Keeping Current—Probate

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

Keeping Current—Probate Editor: Prof. Gerry W. Beyer, Texas Tech University School of Law, Lubbock, TX 79409, gwb@ProfessorBeyer. com. Contributors: Claire G. Hargrove, Paula Moore, Prof. William P. LaPiana, and Jake W. Villanueva.

CASES

JOINT TENANCIES: Execution of a contract of sale does not sever a joint tenancy.

The decedent and one of the decedent’s children owned real property as joint tenants with the right of survivorship. They entered into a contract to sell the property about a month before the decedent’s death, and the sale closed seven days after the decedent’s death. The probate court ruled that the agreement to sell severed the joint tenancy and thus the decedent’s estate was entitled to one-half of the purchase price. In Matter of Estate of Moore, 869 S.E.2d 868 (S.C. Ct. App. 2022), the South Carolina intermediate appellate court reversed, holding that severance does not automatically occur on entering into a sales contract, absent an indication in the contract or the circumstances that the parties intend severance. In the absence of any such evidence, the surviving joint tenant is entitled to all of the sale proceeds.

NO-CONTEST CLAUSES: No violation by objection to ministerial acts.

The decedent’s will and trust both contained no-contest clauses. The clause in the trust required forfeiture on the part of any beneficiary who objects to any action the trustee takes in good faith. One of the beneficiaries objected to the trustee’s inclusion of certain property in the estate’s Connecticut estate tax return. Another beneficiary filed a complaint alleging that the objection violated the nocontest clause. Both the Probate Court and the Superior Court found that the objecting beneficiary did not violate the no-contest clause. In Salce v. Cardello, 269 A.3d 889 (Conn. App. Ct. 2022), the appellate court affirmed, holding that although the objecting beneficiary’s objections were technical violations of the no-contest clause, to enforce the clause in this instance would violate public policy because it would penalize objections to ministerial acts not involving the fiduciary’s exercise of judgment and limit judicial oversight of the fiduciary.

TRUST CONTEST: Tort action is not a trust contest.

The Massachusetts version of U.T.C. § 604, Mass. Gen. L. 203E § 604, requires contests over the validity of a revocable trust to be brought within the earlier of one year of the settlor’s death or 60 days after receiving notice of the existence of the trust and information about how to contact the trustee. The Massachusetts Supreme Judicial Court held in Sacks v. Dissinger, 178 N.E.3d 388 (Mass. 2021), that the code provision does not apply to claims based on intentional interference with an expectancy and unjust enrichment brought against persons alleged to have exerted undue influence on the settlor, resulting in the plaintiffs’ elimination as beneficiaries. The court decided that these claims involved not the validity of the trust but rather harm to the plaintiffs from the actions of other persons.

TRUST CONVEYANCE: Trust terms prevent the settlor-trustee from conveying property in own name.

The individual who was both the surviving settlor and trustee of a revocable trust conveyed trust real estate by a deed signed in the individual’s personal capacity. The successor co-trustees brought an action to invalidate the deed and were granted summary judgment by the trial court, which was affirmed by the Arkansas intermediate appellate court in Leavell v. Gentry, 636 S.W.3d 794 (Ark. Ct. App. 2021). The court agreed with the trial court that trust terms forbidding the transfer of trust property by the settlor in the settlor’s own name meant the deed was invalid. In addition, because the trust terms did not set forth a method of revocation or modification, the settlor may do so by any method that manifests clear and convincing evidence of the intent to do so under Ark. Code § 28-73-602(c)(2)(b) (identical to U.T.C. § 602). Execution of the deed did not provide the needed evidence because the settlor had made transfers of trust property by executing deeds as a co-trustee to herself and then executing deeds as an individual.

TRUST JURISDICTION: Court has jurisdiction even though principal place of administration was in another state.

