Death and Taxes Blog

In this viewer's opinion, "The Office" has grown from modest beginnings to become the funniest show on television.  This week's episode sounds like a good one -- here's the writeup from tv.com:

When Michael takes over conflict resolution duties from HR, chaos ensues at Dunder Mifflin.               

Somehow I think Michael Scott (Steve Carell's character) is going to provide lots of tips on what NOT to do in resolving conflicts.

This week I met with a new client who was seeking advice about the best way to disinherit her brother (he had looted my client's mother's estate upon her death last year).  The client wanted to leave $1 to her brother, since she had been told that this would prevent her brother from contesting the Will.

This isn't actually the case, and a $1 bequest is generally a bad idea.  In order to close an estate, the attorney for the executor or administrator has to produce signed receipts from every beneficiary.  It goes without saying that a beneficiary who inherits $1 is less than thrilled to sign such a receipt, and usually refuses.

The "best" way to disinherit someone is to (a) simply do it and (b) make your reasons for doing it clear to your attorney and/or in your Will. 

I previously discussed the Rosa Parks probate litigation here.  The Detroit News recently published an article updating the story (which you can find here).  This part of the article is particularly worth addressing:

A lawyer for [Elaine Steele, who was Mrs. Parks' caregiver and is named as one of her executors] has accused the [lawyers for Mrs. Parks' nephew, William McCauley] of conducting "an all-out fishing expedition" about Parks' finances, her possessions and those of her closest associates dating to 1994. The requests are "oppressive" and "annoying," Steele's lawyer wrote in court records.

As oppressive and annoying as they may be, these requests are often the only way for a party to make sure that a decedent wasn't taken advantage of during his or her lifetime.  For instance, in Illinois, you can initiate citation proceedings (which I discussed here) to gather information.  A citation allows you to depose the person you believe is holding property belonging in an estate, and to examine any "books of account, papers or evidences of debt or title to lands" in the person's possession.  Citation proceedings are helpful for addressing situations where a person may have stolen property from an estate, as well as cases of undue influence.

On the other hand, I think that Mr. McCauley's lawyers have their work cut out for them, because of two questions they need to answer:

1. Why is Mr. McCauley only raising questions of capacity and undue influence now that Mrs. Parks has died (and he stands to benefit)?  If Mrs. Parks lacked capacity, or was being unduly influenced by Ms. Steele, why didn't Mr. McCauley do something while Mrs. Parks was alive?  The evidence would have been much clearer at that time (especially the evidence of capacity, since Mrs. Parks could have been examined by the court or physicians).  Mr. McCauley's argument -- that his family "had scarce access to their previously attentive aunt in her later years... [which] fueled suspicion that Parks' mind was fading and that she was under the control of Steele" -- doesn't hold up.  If you have suspicions, you get them addressed by initiating a guardianship proceeding.  You don't simply give up, and wait until your loved one dies to raise the issue.

2. If Ms. Steele unduly influenced Mrs. Parks, then why did Mrs. Parks leave  most of her estate  not to Ms. Steele, but to a charity (the Rosa & Raymond Parks Institute for Self Development)?

The article also explains why Mrs. Parks' estate is worth fighting over.  It's not that being a civil rights pioneer is particularly lucrative -- rather, it's due to the fact that Mrs. Parks "was awarded an undisclosed amount of money to settle a lawsuit with record companies and other parties over the use of her name in the title of a song by the rap group OutKast."

Since this blog doesn't focus much on real estate issues anymore, visitors with an interest in Illinois real estate may wish to visit the Illinois Real Estate Blog, run by Robert C. Thurston.  Mr. Thurston's blog focuses on both commercial and residential real estate.

I've recently started on an (overly) ambitious lifetime reading plan.  Part of the plan involves tackling a Shakespeare play or two per year (keep in mind that there are 37 of them!).  Because Turner Classic Movies was showing "Julius Caesar" last week (the Marlon Brando version), I decided to start there.  Interestingly enough, Julius Caesar's Will plays an important part in the story.

(Spoilers ahead!) After Brutus & Co. kill Caesar, they make the mistake of allowing Mark Antony to speak at Caesar's memorial service.  Mark Antony then gives his famous speech -- the one that begins "Friends, Romans, countrymen, lend me your ears!  I come to bury Caesar, not to praise him."  Mark Antony goes on to turn the crowd against Brutus & Co., finally using Caesar's Will as evidence that Caesar loved the people of Rome:

... he hath left you all his walks,
His private arbors, and new-planted orchards,
On this side Tiber; he hath left them you,
And to your heirs forever- common pleasures,
To walk abroad and recreate yourselves.

