T&E Litigation Update – Purcell v. Landers

Author:
Mark E. Swirbalus, Esq., Day Pitney LLP

The T&E Litigation Update is a recurring column summarizing recent trusts and estates case law. If you have question about this update or about T&E litigation generally, please feel free to e-mail the author by clicking on his name above.

Purcell v. Landers

In Purcell v. Landers, Case No. 10-P-1757, 2011 Mass. App. Unpub. LEXIS 1251 (Dec. 6, 2011), a decision issued pursuant to Rule 1:28, the Appeals Court affirmed in part and reversed and remanded in part the probate court’s disposition of a will contest.

The decedent had one adopted daughter, the plaintiff Lisa Purcell, and they were described as “estranged” from each other. The decedent was afraid of the plaintiff, who had admitted to sufficient facts and a guilty finding of threatening to commit a crime against the decedent, apparently for threatening to burn down his house with him in it, and whom the decedent said had taken $26,000 from him during his lifetime.

In his will, the decedent left only $1 to the plaintiff, leaving the rest to his friend, the defendant Richard Landers, whom the decedent also named as executor. The defendant was described as the decedent’s “one true friend” for many years both before and after the death of the decedent’s wife in 1984.

The plaintiff objected to the allowance of the will and to the defendant’s appointment as executor, in part because it was the defendant who had introduced the decedent to his estate planning lawyer and drove the decedent to the lawyer’s office for the preparation of the will. After a trial, the probate court struck the plaintiff’s objections and allowed the will for probate, finding that the defendant, rather than the plaintiff, had become the natural object of the decedent’s bounty.

The Appeals Court affirmed the portion of the probate court’s decision striking the plaintiff’s objections, but reversed the allowance of the will for probate, because the defendant, as the proponent of the will, had not met his burden of proving that the will was executed in accordance with the law. Specifically, the defendant had not called the attesting witnesses to testify at trial. “[T]he judge erred in not enforcing the requirement of testimony by attesting witnesses. Instead, he inappropriately shifted the burden of producing the witnesses to the plaintiff. As a result, despite the judge’s diligence in preparing thoughtful findings, the defendant failed to satisfy his burden to prove proper execution of the decedent’s will as required under G.L. c. 191, § 1.”

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

IRS Rev Ruling 2011-28: Grantor’s Power to Acquire Insurance Policy by Substituting Assets Does Not Cause Estate Tax Inclusion Under IRC § 2042

Author:
Caleb Sainsbury, Esq., Pabian & Russell, LLC

The IRS issued Revenue Ruling 2011-28 on December 5, 2011 regarding the includability of a nonfiduciary power held by the grantor to acquire an insurance policy on the grantor’s life from an irrevocable trust by substituting assets of equivalent value. This ruling is important because it resolves the issue of whether the grantor’s retention of a power, exercisable in a non-fiduciary capacity, to acquire an insurance policy on his life owned by an irrevocable trust by substituting assets of equivalent value causes the insurance policy to be includible in the grantor’s gross estate under § 2042. The IRS ruled for the taxpayer and concluded that such a power would not by itself cause the value of the insurance policy to be includible in the grantor’s gross estate under §2042. In reaching this conclusion, the Service noted several important facts working in the taxpayer’s favor:

  • The trust instrument expressly prohibited the grantor from serving as trustee.
  • The grantor’s power to substitute assets of equivalent value was held in a nonfiduciary capacity.
  • Under the terms of the trust in this particular case, the assets transferred to the trust must be equivalent in value to the insurance policies that the grantor will receive.
  • The trustee had a fiduciary obligation to ensure that substituted assets were of equivalent value ensuring that the trustee cannot act in a manner that will deplete trust assets or increase the grantor’s net worth.
  • Because the trustee had the fiduciary duty to treat the beneficiaries impartially and the trustee had the power to re-invest assets, a substitution of assets would not work to shift assets among the beneficiaries.

This Ruling is taxpayer friendly and provides useful guidance when advising clients on the types of powers a grantor may retain. Practitioners should consult the Ruling itself for the detailed legal analysis the IRS conducted in reaching this result.

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org or call 617-742-0625.

Massachusetts Uniform Probate Code Delayed 90 Days

The Boston Bar Association recently published the following release:

On December 30, 2011, Governor Patrick signed into law a bill that extends the effective date of the Massachusetts Uniform Probate Code, G.L. c. 190B (MUPC ) — as it applies to estates and trusts — to March 31, 2012. The MUPC was set to take effect on January 2, 2012. The Boston Bar Association has been advocating for the implementation of the MUPC for more than twenty years and will continue to work with the Legislature and the Probate and Family Court to ensure that these important provisions become law.

