against the prosthesis manufacturer (from whom it sought double damages), the plaintiff and the plaintiff's counsel seeking its recovery from the settlement proceeds. Medicare cited the "Secondary Provider" statute and insisted that it creates a right in Medicare to secure reimbursement from personal injury, products liability and any other tort recovery.
Landmark Study on Elder Abuse Released
The National Research Council book on elder abuse and neglect has been released. This 552-page study, "Elder Mistreatment: Abuse, Neglect, and Exploitation in Aging America," was commissioned by the National Institute on Aging / National Institutes of Health (NIA/NIH) to establish a national research agenda in the area of elder mistreatment. It represents the latest thinking of the best scholars and practitioners in the field.Profiles of Long-Term Care Across Various States
Comparable state-level and national data for over 70 indicators, which are otherwise difficult to obtain from a single source, may be found in this snapshot of the long-term care landscape in every state and the District of Columbia.Pension Crisis Will Worsen in 2003
The corporate pension crisis is expected to get much worse in the next year or so as the nearly three-year bear market has forced many companies to make contributions to their defined-benefit plans to cover shortfalls and comply with federal laws that protect workers' pensions. In 2002, about 30 percent of the plans will require contributions, according to a Watson Wyatt analysis of the financial statements of some of the country's biggest companies. This figure, though, could more than double to 65 percent in 2003 if current conditions don't improve. This compares with just 15 percent of employers that made pension plan contributions in 2000 and 25 percent in 2001.A Test for Independent Living, A Tool to Screen for LTCI Eligibility
LTC Partners has developed an informal guideline, the "Independent Living Test," for long-term care insurance agents to use. The guidelines are tools that can enable agents to be a resource to their clients or prospective clients, the company says. If a prospective client has symptoms listed in the guidelines, such individuals would not likely be eligible for LTC insurance. According to the guidelines, the questions can be used to determine whether a person is having difficulty in performing everyday activities. The results may reveal whether the family member can live independently or whether intervention is necessary.Nursing Home Quality: Better Care Through Better Staffing
This Alliance for Health Reform and Commonwealth Fund briefing examines nursing home quality from the perspective of better care through better staffing. Discussion focuses on how important to quality are staff numbers, skill levels, morale and turnover, what can be done to staffing levels and training to improve overall quality, who can best drive positive change in the long-term care workforce, how new programs influence nursing home quality, and what role will government play in maintaining quality standards and improving staffing ratios.Revisiting America's "Aging Crisis"
In 2001, American Association of Retired Persons (AARP) released a report entitled "Global Aging: Achieving Its Potential." It argued that the increase in life expectancy over the past century represents a remarkable success story. Although an aging world poses real challenges to income security, health, and long-term care programs, the report argued that the challenges are manageable if institutions and individuals act in a timely fashion to deal with them. The report suggested a number of strategies to help governments, employers, and individuals adjust to an aging world.Decedent's Siblings Permitted to Seek DNA Testing of Putative Child (Matter of Tytanic)
The decedent's common-law wife had delivered a child during their relationship in 1974. The decedent was listed as father on the child's birth certificate. Two years after the couple divorced, the decedent instituted a proceeding challenging the paternity, resulting in an order that no further notice would be required if and when the child's mother sought adoption of the child by her new husband, and acknowledging that paternity was in question.Probate Court Lacked Jurisdiction to Order Lot Line Adjustment (Dabney v. Dabney)
A mother and her daughter lived next door to one another and were both beneficiaries of two separate trusts created by their respective husband and father at his death. The trusts owned fractional shares of the two beneficiary's homes, and the daughter owned another fraction of her home outright. The daughter argued that mother, as trustee, had failed to act appropriately in the division of the deceased husband / father's estate partly because one of the residences encroached on the lot containing the other residence. The daughter filed a petition for removal of the mother as trustee and to compel an accounting. The mother responded that prior to appointment of a new trustee daughter should be compelled to sign a lot line adjustment to remove the encroachment. The probate court found that the mother had not misbehaved, but that she should be removed because of the friction between the beneficiaries, and ordered the daughter to sign the lot line adjustment documents.Articles of Interest in March/April 2003 Probate and Property Magazine
The March / April 2003 issue of Probate and Property magazine has the following articles that may be of interest:Appointment of Guardian Ad Litem Requires Notice and Hearing (In re Joann E.)