This is the last piece in a brilliant bit of rhetoric.  What's also interesting is the fact that Caesar's Will proved to be pretty important in real life as well, for entirely different reasons.  The main beneficiary of Caesar's real-life Will was his nephew Gaius Octavius -- Mark Antony wound up trying to contest Caesar's Will and battling Octavius, who eventually was named emperor (under the name Caesar Augustus).  (For more information, you may wish to access the Julius Caesar Wikipedia entry and/or this page, both of which I've used for reference.  Wikipedia also has the entire text of the play, here)

Saturday's Wall Street Journal featured a lengthy article about John J. Donovan Sr., described as "a wealthy technology consultant and entrepreneur."  The article details a lot of family intrigue, including allegations of sexual abuse by one of Mr. Donovan's daughters, and a shooting incident that was possibly masterminded by one of Mr. Donovan's sons -- or by Mr. Donovan himself.  The article is here, but available only to subscribers.

Is Mr. Donovan a disturbed, evil man?  Or are his children simply being greedy and taking advantage?  It's impossible to tell from the article, but one aspect of the dispute caught my attention:

In the early 1990s, Mr. Donovan established two trusts in Bermuda, naming his children as beneficiaries.  The trusts were designed, among other things, to shelter his wealth from taxes and to assist with estate planning, according to his lawyers.  Mrs. Donovan says her husband believed the money would be used to start companies and create wealth.  He wanted some of the money going to the kids, but most to charities, she says, although those goals were not incorporated into trust documents. The trusts were structured so that trustees in Bermuda had discretion over them, and Mr. Donovan's permission wasn't required for his kids to tap the money, according to lawyers for both Mr. Donovan and his children.  According to his lawyers, the trusts eventually contained more than $100 million in cash and securities. (Emphasis added)

Mr. Donovan apparently set up an irrevocable trust for his children.  Once set up, such a trust is irrevocable, which means you can't change it or revoke it.  If Mr. Donovan wanted to give "most" of the trust funds to charities, he could have done so before he signed the trust agreement.  He didn't. 

It may seem strange, but the word "irrevocable" tends to be a hard one for clients to grasp.  People who set up irrevocable trusts almost by definition have a lot of money and a fair amount of sophistication, but estate planners like to trade stories about clients who call and ask "how do I amend or revoke my irrevocable trust?"  The answer is, "you don't."

This article describes a pretty interesting probate litigation case involving a woman named Madeleine Stockdale.  In 1998, Mrs. Stockdale signed a Will leaving most of her estate (valued at over $5 million) to the Spring Lake (New Jersey) First Aid Squad.  On January 3, 2000, about 3-1/2 months before her death, Mrs. Stockdale signed another Will, naming a neighbor (Ronald J. Sollitto) as primary beneficiary -- this Will was prepared by an attorney friend of Mr. Sollitto.

Since Mrs. Stockdale's death in April 2000, the $5 million plus question has been this: Is the January 3, 2000 Will valid?  In July 2004, the trial court ruled that it wasn't, and threw out the January 3, 2000 Will.

My big concern here is, what has taken so long?  The trial on the Will's validity ended more than four years after Mrs. Stockdale's death, and it took four months.  The case is now on appeal, with no end in sight. 

The issues involved in a Will contest tend to be fairly simple -- they involve (1) whether the creator of the Will (the testator) had the mental capacity to execute the Will and (2) whether someone unduly influenced the testator.  This Bleak House-esque case -- dragging on and on, benefiting only the attorneys -- succeeds at little more than giving probate a bad name.

Two things:

1. Last week The Chicago Tribune ran a story about an Oak Park couple that recently discovered an interesting fact about their home: James Dewar, the inventor of the Twinkie, once lived there.  (The article is here, although registration is required.) 

2. I recently learned that Chicago Cubs Hall of Famer Joe Tinker (of "Tinkers to Evers to Chance" fame) once lived one block west of me in Oak Park.  (Mr. Tinker's house at 832 Gunderson was built for him in 1907, and just appeared on a neighborhood housewalk sponsored by The Historical Society of Oak Park and River Forest.) 

This got me thinking some more about whether having a house with a famous former occupant could help you in the real estate market.  (I pondered this question with respect to gangster's homes last year.) 

