Pennsylvania Fiduciary Litigation

Who gets the grandfather clock?

Patti Spencer — Mon, 01 Mar 2010 13:07:59 -0500

How many families do you know who fought over the settlement of their Mom and Dad’s estate? In my experience, these family feuds are often over things - not money. Who gets the sterling flatware and who gets the drop-leaf table are points of contention that rip apart the family fabric.

Mom and Dad, why on earth do you think that children who fought over who gets the last cookie and, as recently as last week, fought over who gets to stay in the beach house the third week in August will somehow miraculously change when you die? I have news for you. When you’re gone, they will fight worse than ever. Face up to it now.

Even in estates where there are no tax issues - let’s say the total value of the estate is less than $3.5 million - disputes over personal property can cause permanent schisms. Each child wants the teapot that was the center of every family dinner and embodiment of all memories of childhood love. The executor has to decide who gets it. What a job that is! The only way for an executor to escape with his skin is often to sell the piece - then everyone can be equally angry.

If tempers can flare over items of sentimental value, watch out when the monetary value of the disputed items rises or when the estate exceeds the federal exemption for estate tax.

Mom and Dad, don’t bring this problem on yourselves. You may have heard at bridge club that you shouldn’t mention these things in the will because then your heirs have to pay tax on them. Even worse, some estate planners might tell you that too. This is wrong. A decedent’s property owned at death is subject to estate and inheritance tax. It doesn’t matter whether the property is specifically mentioned in the will. What these "advisors" really mean is that if it isn’t mentioned in the will, it’s easier to cheat on the taxes by omitting to report the item. This is tax fraud, pure and simple. The same tax is due on a $10,000 bank account as on a $10,000 oriental rug, and it is absolutely fair and just that it be so.

Tempers may also rise when you or your Executor low-ball the value of valuable items, asking for "low" appraisals for "estate tax purposes" to try to reduce taxes. Then the property is divided up among the children using the appraised value. Surprise, surprise -- a child sells the breakfront that was part of his share for double the appraised value and his siblings call foul.

The IRS is not as dumb as you think. Most people who have valuable collectibles - jewelry, artwork, antiques - realize that they must be insured. Your average homeowners insurance policy doesn’t cover the loss of these items unless they are separately listed and valued. If you don’t report the jewelry all the IRS has to ask for is a copy of the homeowner’s policy. The IRS knows that if you live in a $300,000 house, have three expensive cars, belong to the Country Club and have a winter place in Florida then your household furnishings are worth more than a couple of thousand dollars.

If you’re afraid to talk to your kids about it, how do you think your executor (who may be one of the kids) is going to feel about it? The best thing you can do is make list of items, and who should receive them. Allow your children to have input. You be the one to settle the disputes. Then make the list part of your will or at least make it a non-binding memorandum, mentioned in your will.

If you can’t bear to talk about it, at least put a mechanism in your will for the division of the property. Maybe each child selects items in rotation. Who gets first choice is determined by lot.

Keep this in mind too: putting someone’s name on an item with a tag is legally meaningless. All property is passed under the will or under the intestacy statute if there is no will. It doesn’t matter if "Mom promised it to me" or if "Dad told me it would be mine." If all the other beneficiaries agree, you may be ok. But if there is any dispute, such oral representation, tags, notes, and letters are completely without any legal effect.

Also, there are the people who say "Grandma gave it to me years ago, I just left it in her house until she died." Even if this is true, the IRS takes the view, that this is not a completed gift. A completed gift of personal property, like a corner cupboard, requires delivery. How can you prove delivery in this instance? Even if you can prove delivery by some ingenious means, to the IRS, it still looks like a transfer with a retained right to the use of the property for life and is still subject to tax in the estate.

If you have a $40,000 grand piano, by all means, dispose of it in your will. If you want your daughter to have it, bequeath it to her. The best gift you can give to your beneficiaries is to make a clear and incontestable disposition of all your property, including jewelry, furniture, collectibles and artwork. The last thing you want to bequeath to your children is a battle that will drive them away from mutually supporting each other.

