If you are divorced, or you advise clients who are divorced, this is important. The Pennsylvania Supreme Court has ruled that the federal Employee Retirement Income Security Act (ERISA) takes precedence over the Pennsylvania statute that removes divorced spouses as beneficiaries. What this means is that unless your employer’s plan contains a provision to the contrary, if you are divorced and your ex-spouse is still named as beneficiary of your qualified plan; it is payable to the ex-spouse! That is without regard to Pennsylvania state law, without regard to any order from a Pennsylvania Court, and without regard to any provisions in a property settlement agreement or other contract. It’s really true.

It is very common for spouses to divorce but fail to update their estate plans, including beneficiary designations. This has not been a big problem because Pennsylvania law (20 Pa.C.S. § 6111.2) provides that if an ex-spouse is designated as a beneficiary on a life insurance policy, annuity contract, pension, profit-sharing plan or other contractual arrangement providing for payments to the spouse; any designation which was revocable at the time of death is ineffective, and the beneficiary designation is construed as if the ex-spouse had predeceased. If the designation or a separate contract (such as a property settlement agreement) provides that the designation is to remain in effect even after the divorce, then the designation remains effective. This statute produced the result that most people wanted: the ex-spouse is not the beneficiary. No more.

The legal issue is whether or not the federal law, ERISA, which provides that a qualified plan benefit is payable to the named beneficiary, is superior to, or "trumps" Pennsylvania state law that modifies the beneficiary based on circumstances, in this case, the divorce of the plan participant. The legal doctrine involved is called "federal preemption" and is based on the supremacy clause of the U.S. Constitution: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding." In other words, certain matters are of such a national, as opposed to local, character that federal laws preempt or take precedence over state laws. As such, a state may not pass a law inconsistent with the federal law.

In 2001, the United States Supreme Court in Egelhoff v. Egelhoff, 532 U.S. 141 (2001), set the precedent that any state statutes having a "connection with" ERISA plans are superseded by ERISA. David Engelhoff divorced his wife and did not change his beneficiary designations on his qualified plans. Washington state law provided that on divorce, the beneficiary designation of his wife was revoked. However, his ex-wife successfully claimed the benefit asserting that since she was the named beneficiary and ERISA preempts state law she gets the benefit.

Closer to home, the Pennsylvania Supreme Court case decided an almost identical case on November 23, 2011,in re Estate of Sauers, York County, Supreme Court of Pennsylvania, Middle District (No. 78 MAP 2009). Paul and Jodie Sauers divorced in 2002, and Paul did not change the beneficiary on a $40,000 employee group life insurance plan subject to ERISA. Paul died in 2006. The Court held that the Pennsylvania statute which provides that Jodie, now an ex-spouse, does not receive the death benefit was preempted by ERISA - the benefit was payable to her, the ex-spouse. (The only question is why in the world didn’t the lower court follow Egelhoff.)

The Court explained that the state probate law at issue "gives a Pennsylvania court the power to enjoin a plan administrator from discharging his fiduciary duties in accord with federal law, while concomitantly subjecting the plan administrator to civil liability in federal court. ...

"This Hobson's choice, of being forced to choose between applying either state or federal law, at the potential peril of disregarding a state court order to evade federal liability, is exactly what the preemption provisions of [section]1144(a) of ERISA, as interpreted by the [U.S. Supreme Court], intended to avoid. Such potential not only 'relates to,' but also surely violates, the uniformity requirements and objectives of ERISA."

What to do? If you are divorced, make sure you have changed all of your beneficiary designations.

If you are a plan sponsor, consider amending your ERISA plan to include a provision that would automatically revoke a pre-divorce spousal beneficiary designation.

Does this apply to IRAs? Probably not, because IRAs are not governed by ERISA for most issues. To be safe, change IRA beneficiaries too.

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The estate of deceased multimillionaire Frank Blumeyer of Naples, Florida, is embroiled in controversy.

The 92-year old Blumeyer's $10 million estate is being fought over by his children and, his neighbor, a disbarred lawyer.  Aisling Swift, writing for Naplesnew.com says:  "The tangled web of litigation and love is like a made-for-TV movie. There’s a suspended lawyer who has been in trouble with courts and state bar associations; a now-defunct escort service the lawyer operated with his current wife before his prior wife died of cancer; naked photos of his current wife found on Blumeyer’s computer; and allegations of elder financial fraud."

And if that is not enough, the deceased Blumeyer's son Arthur, who is serving 22 years in federal prison for money laundering, is trying to remove his brothers as estate representatives.

Hat tip to Gerry W. Beyer at Wills, Trusts & Estates Prof Blog

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Gene Upshaw, one-time Oakland Raiders Hall of Fame lineman and head of the NFL Players Association for 25 years, died in August 2008. He led the union through a strike, decertification, the victory of free agency, soaring player salaries and disputes with retired players.

Upshaw was married for the second time and had three sons, Eugene III from his first marriage, and Justin and Daniel from the second. Upshaw, his wife Terri, and another couple, Norman and Sandra Singer, arrived in Lake Tahoe for vacation. Upshaw suddenly became ill and went to the emergency room where he was diagnosed with pancreatic cancer on August 17, 2008. He was hospitalized and died 3 days later at the age of 63.

On the day he died, August 20, 2008, Gene Upshaw’s will was signed, according to court filings. It left everything to his wife Terri.

Son Eugene III arrived in Tahoe the day after his Dad was hospitalized - he had planned on joining the vacationing couples. In Eugene III’s court filing, he said that by early August 2008, his Dad "had deteriorated substantially. . . He was not coherent, and was not speaking." How could his will have been signed that day?