I have to think that the internet can be a huge help in marketing these properties.  After all, a person interested enough in gangsters to buy Sam Giancana's house may not necessarily reside in the Chicago area.  Instead of marketing only to Chicagoland residents, a savvy realtor engaged to sell the Tinker house might try to stir up interest among baseball fans generally or among Cubs fans (or fans of baseball history) in particular.  This tactic probably won't work in all cases --  I don't know whether there would be anyone willing to pay a premium for The House That Twinkie Built -- but this kind of niche marketing may be worth exploring in some cases.  After all, the goal in selling a house is to sell to the person who values it the most, and it only takes one huge Twinkie fan (no pun intended) to create a windfall for the seller.

It looks like the ranks of blogs about estate planning, probate, and related issues has expanded by two:

Arizona Elder Lawyer, a blog by E. Cameron Pickett; and

Utah and Nevada Estate Planning Blog, which is written by Brian L. Olson.

Distribution of someone's tangible personal property upon their death is tricky business, for a number of reasons:

1. Unless the decedent left specific instructions for each piece of property, their beneficiaries (usually the children) are going to be in direct competition for items of property.

2. While most Wills call for tangible personal property to be divided "in shares of substantially equal value," most families don't want to go to the expense of hiring an appraiser to value such property.  As a result, everyone guesses at approximate values, and these guesses may be incorrect.  Furthermore, "equal value" doesn't take into account sentimental value, or the fact that the items with the most sentimental value to the beneficiaries may be indivisible.  (For instance, if your father's prized possession was his cane, how do you and your three siblings decide who receives this item?)

3. It seems like every family (including my own, I've recently discovered) has at least one "looter."  By looter, I mean a family member who decides that he or she is entitled to some/most/all of the decedent's tangible personal property.  The typical looter will ransack the decedent's residence and walk off with lots of valuables -- often while the decedent's body is still warm.  When asked at a later date about what he or she took, the looter's memory usually becomes foggy ("I don't know").

How to deal with the above problems?  I think the keys are foresight and formality.  By foresight, I mean that the person named as executor in the Will (or the most responsible child, if there is no Will) needs to make sure that the residence -- and all tangible personal property in it -- is secured immediately upon the decedent's death.  (Three words: change the locks.)  In addition, appraisals should be performed -- there are costs involved, but I think appraisals save lots of money and aggravation in the long run.  Finally, a formal meeting should be convened at which the beneficiaries select the items they want.  At the end of that meeting, before anyone is allowed to leave with their property, each beneficiary should be required to sign a receipt and a release.

For a scary take on tangible personal property battles, you may want to take a look at yesterday's dear prudence column on Slate (here). 

Life insurance is one of those topics that is important to both financial planners and estate planners.  In my work, I ask about life insurance so that I can figure a rough value for the client's estate -- I may also need to help the client determine the appropriate beneficiaries of the policy.  However, because I'm not an expert on life insurance matters, I try to avoid the question of how to calculate whether you have enough life insurance in the first place.  I'm also wary of having an insurance broker answer this question because of the inherent conflict of interest.  ("How much insurance should you have?  How about $20 million!")  Are there other resources that can be of assistance in this calculation?  One resource that I would recommend is an article that appeared in Wednesday's Wall Street Journal.  The article is available online to Wall Street Journal  Online subscribers only, but it was adapted from Mr. Opdyke's just-released book entitled The Wall Street Journal Complete Personal Finance Guide Book.   

A few years ago the Illinois Real Estate Lawyers Association (IRELA) drafted a form contract called the Multi-Board Residential Real Estate Contract 3.0 -- the form is available as a pdf document here. 

Contract 3.0 was very good, and pretty widely accepted in the Chicago area -- it was approved by the Chicago Association of Realtors as well as attorney and realtor groups in DuPage, Lake, Kane, and McHenry counties (among others).

IRELA has now prepared a new version of the Contract (4.0), which is available to its members on IRELA's website -- hopefully a version of Contract 4.0 will become available to the general public in the near future. 

The website also includes commentaries related to Contract 4.0 -- because IRELA's site is so horrible to navigate, I've linked to these commentaries (all of which are pdf documents) below:

Comparison of Contract 4.0 to Contract 3.0 by Joseph R. Fortunato, Jr. (link)

Contract 4.0 Key Revisions And/Or Additions At a Glance chart by Ralph Schumann (link)

Amendment, Notice and Response Forms 4.0 (link)

Inability to Satisfy Contingency And/Or Mutual Cancellation Agreement 4.0 (link)

Recently I was doing some research on New Jersey probate law and came across a copy of Richard Nixon's Will (here).  It might be an interesting project, to post the Wills of the U.S. presidents. (And imagine how a link to Millard Fillmore's Will would increase the number of hits this site receives!)

