Trust BCLP

Main Content

Heir Stuck With Condo Fees Accruing After Owner’s Death

September 2, 2011

Authored by:

Categories

In Georgia, if you inherit real property from a debtor by virtue of intestacy, you’re on the hook for debts relating to that property that accrue after the debtor’s death.  Even if that property goes into foreclosure.  Those are your debts, not the debtor’s.  So says the Georgia Court of Appeals in its most recent estate litigation decision. 

Intentionally Defective Irrevocable Trusts: A Great Way to Transfer Wealth, Especially In Low Interest Rate Environments

The current low interest rate environment provides excellent opportunities to transfer wealth to family members.   One approach commonly used to accomplish this goal is to sell assets to an intentionally defective irrevocable trust (“IDIT”).  An IDIT is an irrevocable trust for the benefit of someone other than the creator of the trust (the “Settlor”), perhaps Settlor’s descendants.  However, the “intentionally defective” component of the IDIT means that, for income tax purposes, the assets in the trust will continue to be treated as owned by Settlor.  Thus, Settlor’s sale of assets to the IDIT will not result in income tax consequences.   Additionally, Settlor’s payment of income taxes on the income earned by the IDIT provides an additional means of reducing Settlor’s taxable estate, while allowing the benefits of the income earned by the IDIT to benefit Settlor’s descendants.

Typically, Settlor will take back a promissory note for the assets

Lessons from 9/11

Lessons from 9/11

September 1, 2011

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

We are rapidly approaching the tenth anniversary of the September 11th tragedy. There is much to be learned from an estate planning perspective in the aftermath.  

Many of those who perished died without having executed a Last Will and Testament. If you die without a Will, the state in which you are domiciled at the time of your death will determine under the laws of intestacy where the property you held in your own name will pass. It takes many people by surprise, but the list of intestate takers or heirs may not be the people you want to inherit and they might not take in the percentages or shares you would want.

Texas Jury Finds That Husband Unduly Influenced Wife

August 31, 2011

Authored by:

Categories

Last week, in In re Ward, the Tenth Court of Appeals of Texas (Waco) affirmed a jury verdict that the will of Doris Ward was unenforceable because her husband, Bobby Ward, exerted undue influence over her.  So, what does a textbook case of undue influence look like?  Well, it usually starts with remarriage. 

Who Has Standing To Challenge The Appointment Of A Guardian

August 29, 2011

Authored by:

Categories

The class of people who can be appointed guardian or who are statutorily required to receive notice of a guardianship proceeding may be the only people who can later challenge the manner in which a guardian was appointed.  Seems pretty intuitive.  But what about a situation where two parties are divorced and one ex-spouse has a guardian appointed to go after the other ex-spouse?  And the ex-spouse getting sued claims that the guardianship proceeding was a fraud just to go after him?  In fact, the ex-spouse claims, his ex isn’t even incapacitated at all.

In Cacioppo v. Emolo, the New Jersey court of appeals was faced with that question: who has standing to challenge the appointment of a guardian?

Who Should Sign Arbitration Agreements?

August 26, 2011

Authored by:

Categories

We are increasingly seeing more agreements between fiduciaries and clients that contain mandatory arbitration provisions.  Typically the agreements are signed by an “authorized representative” of the fiduciary and personally by the client.  But should other persons within the fiduciary’s organization also be signing on to the arbitration provision? 

Although not a fiduciary litigation case, the United States Court of Appeals for the Fifth Circuit decided in DK Joint Venture 1 v. Weyand that a corporation’s CEO and CFO – who were not signatories to their corporation’s arbitration agreements – were not bound to the arbitration agreement simply by virtue of being agents of the corporation.

This decision has some applicability for arbitration agreements between fiduciaries and clients.  Who should sign an arbitration agreement depends on what you’re trying to accomplish with it.

Why Do I need a Trust?

August 24, 2011

Categories

Why Do I need a Trust?

August 24, 2011

Authored by: alan-singer

In light of the increase in the estate tax exemption to $5,000,000, several clients of mine asked why they need a Revocable Trust if they don’t need advanced tax planning (at least in their minds).   The following discusses some of the reasons for doing so.

What is a Revocable Trust?

A Revocable Trust (also known as a “living trust” or an “inter-vivos trust”), is a legal arrangement in which the creator (referred to as a “grantor” or “settlor”) transfers, during life, all (or part) of his or her assets to a Trustee to be managed and administered pursuant to the terms designated in the trust until fully distributed to the beneficiary or beneficiaries.

Fiduciary Litigator’s Overzealous Representation Leads to Sanctions

August 24, 2011

Authored by:

Categories

Litigators can often have a hard time backing down from the zealous representation of their clients.  This is particularly true when someone of diminished capacity is exploited and when still others are aware of the exploitation and either let it happen or facilitate it.  A fiduciary litigator in Iowa recently learned the hard way that, while it might be okay to sue based on suspicions, as soon as you learn that the facts don’t back up your suspicions, you better dismiss the lawsuit.

In Rowedder v. Anderson the Iowa Court of Appeals had it all – incapacitated executors, shady real estate deals, sanctions, a jury trial . . .

Estate Planners Get Sued Over Ponzi Scheme Investments

August 22, 2011

Authored by:

Categories

Keeping with our recent coverage of the intersection between fiduciary litigation and Bernie Madoff and other Ponzi schemes, we again turn to Pennsylvania where last month a prominent Philadelphia couple sued their estate planning attorneys at Duane Morris over money that ended up in the hands of Bernie Madoff.

In Keating v. Duane Morris, Daniel J. Keating III and his wife, Sarah, sued Duane Morris and two of its attorneys for breach of contract, professional liability, and quantum meruit.  According media reports, the Keatings went to Duane Morris for help in crafting an asset protection plan and advice on long-term investment options.  The firm established one trust for the Keatings in 2005 with a trustee, trust protector, investment manager and custodian.  The problems allegedly arose from a second trust established in 2007.

Is The Law Unforgiving To Ponzi Scheme Victims?

August 19, 2011

Authored by:

Categories

Alaska (and potentially Pennsylvania) law may be or so says the United States Court of Appeals for the Third Circuit.  In Michael S. Rulle Family Dynasty Trust v. AGL Life Assurance Company, the federal appellate court – applying Alaska and some Pennsylvania law – summarily dismissed a trust’s suit against a life insurance company for losses sustained through investments in four funds operated by Bernie Madoff.  In fact, the court went so far as to decide that each of the Michael S. Rulle Family Dynasty Trust’s eight claims against AGL Life Assurance Company failed to state a claim upon which relief could be granted, meaning they couldn’t even get to get into the good stuff through discovery.  Here’s the background: