Probate & Property - November/December 2022, Vol. 36, No. 6

THE IMPORTANCE OF ADVANCE DIRECTIVES

CO-OP SALE APPROVALS: ARE BOARDS OVERREACHING?

SELECTING AN EMPLOYER-SPONSORED RETIREMENT PLAN

VOL 36, NO 6 NOV/DEC 2022

A PUBLICATION OF THE AMERICAN BAR ASSOCIATION | REAL PROPERTY, TRUST AND ESTATE LAW SECTION

CONDOMINIUM TERMINATION A Potential Path for Repurposing and Redeveloping Aging Condominium Buildings

NEW RPTE PUBLICATIONS Check out our library of New Real Property and Trust and Estate Law Books!

The Lease Manual: A Practical Guide to Negotiating Office, Retail, and Industrial Leases Second Edition

APRIL F. CONDON WITH RODNEY J. DILLMAN PC: 5431131 Price: $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 Domestic Asset Protection Trusts: A Practice and Resource Manual EDITOR, ALEXANDER A. BOVE JR. PC: 5431122 527 pages Price: $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

ambar.org/rptebooks

TAILORED TRUST & ESTATE SERVICES FOR YOUR CLIENTS

Contact Us Today Mary Ann Korenic, J.D., CTFA 312-373-1486 mkorenic@wintrust.com 231 South LaSalle Street, 13th Floor Chicago, Illinois 60604

The Chicago Trust Company, N.A. delivers a full range of administrative and fiduciary trust services from personal and corporate trustee services to guardianships, estate settlement and specialty trusts. We are available to be named into either new or existing estate plans.

And as Wintrust’s trust company, we not only serve clients in-market throughout the greater Chicago area and southern Wisconsin, but have trust powers in all 50 states.

Wintrustwealth.com/estateplanning

W O R L D - C L A S S C A PA B I L I T I E S .

I N - M A R K E T S E RV I C E .

In an industry full of rigidity, The Chicago Trust Company stands out for accessibility, swift decision-making, and empathetic recommendations. Our end-to-end capabilities and collective wealth of knowledge in the trust space, along with our high-touch services and local focus, mean that no account is too small for us to handle. We serve Chicago from Chicago.

WINTRUSTWEALTH.COM/ESTATEPLANNING

Securities, insurance products, financial planning, and investment management services offered through Wintrust Investments, LLC (Member FINRA/SIPC), founded in 1931. Trust and asset management services offered by The Chicago Trust Company, N.A. and Great Lakes Advisors, LLC, respectively.

Investment products such as stocks, bonds, and mutual funds are: NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE | NOT A DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 1

CONTENTS November/December 2022 • Vol. 36 No. 6

10 Features 10

By Roger D. Winston and Eben C. Hansel

22

Honoring the Intentions of a Loved One— The Importance of Advance Directives

By Lindsey E. Wilkinson

30

Co-op Sale Approvals in a Hot Market: Are Boards Overreaching?

By Adam Leitman Bailey and John M. Desiderio

34

It’s Not That SIMPLE—Selecting an Employer-Sponsored Retirement Plan

By Bruce A. Tannahill

40

Federal Real Property Case Law Update

By Manuel Farach

44

Speechifying and Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career

22

Condominium Termination: A Potential Path for Repurposing and Redeveloping Aging Condominium Buildings

Departments 6

Young Lawyers Network

8

Uniform Laws Update

16

Keeping Current—Property

26

Keeping Current—Probate

55

Career Development and Wellness

57

Land Use Update

59

Technology—Probate

61

2022 Probate & Property Index

64

The Last Word

By Stephen R. Akers, Dana G. Fitzsimons Jr., Terrence Franklin, Carol A. Harrington, and

Paul S. Lee

Published in Probate & Property, Volume 36, No 6 © 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.

2

November/December 2022

A Publication of the Real Property, Trust and Estate Law Section | American Bar Association

EDITORIAL BOARD Editor Edward T. Brading 208 Sunset Drive, Suite 409 Johnson City, TN 37604

ABA PUBLISHING Director Donna Gollmer

Articles Editor, Real Property Kathleen K. Law Nyemaster Goode PC 700 Walnut Street, Suite 1600 Des Moines, IA 50309-3800 kklaw@nyemaster.com

Art Director Andrew O. Alcala

Managing Editor Erin Johnson Remotigue

Manager, Production Services Marisa L’Heureux Production Coordinator Scott Lesniak

Articles Editor, Trust and Estate Michael A. Sneeringer Porter Wright Morris & Arthur LLP 9132 Strada Place, 3rd Floor Naples, FL 34108 MSneeringer@porterwright.com Senior Associate Articles Editors Thomas M. Featherston Jr. Michael J. Glazerman Brent C. Shaffer Associate Articles Editors Robert C. Barton Travis A. Beaton Kevin G. Bender Jennifer E. Okcular Heidi G. Robertson Aaron Schwabach Bruce A. Tannahill

ADVERTISING SALES AND MEDIA KITS Chris Martin 410.584.1905 chris.martin@mci-group.com Cover Getty Images All correspondence and manuscripts should be sent to the editors of Probate & Property.

Departments Editor James C. Smith Associate Departments Editor Soo Yeon Lee Editorial Policy: 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.

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. © 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.

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 60654-7598.

The price of an 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 orders@americanbar.org.

Periodicals rate postage paid at Chicago, Illinois, and additional mailing offices. Changes of address must reach the magazine office 10 weeks before the next issue date. 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.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 3

2022 RPTE LAW STUDENT WRITING COMPETITION WINNERS We are delighted to announce the winners of the 2022 RPTE Law Student Writing Competition.

FIRST PLACE: The Ownership of Fossils Found on Private Property: Are They Part of the Mineral Estate or the Surface Estate?

by Emma Geesaman, Case Western Reserve University School of Law SECOND PLACE: Heir(ing) on the Side of Caution: Is California’s Intestacy Law Too Strict for Posthumous Children Seeking to Inherit Social Security Benefits?

by Jasmine Sadeghani, Pepperdine University Caruso School of Law THIRD PLACE: Rolling Easements as a Viable Tool to Address Rising Sea Levels in US Coastal Communities

by Katherine Meek, UCLA School of Law Emma Geesaman, the first-place winner, will receive $2,500 cash, a oneyear free membership in the Section and free round-trip airfare and weekend accommodations to attend the 35th Annual RPTE National CLE Conference, May 10-12, 2023, in Washington, D.C. She is eligible for a full-tuition scholarship to the University of Miami School of Law’s Heckerling Graduate Program in Estate Planning OR Robert TraurigGreenberg Traurig Graduate Program in Real Property Development for the 2022–2023 or 2023–2024 academic year. In addition, Emma’s essay will be considered for publication in a future issue of the Real Property, Trust & Estate Law Journal.

Jasmine Sadeghani, the second-place winner, will receive $1,500 cash.

Jasmine’s submission will also be considered for publication in a future issue of the Real Property, Trust & Estate Law Journal.

Katherine Meek, the third-place winner, will receive $1,000 cash.

Katherine’s submission will also be considered for publication in a future issue of the Real Property, Trust & Estate Law Journal.

The goal of the RPTE student writing contest is to encourage and reward law student writing on the subjects of real property or trust and estate law. The essay contest is designed to attract students to these law specialties and to encourage scholarship and interest in these areas.

Articles submitted for judging are encouraged to be of timely topics and not previously published.

The Section sends a huge thank you to Michael Ostermeyer and the 2022 selection committee: Robert Paul, Edward Brading, Amy Milligan, Amy Hess, Susan Gary, Ray Prather, Andrea Boyack, and Jeff Hopkins.

Published in Probate & Property, Volume 36, No 6 © 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.

4

November/December 2022

If it matters to your clients,

it matters to us.

Make Glenmede Private Wealth your partner in trust and estate planning.

As a trusted legal advisor to individuals and families of significant wealth, you have a lot weighing on your shoulders.

Let the experienced professionals at Glenmede help. Our integrated team provides guidance and support on sophisticated tax, estate planning and fiduciary matters. We partner with you to strengthen your client relationships.

We invite you to get to know Glenmede Private Wealth.

Meet Mark R. Parthemer, the Chief Wealth Strategist and Florida Regional Director at Glenmede Private Wealth. Mark recently joined our team as the leading strategist in trust and estate planning and welcomes the opportunity to discuss your clients’ financial and planning objectives.

Learn more at glenmede.com/florida-learnmore © 2022 Glenmede. All rights reserved.

Published in Probate & Property, Volume 36, No 6 © 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.

YOUNG LAWYERS NETWORK Get Known As a young lawyer, the early part of your career is spent learning your craft.

You master the fundamentals of your practice area, and through repetition of tasks, you develop skills. For those lawyers practicing at law firms, you become aware that lawyers fall into two camps—those that bring business to the law firm, and those that do not.

As an associate, especially at the junior level, most law firms do not expect you to generate business. Instead, an associate’s function at most law firms is to grind at the lower-skill level of tasks that you must master in your practice area before you are given the responsibility to handle more sophisticated work. If you work at a firm that bills by the hour, your value largely turns on your ability to bill hours. And while attaining your firm’s billable hour targets yields its rewards, even that does not make you indispensable. What makes you indispensable is having your own book of business with enough work to “feed” you and others at your firm. This article is about one of the most important things you can do to build your book of business—getting known.

People Have to Know Who You Are There is a statistic that 80 percent of small businesses fail within the first 18 months because no one is aware the business exists. The problem is obscurity, and it applies to lawyers, too. If people do not know you and what type of law you practice, they cannot Young Lawyers Network Editor: Josh Crowfoot, Crowfoot Law Firm, 200 W. M.L.K. Boulevard, Suite 1000, Chattanooga, TN 37402, josh@crowfootlaw.com.

retain you as their attorney. As Grant Cardone, one of the greatest thought leaders in sales and marketing, likes to say, “If people don’t know you, they won’t flow you.” The ideas in this article to get known come from a new audiobook, The 10X Mentor: Take Charge of Your Business, Your Career, and Your Life

by Grant Cardone, exclusively available on Audible. I have tailored it to a lawyer audience.

If people don’t know you, they cannot support you. To build a thriving practice, you must stretch your reach beyond your existing network of family and friends.

How to Meet People Who Don’t Know You Yet Become active in your local community. There are myriad ways to do that including, but not limited to, (i) attending neighborhood events, (ii) attending your children’s school events, Commit to Getting Known (iii) participating in local politics, (iv) According to Cardone, the effort to participating in events for a charibecome known must be constant and relentless. The ultimate goal is to be the table organization, and (v) attending industry conferences put on by trade expert in your practice area, not just a organizations in your practice area. participant. A successful outcome will You can also write articles for industry be that your ideal client recognizes publications, local newspapers, or magboth your face and your voice because azines to showcase your knowledge and you have taken steps in your marketing expertise. Find opportunities to collabto make that a reality. The more your orate with players in your community. target client recognizes you, the more This can come in the form of supportbusiness you will have. ing their businesses or participating as a guest on a podcast. The biggest lesDevelop Your Existing Network son here is that you need to leave your Like every lawyer, you have an existing office and promote yourself in the marnetwork of people who know you. This ketplace. Make sure people see you, hear network includes family, friends, colleagues, people you went to college with, about you, and read about you. Let your community know what you can people you went to high school with, do for it. And then do it relentlessly. and people in your neighborhood. But do they all know exactly what you do as How to Accelerate Meeting a lawyer? Be sure to let them know and People You Don’t Know to remind them. Client referrals from Your most valuable asset as a lawyer your existing network are your “lowest is your accumulated knowledge and hanging fruit.” ability to provide legal counsel in a chosen area of law. The best way to marReach Out to People You ket your legal services is to share that Don’t Know knowledge for free. At first blush that The most limiting factor to buildsounds counterintuitive because cliing your book of business (and your ents should be paying us for our time income) is who knows you. The ultiand expertise. The point, however, is mate size of your book of business to share your knowledge with as many in the practice of law directly correpeople as you can, so people get to lates with how many people know you.

Published in Probate & Property, Volume 36, No 6 © 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.

6

November/December 2022

YOUNG LAWYERS NETWORK

know you. This happens with your creating content and distributing it through as many social media channels as you can handle. The more, the better. This includes Facebook, Instagram, TikTok, Twitter, LinkedIn, your firm’s newsletter, or via some type of collaboration with other professionals. All of our potential clients will be on these platforms, although they are likely to behave differently on each one—just as you probably do. Tailor your message as needed to fit with the platform. The

persona that you present on LinkedIn is probably very different from the one on Facebook or Instagram, but the point is the same − let people get to know you.

As for selecting a social media platform to begin with first, determine which platform will have your ideal customer and start there.

The Right Mindset For you to be perceived as an expert in your practice area, you must be thought about and talked about. Take every

opportunity that comes your way to showcase your talent, knowledge, and expertise. Visibility is key.

Conclusion You can be the best lawyer in the world, but no clients will ever give you their business if they do not know you. You should make sure the world knows who you are and what you can provide. In the game of marketing, the best lawyer does not necessarily win. The best known lawyer does. n

SAVE THE DATE We are excited to bring our CLE Conference to Washington, DC! Two full days of CLE programming, networking and social events around the DC area

35th Annual RPTE National CLE Conference

May 10-12, 2023 | Marriott Marquis Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 7

UNIFORM LAWS U P D AT E Uniform Law Commission Announces Two New Real Property Studies The Uniform Law Commission (ULC) recently announced the formation of two new study committees involving the law of real property. A study committee is tasked with determining whether a specific subject can be effectively addressed with a uniform state law. The committee will consider criteria including: • the need for uniformity among the states; • the current state of the law, including how states have addressed the subject with statutes or case law; • whether recent litigation indicates unsettled matters of law; and • the likelihood of widespread enactment.

The study committee will ultimately make a recommendation to the ULC whether to form a drafting committee to create a new uniform act.

Study Committee on the Uniform Marketable Title Act A marketable title act is a state law that simplifies title searches by invalidating most property interests older than a statutorily-fixed period of time. The underlying theory is practicality. A comprehensive search of title records dating back hundreds of years can be expensive, time-consuming, and is usually unnecessary. As a leading treatise puts it, “most titles which are good ‘of record’ for the past several decades are good in fact, and nothing recorded in more remote times casts any doubt on them.”

Whitman, Burkhart, Freyermuth & Rule,

Uniform Laws Update Editor: Benjamin Orzeske, Chief Counsel, Uniform Law Commission, 111 N. Wabash Avenue, Suite 1010, Chicago, IL 60602.

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.

The Law of Property § 11.12, at 794 (4th ed. 2019).

Currently, 19 states have some version of a marketable title act, with statutorily-fixed periods ranging from 20 to 50 years. In these jurisdictions, a title searcher can conduct a search of limited scope. For example, if the lookback period is 30 years, a buyer’s title search can begin with the last deed recorded more than 30 years before the date of the search. If no more recent claims are identified, the title is deemed to be marketable and any older claims will be ineffective against the buyer.

Therefore, a claimant who wants to preserve the validity of an interest created more than 30 years prior must periodically record a notice that will appear in the truncated chain of title.

The ULC first promulgated a marketable title act in 1977, but it was packaged with a set of other real estate laws into a lengthy code that was not adopted in any state. A stand-alone version approved in 1990 was better received, but by that date a number of states had already adopted their own non-uniform marketable title acts. That led to the present situation, in which almost half the states have some form of marketable title act, but the exceptions

and look-back periods vary widely.

Over the past 50 years, litigation in marketable title states has revealed certain issues related to the application and interpretation of the statutes.

For instance, can a marketable title act extinguish a property interest that arose by implication or by operation of law rather than by recorded instrument?

Does the act extinguish the right of a landlocked property’s owner to acquire an easement by necessity? Should the act operate to extinguish restrictive covenants in the context of a condominium or homeowners’ association?

These and other questions can conceivably be addressed in a revised Uniform Marketable Title Act, clarifying the law and standardizing recording practices across adopting jurisdictions.

The study committee is consulting with stakeholders representing the title insurance industry, property records industry, recording offices, and real estate professionals to determine whether a more uniform law in this area would be beneficial.

Study Committee on the Use of Tokens in the Transfer and Financing of Real Estate A typical real estate transfer commences when the buyer and seller sign a contract of purchase and sale, conditioned upon factors including the quality of the seller’s title, the type of financing, the physical condition of structures on the property, and other protections for the buyer and seller. Once the contract is signed, the parties undertake due-diligence tasks described in the contract, which may include inspections, title searches, surveys, environmental tests, and applications for mortgage loans. In the process, the buyer typically incurs significant expenses. All of these acts

Published in Probate & Property, Volume 36, No 6 © 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.

8

November/December 2022

UNIFORM LAWS U P D AT E

involve time, energy, multiple persons, and professional fees.

In recent years, proponents of blockchain technology have promoted its potential to revolutionize real estate transfers through the use of tokenization. They argue that real estate “tokens” recorded on a blockchain can embody a set of property rights and allow for the simpler transfer of real property without professional intermediaries and without the need to comply with traditional formalities.

Existing law in some United States jurisdictions permits a form of tokenization through the registration and certification of title under the Torrens system. Where authorized by statute, Torrens allows the government to issue a certificate of title, much like a motor vehicle title, that embodies certain rights held by the owner of record. The certificate is a public record of title, and any lien or other interest in the property must be listed on the certificate to be valid.

In theory, a certificated Torrens title could be “tokenized” into a nonfungible token (NFT) comprising units of data that represent a unique digital asset stored and verified on a blockchain.

Proponents contend the token could then be transferred from seller to buyer using the blockchain’s protocols, in the process transferring all the same property rights that a buyer acquires under a typical transfer of real estate.

Within the past few years, cryptocurrency proponents have formed companies intended to demonstrate proof-of-concept. The prototypical tokenized transactions are not direct sales of real property, but rather sales of a limited liability company (LLC) that owns a tract of real property. The LLC’s governing documents specified that the LLC membership interest was embodied in a newly minted blockchain token.

The title to the real property was in turn transferred to the LLC using a traditional recorded deed. However, once those initial transactions are complete the ownership interest in the real property, ostensibly now embedded in the token via the LLC, could then be transferred to subsequent buyers using the

relevant blockchain protocol. Theoretically, the purchase of such a token could be financed via a cryptocurrency loan on a decentralized finance platform, rather than by a traditional mortgage lender.

Currently, the law of property does not permit all of the efficiencies that proponents suggest will flow naturally from tokenization. As long as real estate ownership is evidenced though public land records, the rights associated with an interest on the blockchain will remain dependent on the recorded title to the “tokenized” parcel of real estate.

But we can expect proponents of blockchain transactions to seek legislation validating these transactions, and we can also anticipate potential disputes that will have to be resolved by the courts.

The new study committee will determine whether a new uniform state law can help to resolve these issues and advance the law of real estate transfers.

Questions to be considered include: • Should a tokenized right to possession of real property be transferred without memorialization in local land records?

• How can real estate transfer taxes be fairly assessed and collected?

• Should an owner’s right to possession of tokenized real property be

extinguished without a foreclosure sale?

• How can liens, such as tax liens, mechanic’s liens, or homeowners’ association liens, attach to a tokenized real estate interest?

• Should the law implement a Torrens-like system for direct tokenization of real estate, rather than requiring the indirect method of using LLCs or similar holding entities?

The committee will consult with blockchain proponents, real estate practitioners, property records professionals, and any other interested stakeholders to determine whether it is possible to reach a consensus on the reforms that would be necessary to implement a true system of tokenization for real estate.

For more information about these and other ULC projects visit www. uniformlaws.org.

The primary sources for this edition of Uniform Laws Update were memoranda by Professor R. Wilson Freyermuth, Executive Director of the Joint Editorial Board for Uniform Real Property Acts, recommending appointment of the ULC Study Committees on the Uniform Marketable Title Act and on the Use of Tokens in the Transfer and Financing of Real Estate. n

Explore opportunities to get in front of more than 15,000 Real Property, Trust and Estate Law Attorneys.

Sponsorship and advertising opportunities are available now!

KELLY LAIDLER | Corporate Opportunities 410.584.8356 | kelly.laidler@wearemci.com BRYAN LAMBERT | Law Firm Opportunities 312.835.8978 | bryan.lambert@americanbar.org

Partner with us www.ambar.org/rptesponsorships

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 9

CONDOMINIUM TERMINATION

Published in Probate & Property, Volume 36, No 6 © 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.

10

November/December 2022

istockphoto

By Roger D. Winston and Eben C. Hansel

T Getty Images

A Potential Path for Repurposing and Redeveloping Aging Condominium Buildings

he tragic collapse of the Champlain Towers in Surfside, Florida, in June 2021 was a wake-up call for owners of units in aging condominium projects throughout the country, as well as associations, property managers, state regulators, developers, lenders, and others involved in the condominium industry. Many of the factors that may have contributed to the Surfside collapse, including an aging structure, substantial deferred maintenance, and inadequate reserves, are present at many other condominium buildings. In the months since the tragedy, we have seen increased scrutiny of condominiums by lenders, regulatory bodies, insurance carriers, and potential unit purchasers. Fannie Mae and Freddie Mac have added more stringent requirements for condominium loan approvals. See Ben Eisen, Surfside Tower Collapse Makes Buying Condos More Complicated, Wall St. J., Feb. 20, 2022, https://on.wsj.com/3drJaJW. Florida regulators have increased inspection periods and made it more difficult for condominium associations to defer needed repairs. See S.B. 4-D, 2022 Leg., Spec. Sess. (Fla. 2022). Maryland now requires more frequent reserve studies and obligates associations to comply with certain reserve funding level recommendations, see H.B. 107, 2022 Leg., 444th Sess. (Md. 2022) (effective Oct. 1, 2022), and it is expected that other states will consider similar measures.

Buildings constructed during the condominium boom of the 1970s and 1980s are now entering their fourth or fifth decade and may have reached the end of their useful life, particularly in harsh coastal areas. The same factors burdening the broader economy—the threat of recession, inflation, and supply chain obstacles—raise the costs of keeping up with the maintenance requirements of an aging building, which are often managed by volunteer Roger D. Winston is a partner at Ballard Spahr LLP in Washington, DC, and is a past chair of the Section. Eben C. Hansel is a partner at Ballard Spahr LLP in Baltimore, Maryland.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 11

association boards who lack the expertise required to undertake major capital improvements. In the face of these challenges, some condominium projects will be unable to continue to operate according to the status quo and may seek alternatives, including termination of existing condominium regimes.

Termination has been a component of condominium law from its inception but has been pursued only in limited circumstances. It is unfamiliar ground for many associations and practitioners. In addition to the economic reasons discussed above, there

This makes termination an attractive path for an owner or developer who wants to repurpose or redevelop the entire property.

The rules and procedures for a condominium termination can be found in two main sources: (a) the applicable state condominium act (the State Act) and (b) the recorded Condominium Declaration. State Acts generally set forth the minimum standards and requirements for termination, including the percentage of owners required to vote in favor of termination. The Condominium Declaration may

Termination has been a feature of condominium law from its inception, but previously was rarely pursued, and is unfamiliar ground for many associations and practitioners. are many circumstances in which it may make sense to consider a condominium termination, including when significant deferred maintenance exists, following a substantial casualty or condemnation event, or to pivot the project to a better use, such as student housing or higher-density affordable housing.

The authors expect to see a rise in the number of condominium terminations in coming years. This article will review the basic mechanics of termination, identify some common pitfalls, and discuss some broader issues related to condominium termination.

The Mechanics of a Condominium Termination Termination of an existing condominium regime is governed by state law and is typically accomplished by recording a termination agreement. This negates the Condominium Declaration that established condominium units and returns the property to a single unified parcel of real estate with one owner (or one group of owners). Following termination, the property may be sold free and clear of the ownership interests created under the condominium regime.

provide additional requirements beyond the minimum standards in the State Act. In instances where the terminated condominium property will be sold, parties may also need to consider additional requirements imposed by the buyer’s title insurer and lender.

State Acts vary widely in their requirements for termination. This article considers the Uniform Condominium Act (Unif. L. Comm’n 2017) (the UCA), a version of which is in effect in 14 states, see Condominium Act, Unif. L. Comm’n, https://bit.ly/3zPzCQu (last visited Aug. 29, 2022) (listing states that have enacted the UCA), as well as some other notable State Acts that deviate from the UCA. Approval of Termination State Acts set the minimum threshold of owner votes required for termination. A Condominium Declaration may increase this required threshold but generally cannot lower it, except in limited circumstances for nonresidential condominiums. UCA § 2-118(a). The UCA requires the “agreement of unit owners of units to which at least 80 percent of the votes in the association are allocated, or any larger percentage the

Condominium Declaration specifies.”

Id. The 80 percent threshold is widely used, but this varies by state. Colorado has the lowest threshold at 67 percent, Colo. Rev. Stat. § 38-33.3-118(2) (c) (2022), and a few states require 100 percent approval, see, e.g., 765 Ill Comp.

Stat. 605/16 (2022) (requiring all unit owners for approval), which in practice makes termination of a large residential condominium with many owners nearly impossible and gives a single unit owner veto-authority. Some Condominium Declarations also impose requirements for approval by lienholders.

In Florida, where the condominium market plays an outsized role and the State Act is well developed, the termination threshold has been modified several times over the last 20 years.

Prior to 2007, the State Act required consent from 100 percent of owners and mortgagees, a nearly impossible task. Pursuant to legislation enacted in 2007, the threshold was lowered to 80 percent, with the caveat that no more than 10 percent of owners could affirmatively object. This change was followed by a series of high-profile stories about unit owners losing their homes to termination. In response, in 2015 the objection threshold was lowered to 5 percent, and additional consumer protection elements were added to reduce abusive practices and protect homeowners. See Fla. Stat. § 718.117(3) (2022). Most other states do not have a similarly well-developed termination act and could face the same problems previously seen in Florida if terminations become more widespread.

The termination threshold is generally met in one of two ways. First, an interested buyer may approach the condominium association and offer a buyout. The association can vote to accept the offer, contingent on obtaining approval from the requisite number of owners. This approach may be successful in condominiums that are otherwise struggling financially or have costly deferred maintenance obligations on the horizon. If the buyer can

Published in Probate & Property, Volume 36, No 6 © 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.

12

November/December 2022

offer a premium over the market value of the units, this may be a compelling exit strategy for condominium owners. This approach may fail, however, if the governing body of the association is not interested in selling the property.

Second, a buyer may purchase individual units until it controls enough votes in the association to vote to terminate the condominium unilaterally and then sell the property to itself or an affiliated buyer. Some states have consumer protection laws that protect against abuses by “bulk owners” who own a large percentage of units in a condominium and may be able to act against the interests of other owners, but many states do not. See id.

The Termination Agreement The termination agreement, once ratified by the requisite threshold and recorded in the land records, is the instrument that actually terminates the condominium regime. The requirements for the termination agreement are based in state laws and are not universal, but they generally require only a bare minimum of information. The UCA provides very little detail: An agreement to terminate must be evidenced by the execution of a termination agreement, or ratifications thereof, in the same manner as a deed, by the requisite number of unit owners. The termination agreement must specify a date after which the agreement is void unless it is recorded before that date. A termination agreement and all ratifications thereof must be recorded in every county in which a portion of the condominium is situated, and is effective only upon recordation. . . . If, pursuant to the agreement, any real estate in the condominium is to be sold following termination, the termination agreement must set forth the minimum terms of the sale.

UCA § 2-118(b)-(c).

Sale of the Condominium Property A condominium may be terminated with or without an agreement in place to sell the property. Under the UCA and many State Acts, the termination process varies depending on whether the property will be sold.

Under the UCA, an agreement to sell the condominium property may be entered into by a condominium association prior to a vote by the unit owners (subject to any restrictions in the condominium bylaws) but does not become effective until it is ratified by the requisite number of owners. The owners vote on the proposed sale and termination according to their bylaws and applicable law, and they indicate approval of the sale and termination by executing the termination agreement, which includes the terms of the sale. In the interim period between termination and sale, the association holds the condominium property in trust for the unit owners, and each unit owner may retain the right to occupy its unit.

Termination without an agreement to sell the property is much simpler, and usually occurs only when a single owner already holds 100 percent of the units and wants to eliminate the condominium ownership structure.

Upon termination, the unit owners become tenants in common with interests allocated according to their respective ownership interests in the former condominium, and each owner has an exclusive right to occupy its former unit. Given the practical difficulties in managing a property with multiple occupants under a tenancyin-common structure, this approach likely only makes sense in very limited circumstances.

Allocation and Distribution of Proceeds Upon the sale of a terminated condominium property, the unit owners and their respective lienholders are each entitled to a share of sales proceeds.

Under the UCA, the value of each unit is determined according to an appraisal

undertaken by the association. The appraisal report must be distributed to the unit owners and is deemed approved unless objected to by at least 25 percent of unit owners. The proportionate interest of each unit owner is determined according to the fair market value of the owner’s unit, allocated interests, and any limited common elements; and each owner is assigned a proportionate share of the sales proceeds based on their proportionate interests. Sales proceeds are initially held by the association as a trustee for the owners and lienholders and distributed according to their respective interests. In practice, this distribution can be complex, as the buyer and seller must account for adjustments, prorations, and payoffs both at the property level and at the individual unit level, including the payment of liens and delinquent assessments, accounting for property taxes and transfer taxes, adjustments for rent and utilities, and all of the other complexities that accompany a real estate closing.

