Monday, October 28, 2013

Congratulations to our colleague, Douglas J. Stanley, who was recently elected as the newest Missouri Fellow in the American College of Trusts and Estates Counsel (ACTEC ).

Monday, October 21, 2013

The 7520 Rate for November 2013 is dropping to 2.0%.

The November 2013 Federal interest rates can be found here.

Monday, October 21, 2013

urnA Missouri Court recently ruled in In the Estate of Betty Jean Collins v. Tina Shoemaker (Mo. App. W.D. #75448, August 6, 2013) that a person who had died was not “incapacitated” for purposes of a Health Care Power of Attorney (HCPOA). The court decided that the right of sepulcher expressly granted by Collins in her HCPOA to her great-niece did not ever become effective so that, on the death of Collins, her great-niece as her health care attorney in fact had no power to carry out Collins’ wishes to have her body cremated.

The right of sepulcher, that is the right to choose and control the burial, cremation or other disposition of a dead body, is governed by statute in Missouri (R.S. Mo. § 194.119), as it is in many states. This statute sets out the order in which various persons have this right, and grants the right of sepulcher first to “[a]n attorney in fact designated in a durable power of attorney wherein the deceased specifically granted the right of sepulcher over his or her body to such attorney in fact.” However, here, since the court ruled that the HCPOA never became effective, the court determined that the “next of kin”, the next in line with the right of sepulcher under the statute, had this power instead of the great-niece. Collins had no surviving spouse, so that her children, appellants in this case, who wanted her buried and not cremated, had the right of sepulcher. (more…)

Monday, October 14, 2013

birdOnce again, the Internal Revenue Service reminds us in PLR 201330011 that a distribution from an IRA to a residuary beneficiary will not result in recognition of IRD (also known as income in respect of a decedent) to the estate or trust, as only the residuary beneficiary will recognize the IRD.

Here the Decedent’s Estate was the beneficiary of the Decedent’s IRA. Under the provisions of the Decedent’s Will, his Estate poured over to his Revocable Trust on his death. His Revocable Trust provided that each of two Charities were to receive a percentage of the residue of his Trust, and further provided that the Trustee could satisfy this percentage gift in cash or in kind and also could allocate different assets to different residuary beneficiaries in satisfaction of their percentage interest in the trust residue.

Of course, the IRA constitutes income in respect of a decedent (IRD), and pursuant to IRC § 691 (a)(2) and Reg. § 1.691(a)-4(b)(2), the transfer of an item of IRD by an estate, such as by satisfying an obligation of the estate, will cause the estate to recognize the IRD, but if the estate transmits the item of IRD to a specific legatee of the item of IRD or to a residuary beneficiary (emphasis added), only the legatee or the residuary beneficiary will recognize the IRD. (more…)

Monday, October 7, 2013

courtroomThere is some uncertainty as to whether and under what circumstances a revocable trust created by a decedent prior to death would be subject to the claims of the decedent’s creditors after the decedent settlor’s death. Now the Sixth District Court of Appeals of Ohio has weighed in on this issue in Watterson v. Burnard, 986 N.E. 2d 604 (Ct. App. Ohio, February 1, 2013).

In this case, Brad Watterson was injured in an auto accident caused by Barthel Burnard. Brad then filed suit against Barthel, but while the personal injury case was pending, Barthel died. Prior to her death and actually prior to the accident, Barthel had created and funded a revocable trust. After Barthel’s death, Brad sought declaratory and injunctive relief that Barthel’s trust would be available to satisfy any judgment he might obtain in his personal injury case. Barthel’s Trustee argued that Brad’s right to access Barthel’s revocable trust to collect on a judgment ceased when Barthel died. The trial court agreed, stating that as a matter of law the assets in a revocable trust would cease to be available to a creditor unless the creditor’s claim was reduced to a judgment prior to the settlor’s death. (more…)