Trust Decanting Disputes

As trust decanting becomes increasingly popular, we can expect to see more disputes and litigation regarding trust decanting. This blog post examines some of the main issues that will likely arise in those disputes.

First, what is trust decanting? The Uniform Law Commission states: “’Decanting’ is the term used to describe the distribution of assets from one trust into a second trust, like wine is decanted from the bottle to another vessel. Decanting can be a useful strategy for changing the outdated terms of an otherwise irrevocable trust, but can also be abused to defeat the settlor’s intent.”

Essentially, decanting is designed to address a dilemma posed by irrevocable trusts. Unlike revocable trusts that can be revoked by the trust settlor (the person enacting the trust), an irrevocable trust by its terms can’t be revoked by the settlor. That poses an issue as to what should happen if, due to changing circumstances, the settlor would otherwise be (or has been) inclined to amend or revoke it. Decanting is designed to address this problem. In general, and with some caveats, trust decanting entails creating a new trust (often referred to as the “second trust”), into which the assets of the irrevocable trust (the “first trust”) are conveyed. The second trust will contain certain different terms from the first trust, thereby effectively changing the terms governing the administration of the trust assets.

CONTINUE READING . . .

Posted in Fiduciary Duties, Trust Decanting, Trust Disputes \ Comments Off on Trust Decanting Disputes

Trustee Removal Lawsuits: An Overview

How can a person remove a trustee of a trust? Depending on the language of the trust, there could be several ways. This blog post summarizes some of the options, and provides an overview of things to consider when a person wants to remove a trustee.

First, the terms of the trust itself may provide procedures for the removal of a trustee. Oftentimes, comprehensively-drafted trust instruments will contain specific procedures whereby beneficiaries or a beneficiary may remove a trustee. Those procedures could require a specific reason for the trustee removal (such as misconduct on the part of the trustee) or no reason at all. Additionally, the trust may provide that a certain number of beneficiaries need to consent to the removal (such as all of the beneficiaries, or a majority).

Furthermore, trusts may provide for a trust protector to remove the trustee (I wrote an earlier blog post on trust protectors, which can be accessed here). In brief, a trust protector is a third party who holds certain authority with respect to the terms of the trust, or the actions of a trustee (in this case, the authority to remove the trustee and potentially name his replacement). Estate planners are increasingly utilizing trust protectors in the trusts that they draft, so it’s likely that in the future we’ll see greater use of provisions granting trust protectors the authority to remove the trustee.

CONTINUE READING . . .

Posted in Fiduciary Duties, Trust Disputes, Trust Protectors \ Comments Off on Trustee Removal Lawsuits: An Overview

Practical Tips Regarding Oral Contracts to Make Wills

This blog post is part 2 of the series on oral contracts to make wills, and this post contains several practical tips for how a person can optimize his chances of winning a claim for breach of an oral contract to make a will. In part 1 of the series, I provided an overview of the law in Virginia concerning oral contracts to make wills, whereby a testator (the person making the will) enters into a contract with another person, with the testator agreeing to provide for him in his will, in exchange for the other party doing something for him.

Tip #1

First, if a testator orally promises to provide for you in his will if you do something for him, do your absolute best to try to get the testator to put that promise in writing. You will have a vastly easier time enforcing a written contract to make a will compared to an oral contract to make a will. Preferably, you’d have an attorney draft up the written contract to make a will. If the testator is not willing to sign a written contract drafted by an attorney, you could simply draft up an agreement on a piece of paper that contains the names of the parties to the agreement (your name and the testator’s name), the terms of the agreement, and the parties’ signatures.  I don’t necessarily recommend that you try to do this yourself, but I only suggest it as the next best option in the event that the testator refuses to sign a contract drafted by an attorney.

CONTINUE READING . . .