Anyway, President Nixon's Will has some interesting language about his personal diaries and the transfer of property to the Nixon Birthplace Foundation, but from a practical perspective, I wanted to focus on two points:

1. In ARTICLE THREE of the Will, President Nixon leaves money to three of his four grandchildren -- the amounts he does leave vary by grandchild.  Were some of the President's grandchildren on his enemies list?  No, because President Nixon explains the reason for the differing amounts:

The specific bequests to my grandchildren named above are made to equalize the gifts made to all of my grandchildren during my life.  The disparity in amounts, or lack of a bequest, is not intended and should not be interpreted as a sign of favoritism for one grandchild over another.

I think this type of language is a great idea to prevent misunderstandings and hurt feelings (which can, of course, lead to litigation).

2. I'm not sure why President Nixon disposed of his property via a Will instead of by setting up and funding a living trust.  A major advantage of living trusts (especially for the rich and famous) is privacy -- the dispositive provisions of your estate plan (including the names of your beneficiaries) are no longer a matter of public record. 

Yesterday's Wall Street Journal featured a front-page article entitled "Blonde Ambitions: A Battle Erupts Over the Right To Market Marilyn."  (For whatever reason, the article -- written by Nathan Koppel -- doesn't appear to be online right now.) 

The issue in this "Battle" involves who controls the rights to Ms. Monroe's image: the photographers who took pictures of her during life, or Anna Strasberg (the widow of Lee Strasberg, director of The Actors Studio and main beneficiary under Ms. Monroe's Will).  The answer to this question appears to depend on where Ms. Monroe is deemed to have resided at the time of her death -- California law favors Ms. Strasberg (it allows so-called publicity rights to be bequeathed by Will), while New York law (which doesn't recognize postmortem publicity rights) favors the photographers.

One interesting portion of the article addresses the distribution of Ms. Monroe's personal property:

In 1999, Ms. Strasberg commissioned auction house Christie's to sell many famous items Ms. Monroe left behind, including the sequined gown she wore when she sang "Happy Birthday" to President John Kennedy in 1962.  The auction raised $13.4 million, but the sale irked many of Ms. Monroe's fans and friends.  Her will had directed Mr. Strasberg to distribute the actress's personal effects to "friends, colleagues and those to whom I'm devoted."

I took a look at the actual language of Ms. Monroe's Will (available here), and I think the above passage misrepresents things a bit.  The language -- from paragraph (d) of Article FOURTH of the Will -- states the following:

I give and bequeath all of my personal effects and clothing to LEE STRASBERG,  or if he should predecease me, then to my Executor hereinafter named, it being my desire that he distribute these, in his sole discretion, among my friends, colleagues and those to whom I am devoted.

To begin with, the Will doesn't impose any legal (as opposed to moral) obligation -- it states only a "desire" that Ms. Monroe's personal effects and clothing be distributed to "friends, colleagues and those to whom I am devoted."  In addition (and more importantly), I'm not sure that Mr. Strasberg is the "he" or "him" referred to in this paragraph -- I actually think it more likely that the distribution of personal property was meant to take place if and only if Mr. Strasberg predeceased Ms. Monroe (which he didn't -- Mr. Strasberg died in 1982).

One of the most important things to understand about probate is the distinction between probate property and non-probate property, and the fact that only probate property (which is property owned by you in your own name at your death) is subject to probate proceedings.  Non-probate property includes the following types of property, and does not pass via the probate process:

Beneficiary designation property: such as life insurance and retirement assets (like 401k's and IRAs) -- this property, which is in the nature of a contract between you and your insurance company or retirement custodian, passes to the individual(s) listed in your beneficiary designation

Property owned in trust: such as property in a living trust, revocable trust, or land trust -- this property, which is in the nature of a contract between the creator of the trust and the trustee, passes according to the terms of the trust

Jointly-owned property: such as property owned as joint tenants with right of survivorship or as tenants by the entirety -- this property passes to the surviving tenant by operation of law immediately upon the death of the first tenant

Early in my career, I encountered a situation where a woman who owned property in joint tenancy with her sister left a Will in which she left her interest in the property to her daughter.  That provision in the Will was ineffective -- it was trumped by the fact that she had already converted the property into non-probate property, and had an agreement with her sister about how title would pass upon death.

