July 26th, 2011

On July 1, 2010, the provisions of a completely revised Georgia trust code became effective. This month we celebrate its first anniversary, so it seemed to be a good time to reflect on what were the top “attention-getters” of the new code. In thinking about this “top three” list, we’re reminded of the last time we trained a new puppy. The theme was: reward the good behavior, ignore the bad. Fortunately, the new code will help you take care of your dog and rewards good trustee behavior, but there could be serious consequences for a trustee not complying with some of the new provisions.

1. The Dog: By far and away, for better or for worse, most attention has been focused on the new provisions allowing pet trusts. In the past, we were able to (somewhat) accommodate people’s wishes to provide for their pets upon their deaths by naming an individual as beneficiary of the trust fund so long as they were caring for the pet. Now, it’s much easier because the pet itself can be a trust beneficiary.

2. The Carrot: Trustees of Georgia trusts now may take comfort in a shorter period during which a beneficiary can sue for a breach of fiduciary duty. If the trustee has provided the beneficiary a “written report” that “adequately discloses the existence of a claim against the trustee”, then a shortened two-year statute of limitations applies instead of the former six-year period. Without that “written report” the beneficiary has the normal six years to sue beginning when the beneficiary discovered, or should have discovered, the existence of the claim. Over this first year, virtually all trustees we talk to praise this new provision.

3. The Stick: As with number 2 above, the theme of the new trust code is transparency. Trustees also might suffer a stick approach by way of a claim for breach of fiduciary duty for failing to comply with other new statutory provisions such as: (1) the duty to notify certain beneficiaries when trusts are created, and (2) a new duty to provide reports and accounts to certain beneficiaries.

There are many other interesting and important provisions in the new code, such as: (1) easing of the duties owed to remote beneficiaries (the “qualified beneficiary” concept), (2) new duties for trustees regarding investment diversification, and (3) formal “trust certification” mechanisms. Our experience with the new code this first year has been uniformly favorable. However, we are carefully watching to see how some provisions are interpreted or applied by our appellate courts.

July 17th, 2011

Fiduciaries should familiarize themselves with signs that their clients are being exploited by caregivers, particularly where a fiduciary has had some role in selecting or paying the caregiver service.  As baby boomers advance in age, there is a reported rise in exploitation by those they have hired to care for them.  Commons allegations are undue influence, misuse of powers of attorney, and incapacity.  In the Atlanta Journal-Constitution, Bill Rankin explores the rise in caregiver crime.

July 12th, 2011

In a recent blog post, Paula Span examines the challenges of assisting elderly relatives with their health care when those relatives have not been declared incapacitated. The movement in a number of states to permit ‘enhanced’ health care proxies would allow designees to assist with or make health care decisions for the principal while the principal is still legally competent.

July 12th, 2011

In Royal v. Blackwell, the Georgia Supreme Court determined that an executor breached his fiduciary duties by, among other things, paying himself excessive administration fees and directing a bequest declined by one beneficiary to a foundation of which he was a board member and a paid bookkeeper/accountant.

July 12th, 2011

In Cabrel v. Lum, the Georgia Supreme Court provided a lengthy review of the law of year’s support in a complicated case involving a nearly 50-year old award of year’s support.

July 11th, 2011

In the third time Melican v. Parker has come before the Georgia Supreme Court, a 4-to-3 majority of the Court ruled that Florida law applied to determining whether a contract of sale not consummated prior to death causes an ademption when the questioned gift bequeathed in a Georgia will is real property located in Florida.

July 11th, 2011

In a recent Wall Street Journal article, Kelly Greene and Jessica Silver Greenberg discuss the rise in criminal and civil litigation concerning powers of attorney and provide tips for minimizing potential exposure.

July 11th, 2011

On May 12, 2011, Governor Nathan Deal signed SB 134, which made a number of technical corrections to the Georgia guardianship and trust codes, corrected terminology, and updated cross-references within the codes. In addition, the bill allows natural guardians of children to consent on behalf of a beneficiary if there is no conflict of interest. The full text of the bill is located here.