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.

 

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.

 

When your client owns property in foregin countries, estate planning and tax issues can be complex.  This is an excellent article discussing inheritance in the European Union nations centering on the issue of forced heirship.  It is a concept strange to Americans who strongly believe they have a right to disinherit their children.

Thank you to blogger Joel A. Schoenmeyer at Death and Taxes Blog.

Whom are a person’s heirs? Heirs are those who inherit a decedent’s property if he or she dies without a will. The law has long established that a surviving spouse has a right to receive a share, and then children, or other lineal descendants, inherit. If there are no lineal descendants, then parents are heirs, then grandparents, siblings, nieces and nephews, and so forth.

In a world where there are multiple marriages, many children born to unmarried parents, in vitro fertilization, and unconventional living situations, how does one determine whom are a person’s heirs? Recent developments in technology, including DNA tests, are raising challenges to well-settled principals of the common law.

A Florida case, Doe v. Doe, decided by Florida’s 2nd District Court of Appeals in September 2009, was about this problem. The facts of Doe are uncomplicated. Chester Jr. and Eleanor, his wife, executed trusts which provided for a gift to their grandchildren. One of the grandchildren was Catherine, who was the daughter of Chester III (son of Chester Jr. and Eleanor) by virtue of his name appearing on her birth certificate and a court order entered in the domestic relations division following Chester III’s divorce from Catherine’s mother.

Chester Jr. and Eleanor never knew, but Chester III submitted samples from Catherine and himself to two separate laboratories for DNA testing. The test results from each of the two laboratories conclusively excluded Chester III as Catherine’s biological father. Eleanor, who survived Chester Jr., died six years after the results of the DNA tests became known to Chester III.

The trust contained this language: "For all purposes, hereunder, in determining whether any person is a child or descendant, only children and descendants by blood shall be included."

The trustee brought suit to exclude Catherine from the class of trust beneficiaries since the DNA test proved she was not a "descendant by blood." The question before the court was whether DNA test results should be allowed to prove that a child is not an heir?

After a long disquisition, the court said: "To put it in a nutshell, the trusts’ Article XVIII appears in legal instruments, not in a technical paper on genetics. The phrase "descendants by blood" is a legal term of art, not a scientific one. As a legitimate child of one of the settlors’ sons, Catherine qualifies as one of the settlors’ ‘descendants by blood.’"

What is meant by "legitimate" in this context? It has long been a presumption of the law of inheritance that a child born to a married couple is "legitimate" that is, it is the child of both parents. In the days when this presumption developed, DNA testing was not available. Also, a child acknowledged by the father has been presumed an heir.

Questions of the interpretation of wills and trusts always turn on the decedent’s intent. The presumption and interpretations imposed by law are aimed at discerning intent. In this case, what did Chester Jr. and Eleanor intend? Did they want Catherine to share in their estate? Apparently they did. Would they have wanted her to share if they knew their son Chester Jr. was not her biological father? Tough question. How can we know?

The Court closely examined the meaning of the term "descendants by blood" as it has been historically used in wills and trusts. Generally, such expressions were used as a term of art to exclude adopted persons as beneficiaries. Because the blood restriction came to be used long before genetic testing became available, the Court did not want to extend its meaning "to disqualify descendants who were not adopted and who would otherwise qualify as a beneficiary." Therefore, as a legitimate child of Chester III, Catherine qualifies as one of the descendants by blood of Chester Jr. and Eleanor.

Thus, the court held that the DNA evidence would not be used to remove Catherine as a beneficiary.

A different standard and view was applied to the converse case when the court included a child not born in wedlock, who claimed to be an "heir" of the decedent, even though he or she had not been acknowledged and there had been no adjudication of paternity.

We look for more developments in the law around these issues. Will the old common law approach be upheld when the DNA evidence is clear and convincing? What will this do to families?

If you are concerned about who will be considered to be your heirs and beneficiaries because of complex personal relationships, there is an easy solution: make a will. When you make a will you can specify who should be included and how their relation should be determined. Don’t leave it to chance, or years of litigation. Making a will that specifically addresses these issues is the way to make sure your intentions are followed.

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."

 

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."

 

 

 

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."

 

 

 

The Springfield, Illinois State Journal-Register reports:

"Sandra Gayle, 65, of Springfield was convicted of financial exploitation of the elderly and financial exploitation of a person with a disability. A Sangamon County jury deliberated a little more than an hour Friday before returning the verdict.

Prosecutors introduced testimony over the course of the four-day trial to show that Gayle used her own family to gain the trust of the doctor. Gayle, who had the victim’s power of attorney, then “gifted” easily more than $300,000 from the doctor’s bank account to herself, relatives and friends, testimony indicated.

Gayle could receive from 4 to 15 years in prison when she is sentenced Nov. 19 by Associate Judge John Mehlick. Her crimes also are probationable."

Perhaps the most shocking piece of the news is that State’s Attorney Jay Magnuson stated that  the Gayle case is the first financial exploitation of the elderly case to go to trial in Sangamon County in the 14 years he has been a prosecutor here.  Think about it.  How many cases have you seen of this type of abuse?  It’s time to get serious and stop this crime.

Hat tip to Estate of Denial