Potential Pitfalls Termination of a condominium is a complicated and delicate process. In some cases, it may result in the termination of ownership rights against the wishes of a unit owner or at a price that such owner does not think is fair. State Acts often provide only minimal guidance and do not anticipate or address many potential pitfalls and points at which aggrieved owners may object to the process, including the following: Conflicts of Interest. A “bulk owner” of units above the required threshold may have the unilateral right to terminate the condominium over the objection of other owners and to sell the property to itself or an affiliate, which can lead to actual or perceived conflicts of interest at each step of the termination process. The Florida State Act has some consumer protection elements to prevent abuse, but many State Acts do not.

In this scenario, a terminating owner should be careful that it is following all termination procedures to the letter and

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 13

is providing a fair purchase price backed up by an independent appraisal.

Valuation of Units. The UCA and many State Acts require that a separate fair market value must be determined for each individual unit. The appraisal can be an expensive and time-consuming undertaking and may require the consent of each unit owner to access the owner’s unit. If a unit owner does not agree with the results of the appraisal, there is no path for appeal unless at least 25 percent of the owners object to the appraisal.

Cooperation in Closing Process. Conveying clean title may require cooperation from outgoing owners. Although the termination agreement eliminates a unit

the new owner, and whether there are any limits on a unit owner’s right to enter into a new lease that may survive termination.

Changes in a Post-Surfside World We have already seen many changes in the condominium industry after Surfside, including sky-rocketing insurance rates. We also expect to see the additional changes described below, which may affect the calculus of whether to continue or terminate a condominium regime: Updating state laws. In 2022, Florida passed new laws strengthening condominium regulation and requiring additional inspections for certain

Fannie Mae and Freddie Mac issued bulletins to lenders after the Surfside collapse imposing stricter standards that made some condominium unit loans ineligible for resale to the agencies and require burdensome certifications from associations as a condition to new loans. owner’s interest in their individual unit, a title company may impose some or all of the requirements that a seller would typically be required to follow, including filing state tax withholding certificates, paying and allocating property taxes, obtaining payoff letters from lenders, and providing title affidavits.

Mechanics of Transition in Ownership.

Some State Acts are silent on important points about how possession is transferred upon a sale. Under most State Acts, occupancy can continue after termination, but the occupancy right expires upon the conveyance of the condominium property. Some states, including Florida, provide an outgoing owner with a preemptive right to lease back its unit at market rates for a limited time, but many State Acts do not address this point at all. Another unsettled question is how existing leases are treated upon transition, including whether leases survive and remain binding on

buildings. Other states are reviewing their own requirements, and we expect a flurry of activity in the next few years to include new standards for inspections, resale disclosures, periodic recertification, and reserve requirements, all of which may have the effect of increasing costs of ownership and making termination a more appealing option.

In addition to changes targeting safety, many states could benefit from updates to their condominium termination statutes to eliminate some of the uncertainty and pitfalls identified above. A clarification of the procedures for termination would give developers and owners more confidence to proceed with a termination when it makes economic sense.

Insurance. Increases in insurance rates have been one of the most tangible and immediate aftershocks of Surfside for both unit owners and associations. In Florida, some report that premiums have

nearly doubled or that coverage is not available at all to some buildings. See Mary Ellen Klas, As Cost of Condo Insurance Soars, Florida Legislators Remain Silent, Tampa Bay Times, May 20, 2022, https://bit.ly/3QkZkDs. States may face increasing pressure to limit or subsidize insurance rates.

Underwriting. Lenders have always imposed additional underwriting standards on condominium projects, addressing matters such as reserves, deferred maintenance, and potential litigation. Both Fannie Mae and Freddie Mac, which provide essential liquidity to the market by purchasing residential loans, issued bulletins to lenders after the Surfside collapse imposing stricter standards that made some condominium unit loans ineligible for resale to the agencies and require burdensome certifications from associations as a condition to new loans. See Kathy Orton, Surfside Tragedy Makes Condo Buying Challenging Nationwide, Wash. Post, July 14, 2022, https://wapo.st/3zQ4aBx. As many as one in four condominium projects in Florida may now be ineligible for Fannie Mae and Freddie Mac loans. Difficulty financing or refinancing unit loans can send a condominium project into a “death spiral,” as more units go into foreclosure and more assessments go unpaid, further depleting reserves and making the project ripe for termination.

Conclusion The Surfside tragedy accelerated and highlighted ongoing trends that make responsible maintenance of certain aging structures as condominiums an increasingly difficult proposition. In the face of these challenges, many owners and associations may make the rational calculation that their condominium is not sustainable, such that termination and sale to a developer is a desirable alternative. If termination becomes more commonplace, owners, developers, and practitioners alike would be well-served by a condominium termination process that is more understandable, transparent, comprehensive, and as fair as possible to all parties involved. n

Published in Probate & Property, Volume 36, No 6 © 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.

14

November/December 2022

Let your control freak flag fly.

There’s an easier way to stay in control of your time and billing Jotting billable time down on lunch receipts, spending hours chasing slow-paying clients, relying on an “all-inone” time and billing app that doesn’t let you work the way you want. Does this sound like you? Being a Probate & Property Lawyer is hard. Time tracking and billing shouldn’t be. With Sage Timeslips, you never have to relinquish control or disrupt the way you work.

With 37 years of legal industry experience, Sage Timeslips takes the complexity and headaches out of time tracking and billing. We’re an ABA Premium Service Provider and we’re experts at putting you in the driver’s seat so you can control the way you manage your time and billing—and get paid faster. Contact our team today to learn how you can get started!

ABA Premium Service Provider

sagetimeslips.com 800-285-0999 Published in Probate & Property, Volume 36, No 6 © 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.

KEEPING CURRENT PROPERTY CASES AUCTIONS: Contract for sale at auction need not contain attorney review provision. Mengxi Liu, an experienced bidder who had purchased six residential properties at auction sales with her husband, attended an auction sale where she made a high bid of $1.1 million. Before the auction, she received a template “Contract for Sale of Real Estate” and a “notice,” which warned that an auction sale is not subject to an attorney review period and advised prospective bidders that the contract is final and binding. Lui paid $121,000 as an earnest money deposit but did not complete the contract. A second auction was held, and the property sold for $825,000. The seller brought an action for a declaratory judgment that Liu breached the contract, claiming the deposit as liquidated damages.

Liu argued that the contract was unenforceable because it lacked the attorney review clause required by a decision of the New Jersey Supreme Court for residential sales in which real brokers participate. The trial court ruled that no three-day attorney review clause was necessary for a contract of purchase at an absolute auction, that Liu had breached the contract, and that the seller should receive the deposit. The intermediate appellate court affirmed.

On further appeal, the supreme court also affirmed. It explained that a residential real estate sale by absolute auction is distinct from a traditional real estate transaction—in an absolute auction or an auction without reserve, the owner unconditionally offers the property for sale, and the highest bid Keeping Current—Property Editor: Prof.

Shelby D. Green, Elisabeth Haub School of Law at Pace University, White Plains, NY 10603, sgreen@law.pace.edu. Contributor: Prof. Darryl C. Wilson.

Keeping Current—Property offers a look at selected recent cases, literature, and legislation.

The editors of Probate & Property welcome suggestions and contributions from readers.

creates a final and enforceable contract at the auction’s conclusion. Imposing the three-day attorney review in the absolute auction context would unduly interfere with this method of sale. The notice and template sales contract provided to the bidder before the auction—cautioning that any sale at the auction is final with no attorney review period—serves the consumer protection objectives of the attorney review provision. Sullivan v. Max Spann Real Estate & Auction Co., 276 A.3d 92 (N.J. 2022).

BANKRUPTCY: Creditor violates automatic stay by conducting foreclosure sale of home owned by LLC after member of LLC files bankruptcy petition. Eileen Fogarty held a 99-percent interest in an LLC, which in turn owned a residential property that Fogarty occupied as her primary residence.

Bayview Loan Servicing LLC initiated a foreclosure action, naming both the LLC and Fogarty as defendants. After Bayview obtained a judgment that authorized a foreclosure sale, Fogarty filed a Chapter 7 bankruptcy petition.

Fogarty’s counsel notified Bayview that proceeding with the foreclosure sale would violate the automatic stay that took effect when she filed her bankruptcy petition. See 11 U.S.C. § 362.

Bayview responded that because the LLC was a legal entity distinct from Fogarty, her personal bankruptcy petition did not stay acts against the LLC or assets of the LLC. Bayview proceeded

with the foreclosure sale without obtaining relief from the stay from the bankruptcy court. Fogarty then sought sanctions against Bayview under 11 U.S.C. § 362(k), arguing that Bayview willfully violated the statute. The bankruptcy court denied Fogarty’s motion, but the district court reversed and remanded for the calculation of fees and other damages to be charged as sanctions for the violation. The Second Circuit Court of Appeals affirmed, relying on the plain text of the statute.

Bayview willfully violated two of the Bankruptcy Code’s automatic stay provisions. First, the code prohibits “the commencement or continuation . . . of a judicial . . . or other action or proceeding against the debtor.” Id. § 362(a)(1).

Second, the code prohibits “the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case.” Id. § 362(a)(2). Bayview proceeded with the foreclosure sale of a property when Fogarty was a named party in the foreclosure proceedings, even if she held only a possessory interest in the property. In re Fogarty, 39 F.4th 62 (2d Cir. 2022).

FORECLOSURE: Deed of trust provision giving lender the right to enter immediately after default violates statute that bars lenders taking possession before foreclosure. After Santoro defaulted under his home mortgage loan, the loan servicer, Ocwen, had the locks changed on the property and commenced foreclosure. Ocwen maintained that it sent Santoro a “15 Day Vacancy Letter” and received no response. Santoro alleged that he never received the letter. Santoro sued in federal district court, alleging trespass and intrusion upon seclusion. Ocwen defended based on a provision in the deed of trust authorizing the lender to secure the property if the borrower has abandoned

Published in Probate & Property, Volume 36, No 6 © 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.

16

November/December 2022

KEEPING CURRENT PROPERTY

the property. Santoro maintained that the provision is unenforceable because it violated Or. Rev. Stat. § 86.010 by authorizing the lender to recover possession of the property without a foreclosure and sale. The district court ruled for the lender. On appeal, the Ninth Circuit Court of Appeals, finding no Oregon cases on point, looked to the state of Washington, relying on a ruling that a lender recovers possession of a mortgaged property when it changes the locks and requires the borrower to go through the lender to regain access to the property. By authorizing the lender to take those steps before a judgment of foreclosure, the Ninth Circuit held that the deed of trust provision violates the Oregon statute and cannot be enforced. Santoro v. Ocwen Loan Servicing, LLC, 2022 U.S. App. LEXIS 19667 (9th Cir. July 15, 2022).

LANDLORD-TENANT: Indian housing authority may bring action to evict tenant in state court rather than tribal court. Poitra, an enrolled member of the Turtle Band of Chippewa Indians, lived in housing operated by the Trenton Indian Housing Authority (TIHA) located within the Trenton Indian Service Area, about 240 miles away from the Turtle Mountain reservation. TIHA filed an action to evict Poitra in state court, who moved to dismiss on the ground that the tribal court has exclusive subject-matter jurisdiction under the federal statute that defines “Indian country.” 18 U.S.C. §1151. The state court denied her motion and ordered eviction. Poitra appealed. The state supreme court explained that whether the tribal court has jurisdiction depends on whether the housing is in Indian country as defined by the federal statute, as interpreted by federal case law. The statute defines Indian country as lands within an Indian reservation under federal government jurisdiction, including all dependent Indian communities and all Indian allotments where the Indian titles have not been extinguished. Here, the dispositive issue was whether the TIHA area is a dependent Indian community under a two-part test requiring that: (1)

the federal government set aside the land for the use of Indians as Indian land and 2) the land and Indians are under federal superintendence. Poitra offered no evidence of explicit action by Congress to recognize the TIHA housing land as part of a federally recognized Indian community. The supreme court also rejected Poitra’s reliance on a contract required by the Department of Housing and Urban Development, by which the TIHA and Turtle Mountain agreed that tribal courts would have jurisdiction over evictions. The court explained that subject-matter jurisdiction cannot be conferred by agreement, consent, or waiver. Trenton Indian Hous.

Auth. v. Poitra, 973 N.W.2d 419 (N.D. 2022).

MORTGAGES: Obligatory future advances clause gives first lender priority over intervening lender. A landowner issued a promissory note for $344,762 to Epic Solutions to pay for consulting services. A deed of trust secured the promissory note and “all renewals, modifications, or extensions thereof, and also such further sums as may be advanced or loaned.” Next, the landowner issued a promissory note and deed of trust to Commencement Bank for $1.5 million. Later amendments increased Epic’s promissory note to $1,515,000. After a general receiver was appointed to take control of the landowner’s assets, Epic claimed $2,127,073 plus interest and attorneys’ fees. The trial court ruled that Epic had priority over Commencement Bank for the full amount of its claim based on Wash. Rev. Code § 60.04.226, holding that the priority under the future advances clause relates back to the original deed of trust. The appellate court affirmed. The supreme court reversed and remanded. A future advances clause secures a loan or extension of credit that the lender will disburse at a future date. The supreme court held that section 60.04.226, which grants priority to the first lender for all future advances, applies only to construction loans, which was not the type of loan entered into by the parties. Outside the construction loan context, the

common law distinguishes between two types of future advances: optional advances and obligatory advances. This rule is intended to protect both borrowers and junior lenders and to promote efficiency in the lending market by allowing later lenders to assess the risk of lending on already encumbered property. Under an obligatory future advances clause, future lenders can see the maximum limit of the future advances and calculate with certainty the potential risk of lending. Under an optional clause, the initial mortgagee with notice of an intervening encumbrance can decide whether or not to advance additional funds, knowing those subsequent loans will be lower in priority to the intervening encumbrance. The supreme court declined to determine whether there is a future advances clause in the contract at issue or whether the future advances clause was required to directly reference the underlying service agreement or state a maximum amount, leaving those issues for the trial court. In re EM Prop. Holdings, LLC, 511 P.3d 1258 (Wash. 2022).

PUBLIC ROADS: Ancient county map establishes that right of way is public road. The Gregorys and the Longs were adjoining landowners. The Gregorys accessed their parcel using a roadway that crossed the Longs’ parcel to a public highway. Although the parties agreed that the Gregorys had a legal right to use the roadway, they disputed the width of the right of way and its permitted uses. One day, a dump truck filled with gravel traveled up the roadway, ostensibly to fill in some potholes in front of the Gregorys’ house, but the Longs blocked the truck, fearing that the Gregorys were shoring up the road for timbering on their land and that widening the road would cut into the Longs’ ditches, fences, flowers, and trees. The Gregorys sued the Longs, seeking a declaratory judgment to determine the scope of the right of way. The Longs moved for summary judgment, asserting that the Gregorys held only a prescriptive easement, limited to a width of 10 to 12 feet for access to their house and for occasional

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 17

KEEPING CURRENT PROPERTY

agricultural use. The trial court denied the motion because of disputed facts.

Thereafter, the Gregorys found a 1905 map hanging in the hallway of the county courthouse. They claimed that the map showed that the roadway traversing the Longs’ property was an ancient public county road. The trial court granted partial summary judgment to the Longs, finding that the map was “not a public record.” On appeal, the Longs further objected to the introduction of the map as hearsay. The supreme court ruled for the Gregorys.

Although documents may be hearsay and presumptively inadmissible, authentication may raise their level of reliability. An ancient document is authenticated by showing that the item: (1) is in a condition that creates no suspicion about its authenticity; (2) was found in a place where it would likely be; and (3) is at least 20 years old when offered into evidence. W. Va. Rules Evid.

901(b)(8). Each requirement was met: the map was drawn 117 years earlier and no evidence cast doubt on what it purported to be—a map of county landmarks including county roads, drafted on behalf of the county commission.

An affidavit from the current county

Map of the right of way in Gregory v. Long, courtesy of Burton Hunter.

clerk confirmed that a framed copy of the map had hung in the courthouse for at least 21 years. It was thus admissible as an “ancient document.” (Editor’s note: All the supreme court did was rule on the admissibility of a map, per se.

Counsel for the Gregorys tells the editor that he intends to offer a wide-ranging collection of evidence, from newspaper articles to historical accounts on road maintenance. The trial court earlier rejected the opinion of a preeminent law professor on the subject of roads.

This case has been ongoing for six years, and counsel is not sure he will outlive it.) Gregory v. Long, 875 S.E.2d 298 (W. Va. 2022).

RECREATIONAL USE STATUTE: Immunity from liability does not extend to injuries from zip-line installed by landowner.

Doreen Rott attended a party at her brother Arthur’s house, during which she claimed he coerced her into joining others in riding a zip-line he had installed in his backyard. Doreen prematurely thought the ride had ended, extending her legs to the ground too soon, resulting in a serious knee injury.

Doreen sued her brother, who raised the defense of the Recreational Use Act (RUA), Mich. Comp. Laws § 324.73301, which bars claims against property owners providing certain recreational activities unless they have engaged in gross negligence or willful and wanton misconduct. The trial court dismissed Doreen’s claim. The intermediate appellate court agreed that the RUA applied to zip-lining and barred Doreen’s claim.

In a split opinion, the supreme court reversed and remanded. The majority first noted the purpose of the RUA is to encourage landowners to broaden the areas available to the public for recreational purposes by limiting their potential liability. In 1953, the act originally listed only fishing, hunting, or trapping. In 1964, an amendment added camping, hiking, sightseeing, or other similar recreational uses. The activities section was last amended in 1974 to add motorcycling, snowboarding, or “any other outdoor recreational use.” Based on statutory text, precedent,

and the RUA’s evolution, the court held that the most reasonable unifying characteristics shared by the listed activities were that the activity traditionally was engaged in outside, and the activity required nothing more than permission to access the land, purportedly in its natural state, to engage in the activity or use. Therefore, any activity asserted as encompassed by the statute’s catchall phrase, “any other outdoor recreational use,” must meet those criteria. Though zip-lining traditionally is performed only outdoors, the court found it does not meet the mere access requirement when the landowner installs zip-lining facilities and equipment on the land.

Further, zip-lining, now gaining in popularity, was not specifically added as a form of outdoor recreation during the RUA’s most recent amendments. Rott v.

Rott, 972 N.W.2d 789 (Mich. 2021).

SALES CONTRACTS: Seller’s failure to disclose presence of underground fill material is not active concealment. In 1975, Wakefield purchased real property and one year later began construction of two four-unit apartment buildings. After completion of the first building but before construction of the second, Wakefield submitted a site plan to the city, which designated an area on the land to be filled. The site plan was recorded in the public records. Wakefield, however, added the filled material (gravel and debris) to his remaining land more than two decades later. In 2019, Wakefield negotiated to sell the property to Telos Capital. After negotiations began, Telos assigned its rights as purchaser to Pleasantdale. Wakefield had no knowledge of the assignment, and he and Telos signed a sales contract that eliminated all contingencies, including an inspection contingency, and provided for the sale of the property “as is.” Pleasantdale purchased the property for $725,000, never having communicated directly with Wakefield. Some months after closing, Pleasantdale’s contractor excavated the land, uncovering the fill, which impeded Pleasantdale’s plan to build additional apartments. Pleasantdale sued Wakefield, alleging fraud and

Published in Probate & Property, Volume 36, No 6 © 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.

18

November/December 2022

KEEPING CURRENT PROPERTY

negligent misrepresentation under Me. Rev. Stat. Ann. tit. 33, § 173(5), which imposes an affirmative obligation on sellers of residential real property to disclose any “known defects” in the property. Pleasantdale also alleged that Wakefield actively concealed the presence of “uncontrolled fills by burying them so that they could not be seen by visual observation by prospective purchasers and by lying about it on the Property Disclosure form.” Wakefield moved for summary judgment, arguing that section 173(5) applies only to “residential real property,” which the statute defined as “real estate consisting of one or not more than 4 residential dwelling units.” Id. § 171(5). Here, the property, when sold, had eight residential units, and, therefore, the statute did not apply. Wakefield also argued that the doctrine of caveat emptor absolved him of any liability to Pleasantdale. The trial court dismissed all claims, finding section 173(5) not applicable and that Pleasantdale failed to offer evidence of concealment. On appeal, the court explained that, under Maine law, a plaintiff claiming active concealment must show that the defendant took steps to hide the true state of affairs.

Pleasantdale wholly failed in this burden—the site plan describing the fill was a matter of public record, and fill by definition is placed underground.

Moreover, Pleasantdale never dealt with Wakefield and bought the property “as is.” The court stated: “a purchaser’s ignorance of facts, without more, does not amount to active concealment.”

Pleasantdale Condo., LLC v. Wakefield, 37 F. 4th 728 (1st Cir. 2022).

TAX SALES: Tax-sale purchaser may not bring action for forcible entry and detainer against delinquent taxpayer after two voluntary dismissals. Rooney owned his home since 1987 but failed to pay property taxes for 2015, and his home was sold in a tax sale in 2017.

ACC purchased the property for $2,985.

When Rooney failed to redeem, ACC received a tax deed. In September 2017, ACC served Rooney with notice of an impending Forcible Entry and Detainer (FED) action, which it filed in small

claims court on October 1. On October 16, ACC voluntarily dismissed the FED action without reason or prejudice.

ACC had already filed its second FED on October 15 in the district court, attaching the same documents that were used in the first petition. On December 22, ACC voluntarily dismissed the second FED petition, having filed a third FED action in district court, with some updated documents, on December 21.

A FED hearing ultimately took place, and the court awarded possession to ACC, finding the prior voluntary dismissals were not a final adjudication against ACC. Rooney appealed. The supreme court reversed. Under Iowa Rule of Civil Procedure 1.943, a second voluntary dismissal of the same action operates as an adjudication against the movant on the merits unless otherwise ordered by the court in the interests of justice. Here, ACC obtained two prior voluntary dismissals and the third FED action involved the same tax deed and same ongoing occupancy issues and thus should have been dismissed ab initio, with prejudice. Anticipating the inevitable question of legal options post dismissal, the court ventured to consider whether this case would bar ACC from bringing a quiet title action against Rooney and stated that it would not. A FED action does not affect title to the premises and therefore is not a bar to further action between the parties regarding title, such as actions in ejectment, foreclosure, trespass, and quiet title. ACC Holdings, LLC v. Rooney, 973 N.W. 2d 851 (Iowa 2022).

ZONING: Planning department’s statement of present zoning does not give rise to vested rights. Carson met with Brown, the County Planning Director, to discuss Carson’s plan to purchase 17 acres to develop a residential subdivision with 42 lots, each with an area of 9,000 square feet. Brown was allowed to interpret the zoning code but lacked the authority to promise or authorize the issuance of building permits. Carson showed Brown a hand-drawn depiction of his proposed subdivision layout and asked Brown to confirm whether his layout complied with the existing

zoning code. Brown confirmed that Carson’s plan complied with the code at that time, and, soon after, Carson purchased the land. But months later, the county board placed a moratorium on permits for 9,000-square-foot lots.

Carson later made an application for permits, which the county rejected. Carson then filed an action asserting vested rights to develop his land, claiming to have expended $83,000 for plans, studies, and related necessities pursuing the development of the land. The zoning board and county attorney found that Carson had no vested rights. The appellate court reversed. The supreme court reversed the appellate court. The court recognized four scenarios in which a landowner acquires vested rights to initiate specific uses despite subsequent zoning changes: (1) upon an issued permit; (2) upon the law in existence when a landowner properly files an application for a permit; (3) upon formally or informally approved development plans; or (4) upon official assurances that a building permit will probably issue. Carson’s case fell into the latter category and therefore required proof that he made a substantial change in position by expenditures in reliance on an assurance. The record showed no assurance from Brown that a building permit would issue or that county zoning law would not change. Brown’s statements were neutral descriptions of the law in effect, a fact Carson could have easily obtained himself. The purchase of land by itself does not confer a vested right upon a purchaser. There can be no estoppel by conduct when both parties have equal knowledge or equal means of knowing the truth.

Brown v. Carson, 872 S.E.2d 695 (Ga. 2022).

LITERATURE HOUSING: Housing insecurity is a pandemic. That is how Prof. John R. Nolon, in Pandemics and Housing Insecurity: A Blueprint for Land Use Law Reform, 46 Vt. L. Rev. 422 (2022), frames it. Housing insecurity ranks among three other contemporary pandemics— worsening climate change, COVID-19,

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 19

KEEPING CURRENT PROPERTY

and racial inequity. In casting housing insecurity in the league with COVID19, Prof. Nolon shows that, just like COVID-19, it diminishes the quality of life, physical health, and economic prospects of those who experience it. Among the four, housing insecurity seems the most persistent but, at the same time, is perhaps the most immediately addressable. Prof. Nolon demonstrates that, like the responses to COVID-19, states and cities around the country are adopting measures to make housing affordable and accessible, from inclusionary zoning ordinances to prescriptions for the missing middle housing. New legislation has loosened restrictions on accessory dwelling units and the siting of supportive housing, serving environmental goals as well as housing access. Cities are seeing the negative effects of gentrification and are adopting policies and strategies to keep vulnerable populations in their communities, such as right-to-purchase programs. Prof. Nolon goes on to indicate that much housing inadequacy can also be mitigated by supporting the existing housing stock by enforcement of housing codes and property maintenance codes, regulating vacant and substandard properties, abating public nuisances, and taking title to distressed buildings. Prof. Nolon shows that the approach with the greatest promise is multi-faceted and broad-based.

The havoc wrought by the COVID19 pandemic on housing access rivals that of the Great Depression. In Housing Injustice and the Summary Eviction Process: Beyond Lindsey v. Normet, 74 Okla. L. Rev. 391 (2022), Prof. Kathryn Ramsey Mason shows how, just as during the Great Depression, the impacts on housing access were severe but disproportionate, falling more heavily on certain populations—low-income people of color. Prof. Mason asserts the root cause of much of the housing insecurity during the COVID-19 pandemic is the ease and speed with which property owners can displace a residential tenant through the summary possession proceeding—a process designed to provide quick and efficient recovery of possession. But she explains that landlords

have come to use the proceeding more as a debt collection mechanism, while the interests of tenants in possession are largely ignored. She casts the summary proceeding as the embodiment of the lingering power imbalance in the landlord-tenant relationship, a point missed by the Supreme Court in Lindsey v. Normet, 405 U.S. 56 (1972), when, at the height of the revolution in landlordtenant law, the Court rejected a tenant’s equal protection challenge to Oregon’s forcible entry and detainer statute, declaring that there is no constitutional right to housing. She paints a most distressing picture of the summary possession proceeding, an alternative to the cumbersome and ancient ejectment action. The summary proceeding is swift, denying tenants many of the usual civil litigation procedural protections: for example, reasonable time to answer and the ability to assert counterclaims and defenses, except payment.

At hearings in front of judges with thousands of cases on their daily dockets, tenants tend to be unrepresented by counsel, and proceedings last only two minutes on average. Prof. Mason claims that the revolution in landlord-tenant law fell short, as it left in place a proceeding that supports evictions that not only result in poverty but are drivers of poverty and ill health. Prof. Mason believes reforms are in order, starting with the dismantling of the “primacy of possession” in the summary proceedings, then adopting mechanisms to raise the bar to summary actions. Prof.

Mason sees the tenants’ rights to possession and the societal interest in the security of tenure as highly important, but she seems not much concerned that money judgments against defaulting tenants may be worthless or about the rights of property owners stemming from title. The two sides of this dynamic have been in fragile contention for some time, but the balance clearly shifted during the pandemic, as local governments and the CDC imposed moratoria on evictions during the height of the pandemic, at first, without any protections for the economic interests or burdens on property owners. If nothing more, Prof. Mason

shows that the landlord-tenant relationship is not an easy one.

REAL COVENANTS: Prof. Robert C. Ellickson, in Stale Real Estate Covenants, 63 Wm. & Mary L. Rev. 1831 (2022), offers a keen analysis of the purported values and burdens of covenants, at least stale ones—those that might have outlived their initial promises and now only burden land uses and retard development and housing access. Although covenants became prevalent in housing developments early in the twentieth century before zoning became popular, they continue to be used today.

In 2018, the Community Association Institute estimated that at least 61 percent of new dwellings are burdened by covenants. Prof. Ellickson focuses on covenants in Hancock Park, a famous subdivision in Los Angeles, that has led to “Dead Mile,” so named because covenants essentially have barred all improvements that would have allowed the neighborhood to keep up with contemporary uses and living patterns, leaving the city to upzone around the edges. The developer of Hancock Park wanted to keep out not only nonwhites but also middle-income households of all races on the premise that this would add to the social capital of its residents. Simultaneously, this inhibited the creation of social capital across other income groups in Los Angeles.