Posted in Contract to Make a Will, Preventing Disputes, Will Disputes \ Comments Off on Practical Tips Regarding Oral Contracts to Make Wills

UPDATE: Can an Intended (and Disappointed) Beneficiary Still Sue a Will’s Drafter?: The General Assembly of Virginia Enacts a Statutory Fix to the Thorsen Decision

Back in the summer I wrote a post discussing the impacts of the Thorsen decision by the Supreme Court of Virginia.  In Thorsen, a testator wanted to leave her estate to a charity if her daughter did not survive her.  The lawyer erred in drafting the will.  When the testator died several years later (with her daughter having predeceased her), the testator’s property went to other people, contrary to her intentions.  The charity, the intended beneficiary, sued the lawyer, asserting breach of contract for legal services.

Thorsen was notable in that it held that Virginia common law permits intended third party beneficiaries (even contingent beneficiaries) of contracts to sue to enforce a contract for legal services and even a will itself.  Thorsen also held that the statute of limitations for a legal malpractice claim (relating to the drafting of a will) did not begin to run when the will was drafted by the lawyer.  Instead, the statute of limitations began to run when the testator died, which, in Thorsen, was about five years after the will had been written.  Ultimately, the Supreme Court of Virginia affirmed a monetary judgment of over $600,000.00 against the lawyer.

CONTINUE READING . . .

Posted in Court Opinions, General, Legal Terminology, New Laws, Will Disputes \ Comments Off on UPDATE: Can an Intended (and Disappointed) Beneficiary Still Sue a Will’s Drafter?: The General Assembly of Virginia Enacts a Statutory Fix to the Thorsen Decision

Oral Contracts to Make Wills

The vast majority of people have no idea that Virginia law recognizes oral contracts to make a will. As a result, people often miss out on asserting a claim to an inheritance because they didn’t know that they had one to begin with. This blog post provides an overview of Virginia law on this issue. I’ll follow-up this blog post with another one in the coming weeks about practical tips for how people can optimize their chances of winning on a claim for an oral contract to make a will.

Virginia has long enforced contracts to make a will, whereby a testator (the person making the will) enters into a contract with another person, with the testator agreeing to provide for him in his will, in exchange for the other party doing something for him. This most commonly arises in scenarios whereby people agree to care for aging testators in exchange for being provided for in their will. Also, married couples will occasionally contract to make “reciprocal wills” to ensure that neither person changes their will after the first one dies (so as to prevent the other one from disinheriting a child, for example). If a testator breaches a contract to make a will, then the aggrieved party has a right to file a lawsuit for breach of contract against the personal representative of the testator’s estate, seeking a monetary judgment.

CONTINUE READING . . .

Posted in Contract to Make a Will, Preventing Disputes, Will Disputes \ Comments Off on Oral Contracts to Make Wills

10 Arguments Against Pre-Death (Antemortem) Probate and Will Contests

There are a handful of states that allow a person to probate a will (and challengers to contest the validity of a will) before the testator (the person enacting the will) dies. In recent years, there has been a trend to expand the practice to more states. I had an interesting discussion about this issue at the recent Heckerling conference, and I wrote this blog post to discuss why I think the practice is a bad idea.

First, some background: pre-death probate (also known as antemortem probate) is only permitted in a handful of states (including Ohio, Arkansas, North Dakota, and Alaska) because the traditional rule has been that a will doesn’t “speak” (meaning, take effect) until the death of the testator. As a result, no party had legal standing to contest the will prior to the testator’s death. The trend away from the traditional rule began several decades ago and has recently picked up some steam, as new legislation has been introduced in a handful of states in the past few years to permit antemortem probate and antemortem will contests.

While the antemortem probate schemes vary by state, in general, they permit a testator to seek a ruling from the court (while he is still alive) that his will is legally valid. Because all heirs have to be named as parties to that proceeding, it has the effect of binding any potential challengers to the determination, thereby preventing them from contesting the will at the time that the testator dies.

CONTINUE READING . . .

Posted in New Laws, Preventing Disputes, Will Disputes \ Comments Off on 10 Arguments Against Pre-Death (Antemortem) Probate and Will Contests

Left At The Altar?: Who Owns The Engagement Ring When Love Goes Wrong?

ring in the box on the tableYou’ve found the right partner; you’ve found the right ring; and your fiancee accepted.  Now imagine your fiancee unexpectedly breaks off the engagement.  You are devastated.  Your friends tell you there are plenty of fish in the sea.  You’ve returned her favorite CDs and she’s returned your college sweatshirt. But who keeps the engagement ring?

