This Week in Probate and Guardianship Appeals

May 10, 2010

Conte v. Louis M. Ditta, Guardian of the Estate of Doris L. Conte, First Court of Appeals Houston

This week’s entry comes to us from the 1st District Court of Appeals in Houston. Louis Ditta, acting in his capacity as the guardian of the estate of Doris L. Conte, an incapacitated person, filed suit seeking the removal of appellant, Susan C. Conte, as trustee of the Conte Family Trust. After a bench trial, the probate court ruled in Ditta’s favor and issued two orders. The first order removed Susan as trustee, and the second order modified the terms of the Conte Family Trust and appointed a successor trustee. Susan Conte appealed the trial court’s ruling removing her as trustee and appointing a successor trustee.

Background

In 1987, Joseph and Doris Conte created the Joseph P. Conte Family Trust, an inter vivos trust that became irrevocable on the earlier of Joseph or Doris’s death. The Trust agreement named Joseph the original trustee. Upon his death in 1993, per the terms of the trust, Doris began serving as co-trustee along with her two children, Susan and Joseph, Jr.

While things started out well, eventually it came to light that Joseph, Jr. was not administering the trust properly, and Susan began litigation to remove him as co-trustee. During the course of this litigation Doris was declared to be incapacitated and Louis Ditta was appointed as her guardian.

In 1998, Ditta sought the appointment of a receiver to take over the Trust in light of the continuing discord between Joseph, Jr. and Susan. Instead of appointing a receiver, the probate court entered an agreed order appointing a temporary successor trustee. The successor trustee filed an accounting and it revealed that both Susan and Joseph, Jr. had become significantly indebted to the Trust by using Trust assets for personal expenses. Ditta then sought the removal of both Susan and Joseph, Jr. as Trustees.

Following a bench trial, the probate court removed Susan as trustee, modified the terms of the trust regarding trustee succession, and appointed Frost Bank as successor trustee. The modification was in light of an agreement by Susan and Joseph, Jr. to reappoint Susan as trustee if she were removed by the court in the removal proceeding initiated by Ditta. This appeal followed.

Susan appealed stating that there was no evidence upon which to base her removal. Unfortunately for Susan, there was plenty of evidence of her being indebted to the Trust, and as such, removal was deemed to be within the discretion of the trial court.

However, in her second point, Susan argued that the trial court erred in appointing the successor trustee. Susan stated that the Court could not deviate from the terms of the trust when it came to appointing a successor trustee. The Court of Appeals agreed.

The Court of Appeals stated that the Texas Trust Code requires that on the removal of a sole trustee, a successor trustee must be appointed by the court in accordance with the terms of the trust. In this case, the trust provided that if neither Joseph Conte, Sr. nor Doris Conte appointed a successor in the first sixty days after the position of trustee was vacated, the majority of adult beneficiaries had a thirty-day window to appoint a successor. The Court noted that this showed a clear intent by the grantor to leave decisions regarding the management of the trust to his wife and children. While Susan was disqualified from being reappointed, her ability to pick a successor (other than herself) should not be modified. The Court remanded the case to the trial court to rule accordingly.

What does all of this mean for you? First of all, if you have a trust, make sure it says exactly what you want it to say. Secondly, if you are a beneficiary of a trust and have concerns regarding the Trustee, call us today and schedule an appointment to discuss your matter. Even where a Judge has ruled against you there may still be options available, but the timelines are short so do not put off calling an attorney that is qualified in probate matters.

Medical Research and the Ultimate Gift

May 5, 2010

In my experience, I have drafted Wills and other estate planning documents in literally all shapes and sizes. Many clients take a very traditional approach, leaving their estates to their surviving spouse, then to children, and so forth. Others take a less traditional approach, making specific gifts for the care of animal companions, philanthropic organizations or churches. On occasion, a client will ask me how to make arrangements for what I consider the “ultimate gift,” the donation of their body to the advancement of science.

While I could probably spend an entire entry waxing on the state of cryonics, Ted Williams and the likelihood of reviving a deceased (and frozen) loved one with future medical technology, I thought a more practical discussion of current medical donation opportunities might be more appropriate. Many Texans are already organ donors, and so the concept of donating an entire body to science is gaining the approval of some clients who desire for even their remains to provide some kind of legacy.