Prof. Ellickson recites urban economists who study the unmitigated burdens of covenants and conclude that after as few as 40 years, the costs of covenants commonly exceed their benefits.

Although he does point to some existing mechanisms for ameliorating some of the burdens of stale covenants, in particular the changed-conditions doctrine, this approach is ad hoc and does not comprehensively address the staleness. Even legislation that eliminates constraints on certain kinds of housing development (e.g., Oregon’s eliminating single-family zones) often grandfathers private covenants governing the same issue. Despite all the problems with private covenants, Prof. Ellickson believes that the politics of exclusionary zoning with all its rigidity and inflexibility

Published in Probate & Property, Volume 36, No 6 © 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.

20

November/December 2022

KEEPING CURRENT PROPERTY

tend to be far more challenging than the politics of stale covenants and works to harm the national economy, inflate housing costs, and inhibit internal migration. Nonetheless, he warns that “Lawmakers should recognize that covenants commonly have value while in their teens, but not in their dotage.”

But he does not tell us what to do about them.

WASTE: In Waste and the Governance of Property, 93 U. Colo. L. Rev. 609, Profs. Tara K. Righetti and Joseph A. Schremmer ambitiously argue that the historical common-law waste doctrine is more than an educational artifact and should instead be viewed through a modern lens as providing valuable guidance in resolving current and future property disputes. The article characterizes the process of resolving common ownership disputes with conservation in mind for the good of the whole community over time as “the waste principle.” That principle holds that the law should prohibit wasteful uses of property (negative-sum outcomes with losses exceeding gains) when property owners and regulators prove unable to agree to stop the waste.

The authors analyze the well-known cases involving land, oil, gas, and water, examining the gradual transformation from general common-law principles to multiple levels of statutory and regulatory guidelines. Although the authors initially offer Lockean principles on the need to curb uncultivated waste, they also interject economic analysis as well and pepper their reassessment with requests for readers to evaluate theories and outcomes from an angle of general efficiency. On those rare occasions when destruction is likely to prove beneficial to private owners or the collective citizenry, the waste principle is not so strictly applied. As types of ownership have evolved and society has grown, the government has addressed the concerns of the waste principle, usually by legislative action.

The authors remark, however, that statutory development does not automatically eliminate common-law waste law or relegate it to obscurity, although

they give few examples of contemporary uses, except in cases involving fluid commons or naturally migratory resources used to constrict diminution of the total value of the resources. The authors posit that using the flexibility of the waste principle is likely more efficient than statutory regulation in dealing with standard natural resource controversies as well as those coined as atmospheric trust matters, which focus on societal pollution caused by the injection of gases into the air.

LEGISLATION COLORADO amends eminent domain law to specify compensation for conservation easements. When the government takes a conservation easement in gross, just compensation is determined based on the value of the property as if unencumbered by the conservation easement in gross and is allocated between the fee owner and the holder of the conservation easement based upon the value of their respective interests in the property.

2022 Colo. Ch. 420.

DELAWARE ties rent increases in manufactured home communities to the Consumer Price Index for All Urban Consumers in the Philadelphia-Camden-Wilmington region. A community owner may increase rent by no more than (a) 3.5 percent of the rent plus 50 percent of the 24-month Consumer Price Index for All Urban Consumers (CPI-U) up to an amount that does not exceed 7 percent of the 24-month CPI-U, if the CPI-U is equal to or below 7 percent; or (b) the 24-month CPI-U, if the 24-month CPI-U exceeds 7 percent. 83 Del. Laws 341.

FLORIDA amends building code on roof repairs. If 25 percent or more of a roofing system or roof section is being repaired, replaced, or recovered, only the repaired, replaced, or recovered portion is required to be constructed in accordance with the new building code in effect at the time of the work. 2022 Fla. Laws ch. 269.

FLORIDA adopts “Miya’s Law.” The law requires landlords to conduct background screenings for violent criminal offenses for their prospective employees as a condition of employment.

Landlords must also maintain a log for each dwelling unit’s keys. Reasonable notice to enter a unit for maintenance and repairs is increased from 12 hours to 24 hours. 2022 Fla. Laws ch. 222.

MICHIGAN adopts Uniform Assignment of Rents Act. An assignment of rents creates a presently effective security interest in all accrued and unaccrued rents arising from the real property described in the document creating the assignment, regardless of whether the document is in the form of an absolute assignment, an absolute assignment conditioned upon default, an assignment as additional security, or any other form. The security interest in rents is separate and distinct from any security interest held by the assignee in the real property. The act contains provisions on discharge, treatment in the case of foreclosure, transfers, and recording. The act largely exempts interests in real property improved by one-to-four dwelling units. 2022 Mi. P.A. 115.

MISSOURI adopts law to prohibit limits on home-based work. Zoning ordinances may not prohibit mail order or telephone sales for home-based work, prohibit or require structural modifications to the home or accessory structure, restrict the hours of operation for home-based work, restrict storage or the use of equipment that does not produce effects outside the home or accessory structure, or require permitting or licensing for home-based work. 2022 Mo. HB 1662. n

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 21

Published in Probate & Property, Volume 36, No 6 © 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.

22

November/December 2022

Honoring the Intentions of a Loved One— The Importance of Advance Directives

T

Getty Images

rusts and estates practitioners routinely draft wills, living wills, and financial powers of attorney for their clients. My understanding of the importance of a living will was recently reinforced when I had to advise a family member to search for his wife’s advance directive.

My aunt elected to consent to surgery where doctors would attempt to remove a brain tumor below her cerebellum, wrapped around the vagus nerve. The surgery had a 75 percent chance of success. On their way to the doctor, my aunt and her husband did not even consider the possibility of failure. She had her bag packed neatly for rehab and considered her future without the falls, dizziness, and other struggles that her brain tumor imposed on her.

Unfortunately, at the end of the surgery, my aunt suffered a massive blood hemorrhage and stroke, leaving her unresponsive, in a vegetative state, with a “one percent chance” of survival. When I heard the news, I called my uncle and advised him to look for her advance directive. Luckily, she had one prepared along with her will in 2016. Within a week of the operation, and after a proper Catholic unction was performed by a priest

Lindsey E. Wilkinson is an associate attorney at Fox Rothschild LLP in the Taxation and Wealth Planning Department and Fiduciary Litigation Department.

By Lindsey E. Wilkinson (unction is a service that forgives any and all the sins of a sick person committed during the person’s mortal life), family members and the priest gathered in the small hospital room to witness the removal of the feeding tube and breathing apparatus. She struggled to breath momentarily before releasing her last breath.

Although her last few moments were agonizing to watch, my aunt felt no pain.

More importantly, her intentions were honored. She would not have wanted to remain in a vegetative state. Such a state would have been contrary to her entire life as a light-hearted, loving, caring, compassionate person. My aunt loved to laugh. She would find humor and joy wherever she went, always outgoing and a true crowd-pleaser. That is how she will be remembered.

Finding a Practical Legal Solution to a Bio-ethical Dilemma Advances in medical technology have served to prolong the physical life in patients lacking significant brain function, and also have underscored the importance of advance directives in the modern era. Patients enduring life-sustaining treatments involving feeding tubes and artificial nutrition often

present ethical and legal dilemmas, which arise from ignorance about the patient’s preferences for treatment. Many will recall the highly publicized Terry Schiavo case, in which a court-appointed guardian filed to discontinue life-prolonging procedures on behalf of Ms. Schiavo, who was in a vegetative state for nearly a decade, on the basis that the guardian herself believed Ms. Schiavo would make the same decision if she were competent.

The guardianship court authorized the discontinuance of the life-prolonging procedures; however, Ms. Schiavo’s parents appealed the order, claiming they found new evidence that their daughter would not have refused the life-sustaining procedures. The case was appealed until it reached the Supreme Court of Florida, which denied review and remanded the case to the Florida Circuit Court. After hearing advocacy on both sides and five medical experts, the court concluded that the parents did not meet their burden of proof and ordered that Ms. Schiavo’s artificial life-support be withdrawn at 3:00 p.m. on January 3, 2003.

The parents, however, filed a simultaneous federal action to stall the termination of Ms. Schiavo’s life-supporting treatments, and it was not until her case was denied certiorari by the Supreme Court of the United States in 2005 for the judicial processes to end. See In re Guardianship of Schiavo, 792 So. 2d 551, 554 (Fla. Dist. Ct. App. 2001), reh’gs denied, 800 So. 2d 640 (Fla. Dist. Ct. App.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 23

2001) (remanding to In re Guardianship of Schiavo et al. v. Schindler et al., 2002 WL 31817960, at *5 (Fla. Cir. Ct. 2002), appeal denied, 816 So. 2d 127 (Fla. 2002)). See also In re Guardianship of Schiavo et al. v.

Schindler et al., 2002 WL 31817960, at *5 (Fla. Cir. Ct. 2002); see also Schiavo ex rel.

Schindler v. Schiavo, 358 F. Supp. 2d 1161 (M.D. Fla. 2005), aff ’d, 403 F.3d 1289 (11th Cir. 2005), reh’g denied, 404 F.3d 1282 (11th Cir. 2005), reh’g en banc denied, 404 F.3d 1270 (11th Cir. 2005), application for stay and writ of certiorari denied, 125 S. Ct. 1722 (2005).

Ensuring Due Process: Balancing the Patient’s Wishes with Those of the Family The federal Patient Self-Determination Act requires all hospitals to ask patients when admitted if they have a living will.

In California, the right to protect one’s bodily integrity is a matter of constitutional concern, and the courts have held that a violation of a patient’s due process rights occurs if the physician is the sole determiner of a patient’s capacity. CA Advoc. for Nursing Home Reform v. Smith, 38 Cal. App. 5th 838, 879 (2019) (as modified after denial of rehearing). Under Pennsylvania law, the Pennsylvania Supreme Court held only the judgment of two family members and a physician could determine what measures a person in a persistent vegetative state would have desired. In re Fiori, 673 A.2d 905, 912 (Pa. 1996). On the other hand, Kentucky legislation allows the judiciary to designate a surrogate acting in good faith to make such decisions. Woods v. Commw., 142 S.W.3d 24, 40 (Ky. 2004). A Texas Court of Appeals recently struck down its Advanced Directives Act when invoked by an attending physician who authorized involuntary passive euthanasia of an infant. T.L. v. Cook Children’s Med. Ctr., 607 S.W.3d 9, 22 (Tex. Ct. App. 2020).

Know Your State’s Law When Planning for the Worst Statutes exist that authorize and recognize that advance directives are one solution for individuals to bypass the long and arduous court process surrounding termination of life. Depending on the state in which the client lives, the

practitioner should look to the appropriate state statute to determine the requirements for the contents and form of an advance directive. New York’s Public Health Law section 2981 states the parameters under which a health care proxy may be appointed; it places restrictions on employees of hospitals and should be reviewed closely by the practitioner preparing the advance directive.

Florida Statute section 765.203 has suggested a form for a competent principal’s written designation of a health care surrogate. Connecticut and Illinois both provide statutory forms for documents designating a health care representative.

See Conn. Gen. Stat. Ann. § 19a-575a (West 2019); 755 Ill. Comp. Stat. 45/4-10 (2021).

Pennsylvania’s General Assembly acknowledges that life-sustaining procedures are uncomfortable and may cause a loss of dignity to a person, as well as burdensome prolongation of life beyond natural limits. 20 Pa. Cons. Stat. § 5423(c)(3)–(4). Pennsylvania’s Health Care Agents and Representatives Act (the Act) “respect[s] advance health care directives, as well as the decisions of close relatives and friends, where the incompetent person suffers from an end-stage condition or permanent unconsciousness, and enables health care providers to comply with such decisions.” In re D.L.H., 2 A.3d 505, 514 (Pa. 2010) (citations omitted).

In passing the Act, the General Assembly explicitly found that “individuals have a qualified right to make decisions relating to their own care.” 20 Pa. Cons. Stat. § 5423(c)(1). This includes a qualified health care agent’s right to refuse life-preserving medical treatment on behalf of a principal. Note, however, someone who is already not competent cannot appoint a health care agent. In re D.L.H., 2 A.3d at 509. In Pennsylvania, if a person has no health care agent, the law mandates that care must be provided. This seems ethical and right; however, at some point, if a person is in a permanently vegetative state, he will likely be subjected to the court process. Notably, court-appointed guardians do not automatically have authority to make end-of-life decisions unless stated in the final decree of adjudication of incapacity.

Counseling Your Client about the Importance of Advance Directives As a rule of thumb, estate planners should always counsel clients to plan about the possibility of incapacity. This includes physical decline (vision, hearing, memory), as well as mental decline. With mental decline comes the need for asset protection (the financial power of attorney, trusts, LLCs) and protection for the person (the advance health care directive focusing on end-of-life care, nomination of a guardian and caregivers). See, generally, Lawrence Frolik & Bernard Krooks, Elder Law 1–8 (Heckerling Materials Jan. 14, 2013).

The plethora of cases surrounding the rights to termination of life procedures reminds practitioners of the importance of counseling a client about (1) the need to plan and prepare for life support, (2) the need for informed consent to end treatment, (3) the financial costs of medical treatment, and (4) the emotional burdens placed on friends and family faced with the bio-ethical dilemma.

Principals must appoint a health care agent in an advance directive before becoming incompetent to make their own decisions. An advance directive survives a declaration of a person as incapacitated.

A living will is another means for a principal to adopt an advance directive. A living will is “an instrument authorizing and directing the withholding or withdrawing of life supports under certain circumstances.” Gregory G. Sarno, J.D., Living Wills, 49 A.L.R.4th 812 (ed. 1986). Some living wills will allow a competent principal to check off which medical treatments she is willing to accept. It is prudent for the legal practitioner to ask whether the client would like to check these boxes off, or give the health care agent the authority to decide which treatment to reject. The counselor should aim to discover at what point the principal would prefer termination of life-sustaining treatment. Many clients simply do not want to imagine death. They are unaware of the intense legal mechanisms designed to promote their rights but also could prolong a horrible state suspended between life and death. Notwithstanding, it is up to each individual to make the important choice about what life-sustaining treatment he

Published in Probate & Property, Volume 36, No 6 © 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.

24

November/December 2022

would tolerate if unable to communicate his informed consent.

More often than not, it is the surrogate, guardian, or agent appointed to make the decision for an adult patient with the decision-making capacity who should act in accordance with the patient’s wishes, including the patient’s religious and moral beliefs. Under New York state law, “[a]n assessment of the patient’s best interests shall include: consideration of the dignity and uniqueness of every person; the possibility of preserving the patient’s life; the preservation, improvement or restoration of the patient’s health or functions; the relief of the patient’s suffering; and any medical condition and such other concerns and values as a reasonable person in the patient’s circumstances would wish to consider.” N.Y. Pub. Health § 2994-d(4)(ii). Under legislation effective June 17, 2020, decisions by surrogates to withhold or withdraw

life-sustaining treatment (including decisions to accept a hospice plan) are authorized only under specific circumstances: (1) it is an extraordinary burden to the patient and an attending practitioner determines with the independent concurrence of another physician, nurse practitioner, or physician assistant that, to a reasonable degree of medical certainty either (A) the patient has an illness or injury expected to cause death within six months, whether or not treatment is provided or (B) the patient is permanently unconscious; or (2) treatment would involve pain, suffering, or other burden that would reasonably be deemed inhumane or extraordinarily burdensome and the patient has an irreversible or incurable condition as determined by the attending practitioner with a concurrence of another physician, nurse practitioner,or physician assistant. Id. at 2994-d(5)(a) (i)-(ii).

Unless the patient has an advance directive, hospitals fear civil liability for terminating life support systems without court approval. With the development of state laws in support of advance directives, hospitals could face liability for administering care against the patient’s directive. Hospital liability varies, however, depending on whether the jurisprudence of the forum has identified hospitals as state actors or not.

Conclusion All individuals have the right to make the important choice about what life-sustaining treatment they would tolerate if unable to communicate their informed consent. I am thankful that my aunt made this important personal decision while of sound mind and that my family did not need to go through an agonizing, expensive, emotionally painful judicial process to ensure her wishes were honored. n

PROFESSORS’ CORNER 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

TRIBAL WILL: THE CHALLENGES AND IMPORTANCE OF ESTATE PLANNING UNDER THE AMERICAN INDIAN PROBATE ACT OF 2004

Tuesday, November 8, 2022 12:30-1:30 pm ET JOHN ROACH, Office of the Special Trustee for American Indians LUCY MARSH, University of Denver Moderator: BRADLEY MYERS, University of North Dakota School of Law

OPPORTUNITY ZONES: A RE-ASSESSMENT Tuesday, December 12, 2022 12:30-1:30 pm ET EDWARD DEBARBIERI, Albany Law School RASHMI DYAL-CHAND, Northeastern School of Law BRANDON WEISS, American University Washington College of Law Moderator: ANDREA BOYACK, Washburn University

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 25

KEEPING CURRENT P R O B AT E CASES DIVORCE: Statute revokes only gifts to ex-spouse, not other ex-relatives. The testator devised the residue of the estate to the testator’s spouse and, if the spouse did not survive the testator, one-half to the testator’s heirs and one-half to the heirs of the spouse. The testator divorced 24 years after the execution of the will and died two years after the divorce never having made a new will. Minnesota’s revocation on divorce statute, Minn. Stat. § 524.2804, automatically revokes gifts to the ex-spouse but not those to the ex-spouse’s relatives. At the time of the testator’s death, the ex-spouse’s parents were the ex-spouse’s heirs, and they objected to the probate petition the nominated executor filed that did not mention them. The district court granted the executor’s motion for summary judgment and on appeal, the intermediate appellate court reversed in Matter of Estate of Tomczik, 976 N.W.2d 143 (Minn. Ct. App. 2022), review granted.

The court found that the statute requires that the will be given effect as if the exspouse had predeceased the testator and, in that situation, one-half the residue is unambiguously devised to the ex-spouse’s heirs. The Chief Judge dissented on the grounds that, because the ex-spouse is still alive, the heirs are not known.

DOWER: Gift of more than one-half of estate is fraud on spouse’s dower rights.

Kentucky law entitles a surviving spouse to one-half of the decedent’s personal property under Ky. Rev. Stat. § 392.020.

Simpson v. Wethington, 641 S.W.3d 124 (Ky. 2022), involved a blank check the spouse gave to the spouse’s child with directions to “wait until anything ever Keeping Current—Probate Editor: Prof.

Gerry W. Beyer, Texas Tech University School of Law, Lubbock, TX 79409, gwb@ ProfessorBeyer.com. Contributors: Claire G. Hargrove, Paula Moore, Kerri G. Nipp, Prof.

William P. LaPiana, and Jake W. Villanueva.

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

happened” to the spouse and then use the check to “take every dime [the spouse] had” because it was “the only way” the spouse’s children would receive anything.

The child completed the check for the amount in the account, equal to 52 percent of the spouse’s estate, and deposited it into the child’s account two days before the spouse’s death. The spouse was intestate. The surviving spouse claimed dower rights in the closed account, and both the trial court and intermediate appellate court agreed that the check was a valid inter vivos gift and not subject to the surviving spouse’s dower right. The Kentucky Supreme Court reversed, holding that the legislature has not abolished the common law rule against fraudulent deprivation of dower and that the size of the gift in relation to the total estate raised the presumption that the gift was fraudulent, a presumption the child failed to rebut.

FIDUCIARY DUTY: Authority to make non-pro rata distributions allows selfdealing. In Culliss v. Culliss as Trustee of Julia A. Culliss Trust, 514 P.3d 376 (Kan. Ct. App. 2022), a trustee and the trustee’s sibling were the beneficiaries of their parent’s trust. After the parent died, the trustee decided to distribute the trust real property to the trustee as beneficiary and to distribute cash equal in value to the real property to the sibling. In Bennett v. Estate of King, 875 S.E.2d 46 (S.C. 2022), the coexecutors of the parent’s will and another child were the residuary beneficiaries.

The co-executors decided to distribute improved real property to themselves and unimproved real property to themselves and the other beneficiary so that all received equal value. In both cases, the non-fiduciaries objected, and, in both cases, they were unsuccessful because each instrument included terms giving the fiduciary authority to make distributions in cash or in kind and, if in kind, with no requirement to make pro-rata distributions.

INTENTIONAL INTERFERENCE WITH INHERITANCE RIGHTS: Idaho refuses to recognize tort of intentional interference with inheritance rights. In an opinion thoroughly discussing the law of other states, the Supreme Court of Idaho in Nelsen v. Nelsen, 508 P.3d 301 (Idaho 2022), refused to recognize the tort of intentional interference with inheritance rights as part of the law of the state because to do so would undermine freedom of testation. In addition, an alternative remedy, the constructive trust, is readily available to those who wish to pursue assets allegedly obtained through undue influence.

LAPSE: Express omission of relatives not mentioned in the will does not prevent the application of the anti-lapse statute. The testator devised the residuary estate to the testator’s two children “share and share alike.” The terms of the will expressly stated that the omission of any gift to any relative other than those mentioned in the will was “purposely made.” One of the testator’s children predeceased the testator and was survived by a child who survived the testator. The Alabama anti-lapse statute, Ala. Code § 43-8-224, applies to a gift to the testator’s grandparent or a lineal descendant of a grandparent unless a “contrary intention is indicated by the will as provided in Ala. Code § 43-8-222. In Shirley v. Dawkins, No. 1200706, 2022 WL 2286416 (Ala. June 24, 2022), the Supreme Court of

Published in Probate & Property, Volume 36, No 6 © 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.

26

November/December 2022

KEEPING CURRENT P R O B AT E

Alabama reversed the probate court and held that the express omission of those relatives not mentioned in the will did not prevent the application of the anti-lapse statute.

TRUST AMENDMENT: Settlor’s exchange of emails with attorney can be amendment of trust. N.H. Rev. Stat. § 564-B:6-602 allows the amendment of a revocable trust by any method that manifests clear and convincing evidence of the settlor’s intent as long as the terms of the trust do not set forth an exclusive amendment method. In In re Omega Trust, No. 2021-0138, 2022 WL 1498499 (N.H. May 12, 2022), the New Hampshire Supreme Court held that in the absence of language making a stated method of amendment exclusive, an email exchange between the settlor and the settlor’s attorney can amend the trust and create the possibility of using clear and convincing evidence of intent to provide a basis for relief.

TRUST REVOCATION: All the settlors must consent to revocation of irrevocable trust. Iowa Code § 633A.2202 allows the modification of an irrevocable trust by consent of the settlor and all of the beneficiaries. After the death of one of the settlors of an irrevocable trust created by spouses, the surviving spouse sought and obtained the consent of the beneficiaries, the surviving spouse’s children, to a modification authorizing the surviving spouse to amend or revoke the trust.

The surviving spouse then did so, changing the equal distribution to the children on termination to a distribution favoring two of them. One of the disfavored children successfully sought to disallow the amendment. In Little v. Davis, 974 N.W.2d 70 (Iowa 2022), the Supreme Court of Iowa explained that because the statute requires the consent of all settlors to modify the trust, modification is impossible after the death of one of the multiple settlors.

TRUST TERMINATION: Liquidation of trust on termination violates duties.

A parent created a testamentary trust for the benefit of a child funded by a bequest of shares of stock in a single company.

At the child’s death, the trust terminates,

and “said shares of stock” are to be distributed to the child’s estate. After the child’s death, disagreements between the trustee and the executor of the child’s will led to a court order to liquidate the trust assets, which had been diversified, and distribute the proceeds to the estate. On appeal, the Supreme Court of Kentucky in Estate of Worrall by Worrall v. J. P. Morgan Bank, N.A., 645 S.W.3d 441 (Ky. 2022), reversed, holding that the trustee’s demand that the executor sign a release and indemnification before distribution violated the statutory rules for trust termination requiring delivery to the beneficiary of an accounting for the proceeding five years and that liquidation directly violated the trust terms requiring distribution of the shares of stock to the child’s estate. On remand, the court is to consider remedies for breach of the trustee’s duties, including the required accounting, reimbursement of capital gains tax paid because of the liquidation, the trustee’s and attorney’s fees for the period after the appointment of the executor, reimbursement of commissions on the liquidation, and payment of the executor’s attorney’s fees, as well as any difference in value between what was realized on liquidation and the value of those assets on the date of the Supreme Court’s opinion.

TRUSTS: Arbitration not required because a trust is not a contract. A trust beneficiary brought an action against the trustee alleging breach of fiduciary duties.

The trust terms required settlement of disputes by arbitration. The trial court denied the trustee’s motion to require arbitration and the Supreme Court of Virginia affirmed in Boyle v. Anderson, 871 S.E.2d 226 (Va. 2022). The court held that the relevant state (Va. Code § 8.01581.01) and federal (9 U.S.C.§ 2) statutes requiring the enforcement of contractual agreements to arbitrate do not apply to trusts because trusts are not contracts and the beneficiaries are not parties to any agreement.

TAX CASES, RULINGS, AND REGULATIONS GIFTS: Checks written but not paid by the decedent’s bank before decedent’s

death were not completed gifts. The decedent executed a power of attorney appointing his son as his agent with the authority to make gifts. For many years, the agent made annual gifts under the power of attorney. Shortly before the decedent died, the agent wrote 11 checks from the decedent’s investment account totaling $464,000. The decedent’s bank paid only one of the 11 checks before his death.

The bank paid the other ten checks after his death. The executor excluded the value of all 11 checks from the decedent’s gross estate. The IRS took the position that the checks not paid until after the decedent’s death should have been included in the gross estate and issued a notice of deficiency. The Tax Court in Estate of Demuth v.

Commissioner, T.C. Memo 2022-72, looked to whether the decedent had parted with dominion and control over the checks and could change his mind concerning the payment. Pennsylvania state law holds that the gift of a check is not complete until the point the drawer can no longer make a stop payment order. Because the drawer’s bank had not accepted, certified, or made final payment on any of the ten checks until after the decedent’s death, none of the ten checks represented completed gifts. However, the Tax Court determined that three of the checks would not be included in the gross estate because the IRS had previously conceded with regard to checks the payees deposited but had not yet been paid. The Tax Court stressed that both parties had misconstrued the term drawee bank to mean depository bank. The court explained that the drawee bank is the entity ordered by the drawer to make the payment and the depository bank is the entity that a payee uses to deposit a check.

INCOME TAX: Both the taxpayer and IRS failed to meet substantiation requirements. The Tax Court held in Wolpert v. Commissioner, T.C. Memo 2022-7, that the estate and the decedent’s husband could not deduct certain business expenses for 2016 and 2017 on their income tax returns because they failed to properly substantiate the expenses. Car and truck expenses deducted through Section 274 have especially strict substantiation requirements, and the taxpayers

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 27

KEEPING CURRENT P R O B AT E

did not have the appropriate mileage log or calendar to document the trips.

in a comprehensive bill that revised and clarified the laws relating to wills, trusts, and the administration of estates which became effective January 1, 2021.

from public sentiment. The article details the precise ways the law fails the problem and proposes four concrete solutions for states to adopt.

CRIMINAL TRUST BENEFICIARIES: In Trustee Quandary: Criminal Activity by a Beneficiary with or on Trust Property, 14 Est. Plan. & Comm. Prop. L.J. 479 (2022), David F. Johnson analyzes the troubling issues trustees face when beneficiaries act contrary to criminal law.

GIFT TAX RETURNS: In Filing Gift Tax Returns with 2020 Vision, 14 Est. Plan. & Comm. Prop. L.J. 377 (2022), Kristin L. Brown revisits “the fundamentals of gift tax return preparation and the reporting requirements necessary to achieve adequate disclosure.”

CRYPTOCURRENCY: In her Comment, In the Crypt: The Importance of Planning for Distribution of Cryptocurrency Assets After Death, 14 Est. Plan. & Comm.

Prop. L.J. 621 (2022), Mariah Paulger provides estate planners with guidance for handling their clients’ virtual currency.

GREEN BURIAL: The thesis of Victoria J. Haneman’s article, Tax Incentives for Green Burial, 21 Nev. L.J. 491 (2021), is equal parts positive, normative, descriptive, and prescriptive—plumbing the depths of our modern disconnection from death, the need to transition human remains in an environmentally friendly manner, the importance of pre-need or pre-death planning and prepayment to protect the grieving consumer, and the power of advancing important social policy through a green tax credit.

POWERS OF ATTORNEY: In How Some Agents use a Power of Attorney to Commit the Crime of Financial Exploitation, 30 Elder L.J. 1 (2022), Kevin Hansen, Rebecca C. Morgan, Pamela B. Teaster, and Randolph Thomas examine criminal appellate cases where it was clear that a power of attorney was used to commit financial exploitation. They use these cases to support examples of the misuse of powers of attorney and offer their insights into the common factors of these cases. The authors also provide their views about the scope of the problem and the way the legal system has addressed these crimes and offer opinions about options going forward.