Eugene III contested the will and sought to have his step-mother removed as executor. It came out that Mr. Upshaw didn’t sign his will. One of the witnesses signed it on his behalf. The fact that he did not sign the will is unusual, but not in itself a reason to overturn the will. Most states (including Pennsylvania) have a statute of wills that includes the alternative that a valid will may be signed by the testator or by some person in his presence and at his direction. There were a number of problems in Upshaw’s case, however. First, one of the witnesses was also the one who signed the will on behalf of Upshaw. Second, according to Eugene III, on the day Upshaw died and the will was also signed, he lacked all capacity to make a will.

The witness and signer of the will was Upshaw’s friend who went on vacation with him, lawyer Norman H. Singer. The litigation here was to contest the will and remove Terri as executor. Norman Singer was not sued.

The trial was scheduled for May 2011 (almost 3 years after death) but was settled by a confidential agreement a few days before it was to begin.

One of the assets that was uncovered was a previously undisclosed $15 million deferred compensation that the union paid to his surviving wife, Terri Upshaw. Retired NFL players, who were angry with Upshaw for not getting them better pensions and medical benefits, were outraged. Upshaw’s estate also apparently received $1.73 million in "past due compensation." The Upshaws lived in a home in Great Falls, Virginia. The probate inventory showed eight luxury vehicles, a 32-foot boat, and another home in Lake Tahoe, California.

When the will was submitted to probate in Fairfax County, Virginia; both Norman and Sandra signed a document in which they answered "yes" to the question: "Did the decedent sign this paper in your presence and in the presence of other witness(es), with all of you together at the same time?" When they were deposed, the Singers changed their answer to "no" and acknowledged that Norman Singer had actually signed it. What a mess.

If Upshaw had died intestate, his widow would have received a 1/3 share of his estate, and 2/3 would have gone to his children. That would have given a 2/9 share to son Eugene III. Which side do you like in this argument? If I had to bet, I’d say that Eugene walked away with a big chunk of his 2/9 share.

Certainly his is an interesting story, but here is my question. How can a 63 year-old man with a second wife, 3 children from two marriages, and a net worth of more than $20 million not have a will? Seriously.

A 2009 Wills and Estate Planning survey commissioned by lawyers.com found that only 35% of adult Americans currently have wills and only 29% have powers of attorney. Another survey found that 32% of respondents would rather have a root canal than make a will.

Please make a will. It is not too expensive. You have enough assets to plan for no matter how small your estate is. Signing a will does not hasten your death. You can die at any age, you don’t have to be old. Really.

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Interesting reading from Estate of Denial:  The long goodbye.

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"Extreme wealth is a menace to happiness."

                                                          – Huguette Clark

Reclusive heiress Huguette Clark died May 24, 2011 at the age of 104. Her estate is estimated at $500 million. She has lived in a New York hospital for the last 22 years. No visitors or family have seen her. Her affairs are controlled by an attorney and an accountant.

Huguette had been living at a New York hospital under pseudonyms - the latest was Harriet Chase. She had a guarded room with full-time private nurses. Her hospital room number didn't even exist - outside her room on the 3rd floor, a card with the fake room number "1B" and the name "Chase" was taped over the actual room number.

The Elder Abuse Unit of the Manhattan District Attorney’s office has been investigating Huguette’s lawyer Wallace Bock and accountant Irving Kamsler. The investigation began in 2010 when three relatives of Huguette sought to have an independent guardian appointed for her alleging mismanagement of her funds by Bock and Kamsler. Huguette hadn’t been seen since she left her 42-room Fifth Avenue apartment in an ambulance 22 years ago. The action for appointment of an independent guardian was unsuccessful. The court allowed Huguette’s finances to remain in the hands of Bock and Kamsler. Bill Dedman writes for MSNBC: "The case presented something of a Catch-22: The judge said the relatives were not able to provide first-hand information about Clark to prove their allegations against the attorney and accountant, but the relatives said they had been prevented for many years by the attorney and accountant from visiting Clark." But the DA’s office launched an investigation that is ongoing.

Is this another case like Brooke Astor? Her son and her attorney were convicted in 2009 of taking $10 million f rom her. Astor’s estate was valued at $131 million. Huguette’s estate is estimated at $500 million and includes three opulent homes: an estate on the Pacific Ocean in Santa Barbara, CA, worth an estimated $100 million (she had not visited this home since the 1950s); a country house in New Canaan, CT, now on the market for $23 million (which she built but never spent a night in); and the largest apartment on New York City's Fifth Avenue, actually 42 rooms on the 8th and 12th floors, valued at about $100 million. All three homes have been carefully maintained and staffed.

Huguette Clark was born in 1906 in Paris. She was the daughter of then 67-year-old U.S. Senator William A. Clark of Montana and his second wife, 28-year-old Anna Eugenia La Chapelle. William and Anna had another daughter, Louise, who died at the age of 17 from meningitis. Clark had 5 children with his first wife. The issue of these children are now parties of interest in Huguette’s estate, being her closest kin.

New York Post columnist Veren Dobnik writes of Huguette: "At 22, she married a poor bank clerk, but they parted ways after only nine months. Huguette Clark cited desertion by her husband. He claimed she failed to consummate the marriage, according to ‘The Clarks: An American Phenomenon.’"

In 2002 another mutual client of Bock and Kamsler died – Donald L. Wallace, Bock’s former law partner and Huguette’s former attorney. Wallace’s will (drafted by Bock) gave Bock and Kamsler $100,000 each, his Mercedes, and his New York apartment, not to mention the $368,000 in fees for settling Wallace’s $4 million estate. In New York, when a lawyer who drafted a will receives a bequest from that will, that fact automatically raises a suspicion of undue influence. The surrogate must determine if the bequest to the attorney was made voluntarily - a so-called Putnam inquiry. In Wallace’s estate, the surrogate determined that the bequests should be paid.

In September 2010 a spokesman for attorney Wallace Bock revealed that Huguette Clark did have a will which had been in existence for some time. Now we await the production of the will. Who will be the beneficiaries? And of course, we await the results of the Manhattan District Attorney’s investigation.