The Art of the Steal

Patti Spencer — Sat, 27 Feb 2010 22:18:02 -0500

Manohla Dargis writes a movie review of a documentary about the Barnes Foundation for the New York Times.

Dr. Albert Barnes' will provided that the collection must remain in its original location - the mansion in Lower Merion Township, Pennsylvania.

The Foundation became embroiled in controversy due to a financial crisis in the 1990s, partially related to longstanding restrictions related to its location in a residential neighborhood. The relocation of the gallery from Lower Merion to a site in Philadelphia, on the Benjamin Franklin Parkway, for enhanced public access is scheduled for 2012.

Billionaire Mel Simon's Widow and his Kids Fight it Out.

Patti Spencer — Sun, 14 Feb 2010 14:27:12 -0500

Mel Simon, who died at age 82 in September 2009, left behind a huge estate tangled in litigation. Mr. Simon was famous for building shopping centers - including the huge multi-use complex, Mall of America, located outside of Minneapolis, known as the U.S.'s largest mall. Forbes estimated his net worth at $1.3 billion.

Mr. Simon was survived by a wife and children from a prior marriage. He signed a new will and trust seven months before he died that drastically reduced the amount left to his three children and increased the amount going to his wife of 37 years, Bren Simon (37 years is a long time.)

Andrew Mayoras comments on the litigation at The Probate Lawyer Blog: The wars over the final wishes of Bill Davidson & Mel Simon:

"Deborah Simon, Mel's daughter, filed the lawsuit a few weeks ago. She claimed that Mel was ill from pancreatic cancer, dementia and neurological disorders which impaired his understanding and his ability to sign the new documents. In fact, she says, he wasn't even able to hold the pen or the documents to sign his name, and someone else had to move his hand for him.

Mel's wife, Bren, counters that the documents were valid. Mel fully understood and desired to make the changes, she says, to protect his wife from his children, and because he wanted to compensate her for loss in value of company stock. Bren admits that Mel needed help signing the estate planning documents, because he suffered from symptoms of Parkinson's disease.

As a probate litigation attorney who regularly handles will disputes and trust contests like these cases, I see these types of family fights affect people on a daily basis. While millionaires and billionaires do seem to attract these legal battles more often (as covered in Trial & Heirs: Famous Fortune Fights!), the reality is that they are also far more common than people realize, even for middle-class families.

The exact same type of legal fights surface over estates worth hundreds of thousands, or even tens of thousands. When a will or trust is changed and family members are cut out, or someone is convinced that a promise was made and not fulfilled, estate disputes are usually just around the corner. "

Kris Hudson and Rachel Emma Silverman wrote about the case for the Wall Street Journal:

"The battle over Mr. Simon's will joins a list of high-profile estate contests among the super-rich, involving accusations that a senior family member may not have fully understood what was at stake when signing estate-planning documents. For instance, in the recent case of society doyenne Brooke Astor, her son, Anthony Marshall, was convicted last year of defrauding his mother as she struggled in her last years with Alzheimer's disease. "

For more commentary see Estate of Denial: Simon Family Estate Dispute. and Juan Antunez's Billionaire's Will Sparks Family Fued: Spousal Undue Influence?

Widow of Drunk Driver Denied Life Insurance Payment

Patti Spencer — Sun, 07 Feb 2010 15:50:12 -0500

CIGNA refused to pay the death benefit on a life insurance policy claiming that the death was not a result of an accident. They claimed the injury was self-inflicted, as the crash could reasonably have been anticipated to happen with an intoxicated driver. No life insurance for you, Mrs. Firman.

The widow has brought a lawsuit since CIGNA denied the internal appeal.

