Archive for the 'Recent Cases worth noting' Category

Estate Planning Malpractice – NY Court Has A Warning For Ohio Planners

Published on August 14, 2010 in Estate Litigation, Estate Planning and Recent Cases worth noting. 0 Comments

I’ve written on the issue of estate planners committing malpractice against their clients here and here on this blog before.   Its an issue of interest for Ohio attorneys  because Ohio still clings to the antiquated rule of privity to decide who has standing to sue the attorney who allegedly gave the bad advice.  Basically, requiring privity means you must have been the one in a contractual relationship with the attorney – the client.  In the estate planning context, however, this is a little complicated because if the bad advice was given during the client’s lifetime its more than probable than not that damages for the bad advice won’t accrue until the client dies.  Therefore, you’ve got no one left to sue the attorney for malpractice because the client is dead!  Kinda dumb, I know, I complain about it all the time.

However, tn The Estate of Saul Schneider v. Victor M. Finmann, N.Y.3d 2010 N.Y, Slip Op 05281 (pdf of opinion) decided this past June 17th, the New York court held:

the legal representative of a decedent stands in  that person’s shoes for the purpose of being able to maintain a malpractice action against the decedent’s estate planner where improper advice or negligent estate planning has resulted in a loss.

Imputing this legal fiction on the fiduciary means a malpractice action can now be maintained.  So there you go Ohio courts!  Lets get this done.  If you don’t want to update the law (to the much preferable California rule that follows the harm and allows the party that suffered as a result of the bad advice to bring a malpractice case) then lets give this a try…  Its a little awkward but its about time in Ohio stepped up and allowed aggrieved clients to sue the attorney who rendered the poor advice.

Thanks to Philip Bernstein of the New York Probate Litigation Blog for pointing this out to me.

Google Buzz

Post to Twitter Tweet This Post

Probate Creditor Deadlines Are Important

Published on April 11, 2010 in Estate Litigation and Recent Cases worth noting. 0 Comments Tags: , .

The above is actually important to point out.  Should be self-evident right?  Nope.

Too many talented and experienced attorneys blow their cases for failing to adhere to probate creditor claim rules and time lines.  This post by Juan Antunez of The Florida Probate & Trust Litigation Blog is a perfect example of how wrong things can go if you’re not paying attention to probate court rules.  The below summary of 2010 WL 479862 (Fla. 1st DCA Feb 12, 2010) is from Mr. Antunez:

Wald was involved in an automobile/motorcycle accident with the decedent and brought a personal injury lawsuit to recover damages. Wald eventually prevailed in his lawsuit, but the judgment was not rendered until after the decedent’s death. Some time after obtaining the judgment, Wald filed a claim against the probate estate.

The personal representative argued she had served notice on Wald’s attorney as required by Florida Probate Rule 5.041(b) (2009) on May 23, 2007, thus triggering the time constraints of section 733.702(1). Therefore, under the statute, Wald had until June 22, 2007, to file any claim he might have. Since Wald’s claim was not filed until July 2, 2007, the personal representative argued it was untimely and forever barred.

Scary stuff right?  Well, it happens all too often.  Juan wisely points out:

Plaintiffs suing estates often fail to realize that they’re really litigating their claims in two separate courts in front of two separate judges:

  1. The trial court adjudicating their lawsuit (this is where the decedent’s liability is established); and
  2. The probate court administering the decedent’s probate estate (this is where you go to collect on your judgment)

Ohio’s rules for presenting claims against an estate are found in R.C. 2117.  2117.06 gives a creditor 6 months after a decedent dies to present a claim or, as in Florida, the claim is forever barred.  A distinction is necessary here though.  If the above case had happened in Ohio, the Plaintiff still likely could have won something from decedent defendant’s non-probate property.  I’m thinking here of decedent defendant’s auto insurance coverage.  Assets from insurance that are recoverable as damages in a tort action are non-probate property (typically).  Thus these assets aren’t governed by 2117.06.  You have the regular time allowed under Ohio law to bring a claim of this type – 2 years I think in Ohio for personal injury claims.  However, if the defendant dies during the case, or perhaps died as a result of the accident before the case was filed, you still have to pay attention to the probate court deadlines if you want to retain the ability to recover from defendant’s estate.  Hypothetical:  Plaintiff wins their case against defendant for liability stemming from a car accident.  Defendant died as a result of the accident.  Plaintiff gets a $1 million dollar judgment against Plaintiff.  (I know that’s high but its my hypothetical.)  Defendant had insurance which will pay Plaintiff, however, Plaintiff’s insurance company will not pay any more than policy limits.  SO, the insurance isn’t sufficient to pay the full claim and now Plaintiff wants to/has to recover the deficiency against decedent’s estate but we’re now more than six months from the date of defendant’s death.  Plaintiff is out of luck.  Nothing they can do about it.  Even if defendant dies with a multi-million dollar estate, Plaintiff gets nothing from that estate if their claim wasn’t timely filed.  This situation, similar to the one linked to above = a malpractice lawsuit against the attorney who failed to adhere to the probate code’s deadline.

