In January 2012, the Boston Bar Association’s Trusts & Estates Section offered three educational programs on timely topics and developments in trusts and estates law. Below is a summary of the programs.
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UNWRITTEN RULES OF THE PROBATE COURT
Wednesday, January 11, 2012
Probate Court insiders and seasoned practitioners Hon. Beverly Boorstein; Hon. Edward F. Donnelly Jr. and Jennifer A. Maggiacomo of Middlesex Probate and Family Court; Daniel J. Gibson of Suffolk Probate and Family Court; John Harney of Norfolk Probate and Family Court; and Eugene A. Nigro of Nigro, Pettepit & Lucas provided practical tips and guidance regarding Probate Court practice.
Sponsoring Sections: Administration of Justice Section, Family Law Section, and Trusts & Estates Section
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WHY ESTATE PLANNING IS STILL CRITICAL
Friday, January 20, 2012
Speakers Robert J. Morrill, Esq. and Brian Liberis of Gilmore, Rees & Carlson, P.C. focused on why it remains critical for people to undertake estate planning, even with the recent significant increases in the estate tax exemptions.
Sponsoring Committee: Estate Planning Committee
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GLBTQ SENIORS: LONG TERM CARE & ESTATE PLANNING
Tuesday, January 24, 2012
There remains unequal treatment of GLBTQ clients under law. A same-sex Massachusetts marriage is not recognized by the federal government for the purposes of estate taxes, social security or Medicaid. Planning for this community must address this dual tract status.
In addition, the life experience of older GLBTQ persons often makes their planning more challenging. They are more likely to have less family support and require documents that address specific social realities. Panelists Gail E. Horowitz, Esq., Ellen K. Wade, Esq. and Michelle LaPointe, Esq. of Wade Horowitz LaPointe, LLC, addressed the unique estate planning issues of aging GLBTQ clientele.
Sponsoring Committee: Elder Law and Disability Planning Committee
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For a schedule of upcoming programs, visit the Boston Bar Association’s online calendar.
A discussion of law and developments in the trusts and estates field.
Call for authors: The BBA Trusts & Estates Secton is seeking Massachusetts attorneys to author articles. If you are interested, please contact the Editors for more information.
Thursday, February 16, 2012
Wednesday, February 15, 2012
T&E Litigation Update - Rochalski v. Sklodowski (Correction)
Due to an error in the original post, this Litigation Update is being re-posted.
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.
Rochalski v. Sklodowski
In Rochalski v. Sklodowski, Case No. 10-P-1750, 2012 Mass. App. Unpub. LEXIS 12 (Jan. 6, 2012), a decision issued pursuant to Rule 1:28, the Appeals Court affirmed the probate court's judgment voiding certain transactions on grounds of lack of capacity and undue influence.
The decedent's native language was Polish, with her knowledge of English being limited. She also suffered from mental illnesses, among them hoarding. Despite these limitations, she was able to accumulate a considerable estate, including a six-family residential building in Boston.
The decedent lived in an apartment on the property until 2002, when the building was condemned and put into receivership. The decedent contested the receivership and became embroiled in legal proceedings in an attempt to rehabilitate the property. She was assisted by an attorney, her guardian, and the defendant, who acted as the decedent's interpreter. The attorney developed a plan for the property that required the decedent to deed one-half of her interest to a developer, who would rehabilitate the property and then allow the decedent to live in one of the apartments rent-free for the remainder of her life. The defendant intervened, however, persuading the decedent to deed the entire property to him for one dollar.
Thereafter, the defendant rehabilitated the property but rented the apartment meant for the decedent to a third party. The defendant also assumed control of the decedent's finances, using a general power of attorney to withdraw money from the decedent's accounts and cashing her Social Security checks, and isolated her from her family and guardian. Moreover, the defendant arranged for the decedent to execute a new will, which the defendant hand-wrote, naming himself as executor and the beneficiary of almost the entire estate.
The defendant admitted that he had emptied the decedent's accounts, but argued that he did so at the decedent's request. He also claimed that he sent $150,000 to a purported guard who had allegedly helped the decedent escape from a concentration camp in Siberia, even though the defendant conceded that he did not believe this had actually happened.
After trial, the probate court found the decedent had been incompetent and the victim of undue influence, voiding the deed, invalidating the will, and ordering the defendant to return funds to the decedent's estate. The probate court also found that the defendant had violated his common law duties associated with a power of attorney, including by sending $150,000 to a person whose identity the defendant himself had questioned. The Appeals Court affirmed on all counts, and further ordered the defendant to pay the plaintiff administratrix's costs and fees on appeal pursuant to Rule 25 of the Massachusetts Rules of Appellate Procedure.
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.
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.
