A PUBLICATION OF THE AMERICAN BAR ASSOCIATION | REAL PROPERTY, TRUST AND ESTATE LAW SECTION VOL 36, NO 5 SEP/OCT 2022 CELEBRITY ESTATE PLANNING Misfires of the Rich and Famous V AERIAL VIEW OF LAND USE UNIFORMRELOCATIONEASEMENTACTCRYPTO AND ACCOUNTSRETIREMENT
Investment Management & Consulting | Trust Services | Family Offi ce Philanthropy & Family Continuity | Real Estate — Katherine, West Hollywood
Patrick is more than my advisor. He’s been there through all of our milestones, from selling our company to watching our two daughters grow up. I confided in him about wanting to help my daughters enhance their income. While I planned to transfer them some of my stocks, Patrick worried about it affecting my liquidity. Knowing the inner workings of my balance sheet, he offered an alternative solution using a charitable trust, suggesting I fund it with artwork I had recently stored away. I was delighted to find out that we could sell the artwork free of capital gains tax and get my children an annuity stream of income—problem solved! Not only did he find a creative solution, but he saw to it that the trust would ultimately support a philanthropic cause near and dear to my heart. Patrick didn’t offer the easiest solution. Instead, he looked at the big picture and found an option that supported all of my goals. One that he wouldn’t have known without paying attention to the little things.
His big picture approach off ered a priceless solution.
$10 MILLION MARKETABLE SECURITIES AND/OR LIQUID ASSETS REQUIRED. Investment and Wealth Management Services are provided by Whittier Trust Company and The Whittier Trust Company of Nevada, Inc. (referred to herein individually and collectively as “Whittier Trust”), state-chartered trust companies wholly owned by Whittier Holdings, Inc. (“WHI”), a closely held holding company. This document is provided for informational purposes only and is not intended, and should not be construed, as investment, tax or legal advice. Past performance is no guarantee of future results and no investment or ﬁnancial planning strategy can guarantee proﬁt or protection against losses. All names, characters, and incidents, except for certain incidental references, are ﬁctitious. Any resemblance to real persons, living or dead, is entirely coincidental.
CONTACT TIM MCCARTHY | 626.463.2545 |
September/OctOber 2022 1 Published in Probate & Property, Volume 36, No 5 © 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. PROFESSORS’ CORNER Explore opportunities to get in front of more than 18,000 Real Property, Trust and Estate Law attorneys. Sponsorship and advertising opportunities are available now! CHRIS MARTIN | Corporate Opportunities 410.584.1905 | firstname.lastname@example.org BRYAN LAMBERT | Law Firm Opportunities 312-835.8978 | email@example.com Partner with us www.ambar.org/rptesponsorships SPONSORSHIPIS ONE SIMPLE WAY TO MAKE DIFFERENCEA A monthly webinar featuring a panel of professors addressing recent cases or issues of relevance to practitioners and scholars of real estate or trusts and estates. FREE for RPTE Section members! Register for each webinar at http://ambar.org/ProfessorsCorner UNIFORM ELECTRONIC ESTATE PLANNING DOCUMENTS EXECUTION ACT Tuesday, September 13, 2022 12:30-1:30 pm ET GERRY BEYER, Texas Tech University TURNEY P. BERRY, Wyatt, Tarrant & Combs, LLP Moderator: BRADLEY MYERS, University of North Dakota
September/OctOber 20222 Published in Probate & Property, Volume 36, No 5 © 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. September/October 2022 • Vol. 36 No. 5 CONTENTS 24 12 Features 12 Celebrity Estate Planning: Misfires of the Rich and Famous V By Jessica Galligan Goldsmith, Stacia C. Kroetz, David E. Stutzman, Daniel J. Studin, Erica HowardPotter, Lauren G. Dell, and Samuel F. Thomas 24 The Aerial View of Land Use: Preempting the Locals for Improved Housing Access By Shelby D. Green and Bailey Andree 34 Crypto and Retirement Accounts—Can You? By Mark R. Parthemer 40 Easements on the Move: The Uniform Easement Relocation Act By John A. Lovett 46 Federal Real Property Case Law Update By Manuel Farach 50 The Remotest Idea—Practical and Ethical Lessons Learned During the Pandemic By Pamela E. Barker, Melissa G. Powers, and Ben Lund Departments 4 Section News 8 Young Lawyers Network 9 Uniform Laws Update 10 Career Development and Wellness 18 Keeping Current—Property 30 Keeping Current—Probate 58 Land Use Update 60 Technology—Property 64 The Last Word
Editor Edward T. Brading 208 Sunset Drive, Suite 409 Johnson City, TN 37604 Articles Editor, Real Property Brent C. Shaffer Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 N. King Street Wilmington, DE 19801 Articles Editor, Trust and Estate Michael A. Sneeringer Porter Wright Morris & Arthur LLP 9132 Strada Place, 3rd Floor Naples, FL 34108
All correspondence and manuscripts should be sent to the editors of Probate & Property Probate & Property (ISSN: 0164-0372) is published six times a year (in January/February, March/ April, May/June, July/August, September/October, and November/December) as a service to its members by the American Bar Association Section of Real Property, Trust and Estate Law. Editorial, advertising, subscription, and circulation offices: 321 N. Clark Street, Chicago, IL The60654-7598.priceofan annual subscription for members of the Section of Real Property, Trust and Estate Law ($20) is included in their dues and is not deductible therefrom. Any member of the ABA may become a member of the Section of Real Property, Trust and Estate Law by sending annual dues of $70 and an application addressed to the Section; ABA membership is a prerequisite to Section membership. Individuals and institutions not eligible for ABA membership may subscribe to Probate & Property for $150 per year. Single copies are $7 plus postage and handling. Requests for subscriptions or back issues should be addressed to: ABA Service Center, American Bar Association, 321 N. Clark Street, Chicago, IL 60654-7598, (800) 285-2221, fax (312) 988-5528, or email
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POSTMASTER: Send change of address notices to Probate & Property, c/o Member Services, American Bar Association, ABA Service Center, 321 N. Clark Street, Chicago, IL 60654-7598.
Probate & Property is designed to assist lawyers practicing in the areas of real estate, wills, trusts, and estates by providing articles and editorial matter written in a readable and informative style. The articles, other editorial content, and advertisements are intended to give up-to-date, practical information that will aid lawyers in giving their clients accurate, prompt, and efficient service.
Section | American
September/OctOber 2022 3
ABA DirectorPUBLISHING Donna Gollmer Managing Editor Erin Johnson Remotigue Art Director Andrew O. Alcala Manager, Production Services Marisa L’Heureux Production Coordinator Scott Lesniak
Senior ArticlesAssociateEditors Thomas M. Featherston Jr. Michael J. Glazerman Associate Articles Editors Robert C. Barton Travis A. Beaton Kevin G. Bender Kathleen K. Law Jennifer E. Okcular Heidi G. Robertson Aaron Schwabach Bruce A. Tannahill Departments Editor James C. Smith Associate Departments Editor Soo Yeon Lee
Published in Probate & Property, Volume 36, No 5 © 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. Publication of the Real Property, Trust and Estate Law Bar
© 2022 American Bar Association. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Contact ABA Copyrights & Contracts, at https://www.americanbar.org/about_the_aba/reprint or via fax at (312) 988-6030, for permission. Printed in the U.S.A.
The materials contained herein represent the opinions of the authors and editors and should not be construed to be those of either the American Bar Association or the Section of Real Property, Trust and Estate Law unless adopted pursuant to the bylaws of the Association. Nothing contained herein is to be considered the rendering of legal or ethical advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. These materials and any forms and agreements herein are intended for educational and informational purposes only.
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Published in Probate & Property, Volume 36, No 5 © 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.
NEW RPTECheck out our library of New Real Property, and Trust and Estate Law Books!
Anatomy of Mortgage Loan Documents: Understanding and Negotiating Key Commercial Real Estate Loan Documents, Third Edition LAWRENCE UCHILL PC: Price:3585431130pages$139.95 / $125.95 (ABA member) / $111.95 (RPTE Section member)
Providing a thorough analysis of the provisions in a real estate mortgage, the analysis and commentary for each provision is useful both for lawyers well-seasoned in commercial mortgage loan practice, as well as for attorneys new to real estate law. ambar.org/anatomyofmortgage3
The Lease Manual: A Practical Guide to Negotiating Office, Retail, and Industrial Leases, Second Edition APRIL F. CONDON WITH RODNEY J. DILLMAN PC: Price:5431131$159.95 / $143.95 (ABA member) $127.95 (RPTE Section member) 558 pages This wholly revised practical manual describes and analyzes typical lease paragraphs for office, retail, and industrial leases, examining and exploring the concerns, needs, and desires of landlords, tenants, lenders, and brokers by analyzing typical lease paragraphs from each point of view. ambar.org/leasemanual
September/OctOber 2022 5 Published in Probate & Property, Volume 36, No 5 © 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. Domestic Asset Protection Trusts: A Practice and Resource Manual EDITOR, ALEXANDER A. BOVE JR. PC: Price:5275431122pages$169.95 / $152.95 (ABA member) / $134.95 (RPTE Section member) Many states have established trusts that offer the protection of the trust assets from the settlor’s creditors. This resource provides information on the trust rules and regulations in the states that have allowed DAPTs, as well as general guidance on key issues. ambar.org/domesticassetrpte TITLE INSURANCE, FIFTH EDITION: A COMPREHENSIVE OVERVIEW OF THE LAW AND COVERAGE JAMES L. GOSDIN PRICE: $229.95 / $206.95 (ABA MEMBER) / $183.95 (RPTE SECTION MEMBER) 1130 PAGES (AND HUNDREDS OF PAGES OF EXHIBITS ONLINE) Title insurance is an increasingly complex and critical factor in real estate transactions, and lawyers must be prepared to play equally critical roles as advisors to their clients. This updated and expanded edition provides practical tools and essential information for real estate attorneys who need to understand title insurance coverage. ambar.org/titleinsrptePUBLICATIONSambar.org/rptebooks
Elizabeth Lindsay-Ochoa, Millis, MA Robert Nemzin, New York, NY Benjamin Orzeske, Chicago, IL Crystal Patterson, Louisville, KY Ray Prather, Chicago, IL Karen Sandler Steinert, Minneapolis, MN
James R. Carey, Chicago, IL
Mary E. Vandenack, Omaha, NE Ryan Walsh, Chicago, IL
TRUST AND ESTATE DIVISION ASSISTANT SECRETARY
REAL PROPERTY DIVISION ASSISTANT SECRETARY
Karen E. Boxx, Seattle, WA Keri Brown, Houston, TX Vanesa Browne, Washington, DC
Wogan Bernard, New Orleans, LA George P. Bernhardt, Houston, TX Jack Fersko, Roseland, NJ Shelby D. Green, White Plains, NY Christina Jenkins, Dallas, TX Cheryl A. Kelly, St. Louis, MO Soo Yeon Lee, Chicago, IL Jin Liu, Tampa, FL Joseph Lubinski, Denver, CO John P. McNearney, St. Louis, MO Patrick T. Sharkey, Houston, TX James E.A. Slaton, Baton Rouge, LA
James G. Durham, Dayton, OH IMMEDIATE PAST CHAIR Robert C. Paul, East Hampton, NY
Mary Elizabeth Anderson, Louisville, KY
TRUST AND ESTATE DIVISION COUNCIL MEMBERS
SECTION DELEGATES TO HOUSE OF DELEGATES
Published in Probate & Property, Volume 36, No 5 © 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.
SECTION CHAIR-ELECT Robert S. Freedman, Tampa, FL TE VICE CHAIR Benetta Y. Park, Oak Creek, WI RP VICE CHAIR Marie A. Moore, New Orleans, LA FINANCE OFFICER
Rana H. Salti, Madison, WI
ASSISTANT FINANCE OFFICER
David M. English, Columbia, MO Rana H. Salti, Madison, WI
Orlando Lucero, Albuquerque, NM
REAL PROPERTY DIVISION COUNCIL MEMBERS
Timnetra Burruss, Chicago, IL
The Section of Real Property, Trust and Estate Law welcomes its new leadership: SECTION CHAIR Hugh F. Drake, Springfield, IL
James R. Carey, Chicago, IL
Kellye Curtis Clarke, Alexandria, VA
Assistant Secretary Mary Elizabeth Anderson Eligible for re-nomination
Members: Vanesa Browne, Bessemer Trust, 900 17th Street, NW, Suite 1000, Washington, DC 20006, email@example.com
Section Nominations Committee
Positions to be elected for service commencing September 1, 2023 Office Incumbent Eligible for Re-nomination?
Pursuant to Section Bylaw § 6.1(f), the names of the Section’s 2022-2023 Nominations Committee and the Section officer and council positions to be elected at the 2023 Section Annual Meeting are set forth below. Any Section member wishing to suggest a nomination should send the suggested nomination to one of the Nominations Committee members listed below.
Trust and Estate Division
Chair: Stephanie Loomis-Price, Winstead PC, 600 Travis Street, Suite 5200, Houston, TX 77002-3017, firstname.lastname@example.org
Assistant Finance Officer James R. Carey Eligible for nomination as Finance Officer Section Secretary James G. Durham Not eligible for re-nomination
Vice-Chair: Robert C. Paul, 4 Towhee Trail, East Hampton, NY 11937, email@example.com
Real Property Division
Real Property Council Members George P. Bernhardt Eligible for re-nomination Jack Fersko Not eligible for re-nomination Jin Liu Eligible for re-nomination James E. A. Slaton Eligible for re-nomination
September/OctOber 2022 7
Trust and Estate Council Members James R. Carey Not eligible for re-nomination Elizabeth Lindsay-Ochoa Not eligible for re-nomination Ray Prather Eligible for re-nomination Mary E. Vandenack Eligible for re-nomination
Chair-Elect Robert S. Freedman Section Chair (Automatic)
Published in Probate & Property, Volume 36, No 5 © 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.
Shelby D. Green, Elisabeth Haub School of Law, Pace University, 78 North Broadway, White Plains, NY 10603-3796, firstname.lastname@example.org
Vice Chair Benetta Y. Park Eligible for nomination as Chair-Elect
Vice Chair Marie A. Moore Eligible for re-nomination Finance Officer Rana H. Salti Not eligible for re-nomination
Marissa Dungey, Dungey Dougherty PLLC, One Sound Shore Drive, Suite 204, Greenwich, CT 06830, email@example.com
Assistant Secretary Timnetra Burruss Eligible for re-nomination
Section Delegate David M. English Not eligible for re-nomination
Stop Clearing the Decks
In Four Thousand Weeks, Oliver Burke man writes: “[T]he average human lifespan is absurdly, terrifyingly, insult ingly short.” If you live to be 80, you will have had about 4,000 weeks on earth.
Each day, set a hard limit for the num ber of things you allow yourself to work on at any given time. Burkeman rec ommends three projects, but it can be any number. The idea is to set a num ber, and then all incoming demands on your time must wait until one of those three projects has been completed. Fol low through on what you set out to complete, rather than have many halffinished items on a long to-do list. The more you can prevent starting projects and then having to restart them later, the more efficient you will be. Any time you can eliminate that goes toward “reacclimating” yourself on a specific project is time you can allocate else where. In summary, pick a select few projects and knock them out. Anything else you can fit afterward is a bonus.
How do you make the most of your finite time? The book provides insight on how we, as modern humans, view time and how that creates problems for us in an era when technology provides numerous ways to save time, yet we are somehow “busier” than ever. Below are a few takeaways that can assist even the busiest lawyer among us.
Embracing the Limits of Time Organize your days with the under standing that you will not have time for everything that you want to do or that other people want you to do. Avoid denying the temporal limitations that life places on you and embrace them instead. None of us has infinite time to accomplish what we want. A decision to “do” something is also a decision to forego something else. When we are reminded that our day is merely a series of decisions regarding how to allocate our time, it is easier to accept that it is rare that in any given day we are going to accomplish “everything” that needs to get done.
Prioritize What Is Important in Your Practice
client each month, standardizing some forms to streamline your practice, or writing an article to solidify your posi tion as an expert in your area of law, start today and designate a specific time to do so.
Sit down and write the 25 things you want most in your law practice. Then arrange them in order from the most important to the least. The top five should be those around which you organize your time. What about the remaining 20? Avoid them at all costs. Why? They are ambitions insufficiently important to you to form the core of your law practice, yet desirable enough to distract you from the ones that mat ter most. It’s a cliché that one must learn how to say “no” to things one doesn’t want to do, but it’s equally as important to learn how to say “no” to the things you do want to do to free up time for the stuff that really matters. n
YOUNG LAWYERS NETWORK Making the Most of a Finite Life
It’s not uncommon for lawyers to be plagued by busyness. In a frenetic law practice, everything can feel impor tant, and the list of tasks big and small that need to be completed can grow quickly. When this happens, lawyers believe that we can postpone the “big” tasks, which usually require more of our time and focus, for a while because we do not have an immediate and large block of time to allocate to that big task. Instead, we complete numerous smaller, less time-consuming tasks. These are things that need to get done, too, so we feel some accomplishment in having completed them. But what happens? The big and, ostensibly, more important tasks get delayed. We “clear the decks” of the smaller items, but we delay the completion of the big ones. This delay in completion can cause stress in one of two ways. First, the mere delay in the completion creates anxiety. Sec ond, because one may not leave himself enough time to complete the big task, one can rush through its completion and do a mediocre job in the process. What’s the solution? Focus on what is “truly of the greatest consequence while tolerating the discomfort of knowing that, as you do so, the decks will be fill ing up further, with e-mails and errands and other to-do’s, many of which you may never get around to at all.” In other words, the best way to operate a law practice is to let go of the illusion that in any given day, you will have time to do everything that needs to get done. Com plete the big tasks of consequence and let go of the smaller ones, knowing that decisions must be made.
Focus on Three Tasks to the Exclusion of All Else
When It Comes to Time, Pay Yourself First If there is a goal you have for your law practice, claim time for it at the begin ning of the day. If you do not save a little bit of time for yourself each day, there is no moment in the future when you’ll magically be done with every thing and have loads of free time. If there is something that really matters to you, then at some point you are going to have to start doing it. Whether it’s developing a business development plan that will net you an additional
Young Lawyers Network Editor: Josh Crowfoot, Daspin & Aument, LLP, 633 Chestnut St., Suite 600, Chattanooga, Tennessee 37450, daspinaument.com.jcrowfoot@
Unlike a joint tenancy, cotenants under a tenancy in common have no right of survivorship. Their interest in the prop erty passes to their heirs or devisees at death.Tenancies in common can be cre ated intentionally or unintentionally. Whenever someone dies intestate with multiple heirs, a tenancy in common is created by default. If the property passes through multiple generations in this manner, the number of cotenants can multiply quickly. The presence of many cotenants makes management of the property more difficult as disagree ments over the use and upkeep of the property become more likely. A few years ago, the Uniform Law Commission (ULC) approved an act to address one major issue involving a subset of tenancies in common: abusive partition actions. A speculator seeking to acquire property at a bargain price can buy one cotenant’s interest and then file a partition action, potentially forcing a sale of the property at auction. The Uniform Partition of Heirs Prop erty Act (UPHPA) helps the owners of inherited property defend against such actions with a series of due process reforms: enhanced notice; independent appraisal to determine the value of the property; an option for the cotenants who did not request a partition sale to
Rethinking the Law of Tenancy in Common
UNIFORM LAWS UPDATE
September/OctOber 2022 9
A tenancy in common is an arrange ment in which multiple persons own undivided shares of the same property.
Uniform Laws Update Editor: Benjamin Orzeske, Chief Counsel, Uniform Law Commission, 111 N. Wabash Avenue, Suite 1010, Chicago, IL 60602.
Under the common law, each cotenant has an equal right to use and enjoy the property but may not exclude any other cotenant from any part of the property.
Theproperty.drafting committee will con tinue to meet and revise its draft over the next year, with final approval pos sible by summer 2023. All RPTE members with interest or expertise are invited to participate in the drafting committee’s efforts to reform the rules governing the management of tenan cies in common. Sign up to follow the committee’s work at www.uniformlaws. org. n purchase the interest of the plaintiff cotenant; a strengthened preference for partition in kind (physical division) of the property; and, if the property must be sold, a requirement to market the property openly to all potential buyers, including those who intend to finance the purchase. To date, the UPHPA has been enacted in 20 states and the US Virgin Islands and is under consider ation in several more. Building on this successful founda tion, last year the ULC formed a drafting committee to consider further reforms to the common law of tenancies in com mon. The committee has met several times and read a draft act for comment and critique at the recent ULC Annual meeting in July 2022. The proposed reforms would eliminate the commonlaw rule requiring unanimous consent of all cotenants for property-manage ment decisions and replace it with a three-tier set of rules: 1. For decisions affecting the title, including the transfer, sale, lease, exchange, mortgage, or other disposition of the property, cote nants holding a supermajority of the interests in the property would have to consent. The com mittee suggested an 80-percent threshold. Uniform Laws Update provides information on uniform and model state laws in development as they apply to property, trust, and estate matters. The editors of Probate & Property welcome information and suggestions from readers.
2. For other decisions affecting the property, including changing the existing use or building an improvement, cotenants holding a simple majority of the inter ests in the property would have to consent. 3. Any single cotenant, without the consent of others, could take any reasonable action necessary to preserve the property, including ordinary repairs and payment of expenses such as taxes, insurance, or mortgage installments.
By eliminating the common-law rule requiring unanimous consent for all management decisions, the draft ing committee hopes to alleviate the gridlock that can prevent active man agement of real property when even a single cotenant withholds consent. But the committee also recognizes that the rights of dissenting cotenants must be protected. Under the first two tiers, the majority who propose to take action must deliver a 60-day advance notice to all cotenants. This provides a reason able period for a tenant to object and resolve any differences with the cote nants holding a majority interest, or file a lawsuit if agreement proves impossi ble. The draft act also creates a statutory right to reimbursement of any expenses incurred in taking an action affecting the
Employment as a lawyer can be very challenging on a good day when you are working somewhere you love. If you are working in a culture that isn’t a good fit, you have a recipe for mis ery. In finding a workplace where your values and lifestyle are in sync, under standing the culture of law firms, legal departments, or businesses is extremely important. I worked at four different law firms before deciding to start my own. Though each of the law firms that I joined had excellent lawyers and some admirable characteristics, I failed to find a cultural fit for me. At one firm, I was so miserable that I concluded that I was not cut out for the practice of law. I began pursuing an alternative career. Before I made a career switch, I started my own firm—and I’ve been liv ing mostly happily ever after. I wish I had better understood culture and the importance of cultural fit earlier in my career.Inunderstanding the culture of a legal environment, consider how the firm or business operates. What is efficiency rewarded? Is production valued over avoiding professional burnout? In writing this article, I googled “What do law firms reward?”
CAREER DEVELOPMENT AND WELLNESS
While I was in college, a mentor said to me “When your values and lifestyle are out of sync, you will be in conflict and won’t find happiness. When you live your life following your values, you will be Culturehappy.” has a variety of definitions, but in the business context, culture refers to the work environment of a business. Most law firms and busi nesses establish core values and have a strategic plan. Incorporating the core values into day-to-day operations and functioning is how values are expressed in the firm or business culture.
The first three pages were articles on compensation and bonuses. A couple of the articles do suggest that law firms consider rewarding leadership, inno vation, community service, education, and thought leadership. For someone considering a new position, numerous acceptable ques tions can be asked during the interview process to help identify what is rewarded. It is important to find out what matters to the firm and to make a conscious decision whether what is rewarded is sufficiently consistent with your values that the firm or business will be a good fit. What Is Accepted or Overlooked? Is bad behavior accepted? Common detrimental behaviors include bully ing, lack of respect, “me-too” behaviors, and gaslighting. Poor matter man agement is another issue that may be overlooked.Itismore difficult to ask questions in an interview that will identify bul lying and gaslighting as compared to asking about the compensation system. You can, however, ask about how pro cesses and projects are managed and what the expectations of you would be on those issues. You can also ask about accountability. Investigate In the interview situation, you are likely to meet with those who will pro vide positive stories about culture. Ask good questions, but explore on your own. As you walk through the office, notice the lower-level employees. It rewarded? What is accepted? What is punished? Culture isn’t about what the website says are the great qualities but how the firm or business functions every day. Develop Cultural Competence Culture competence is generally con sidered to be the ability to understand and appreciate cultures and belief systems. In the context of evaluating culture for legal practitioners, I use the term to refer to our ability to be aware of and understand the culture of differ ent forms of legal businesses to help us ascertain what type of culture will allow career satisfaction to be part of a whole life. What Is Rewarded? Historically, law firms value the origina tion of work and production measured in billable hours. A law firm must indeed have rain and production, but consider whether the firm rewards efforts other than rainmaking and pro duction. Is collaboration valued? Are technological contributions to practice
Culture Matters: Finding a Legal Culture Consistent with Your Values
Contributing Author: Mary E. Vandenack, Vandenack Weaver LLC, 17007 Marcy Street, #3, Omaha, NE 68118.
eptember ber 11
REAL PROPERTYBRANDONFELLOWSBRAUER Saul Ewing Arnstein & Lehr LLP Bethesda, MD MARIA CORTES Holland & Knight LLP Philadelphia, PA RYAN ELLARD Womble Bond Dickinson (US) LLP Charleston, SC JESSICA FERGUSON Turner Padget Greenville, SC BRITTANI MILLER Michael, Best & Friedrich LLP Milwaukee, WI TRUST & ESTATECLAIREFELLOWSCARRABBA Day Pitney LLP Providence, RI NATHAN CATANESE Steptoe & Johnson PLLC Pittsburgh, PA NICKOLAS DAVIDSON Ernst & Young U.S. LLP Silver Spring, MD BRIANA LOUGHLIN Winstead PC Austin, TX CHELSEA RUBIO McDermott Will & Emery LLP Washington, DC 2022–2024 RPTE FELLOWS
may be useful to talk to lawyers who have worked at the law firm or business that you are considering, but, in doing so, remember that the right law firm for one person is the wrong law firm for another. Make sure you are clear about what matters to you in a career.
Look closely at the website and lawyer profiles. Do they support community activities that line up with your val ues? Do they engage in activities that are consistent with what you want to do? Are there lawyers that appear to be where you want to be? Persist If you find yourself in any situation in which you are unhappy, evaluate whether it relates to the practice of law, the particular practice area, the culture you are part of, a work/life balance that isn’t working, or whether you should con sider some personal coaching. Always persist in finding a practice and a culture that leads to work/life satisfaction. n
By Jessica Galligan Goldsmith, Stacia C. Kroetz, David E. Stutzman, Daniel J. Studin, Erica Howard-Potter, Lauren G. Dell, and Samuel F. Thomas
ESTATECELEBRITYPLANNING Misfires of
the Rich and Famous V
Background: DMX, an American rapper, songwriter, and actor, died of a heart attack on April 9, 2021, at the age of 50. He was survived by his fiancée, Desiree Lindstorm, and a reported 15 chil dren. After a troubled childhood, DMX started his career as a rapper in the early 90s and became the first artist to debut an album at No. 1 five times in a row on the Billboard 200 charts. He released a total of eight albums and sold over 74 million records worldwide. He was nominated for three Grammys, won the AMA award for Best Rap/Hip Hop Artist in 2000, and was nominated for a num ber of other awards. Despite his success, DMX’s estate was estimated to be worth less than $1 million at the time of his death. The future royalties on his mas ter recordings and publishing will likely be the largest asset of the estate, with an estimated value of $18 million.
September/OctOber 2022 13
Mistakes are often made in estate plans. Unfortu nately, the consequences can be devastating. Celebrities are not immune and can be just as guilty of inattention and poor planning as regular people. When estate planning misfires occur, grieving family mem bers can end up fighting with each other and with taxing authorities. The problems and issues discussed below involve celebrities, but the issues should be considered carefully, as they relate to everyone.
Result: Lindstorm petitioned the court to be considered DMX’s commonlaw wife, but the court ruled that she did not have standing to file. Commonlaw marriage was abolished in New York in 1933. Notably, if Lindstorm and DMX had a valid common-law marriage in another state, then it would likely be recognized in New York. However, as it stands, Lindstorm will not be able to inherit from DMX’s estate. Under New York law, in order for a child to inherit from a parent, there must be a legal parent-child relation ship. If the mother is married when the child is born, her spouse is considered the other legal parent. If the mother is not married, the legal relationship must be established through acknowl edgment of paternity or by a court Order of Filiation. DMX was married to Tashera Simmons for 11 years, and they had four children together, but the other 11 children were born out of wed lock. To the extent that paternity was not already established, such children would have to establish paternity by clear and convincing evidence in order to inherit from his estate. The attorney representing the estate has indicated that all of DMX’s alleged children have been asked to take DNA tests to confirm paternity.Numerous people, including DMX’s fiancée and certain children, petitioned to be the administrator of DMX’s estate. To date, DMX’s three oldest sons have been named temporary administrators of his estate, and they will be respon sible for making many decisions about DMX’s legacy and the future earnings of the estate. Lesson: It is very important to have a will. If engaged, consider including the fiancée in the estate plan, and, above all, be sure to establish paternity when a baby is born. DMX’s failure to have a will is likely to have the most significant impact on his fiancée, who is also the Jessica Galligan Goldsmith is co-managing partner in the White Plains office of Kurzman Eisenberg Corbin & Lever, LLP. Stacia C. Kroetz is a senior vice president in the New York office of Brown Brothers Harriman. David E. Stutzman is counsel in the New York office of Seward & Kissel LLP. Daniel J. Studin is a partner in the New York office of Morrison Cohen LLP. Erica HowardPotter is a partner in the New York office of Schnader Harrison Segal & Lewis LLP. Lauren G. Dell is a strategic advisor in the New York office of Brown Advisory. Samuel F. Thomas is an associate in the New York office of Seward & Kissel LLP.
Earl Simmons, aka DMX: Intestacy, Common Law Marriage, and Nonmarital Children
Estate plan: Unfortunately, DMX did not leave a will. The New York intestacy statute provides that when a decedent is survived by a spouse and issue, $50,000 plus one-half of the residue goes to the spouse, and the balance thereof to issue, by representation. However, when there is issue but no spouse, the whole estate passes to issue by representation.
DMX performing at the House of Blues Chicago in June 4, 2019. Photo by Adam Bielawski.
Larry King during a videotaping of his Larry King Live program at the Pentagon in Arlington, Va.
Lesson: Holo graphic wills are not jurisdictionsinvalidSuchrecommended.awillisinmanyand, even when valid, is inherently suspect. The lack of formality and the lack of an attorney present almost always raises concerns about due execution and tes tamentary capacity. In June 2021, King’s estate was reportedly settled between Larry Jr. and Southwick, and it is likely that Southwick received a sizeable por tion of King’s estate—clearly not what the holographic will contemplated.
Photo by Petty Officer 1st Class Chad J. McNeeley via Wikimedia Commons.
Eleanor Close Barzin (Daughter of Marjorie Merriweather Post): Failure to Coordinate an Overall Estate Plan Background: Eleanor Close Barzin was the half-sister of actress Dina Mer rill and the granddaughter of C.W. Post, the cereal magnate who founded Post Consumer Brands, the third-larg est breakfast cereal company in the United States. Her mother, Marjo rie Merriweather Post, was frequently referred to in the press as “the wealthi est woman in the world” and was one of the first women to sit on the board of a major American company. Marjo rie was known for her fabulous parties, her quiet but substantial philanthropy, and her magnificent homes and yachts, most notably including Mar-a-Lago.
Estate Plan: Born in Greenwich, Con necticut, Barzin lived outside of the United States for the majority of her life. When she died in 2006 at her home in Paris, she left behind a $65 million family trust, a $74 million estate con sisting of real and personal property in France and Switzerland, and a sub stantial securities account located in Baltimore. Barzin disposed of her Euro pean assets under a 2001 Swiss will and two French codicils, and her US assets under a 2004 US revocable trust agree ment. Under these documents, Barzin left the greater portion of her European assets to her son, Antal de Bekessy, and the greater portion of her US assets to her granddaughter, Laetitia Allen Vere. Her revocable trust agreement directed her trustees to pay US and foreign death taxes, while her amended Swiss will provided that Barzin’s French inheri tance taxes should be paid by her estate.
King filed for divorce from Southwick, which was still pending when King died on January 23, 2021, from COVID-19. Estate Plan: King reportedly enjoyed gambling—on romance, on his career, on horses, and, fatefully, on his estate planning. King’s last gamble, in October 2019, was to execute a three-sentence holographic (handwritten) will in which he attempted to rewrite his estate plan to cut out Southwick. In relevant part it read: “In the event of my death, any day after the above date I want 100% of my funds to be divided equally among my children Andy, Chaia, Lary Jr [sic] Chance & Cannon.” Allegedly, King pre viously had a well-drawn estate plan that named Southwick as executor of his estate. Result: Southwick objected to the probate of the holographic will on several grounds, including testamen tary capacity and undue influence. Although holographic wills are not respected or valid in many states, King died domiciled in California, and Cali fornia’s Probate Code does permit the probate of a holographic will under certain circumstances. While marinersorforceswithsonsNewonlywillsastedtheharderhaveNewbeenbly,signwillofrequiresCaliforniainsteadthedatedmaywasholographicKing’swillwitnessed,ithavebeenbyoneoftwowitnessesofbyKing.lawthewriteraholographictodateandthewill.NotaifKinghaddomiciledinYork,itwouldbeenmuchtohavewilladmittoprobate,holographicaregenerallypermittedinYorkforperservinginorthearmedduringwarconflict,orforatsea.
Result: The inconsistent tax pro visions in the various documents
Larry King: Gambling on Estate Planning Background: Larry King was most famous for hosting Larry King Live on CNN, the highest-rated late night talk show for a quarter century. King had a complicated family life, marrying seven times and siring five children, including two sons that he had late in life with his last wife, Shawn Southwick. King and Southwick separated in 2019 and two of King’s adult children died in 2020.
mother of his youngest child. DMX may well have wanted to provide for Lind storm, but she will end up receiving nothing from his estate.
Photo by Sgt. Joseph A. Lee via Wikimedia Commons.
Background: Kobe Bryant was a pro fessional basketball player who spent his entire 20-year career with the Los Angeles Lakers, winning five NBA championships. Bryant was an 18-time All-Star, a 15-time member of the AllNBA Team, and the 2008 NBA’s most valuable player. Bryant married Vanessa Laine in 2001, and together they had four daughters, with the youngest born in 2019. Bryant was killed together with his daughter Gianna and seven others in a helicopter crash in 2020 at age 41. His career earnings of $680 million were the most ever by a profes sional athlete, and Bryant reportedly left behind an estate estimated at more than $600 million.
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Eleanor Close Barzin, photographed by John Alfred Piver. Photo provided by Hillwood Estate, Museum & Gardens, Archives & Special Collections, Rights Holder: Digital Object. governing Barzin’s domestic and for eign assets pitted de Bekessy against his own daughter as well as 17 other individuals and charitable organi zations. What ensued was dueling probate proceedings, dueling estate tax returns, a fight over a $10 million fed eral tax refund check sent to de Bekessy as ancillary executor instead of to the trustees of the revocable trust, and actions in multiple courts seeking to determine which assets should pay the various wealth transfer taxes. After a six-day trial, a Maryland circuit court issued a 147-page opinion in which the court reformed the revocable trust agreement and removed the portion of the tax allocation clause that called for the payment of foreign taxes. The court concluded that this language was mis takenly included and was inconsistent with Barzin’s intent. The court’s deci sion was subsequently affirmed by the Maryland Court of Appeals. Lesson: Lack of needtion.withbebequestschange.andthatmusteachThenationpropervariouseffectuatedmentsmultipleisantration.trustincostlystantialoftralclarityabsoluteincenprovisionsestateplanningdocumentscreatesasubriskofdisputesestateandadminisWhenestateplansetforthininstru(orbymeans),coordiiscrucial.drafterofdocumentconsiderassetsfactscanSpecificshouldincludedgreatcauDrafterstobe
Estate Plan: Bryant created a revo cable trust on April 9, 2003, which was restated on December 30, 2011, and amended on July 28, 2017 (collec tively, the “Trust”). The Trust identified and limited the beneficiaries to Bry ant’s wife; daughters Natalia, Gianna, and Bianka; and their descendants. Bry ant’s fourth daughter, Capri, was born on June 20, 2019. When Bryant died in the helicopter crash on January 26, 2020, the Trust did not include Capri as a beneficiary.
Kobe Bryant: Failure to Include Youngest Child in Estate Plan
Kobe Bryant stands ready to shoot a free throw during a game against the Golden State Warriors.
aware that tax apportionment clauses, whether contained in the governing documents or simply applied under default law, can inadvertently over ride dispositive provisions. If an estate plan has ties to multiple jurisdictions, a careful analysis of applicable proce dural, tax, and other local rules must be performed, and local counsel must be retained, in order to ensure that the wishes of the testator are ultimately met.
Background: Kenny Rogers was a coun try music legend most famous for his classic hit “The Gambler.” He was inducted into the Country Music Hall of Fame in 2013, but notably, Rogers was also one of the most successful cross over artists of all time. He had more than 120 hit singles, topped the pop and country album charts for more than 200 total weeks, and sold more than 100 million records worldwide. In addition to his storied music career, Rogers was also an actor, producer, and entrepreneur who earned an estimated $250 million during his lifetime. Rog ers married five times between 1958 and 1997 and had five children with four of his wives. Rogers was married to his surviving spouse, Wanda Miller, for 22 years before his death on March 20, 2020, at the age of 81. At that time, Rogers’s oldest child was 60 years old, Miller was 50, and his youngest twins were only 16. Estate Plan: Rogers is believed to have left most of his estate to Miller, including control over his image, musi cal rights, and social media. In 2020, Rogers’s estate sued to block the release of a DVD of his final concert, alleging that the filming was only for “personal use” and that Rogers had denied the filmmaker the right to use the content commercially. It has been theorized that Rogers’s estate intends to produce its own DVD of the final concert with a full retrospective of Rogers’s life. However, Rogers’s musical and publicity rights are likely to have substantial value. It is assumed that Miller will have control
Lesson: Bryant’s Trust illustrates why drafters should not identify a class of beneficiaries using individual names. By identifying each class member by name, Bryant inadvertently disinher ited his youngest child. To avoid this issue, the intended class itself should be used instead. If class members are named, language should be added to take into account future members of that class. For example, Bryant’s Trust could have said, “Natalia, Gianna, Bianka, and any other child born of my marriage to Vanessa.” Using this approach would limit the class to the intended beneficiaries but prevent the unintentional disinheritance of a future class member.
Kenny Rogers: Five Wives, Five Children, No Prenuptial Agreements
Drafters should not identify a class of beneficiaries using individual names.
Result: Following Bryant’s death, the co-trustees of the Trust petitioned the Los Angeles County Superior Court, with the support of the Guardian ad Litem for the minor daughters, to mod ify the Trust to include Capri and her descendants (1) in the “family infor mation” section, (2) as a beneficiary of any trust for Vanessa of which Capri’s sisters were beneficiaries, (3) as permis sible appointees of Vanessa’s power of appointment, and (4) as remainder ben eficiaries of any trust. The court granted the petition and, as a result, Capri was added as a beneficiary of the Trust in the same manner as her sisters.
Kenny Rogers. Photo courtesy of Special Collections, University of Houston Libraries, UH Digital Library via Wikimedia Commons.
Chadwick Boseman: Planning with a Terminal Illness Background: In his relatively brief film career, Black Panther star Chadwick Boseman became one of Hollywood’s most sought-after leading men. At age 35, Boseman earned his first star ring role, playing Jackie Robinson in the biopic 42, and also played famous figures such as James Brown and Thur good Marshall. Boseman was diagnosed with stage III colon cancer at age 39.
Estate Plan: Surprisingly, despite his cancer diagnosis, Boseman died with out a will, leaving approximately $3.5 million to pass under the intestacy laws of the state of California. His estate is therefore subject to court-ordered dis position, which has involved appraisers, referees, creditor claims, and status reports.
Black Panther was shot in 2017 after his diagnosis. It was the first major superhero movie with an African pro tagonist and a majority Black cast and earned more than $1.3 billion world wide. After starring in Black Panther, Boseman reprised the role in two more films, Avengers: Infinity War (2018) and Avengers: Endgame (2019). Filming in between a number of surgeries and while undergoing chemotherapy, Bose man ultimately died of the disease in August 2020 at the age of 43.
over these assets during her lifetime. Result: Rogers never executed a pre nuptial agreement with any of his wives, and lost much of his wealth to divorce. Rogers’s fourth wife, the actress Marianne Gordon, was married to Rog ers for 16 years and received a $60 million settlement (half of Rogers’s assets) when they divorced in 1993. She had one son, Christopher, with Rog ers, and Christopher will likely inherit some or all of his mother’s assets (now worth $119 million, adjusted for infla tion). Miller is the mother of Rogers’s two youngest children, Justin and Jor dan, and it is likely that Miller will leave any assets she has at the time of her death to her own children. Rogers’s two oldest children, born to his first and third wives respectively, are older than Rogers’ surviving spouse and may not inherit anything from their stepmother.
Conclusion The celebrities highlighted above each had an estate misfire. Some had no estate plan at all, and some had plans that suffered from poor drafting or poor planning. Given today’s increasingly varied and complex families, everyone, including but not limited to wealthy celebrities, should protect assets and loved ones by hiring competent estate planning counsel and devising thought ful and comprehensive estate plans. n Chadwick Boseman on the red carpet for Gods of Egypt in New York City on February 24, 2016. Photo by Sachyn via Wikimedia Commons.
Lesson: As Boseman’s story illus trates, even a superhero needs a well-thought-out estate plan. Planners can help ease a terminally ill client’s concerns about how to provide for the client’s loved ones. Clients who are seri ously ill may not want to think about death. However, by ensuring that the client’s legal and financial affairs are in order, and helping the client examine opportunities for tax-advantaged trans fers, an estate planning attorney can assist the client in leaving a lasting leg acy for the client’s family.
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Result: At the time of his death, Bose man was married to Taylor Simone Ledward, did not have any children, and was survived by both of his par ents, Leroy and Carolyn Boseman, and two older brothers. Under California’s intestacy laws, Ledward inherited all of his community property and half of his separate property, and his parents inherited the other half of his separate property. One wonders if this is the tes tamentary arrangement that Boseman would have wanted. Notably, the judge in charge of Boseman’s estate admin istration recently denied a request for his estate to pay the expenses of burial plots for his parents adjacent to his final resting place. Ledward subsequently bought the adjacent crypts for the Bosemans.
Lesson: When a blended fam ily exists, thoughtful estate planning, including the use of a marital trust, can help create more equitable results. Rog ers could have left some or all of his estate in trust for Miller rather than out right. A marital trust would still have delayed the imposition of estate tax until Miller’s death and supported her during her lifetime; however, Rogers could have provided that the mari tal trust remainder passed equally to his five children (or their descendants) upon Miller’s subsequent death. In addition, more robust lifetime plan ning, including the use of prenuptial agreements, could have helped ensure each child’s inheritance. Although Rog ers’s first three divorces occurred early in his career, his divorce agreements could have required that his children from those marriages receive a percent age of his estate on his death. Likewise, Rogers could have funded trusts for his children earlier in his life or maintained life insurance policies providing taxfree death benefits to each child.
INTEREST COMMUNITIES: Email addresses of members are records subject to disclosure on request by unit owner. Harkins owned a condominium unit in Grant Park, a community governed by Minneso ta’s adoption of the Uniform Common Interest Ownership Act (UCIOA). Minn. Stat. §§ 515B.1-101 to 515B.4-118. Harkins sought contact information, including email addresses, for all mem bers of the community’s association so he could solicit support for amend ments to the association’s bylaws. The association provided a list of names but no email or physical addresses. Harkins filed suit arguing the associa tion violated the act, which provides that “[a]ll records, except records relat ing to information that was the basis for closing a board meeting . . ., shall be made reasonably available for exami nation by any unit owner.” Minn. Stat. § 515B.3-118. Harkins also argued the association’s refusal further violated its own bylaws which, similar to the act, provide that “all Association records” shall be available for examination by owners for a proper purpose. The trial court granted judgment for the associ ation, concluding that “all records” do not include email addresses because they are not required by statute to be kept. The appellate court reversed and remanded, finding “all records” is not limited to the minimum statutory records the association is required to maintain. The association appealed, and the supreme court affirmed. The court considered Harkins’s interpreta tion that “all records,” to be reasonable, revert to the other joint tenant in fee simple immediately. After the Mind ocks’ death, Matthew formed an LLC, which acquired his uncle’s 15/64 inter est in the LLC, and then he sued in state court for a declaration that the 2007 deed’s restrictive condition was unreasonable and void as a restraint on alienation. Christina removed the case to the federal district court, which held that the restrictive condition was an invalid restraint on alienation. On appeal, Christina argued that the restric tive condition was a permissible use restraint because the grantors did not intend to restrain alienation but only desired the property to be used by the family. The Tenth Circuit was not con vinced and affirmed the district court ruling, first, explaining that under Colo rado’s public policy, the property should be freely alienable. When an estate in fee simple, as here, is granted, a condi tion that the grantee shall not alienate the land is void. Rejecting Christina’s argument, the court pointed out that use restrictions regulate how property should be used and occupied. In con trast, restraints on alienation generally limit an owner’s right to sell the prop erty to a third person. Nothing in the restrictive condition here mentioned use—either by third parties or by the joint tenants. Instead, the plain text of the covenant limited Matthew’s and Christina’s ability to partition the prop erty or convert their joint tenancy. The court predicted that Colorado would find the restrictive condition to be an unreasonable restraint on alienation. It did not matter, as Christina insisted, that the restriction would last only for the cotenants’ lifetimes because the Colorado Supreme Court had held that even a lifetime restraint on alien ation is void. This follows from the principle that a joint tenant has an indisputable right to extinguish the sur vivorship interest by creating a tenancy plainly means every document, given the statutory context. Preceding the ref erence to “all records,” section 3-118 lists categories of records that the asso ciation “shall keep.” The court stated that if an association keeps informa tion beyond the statutory minimum, it must disclose that information as well. If email addresses are kept as records of membership, which is one of the express categories, then disclosure of those email addresses is required. Because the bylaws provide that terms therein shall have the same meaning as those in the act, they should be con strued the same way. Harkins v. Grant Park Ass’n, 972 N.W.2d 381 (Minn. 2022).
COTENANTS: Restriction on transfer of joint tenancy interest is void as unreasonable restraint on alienation. In two steps, the Mindocks conveyed their family cabin to two of their chil dren and two of their grandchildren. In 1987, the Mindocks conveyed equal 15/64 interests as tenants in common to the children. In 2007, the Mindocks conveyed their remaining 34/64 inter est to their grandchildren, Matthew and Christina, as joint tenants with the right of survivorship. The 2007 deed included a restrictive condition that if either joint tenant, without the writ ten consent of the other, attempted to partition the property or otherwise convert the property into a tenancy in common, then the property would Keeping Current—Property offers a look at selected recent cases, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
KEEPING CURRENT PROPERTY
Keeping Current—Property Editor: Prof. Shelby D. Green, Elisabeth Haub School of Law at Pace University, White Plains, NY 10603, firstname.lastname@example.org. Contributor: Prof. Darryl C. Wilson.
FORECLOSURE: Court may not deny deficiency judgment on basis that original lender sold defaulted mortgage loan years before foreclosure when property value was declining. In 2010, Bank of America made two loans for $610,244 to a veterinary hospital business, secured by a mortgage on real property and a security interest in busi ness assets. In 2014, the loans were in default, and the borrower abandoned the property and unsuccessfully tried to sell it. The bank assigned the loans and mortgages to New England Phoenix, which soon after sued for foreclosure.
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FRAUDULENT TRANSFERS: Imputed knowledge prevents buyer from qualifying as good faith purchaser. Cherry Community Organi zation conveyed eight acres of land to StoneHunt in exchange for StoneHunt’s promise to develop affordable lowincome housing on most of the land. StoneHunt instead resold all of the land, except a half-acre, to market-rate residential builders for enormous prof its. Midtown Area Partners Holdings, LLC, approached StoneHunt regard ing the half-acre, expressing an interest in combining a quarter-acre adja cent parcel it owned for a $50 million mixed-use development. They formed a joint venture and signed an operating agreement. Upon discovery of Stone Hunt’s shenanigans, Cherry filed suit against StoneHunt, but the case was dismissed. Cherry appealed, but, in the meantime, StoneHunt offered to sell the half-acre property to Midtown at a reduced price. They admittedly were trying to move the property beyond the reach of Cherry; they did not pub licize the availability of the property on the open market, did not have it appraised, and did not negotiate the price. Shortly after the appellate court reversed the dismissal of Cherry’s initial case, StoneHunt and Midtown closed the deal and then dissolved their joint venture. Cherry then brought a sec ond action, this time against Midtown, to set aside the transfer of the prop erty, alleging numerous transgressions including a violation of North Carolina’s enactment of the Uniform Voidable Transfers Act (UVTA). N.C. Gen. Stat. §§ 39-23.1 to 39-23.12. In the first action, Cherry recovered a $7 million verdict against StoneHunt, which in the meantime had filed for bankruptcy. The trial court dismissed the Midtown suit with prejudice, finding Midtown acted in a commercially reasonable manner and met its burden of proving it was a good faith purchaser. An appel late court unanimously affirmed. The supreme court reversed, imputing to Midtown knowledge of its co-venturer’s fraudulent intent by virtue of the prin cipal-agent relationship arising from their joint venture. The court noted that the UVTA renders voidable as to a creditor any transfer made when that transfer is consummated by a debtor with the intent to defraud any creditor of the debtor. An exception exists for a transferee that took in good faith for a reasonably equivalent value. However, the doctrine of imputed knowledge may operate to disqualify a purchaser from this exception. Under agency law, a principal is deemed to know facts known to his agent if they are within the scope of the agent’s duties. The creation of a partnership makes each partner an agent of the other partners in matters within the scope of the busi ness. Here, the facts of StoneHunt’s poorly hidden effort to defraud Cherry compelled the imputation of knowledge to its principal, Midtown, rendering the transfer of the property voidable. Cherry Cmty. Org. v. Sellars, 871 S.E.2d 706 (N.C. 2022).
FAIR HOUSING: Broker’s statements pointing to obstacles in renting to Section 8 voucher tenant are discrim ination based on source of income. Vaccaro listed an apartment in his twofamily home for rental with William Raveis Real Estate, Inc., a brokerage agency represented by Henry, a real estate salesperson. Vaccaro wanted a new tenant by April 1. On March 9, Lopez, through her agent, Becker, sub mitted to Henry an application and offer to lease the apartment. Henry replied that all was set for April 1 and that she would soon send over the lease. After Becker forwarded Section 8 Housing Choice Voucher program paperwork to Henry, Henry’s tune changed. In a series of emails and text messages, Henry said that she was not aware that Lopez was a Section 8 ten ant when they first spoke; Vaccaro might not want to wait to complete the administrative process; they did not yet have a signed offer from Lopez; and Vaccaro was considering another offer, which he later accepted. Lopez sued Vaccaro, Henry, and the Raveis agency, alleging a violation of the state fair housing act, which makes it unlaw ful to refuse to rent a dwelling because of a lawful source of income or to make statements indicating any preference, limitation, or discrimination on that basis. Conn. Gen. Stat. § 46a-64c(a)(1), (3). The trial court entered judgment for the defendants, concluding that Hen ry’s statements would not convey to an ordinary listener a rejection or disfa vor of a Section 8 tenancy. The supreme court reversed, first agreeing with the trial court’s finding that Henry’s state ments were not facially discriminatory and the trial court’s use of the ordi nary listener standard in determining whether Henry’s statements in context indicated an impermissibly discrimi natory preference. The supreme court, however, disagreed with the trial court’s conclusion that Henry’s statements would not indicate discrimination to an ordinary listener. Indeed, her statements could not reasonably be understood to mean anything other than that the use of a Section 8 voucher to pay rent would be an obstacle to her lease application. The court went on to hold that the brokerage agency was lia ble under the act for the wrongful acts of its agent because her statements were made in furtherance of the listing con tract. On the other hand, Vaccaro was not vicariously liable for Henry’s state ments because Vaccaro had no control over Henry, who acted as an indepen dent contractor. Lopez v. William Raveis Real Est., Inc., 272 A.3d 150 (Conn. 2022).
KEEPING CURRENT PROPERTY in common. Mindock v. DuMars, 2022 U.S. App. LEXIS 12044 (10th Cir. May 4, 2022).
New England Phoenix filed a supple mental affidavit representing that the value of the property had continued to decline in the years since abandon ment, that the current tax assessment of the property was $439,500, and that its bid was “in between the current listing price of $295,000.00 and the tax-assessed value, a reasonable reflec tion of the fair market value.” The trial court denied the deficiency, citing its discretion whether to grant a deficiency altogether or in part, essentially finding that New England Phoenix should not have purchased loans already in default and already deteriorating because of abandonment or misuse. The supreme court reversed. First, the court acknowl edged that a foreclosure action is a creature of equity, and thus a court has the discretion to deny a deficiency judgment that would be inequitable. The court pointed to a procedural rule that limits deficiency judgments when the foreclosing mortgagee is the win ning bidder to “the difference between the fair market value of the premises at the time of sale” and the loan balance.
Vt. R. Civ. Proc. 80.1(j)(2). Ordinar ily, the interests of both the mortgagor and mortgagee are served by follow ing the formula set forth in Rule 80.1(j) (2). Here, the trial court erred by not making a finding of the property’s fair market value, and its reasons for deny ing the deficiency judgment were “clearly untenable.” New England Phoe nix’s decision to take a risk by buying the loans was irrelevant to the equi ties of granting a deficiency judgment. Instead, the correct standard is whether a secured creditor disposed of the prop erty in a commercially reasonable manner. New Eng. Phoenix Co. v. Grand Isle Veterinary Hosp., Inc., 275 A.3d 174 (Vt. 2022). PARTITION: Mere filing of action for partition by sale does not sever joint tenancy. In 1993, Dunn and Howard acquired property as joint tenants. In 2020, when Dunn was 93 years old, he filed a petition for partition by sale. The court appointed a commissioner, who accepted an offer to buy the property, but Dunn died one day before a hear ing scheduled for the court to review and consider approval of the sales contract. Howard then filed a motion to dismiss the partition proceeding, asserting sole ownership of the prop erty as the surviving joint tenant. But Dunn’s heirs moved under Mass. Gen. Laws c. 241, § 26 to stand in for him. That statute allows the heirs of a party named in a petition to claim that par ty’s share of the property if the party dies before or during a partition action.
The trial court denied Howard’s motion to dismiss. The Supreme Judicial Court reversed, finding that a joint tenancy is not severed by the mere filing of a par tition action nor by the commissioner’s approval of a contract of sale. The joint tenancy continues until all necessary determinations are made and condi tions satisfied. Up until the point of the conveyance, the parties may terminate the proceedings, including termination by settlement or voluntary dismissal. Indeed, the court’s warrant authoriz ing a sale made clear that the partition was not final until the conveyance, and that any sales contract was subject to approval by the judge and the parties’ rights to object to its terms or to set tle the matter consensually, including, presumably, by terminating the action for partition and maintaining the sta tus quo, that is, their joint tenancy. The court went on to conclude that the heirs of the deceased joint tenant could not stand in for him under section 26, as this section surely could not apply to a joint tenancy because there are no heirs to the property if a joint tenant dies before or during a partition proceeding. To read the statute otherwise would abolish the right of survivorship. The court found no evidence of any legisla tive intent to work such a fundamental change to the common law of joint ten ancy. Battle v. Howard, 185 N.E.3d 1 (Mass. 2022).
PREMISES LIABILITY: Negligent landlord and tenant are not entitled to indemnification from contractor who built leased premises. A landlord agreed to construct a store for lease to Fred’s, Inc., a corporation operating a chain of discount general merchandise stores, according to Fred’s conceptual design specifications. The landlord hired a general contractor with experi ence building other Fred’s stores. The contractor built the store entrance with a curb ramp that was flush with the parking lot but sloped upward on each side to adjoin the curbing surround ing the building. The elevation change was visible, but not painted yellow. Five years after its opening, Martha Foun tain visited the store and tripped on the sloped portion of the ramp, fell, and suf fered extensive injuries. Fountain sued the tenant and landlord, both of whom settled on the eve of the trial. The ten ant and landlord then proceeded with an action for equitable indemnifica tion against the contractor. The trial court found that the contractor devi ated from the site plan and engaged in improper construction and that nei ther tenant nor landlord breached any duty owed to Fountain. Relying solely on construction-defect cases rather than cases involving premises liabil ity or equitable indemnification, the trial court granted equitable indemni fication. The appellate court affirmed. The supreme court reversed. The court noted that equitable indemnification requires proof of a special relationship, that the indemnity defendant was at fault in causing injury to a third party, and that the indemnity claimant was not at fault. With this proof, the claim ant may recover costs and expenses that were necessary to defend against the third party’s claim. The court found it unnecessary to determine if a special relationship existed between the parties
KEEPING CURRENT PROPERTY In 2019, the trial court entered a default judgment against the borrower. At the sale, New England Phoenix sub mitted the winning bid of $325,000 and filed a motion for a confirmation order and a deficiency judgment of $465,230. The trial court confirmed the sale but requested additional informa tion before ruling on the request for a deficiency judgment, including the appraisal value in 2010 when the loan was first disbursed, when exactly the borrower abandoned the property, how long the borrower marketed the prop erty for sale, and for what listing price.
Published in Probate & Property, Volume 36, No 5 © 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. to the lease and the contractor because, even if present, the tenant and land lord failed to demonstrate their own absence of fault. The court analyzed the fault issue through the lens of premisesliability cases, finding that, as a matter of law, the tenant and landlord owed a duty to Fountain, an invitee, to keep the premises reasonably safe and warn of any unreasonable danger. The landlord admitted to never inspecting the perim eter of the store to look for tripping hazards, and there was also no evidence to support the trial court’s finding that the tenant made periodic inspections. Instead, their own expert stated that a reasonable inspection would have revealed the risk of the curb elevation change. The tenant and landlord were not entitled to equitable indemnifica tion because they failed to warn of or remedy the condition. Fountain v. Fred’s Inc., 871 S.E.2d 166 (S.C. 2022).
RESTRICTIVE COVENANTS: Cov enants adopted without signatures of all landowners are voidable and ratifiable, but not void. In 1973, Lew ton purported to create a homeowners’ association (HOA) covering 2000 acres of land in rural Utah, subjecting the land to various restrictive covenants. In 2015, purchasers of land in the community who wished to develop their properties discovered that Lew ton had owned only eight of the 2,000 acres when he signed the covenants.
The supreme court affirmed, ruling that the restrictive covenants were voidable and not void ab initio. The distinction mattered as a void interest is not rati fiable and its validity is always subject to attack. In contrast, a voidable inter est can be affirmed. Courts start with a presumption that contracts are void able unless they clearly violate public policy. As sources of such public policy, the landowners pointed to the Wrong ful Lien Act, Utah Code § 38-9-102(12), the statute of frauds, and case law, but the court found none to be persuasive. Finding that because the covenants affected only the individuals sub ject to them, and not the public as a whole, the court declined to declare them absolutely void. Nonetheless, the court remanded for a determination on whether owners of property in the community had ratified the covenants.
WDIS, LLC v. Hi-Country Estates Home owners Ass’n, 2022 WL 1252425 (Utah April 28, 2022).
September/OctOber 2022 21
Thornton Mellon, the high bidder at a tax sale, obtained a tax sale certificate from the City Director of Finance. After the property owner failed to redeem the property, Thornton Mellon filed a com plaint for a judgment of foreclosure, which the circuit court granted. The day after the judgment was entered, Thorn ton Mellon assigned the certificate and judgment to Ty Webb. Under the requirements of the tax sales statute, Md. Code Ann. Tax-Prop. §14-847(b), Thornton Mellon prepared and submit ted to the City Director a tax sale deed for the property, reflecting a conveyance of the property from the City Director to Ty Webb, as assignee of Thornton Mellon, all in proper form. The City Director refused to execute the tax sale deed on the ground that Thornton Mel lon obtained legal title at the moment of entry of the judgment foreclosing the right of redemption; therefore, its assignment was made too late. The City Director asserted that upon the entry of the judgment, the only way that Thorn ton Mellon could effectuate a transfer of its interest in the property was by a two-deed transaction: first, by taking title to the property in a tax sale deed as the grantee; and second, by a deed of conveyance from Thornton Mellon, as the grantor, to Ty Webb as the grantee. It seems the City Director’s “public pol icy reasons” for this stance were entirely fiscal—to collect $2,259 in transfer taxes on two separate conveyances. After some procedural maneuvers
Fred’s Store, scene of the accident in Fountain v. Fred’s Inc. Photo courtesy of Morgan S. Templeton, Wall Templeton & Haldrup, P.A., Charleston, SC.
KEEPING CURRENT PROPERTY
TAX FORECLOSURE: Judgment foreclosing owner’s right of redemp tion gives certificate holder an equitable right to acquire legal title.
None of the other landowners had signed the recorded documents. There after, the landowners sued to quiet title, arguing that the HOA and subse quently amended restrictive covenants were void ab initio, based on public policy, and invalid because not signed by the affected landowners. The trial court denied the landowners’ motion for summary judgment. The court treated the covenants as contracts and applied a two-factor test that required a determination (1) whether the law has already declared the type of con tract at issue to be “absolutely void as against public policy” and (2) whether the contract harms the general public.
KEEPING CURRENT PROPERTY
Don’t leave Probate & Property behind. Send your change of address notice to: Probate & Property American Bar Association 321 North Clark Street Chicago, IL 60654-7598 and a hearing, the circuit court deter mined that the plain language of Md. Code Ann. Tax-Prop. § 14-821 does not limit the assignability of either a tax sale certificate or a judgment fore closing the right of redemption and concluded that the judgment foreclos ing redemption itself was assignable as a chose in action. The intermediate court of appeals affirmed, construing the meaning of a certificate from the statute and noting that the language in the judgment itself reflected the assign ability of the certificate by the use of the words “his successors and assigns.” The court of appeals, in turn, affirmed. The court noted that the fundamental issue in the case turned on the moment when fee simple title to real prop erty vests in a tax sale purchaser. In a treatise-like discussion of the law for conveying title and an extensive review of the statute and case law, the court held that the circuit court’s entry of a judgment foreclosing the owner’s right of redemption in a tax sale proceed ing does not vest fee simple title in the certificate holder. It grants only equi table title to the certificate holder or the right to acquire legal title upon the performance of certain statutory con ditions, including paying the balance of the purchase price, post-sale taxes, interest, and penalties. After this hap pens, the City Director executes a deed conveying fee simple title. Nothing in the statute even hints at the notion that the certificate is somehow extinguished by the judgment or that its assign ment is affected. Moreover, making the certificate of sale assignable after the judgment is consistent with the pub lic policy of ensuring that the tax sale process creates a marketable title for property sold at a tax sale. The policy is served by encouraging the completion of the transfer of interests once a certifi cate holder undertakes to foreclose the right of redemption. Mayor of Baltimore v. Thornton Mellon, LLC, 274 A.3d 1079 (Md. 2022).
Moving? Changing Firms? Retiring?
WIND ENERGY: Grant of a permit for wind turbines does not infringe property rights of neighbors. Crowned Ridge obtained a permit from the Pub lic Utilities Commission (PUC) to construct a large-scale wind energy farm. Residents who lived near the wind farm (Intervenors) opposed the permit primarily based on concerns of ambient noise and shadow flicker. Shadow flicker refers to momentary disruptions of sunlight caused by the rotation of wind turbine blades. The PUC permit contained 49 conditions, including a limit on sound pressure lev els to not more than 45 dBA within 25 feet on any non-participating residence and a shadow flicker limit of not more than 30 hours per year, although resi dents could waive both limitations. The Intervenors filed suit, alleging that (1) the PUC failed to establish sound and shadow flicker standards, (2) the permit subjected their property to a de facto easement, (3) the permit amounted to an uncompensated taking, and (4) the permit foreclosed future nuisance rem edies. The circuit court affirmed the issuance of the permit and rejected all of the Intervenors’ claims. The supreme court affirmed. By reviewing volumi nous evidence and crafting noise and shadow flicker limits, the PUC satisfied its legislative obligations to assure mini mal adverse effects from wind energy projects. The court also concluded that the operation of wind turbines does not result in any discharge of light by casting a shadow any more than a grain silo or multi-story office build ing. Moreover, Crowned Ridge retained no interest in the Intervenors’ property, and the Intervenors were not forced to relinquish any legally cognizable property rights. The court went on to observe that the Intervenors made only a bare assertion of a “per se” taking, unsupported by takings precedents. In any case, there was no physical inva sion of the Intervenors’ property in any legally cognizable sense and no claim of any burdensome regulation of their property. Ehlerbracht v. Crowned Ridge Wind II, LLC, 972 N.W. 2d 477 (S.D. 2022).
Landlords must act in good faith in accepting a tender of payment of past rent made before the issuance of a warrant. 2022 Miss. S.B. 2461.
PREMISES LIABILITY: In What Con stitutes a Reasonable Inspection? The Need for Expert Testimony in Premises Liabil ity Litigation, 39 Quinnipiac L. Rev. 323 (2021), Neal S. Krokosky advocates for a requirement of expert testimony for plaintiffs who rely on a “reasonable inspection” theory in premises liabil ity cases. Reasonable inspection is based on constructive notice, i.e., what a person should have known; what notice the law presumes a person has acquired; what notice is imputed to a person. He believes that an expert tes timony requirement is necessary to ensure that a factfinder’s decision is based on evidence, not impermissible speculation. In the context of premises liability, this is particularly important because, first, a possessor of land is not the insurer of a guest’s safety and, sec ond, the mere happening of an accident is not evidence of negligence. Expert testimony would define the scope of a reasonable inspection of the situa tion at issue. The article provides the basic contours of a premises-liability claim, focusing on the issue of construc tive notice and specifically develops the “reasonable inspection” concept using two decisions issued by the Supreme Court of Nevada. The article then goes on to identify the few cases in which courts have ruled on the issue of whether a plaintiff must produce expert testimony to prove a reason able inspection theory of constructive notice. The author offers a convincing case for his claim, handily anticipating counterarguments.
The amendments also prescribe a form for the summons to the ten ant, describe the parties’ rights, and set out dates for the tenant to move out and for other actions. A tenant is given 72 hours after a warrant of evic tion to remove personal belongings.
NEW JERSEY extends the statute of limitations for construction-defect claims in common interest commu nities. An owner’s claim for damages against a real estate developer is tolled until an election of the board is held and the owners other than the devel oper constitute a majority of the board. 2021 N.J. Laws 379. n
MISSISSIPPI amends residential landlord-tenant law to give protec tion to tenants. To commence an action against a tenant, a landlord must file an affidavit or complaint, stating the factual basis for the action and declaring that it gave the neces sary notices to terminate the tenancy.
Published in Probate & Property, Volume 36, No 5 © 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. PROPERTY
KENTUCKY amends property law on priorities. A purchase-money deed of trust or mortgage granted by a pur chaser will have priority over a prior judgment lien against the purchaser. 2022 Ky. ch. 167.
September/OctOber 2022 23
PUBLIC ROADS: In Identifying Rural Roads, 54 Ind. L. Rev. 151 (2021), Prof. Alan Romero describes and analyzes the rules of the roads—their creation and termination. There are over four million miles of roads in the United States and over two-thirds of them are local roads. The article focuses on the rules for rural roads, which vary con siderably across the country, and shows how this variation leads to a degree of uncertainty about their legal status. About half of the roads are unpaved and hardly recognized as roads. Prof. Romero describes the different uses and purposes—some are used very lit tle or not at all; some were once used but use has ceased; others were built for expected growth that never happened. These circumstances create problems in determining who has what rights and duties concerning the roads. The article offers a useful classification of the rules, which will help in resolving the identi fied uncertainties and related problems.
COLORADOLEGISLATIONamends homestead law. The amendment raises the amount of exemption to $250,000 and expands the definition of dwelling to include railroad cars, cargo containers, vehi cles, camper coaches, and tiny homes, whether stationary or on wheels. 2022 Colo. Ch. 74. HAWAII requires sellers to disclose the risks of sea-level rise to buyers. The law applies to residential real property lying within the boundar ies of a special flood hazard area as officially designated on flood maps promulgated by the National Flood Insurance Program of the Federal Emergency Management Agency or within the sea-level rise exposure area as designated by the Hawaii climate change mitigation and adaptation commission. 2021 Haw. Act 179.
FRAUDULENTLITERATURE TRANSFERS: When is a transfer void as opposed to just voidable? In Fraudulent Transfers: Void and Voidable, 29 Am. Bankr. Inst. L. Rev. 1 (2021), Prof. David Gray Carl son suggests that a flawed transfer can be both simultaneously. This follows from the regime being considered—law versus equity. Under law, a fraudu lent transfer is “void,” but equity might regard the same transfer as voidable. The consequence of the characteriza tion is not idle, i.e., as every lawyer knows, a voidable title transferred to a bona fide purchaser for value becomes a good title. Prof. Carlson explores the ancient law-equity contradiction in the context in which the enforcing creditor already has a money judgment against the transferor and wishes to reach the property in the hands of the trans feree. He also explores the avoidance of fraudulent transfers as a pre-judg ment remedy. He concludes that the law-equity contradiction remains trouble some, even as uniform legislation dealing with this subject matter has evolved in name and substance over time.
Published in Probate & Property, 36, 5 © 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.
September/OctOber 2022 25
According to the old saw, all politics (and its twin, zoning) is local. If one seeks office in municipal government, she must either pledge to ramp up development (new indus tries, more housing) or preserve neighborhoods (downzoning).
By Shelby D. Green and Bailey Andree Shelby D. Green is a professor of law at the Elisabeth Haub School of Law at Pace University, in White Plains, New York, the chair of the Section’s Legal Education Committee, and editor of the Probate & Property Keeping Current—Property column. Bailey Andree is a thirdyear student at Elisabeth Haub School of Law at Pace University in White Plains, New York.
Opposed platforms will animate constituents or antagonize opponents. Caught in the middle of these contests are the devel opers, who face interminable and hostile public hearings and administrative hoops, the under- and unemployed, and the poorly housed. The power to control land use at the local level gives local governments inordinate control over the lives and fortunes of individuals, disrupts housing and construction mar kets, and frustrates larger state issues and policies. To be sure, assessing existing land uses at the local level to develop a vision for desirable and sustainable communities has advantages. Yet, the view from the ground can be limit ing—it is often narrow and insular, and it misses the periphery. Fears that affordable housing development will bring undesir able changes to the neighborhood and “community character,” which ultimately will depress property values and increase
The Aerial View of Land Use
Preempting the Locals for Improved Housing Access
Zoning Upheld and Transmogrified At first, zoning was openly and explic itly racial as cities enacted ordinances that prevented Black people from living in white neighborhoods. The Supreme Court in the 1917 case Buchanan v. War ley struck down one such ordinance. 245 U.S. 60 (1917). Then, in 1926, in Village of Euclid v. Ambler Realty Co., in an ostensibly race-neutral context, the Supreme Court gave its imprimatur to zoning laws that purported to sepa rate incompatible uses, concluding that local governments held inherent police powers to protect the health, safety, and general welfare of citizens. 272 U.S. 365 (1926). The Court highlighted the importance of land use in control ling nuisances, describing apartment buildings (and presumably their occu pants) as parasites to keep at bay. From that ruling, municipalities proceeded to enact all manner of land use limi tations, specifying the size of lots and their siting, height restrictions, infra structure requirements, street width requirements, and more. Euclidean zoning became almost fanatical in its protection of the single-family zone, sometimes unwittingly, other times purposefully, operating to exclude those families lacking the means to buy into these zones and thereby excluding by race. In Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 928 (2d Cir. 1988), the court noted that some times “[facially neutral] rules bear no relation to discrimination upon passage, but develop into powerful discrimina tory mechanisms when applied.” The court explained that “the discriminatory effect of a rule arises in two contexts: adverse impact on a particular minor ity group and harm to the community generally by the perpetuation of segre gation.” Id. at 937. See also Mhany Mgmt., Inc. v. County of Nassau, 819 F.3d 581, Under home rule, local governments are endowed with “police powers” to enact and enforce laws to protect the public safety, health, and general welfare.
Published in Probate & Property, Volume 36, No 5 © 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. crime, litter, and violence, have led to the phenomenon called NIMBYism. NIMBY (Not in My Backyard), Home less Hub, https://bit.ly/3NwQv8b (last visited Apr. 14, 2022). The NIMBYists pressure the elected officials, who pro mote a land use regime that fails to embrace the needs of all in the com munity. Indeed, we see from the cases that many local land use ordinances are designed to exclude. In South Bur lington Township NAACP v. Mt. Laurel, the New Jersey Supreme Court found an ordinance exclusionary and ruled that every county has a duty to provide for its fair share of affordable hous ing. 456 A.2d 390, 490 (N.J. 1983). This decision set in motion a nearly 40-year saga to strike down such ordinances as part of a broader effort to address wide spread housing inadequacy in the state. New Jersey Guide to Affordable Housing, N.J. Dep’t Cmty. Affairs (Mar. 16, 2022), https://bit.ly/38ZGOzX. But why did it take 40 years to impress upon local governments their duties under the Constitution? The answer may at first be found in the predicate for local land use regulation. Creatures of the State Municipalities owe their existence to the state government that created them. According to Justice John F. Dillon in Clinton v. Cedar Rapids and the Missouri River Railroad [M]unicipalities: owe their origins to and derive their powers and rights wholly from, the [state] leg islature. It breathes into them the breath of life, without which they cannot exist. As it creates, so may it destroy. If it may destroy, it may abridge and control. . . .They are, so to phrase it, the mere tenants at will of the legislature. 24 Iowa 455 (1868). This “Dillon’s Rule” had been modified over subsequent years to give local governments varying degrees of discretionary power, called home rule, over specific matters. Some times home rule is embodied in state constitutions, such as in the New Jersey Constitution: “the powers of counties and such municipal corporations shall include not only that granted in express terms, but also those of necessary or fair implication, or incident to the pow ers expressly conferred, or essential thereto, and not inconsistent with or prohibited by this Constitution.” N.J. Const. art. 4, § 7. Under home rule, local governments are endowed with “police powers” to enact and enforce laws to protect the public safety, health, and general welfare. But home rule is curtailed when a local ordinance con flicts with state rules (or the policies of the ruling party). Although states historically have preempted local gov ernments on matters of taxation and education, in some recent cases, states have exerted control over matters that concern issues of housing access. For example, in Austin, Texas, state law pre empted a local ordinance that barred landlords from refusing to accept hous ing choice vouchers. In California, state legislation precludes cities from enact ing restrictions in Accessory Dwelling Unit development. These two examples show that even with home rule, munici palities can take few actions to regulate land use that are not potentially sub ject to state preemption. A growing number of states are seeing the need to intervene in community development and housing. Much of this movement can be attributed to an examination of the harms wrought by Euclidean zon ing and seeing its incompatibility with notions of social justice and the impera tives of climate change.
September/OctOber 2022 27
Zoning Harms Few would argue that keeping facto ries out of residential neighborhoods is not a good thing (although this view did not seem to apply to communi ties of color, as recent research reveals that the overwhelming majority of hazardous industrial facilities, sewage treatment, and landfill sites are situ ated within close proximity to these communities). Still, many of the land use tools have been exposed as not serving the cause of health, safety, or general morals for all citizens. See Juli ana Maantay, Jayajit Chakraborty & Jean D. Brender, Proximity to Environmen tal Hazards: Environmental Justice and Adverse Health Outcomes, Env’t Protec tion Agency (Mar. 19, 2010), https://bit. ly/3thZh1t. Indeed, we are now ques tioning whether single-family zoning is necessary for community. We do know that such rigid zoning causes harm by driving up housing costs and retarding housing supply. See Robert C. Ellickson, Zoning and the Cost of Housing: Evidence from Silicon Valley, Greater New Haven, and Greater Austin (Jan. 19, limited(lastU.S.22“extremelyofofdened,householdshousing-cost-burdened.effecthousing[hereinafterhttps://ssrn.com/abstract=34721452020),Ellickson].ThesehighercostsposeadisproportionateonpeoplewhoarepersistentlyOver36millionarehousing-cost-burorpayingmorethan30percentincomeonshelter,and35percentAfricanAmericanhouseholdshavelow”incomescomparedtopercentofwhitehouseholds.Tables,Census,https://bit.ly/3H0d2aWvisitedMar.28,2022).Largelots,toonedetachedstructure, precludes multi-use buildings, thereby denying opportunities for affordable housing to many. A required mini mum house or lot size will rule out tiny homes, accessory dwelling units, mobile homes, and infill development. Profes sor Ellickson reports that from 2011 to 2017, half of all major metropolitan areas declined in affordable units by over 10 percent. Ellickson, supra. This disparity is amplified by rising hous ing prices—from 2000 to 2019, prices appreciated faster at the lower end of the market, at 126.6 percent, than the higher end of the market, at 86.4 percent. The unyielding character of Euclidean zoning leaves planning deci sions blind to and largely out of sync with sustainability concerns—they may not allow the best siting of solar panels or accommodate green infrastructure, and they require more travel by car to reach basic services.
588–90 (2d Cir. 2016) (expressing con cerns about community “flavor” exposed as intent to exclude based on race).
Deploying the Euclid Proviso to Rein in Errant Land Use Controls
Although local control is an important tool to respond to concerns confined to a specific area, state-level control of cer tain aspects of local land use provides a valuable tool to improve the state of housing. The aerial view, by the state governments, can reveal disruptions in the market and enable comprehen sive solutions. Access to housing affects much more than this or that specific neighborhood. It carries over into intra state and interstate relations. The Euclid Proviso is an important caveat to locallevel land use control. Ezra Rosser, The Euclid Proviso, 96 Wash. L. Rev. 811 (2021). The proviso limits local land use authority if zoning is counter to larger public interests, allowing local action to be rejected if it does not operate for the good of the community. Scholars argue that the Euclid Proviso provides the authority needed for states to circum vent local zoning practices, particularly in the name of housing affordability and accessibility. Even if the bounds of “home rule” are not clear, state legisla tures can cite the proviso to strike down the harmful local land use practices that pose unfair burdens on housing acces sibility, thereby eliminating some of the political barriers imposed by locallevel opposition and NIMBYism. State control over housing access may be the most efficient way around the cam ouflage of facially neutral but racially animated zoning laws. Opening the Avenues to Housing Alas, the Euclid Proviso is little used, as state oversight of zoning remains largely hands-off. Only three states have enacted comprehensive state wide housing requirements, and only a handful more have enacted state man dates for localities to reduce barriers to affordable housing development; none of these requires affordable hous ing in the first place. Oregon’s statewide initiatives have provided the first com prehensive statewide action to control certain aspects of local land use. First, the state mandates a certain level of multifamily housing types to be per mitted in single-family zones. Or. Rev. Stat. §§ 197.175, 197.290 (2021). Under that legislation, cities with a popula tion over 20,000 must allow for duplex, triplex, quadruplexes, cottage housing, and townhouses in all single-family zones. It also requires all cities between 10,000 and 25,000 residents to allow duplexes in single-family zones. The legislation establishes mandatory density requirements for large cities, another mechanism to encourage mul tifamily development. Additionally, the act requires Regional Housing Needs Assessments and imposes financial penalties on municipalities that fail to meet state affordable and missing mid dle housing goals. Last year, California adopted a slew of laws aimed at making housing more accessible. Governor Newsom’s Cali fornia Comeback Plan is focused on loosening development restrictions and streamlining the missing middle development processes, while previ ous efforts have focused on Accessory Dwelling Unit development specifically. Under California Code § 65852.2, poi son pills in Accessory Dwelling Unit codes are prohibited. Rev. Cal. Gov. Code § 65852.2. This means that municipalities must allow easy ADU development, which will add a substan tial amount of affordable housing to the state. This opens the way to afford able housing by removing the power to enact barriers from actors at the local level altogether. California Code § 65852.21 simplifies the approval process for two-unit development, clas sifying it as ministerial in nature, so long as the development meets certain predetermined criteria. Id. § 65852.21. This effectively eliminates single-family zones. California Code § 65913.5 also allows local governments to upzone parcels for missing middle develop ment. Id. § 65913.5. The California Comeback Plan does more than just loosen the constraints of Euclidean zon ing; importantly, it authorizes $1.75 billion in funding for 84,000 planned housing units, paving the way for other states to do the same. California Code § 47605 permits local governments to establish their own affordable housing requirements for developments while also affirming local power to enact inclusionary housing ordinances. Id. § 47605.Maine has also made significant departures from the straitjacket of the single-family zoning paradigm. Under Maine Code § 3015, accessory dwell ing units must be permitted as-of-right in all single-family zones, but munici palities are allowed to enact their own ordinances to achieve this directive. Me. Stat. tit. 30A, § 3025. Utah has enacted similar legislation, barring local governments from prohibiting acces sory dwelling units that fit within the footprint of the primary dwelling unit and comply with applicable building, health, and fire codes. Utah Code Ann. § 10-8-85.4.Thelongest-running example of state control over affordable housing is Massachusetts’s Chapter 40B. Passed in 1969, the code was dedicated to encour aging affordable housing development in the state. Mass. Gen. Laws ch. 40B. It enables the Zoning Board of Appeals to Although local control is an important tool to respond to concerns confined to a specific area, state-level control of certain aspects of local land use provides a valuable tool to improve the state of housing.
September/OctOber 2022 29
approve developments with long-term affordability restrictions, allows eligible developments to receive a permit even if they require local zoning waivers, permits rejection without appeal if a develop ment does not contain at least 10 percent affordable units, and streamlines the per mitting process. Since its enactment, this statute has led to the production of about 70,000 affordable units. In 2004, the Massachusetts legislature enacted Chapter 40R as a fol low-up to 40B. Mass. Gen. Laws ch. 40R. Through financial incentives, it encour ages municipalities to create mixed-use smart-growth districts, develop a high percentage of affordable units, locate units near transit stations, and create affordable overlay districts. Newly-cre ated affordable overlay districts must require 20 percent affordable units and allow mixed-use development near the zone. The focus is to increase the amount of dense housing zones to provide housing options for low- and moderate-income households. It also requires affordable units in most pri vate developments. A town adopting this measure is eligible to receive up to $600,000 from the state plus $3,000 for each new home created. Since its passing, Chapter 40R has spurred the development of 3,037 new affordable units and is currently facilitating pro duction of 13,715. Like Massachusetts, other states approach the issue of improving hous ing opportunities through a delegation of authority to local actors to enact ordinances toward that end, but with specific directives for achieving it. For example, in South Carolina, local gov ernments have the power to enact inclusionary housing ordinances, but the state requires that any such ordi nances include incentives for affordable housing development. S.C. Code Ann. § 6-7-5 (2015). Similarly, in Vir ginia, municipalities have authority to waive fees associated with afford able housing development. Va. Code Ann. § 15.2-2305.1(B)(2); see generally id. § 15.2-2305.1 (authorizing afford able housing dwelling unit ordinances). Maine now requires municipali ties to comply with statewide housing production goals that increase the avail ability and affordability of all types of housing in all parts of the state. 2021 Me. Laws 672. The recent amendments to Ch. 30-A also specify densities for affordable housing of up to two and a half times the base density otherwise permitted; require municipalities to allow structures with up to four dwell ing units per lot, depending on the area; and allow accessory dwelling units. Id. Another creative mechanism of statewide control is Connecticut’s rever sal of the presumption of validity for challenges to affordable housing devel opment. Traditionally, the burden of persuasion lies on the party challeng ing a local board’s denial. Connecticut’s updated Affordable Housing Land Use Appeals Procedure changes this. Conn. Gen. Stat. § 8-30(g) (2021). Local boards now must show why they chose to deny a proposal for affordable housing devel opment. This procedural tool will go far to address zoning decisions that dis proportionately impact impoverished communities. A Clear-Eyed Vantage The techniques described are just a few examples of the efficacy of state-level land use control techniques concerning housing. States have the power of pre emption on their side and can use that power to require localities to take action towards affordable housing develop ment. A large-scale statewide initiative provides the aerial perspective neces sary to solve such broad and persistent issues of housing insecurity. The hous ing landscape can be assessed more keenly from a higher vantage. n
KEEPING CURRENT PROBATE
DISCLAIMERS: Laches not a bar to valid disclaimer of real property received through intestacy. The intes tate’s heirs filed disclaimers of their interests in real property included in the estate less than two months after the administrator recorded the “certifi cates of transfer” memorializing the passing of title to the heirs and almost four years after the decedent’s death. The Ohio disclaimer statute requires the filing or recording of the disclaimer “at any time” after the latest of the effective date of “the donative instrument” or the date on which the disclaimant’s inter est is finally ascertained, under Ohio Rev. Code § 5185.36(D). The lower court upheld the validity of the disclaimer, and the Ohio intermediate appellate court affirmed in Clark v. Beyoglides, 182 N.E.3d 1212 (Ohio Ct. App. 2021), find ing that the certificate was a donative instrument for purposes of the dis claimers and that, under the facts, the beneficiaries were not barred by laches.
ANCILLARY PROBATE: Probate in domiciliary jurisdiction was not necessary predicate to admission in jurisdiction where real property located. In In re Estate of Huang, No. 2-21-0269, 2022 WL 702626 (Ill. App. Ct. Mar. 9, 2022), the Illinois intermedi ate appellate court held that under the Probate Code (755 Ill. Comp. Stat. 5/5-1 and 7-1), a will disposing of real prop erty in Illinois properly executed by the domiciliary of another state under the law of that state may be admitted to original probate in Illinois.
Keeping Current—Probate Editor: Prof. Gerry W. Beyer, Texas Tech University School of Law, Lubbock, TX 79409; gwb@ ProfessorBeyer.com. Contributors include Claire G. Hargrove, Paula Moore, Prof. William P. LaPiana, and Jake W. Villanueva.
LIFE INSURANCE: Failure to return signed beneficiary change form not substantial compliance. After the insured’s spouse filed for divorce, the insured asked the life insurance company for information on chang ing the beneficiary of a policy on the decedent’s life from the spouse to the insured’s children. The company faxed the insured a form that the insured returned without signing or dating it. The insurance company sent the insured a letter asking for a signed 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.
GUARDIANS: No authority to bind ward to arbitration. A child was appointed guardian of the parent and three years later signed a contract with a long-term care facility allow ing the parent to reside there. The contract included an arbitration agree ment. After the parent’s death, the child brought a medical negligence and wrongful death suit against the facil ity, which moved to dismiss the claims or in the alternative compel arbitration of the negligence claim. The trial court denied the motion to compel arbitra tion, and the intermediate appellate court reversed. On appeal by the guard ian, the Supreme Court of Kentucky reversed in Jackson v. Legacy Health Ser vices, Inc.¸ 640 S.W.3d 728 (Ky. 2022), holding that because, under Kan. Rev. Stat. § 387.660(4), a guardian may act in a manner that deprives the ward of civil rights and restricts personal free dom “only to the extent necessary to provide needed care and services” to the ward, the guardian did not have the authority to waive the ward’s right to trial by jury by signing an arbitration agreement that was not a prerequisite to the provision of needed care and services. IRAs: Inherited IRA is not exempt from garnishment. In Jones v. McGreevy, 270 A.3d 1 (Pa. Super. Ct. 2021), the Pennsylvania intermedi ate appellate court reversed the trial court and held that the statute exempt ing retirement and annuity accounts, including IRAs, from attachment or execution on a judgment, 47 Pa. Cons. Stat. § 8124(b)(1)(ix), does not apply to an inherited IRA, which is there fore subject to attachment to satisfy a judgment.
Bequest of interest in corporation adeemed on sale to suc cessor. The decedent’s will included a bequest to the decedent’s sibling of all of the decedent’s interest in a familyowned corporation. The corporation was later sold to an LLC in which the decedent held a majority of the membership interests and all of the gov ernance rights. The LLC continued to carry on the business of the corporation using the corporation’s name. The cor poration was liquidated and formally dissolved. In a construction action brought by the decedent’s surviving spouse, the probate court determined that the bequest had adeemed. The Ten nessee intermediate appellate court affirmed in In re Estate of Cone, No. M2020-01024-COA-R3-CV, 2022 WL 587448 (Tenn. Ct. App. Feb. 28, 2022), because the property that was the sub ject of the bequest was not part of the probate estate. The sale to the LLC was not a mere change of form because it came about through a sale of all of the corporation’s assets to a new entity.
NO-CONTEST CLAUSE: Violation of no-contest clause eliminates the beneficiary’s standing to assert claims against the trustee. The Supreme Court of Wyoming held in Matter of Phyl iss V. McDill Revocable Trust, 506 P.3d 753 (Wyo. 2022), that a trust benefi ciary has no standing to assert breach of trust claims against the trustee once the beneficiary has violated the trust’s no-contest clause. The court agreed that the beneficiary had violated the no-con test clause by bringing a proceeding in Texas challenging the validity of the set tlor’s amendments even though it was dismissed for lack of personal jurisdic tion over the defendants.