In the opinion of the linked-to case (available here as a PDF), the court was none-too-pleased with plaintiff’s attorney for blowing this deadline:

Filing a probate claim is a relatively simple act and requires nothing more than submitting a written statement of the case. If for some reason Wald’s attorney was unable to file the claim, he certainly could have referred Wald to another attorney or advised Wald about the need to timely file a claim. Wald’s attorney failed to accomplish this simple task.

Ouch.  Probate deadlines are important people!  If you’re litigating a personal injury case or any other claim that even may have to be collected from a probate estate, find yourself a good probate attorney to advise on the collection procedures in your local probate court.  Otherwise you may need a good malpractice attorney.

Google Buzz

Post to Twitter Tweet This Post

Bo Schembechler Trust Battle

Published on November 17, 2009 in Estate Litigation and Recent Cases worth noting. 0 Comments

Andrew Mayoras posts a good story here about Bo Schembechler’s son suing his step-mom over his dad’s trust.

Andrew writes:

From an estate planning perspective, Bo did everything right to avoid a family fight after he passed.  He created a living trust, which was quite detailed and left the income from his assets to his wife, Kathryn, passing from there to his son Glenn III (known as “Shemy”), and then onto his grandchildren and Kathryn’s grandchildren. 

He chose Kathryn as his successor trustee to manage his trust after he passed. From an estate planning perspective, Bo did everything right to avoid a family fight after he passed.  He created a living trust, which was quite detailed and left the income from his assets to his wife, Kathryn, passing from there to his son Glenn III (known as “Shemy”), and then onto his grandchildren and Kathryn’s grandchildren. 

He chose Kathryn as his successor trustee to manage his trust after he passed.
Sounds fine to me…  Apparently though the trust was specific that Kathryn had to report on the trust’s assets every so often to Shemy which, according the to the complaint (which is available here as a PDF) she hasn’t been doing.
Shemy’s case is bolstered by Ohio Revised Code Section 5808.13 which requires a Trustee to “keep the current beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests” by annually sending to all “the current benficiaries, and to other beneficiaries who request it, at least annually and at the termination of the trust, a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets, and, if feasible, the trust assets’ respective market values.”
According to the complaint, Kathryn hasn’t disclosed anything since Bo’s death in 2006.  Oops.
This one seems pretty open and shut to me.  I have to say though, its an awfully gentle complaint.  There’s only one count that asks the court to force Kathryn to render an accounting (and for attorney’s fees obviously) but they don’t ask to have Kathryn removed.  Under these circumstances that’s usually my first advice…  Considerations of family harmony, who the named Successor Trustee is, the procedure for replacing Trustees, etc., are additional bits of info that I’m ignorant about so the gentle approach may be appropriate here…  But once you’ve sued someone in federal court you’re usually not also thinking about what to get them for christmas, especially when christmas is about a month away.
Despite coaching “that team up north” for many years, Coach Schembechler’s ties to Columbus, Ohio run deep.  I was dissapointed to see this happening but I wish Shemy well in his apparent efforts to honor his father’s testamentary wishes.  That being said, I wish both parties luck in holding the family together. 
And ok, that being said, I’m still looking forward to OSU kicking the holy hell out of Michigan this weekend.  O-H!
Google Buzz

Post to Twitter Tweet This Post

Ohio Fells Another Trust Mill – UPDATE

Published on November 1, 2009 in Recent Cases worth noting. 0 Comments

My last post pointed to a Columbus Bar Association press release about Columbus Bar Assn. v. Am. Family Prepaid Legal Corp., Slip Opinion No. 2009-Ohio-5336, (available here as a PDF). In that case the Ohio Supreme Court found that “American Family Prepaid Legal Corporation (“American Family”) and its various allied entities and associates – after being pursued by the Columbus Bar since 2002 – were found to have practiced law without a license and to have used scare tactics, misinformation and false promises to induce thousands of individuals in Ohio and other states to purchase living trust packages and other estate planning documents at inflated prices.”

Game over right? Maybe not.

