Keeping Current—Probate

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

CASES

ACCEPTANCE OF BENEFITS: Contest barred by acceptance of benefits even if less than amount receivable upon a successful contest. The executor distributed to a child of the testator a mutual fund account specifically bequeathed to the child. The child assumed ownership of the account and five months later sued to set aside the will alleging undue influence by the executor, another child of the testator. The executor moved to dismiss for lack of standing and the trial court agreed because accepting a benefit under the will prevents the beneficiary from attacking the will’s validity. The intermediate appellate court reversed, holding that the child was not estopped because the benefit accepted was worth less than what the child would receive if the suit were successful. On appeal by the executor, the Texas Supreme Court reversed in Estate of Johnson, 64 Tex. Sup. Ct. J. 1160 (Tex. 2021), holding that the application of the acceptance of benefits doctrine does not depend on the value of the interest accepted under the will.

EXECUTOR POWERS: Statutory powers authorized the executor to convey property devised to a trust. In Lockhart v. Chisos Minerals, LLC, 621 S.W.3d 89 (Tex. App. 2021), a Texas intermediate appellate court held that the terms of a will giving the executor all the statutory powers given to a trustee authorized the executor to convey the real property of the estate that passes under the residuary devise to an existing trust for consideration.

Therefore, the executor, who was also the trustee of the trust, could not challenge the validity of the deed on the grounds that the executor had not signed the deed in a trustee capacity.

LAPSE: Devise to charity does not lapse so long as the charity is in existence when the testator died. The testator’s will made a devise to a nursing home operated as a charity under IRC § 501(c)(3). At the time of the testator’s death, the nursing home was a party to an agreement with a for-profit entity to transfer its operations and licenses to the entity once a new facility was completed. After filing estate tax returns identifying the devise as a charitable gift, the executor petitioned for construction of the will. The trial court agreed with the executor that the devise had lapsed because the nursing home was no longer operating as a charity at the time of the testator’s death. On appeal, the Supreme Court of Nebraska in In re Estate of Akerson, 960 N.W.2d 719 (Neb. 2021), reversed because the nursing home was operating as a charity on the date of the decedent’s death and thus the agreement was irrelevant.

NO-CONTEST CLAUSE: No-contest clause applies to a settlor who is a trustee. In its opinion in McMurtrie v. McMurtrie, No. 200404, 2021 WL 1569396 (Va. Apr. 22, 2021), the Supreme Court of Virginia held that a no-contest clause in a trust that applies to “any beneficiary” also applies to the settlor who is the sole life beneficiary.

TORTIOUS INTERFERENCE: A plaintiff must prove the defendant’s knowledge of the plaintiff ’s expectations. The defendants in a suit alleging tortious interference with inheritance won their summary judgment motion because the trial court agreed that the plaintiffs had not presented evidence to create a sufficient dispute of a material fact, that is, whether the defendants had knowledge of any inheritance the plaintiffs expected. The plaintiffs appealed and the Supreme Court of Iowa affirmed in Buboltz v. Birusingh, 962 N.W. 2d 747 (Iowa 2021), holding that an element of the cause of action is the defendant’s “purpose to interfere with the plaintiff ’s expectancy,” citing Restatement (Third), Torts: Liability for Economic Harm, § 19, and stating that purpose to interfere requires knowledge of the expectancy.

TORTIOUS INTERFERENCE: Denial of an undue influence claim prevents bringing action based on tortious interference. The decedent’s surviving spouse challenged the admission to probate of the decedent’s will alleging undue influence by the decedent’s child from a prior marriage and the decedent’s attorney. After an evidentiary hearing, the probate court dismissed the objections, finding there was insufficient evidence of undue influence, and admitted the will to probate. The surviving spouse then brought an action against the child and the attorney alleging tortious interference with inheritance and with contractual relations regarding revision of a pre-nuptial agreement. The trial court granted the defendants’ motion for summary judgment. On appeal, the Connecticut intermediate appellate court in Solon v. Slater, 253 A. 3d 503 (Conn. App. 2021), affirmed, agreeing that the action was barred by collateral estoppel because the probate court decision had already fully addressed the same allegations in disposing of the undue influence claim.