A grandmother, although mentally ill, HIV positive and a hepatitis patient, had been caring for her granddaughter for several years and had been appointed as the granddaughter's guardian ad litem (apparently in pending juvenile proceedings). After the grandmother's brief hospitalization, new dependency proceedings were initiated against granddaughter, and the court on its own motion appointed both an attorney and a guardian ad litem for the grandmother, without either giving her notice or conducting a hearing on the need for a guardian ad litem -- in fact, the record contained no indication of the actual appointment of a guardian ad litem, but merely the appearance at the next hearing of a guardian ad litem on her behalf.Prenup Agreement Interpreted After H's Death (Est. of Blumenthal)
The decedent and his surviving spouse had executed a prenuptial agreement with two provisions which became problematic. One required the decedent to maintain a certain life insurance policy with a face value of $200,000 naming his wife as beneficiary, or she would be entitled to that amount from his residuary estate. The second provision prohibited husband from making lifetime gifts to his own children or grandchildren without making similar gifts to his new wife's sons. After his retirement husband stopped making payments on the life insurance policy, with the result that the benefit had dropped to $38,700, although other policies naming wife as beneficiary totaled $114,000. Each year until three years before his death husband had made substantial gifts to his children and grandchildren, but no gifts to his stepsons.The deceased husband's estate was left in trust for his second wife, with the trustee given the discretion to invade the trust principal for her "health, support in reasonable comfort, education, best interests and welfare." The second wife had suffered a debilitating stroke and was moved to another state and then on to a nursing home. The trustee, who was also a child of decedent's from his first marriage and one of the two remainder beneficiaries to the trust, refused to make any discretionary payments without a detailed accounting of the widow's financial circumstances. The widow sued to compel distributions from the trust and the nursing home where she resided was allowed to intervene.
Income Beneficiaries Not Entitled to Force Replacement of Trustee (Est. of Berthot)
A grandmother's trust provided income to child until her death, and then income to two grandchildren or the surviving grandchild until the death of both, whereupon the trust will end and distribute to great-grandchildren. On the child's death in 1994, the grandchildren began to challenge the bank trustee, alleging that bank's investment policies produced inadequate income and excessive fees. When the bank trustee filed a petition for approval of its account, the grandchildren sought the removal of the trustee and its replacement by a family friend.Will Found Invalid After Unusual Trial (Estate of Volmer)
The son of decedent contacted the lawyer who had prepared the decedent's previous will and told him about changes she allegedly wanted made. The lawyer prepared a new will without speaking with the decedent, and delivered the original document to the son with instructions as to how to have it signed and witnessed. The mother signed the will in the hospital a month later, and died one month after that.Estate Tax Policy and the Politics of Repeal
There was an interesting article in the Washington Post regarding estate tax policy and the politics of the repeal movement. It gives a good background on both sides of the repeal movement.A complaint was filed by elderly woman in 1997 (with five amendments naming additional defendants and causes of action) alleging violations of fiduciary duty, theft, conversion and unjust enrichment dating from transactions as early as 1992. The complaint alleged that the plaintiff was unaware of the misappropriations until 1995, within the four-year statute of limitations applicable to most of the counts of the complaint.
Long-Time Companion Claims Against Decedent's Estate Based on Palimony (Matter of Roccamonte)
The decedent, married with children, had lived with a woman other than his wife for 25 years at the time of his death. The couple had begun an affair a decade before that, and the companion had moved across the country to get away from her lover. The decedent had promised her that he would divorce his wife and marry her, and that he would provide for her financially for the rest of her life. Based on that promise she returned to him, divorced her husband and moved into an apartment with him.Devise of Land Includes Claim for Environmental Damages (Estate of Wright)
The decedent's will left an identified parcel of real property to her nephew, and the residue of her estate to two other persons. At the time of making the will (and at the time of her execution of an unrelated codicil), the decedent had been one claimant in an action against an oil company for damages resulting from a brine spill on the property. The residual devisee(s) filed a petition for declaratory judgment, seeking a declaration that the cause of action against the oil company was personal property and passed according to the residuary clause of decedent's will. The specific devisee objected, and the trial court ruled that the environmental damage claim was part of the real estate.Undue Influence Not Shown in Establishment of Joint Tenancy Bank Account (Dickinson v. Dickinson)
The decedent had executed a will in 1977 devising her estate equally among her niece and four nephews. In 1991 one nephew became concerned about her condition and asked another nephew to act -- the result of the second nephew's actions was a new durable power of attorney and a change of six certificates of deposit into joint tenancy with the second nephew.New Form to Report Suspicious Activity
Businesses that issue or redeem money orders or travelers checks must use a new form to report suspicious activities to the IRS.Frivolous Tax Appeals Can Bring Stiff Penalties
The Tax Court states that frivolous cases waste its limited resources and delay the resolution of other taxpayers genuine controversies. Taxpayers who would abuse those rights to stall tax collections could get stiff penalties, up to $25,000.The Service has announced that it will renew a program that matches information from Schedules K-1 filed by pass-through entities (partnerships, S corporations, and trusts) to what the partners, shareholders, and beneficiaries report on their own returns.
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