In Allen v. Campbell, 499 P.3d 1103 (Idaho 2021), the Idaho Supreme Court held that a proceeding alleging breach of duty by trustees of a trust created by Idaho residents could be heard in the Idaho courts, even though the principal place of trust administration was moved to Indiana after the settlors’ deaths. The court reversed the grant of a motion to dismiss based on the lack of subject matter jurisdiction, holding that the relevant statute, Idaho Code § 15-7-203 (identical to former U.P.C § 2-703) is concerned only with the issue of forum non conveniens and not with subject matter jurisdiction, disavowing Rasmuson v. Walker Bank & Trust, 625 P.2d 1098 (Idaho 1981), in which the court had held that the statute did indeed deal with jurisdiction.

UNDUE INFLUENCE: Child’s co-trusteeship of parent’s trust and authority as parent’s agent under power of attorney does not give rise to a confidential relationship.

In Matter of Williams, 162 N.Y.S.3d 9 (App. Div. 2022), the New York intermediate appellate court affirmed the Surrogate’s dismissal after trial of allegations by settlor’s stepchildren of undue influence on the settlor of a revocable trust by settlor’s child. The court expressly approved the Surrogate’s refusal to charge on the existence of undue influence as a matter of law due to a confidential relationship between the settlor and the child because the close family relationship “counterbalances” any presumption of undue influence. Nor were the stepchildren entitled to submit the question of a confidential relationship to the jury. As the settlor’s only surviving child, “it makes sense” that the child would replace the settlor’s deceased child as co-trustee, agent, and health care proxy. In addition, the settlor’s right to remove the co-trustee and amend the trust made the child a trustee “in name only.”

UNDUE INFLUENCE: Testimony rebuts presumption of undue influence despite misallocation of burden.

The trial court refused to find the existence of a confidential relationship between the testator and the testator’s spouse, the alleged source of undue influence. The Supreme Court of Arkansas affirmed in Matter of Estate of Haverstick, 635 S.W.3d 482 (Ark. 2021). Although the marriage and the spouse’s authority as agent under the testator’s power of attorney did create a confidential relationship giving rise to a presumption of undue influence, the testimony elicited by the contestants in their unsuccessful effort to prove that the testator lacked capacity was sufficient to rebut the presumption.

WILL FORMALITIES: Notary can be counted as witness to will.

The testator executed a will containing an attestation clause with signature lines for two witnesses. Only one witness signed. Another clause titled “Affidavit” followed the attestation clause. Its terms recited the facts of the execution ceremony and included the signature and stamp of a notary public. After the testator’s death, the will was offered for probate and both the witness and the notary signed affidavits of proof. The probate court ordered the will admitted over an objection alleging lack of due execution. The Superior Court affirmed. On appeal, the Supreme Court of Rhode Island affirmed in In re Estate of Cardiff, 266 A.3d 1217 (R.I. 2022). The court held that the notary was not disqualified as a witness by also signing as a notary. In addition, the language of the will shows that the testator, the witness, and the notary all signed in the presence of each other, thus fulfilling the requirements of R.I. Gen. Laws § 33-5-5.

TAX CASES, RULINGS, AND REGULATIONS

GROSS ESTATE: Decedent’s lack of termination rights for life insurance policies leads to exclusion from gross estate.

As part of a complex estate plan, the trustee of the decedent’s revocable trust agreed to pay the premiums on life insurance policies taken out on the decedent’s daughter and son-in-law. A separate and irrevocable insurance trust held the policies. The decedent’s children and grandchildren were the beneficiaries of the irrevocable trust. Only the trustee of the insurance trust could terminate the insurance policies, and a family friend served as the sole member of the investment committee to direct the trust. The decedent herself did not have the right to terminate the policies, but the decedent’s revocable trust had the right to be repaid for those premiums. Although the family friend who directed the insurance trust served as one of the decedent’s three agents, the court separated that role from his fiduciary duty to the beneficiaries of the life insurance trust. The receivable the decedent held on the day of her death was the right to receive the greater of the premiums paid or the cash surrender values of the policies when they are terminated. The Tax Court in Estate of Levine v. Comm’r, 158 T.C. No. 2 (2022), held that without any contractual right to terminate the policy, the decedent did not have possession or right to their cash surrender values. Accordingly, the policies’ cash surrender values were not included in the decedent’s gross estate.