LITERATURE

FLORIDA—TRUST AND PROBATE LITIGATION: In Increase Your Toolbox: Lesser-Known Sanctions in Probate and Trust Litigation, 35 Quinnipiac Prob. L.J. 116 (2022), Jani Maurer explores when attorney’s fees and costs are likely to be awarded under Florida law in trust and estate administration and litigation, what actions counsel might take in handling estate disputes to protect both counsel and the client from liability, and actions recommended or required if sanctions are sought to be imposed under that statute or common law.

GEORGIA—ELECTRONIC WILLS: Jacob C. Wilson presents an assessment of the changes in Georgia’s laws regarding the formalities of wills and how acceptance of an electronic will in Georgia would be an acceptable response to the changing times in his Comment, Electronic Wills: Why Would Georgia Choose to Delay the Inevitable?, 73 Mercer L. Rev. 337 (2021).

GEORGIA—RECENT DEVELOPMENTS: In Trusts, Guardianships, and Fiduciary Administration, 73 Mercer L. Rev. 281 (2021), Mary F. Radford discusses significant cases decided by the Georgia Court of Appeals during the period of June 1, 2020, through May 31, 2021, on Georgia fiduciary law, guardianship, and estate planning. She also describes the highlights of legislation contained

INEQUALITY REMEDY: Felix B. Chang argues in his article, How Should Inheritance Law Remediate Inequality?, 97 Wash. L. Rev. 61 (2022), that trusts and estates law should prioritize intergenerational economic mobility—the ability of children to move beyond the economic stations of their parents—above all other goals.

MARITAL AGREEMENTS: The preparation of marital agreements requires skills from two disparate areas of the law, family law and estate planning. Christine Wakeman, Natalie Webb, and Lacey Stevenson provide sage advice in Marital Property Agreements: Family Law Attorneys’ and Estate Planning Attorneys’ Top Tips for Each Other, 14 Est. Plan. & Comm. Prop. L.J. 525 (2022).

POSTMORTEM CONCEPTION: Kristine S. Knaplund’s article, Reimagining Postmortem Conception, 37 Ga. St. U. L. Rev. 905 (2021), is the first time that the laws of all 50 states are examined to provide a comprehensive look at whether a postmortem child inherits and determine how wildly disparate the legal standards are

PRE-NEED PLANNING: In Prepaid Death, 59 Harv. J. on Legis. 329 (2022), Victoria J. Haneman borrows from nudge theory to shape an intervention (in this case, an incentive or carrot) that will correct unfairness and inefficiency in an imperfect market, in a way that deftly sidesteps an all-out attack on the industry itself. The proposed paradigm shapes an incentive that allows the consumer to pay for pre-need death care service with pre-tax earnings through IRC § 125 and flexible spending account principles.

RELATION BACK THEORY: In Conflict of Laws and the Transitivity of the “Relation Back” of Special Powers of Appointment, 56 Real Prop. Tr. & Est. L.J. 333 (2021), James P. Spica analyzes Restatement (Second) of Conflict of Laws § 274(a) which “describes a choice-of-law deployment of the socalled ‘relation back theory’ of powers of appointment. The Restatement suggests that analogies to local-law exemplifications of the relation back theory in cases concerning remoteness of vesting and resulting trusts will allow a judge to derive—or at least assist a judge in deriving—the rule of section 274(a) in a conflicts case of first impression.

This Article explores that suggestion by noting that, in the perpetuities and resulting trusts contexts, the relation back is transitive over successively generated special powers of appointment and then examining a suite

Published in Probate & Property, Volume 36, No 6 © 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.

28

November/December 2022

KEEPING CURRENT P R O B AT E

of hypothetical conflicts cases in which that transitivity, if recognized for choice of law purposes, would be decisive.”

SOUTH DAKOTA—FIDUCIARY LAW: In Restraining the Unsupervised Fiduciary, 66 S.D. L. Rev. 208 (2021), Thomas E. Simmons and Andrew J. Knutson analyze South Dakota Codified Laws Chapter 59-12 and describe the new statutory framework for agent-fiduciaries acting under power of attorney instruments.

TESTAMENTARY CAPACITY: In The Future of Testamentary Capacity, 79 Wash. & Lee L. Rev. 609 (2022), Reid Kress Weisbord and David Horton argue that the legal system’s treatment of individuals with cognitive, intellectual, or developmental disabilities remains rooted in the past. Since the sixteenth century, judges have voided wills executed by testators who lacked testamentary capacity. Their article reveals that this notoriously problematic rule has resisted the progressive forces that have swept through guardianship law. They offer fresh insight into how parties litigate testamentary capacity claims and analyze several unsettled doctrinal issues, such as whether testators have due process rights to participate in adjudications of their competence, the relationship between supported decision-making and will-making, and the appropriate capacity test for nonprobate transfers.

TEXAS—PROBATE JURISDICTION AND VENUE: Lauren Davis Hunt explains the confusing and complex Texas rules in Jurisdiction and Venue in Probate Proceedings, 14 Est. Plan. & Comm. Prop. L.J. 433 (2022).

TEXAS—RULE AGAINST PERPETUITIES: In his Comment, ‘R.A.P.’ It Up: Keeping Texas’s Amendment to the Rule Against Perpetuities But Calling For a More Clearcut Definition, 14 Est. Plan. & Comm. Prop.

L.J. 671 (2022), Grant K. Underwood evaluates the effect and constitutionality of recent Texas legislation expanding the vesting period to 300 years from the date of the trust’s irrevocability.

TEXAS—WIND RIGHTS: In her Comment, Pecos Bill’s Turbines in the Tumbleweeds: Extending the Texas Property Code to Permit

Severance of Wind Rights Through Testate and Intestate Succession, 14 Est. Plan. & Comm. Prop. L.J. 579 (2022), Rachel Givens explains how Texas law needs to evolve to provide comprehensive coverage of wind rights.

created on or after July 1, 2022. 2022 Fla. Sess. Law Serv. Ch. 2022-96.

WILL REVOCATION: In Revoking Wills, 97 Notre Dame L. Rev. 563 (2022), David Horton reveals that revocation formalities defeat testamentary intent far more often than is commonly believed. He then demonstrates that the benefits of these merciless rules are minimal and critiques potential solutions to these problems by proposing a novel path forward, that is, importing the revocation formalities from trust law.

HAWAII allows for the use of alkaline hydrolysis as a method of disposing of human remains. 2022 Haw. Laws Act. 294.

LEGISLATION CALIFORNIA allows advance health care directives to include instructions relating to mental health conditions. 2022 Cal. Legis. Serv. Ch. 21.

CALIFORNIA enacts the Partition of Real Property Act which expands the Uniform Partition of Heirs Property Act to apply to any real property held in tenancy in common where there is no binding agreement governing the partition of the property. 2022 Cal. Legis. Serv. Ch. 82.

CALIFORNIA prevents a settlor from being considered a beneficiary of a trust solely because the trustee has been given the discretion to reimburse the settlor for federal or state income tax on trust income or principal that is payable by the settlor. 2022 Cal. Legis. Serv. Ch. 32.

COLORADO provides for confirmatory adoptions to be used where a person did not give birth to a child conceived as a result of assisted reproduction. 2022 Colo.

Legis. Serv. Ch. 210.

FLORIDA allows for virtual representation by a parent of an unborn child and the unborn descendants of an unborn child provided there is no conflict of interest. 2022 Fla. Sess. Law Serv. Ch. 2022-96.

FLORIDA extends the Rule Against Perpetuities period to 1,000 years for trusts

GEORGIA enacts the Psychiatric Advance Directive Act. 2022 Ga. Laws Act 836.

LOUISIANA prohibits discrimination against living organ donors for disability, life, or long-term care insurance coverage.

2022 La. Sess. Law Serv. Act 146.

LOUISIANA provides that “unless the trust instrument provides otherwise, the duties of the trustee are owed exclusively to the settlor while the trust is revocable.”

2022 La. Sess. Law Serv. Act 37.

MARYLAND allows for remote notarizing of wills using communication technology under certain conditions.

2022 Md. Laws Ch. 714.

NEW HAMPSHIRE modernizes its pretermitted heir statute. 2022 N.H. Laws Ch. 261.

NEW HAMPSHIRE protects vulnerable adults from financial exploitation. 2022 N.H. Laws Ch. 317.

RHODE ISLAND allows the remote notarization of documents. 2022 R.I. Laws Ch. 22.

TENNESSEE enacts the Uniform Partition of Heirs Property Act. 2022 Tenn.

Laws Pub. Ch. 1109.

UNIFORM LAW COMMISSION approves Uniform Electronic Estate Planning Documents Act. VERMONT allows for the disposition of human remains through the process of natural organic reduction. 2022 Vt. Laws No. 169.

VERMONT enacts the Uniform Real Property Electronic Recording Act. 2022 Vt. Laws No. 171. n

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 29

CO-OP SALE APPROVALS IN A HOT MARKET

Are Boards Overreaching?

By Adam Leitman Bailey and John M. Desiderio

Published in Probate & Property, Volume 36, No 6 © 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.

30

November/December 2022

F

Getty Images

inancially qualified cooperative buyers’ applications are being rejected by co-operative boards of directors solely on the basis that the purchase price is too low. Besides causing lost time, money, and distress among the individual parties, the buyer and seller, and the real estate brokers, these rejections create an artificial market, as the seller must now put the unit on the market at a price that does not reflect its true value – that is, below what a buyer was willing to pay for it. The inflated boarddemanded prices will appear as the first entry of a Google search for building comparables or past sales, which can manipulate prices throughout the Adam Leitman Bailey is the founding partner of Adam Leitman Bailey, P.C., and John M. Desiderio is chair of the firm’s Real Estate Litigation Group, in New York, New York.

building. Brokers may then fail to show units to potential buyers, and potential buyers miss out on viewing, lowerpriced selling units. This artificial market might work when a market is hot and a unit has been priced poorly, but that has not been the experience in the several cases in which the authors have been involved.

Courts mostly have rejected these tactics of the board of directors, but other cases have given boards discretion to allow such rejections. The cases and reasoning are discussed below, but it would help New York buyers, sellers, and the integrity of the real estate market for the Appellate Division to ultimately settle this dispute.

Board disapproval of a sale price can kill the sale and upset the selling shareholder’s immediate living plans and needs. A board may have a legitimate corporate purpose for evaluating the sale

price, but that interest is not unlimited.

Where Bylaws Authorize Boards to Set the Price It is not unlawful for co-ops to adopt governing bylaws that require their shareholders to offer their shares for sale to the co-op first, at book value, before offering them to nonshareholders.

As the court of appeals explained in Allen v. Biltmore Tissue Corp., 2 N.Y.2d 534, 541 (Ct. App. 1957): The courts have almost uniformly held valid and enforceable the first option provision, in charter or by-law, whereby a shareholder desirous of selling his stock is required to afford the corporation, his fellow shareholders or both an opportunity to buy it before he is free to offer it to outsiders. . . .

[T]his first option provision is in

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 31

the nature of a contract between the corporation and its stockholders and, as such, binding upon them. . . . [A] by-law provision against transfer by any stockholder . . . of any shares until they [have] first been offered for sale to other stockholders at book value, was sustained as reasonable and valid.

(Internal citations omitted, emphasis added.)

In Jones v. Surrey Cooperative Apartments, 263 A.D.2d 33, 36, 700 N.Y.S.2d 118 (1st Dep’t 1999), the plaintiff cooperative tenant failed to raise an issue of fact as to whether defendant cooperative corporation’s exercise of an option contained in the corporation’s bylaws to repurchase her shares at book value, as opposed to market value, was “unjust and unconscionable” and thus beyond the scope of protection afforded by the business judgment rule. The court directed dismissal of the plaintiff ’s complaint and judgment for the corporation, holding that plaintiff “bore the burden of making the requisite showing that the board of directors breached its fiduciary duty,” and that “absent a showing of discrimination, self-dealing or misconduct by board members, corporate directors are presumed to be acting ‘in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes.’”

In Buttitta v. Greenwich House Co-op Apartments, Inc., 11 A.D.3d 250, 251, 783 N.Y.S.2d 26, 27 (1st Dep’t 2004), the court upheld a board’s right to enforce a bylaw that prevented plaintiffs from selling their shares in the co-op on the open market and requiring them to offer the stock first to the co-op at a below-market price. The court noted that documentary evidence, consisting of minutes of shareholder and board meetings, conclusively establish[ed] that plaintiffs, who are husband and wife and joint tenants of the unit in question, [had] ratified the bylaw in issue by their votes at meetings where the cooperative’s right of redemption was either exercised or waived with

the specific proviso that the waiver was without prejudice, and [they were] therefore precluded from challenging it.

In such cases, specific performance of an agreement to convey will not be refused merely because the price is inadequate or excessive. The difference must be so great as to lead to a reasonable conclusion of fraud, mistake, or concealment in the nature of fraud and to render it plain inequitable and against conscience that the contract should be enforced.

Palmer v. Chamberlin, 191 F.2d 532, 540– 41 (5th Cir. 1951) (cited with approval in Allen v. Biltmore Tissue Corp., 2 N.Y.2d at 541).

Where Sales Are Not Restricted

by Governing Documents When corporate charters or bylaws do not require shareholders to sell their shares to the co-op or to other shareholders at either book value or some other set price, board review of the sale prices of proposed transfers generally is subject to the business judgment rule. Nevertheless, where a co-op’s proprietary lease directs that consent to a sale or transfer of shares “shall not be unreasonably withheld,” a “‘heightened standard of reasonableness’ is to be applied in lieu of the usual business judgment rule.” Matter of Kotler v. 979 Corp., 191 A.D.3d 473, 474, 142 N.Y.S.3d 495 (1st Dep’t 2021).

New York trial courts that have adjudicated cases involving claims of board rejection of “too low” sale prices have ruled in most decisions that the plaintiffs have sufficiently alleged causes of action against the co-op board defendants for unreasonable restraint on alienation in violation of the business judgment rule. Nevertheless, at least one case, citing the business judgment rule, has held that, in the absence of any nonspeculative discriminatory, self-dealing, or bad faith motive, the sale rejection is within the purview of the board’s authority to deny its consent “for any

reason or no reason.”

In Hershkowitz v. White House Owners Corp., 2010 WL 1416206 (N.Y. Sur.) (Surrogate’s Ct., Nassau Cnty., Feb. 22, 2010), a decedent purchased a co-op unit for $425,000.00 with a mortgage.

Upon death, following a foreclosure proceeding, the administrator executed a contract of sale for a purchase price of $141,000.00, which received lender approval for a “short sale.” The corporation moved for summary judgment contending, in part, that it had a right to reject the sale on the grounds that an inadequate price would diminish the value of other apartments. The estate contended that the corporation’s authority was not unlimited, that the corporation had not acted in good faith, and that the corporation’s rejection of the sale constituted an unreasonable restraint on alienation. The Surrogate’s Court held that, [w]here a lease gives the Board of Directors of a cooperative apartment unlimited discretion to withhold consent to a sale, the business judgment rule prohibits judicial inquiry into a decision made by the Board taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes,” but, nevertheless, “whether or not the corporation acted in good faith, and [was] therefore entitled to protection of the business judgment rule, [could not] be determined on a motion for summary judgment.

Cases That Have Condemned Board “Too Low” Decisions In Chappell v. Trump Plaza Owners, Inc., 2011 WL 5024488 (N.Y. Sup.), 2011 N.Y. Slip Op. 32661 (U) (Trial Order) (Oct. 12, 2011), a shareholder sued her co-op for damages when the corporation refused to consent to a transfer of her shares to her contract vendee.

The shareholder alleged that the cooperative board refused to interview the prospective purchasers because the purchase price was “too low,” even after the original contract price of $599,000 had

Published in Probate & Property, Volume 36, No 6 © 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.

32

November/December 2022

been increased to $675,000. The court recognized that the corporation had a legitimate interest in securing the highest possible price for the sale of its units, and that the proprietary lease gave the board broad discretion to withhold consent “for any reason or for no reason.”

However, the court denied the co-op’s motion to dismiss the complaint, holding that the shareholder had sufficiently alleged a cause of action for unreasonable restraint on alienation because the shareholder’s counsel, in opposing the motion, had attested on personal knowledge that the board had acted in bad faith by “preventing sales at market price, and [thus] requires shareholders to set an artificially high price as the contract price (which increases the flip tax paid at closing)” (italics in original).

In Cohen v. Seward Park Housing Corp., 7 Misc. 3d 1015(A), 801 N.Y.S.2d 231 (Sup. Ct., New York Cnty., 2005), the husband-and-wife shareholders, who already owned three units of the co-op, contracted to purchase the shares and proprietary lease of an additional unit that was contiguous to other apartments they owned. When the shareholders applied to the co-op board for consent to the transfer, the board blocked the transfer by asserting that the corporation’s “right of first refusal” on the ground that “the purchase price was too low or not within the market range for such apartments.” Although the shareholders claimed that the $160,000 price was within the fair market price range, when the apartment remained unsold for several months, the shareholders increased their purchase offer to $190,000 and stated that they were prepared to offer a higher price if the board requested it.

Nevertheless, the board continued to withhold its consent to transferring the unit to the plaintiff shareholders (though apparently the board never informed the plaintiffs of their decision). More than a year after the shareholders first applied for board consent, the shareholders overheard construction work being done and learned that the apartment had been sold to a third party for $230,000.

The shareholders sued the board, alleging that the board had acted in bad faith, without a legitimate purpose, and

in a discriminatory manner. They noted that they had never been in default, that they had excellent financial qualifications, that the board had approved applications by other shareholders and residents (including that of a board member) to purchase similar apartments at prices equal to or below market price, that those other shareholders had personal relationships with board members, that the board had not asserted the corporation’s right of first refusal against any of those similar transfers, and that certain board members had “personal animosities” against them. On these alleged facts, the court denied the corporation’s motion to dismiss the plaintiff ’s cause of action for breach of fiduciary duty.

The court held that plaintiffs “[had] not simply asserted that the board holds personal animosity toward them, but have set forth circumstances which, if true, show a board seemingly unwilling to allow them to buy the apartment they wanted at any price for a reason which could be understood as exhibiting animosity,” and that “[a] showing of unequal treatment is sufficient to allege bad faith” (emphasis added).

In Oakley v. Longview Owners, 165 Misc. 2d 192,195, 628 N.Y.S.2d 468 (Sup. Ct, Westchester Cnty., 1995), the co-op board refused to approve the sale-assignment of the shareholder’s apartment. The board’s refusal was based, in part, on the sale price being less than a cooperative-wide floor price adopted by the board after an appraisal of one- and two-bedroom apartments in a 160-unit complex. Only two of the 160 apartments were appraised. The shareholder’s contract sale price was $37,000, and the cooperative-wide floor price was $49,000. Although the price restraint was dependent upon real estate market forces beyond the control of either party, the court held that the restraint constituted an “open-ended and potentially long-lasting prohibition,” and “as adopted” was an unreasonable restraint on alienation. The court also noted that there was no indication that the board had acted in accordance with authority given it in the co-op bylaws; and there was no evidence that the shareholders

were ever given prior notice of the board’s price resolution and an opportunity to vote on the restriction.

In Marine Midland Bank v. White Oak Cooperative Housing Corp., 1997 WL 34823122 (N.Y. Sup.) (Trial Order) (Mar. 19, 1997), the Occupancy Agreement of the corporation provided that if a stockholder-member notified the corporation of its intention to leave the project, the corporation had the right, but not the obligation, to purchase the member’s stock and occupancy agreement within 60 days. If the corporation did not exercise its option within the 60-day period after its receipt of written notice from the member, the stock could be sold “to any person.” Citing Oakley, 165 Misc. 2d 192, the court held that the requirement that the member “must sell its share at a price set by [the corporation] to be approved is an unreasonable restraint on alienation.”

The court also noted that the restriction was inconsistent with the terms of the Occupancy Agreement. In the absence of the corporation’s exercise of its option to purchase the stock, the stockholder was permitted to sell “to any person,” and “in that instance, [the corporation] [had] no right under the Occupancy Agreement to restrict the price.”

Conclusion As noted above, it is not unlawful for co-ops to adopt governing bylaws that require their shareholders to first offer their shares for sale to the co-op, at book value, before offering them to non-shareholders. When the governing documents do not contain such option provisions, trial-court-level cases have mostly decided in favor of striking the rejection of unit sales by co-op boards because the sale price, which may otherwise reflect fair market value, is “too low.” As of now, however, there have been no definitive appellate court rulings on this question.

Until there is a clear holding by an appellate court that outlines the parameters within which a co-op board may or may not reject a sale for a “too low” sale price, it is still an open question whether or not board rejection of “too low” share transfers can be said to violate the business judgment rule. n

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 33

It’s Not That SIMPLE— Selecting an EmployerSponsored Retirement Plan

By Bruce A. Tannahill

Benefits for Employees and Employers It’s easy to understand why retirement plans are attractive to both employees and employers. Employer-sponsored retirement plans, or simply retirement plans for purposes of this article, include defined contribution plans and defined benefit plans qualifying under section 401(a), Simplified Employee Pension (SEPs) established under section 408(k), the Savings Bruce A. Tannahill is director of advanced sales for a large mutual life insurance company, a member of the RPTE CLE Committee, and an associate articles editor of Probate & Property.

Incentive Match Plan for Employees (SIMPLE) established under section 408(p), and 403(b) plans. For employees, employer-sponsored retirement plans can simplify the process of saving for retirement, and employer contributions increase their retirement savings. Making salary deferrals into an employer-sponsored defined contribution plan allows employees to automate the contribution process. Profit-sharing and 401(k) plans normally offer employees the ability to select from investment options chosen by the plan sponsor, generally with assistance from the plan administrator or its investment advisor. In contrast, contributing to an IRA often requires the employee to take the initiative to make the contribution, either through a one-time contribution, via automated payments from a bank account, or through payroll deduction and choose how to invest the contribution, possibly with the assistance of a financial professional.

Offering a retirement plan enhances an employer’s benefit package. Both current employees and potential employees value the ability to save for retirement offered by an

employer-sponsored retirement plan. A recent survey found that 74 percent of employees would consider leaving their current job for an employer that offers a high-quality 401(k) or other retirement plan. Betterment, The Impact of the Great Resignation on Benefits Needs and Expectations (2022). When evaluating a new job, the most important retirement plan features workers consider are: • An employer match (91percent).

• Eligibility (80 percent).

• Vesting requirements for company matches (74 percent).

• Investment options offered (73 percent).

• Withdrawal options when leaving the employer (70 percent).

Principal, Retirement Security Survey (3d Quarter 2021).

Offering an employer-sponsored retirement also provides income tax benefits for the employer. Its contributions to a plan are tax-deductible, even though they are not immediately taxable to employees. Qualifying employers who start a plan may be able to claim the Credit for Small Employer

Published in Probate & Property, Volume 36, No 6 © 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.

34

November/December 2022

Getty Images

T

he “Great Resignation” that resulted from the COVID-19 pandemic has increased the focus on employer-sponsored retirement plans. These plans offer benefits for both employers and employees. Robert Half ’s 2022 Salary Guide lists retirement savings plans as both the third most-wanted employee benefit and the third most-offered benefit.

Pension Plan Startup Costs. It is based on the costs to set up and administer the plan and to educate employees about the plan.

The credit is 50 percent of the eligible start-up costs, up to the greater of $500 or the lesser of (a) $250 per non– highly compensated employee eligible to participate or (b) $5,000. Employers may claim the credit for each of the plan’s first three years and may elect to begin claiming the credit in the year before the plan becomes effective.

To be eligible, an employer must: • Have 100 or fewer employees who earned at least $5,000 of compensation for the preceding year.

• Have at least one non–highly compensated participant (did not own more than 5 percent of the employer during the current year or the preceding year or receive more than $135,000 in compensation).

• Not have offered substantially the same group of employees another retirement plan in the three preceding tax years.

Considerations in Choosing a Retirement Plan Employers interested in establishing or modifying a retirement plan may find the numerous options available to be overwhelming. It’s often possible to narrow the options by asking a series of questions.

How many employees does the company have? When the owner is the only employee, the plan can reflect the owner’s objectives and situation. Adding employees later may require reviewing whether a different plan is a better fit.

A solo 401(k) plan is an option when the only participants are the owner and their spouse. A large number of employees may make certain plans impractical or, in the case of SIMPLE IRAs, not permitted for companies with more than 100 eligible employees.

What are the employer’s objectives?

A company focused on maximizing the contributions that benefit the owner or generating the maximum deduction will likely choose a plan that can be designed to accomplish those objectives rather than one focused on recruiting and retaining employees. The nondiscrimination rules prevent employers

from benefiting only the owner but do allow plans to use eligibility requirements (age, years of service, and, for some plan options, compensation) and other plan design elements so that a large share of the contributions benefit the owner.

What is the employer’s budget— both in administrative resources and financial? Establishing a retirement plan is generally a commitment by the employer to make contributions to the plan and to devote the resources necessary for the plan administration.

An employer’s financial commitment includes any employer contributions, the cost of its staff involved in handling its plan responsibilities, and any thirdparty administrator (TPA) costs not paid by participants.

Even if the employer outsources most of the plan administration and recordkeeping to a TPA, the employer still has ongoing plan administration responsibilities. These can include informing new employees about their retirement plan options; providing information about new employees, terminated employees, rehires, and compensation changes to the TPA;

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 35

working with payroll and other departments or providers so employee salary deferrals are deducted from the employee’s paychecks and timely deposited along with the employer’s matching contributions to employee accounts; sending required information to plan participants; and filing the plan’s Form 5500 or related forms. The employer is ultimately responsible for ensuring that the plan is properly administered.

How much contribution flexibility does the employer want? Employer contributions to retirement plans are often a commitment similar to a mortgage.

Matching contributions to a 401(k) plan are required under the plan document, although the employer can amend its plan to reduce or eliminate the match.

To qualify as a safe harbor 401(k) plan, a plan must either (1) make minimum matching contributions or (2) make a nonelective contribution for all eligible

comes with a downside—it’s hard for the plan to be an employee incentive if the employer’s contribution isn’t determined until the following year.

Does the employer plan to contribute every year? Similar to how much contribution the employer wants is whether the employer plans to contribute to the plan every year. Qualified plans under ERISA (which exclude SEPs and SIMPLEs) must be designed to be “permanent” rather than temporary.

Although permanent has never been defined precisely, Treas. Reg. § 1.4011(b)(2) provides some guidance, stating that the abandonment of a plan within a few years after it takes effect for any reason other than business necessity indicates that the plan was not intended to be permanent. A common view is that if a plan has been in place for at least five years, it was intended to be permanent.

Flexibility comes with a downside—it’s hard for the plan to be an employee incentive if the employer’s contribution isn’t determined until the following year.

participants, even for employees who do not make any contributions, to avoid violating the safe harbor rules. Defined benefit plans are subject to a minimum funding standard based on the benefits promised under the plan.

When evaluating the importance of flexibility, employers and their advisors must consider such factors as: • How stable and predictable the company’s cash flow is.

• Potential changes in the company’s workforce.

• How easy it is to adjust plan contributions.

An employer that wants the ability to adjust its contributions will often gravitate to either a profit-sharing plan or a Simplified Employee Pension IRA (SEP IRA), both plans that allow an employer to determine and make its contribution by the due date of its tax return, including extensions. This flexibility

What are the characteristics of the employer’s workforce? Employers whose workers are primarily under 21, are part-time employees, or leave within a year may find that they can exclude those employees from participating in its retirement plan. In addition, union members may be excluded if retirement plan benefits were the subject of good faith bargaining between the union and employer, even if they are not covered under a retirement plan. Doing so can reduce the employer’s required contributions and may produce a more generous plan for the eligible employees.

When considering the options for an employer-sponsored retirement plan, reviewing the employee census will provide crucial information. The important employee information is salary, age, and years of service.

Salary. Salary is an important factor in determining what the employer must contribute. All other things being equal,

an employee’s benefit under a defined benefit plan will be higher if their salary is higher (subject to an annual maximum salary used to calculate the benefit). If the employer contribution in a safe harbor defined contribution plan is based on the employee’s salary, higher-paid employees will receive a higher contribution. For small businesses, the greater the disparity between the owner’s salary (and potentially the salary of key employees) and other employees’ salaries can indicate whether certain plans will accomplish the owner’s objectives.

Age. Employees’ ages can play an important role in evaluating the employer’s options in two ways. First, retirement plans other than SIMPLEs and 403(b)s can exclude from participation employees who are under the age of 21. Not only does an employer not have to make any contribution for an employee who is under 21, those employees are not included in any nondiscrimination testing, making it possible for the plan to provide more benefits to the plan participants.

Second, age directly impacts the contribution required for defined benefit plans that include age in the benefit formula. The longer until an employee reaches the plan’s normal retirement age, the less the employer must contribute to provide the promised benefit. By contrast, the closer a participant is to retirement, the more the employer must contribute to provide the same benefit.

Years of service. Requiring a minimum number of years of service before an employee becomes eligible to participate in a plan allows an employer to reduce the number of employees who can participate. The maximum years of service before an employee becomes eligible depends on the type of plan.