Two Motions for Reconsideration were filed this last Monday (10/26) by Defendants alleging that they were denied due process as the result of alleged collusion. You can read the press release here. Please also make your own decisions about the motions’ merits…

So, whats the big deal with these cases? Why have I dedicated so much screen space to cases like this? Because companies whose sales pitches involve misstating the tax code in order to make a buck, make it more difficult for an already leery society to trust actual estate planning lawyers who are sincerely interested in helping people work with the code to preserve and pass on their estate. Because providing poorly thought-out estate plans can often cause more harm than doing nothing. Because the most susceptible among us deserve nothing short of our most earnest efforts to protect their legacies. Because these legacies belong to the greatest generation whose passage we are now bearing witness to; a generation that lived through the great depression, that beat down Hitler through the Rising Sun only to return home to work their butts off to make this country the greatest power for good the world has ever known. Because fidelity to our humanity demands that we care as much now for those helpless multitudes who raised us as they cared for us when we were helpless ourselves. And because there is a special place in hell for those who prey on the fears of the elderly for their own gain. [Caveat: I've never read any of the materials offered by Defendants so I do not have any first-hand knowledge of their merit... But I'm sure they're terrible.]

It should also be pointed out that this isn’t the first time Mr. Norman has gotten a legal spanking for lying to the elderly – apparently they’re his favorite targets… According to this story in the LA Times, in 1993 “Orange County Deputy Dist. Atty. Robert C. Gannon Jr. charged that officials with Vanguard Assisted Care Inc. pose ‘a continuing threat to the consumers of the state [of California] in that more elderly individuals and senior citizens may be misled and enticed into purchasing’ the company’s companion-care plan.” “Named in the lawsuit were Vanguard’s President Stanley Norman; his son and company Vice President Jeffrey L. Norman; and company consultant Barbara Bufty.”

From its offices in Lake Forest, Vanguard salespeople have been selling the companion-care plan, particularly to residents of the nearby Leisure World retirement community in Laguna Hills. Under an agreement, senior citizens must make an initial $6,600 payment to qualify for the plan’s benefits. They also must make co-payments when they call for an in-home worker to help them with housecleaning, preparing meals or getting to doctor’s appointments.

Pretty nasty stuff.

Once again, I applaud the Columbus Bar Association for their hard-fought victory in this case.

Google Buzz

Post to Twitter Tweet This Post

Ohio Fells Another Trust Mill

Published on October 19, 2009 in Estate Planning and Recent Cases worth noting. 0 Comments Tags: , .

From a Columbus Bar Association press release last Wednesday:

The Columbus Bar Association announced today that the Supreme Court of Ohio, in a unanimous decision in Columbus Bar Assn. v. Am. Family Prepaid Legal Corp., Slip Opinion No. 2009-Ohio-5336, (available here as a PDF) took a momentous step to protect Ohio’s citizens from illegal trust mills that prey upon seniors and other vulnerable individuals. American Family Prepaid Legal Corporation (“American Family”) and its various allied entities and associates – after being pursued by the Columbus Bar since 2002 – were found to have practiced law without a license and to have used scare tactics, misinformation and false promises to induce thousands of individuals in Ohio and other states to purchase living trust packages and other estate planning documents at inflated prices. Often these legal documents were not needed or legally appropriate, and did not fulfill the purposes of the people who purchased them. As a result, the Ohio Supreme Court issued a permanent injunction to shut down their operations and penalized them with heavy fines, including a $6,387,990 sanction against American Family and others. 

After 2005′s Cleveland Bar Association v. Sharp Estate Services, Inc. et. al., you’d have thought people would know better than to try to prey on the elderly in Ohio…  Guess not.

Well done CBA and those involved in pursuing and winning this righteous case!

Google Buzz

Post to Twitter Tweet This Post

New “Asisted” Suicide Case in Austrailia

Published on August 16, 2009 in Estate Planning, Gaurdianships/Conservatorships and Recent Cases worth noting. 0 Comments

CNN reports that an Australian man, Christian Rossiter, recently won his right to die, by refusing food and water, from the Australian Supreme Court.  The case is interesting for two reasons: 1) Chief Justice Wayne Martin wrote “Mr. Rossiter is not a child, nor is he terminally ill, nor dying. He is not in a vegetative state, nor does he lack the capacity to communicate his wishes, and 2) Mr. Rossiter is a quadriplegic thus requiring the intervention of the nursing home workers (where he resides) to assist him with taking pain medications.

It is this latter point that lead Mr. Rossiter’s nursing home to file the suit seeking a declaration from the court that they would not face liability for assisting Mr. Rossiter with his wishes.  In Australia one is able to make their own decision regarding their right to to die but assisting someone else in actualizing those wishes can lead to a life sentence.