As reported in the Houston Press:

"According to the lawsuit, CIGNA told Firman that since her husband "would have been aware of the risks involved in operating his vehicle while under the influence, his death was a foreseeable result of his actions and thus not an accident." CIGNA also told Firman that driving drunk is "conduct that must be deterred, apparently assuming a moral stance on this claim," the lawsuit states. In the end, Firman claims, CIGNA decided that since her husband was intoxicated, his death was the "result of intentionally self-inflicted injuries."

And if you have a heart attack because you are overweight, have high cholesterol and don't exercise. . . . . . .

Hat tip to J. Michael Young of Texas Probate Litigation and his blog post.

Privacy Rights of John E. duPont, Convicted Murderer

Patti Spencer — Wed, 27 Jan 2010 17:34:16 -0500

Trusts and Estates published an article by John T. Brooks and Samantha E. Weissbluth:

Wrestling with the Privacy Rights Of John E. du Pont, Convicted Murderer

A Pennsylvania court weighs in on a former wrestler’s bid to unseal the records of du Pont’s incapacity hearing so as to peer into his trust documents.

A Pernicious and Pervasive Culture of Corruption

Patti Spencer — Tue, 26 Jan 2010 11:17:33 -0500

U.S. District Court Judge Jack Weinstein when sentencing a former broker for securities fraud said:

"'What becomes evident in a trial like the present one, and in recent mortgage fraud cases, is how pernicious and pervasive is the culture of corruption' in the securities industry."

Daniel Solin writing for Daily Finance on January 24, 2010 reports:

"Eric Butler, a former broker with Credit Suisse, had a lot to be worried about when he walked into the U.S. District Court in Brooklyn, N.Y., on Friday for sentencing. A jury had found him guilty of misleading his clients into believing they were purchasing low-risk, auction rate securities backed by student loans, with federal guarantees. Instead, the hapless clients were sold high-risk, high-commission auction rate securities backed by home mortgage assets.

Butler altered the trade confirmations to make them appear to reflect securities backed by student loans. But the scheme fell apart when the auction rate securities market collapsed.

The government claimed losses exceeded $1.12 billion and asked for a sentence of 45 years in prison, plus significant monetary penalties. But Butler caught a major break. U.S. District Court Judge Jack Weinstein sentenced him to only five years in prison and fined him $5 million.

Judge Weinstein isn't your run-of-the-mill jurist. He has been a federal judge for 43 years, is a prolific author and one of the most experienced and respected judges in this country. After the jury returned its guilty verdict, Judge Weinstein signaled his concern about allocating all of the blame for these misdeeds to Butler. Said Weinstein: "What becomes evident in a trial like the present one, and in recent mortgage fraud cases, is how pernicious and pervasive is the culture of corruption" in the securities industry.

He repeated these views on Friday, noting the reduced sentence took into consideration "the pernicious and pervasive culture of corruption in the financial-services industry," which is "beset by avarice."

Wake-Up Call to Investors

Weinstein left no doubt about his view of Credit Suisse's culpability, stating that "[T]he blame for this condition is shared not only by individual defendants like Butler, but also the institutions that employ them."

This judicial validation of the pervasive greed and dishonesty in the securities industry should be a wake-up call to investors. It's difficult to understand why investors continue to trust their assets to members of this industry. It's bad enough that brokers generally lack the expertise to manage your assets. It's worse that, if you're a victim of broker misconduct, the mandatory, industry-run arbitration process is rigged to ensure you won't recover any meaningful portion of your losses.

I appreciate Judge Weinstein taking corruption and greed in the securities industry into account as an argument against a long prison sentence for Butler. What's your argument for continuing to place your trust in the securities industry? "

More here on Affinity Fraud: Misplaced Faith?

Undue Influence Worksheet

Patti Spencer — Mon, 25 Jan 2010 12:47:27 -0500

Thank you to Juan Antunez of Florida Probate & Trust Litigation Blog for this information about the law governing undue influence.

The Undue Influence Worksheet was developed by forensic psychiatrist Bennett Blum, M.D.