The SECURE Act modified the rules for 401(k) plans so that certain longterm part-time employees may make elective salary deferrals. To qualify, the employee must have worked at least 500 hours but fewer than 1,000 hours in each of the last three consecutive years. Years beginning before 2021 are not included, so the first year that a long-term part-time employee must be

Published in Probate & Property, Volume 36, No 6 © 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.

36

November/December 2022

able to participate is 2024. Employer contributions are not required for longterm part-time employees.

Who can contribute to the plan—the employer, the employees, or both? Most defined contribution plans allow both employer and employee contributions.

Defined benefit plans are generally fully funded by the employer and do not allow employee contributions.

Employers who want to help employees save for their retirement will generally choose a defined contribution plan that allows employee and employer contributions. Employer contributions are often crucial in helping a plan pass the nondiscrimination tests or allow a safeharbor plan to bypass them altogether.

When does the employer want to establish the plan? SIMPLE IRAs must be established by October 1 of the current year. All other plans can be established and funded by the due date of the employer’s tax return, including any extensions obtained. This allows employers to establish and fund a plan after the end of its taxable year.

Only employer contributions may be made to a plan after the end of the plan year—employee salary deferrals in a subsequent year cannot reduce salary earned in the previous tax year.

How quickly does the employer want employees to vest in employer contributions? A vesting schedule provides an incentive to participants to stay with the company so they can benefit from employer contributions. Employees are always fully vested in their own contributions. An employee who terminates before becoming fully vested forfeits the unvested portion of his benefit. In a defined contribution plan, forfeitures can reduce the employer’s contribution, be used to pay plan expenses, or be allocated among the participants.

Defined benefit plans can use forfeitures to reduce plan expenses or the employer’s contributions, but they must not be used to increase the benefits available to participants under the plan.

Plans can offer three different types of vesting schedules: • Immediate—participants are fully vested immediately upon

becoming eligible to participate in the plan.

• Cliff vesting—participants are not vested until they have completed a specified number of years of service and are fully vested at that time.

• Graduated vesting—participants start to vest in plan benefits once they have completed a specified number of years of service, with the vested amount increasing based on additional service until they are fully vested.

Different types of plans are subject to different maximum vesting schedules for employer contributions: • For defined contribution plans, the maximum vesting period is either three-year cliff vesting (fully vested after three years of service) or a two- to six-year graduated vesting (20 percent vested upon two years of service, increasing by 20 percent each subsequent year until fully vested after six years of service).

• Defined benefit plans (other than cash balance plans) can provide for cliff vesting after five years of service or a three- to seven-year graduated vesting schedule (20 percent vested after three years of service, increasing by 20% each subsequent year until fully vested after seven years of service).

• Cash balance plans must be 100 percent vested after three years.

• SEPs and SIMPLEs are always 100 percent vested.

These are the longest vesting schedules permitted. Plans may offer a shorter vesting schedule.

Does the employer want to integrate the plan with Social Security?

Social Security integration allows plans to consider Social Security benefits in determining benefits provided under employer-sponsored plans. Plans that are integrated with Social Security permit employers to offer higher benefits or contributions for more highly compensated employees.

Retirement Plan Options There are two basic types of employersponsored retirement plans—defined contribution and defined benefit.

Employers may offer both types of plans. Offering both types of plans can provide larger retirement benefits for employees and deductions for employers but generally results in more complexity because the rules governing combined plans vary from the rules for stand-alone plans.

A defined contribution plan does not promise a specific benefit, just that a specific contribution will be made. At retirement, the employee is entitled to receive the account balance, not a specific amount. The employee bears the risk that the account balance is less than the desired amount.

A defined benefit plan promises participants a specific benefit at retirement, determined using a formula usually based on average compensation and other factors that vary with the type of plan. The employer bears the risk that the plan’s assets are insufficient to pay the projected benefits.

Traditional and Roth IRAs are not included because they are established by individuals, not by employers.

Types of Defined Contribution Plans Profit-sharing plan. A profit-sharing plan provides an employer discretion on whether to contribute for a plan year and the amount of the contribution. “Profit-sharing plan” is a misnomer—an employer may establish and fund a profit-sharing plan even if it does not have a profit for the year or is a nonprofit organization. Traditional profit-sharing plans allocate employer contributions based on their share of total compensation. Employers who want to benefit older or more highly compensated employees may select either a new comparability or an ageweighted profit-sharing design.

• A new comparability plan divides employees into groups with a larger percentage of the contributions allocated to certain groups.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 37

• An age-weighted plan uses employees’ ages in addition to their salaries in the allocation formula. It produces larger contributions for older employees.

This is similar to defined benefit plans but with the contribution flexibility permitted under a profit-sharing plan.

401(k) plans. A 401(k) plan is a profit-sharing plan variation that allows employees to contribute to their accounts through salary deferrals. They are often combined with profit-sharing plans, permitting employers to contribute to employees’ accounts. Employees who are at least 50 can make a $6,500 catch-up contribution in 2022 in addition to the maximum 2022 deferral of

a profit-sharing plan, the contribution is mandatory. Originally, money purchase plans had higher deduction limits than profit-sharing plans, so employers often combined profit-sharing plans and money purchase plans to maximize the contributions. Since Congress eliminated the disparity by increasing the profit-sharing limit, many employers have discontinued their money purchase plans to take advantage of the flexibility of profit-sharing plans.

Target benefit plans. A target benefit plan is a variation of a money purchase plan that uses the participant’s age and length of service in determining the targeted benefit. As with other defined contribution plans, the actual benefit is based on the participant’s account balance.

Many employers have discontinued their money purchase plans to take advantage of the flexibility of profit-sharing plans.

$20,500. Total employee and employer contributions to a 401(k)-profit-sharing plan are limited to $61,000 in 2022.

The catch-up contribution allows total 2022 contributions of $67,500. The contributions can be made on a pre-tax, after-tax, or Roth basis. Those 401(k) plans that are part of a new comparability or age-weighted profit-sharing plan may need to be safe harbor 401(k) plans.

• Using a “safe harbor” plan design, including a SIMPLE 401(k), avoids the need for nondiscrimination testing.

• A solo 401(k) plan is a 401(k) plan used by businesses whose only employees are the owner and the owner’s spouse.

Money purchase plans. A money purchase plan is a defined contribution plan that commits the employer to a contribution percentage based on the participant’s compensation. Unlike

SEP IRAs. SEP IRAs are employersponsored plans, although they are established under IRC section 408(k) and are not qualified plans established under IRC section 401(a). They are not subject to ERISA requirements. They are similar to profit-sharing plans, but the contributions are made to IRAs established by employees to receive the employer contributions rather than to accounts established under a plan for employees. SEPs are much easier to establish and administer than profit-sharing plans. Because all SEP contributions are employer contributions, no catch-up contributions are allowed.

SIMPLE IRAs. A SIMPLE IRA can be viewed as an IRA-based alternative to a 401(k), just as a SEP is an IRA-based alternative to a profit-sharing plan.

Employers can choose from two different contribution structures. The first provides a 3 percent employer match for employee contributions with the ability to reduce the match to 1 or 2

percent in two of every five years. The second provides a 2 percent contribution for all eligible employees, without regard to their contribution. Like SEPs, SIMPLE IRAs are not considered qualified plans and are not subject to ERISA. Types of Defined Benefit Plans Traditional defined benefit plans. A traditional defined benefit plan uses a formula to determine the benefits promised to participants, usually based on their average compensation, age, and years of service. Plan contributions are based on the amount required to fund the promised benefits beginning at the participant’s retirement age and continuing for life. The employer bears the risk that the plan’s assets are insufficient to pay the projected benefits. Plan assets are normally invested in stocks, bonds, and cash but may also be invested in alternative investments such as real estate and private equity.

Cash balance defined benefit plans.

Rather than promising a specific dollar benefit, a cash balance plan promises a defined benefit but defines the benefit on a hypothetical account balance.

The account balance is determined from two credits: a “pay credit” based on the participant’s annual compensation and an “interest credit’ applied to the account balance. At retirement, the monthly benefit is based on the account balance and the participant’s life expectancy. Alternatively, the participant may choose a lump-sum benefit actuarially equivalent to the account balance. The hypothetical account balance will not reflect the value of the plan assets. As with traditional defined benefit plans, the employer bears the risk that the plan assets are insufficient to pay the promised benefit.

412(e)(3) (fully insured) plans. The difference between a traditional defined benefit plan and a 412(e)(3) plan is how the plans are funded. A 412(e)(3) plan is funded exclusively with fixed annuity contracts or a combination of fixed annuity contracts and life insurance, providing for level premiums paid at

Published in Probate & Property, Volume 36, No 6 © 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.

38

November/December 2022

least annually and ending not later than the participant’s normal retirement age or when the person stops participating in the plan. The plan benefits at normal retirement age for a participant must equal the benefits available under the insurance and annuity contracts and guaranteed by the insurance company.

The guaranteed interest rate specified by the annuity and life insurance contracts are used to determine the required contribution. These rates are lower than normally used in traditional defined benefit plans, resulting in larger contributions being required to provide the same benefits.

the part-time employees become eligible for the plan and to minimize contributions for those who do. The first decisions are often the kind of plan and benefits they want to offer the fulltime, long-term employees. Once those decisions are made, the next step is determining whether the plan design can minimize the participation of the part-time employees and the contributions required for them. The following design elements can be used to accomplish those goals:

Examples The following examples illustrate how the considerations discussed above influence the choice of a retirement plan.

Example 1—One owner, no employees. The important considerations in this situation are the amount that the owner wants to contribute, the amount of her earned income, her age, and how much contribution flexibility the owner wants. An owner who wants to contribute the maximum amount would likely consider the following options first:

allowed. When the business is a second business and the owner makes the maximum contribution to a 401(k) plan offered by his employer, a SEP may be the best option. The maximum annual salary deferral includes deferrals to 401(k), 403(b), and SIMPLE plans. Deferrals under a section 457(b) plan offered by a governmental entity or nonprofit are separate, although the limit is the same. Employees may make salary deferrals to 401(k), 403(b) s, or SIMPLEs and a section 457(b) plan.

• 412(e)(3) plan. For a high earner, a 412(e)(3) plan may provide the largest deduction of any option, depending on the owner’s age and earnings.

• Solo 401(k). For an owner who is at least 50, the ability to make a catch-up contribution in addition to a regular salary deferral and an employer contribution permits a larger contribution than available under a SEP. The 25 percent of compensation limit applies only to the employer contribution, not the employee contribution, which could result in a larger contribution than the SEP offers.

• SEP. If the owner is under 50, the contribution limits for solo 401(k)s and SEPs of $61,000 is the same. However, the 25 percent of compensation limit may reduce the SEP contribution

Example 2—One or two highearning owners, small number of employees, none with high salaries.

The ages of the owners and employees generally are the crucial factors in this situation. When the owners are close to retirement age and the employees are not, a defined benefit plan such as a 412(e)(3) plan may be very attractive.

A defined benefit plan would allow a large contribution and deduction, with most of the contribution benefitting the owners. Owners wanting a plan with more flexibility or with a different mix of ages and salaries may consider a new comparability or age-weighted profitsharing plan and 401(k) plan.

Example 3—Small group of fulltime, long-term employees and large group of part-time employees, most of whom expected to leave within one year of hire. Employers with this mix of employees often want to avoid having

• Age. Setting a minimum age of 21 to participate in the plan may exclude many employees. Note that a minimum age requirement cannot be imposed by SIMPLEs and 403(b) plans.

• Years of service. Requiring at least one year of service would likely mean most of the part-time employees would not meet the eligibility requirements.

• Vesting. Using either three-year cliff vesting or a six-year graduated vesting schedule can reduce the vested amount for participants, especially part-time employees who meet the plan’s eligibility requirements.

Employers in this situation may find a 401(k)-profit-sharing plan using a new comparability design attractive. It would allow them to use age and years of service to minimize the participation of part-time employees. The vesting schedule and new comparability design can result in a larger share of employer contributions benefiting the full-time, long-term employees.

Conclusion Selecting a type of employer-sponsored retirement plan requires considering and weighing numerous factors. Asking the questions in this article can help an employer identify the important factors and weigh them. Once that is done, an employer, working with advisors, can choose the plan that best fits the employer’s needs. n

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 39

T

his article provides a brief summary of the most significant opinions issued by federal appellate courts during the period from May through June 2022, which addressed, among other topics, contracts, governmental takings, COVID shutdown orders, arbitration, bankruptcy, and consumer law.

Contract Actions This summary begins in the First Circuit where the court, applying Maine law, held that a seller under an “as is” contract has no duty to disclose the existence of fill on a property when there is evidence of the fill in the public records. The court went further and stated that the seller could not be sued for “active concealment” for “hiding” the fill when fill is—by its very nature—buried and not visible. The court explained the concept of “active concealment” and found summary judgment was proper for the seller due to the fill’s existence being recorded and there being two decades between the filling of the property and the sale contract. Pleasantdale Condo., LLC v. Wakefield, 37 F.4th 728 (1st Cir. 2022).

The Sixth Circuit explained how a “right of first refusal” under Low-Income Housing Tax Credit (LIHTC) program, 26 U.S.C. § 42, works in the SunAmerica Housing Fund 1050 v. Pathway of Pontiac, Inc., 33 F.4th 872 (6th Cir. 2022), decision. Briefly, a right of first refusal under the program requires there be a bona-fide, thirdparty offer but then differs from the common law right by permitting a qualifying nonprofit organization to exercise its right of first refusal at

Federal Real Property Case Law Update Published in Probate & Property, Volume 36, No 6 © 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.

40

November/December 2022

Getty Images

By Manuel Farach

for 1,800 acres at a price for 180 acres is not a “mistake in judgment,” i.e., a mistake involving the exercise of discretion.

The end result here was that the owner could not terminate the lease under Louisiana law.

The circuit decisions regarding contracts also touched on settlement agreements as contracts. The Fifth Circuit held that a grace period in a mortgage reinstatement agreement must be given effect and overcomes any conflict with a monthly payment schedule or a “time is of the essence” clause.

Burbridge v. CitiMortgage, Inc., 37 F.4th 1049 (5th Cir. 2022). And the Eighth Circuit held that a party cannot use equitable estoppel to enforce a settlement agreement against a non-signing party when the party who signed the agreement with plaintiff was not acting as the non-signer’s agent and when there was no joint venture between the signer and the non-signer. Cardiovascular Sys., Inc. v. Cardio Flow, Inc., 37 F.4th 1357 (8th Cir. 2022).

the section-42-established right of first refusal ex ante price: the outstanding debt on the property plus any “exit taxes” that result from the sale (sometimes referred to as “debt plus taxes”).

The circuits were also busy with breach of contract cases. The Seventh Circuit ruled in an interesting case that a party who uses a false name to defraud under a contract cannot obtain 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. Readers may obtain a weekly summary of federal case law by sending an email to mfarach@ mracheck-law.com and requesting to be placed on the distribution list.

benefits under the contract. The defendant was a competitor of the plaintiff and used a false name to pretend to be a customer in order to obtain the plaintiff ’s software. The defrauding party was sued and demanded arbitration under the provision in the contract, but the court reasoned that a defrauding party cannot avail itself of benefits under the contract when it defrauded the other party when entering into the contract.

CCC Intelligent Solutions Inc. v. Tractable Inc., 36 F.4th 721 (7th Cir. 2022). Also interesting is Franklin v. Regions Bank, 37 F.4th 986 (5th Cir. 2022), in which the Fifth Circuit held that a landman (an expert in oil, gas, and minerals who works for energy developers to obtain access or development rights from landowners) mistakenly entering into a lease

Takings We also saw a takings case this cycle, but with a twist. The Seventh Circuit declined to endorse a “judicial takings” theory, holding that lakefront owners could not sue their state government in federal court under a “judicial taking” theory to overturn a state supreme court decision that arguably changed state law regarding private versus public ownership of lakefront land. Pavlock v. Holcomb, 35 F.4th 581 (7th Cir. 2022).

The concept of judicial takings comes from the plurality decision in Stop the Beach Renourishment v. Florida Department of Environmental Protection, 560 U.S. 702 (2010), a U.S. Supreme Court case affirming a Florida Supreme Court decision upholding a beach renourishment program. A plurality of the Stop the Beach court believed, however, that the Florida Supreme Court decision effected a “judicial taking” because the program placed dry sand between beachfront owners and the water and disconnected beachfront owners from the water (thus creating a public beach between the beachfront owners and the water). Judicial takings theory has not

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 41

gained traction, however, as the Pavlock decision to not allow a case to proceed under that theory demonstrates.

COVID-19 Insurers continue their winning streak on claims arising from COVID. The Seventh Circuit aligned with the Fourth and Sixth Circuits and held that there is no coverage under all-risk insurance policies for interruption as the result of closures due to COVID-19 if there was no physical damage caused by the virus. Paradigm Care & Enrichment Ctr., LLC v. West Bend Mut. Ins. Co., 33 F.4th 417 (7th Cir. 2022). The Eleventh Cir-

Title Circuit court decisions on title issues are not common, but the Tenth Circuit issued Mindock v. Bruff Dumars, 2022 WL 1410017 (10th Cir. May 4, 2022), and weighed in with a decision holding that the following language presents a restraint on alienation of a fee simple estate (not a use restriction) and is thus void under Colorado law: If either Joint Tenant, without the written consent of the other, attempts to: a) partition the property, or b) convert this joint tenancy into a tenancy in com-

A lender violated the Fair Credit Reporting Act by reporting a borrower’s second mortgage as “past due” even though the borrower’s liability for deficiency under the second mortgage had been abolished under the state’s anti-deficiency statute. cuit applied state law and followed the majority view to hold there is no coverage under all-risk insurance policies under Florida law for damages arising out of government-imposed closures arising as a result of COVID-19 because the virus did not cause a tangible, physical alteration of the insured properties.

SA Palm Beach, LLC v. Certain Underwriters at Lloyd’s London, 32 F.4th 1347 (11th Cir. 2022). And apropos of our discussion above regarding takings, the Seventh Circuit held that claims against the state for closure orders under the First Amendment’s Free Exercise, Free Speech, and Freedom of Assembly Clauses and the Fourteenth Amendment’s Due Process and Equal Protection Clauses do not state causes of action, but upon sufficient proof, a claim under the Fifth Amendment’s Takings Clause may do so. Nowlin v.

Pritzker, 34 F.4th 629 (7th Cir. 2022).

Aggrieved parties may want to sue states instead of insurers.

mon with respect to any interest conveyed by this Warranty Deed or other interest in the Property currently owned or subsequently acquired by such Joint Tenant, then the Property shall, by operation of law, revert to the other Joint Tenant in fee simple immediately without requirement of judicial intervention or further legal conveyance.

Regulatory There were three relevant decisions in the regulatory arena, Seila Law LLC v.

Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020) (for cause legislative restriction on President’s authority to remove director of Consumer Financial Protection Bureau who wielded executive powers was unconstitutional), continues to cast a long shadow over the landscape. Take, for example, the bank officer who was removed by the FDIC for failure to follow bank procedures when protecting a bank client

from loan default. The officer claimed that the FDIC administrative law judge had no authority over him as a result of Lucia v. SEC, 138 S. Ct. 2044 (2018) (holding that appointments of SEC administrative law judges who are shielded from removal violates the Constitution). Unfortunately for him, the Sixth Circuit did not agree. Calcutt v.

Fed. Deposit Ins. Corp., 37 F.4th 293 (6th Cir. 2022).

On a more prosaic level, there are two Fair Credit Reporting Act cases to note.

The employer in Schumacher v. SC Data Center, Inc., 33 F.4th 504 (8th Cir. 2022), failed to obtain proper consent before running a credit report on a potential employee. The court held that although failure to obtain consent was a technical violation of the Act, the claim did not rise to the level of Article III standing. In Gross v. CitiMortgage, Inc., 33 F.4th 1246 (9th Cir. 2022), a lender violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by reporting a borrower’s second mortgage as “past due” even though the borrower’s liability for deficiency under the second mortgage had been “abolished” under the state’s antideficiency statute. This party was not able to escape liability.

Arbitration As is typical, there are several arbitration cases of note, including two from the US Supreme Court. The more significant of the cases is Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022), where the Court held that federal courts interpreting the Federal Arbitration Act cannot add additional conditions to the Act and, accordingly, may not require a showing of prejudice to establish a party waived its right to arbitrate. And in ZF Automotive US, Inc. v. Luxshare, Ltd., 142 S. Ct. 2078 (2022), the Court held that only a governmental or intergovernmental adjudicative body (i.e., not an arbitral body) constitutes a “foreign or international tribunal” under 28 U.S.C. § 1782 such that a district court may order the production of evidence “for use in a proceeding in a foreign or international tribunal.”

On the procedural front, the Second Circuit held that an agreement between

Published in Probate & Property, Volume 36, No 6 © 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.

42

November/December 2022

counsel to serve pleadings during the arbitration via email does not alter the Federal Arbitration Act’s requirement under 9 U.S.C. § 12 that motions to vacate be served in accordance with Federal Rule of Civil Procedure 5. DallaLonga v. Magnetar Cap. LLC, 33 F.4th 693 (2d Cir. 2022). Accordingly, a motion to vacate an arbitration award improperly served by email was untimely. And the Fourth Circuit held in Reddy v. Buttar, 38 F.4th 393 (4th Cir. 2022), that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, as implemented by 9 U.S.C. §§ 201–208 (the Convention), provides the method for determining the merits of arbitration awards but leaves the decision of the method for enforcement of awards to the laws of the Convention’s signatory states.

Bankruptcy Although not expected to affect real estate practitioners a great deal, the US Supreme Court held in Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022), that the congressional enactment of different bankruptcy fee structures for different states violates the uniformity requirement of the Constitution. At the circuit level, the Ninth affirmed the widely held understanding that failure to make payments to a secured real estate lender as set forth in a confirmed Chapter 11 plan can result in conversion of the bankruptcy to a Chapter 7 even if substantial payments have been made under the Chapter 11 plan. The key, of course, is whether there was substantial consummation, so the Ninth Circuit’s decision should not be taken as a bright-line rule. Baroni v. Seror (In re Baroni), 36 F.4th 958 (9th Cir. 2022).

Two other concepts that bear mentioning are who “owns” the right of conversion and what constitutes a “conflict” under the Bankruptcy Code. The Tenth Circuit in Bear Creek Trail, LLC v.

BOKF, N.A. (In re Bear Creek Trail, LLC), 35 F.4th 1277 (10th Cir. 2022), held that the management of a bankrupt company may appeal the conversion of their company’s Chapter 11 case to Chapter 7 in their own name (if they

have standing), but the right of the company itself to appeal the conversion belongs to the Chapter 7 trustee. The Third Circuit held that a bankruptcy court determines conflicts to an estate under 11 U.S.C. § 327 and—in making its determination as to whether a conflict exists—may consider but is not controlled by the Model Rules of Professional Conduct. In re Boy Scouts of Am., 35 F.4th 149 (3d Cir. 2022).

Bankruptcy appeals are somewhat tricky due to the underlying structure of the cases, but the Sixth Circuit confirmed that bankruptcy appeals follow the general rule that appeal of a Rule 60(b) order does not automatically raise for appeal the merits of the underlying judgment. In re Murray Energy Holdings Co., Case No. 21-8014, 2022 Bankr. LEXIS 2056 (6th Cir. B.A.P. June 3, 2022). Along the same lines, the Eleventh Circuit held that under 11 U.S.C. § 1141(d)(1) and (1)(A), a plan of reorganization discharges a debtor from all claims “that arose before” the “order confirming the plan” unless the plan itself excludes those claims. Accordingly, obligations fixed before the bankruptcy court confirmed the plan

Potpourri Though not falling clearly into welldefined categories, some additional decisions are still of interest to real estate practitioners.

For example, the Fourth Circuit held in Martz v. Day Development Company, L.C., 35 F.4th 220 (4th Cir. 2022), that a court can determine the method of compensation for a land planner and consultant if the planner meets the requirement for compensation under his retention contract but the contract has no available method of determining compensation. The Eleventh Circuit held in Brucker v. City of Doraville, 38 F.4th 876 (11th Cir. 2022), that it is not unconstitutional for a municipality to base its annual budget on the collection of code enforcement and traffic fines. The Eighth Circuit held in Sanborn Savings Bank v. Freed, 38 F.4th 672 (8th Cir. 2022), that a mortgage is a “credit agreement” under Iowa statutory law, and accordingly, equitable defenses to a mortgage are waived to the extent a written mortgage differs.

The Sixth Circuit held in Tarrify Properties, LLC v. Cuyahoga County, 37 F.4th 1101 (6th Cir. 2022), that a class of

A court can determine the method of compensation for a land planner and consultant if the planner meets the requirement for compensation under his retention contract, but the contract has no available method of determining compensation. of reorganization, e.g., to provide health care benefits, are discharged by the plan. U.S. Pipe & Foundry Co., LLC v.

Holland (In re U.S. Pipe & Foundry Co.), 32 F.4th 1324 (11th Cir. 2022). And the Second Circuit held that a bankruptcy court’s traditional power to impose contempt sanctions carries with it the authority to award damages and attorney fees—including appellate attorney fees. Law Offices of Francis J. O’Reilly, Esq. v. Selene Fin., L.P. (In re DiBattista), 33 F.4th 698 (2d Cir. 2022).

property owners who had their properties transferred to a land bank through a tax foreclosure process is not capable of class certification because there is no cognizable common theory for measuring the value in each property at the time of transfer. Finally, the Fifth Circuit ruled that a stipulation in state court that plaintiff seeks damages less than $75,000 may be binding on a defendant such that the defendant cannot remove the case to federal court. Durbois v. Deutsche Bank Nat’l Trust Co., 37 F.4th 1053 (5th Cir. 2022). n

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 43

Published in Probate & Property, Volume 36, No 6 © 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.

44

November/December 2022

SPEECHIFYING AND SCRIBBLING— A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career

By Stephen R. Akers, Dana G. Fitzsimons Jr., Terrence Franklin, Carol A. Harrington, and Paul S. Lee

F

Getty Images

or many if not most attorneys, public speaking is an essential part of both successfully practicing law and building a law practice. In 2022, the ABA RPTE Special Committee on Career Development & Wellness presented a three-part series of programs with the goal of providing Section members of all experience levels essential insights into effective and strategic public speaking. As part of that series, a panel of trusts and estates attorneys who are nationally known as successful presenters pulled back the curtain on their processes, wisdom, best practices, tips, and tricks for successful public speaking. The panel discussed strategic use of speaking as a tool for career enhancement, preparing materials, working with co-presenters, dealing with nervousness and stage fright, and maximizing results and spoke candidly about the

“why” and “how” of integrating public speaking into a trusts and estates career. Dana Fitzsimons moderated the panel, which included Steve Akers, Terry Franklin, Carol Harrington, and Paul Lee. What follows is a transcript of their conversation.

Edits were kept to a minimum to preserve the conversational and collegial nature of the program.

Introduction DANA: Welcome, and this is the program on public speaking for trust and estates audiences. I’m your moderator, Dana Fitzsimons, and I’m lucky to be joined by a panel of folks who really need no introduction. So, we’re going to skip that part and get on with it, other than to say this. Everyone’s really busy right now. Exemptions are high and fragile. Markets are roller coasters. People are scared, and staffing is thin. But when I Stephen R. Akers is Managing Director and Senior Fiduciary Counsel asked these four insanely busy professionals to give still more at Bessemer Trust, serves as Immediate Past President of ACTEC, is time to help the rest of us, they couldn’t say “yes” fast enough. a member of the Advisory Committee to the University of Miami And that’s just one of the many reasons they are in that echPhilip E. Heckerling Institute on Estate Planning, and served as elon of lawyers we all look up to and that we refer to by just Chair of the ABA RPTE Section. Dana G. Fitzsimons Jr. is Managing Director and Senior Fiduciary Counsel with Bessemer Trust in Atlanta their first names. So, it’s my honor to welcome and thank Carol, and chairs its Fiduciary Counsel Committee, serves on the ABA Steve, Terry, and Paul for joining us, and I’m looking forward, RPTE Planning Committee and the Special Committee on Career as I’m sure we all are, to learning from them. And thank you for Development & Wellness, is an ACTEC Fellow and the chair of its attending and taking some time to invest in yourself and your Long Range Planning Committee, and is a 2021 inductee into the career. And to keep things fun, none of us has any idea what NAEPC Association Estate Planning Hall of Fame. Terrence Franklin the others are going to say. practices trust and estate litigation at the firm he co-founded, Sacks, We’re going to be exploring incorporating speaking and Glazier, Franklin & Lodise, LLP in Los Angeles. Carol A. Harrington writing into your career from every angle—at least every angle practices in Chicago in McDermott Will & Emery’s Private Client Practice and advises clients on a variety of issues related to estate we could think of when we put the program together. And I’ll planning, trust law and administration, and estate, gift, and speak just this one time for the whole panel and say that speakgeneration-skipping taxes. Paul S. Lee is an Executive Vice President ing and writing have been, for us and many others, a vital and the Chief Tax Strategist of The Northern Trust Company, within part of building successful careers. But before we get into the the Global Family & Private Investment Offices Group and Wealth mechanics, we should be candid that it’s not without costs. CliManagement Division of Northern Trust. ents and firms are already demanding, and they sometimes

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 45

demand everything from a lot of us. And our families need us too, and they’re not always patient with us being away from home even more. And professional activities don’t just cost time. They cost money, and life is expensive, and that may not be money that’s easy to spend.