It appears this is the first case of an individual not under a legal disability or otherwise lacking capacity that has made this decision in Australia.

Most ironic quote:  “Rossiter appeared ‘very happy’ afterward.”

Professor Berry posted on this story yesterday.

Google Buzz

Post to Twitter Tweet This Post

Heir to IBM Fortune Adopts Her Lesbian Parter in Maine – Supreme Court Upholds Adoption’s Validity

Published on July 24, 2009 in Estate Litigation, Estate Planning, Recent Cases worth noting and Trust Litigation. 0 Comments

This seemed as good a topic as any to ease myself back into the blog-o-webs, so here goes:

According to this story at 39online.com (a CW network affiliate out of Houston),

Maine’s highest court gave a legal victory Thursday to a woman who stands to stake a claim to a share of one of America’s premier business fortunes thanks to her adoption by her lesbian partner.

Back in ’91, Olive Watson, daughter of Thomas Watson Jr. – the guy who built IBM – adopted Patricia Spado.  At issue in the case was whether the adoption was legal at all.  The two longtime partners spent “several weeks” each summer in North Haven.  Like many other states, Maine requires peitioners for adoption to live in the state and, after Mr. Watson, Jr. and his wife passed away, the Trustees for Mr. Watson’s trust ”alleged that the couple obtained the adoption through fraudulent means by not disclosing their relationship to the court. The petition further alleged that Spado and Watson, as New York residents, had not fulfilled the statutory requirements of living in Maine at the time of the adoption.”  On appeal, the Trustees further argued “that the adoption should have been annulled on the grounds that it was obtained by two partners seeking to manufacture inheritance rights who did not intend to establish a normal parent-child relationship.”

In yesterday’s decision, Maine’s supreme court ruled that even if Spado did not live in Maine under the law, the adoption should not have been annulled [in the lower court] because there wasn’t enough evidence to support the claim that Watson had committed fraud.

The court also rejected the trustees’ claim that the adoption should be annulled based on a public policy prohibiting adoptions involving same-sex couples. Historically, adult adoptions have been recognized as a means to convey inheritance rights, to formalize an existing parent-child relationship or to provide perpetual care to a disabled adult adoptee, the decision reads.

Its interesting to ponder what would have happened if Watson and Spado were allowed to marry…  Under the terms of most standard trusts, its unlikley that Spado, as Watson’s spouse would have inherited anything given that most trusts attmpt to keep assets in the bloodline of the Grantor.  Being the adopted child of Watson, however, Spado is deemded to be just that.  Interesting.

Google Buzz

Post to Twitter Tweet This Post

To Restate Or Not To Restate – That Is The Question

Published on April 18, 2009 in Estate Litigation, Estate Planning and Recent Cases worth noting. 0 Comments Tags: , .

Professor Berry tangentially raises the above question in a post today on the Wills, Trusts & Estates Prof Blog via his telling of the case of Soefje v. Jones, 270 S.W.3d 617 (Tex. App.—San Antonio 2008, no pet. h.).

The case pits brother against sister in a dispute over the meaning of a trust amendment to dad’s trust.  “Brother argued that the amendment only added to the property to which Sister was entitled under the original trust instrument but left the property to which he was entitled intact.  On the other hand, Daughter claimed that the amendment revoked the entire property distribution provided for in the original trust causing property originally given to Brother to pass under the trust’s residuary clause permitting her to share in that property.” Sounds like brother was being reasonable, sister was being greedy.  But I haven’t read the trust yet folks so shelve the mail bombs.

Daughter won.  Brother appealed.  Appellate Court reversed:

The court began its analysis by recognizing that a trust amendment does not revoke a provision of the original trust “unless the words used in the amendment clearly show the [settlor’s] intent to revoke the trust.”  Soefje at 629.  The court studied the trust and the amendment and held as a matter of law that the instruments are unambiguous.  The amendment merely added to Sister’s entitlement by giving her certain properties to which Brother was originally entitled under the original trust.  The amendment did not act to revoke gifts of other property to Brother.

The case is interesting in and of itself but its more useful as a tale of the trouble with amending one’s trust.  If you want to substitute a fiduciary, amend how qualified assets are handled, even expand/reduce the fiduciary’s authority, an amendment can be fine.  But they’re tricky.  They muddle the Grantor’s original intent which is drawn from the whole of the original document, its one more piece of paper for you to lose as the years pass and they’re usually more expensive than the change alone is worth.

The question therefore is, do you amend the trust?  Or do you restate the trust in its entirety?

More often, I’m a fan of the latter option.  The sanctity of the single document is maintained and you lessen – to the extent possible – the likelihood of interpretive litigation.  Also, believe it or not, the cost is about the same.