"The “Worksheet” is based upon the IDEAL protocol, which combines knowledge from the fields of psychiatry, psychology, and sociology regarding the mechanisms of human manipulation, with extensive review of statutes, case law, and legal theory. IDEAL describes those psychological and social factors that commonly co-exist in undue influence situations. These factors are: Isolation; Dependency; Emotional manipulation and/or Exploitation of a vulnerability; Acquiescence; and Loss. "

This is invaluable information for use in preparing your undue influence case. Read Juan Antunez's post here.

MISPLACED FAITH?

Patti Spencer — Mon, 25 Jan 2010 11:46:51 -0500

The January 24, 2010 Lancaster Sunday News front page headline is "MISPLACED FAITH?".

Gil Smart's article (read it here) explained an investment scam that looks like an Amish version of the Madoff debacle. Full details have yet to emerge, but it appears that the interest rates promised by John M. Sensenig were simply too good to be true.

Why do people, from all faiths, all regions, and all walks of life fall for these scams?

The Securities and Exchange Commission calls these schemes Affinity Fraud:

"Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are - or pretend to be - members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse.

These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.

Many affinity scams involve "Ponzi" or pyramid schemes, where new investor money is used to make payments to earlier investors to give the false illusion that the investment is successful. This ploy is used to trick new investors to invest in the scheme and to lull existing investors into believing their investments are safe and secure. In reality, the fraudster almost always steals investor money for personal use. Both types of schemes depend on an unending supply of new investors - when the inevitable occurs, and the supply of investors dries up, the whole scheme collapses and investors discover that most or all of their money is gone. "

Read more from the SEC on how to avoid affinity fraud: click here.

Also check out " Why scams work - analyzing the reasons people fall for scams"

All too often, there is no recovery available. But sometimes, there is recourse, in which case the expertise of an attorney experienced in investment fraud or stockbroker fraud is required.

Your Estate Plan May Need a Band-aid

Patti Spencer — Mon, 18 Jan 2010 09:58:49 -0500

Thanks to Congress’s failure to act to "fix" the estate tax by the end of 2009, your estate plan may have a serious problem. If your estate plan divides your assets by use of a formula that refers to the estate tax, your plan could be in trouble.

Many people have this type of plan. It goes by various names. Some call it an A-B Trust, some call it credit shelter trust planning, some refer to it as by-pass trust planning. Whatever you call it, the salient feature is a word formula that directs part of the decedent’s assets to a trust and part to the surviving spouse (or to a trust usually for his or her benefit). These formulae were put into your plan so that your plan could adapt to changes in the federal estate tax, like the increasing exemption amount, and to take account of gifts you may make in your lifetime.

The formula divides the assets by reference to the federal estate tax law. Since we don’t have a federal estate tax right now, these formulae don’t work - they are either meaningless gibberish or they produce a bad result. (Thank you Congress.)

On December 31, I sent out letters to all my clients who had such formula provisions in their wills or revocable trusts. Many of them have been in to sign codicils or amendments already. If your plan has a formula, you really should get it fixed up for 2010.

One example of a formula would direct the distribution of the maximum portion of your estate amount that can pass free of estate tax to the credit shelter (or by-pass) trust. Since there currently is no estate tax, the maximum amount that can pass free of estate tax is 100% of your estate. Thus, if you died now, all of your assets would go to that trust; and your surviving spouse would not receive anything (except that he or she may have some interest in that trust). This is probably not what was intended when you signed the document.

Another example of a formula is one which provides that an amount passes to the spouse which is the whole estate minus an amount equal to the amount the federal exemption equivalent which is directed to the credit shelter (or by-pass) trust. Using this formula, if you died now, since there is no estate tax in 2010, 100% of your estate would pass to the surviving spouse, and nothing would go to the trust. Again, this is probably not what was intended when you signed the document.