“This landmark piece of legislation improves what was an unacceptable situation concerning the appointment and conduct of guardians,” said BBA President Lisa C. Goodheart. “The MUPC will also simplify the probate process for families and our courts while expediting the process for administering estates.” The MUPC facilitates the appointments of executors and also provides options for choosing informal or formal procedures to open and close probate matters.

The MUPC became effective for guardianship on July 1, 2009. Still under consideration by the Legislature is a bill establishing a uniform trust code, containing technical corrections to the MUPC, and granting the Probate and Family Court statutory authority to collect fees under the MUPC.

The Probate and Family Court’s statement on the delay, including amended Standing Order 5-11 and revised forms and instructions, can be found here.

Effective Date of Probate Code Overhaul Likely to be Delayed

The Boston Bar Association and Massachusetts Bar Association released the following announcement earlier today to members:

Today the House passed a bill extending the effective date of the Massachusetts Uniform Probate Code (MUPC) to March 31, 2012. The extension bill awaits action by the Senate. The MUPC was set to go in effect on Jan. 2, 2012.

Still under consideration by the Legislature is a bill establishing a uniform trust code, containing certain technical corrections to the MUPC, and granting the Probate and Family Court statutory authority to collect fees under the MUPC.

Both organizations look forward to continued work with the Legislature and the Court to ensure that these important provisions become law.

Probate Court Begins to Release MUPC Forms

The Massachusetts Probate and Family Court has begun to publish the new MUPC probate forms on a new page on its website here. At this time, more than thirty forms have been released, including forms for opening an informal probate, opening a formal probate, closing probate, and creating an inventory and accounts. The Court will publish additional MUPC forms as they become available and plans to remove current probate forms (those effective until January 2, 2012) from its website in January 2012.

The Court has also begun to publish certain instructional materials that have been used at recent trainings on its website here.

Massachusetts Uniform Trust Code Passes Senate

Author:
Brad Bedingfield, Esq., Wilmer Cutler Pickering Hale and Dorr LLP

On December 15, 2011, the Massachusetts Senate passed S.2094, a combined bill containing both the Massachusetts Uniform Trust Code and the technical corrections to the Massachusetts Uniform Probate Code formerly in S.704. Section 38 of S.2094 also includes a new probate court fee schedule to correspond with the new rules. 
 
Although the House passed a substantially identical version of the Massachusetts Uniform Trust Code (H.3756) on November 2, 2011, because S.2094 includes the MUPC technical corrections and the fee schedule, it has now been sent back to the House. We will keep you informed of any further developments.

Urgent Alert: We Need Your Help – Massachusetts Uniform Trust Code and Massachusetts Uniform Probate Code Technical Corrections

Author:
Kelly Aylward, Esq., Bove & Langa, P.C.

As discussed here, on November 1, 2011, the Massachusetts Uniform Trust Code (“MUTC”) (now H.3780/S.2034) was passed by the House and was referred to the Senate Ways and Means Committee. The next step is for the Senate Ways and Means Committee to report the bill out for a vote by the Senate. Because the Senate is now in “informal session”, which is only open for the next three weeks, a unanimous vote by the Senate is required for this bill to pass in time to become effective on January 2, 1012 [the date that the trust provisions of the Massachusetts Uniform Probate Code (“MUPC”) become effective]. This is where you can help.

Please contact your representatives in the Senate and urge them to send the MUTC to the Governor’s desk. As discussed here, it is vital that the MUTC pass in time to become effective on the same day as the trust provisions of the MUPC to avoid a scenario whereby courts, practitioners, trustees, and beneficiaries must grapple with multiple disparate bodies of trust law in succession.

In addition, the technical corrections to the MUPC (bill S.704) is still before the Joint Committee on the Judiciary and has not passed the House or the Senate. We ask that you also urge your representatives to encourage the passage of the technical corrections.

As the Boston Bar Association continues to work closely with representatives and senators to encourage the passage of both the MUTC and the technical corrections to the MUPC, we would appreciate your assistance in contacting your representatives and senators to move this process along as quickly as possible. We have attached an updated template letter here for your consideration.

To identify your representatives, and for contact information, please visit here.

Thank you for your continued support.

T&E Litigation Update – Cohen v. Attorney General

Author:
Mark E. Swirbalus, Esq., Day Pitney LLP

The T&E Litigation Update is a recurring column summarizing recent trusts and estates case law. If you have question about this update or about T&E litigation generally, please feel free to e-mail the author by clicking on his name above.


