Yearly Archives: 2012

Estate Planning Makes Business Sense for Non-Traditional Families

Nov 9, 2012 Camille Davidson

Fame, Family Feuds, Lack of Estate Planning, and Ethical Misconduct in the Administration of the Billion-Dollar Legacy of Bob Marley reads like a fact pattern for a law school final examination. In the article, Professors McKen Carrington and Christopher Ogolla discuss the controversy surrounding the estate of Robert Nesta “Bob” Marley. Famed reggae icon and Rastafarian Marley died intestate in 1981 with an estate valued at approximately 30 million dollars at the time of his death. Although Carrington and Ogolla focus on Jamaican law, the issues they highlight extend far beyond Jamaica and provide a backdrop for discussing several issues important in the administration of a decedent’s estate. With respect to the administration of Marley’s estate, those issues included adopted children, out of wedlock children, intellectual property rights, fiduciary obligations of a trustee, ethical obligations of an attorney, and choice of law issues. Further, there were allegations of forgery and fraud. Carrington and Ogolla merely scratch the surface with each of these topics. I would love to see them expand on several of the topics they highlight. Real life stories make great topics for writing and teaching in the area of decedents’ estates.

One of the first issues addressed in the paper is who should be included in Marley’s family. The article provides a brief section on the Marley family structure. Although Marley was survived by a spouse, Rita and the three children born to their marital union, he was also survived by two children of Rita that he had adopted and six other children that he had fathered with other women while he was married to Rita. I would have liked for the authors to have included a little more detail about the Marley family.

Although this article relegates to one sentence that Rita was the custodial mother and caretaker of all the children, one unanswered question is why did she take on that role? Why did Marley father so many children outside of his marriage? Were all of the children really Marley’s? Where were their mothers? Who is a decedent’s child under Jamaican law? Is a genetic connection all that is necessary to inherit from one’s father in Jamaica? Is a genetic connection necessary in order to inherit from one’s purported father in Jamaica? In most jurisdictions in the United States, biological connection is generally not enough for a child to inherit from or through his father. A parent-child relationship or other acknowledgment is often required.¹

The authors suggest that the Jamaican intestacy system failed Marley’s heirs. They mention Marley’s mother, Cedella Marley Booker, and indicate that she and Marley were extremely close, yet under the law she received nothing. Marley’s surviving spouse Rita was entitled to 10 percent of his estate outright and a life interest in 45 percent of his estate. The children were entitled to 45 percent outright and the remainder of the life interest. The authors suggest that the couple built the 30 million dollar empire together and we are to infer that Rita should be entitled to more. In fact, the authors mention Texas law as an example of where a surviving spouse would be entitled to more. Perhaps a little more detail about community property states and separate property states is warranted. Why is the life interest not beneficial to Rita? We often create spousal trusts for lifetime use as an estate tax savings mechanism.  Did the Jamaican system really fail Marley’s heirs?

The authors suggest that Marley was unlike most individuals who die intestate. Although he was a shrewd business person, his failure to devise an estate plan was for religious reasons. Some background on the Rastafarian religion may be helpful to the reader. Given the non-traditional nature of Marley’s family, an estate plan would have been a business plan. The authors could draft a practice-ready piece that highlights the importance of an estate plan especially for non-traditional families.

The second half of the article focuses on the many companies that Marley created and the ethical conduct of his spouse and business attorney. The authors state that the Model Rules of Professional Conduct do not adequately address the problems faced by estate planning attorneys. Indeed estate planning attorneys are often faced with potential conflicts of interest as they determine who exactly they represent. Carrington and Ogolla also remind us that there is a fine line between asset protection and fraud. But, the authors suggest that Marley’s estate problems arose because Marley did not have an estate plan. It appears from the article that some of the fraudulent transfers or misappropriations that Rita Marley made (with the assistance of David Steinburg took place prior to Marley’s death. Thus, an estate plan may not have prevented the fraudulent acts. Further, lawsuits filed by co-songwriters and band members probably would have still occurred even if Marley had a will. Even when a decedent dies with a will, determining the property that the decedent owns at the time of death may be controversial. Although everyone should have an estate plan, such plan will not prevent litigation.