TAX CASES, RULINGS, AND ESTATEREGULATIONSANDGIFT TAX: Proposed regulations provide an exception to the anti-clawback special rule. IRS pro posed regulations (REG-118913-21) would apply when, at the time of the decedent’s death, the exclusion amount differs from the exclusion amount that applied when any gifts were made. This disparity can occur because the Tax Cuts and Jobs Act temporarily increased the exclusion amount for decedents dying and gifts made after December 31, 2017, and before January 1, 2026. Earlier regulations provided a credit that meant that the higher exclusion amount on gifts would not be clawed back from the estate of decedents who died with a lower exclusion amount in the future. The proposed regulations make an exception to the anti-claw back rule for gifts that are includible in a decedent’s gross estate or treated as includible, such as gifts subject to a retained life estate, gifts made by an enforceable promise that are unsatis fied at the date of death, and transfers of certain retained interests in corpora tions, partnerships, or trusts. Proposed Rule 2022-08865; Internal Revenue Bulletin 2022-20 IRB 1089.
TRUSTS: Qualified beneficiary determined when trust property distributed. The Massachusetts inter mediate appellate court held in Matter of Colecchia Family Irrevocable Trust, 180 N.E.3d 988 (Mass. App. Ct. 2021), that under the definition of a qualified ben eficiary in the Massachusetts Uniform Trust Code (Mass. Gen. Laws ch. 203E § 103, identical to UTC § 103 (12)(C)), a beneficiary is a qualified beneficiary on the date on which an event occurs that “triggers a beneficiary’s entitlement under the trust” which in the instant case was the date the trust terminated and the beneficiary became entitled to a distribution of trust property.
POWER OF APPOINTMENT: Tes tamentary power of appointment deemed a limited power. The set tlor created a revocable trust and died before September 25, 1985. Upon her death, Son’s Trust was established. Son’s Trust included a power of appointment that allowed him to appoint by will the trust to one or more of the settlor’s descendants. Son died and exercised his power of appointment by directing the property of Son’s Trust to the trustee of Son’s Revocable Trust. Son’s Revocable Trust provided that property appointed to the trust through his power of appointment was to be administered through New Trust, a separate trust for the benefit of Granddaughter. Son’s Revocable Trust granted Granddaughter a testamentary power of appoint ment. Granddaughter could appoint trust principal to Granddaughter’s descendants or Settlor’s descendants, excluding (1) Settlor’s children and (2) Settlor’s grandchildren who do not have descendants. PLR 202217005 provided that Granddaughter’s testamentary power of appointment did not include her estate or creditors of her estate and was a limited power of appointment. As a result, New Trust remained GST taxexempt under its grandfathered status, no part of New Trust would be included in Granddaughter’s gross estate for federal estate tax purposes, and Grand daughter did not release a general power of appointment for federal gift
EFICIARY: Beneficiary of a revocable trust does not have standing as “interested person” to bring action respecting the trust. The Uniform Trust Code provides that the trustee of a revocable trust owes duties only to the settlor (§ 603) and that any “interested person” may ask the court to inter vene in the administration of a trust (§ 201(a)). The Oregon intermediate appel late court in Matter of Virginia Worley Revocable Living Trust, 318 Or. App. 127 (2022), held that the correspond ing provisions of the Oregon Uniform Trust Code (Or. Rev. Stat. §§ 130.510 and 130.050(1)) prohibit the benefi ciary of a revocable trust who is also the child of the settlor from bringing an action based on an alleged violation of fiduciary duties by the trustee. In addi tion, the prevailing trustee is entitled to attorney’s fees because, under Or. Rev. Stat. § 20.105(1), there was “no objec tively reasonable basis” for the claim.
September/OctOber 2022 31
KEEPING CURRENT PROBATE form, but the insured never replied. After the insured’s death, the insured’s children, the beneficiaries under the incomplete form, brought suit. The company deposited the proceeds with the court, and the trial court decided that the insured had substantially com plied with the contractual requirement that the beneficiary be changed by the company’s receipt of a satisfactory writ ten request. In James v. Mounts, 644 S.W.3d 425 (Ark. Ct. App. 2022), the Arkansas appellate court reversed, find ing that the form explicitly required a signature and that the insured had suf ficient time to comply with the request for a signed form.
STANDING OF TRUST BEN-
QUALIFIED PLANS: Property settle ment agreement constituted a waiver of rights to retirement account. The Rhode Island Supreme Court held in Morgan v. Bicknell, 268 A.3d 1180 (R.I. 2022), that a property settlement agreement in which Spouse A waived “any and all interest” in Spouse B’s § 401(k) plan was an unambiguous waiver of Spouse A’s rights as the desig nated beneficiary at Spouse B’s death. Accordingly, the account was payable to Spouse B’s estate where there was no evidence of a modification of the agree ment and despite Spouse B’s failure to change the beneficiary designation.
PRIVILEGE: In Traps for the Weary Trustee and the Unwary Attorney: Communications Between Trustees and Attorneys May Not be Privileged, 49 Est. Plan. 04 (Apr. 2022), Patricia L. Davidson and Tatiana Tway provide a warning to attorneys and trustees that their communications may not be covered by attorney-client privilege because the fiduciary excep tion precludes a trustee who obtains legal advice related to trust duties from asserting such privilege against beneficiaries of the trust. As a result, beneficiaries can discover otherwise sacred communications between a trustee and an attorney.
DIGITAL ASSETS: In her article, Beyond the Grave: A Fiduciary’s Access to a Decedent’s Digital Assets, 43 Car dozo L. Rev. 745 (2021), Isabelle N. Sehati argues that a too-heavy reli ance on privacy concerns overshadows a fiduciary’s responsibility to prop erly and efficiently administer an estate. She examines several scenarios in which courts should be more will ing to grant fiduciaries access to the contents of a decedent’s communica tions and explores how individuals can escape the confines of the statute through education, creative lawyering, and the execution of various consent documents.
UTAH—POWERS OF ATTORNEY: Craig E. Hughes provides an overview of mental incapacity and the practical aspects of defining mental incapac ity in a Utah power of attorney in Utah Incapacity Law and Powers of Attorney, 35-APR Utah B.J. 29 (Mar./Apr. 2022).
ALABAMALEGISLATIONmodernizes law relating to the certification of a surrogate desig nated to make end-of-life decisions for a terminally ill patient. 2022 Ala. Laws Act 2022-434.
KEEPING CURRENT PROBATE tax purposes and did not make a con structive addition to New Trust.
GEORGIA—REMOTE WILL EXECUTION: In the Note, Socially Distant Signing: Why Georgia Should Adopt Remote Will Execution in the Post-COVID World, 56 Ga. L. Rev. 391 (2021), Jessie Daniel Rankin presents the arguments for permanently adopting remote exe cution and attestation, explores efforts by other jurisdictions in this area, and presents a suggested set of criteria for the Georgia General Assembly as guid ance when considering such legislation.
ARIZONA prohibits discrimination in determining organ transplant eligibility based on the prospective donee’s dis ability. 2022 Ariz. Legis. Serv. Ch. 70. COLORADO updates its intestate suc cession scheme and the treatment of pretermitted children. 2022 Colo. Legis. Serv. Ch. 60. DELAWARE prohibits insurance com panies from discriminating against an individual due to that individual’s sta tus as a living organ or tissue donor. 2022 Del. Laws Ch. 292. FLORIDA extends the Rule Against Perpetuities time period to 1,000 years for trusts created on or after July 1, 2022. 2022 Fla. Law Serv. Ch. 2022-96.
FLORIDA prohibits insurance com panies from discriminating against an individual due to that individual’s sta tus as a living organ donor. 2022 Fla. Sess. Law Serv. Ch. 2022-59. GEORGIA enacts the Psychiatric Advance Directive Act. 2022 Ga. Laws Act 836. IDAHO passes the Digital Assets Act to govern the transfer, sale, control, and
NEW YORK—VIDEO DOCUMENT EXECUTION: In New York Execu tive Order 202.14: A Temporary Fix to a Temporary Problem, or a Framework to Change Estate Planning Document Execution?, 32 Alb. L.J. Sci. & Tech. 99 (2021-2022), Alexander James Ansel ment discusses the enactment of a New York State executive order that allowed estate planning documents to be executed and witnessed over video conference during the pandemic. He goes on to discuss how that executive order could be turned into legislation that would allow time-honored rules of succession law to be compatible with our society’s ever-growing, technologydriven world. SECURED ACT: In his article, The SECURE Act: Retirement Plan Distribu tions after the Death of a Beneficiary, 74 Tax Law. 629 (2021), Vorris J. Blanken ship discusses the provisions of the Act, identifies a problem when there are multiple beneficiaries, and proposes a solution.
ESTATE TAX: In their article, Wealth Tax Design: Lessons from Estate Tax Avoidance, 74 Tax L. Rev. 175 (2021), Jason S. Oh and Eric M. Zolt posit that the US experience with design ing and implementing a gift and estate tax regime sheds light on the emerg ing discourse about wealth taxes in two important ways. First, it may help resolve a robust debate about the rev enue consequences of potential wealth taxes. Second, a good understanding of the various strategies that taxpay ers have used to reduce gift and estate tax liability can inform the design of a wealth tax.
HEIRS’ PROPERTY: In Acres of Dis trust: Heirs Property, the Law’s Role in Sowing Suspicion among Americans and How Lawyers Can Help Curb Black Land Loss, 28 Geo. J. on Poverty L. & Pol’y 377 (2021), Will Breland contends that past negative interactions with the legal system inhibit the use of estate planning services, perpetuating the cycle of inheritance through intestacy on a massive scale. He proposes solu tions for legal professionals to consider when dealing with such legal issues and argues that law schools and continuing legal education programs must empha size cultural competence.
OKLAHOMA enacts the Uniform Tes tamentary Additions to Trusts Act. 2022 Okla. Sess. Law Serv. Ch. 186.
ILLINOIS allows an agent to present an electronic copy of an executed form as proof of the health care agency. 2022 Ill. Legis. Serv. P.A. 102-794. INDIANA adopts Uniform Trust Decanting Act. 2022 Ind. Legis. Serv. P.L. 161-2022. INDIANA increases the value of an estate that may be deemed a “small estate” from $50,000 to $100,000. 2022 Ind. Legis. Serv. P.L. 151-2022.
OKLAHOMA passes the Oklahoma Health Care Agent Act. 2022 Okla. Sess. Law Serv. Ch. 136.
MARYLAND enacts special rules for the partition of real property among co-tenants such as co-devisees and coheirs. 2022 Md. Laws Ch. 401. MISSISSIPPI authorizes beneficiary designations allowing for a transfer of a motor vehicle upon death and permits vehicles to be held jointly with rights of survivorship. 2022 Miss. Laws H.B. 1430.
SOUTH DAKOTA authorizes remote witnessing of non-holographic wills, durable powers of attorney for health care decisions, anatomical gifts, refusals to make anatomical gifts, and pre-need cremation authorizations. 2022 S.D. Laws Ch. 56.
TENNESSEE passes the Small Estate Affidavit Limited Letter of Authority Act providing for the administration of small estates. 2022 Tenn. Laws Pub. Ch. 665. US VIRGIN ISLANDS adopts the Uni form Electronic Wills Act. 2022 V.I. Laws Act 8556. US VIRGIN ISLANDS enacts the Uni form Law on Notarial Acts. 2022 V.I. Laws Act 8542.
KANSAS adopts the Uniform Directed Trust Act. 2022 Kan. Laws Ch. 16. MAINE enhances the rights of an adult subject to guardianship. 2022 Me. Legis. Serv. Ch. 500.
WASHINGTON enacts the Revised Uniform Unclaimed Property Act. 2022 Wash. Legis. Serv. Ch. 225.
NEW JERSEY allows motor vehicles to be titled in transfer on death form. 2022 N.J. Sess. Law Serv. Ch. 13. OHIO prohibits insurers from discrim inating against living organ donors. 2022 Ohio Laws File 90.
WEST VIRGINIA adopts the Uniform Unclaimed Property Act. 2022 W.Va. Laws H.B. 4511. WISCONSIN provides for nonpro bate transfers of farming implements at death. 2021–2022 Wisc. Legis Serv. Act 201. n
September/OctOber 2022 33
UTAH adopts the Uniform Partition of Heirs’ Property Act. 2022 Utah Laws Ch. 304. UTAH establishes a framework for the ownership of digital assets. 2022 Utah Laws Ch. 448. VIRGINIA enacts the Uniform Fidu ciary Income and Principal Act. 2022 Va. Laws Ch. 354.
TAKE PROPERTY& TO GO https://issuu.com/rptelaw
SOUTH DAKOTA allows succession to real property by affidavit under speci fied circumstances. 2022 S.D. Laws Ch. 89.
KEEPING CURRENT PROBATE perfection of security interests in digital property. 2022 Idaho Laws Ch. 284.
MISSISSIPPI prohibits discrimination in decisions regarding anatomical gifts or organ transplants solely based on disability. 2022 Miss. Laws H.B. 20.
SOUTH CAROLINA enacts the Uni form Transfers to Minors Act. 2022 S.C. Laws Act 128.
So, let’s apply the “Can you?” filter to each of them. Although this article will explore some of the legal aspects of cryptocurrency in retirement accounts, it expresses no opinion as to the sound ness or prudence of such investments.
“Youaccounts?can,you should, and if you’re brave enough, you will.”
By Mark R. Parthemer Mark R. Parthemer is the Chief Wealth Strategist and Head of Florida at Glenmede Trust Co.
—Stephen King Inspiring words from prolific author Mr. King, albeit encouraging writers. Clearly, he was not addressing investing in bitcoin, ethereum, or any cryptocur rency, but his framework may not be a bad starting point to analyze investing in cryptocurrency inside a retirement account.Thetwo major forms of managed retirement assets are IRAs and 401(k)s.
Ashort decade ago, the cryptocur rency meteoroid launched and now is hurtling toward the tril lions of dollars in retirement assets. Can clients embrace this digital asset and provide a soft landing in their retire ment
In other words, the “Should you?” ques tion will go unanswered. IRAs According to the Investment Company Institute, by the end of 2019, there was over $11 trillion in IRA accounts in the United States. This represents over 34 percent of dedicated retirement assets.
Of those assets, 64 percent are in equi ties or equity funds. ICI Research, May 2020. Further, households with an IRA have eight times the median finan cial assets of households without an IRA. The result is that households with IRAs have significantly more other investments, and for some IRA own ers, cryptocurrencies may be a tempting allocation. So, “Can you?” That is, can an IRA hold cryptocurrencies? For clar ity, we need to separate this question intoFirst,two.we need to explore if an IRA can be funded with cryptocurrency. The
Cryptocurrency is not a prohibited asset and therefore can be an investment held in an IRA.
answer is yes, but not directly. By con trast, the general answer is no, with one exception.Thisisbecause funding of an IRA is limited to cash. I.R.C. § 408(a)(1). This raises the question as to whether cryp tocurrency is cash. Eight years ago, Treasury told us that, despite its name, for tax purposes, cryptocurrency is not currency, but property. IR Notice 201421. We thus have our general rule that one cannot contribute cryptocurrency into an IRA. But in § 408(a)(1), we also find the exception. It reads, “Except in the case of a rollover . . . no contribu tion will be accepted unless in cash.” Qualified rollovers may be in kind. I.R.C. § 408(d)(3). Therefore, if there is an existing allocation being rolled into a new IRA, then it is permitted as an orig inal asset of the new IRA. Second, may an IRA invest in cryp tocurrency? The answer is yes, but let’s walk through the analysis. The I.R.C. defines what property can be owned in an IRA in the negative. That is, as we often find in the code, we are advised what is prohibited, and all else is permitted.So,foran IRA, four types of prop erty are prohibited: S corporation stock, life insurance contracts, personal use real estate, and collectibles. Id. § 408. The primary category of interest here is collectibles, which includes tangible personal property. Id. § 408(m)(2), (3). Coins generally are prohibited as a col lectible, with the exception of certain our second form of retirement assets. So, can you hold cryptocurrencies in theseUnlikeplans?defined benefit plans, 401(k)s are employer-provided defined contribution plans. As such, they are funded with cash. Thereaf ter, the employee is entitled to select investments from a menu of employerapproved investment allocations. Unlike IRAs, however, there are no express statutory guidelines on quali fying assets. Under I.R.C. § 401(a)(35) (D), an investment menu need only have three options (employer securities are ignored for this criterion), “each of which is diversified and has materially different risk and return characteris tics.” I.R.C. § 401(a)(35)(D). The answer to the “Can you?” question depends on the other options, but it is certainly possible.Earlier this year, a large plan admin istrator hosting over 23,000 401(k) plans with over 20 million participants announced that employers will be able add a cryptocurrency allocation. Ini tially, this authority will be limited to bitcoin and maxed out at a 20% alloca tion (employers will have the ability to set a lower allocation cap). A company representative indicated an expectation to expand to other digital assets in the near future. This confirms the ability to permit an employer to include an allo cation to cryptocurrencies, but is doing so without liability?
Employer Liability Considerations
There are two components to under standing potential employer liability surrounding cryptocurrencies in 401(k) plans. First, if an employee selects an allocation and it drops in value, can the employee sue the employer? One would not expect that the employer be a guarantor of investment success, and that is correct. In fact, ERISA § 404(c) limits fiduciary liability for individ ual investment decisions. Specifically, if a participant exercises control over the assets in his account, then no per son who otherwise is a fiduciary (this includes the employer) will be lia ble for any loss, or by reason of any breach, that results from such exercise
precious metals. Those are certain gold, silver, and platinum coins; coins issued by any state; as well as gold, silver, plati num, and palladium bullion of certain fineness, but only if in the custody of a US trustee (US bank or financial institu tion). Id. § 408(m)(3)(A), (B). A careful reading of that provision leads to the conclusion that cryptocur rency is not a qualified precious metal and not a collectible. Nor is it tangible personal property or any of the other forms of prohibited assets. Thus, cryp tocurrency is not a prohibited asset and therefore can be an investment held in an ToIRA.review, then, cryptocurrencies are not barred from being in an IRA but cannot be used to fund an IRA, except via a rollover. Recall that an IRA may be managed or self-directed, and it may be difficult to find a manager with a tol erance for cryptocurrency (but there are some that absolutely will; just do an online search). Also, most large pro viders such as Schwab and Fidelity do not allow direct investment in cryp tocurrency, so if the account is at an institution with this prohibition, only indirect investment currently is possi ble. Indirect exposure to cryptocurrency could be accomplished through an ETF or mutual fund. 401(k)s As of June 30, 2021, there was over $7.3 trillion in 401(k)s. ICI Research, Oct. 11, 2021. Thus, such accounts constitute
1. Cybersecurity (most plan
Other Concerns Beyond prudence and the above analy sis regarding legality, other factors to be considered include:
September/OctOber 2022 37
Published in Probate & Property, Volume 36, No 5 © 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. of control. Thus, there is no cause of action against the employer for invest mentSecond,losses.and in contrast, the employer does have a fiduciary duty to prudently select and monitor invest ment alternatives. Specifically, ERISA § 404(a)(1)(B) requires plan fiduciaries to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like char acter and with like aims.” So, adding an investment allocation to the menu is something for which the employer may be held accountable. Would add ing cryptocurrency investments be prudent? Would not adding one be prudent? Those are certainly questions of fact and go to the “Should you?” question, which, as promised, will go unanswered. It is, however, worth men tioning that representatives of the Department of Labor have expressed hesitation.TheLabor Department regulates company-sponsored retirement plans. Ali Khawar, acting assistant secretary of the Employee Benefits Security Admin istration, said in an interview with The Wall Street Journal that he views crypto currency as speculative and expressed concern over permitting cryptocur rency allocations. Ann Tergesen, Bitcoin in Your 401(k): Is That a Good Idea?, Wall St. J. (Apr. 30, 2022), https://on.wsj. com/3MEFJez.Itshouldbe noted that the DOL has recently established agency guidance to the effect that companies offering cryp tocurrencies in their retirement plans should expect to be investigated. This is based on factors including the mar ket’s volatility and the lack of broadly accepted methodologies investors can rely on to evaluate prices. As of the submission of this article, a plan admin istrator based out of San Francisco with 500 401(k) plans, 150 of which do have a cryptocurrency option, has filed suit in the U.S. district court in Washington, D.C. This plan administrator permits employers to adopt an option for par ticipants to invest up to 5 percent in bitcoin, ether, Litecoin, and other cryp tocurrencies. See Wall St. J., June 3, 2022, p. B1.
sponsors don’t have blockchain expertise);
4. Tripled increase in S&P 500 corre lation (up to .78) over the last few years, diminishing reality of per ceived diversification; and
This article is provided solely for infor mational purposes and is not intended to provide financial, investment, tax, legal, or other advice. It contains information and opinions that may change after the date of publication. The author takes sole respon sibility for the views expressed herein, and these views do not necessarily reflect the views of the author’s employer or any other organization, group, or individual. Information obtained from third-party sources is assumed to be reliable and has not been verified. No outcome, includ ing performance or tax consequences, is guaranteed, due to various risks and uncer tainties. Readers should consult with their own financial, tax, legal, or other advisors to seek advice on their individual circum stances. n
Cryptocurrency is not neces sarily segregated, so there is the potential that bankruptcy of an exchange entity might convert “owners” into general unsecured creditors. The SEC now requires a disclosure that alerts to the fact that crypto assets are not insured or guaranteed by any govern ment or government agency and the legal risks in the occurrence of a financial event such as bank ruptcy. Staff Acct. Bull. No. 121, 17 C.F.R. § 211. One publicly traded cryptocurrency exchange, Coinbase, in its May 10, 2022 10-Q, provided in part: [B]ecause custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceed ings and such customers could be treated as our general unsecured
On the other hand, perhaps like the proverbial understanding of beauty, prudence may be in the eye of the beholder.
Conclusion So, the ultimate answer as to the legal ity of cryptocurrency in the major two forms of retirement accounts is clear.
2. Indicia of ownership, especially for cryptocurrencies not based or held in the US and the potential for future regulation from SEC or DOL; 3. Fees (such as custodial and exchange), which tend to be higher than for most mutual funds and ETFs;
Thiscreditors.statement, combined with a meaningful loss of market value of over 80 percent, led to public reaction. In response, on June 1, 2022, Coinbase’s chief legal officer released a press state ment assuring its customers that based on Coinbase’s business practices, cus tomer assets were not comingled or at risk. The point is not whether in spe cific there is a risk to this company’s customers but that there is an evolving area with legal uncertainty surround ing numerous issues that perhaps should factor into a participant’s or an employer’s decisionmaking.
