Pennsylvania Fiduciary Litigation : Pennsylvania Trusts and Estates Lawyer & Expert Witness : Patti Spencer Law Firm : Fiduciary Litigation, Planning : Lancaster, Harrisburg, Philadelphia, Pennsylvania

CIGNA refused to pay the death benefit on a life insurance policy claiming that the death was not a result of an accident.  They claimed the injury was self-inflicted, as the crash could reasonably have been anticipated to happen with an intoxicated driver.  No life insurance for you, Mrs. Firman.

The widow has brought a lawsuit since CIGNA denied the internal appeal. 

 As reported in the Houston Press:

"According to the lawsuit, CIGNA told Firman that since her husband "would have been aware of the risks involved in operating his vehicle while under the influence, his death was a foreseeable result of his actions and thus not an accident." CIGNA also told Firman that driving drunk is "conduct that must be deterred, apparently assuming a moral stance on this claim," the lawsuit states. In the end, Firman claims, CIGNA decided that since her husband was intoxicated, his death was the "result of intentionally self-inflicted injuries."
 

And if you have a heart attack because you are overweight, have high cholesterol and don't exercise. . . . . . .

 Hat tip to J. Michael Young of Texas Probate Litigation and his blog post.

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Thank you to Roy Newman of The San Diego Estate Center for his post, 8 Steps To Avoid Estate Litigation.

Newman reports:

"An article by the US News and World Report gives “8 Tips to Avoid Nasty Estate Surprises.”  I agree with most of the points, and add my critique after each tip below:

1. Get a good lawyer. I would add that your lawyer should concentrate exclusively in this area.
2. Pick the right executor and trustees. The right trustee will be solid and will react neutrally to avoid disputes over the estate’s property.
3. Talk about it now. This seems obvious, but most people will not let their intentions be known ahead of time. Unfair surprise is one surefire way to start a contest.
4. Know state laws. In California, as the Tax Professor adds, probate can be avoided entirely through the use of a trust.
5. Make your intentions known early and often. Making repeated modifications to the will or trust will make it harder to invalidate later.
6. Make sure title to your assets is clear. Circumventing the estate distribution by retitling assets later in life is another way to encourage litigation.
7. Consider including a “no contest” clause. Then give the beneficiary an amount that they would rather not sacrifice if they lost the contest.
8. Don’t try to manage your estate from the grave. Although I am not sure that I entirely agree with this one, in theory giving discretion to your beneficiaries may stop them from fighting over items to which they are personally attached. I agree that not every item need be listed in the instrument, but sometimes a person who writes a will or trust can avoid disputes ahead of time by simply making the right decision."

Whevener your estate ends up in litigation, only the lawyers win.  A good lawyer can help make sure youre state doesn't turn into a modren day Jaryndyce v. Jarndyce.

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Thomas Bucher, son of retired Lancaster County Court of Common Pleas Judge Wilson Bucher, died in July 2008.  It was a suicide.  His will gave the bulk of his estate to the Lancaster County Public Library - an estimated $1 million. We wrote about the case in an earlier blog post. 

Judge Joseph Rehkamp, the Perry County Judge who is hearing the case because of Lancaster County judges' recusal, has dismissed Wilson Bucher's motion for summary judgment ruling that while there's no evidence his family was stealing from him, Thomas Bucher "had a strained relationship with his father and mother and siblings, and had expressed animus toward his brothers-in-law, particularly Steven R. Blair" — and that his suspicions did not amount to an "insane delusion." 

Judge Rehkamp stated in his opinion that Thomas Bucher "had a rational basis for willing his entire estate to a charity. . . . ""Despite the argument of Attorney Blair that Thomas Bucher had an insane delusion at the time he executed his will, none of the answers supplied by the scrivener of the will nor his associate indicate other than a rational mindset in willing his estate to the Lancaster Public Library." 

"There is, at minimum, a genuine dispute of material fact as to the state of the mind of the decedent [Thomas Bucher] to prevent the granting of a motion for summary judgment in this matter."

Read the Intelligencer Journal article about the ruling here.:  A Battle of Wills.