UT Southwestern Medical Center, as well as the Texas A&M Health Science Center, provide some excellent information related to body donation. Both require the completion of some very basic forms which are, of course, revocable. Each institution also outlines the procedure that occurs upon the death of the donee, as well as the requirements that must be met before a body is accepted. While the advice of an estate planning attorney should be sought in connection with the gift, it is not necessarily needed in all cases.

The body must be suitable for scientific or educational research. That is, it cannot be embalmed, and an excessive amount of time after death cannot have passed. Certain conditions, such as trauma or contagious diseases may also prevent acceptance. Generally speaking, the institutions retain the body for two years depending upon their needs. At the conclusion of the institution’s use, the body is cremated. The remains are either returned to the family for a nominal fee, or disposed of appropriately by the institution.

Of the clients that I’ve counseled concerning these matters, I typically tell them to insert the gift into their Will, but to take the steps now to ensure that it can be fulfilled. Practically speaking, it may be weeks or months after death before a Will is admitted or even discovered, negating any chance of fulfilling the donation. Moreover, your loved ones should be aware of your plans as soon as you make them, so that they can take the appropriate steps to see your donation through in a timely manner.

Much of what we plan for involves things and money – the tangible parts of our lives that we realize we cannot take with us. With some foresight and a small amount of planning, you can make a gift that some might argue has a bit nobler intentions – one that will benefit the advancement of medical and scientific learning.

2010 Estate Tax Anomaly

April 27, 2010

In June 2001, I wrote an article for the Houston Chronicle in which I detailed the new tax law changes that had been put into effect that would completely eliminate the estate tax in 2010. At the time, I posed the question, “Is the repeal of the estate tax a myth or a miracle?” As we sit here in April 2010, I’m not sure that anyone knows the answer any better today than we did 9 years ago.

Under the 2001 legislation, the estate tax exemption (the amount a person would leave to their family free of estate tax upon their death) was set to increase from $1 million in 2001 to $3.5 million in 2009. Additionally, the tax would be completely abated in 2010 (so that no one dying in 2010 would pay taxes as a result of their deaths), and then in 2011, the estate tax exemption would return to the $1 million level that had existed in 2001.

As the recession hit the U.S. in full force in 2009, members of Congress and the President have continually discussed the option of re-instituting the estate tax for 2010 and making it retroactively effective to estates of anyone who died in 2010, even if they died prior to the enactment of the new law. The March 28, 2010, death of Houston Billionaire Dan Duncan has created intense buzz about these issues because the death of someone like Duncan in the one tax-free year in decades means that the U.S. Treasury will miss out on potentially billions of dollars of tax revenue which it might have ordinarily received as a result of Duncan’s death.

Although very few estates are as large as Duncan’s, the 2010 quandary has the potential to affect a vast number of people dying in 2010. If Congress re-institutes the tax for this year, then it will necessarily include a cap on the amount of money that someone could leave to their family members tax free. At Ford & Mathiason, we had 2 clients die in just the first two weeks of January, 2010, who will potentially be affected by these changes. In our first meeting with their families after their deaths, we had no option but to tell them to just “hang on and see what Congress does by the end of the year.” Until Congress makes a decision about the estate tax issues, we will not know how to advise our clients.

Regardless of how the estate tax issues play out this year, 2010 will go down in the history books as an interesting year from an estate tax perspective. It is the first year in decades in which there could be no estate tax, but by the end of the year, that may be changed completely and will cost some taxpayers considerable amounts of money.

Stay tuned to see what happens!

This Week in Probate and Guardianship Appeals

April 9, 2010

Doherty v. JPMorgan Chase Bank, First Court of Appeals Houston

This week’s entry comes to us from the 1st District Court of Appeals in Houston. Lois Doherty appealed the order of Mike Wood, Judge of Harris County Probate Court Number Two, who granted JPMorgan’s motion for summary judgment.