LITERATURE

COUPLES ESTATE PLANNING:

In Twenty-First Century Trusts and Ethics: Estate Planning for Couples, 53 Creighton L. Rev. 683 (2020), Carla Spivack re-orients the conversation by posing the fundamental question: given the economic inequality between men and women, and between primary caregivers and primary wage-earners in today’s American family, can a couple—same or opposite sex—ever be assumed to be non-adverse in estate planning? Or would it be wiser to reverse this presumption? She poses this question in the context of the twenty-first-century trust because she thinks that it, in all of its permutations, highlights the identified problems.

FOREIGN TRUSTS:

In his article, Achtung with Your Stiftung: Evolving Concept of Foreign Trusts and Potential Relief for Taxpayers, 33 J. Int’l Tax’n 49 (2022), Hale E. Sheppard identifies obligations associated with having foreign assets, activities, and income, defines the concept of foreign trusts, chronicles the major cases and IRS rulings on this issue from 1955 to the present, explains the IRS’s current foreign trust compliance campaign, and explores potential relief for taxpayers thanks to a recent Revenue Procedure.

FUNERAL PLANNING:

In You Can’t Always Get What You Want: Inconsistent State Statutes Frustrate Decedent Control over Funeral Planning, 55 Real Prop. Tr. & Est. L.J. 147 (2020), Tanya D. Marsh posits that the disconnect between common and statutory law creates problems for decedents and estate planning professionals. She provides a comprehensive appendix listing and summarizing each state’s “personal preference” and “designated agent” laws as an aid to practitioners.

ILLINOIS—TRANSFER ON DEATH DEEDS:

In The New & Improved Transfer on Death Instrument Act, 110 Ill. B.J. 30 (2022), Charles G. Brown and Nathan B. Hinch explain the significant changes made to the law governing transfer on death deeds, including the expansion of the technique to all real property, rather than being limited to residential real property.

INHERITANCE CRIME:

In their article, Inheritance Crimes, 96 Wash. L. Rev. 561 (2021), David Horton and Reid Kress Weisbord expose the dangers of criminalizing this unique area of law, positing that such laws may be unconstitutional in some situations and make probate litigation unreliable. Additionally, because inheritance law and criminal law have been traditionally understood as distinct, jurisdictions have not yet figured out how to gracefully merge them. Finally, this article builds on these insights to argue that states should abolish criminal undue influence, harmonize civil and criminal rules, and create exceptions to abuser laws.

LIMITED PARTNERSHIPS:

Elaine Hightower Gagliardi presents an exploration of the continued viability and new role the limited partnership can take in estate planning in Estate Planning Choice of Wealth Management Entity: The Limited Partnership as an Alternative to the Trust, 53 Creighton L. Rev. 695 (2020).

MEXICO:

Michelle Rosenblatt and Abril Rodriguez Esparza provide an insightful perspective of U.S.-Mexico Cross-Border Estate Planning: Planning Techniques From a U.S. and Mexican Perspective, 14 Est. Plan & Comm. Prop. L.J. 121 (2021).

NEW JERSEY—PROBATE MANUAL:

Gerard G. Brew’s two-volume treatise, New Jersey Estate and Trust Administration and Procedures Manual (2021), provides comprehensive guidance for handling the administration of estates and trusts.

NON-PROBATE ASSETS:

In Just a Will Won’t Cut It: Planning for the Transfer of Non-Probate Assets At Death, 14 Est. Plan & Comm. Prop. L.J. 55 (2021), Arielle M. Prangner explains the importance of planning for assets that pass outside of the probate process and makes helpful suggestions.

PRUDENT INVESTMENT:

C. Boone Schwartzel provides a comprehensive analysis of the UPMIFA in Was It Wise to Try to Implement Trust Law Reforms Through the Uniform Prudent Management of Institutional Funds Act?, 14 Est. Plan & Comm. Prop. L.J. 179 (2021).