TRUST PROTECTOR: Trust protector’s action voided by indirect undue influence. In its opinion in Matter of ABB Trust, 491 P.3d 1120 (Ariz. Ct. App. 2021), an intermediate Arizona appellate court held that Ariz. Rev. Stat. § 14-10406, which makes void a trust “to the extent its creation was induced by fraud, duress or undue influence” (identical to UTC § 406), means that a person alleged to have exercised undue influence to procure an amendment of a trust need not exercise undue influence directly on the person authorized to amend the trust. The court, therefore, reversed the dismissal of the suit and remanded for trial to determine if a trust protector amended a trust because of pressure from the settlor who was in turn subjected to undue influence by the settlor’s spouse.

TAX CASES, RULINGS, AND REGULATIONS

ESTATE TAX: Marital deduction allowed because marriage was considered valid by a foreign country. Over several decades, the decedent had married three women. Before his death, a New York court declared the decedent’s divorce in Mexico of his first marriage invalid and his marriage to his second wife null and void. Then decedent obtained a religious divorce for the first marriage under rabbinical law in New York. The decedent then traveled to Israel and married his third wife in an Orthodox Jewish ceremony without obtaining a divorce of the first marriage in a US state court. The Israeli marriage certificate noted that the decedent was free to marry because he was divorced. Upon the decedent’s death, he left the bulk of his estate to his third wife. The US government denied the marital deduction claimed by his estate stating the first wife was the decedent’s wife at death, his divorce was not valid, and accordingly, the property did not pass to the decedent’s third spouse. In Estate of Grossman v. Commissioner, 121 T.C.M. 1492 (2021), the Tax Court held the issue under the Tax Code was whether the third marriage was valid, not whether the religious divorce was valid. New York law uses the place of celebration test to evaluate the legality of a marriage. Because Israel recognized the marriage as valid, it was a valid marriage under New York state law and the estate could claim the marital deduction.

TRUSTS: A taxpayer may pursue a claim for improper levy only against the IRS, not the custodian of the funds. A family trust named the taxpayer as a beneficiary and held two accounts at a bank. The IRS issued two levies upon the bank, naming the taxpayer. The bank transferred the amount of funds identified in the levies from the trust into a suspense account. Later, when the taxpayer disputed the levies, the bank transferred the funds to a state court register. The trustee brought suit against both the United States and the bank. The trustee argued that the IRS had improperly levied and the funds should not have been turned over. In Newman v. Santander Bank, N.A., No. 20-10632-FDS, 2021 WL 2900986 (D. Mass. July 9, 2021), the court held that the taxpayer could not sue the bank for breach of contract, conversion, or unfair trade practices under state law. It noted that a bank must comply with a notice of levy unless it is not in possession of the taxpayer’s property or the property is subject to a prior judicial attachment or execution. The bank has no liability for its surrender of property under the levy and is held immune from taxpayer claims stating the property was improperly released.

LITERATURE

ABATEMENT: Mark R. Siegel argues that abatement of a decedent’s property to pay debts and other expenses should encompass non-probate assets in Extending Abatement to Non-Probate Succession, 13 Est. Plan. & Comm. Prop. L.J. 487 (2021).

CALIFORNIA—CONSERVATOR- SHIPS: In her Comment, It’s Mom’s Money and I Want It Now: A Review of Whether the Conservatee Should Continue to Pay the Attorney Fees of Feuding Parties, 52 U. Pac. L. Rev. 963 (July 2021), Julianna Wright examines the current California Probate Code and the California Rules of Court and proposes an amendment that limits the circumstances under which the conservatee’s estate pays attorney fees. Her proposed amendment underscores the idea that the conservatee’s estate is no longer responsible for paying all attorney fees in a disputed conservatorship case.

ESTATE LITIGATION: In their Note, Wealth Transfer Tax Planning After the Tax Cuts and Jobs Act, 46 B.Y.U. L. Rev. 1411 (2021), John A. Miller and Jeffrey A. Maine discuss the repercussions associated with keeping an estate open for a prolonged period and examine whether keeping an estate in litigation violates the testator’s intent.