5. Bankruptcy of an exchange.
Published with rights
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in Probate & Property, Volume 36, No 5 © 2022 by the American Bar Association. Reproduced
By John A.
ON THE MOVE The Uniform Easement Relocation Act
ImagesGetty John A. Lovett is the De Van D. Daggett Jr. Distinguished Professor, Loyola University New Orleans College of Law, in New Orleans, Louisiana.
The Law Before the UERA For many years, the servient estate owner had few options in most of the United States. Under the traditional “mutual consent” rule, a servient estate owner could only relocate an ease ment in this situation by obtaining the consent of the easement holder, regard less of the benefit to the servient estate owner and even if the relocation would cause no material harm to the ease ment holder. Stamatis v. Johnson, 224 P.2d 201, 202–03 (Ariz. 1950), modified on reh’g, 231 P.2d 956 (Ariz. 1952); Davis v. Bruk, 411 A.2d 660, 661–62, 664–66 (Me. 1980). However, not every court in the US followed this rule. A few rejected it outright, and others applied a balanc ing of the equities approach to resolving disputes over easement relocation. See, e.g., Brown v. Bradbury, 135 P.2d 1013, 1014 (Col. 1943); Cozby v. Armstrong, 205 S.W.2d 403, 405–08 (Tex. Ct. Civ. App. 1947). Moreover, trial court judges frequently had to be overruled, and some appellate court judges voiced con siderable displeasure with the majority rule. See John A. Lovett, Easements and Change, 74 Baylor L. Rev. 1, 11–23 (2022) (describing evolution of majority rule and judicial resistance to and dis content with that rule). In 2000, the law of easement relo cation in the United States began to change significantly when the Ameri can Law Institute borrowed the civil law “servitude relocation” rule long followed in Louisiana and much of the rest of the world and offered a new approach
easement to the edge of the servient estate, the servient estate owner could subdivide the land into smaller parcels suitable for several houses. Perhaps the servient estate could host a significant commercial or multifamily housing development. The servient estate owner is willing to pay for all costs associated with moving the easement. The relo cated easement will provide the same functional benefit to the owner of the dominant estate. If the easement holder, that is, the owner of the dominant estate, refuses to go along with this plan, what can the servient estate owner do?
The Problem Consider a typical easement conun drum. Many years ago, two neighboring landowners, or perhaps a single land owner who was subdividing a larger parcel, established an easement provid ing vehicular access to a public road across one estate for the benefit of the other. At the time of creation, the servi ent estate was undeveloped woodland, farmland, or prairie. Without giving much thought to the matter, the par ties fixed the easement’s location in the middle of the servient estate. Circumstances have now changed. Different persons own the two parcels. The nearby town is a growing city. If the servient estate owner can move the
Easements are useful property interests that can facilitate coop erative relationships between neighboring landowners. Sometimes, however, easements can be a source of conflict. The Uniform Easement Relo cation Act (UERA), recently approved and offered to state legislatures by the Uniform Law Commission (ULC), offers a carefully structured, judicially con trolled framework to resolve a common conflict between a servient estate owner and an easement holder.
September/OctOber 2022 41
Legislatures enacted statutes over the years that allow certain kinds of easements— irrigation or water conveyance easements and vehicular access easements—to be relocated on terms more or less similar to the Restatement.
in the Restatement (Third) of Property: Servitudes. Under section 4.8(3) of the Restatement, a servient estate owner can make reasonable changes in the location or dimensions of an easement, at the servient estate owner’s expense, to permit nor mal use or development of the servient estate, but only if the changes do not (a) significantly lessen the utility of the easement, (b) increase the burdens on the owner of the easement in its use and enjoyment, or (c) frustrate the purpose for which the easement was created. Restatement (Third) of Property: Servi tudes § 4.8(3) (2000). Some American courts embraced the new Restatement approach to easement relocation. The highest courts in Colo rado, Massachusetts, and South Dakota, for example, quickly adopted robust versions of the Restatement. Roaring Fork Club, L.P. v. St. Jude’s Co., 36 P.3d 1229, 1237–39 (Colo. 2001); M.P.M. Builders, LLC v. Dwyer, 809 N.E.2d 1053, 1057–59 (Mass. 2004); Stanga v. Husman, 694 N.W.2d 716, 718–20 (S.D. 2005); Bur khart v. Lillehaug, 664 N.W.2d 41, 42–44 (S.D. 2003). The Nebraska Court of Appeal soon followed. R & S Inv. v. Auto Auctions, Ltd., 725 N.W.2d 871, 879–81 (Neb. Ct. App. 2006). Courts in Illinois demonstrated receptivity as well. 527 S. Clinton, LLC v. Westloop Equities, LLC, 932 N.E.2d 1127, 1138 (Ill. Ct. App. 2010); McGoey v. Brace, 918 N.E.2d 559, 563–67, 569 (Ill. Ct. App. 2009). Courts in New York and Nevada, however, adopted a weaker version of the Restatement approach, limiting its application to an undefined easement, that is, an easement whose location was not defined by a metes-and-bounds description or other actions of the par ties. Lewis v. Young, 705 N.E.2d 649, 653–54 (N.Y. 1998) (relying on tenta tive draft of section 4.8(3)); St. James Vill., Inc. v. Cunningham, 210 P.3d 190, 193–96 (Nev. 2009). Other courts lim ited the Restatement rule to nonexpress easements or subsurface easements. McNaughton Props., LP v. Barr, 981 A.2d 222, 225–29 (Pa. Super. Ct. 2009) (prescriptive easements); Goodwin v. Johnson, 591 S.E.2d 34, 37–39 (S.C. Ct. App. 2003) (easements by necessity); Roy v. Woodstock Cmty. Trust, Inc., 94 A.3d 530, 537–40 (Vt. 2014) (subsur face easements). Some courts rejected the Restatement altogether and stuck with the traditional mutual consent rule. See, e.g., Alligood v. LaSaracina, 999 A.2d 836, 839 (Conn. App. Ct. 2010); Weston St. Hartford, LLC v. Zebra Realty, LLC, 219 A.3d 844, 851–54 (Conn. App. Ct. 2019); Herren v. Pettengill, 538 S.E.2d 735, 736 (Ga. 2000); Town of Ellettsville v. DeSpirito, 111 N.E.3d 987, 992–97 (Ind. 2018); Stowell v. Andrews, 194 A.3d 953, 964–66 (N.H. 2018); ; MacMeekin v. Low Income Hous. Inst., Inc., 45 P.3d 570, 578–79 (Wash. Ct. App. 2002); AKG Real Est., LLC v. Kosterman, 717 N.W.2d 835, 842–47 (Wisc. 2006). In a handful of states, legislatures enacted statutes over the years that allow certain kinds of easements—irri gation or water conveyance easements in New Mexico, Idaho, and Utah, and vehicular access easements in Idaho and Virginia—to be relocated on terms more or less similar to the Restatement. Lovett, supra, at 41–43. The UERA In the early 2010s, the Uniform Law Commission (ULC) began to study whether a uniform act on easement relocation would bring coherence and clarity to this increasingly disharmo nious body of law. In 2018, the ULC formed a drafting committee. Over the next two years, the drafting committee labored, aided by observers from the title insurance industry, the mortgage banking industry, and a representative from the ABA’s Real Property, Probate, and Trust section. In July 2020, the ULC approved the UERA at its annual meeting. Over the last two years, two state legislatures—Nebraska and Utah— have already adopted the UERA. 2021 Neb. L.B. 501 (enacting Neb. Rev. Stat. § 76-2,128 et seq.); 2022 Utah H.B. 132 (enacting Utah Code § 57-13c-101 et seq.).In coming years, more legislatures will likely consider adoption of the UERA. The UERA features 17 sections, including provisions setting forth defi nitions and addressing the requirement of good faith, the limited effect of a relocation, uniformity of application, electronic signatures, and severabil ity. The act’s key provisions address its scope, the core relocation right and substantive conditions for reloca tion, procedural protections, expenses, waiver, and legal transition. Scope Section 3 of the UERA first states that the act applies to express easements established by grant or reservation and to non-express easements established by prescription, implication, or estop pel. UERA § 3(a). Section 3 also specifies
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three specific kinds of easements that are not subject to relocation under the act: (1) public-utility easements, (2) conservation easements, and (3) neg ative easements. Id. § 3(b). When it adopted its version of the UERA, Utah also exempted several other kinds of easements: public-entity easements, water-conveyance easements, ease ments held by a mine operator, and an easement associated with a high way or public transit facility. Utah Code § 57-13c-102((2). Finally, section 3 also clarifies that the UERA does not prevent a servient estate owner and an easement holder from relocating an easement by mutual consent. UERA § 3(c).
The Right to Relocate Section 4 is the core of the UERA. It establishes a servient estate owner’s basic right to relocate an eligible ease ment provided the relocation does not materially (1) lessen the utility of the easement, (2) increase the burden on the easement holder in its reasonable use and enjoyment of the easement, or (3) impair “an affirmative-easement related purpose for which the easement was created.” Id. § 4(1)–(3). These con ditions generally mirror section 4.8(3) of the Restatement. Section 4, however, adds four more substantive condi tions for an easement relocation. The proposed relocation cannot materially (4) impair the safety of the easement holder or others entitled to use and enjoy the easement; (5) disrupt the use and enjoyment of the easement dur ing the process of relocation, unless the servient estate owner substantially mitigates the disruption; (6) impair the physical condition, use, or value of the dominant estate or improvements on that estate; or (7) impair the value of a security interest holder’s collateral or other recorded real property interests. Id. § Just4(4)–(7).aswith the Restatement, the basic relocation right offered in the UERA only belongs to the servient estate owner, not the dominant estate owner. Unlike the Restatement, relocation under the UERA does not hinge on an initial showing of necessity.
Procedural Protections In response to some criticism of the Restatement, sections 5 and 6 of the UERA require a servient estate owner who seeks to relocate an easement with out the easement holder’s consent to do so through a judicial proceeding. Section 5(a) thus requires a servient estate owner seeking to use the act to file a “civil action.” The rest of section 5 establishes the necessary parties for the lawsuit; provides for notice and service, including special rules for service of holders of severed, subsurface mineral interests; and specifies the contents of the complaint. Id. § 5(b)–(c). Section 6 details all of a court’s obligations when an easement relocation action is filed,
Nonwaiver Section 11 of the UERA departs more significantly from the Restatement by making the act’s core relocation right immune from waiver. It does this by prohibiting the “waiver, exclusion, or restriction” of relocation rights under the act, and by prohibiting parties from drafting around section 4 by requir ing easement holder “consent to amend the terms of an easement.” Id. § 11(a)–(b). The final subpart of section 11 also rejects the narrow approach to easement relocation under the Restate ment adopted by courts in New York and Nevada. It does this by provid ing that an easement relocation is not waived, excluded, or restricted even if “the location of the easement is fixed by an instrument creating the easement, another agreement, previous conduct, acquiescence, estoppel, or implication.” Id. § 11(c).
Affidavit of Relocation Section 9 of the UERA addresses another potential concern about a proposed and judicially authorized easement relocation—the possibility that a servient estate owner will com mence the physical work necessary to relocate the easement but will not finish the job. Section 9 responds in two ways. First, it requires the servient estate owner to record an affidavit attesting that all the work necessary to make the easement usable in its new relocation is complete. Id. § 9(a). Second, it assures that the easement holder will have the right to use the easement in its current location until all the work necessary for relocation is completed and the reloca tion affidavit is recorded. Id. § 9(b).
Expenses Section 7 of the act follows the Restate ment by requiring the servient estate owner to pay “all reasonable expenses” of relocation and illustrates some of those expenses. It does not displace the traditional American rule for attorney fees.
Many legal scholars and judges have weighed in on the policy arguments in favor of and against any kind of unilateral easement relocation right. Lovett, supra, at 75–91. The draft ers of the UERA and the Uniform Law Commission believe the UERA adds an important element of flexibility in easement law without jeopardizing the functional interest of an easement holder in the use and enjoyment of an easement.First,because it provides a servi ent estate owner with an opportunity to ask a court to approve a proposed easement relocation but does not allow the servient estate owner to engage in self-help, the UERA should encourage cooperation and good faith negotia tion between the servient estate owner and the easement holder. A servient estate owner would be foolish to make any unilateral changes to the easement without first attempting negotiation, and if negotiation fails, filing a civil action to obtain judicial approval for a proposed relocation. Likewise, an ease ment holder will think carefully about withholding consent to a reasonable relocation request if it knows that a court could eventually authorize the relocation and if it understands that it, too, may need the servient estate owner’s cooperation in the future, particularly if it needs to adjust the manner, frequency, and intensity of easement use one day. Relatedly, dis putes over the creation and existence of a non-express easement—for example, a prescriptive easement or an easement by necessity—may become easier to resolve without litigation if the servient estate owner can count on the ability to relocate such an easement if its cur rent location becomes problematic in theNext,future.the UERA offers an oppor tunity to unlock the development potential of a servient estate burdened by an easement created long ago by The act maintains the easement but simply allows the servient estate owner to move it to a new location that provides the same functional benefit as in the prior location.
Published in Probate & Property, Volume 36, No 5 © 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. including specific rules dealing with the contents of an order authorizing a relocation. Id. § 6(a)–(c). Section 6 also addresses the servient estate owner’s obligation to record an order authoriz ing relocation. Id. § 6(d).
Legal Transition The final crucial provision of the UERA is section 14, which provides that the act “applies to an easement created before, on, or after” the act’s effective date. By providing for retroactive effect, section 14 guarantees that the act will actually be useful in facilitating the relocation of easements created many years, even decades or centuries, ago. Retroactive application of the UERA will not produce a taking of a property interest, however, because the easement holder is not denied use and enjoyment of the easement. The act maintains the easement but simply allows the servient estate owner to move it to a new loca tion that provides the same functional benefit as in the prior location, without any material diminution in the physical condition, use, or value of the domi nant estate or improvements on that estate. Id. § 4(1)–(3), (6). Interestingly, the Idaho Supreme Court has already determined that retroactive application of the Idaho statute allowing for relo cation of a vehicular access easement under terms roughly similar to the Restatement does not constitute a taking under either the US or Idaho constitu tion. Statewide Constr., Inc. v. Pietri, 247 P.3d 650, 654–56 (Idaho 2011).
Automated Creditor Notifications To Assist Executors An Inheritance Advance Is Often Exactly What A Client Needs encourage abuse. Nor will it cheapen the value of the reg istered title or prejudice third parties.
Finally, legislatures considering adoption of the UERA should keep in mind that an easement, though a valu able property interest to be sure, has never been quite the same thing as a fee simple interest in land. Not only is an easement a nonpossessory interest in land, but the easement holder generally must exercise the easement in a manner that imposes the least possible interfer ence with the servient estate. Moreover, even when it is denominated as per petual, an easement can be terminated for a wide variety of reasons, including abandonment and nonuse. In short, an easement has never really been as invi olable as a fee simple estate. Rather, an easement has always been more contin gent and relational in nature.
P V D V
Linvestment CC v. Hammersley 2008 (3) SA 283 (SCA) at 293 (S. Afr.). If a leading South African court can see its way toward a new rule on servi tude relocation, perhaps American state legislatures will do the same when they consider the Uniform Easement Relocation Act. n
Conclusion American real estate lawyers sometimes have a tendency to view American property law in isolation. This makes some sense because the object of that law, land in the United States, stays put. However, with the UERA, Ameri can property law has an opportunity to revise the architecture of our law of easements to provide greater flexibil ity for servient estate owners and to rebalance the relationship between a servient estate owner and an easement holder. Many other jurisdictions around the world have already taken this step. Lovett, supra, at 25–29. In 2008, after considering developments around the world, including the Restatement, the Supreme Court of Appeal of South Africa reconsidered that country’s law on servitude relocation and discarded its early-twentieth-century version of the mutual consent rule. In its place, it fashioned a new rule based on the Restatement. Summing up its rationale, that court [p]roperlyobserved:regulated flexibility will not set an unhealthy precedent or M
parties who may have not given much attention, if any, to the precise loca tion of the easement or the ability of the servient estate owner to relocate. The economic and social gains that can result from an easement reloca tion under the UERA will benefit not only the servient estate owner but other market participants—for example, future homeowners, tenants, customers, and other people who might be advan taged by enhanced development of the servient estate. Crucially, these aggre gate gains in welfare do not come at the expense of the easement holder because the UERA guarantees that the relocated easement must continue to serve the same “affirmative, easement-related purpose” for which the easement was created and cannot materially diminish the “physical, condition, use, or value of the dominant estate.” UERA § 4(3) & (6). The only interest that an easement holder will lose is the opportunity to hold up the servient estate owner and demand a ransom payment for consent to a proposed easement relocation.
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The UERA will also help to rebalance the law of easements. Today easement holders already benefit from a wellestablished but muddy common law rule that permits the easement holder to “use the servient estate in a manner that is reasonably necessary for the con venient enjoyment of the [easement]” and to change the “manner, frequency, and intensity” of that use over time “to take advantage of developments in technology and to accommodate nor mal development of the dominant estate or enterprise benefitted by the [easement.]” Restatement (Third) of Prop erty: Servitudes § 4.10 (2000). See also Jon W. Bruce, James W. Ely Jr. & Edward T. Brading, The Law of Easements and Licenses in Land § 8.3, at 530–32 (2021–22) (noting that “Reasonable use [of an easement] is not fixed at a particular point, but may vary from time to time. . . . Absent specific provision to the con trary, the concept of reasonableness includes a consideration of changes in the surrounding area and technological developments. These factors pro vide a degree of elasticity in the scope of express easements”). The UERA introduces a measure of functional rec iprocity into the law of easements by giving the servient estate owner, as well as the easement holder, the ability to respond to changed conditions as long as that response does not materially harm the easement holder.
FarachManuelBy Federal LawPropertyRealCaseUpdate
Published in Probate & Property, Volume 36, No 5 © 2022 by the 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.
The circuit courts have also issued a number of rulings recently that have a significant effect on real estate prac tice, and takings issues were at the forefront during this period. Foremost among these decisions was Heights Apartments, LLC v. Walz, 30 F.4th 720 (8th Cir. 2022), where the Eighth Circuit held that a property owner suf ficiently pleaded claims under the Contract Clause and the Takings Clause as the result of the statewide residen tial eviction moratorium imposed by Minnesota. Admittedly, Heights Apart ments is only at the pleadings stage, but it is a significant decision holding that the pandemic and resulting lockdowns created at least one cause of action for claims against the government. The Sixth Circuit also issued prec edential opinions in this area. It held that removal of a dam and the results arising therefrom can constitute a tak ing under 42 U.S.C. § 1983. Barber v. Charter Township of Springfield, 31 F.4th 382 (6th Cir. 2022). The Sixth Circuit also held that a party that does not own land in a municipality can claim
September/OctOber 2022 47
Manuel Farach is a shareholder at Mrachek Fitzgerald Rose Konopka Thomas & Weiss, P.A., in West Palm Beach, Florida, and a member of the Section’s Marketing and Social Media Committee. This article provides a brief sum mary of the most significant opinions rendered by federal courts during the period from March through April 2022. The opinions address, among other topics, issues involving arbitration, takings, rights of first refusal, and bankruptcy.
The Supreme Court has finished oral argument for the October 2021 term and is now busy issuing opinions. The Court issued three opinions of interest to real estate practitioners: Badge row v. Walters, 142 S. Ct. 1310 (2022); Boechler, P.C. v. Commissioner of Inter nal Revenue, 142 S. Ct. 1493 (2022); and City of Austin v. Reagan National Advertising of Austin, LLC, 142 S. Ct. 1464 (2022). City of Austin concerned an Austin, Texas, local ordinance and held that on-site/off-site premises distinctions for signs is facially contentneutral under the First Amendment. This is of interest because the Court declined to announce a bright-line rule for determining when commercial speech violates the First Amendment. Many were hoping for a bright-line pro nouncement, but unfortunately, that statement was not forthcoming, and we are still left trying to decipher the series of court cases to determine what speech is protected. Badgerow (establishing the Look Through Doctrine for determining federal jurisdiction under the Federal Arbitration Act, i.e., courts are to “look through” the arbitration petition to examine the underlying claim to see if the claim is cognizable under the FAA) and Boechler (holding that Congress must clearly state in a statute that the statutory limitations period is jurisdic tional; otherwise it is not) do not have as much impact but help clarify the fun damental legal principles we rely upon in drafting instruments.
Published in Probate & Property, Volume 36, No 5 © 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. a violation of its constitutional rights against the municipality for failing to approve a land use designation if a par allel application for annexation was rejected by the municipality. Rice v. Vil lage of Johnstown, 30 F.4th 584 (6th Cir. 2022). Barber does not seem to be an expansion of property rights because “takings” from governmentally cre ated water damage have often been held to constitute a taking, but Rice is remarkably interesting for its apparent willingness to grant a property owner relief against a municipality when the property was not within the municipal ity. This arguably appears an expansion of the class of persons who may claim against a municipality. We were also treated to interest ing opinions affecting transactional practice during this time period. The Seventh Circuit held in Archer-Dan iels-Midland Co. v. Country Visions Cooperative, 29 F.4th 956 (7th Cir. 2022), that a purchaser who buys a prop erty with knowledge of a right of first refusal, even if the property had been sold out of bankruptcy court without reference to the right of first refusal, is not a good faith purchaser under the Bankruptcy Code. The end effect of the ruling is that the purchaser is subject to the right of first refusal on the property. This is clearly a victory for the notice provisions of recording acts and serves as a warning to purchasers to further inquire regarding all aspects of instru ments found in title records. Along these lines, the Eighth Circuit held in Erickson v. Nationstar Mortgage, LLC, 31 F.4th 1044 (8th Cir. 2022), that an inno cent mistake (e.g., mistakenly releasing a deed of trust) is not slander of property as it lacks an element, i.e., malice, which is required to constitute a slander. The facts in Erickson were not kind to the borrower. The borrower knew he had not paid the mortgage but still wanted the mortgage satisfied under the mis taken release, so it was clear the court was not leaning in his favor. Still, the opinion provides an additional basis for backing out of a mistaken satisfaction.
