Category Archives: Trusts & Estates

Guardianship Reform: Lessons for Reforming Testamentary Capacity Laws

Sep 28, 2022 Solangel MaldonadoTrusts & Estates

Solangel Maldonado

I must admit that I never followed Britney Spears until a colleague pointed out that her life was a family law exam in the making. The annulment of her 55-hour marriage, followed by her secret wedding to Kevin Federline and their very public divorce and custody battle allowed me to bring pop culture and Hollywood drama to my Family Law course. Spears’s life is once again the subject of discussion in law school classrooms, this time in Trusts & Estates courses. Spears’s lack of control over her life and finances while under a guardianship brought to light the injustices of guardianship systems that, despite significant reforms, restrict the rights of persons with cognitive, intellectual, or developmental disabilities (CIDD) to make personal and financial decisions. Few people, however, have considered why the law deprives persons with CIDD of the right to make decisions about their property at death, when their financial decisions can no longer benefit or harm them. This is the question driving Weisbord and Horton’s The Future of Testamentary Capacity.

Weisbord and Horton examine reforms to guardianship laws that aim to preserve the freedoms of persons with CIDD as much as possible, provide due process protections, including the right to participate in guardianship proceedings, and shift away from surrogate decisionmaking toward supportive decisionmaking—a model designed to help persons with CIDD make their own decisions with the support of others. They then explore why similar reforms have not been extended to testators and whether they should be. Weisbord and Horton demonstrate that while guardianships laws in many states increasingly try to preserve and facilitate the autonomy and decisionmaking ability of persons with CIDD, the law of wills continues to deprive them of the right to devise their property at death. A person who lacks testamentary capacity cannot make a will, and under the non-delegation doctrine, their guardian (or agent acting under a power of attorney) cannot make one for them. In short, persons who lack testamentary capacity are consigned to intestacy. Moreover, while persons who are the subject of guardianship petitions have a right to participate in proceedings about their capacity, in most jurisdictions testators cannot do the same as there is no mechanism for assessing their capacity until the will is probated—after their death. Continue reading "Guardianship Reform: Lessons for Reforming Testamentary Capacity Laws"

Flying Blind: Planning for Death when Holding Illegal Assets

Aug 15, 2022 Goldburn MaynardTrusts & Estates

Goldburn Maynard

Valuation, a process considered both a science and an art, often lies at the heart of estate and gift tax planning. In the course of settling large estates, the size and appropriateness of valuation discounts are common sources of disagreement between taxpayers and the IRS. To this already tricky terrain, in Estate and Gift Tax Valuation of Cannabis Business Interests, three estate tax experts, Jonathan G. Blattmachr, Bridget J. Crawford, and Mitchell M. Gans, add another complication: cannabis. That is, how should cannabis business interests be valued for gift and estate tax purposes? Since the ownership of such a business is illegal under federal law but legal in over 30 states, what are taxpayers to do? These questions are both timely and cry out for guidance from the IRS.

Tax law has a long history of considering the treatment of illegal income. If it were excluded from gross income, thieves and law breakers would have an unfair advantage over law-abiding taxpayers. Thus, inclusion seems necessary to avoid the absurdity of a tax code that favors illegality. As early as the 1920s, it appeared settled that gains from an illegal business could be taxed, but questions remained over embezzlement. See United States v. Sullivan, 274 U.S. 259 (1927). In the 1940s, the Supreme Court held that embezzled funds were not gross income because the embezzler had an obligation to repay, much like a debtor. See Commissioner v. Wilcox, 327 U.S. 404 (1946). But the Court reversed itself 15 years later in James v. United States, 366 U.S 213 (1961). Even with this certainty, questions have arisen at the margins in trying to distinguish the tax treatment of swindling gains from legitimate loans that sour into bad debt. See, e.g., Kreimer v. Commissioner, T.C. Memo 1983-672. Continue reading "Flying Blind: Planning for Death when Holding Illegal Assets"

Becoming

Jul 15, 2022 Browne LewisTrusts & Estates

Browne Lewis

Editor’s Note: With profound sadness, we share the untimely passing of Dean Browne C. Lewis of the North Carolina Central University School of Law on June 2, 2022. We extend our heartfelt condolences to Dean Lewis’s family, colleagues, and students. Dean Lewis submitted this review shortly before her death, so it was edited and published posthumously.