GRANTOR TRUSTS: In Implications of Termination of Grantor Trust Status, 13 Est. Plan. & Comm. Prop. L.J. 443 (2021), Arielle M. Prangner provides “a resource to highlight issues that require consideration when termination of grantor trust status has occurred, is being contemplated, or is foreseeable.”

GUARDIANSHIP: In her Comment, Don’t You Know That Your Law Is Toxic? Britney Spears and Abusive Guardianship: A Revisionary Approach to the Uniform Probate Code, California Probate Code, and Texas Estates Code to Ensure Equitable Outcomes, 13 Est. Plan. & Comm. Prop. L.J. 587 (2021), Lisa Zammiello “proposes improvements to existing laws and argues the need for supportive services to ensure equitable enforcement of protective laws.”

HEIR HUNTING: In Heir Hunting, 169 U. Pa. L. Rev. 383 (2021), David Horton illuminates a mysterious corner of succession law by reporting the results of the first empirical study of heir hunting. Its centerpiece is a hand-collected dataset of 1,349 recent probate matters from San Francisco County, California.

ILLINOIS—GUARDIANS AD LITEM: In Guarding the Guardians: Should Guardians ad Litem Be Immune from Liability for Negligence?, 51 Loy. U. Chi. L.J. 1001 (2020), Alberto Bernabe explores the issue of whether guardians ad litem should be subject to liability and whether the Illinois Supreme Court reached the correct result in Nichols v. Fahrenkamp, concluding that although the facts before the court did not quite support the court’s conclusion, the court made some good suggestions that may help clarify this area of the law in the future.

ILLINOIS—TRUSTS: Susan Bart provides an analysis of how to determine the trust beneficiaries who have more rights than remote beneficiaries in Who Are My Qualified Beneficiaries, Ill. B.J., May 2021, at 26.

INTESTATE SUCCESSION: Megan Doherty Bea and Emily S. Taylor Poppe use the concept of marginalized legal categories to describe how the law disadvantages individuals and groups by transforming inherently ordered social classifications into consequential legal categories employing intestacy laws as an illustration in Marginalized Legal Categories: Social Inequality, Family Structure, and the Laws of Intestacy, 55 Law & Soc’y Rev. 252 (2021).

IOWA—IRREVOCABLE TRUSTS: In his Note, A Changing World Calls for Iowa to Apply the Alter Ego Doctrine to Irrevocable Trusts, 106 Iowa L. Rev. 1477 (2021), Patrick K. Kenney argues that Iowa should regulate this application of the alter ego doctrine through statute, thus limiting judicial discretion and allowing citizens of Iowa to understand the law regarding irrevocable trusts while using them.

KANYE WEST: In An Estate Plan for Kanye West, 39 Cardozo Arts & Ent. L.J. 195 (2021), Thomas E. Simmons proposes a noncharitable purpose trust as a means by which Kanye West’s right of publicity can be safeguarded and appropriately exploited.

MARIJUANA TRUSTS: Brandy M. Parry’s Note, Puff, Puff, Pass: How State Marijuana Laws May Impact Probate Courts and Lead to Liability, 33 Quinnipiac Prob. L.J. 178 (2020), focuses on the potential liability surrounding the passing of marijuana from the decedent to a beneficiary, pointing out that liability may extend not only to the beneficiary but also to the executor and probate judge tasked with the administration of the estate. She proposes creating a marijuana trust as a possible solution to keep assets out of the probate system and limit the potential liability for beneficiaries.

PASS-THROUGH ENTITIES: Kelly M. Perez “examines Estate of Jones v. Commissioner, provides a brief historical context of the opinions that consider tax-affecting in prior Tax Court and Federal Circuit Court opinions, reviews current trends in determining FMV for transfer tax purposes, and offers several key observations, specifically in light of the current economic climate with COVID-19” in Keeping Up With the Joneses: A Fresh Perspective on Tax- Affecting, 13 Est. Plan. & Comm. Prop. L.J. 417 (2021).

