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Pay My Debts — Please!

Pay My Debts — Please!

December 22, 2012

Authored by: Kathy Sherby and Stephanie Moll

Boilerplate trust drafting, debts secured by non-trust assets, a second marriage with children by a first marriage, a bad economy, and a trust with different beneficiaries than the estate beneficiary, combined to spawn “over 7 years of litigation in three states – Florida, Illinois and Minnesota”, culminating in the recent Minnesota Supreme Court decision, In the Matter of the Pamela Andreas Stisser Grantor Trust, 818 N.W.2d 495 (MN, 8/1/2012).

In this case, Pamela Stisser (the “Decedent”) married Vernon Stisser in 1983. The Decedent provided in her Will that all of her property in her own name, consisting of her roughly $3 Million Schwab brokerage account, pass to Vernon on her death, and she provided in the Pamela Andreas Stisser Grantor Trust (the “Trust”), the Decedent’s revocable trust, that her trust property, valued at approximately $9.1 Million, would be distributed equally to her three children from her first marriage and Vernon’s

When Is More Than 35 Years Still Timely?

PLR 201228017 provides a good reminder of the requirements for disclaiming an interest in a trust that was created prior to January 1, 1977. This PLR involves a disclaimer by a beneficiary within 9 months of attaining age 18.

In order for a disclaimer of a pre January 1, 1977 transfer not to be considered a transfer subject to gift tax, the disclaimer must be “unequivocal, effective under prior law, and prior to accepting any benefits. In addition, the disclaimer must be timely. In order to be timely, Reg. § 25.2511-1(c)(2) provides that the refusal must have been made “within a reasonable time after knowledge of the existence of the transfer.”

After reciting these general rules applicable to pre-January 1977 transfers, the PLR then relied on the Regulations under § 2518 applicable to post December 31, 1976 transfers. In respect of the timeliness of the disclaimer, the PLR states that

What’s Yours is Ours?

What’s Yours is Ours?

November 5, 2012

Authored by: Kathy Sherby and Stephanie Moll

Estate of Alfred J. Richard v. Commissioner, T.C. Memo 2012-173 (6/20/2012), is an unusual case in which the government sought to include 140 shares of preferred stock in A.J. Richard & Sons, Inc. (the “Company”) in the gross estate of the decedent, Alfred Richard (“Alfred”).  The shares were initially reported on the estate tax return, but it was later determined that Alfred did not own the shares that passed through his predeceased wife’s will.  The government’s arguments in opposition to the estate’s amended Tax Court petition reducing the number of shares of preferred stock from the 740 shares reported on the estate tax return by the 140 shares in Mrs. Richard’s name at the time of Alfred’s death, were each resoundingly overruled by Judge Goeke.

Mrs. Richard had died in 1997 at a time when she owned 140 shares of preferred stock in the Company and Alfred owned 600 shares

Gifting Real Estate: A Comparison of QPRTs and Intentional Grantor Residential Trusts

As discussed in our prior post, “2012 Gift Tax Opportunities: Wait to Gift, but Do Not Wait to Plan“,  we discussed how the 2010 Tax Relief Act has provided a great opportunity for lifetime gifts to family members with a temporary increased estate and gift tax exemption of $5.12 million making these gifts potentially free of ever incurring gift or estate tax. The exemption will return to $1 million on January 1, 2013 unless Congress acts, and although most commentators think a return to $1 million is unlikely, there is a good possibility the exemption will be reduced.  However, many people are reluctant to make gifts of their liquid assets, in case they might have need of them as the get older.  Many people, therefore, are looking for ways of making a gift on a non-liquid asset, such as their home or another piece of real estate, such as

Massachusetts Law Retroactively Giving Inheritance Rights To Adopted Children Ruled Unconstitutional As Applied

Originally published at

We’ve recently looked at the inheritance rights of children adopted out of families here and here, now let’s look at the inheritance rights of children adopted into families.

Big news out of Massachusetts this week, as the Supreme Judicial Court ruled in Bird Anderson v. BNY Mellon, N.A. that a Massachusetts law that had significant implications for trusts and estates planners, fiduciaries, and especially adopted children was unconstitutional as applied to the trust case before it.