The probate system is designed to ensure that the decedent’s wealth is transferred to family members. Common law dictates that the probate system gives preference to families. The probate system has not kept up with the ever evolving definition of family. In The Dilemma of the Transgender Heir, Professor Carla Spivack discusses yet another complication that may arise because of the law’s tendency to see the world through a binary lens that requires people to identify as male or female. The problem identified by the author is how the law should treat a bequest when a person transitions to a gender different from the one mentioned in an executed testamentary instrument. For example, the testator may leave a bequest to a son who has transitioned to a daughter at the testator’s death. Does the gift lapse because the person identified in the testamentary instrument as male is now female? The author looks to several legal doctrines to determine whether the law provides a way to save the gift for a son who has become a daughter.

If an ambiguity exists in a will, the court will admit extrinsic evidence to clarify the testator’s intent. Once that intent is determined, the court can distribute the decedent’s property accordingly. In the case of a transgender heir, the ambiguity would be latent because the confusion only occurs when the executor discovers that the heir has transitioned to another gender. Under the common law, a court would allow the executor to present extrinsic evidence showing that the testator would have wanted the person to receive the property regardless of the person’s gender identity. The author, however, rejects the ambiguity-rule approach to resolving the dilemma of the transgender heir because she argues that the will does not truly contain an ambiguity. This is not a typical case of ambiguity in which the testator refers to an heir by the wrong name. Here, the information contained in the will is correct, even though the person named in the will no longer exists in the original form. Continue reading "Becoming"

The Double-Edged Sword of Hunting Heirs

Jun 14, 2022 Gerry W. BeyerTrusts & Estates

Gerry W. Beyer

Heir hunting. This slightly ominous term refers to the practice of sophisticated individuals and companies scouring probate filings, conducting genealogical research, and contracting with heirs of intestate decedents to provide help with probate proceedings in exchange for a cut of their inheritance. The practice originated in 1850s England before crossing over to the United States, and despite the prevalence of heir hunting, its legal treatment is murky at best. Academic scholars have failed to give it the attention its longevity would seem to warrant. Professors David Horton and Reid Kress Weisbord rectify this neglect and seek to understand the reality of heir hunting through an empirical study of San Francisco County probate filings. The professors’ findings guide their critique of heir hunting, and they propose legislation that provides a time and place for the practice in the present day and mitigates the serious harms it can cause.

The legal history of heir hunting is complex. Courts initially invalidated heir hunting contracts under the doctrine of champerty, which prohibits a third party from pursuing another’s legal claim. However, courts did not always employ the same logic when they struck down these contracts. Some courts voided the contracts because they encouraged litigation, and others pointed to heir hunters’ meddling with the duties of actual estate administrators. To make sense of these discrepancies, Professors Horton and Weisbord distinguish the differences in court opinions with two ideas: the “litigiousness” theory of champerty and the “interference” theory of champerty. Continue reading "The Double-Edged Sword of Hunting Heirs"

New Developments in Fifteenth-Century Ottoman Trust Law and the Fate of the Hagia Sophia

May 16, 2022 Reid WeisbordTrusts & Estates

Reid Weisbord

English legal historian Frederic William Maitland declared in the late 19th century, “[i]f we were asked what is the greatest and most distinctive achievement performed by Englishmen in the field of jurisprudence I cannot think [of] any better answer . . . than . . . the development from century to century of the trust idea.”¹ Maitland, indeed, had good reason to applaud the innovation of trust law. But his claim of English exceptionalism may have been a bit immodest.