And the Eleventh Circuit re-clarified the role of witnesses by holding that an “attesting” witness witnesses the sig nature applied to the instrument and attests to having seen the act while an “acknowledging” witness is an officer before whom the grantor appeared and declared the paper to be the grantor’s instrument. In re Lindstrom, 30 F.4th 1086 (11th Cir. 2022). The Sherman Antitrust Act also was discussed in the real estate con text, with the Third Circuit holding that standing under the Sherman Antitrust Act is more restrictive than typical fed eral court standing. Under this more restrictive standard, a concessionaire at an airport is not a proper party under the Act and accordingly does not have standing to bring a claim for violation of the Act. Host International, Inc. v. Mar ketplace, PHL, LLC, 32 F.4th 242 (3d Cir. 2022). This opinion is counterintuitive but hews closely to and is consistent with the Act. This opinion will provide support to landlords but takes away a possible argument that tenants can use against landlords.
Practitioners drafting and working with arbitration provisions should exam ine this opinion carefully and note that return of the arbitration award was pur suant to the contractual arbitration provision itself, a case in which careful drafting created the proper result.
Termination of arbitration has become problematic, and the Fifth Circuit explained that a contractual requirement to arbitrate disputes is ful filled even though no award was issued.
Arbitration issues were also preva lent at the circuit level. The Sixth Circuit explained that remanding an arbitra tion award back to the arbitration panel for clarification of the contractually required reasoning behind the award does not violate the Federal Arbitration Act and that the actions of the arbitra tion panel in explaining its reasoning satisfy the clarification completion exception to the functus officio rule. In re Romanzi, 31 F.4th 367 (6th Cir. 2022).
Noble Capital Fund Management, L.L.C. v. US Capital Global Investment Manage ment, L.L.C., 31 F.4th 333 (5th Cir. 2022) (termination of arbitration proceed ings without the issuance of an award, even if for nonpayment of arbitration fees, satisfies the contractual require ment that an arbitration be conducted, and the parties are now free to exercise nonarbitration remedies as a result). By way of background, arbitral organiza tions typically ask all parties to make advance deposits in order to conduct the arbitration and will ask one party to pay another party’s deposits if a party fails to make the deposit. Arbitrators are understandably reluctant to proceed if all deposits have not been made, and cases will often stall if the paying party fails to advance costs for the nonpaying party. This case clarifies the procedure employed in this situation in order to avoid a stalemate in the dispute resolu tionBankruptcyprocess. decisions were once again prevalent, including a Fourth Circuit case involving the In Pari Delicto doctrine, which keeps a wrongdoer (including a bankruptcy trustee) from collecting from or against another wrongdoer, In re Infinity Business Group, Incorporated, 31 F.4th 294 (4th Cir. 2022), and a Sixth Circuit holding that objections to discharge under 11 U.S.C. § 727(a)(5) have no lookback period, In re McDonald, 29 F.4th 817 (6th Cir. 2022). These decisions do not directly affect real estate practitioners but are helpful for purposes of understanding the rights of contracting parties.
Conclusion As this article is written we are head ing into the summer months, when the Supreme Court takes its recess and the circuit courts are a bit quieter than dur ing the rest of the year. But the Court’s term is not over yet, and the changes in the market are sure to generate a good deal of disagreement, so stay tuned for future developments. n
September/OctOber 2022 49
By Pamela E. Barker, Melissa G. Powers, and Ben Lund
Practical and Ethical Lessons Learned During the Pandemic
The Paperless Office
Pamela E. Barker is a member at Lewis Rice LLC in St. Louis, Missouri. Melissa G. Powers is an associate at Lewis Rice LLC in St. Louis, Missouri. Ben Lund is a partner at Brann & Isaacson in Lewiston, Maine. It has now been more than two years since many lawyers began to work remotely as a result of the COVID19 pandemic. For most, the nature of the public health emergency meant that the change had to be made with little advance preparation, training, or resources. This presented substan tial challenges for those who had not previously considered the practical steps required to work remotely for an extended period of time. In addition, working remotely raised a number of potential ethical issues that lawyers had not previously needed to consider.
Property & Probate has already cov ered some of the practicalities of working remotely in previous arti cles—first, and perhaps presciently, “Common ¢ents for Lawyers—Go from Paper to Bytes with Payment Process ing Software” (January 2020), and more recently, “Surviving the 24-7 Office” (January 2022) and “Learning to Love Remote Work” (March 2022). One should consult all of these articles for more detailed recommendations and links to resources for remote work, along with other articles available to members on the ABA’s website (search for “working remotely”). The first part of this article will build on those use ful beginnings, and the second part will add to the discussion begun in “Law yers Working Remotely—Navigating ABA Formal Opinion 495” (May 2021).
As early as 1975, an article in Busi ness Week predicted the coming of the “paperless office.” Instead, for mostImagesGetty
September/OctOber 2022 51
• Communicate quickly, informally, and formally.
remote work became a possibility for lawyers willing to invest in the neces sary resources and training.
What’s Past Is Prologue
• I am alert to nontechnol ogy (journal?) and technology improvements I can make.
Although some busy lawyers have always worked in more than one loca tion, taking work home, or to another office, a registry of deeds, or court house, this remote working typically required the physical transportation of paper files and other supporting materi als. Digital storage and portable devices have both lightened the physical load and enabled access to a lawyer’s infor mation resources from anywhere that has Internet access. That said, for most, access to infor mation is only part of the practice of law. As part of a 2021 ABA presenta tion, Dan Smith, of Omaha’s Smith Slusky, and a long-time advocate for cloud-based legal practice, provided a succinct list of his work processes: “read emails (snail mail?); respond; save; log assignments to task list; capture attach ments and facts; delegate and track delegated tasks; take and return phone calls; collaborate and brainstorm with colleagues and assistants; keep time; review documents; draft documents; send and receive paper—FedEx, etc.; do the d*mned bills; and socialize—which is not nothing.” His description is an accurate summary of the work of most
• Get input from the people from whom I need input.
• Have the tools around me that work the way I need them to work.
• Get document input/review from colleagues.
• Delegate tasks.
Dan shared a short list of his rules for office technology, which can be adapted to plan for what a law practice needs for remote work:
• Have instant access to informa tion I need to complete my task.
• Time entry—minimum hassle, always ready.
• I am always looking for friction points.
• I am not slavishly averse—“technologytechnologyroad-kill.”
• I am not a slave to new technol ogy—time waster.
lawyers, the ease of document produc tion permitted by office automation and the increase in electronic commu nication resulted in more production of paper files, not less. Still, approximately two decades ago, that trend began to reverse, due in part to the associated costs of paper, printers, and physical storage needs associated with all that paper, and also in part to a generational shift as “digital natives” entered the practice of law. This corresponded with an increase in the digital storage of doc uments and other information used by lawyers, either in their own office-based hardware or in “the cloud”—hardware provided by third parties and accessible using the Internet. There were other good business rea sons to make this transition. Stored in digital form, documents could be used as a “knowledge bank,” with the search for previous work product made simpler and faster. Digital documents also permitted simultaneous review and editing, expediting the drafting process and improving collabora tion. Staff could be trained for billable knowledge-based tasks, rather than simply performing clerical tasks such as copying and filing. Risk manage ment practices could be improved, with backups of documents and billing infor mation stored in multiple locations for purposes of disaster recovery. Finally, transactional attorneys, which previ ously took place in a traditional office setting. One year into the pandemic, his observation about working remotely was that “we now know it can be done. But we also know it is less than ideal. How can we make it better?”
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Imagine the Perfect Productivity World and Aim in That General Direction For remote work to be productive, the key is to use tools that will reproduce the lawyer’s preferred work environ ment as completely as possible. This requires a combination of hardware, software, and communications technol ogy. Each user may have specific needs, but the basic hardware should include a portable computer, docking station, full-sized monitor or monitors, web cam, and keyboard. Together with a secure VPN (virtual private network) connection to the office, or a cloudbased or remote “workspace” solution, these will allow lawyers and staff to work in a hardware and software envi ronment that is essentially identical to that available at the office. A high-speed Internet connection at home is also vital, along with enough bandwidth at the office or cloud solution to handle anticipated peak Communicationusage.technology is cru cial. In addition to portable computers, law practices should provide all remote users with mobile smartphones, tab lets, or data allowances for those who prefer to use their own device. Another approach is to use existing “VOIP” (voice over internet protocol) office tele phone systems, which are frequently cloud-based or can be adapted to func tion in the cloud. This allows users who will not be returning to the office for an extended period to take their phone handsets to their remote work locations; once connected to the inter net, the phones function as if they were in the office, allowing client calls to be answered and transferred, voice messages to be left and retrieved, con ference calling, and other usual system functions.Inaddition to phones, videocon ferencing has proved to be another important tool for communications, adding visual cues to enhance verbal communication and collaboration and permitting real-time document shar ing. Widely adopted platforms include Zoom Meetings, Microsoft Teams, Google Meet, GoToMeeting, Webex, and Facetime, and there are a number of other providers. Some of these plat forms can be integrated with an office telephone system to provide an inte grated set of communications tools. Access to information can be accom plished with the use of a law practice management system or document management system (typically used in tandem with or integrated with a time and billing system). Like other platforms, these can be operated from office-based hardware and accessed using a VPN, or from the cloud and used with a secure Internet connec tion. Generally, these will be more successful if they provide a uniform user interface—menus and commands that are similar across different tools. For example, many offices use Micro soft’s Exchange Server, which provides tools for e-mail, calendars, contacts, and tasks through the Outlook client. Many law practice management or document management systems can be integrated with Exchange to provide the user with a more familiar software environ ment. In addition to document storage and retrieval, most of the systems can also be used as a knowledge bank, with full-text searching and classification to allow users to identify examples of doc uments developed in other transactions that can provide a starting point for a current transaction.
Even if an office is being operated on a fully remote basis, there will inev itably be paper involved, such as that used in connection with service of pro cess or the delivery of physical notices or other hard-copy correspondence. A scanner will be necessary at whatever location these deliveries are received, to distribute the documents to the recipients and store them in the docu ment management system. In addition, although many law practices and cli ents have shifted to electronic payment systems or credit cards, some clients will continue to pay using paper checks. If so, when operating remotely, it may be preferable to use a check scanner to make deposits, rather than making reg ular visits to drive-through bank teller windows.Finally, all of the tools described above will not be productive without an investment in user training. Encourage and actively solicit feedback from users about what is working and what is not. This is particularly important in a remote work setting, which lacks many of the more informal office feedback channels. Encourage everyone to pick up the phone or start a videoconfer ence, particularly where a conversation will be more efficient than a series of messages and replies. Consider regu lar meetings with a standing agenda to
With respect to paperless offices and remote work environments, Model Rule 1.6(c), which sets forth a lawyer’s duty of confidentiality, is particularly important.
Some Form of Remote Work Is Here to Stay
Let’s Get (and Stay) Ethical Although remote work may be a rela tively new trend, the ABA Model Rules of Professional Conduct are not. Orig inally published in 1983, the Model Rules govern attorney behavior, in both a paperless practice and a traditional office setting. Even when working from the comfort of their homes, lawyers Model Rule 1.6 sets forth a lawyer’s duty of confidentiality, perhaps one of a lawyer’s most critical duties. With respect to paperless offices and remote work environments, Model Rule 1.6(c) is particularly important. Under this Model Rule, lawyers have a duty to pre vent the inadvertent or unauthorized disclosure of, or unauthorized access to, client information, and a lawyer’s efforts to prevent the unauthorized access to such information are judged by a reasonableness test. It is worth not ing that Model Rule 1.6(c) has not been adopted in all states. In states that have not adopted this rule, lawyers may con sider the prevention of the inadvertent or unauthorized disclosure of, or unau thorized access to, client information more of an industry best practice. As the use of technology continues to develop, a lawyer’s ethical obliga tions so too develop. In April 2022, the New York Bar issued an opinion regard ing maintaining the confidentiality of client identity information stored on a lawyer’s smartphone. In particular, it restricts lawyers who store confiden tial client identity information in their contacts on their smartphone from con senting to share these contacts with a smartphone app, unless the lawyer determines that (1) no person will view the information and (2) the informa tion will not be sold or transferred to additional third parties without the client’s consent. Although this opin ion is based on the New York Rules of Professional Conduct Rule 1.6(c), that rule is substantially the same as Model Rule 1.6(c), so this may serve as an illustrative example for lawyers out side of New York with similar rules of confidentiality.Notonlydoes Model Rule 1.6(c) work to the benefit of clients, but also it aims to benefit a lawyer’s practice. For example, returning to the multi tude of videoconferencing platforms, Model Rule 1.6(c) would instill a duty for lawyers to analyze the security fea tures of the various videoconferencing platforms and features that can be used to maintain client confidential ity. For example, Zoom allows users to set a meeting password to help prevent must not get too comfortable with their ethical duties. In the remote work environment, four of the Model Rules become particularly important: (1) Rule 1.1: Competence; (2) Rule 1.6(c): Confidentiality of Information; (3) Rule 4.4: Respect for Rights of Third Persons; and (4) Rule 5.3: Responsibilities Regard ing Nonlawyer Assistance. Model Rule 1.1 sets forth a lawyer’s duty of competence. It requires that lawyers keep abreast of changes in the law and their practices, including the benefits and risks associated with rele vant technology. For example, when the COVID-19 pandemic hit, use of video conferencing expanded rapidly across various platforms like Zoom Meetings, Microsoft Teams, Google Hangouts, GoToMeeting, Webex, and Skype. Many lawyers had to quickly download and familiarize themselves with these new technologies to have meetings with cli ents or even to attend court hearings. Maintaining competence across many applications was not only a necessity resulting from the pandemic but also part of a lawyer’s ethical obligations under Model Rule 1.1.
check in on how everyone is doing, to try to identify problems and solutions, and to maintain a sense of community.
Based on anecdotes and reports in the news media, remote work in some form is here to stay. Recent surveys suggest that there is an increasing trend toward hybrid work, in which employees are working remotely some of the time, and almost half of surveyed employers have made remote work a permanent option. A majority of employers report that remote work has not reduced pro ductivity or collaboration and has not negatively affected workplace culture. Given this trend and a tight labor mar ket, from a competitive perspective, it will be important for law practices to invest in the tools and training to allow effective and secure remote work.
Published in Probate & Property, Volume 36, No 5 © 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. unauthorized individuals from attend ing the meeting. During the COVID-19 pandemic, many people would guess Zoom meeting IDs and randomly enter a meeting and disrupt it, a practice that became known as “Zoom-bombing.” Using a password helps to prevent this and creates an extra layer of security. Additionally, some videoconferencing applications allow the host to indi vidually approve each user and have the user sit in a virtual waiting room until the host approves them to enter the meeting. Taking extra steps such as these works to benefit clients but also enhances the digital and security pos ture of a lawyer’s practice overall, which should protect not only client confiden tiality but also the ability for a lawyer to practice effectively and securely.
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It’s Not You, It’s Us Another rule that plays a pivotal role in working remotely or in a paperless law office is Model Rule 4.4: Respect for Rights of Third Persons. Under this Model Rule, a lawyer who receives a document or electronically stored information and knows or reasonably should know that it was inadvertently sent has a duty to notify the sender. This Model Rule has been important since long before the pandemic. The ABA adopted this Model Rule in Febru ary 2002, after electronic transmission of information started to become the standard form of communication. How ever, when the pandemic hit, lawyers even more heavily relied on electronic transmission and storage of informa tion, and Model Rule 4.4 became even more important. For purposes of this Model Rule, “document or electronically stored information” is a broadlydefined term that includes not only paper documents, email, and other forms of electronically stored informa tion, but also embedded data (known as “metadata”).AnotherModel Rule that long pre dates the pandemic, but that has become of heightened importance in the pandemic era of remote work and increased reliance on a paperless law office, is Model Rule 5.3: Responsibili ties Regarding Nonlawyer Assistance.
Pursuant to this Model Rule, lawyers have a duty to make reasonable efforts to ensure the services are provided in a manner that is compatible with the lawyer’s professional obligations when using nonlawyers to assist with a lawyer’s services. These nonlawyers include internal players: secretaries, investigators, law student interns, and paraprofessionals. They also include external players, such as document management companies and cloudbased technology providers. The use of cloud computing has been growing in recent years. The ABA reports that cloud usage was at 54.6 percent in 2018, with solo and small firms leading the way. A 2018 survey by the ABA asked cloud users to iden tify their biggest concerns, and the topic titled “confidentiality/security concerns” was number one with 63 per cent. Although it is possible for lawyers ethically to entrust client informa tion to “nonlawyer” cloud-computing companies, and although lawyers can use cloud computing services in their practices without breaching their
If You Build It, They Will Come In the remote work environment and paperless law offices, a firm’s technol ogy footprint tends to grow to facilitate “business as usual” without some of the usual tools, such as paper, in-person communications, printers, hand-offs of documents, etc. Though such mod ernization is often a huge asset for firms, it comes with risk. As firms build robust and interconnected technology structures and mount their operations on top of them, the risk of vulnerabil ity increases, and the pandemic has brought its own cyber challenges and risks, too. In response to a data breach, state breach notification statutes create obli gations for businesses, including law firms. In addition, under Model Rule 1.4, lawyers have an ethical obliga tion to notify clients of a breach that involves or has a substantial likelihood of involving material client informa tion. Because of the sensitive, personal, and material information collected, law firms are attractive targets for hackers.
duty of competence or confidentiality, addressing confidentiality and secu rity concerns requires effort. Pursuant to Model Rule 5.3, lawyers will need to make reasonable efforts to ensure any cloud-based services are provided in a manner that is compatible with the lawyer’s professional obligations. Fur ther, it is becoming more common for clients to require specialized security measures, or at least mandate a baseline security level, for their information.
With cyberattacks more of a “when” than an “if,” one way law firms take a proactive approach is by seeking cybersecurity insurance.
A 2018 ABA survey found that one in four law firms has experienced a data breach.TheUS Department of Homeland Security encouraged companies prepar ing for the impact of COVID-19 to adopt heightened cybersecurity standards as well as make efforts to mitigate the risk of cyber threats from employees work ing remotely. In April 2020, the FBI reported that the number of complaints about cyberattacks to their Cyber Divi sion was up to as many as 4,000 a day. That represents a 400 percent increase from pre-COVID-19. Microsoft reported in June 2020 that COVID-19-themed attacks, where cybercriminals get access to a system through the use of phish ing or social engineering attacks, had jumped to 20,000 to 30,000 a day in the US alone. These types of attacks are a particular risk in the remote work environment, where deception is more easily attainable. For law firms, it can help to be proactive rather than reactive, espe cially because, under Model Rule 1.15, lawyers have an obligation to appro priately safeguard property of a client or third party that is in a lawyer’s pos session. With cyberattacks more of a “when” than an “if,” one way law firms take a proactive approach is by seek ing cybersecurity insurance, knowing that in spite of their best efforts to pre vent hacks and mitigate risk, hacks are an inevitable possibility. Cybersecurity insurance is intended to assist compa nies and other organizations with the financial aspects of data recovery and other activities in the unfortunate event of a cyberattack. But most crime and cyber policies require a computer hack or active invasion of a computer system by a criminal to trigger coverage, which can create coverage gaps. It is important for policyholders, such as lawyers and law firms, to adequately gauge their req uisite cybersecurity coverage.
Check out our library of Real Property, and Trust and Estate Law Books ambar.org/rptebooks
Looking Forward, but Cautiously Optimistic To an extent, the remote work envi ronment, paperless law offices, the COVID-19 pandemic, and all of the related shifts in technology have created a new standard in the context of legal malpractice. There is more to know about and different duties to uphold in new contexts. Lawyers must not lose sight of their ethical obligations, but also they cannot remain stagnant in theirTheapplication.1957sci-fi film Plan 9 from Outer Space has a line—“We are all interested in the future, for that is where you and I are going to spend the rest of our lives.” The future of the legal profession is looking more and more like the remote work environments and paperless law offices we have seen spring up in recent years and take flight during the pan demic, and lawyers are going to spend their lives living and working that way. But they cannot do so successfully without keeping in mind the ethical considerations that may potentially arise out of doing so. n
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The trend toward the conversion of static signs to digital signs created the problem in the Reagan case. Digi tal signs have electronically controlled changeable copy and are more distract ing than static signs, which do not have changeable copy. Concerned about the distracting effect created by off-premise digital signs, which include billboards, the city enacted a sign ordinance allow ing on-premise signs to be digitized but not off-premise signs. This distinction created a problem because the ordinance defined each type of sign differently. It defined an off-premise sign as “a sign advertis ing a business, person, activity, goods, products, or services not located on the site where the sign is installed, or that directs persons to any location not on that site.” A footnote in Justice Ali to’s concurring and dissenting opinion quoted the definition of an on-premise sign as “a sign that is not an off-premise speech decision on sign ordinances, casts doubt on it.
Land Use Update Editor: Daniel R. Mandelker, Washington University School of Law, Stamper Professor of Law Emeritus, St. Louis, Missouri.
Three themes dominated Justice Soto mayor’s majority opinion. One theme placed heavy weight on history and practice. Justice Sotomayor found a regulatory tradition that supports the different treatment of signs “that pro mote ideas, products, or services located elsewhere and those that promote or identify things located onsite.” She noted that different treatments prolif erated with the adoption of the federal Highway Beautification Act of 1965, 23 U.S.C. § 131, which includes it and has been adopted by two-thirds of the states. “Tens of thousands of munici palities nationwide” have analogous distinctions in their sign codes. This is resourceful use of history, but its reach is not clear. Is it limited only to the off-premise versus on-premise dis tinction? What weight should be given to history and practice for free speech issues raised by other sign regulations? These are open questions. Justice Thomas, dissenting, asserted that the Austin off-premise sign defini tion was content-based and therefore violated the First Amendment. Justice Sotomayor disagreed because sign ordi nances have treated on-premise and off-premise signs differently for more than half a century, and the Court has repeatedly reviewed and has never questioned this distinction. Nothing in Reed v. Town of Gilbert, 576 U.S. 155 (2015), the Court’s most recent free
The Supreme Court Speaks on Billboards
As she explained, “[R]estrictions on speech may require some evaluation.” Court precedent supported her deci sion because it rejected the view that “ any examination of speech or expres sion inherently triggers heightened First Amendment concern.” This state ment is not quite accurate, because two earlier Supreme Court cases split on whether the read-the-sign rule should be adopted. Justice Sotomayor did not discuss these cases. Rejec tion of the read-the-sign rule means that an automatic trigger cannot turn a sign ordinance into a content-based regulation. sign.” This definition means that an on-premise sign can advertise on-site activities. In Reagan, the sign company argued that the distinction between off-premise and on-premise signs was content-based, which probably would have made it fatal.