Background

Mrs. Doherty is the beneficiary of the Lois Doherty Trust, created by her late husband Wilfred T. Doherty in his Will. JPMorgan is the trustee of this Trust. Paragraph 3.3 of the Trust states that the Trustee must distribute such amounts of Trust principal as Mrs. Doherty may request to provide for her comfort, health, support or maintenance. In 2005, Mrs. Doherty suffered a stroke that left her physically impaired and she moved into her daughter’s home. This house lacked a handicap-accessible bathroom and therefore Mrs. Doherty requested funds to modify the bathroom in her daughter’s home. Mrs. Doherty requested that all of the funds in the trust be released and placed into another account that she owned.

The bank decided that they did not agree with this request and instead asked her to send them quotes for the repairs to the bathroom and they would review such quotes and make the distribution. Obviously this did not sit well with Mrs. Doherty. She therefore hired an attorney and requested that JPMorgan resign as trustee. JPMorgan refused to resign and instead requested a full judicial release. They then denied the request for funds to install a handicap accessible bathroom and continued to hold the funds.

Mrs. Doherty filed a petition for declaratory judgment seeking a declaration that in light of JPMorgan’s refusal to act, the Will allowed her to appoint a successor trustee. Both Parties then filed motions for summary judgment. Mrs. Doherty’s motion sought summary judgment on the issue that JPMorgan had refused to act under the mandatory terms of the trust and such an act entitled Mrs. Doherty to appoint a successor. JPMorgan’s motion sought summary judgment on the issue that it had not failed to act under the terms of the trust and that all of Doherty’s claims were invalid. Even though JPMorgan expressly denied Mrs. Doherty’s request for funds under a mandatory provision of the Trust, Judge Wood found in favor of the bank and granted its request for summary judgment.

The Court of Appeals reviewed the terms of the trust, acknowledged that the provisions under Paragraph 3.3 required mandatory distribution when requested for maintenance, and therefore ruled that JPMorgan had in fact refused to act under the terms of the trust. This meant that Mrs. Doherty was well within her rights to appoint a successor trustee and JPMorgan was not entitled to summary judgment. The Court reversed Judge Wood’s ruling and rendered judgment in favor of Mrs. Doherty on her declaratory judgment claim.

What does all of this mean for you? First of all, if you have a trust, make sure it says exactly what you want it to say. Secondly, if you are a beneficiary of a trust and have concerns regarding the Trustee, call us today and schedule an appointment to discuss your matter. Even where a Judge has ruled against you there may still be options available, but the timelines are short so do not put off calling an attorney that is qualified in probate matters.

Five Things to Consider When Planning to Write your Will

March 30, 2010

1. Who Should Receive the Estate?

For some, the passage of property equally to their descendants is the norm. However, each family dynamic is different, and your estate plan should reflect the same standards and ideals that you act on today. Many clients like to include friends, charities and other organizations that they deem important and deserving. In the absence of a Will, your heirs will receive your Estate under a system designed by the legislature. A well-drafted Will is not so rigid, and can be tailored to fit your wishes precisely.

2. Who Will Manage the Estate?

With a well-drafted Will, the person of your choosing can administer your Estate largely free of supervision by a Court. They will gather up the assets of your Estate, pay any proper debts and distribute the remainder to your beneficiaries. When selecting the person to fill this role, it is wise to consider their age, ability to handle professional matters and their relationship to you and the beneficiaries that they will ultimately have to deal with. Their position is one of trust and confidence, and the task of picking the right person is as important as the tasks that they will be asked to carry out.

3. What if the Beneficiaries are Young or Incapacitated?

Estate planning focuses on contingencies – the “what ifs” of life. Some are more likely than others. What if my spouse dies before I do? What if our children are minors when I die? Good planning can provide good answers. Your Will might include provisions that nominate guardians for minor children. It might include trust provisions to ensure that property received by a minor is held and used for their benefit until they reach a specified age. Rarely can a contingency not be planned for when a well-counseled client sits down to execute an estate plan.

4. What Happens to the Non-Probate Assets?

Many of the largest assets in an Estate are not even technically part of the Estate. They pass to designated beneficiaries pursuant to an agreement with a life insurance company or a retirement plan administrator. The best estate plans harmonize these probate and non-probate assets. For example, where one child is provided for significantly by a life insurance policy, the Will may balance things out by favoring the other child a bit more with other assets. Many clients fail to update their beneficiary designations when they sit down to revise their Wills, but the decisions made in regard to these documents are as important as those that you will make when creating your Will.