Google Buzz

Post to Twitter Tweet This Post

Iowa Supreme Court Strikes Down Gay Marriage Ban

Published on April 3, 2009 in Estate Litigation, Estate Planning, Insurance and Recent Cases worth noting. 0 Comments Tags: , , .

This is what happens when I schedule early morning meetings…  Everyone else gets the good stories out first.

The ABA Journal, The Volokh Conspiracy and Professor Berry’s ever-timely Wills, Trusts & Estates Prof Blog all wrote this morning to report on the Iowa Supreme Court striking down the state’s ban on same-sex marriages.  The decision was unanimous.

The court ruled the ban violates the equal protection clause of the Iowa Constitution, according to the Associated Press and the Des Moines Register.

“Our responsibility … is to protect constitutional rights of individuals from legislative enactments that have denied those rights, even when the rights have not yet been broadly accepted, were at one time unimagined, or challenge a deeply ingrained practice or law viewed to be impervious to the passage of time,” the opinion (PDF) said.

I added the emphasis there in the last sentence because it reminded of Lawrence v Texas overruling Bowers v Hardwick.  Bowers had been invoked more times than I care to count for its “deeply rooted in our Nations history” standard/B.S., that had, until the Lawrence case, stood as an insurmountable barrier to the equal rights of more than the just the GLBT community.

“We are firmly convinced the exclusion of gay and lesbian people from the institution of civil marriage does not substantially further any important governmental objective. The legislature has excluded a historically disfavored class of persons from a supremely important civil institution without a constitutionally sufficient justification. There is no material fact, genuinely in dispute, that can affect this determination” the Court stated.

The Court stated further.

The court stated that “a statute inconsistent with the Iowa constitution must be declared void even though it may be supported by strong and deep-seated traditional beliefs and popular opinion.”

Also interesting, according this story at the New York Times, is Iowa’s lack of a residency standard for marriage licenses…  I think you see where this is going.  Have you ever seen a Pride Parade adjacent to a cornfield?  Neither have I.  But I bet its pretty cool.

Above The Law writes:

Not surprisingly, a spokesperson for the Iowa Family Policy Center was deeply sadden [sic] that more people will be allowed to get married:

Bryan English, spokesman for the Iowa Family Policy Center, a conservative group that opposes same-sex marriage, said many Iowans are disappointed with the ruling and don’t want the courts to decide the issue.

“I would say the mood is one of mourning right now in a lot of ways, and yet the first thing we did after internalizing the decision was to walk across the street and begin the process of lobbying our legislators to let the people of Iowa vote,” Mr. English said. “This is an issue that will define (lawmakers’) leadership. This is not a side issue.”

Iowa is now the first Midwestern state, and the fourth nationwide, to allow same-sex marriages.

Google Buzz

Post to Twitter Tweet This Post

Same-Sex Spouse To Inherit Deceased Partner’s Estate

Published on February 5, 2009 in Estate Administration, Estate Litigation, Estate Planning and Recent Cases worth noting. 0 Comments Tags: , , .

Saw this yesterday and its making its predictable rounds (here and here and here) today.  The actual decision was hard to find so I offer it to you here (PDF).  I enjoy these decisions; the ones whose menial size belies the hefty weight of their potential impact.  It seems a simple matter too: The Court was asked to determine the identity of decedent’s distributees entitled to receive notice of the probate of decedent’s will.

     The decedent married his same-sex partner, J. Craig Leiby, in Montreal, Province of Quebec, Canada on June 7, 2008.  He died on November 1, 2008 survived by Mr. Leiby and by three siblings.  The decedent had no children.  His parents predeceased him, as did another sibling, who also left no children.

     Marriages valid where solemnized have long been recognized in New York; exceptions exist only for marriages affirmatively prohibited by New York law, or proscribed by “natural law” [citation omitted] [footnote omitted].  As decedent’s marriage was valid under the law of Canada, where performed, and falls into neither exception to the general rule, the marriage is entitled to recognition in New York [citation omitted].

Accordingly, Mr. Leiby is decedent’s surviving spouse and sole distributee.  [Notice] in this probate proceeding need not issue under SCPA 1403(1)(a) or any other provision of law to any other person as distributee.

The ruling is boring insofar as it appears to merely affect notice, but its more interesting as a determination of standing…  If the Judge’s ruling holds, then family members of gay or lesbian decedents who were married and left a surviving spouse would have no standing in probate, since they would be neither heirs nor legatees of the gay or lesbian decedent.  Lacking standing they would not be able to challenge decedent’s will.

Google Buzz

Post to Twitter Tweet This Post