TAXATION FOR COHABITANTS: Keeva Terry proposes a theory for the taxation of nonmarriage in Divorce Without Marriage: Taxing Property Transfers Between Cohabiting Adults, 89 U. Cin. L. Rev. 882 (2021), advocating for the adoption of an interdisciplinary approach that incorporates family law principles that more fully recognize the changing landscape of the American family.

TAXATION: Hale E. Sheppard explains international obligations that can trigger significant liabilities by examining recent cases where the government pursued liabilities from surviving spouses, executors of estates, trustees, distributees, and fiduciaries. In Neither Death nor Distance Erases the Issues: IRS Actions Against Deceased or Absconding Taxpayers, 31-JUL J. Multistate Tax’n 06 (July 2021), he identifies the main tools available to the IRS, DOJ, and district courts in international tax collection cases, and analyzes the use of Repatriation Orders over time.

TESTAMENTARY CAPACITY: In The Dilemma of an Aging Population: Evaluating the Treatment of Insane Testators in the Modern Probate Process, 13 Est. Plan. & Comm. Prop. L.J. 389 (2021), Ryan F. Bender evaluates two critical estate planning topics: (1) “the current state of judicial treatment of insane testators in probate and the potential for admitting extrinsic evidence in will contests to improve the protection of testators” and (2) the deductibility of conditional donations to nonprofit organizations and possible policy changes to deductibility in the case of restricted gifts.

TESTAMENTARY SCHEMES: In The Secret Life of Testamentary Schemes, 68 Drake L. Rev. 85 (2020), Richard F. Storrow reveals that testamentary schemes enable a probate court to declare a will’s language plain even when the will suffers from significant omissions in its dispositive provisions. He contends that, as a device that ensures a certain elasticity in the interpretation of wills, testamentary schemes have enabled wills to retain their vitality when the passage of time has rendered their provisions obscure or obsolete.

TEXAS—CONTINGENT REVENUE: In her Comment, Dividing the Intangible: An Examination of Community Property in a World of Contingent Revenue, 13 Est. Plan. & Comm. Prop. L.J. 547 (2021), Mariana Pedroza “calls on the Texas legislature to hold this unique form of revenue as separate property at the time of divorce, giving post-divorce protection to those individuals that seek to retain creative control of their works,” such as those created by social media influencers.

TEXAS—POSTHUMOUS CONCEP- TION: In her Comment, A Piece of You and I: Posthumous Conception and its Implications on Texas Estates Law, 13 Est. Plan. & Comm. Prop. L.J. 509 (2021), Alexis C. Mejia discusses “whether children conceived posthumously are considered beneficiaries of a deceased parent’s estate under the current Texas Estate Code.”

TRANSGENDER HEIRS: By acting in advance of a future matter of first impression, Carla Spivack proposes to unlock the law’s expressive potential and use its norms to create space within it for change by arguing that inheritance law can play an expressive role by presumptively pulling transgender heirs into the notional matrix of what constitutes “family” for inheritance purposes in The Dilemma of the Transgender Heir, 33 Quinnipiac Prob. L.J. 147 (2020).

UNIFORM PROBATE CODE: Richard C. Ausness contends that some of the 1990 UPC’s sections are unnecessarily confusing and complex, while others seem excessively vague and openended. In These Are a Few of My Least Favorite Things, 34 Quinnipiac Prob. L.J. 231 (2021), he identifies some of the worst offenders and suggests ways to improve them.

VIDEO ADVANCE DIRECTIVES: In Video Advance Directives: Growth and Benefits of Audiovisual Recording, 73 SMU L. Rev. 163 (2020), Thaddeus Mason Pope makes the case for video advance directives as a valuable, additional way for individuals to record their health care treatment preferences.