We need to be candid about these costs of building a career. So, we should start with this question: Why should we speak and write?

Why Speak and Write CAROL: I started speaking and writing early on because the partner that I worked with told me I had to. And I was young and impressionable and believed what he said, but I found out, as I did it, why I kept doing it. And it was in large part because it was the best way to learn something thoroughly. I never was having a good time while I was putting

And so those are all the reasons why I did it. Now, you also do it because you’ve got an ego, and it’s nice to have people come up and tell you thank you. And I don’t discount that, but that’s the last reason to do it honestly for me.

STEVE: Carol, there’s not much to add to that. That is just a fantastic list of reasons why. When I was a young attorney and starting out, it was predominantly to just build credibility—“Let people in the state know who you are” sort of thing.

I’m now in a position that it’s part of my job of doing this as development for the firm. But I did it very much for the same reasons that you had mentioned.

TERRY: And I would agree with all of those, and I’d note that the ABA’s mission is to serve equally our members, our profession, and the public, by defending liberty and delivering justice as the national representative of the legal

Figure out a way to become the go-to person on a particular topic.

together the outline for a speech that I did. But when it was done, I have to say I really learned something and learned it in a way that I wouldn’t have otherwise.

So, to me, building that expertise and excellence is the most important thing.

You also do it to build your reputation for business generation, but that’s a long-term build. You’re not going to, in most cases, get a client or two because you gave one speech. It’s about your reputation generally.

You get a network of colleagues who are your friends. We go to each other’s weddings and on vacation with them.

And if you’re in a jam, and you need to know something about law in some other state, you can call them, and they’ll tell you. And it’s wonderful to have that network of friends.

And finally, you give something back to the profession, and if we aren’t willing to do that, then how are we going to expect the profession to give back to us?

profession. If you think about that mission and how you can best work towards fulfilling it, there are lots of different ways to do this, but certainly, speaking is one of those ways. I think mentorship and developing a relationship that helps show how we can grow and how we can help others to grow is essential to what we do as lawyers and, really, as human beings. Speaking is a huge part of that. It enriches your understanding of topics, and it also opens the door to networking opportunities that you might not have had otherwise. And for some people, you speak because you have to.

You’re the kind of person who needs to share, and I think there’s nothing wrong with acknowledging that, if that is part of your personality and your character. And it can help you to develop your practice.

PAUL: There are things that I would add to this just to add some color to everything that’s already been said.

When we were all talking about what we might talk about on the subject, we all brought up our mentors who pushed us in that direction. And for me, that was Professor Jeff Pennell at Emory University, whom we all knew and listened to when we were growing up as pup lawyers. Some people say I actually started out by doing a very bad imitation of his cadence—for a couple of decades! And I’ll really underline what Carol started with. For me, it was a way to force myself to stay sharp and to learn new things. I know we’ll talk about how we select subjects, but very often for me it is—“I’ve been thinking about this. I don’t really know as much as I would like to know.

Maybe there’s something interesting here that might turn into a presentation or an article.”

Getting to what Carol was saying about building your own brand, another one of my mentors, very early on in my career when I was practicing law as an associate, made it a very important emphasis for me, just in terms of career development, to build your own brand. I was working for him. I would have been happy to have worked my entire career with him, but he said, listen, firms come and go. Jobs come and go. Your personal brand will always stay with you, regardless of what happens to the things around you professionally. And so, it’s been a critical part of whatever modicum of success I have nowadays. But it’s really for me not only professionally rewarding but it’s also personally rewarding.

CAROL: When you deal with things in your own practice, there are certain mistakes that you hope you wouldn’t make. When people come up and ask you questions, they raise issues that you would never get into on your own. I have learned a lot from really interesting questions that people ask me. Some people say, “Why do you respond to all these people? You’re just giving them free legal help.” It’s because I’m learning something from them.

PAUL: I’ll hit that home. One of the most recent things I’ve been talking about is qualified small business stock, and, four or five years ago I didn’t know anything really about it. And still now, I

Published in Probate & Property, Volume 36, No 6 © 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.

46

November/December 2022

get email questions that are some of the most interesting, unanswerable questions that you will get out there, and it has enriched my knowledge in that area.

DANA: Anyone that knew him knows that my mentor gave professional lessons with short statements that were memorable, quotable, and packed with a lot of power and wisdom. The lesson I got was pretty simple. This builds on what Paul said—I think we got the same lesson—which is the only thing that you own are your skills and your reputation, and if you don’t invest in yourself and build those, you’re always going to be dependent on a law firm or an employer for your career and your work. You won’t have professional options if you need them. So, my boss trained me—and I thought it was crazy at the time—but trained me from the very beginning of my career to have the option to leave the firm by building a reputation of my own.

STEVE: Very interesting. So, Dana, who was that?

DANA: That was Dennis Belcher.

STEVE: Mentor to many of us.

Selecting Topics DANA: Yeah, we miss the boss. Let’s pivot with that and talk about selecting topics. Now that you’ve made the decision to speak and write, what the heck do you speak and write about? After I had practiced long enough to have a little experience in the different aspects of—and some exposure to the different aspects of—trust and estates work, my boss told me to think about the kind of work I liked and the kind of work I wanted to do and to think about the career I wanted. He said, “You speak and write about the type of work you want, and that’s the work that’s going to come to you.” That’s the lesson I got.

PAUL: I do believe you want to pick a topic that you are actually passionate about and that you feel like you have some real expertise in. All of that being said, I have been telling young attorneys that want to get involved in public speaking that there is one subject you should definitely do because it will make you famous. And it certainly may have made Natalie Choate famous! The broadest asset type in the United States

is qualified retirement plan money, and all of the picayune ideas there in terms of required minimum distributions, IRAs, and things of that sort. I still have yet to have any young person jump on it and make it their thing. Natalie’s famous at it. Nobody knows anything more than she does, but we need a succession plan in that particular area. Now, all of that being said, no one can ever pay me enough to do that particular subject because I’m just not passionate about it. If you can find your one thing that makes you unique in terms of your subject, I think you should definitely run with it. I, unfortunately, have subtopics, for lack of a better word. I’ve mentioned qualified small business stock because I thought that was interesting. I have a subspecialty on the partnership tax side, in particular planning issues there, and in years past it was charitable lead trusts and things of that sort.

I find it hard to do the things like Steve can do, where I just don’t have the comprehensive passion to know everything about all of estate planning. I’m always in awe of Steve’s recent developments and the depth by which he goes and the historical context that he can bring to all of those particular subjects.

This is just to say you have to decide what is yours and what you’re passionate about, and what you feel like you can really run with and teach people new things.

STEVE: Paul, I always think of you and Carol as knowing everything about everything. We all do.

PAUL: You’re too nice.

CAROL: The definition of an expert is that you know more and more about less and less, until you know everything there is to know about absolutely nothing. I think you’re right—you should be strategic about it, and I’ve never done that. I’ve never been strategic about what I decided to talk about, except in this way. I often got into something that I found interesting, and, particularly, if I could do the initial knowledge building on the basis of some client work.

And then if this is of general interest, I’ve already done some spade work here. So, if I could take this material and recycle it, it just makes it a little easier than starting

from scratch. On the other hand, that’s not how I got into generation-skipping tax. My boss and mentor came to me in 1977, after I’d been with the law firm for about two weeks, and said he’d been asked by BNA to do the generation-skipping tax portfolio. He said, “So here’s the deal—you’ll write it, I’ll review and edit it, we’ll be co-authors, and you’ll be an instant expert.” Of course, I say, “Okay,” with no idea what this is going to be. So, I just sort of fell into it, but it turned out to be a good thing for me because the GST tax is really hard. It’s got a lot of silly rules that people can’t keep track of, and it’s very important. Grandfathered trusts were really important for wealthy people, but I didn’t select it with any strategy in mind. It just fell on my head, basically.

TERRY: I also had a mentor, Bruce Ross, who was a partner at my firm who actually wrote the California book on probate. Every year, he would give this talk, multiple times, where he would basically have this encyclopedic understanding of everything there is to know about California probate. I would watch him on the stage, going back and forth, thinking I’ll never be able to do that, and I still will never be able to do that.

I think you do have to figure out a way to choose topics that work for you—if you’re not the person who is going to be a Steve Akers or Carol or a Paul. But I think the ideal is to pick topics that you either know or that you need to know or that you want to know. And I think early on in your career it’s probably hard because you don’t necessarily choose topics. People come to you and they say, “Hey, would you like to join a panel on this or participate in this or that?” And I think you can be selective about that, and then try to shape the portion of the talk that you’re giving to fit something that you are familiar with or would like to know more about.

The ideal is to figure out a way to become the go-to person on a particular topic or build off of a case or a problem that you’ve already researched and used.

As Carol said—the spadework has been done already. You’ve been doing memos for a court or for clients. Take that and transform it into a speech or into an article. You can also repurpose presentations

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 47

for maximum leveraged output. If you can find a way to take a topic that you know and develop it well and then reuse it on other occasions, it helps to sharpen the edge.

CAROL: It’s important to be interested in the topic. You’re going to spend hours and hours on this stuff, and if you don’t find it interesting, you’re not going to make it interesting for anybody else either.

STEVE: All of those are very good comments. First, I would say, particularly as a younger attorney, take advantage of opportunities as they come. It’s like Carol with the generation skipping. You may get your topic selected for you. I know the first time I spoke at Heckerling, I was invited to speak on something I’d never done before. Nobody else had done it either. It was after QDOTs had come in, and well, I learned a lot about QDOTs. Most of the speeches that I’ve done are ones that I’ve been asked to do on a topic, and so as a result I’ve ended up speaking on a lot of different things and learned a lot as a result. Now I tend to have some set topics. For me to do a new paper on a new topic is probably a 50- to 100-hour project, so I’m very judicious about doing those new projects.

Working Well with Others DANA: Let’s talk about co-panelists— the good, the bad, the annoying. Early in your career, speaking opportunities will most likely be as part of a panel rather than a podium speech. That’s natural. That’s where new speakers get their opportunities. That can be a great experience, if the panelists carry their weight, share time, work together, and share their perspectives. But there are also the freeloaders, the prima donnas, the aggressive self-promoters, the under-preparers and procrastinators, the time hogs and the panel bullies, all of whom exist. We should talk about how not to be those people, how to deal with them when you get stuck with one, and what we can do to ensure a good panel dynamic.

STEVE: You’ve laid out all the terribles that can happen, and certainly, those things happen. To me, being on a panel, particularly being the moderator of a

panel, is more work and takes more time than to just give the speech yourself. But it ends up being better because you get multiple inputs with respect to the particular topic.

There will be a variety of conference calls that you’ll have before the session itself to decide upon what subtopics you’re going to be covering, what kind of time frame for each of those subtopics, and who’s going to be covering different subtopics. My personal preference on a panel would be to have five- to sevenminute slots of somebody leading the discussion, and not to have a panel of an hour and a half of three 30-minute presentations. I’d much prefer the short time slots and then to leave time for dialogue. That’s really the huge advantage of a panel—to be able to get input from a number of different people.

So once we have those pre-conferences and we’ve decided what we’re going to do, I think it’s very helpful to have a timeline laid out, upfront, to the minute, of how much time you’re going to spend on various topics. And strategically give thought to how much time you want to spend on particular topics. Not that you’ll follow that by the minute— you might deviate greatly from it. And when you do, nobody in the audience will know that you deviated, and that’s fine. But at least you have a plan going into it.

DANA: And for the record, we’ve already deviated from our plan!

PAUL: I totally agree with what Steve is saying. Having essentially three different speeches by three different panelists is typically the least effective in terms of getting real information to the audience and in terms of the audience really understanding it. It really is. If you are talking about a panel that really knows their subject matter, the best parts of the panel, and I would say by way of example the best part of the ACTEC committee meetings, are the back and forth that haven’t been discussed or haven’t been scripted out already.

The other thing I’ll mention is that, if you feel confident about it, there is nothing wrong with disagreeing with one of your panelists. It’s just how you end up disagreeing with them, right?

We’ve all been on panels where somebody will just say, “You are wrong, you’re dead wrong, and I’ll tell you exactly why you’re wrong.” I wouldn’t recommend that. I think there are ways to say, “Can I give you another perspective about this?

Here’s my thought. I would love to hear your thoughts on that.”

DANA: I’m just going to jump in and say that, when I see somebody act like a jerk on a panel, I know I’m never going to do business with them.

PAUL: Is this why you and I are not doing business?

[LAUGHTER] DANA: I gave away the secret.

TERRY: I would also say that trying to figure out a way to avoid serial presentations is great and important because if one person isn’t great, then it loses for the whole panel. I think if you remember the gestalt of it all, that we all benefit when we all are good together, and, of course, that requires some organization and some effort ahead of time.

One of the challenges for me is that I’m not as well-organized as some of the people that I sometimes do panels with, and I know that about myself. So, I’m fortunate that I’ve had the experience of working with people who are very organized about working on a presentation. An organizer may chart out, over the time between when the panel is announced and when you’re going to speak, a call here, another one here, and another one here, so that you have an overall arc for developing what the presentation is going to look like. At the beginning it feels like, oh my gosh, this is overwhelming. There’s no way I can do this. But to break it up into pieces like that helps to make it work really well, and by the end you go, “Ok, I’ve accumulated an understanding and appreciation for how this panel should work.” So by the time you’re ready to do it, it almost is second nature to you. So, I found that to be helpful. I probably will never be the one who will organize like that. I’m still looking forward to working with people who are more organized than I am, but I think that’s a useful tool and a way to think about how to make a panel most effective.

CAROL: I think those are all great

Published in Probate & Property, Volume 36, No 6 © 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.

48

November/December 2022

comments. Look, everybody on this panel I would speak with instantly, in a heartbeat, without thinking twice. But you do learn from mistakes, and there are people to whom you would say, no, I think I’m busy that day. I think it is helpful to have a leadoff speaker on a topic, but panels are more interesting when there’s some give and take.

But you should make sure, though, that your co-panelists are comfortable with you piping in. If they’re in the middle of a rant, and you want to make a point, you have to be careful about interrupting their train of thought. You certainly never want to make your panelist look bad, if you can help it. I was in a situation once where somebody speaking before me just said something that was absolutely dead wrong. It was not a matter of opinion. It’s just completely, completely wrong, and rather than say what he just said was completely wrong, I just said what the right rule was and left it up for people to make up their own minds.

PAUL: Well, Carol, it does bring up one of the most important things, and it goes without saying, that is to listen to what your panelists are saying. I’ve been on panels where a co-panelist is so worried about what they’re reading, they’re literally looking at their notes. Because they’re coming up and leading the next section, and they’re reading their notes.

And they’re not actually following the arc of the conversation, where it’s going, and the nuances of it.

CAROL: Guilty as charged.

DANA: Yeah, I have no idea what Paul just said, but I’ve got my notes for the next section.

CAROL: I’ve been known to be preparing while I’m on the panel.

STEVE: And Paul, that’s a good point.

As a panelist, if you’re going to ask somebody a question, start off with, “Carol, . . .”

Get Carol’s attention, and then ask the question. If you just ask the question, and then say, “Carol, what do you think about that?”—Carol may have no idea because she wasn’t listening.

Written Materials DANA: We could talk about this all day, and we all have our scars and stories

on that one. But let’s turn to putting together written materials, which are obviously an important part for getting CLE credit for a lot of programs, and also a calling card. Everyone has those outlines that are so good that we save them.

We pull them out over and over again, when we need direction. So that’s the goal. Right? To write things that are useful and endure and age well, and they give real value to the audience. Those, when they’re really good, serve as that advertisement for your professional ability and judgment. You give people a good takeaway that they save, and that starts with the terrifying moment of looking at a blank piece of paper, if you’re old like I am, or a blank screen, if you’re just about everybody else in the world. Outlines and slides, putting them together.

TERRY: I think one of the things that sometimes people do is they overdo the slides. I think it’s important, obviously, to

best we could. But I think the key is to plan ahead, talk to your fellow panelists, and have an understanding of how the slides are going to be used, especially if you’re coordinating with them, just to make sure that the flow is continuing to move forward—because they’re essential tools, but they can be deadly in the wrong hands.

PAUL: With respect to written materials, I would say, Steve is the gold standard on written materials, in terms of things you pull down, constantly, all the time. I aspire to that. Writing the written materials and updating the written materials is my favorite activity, and also the bane of my existence at the same period of time. As I mentioned, I have a number of subspecialties, which makes it a little bit more difficult because I feel like I’m sort of jumping between subjects. So, I end up having to carve out a certain portion of whatever free time I have outside of work just to

If you feel confident about it, there is nothing wrong with disagreeing with one of your panelists. have the guides because they are a helpful visual tool to help keep the attendees flowing with you and understanding what’s going on and where you are. But you have to make sure that they’re organized in a reasonable way, and that, especially if you’re working on a presentation with someone else, you are prepared and have an opportunity to see them in advance.

I’ll tell a mini-war story about someone that I did a program with and we were organizing the slides a little bit.

And we worked out an agreement about what was going to be in it, and then I think the night before, they said, oh, I want to add some more slides. And when we showed up the next morning, there were, I don’t know, 94 new slides that I had never been seen before. I was shocked and didn’t quite know how to deal with it, but we made our way as

update periodically each of those things in series.

Now, I’m a big proponent of slides, but I’m not a big proponent of slides that have point by point by point by point, subpoint by subpoint, and then lots of quotes. Sometimes, the subject lends itself to those types of things, like when Steve was talking about QDOTs. The first time the QDOT stuff was coming around, you needed to have all of those bullet points. It’s a totally new subject, a totally different way of getting the marital deduction and then making sure that it gets paid somewhere down the line.

I think about different ways of learning. There are those people who learn by reading the words and those who learn by graphics, and also those who learn by listening. I’m a proponent of trying to balance between them. Have a graphic on the screen that actually tells a story

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 49

that you’re trying to say, whether it’s a structure or a planning technique, and enough very short bullet points that the reader can look at very quickly. The big mistake that you see from a presentation standpoint is people who will read off the slide, especially if it’s one of those narrative slides.

CAROL: The reason I don’t like slides is because I’ve already written an outline. Now I have to do more work to put it into the slides, and I’m already late with the outline. I’ve been a talking head for most of my life, but I do find that slides do help you stay on track with your subject matter. They are more work to do, but what I have done is used my outline as my slides, by highlighting stuff. Between looking down and seeing that in small print in the outline versus looking up at a slide, it is easier to look up, if you have the time to do slides. I think it is a mistake to put too much on any single slide. People in the back can’t read it. You can say, well, the slide is as much for them as it is for me, and there’s some truth to that. The slide is partly for you, to keep you on track. It’s partly for them because there are people who are more visual than auditory learners. But I always hate doing slides, and I always think it’s a good thing once I’ve done them.

PAUL: Carol, you’ll chuckle at this. So, Professor Pennell, for my entire career, has basically said I’m a coward and I use slides as a crutch. He would say that when you become an adult presenter, you won’t have to use them.

STEVE: Yeah. I’ve never thought of Jeff as a coward. Those are all great comments. Let me just make a few comments about writing and my particular biases on that. When I read something, it’s easier for me to read if there are headings on it. So, I do a lot of headings.

It’s easier for me too, and just visually it’s more appealing, to see shorter paragraphs rather than longer paragraphs. I tend to break into a new paragraph with every new thought. I think that’s easier to understand. Be organized, the same as with speaking, but be organized in writing as well. Also, be practical. Discuss what you need to discuss technically, but be sure to discuss the practical aspects of

whatever you’re writing about.

CAROL: One more thing about the written materials. The outlines are painful. If you are starting from scratch, 50 to 100 hours is nothing for an outline. It is awful.

PAUL: One of the decisions you have to make on your outline is, do you want your outline to be the reference point for a particular subject, or is it—let’s assume that most of the technical issues are relatively well known, and what you’re going to do is take that information, push it along, and, as Steve was saying, in a very practical way, from a planning or practice standpoint.

CAROL: I’m “Plan A.” What I found is that if I would write my outlines really as an article but with headings and subparagraphs, I could then easily turn it into an article without having to do a huge amount of rewriting. If you really do a bullet point-type outline, and you have to have a real outline or an article later, you do most of the work all over again. And so I’ve just always bitten the bullet and tried to write the outline with full sentences. I try to put citations in it, just so that if I have to do that later, I’ve already got them. I don’t have to go look them up again later.

PAUL: Well, all five of us are in “Plan A,” when I think about our materials.

STEVE: A recent phenomenon is that I’ve found seminars are no longer printing the papers. They’re available, and people can download them and print them before they come to the seminar if they want. I realize that is cheaper for the seminar producer. But I get to the seminar, and I find nobody has printed it out beforehand. Most people are not looking at their computers and are not looking at a PDF on their computer. And so something I’ve started doing is to prepare a two-page summary—a two-page highlight. If nothing else, I might take it myself and hand it out so that the participants have something in front of them to see the organization of what’s being spoken about. I’ll put page numbers on that highlight so that if somebody does want to look in the longer paper, they can find it very quickly.

TERRY: I think the important thing is to really be adaptive and to consider, in

some cases, what the topic is and what format the topic may suggest. There are some lighter presentations that I’ve been fortunate to be able to give, and they don’t require this detailed outline. Trying to find the right thing that communicates the ideas most effectively is always a challenge for any writer or speaker or presenter. And if you can be flexible about it, I think it will help to make the best of whatever presentation you’re presenting.

CAROL: Just because you have copanelists, you don’t have to have a co-outline. And you only make that mistake once, which is trying to write something with someone else. It’s the hardest, most time-consuming thing.

If you think it’s hard to write your own outline, try writing it with somebody else. And look back to those joint projects you did in law school or high school or college, where one person does all the work, and the other two get to put their name on it. That’s what happens. And the person who cares the most, of course, is me. So, I just—if somebody says, well, let’s do it—no. I’ll do my outline, you do your outline, and we’ll just talk about the things we want to talk about. And if you want to have a two-page outline, that’s swell, but you’re not putting your name on my outline, sweetheart.

DANA: We’re going to move on with “sweetheart,” but I’ll just say this to wrap up this section. It takes longer than you think. Start way earlier than you think you need to think. For me, that process of when you’re writing the outline is when you are going to think the most deeply about the topic. That is when you are preparing for the speech, and your brain is grappling with what’s important to say and how things are connected. So, start early, give yourself a lot of time, and embrace that time.

Preparing to Speak DANA: So, you got yourself a good outline. Now, you’ve got to figure out what you’re going to say. How are you going to keep the audience engaged? How are you going to get into something that will help them better serve their clients?

I’m going to say a couple of things on this, then turn it over to Carol. I have a

Published in Probate & Property, Volume 36, No 6 © 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.

50

November/December 2022

really close friend who knows me better than just about anybody on the planet.

And she gave me a shirt that says, on the front of it, “I’m not for everyone.”

Everyone learns differently. And everybody’s got their own style. And not every speaker will connect with every audience member. But everybody responds to authenticity. You have to speak with your voice and not try to pretend to be someone else. You can steal—it’s like jazz music. You can steal and you can emulate, and you can integrate things from other people that you respect, that resonate with you in your own style. But the only sustainable path is to be yourself.

That’s the only way for what you say to be meaningful and really connect.

Just by way of example, I grew up standing around the kitchen with a bunch of loudmouth Irish factory workers, telling stories to pass the time and trying to one-up each other. So that’s my style. That’s the style I grew up with.

In addition to using humor—I’ll just say this—when that works for your authentic voice, I’ve also found it effective to share a little bit of yourself. Not too much of yourself, but to share some things about yourself and your life with the audience, to open up, and to be a little bit personal. Humor and personal anecdotes wake up the listener’s ear and mind, can help them feel connected to you and engaged. And since I’m a notorious over-sharer, this is also authentic to my speaking style.

CAROL: Well, I think everything you said was really important. And I think the effect is one size does not fit all. I know very effective speakers who write out their whole speech, every word, and you cannot tell for a minute that they’re reading a speech. If I did that, you would fall asleep and run screaming out of the room. I tried it once. And I practically screamed and ran out of the room. And after I did that, I said, well, that doesn’t work for me. And I decided that if I could talk to one person, I ought to be able to talk to several hundred people and explain something. And it’s very scary, working without a net the first time you decide that you’re not going to practice a speech because it doesn’t work for—it didn’t work for me. That I was just

going to extemporaneously explain the subject matter.

And so my preparation is doing the outline. Doing the outline is where you’re thinking, What’s the right organization? What’s the order I want to talk about things? And how do I connect those dots? And then I go over my outline before I talk and kind of emphasize what I want to talk about and try to put some timing on it. But writing out my speech and practicing it didn’t work for me. But it does work for some people.

And so, you have to find out what your own style is.

As far as using humor, humor without content is a comedy show. People are not taking time out of their days to hear you tell jokes. That doesn’t mean that a few jokes aren’t welcome. In fact, this stuff is so dry sometimes that people are pathetically grateful if you say anything moderately amusing. They think you’re a laugh riot. So, it is great—if you can do it.

DANA: The bar is very low.

CAROL: But not everybody is good at it. I’m a bad joke-teller. I’m a really bad joke-teller. And I found that out, tried it, and it didn’t work. And so, I don’t tell jokes because it’s not my thing. If you can say something sarcastic and funny without hurting somebody’s feelings, swell. But extemporaneous humor is dangerous. And you have to think fast enough, before it comes out of your mouth, so that you don’t say something you’re going to regret. But humor and substance are a great combination. I think people pay attention. I think they listen. I think they remember it. And they enjoy the talk. Humor without substance is a waste of their time. They’re not there to hear you be funny.

STEVE: As always, everything Carol said is right. We all know that. In preparing for the speech—the big deal is, know it so well that you merely need a few key words to remind you as you’re going through. That is my style. As Carol indicated, some people can read and do it well. Very few people can do that without it being apparent they’re reading. So, know your speech so well that during the presentation you just need some key words. Have the organization down.

If wanting to refer to page numbers (which is very helpful for listeners who are also trying to follow along in the materials, put the page numbers in your brief notes so you can refer to them in the presentation.

Give thought to time allocation. What topics are most important? Where do you want to spend most of your time?

Don’t just get into the presentation and let it flow. Think strategically how much time you’re going to spend on various topics.

Think about what comes first and what comes last. People remember what comes first and what comes last. But the danger of that is that if you save one of the most important things for the end and you run out of time, then you don’t get to that. And so that means you’ve got to be flexible.

If you can see that you have 10 minutes left and the thing that you really think is important that you want to talk about is going to take 8 minutes, then go to that. Leave out something else.

Nobody else will know that. Think strategically about time allocation.

TERRY: Even though a topic may just flow from point to point to point, you are still giving a presentation that is essentially your storytelling. And storytelling always involves having an understanding of the beginning, the middle, and the end. And whether you have a joke at the beginning or whether you are just prepared with something that’s light to get the audience engaged and in the mood for the presentation, it’s nice to know what that is so that you don’t have to worry about what’s going to happen at the beginning.

It’s also nice to have some idea of how you want to close out, or at least what’s your most important thing that you’d like to leave with people. But be adaptive and understand that it’s going to change, and it’s going to shift. And there’s a possibility that things may not end up as they were intended.

So being well-prepared, and essentially knowing what your core theory or what your mission is that you’re trying to accomplish, and always being able to go back to that, allows you to come back to that focus and stay on the page and

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 51

not lose your place. And even if you lose your place, you can always get back to where you need to be to keep it going.

PAUL: The only thing I would add to all of the excellent things that have already been said is I don’t think any one of my speeches or presentations has been exactly the same. Every single one of them has been different in some significant way. But all of them have sort of common themes.

And so the one thing I would mention to those people who are just starting out in these types of presentations is that nothing will prepare you better than actually forcing yourself to do it by yourself in front of somebody or by yourself a few times. I don’t do that anymore, just because I’ve done that in the past and most of the subjects I’m speaking about I know relatively well in terms of the content.

Many of my presentations—I have

fright. Let’s spend just a couple minutes talking about this. I think nerves are good. Nerves mean you care about what you’re doing. But they can be debilitating. My first speech was to a statewide trust in an estate seminar in a place called Tides Inn, in Tidewater, Virginia.

My heart was racing. My hands were shaking. I was sweating. I was standing next to the podium, getting ready to speak, and one of the partners at the firm named Birch Douglass came up to me. And he said, “Dana, you seem a little nervous.” And I said, “Well, yeah, I’m terrified.” And he goes, “Well, did you read the cases that you’re talking about?”