The article states:  "Both the office and the library had asked that Blair be disqualified as attorney for petitioner Wilson Bucher due to his close connection to the case. But Rehkamp ruled against those requests, saying that 'this court is satisfied, upon review of the case file, under the circumstances of this matter, that [Blair] shall continue as attorney for petitioner.'"

There will be a hearing on the insane delusion claim.  Also, Steven Blair, attorney for Wilson Bucher has also raised a claim based on an oral contract to make a will. 

Stay tuned for Part 3.
 

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This article on www.law.com  points out a gross inequity.  Estate planning attorneys can get away with murder.  Well,  not murder literally, but they get off scot-free when committing horrendous malpractice because of antiquated notions about privity.

In short, the common law view is that since the heirs and beneficiaries didn't hire the lawyer to write the decedent's estate plan, they can't sue the lawyer for making mistakes.  There is no privity of contract.  And since the person who hired the lawyer is dead and isn't going to be suing anyone, oh well, i guess there is just no remedy.

Its time for this to change.  All professionals should be responsible for the quality of their work -- no exceptions.

The state law discussed in the article is New York.  Pennsylvania has a similar rule, except that in Pennsylvania, some headway can be made under third-party beneficiary  or negligence analysis.

About 18 years ago I was interviewing with the chair of a Trusts & Estates Department in a large Philadelphia firm.  I was new to Pennsylvania, having moved here from Boston.  He explained to me that estate planning was a great practice area because if you made mistakes, they weren't found.  Since beneficiaries had no privity they couldn't sue for malpractice.  I was appalled.  I explained, that as a matter of public policy, not to mention fairness and basic Justice, I did not think that was a good result.  I didn't get the job.

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Jury selection begins Monday March 30, 2009 for the trial of Anthony Marshall, Mrs. Astor's son.  The trial is expected to last two months.

As reported in the New York Times, "Prosecutors will argue that Mr. Marshall and Mr. Morrissey knew that Mrs. Astor, suffering from Alzheimer’s disease, had deteriorated mentally, but that they exploited her ailments to trick her into directing millions of dollars their way, according to the indictment and lawyers briefed on the case. A second change to Mrs. Astor’s will, executed in January 2004, which gave Mr. Marshall her estate outright, will be under the most scrutiny."

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We wrote earlier about the first Supreme Court ruling on Anna Nicole's estate here  regarding the so-called "probate exception" to federal jurisdiction.

Here we go again.

A writ has been filed before SCOTUS asking that " lawyers for the late Anna Nicole Smith be allowed to start collecting on $88 million awarded her by a Santa Ana judge from her husband’s estate."

See Gerry Beyer's post at Wills, Trusts & Estates Prof Blog discussing the writ.  Here is an excerpt:

"The writ, filed with the court [on March 9, 2009], asks in the alternative that the heirs of Smith's husband, Texas oil tycoon J. Howard Marshall, post a bond in that amount to assure that the money is there when when the legal battle concludes. * * *

However, David Margulies, who represents the heirs of J. Howard Marshall and his son, E. Pierce Marshall * * * denied the award by U.S. District Judge David Carter in 2002 is still valid.

Margulies said the 9th U.S. Circuit Court of Appeals threw out Carter's award, finding that he overstepped the jurisdiction of the Probate Court.

Even though the U.S. Supreme Court in 2006 found that Smith had the right to pursue a claim on her husband's estate, it did not uphold the $88 million award, Margulies said."

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Please read this excellent post by Juan Antunez at Florida Probate & Trust Litigation Blog:

Persuading a Cold Judge

Here is an excerpt:

"A defining characteristic of probate litigation is that your cases are decided by judges, no jury trials here. If your judge is prepared and understands the facts and law of your case, all is well. But when your judge is not prepared, or simply doesn't "get" it, he's what Denver, Colorado litigator Peter Bornstein refers to as a "cold" judge in Persuading a Cold Judge, an excellent article just published in the ABA's Litigation magazine. Here's how Bornstein frames the issue:"

And this is MOST interesting:

"So what's to be done? One option is to "privatize" contested probate proceedings to the extent possible by tapping into one of the many alternative-dispute-resolution tools available under Florida law [click here]."

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In September 2008 we wrote about John P. Karoly, Jr. the Allentown attorney who allegedly faked his brother's will.

Turns out there's more.   Read what the Taxgirl, Kelly Erb, has to say at Lawyer Fakes Will (Allegedly), Now Faces Tax Charges.

Here is an excerpt::

While Karoly fights the fake will charges, he has other charges brewing. He has also been accused of one count of mail fraud, three counts of failing to report taxable income on his federal income tax returns, one count of conspiracy to commit wire fraud, two counts of wire fraud, and six counts of money laundering charitable proceeds through a church.

Karoly allegedly failed to report more than $5 million in income for the years 2002, 2004 and 2005.

Karoly is also accused of claiming a charitable donation for a noncharitable contribution. In 2005, Karoly donated $500,000 to the nonprofit Lehigh Valley Community Foundation and took the deduction on his tax returns. He later asked that the money be transferred to the Urban Wilderness Foundation, which does not have tax-exempt status. The Urban Wilderness Foundation shared an address with Karoly’s law office, and Karoly had sole signature authority on the Urban Wilderness Foundation bank account.

No wonder they say that 99% of lawyers give the rest of us a bad name.

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Hughes Estate Group publishes Estate Street - about all things estate and tax planning.  This  post reports on the dispute over a $90 million dollar collection of art from Papua New Guinea:

"Three brothers have been feuding since 2005 over the estate of their mother, Evelyn A.J. Hall who was a sister of the late publishing tycoon Walter Annenberg. John Friede and his brothers reached a settlement where John agreed to pay his brothers $30 million dollars, $20 million which was secured by the collection. The problem was he had signed the collection over to the museum the week before. Oops!"

More info from the San Francisco Chronicle here and here.

From the New York Times on October 5, 2008:

"Last month a Florida judge ruled that Mr. Friede’s brothers, Robert Friede, 68, and Thomas Jaffe, 58, could take possession of the entire collection. The judge determined that John Friede had violated the terms of an October 2007 settlement in the estate dispute in which he put up his collection as collateral. Later the city attorney’s office in San Francisco, acting on the de Young Museum’s behalf, sued and obtained a temporary restraining order prohibiting the brothers and John and Marcia Friede from disturbing the collection until a judge could determine who legally had title to it.

And on Thursday a New York State Supreme Court judge ruled that Sotheby’s, which lent Mr. Friede $25 million and has not been repaid, could take possession of 54 artworks that are part of the collateral for the loan. The judge placed a restraining order on another 99 works to which priority rights are being disputed between Sotheby’s and Mr. Friede’s brothers. "

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John T. Brooks and Erika A. Alley are authors of The Jewish Clause published in Trusts and Estates discussing the case of In re Feinberg, 383 III. App. 3d 992 (1st Dist June 30, 2008).

They write:

"Max Feinberg created a trust in which he declared that any descendant of his — that is, any descendant other than his children — “who marries outside the Jewish faith (unless the spouse of such descendant has converted or converts within one year of the marriage to the Jewish faith) and his or her descendants shall be deemed to be deceased for all purposes of this instrument as of the date of such marriage.”

The parties in Feinberg refer to this provision as "the Jewish clause."

ROUND 1:     The Illinois Circuit Court found the clause to be invalid and contrary to public policy. (Which public policy is that?)

ROUND 2:     A three- judge panel of the First District Appellate Court daffrimed, holding that  the clause is not enforceable.    As stated in the article:

"The court’s majority opinion ends by noting that the clear intent of the Jewish clause was to influence the marriage decisions of Max’s grandchildren based on a religious standard and thereby to discourage them from marrying outside the Jewish faith.  As such, the clause seriously interferes with, and limits the right of individuals to marry whom they choose. It is therefore unenforceable. "

Justice Alan J. Greiman dissented passionately, stating: “Max and Erla had a dream. . . to preserve their 4,000 year old heritage.”