The Virginia Supreme Court recently decided this very question in the case of McGrath v. Dockendorf, No. 160262, 2016 WL 7243097 (Va. 2016).  In McGrath, Ethan proposed to his fiancee Julia with an impressive two-carat, $26,000.00 engagement ring. Julia accepted and took the ring.  About a year later, Ethan broke off the engagement.  Ethan and Julia never married. Julia did not return the engagement ring.  Ethan filed a detinue action (a suit seeking the return of specific property, or in the alternative, a judgment for its value) in Fairfax County Circuit Court.

The Fairfax County Circuit Court found that the engagement ring was a conditional gift and held that Ethan was entitled to its return or a judgment for its value.  Julia appealed to the Virginia Supreme Court.

CONTINUE READING . . .

Posted in Court Opinions, Divorce, General, Gifts, Legal Terminology \ Comments Off on Left At The Altar?: Who Owns The Engagement Ring When Love Goes Wrong?

Top Four Estate Disputes from 2016

princeWith the end of 2016 upon us, now is a fitting time to look back at some of the top estate disputes from this past year. 2016 was a typical year in that, unsurprisingly, people continued to die and families continued to fight over estates.

The following are some of the major estate disputes that graced the headlines this past year. Note that this is just a sample of some of the major ones; there were several rather prominent ones this past year that I’m unable to write about, whether because I or my colleagues at LeClairRyan represented parties in them, or because we have business relationships with one of the parties or a related entity. That said, here are what I think are the four top estate conflicts from 2016:

Prince

Pop artist Prince died in April 2016 without a will. I previously wrote a blog post, which can be accessed here, discussing at length several lessons that can be learned from Prince’s situation.

CONTINUE READING . . .

Posted in Celebrity Estate Disputes, Disinheriting Family Members, Elective share, Preventing Disputes \ Comments Off on Top Four Estate Disputes from 2016

Changes To Elective Share Law in Virginia Will Lead To More Litigation

Gavel and flag - American justiceThe Virginia General Assembly overhauled Virginia’s elective share statute this past year, and one of the big results will likely be an increase in litigation.

My colleague Brett Herbert recently wrote a blog post summarizing some of the more significant changes in the elective share framework that go into effect on January 1, 2017 (that post can be accessed here). This post focuses on a specific change that adds a time requirement in which a surviving spouse asserting a claim for the elective share must file a lawsuit to determine the elective share.

Under the prior Virginia law, when a surviving spouse wanted to assert a claim for the elective share, she needed to record a written claim in the court clerk’s office within six months of the later of the admission of the decedent’s will to probate, or the qualification of an administrator of the estate.

CONTINUE READING . . .

Posted in Disinheriting Family Members, Elective share, Will Disputes \ Comments Off on Changes To Elective Share Law in Virginia Will Lead To More Litigation

A Post-Mortem, Spousal Surprise: Can My Husband Write Me Out of His Will?

Young couple after quarrel sitting on sofaImagine this potentially devastating situation.  Your spouse unexpectedly dies.  You find his will and discover, shockingly, that he left everything to his adult son (or his mistress)!  Is there anything you can do?

This situation commonly arises when a husband and wife are separated but not yet divorced.

Under Virginia law, a spouse possesses certain rights to what is known as the elective share.  Think of the elective share as a floor for a spouse’s inheritance.  It can be invoked even if the deceased spouse writes the surviving spouse out of his or her will.

Under current law, a surviving spouse can be entitled to a certain portion of what is known as the deceased spouse’s “augmented estate.”  The components of the augmented estate include things such as the decedent’s probate assets (less certain expenses and enforceable debts), non-probate transfers to others (such as payable on death type accounts), and non-probate transfers to the surviving spouse (such as co-owned accounts or certain real estate).  The exact components of the augmented estate are quite complicated, and a full discussion of those is well beyond the scope of this post.

CONTINUE READING . . .

Posted in Disinheriting Family Members, Will Disputes \ Comments Off on A Post-Mortem, Spousal Surprise: Can My Husband Write Me Out of His Will?