The take away: it can happen to anyone. Who protects the elderly, not only from physical abuse but from financial abuse. Who protects an old person who has no children and whose distant relatives have been prevented from visiting him or her? Does our current legal structure suffice?

According to the American Psychological Association, over 2 million older Americans are victims of physical, psychological, or other forms of abuse and neglect every year. Further, for every case of elder abuse and neglect that is reported to authorities, experts believe there may be as many as five cases that have not been reported.

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Andrew Wolfe writing for the Nashua Telegraph:

NASHUA – A daughter of the late developer Samuel Tamposi will appeal a judge’s decision that cut her out of the family fortune and left her with millions of dollars in debt to the family trust, probate court records show.

Last month, Elizabeth “Betty” Tamposi, 55, of Gilford, lost a long, high-stakes battle with her brothers, Samuel Jr. and Stephen Tamposi, for control of her share of their family’s fortune.

Hillsborough County Probate Court Judge Gary Cassavecchia concluded that Betty Tamposi had violated the “no contest” clause of her father’s trust and would thus be disinherited. Rather than gain control of her share, Betty Tamposi could lose everything.

In addition, Cassavecchia ruled that she must pay back all the money she has received over the last two years, since she first filed the suit, and pay her brothers’ legal bills, which by their reckoning exceed $2 million.

Betty Tamposi and her lawyer, Michael Weisman, of Boston, had asked the judge to reconsider his rulings, but they withdrew their request on Aug. 31, court records show. On Sept. 17, one day before the 30-day deadline, they filed notice that they will appeal his decisions before the state Supreme Court.

It isn’t clear exactly how many millions of dollars Betty Tamposi would owe under Cassavecchia’s order – the figure could be $17 million or more – and neither side would comment on whether any post-trial settlement negotiations were under way.

Betty Tamposi declined to comment on the case by e-mail, writing that while the court case is public, “I view this as a private matter among my family.”

Andie Schwartz wrote an excellent article for Trusts and Estates analyzing the case.  It is entitled "Cementing Family Bonds."  Read it here.

Schwartz writes:  "As an expert witness for Betty, John Langbein, a professor at Yale Law School testified that the investment directors 'have a continuing duty to diversify trust assets to afford sufficient liquidity to meet the … distribution requests of the trustee.' He stated also that it wouldn’t benefit the beneficiaries to hold assets that were illiquid or undiversified. "

"The court held that in bringing and prosecuting the litigation, Betty acted in bad faith. Because she challenged the investment directors’ role and specific investments—both of which were expressly provided in the trust document as well as through Sam, Sr.’s intent—her lawsuit was a challenge to the trust provisions. "

The court's 54 page opinion: Shelton, Tamposi v. Tamposi, Jr. & Tamposi, 316-2007-EQ-0219 (August 2010).

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Death of Female Partner Puts Cozen Firm in Center of Same-Sex Marriage Comity Case

Law partner in Philadelphia firm dies and her parents and wife to whom she was legally married in Toronto in 2006 fight over her profit-sharing account.

See Martha Neil's article in the ABA Journal online:  Death of Female Partner Puts Cozen Firm in Center of Same-Sex Marriage Comity Case

See Gina Passarella;s article in New York Law Journal:  Fight Brewing Over Dead BigLaw Partner's Benefits

COMITY - definition

Courtesy; respect; a disposition to perform some official act out of goodwill and tradition rather than obligation or law. The acceptance or adoption of decisions or laws by a court of another jurisdiction, either foreign or domestic, based on public policy rather than legal mandate.

In comity, an act is performed to promote uniformity, limit litigation, and, most important, to show courtesy and respect for other court decisions. It is not to be confused with full faith and credit, the constitutional provision that various states within the United States must recognize the laws, acts, and decisions of sister states.

Comity of nations is a recognition of fundamental legal concepts that nations share. It stems from mutual convenience as well as respect and is essential to the success of international relations. This body of rules does not form part of International Law; however, it is important for public policy reasons.

Judicial comity is the granting of reciprocity to decisions or laws by one state or jurisdiction to another. Since it is based upon respect and deference rather than strict legal principles, it does not require that any state or jurisdiction adopt a law or decision by another state or jurisdiction that is in contradiction, or repugnant, to its own law.

Comity of states is the voluntary acceptance by courts of one state of the decision of a sister state on a similar issue or question.

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Click here to read about the litigation over trusts in Walt Disney's family.  Hat Tip to Gary Beyer at Wills Trusts and Estates Prof Blog.

Robert Anglen, writing for the Arizona Republic:  "The court battles revolve around the fortune of one of the legends of American entertainment, Walt Disney. They trace back to secret land deals in Florida. A prominent East Valley developer. A controversial Arizona real-estate baron. And two Disney heirs, his grandchildren, who inherited hundreds of millions of dollars.

The cases illustrate how even the most careful estate planning may not prevent vicious court fights from erupting when families feud. Relatives take sides, attorneys clash, and original estate terms may be altered."

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Huguette CLark, a 104-year-old heiress, has been in a hospital for the last 20 years? 

Read Verena Dobnik's article for the New York Post:  click here

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Aron Heller writes for the AP:

"JERUSALEM – It seems almost Kafkaesque: Ten safety deposit boxes of never-published writings by Franz Kafka, their exact contents unknown, are trapped in courts and bureaucracy, much like one of the nightmarish visions created by the author himself.

The papers, retrieved from bank vaults where they have sat untouched and unread for decades, could shed new light on one of literature's darkest figures.

In the past week, the pages have been pulled from safety deposit boxes in Tel Aviv and Zurich, Switzerland, on the order of an Israeli court over the objections of two elderly women who claim to have inherited them from their mother."  Click here to read the rest of Heller's article.

