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House Held In Trust Lost Marital Asset Status

December 22, 2016

Authors

Luke Lantta

House Held In Trust Lost Marital Asset Status

December 22, 2016

by: Luke Lantta

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

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Filing Trust Modification As Public Record Started Statute Of Limitations

December 23, 2015

Authors

Luke Lantta

Filing Trust Modification As Public Record Started Statute Of Limitations

December 23, 2015

by: Luke Lantta

Fiduciaries should always be thinking of ways to get the statute of limitations started.  Why have a claim hanging over your head for many years, when you can take actions that shorten the time in which a claim may be brought against you?  Typically, we think of getting that time running in terms of sending regular account statements to the trust beneficiaries.  In Domino v. Braswell, the Court of Appeals of Mississippi got us thinking about another way to start the clock running:  by publicly recording documents.

A grantor, the trustees, and the beneficiaries of a trust modified the trust to correct a clerical error.  The trust modification was filed as a public record in 1997.  After the grantor died, in 2013, a complaint was

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When Can A Trust Be Reformed To Add Remainder Beneficiaries?

August 26, 2015

Authors

Luke Lantta

When Can A Trust Be Reformed To Add Remainder Beneficiaries?

August 26, 2015

by: Luke Lantta

We’ve looked at a lot of cases where courts have permitted trust reformation or modification.  In many of these cases, trusts had been modified to avoid unintended or adverse tax consequences, to fix a scrivener’s error, or to tweak some administrative provision.  A Florida appellate court’s ruling in Megiel-Rollo v. Megiel causes us to add another potential circumstance to that list: adding remainder beneficiaries.  Adding beneficiaries gets to the core of a trust’s dispositive provisions, so let’s turn briefly to the unique circumstances underlying this decision.

The grantor created a revocable trust naming herself as trustee and beneficiary during her life.  Upon her death, the grantor’s assets were to be “divided between the Beneficiaries as tenants in common in proportion to their respective interests as

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Unintended Tax Results Permitted Trust Reformation

January 7, 2015

Authors

Luke Lantta

Unintended Tax Results Permitted Trust Reformation

January 7, 2015

by: Luke Lantta

Accomplishing a settlor’s tax objectives can be a major factor in creating a trust.  When a drafting error frustrates the settlor’s tax objectives, why shouldn’t  the trust instrument be reformed to reflect the intent of the settlor?  In O’Connell v. Houser, the Supreme Judicial Court of Massachusetts did just that – permitted reformation of a trust to embody the settlor’s intent and produce tax results that were consistent with the settlor’s objectives.

The George Houser Trust established two trusts for the benefit of George’s wife, Mary, and gave her a power of appointment over the marital trust.  When Mary died in 1993, the remaining principal in the George Houser Trust was divided into two “share trusts,” one for each of the Housers’ sons.  Each son had a limited testamentary power of

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Separate Writing Could Not Modify Trust Or Dispose Of Real Property

October 23, 2014

Authors

Luke Lantta

Separate Writing Could Not Modify Trust Or Dispose Of Real Property

October 23, 2014

by: Luke Lantta

Trustors frequently build into their trust instrument a provision through which they can dispose of property through a list, drafted later, but attached to the trust instrument. Such a list can provide a simple way of distributing tangible personal property without the need to modify or amend the entire trust every time the trustor acquires new personal property or changes her mind about who should get what. But such a list has its limits. As the Indiana Court of Appeals explained in Turner v. Kent, under Indiana law a list cannot dispose of real property.

Alexander and Selma Kazlauski established a trust that provided that:

We may from time to time indicate our desire that specific gifts be made from this living trust upon the death of the survivor of

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Trust Modification Based On Undue Influence

September 24, 2014

Authors

Luke Lantta

Trust Modification Based On Undue Influence

September 24, 2014

by: Luke Lantta

A recent case from ConnecticutTyler v. Tyler, involved a claim to modify a trust based on undue influence.  Few details are provided in the opinion about the requested modification but it is a curious claim.  If undue influence is exerted over the grantor, then isn’t the contested trust or amendment invalid?  Why or how should a trust that is the product of undue influence be modified to reflect the true intent of the grantor?

The appellate court reversed a trial court’s entry of summary judgment that had tossed the undue influence claim, finding instead that there were genuine issues of material fact with respect to each element of an undue influence claim under Connecticut law.

1.  A person who is subject to influence.  Among the evidence at summary judgment

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Alaska Supreme Court Refuses To Reform Or Terminate Irrevocable Trust

May 28, 2014

Authors

Luke Lantta

Alaska Supreme Court Refuses To Reform Or Terminate Irrevocable Trust

May 28, 2014

by: Luke Lantta

An irrevocable trust, once set up, can be a difficult thing to terminate or modify.  In Purcella v. Olive Kathryn Purcella Trust, we see how difficult it is to modify or terminate a trust even in a friendly jurisdiction like Alaska.  Therefore, those considering an irrevocable trust need to consider that irrevocable means what it says, and those advising persons in their wealth planning should make sure that they explain that irrevocable means what it says.

Olive Kathryn Purcella sought to terminate her trust or to modify her trust, claiming that she did not intend to execute an irrevocable trust or that the irrevocable trust was the product of undue influence.  Ms. Purcella’s lawyer had suggested that she create a trust because she was going to receive some money from a dispute

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Trust Was Modified, Not Terminated

February 11, 2014

Authors

Luke Lantta

Trust Was Modified, Not Terminated

February 11, 2014

by: Luke Lantta

When a trust instrument sets a time for termination of the trust, it terminates, right?  Well, maybe not.  According to the Kansas Court of Appeals in Lindholm v. Melland (2014 WL 278774) (unpublished), under certain circumstances a trust may continue in existence beyond a termination event.  What happened here to keep the Francis G. Melland Trust going over a decade after it was supposed to terminate?

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Court Refuses To Declare That A Revocable Trust Is Irrevocable

February 4, 2014

Authors

Luke Lantta

Court Refuses To Declare That A Revocable Trust Is Irrevocable

February 4, 2014

by: Luke Lantta

We’ve looked at a number of cases where parties sought to modify the terms of a trust.  And there are plenty of good reasons why a trust might need to be modified from circumstances not anticipated by the settlor to simply a scrivener’s error in drafting the instrument.  But, whatever or wherever the case may be, there is a good chance that a court is going to require some significant evidence to justify the modification.  And that’s what the daughter of Donald Ross Frost was unable to provide to an Arkansas court in Erwin v. Frost.

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Equity Will Not Interfere With Plain Language Of Trust Instrument And Trust Settlement Agreement

August 6, 2013

Authors

Luke Lantta

Equity Will Not Interfere With Plain Language Of Trust Instrument And Trust Settlement Agreement

August 6, 2013

by: Luke Lantta

Just how controlling is a trust instrument?  Even though a court may have the equitable power to modify a trust instrument or trust settlement agreement, the Court of Appeals of Michigan‘s opinion in In re George W. Scheer Inter-Vivos Trust reminds us of just how reluctant a court may be to allow equity to interfere with the plain language of a trust.

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