And I said, “Yeah.” And he goes, “Well, you’re the only one who has. You’re the only expert in the room.” And it was just enough to take my heart down a little bit so that I could get through the program.

So, Terry, why don’t you lead us off in dealing with nerves?

Self-effacing humor will never offend anybody.

Non-self-effacing humor may offend somebody.

a story in mind that I’m going to tell.

And often, I will say, by way of example, “Here, we’re going to be talking about the formation, creation, the operation, then the termination of partnerships,” just so they can understand the arc that you’re going through. Or at the beginning, “I’m going to tell you a story about this code section that is written horribly, has caused more problems,” but it gives you lots of opportunities for these types of things. And you keep on bringing that narrative through there.

And the last thing I’ll say about humor, in my mind, is you should use it sparingly. And remember, self-effacing humor will never offend anybody.

Non-self-effacing humor may offend somebody. So just use that power gently.

Dealing with Nervousness DANA: No amount of preparation will completely eliminate nerves and stage

TERRY: I love that. Remembering that you’re the expert in the room should help you to have a little bit of confidence about that. Although, you know there’s somebody out there who believes that they are truly the expert in the room and that you’re going to get a question that you’re going to have to deal with.

In anticipation of that, you want to try to make sure that you can reduce the nervousness as much as possible. Many times, we do these presentations in the midst of a RPTE meeting or an ACTEC meeting. And you know that at those meetings you’re going to be having fun the day before or the night before and going out for drinks and hanging out with your friends because that’s a part of this process, too, of working together. But remember, if you’ve got a program the next day, that you need to get some rest and drink plenty of water and make sure that you’re staying hydrated the night

before and the morning before when you’re getting ready to speak because that will help you to address some of those physical aspects.

Make sure that you take some deep breaths before you speak. Really just open up those lungs because that helps to center yourself and make sure that you understand where you are. Ground yourself. Feel your feet on the floor and understand where you are in the space and this time. Those are just general good tools that are helpful for everything in terms of being mindful and understanding how to present a story well.

Reduce the stress factors, if you can.

Arrive early to the presentation so that you’re not scrambling at the last minute. There’s going to be some technical problem such as the mic doesn’t work or the slides aren’t hooked up. If you prepare in advance and can check in with the tech people—ideally the day before, if you can, but certainly before the speech so that you’re not going to run into any of those problems—that’s just a reassuring thing.

Find somebody in the audience who’s a supporter, someone that you know and trust, whether they understand that they’re going to be your supporter or not. Find the person who’s smiling and nodding when you’re speaking because you know that you’re communicating with them. And if you seem to lose them, then that tells you maybe you’re going a little off track and you can kind of bring yourself back on.

And finally, lighten up with the speakers, with your co-panelists especially. Try to make sure that you are enjoying your presentation because if you’re enjoying it, it’s much more likely that your audience is going to be enjoying it, too.

PAUL: I’ve done thousands of presentations. I have been nervous before every single one of them and still am to this day. Now, what I find particularly helpful for me, and I would encourage especially younger presenters in this space: years ago, in the ’90s, when the 49ers were winning all of their Super Bowls, they were famous for scripting the first 20 plays. No matter what, no matter who they were playing, those first 20 plays were exactly the same.

Published in Probate & Property, Volume 36, No 6 © 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.

52

November/December 2022

And they practiced them over and over again. When you are doing especially a relatively new presentation, just know your first three or four slides because that will give you momentum to sort of get through it. And once you sort of get through it, it seems to roll, and you gain momentum as you’re going through.

STEVE: I’ll just add to all this the Nike slogan—Just Do It. The more you do it, the more comfortable you’re going to get.

Just Do It. CAROL: And I would say, start small.

I started by being part of a Chicago Bar committee, where you’d have a subcommittee. They’d do a little presentation.

Maybe your part was five minutes. It’s maybe 30 people. They’re all on your side. They all want you to succeed. And that’s true for even a larger audience.

They don’t want you to be bad, right?

They’re on your side. They’re not looking to have you look bad. But if you start small, you realize that you can speak in front of people and not pass out. And then you get a little bigger and a little bigger. And you find, after a while, that once you start talking, the nervousness does kind of go away. If you know your subject well, you should be able to talk to people about it, whether, again, it’s one person or a thousand.

And think about what your audience needs to know. It’s not about you.

It really is not about you looking good or being smart or showing off what you know. You will impress your audience when you talk about things that they need to know, not you showing off everything you’ve learned. They don’t care about that. You’re there to tell them stuff that is important to them. They’re taking time out of their busy day. Often, they’re practicing lawyers. It’s costing them money. So, if you’re thinking about them, you’re not as likely to be thinking about yourself.

Delivering the Speech and Responding to the Unexpected [Dana’s camera freezes] STEVE: I think Dana has frozen.

CAROL: I think Dana is frozen, exactly. Well, we can move on to actually delivering the speech and responding to unexpected moments. And Dana was

going to lead that off, but he’s not participating at the moment. Oh, there he is. He moved.

DANA: Am I back?

CAROL: You’re back.

DANA: Speaking of responding to unexpected moments, that would be one of them! There’s an anecdote about jazz musicians, that if you’re on the bandstand and you’re really, really nervous, it means you’re totally focused on yourself, and you’re not thinking about anybody else. You’re totally self-focused.

And when you start thinking about the interaction between you and the audience—or between the musicians—your nerves tend to fall away.

PAUL: Since we’re on the unexpected, there is a question in the chat. And I think this is actually a really good one.

Does the panel have any recommendations specific to Zoom presentations?

We’ve all been subject to these over the last couple of years. I’d love to hear this panel’s ideas about what to do differently in Zoom presentations. In Zoom presentations, I think slides are even more important because nobody wants to see just me just talking. The other thing that makes Zoom presentations difficult for me is to show enthusiasm for a subject on a screen. And so you have to find—I find myself having to over-emote and over-gesticulate just to hit some points home, like I’m doing right now.

CAROL: I think a panel like this is much easier than talking to your face on a screen for an hour. I did that. And my advice is, don’t do them.

STEVE: They are a bit soul-sucking at times.

CAROL: There’s no audience reaction.

And I find that’s important to me. Even if they’re just making frowny faces at me or falling asleep, it’s feedback, right?

And when you’re talking to yourself on a screen, you get nothing but you. It’s awful.

DANA: So now it’s game time—some game time techniques that we all find useful. I’ll just briefly start off by saying two. If you get to the point where you’re speaking in a room that’s bigger than you are otherwise comfortable with, especially the big ones with the

jumbotrons and all that sort of thing, or any room that’s just bigger than you’re used to speaking in and that’s starting to overwhelm you, it’s very helpful to find a person or two in the front and just give the speech to them. Don’t try to speak to a big room because those big rooms can become overwhelming and you lose your focus. So, you find a couple of people in the front. If you can find Howard Zaritsky or Susan Porter, they’re the best.

If they’re in the front, give the speech to them. They’re great audience members. But find a couple of people in front.

Don’t try to speak to a huge room. The cameras will take care of the rest or people will be looking at you.

The second one, just as a practical thing, if you have a terrible cough— this comes from personal experience. If you have a terrible cough just before a speech, you do not eat the entire pack of Halls Mentho-Lyptus because there’s stuff in there that will make your head swim. And I once did the back 45 minutes of a 90-minute Heckerling program with the room spinning. So, that’s my practical takeaway.

PAUL: On unexpected things that happen during the presentations—I have fallen off the dais twice on platforms.

And both times, I did something like—as I sort of gathered myself and got back on my feet, I did something like this, which I guess is a—[LAUGHS] CAROL: Stuck the landing.

PAUL: You will have many unexpected moments, whether it is clumsiness or somebody yelling something out or asking a question that’s sort of bizarre and not on the point.

The audience does not want to see you uncomfortable. And so, they will be incredibly gracious. And I think humor under those circumstances works really well to sort of get yourself situated. And there is nothing wrong with stopping and pausing. Take a big breath. Think about where you were and where you want to start over again. And feel free to go back to where you were before if you want to get some momentum as you’re going into where you were going.

CAROL: All those are all good comments. I have had a problem with speaking too rapidly, so I’ve been told.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 53

It seems normal to me, but not to other people listening, apparently. And so, I would write on my pages, as I flipped them, slow down. And I would write it on every page because, as soon as I wasn’t thinking about—I mean, for me, I have to either think about what I’m saying or think about how I’m saying it. I have a hard time doing both at the same time. And so, I had to keep reminding myself to not speak so rapidly. So, there are just things about your own—you’ll get feedback from people. People are quick to criticize, frankly. And don’t take it too personally—I always said, well, if it’s really awful, they won’t ask me again.

Problem solved.

TERRY: And again, preparation is key because then you can anticipate things that might go wrong. And so long as you have a core theory that you can come back to, that’s, I think, really helpful.

STEVE: Let me just hit a number of things quickly. I’ve already mentioned be organized. I think that is just one of the most important things about speaking and people being able to understand and take away something from what you said. Be organized. I like the idea of the two-page summary to help people follow the organization.

Know the topic well enough that all you need are topic notes, notes to remind you of what to cover next. I like to refer to page numbers. And that’s because, Paul, you mentioned people learn differently.

I’m a visual learner. It helps me to be able to look at something as I’m listening. And so, I refer to page numbers. I realize I’m a dinosaur. When I listen to people speak now, very rarely do they refer to page numbers, where they are in the paper. But I find it very helpful.

One of the key things about presentations is look at your audience. Again, it’s fine to look down at the paper occasionally, but all you should need to look for is the key word, not to read the sentence.

Look at your audience. And that’s the thing, Paul, I would say about Zoom calls as well. Look directly into the camera and not at the other people on the screen. That seems natural to do, but that’s very disconcerting when someone is always looking down. Look at your audience.

Speak slowly. Communicate. Educate.

Your goal is not to be just the smoothest speaker possible. Instead your goal is to—Communicate. Whatever you have to do to communicate is what you want to do. And educate. Never assume that your audience knows too much. I find, almost invariably, no matter how sophisticated the audience is, it is very helpful to begin at the beginning and lay out the predicate of where you are. The goal is to educate, not to impress people with how smart you are.

Have a passion for what you do.

Be very practical and give practical suggestions.

Just some very practical comments— take Kleenex with you in case you get a runny nose. Take water with you in case you get the coughing fit. That can be very helpful.

Here’s another practical suggestion that I’ve learned from personal experience. You’re in the middle of the presentation, and you forget when you’re supposed to end. I take a little sticky note and put at the top of my presentation when I begin and when I end. And then you know that.

Last, I would say, act like you’re enjoying what you’re doing. Act like you know what you’re doing. You don’t have to be arrogant about it. But act like you know your subject. And be confident about it.

Audience Questions DANA: We’re down to the end of our time. But I want everybody to say one fast sentence about dealing with audience questions. And here’s my sentence.

I don’t do it anymore. It’s because early in my speaking career, I had lots of people stand up to ask questions who didn’t really have a question. They wished they were the speaker, and they wanted to demonstrate to the audience that they knew more than I did. So, I stopped doing it. But real quick, let’s go around the horn.

PAUL: For me, I actually love the questions and prefer them actually during the presentation because I feel—if it’s a relevant question, I feel like it’s something that the audience will get some additional stuff, especially if you’re not going to be talking about it. That being

said, that’s only because I’ve been doing this for a few decades. I feel like I have earned the right to say to somebody who is asking a question or is trying to tell me something that they’re smart; I can call them out on it. Or I’ll say, we’ll discuss that afterwards, and then move on.

TERRY: I prefer my questions at the end, if I can, if I give them time.

CAROL: I think questions at the end are good because you may have answered them already if they’re patient enough to listen. But I agree with you, Paul. I think you have to be willing to say, look, I don’t think it’d be a good idea to talk about that right now in front of everybody. Why don’t you come up afterwards and we’ll talk? I do like questions. I learn from questions. And I learn what people are curious about. But you do get people who will bog you down with, plan this estate. Here are a zillion facts. And it’s not of interest to the whole group.

STEVE: If it’s a small enough group, I do like questions during the presentation. I’ll tell people that right up front but tell them that I reserve the opportunity to say that we’ve got to move on so that I can interrupt if there’s a long question.

But I just find it’s interesting to be able to dialogue with the audience as I go along.

Conclusion DANA: Thank you to the ABA RPTE Special Committee on Attorney Development and Wellness for hosting this program. Thank you to the ABA staff for putting it on. Thank you to Carol, Paul, Terry, and Steve for your wisdom and humor. And thank you for attending. I’m going to close with this thought.

Every one of your practices is unique.

No will has a brother. No law practice has a brother. You’re doing and learning things every day that others will be interested in and benefit from learning about. I encourage all of you who are watching this program to share what you learn. I think you will find that it’s good business to do that. And I think it’s an important part of what makes this a profession and not just another business.

Thank you. n

Published in Probate & Property, Volume 36, No 6 © 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.

54

November/December 2022

CAREER DEVELOPMENT AND WELLNESS When to Use Coaching, When to Use a Psychologist— Some Tips on Finding the Right Fit The McLean Institute of Coaching, an affiliate of Harvard Medical School, indicates that 70 percent of those people who seek out and obtain coaching benefit in various ways such as improved performance and better communication. A variety of evidence-based research can be found at the Institute’s website: https:// www.instituteofcoaching.org. Coaching can help clarify goals, identify obstacles to achieving goals, improve self awareness, and develop strategies to work more productively.

It is important to know when you might want to seek out a coach rather than a psychological professional. Some coaches have psychological credentials as well as coaching credentials, and personally I gravitate towards such coaches, but it is important to be clear about what you are seeking from a professional and find the right profession and the right fit.

In general, coaching focuses on setting goals and developing and implementing strategies to achieve them. Therapy focuses on mental health and emotional healing. Therapy focuses on cognitions, but coaching focuses on behaviors.

Providing therapy requires a license, and therapists are subject to ethical rules and guidelines established by a licensing board. Coaches may hold certifications in particular areas of coaching, but currently licensing is not required at the federal or state level.

Seeking a Coach If your primary goals include finding direction and clarity, identifying specific goals, and developing strategies to achieve them, coaching is a possible path. Coaching can be provided one-on-one or in group settings. Many coaches have business experience or at least a good understanding of business.

At one point, I rejected a coach who became a coach because she hated practicing law. My theory was “How can she coach me to do what she hated doing?” Although I generally prefer working with someone who liked what she did before coaching, I worked with this particular coach at one juncture and found that her hatred for what I did actually could be used to Contributing Author: Mary E. Vandenack, Vandenack Weaver LLC, 17007 Marcy Street, #3, Omaha, NE 68118.

identify the pain points of the profession.

Coaches have varying specialties such as leadership coaching, positive psychology, health coaching, business coaching, spiritual coaching, or life coaching.

The first step is to decide which type of coach you need. You can then identify coaches with credentials that match your purposes in seeking one. Rather than searching the internet for coaches, consider reaching out to your network for a referral. Ask for referrals from your business network or groups you participate in on LinkedIn. Know what you are willing to pay. Coaching can get very expensive. Before hiring a coach, discuss the amount of sessions to achieve your initial objectives and know what that will cost.

Interview your prospective coach. The coach should be a great listener. Ask about her experience. Ask for examples of her successes with other clients. Inquire about the style the coach uses as well as the tools. Ask for references.

Consider a coach from another locale. In my “small” big town, almost everyone knows a lawyer or has a sibling or child who is a lawyer. Coaching is confidential, but I just don’t want to have those conversations with someone who might know someone else that I have worked with or am discussing. I want to be able to be open.

Be Clear about Boundaries The best coaches (and therapists) know the boundaries of their abilities. It is important to discuss and make your boundaries clear early on. If your boundaries are disregarded or minimized in any way ever, there is one word: RUN. A free peer coaching service might seem tempting, but if the coach you choose through that service has no real coaching experience and tries to impose mental health diagnoses on you or, worse yet, starts reaching out to people you know with comments about you, again, RUN. When Your Coach Should Refer You to a Therapist There is a significant inter-relationship between cognition and behavior. Psychotherapy is outside the scope of coaching work. Most coaching certification organizations provide a list of signs and symptoms that indicate when a referral should be made to therapy.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 55

CAREER DEVELOPMENT AND WELLNESS

STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION (PS Form 3526, July 2014) (Act of August 12, 1970: Section 3685, Title 39, United States Code) 1. Title of publication: Probate & Property (ISSN: 0164-0372). 2. P.N. 010-781. 3.

Date of filing: 10-01-22. 4. Issue Frequency: Bi-Monthly. 5. No. of issues published annually: Six. 6. Annual subscription price: $20. 7. Complete mailing address of known office of publication: 321 N. Clark Street, Chicago, IL 60654-7598. 8. Complete mailing address of the headquarters or general business offices of the publisher: American Bar Association, 321 N. Clark Street, Chicago, IL 60654-7598. 9. Full names and complete mailing address of publisher, editor, and managing editor: Publisher: American Bar Association, 321 N. Clark Street, Chicago, IL 60654-7598; Editor: Edward T. Brading, Attorney at Law, 208 Sunset Drive, Suite 409, Johnson City, TN 37604; Managing Editor: Erin Remotigue, American Bar Association; 321 N. Clark Street; Chicago, IL 60654-7598. 10. Owner (if owned by a corporation, its name and address must be stated and also immediately thereunder the names and addresses of stockholders owning or holding 1% or more of total amount of stock. If not owned by a corporation, the names and addresses of the individual owners must be given. If owned by a partnership or other unincorporated firm, its name and address must be stated): American Bar Association, 321 N. Clark Street, Chicago, IL 60654-7598. 11. Known bondholders, mortgagees, and other security holders owning or holding 1% or more of the total amount of bonds, mortgages or other securities (if there are none, so state): None. 12. Tax Status: Has not changed in preceding 12 months. 13. Publication title: Probate & Property. 14. Issue date for circulation data below: July 1, 2022 (36:4).

15. Extent and nature of circulation. a. Total no. copies printed (net press run). Average no. copies each issue during preceding 12 months: 16,609.

Actual number of copies of single issue published nearest to filing date: 17,111. b. Paid and/or requested circulation: (1) Paid requested outsidecounty mail subscriptions. Average no. copies each issue during preceding 12 months: 10,794. Actual number of copies of single issue published nearest to filing date: 10,787. (2) Paid in-county subscriptions. Average no. copies each issue during preceding 12 months: 0. Actual number of copies of single issue published nearest to filing date: 0. (3) Sales through dealers and carriers, street vendors, and counter sales. Average no. of copies each issue during preceding 12 months: 0. Actual number of copies of single issue published nearest to filing date: 0. (4) Paid Distribution by Other Classes of Mail Through the USPS. Average no. of copies each issue during preceding 12 months: 0. Actual number of copies of single issue published nearest to filing date: 0. c. Total paid circulation. Average no. of copies each issue during preceding 12 months: 10,794. Actual number of copies of single issue published nearest to filing date: 10,787. d. Free or Nominal Rate Distribution (by mail and outside the mail): (1) Free or nominal rate outside-county copies. Average no. copies each issue during preceding 12 months: 4,499. Actual number of copies of single issue published nearest to filing date: 4,845. (2) Free or nominal in-county copies. Average no. copies each issue during preceding 12 months: 0. Actual number of copies of single issue published nearest to filing date: 0. (3) Free or nominal rate copies mailed at other classes. Average no. copies each issue during preceding 12 months: 0. Actual number of copies of single issue published nearest to filing date: 0. (4) Free or nominal rate distribution outside the mail. Average no. copies each issue during preceding 12 months: 0. Actual number of copies of single issue published nearest to filing date: 0. e. Total free distribution (sum of 15d(1), (2), (3), (4)). Average no. copies of each issue during preceding 12 months: 4,499. Actual no. of copies of single issue published nearest to filing date: 4,845. f. Total distribution (sum of 15c and 15e). Average no. of copies of each issue during preceding 12 months: 15,293. Actual no. of copies of single issue published nearest to filing date: 15,632. g. Copies not distributed. Average no. of copies each issue during preceding 12 months: 1,316. Actual number of copies of single issue published nearest to filing date: 1,479. h.

Total (sum of 15f and g). Average no. copies each issue during preceding 12 months: 16,609. Actual number of copies of single issue published nearest to filing date: 17,111. i. Percent paid. Average no. of copies each issue during preceding 12 months: 70.6%. Actual number of copies of single issue published nearest to filing date: 69.0%. 16. There are no electronic copies of this publication. I certify that 50% of all distributed copies (electronic and print) are paid above a nominal price.

I certify that the statement made by me above is correct and complete. (signed) Bryan Kay, Director, ABA Editorial and Licensing

Selecting a Therapist If you choose to seek a therapist, check state certifications and educational credentials. Seek referrals. Interview the therapists about their style, and ask them how they can help you.

Therapeutic Coaches There are some professionals who blend coaching and therapeutic approaches. Typically, this is a coach who has a mental health counseling background but uses a coaching approach. The same principles apply to selection of a therapeutic coach. What are your goals? How can the coaches help you achieve them? What is their method? Establish boundaries, a plan, and understand costs.

Keep Your Business Goals in Mind If a primary goal in seeking coaching is to help you with practice issues, keep in mind that the background of the person with respect to business matters. If you are entrepreneurial, seek someone who understands that. If you are interested in leadership, seek an effective leadership coach. If your goal is to achieve a better work/life balance, there are coaches who have backgrounds specific to that. n

Published in Probate & Property, Volume 36, No 6 © 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.

56

November/December 2022

LAND USE U P D AT E Standing to Sue and a California Zoning Study Standing to Sue Getting into court in land use cases can be challenging. Property owners usually have standing to challenge a land use decision that goes against them. Third parties, like neighborhood and community organizations, may have a more difficult time getting standing to dispute land use decisions and policies that they don’t like.

Assume a local government makes a land use decision that a number of its citizens oppose. An example would be the adoption of a comprehensive plan that does not include the required statutory policy for nature conservation. Attempts to change the plan fail, and the plan’s opponents ask their local conservation organization to go into court and argue that the plan does not meet statutory requirements. Does the organization have standing? Courts give conflicting answers.

In Historic Alexandria Foundation v. City of Alexandria, 858 S.E.2d 199 (Va. 2021), the court denied an organization standing to challenge the renovation of an historic home in the Old and Historic District, which once was the residence of US Supreme Court Justice Hugo Black. The extent of the renovation is not clear. The Board of Architectural Review approved the renovation, the Historic Alexandria Foundation (Foundation) appealed to the city council, the council affirmed the Board after a lengthy public hearing, and the Foundation appealed the council’s decision under a provision of the city’s zoning ordinance that allowed “aggrieved” Land Use Update Editor: Daniel R. Mandelker, Stamper Professor of Law Emeritus, Washington University School of Law, St. Louis, Missouri.

parties to appeal certain decisions of the city council. An “open space” easement restricted development on the property, but the Virginia Department of Historic Resources decided that the renovation complied with the easement.

Because the Foundation was a third party to the renovation approval, it needed standing under the zoning ordinance to appeal as an aggrieved party. To support its standing claim, it argued that it owned property in the Old and Historic District within approximately 1,500 feet of the historic residence, was established “to advocate for the preservation of Alexandria’s historic buildings, districts, and neighborhoods,” had encouraged the preservation of the historic residence, and had granted open space easements over some of its properties.

The court rejected these arguments and held that the Foundation was not an “aggrieved party” that has standing to appeal under Virginia standing rules.

Standing requires a direct, immediate, pecuniary, and substantial interest in a decision by owning or occupying property within or in close proximity to a property that was subject to the land use determination. It also requires “some personal or property right, legal or equitable, or imposition of a burden or obligation upon the petitioner different from that suffered by the public generally.” This is a common requirement for standing that allows courts to reject standing claims when they are not based on private harm.

The Foundation claimed it showed harm under these rules because the renovation compromised the integrity of the historic residence and diminished protected open space on the property. The court again disagreed. Assuming these

harms would occur, they could not be the basis for standing because the Foundation failed to show that they were not shared by the public generally. “Every property owner and resident of the Old and Historic District would share the loss of the historic residence and open space,” and “every citizen of the Commonwealth” would be harmed by a decision that jeopardized the preservation of public open space. The Foundation, the court held, was founded to advocate for historic preservation, but that purpose did not give it standing.

Alliance for Metropolitan Stability v. Metropolitan Council, 671 N.W.2d 905 (Minn.

Ct. App. 2003), reached an opposite result. Under the Metropolitan Land Use Planning Act, Minn. Stat. §§ 473.851 to 473.871, the Metropolitan Council, which covers the Minneapolis-St. Paul metropolitan area, is responsible for providing guidelines to help cities plan their share of local and regional affordable housing need. The guidelines assist cities in assessing housing supplies, analyzing housing needs and goals, and preparing implementation plans.

The Alliance and other community organizations argued that the guidelines violated the Metropolitan Land Use Planning Act by understating the statutory planning obligations. They argued that the guidelines harmed their missions of promoting more affordable housing, required diversion of staff resources to help members obtain housing and to advocate for changes in Council practices under the Act, and harmed members because an affordable housing shortage causes rent increases.

The court held that the associations had standing to sue. It explained

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 57

LAND USE U P D AT E

Minnesota’s liberal standing rules for organizations and held that standing in this case was “supported by the wellestablished notion of associational or organizational standing, which recognizes that an organization may sue to redress injuries on its own behalf or on behalf of its members.”

The court then applied standing rules, similar to Virginia’s rules, that require an “injury-in-fact” that can be proved by showing that a party suffered actual, concrete injuries caused by the challenged conduct, and a direct interest in a statute different in character from the interest of citizens in general. The organizations had standing to challenge the guidelines under these rules because “Minnesota courts recognize impediments to an organization’s activities and mission as an injury sufficient for standing.”

The court also identified “two key questions” that decide whether organizational standing is more likely when an organization claims to have an interest in a statute: “(1) if these organizations were denied standing, would that mean that no potential plaintiff would have standing to challenge the regulation in question? and (2) for whose benefit was the regulation at issue enacted?”

Answers to both questions were positive. A city would not likely sue for stricter regulations, and the Metropolitan Council adopted the guidelines to benefit low-income and moderate-income homeowners. The homeowners who were affected by the guidelines were both members of the organizations that claimed standing and the people they represented. Recognizing a plaintiff willing to challenge public policy decisions opens standing opportunities when a party that has suffered traditional injury-in-fact can be difficult to find. It allows a court to create “private attorneys-general” with the right to sue.

Differences between the federal and state constitutions influence state standing rules. The federal constitution contains a case or controversy clause that requires injury-in-fact for standing. Standing in state courts is prudential because state constitutions do not have a case or

controversy clause, but some states apply the federal injury-in-fact rule. Other states apply a functional standing rule to ensure that a litigant will vigorously and effectively present a case against an adverse party, will have a “stake” in the litigation, or will have an interest that is adverse, substantial, or concrete.

Virginia and Minnesota applied modified versions of the injury-in-fact rule.

The Virginia court rejected organizational standing because the organizational injury was “suffered by the public.” The Minnesota court broadened standing for organizations by recognizing that injury to their mission is enough for standing.

The two cases can be distinguished.

The Minnesota case considered a guideline that had region-wide effects on housing availability. The Virginia case considered only the renovation of a single historic building in one historic district.

Perhaps the Virginia case was not wellpleaded. The organization could have argued that its mission and its members were harmed because the renovation affected the integrity of the historic district and that organizational resources would have to be diverted to change the city‘s historic preservation policy. For discussion see my article, Standing in Land Use Litigation, 57 Real Property, Trust and Estate Journal 237 (2021).

The California Zoning Study A recent survey of 15 California cities confirmed the use of zoning practices that bar affordable housing. Moira O’Neill, et al., Examining Entitlement in California to Inform Policy and Process: Advancing Social Equity in Housing Development Patterns (2022), available at https://bit. ly/3R4nmmm. One of the questions the study considered was how much zoned land was available for multi-family use in the study cities, and it found that generally the cities made little land available. The study defined two base zoning categories to consider this question. “Permissive base zoning” allows multi-family residential use at a density high enough to accommodate housing affordable for all income levels. “Restrictive base zoning” is single-family zoning.

The study examined zoning maps and ordinances to determine how much land was zoned for permissive base zoning and how much land was zoned for restrictive base zoning. Nine of the 15 cities zoned less than ten percent of their total zoned land area for multi-family housing that could accommodate all income levels.

San Francisco had the most permissive base zoning, with 33.54 percent of its total zoned land area zoned for all income levels. San Diego, with approximately three percent of its total zoned land area zoned for all income levels, had the most restrictive base zoning. No urban cities had permissive regulatory environments for housing, and six were likely prohibitive.

The study also considered how many cites relied on zoning that requires an exercise of discretion. This create problems for developers because a local government can use its discretion to reject or modify a proposed development project, even if it complies with local regulations. They can do this by creating unexpected, expensive challenges to project approval in the discretionary zoning process. Five of the cities did not allow any development to avoid discretionary approval. Several cities used design or architectural review to require discretionary review for developments that otherwise complied with base zoning and planning. Only four cities had a nondiscretionary process for approving development.