As beautifully recounted in an unattributed student case note,² English legal tradition is not alone in recognizing beneficial ownership, the concept that underlies the enduring ingenuity of trust law. The Hagia Sophia Case: Turkey’s Highest Administrative Court Annuls Ataturk’s 1934 Decision Converting the Hagia Sophia into Museum, reveals that the validity of a fifteenth-century Islamic charitable trust emerged in 2020 as a pivotal question on appeal to Turkey’s highest administrative court. In that case, the petitioner sought to invalidate the conversion of one of Istanbul’s famous landmarks, the Hagia Sophia, from an active mosque into a public museum. Continue reading "New Developments in Fifteenth-Century Ottoman Trust Law and the Fate of the Hagia Sophia"

‘Till Death Do We Vote: The Thorny Issue of Votes Cast By People Who Die Before Election Day

Apr 11, 2022 Sergio ParejaTrusts & Estates

Sergio Pareja

It is vastly better to address issues related to voting outside the context of a hotly contested election. Professor David Horton has done an admirable job of doing this with his article that addresses what he accurately refers to as a “comparatively niche issue of predeceasing absentee voters.” (P. 347.) Specifically, he takes on the nuanced and thorny issue of whether to count votes that were cast by a voter who subsequently dies before election day.

In his thought-provoking article, The Dead Voter Rule, Professor Horton notes that in the 2020 national election, more than 100 million voters used absentee ballots and early voting procedures before Election Day. This was out of the approximately 160 million total votes cast. A small number of early voters, however, died before Election Day. When this happens, many states utilize what Professor Horton refers to as the dead voter rule (the “DVR”) to invalidate those votes. While the numbers are small, Professor Horton accurately notes that those votes can alter the outcome of a close election. He argues persuasively that the DVR should be abolished and that we should not wait until we have a really close election to enact reforms. Continue reading "‘Till Death Do We Vote: The Thorny Issue of Votes Cast By People Who Die Before Election Day"

Unearthing Posthumous Subordination

Mar 2, 2022 Allison Anna TaitTrusts & Estates

Allison Anna Tait

Fred O. Smith Jr.’s compelling new article, On Time, (In)equality, and Death, is a remarkable inquiry that delves into the posthumous rights of individuals and the risks of subordination that persist even beyond death. Smith identifies “four long-standing ‘rights’ after death” – bodily integrity, dignified interment, protection against undignified disturbance once interred, and control over the disposition of one’s property – and subsequently analyzes the potential that inheres in each category for posthumous subordination. These risks overlap with and undergird each other, discrimination compounding dispossession, but Smith identifies four main mechanisms and details how reliance on these mechanisms increases the likelihood of posthumous subordination.

The first site of subordination is linguistic and discursive. As Smith explains, statutory language used to govern burial practices and acts of desecration rely on terms like “outrage,” “offensiveness,” and “reasonableness.” The problem is that these terms are culturally contingent and “imbued with cultural values and norms.” Bodies have been prepared in different ways, burial has involved many different processes, and mourning practices have ranged from public and vocal, to private and silent. Cultural norms, pinpointed in time, have dictated these practices and the variety of approaches taken to death and care for the dead reminds us that the “outrage” accounted for in statutes is co-extensive with whatever it is that ruling bodies and classes find outrageous at any given moment. It would be interesting to have some examples of what Smith has in mind here as evidence of the cultural contingency of burial practices. Continue reading "Unearthing Posthumous Subordination"

Most People, Most of the Time

Jan 31, 2022 Katheleen GuzmanTrusts & Estates

Katheleen Guzman

Each moment of every day, many people are living without a formal estate plan and dying without a valid will. Reasons include ignorance, inertia, and choice. Some might not know that they have the ability to transfer property at death; others don’t want to think about the matter or do not care. A slight few might consciously figure that solving who gets what is best left to survivors to sort out, thereby externalizing the effects of their indecision. And there always remains the unlikely possibility that a person will both know, and consciously select, the succession outcomes that intestacy would force. In the latter two instances, those who “choose not to decide [] still have made a choice.” Nevertheless, as Professors Mary Louise Fellows and E. Gary Spitko intimate in How Should Non-Probate Transfers Matter in Intestacy?, individuals who intentionally die without an estate plan are probably rare.