PURPOSE TRUSTS:

In his article, Christian Purpose Trusts, 53 Creighton L. Rev. 643 (2020), Thomas E. Simmons contextualizes noncharitable purpose trusts, outlines and critiques the Uniform Trust Code provisions governing purpose trusts, and proposes a corporate purpose trust format that preserves a business founder’s core Christian values modeled on a recent statutory enactment in Oregon.

SLAYER STATUTES:

In her Comment, Avoiding Prison Bars, But Gaining a Bar to Inheritance: A Statutory Solution for the Insane Slayer Through a Comparative Approach, 89 Miss. L.J. 763 (2020), Brittany Brewer argues that the insane slayer should be able to inherit and proposes the comparative solution, reasoning that because insane slayers do not possess the requisite intent, they do not fall under the “manners” required in most slayer statutes and, therefore, should not be barred from inheritance. She further contends that the genetic inheritance of mental illness should not bar inheritance for the insane slayer because it is uncontrollable and unsolicited.

TESTAMENTARY CAPACITY— COGNITIVE COMPETENCE:

Julie Blaskewicz Boron’s essay, Cognitive Competence and Decision-Making Capacity, 53 Creighton L. Rev. 659 (2020), includes information on normative age-related changes in cognition and the relation to capacity and competency. In addition, she discusses appropriate considerations for decisional capacity and evaluation of capacity, along with suggestions to support aging clients.

TESTAMENTARY CAPACITY—ECO- NOMICS:

Ben Chen argues in Capacity Law and Economics, 106 Cornell L. Rev. 1457 (2021), that the mental capacity doctrine in prevailing American law is illsuited for the era of an aging population and suggests that it be reformulated to offer appropriate protection against elder financial abuse without undue intrusion into close families and personal relationships. In particular, when applied to transactions between close relatives and friends, the doctrine should be narrow, determinate, and respectful of individual will and preferences.

TESTAMENTARY CAPACITY— MINOR SOCIAL MEDIA INFLU- ENCERS:

In her Comment, Sucking Success Out of Minor Social Media Influencers: A Call for Testamentary Capacity Rights in Texas, 14 Est. Plan & Comm. Prop. L.J. 337 (2021), Symphony Munoz argues that states should allow commercially valuable minor social media influencers to have the ability to execute wills under certain circumstances.

TEXAS—CUTTING-EDGE ISSUES:

Joyce W. Moore and Christian S. Kelso delve into several complex Texas issues in Unanswered Questions in Wills and Trusts (and How to Try and Answer Them), 14 Est. Plan & Comm. Prop. L.J. 1 (2021).

TEXAS—MARRIAGE:

With Texas being the only state both to follow the community property system and authorize common law marriage, Ana Mitchell Córdova addresses the “disconnect between the legal treatment of marriage in Texas and the people’s understanding and manifestation of a marriage-like relationship” in her Comment, First Comes Love, Then Comes Marriage: Cohabitation As a Framework for Conflicts Between Community Property and Common Law Marriage, 14 Est. Plan & Comm. Prop. L.J. 293 (2021).

WILLS:

In her Comment, Mitigating the Lack of Wills One Brochure At a Time, 14 Est. Plan & Comm. Prop. L.J. 257 (2021), Katelyn Barker proposes that states incorporate “a prompting system and informational brochure into the driver’s license renewal process” to increase awareness of the importance of having a will.

LEGISLATION

INDIANA enhances protections for purchasers of cemetery commodities or services. 2022 Ind. Legis. Serv. P.L. 113-2022.

MISSISSIPPI prohibits discrimination against recipients of an anatomical gift or organ transplant based on disability. 2022 Miss. Laws H.B. 20.

NEBRASKA modifies the inheritance tax structure. 2022 Neb. Laws L.B. 310.

NEW YORK enacts legislation to govern remote ink and electronic notarization. 2022 Sess. Law News N.Y. Ch. 104.

SOUTH CAROLINA authorizes a parent or legal guardian of a medically eligible child to request and revoke a DNR order for emergency services. 2022 S.C. Laws Act 122.

SOUTH DAKOTA allows succession to real property by an affidavit. 2022 S.D. Laws HB 1115.

Published in Probate & Property, Volume 36, No 4 © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.