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Will an Affirmative Disposition of an IRA in a Trust Work? Maybe

In the past, the Service has indicated informally that an affirmative direction in a trust that is named as the beneficiary of an IRA would not be respected to limit the consideration of other beneficiaries named in other sections of the trust, but that a negative direction would work. Thus, if the trust created Trust A, Trust B and Trust C after the settlor’s death, and specified that the IRA was to be an asset of Trust A, the Service still required a review of all the beneficiaries of Trust B and Trust C, but if the trust specified that the IRA could not be used to fund Trust B or Trust C, the beneficiaries of those trusts would not be considered in determining whether the trust was a “see through” trust and the measuring life for purposes of the required minimum distributions. However, in PLR 201241017, the Service appears

Defalcation, Bankruptcy, And Fiduciary Litigation

Originally posted on our sister blog, www.bryancavefiduciarylitigation.com

Last week, the United States Supreme Court issued its opinion in Bullock v. BankChampaign, N.A., which addressed the circumstances in which a breach of fiduciary duty judgment can be discharged in bankruptcy proceedings.  Specifically, the Court resolved a deeply fractured Circuit split on the scope of the term “defalcation” within Section 523(a)(4) of the Federal Bankruptcy Code.  That Section of the Bankruptcy Code provides that an individual cannot obtain bankruptcy discharge “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”  For years, the lower courts had struggled with what, exactly, “defalcation” means.  Wonder no longer because the Supreme Court has defined it.

How is an Illinois Trust Now Like a Fine Wine? It Can Be Decanted: A Summary of the New Illinois Decanting Statute

decanterEffective January 1, 2013, Illinois statute authorizes “decanting” of irrevocable trusts. What is decanting, you ask? Isn’t that something you do with a bottle of wine? Yes, it is, and just like you decant wine from one bottle into a new container to remove sediment and to allow the wine to breathe, when you decant a trust, you pour the trust assets from one trust into another trust, allowing flexibility in the terms of an otherwise irrevocable trust.

Illinois recently enacted a new Section 16.4 of the Trust and Trustees Act, entitled “Distribution of trust principal in further trust” (the “Decanting Statute”). The Decanting Statute allows the trustees of an irrevocable trust (the first trust), acting pursuant to their fiduciary duty (and assuming certain conditions are met), to distribute all or part of

When The General Powers Granted To A Trustee Conflict With A Specific Trust Provision

From BryanCaveFiduciaryLitigation.com

Almost invariably, settlors give their trustees broad powers regarding trust property.  Often these broad powers include the power to convey and encumber trust property and the power to loan trust property.  But, sometimes, the settlor also gives the trustee specific instructions with respect to specific trust property.  In Hamel v. Hamel, the Kansas Supreme Court interpreted a trust instrument that gave the trustee broad general powers, but also specific directions regarding a specific piece of real property, and examined the interplay between the two provisions.

Arthur L. Hamel’s trust instrument gave the trustee broad authorization to control and administer trust property, including “the power to do all acts that might legally be done by an individual in absolute ownership and control of the property” and provided the trustee with “the power to lend money to . . . any beneficiary

Is the Trustee of a Revocable Trust Answerable to the Remainder Beneficiaries? Ever?

Part 3 of a 3 part series.

In a trilogy of new cases decided in the last couple of months, the courts in three states have addressed the issue of whether the trustee of a revocable trust has a duty to account to, and can be held liable to, the remainder beneficiaries of the trust, for a period during which the trust was revocable, after the death of the settlor. In reviewing the discussion of the courts in these three decisions, it is clear that, while a trust is revocable, the trustee has a duty only to the settlor, and that even after the death of the settlor when the interests of the remainder beneficiaries has vested, the trustee continues to have no duty to the remainder beneficiaries for any actions taken while the trust was revocable. In Part 1 of this series, we reviewed the case of Pennell

Is the Trustee of a Revocable Trust Answerable to the Remainder Beneficiaries? Ever?

Part 2 of a 3 part series.

In a trilogy of new cases decided in the last couple of months, the courts in three states have addressed the issue of whether the trustee of a revocable trust has a duty to account to, and can be held liable to, the remainder beneficiaries of the trust after the death of the settlor, for a period during which the trust was revocable. In reviewing the discussion of the courts in these three decisions, it is clear that, while a trust is revocable, the trustee has a duty only to the settlor, and that even after the death of the settlor when the interests of the remainder beneficiaries has vested, the trustee continues to have no duty to the remainder beneficiaries for any actions taken while the trust was revocable. In this series of blogs, we review these cases.  In Part 1

Is the Trustee of a Revocable Trust Answerable to the Remainder Beneficiaries? Ever?

Part 1 of a 3 part series.

In a trilogy of new cases decided in the last couple of months, the courts in three states have addressed the issue of whether the trustee of a revocable trust has a duty to account to, and can be held liable to, the remainder beneficiaries of the trust after the death of the settlor, for a period during which the trust was revocable. In reviewing the discussion of the courts in these three decisions, it is clear that, while a trust is revocable, the trustee has a duty only to the settlor, and that even after the death of the settlor when the interests of the remainder beneficiaries has vested, the trustee continues to have no duty to the remainder beneficiaries for any actions taken while the trust was revocable. In this series of blogs, we will review these cases.

In the first

Recluse Leaves Estate to Actors

Recluse Leaves Estate to Actors

February 21, 2013

Authored by: Stephanie Moll and alan-singer

What to do when you have no friends or family to whom to leave your estate? Why not do what Ray Fulk of Illinois did? Fulk had no family to which he wanted to leave his estate, so he executed a Will leaving $5,000 to his favorite charity, and the rest of his nearly $1,000,000 estate to his two favorite actors, Kevin Brophy (perhaps most famously known for his role in the 1977 television show, Lucan) and Peter Barton (who spent five years on The Young and the Restless in the 80s and 90s and starred in Linda Blair’s 1981 movie, Hell Night), whom he had never met.

First-Time Father at 94? Illinois Court Calls Foul

It is no secret that when it comes to inheriting money, people have been known to dream up some creative schemes to get rich. Recently, however, an Illinois Appellate Court nixed the idea that marrying a man and persuading him to adopt—at the age of 94—your 50-plus year-old children could be a successful means to that end.

In November, the court in Dixon v. Weitekamp-Diller held that to allow the four adult adoptees, at least one of whom was a grandmother, to inherit under several trusts created to benefit descendants of the settlor would be to give judicial approval to an act of “subterfuge.” Where an adult adoption is undertaken solely to make the adoptee an heir or a beneficiary of a trust, the court ruled, the adoptee will not be permitted to inherit.

At issue in the case were three trusts created by ancestors of William Hughes Diller,

Death, Taxes and Miles: Where do your frequent flyer miles go when you’re gone?

When someone passes away, usually their next of kin, agent or fiduciary will begin to compile a list of the decedent’s assets.  Rarely will such a list include the decedent’s frequent flyer miles.  However, depending upon how many miles have been accrued during the decedent’s life, frequent flyer miles can be worth hundreds, maybe even thousands, of dollars.  In such cases, heirs or beneficiaries of the decedent’s estate may wish to benefit from the value the decedent has amassed in frequent flyer miles.

Transferring Miles

Most airlines allow for mileage transfer among the living, but it is usually an expensive task to accomplish, often accompanied by fees and yearly limits.  The transferability of frequent flyer miles upon death is no more simple.  Susan Stellin, the author of a New York Times article entitled “The Afterlife of Your Frequent Flyer Miles,” stated “I asked six airlines if they allow transfers