WYOMING—HOLOGRAPHIC WILLS: The application of Wyoming’s holographic will statute creates harsh outcomes when a testator fails to strictly comply with its requirements according to Birney Brayton and Krystle Somers. In Let the Author Do the Talking: Why Wyoming’s Holographic Will Statute Does Not Currently Give the Testator Final Say, 21 Wyo. L. Rev. 371 (2021), they propose two possible solutions to help Wyoming courts reach more equitable outcomes that will better achieve a testator’s intent and further validate homemade wills executed by Wyoming residents.

LEGISLATION

COLORADO amends the Colorado Uniform Trust Code to govern spendthrift and discretionary trusts. 2021 Colo. Legis. Serv. Ch. 170.

COLORADO enacts the Uniform Fiduciary Income and Principal Act. 2021 Colo. Legis. Serv. Ch. 143.

COLORADO prohibits discrimination against a potential organ transplant recipient because of the person’s disability. 2021 Colo. Legis. Serv. Ch. 99.

COLORADO regulates the conversion of human remains to basic elements within a container using an accelerated process. 2021 Colo. Legis. Serv. Ch. 123.

DELAWARE provides that a beneficiary of a discretionary trust has a mere expectancy rather than a property right. 2021 Del. Laws Ch. 69.

FLORIDA adopts the Uniform Directed Trust Act. 2021 Fla. Sess. Law Serv. Ch. 2021-183.

FLORIDA creates an elder-focused dispute resolution process. 2021 Fla. Sess. Law Serv. Ch. 2021-67.

FLORIDA passes the Community Property Trust Act. 2021 Fla. Sess. Law Serv. Ch. 2021-183.

GEORGIA prohibits discrimination against a potential organ transplant recipient because of the person’s physical or mental disability. 2021 Ga. Laws Act 244.

HAWAII enacts the Uniform Trust Code. 2021 Haw. Laws Act 32.

ILLINOIS enacts the Electronic Wills and Remote Witnesses Act. 2021 Ill. Legis. Serv. P.A. 102-167.

ILLINOIS updates its Residential Real Property Transfer on Death Instrument Act. 2021 Ill. Legis. Serv. P.A. 102-68.

LOUISIANA adopts the Uniform Transfer on Death Security Registration Act. 2021 La Sess. Law Serv. Act 167.

MAINE passes the Uniform Trust Decanting Act. 2021 Me. Legis. Serv. Ch. 235.

MARYLAND authorizes electronics wills, powers of attorney, and advance directives. 2021 Md. Laws Ch. 686.

MARYLAND provides enhanced protection against the financial exploitation of susceptible adults and older adults. 2021 Md. Laws Ch. 311.

MARYLAND regulates the custodianship and disposal of original wills. 2021 Md. Laws Ch. 513.

MONTANA prohibits discrimination against a potential organ transplant recipient because of the person’s disability. 2021 Mont. Laws Ch. 487.

NEBRASKA enacts the Uniform Powers of Appointment Act. 2021 Neb. Laws L.B. 501.

NEVADA prohibits discrimination against a potential organ transplant recipient because of the person’s disability. 2021 Nev. Laws Ch. 244.

NEVADA updates laws governing electronic wills and trusts. 2021 Nev. Laws Ch. 209.

NORTH CAROLINA allows the judicial establishment of the validity of a revocable trust during the settlor’s lifetime. 2021 N.C. Laws S.L. 2021-53.

NORTH CAROLINA prohibits discrimination against a potential organ transplant recipient because of the person’s disability. 2021 N.C. Laws S.L. 2021-64.

OREGON authorizes body disposition via alkaline hydrolysis. 2021 Or. Laws Ch. 296.

OREGON provides a comprehensive form for advance directives for health care. 2021 Or. Laws Ch. 328.

RHODE ISLAND prohibits discrimination against a potential organ transplant recipient because of the person’s disability. 2021 R.I. Laws Ch. 21-133.

TENNESSEE prohibits discrimination against a potential organ transplant recipient because of the person’s disability. 2021 Tenn. Laws Pub. Ch. 441.

TEXAS expands the Rule Against Perpetuities period to 300 years for trusts, but a real property asset cannot be restricted for more than 100 years. 2021 Tex. Sess. Law Serv. Ch. 792.