5. What if the Beneficiaries are Unhappy with my Choices?

Estate disputes happen. In most cases that I have encountered, the seeds of Will Contests and beneficiary fights are sown long before the testator even dies. Clients know their families better than a lawyer, and some frank and open family discussions may avert situations like this. But well-drafted Wills typically go a step further to include provisions that discourage fighting among beneficiaries, just in case. Your estate plan should please you, and it should be executed in a manner that best protects the decisions that you have made concerning your legacy.

Estate Planning Conversations

March 8, 2010

For a lot of people, death and their own fragile mortality is the last thing that they want to discuss with anyone – let alone loved ones. We know that we are not going to live forever, but pondering our inevitable demise can steal the sun right out of the day, and so we tend to focus on happier things. For the same reason, parents and children sometimes tend to avoid openly discussing Wills, Trusts and all of that legal business that will be left when someone dies.

Yesterday’s New York Times included a great article about those challenging conversations, and the benefit of having them well in advance. The centerpiece of the story is a lawyer in Seattle. He has two children and has been separated from his wife, but not divorced, for around 30 years. He also has a brain cancer, and did not have a Will. In his state, had he died without a Will, his estate would have passed to his wife. He wanted to avoid this and opened up candidly with one of his daughters, who learned of his intentions and helped him find a lawyer to put his plan down on paper.

It’s a nice story and yes, it’s good to know that you can open up to your children to discuss your estate planning. Many of our clients take the same path of least resistance. I’ve drafted countless Wills that leave a client’s estate to the surviving spouse and then equally to the children. But occasionally, depending on the facts, things get changed up. Perhaps the spouse only gets a lifetime interest in the home, and the children inherit everything else, except for the child who receives nothing. Neither the spouse nor the children have any idea about the client’s plan until the client dies and the Will surfaces. Talk about awkward.

Undoubtedly, the client had a perfect reason for putting that plan into effect. It all made sense and the principles behind the decisions were sound. But the principles and reasons were kept by the client. The client never sat down with the spouse or children to share. So the spouse sues – the prodigal child sues – everyone sues because nobody’s happy about that Will. Twelve months and tens of thousands of dollars later, the suits are settled.

I’m not willing to bet that a conversation between the client, the spouse and the kids could have avoided all of that, but it probably couldn’t hurt. So much litigation in our area stems from resentment and the fact that a spouse or child is treated differently in the client’s Will than someone else. The Times article includes the thoughts of some experts, who believe that a series of conversations about these kinds of delicate issues works best. I agree.

Sadly, if a family has some inner turmoil ahead of the client dying, you can usually expect that turmoil to break loose after the fact. I tend to believe that litigation is unavoidable in some cases. But the Times article does make an excellent point for those situations where all it takes is a few conversations with your loved ones to openly discuss your plans.

Alternatives to Guardianships of the Person

February 1, 2010

A few weeks ago, we took a more in-depth look at the use of Section 867 Trusts as an alternative to guardianships for a minor. We examined some the advantages of the trusts and pointed out that guardianship alternatives like them are fine examples of the legislature working to provide reasoned solutions to issues that affect more people every day. There are others, and this time I thought we would focus on a few alternatives to guardianship of the person.

Recall that guardianship of the person involves the Probate Court’s judicial finding of incapacity of a minor or adult. Once the court finds the person lacks some or all capacity, the court appoints an individual to be responsible for that person’s non-financial interests. Often, the court reaches this restrictive measure because there is no option that can better protect the incapacitated person. Other times, there are alternatives that are not nearly as restrictive as the imposition of a guardianship.

For example, the Texas Health and Safety Code provides several useful options. Under that Code’s provisions, a person may take advantage of naming an agent under a Medical Power of Attorney. With some pre-need estate planning, a person could avoid guardianship altogether by nominating someone to make the same kinds of decisions before the need ever arises. Directives to Physicians, also authorized under the Health and Safety Code, might be useful as well. Used correctly, these documents can communicate a person’s intentions and directions regarding medical treatment under terminal or other specified circumstances.

Likewise, the Health and Safety Code may help avoid guardianship and permit the nomination of a surrogate decision maker, much like the agent under a Medical Power of Attorney. In both emergency and non-emergency situations, Texas law may provide a means of assisting the person without the time and expense of a formal guardianship.