Cohen v. Attorney General

In Cohen v. Attorney General, Case No. 11-11500-NMG, 2011 U.S. Dist. LEXIS 120336 (D. Mass. Oct. 18,2011), the federal district court dismissed an action brought by Jillian Cohen, purporting to act in her capacity as “Full Statutory Administratrix” of the estate of the decedent, effectively seeking federal court review of two state court dismissals of her previous suit for alleged negligence, products liability and wrongful death.

In dismissing the case on a motion brought by the Attorney General on other grounds, the court offered the following commentary on the plaintiff’s inability to pursue the action pro se on behalf of the estate:

“Notwithstanding that Cohen may have authority to act based on her appointment as Administratrix, that is not sufficient to permit her to represent the interest of the Estate, where she is not a duly-licensed attorney admitted to practice in this Court. Although 28 U.S.C. § 1654 permits persons to proceed pro se, this provision does not allow unlicensed [sic] lay people to represent other pro se litigants. See Feliciano v. DuBois, 846 F. Supp. 1033, 1039(D. Mass. 1994); Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305,1308 (2d Cir. 1991). Additionally, this Court’s Local Rules do not provide such authorization. See District of Massachusetts Local Rule 83.5.3(c), providing that “[a] person who is not a member of the bar of this court, and to whom sections (a) and (b) are not applicable, will be allowed to appear and practice before the court only in his own behalf.” Id.  See also Pridgen v. Andresen, 113 F.3d 391, 393 (2d Cir. 1997) (holding that “an administratrix or executrix of an estate may not proceed pro se when the estate has beneficiaries or creditors other than the litigant.”).  Here, it appears that there are several beneficiaries and/or creditors, and thus claims inuring to the Estate…may only be prosecuted in this Court by duly-licensed counsel.”

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org or call 617-742-0625.

Alert: Massachusetts Uniform Trust Code Passes House

Author:
Brad Bedingfield, Esq., Wilmer Cutler Pickering Hale and Dorr LLP

As discussed here, on October 19, 2011, the Massachusetts Uniform Trust Code (MUTC) (formerly H. 2261 and S. 688, now H. 3780 and S. 2034) was reported favorably from the Joint Committee on the Judiciary. On October 31, it was reported from the House Committee on Ways and Means, and on November 1 passed the House.

For those of you who have contacted your representatives to urge passage of the MUTC, thank you for your support. However, we’re not there yet. Please ask your representatives in the Senate to send the MUTC to the Governor’s desk. As discussed here, the trust law provisions of the Massachusetts Uniform Probate Code (MUPC) are scheduled to take effect on January 2, 2012. It is vital that the MUTC, which has an effective date of January 2, 2012, is signed as soon as possible, to avoid a scenario whereby courts, practitioners, trustees and beneficiaries must grapple with multiple disparate bodies of trust law in succession.

In addition, the Massachusetts Uniform Probate Code (MUPC) technical corrections bill (S. 704) has not yet passed the House or the Senate. The Boston Bar Association is working closely with representatives to encourage passage of both the MUTC and the MUPC technical corrections bill as soon as possible. Please contact your representatives and urge them to push this bill through as well.

Thank you for your support.

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org or call 617-742-0625.

Standing Order 5-11, Guidance in Applying the MUPC to Pending Proceedings

Author:
Kerry L. Spindler, Esq., Goulston & Storrs, PC

The Massachusetts Probate and Family Court (the “Court”) recently announced new Standing Order 5-11, providing guidance as to application of the MUPC’s estate administration and trust provisions to proceedings pending before the Court after January 2, 2012, the MUPC effective date. A proceeding is “pending” if a petition was docketed, filed or date stamped as received by a Probate and Family Court on or before December 30, 2011 and where (i) a permanent decree has not entered, or (ii) a permanent decree has entered but other proceedings may be pending in the matter. The proceedings addressed in the Standing Order include:

  • Citations
  • Probate and administration decrees
  • Petitions to establish a testamentary trust or to fill a vacancy in a previously established testamentary trust
  • Petition for license to sell
  • Other petitions
  • Allowance of accounts
  • Voluntary administration
  • Appointment of certain fiduciaries

The Standing Order also provides that “all fiduciaries, including trustees, shall continue to have the obligations of their pre-MUPC bonds unless modified by petition after January 2, 2012”. This suggests that a fiduciary acting under a pre-MUPC bond may submit a petition to modify the bond and request access to the more flexible MUPC procedures. However, as previously reported, the MUPC technical corrections legislation, which would eliminate the ambiguity in the MUPC’s “effective date” provisions and cause Article VII of the MUPC (and the provisions incorporated through Article VII) to apply to trusts that became irrevocable prior to January 2, 2012, has not yet been adopted. As a result, it remains unclear whether trustees of such trusts may petition to bring those trusts within the MUPC.