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What’s The Correct Fiduciary Standard When A Trustee Controls Family Entities Held By The Trust?

March 27, 2014

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As part of wealth planning, trustees are frequently put in charge of corporate entities in which the trust owns an interest.  When it comes to the trustee’s corporate duties and actions with respect to the corporate entity, what is the appropriate standard of care?  Is it a corporate level fiduciary standard or is it the heightened trustee level fiduciary standard? Jurisdictions are split on this issue.  The Georgia Supreme Court in the case of Rollins v. Rollins, is the latest state to weigh in on the issue.  In reaching its opinion, the Georgia Supreme Court resolved some issues, set some thresholds, and left open a few questions.

To understand the Court’s opinion, we must first understand the structure of the trusts and family entities involved.  O. Wayne Rollins established ten irrevocable trusts, the Rollins Children’s Trust (“RCT”), and nine Subchapter S-trusts, each for the

It’s Income Tax Time Again . . . But Don’t Forget About the Gift Tax Return

474603253It’s that time of the year again…tax time! Like it or not, when tax season rolls around it is time for most Americans to add “do taxes” to the “to do” list. Chances are you have already started gathering the documents that you or your accountant will need to complete your income tax return. Or, if you are ahead of the game, your income tax return is already filed and your refund (if you are lucky) is in your pocket.

California Appellate Court Rules That Trust Arbitration Provision Was Unenforceable

March 25, 2014

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Mandatory arbitration provisions in trusts are a relatively new concept, and only now are courts really beginning to weigh in on their enforceability.  In McArthur v. McArthur, add the First District Court of Appeal of California to the list of courts that have now considered the issue.  It determined that an arbitration provision in the inter vivos trust of Frances E. McArthur was unenforceable as against a trust beneficiary who brought suit to invalidate an amendment to the trust based on undue influence and lack of testamentary capacity.

Let’s start with the provision.  In 2011, Frances amended her 2001 trust to give a greater portion of the property to one of her daughters and to add a “Christian Dispute Resolution” provision that required mediation and, if necessary, arbitration of “any claim or dispute arising from or related to the

Renee Gabbard Honored for Excellence in Public Service

March 24, 2014

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KKFIrvine Partner, Renee Gabbard, is being honored on March 27, 2014 with an Award for Excellence in Public Service at the Chapman University Fowler School of Law’s Public Interest Law Foundation (PILF) 2014 Silent Auction and Gala.  The Silent Auction and Gala honors the dedicated work of its students and community leaders in public interest law.  Proceeds from the dinner and auction will support PILF’s public interest summer jobs grant program.

Statute Of Limitations Barred Action To Set Aside Allegedly Fraudulent Deed

March 21, 2014

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If a deed has been procured by fraud, it may take a while for the defrauded person to figure out that he or she has been duped.  That’s why, in certain circumstances, the statute of limitations to set aside a fraudulent deed may be tolled.  But a mere allegation that a deed has been procured by fraud isn’t enough to toll the statute of limitations.  The allegedly defrauded person usually can’t just blindly accept someone else’s purportedly fraudulent representations.  Then again, the situation may be different if a fiduciary is the alleged fraudster or if there is a confidential relationship between the parties.  In McCall v. Williams, the Georgia Court of Appeals explored the intersection between alleged fraud, the duty to exercise reasonable diligence to detect such fraud, the role a fiduciary or confidential relationship plays in

Probate Exception Did Not Apply To Claims Relating To Trust Funded By A Pour Over Will

March 18, 2014

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The probate exception to federal jurisdiction provides that a federal court may not probate a will, administer an estate, or entertain an action that would interfere with pending probate proceedings in state court or with the control of property in the custody of the state court.

After the U.S. Supreme Court’s decision in Marshall v. Marshall, federal courts have generally applied this test to determine whether a case fits within the probate exception: whether a plaintiff seeks an in personam judgment against a defendant, as opposed to the probate or annulment of a will or other relief seeking to reach a res in the custody of a state court, and whether sound policy considerations, specifically, the special proficiency of state courts with respect to the issues presented by a case, militate in favor of extending the probate exception to that case.

In Janecek

Personal Representative Did Not Breach Fiduciary Duty By Distributing Personal Property To Himself

March 14, 2014

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If you know that you have items of personal property with sentimental value, a little advanced planning on how those items will be divided upon your death may help avoid litigation.  There are a number of ways this can be done.  Drawing cards, a snake draft, blind drawings, auctions, and the “slice of cake” method are a few possibilities.  Just pick a method.  The Supreme Judicial Court of Maine‘s opinion in Estate of Ada Y. Greenblatt provides a good example of what might happen if you don’t – especially if your personal representative is one of the people who gets some of the property.

Ada Greenblatt’s will provided for a number of specific bequests and then provided that the remainder of her estate should be distributed to her brothers, sisters, and sister-in-law in equal shares, or if they are deceased, to their families, per

Madness in March?

Madness in March?

March 14, 2014

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

The term March Madness may take on new significance to New Yorkers this year. In addition to contributing to NCAA pools, New Yorkers should consider making gifts this month. Following up on prior blog post, New Yorkers may have a very small window of opportunity to take advantage of gifting significant sums of money prior to April 1, 2014. Currently New York State has no gift tax. New Yorkers can make gifts of any size to anyone without incurring any New York gift tax consequences at all. However, the gift and estate tax rules may change shortly. Governor Cuomo has proposed a change to New York’s estate and gift tax law that will require all taxable gifts made by a New York resident after March 31, 2014 to be included as part of the gross estate for purposes of calculating the New York estate tax. However, the proposal would

Sherby Elected President of ACTEC

March 13, 2014

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Kathleen Sherby in our St. Louis office has been elected president of the American College of Trust and Estate Counsel (ACTEC), effective March 8. Kathy’s election as president is an honor that recognizes her reputation as one of the country’s preeminent estate planning attorneys. She most recently served as president-elect of the organization. The American College of Trust and Estate Counsel is a national organization of approximately 2,600 lawyers elected to membership by demonstrating the highest level of integrity, commitment to the profession, competence and experience as trust and estate counselors. Kathy is a partner in our Private Client Group and co-leader of the Fiduciary Litigation Team.

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