ITS NOT OVER YET. 

ROUND 3:    Illinois' Supreme Court has agreed to hear the case.

See Pauline Dubjkin Yearwood's article, The Jewish Clause, in the Chicago Jewish News.  She reports on the views of an orthodox rabbi who is also an attorney:

"Steven H. Resnicoff, a professor at the DePaul University College of Law who is also an attorney, ordained Orthodox rabbi and expert on Jewish law, agrees.

The case "is significant in that it is different from what the majority of jurisdictions" have ruled, he said in a recent phone conversation. "Therefore estate planners were likely to have thought that it was permissible to structure the will the way it was structured, and unless they hear about it and make changes, the intention of the testators (those making the will) are going to be frustrated. The word has to get out so people can accomplish their objectives in a permissible way."

As for the case itself, he sides with the dissent. "I think it's unfair," he said of the majority opinion. "The reason given by the majority was that the provision conflicts with public policy in favor of marriage and against divorce. But it seems to me that's really a smokescreen. What may have rankled some of the people is the fact that someone wanted to influence the heirs' religious choices. That bothers people, particularly people who are not sympathetic to religion," he said. "It seems disingenuous to make this kind of decision based on the supposed public policies in favor of marriage and divorce."

From the perspective of Jewish law, he said, a person is not supposed to disinherit his or her children unless they have converted to another religion, but since this case involved Max Feinberg's grandchildren, it was not inconsistent with Jewish law.

Still, Resnicoff said, "the concept under Jewish law is that generally, even if an heir doesn't behave properly, we hold out hope for that person." So, he said, declaring the grandchildren who married non-Jews "deceased" "doesn't violate the letter of Jewish law but it does violate the spirit - for very different reasons from what the court said.""

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Lancaster Sunday News front-page headline today:  

" Retired county judge challenges late sons' $500,000-$900,000 bequest to Lancaster Public Library; state Attorney General's office wants the filing attorney - judge's son-in-law - off the case." 

Read the article - click here or here. 

THE CAST OF CHARACTERS:

The retired judge is Wilson Bucher, now 88 years old.  Last July, his son, Thomas Bucher, was found in his apartment in Columbia dead of a self-inflicted gunshot wound.  The 59 year old Thomas Bucher had been employed as a supervisor with the Impaired Driver Program of the Adult Probation and Parole Office for Lancaster County Court.

The son-in-law who brought this petition is Steven R. Blair, married to Wilson Bucher's daughter Christine.

The PA Attorney General's office, involved to protect the interest of the library which is a public charity, wants Steven Blair removed as counsel because he is a potential witness.

Lancaster County Judge Jay Hoberg has recused himself.  The case is being heard by Perry County Judge Joseph Rehkamp.

Thomas Bucher's will was written by Theodore Brubaker.

The library is represented by Bob Hallinger of Appel  & Yost

THE CASE:

Lancaster Court of Common Pleas No. 36-2008-1522

According to the The Sunday News, in 1998 Thomas Bucher approached his parents and "said he could not understand how it was that his brother-in-laws could be supporting their families since he had information that they were going to Las Vegas and blowing all their money."  This was the "insane delusion"  under which Thomas Bucher made the first changes to his will.

In 2002 Thomas Bucher's aunt, Helen Bucher died.  Steven Blair had been her agent under a power of attorney, had written her will and was executor.  Apparently, Thomas Bucher was suspicious of Blair's actions.

Hallinger, representing the library, wrote  that Thomas "simply did not trust the involvement of his brother-in-law, attorney Steven R. Blair, in estate planning and/or settlement matters relating to family."  "[M]istrust or suspicion of motives and actions of an in-law and an attorney do not rise to the level of an 'insane delusion' under Pennsylvania law, regardless of whether there is a factual basis for such mistrust or suspicion."