With neither formula do you get the result that was intended when you signed your estate plan. Thanks to our venerable Congress’s failure to act with regard to the estate tax prior to the end of 2009, your plan now has a serious problem.

Remember, this type of planning was done to save estate taxes, specifically to use both spouses’ exemptions from the federal estate tax. In most cases, the only purpose of including a by-pass or credit shelter trust was to save estate taxes. It would not be good to saddle your surviving spouse with a trust to administer when the trust was completely unnecessary to save taxes and was funded only because of Congress’s current shenanigans.

The solution is to amend the formula provision. There is not sufficient time to revisit your whole plan. As an immediate "band-aid" fix, if your plan contains a formula division, you should contact your attorney to make a simple codicil to your will or amendment to your trust. The codicil or amendment should provide that if you die in 2010 when the estate tax and generation-skipping tax do not apply to your estate and if these taxes are not retroactively reinstated by Congress, any computations required to apply the formulae in your plan shall be made as if the Internal Revenue Code in effect on December 31, 2009 is then in effect.

If you make a change like this, your plan will be the same as when you signed it. That may or may not be good for you. Depending on when you created the plan, the federal exemption may have been $600,000. In 2009 it was $3.5 million. That’s a big difference. Maybe you don’t really want to direct up to $3.5 million where you had directed $600,000 before. If that is the case, you need a complete review of your plan, not just a band-aid fix.

The objective is to make sure your plan works and makes sense in 2010 until Congress acts, if it does. Don’t delay. This needs attention.

Brooke Astor's Son Sentenced

Patti Spencer — Mon, 21 Dec 2009 21:49:15 -0500

Brooke Astor's son, Anthony Marshall, 85, was sentenced to one to three years in prison. He was convicted earlier this year of 13 felonies and one misdemeanor. Marshall's former attorney, Francis Morrissey was also convicted on five counts including forgery and scheming to defraud Astor. CNN reports:

During the trial, Marshall was portrayed as a cold, calculating man who spent the last years of his socialite and megaphilanthropist mother's life stealing her fortune to line his pockets

"These defendants, two morally depraved individuals, preyed on a physically and mentally ill 101-year-old woman to steal millions of dollars -- dollars that she had intended to go to help the lives of ordinary New Yorkers," Seidemann said, echoing his closing argument to the jury.

The sentence came after a six-month trial that featured as witnesses a "Who's Who" of New York's social elite, including Henry Kissinger, Graydon Carter, Barbara Walters, Vartan Gregorian and Annette de la Renta.

Does the Estate Planning Attorney Owe a Duty to Beneficiaries?

Patti Spencer — Sat, 19 Dec 2009 21:21:21 -0500

Adam F. Steisand, Esq. of Loeb & Loeb LLP gave a presentation at the ACTEC Annual Meeting in Rancho Mirage, California, March 2009, entitled "To Tell the Truth (T&E Lawyers' Edition): Will My Real Client Please Stand Up. A pdf of his excellent presentation is posted on the Loeb & Loeb website: click here.

He discusses the question of whether or not an attorney owes a duty to non-client beneficiaries as well as whom the attorney represents when he or she represents a fiduciary, what are the ethical duties when representing a husband and wife, and what duty is owed to a client with diminished capacity.

Liliane Bettencourt

Patti Spencer — Thu, 03 Dec 2009 11:08:06 -0500

Liliane Bettencourt is the heiress to the L'Oreal cosmetics fortune. Forbes estimates her net worth at $13.4 billion and lists her as the richest woman in Europe.

Her daughter, Francoise Bettentcourt-Meyers fied a criminal complaint in December 2007 against Francois-Marie Banier, a photographer, for exploiting the frail Mrs. Bettencourt and influencing her to give him gifts valued at 1 .3 billion in euros plus life insurance policies and artwork. Read more at the New York TImes .

Now daughter Francoise has asked that her mother be put under judicial supervision. The case against Banier will come to court next week. The charge is what the French call "abus de faiblesse" -- the exploitation of physical or psychological weakness for personal gain.