From Wikipedia:

"Kafkaesque" is an eponym used to describe concepts, situations, and ideas which are reminiscent of the literary work of the Austro-Hungarian writer Franz Kafka, particularly his novels The Trial and The Castle, and the novella The Metamorphosis.

The term, which is quite fluid in definition, has also been described as "marked by a senseless, disorienting, often menacing complexity: Kafkaesque bureaucracies"^[1] and "marked by surreal distortion and often a sense of impending danger: Kafkaesque fantasies of the impassive interrogation, the false trial, the confiscated passport ... haunt his innocence" — The New Yorker.^[2]

Hat tip to Wills, Trusts and Estates Prof Blog - read his summary here.

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Juan Altunez writes in his Florida Probate and Trust Litigation Blog about this recient Florida Supreme Court case:  Olmstead v. F.T.C., --- So.3d ----, 2010 WL 2518106 (Fla. Jun 24, 2010). Read his execllent summary and anlaysis of the case here.

An excerpt from the post:

"For those of you interested in understanding the charging-order policy issue I think is lurking in the background of the Florida Supreme Court's ruling, STARTrightLLC.com is an excellent starting point. Below is an excerpt from that website explaining why charging-order protection makes sense in a multi-member LLC scenario, and why it doesn't make sense for single-member LLCs.

The charging order protects the company and the member’s investment if one of the members is sued in his or her personal life. . . . The original charging order philosophy protected guys A, B from having to accept D as an unwanted partner if C, the person they originally went into business with gets sued. They don’t want to have to deal with D. To prevent this unwanted member . . . the charging order is all D can get out of C’s membership . . . The charging order limits D. He must wait for A and B to decide to distribute money. No distributions = no money.

The Single Member Hitch: When a the member of a single member LLC is sued, there is no other member to protect from D. Two bankruptcy courts have used this flaw in the LLC protection to allow creditors of a business owner to completely take over his LLC and liquidate it for cash. The first case was in Colorado and the nation held its breath to see what would happen next. The next case was in Idaho and actually used the Colorado case to base its decision on. This means the trend is starting to move in the direction of denying charging order protection to single member LLCs."

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Leslie Scism and Mark Maremont writing for the Wall Street Journal detail the story of the late Germain Tomlinson  who was found dead in her bathtub at the age of 74  "fully clothed from an evening out at a martini bar, high heels still on her feet."  Her "social companion," 36-year old JB Carlson had a $15 million life insurance policy on her life, payable to his compnay.  Read the article here.

"The dispute over the $15 million policy is a dramatic example of a larger controversy roiling the life-insurance industry over "stranger-originated" policies. In recent years, insurance agents, hedge funds and other investors have induced thousands of elderly people to take out giant policies. Investors then buy these policies, pay the premiums, and collect when the insured dies.

Insurers argue the practice violates "insurable interest" laws that require a buyer to be a relative, employer or someone else more interested in having the insured person alive than dead. U.S. courts long have supported this concept, including a 1911 ruling in which Supreme Court Justice Oliver Wendell Holmes Jr. wrote: "A contract of insurance upon a life in which the insured has no interest is a pure wager that gives the insured a sinister counter interest in having the life come to an end."

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Manohla Dargis writes a movie review of a documentary about the Barnes Foundation for the New York Times.

Dr. Albert Barnes' will provided that the collection must remain in its original location - the mansion in Lower Merion Township, Pennsylvania.

The Foundation became embroiled in controversy due to a financial crisis in the 1990s, partially related to longstanding restrictions related to its location in a residential neighborhood.  The relocation of the gallery from Lower Merion to a site in Philadelphia, on the Benjamin Franklin Parkway, for enhanced public access is scheduled for 2012.

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Mel Simon, who died at age 82 in September 2009, left behind a huge estate tangled in litigation.   Mr. Simon was famous for building shopping centers - including the huge multi-use complex, Mall of America, located outside of Minneapolis, known as the U.S.'s largest mall.  Forbes estimated his net worth at $1.3 billion.

Mr. Simon was survived by a wife and children from a prior marriage.  He signed a new will and trust seven months before he died that drastically reduced the amount left to his three children and increased the amount going to his wife of 37 years, Bren Simon (37 years is a long time.)

Andrew Mayoras comments on the litigation at The Probate Lawyer Blog:  The wars over the final wishes of Bill Davidson & Mel Simon:

"Deborah Simon, Mel's daughter, filed the lawsuit a few weeks ago.  She claimed that Mel was ill from pancreatic cancer, dementia and neurological disorders which impaired his understanding and his ability to sign the new documents.   In fact, she says, he wasn't even able to hold the pen or the documents to sign his name, and someone else had to move his hand for him. 

Mel's wife, Bren, counters that the documents were valid.  Mel fully understood and desired to make the changes, she says, to protect his wife from his children, and because he wanted to compensate her for loss in value of company stock.  Bren admits that Mel needed help signing the estate planning documents, because he suffered from symptoms of Parkinson's disease. 

As a probate litigation attorney who regularly handles will disputes and trust contests like these cases, I see these types of family fights affect people on a daily basis.  While millionaires and billionaires do seem to attract these legal battles more often (as covered in Trial & Heirs:  Famous Fortune Fights!), the reality is that they are also far more common than people realize, even for middle-class families. 

The exact same type of legal fights surface over estates worth hundreds of thousands, or even tens of thousands.  When a will or trust is changed and family members are cut out, or someone is convinced that a promise was made and not fulfilled, estate disputes are usually just around the corner. " 

Kris Hudson and Rachel Emma Silverman wrote about the case for the Wall Street Journal:

"The battle over Mr. Simon's will joins a list of high-profile estate contests among the super-rich, involving accusations that a senior family member may not have fully understood what was at stake when signing estate-planning documents. For instance, in the recent case of society doyenne Brooke Astor, her son, Anthony Marshall, was convicted last year of defrauding his mother as she struggled in her last years with Alzheimer's disease. "

For more commentary see Estate of Denial:  Simon Family Estate Dispute. and Juan Antunez's Billionaire's Will Sparks Family Fued:  Spousal Undue Influence?