THE LAW:

Partridge-Remick Practice and Procedure in the Orphan's Court Division Court of Common Pleas of Pennsylvania by Charles W,. Frampton. George T. Bisel Company (1975)  (hereinafter Partridge-Remick")Section 4.12, p. 273:

"A man may be of sound mind in regard to his dealings in general, but he may be under an insane delusion,and whenever it appears that the will was a direct offspring of the partial insanity or monomania under which the testator was laboring at the very time the will was made, that it wasthe moving cause of the disposition, and if it had not existed the will would have been different, it ought to be considered no will, although the general capacity of the testator may be unimpeached.45"  Footnote 45: "Nelson Estate, 66 York 161."

 and  from Partridge Remick Cumulative Supplement at §4.12 for p. 273.

"A testatrix may suffer from a delusion and, indeed, there is no requirement that she give any of her property to those she loves or to the relatives that society believes she should love.  She can give it in such a way that 99 percent of her fellow citizens believe it is foolish, unjust or outrageous.  Such a dispositive scheme does not mean a testatrix suffers from an insane delusion.41,1  Footnote 41.1 Sommerville Est, 406 Pa. 207, 177 A. 2d 496 (1962)

and

"For a will to be invalidated on the grounds of insane delusion, the evidence must show not merely that testatrix was the victim of an insane delusion, but that she was controlled by the delusion in the making of her will, causing it to be written differently from what it otherwise would have been. 42.1 Footnote 42.1 Dunross Will, 395 Pa. 492, 150 A. 2d 710 (1983); Agostini Est., 311 Pa. Super, 457 A. 2d 861 (1983); Nunemacher Will, 3 Fiduc. Rep. 2d 292 (Berks 19083).

THE FACTS:

Unknown until the hearing. 

THE RESULT:

It will be interesting.  If disliking and mistrusting in-laws is an "insane delusion" there are heck of a lot of wills out there that will be invalidated.  On the other hand, shouldn't a will disposition made on account of paranoia (assuming that it is insanity) be invalidated?

Here is Robert FIeld's comment on www. NewsLanc.blogspot .com and his original post here.

The next headline may be  "Just because you're paranoid doesn't mean they're not out to get you."

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Trusts and Estates published an article here called Get Me To The Church On Time by John T. Brooks and Samantha E. Weissbluth.  They write:

"The Kinney case out of Minnesota offers a good review of the general requirements for a valid prenuptial agreement. The appeal also shows a modern trend in which courts view such agreements with suspicion when one party is not represented by counsel. Of course, decisions in most cases turn on the facts, but courts tend to enforce prenups when the playing field is more level. The litigants in Kinney appear headed for another round to determine the facts and fairness of the agreement. Estate of Kinney, 733 N.W.2d 118 (Minn. June 14, 2007)."

The leading case in Pennsylvania on the enforceability of pre-nuptial agreements is Simeone v. Simeone, 581 A. 2d 162 (Pa. 1990).   The case marks a sea change in the way Pennsylvania courts viewed these agreements.  The PA Supreme Court abandoned the protective and paternal stance of earlier years and provided these two requirements for enforcability:

1.  application of the usual contract law concepts about invalidating contracts for fraud, misrepresentation, or duress.

2.  a "full and fair disclosure of the financial positions of the parties"

Notably, the PA Supreme Court did not require representation by separate counsel:  "To impose a per se requirement that parties entering a prenuptial agreement must obtain independent legal counsel would be contrary to traditional principles of contract law, and would constitute a paternalistic and unwarranted interference with the parties' freedom to enter contracts."  See Simeone at p. 161.

Despite the assurances of Simeone, I have never been comfortable with a pre-nup unless both parties are represented by separate counsel.   I have always insisted on such representation for the party who is not represented by Spencer Law Firm.  Call me paranoid, but I think the Kinney case in Minnesota points out the risks and it can happen here in Pennsylvania too.
 

Additional resource:

Robert B. Standler has an excellent essay, Prenuptial and Postnuptial Contract Law in the US, posted at http://www.rbs2.com/dcontract.pdf.

