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Georgia Appellate Court Clarifies What It Takes For An Emergency Guardianship

June 11, 2013

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Few appellate opinions give us a window into contested guardianship proceedings.  Fewer still give us insight into what it takes to obtain an emergency guardianship.  In In the Interest of Farr, the Georgia Court of Appeals let us know that the “emergency” needed for an emergency guardianship needs to be an actual emergency.

St. Joseph’s Hospital in Savannah wanted an emergency guardian for one of its patients, Claudine Tapley Farr.  The hospital wanted an emergency guardian appointed to facilitate the patient’s discharge from the hospital.  That wasn’t an emergency.

Changing Trustees When The Trust Instrument Lacks A Portability Clause

June 6, 2013

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Today, portability clauses in trust instruments are relatively common and for good reason.  Individuals die and corporate fiduciaries merge, consolidate, acquire, and occasionally close.  Likewise, some jurisdictions are simply more advantageous than others.  But, we know that the inclusion of portability clauses in trust instruments hasn’t always been the norm.  The Uniform Trust Code, however, contemplates situations where it may make sense to change trustees and many states that have not adopted the UTC have also come to the same realization through their own trust codes, statutes, or common law.

While the UTC and various jurisdictions have contemplated a number of situations that may call for a change in trustees absent a provision in the trust instrument permitting a change, in In re McKinney, the Superior Court of Pennsylvania for the first time interpreted that provision in Pennsylvania’s Probate, Estates, and Fiduciaries

Federal Tax Consequences of Trust Modification/Reformation: Score One for the IRS

When is a modification or reformation of an irrevocable trust given effect for Federal tax purposes? In each of two recent private letter rulings, the government addressed the impact of a reformation and of a modification on Federal taxation of the trusts in question.  Here, we will look at a ruling favorable to the IRS.  Come back next week when we discuss a ruling in favor of the taxpayer.

In PLR 201243001, on advice of his own attorney, the Decedent’s son requested that Decedent amend her trust to eliminate the outright distribution of his inheritance, and instead to have that portion of her trust fund a continuing trust for the benefit of the son and his descendants during his lifetime, and, upon his death, to be distributed outright to his descendants upon reaching age 45. The purpose of this trust amendment was to avoid having the property that would fund

Bank Not Liable To Beneficiaries For Individual Fiduciary’s Breach Of Fiduciary Duty

June 4, 2013

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Most of the states have adopted the Uniform Fiduciaries Act which protects a bank from liability for a fiduciary’s misconduct when the bank is serving as the depository of fiduciary funds unless the bank has actual knowledge of the fiduciary’s misconduct or the bank’s actions otherwise amount to bad faith.  The idea behind the act makes sense – banks must routinely deal with fiduciaries, and, to facilitate commercial transactions, the bank has to be able to trust that the fiduciary is acting properly and not absconding with trust or estate funds.

Unfortunately, it sometimes happens that a fiduciary misappropriates trust or estate assets and, by the time the beneficiaries find out, the money is long gone.  So, the beneficiaries often look to the bank as a pocket from which to make them whole.  According to a recent federal appellate court opinion, that’s pretty much

Expert Witness’s Draft Reports Not Discoverable in Tax Court

The U.S. Tax Court recently amended Tax Court Rule 70(c)(4). It now specifically recognizes that the Limitations on Discovery set forth in Tax Court Rule 70(c)(3) does apply to draft reports of any expert witness in a Tax Court case.

Whenever a taxpayer or the government expects to call an expert witness in a Tax Court case, the direct testimony of the expert witness is to be submitted to the Tax Court in written form. This change in Rule 70 now expressly treats the work preliminary to the final report that is filed with the court as having been prepared in anticipation of litigation. Consequently, the drafts of that final report is not subject to discovery.

In addition to this change in Rule 70, the new Rule 70 protects from discovery communication with a non-testifying expert witness, unless the party seeking such discovery can establish “exceptional circumstances” such that it

Interest Rates Indicate a Great Time for Charitable Lead Trusts

charity

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

Previously, I blogged about the low interest rate environment and how that results in a great opportunity for a donor with charitable objectives who also wishes to pass assets to the next generation free of federal estate or generation-skipping transfer tax. To read that posting about Charitable Lead Trusts, click here. Well, rates have continued to stay at historic lows.  The IRS just announced the rates available for June of 1.2%.  These low rates mean that it’s easier then ever for these trusts to be productive to pass even more cash to lower generations free of transfer tax. So, if you think that the trust’s investment strategy could beat the IRS-decreed rate of 1.2%, while also benefiting charity, June is the time.

For an overview regarding the basics

Alcoholism And Incapacity

May 24, 2013

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Alcoholism And Incapacity

May 24, 2013

Authored by: Luke Lantta

A common theme of plaintiffs in lack of capacity cases is that some kind of cognitive impairment, such as dementia, chronic alcoholism, or major depression, by itself indicates that the grantor or testator lacked the requisite capacity to create a trust or will, respectively.  In Dorsey v. Ratz (link from Justia), a Maryland federal court recently looked at whether the diagnosis of major depressive disorder and alcohol dependence suggested incompetence when it came to executing a change of beneficiary form on a life insurance policy.

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.

Defalcation, Bankruptcy, And Fiduciary Litigation

May 20, 2013

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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.

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