Avoiding Estate Litigation

Patti Spencer — Mon, 30 Nov 2009 21:49:32 -0500

Thank you to Roy Newman of The San Diego Estate Center for his post, 8 Steps To Avoid Estate Litigation.

Newman reports:

"An article by the US News and World Report gives “8 Tips to Avoid Nasty Estate Surprises.” I agree with most of the points, and add my critique after each tip below:

1. Get a good lawyer. I would add that your lawyer should concentrate exclusively in this area.
2. Pick the right executor and trustees. The right trustee will be solid and will react neutrally to avoid disputes over the estate’s property.
3. Talk about it now. This seems obvious, but most people will not let their intentions be known ahead of time. Unfair surprise is one surefire way to start a contest.
4. Know state laws. In California, as the Tax Professor adds, probate can be avoided entirely through the use of a trust.
5. Make your intentions known early and often. Making repeated modifications to the will or trust will make it harder to invalidate later.
6. Make sure title to your assets is clear. Circumventing the estate distribution by retitling assets later in life is another way to encourage litigation.
7. Consider including a “no contest” clause. Then give the beneficiary an amount that they would rather not sacrifice if they lost the contest.
8. Don’t try to manage your estate from the grave. Although I am not sure that I entirely agree with this one, in theory giving discretion to your beneficiaries may stop them from fighting over items to which they are personally attached. I agree that not every item need be listed in the instrument, but sometimes a person who writes a will or trust can avoid disputes ahead of time by simply making the right decision."

Whevener your estate ends up in litigation, only the lawyers win. A good lawyer can help make sure youre state doesn't turn into a modren day Jaryndyce v. Jarndyce.

Dementia Rise Puts Stress on Wills

Patti Spencer — Mon, 09 Nov 2009 09:27:00 -0500

This article from the UK highlights the predicted rise in dementia diagnoses due to the ageing of the population and what that means for will contests. Click here.

Hat Tip to J. Michael Young, Esq. at Texas Fiduciary Litigation.

Martin Luther King Jr.'s Children Resolve Bitter Dispute Over Estate

Patti Spencer — Sun, 01 Nov 2009 12:10:21 -0500

Bruce Carton at Legal Blog Watch writes:

"An out-of-court settlement has finally resolved a long-standing dispute among Dr. Martin Luther King's children over his multimillion-dollar estate.

Although Dr. King died in 1968, his estate continues to produce substantial income. Among other things, the estate includes the broadcast rights to Dr. King's “I have a dream” speech. In 1999, the 11th Circuit ruled in Estate of Martin Luther King, Jr., Inc. v. CBS, Inc.that the public performance of his speech did not constitute "general publication," and that by giving the speech in public he did not forfeit his copyright. As a result, re-broadcast of the speech has remained a major income generator for the estate."

More at Times Online: click here.

Inheritance Laws and the EU

Patti Spencer — Sun, 01 Nov 2009 10:41:55 -0500

When your client owns property in foregin countries, estate planning and tax issues can be complex. This is an excellent article discussing inheritance in the European Union nations centering on the issue of forced heirship. It is a concept strange to Americans who strongly believe they have a right to disinherit their children.

Thank you to blogger Joel A. Schoenmeyer at Death and Taxes Blog.

DNA Testing to Determine Heirship?

Patti Spencer — Thu, 29 Oct 2009 20:42:07 -0500

Whom are a person’s heirs? Heirs are those who inherit a decedent’s property if he or she dies without a will. The law has long established that a surviving spouse has a right to receive a share, and then children, or other lineal descendants, inherit. If there are no lineal descendants, then parents are heirs, then grandparents, siblings, nieces and nephews, and so forth.

In a world where there are multiple marriages, many children born to unmarried parents, in vitro fertilization, and unconventional living situations, how does one determine whom are a person’s heirs? Recent developments in technology, including DNA tests, are raising challenges to well-settled principals of the common law.