Family Feuds reminds us that estate planning is essential for everyone and that being a lawyer is a noble profession.

The Anatomy of a Will Contest

Oct 12, 2012 Phyllis C. Taite

Gerry W. Beyer’s Will Contests-Prediction and Prevention starts with a discussion of reasons to anticipate a will contest. He points out society has come to accept nontraditional families as a societal norm and yet the likelihood of a will contest increases when a decedent makes bequests that pass outside of what we define as a traditional family. Thus, for example, from a planning standpoint the best option for a testator involved in a same-sex relationship is to create a will because the intestacy laws will not make provision for the surviving partner. The article points out that even when the testator plans in advance, the likelihood of this will being challenged by a blood relative is much higher than when bequests are made to traditional family members.

Professor Beyer points out that historically, no-contest clauses have been used as a weapon to deal with the potential threat of a will contest. Even so, Professor Beyer points out that no-contest clauses are becoming less reliable as a deterrent because enforceability may be called into question. With that in mind, Professor Beyer offers an alternative solution — an incentive not to contest the will: In exchange for not challenging the will for a period of 2 years after the date of death, the beneficiary would receive a gift. Such a provision may be especially valuable for states where no-contest clauses are not enforceable.

Professor Beyer also suggests the use of technology to provide “will insurance.” We’ve seen countless television shows where a decedent leaves a “video will.” I certainly cannot think of a circumstance where I would suggest that a client make a video will alone, although videotaping the execution ceremony is quite different. Certainly if a testator’s capacity may be called in to question a video could provide “will insurance,” but even in circumstances where competence is not questioned the testamentary intent may be established by use of statements made by the testator contemporaneous with the will execution. When properly done, the video execution could provide evidence of the adages estate planners and professor use frequently, such as the testator understanding the natural objects of his bounty, understanding the nature and extent of his property, understanding the disposition of his property under the will, and so on. The bequest to a same-sex surviving partner has more protection when supported by video evidence, but it still has inherent risk.

Professor Beyer also provides suggestions regarding witnesses to the will. The article is written in the context of an anticipated will contest. Thus it discusses the importance of the witnesses’ role in the execution process. In many cases, witnesses are persons who happen to be in the right place at the right time.  They tend to have no personal relationship to the testator and can only testify about the testator’s demeanor at the time of the execution, if they remember. However, as Professor Beyer points out, if witnesses were specifically chosen with a will contest in mind, the witnesses could be much more useful. If attorneys chose witnesses who were personally acquainted with the testator, these witnesses are more likely to remember the execution and have a frame of reference to testator’s intent and capacity on the date of execution as well as a prior time when it is uncontested that testator had such capacity. In addition, it would be much easier to locate witnesses with whom there is a personal relationship in the event their testimony is required.

I highly recommend this article to academics, and to transactional attorneys as well as litigators. This article provides the framework to minimize the risk of a will contest or provide the best protection in the event of one.

Estate Planning Is Better Than Xanax

Sep 21, 2012 Alyssa DiRusso1 comment

Sometimes a will is not just a will.  In Mark Glover’s recent article, he illuminates the psychological power that the law of wills and the process of estate planning can have.  Although I’ve long suspected many of us who work in the world of trusts and estates do so for psychological reasons (what drives us to attempt to control death?), I’ve never seen the connection between psychology and the law of death made so persuasively and concretely.

Professor Glover begins with a useful introduction to therapeutic jurisprudence.  It seems a gentle and unobtrusive movement; it largely suggests that, all other things being equal, the law should tilt toward rendering positive psychological consequences rather than negative ones.  Fair enough.  The model requires an analysis of the impact of laws on people, noting both the negative and positive psychological effect of the constructs law has created.  An analysis should lead to an adjustment in the law if the primary goals of the law could be accomplished in a way with better net psychological impact.