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Trusts and Estates published an article by John T. Brooks and Samantha E. Weissbluth:

Wrestling with the Privacy Rights Of John E. du Pont, Convicted Murderer

A Pennsylvania court weighs in on a former wrestler’s bid to unseal the records of du Pont’s incapacity hearing so as to peer into his trust documents.

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Brooke Astor's son, Anthony Marshall, 85, was sentenced to one to three years in prison.  He was convicted earlier this year of 13 felonies and one misdemeanor.  Marshall's former attorney, Francis Morrissey was also convicted on five counts including forgery and scheming to defraud Astor.  CNN reports: 

During the trial, Marshall was portrayed as a cold, calculating man who spent the last years of his socialite and megaphilanthropist mother's life stealing her fortune to line his pockets

"These defendants, two morally depraved individuals, preyed on a physically and mentally ill 101-year-old woman to steal millions of dollars -- dollars that she had intended to go to help the lives of ordinary New Yorkers," Seidemann said, echoing his closing argument to the jury.

The sentence came after a six-month trial that featured as witnesses a "Who's Who" of New York's social elite, including Henry Kissinger, Graydon Carter, Barbara Walters, Vartan Gregorian and Annette de la Renta.
 

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Liliane Bettencourt is the heiress to the L'Oreal cosmetics fortune.  Forbes estimates her net worth at $13.4 billion and lists her as the richest woman in Europe.

Her daughter, Francoise Bettentcourt-Meyers fied a criminal complaint in December 2007 against Francois-Marie Banier, a photographer, for exploiting the frail Mrs. Bettencourt and influencing her to give him gifts valued at 1 .3 billion in euros plus life insurance policies and artwork.  Read more at the New York TImes .

Now daughter Francoise has asked that her mother be put under judicial supervision.  The case against Banier will come to court next week. The charge is what the French call "abus de faiblesse" -- the exploitation of physical or psychological weakness for personal gain.

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Bruce Carton at Legal Blog Watch writes:

"An out-of-court settlement has finally resolved a long-standing dispute among Dr. Martin Luther King's children over his multimillion-dollar estate.

Although Dr. King died in 1968, his estate continues to produce substantial income. Among other things, the estate includes the broadcast rights to Dr. King's “I have a dream” speech. In 1999, the 11th Circuit ruled in Estate of Martin Luther King, Jr., Inc. v. CBS, Inc.that the public performance of his speech did not constitute "general publication," and that by giving the speech in public he did not forfeit his copyright. As a result, re-broadcast of the speech has remained a major income generator for the estate."

More at Times Online:  click here.

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Remember Jarndyce and Jarndyce? The Chancery suit that goes on and on in Dickens' Bleak House?

From the first chapter of Dickens' Bleak House:

Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce without knowing how or why; whole families have inherited legendary hatreds with the suit. The little plaintiff or defendant who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled has grown up, possessed himself of a real horse, and trotted away into the other world. Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; there are not three Jarndyces left upon the earth perhaps since old Tom Jarndyce in despair blew his brains out at a coffee-house in Chancery Lane; but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.

We have another scarecrow of a case -  Anna Nicole Smith - whose suit for her deceased husband's estate has been to the Supreme Court of the United States and drags on.   Now there is a new wrinkle:  According to AP writer Matt Sedensky, the FBI investigated whether Anna Nicole Smith plotted to kill her husband's son, E. Pierce Marshall, as he and Anna Nicole battled over his father's fortune.  

Sedenksy writes:  "Smith's FBI records, obtained exclusively by The Associated Press, say the agency investigated Smith in 2000 and 2001 in a murder-for-hire plot targeting E. Pierce Marshall  who was at the center of a long legal fight to keep the starlet, model and stripper from collecting his father's oil wealth, valued in the hundreds of millions. The younger Marshall died three years ago of natural causes."

"The Supreme Court ruled unanimously in 2006 that Smith could pursue her late husband's fortune, overturning an appellate decision, which continues to be fought in California. The money became a factor after Smith's death, too, with Stern, her mother, and another boyfriend all fighting over an estate that ultimately will go to her daughter, who is now 3."

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The jury came back on October 8, 2009 on the 11th day of deliberations with the verdict:  guilty on 14 counts including first-degree grand larceny and scheming to defraud.

The co-defendant, estate planning lawyer Francis X. Morrissey Jr. was convicted on 5 counts including scheming to defraud, conspiracy and forgery.

The trial took 5 months.  Over 70 witnesses were called by the prosecution, including Henry Kissinger, Graydon Carter, Barbara Walters, and Annette de la Renta.

Sentencing will be December 8.  Mandatory sentencing guidelines call for a minimum sentence of 1 year - up to 25 years.

Read all about it here.

The New York Daily News reports:

"The evidence in this case was overwhelming," Assistant District Attorney Elizabeth Loewy said after the verdict. Marshall "stole from his mother while she suffered from Alzheimer's disease... making her own life worse while enriching his own," Loewy said.

Loewy, who was barred from mentioning during trial that Morrissey had his legal license suspended for taking advantage of other elderly clients, said she'll make that part of her pitch for giving him the max.

Marshall's lawyer, Frederic Hafetz, said he was "stunned" by the jury's decision.

"We will be appealing," he vowed. "I thought he was not guilty."

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The Chicago Tribune reports the Supreme Court of Illinois' unanimous decision in the Erla Feinberg case.  Here is Manya A. Brachear's and Ron Grossman's article: Illinois Supreme Court: Wills can use religious tests.  

We blogged about the case before: The Jewish Clause.   Read the Illinois Supreme Court opinion here.