The report concluded that the “state and cities should invest heavily to encourage dense housing in urban and suburban areas that are less car-centered and more oriented around mass-transit and walkable.” Change is beginning to occur, as some California cities have revised their zoning regulations by opening up singlefamily zoning districts to other types of housing. n

Published in Probate & Property, Volume 36, No 6 © 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.

58

November/December 2022

TECHNOLOGY P R O B AT E NFT Scams—Buyer Beware The year 2022 has been a rough year for digital assets. First, after reaching all-time highs in late 2021, Bitcoin, Ethereum, and many other popular cryptocurrencies lost more than 70 percent of their market value earlier this year, erasing trillions of investment dollars. Second, multiple crypto exchanges either declared bankruptcy or limited withdrawals from their customers’ accounts to avoid a run on assets. Third, the Securities and Exchange Commission charged several crypto exchange employees with insider trading, which resulted in increased demand for Congressional regulation over digital assets and their markets. Among digital assets, this article focuses on a specific type of digital asset that is experiencing remarkable volatility—non-fungible tokens (NFTs).

Like other digital assets, NFTs have faced their fair share of problems in the last year. Sales of NFTs have significantly dropped in both volume and value.

According to Non-Fungible.com’s market tracker tool, NFT sales peaked in late 2021 and as of late summer 2022 stood at about 25 percent of their highest values. Admittedly, even after excluding the current market turmoil, I have some doubts about the functionality and value of a majority of existing NFTs. I believe the purported fundamentals of many NFTs are questionable at best. Furthermore, the NFT environment and various markets are ideal for scams and other fraudulent activity (more on that below).

That being said, underlying NFT smartcontract technology appears to be useful in some capacities and will likely continue to appear in different formats and

Technology—Probate Editor: Ross E. Bruch, Brown Brothers Harriman & Co., One Logan Square, 14th Floor, Philadelphia, PA 191036996, ross.bruch@bbh.com.

Technology—Probate provides information on current technology and microcomputer software of interest in the probate area. The editors of Probate & Property welcome information and suggestions from readers. platforms for years or decades to come.

In other words, I believe we are still in the very early stages of NFT development, and just as the internet of the late 90s barely resembles the ubiquitous digital resource we so heavily rely upon today, NFT naysayers should not immediately dismiss NFTs as merely a passing fad.

What Is an NFT? By now, most readers have heard of NFTs so I won’t belabor the point with an indepth explanation, but I suggest that uninitiated readers return to the September/October 2021 issue of Probate and Property magazine and read Joshua Caswell and Leigh E. Furtado’s excellent article titled NFTs for Estate Planners: Not Just a Token Concern. Essentially, an NFT is a form of digital data on a blockchain with unique identification codes and metadata that distinguish them from each other.

They can be entirely digital creations, or they can be digital representations of realworld items like artwork and real estate.

NFTs cannot be replicated or replaced. A very common NFT form is digital artwork, but NFTs can be a wide range of items including GIFS, tweets, items in video games, songs or albums, tickets, etc. NFT ownership and sales are recorded through the blockchain and therefore, in theory, are intended to be more secure and less susceptible to fraud.

NFT’s blockchain-based ownership can also serve as the foundation of smart contract-enabled NFTs such as automated

legal or financial operations. For example, some NFT license agreements include provisions that grant a royalty to the original NFT artist or issuer every time an NFT is resold. I believe one of the greatest benefits an attorney can provide to NFT investors is to help them read the token’s license agreement and alert them to the potential pitfalls of these agreements. Many attorneys may be surprised to learn (i) how poorly written many of these agreements are, (ii) that many of these agreements are extremely vague and fail to address several basic contractual questions for all parties involved, and (iii) how easy it is for NFT owners to run afoul of the requirements embedded within these agreements, thereby jeopardizing the agreement and forfeiting their rights and access to the NFT. Returning to the above-referenced article, Caswell and Furtado also make suggestions about how to structure an estate plan that contains NFTs. I believe all of the authors’ suggestions are useful, including asking questions about digital assets and NFTs in client intake forms, considering holding NFTs within LLCs for easier management and transfer, employing strategic gifting strategies, updating estate planning documents to ensure they are compliant with the Revised Uniform Fiduciary Access to Digital Assets Act, and structuring ownership to provide secured access to owners.

What Could Go Wrong?

Beyond NFT basics and license agreements, there is another consideration estate planning attorneys should be aware of to educate, advise, and protect their clients: the proliferation of scams plaguing the sale and ownership of all digital assets, but in particular NFTs. It should come as no surprise that fraud and grift are not uncommon in NFT marketplaces, because many new NFT buyers are not well-versed in the mechanics of NFT ownership but are nevertheless drawn to the asset class because they have observed the rapid growth of the industry

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 59

TECHNOLOGY P R O B AT E

(which until recently, rarely decreased in value) and either assumed NFTs will continue to appreciate at a rapid level for years to come or simply feared that if they didn’t act quickly they would miss out on their opportunity to participate in “the next big thing.” This is a dangerous combination leading to opportunities for nefarious individuals to initiate scams on a susceptible population. To be clear, I am not saying that all NFTs are scams (despite the questionable valuation of some), but, given the dynamics of the current NFT environment, attorneys need to educate their clients on potential mishaps NFT buyers may face. As with any investment, buyers must be aware of what they are purchasing and do their due diligence about the underlying asset and the company or individual from which the asset is being purchased. To further this point, I will briefly summarize some of the most popular NFT-related scams that are being deployed in 2022. It may be helpful to educate your clients on these potential investment traps both to steer them clear of such dangers as well as to demonstrate the potential risks of investing in NFTs on a broader scale.

Rug-Pull Scams: In this scenario, a scammer will promote an NFT project or collection on social media and promise investors guaranteed returns as well as other intangible benefits to NFT ownership (e.g., in-game giveaways or VIP access to events). Purchasers buy into the idea that this is a “can’t lose” opportunity, but, after enough NFTs are purchased, the scammer shuts down the entire project and often vanishes with the funds in hand (something far easier to do in the digital world than it is in the real world), leaving buyers with nothing but worthless NFTs. Pump and Dump Scams: This type of market manipulation involves an individual or group that artificially inflates NFT prices by buying large amounts of digital assets to drive up prices. Similar to rugpull scams, the process may also involve sellers spreading misleading information about the value or function of the NFTs. The group then sells the asset in bulk to cash in on the gains before the price drops.

This type of scam is not unique to NFTs or digital assets, but whereas pump and

dump attempts of publicly traded securities are under the purview of the SEC, NFTs do not (yet) have the benefit of similar regulatory oversight.

Bidding Scams: This scam often occurs in secondary market places where an individual places an NFT for sale or auction; a winning offer or bid is accepted at an agreed price, paid in cryptocurrency. Immediately before the transfer, however, the scammer changes the type of cryptocurrency he will pay with to a far less valuable coin. If the seller does not catch the last-second switch, the sale will occur at a fraction of the originally agreed-to value.

Plagiarism: NFTs are supposed to be unique digital tokens as with all highvalue assets. Unfortunately, plagiarism is extremely common on many NFT platforms. Recently, the largest NFT marketplace, OpenSea, reported that over 80 percent of NFTs created for free on its platform were fake. OpenSea has taken steps to minimize this issue, but the problem still exists in many different NFTs marketplaces. Just as a replica of a high-priced tangible object has very little value compared to its original counterpart, fake NFTs are nearly worthless.

Artificial Inflation: In this type of scam, one party will create an NFT and “sell” it to a second party, who is also in on the scam, for a high price. The second party will then turn to the open marketplace and sell the same NFT, at a “discount” while demonstrating the original purchase price he paid. An unrelated third-party buyer will see the discount and purchase the NFT believing that it is a bargain. The creator and the first buyer will then split the profit from the resale.

Airdrop Scams: Also known as NFT giveaway scams, this scam occurs when fraudsters ask innocent targets to undertake some activity such as creating an account on the fraudster’s website or helping promote an NFT project in exchange for a “free” NFT. Once that is done, they send their targets a link requiring them to enter their digital wallet information to receive the prize. The scammers then copy the account details and use them to access and steal the targets’ NFT collections.

How to Avoid The scams listed above are far from an exhaustive list, and, so long as NFT ownership remains popular, this list will surely evolve and change in the coming years. It is noteworthy that most of these scams existed in non-digital forms before the invention of digital assets but have simply been updated using modern technology. How can attorneys best help their clients avoid these potential investment mistakes? It is important to remember the age-old advice that if it seems too good to be true, it probably is. It is easy to understand why the hype around a particular NFT project makes some potential buyers believe it is a “can’t miss” opportunity, but an attorney should advise clients to thoroughly research any large investment they intend to make, which includes a thorough investigation of the individual or group promoting the NFT project. If this is the first time they’re publicly promoting an NFT, it carries a significantly larger amount of risk than if they have a proven record of successful NFT launches. Learning to be skeptical in a market that appears to have unlimited upside is a difficult but important lesson to convey to clients.

Furthermore, buyers often assume that they will be able to spot pumps and dumps ahead of time and that they are smart enough to predict when to exit an investment, but unfortunately in real-life market situations, people are rarely as nimble as they predict they will be. Though it may be difficult to convince clients that these scams work because most people are susceptible to them, it is nevertheless important to try.

Attorneys should also remind investors to use extreme vigilance leading up to a sale.

Although no marketplace can guarantee that every transaction is secure, it is preferable to use well-established third-party exchanges that properly vet their patrons.

Unfortunately, the only truly fool-proof way to invest in NFTs is to not invest in them at all—undoubtedly, that is an unacceptable solution for many NFT investors who remain extremely interested in the sector despite its recent downturn. Nevertheless, there are ways to minimize the risks involved as we wait for the industry to establish greater stability and consumer protection, either through innovation or future regulation. n

Published in Probate & Property, Volume 36, No 6 © 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.

60

November/December 2022

2022 PROBATE & PROPERTY INDEX AUTHOR INDEX Akers, Stephen R., Speechifying and Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career, Nov/Dec at 44.

Andree, Bailey, The Aerial View of Land Use: Preempting the Locals for Improved Housing Access, Sep/Oct at 24.

Bailey, Adam Leitman, Co-op Sale Approvals in a Hot Market: Are Boards Overreaching?, Nov/Dec at 30.

Bailey, Adam Leitman, Florida Building Disaster Should Set Off Alarm Bells in New York City, Jul/Aug at 4.

Bailey, Adam Leitman, Title Insurance: Determining an Insured’s Loss and Calculating Damages, May/Jun at 22.

Barker, Pamela E., The Remotest Idea— Practical and Ethical Lessons Learned During the Pandemic, Sep/Oct at 50.

Block, Walter E., Moving Forward, Gentrification, Jan/Feb at 24.

Bogues, Jonathan M., How to Love Remote Work, Mar/Apr at 48.

Butler, Jim, Can a Hotel Ever Be Single Asset Real Estate for Bankruptcy Purposes?, Jan/Feb at 36.

Constants, Holly P., Freedom to Contract Injunction Waivers in Commercial Leases, Jul/Aug at 44.

De Lancie, Nicolas, Can a Hotel Ever Be Single Asset Real Estate for Bankruptcy Purposes?, Jan/Feb at 36.

Dell, Lauren G., Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Dennison, Karen D., Documentation and Operation of Timeshare Plans, May/Jun at 44.

Dennison, Karen D., Federal and State Regulation of Timeshares and Fractional Interests, May/Jun at 49.

Dennison, Karen D., Timeshares: History, Project Structuring, and Types of Plans, May/Jun at 36.

Freedman, Robert S., Timeshares: History, Project Structuring, and Types of Plans, May/Jun at 36.

Desiderio, John M., Co-op Sale Approvals in a Hot Market: Are Boards Overreaching?, Nov/Dec at 30.

Givens, Bennett, Wireless Landlords: A Checklist for Protecting Landlord Rights and Budgets, Mar/Apr at 14.

Desiderio, John M., Florida Building Disaster Should Set Off Alarm Bells in New York City, Jul/Aug at 4.

Goldsmith, Jessica Galligan, Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Drennan, William A., The Law of Halloween Nightmares: Damages for Caskets Bouncing Down the Highway, Burial Blunders, and More Funeral Frights, May/Jun at 12.

Green, Shelby D. The Aerial View of Land Use: Preempting the Locals for Improved Housing Access, Sep/Oct at 24.

Duffy, Michael, Art Dealers—Wealth Transfer Considerations, Jan/Feb at 12.

Farach, Manuel, Federal Real Property Case Law Update, Sep/Oct at 46.

Farach, Manuel, Federal Real Property Case Law Update, Nov/Dec at 40.

Fielding, Scott W., What to Do When Reviewing a Small Lease—Some Practical Suggestions, Mar/Apr at 26.

Filsoof, Joshua M., Title Insurance: Determining an Insured’s Loss and Calculating Damages, May/Jun at 22.

Hale, Michael S., Belt and Suspenders Risk Management for Not Getting Caught with Your Pants Down: Drafting Enforceable and Effective Indemnity and Insurance Requirements Provisions, Jul/Aug at 40.

Hansel, Eben C., Condominium Termination: A Potential Path for Repurposing and Redeveloping Aging Condominium Buildings, Nov/Dec at 10.

Harrington, Carol A., Speechifying and Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career, Nov/ Dec at 44.

Fitzsimons Jr., Dana G., Speechifying and Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career, Nov/Dec at 44.

Havens-Morris, Grayson, Moving Forward, Gentrification, Jan/Feb at 24.

Franklin, Terrence, Speechifying and Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career, Nov/ Dec at 44.

Johns, Scott, The Tacoma Bridge…and Other Planning Disasters, Jul/Aug at 26.

Freedman, Robert S., Documentation and Operation of Timeshare Plans, May/ Jun at 44.

Kroetz, Stacia C., Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Freedman, Robert S., Federal and State Regulation of Timeshares and Fractional Interests, May/Jun at 49.

Lattman, Laura Joy, Protect Your Practice: Necessary Engagement Letter Clauses to Revisit, Jan/Feb at 50.

Howard-Potter, Erica, Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Kaplan, Robert B., Can a Hotel Ever Be Single Asset Real Estate for Bankruptcy Purposes?, Jan/Feb at 36.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 61

Lawrenson, Amy, Key Lease Provisions to Consider in Due Diligence, Jul/Aug at 54.

Lederer, Gerard Lavery, Wireless Landlords: A Checklist for Protecting Landlord Rights and Budgets, Mar/Apr at 14.

Lee, Paul S., Speechifying and Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career, Nov/Dec at 44.

Lee, Soo Yeon, Protect Your Practice: Necessary Engagement Letter Clauses to Revisit, Jan/Feb at 50.

Lovett, John A., Easements on the Move: The Uniform Easement Relocation Act, Sep/Oct at 40.

Lund, Ben, The Remotest Idea—Practical and Ethical Lessons Learned During the Pandemic, Sep/Oct at 50.

Lyden-Horn, Alexander, IRS Argues Split-Dollar Is Not “Faire,” but Challenge Is Foiled, Jul/Aug at 16.

Mandelker, Daniel R., The Changing Landscape for Billboard Regulation, Mar/Apr at 40.

Miller, Justin, IRS Argues Split-Dollar Is Not “Faire,” but Challenge Is Foiled, Jul/ Aug at 16.

Mull, Brian M., Key Considerations for Home Mortgage Debt Collectors under the Consumer Financial Protection Bureau’s Final Rule, Jan/Feb at 40.

Naeemullah, Imran, Key Lease Provisions to Consider in Due Diligence, Jul/Aug at 54.

Nashiwa, Karen, Key Lease Provisions to Consider in Due Diligence, Jul/Aug at 54.

O’Sullivan, Maria E., Protect Your Practice: Necessary Engagement Letter Clauses to Revisit, Jan/Feb at 50.

Parthemer, Mark R., Crypto and Retirement Accounts—Can You?, Sep/Oct at 34.

Powers, Melissa G., The Remotest Idea— Practical and Ethical Lessons Learned During the Pandemic, Sep/Oct at 50.

Rikon, Michael, Valuation of Real Property When There Has Been a Recent Sale, Mar/Apr at 44.

Sneeringer, Michael A., Directions to Trust Directors of Direct Trusts, May/Jun at 30.

Spaulding Jr., Arthur O., Documentation and Operation of Timeshare Plans, May/ Jun at 44.

Spaulding Jr., Arthur O., Federal and State Regulation of Timeshares and Fractional Interests, May/Jun at 49.

Spaulding Jr., Arthur O., Timeshares: History, Project Structuring, and Types of Plans, May/Jun at 36.

Stevenson, Sahmra A., How to Love Remote Work, Mar/Apr at 48.

Stevenson, Sahmra A., Protect Your Practice: Necessary Engagement Letter Clauses to Revisit, Jan/Feb at 50.

Studin, Daniel J., Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Stutzman, David E., Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Tannahill, Bruce A., It’s Not that SIMPLE—Selecting an Employer-Sponsored Retirement Plan, Nov/Dec at 34.

Thomas, Samuel F., Celebrity Estate Planning: Misfires of the Rich and Famous V, Sep/Oct at 12.

Veurink, Jordan D., Directions to Trust Directors of Direct Trusts, May/Jun at 30.

Wilkinson, Lindsey E., Honoring the Intentions of a Loved One—The Importance of Advance Directives, Nov/Dec at 22.

Winston, Roger D., Condominium Termination: A Potential Path for Repurposing and Redeveloping Aging Condominium Buildings, Nov/Dec at 10.

SUBJECT INDEX Advance Directives Lindsey E. Wilkinson, Honoring the Intentions of a Loved One—The Importance of Advanced Directives, Nov/Dec at 22.

Bankruptcy Jim Butler, Robert B. Kaplan, and Nicolas De Lancie, Can a Hotel Ever Be Single Asset Real Estate for Bankruptcy Purposes?, Jan/Feb at 36.

Career Development Stephen R. Akers, Carol A. Harrington, Paul S. Lee, Dana G. Fitzsimons Jr., and Terrence Franklin, Speechifying and

Scribbling—A Candid Discussion about the “Why” and “How” of Integrating Public Speaking and Presentations into Your Trusts and Estates Career, Nov/ Dec at 44.

Condominiums Adam Leitman Bailey and John M. Desiderio, Florida Building Disaster Should Set Off Alarm Bells in New York City, Jul/Aug at 4.

Roger D. Winston and Eben C. Hansel, Condominium Termination: A Potential Path for Repurposing and Redeveloping Aging Condominium Buildings, Nov/Dec at 10.

Co-ops Adam Leitman Bailey and John M. Desiderio, Co-op Sale Approvals in a Hot Market: Are Boards Overreaching?, Nov/Dec at 30.

COVID-19 Pamela E. Barker, Melissa G. Powers, and Ben Lund, The Remotest Idea—Practical and Ethical Lessons Learned During the Pandemic, Sep/Oct at 50.

Cryptocurrency Parthemer, Mark R., Crypto and Retirement Accounts—Can You?, Sep/Oct at 34.

Published in Probate & Property, Volume 36, No 6 © 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.

62

November/December 2022

Easements

Land Use

Retirement Planning

John A. Lovett, Easements on the Move: The Uniform Easement Relocation Act, Sept/Oct at 40.

Shelby D. Green and Bailey Andree, The Aerial View of Land Use: Preempting the Locals for Improved Housing Access, Sep/Oct at 24.

Mark R. Parthemer, Crypto and Retirement Accounts—Can You?, Sep/Oct at 34.

Estate Administration William A. Drennan, The Law of Halloween Nightmares: Damages for Caskets Bouncing Down the Highway, Burial Blunders, and More Funeral Frights, May/Jun at 12.

Estate Planning Michael Duffy, Art Dealers—Wealth Transfer Considerations, Jan/Feb at 12.

Jessica Galligan Goldsmith, Stacia C. Kroetz, David E. Stutzman, Daniel J. Studin, Erica Howard-Potter, Lauren G. Dell, and Samuel F. Thomas, Celebrity Estate Planning: Misfires of the Rich and Famous V, Sept/Oct at 12.

Scott Johns, The Tacoma Bridge…and Other Planning Disasters, Jul/Aug at 26.

Lindsey E. Wilkinson, Honoring the Intentions of a Loved One–The Importance of Advance Directives, Nov/Dec at 22.

Ethics Pamela E. Barker, Melissa G. Powers, and Ben Lund, The Remotest Idea—Practical and Ethical Lessons Learned During the Pandemic, Sep/Oct at 50.

Federal Property Law Manuel Farach, Federal Real Property Case Law Update, Sept/Oct at 46.

Manuel Farach, Federal Real Property Case Law Update, Nov/Dec at 40.

Housing Discrimination Grayson Havens-Morris and Walter E. Block, Moving Forward, Gentrification, Jan/Feb at 24.

Insurance Adam Leitman Bailey and Joshua M. Filsoof, Title Insurance: Determining an Insured’s Loss and Calculating Damages, May/Jun at 22.

Michael S. Hale, Belt and Suspenders Risk Management for Not Getting Caught with Your Pants Down: Drafting Enforceable and Effective Indemnity and Insurance Requirements Provisions, Jul/Aug at 40.

Daniel R. Mandelker, The Changing Landscape for Billboard Regulation, Mar/Apr at 40.

Landlord-Tenant Gerard Lavery Lederer and Bennett Givens, Wireless Landlords: A Checklist for Protecting Landlord Rights and Budgets, Mar/Apr at 14.

Law Practice Management Maria E. O’Sullivan, Laura Joy Lattman, Soo Yeon Lee, and Sahmra A. Stevenson, Protect Your Practice: Necessary Engagement Letter Clauses to Revisit, Jan/Feb at 50.

Sahmra A. Stevenson and Jonathan M. Bogues, How to Love Remote Work, Mar/Apr at 48.

Leases Holly P. Constants, Freedom to Contract Injunction Waivers in Commercial Leases, Jul/Aug at 44.

Scott W. Fielding, What to Do When Reviewing a Small Lease—Some Practical Suggestions, Mar/Apr at 26.

Amy Lawrenson, Imran Naeemullah, and Karen Nashiwa, Key Lease Provisions to Consider in Due Diligence, Jul/Aug at 54.

Purchase and Sale Adam Leitman Bailey and John M. Desiderio, Co-op Sale Approvals in a Hot Market: Are Boards Overreaching?, Nov/Dec at 30.

Bruce A. Tannahill, It’s Not that SIMPLE—Selecting an Employer-Sponsored Retirement Plan, Nov/Dec at 34.

Tax Alexander Lyden-Horn and Justin Miller, IRS Argues Split-Dollar Is Not “Faire,” but Challenge Is Foiled, Jul/Aug at 16.

Timeshares Arthur O. Spaulding Jr., Karen D. Dennison, and Robert S. Freedman, Documentation and Operation of Timeshare Plans, May/Jun at 44.

Arthur O. Spaulding Jr., Karen D. Dennison, and Robert S. Freedman, Federal and State Regulation of Timeshares and Fractional Interests, May/Jun at 49.

Arthur O. Spaulding Jr., Karen D. Dennison, and Robert S. Freedman, Timeshares: History, Project Structuring, and Types of Plans, May/Jun at 36.

Title Adam Leitman Bailey and Joshua M, Filsoof, Title Insurance: Determining an Insured’s Loss and Calculating Damages, May/Jun at 22.

Trusts Michael A. Sneeringer and Jordan D. Veurink, Directions to Trust Directors of Direct Trusts, May/Jun at 30.

Valuation Michael Rikon, Valuation of Real Property When There Has Been a Recent Sale, Mar/Apr at 44.

Michael Rikon, Valuation of Real Property When There Has Been a Recent Sale, Mar/Apr at 44.

Real Estate Development Grayson Havens-Morris and Walter E. Block, Moving Forward, Gentrification, Jan/Feb at 24.

Real Estate Financing Brian M. Mull, Key Considerations for Home Mortgage Debt Collectors under the Consumer Financial Protection Bureau’s Final Rule, Jan/Feb at 40.

Published in Probate & Property, Volume 36, No 6 © 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.

November/December 2022 63

THE LAST WORD The Valuable Oxford, Harvard, Serial Comma I don’t understand the reluctance of American lawyers (well, the outright refusal of many American lawyers) to use the comma that Sister Mary Particular taught me to place before the last item in a list—the serial, aka Oxford, aka Harvard comma. It’s a simple, clarifying tool that costs us nothing. See Marie A. Moore, Practical Punctuation (Part 3): The Comma Law, 29 Prob. & Prop. 64 (May/June 2015). Professor Bryan Garner observes, “It is never incorrect, but omitting it sometimes results in awkwardness, miscues, or even ambiguities.” Bryan A. Garner, The Redbook: A Manual on Legal Style 4 (3d ed. 2013). Strunk & White, our law school grammar bible, also prescribes serial commas. William Strunk, Jr. & E.B. White, The Elements of Style 2 (4th ed. 2000). Yet, I recently had a heated dispute with one of my well-respected law partners on the value of these commas. Let’s look at the considerations.

Wikipedia—that universal “authority” on conventional wisdom that my law partner cited—tells us that British usage (except, of course, the usage prescribed by the Oxford Style Manual) does not favor the Oxford comma, but “[a] majority of American style guides mandate the use of the serial comma.”

Serial Comma, Wikipedia, https:// en.wikipedia.org/wiki/Serial_comma (last updated July 13, 2022). As the arguments against the serial comma, this “authority” lists the inconsistency of a serial comma with conventional practice and its introduction of ambiguity and unnecessary bulk. Id. The 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) 2992100.

conventional practice and unnecessary bulk reasons are excuses, not reasons—just because everyone does something is not a reason to do it, and a comma as bulk, really? Ambiguity would be the only real reason for omitting the serial comma, but Wikipedia’s sole example assumes that in “To my mother, Ayn Rand, and God,” the reader would assume that Ayn Rand was the author’s mother. On the other hand, this authority’s list of reasons for using the serial comma also includes conventional practice and avoiding ambiguity, and it gives many examples of possible ambiguities created by omitting serial commas, not just one example.

A few years ago, the First Circuit gave a prime and notorious example of the ambiguity that may stem from the omission of a serial comma. In O’Connor v. Oakhurst Dairy, a Maine statute requiring that employees be given overtime pay excluded workers engaged in “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of” certain food products. 851 F.3d 69, 71 (1st Cir. 2017) (emphasis added).

The delivery drivers asserted that this law exempted only workers that were engaged in “packing for . . . distribution,” not delivery drivers engaged in “distribution” alone. Id. The court held that this language was ambiguous and that this ambiguity required an interpretation that furthers the law’s purpose—providing overtime to workers. Id. at 80–81. It also observed that had a comma been inserted after “shipment,” there would have been no ambiguity, and the result would have favored the employers. Id. at 72.

In his 2018 The Last Word contribution addressing the Oakhurst decision, Joshua Stein opined that the court imposed an ancient, unnecessary

construction on the statutory phrase— but the court’s interpretation seems perfectly understandable to a literal reader like me. Joshua Stein, An Expensive Dispute about Serial Commas, 32 Prob. & Prop. 64 (May/June 2018).

Other legal commentators correctly pounced on this case to support the invariable use of serial commas, particularly in laws and agreements. See, e.g., Harrison M. Rosenthal, Kill the Comma?

A Case for Punctuation Preservation, 87 J. Kan. B.A. 25 (Feb. 2018); Douglas Abrams, The Pesky Serial Comma, 73 J. Mo. B. 212 (July-Aug. 2017). In his article championing the use of serial commas, commentator David A. Marcello observes that the use of serial commas and other plain-language drafting techniques, such as listing a series of items in a vertical list, not only aids the reader’s understanding that the last two listed items are separate, but also help the drafter analyze what his or her clause is communicating; for example, when the drafter uses a serial comma, he or she must think through whether, in the Oakhurst example, the drafter means “packing for shipping” and “distribution,” separately, or a joined reference to “packing for shipping and distribution.” David A. Marcello, The Case of the Serial Comma: What Can Plain-Language Drafting Tell Legislative Drafters?, 19 Scribes J. Legal Writing 127, 133–35 (2020). So, the serial comma is better for readers and drafters alike!

Sure, my law partner and others were taught not to use that extra comma—that it’s not good style. But as contract drafters, our goal is not style; instead, what we need is clarity. And American grammar gurus and Oakhurst both make clear that if we want clarity, we must use the serial comma. n

Published in Probate & Property, Volume 36, No 6 © 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.

64

November/December 2022

Have you renewed your ABA Membership?

Don’t miss out on practice specific content.

Renew today to maintain access to resources like this and more.

Scan the QR Code to renew.

This publication is an exclusive ABA Member Group benefit.

If you have recently renewed, thank you for your continued membership.

His big picture approach offered a priceless solution.

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.

— Katherine, West Hollywood

Investment Management & Consulting | Trust Services | Family Office Philanthropy & Family Continuity | Real Estate

CONTACT TIM MCCARTHY | 626.463.2545 | WHITTIERTRUST.COM/ABA

Learn More

$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.