In the trusts and estates context, Professor Glover notes both negative and positive (“antitherapeutic” and “therapeutic”) psychological consequences of estate planning.  Anxiety about death and dying, and being forced to address issues relating to that source of angst, can by psychically troublesome.  Familial conflict and estate disputes also render negative psychological consequences.  Fear of the probate and administration process may provoke an anxiety reaction as well.  For clients most strongly affected by these concerns, the estate planning process can be a source of worry, anxiety, and negative emotions.

Much of estate planning, however, has therapeutic consequences, according to Professor Glover.  Many testators can experience “peace and satisfaction” from both the anticipated result of estate planning and the process itself.  The freedom of testation afforded by estate planning can produce satisfaction in a testator’s implementation of his individual preferences, not the least of which may be provision for the testator’s family after death.  The lawyer as “counselor” in the estate planning process can also have positive psychological benefits; the relationship and interpersonal support, in addition to the expert advice provided, can reduce death anxiety and minimize other negative emotions associated with wills.  The will execution ceremony itself may provide the comfort and satisfaction of ritual.  Finally, the execution of a will provides an avenue for self-expression, conveying the testator’s values and emotional connections.  On the whole, the positive psychological impact of estate planning appears to outweigh the negative.

Having applied a basic therapeutic analysis to estate planning as a whole, Professor Glover next demonstrates how the theory could be applied to a specific example of wills law: military wills.  Drawing on the general framework of the negative and positive psychological impact to be anticipated from the estate planning process, Professor Glover analyzes two reform movements within military wills: the reduction of states recognizing a privileged status for military wills, and the narrowing of the circumstances under which military wills may be executed (construing active military service more strictly).  Given that those in active combat are less likely to be able to access any of the psychological benefits of estate planning if significant formalities of will execution are required, Professor Glover argues that therapeutic analysis weighs against removing the privilege of military wills in many states.  Noting, however, that additional therapeutic benefits of estate planning may be accessed through attested wills if time permits (the counseling benefits of an attorney, the satisfaction of ritual), Professor Glover explains that the therapeutic balance weighs in favor of the restriction of access to military wills to those in active duty.

In conclusion, Professor Glover notes that a therapeutic jurisprudential framework can be applied to a variety of aspects of wills law.  Indeed, his list of selected publications shows that he will apply the analysis to will execution in his next article (Mark Glover, The Therapeutic Function of Testamentary Formality, 61 U. Kan. L. Rev. __ (forthcoming)).  I am sure it will be as satisfying a read as this article was.  Until it is released, I suppose I will have to console myself with the therapeutic benefits of a nice cup of green tea, or maybe just update my will.

Trust as Contract? Organization? Property!

Jul 23, 2012 Thomas Gallanis

This fascinating book stems from the author’s Ph.D. dissertation at the University of London, supervised by Professor (now the Honorable Mr. Justice) David Hayton and Professors James Penner and Paul Matthews.

The book is a response to academic writing from the United States emphasizing the contractarian or organizational basis of trust law.³

Dr. Lau’s account is also relevant to American trust law, even though our law will never be as proprietarian as the English law from which it descends. Still, American trust law, particularly as articulated in the Uniform Trust Code and the Restatement Third of Trusts, is experiencing a renewed appreciation of the property rights of the beneficiaries.⁴ Scholars of U.S. trust law will find much of interest in Dr. Lau’s thought-provoking book.

For Love or Money? Legal Treatment of Golddiggers

Jun 4, 2012 Stewart Sterk

Under what circumstances should courts permit a donor to undo what appears to be a completed gift – particularly when the gift is embedded in a real or imagined romantic relationship?  After surveying existing law, Ruth Sarah Lee concludes that traditional doctrine does not adequately deter donees from subtly misleading donors into making generous gifts that the donor would never make if the donee had been honest about his or her intentions.  Although the article’s focus is on a subspecies of lifetime gifts, its conclusions suggest possible application to testamentary gifts, and to how courts might approach doctrines of undue influence and tortious interference.