"Although those plans might be offensive to individual family members or to outside observers, Max and Erla were free to distribute their bounty as they saw fit and to favor grandchildren of whose life choices they approved," Justice Rita Garman wrote.

Brachear and Grossman write:

"After her husband's death, Erla Feinberg came up with a different scheme, same intent. When she died in 2003, she bequeathed $250,000 to the one grandchild who had married within the faith. Those who had not -- four of five -- got nothing. Michele Feinberg Trull, a disinherited granddaughter, argued that the clause, dubbed the "beneficiary restriction clause" by the court, violated public policy by offering money to practice a particular religion.

The court disagreed, pointing out that Erla Feinberg did not set up a system that encouraged heirs to divorce and remarry to claim an inheritance. "Erla did not impose a condition intended to control future decisions of their grandchildren regarding marriage or the practice of Judaism; rather, she made a bequest to reward, at the time of her death, those grandchildren whose lives most closely embraced the values she and Max cherished," Garman wrote. "
 

Hat tip to Hull & Hull LLP's Toronto Estate Law Blog.

Check out "Bring Home a Nice Jewish Boy... or Else."

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Charles Kuralt, the TV Journalist and "On the Road" reporter, has another distinction. He has become famous in estate planning circles for "what not to do" with regard to your estate plan.

Mr. Kuralt died at age 62 of complications from lupus. His wife survived him, and under his 1994 will, his estate passed to his wife and his two daughters from a prior marriage.

After his death, the truth emerged. While his wife lived in New York City, Kuralt had a second, "shadow" family with Pat Shannon. Over the nearly 30-year course of their relationship, Kuralt and Shannon saw each other regularly and maintained contact by phone and mail. Kuralt was the primary source of financial support for Shannon and established close, personal relationships with Shannon's three children. Kuralt provided financial support for a joint business venture managed by Shannon and transferred a home in Ireland to Shannon as a gift.

In April1997 Kuralt deeded his interest in a 20-acre parcel with a cabin in Montana to Shannon. The transaction was disguised as a sale, but Kuralt supplied the "purchase" price for the 20-acre parcel to Shannon prior to the transfer. After that transaction, Shannon sent Kuralt, at his request, a blank real estate contract so that the remaining 90 acres along the Big Hole River could be conveyed to Shannon in a similar manner. The second transaction was to take place in September 1997 when Shannon, her son and Kuralt agreed to meet at the Montana cabin.

But Kuralt became ill and was admitted to a New York hospital in June 1997. On that day he wrote Shannon a letter. He died on July 4, 1997. The bulk of his estate was in New York, but he also owned the 90 acres in Madison County, Montana. Mr. Kuralt's widow, Suzanna "Petie" Baird Kuralt, filed a petition to probate his will in New York. A short time later she filed a petition in Montana to be the Domiciliary Foreign Personal Representative of the Estate.

Then, in the words on the Montana Supreme Court, "Kuralt's long-time and intimate companion,

Patricia Elizabeth Shannon, filed a Petition for Ancillary Probate of Will, challenging the application of Kuralt's New York will to the Madison County property based, in part, on a letter which she had received from Mr. Kuralt shortly before his death - a letter that this Court, in Kuralt II, determined to be a valid holographic codicil conveying the Madison County property to Shannon."

What was that? You read correctly. Kuralt wrote his mistress a letter. What did it say? It said, and I quote: "June 18, 1997 Dear Pat - Something is terribly wrong with me and they can't figure out what. After cat-scans and a variety of cardiograms, they agree it's not lung cancer or heart trouble or blood clot. So they're putting me in the hospital today to concentrate on infectious diseases. I am getting worse, barely able to get out of bed, but still have high hopes for recovery ... if only I can get a diagnosis! Curiouser and curiouser! I'll keep you informed. I'll have the lawyer visit the hospital to be sure you inherit the rest of the place in MT. if it comes to that. I send love to you & [your youngest daughter] Shannon. Hope things are better there!  Love, C. "

And that, ladies and gentlemen, was found to be a valid codicil to his will. The attorney for the surviving spouse and after she died, Kuralt’s two daughters argued that this letter merely expressed an intention to make a will and was not a will itself. Not so, held the court.

The plot thickens. The 1994 will (to which the letter was found to be a codicil) provided that all estate and inheritance taxes should be paid from the residue of the estate. The residue consists of the assets remaining after the payment of specific bequests, legacies and devises. Since the letter created a specific devise of the Montana land to Pat Shannon, the residue, which as ultimately to be inherited by the two daughters, had to pay the taxes on the property that the mistress inherited. That’s rubbing salt in the wound. Not only did the girls not get the Montana property,. but they had to pay $350,000 in taxes on it when it passed to the mistress.

What’s the moral of the story? Many, to be sure. Take a lesson from Mr. Kuralt. Consult an attorney who specializes in estate planning so that your wishes can be incorporated in a valid instrument. All communications with your lawyer, (so long as the lawyer is not jointly representing you and your spouse) are confidential. Don’t put the burden and expense of litigation on loved ones to have the Court decide what were your intentions for the disposition of your estate.

P.S.  And then there's Ike Turner's estate:  click here

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See John Elihon's article in the August 5, 2009 New York Times:  Writing Expert Says Astor's Signature Was Forged

"That testimony by Mr. Lesnevich, a forensic document examiner and prosecution witness, appeared to be a blow to Francis X. Morrissey Jr., an estate lawyer who prosecutors have accused of forging Mrs. Astor’s signature on that March 3, 2004, codicil to her will."

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No word as yet about Michael Jackson's will.  According to a June 29, 2009 article in The Independent: "For reasons that remain murky, Jackson's immediate family have so far had no luck in persuading his former entourage to grant access to his will, the one document that could reveal details of how the performer wished his funeral to be conducted."