A Florida case, Doe v. Doe, decided by Florida’s 2^nd District Court of Appeals in September 2009, was about this problem. The facts of Doe are uncomplicated. Chester Jr. and Eleanor, his wife, executed trusts which provided for a gift to their grandchildren. One of the grandchildren was Catherine, who was the daughter of Chester III (son of Chester Jr. and Eleanor) by virtue of his name appearing on her birth certificate and a court order entered in the domestic relations division following Chester III’s divorce from Catherine’s mother.

Chester Jr. and Eleanor never knew, but Chester III submitted samples from Catherine and himself to two separate laboratories for DNA testing. The test results from each of the two laboratories conclusively excluded Chester III as Catherine’s biological father. Eleanor, who survived Chester Jr., died six years after the results of the DNA tests became known to Chester III.

The trust contained this language: "For all purposes, hereunder, in determining whether any person is a child or descendant, only children and descendants by blood shall be included."

The trustee brought suit to exclude Catherine from the class of trust beneficiaries since the DNA test proved she was not a "descendant by blood." The question before the court was whether DNA test results should be allowed to prove that a child is not an heir?

After a long disquisition, the court said: "To put it in a nutshell, the trusts’ Article XVIII appears in legal instruments, not in a technical paper on genetics. The phrase "descendants by blood" is a legal term of art, not a scientific one. As a legitimate child of one of the settlors’ sons, Catherine qualifies as one of the settlors’ ‘descendants by blood.’"

What is meant by "legitimate" in this context? It has long been a presumption of the law of inheritance that a child born to a married couple is "legitimate" that is, it is the child of both parents. In the days when this presumption developed, DNA testing was not available. Also, a child acknowledged by the father has been presumed an heir.

Questions of the interpretation of wills and trusts always turn on the decedent’s intent. The presumption and interpretations imposed by law are aimed at discerning intent. In this case, what did Chester Jr. and Eleanor intend? Did they want Catherine to share in their estate? Apparently they did. Would they have wanted her to share if they knew their son Chester Jr. was not her biological father? Tough question. How can we know?

The Court closely examined the meaning of the term "descendants by blood" as it has been historically used in wills and trusts. Generally, such expressions were used as a term of art to exclude adopted persons as beneficiaries. Because the blood restriction came to be used long before genetic testing became available, the Court did not want to extend its meaning "to disqualify descendants who were not adopted and who would otherwise qualify as a beneficiary." Therefore, as a legitimate child of Chester III, Catherine qualifies as one of the descendants by blood of Chester Jr. and Eleanor.

Thus, the court held that the DNA evidence would not be used to remove Catherine as a beneficiary.

A different standard and view was applied to the converse case when the court included a child not born in wedlock, who claimed to be an "heir" of the decedent, even though he or she had not been acknowledged and there had been no adjudication of paternity.

We look for more developments in the law around these issues. Will the old common law approach be upheld when the DNA evidence is clear and convincing? What will this do to families?

If you are concerned about who will be considered to be your heirs and beneficiaries because of complex personal relationships, there is an easy solution: make a will. When you make a will you can specify who should be included and how their relation should be determined. Don’t leave it to chance, or years of litigation. Making a will that specifically addresses these issues is the way to make sure your intentions are followed.

A Modern Day Jarndyce and Jarndyce

Patti Spencer — Mon, 19 Oct 2009 20:30:02 -0500

Remember Jarndyce and Jarndyce? The Chancery suit that goes on and on in Dickens' Bleak House?

From the first chapter of Dickens' Bleak House:

Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce without knowing how or why; whole families have inherited legendary hatreds with the suit. The little plaintiff or defendant who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled has grown up, possessed himself of a real horse, and trotted away into the other world. Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; there are not three Jarndyces left upon the earth perhaps since old Tom Jarndyce in despair blew his brains out at a coffee-house in Chancery Lane; but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.

