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Need Another Reason To Avoid Mixing Family & Finances?

July 25, 2017

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You have a big heart and a little bit of money.  You want to help out a cash-strapped family member, and – “because you’re family” – you don’t put down how much you’ll loan or how it’ll be paid back.  You would hate to do it, but, in a worst-case scenario, you suppose a court could help you get it back.  Through its opinion in Roberts v. Smith, however, the Georgia Court of Appeals may have made it harder to get that money or property back from a family member through an implied trust.

Four siblings arranged to purchase a home for the benefit of one of the siblings.  All of the siblings verbally agreed to contribute money toward the purchase and maintenance of the house.  One of the siblings testified that “[n]obody had a set amount to pay,” and another testified that “we are a family. So

Transferring Property To A Trust: It’s Not What You Meant, It’s What You Said

June 21, 2017

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When we put pen to paper, sometimes the words don’t come out right.  If that happens, hopefully there’s an opportunity to explain what we meant.  Most times that’s true – even in estate planning.  For example, we have seen how scrivenor’s errors can be explained.  But, for the second time in less than a year, Georgia has limited the role evidence of the settlor’s intent plays under Georgia trust law. In Gibson v. Gibson, the Georgia Supreme Court strictly applied a statute governing the transfer of property to a trust to determine that mistitled brokerage accounts were never transferred to two trusts regardless of the settlor’s intent.

In Gibson, the Georgia Supreme Court had to decide a number of issues arising out of a divorce.  One of the multitude of issues on appeal was whether the husband failed to transfer properly two brokerage accounts into

House Held In Trust Lost Marital Asset Status

December 22, 2016

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In the afterglow of a wedding, the spouses probably don’t immediately start thinking how the bliss they feel may end spectacularly and expensively.  Chances are they may even start estate planning, thinking how they can seamlessly transfer assets to the other.  In Nelson v. Nelson, a Florida appellate court reminded us that the estate planning choices spouses make, however, have far-reaching consequences if before death they doth part.

Husband and wife bought a house together in California and titled it in both of their names.  They then transferred the home into an irrevocable trust established for the benefit of the wife and her descendants, and named the wife as the sole trustee of the trust.  Husband and wife divorced and a Florida trial court characterized the house as a marital asset subject to equitable distribution.  The Florida appellate court, however, found that the house

Your Estate Planning New Year’s Resolution Checklist

(This is an updated post from December 2015)

Need a New Year’s resolutions to kick start 2017? Here is an idea you probably hadn’t considered: review your estate planning documents.

If you are like most people, you are probably thinking that reading legal documents does not sound like an even remotely enjoyable way to start a new year. But, it doesn’t have to be as unpleasant as it sounds. Reviewing your documents does not mean you have to read them cover to cover. If you know what are the most important elements, it is easy to review your will, trust, and powers of attorney regularly to ensure they still comply with your wishes. These documents not only determine who will receive your property when you die, but also likely determine who has the right to make financial and major medical decisions during your lifetime. Needless to say, it is important

How Far Can A Grantor Go In Eliminating The Duty To Account?

December 1, 2016

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Trusts are often used to transfer wealth privately without the messiness of a public estate administration.  That financial privacy can get blown, however, when trusts become the subjects of very public litigation.  In open court and in publicly available filings, dollar figures, assets, and dirty laundry can get thrown about for anyone to see.  This is especially true in trust accounting actions, which dig into the financials: income, expenses, assets, investment performance, and so on.  In Estate of Fuller, however, the Court of Appeals of Mississippi indicated that a grantor may be able to shroud a trust in greater secrecy through restrictive language in the trust instrument.

The trust at issue was a private trust that provided that the trustee would not “be required to account to any court.”  Under Mississippi law, this provision was enforceable because a trust “may

When The Power To Amend Doesn’t Actually Mean You Can Amend

October 20, 2016

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Circumstances, laws, and taxes all change.  And, when they do, many settlors don’t want their beneficiaries to have to go into court to get permission to roll with the changes.  That’s why you often find a trust provision that permits non-judicial amendments to the trust.  The breadth of these powers to amend differ from a narrow power to amend to a broad power to amend, like the one before the Maryland Court of Special Appeals in Grueff v. Vito.  There, the power to amend a family trust provided:

This Agreement may be revoked, altered or amended from time to time by an instrument in writing, signed by the holders of not less than seventy-five (75%) interest herein and delivered to the Trustee.

The beneficiaries used that amendment power a number of times over the years.  But, eventually they took it too far.  After

THE CHOICE IS NOW YOURS

THE CHOICE IS NOW YOURS

October 6, 2016

Authored by: Kathy Sherby and Charles Lin

Rev. Proc. 2016-49

The recent issuance of Rev. Proc. 2016-49, which modifies and supersedes Rev. Proc. 2001-38, now puts the taxpayer in the driver’s seat. Recall that in Rev. Proc. 2001-38, the Service was providing relief for the surviving spouse when an unnecessary QTIP election was made, by treating such a QTIP election as though it had not been made. Practitioners began to question whether Rev. Proc. 2001-38 would render a QTIP election a nullity when made in order to qualify for a state marital deduction where such an election was not needed to reduce the Federal estate tax liability to zero. Then when portability came into the picture, the enhanced concern about basis adjustment at death drove practitioners to want to make a QTIP election even though not needed to reduce the estate tax liability, to permit the surviving spouse to make larger gifts that would not

The Four Corners Of The Trust Instrument Get Tighter

September 28, 2016

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When a court is called upon to decide a trust dispute, it starts by looking at the intent of the settlor.  Invariably there is some statement about the court being bound by the “four corners” of the trust.  Only if the language within the trust instrument is ambiguous can the court then look at evidence outside of the trust instrument.  Just how serious are Georgia‘s appellate courts when it comes to sticking to the language in the trust instrument? In Jackson v. Nowland, the Georgia Court of Appeals refused to look at outside evidence that created a pretty clear ambiguity with the trust termination language.

The trust at issue contained a provision that the trust would continue during the settlor’s life and until her youngest named family members had reached the age of 27.  Pretty easy, right?  Plain language of the trust indicates that

Trust Instrument Can’t Completely Insulate Trustee From Liability

September 2, 2016

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Settlors often want to give their trustees peace of mind that they can administer the trust without a court looking over their shoulder and second-guessing every act they take.  So, estate planners will often put a broad exculpatory clause in the trust instrument to relieve the trustee from liability for certain actions in administering the trust.  But, just as we have seen in other jurisdictions, in In re Scott David Hurwich 1986 Irrevocable Trust, the Court of Appeals of Indiana recognized that there is a limit as to how far the relief from liability can extend.

A settlor/beneficiary of a trust sued the trustee, alleging mismanagement of trust assets, commingling trust assets with the trustee’s own funds, conversion of trust assets, waste of trust property, and breach of fiduciary duty.  Among other defenses, the trustee pointed

WHAT CAN YOUR SPOUSE REACH IN A DIVORCE?

WHAT CAN YOUR SPOUSE REACH IN A DIVORCE?

August 15, 2016

Authored by: Stacie J. Rottenstreich and Edward Peck

 

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In the recent decision, Pfannenstiehl v. Pfannenstiehl, the Massachusetts Judicial Supreme Court overruled the appeals court decision and concluded that assets held in a discretionary trust created by a third party, where the husband is but one potential beneficiary of the trust, is not a marital asset to be divided on divorce.

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