Keep in mind that the Probate Court does not approach the creation of a guardianship lightly. Because the process can involve the removal of rights and liberties that a person would otherwise enjoy, most probate judges in Texas are very careful to invoke their guardianship authority only in those circumstances where it appears that there is no other option available. Even then, by requiring appointed guardians to report on the condition of their ward annually, those probate judges are careful to keep a watchful eye on the guardian to see that he or she is making decisions consistent with the ward’s best interests.

Too often, guardianship issues become litigated matters. They are particularly emotional when guardianship of the person is at issue. These cases can pit brothers against sisters, sons against mothers, and so on. Meanwhile, a person who may need help is often tugged in both directions. The fact is that in many cases, these fights have been brewing for some time, and they are going to happen despite all the best estate planning. Human nature often knows no logic. But, with alternatives to formal guardianships in place, the Probate Court and the parties can begin to work together toward crafting a result that accomplishes what everyone should be concerned about – the well-being and best interests of the incapacitated person.

This Week in Probate and Guardianship Appeals

January 26, 2010

Johnny Carroll, Individually and as Trustee of the Johnny Carroll Trust, v. Letha Frances Carroll and Donald Carroll, Supreme Court of Texas
This week’s entry comes to us from on high, the Texas Supreme Court. Johnny Carroll appealed the Appellate court’s ruling on a default judgment which was awarded in favor of Letha and Donald Carroll. Johnny raised the issue of jurisdiction for the first time in the Supreme Court cliaming that the County Court, to which this case had been transferred, lacked the requisit jurisdiction to hear the matter. The Supreme Court agreed.

Jurisdiction in regard to Trust Proceedings

The Texas Property Code provides that a district court has original and exclusive jurisdiction over all proceedings concerining trusts, including proceedings to appoint or remove a trustee, determine the liablity of a trustee, or to require an accounting by a trustee.

Letha and Donald’s original suit sought exactly such accounting and removal. Despite this, the 66th District Court of Hill County transferred this suit to to County Court at Law.

The Supreme Court noted that the district courts may only assign cases to the county courts at law that are within the county court at law’s jurisdiction. Because nothing in the Texas Government Code confers jurisdiction on county courts at law over trust proceedings, the transfer to the Hill County Court at Law was improper. In light of the fact that the Hill County Court at Law had no jurisdiction over the proceeding, its judgment was void.

What does all of this mean for you? Perhaps a lot. Void judgments are no judgments at all. They are good nowhere and can be attacked at any time. Therefore, even if you have been out of court for years and you now read this and realize your trust case was handled in a court that lacked jurisdiction, you may still be able to attack such a judgment on the basis of voidness. To make sure, call us today and schedule an appointment to discuss your options.

The High Cost of Your Will

January 18, 2010

Each week, The Houston Chronicle runs a column entitled “State Your Case,” where local attorney Ron Lipman answers 4 or 5 questions from readers regarding various legal subjects. Recently, Lipman devoted the entire week’s column to estate planning and probate questions covering a range of concerns regarding Wills and probate questions.

In one of those questions, the reader asked Lipman, “What should I expect to pay for a simple Will…?” The reader pointed out that he just wanted a Will that passed everything to he or his wife when the first of them died, and then upon the death of the second of them, everything would be split equally between their children.

Having apparently conducted an informal survey of other attorneys in Houston, Lipman discussed that fees for a simple Will can sometimes be as high as $2,000 for a married couple. He also pointed out that a simple trust for a special needs child will generally cost anywhere from $2,000 on the low side or $4,000 on the higher end.

In my opinion, Lipman has provided useful information to answer this reader’s question, and his answer is probably fairly accurate. What surprises me, though, is the fairly high cost that some lawyers are charging for their “simple” Wills and for trusts for special needs children.

Ford & Mathiason has always advocated that each person in Texas should have a Will and that there is no substitute for the competent, experienced advice of attorneys who routinely advise clients in estate planning. However, Ford and Mathiason has historically charged much lower rates for these services and has always been very upfront and honest about the manner in which we charge for our estate planning services. In the Rates and Fees section of our website, you can find detailed information on the methods that we use for charging for our services, which we provide so that potential clients can fully understand the financial commitment that they are making when hiring an attorney.