Postscript:

I never refer to these agreements as Antenuptial Agreements, although that is quite proper and correct.  I find that the general public's understanding of Latin is quite deficient.  Many do not know that "ante" means "before" as in "antebellum."  All too often they mistake it for "anti" which means "against" as in "anti-aircraft."   We don't want them to think these agreements are "against" marriage.  On the contratry, they are a way to promote marriage with the parties making their own property agreement instead of relying on the "one-size-fits-all" agreement provided by state law.

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The general rule is that damages for a decedent's pain and suffering (the survival action) are an asset of the decedent's estate and subject to federal estate tax and PA inheritance tax.  The wrongful death award that goes to next of kin for loss of society, consortium and support are not estate assets and are not subject to estate or inheritance tax.

Trusts & Estates carried an article by John T. Brooks and Samantha Weissbltuh, entitled Estate Tax on Wrongful Death Claims? which discusses an Illinois case where the appellate court held that the wrongful death damages went to the estate.  The case, Bender v. Eiring, 2008 WL 351126 (Ill. App. 1st Dist. Feb. 7, 2008) established, in the words of the authors. "a potentially dangerous precedent."

Brooks and Weissbluth say:  "We not only think the appellate court made a mistake, but also worry that the decision could have an unfortunate ripple effect. Will wrongful death proceeds now be subject to estate tax? Spousal elections? Creditors' claims?"

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"Heaven has no rage like love to hatred turned, Nor hell a fury like a woman scorned."

                                                                                            from William Congreve's The Mourning Bride (1697)

Fritzi Benesch, 86 year old multimillionaire and former owner of the clothing company, Fritzi California, is suing her lawyer for malpractice.  The case, brought in 2000 went to trial the week of October 27, 2008.  See ABA Journal report here.

Her lawyer, now retired trust and estates lawyer William Hoisington, of Orrick, Herrington & Sutcliffe did estate planning for the Benesch family for 20+ years.  Fritzi and her husband Ernst started working with Orrick in 1977.

In 1981 daughter Valli (and later, her husband Robert Tandler) also retained the Orrick firm for advice on their own estate, corporate and tax matters, and for the family business.   Fritzi, the plaintiff in this action, now alleges that the Orrick firm did not inform her of the representation of her prospective heirs, nor was the potential conflict of interest inherent in that representation ever explained to her, nor was she ever asked to consent to that representation or to waive the conflict.

In the summer of 1999, 16 years after she had passed control of the family business to her older daughter, Valli and Valli's husband Robert Tandler,  In that same year Fritzi discovered that her husband had had an affair and Fritzi filed for divorce.  The attorney for the defense says that Fritzi Benesch's discovery of her husband's infidelity sparked her desire to undo decades of estate planning and stock transactions.

Plaintiff's attorney argues that Fritzi's attorney had a conflict of interest.  "What this case is about is a law firm favoring one set of clients over another," he said. "They were getting richer as my client was getting lesser."  (Isn't that what we do all the time in estate planning? Don't' we usually call that good planning?)

Here is brief submitted to San Francisco Superior Court on behalf of Fritzi Benesch, Plaintiff and Appellant.

Here is Juan Antunez's blog post discussing the ethics issue.

What do you think?

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Robert Anbrogi has an excellent article posted at Findlaw:  Ethics: Hiring Experts You Don't Plan To Use.   He asks:  "Do lawyers ever retain experts just to lock them out from being hired by the other side?"

"Lawyers do occasionally contact or 'retain' experts solely to disqualify them from working for the other side," says Erik Anderson, senior attorney in the corporate legal department of Safeco Insurance Company of America. He should know: he faced this situation in a case not long ago in which one party sought to disqualify the other's expert.

Another lawyer who has seen it done is David W. White, a trial attorney in Boston who is also president of the Massachusetts Bar Association. Although he would never do it himself, he once found himself the victim of this tactic.

"It was an antiques case, where fraud was alleged," White says. "There wasn't an available independent expert on the east coast of the U.S. because the plaintiff had consulted them all." 

When the expert is contacted, how much can be disclosed?  Typically the hiring attorney wants to be able to discuss that case with  the expert.  Must the expert refuse to hear any details before being hired?  Must you request a retainer just to talk about whether or not you want to take the case? Sure sounds like it.

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