Rochalski v. Sklodowski
In Rochalski v. Sklodowski, Case No. 10-P-1750, 2012 Mass. App. Unpub. LEXIS 12 (Jan. 6, 2012), a decision issued pursuant to Rule 1:28, the Appeals Court affirmed the probate court's judgment voiding certain transactions on grounds of lack of capacity and undue influence.
The decedent's native language was Polish, with her knowledge of English being limited. She also suffered from mental illnesses, among them hoarding. Despite these limitations, she was able to accumulate a considerable estate, including a six-family residential building in Boston.
The decedent lived in an apartment on the property until 2002, when the building was condemned and put into receivership. The decedent contested the receivership and became embroiled in legal proceedings in an attempt to rehabilitate the property. She was assisted by an attorney, her guardian, and the defendant, who acted as the decedent's interpreter. The attorney developed a plan for the property that required the decedent to deed one-half of her interest to a developer, who would rehabilitate the property and then allow the decedent to live in one of the apartments rent-free for the remainder of her life. The defendant intervened, however, persuading the decedent to deed the entire property to him for one dollar.
Thereafter, the defendant rehabilitated the property but rented the apartment meant for the decedent to a third party. The defendant also assumed control of the decedent's finances, using a general power of attorney to withdraw money from the decedent's accounts and cashing her Social Security checks, and isolated her from her family and guardian. Moreover, the defendant arranged for the decedent to execute a new will, which the defendant hand-wrote, naming himself as executor and the beneficiary of almost the entire estate.
The defendant admitted that he had emptied the decedent's accounts, but argued that he did so at the decedent's request. He also claimed that he sent $150,000 to a purported guard who had allegedly helped the decedent escape from a concentration camp in Siberia, even though the defendant conceded that he did not believe this had actually happened.
After trial, the probate court found the decedent had been incompetent and the victim of undue influence, voiding the deed, invalidating the will, and ordering the defendant to return funds to the decedent's estate. The probate court also found that the defendant had violated his common law duties associated with a power of attorney, including by sending $150,000 to a person whose identity the defendant himself had questioned. The Appeals Court affirmed on all counts, and further ordered the defendant to pay the plaintiff administratrix's costs and fees on appeal pursuant to Rule 25 of the Massachusetts Rules of Appellate Procedure.
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.
Thursday, February 2, 2012
Final Regulations re: IRC § 2036 and the Extent of Gross Estate Includibility of Grantor's Retained Interest
Author:
Nikki Marie Oliveira, Esq., LL.M., Margolis & Bloom, LLP
On November 8, 2011, the IRS published T.D. 9555, final regulations regarding the includibility of property (regardless of whether held in trust) in the grantor’s gross estate under I.R.C. § 2036 where the grantor retained:
(1) the use of the property;
(2) the right to an annuity or unitrust;
(3) a graduated retained interest; or
(4) other payment from the property
in any event, for:
(A) life;
(B) any period not ascertainable without reference to the grantor’s death; or
(C) a period that does not in fact end before the grantor’s death.
The final regulations amend Treas. Reg. § 20.2036-1 and fine tune proposed regulations published in the Federal Register on April 30, 2009. The final regulations are generally effective as of November 8, 2011 and affect estates filing a federal estate tax return.
Grantor’s retained annuity or unitrust. The final regulations describe how to determine the portion of trust corpus that is includible in the grantor’s gross estate where the grantor retained an annuity or unitrust. The amount includible is the amount of trust corpus required to generate sufficient income to satisfy the retained interest.
Grantor’s retained annuity following another person’s current annuity interest. The final regulations describe how to determine the portion of trust corpus that is includible in the grantor’s gross estate where the grantor was to receive an annuity after the death of the current recipient of the annuity. The amount includible in the grantor’s gross estate is the greater of (1) the amount of trust corpus required to generate sufficient income to pay the annuity or unitrust payable to the grantor as of the date of death, or (2) amount of corpus required to produce sufficient income to satisfy the annuity or other payment the grantor would have been entitled to receive if the grantor had survived the current recipient, reduced by the present value of the current recipient’s interest. The maximum includible value is the fair market value of the trust corpus at the grantor’s death.
Grantor’s graduated retained interest. The final regulations define a graduated retained interest as the grantor’s reservation of a right to receive an annuity, unitrust or other payment that increases over a period of time, and provide an example of how to calculate the extent to which trust corpus is includible in the grantor’s gross estate where the grantor retained a graduated retained interest.