As you embark on new decisions in 2010, consider carefully whether you need to make changes to your existing Will or if you need to create a Will for the first time. At the same time, do not let articles like Lipman’s scare you into thinking that these services are cost prohibitive. Ford & Mathiason is happy to offer estate planning expertise at reasonable rates. Please contact us if you would like to discuss your options further.

This Week in Probate and Guardianship Appeals

January 8, 2010

Starting in 2010, Ford & Mathiason LLP will be writing a weekly entry covering newly released opinions by the Texas Courts of Appeals in the areas of Probate and Guardianship. Jason Brower, Associate in charge of the appellate section of Ford & Mathiason LLP, will be authoring these entries.

Estate of Pauline Moran Allen, Tyler Court of Appeals

This week’s entry comes to us from the 12th District Court of Appeals in Tyler. Dollie Weir appealed the trial court’s order which granted Leonard Allen’s motion for summary judgment. Two Issues were raised by Dollie, (1) that Leonard failed to present any summary judgment evidence to support his motion, and (2) that the thirteen writings, purported to be a codicil to Pauline Moran Allen’s Will, lacked testamentary intent.

Summary Judgment Evidence

The Will of Pauline Moran Allen was admitted to probate as a muniment of title on January 16, 2008. On April 2, 2006, Leonard filed a motion to amend the application and probate as a muniment of title thirteen writings purportedly signed by Pauline on December 27, 2002. Dollie filed a contest to Leonard’s motion, stating that the writings lacked testamentary intent. Leonard filed a motion for summary judgment, asserting that the thirteen writings were prepared, dated, and executed by Pauline, contained the signatures of the two witnesses, and complied with all the formalities of a will except for being entitled a will or codicil. However, he failed to attach any summary judgment evidence to his motion.

Dollie moved for both a no-evidence and a traditional summary judgment (attaching the 13 writings along with other summary judgment evidence) and asserted that the writings lacked the necessary testamentary intent to constitute a will or codicil. The trial court granted Leonard’s motion and denied both of Dollie’s motions. The court found that there was no genuine issue of material fact in Dollie’s contest, that no ambiguity existed with regard to the testamentary intent of Pauline in the codicils and that Leonard was entitled to have the codicils admitted to probate as a muniment of title.

The Court of Appeals agreed with the Trial Court on the basis that even though Leonard did not attach any summary judgment evidence in his motion, when both parties move for summary judgment, the trial court may consider the combined summary judgment evidence. Therefore, because Dollie had included all the evidence needed to establish Leonard’s motion, the granting of such motion was not in error.

Lack of Testamentary Intent

Dollie’s second issue revolved around her claim that the thirteen writings lacked testamentary intent. The Court of Appeals first noted that any writing introduced as a will or codicil must contain an explicit statement declaring that the writings are wills or codicils or that the property division will take place only after the decedent’s death. The Court then further noted that the intent of the testator must be ascertained from the language used within the four corners of the instrument offered for probate. Commonly called the “Four Corners Rule” this means that unless there is some ambiguity in the language of the instrument, outside evidence cannot be used to add or contradict the writing or show that the testator intended something different than what is on the instrument.

Leonard, in his motion for summary judgment, was in effect saying that these thirteen writings are unambiguous, executed with all requisite formalities of a codicil, and therefore no outside evidence of testamentary intent is needed or even allowed. Dollie disputed this however, and stated that none of the writings are referred to as wills or codicils, and contain no words evidencing that Pauline intended for these to dispose of her property only upon her death, and therefore lacked the requisite testamentary intent to be regarded as codicils.

The Court of appeals agreed with Dollie. They stated that nowhere in the writings did they find testamentary language, such as words of grant or devise, nor were there words from which a bequest could reasonably inferred. Because no amount of outside evidence could supply the absent testamentary intent, such writings were not a codicil. The trial court therefore erred in granting Leonard’s motion for summary judgment and the Court of Appeals reversed such judgment.

What does all of this mean for you? If you want to ensure proper disposal of your property upon your death, do not draft your own documents. Instead, call us today and schedule an appointment to discuss your estate planning needs.


Follow

Get every new post delivered to your Inbox.