KEEPING CURRENT P R O B AT E CASES AFTER-ACQUIRED PROPERTY: After-acquired property is not part of a decedent’s estate. The decedent died in 2004 and was the surviving spouse of William Keough, one of the Americans held hostage in Iran from 1979 to 1980. Keough died in 1985. In 2015, Congress enacted legislation providing monetary compensation to the hostages and their families. The surviving spouse, whose will disposed of the residuary estate to a stepchild, one of Keough’s three children, was entitled to receive a payment of $600,000. Under the legislation, if a person entitled to payment is deceased, the payment is made to the personal representative of that person’s estate (34 USC § 20144(d)(1)). The surviving spouse’s sole heir was a post-deceased sibling. The administrator of the estate of the surviving spouse’s post-deceased sibling then petitioned for a declaration that the payment passed through intestacy. The Surrogate’s Court dismissed the petition and, on appeal, the intermediate appellate court in Matter of Estate of Keough, 150 N.Y.S.3d 449 (App. Div. 2021), reversed and held that a will disposes of all property that the testator was entitled to dispose of at death. Because the decedent did not have the capacity to dispose of the payment, it, therefore, passes through intestacy to the estate of the sibling. NON-TESTAMENTARY TRANSFER: Provision in LLC operating agreement purporting to transfer member’s interest on death was invalid testamentary substitute. The decedent was
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.
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.
a member of an LLC whose operating agreement provided that upon death the decedent’s interest in the LLC— the right to share in profits, losses, and distributions—would pass to the decedent’s surviving spouse. Voting rights were to be assigned to other members. The surviving spouse brought a declaratory judgment action for confirmation of ownership of the decedent’s interest, and the trial court found in the spouse’s favor. On appeal by the decedent’s estate, the court reversed in Potter v. Potter, 252 A.3d 17 (Md. Ct. Spec. App. 2021), holding that the attempted disposition on death was an invalid testamentary substitute because the decedent had complete control of the property during life, and the only way to dispose of such property at death is through a valid will. PROBATE EXCEPTION: Probate exception did not apply to suit against bank over investment account in which plaintiff had been co-owner with the decedent. In Fisher v. PNC Bank, N.A., 2 F.4th 1352 (11th Cir. 2021), the Eleventh Circuit reversed the district court’s dismissal of a suit brought under diversity jurisdiction on the ground that hearing it would violate the probate exception. The appellate court held the exception was inapplicable because the plaintiff ’s allegation that the defendant bank mishandled the decedent’s investment account
before the decedent’s death did not involve any of the three situations to which the probate exception applies: a probate proceeding, questions of estate administration, or disputes involving property in the custody of a state probate court. STANDING OF TRUST BENEFICIARIES: Beneficiaries do not have standing to sue third party for alleged harm to trust. Remainder beneficiaries brought suit against the estate of the life beneficiary, alleging that the beneficiary fraudulently induced the trustee to exercise discretion to make principal distributions to the life beneficiary. The trial court dismissed the action for lack of standing, and on appeal, the Supreme Court of South Dakota affirmed in Matter of Estate of Calvin, 963 N.W.2d 319 (S.D. 2021). The court held that the beneficiaries would have standing to sue a third party only if they could show that the trustee would not or could not pursue the claim. STANDING OF WILL BENEFICIARIES: Beneficiaries of a prior will do not have standing to sue to recover property for estate. Two of the decedent’s three children sued the decedent’s surviving spouse and the decedent’s third child, the personal representative of the estate. The suit alleged that inter vivos transfers the decedent had made benefitting the spouse and the third child, which resulted in the ademption of gifts made to them under a prior will, were the result of undue influence. The trial court granted the defendants’ motion to dismiss on grounds of lack of standing, and the Supreme Court of Virginia affirmed in Platt v. Griffith, 858 S.E.2d 413 (Va. 2021). The court stated that because rescission of the inter vivos transfers would directly benefit the estate, only the personal representative had standing to assert the claim.
Published in Probate & Property, Volume 36, No 1 © 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.
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