Although the conventional wisdom is that gifts are gestures of altruism, love, or kindness, that conventional wisdom does little to explain why a donor makes particular gifts.  Much recent scholarship recognizes that gift-giving helps build relationships, in part by enhancing trust between donor and donee.  Gifts, particularly gifts that require the donor to learn about the donee’s individual preferences, or gifts that are particularly expensive, perform an important signaling function:  they indicate to the donee that the donor has an interest in a long-term relationship.  As Ms. Lee points out, “[i]f the donor expected only a short-term relationship with the donee, he would not expect enough in return, in terms of affection or trust, for the gift to be worth its cost.”   If gifts were freely revocable, they would lose that signaling advantage, because the donor would not be making the same sort of commitment to a relationship with the donee.  Nevertheless, as Ms. Lee indicates, engagement gifts are routinely treated as revocable at the donor’s behest if the marriage does not occur.  Courts invoke either the theory that the gift was conditioned on occurrence of the marriage, or that the theory that the gift was given only as consideration for the marriage.

Even when a romantic gift is not enmeshed in an engagement to be married, courts sometimes hold that the donor is entitled to revoke the gift on a theory of unjust enrichment or fraud.  Why should that be?  Ms. Lee points out that much as a donor sends a signal when the donor makes a gift, the donee sends a signal by accepting the gift:  a signal of interest in developing the relationship.  If a donee who has no interest in the relationship accepts gifts without communicating his or her lack of interest, the donor may be misled into making still more gifts.  For this reason, Ms. Lee argues that explicit gold-digging is far less serious a problem than subtle gold-digging; the donor who makes gifts to the explicit gold-digger knows precisely what he (or she) is doing.

The problem, Ms. Lee argues, is that traditional remedies for unjust enrichment and fraud do not provide the right incentives for subtle gold-diggers. If doctrine only requires a donee to disgorge gifts received under false pretenses, a scheming donee faces no effective deterrent:  if his (or her) chicanery is discovered, he must return the ill-gotten gains; if not, he gets to keep them.  (Ms. Lee does ignore the time and effort the donee might spend cultivating an unpleasant donor’s interest.)  She then identifies a recent case, United States v. Saenger, No. CR11-223RAJ, (W.D.Wash. 2012), in which a donee was convicted of mail fraud and sentenced to 46 months in prison for her role in convincing her elderly boyfriend to send her more than $2 million over the course of a five-year “relationship,” and suggests that in a limited set of cases, criminal penalties might be effective in inducing donees like Saenger to turn down extravagant gifts when they have no interest in a long-term relationship with the donor.  Ms. Lee cautions, however, that “[p]unishment beyond the cost of the gift should be applied very sparingly” because it is only the role of the courts to protect donors from true fraud, not from “the manipulations of their partners, the entreaties of their lovers, or the generous whims of their own hearts.”

Whether gold-digging donees know enough law to worry about the legal consequences of their actions is a question that plagues deterrence-based arguments in this area.  But if we take Ms. Lee’s argument on its own terms, the problems she identifies are not limited to lifetime gifts.  Gold-diggers — both those who feign romantic interest and those who mislead testators in other ways – can lead those testators to make substantial bequests in their favor.  The traditional remedy for misconduct by will beneficiaries is invalidation of the will on undue influence grounds.  But that remedy suffers from the same defect as the unjust enrichment remedy against lifetime donees who induce donors to make extravagant gifts under false pretenses: its deterrence potential is limited.  Ms. Lee’s analysis implicitly suggests that courts should consider punitive damages awards in at least some undue influence cases (see Estate of Stockdale, 953 A.2d 424 (N.J. 2008)), or should become more receptive to tortious interference with inheritance claims if punitive damages appear unfeasible in the context of a will contest proceeding.