It is commonly known that Jackson had serious financial problems and was deeply in debt.  Reports vary - from $200 to $500 million in debt.  His assets are estimated by one source at $ 1 billion.  Jackson was counting on his upcoming "This Is It" tour with 50 dates over 6 months to restore his financial position.

True, the tour won't be proceeding but as blogger Harry Thomas Hackney says in his post, the estate may make a lot of money:  "Jackson’s estate may earn even more than Jackson.  Even as I write this, radio stations and TV stations are playing Jackson songs and videos and the royalties are pouring in. Itunes is probably sellng Jackson’s music at a record rate and CDs and posters are flying off the shelves at WalMart.  This income is likely to go further without Jackson to spend it faster than it comes in.  It is likely to support an army of lawyers and accountants and still be able to pay debt and a legacy for his three (3) children.  Elvis Presley’s estate earned $52,000,000.00 last year, which may be more than Jackson earned while living. "

Then there will be the custody battle.  Mail Online reports that Jackson's three children, Prince (age 12), Paris (age 11) and Prince Michael II (a/k/a Blanket) want to live with their grandparents - Joe and Katherine Jackson.  Jackson's second ex-wife, Debbie Rowe, also wants custody.

There has long been speculation that Jackson would will the rights to the 200 songs from the Beatles catalogue that he purchased in 1985 to Paul McCartney. 

An article in The National Law Journal predicts a slew of legal battles over the use of Michael Jackson's name, music and image.  Posters and T-shirts with his picture are already out there along with bootleg copies of videos and CDs.   

The June 29 article in The Independent continues:

"Friends, family and former business associates unveiled legal teams yesterday as they prepare to duke it out over everything from the shady events that led to the King of Pop's sudden death, to the billion-dollar question of how the estate should be divided and who should gain custody of his three children.

Even Jackson's forthcoming burial is the subject of legal wrangles. His parents and eight siblings, who spent the weekend at their home in Encino, are hoping to co-ordinate a private service and public memorial event that would bring hundreds of thousands of mourners to the streets of Los Angeles. "

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Michael Sorkin of the St. Louis Post -Dispatch reports on alleged undue inffuence exerted by an elderly munchkin's caretaker:

Heirs sue to gain control of Munchkin Mickey Carroll's assets

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Joel A. Schoenmeyer wrote an excellent review of Mrs. Astor Regrets, by Meryl Gordon. 

Attorney Schoenmeyer says: "I just finished reading Meryl Gordon's book Mrs. Astor Regrets, and highly recommend it. The story should be interesting to anyone who likes a lurid tale that's well-told, but it has special interest to those interested in estate planning and related fields."

And closes with: "Interestingly enough, although Brooke has been dead almost two years, the battle over her estate is just beginning. And the battle has now carried over into the criminal arena, as Anthony is currently on trial and charged with stealing from his mother. After that trial, a Will contest trial will begin over certain estate planning documents signed by Brooke."

Here is the New York Times Sunday Book Review of the book.  Click here.

Donna L. Davey, writing for Library Journal:  "This is a behind-the-scenes account of the scandal sparked when the grandson of world-famous philanthropist Brooke Astor sued his father for neglecting to properly care for his grandmother. Gordon (New York magazine) conducted 230 interviews for the book and interweaves Astor family history with insights provided by Astor's family, friends, caregivers, and servants. Shortly after Astor's death, Tony Marshall, her 83-year-old son, was indicted on 18 counts of grand larceny, falsifying business records, conspiracy, and possession of stolen property, reigniting a frenzy in the tabloids that began 16 months earlier, when grandson Philip Marshall first raised the allegations that his aged grandmother was living out her final days in neglect. Intimate details of the family life and interpersonal relationships of the New York society icon are exposed by Gordon in this impeccably researched, thoroughly detailed, and absorbing profile of a sadly dysfunctional family."

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According to the AP story:

The executor of Dee Dee Ramone's estate has gone to court to stop publication of a book about the late punk rocker by his first wife.

Executor Ira Herzog says Vera Davie of Port St. Lucie, Fla., violated an agreement to let him review and change anything she wrote about the bassist.

Herzog's lawsuit in Manhattan's state Supreme Court uses Ramone's real name, Douglas Glenn Colvin. Colvin was with the Ramones from their creation in 1974 until 1989. He died in June 2002 at age 50 in Los Angeles.

Davie's book is "Poisoned Heart: I Married Dee Dee Ramone," published by Phoenix Books of Beverly Hills under the pen name Vera Ramone King.

Phoenix Books did not immediately return a call for comment.

Here is the Amazon pre-order:    order form

From the Back Cover:

"I'll always be grateful to Vera and thank her for loving and taking such good care of my son for so many years. Her story tells it all and this final tribute to Dee Dee will keep his legacy alive long after he's gone. I know he's smiling down from heaven."

––Doug's Mom


"Vera Ramone was Dee Dee Ramone's wife, lover, punching bag, babysitter, and support system. In this riveting memoir of a romance on the edge, she chronicles both the recklessness and the poetry of a disturbed but talented punk god."

––Michael Musto, Village Voice


"The sweet, heartbreaking tale of Vera Ramone's shattered romance with Dee Dee unflinchingly told from the flickering gloom and glitter of the Punk bunker."

––David Dalton, founder of Rolling Stone magazine and author of El Sid: Saint Vicious


"As Dee Dee Ramone's wife, Vera Ramone King was half of punk-rock's royal couple––but at tremendous cost. Her inspiring memoir 'Poisoned Heart,' while vividly portraying a marriage savaged by the late Ramone's mental illness, also shows King to be a true survivor, not only of an abusive relationship but one of the most exhilarating periods in rock 'n' roll history…. 'I have chosen, rather than to cry over what I've lost, to smile about what I've had,' she concludes, her own heart anything but poisoned."