Let’s take a look at the law.

The rights of adopted children as “heirs” under Massachusetts law have a long history.

Prior to 1958, Massachusetts had a statute prescribing a rule of construction for certain types of instruments relating to inheritance that provided that unless the contrary “plainly appear[ed] by the terms of the instrument,” an adopted child was excluded from the definition

Georgia Will And Revocable Trust Were Invalid Products Of Undue Influence


Let’s just jump right into this one: in 2010, a Houston County, Georgia jury declared that a Will and a Revocable Trust executed by Thomas Hines, Sr., in 2002 were invalid, as they were the product of undue influence.

In Davison v. Hines, the Georgia Supreme Court affirmed the jury verdict.  The reason we just jumped right into the discussion of this case is because undue influence cases are fact-intensive.  So, let’s look at the facts that supported the verdict.

– Thomas’s 2001 will left the bulk of his estate to his wife for her life, and upon her death, divided the estate equally between his sons.  Thomas’s 2002 will, however, gave Steve Davison and his wife, Deborah, control over Thomas’s assets and estate.  Deborah was a granddaughter of Thomas.

– In December 2001, although Thomas didn’t want to move from his home,

A Case of Buyer’s Remorse or Breach of Fiduciary Duty?

In French v. Wachovia Bank, N.A., 2011 WL 2649985 (E.D. Wis., July 6, 2011), the court issued an order granting Wachovia Bank’s (“Wachovia”) motion for summary judgment in an action by the beneficiaries of the French Trusts for breach of fiduciary duty. Wachovia was the successor trustee of the French Trusts that owned two whole life policies as well as significant other assets having a total value of about $30 million. Wachovia was appointed as such successor trustee in conjunction with its review of the policies and its recommendation to replace the whole life policies with a no-lapse John Hancock policy. The settlor (“French”) had his attorneys review the recommendation and provide him an analysis of the proposed exchange.

After an extensive year-long analysis of the advantages and disadvantages of the proposed policy exchange, including multiple detailed memoranda from his attorneys and discussions of the transaction with his attorneys and

Where Facebook and Estate Planning Collide

As Facebook prepares to go public on Friday, many news articles, such as this Forbes article, have discussed the fact that Facebook co-founders Mark Zuckerberg and Dustin Moskovitz have funded annuity trusts, most likely Grantor Retained Annuity Trusts (GRATs), with Facebook stock.  This stock is set to increase exponentially in value with the IPO takes place on May 18.  If these annuity trusts are, in fact, GRATs, they may be transferring millions of dollars worth of Facebook stock to their beneficiaries, potentially free of any transfer tax.

For more information on the benefits of planning with Grantor Retained Annuity Trusts, see our September post by Justin Flach and Doug Stanley, GRAT Planning in a Down Market.

Trust Protectors: An Update

McLean V. Ponder, Cause No 36V010500665-01, Circuit Court of Butler County, Missouri, is a case that has been followed closely by practitioners across the country as the first case involving a claim filed by a trust beneficiary against the trust’s “trust protector.” After the plaintiff, Robert McLean, the trust beneficiary, had fully presented all of his evidence against Michael Ponder, the trust protector, during the jury trial last October, the trial court granted Ponder’s motion for directed verdict, taking the case away from the jury. Apparently, McLean had failed to prove the allegations in his petition that had previously garnered so much press as “bad facts” that had previously enabled the beneficiary to win a reversal of the summary judgment in favor of the trust protector and a remand to the trial court for trial.

This case involved a (d)(4)(a) type special needs trust created for Robert McLean with the

Will Assets I Place In Trust for My Children be Protected if They Get Divorced?

Our clients are increasingly concerned about the preserving the assets their children will inherit from them in the event of divorce. The New Jersey court in Tannen v. Tannen, 416 N.J. Super. 248, 3 A. 3d 1229 (2010) wrestled with the issue of the extent to which a trust created by parents should impact the award of alimony in a divorce.

In this case, after Mark and Wendy Tannen were married, they moved into a large house that was given to Wendy by her father. Several years later,