October 31st, 2011

Joint tenant with right of survivorship accounts are commonly used to transfer assets outside of probate.  They also tend to lead to a lot of estate litigation.  The concept of a JTWROS account is simple enough: the tenants have an equal right to the account’s assets and the survivor gets the assets when the other account holder dies.

What if someone doesn’t want to make an inter vivos gift of his or her cash or other valuable personal property, but instead wants it to be transferred outside of probate upon his or her death?  Can something like a joint tenant with right of survivorship safe deposit box work?  If your plan is to use a ’joint’ safe deposit box, then you better pay careful attention to the safe deposit box contract.  At least that was what was decided by the Georgia Court of Appeals in Longstreet v. Decker. (more…)

October 28th, 2011

We’ll start and end the week here at BryanCaveFiduciaryLitigation.com with powers of attorney.  In order to abuse a power of attorney, there actually has to be one.   In Kubek v. Jones, the United States District Court for the Middle District of Alabama recently determined that a decedent’s daughter forged a power of attorney so she could convert her father’s retirement benefits and life insurance policy to the exclusion of her stepmother.  And, as if the forgery wasn’t enough, she also exercised undue influence over her father.

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October 25th, 2011

A client recently asked me about the status of Georgia common law marriage, and in answering him, I thought it might be a good time for a reminder for all of us (including those in other states) that even if a state no longer recognizes common law marriage, usually such marriages remain valid if formed prior to the date of a statutory enactment prohibiting them. In addition, most states also recognize common law marriages formed in other states.

For example, the State of Georgia recognizes common law marriages formed prior to January 1, 1997, as well as valid common law marriages formed in other states. Under Georgia law, a valid common law marriage may be formed between a man and a woman if they have (1) the capacity to make a marriage contract, (2) actually entered into a nuptial contract (usually proven by evidence of the couple holding themselves out publicly as spouses) , (3) consummated their union by cohabitation, and (4) achieved all of the above prior to 1997.

Why is this important?  (more…)

October 24th, 2011

There are so many ways to abuse powers of attorneys.  That’s why they’ve been referred to as “vehicles for fraud.”  While we’ve previously looked at ways in which they’ve been abused and our colleagues at Bryan Cave, Stephanie Moll and Mary McMath, have examined them in the context of “Who Can You Trust?” over at TrustBryanCave.com, the ways in which they can be abused are seemingly endless.  The reality is that these cases will continue to appear in increasing numbers as the Baby Boomers get older.

Last month, in Ward v. Patrizi, the Ohio Court of Appeals dealt with a a classic power of attorney abuse fact pattern.  A person who needed some help managing his bills designated a family member as his attorney-in-fact.  The attorney-in-fact dutifully paid the principal’s bills from his checking account, but, on the day the principal died – before his body was even cold – the attorney-in-fact cut herself a check made out to “cash” from the principal’s account.

You can probably figure out how this turned out for the attorney-in-fact.  But the interesting part of this story is what happened to the attorney-in-fact after she tried to give the money back to the estate.

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October 21st, 2011

When trust beneficiaries sue their trustee, there will almost invariably be a demand for an accounting.  Even if the trust instrument relieves a trustee from having to provide regular accountings, the trustee is almost always going to be required to provide some accounting to the beneficiaries.

Trust litigation often deteriorates into fights over the depth of the accounting.  How far back must the accounting go?  What level of detail is required?  Must the trustee provide receipts for every expense?  In the case of a trust where the grantor is also a beneficiary during his or her lifetime, one of the most common disputes is whether the trustee must provide the remaindermen or successor income beneficiaries with an accounting for that period of time preceding the grantor’s death.

In In re Stephen M. Gunther Revocable Living Trust, the Missouri Court of Appeals decided that, with respect to a revocable trust, the answer to that question is  “no.”  (more…)

October 19th, 2011

Plenty of trust instruments are set up to permit a beneficiary to act as trustee.   When the trust has more than one beneficiary, however, the testator or grantor potentially sets that trustee-beneficiary up for conflict of interest claims.  In these situations, prudent testators or grantors typically appoint a neutral co-trustee to serve with the trustee-beneficiary and require the trustee-beneficiary to take no part in self-encroachments or self-distributions.

In Faville v. Burns, the Illinois Court of Appeals considered whether a trustee-beneficiary has a conflict of interest with his co-beneficiaries of a trust.  The trial court had dismissed the co-beneficiaries’ efforts to remove the trustee-beneficiary based on a conflict of interest.  The Court of Appeals, however, reinstated the removal claim.  (more…)

October 17th, 2011

In a probate court case, attorney Richard S. Weiss was sanctioned by the court.  Weiss was required to resign his appointment as guardian for an elderly woman, required to forgo fees that he claimed to have earned, and required to pay certain sums to the guardianship estate.  Weiss had probably hoped that was the end of the fallout from the conduct that led to the sanctions.  It was not.  The Massachusetts Board of Bar Overseers had not yet weighed in . . . . (more…)

October 14th, 2011

In response to several Florida statutory changes that went into effect earlier this year, the Florida Bar’s Probate Rules Committee proposed certain amendments to Probate Rules 5.025 (Adversary Proceedings) and 5.240 (Notice of Administration).  On September 28, 2011, the Florida Supreme Court adopted the Committee’s proposals. 

The Florida Probate Rules have been amended as follows: (more…)

October 12th, 2011

Perception — or perhaps more precisely, misperception — fuels so much fiduciary litigation.  For example, an elderly grantor may have perfectly legitimate reasons for conveying property to someone outside the family.  Even if the grantor’s reasons aren’t good, she is within her rights to make a completely unreasonable transfer so long as nothing afoul is afoot (e.g., lack of capacity, undue influence, fraud, etc.).

But, when a blood relative learns of this transfer, a sense of entitlement kicks in, and we’re on our way to litigation.  The problem for these elderly grantors, who are under so much pressure to explain or change their decision, is that they oftentimes say or do anything to try to make everyone happy.  That never works.  And that was the sort of situation recently before the Kentucky Court of Appeals. (more…)

October 10th, 2011

Somewhere Kirby E. Cole sits in prison, having plead guilty to mail fraud.  As trustee for the Phillips Foundation, Cole breached his fiduciary duties to the Foundation by fraudulently transferring Foundation property and mineral rights for free to himself.  So, Cole did what any imprisoned former trustee would do – he sued his lawyer. (more…)