––Jim Bessman
 

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Thank you to Professor Gerry W. Beyer for this interesting piece of news:

Harvest of a dead man's sperm authorized by Texas judge.

Here is the story from the AP:  click here.

Let me get this straight.  A 21 year old guy dies after a bar fight.  His mother wants his sperm so she can carry out his wish to have children.  Let me be more speicfic -  to have 3 boys named Hunter, Tod and Van.

"University of Texas law professor John Robertson, who specializes in bioethics, said state law gives parents control over a child's body for organ and tissue donations but its use for sperm "is very unclear."

"There are no strong precedents in favor of a parent being able to request post-mortem sperm retrieval," he said

No kidding.

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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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POINT:

Duncan Bannatyne, a British Multi-Millionaire and best selling author terminated his daughter's interest in a trust after her caught her smoking.  

COUNTERPOINT:

In September 1993, Marin Cemenescu died leaving a will which stipulated that his wife must smoke five cigarettes per day for the rest of her life to inherit his house and $30,000.

The will provided that "She could not stand to see me with a cigarette in my mouth [and] I ended up smoking in the bathroom like a schoolboy.  My life was  hell."

 Blogging credit to Prof. Gerry Beyer

What kinds of conditions are enforceable?   What about a condition that the beneficiary shall not marry?  Or shall not marry a Catholic?  What about a provision discouraging divorce?

The general rule is that a trust can be created for any purpose that does not violate public policy (whatever that is).

It is generally accepted that in the case of a surviving spouse, a provision that discourages remarriage is enforceable.  

While they live parents certainly try to influence the behavior of their children, often with monetary consequences for reward ro punishment.  Why not after death?

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I've heard it said that there is not a remedy for every wrong, but it has always troubled me that a person "done out" of an inheritance had no recourse.  Unless the person could fit themselves into the very limited circumstances of a third party beneficiary, most of these "disinherited" persons had no remedy agaisnt the person who wronged them.

There is new law in Pennsylvania and this is no longer the case.  In a tremendous victory for the disinherited, the PA Superior Court has affirmed the existence of a tort for tortious interference with inheritance.

"Sometimes people marry for money, and sometimes people kill for money. But when someone has done you out of an inheritance, can you sue for money? That, in a nutshell, is the question of tortious interference with expectation of inheritance."    -   Thus begins  Diane J. Klein in her article, "A Disappointed Yankee in Connecticut (or nearby) Probate Court: Tortious Interference with Expectation of Inheritance - A Survey with Analysis of State Approaches in the First, Second, and Third Circuits"   University of Pittsburgh Law Review Vol. 66:235.

She says of Pennsylvania at p.275: 

"In a pair of recent Pennsylvania Superior Court cases on appeal from the Montgomery County Court of Common Pleas, Judge Zoran Popovich has held that Pennsylvania recognizes the tort, although not in its Restatement (Second) Section 774B formulation.212 Instead, apparently relying on the 1904 case of Marshall v. De Haven, [58 A. 141 (Pa. 1904)] Judge Popovich has identified a Pennsylvania specific version of the tort, available exclusively when the tortious conduct prevents the execution of a will in favor of the plaintiff. This specific version of the tort remedies the specific injury of one who lacks standing to challenge a will, or would not benefit from such a challenge because the instrument under which he or she would benefit was never executed.. . . . until Judge Popovich, apparently no other Pennsylvania jurist regarded Marshall v. De Haven (or Mangold v. Neuman, or Cole v. Wells, other cases cited by Judge Popovich) as recognizing the tort. "

The two cases are: 

Cardenas v. Shober, 783 A.2d at 319-20,  and

 McNeil v. Jordan, 814 A.2d 234 (Pa. Super. Ct. 2002).

The elements of the tort, as set for by the court in Cardenas, are:

     (1)     The testator indicated an intent to change his will to provide a described benefit for plaintiff,

     (2)     The defendant used fraud, misrepresentation or undue influence to prevent execution of the intended will,

    (3)      The defendant was successful in preventing the execution of a new will; and

    (4)       But for the Defendant’s conduct, the testator would have changed his will.

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You gotta see this:

Juan Antunez's post on the Florida Probate & Trust Litigation Blog --

Probate lawyers arrested for representing client disinherited by Georgia's Slayer Statute.

Antunez writes:  "When it comes to staying out of trouble, spotting your risk exposures is half the battle (it's the "unknown unknowns" that will get you).  The Georgia case gives probate attorneys something else to worry about (as if we didn't have enough already). If your fees could in any way be characterized as tainted by criminal conduct, you need to assume the worst and take appropriate precautions.  As the Georgia lawyers learned, just because you're the friendly neighborhood probate attorney (and not some high profile criminal defense attorney), doesn't mean you can't get put in jail for doing your job."

Here is Professor Gerry Beyer's summary of what happened posted on Wills, Trust & Estates Prof Blog:

• Debra Post allegedly murdered her husband, Jerry Post, in 2002.
• Debra hired Candice Rader and Valerie Cooke to defend her.
• As payment for their services, Candice and Valerie accepted assets valued at over $320,000 from Debra to which Debra was not entitled because of the slayer statute (that is, proceeds of Jerry's life insurance and some real property).
• Subsequently, Debra pled guilty to felony murder and was sentenced to life without parole.
• A Douglas County Georgia grand jury indicted Candice and Valerie on August 21, 2008 for knowingly taking assets which were "covered" by the slayer statute.
• The attorneys were arrested

Under Georgia's "Slayer's Statute," a murderer isn't entitled to profit from his or her victim's estate.  Since the attorney's were paid from the victim's estate, they, well, what did they do?  They were charged with  six counts of theft by taking and one count of theft by receiving.  They were taken to jail after their arrest and released the next day on $100,000 bond each (according to the Atlanta-Journal Constitution).

Were they really probate lawyers?   Or were they criminal defense lawyers?    What's the difference between. . . . . . .

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