Grantor and child share equal income or annuity interests. The final regulations clarify the extent to which the value of trust corpus is includible in the grantor’s gross estate where income is payable to the grantor and his child in equal shares while they are both living, and then to the survivor of them. In summary, if the grantor dies first, the present value of the surviving child’s life estate reduces only the half of the trust corpus from which it is payable. One half of the value of the trust corpus is includible in the grantor’s estate because of his right to receive one half of the trust income for life. The value of the remaining one half of trust corpus less the present value of the child’s outstanding life estate in the child’s half is also includible in the grantor’s estate because the grantor had the right to receive all the trust income if he had survived the child. Alternatively, if the grantor survived the child, the entire trust corpus would be includible in the grantor’s gross estate.
The final regulations also provide an example calculating the portion of the trust corpus includible in the grantor’s estate where the grantor and his child held annuity interests rather than trust income.
No double inclusion under §§ 2033 and 2036. The final regulations resolve the issue of whether I.R.C. §§ 2033 and 2036 might cause an asset to be subject to “double inclusion” in a particular circumstance. Specifically, if a grantor retains an interest for a term of years, dies before the term expires, and payments become payable to his estate for the balance of the term, those amounts payable to the estate after the grantor’s death are not includible in the grantor’s gross estate under § 2033 because they are already reflected in the value of the trust corpus and are includible under § 2036. Conversely, if the payments are payable to the grantor prior to death, but not actually paid until after death, those amounts are includible under § 2033.
Nikki Marie Oliveira, Esq., LL.M., Margolis & Bloom, LLP
On November 8, 2011, the IRS published T.D. 9555, final regulations regarding the includibility of property (regardless of whether held in trust) in the grantor’s gross estate under I.R.C. § 2036 where the grantor retained:
(1) the use of the property;
(2) the right to an annuity or unitrust;
(3) a graduated retained interest; or
(4) other payment from the property
in any event, for:
(A) life;
(B) any period not ascertainable without reference to the grantor’s death; or
(C) a period that does not in fact end before the grantor’s death.
The final regulations amend Treas. Reg. § 20.2036-1 and fine tune proposed regulations published in the Federal Register on April 30, 2009. The final regulations are generally effective as of November 8, 2011 and affect estates filing a federal estate tax return.
Grantor’s retained annuity or unitrust. The final regulations describe how to determine the portion of trust corpus that is includible in the grantor’s gross estate where the grantor retained an annuity or unitrust. The amount includible is the amount of trust corpus required to generate sufficient income to satisfy the retained interest.
Grantor’s retained annuity following another person’s current annuity interest. The final regulations describe how to determine the portion of trust corpus that is includible in the grantor’s gross estate where the grantor was to receive an annuity after the death of the current recipient of the annuity. The amount includible in the grantor’s gross estate is the greater of (1) the amount of trust corpus required to generate sufficient income to pay the annuity or unitrust payable to the grantor as of the date of death, or (2) amount of corpus required to produce sufficient income to satisfy the annuity or other payment the grantor would have been entitled to receive if the grantor had survived the current recipient, reduced by the present value of the current recipient’s interest. The maximum includible value is the fair market value of the trust corpus at the grantor’s death.
Grantor’s graduated retained interest. The final regulations define a graduated retained interest as the grantor’s reservation of a right to receive an annuity, unitrust or other payment that increases over a period of time, and provide an example of how to calculate the extent to which trust corpus is includible in the grantor’s gross estate where the grantor retained a graduated retained interest.
Grantor and child share equal income or annuity interests. The final regulations clarify the extent to which the value of trust corpus is includible in the grantor’s gross estate where income is payable to the grantor and his child in equal shares while they are both living, and then to the survivor of them. In summary, if the grantor dies first, the present value of the surviving child’s life estate reduces only the half of the trust corpus from which it is payable. One half of the value of the trust corpus is includible in the grantor’s estate because of his right to receive one half of the trust income for life. The value of the remaining one half of trust corpus less the present value of the child’s outstanding life estate in the child’s half is also includible in the grantor’s estate because the grantor had the right to receive all the trust income if he had survived the child. Alternatively, if the grantor survived the child, the entire trust corpus would be includible in the grantor’s gross estate.
The final regulations also provide an example calculating the portion of the trust corpus includible in the grantor’s estate where the grantor and his child held annuity interests rather than trust income.
No double inclusion under §§ 2033 and 2036. The final regulations resolve the issue of whether I.R.C. §§ 2033 and 2036 might cause an asset to be subject to “double inclusion” in a particular circumstance. Specifically, if a grantor retains an interest for a term of years, dies before the term expires, and payments become payable to his estate for the balance of the term, those amounts payable to the estate after the grantor’s death are not includible in the grantor’s gross estate under § 2033 because they are already reflected in the value of the trust corpus and are includible under § 2036. Conversely, if the payments are payable to the grantor prior to death, but not actually paid until after death, those amounts are includible under § 2033.
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