We have another scarecrow of a case - Anna Nicole Smith - whose suit for her deceased husband's estate has been to the Supreme Court of the United States and drags on. Now there is a new wrinkle: According to AP writer Matt Sedensky, the FBI investigated whether Anna Nicole Smith plotted to kill her husband's son, E. Pierce Marshall, as he and Anna Nicole battled over his father's fortune.

Sedenksy writes: "Smith's FBI records, obtained exclusively by The Associated Press, say the agency investigated Smith in 2000 and 2001 in a murder-for-hire plot targeting E. Pierce Marshall who was at the center of a long legal fight to keep the starlet, model and stripper from collecting his father's oil wealth, valued in the hundreds of millions. The younger Marshall died three years ago of natural causes."

"The Supreme Court ruled unanimously in 2006 that Smith could pursue her late husband's fortune, overturning an appellate decision, which continues to be fought in California. The money became a factor after Smith's death, too, with Stern, her mother, and another boyfriend all fighting over an estate that ultimately will go to her daughter, who is now 3."

Brooke Astor's Son Anthony Marshall Found Guilty

Patti Spencer — Thu, 08 Oct 2009 21:02:13 -0500

The jury came back on October 8, 2009 on the 11th day of deliberations with the verdict: guilty on 14 counts including first-degree grand larceny and scheming to defraud.

The co-defendant, estate planning lawyer Francis X. Morrissey Jr. was convicted on 5 counts including scheming to defraud, conspiracy and forgery.

The trial took 5 months. Over 70 witnesses were called by the prosecution, including Henry Kissinger, Graydon Carter, Barbara Walters, and Annette de la Renta.

Sentencing will be December 8. Mandatory sentencing guidelines call for a minimum sentence of 1 year - up to 25 years.

Read all about it here.

The New York Daily News reports:

"The evidence in this case was overwhelming," Assistant District Attorney Elizabeth Loewy said after the verdict. Marshall "stole from his mother while she suffered from Alzheimer's disease... making her own life worse while enriching his own," Loewy said.

Loewy, who was barred from mentioning during trial that Morrissey had his legal license suspended for taking advantage of other elderly clients, said she'll make that part of her pitch for giving him the max.

Marshall's lawyer, Frederic Hafetz, said he was "stunned" by the jury's decision.

"We will be appealing," he vowed. "I thought he was not guilty."

Wills Can Impose Religious Conditions

Patti Spencer — Wed, 30 Sep 2009 11:40:37 -0500

The Chicago Tribune reports the Supreme Court of Illinois' unanimous decision in the Erla Feinberg case. Here is Manya A. Brachear's and Ron Grossman's article: Illinois Supreme Court: Wills can use religious tests.

We blogged about the case before: The Jewish Clause. Read the Illinois Supreme Court opinion here.

"Although those plans might be offensive to individual family members or to outside observers, Max and Erla were free to distribute their bounty as they saw fit and to favor grandchildren of whose life choices they approved," Justice Rita Garman wrote.

Brachear and Grossman write:

"After her husband's death, Erla Feinberg came up with a different scheme, same intent. When she died in 2003, she bequeathed $250,000 to the one grandchild who had married within the faith. Those who had not -- four of five -- got nothing. Michele Feinberg Trull, a disinherited granddaughter, argued that the clause, dubbed the "beneficiary restriction clause" by the court, violated public policy by offering money to practice a particular religion.

The court disagreed, pointing out that Erla Feinberg did not set up a system that encouraged heirs to divorce and remarry to claim an inheritance. "Erla did not impose a condition intended to control future decisions of their grandchildren regarding marriage or the practice of Judaism; rather, she made a bequest to reward, at the time of her death, those grandchildren whose lives most closely embraced the values she and Max cherished," Garman wrote. "

Hat tip to Hull & Hull LLP's Toronto Estate Law Blog.

Check out "Bring Home a Nice Jewish Boy... or Else."