Dying without an enforceable estate plan poses problems because clarity of ownership – knowing who owns what and precisely when – matters. Such deaths are neither new nor novel, with intestacy rules offering a solution. The property will pass to the decedent’s heirs, i.e. those whom state statutes identify as takers in default of a will. Otherwise stated: the property will pass to whomever some set of long-ago legislators (picture that demographic) determined as the most likely (or, as shaded by inherent biases, “appropriate”?) candidates for the decedent’s largesse. While intestacy may provide an efficient solution for distributing the property of decedents who died without manifesting a preference, Professors Fellows and Spitko note the inadequacy of that solution and posit a more intent-effectuating response. Continue reading "Most People, Most of the Time"

Wealth, Privilege, Power, And Opportunity

Dec 22, 2021 Victoria J. HanemanTrusts & Estates

Victoria J. Haneman

Over one’s lifetime, advantage processes have a cumulative and potentially significant impact on inequality.  The notion of cumulative advantage, or behavior processes whereby wealth continues to fall into the hands of individuals based upon how much they have already accumulated, is a concept to which many labels are applied: preferential attachment; “the rich get richer”; the Matthew effect. Most law school courses on trusts and estates consider (to some extent) the privilege, power, and opportunity that flows from economic wealth. Conversely, inherited social and cultural capital create advantage processes that are arguably no less significant, driving behaviors that produce tacit economic benefits—the parent who pays for extra tutoring so that a child may outperform peers on an entrance exam; the professional able to develop an instant sense of rapport and connection with other successful professionals; the job candidate who comports herself with high cultural knowledge (au courant but appropriate attire, elegant table manners, knowledge of fine arts, broad functional vocabulary). Although the intergenerational impact of inherited cultural capital is fascinating and relevant as an advantage process, the implications have been largely overlooked by legal scholars contemplating inheritance frameworks. Inheriting Privilege by Allison Anna Tait considers the family trust as a mechanism for intergenerational transfer of privileged social standing and cultural hierarchies.

The article encourages us to think more broadly about patrimonies: family resources usually considered by legal scholars in the narrow context of financial assets. Social and cultural capital is manifest within the patrimonies of the wealthy, with season tickets to the polo club, country club memberships, fee-paid legacy status within initiation-based social clubs, or box seats to performing arts events. Cultural objects, heirloom possessions, and shared rituals may also be part of the patrimony. Notably, treasured collectibles may sometimes be a part of both the economic patrimony and the family’s cultural capital. Trust beneficiaries may have access to priceless antiquities without ever investing capital to purchase them (“only middle-class people buy furniture (because upper-class people inherit it)”). Access to high-value antiquities, artwork, and social memberships—or any of the conspicuous markers of elite white culture—is a mantle of privilege and one inherits unearned opportunities when cloaked with this mantle. Professor Tait’s argument that young people are paid more and promoted far earlier when they possess a wealth of social capital is thoroughly supported. Continue reading "Wealth, Privilege, Power, And Opportunity"

Don’t Forget About the Fakes

Nov 25, 2021 Sarah WaldeckTrusts & Estates

Sarah Waldeck

In the Estates textbook I use, most of the will execution cases involve testators whose clear intent is unrealized because they bungled strict execution requirements. The Uniform Probate Code and the Restatement (Third) of Property: Wills and Other Donative Transfers—mainstays in any Estates class—are drafted to minimize the possibility of formal requirements interfering with testator intent. Reis Kress Weisbord and David Horton’s Inheritance Forgery is a counter-narrative that demonstrates how forgery remains a real and substantial risk of which the law must take account.

Weisbord and Horton argue that “counterfeit donative instruments are a serious problem.” (P. 855.) They focus on three donative transfers: wills, deeds, and life insurance beneficiary designations. To explore the prevalence of forged wills, the authors conduct empirical research in Alameda County, California. In a dataset consisting of every matter on the probate court’s docket in a one-year period, ten percent of will contests involved a forgery claim. (P. 876.) To document the forgery risk with deeds, the authors examine reported opinions since 2000, grand jury reports, and journalistic accounts of cases that were never litigated. As Weisbord and Horton explain, “these cases and stories share a common thread: deed forgers tend to prey on property that is owned by a decedent’s estate.” (P. 883.) To demonstrate that courts “routinely preside[] over claims that a life insurance form was falsified or fabricated,” the authors study reported opinions since 2000. (P. 889.) This empirical works reveals the extent to which forgery threatens the integrity of donative transfers. Continue reading "Don’t Forget About the Fakes"