LAND USE UPDATE
In a surprising decision, City of Austin v. Reagan National Advertising of Aus tin, LLC, 142 S. Ct. 1464 (2022), the Supreme Court upheld a sign ordinance that treated off-premise and on-prem ise signs differently, a difference that could have proven fatal as a contentbased distinction. In a recent article in this magazine, I discussed this case while it was on appeal to the Supreme Court. Daniel R. Mandelker, The Chang ing Landscape for Billboard Regulation, 36 Prob. & Prop. 40 (Mar./Apr. 2022). This column updates and reviews the Rea gan decision and what it means for free speech law and sign regulation.
The “Read-the-Sign” Rule Justice Sotomayor next considered what she called the “read-the-sign” rule.
As explained by the court of appeals in Reagan, which rejected the off-premise sign definition, a regulation is contentbased if a government official has to “read a sign’s message to determine the sign’s purpose.” Several federal courts adopted this rule, but a greater num ber rejected it. The rule has an absolute effect. It is an automatic trigger that makes every sign ordinance contentbased because government officials must always read signs to determine their purpose. The only signs that would be free of content are blank signs.The read-the-sign rule requires rejection, and Justice Sotomayor rejected it. It was “too extreme” an interpretation of Court precedent because the off-premise sign definition in the Austin sign ordinance required an examination of speech only to draw “neutral, location-based lines.”
History and Practice
Theproblem.question is how far the location exception for off-premise sign defini tions extends that is carved out by the narrow reading. One of the purposes of every sign ordinance is to regulate the location of signs. Take the sim ple real estate sign. Sign codes usually define these signs as “signs advertising property for sale.” This is messagebased content under Reed. What if a sign ordinance defined these signs as “signs located on property offered for sale”? This definition should fall within the location exception. What if the definition is changed to allow “signs advertising and located on prop erty offered for sale”? Is this definition within the location exception? Interested in sign regulation? Down load my handbook, Free Speech Law for On-Premise Signs, which is available on my website, landuselaw.wustl.edu. n
LAND USE UPDATE
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The Austin ordinance raised a contentbased regulation question because it applied not only to commercial speech, which goes under different rules, but also to noncommercial speech, which must be content-free. The answer to this question is decisive. A contentbased law is subject to strict judicial scrutiny, is presumptively unconsti tutional, and must be supported by a compelling governmental interest. This test is a high bar, as strict scrutiny often becomes strict in theory but fatal in fact.The Reed decision is the most recent Supreme Court case before Reagan to deal with content-based sign regulation, and so Justice Sotomayor considered it. She explained how Reed influenced her opinion. Reed struck down the sign ordinance in that case, and she distin guished it as “a very different regulatory scheme” that applied “distinct size, placement, and time restrictions” to 23 different types of signs, with some signs regulated more restrictively than oth ers. She quoted Reed as holding that the ordinance was content-based because it “singl[ed] out specific subject matter for differential treatment,” and because its restrictions were a “prohibition of pub lic discussion of an entire topic.” She also quoted Reed as holding that a reg ulation of speech is content-based if it “applies to particular speech because of the topic discussed or the idea or mes sage expressed.” Reed adopted another rule, not quoted by Justice Sotomayor, that turns on facial distinctions and that applies to the off-premise sign defini tion in Reagan. It holds that “[s]ome facial distinctions based on a message are obvious, defining regulated speech by particular subject matter.” The offpremise sign definition in the Austin sign code could have been held con tent-based under the obvious facial distinction rule. The code defines an off-premise sign with obvious contentbased facial distinction as a sign that advertises “a business, person, activity, goods, products, or services not located on the site where the sign is installed, or that directs persons to any location not on that site.” Justice Thomas dissented because he would have found the defi nition content-based under this rule. Justice Sotomayor disagreed. In her view, the off-premise sign definition was constitutional because it did not “single out any topic or subject mat ter for differential treatment,” as Reed required. Qualifying Reed, she held that “[a] sign’s substantive message itself is irrelevant to the application of the provisions.” There were no contentdiscriminatory sign classifications, as in the ordinance struck down in Reed. Instead, the off-premise sign definition made a distinction based on location. The message on the sign mattered only to the extent that it provided informa tion about “the sign’s relative location,” and Reed does not require strict scrutiny for location-based regulations. The offpremise versus on-premise definition, she concluded, is similar to ordinary time, place, and manner restrictions. Justice Sotomayor also downgraded a “function or purpose” rule adopted by Reed. This rule holds that speech regulated by its “function or purpose” is content-based on its face. The sign company argued that the sign code was content-based on its face under this rule because it defined off-premise signs based on their function or pur pose. Justice Sotomayor disagreed. The company’s argument took the rule too far, as it was only intended to address subtler forms of discrimination. The rule means only that a law cannot escape facially content-based classifica tion “simply by swapping an obvious subject-matter distinction for a ‘func tion or purpose’ proxy that achieves the same result,” though not every function or purpose classification is contentbased. This is a clarification of a rule that caused some confusion when it wasJusticeannounced.Sotomayor remanded the case because she held that the First Amendment inquiry is not ended when a law is content-neutral. There may be evidence of an impermissible purpose or justification, and a restriction on freedom of speech or expression must be “narrowly tailored to serve a signifi cant governmental interest,” which is one of the requirements for time, place, and manner regulations. They must also leave alternative channels of com munication open, a requirement she did not mention. What Reagan Means Reagan revised Reed. It qualified Reed’s requirement that obvious facial distinctions based on message are con tent-based and upheld an off-premise sign definition that could have been held content-based under this rule. The question is what Reagan means for free speech restrictions on sign ordinances. There is a broad and a narrow reading. A broad reading rejects or at least revises the Reed decision by downgrad ing Reed’s function or purpose rule for determining what speech is contentbased. A narrow reading limits Reagan to the off-premise versus on-premise distinction because it concentrated on that distinction, the history and prac tice that supports it, and the location exception for the off-premise sign defi nition
The Content-Based Regulation Question
Technology—Property Editor: Seth G. Rowland, Esq. (www.linkedin.com/in/ sethrowland) has been building document workflow automation solutions since 1996 and is Director of Document Services at 3545 Consulting-Global (3545consulting. com).
Share It Forward How to Build a Knowledge Base out of Your DMS
Wrestling with Your DMS
Management consultant, educa tor, and philosopher Peter Ferdinand Drucker wrote that “knowledge has to be improved, challenged, and increased constantly, or it vanishes.” Early 19thcentury feminist Margaret Fuller wrote that “if you have knowledge, let others light their candles in it.” There is a vast repository of knowl edge in the modern 21st-century law office. With the advent of computers, the knowledge of attorneys and staff with years of experience is captured electronically in the documents they produce each day. For a modern law firm to thrive and grow, this knowledge needs to be kept current, as Drucker admonishes, and to be shared, as Fuller extols. Knowledge Locked in Farm Silos
The problem is not the DMS system software; the problem is how these sys tems are implemented. In this article, I will offer some minor changes you can make to your DMS to turn it into a folder. Sometimes attorney folders are grouped by office or practice area. Other firms put the practice area at the top of the hierarchy; each practice area has its root folder, with separate subfolders for active and inactive cases. Typically, the next level down is the “client” folder fol lowed by an optional “matter” folder.
The file system forces information into silos. The attorney needs to know where to look. Often, attorneys have a private stash of research memos, forms, and model documents. Sometimes, the stashes are organized into topics and shared with the other members of the attorney’s practice group. In larger firms, these stashes may be on a shared drive available to anyone in the firm. Some aspects of the knowledge base may be curated. In other areas, it is often the Wild West, where anything goes.
Today, few of us grow up on farms, but many of us know the term “silo.” In the modern law firm, “silo” refers to the collection of documents that practice areas and attorneys keep to themselves as their special work prod uct. Many firms still use network-based file shares. These file systems can be cloud-enabled. With products such as SharePoint/OneDrive for business, Google Drive, DropBox.com, ShareFile, or Box.com, documents are still orga nized into a hierarchy of folders. There is an infinite variety of hierar chies. Some firms stress ease of access by putting the attorney at the top of the hierarchy; each attorney has her own Even if you can find what you are look ing for, there is no guarantee that the information is reliable. Moreover, in a file system, there is no clear informa tion on who is the author or knowledge expert from whom to seek additional guidance. Apart from the filename of a document and the folder in which the document is found, there is no informa tion on what treasures may be locked within a particular document. Nor is there information on when the docu ment was last reviewed or by whom or from where the document originated.
The Need for Constant Watering and Weeding In the absence of constant manage ment, these silos of information become dated. The memos of law are not updated frequently enough, or at all. The model briefs may no longer rep resent the current state of the law. The model agreements may not contain the latest language that the partners prefer.
Technology—Property provides information on current technology and microcomputer software of interest in the real property area. The editors of Probate & Property welcome information and suggestions from readers.
The promise of the firm-wide docu ment management system (DMS) was to break open these silos and allow the contents to pour together and merge into one repository of all firm knowl edge. But in many firms, this DMS promise has proved hollow. DMS systems are promising in that all documents are now central ized in a single system that is full-text searchable. When meta-data is added to documents in the form of “profile attributes,” this data is usually applied to organize documents by the client, matter, and document type into matterbased workspaces. But you still need to know where to find a document. Addi tional profile attributes, such as author, typist, office, or practice area can be used to narrow down the list of docu ments that are retrieved via search, but, in practice, these DMS systems continue the silo process—except in this case the documents are put into silos by Client and Matter.
functional up-to-date knowledge base. I will use NetDocuments for illustration purposes. By way of disclosure, in addi tion to being a lawyer, I am also Director of Document Services at 3545 Consult ing Global, and in that capacity, I have been responsible for overseeing over 200 law firm and corporate migrations into NetDocuments. That said, many of the ideas that I will suggest can be implemented in iManage, Worldox, or eDocs/OpenText and to a lesser degree can also be done with “custom fields” or “tags” in practice management systems such as Time Matters, PracticeMaster, Litify, ZolaSuite, and Centerbase. Drop Box, Sharefile, SharePoint, and Box have recently implemented “tags,” although these still lack good tools for global search and tag management.
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The second option, copying the doc ument into a separate cabinet, requires someone to manage the knowledge base. Start by adding a custom profile question: “Add to knowledge base?” with three options: “Yes,” “No,” and “Copied.” The author would then fill out a profile field titled: “Why Add?” and a profile field titled: “How to Classify.” The curator or knowledge management specialist would open a saved search of documents flagged as “Yes” and then review the request and determine how best to classify the document. At this point, the knowledge manage ment specialist would make a copy (or copies) of the document, place the cop ies in the knowledge base, change the flag to “Copied,” and the document would drop off the list. The attorney could then receive a notification that the document had been added to the knowledge base. Classifying by Topic—Ad Hoc Tags vs. Taxonomy. A robust knowledge base can be built with simple tags. Tags are single words or short phrases, sep arated by commas, that can be used to classify a document. Use an open text field or a memo field to enter sev eral tags on a single document. If an attorney can think of a tag, she can cre ate one. The tag list can be searched using the global search or the advanced search engine in most DMS systems. Tags can be any phrase, a jurisdiction, the name of a court, or the name of a judge. The beauty of tags is that any one can add them; they are democratic. There is no owner or manager. To use tags, anyone can create a folder contain ing saved searches of their favorite tags. As new documents use those tags, these documents will automatically appear in the search results. The drawback of ad hoc tags is that anyone can add them. There is no hier archy or structure. Tags can overlap; spelling differences between tags can result in incomplete search results. For this reason, most knowledge manage ment systems (KM systems) eschew ad hoc tags as a last resort. Rather, KM systems use several taxonomies or hier archies. The most common hierarchy is based on topic. Using NetDocuments, we would assign ownership of the top ics to departments, practice areas, or groups of lawyers. The members of each group would decide what topics should appear in their section of the knowl edge base. Each topic would have its own workspace. The documents in the workspace would be typed. Under one scenario, there would be smart filters based on content type, such as blank forms, research, instruction guides, legal memos, model agreements, templates, briefs, etc. As a document is classified, it will appear in these filters. Further sub classification could be handled by ad hoc tags or short summaries. If desired, folders and subfolders could be added to further organize the documents on a given topic. Alternatively, some topics could have dynamic subtopics to fur ther classify the content. Jurisdiction and Jurisprudence— Solving the Problem of Overlapping Hierarchies. Folder-based systems are limited to one folder tree. If organized by topic and subtopic, it can be hard to pick out all those documents that per tain to a particular court, agency, or state. However, in a profile-based DMS, the same document can be classified in multiple ways. Simply add a field called jurisdiction with the choices of the fed eral agency, federal court, state court, or state agency. Depending on which is chosen, a Jurisdiction Level 2 field can present a dynamic list of agencies, state courts, or federal courts. By combin ing both topic and jurisdiction in KM searches, the user gets precisely the doc umentNetDocumentsneeded. recently announced an integration with PacerPro. PacerPro is a service that searches the case dock ets of all cases in federal court where attorneys of a firm are registered as attorney-of-record. PacerPro typically delivers the documents as email attach ments. With PacerPro Manifold, the service will instead automatically file the documents into the NetDocuments workspace associated with the sub scribed case. Moreover, the document, as delivered to NetDocuments, also includes searchable meta-data fields, including court, judge, docket number, type of filing, name of motion, name of filing party, and more. For an addi tional fee, a law firm can also subscribe to the court dockets of other cases where the firm members are not attor neys of record if the documents are in the PacerPro master database. The Pac erPro fields can be combined with your other knowledge base profile fields to produce incredibly accurate searches. PacerPro is in the process of getting the rights to the electronic dockets in many
Flag and Profile in Place vs. Flag and Copy: There is an initial design decision. Do you want to leave the doc uments in place where they are, or do you want to “copy” the documents into a separate cabinet or library? The first option, leaving documents in place, is easiest to implement, because the attor ney needs only to flag the document to have it added to the knowledge base, and then add some additional infor mation as to why the document should be added and how it is to be classified. Start by adding a custom profile ques tion: “Add to knowledge base?” with the options of “Yes” or “No.” By choos ing “Yes,” the flagged document will now be included in any saved queries for topics in the knowledge base. This is easy to implement. If you combine it with “Tags,” you can then organize your saved searches into topic-based folders. Adding an item to the knowledge base becomes a matter of saying “Yes” and adding a tag from a master tags list.
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There are many ways to build knowl edge bases. Some are quite complex and expensive. Many are a bit much for the average law firm. One day, your firm may want to invest in a dedicated KM System. If you don’t currently have a document management system, this article should give you another good reason to get off the fence. If your firm already has a DMS system, you can use the options outlined above to leverage the DMS your firm already possesses and stretch it into a useful and usable Knowledge Management System. n
TECHNOLOGY PROPERTY state courts. Until they do, your KM specialist can manually complete the meta-data fields inside NetDocuments so you can use these fields to handle state court and agency filings. Knowing Where the Document Came from. If you are copying a doc ument into a separate KM cabinet or library, you should retain the original meta-data. In particular, you should keep the Client ID and Matter ID, as well as the original author. This will allow the user who finds a “good docu ment” to go back to the original matter workspace and find other useful related documents. If you have the PacerPro Manifold enabled, you would want to copy the document with all the court metadata into your KM cabinet. Taking Your KM to the Next Level Know Your Experts. Up to this point, I have focused on how easy it is to get documents into your KM system. The lawyer can flag and tag choice docu ments, and a KM specialist can refine the classification of the document by filling out additional fields. For this reason, I recommend adding a few additional fields. I would include the author, who would be the member of the firm that authored the actual docu ment. Some authors are known experts on particular topics, and thus their documents would be more useful than those authored by others. If the author is someone outside of the law firm, such as a subject matter expert, you might want to add an “expert” field. That field can be an open text field, or you can also make it a managed field. By using the Microsoft PowerAutomate connec tor to NetDocuments (it comes free with Office365), you can create a simple PowerApp to allow users to add experts to the NetDocuments lookup table. A managed list ensures consistency in how the expert’s name is added. You could similarly add an Area of Expertise field and a Summary of Expert Opinion field as well. All of these will be useful as your KM system grows. Keeping Current and Quality Con trol. In the early phase, a KM system will be fresh and current as users are excited to contribute their knowl edge. But over time, the documents can become stale and out of date. For that reason, you will need an actual document date. The date a profile was created or the date a document was last modified is often different from when the actual document was created. As the amount of content grows, you will want to have domain experts review the con tent for quality and currency. I would recommend adding the following addi tional profile attributes: name of the reviewer, last review date, a review score (1–10 scale or 0–100), and review status. The review status should flag documents that are current, in-process, need to be rewritten, are out of date, or have been superseded. If a document is flagged as “needs to be rewritten,” alerts can be sent out to the original author of the document suggesting that he update the docu ment or designate an associate attorney to do the work. NetDocuments does allow co-editing of documents using Office365. I used that co-editing feature to write this very article. Building Template Sets. A KM sys tem is not limited simply to storing copies of briefs and agreements that you might want to use as models for future documents. It can also store tem plates, outlines, and checklists. Many firms have organized forms committees for individual departments or practice groups. These committees are tasked with creating and maintaining model forms to be used as the starting point for transactions or even court filings. These documents can be stored in a KM system. Using version control, they can be regularly updated to ensure the attorney always uses the most current version of the form. By applying a security model, these forms can also be made “read-only,” effectively functioning as templates. These templates can then be organized into sets or binders. NetDocuments has a tool called SetBuilder, which is a cross between an outliner, a binder, and a checklist. A group of model forms can be combined with instruction guides into an ordered outline. This is a great way to build instruction manuals, dis covery outlines, and due diligence checklists.
, Volume 36, No 5 © 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. ambar.org/rptebooks Check out our library of Real Property, and Trust and Estate Law Books TRUST AND ESTATE BOOKS
Professor Garner recognizes that some writers like to capitalize all of the words in a title or heading, but he recommends that only the main words be capital ized, using lowercase for the following if they are not the first word of the title or heading: articles (like a, an, and the), con junctions or prepositions shorter than five letters (e.g., and, but, of, and from), and to when in an infinitive. The Red book, supra, § 2.10, at 67. Professor Garner also has several (somewhat confusing) exceptions to these recommendations on capitalization in titles and headings; for example, capitalize with if without also appears in the heading. Id. The Bluebook decrees that in a title or heading, the author should capitalize the initial word and any word that immedi ately follows a colon but not “capitalize articles, conjunctions, or prepositions when they have four or fewer letters, unless they begin the heading or title, or immediately follow a colon.” The Blue book, supra, R.8, at 91.
I’m no more a fan of capitalized email acronyms in business communications than I am of emojis, though when advis ing proponents of zoning changes, I’ve been known to warn of NIMBYs. See Marie A. Moore, [emoticon] of Emojis: They Are Communication, But of What?, 33 Prob. & Prop. 64 (Nov./Dec. 2019). Sometimes capitalizing the first letter of the words in a phrase can be useful—Professor Gar ner approves the use of this device, albeit sparingly and when necessary to show irony or mockery. The Redbook, supra, § 2.18, at 73. For Professor Garner, how ever, our common use of all caps is bad and the result hard to read. Id. at 73-74. As a practical matter, he’s probably right, but, in documents, putting a waiver of rights in upper case does give us addi tional comfort that it will be given effect; after all, I’ve never known a litigant to argue that waiver language was less clear because it was in upper case. As H.W. Fowler observes, capitaliza tion is mainly a matter of personal style. So, we can be individual in our capi talizations—as long as we follow a few recognized customs and practices. n
We—or most of us anyway—capitalize: • the first letter of the first word of a sentence (DUH!)
See The Redbook, supra, § 2, at 61; The Blue book, supra, R. 8, at 92-94.
OMG! LOL! We use capitalization daily, but when is it used correctly? Inter estingly, capitalization has long been considered a matter of personal style. In my venerable 1965 edition of A Diction ary of Modern English Usage, H.W. Fowler observes, “[T]he employment of capitals is not a matter of rules but of taste; but consistency is at least not a mark of bad taste.” H.W. Fowler, A Dictionary of Mod ern English Usage 75 (Sir Ernest Gowers ed., 2d ed. 1965). Unlike Fowler, Profes sor Garner recognizes that capitalization has rules, as illustrated by the title of § 2.2 of his Redbook, “Use lowercase unless a rule calls for capitalization.” Bryan A. Garner, The Redbook: A Manual on Legal Style 61 (3d ed. 2013). The Bluebook also prescribes capitalization rules. See The Bluebook: A Uniform System of Citation R. 8, at 91 (Columbia L. Rev. Ass’n et al. eds., 21st ed. 2020). Let’s first look at the clear conventions for the use of capitaliza tion that we legal writers should observe, before considering the more stylistic use of capitalization for emphasis and those annoying acronyms we see daily.
The Last Word Editor: Marie Antoinette Moore, Sher Garner Cahill Richter Klein & Hilbert, L.L.C., 909 Poydras Street, Suite 2800, New Orleans, LA 70112, (504) 299-2100.
THE LAST WORD
• the first letter of each word (well, the main ones—not the articles and prepositions) in other proper nouns, like the names or titles of coun tries, persons, entities, government agencies, statutory codes, specific government laws, books, and arti cles, as well as short forms of those proper nouns when referring to a particular one of them, but not when referring generally to unspec ified countries, laws, and the like • the first letters of previouslydefined terms
Titles and Headings
Storming the Capitalization
• the first letter of a person’s first, middle, and last name—or nick name (subject to esthetic deviations: e.e. cummings)
Clear, Conventional Capitalization
Examples of Other GarnerSanctioned Capitalization
In a quotation of a full sentence, retain the capitalization of the first word or, if the first word is not already capitalized, place the first letter, capitalized, in brack ets. If the quoted language is not a full sentence, follows that in its introduction, or is “woven into the syntax of the sen tence,” do not capitalize its first letter or, if that first letter is capitalized in the source document, place a lowercase version of the first letter in brackets. The Redbook, supra, § 2.4, at 62-63. Capitalize the first word of a direct question, with the admonition that direct questions should follow a comma, emdash, or colon. Id. at 63. This raises the following question: Must the first let ter of everything that follows a colon be capitalized? Professor Garner says “no”: “[I]f you use a colon, whether to capital ize depends on whether it introduces a direct question or a declaratory state ment (including a direct question).” Id. at 63.
Don’t forget to check out the latest articles from the Digital RPTE Law Journal Summer 2022 Articles Creditors’ Rights in Property Subject to a Beneficiary’s Right of Withdrawal S. Alan Medlin & F. Ladson Boyle Physician-Assisted Death and the Slippery Slope: Carving out an American Ledge Zachary Carstens RPTE LAW JOURNAL To review the latest Digital RPTE Law Journal visit www.ambar.org/rptejournal
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