A similar situation arose in the recent 1st District case of Hoxha v. LaSalle National Bank.  Doris Robbert was the beneficiary of a land trust which held property located at 5018 North Kenmore Avenue in Chicago.  The land trust named Donna Forrest as successor beneficiary of the land trust upon Ms. Robbert's death.  The land trust also stated the following:

"DORIS ROBBERT, alone, during her lifetime, may sell, assign, transfer or otherwise dispose of all or any part of her beneficial interest hereunder, or all or any part of the trust property, and may use and consume proceeds thereof, and that she also may amend, alter or revoke from time to time, any provisions herein made for successors in interest in event of her death, by an instrument in writing which shall in each case be filed with and accepted by the Trustee hereunder."

Before she died, Ms. Robbert entered into an agreement with Roger and James Hoxha by which she stated that, upon her death, 5018 North Kenmore "shall be sold" to the brothers for $400,000.  The court in Hoxha found this contract to be unenforceable, in part because of questions about the validity of the agreement, but also because Ms. Robbert did not follow the proper procedures under the land trust.  If Ms. Robbert had wanted to convey the property to someone during her life, or wanted to change the successor beneficiary from Ms. Forrest to either or both of the Hoxha brothers, she could have done so by a writing filed with the land trustee during her lifetime.  She didn't -- as a result, the agreement with the Hoxha brother had no effect.

Thanks to Patricia Brosterhous for bringing this case to my attention through her excellent Estate Planning & Probate Law Flash Points newsletter.

Yesterday's Wall Street Journal had an informative article about websites that are starting to challenge the supremacy of Realtor.com in the real estate listings game.  Here's a partial list of other sites you may want to visit if you are thinking of buying a home:

Craigslist Chicago (real estate for sale is here)

Oodle Chicago (real estate is here)

Propsmart

Trulia (which doesn't currently have any Illinois presence)

ForSaleByOwner.com

Google [Added 4/9/06: thanks to Anthony Cerminaro for his link in the comment below]

Yesterday I received an invitation to an interesting luncheon being sponsored by the Chicago Bar Association.  The concept, "Take Your Adversary To Lunch," is based on a line in Shakespeare's The Taming of the Shrew ("and do as adversaries do in law, strive mightily, but eat and drink as friends").  The luncheon's focus is to "encourage lawyers to share a meal with an adversary - someone who they have opposed in the past or are currently opposing in a legal matter."

This idea makes sense from a couple of perspectives.  To begin with, I think attorneys (and the public) need to move beyond the often ridiculous notion that representing your client well means you have to act with incivility toward the other side.  You don't, and in some (many?) cases clients are ill-served when their attorneys behave badly.  To me, that's one of the points of alternative dispute resolution.

I've also been reading a lot about the increasing number of attorneys who become depressed about their line of work.  My pet theory is that acting -- or feeling required to act -- in an uncivil manner can take a real toll on your psyche.

A blurb about the event, with information on how to register, can be found on this page (it's about half-way down the page, under "Special Events").

Last Friday I spoke about the role of the Public Administrator in handling Illinois estates (the Public Administrator's role is also discussed in depth in Article XIII of the Illinois Probate Act). That post got me thinking about the other types of administrators that we have in Illinois.  They are as follows:

(Regular Ole, Garden Variety) Administrator (Article IX): Appointed after a person dies intestate (i.e. without a Will).

Administrator To Collect (Article X): Appointed by the court in two situations:

1. when, for whatever reason, it appears that the appointment of a regular administrator is being delayed, and the court believes "that the estate of the decedent is liable to waste, loss or embezzlement"; or

2. when a person is missing.

Administrator with the Will Annexed: Appointed when a person dies with a Will, but the Will doesn't name an executor (or when the executor(s) named in the Will can't or don't want to act). 

Administrator de bonis non: Appointed if an acting administrator or executor ceases to act (perhaps because of death or disability), and no one is available to take the administrator's place.

Special Administrator: Appointed if the acting administrator has a conflict in the handling of the estate.  For instance, if someone files a citation against an administrator, alleging that the administrator has embezzled property from the estate he or she is administering, then the court can appoint a special administrator to represent the estate with respect to the citation.

Ancillary Administrator: Appointed if a probate is needed to administer Illinois property owned by a resident of another state.  For instance, if a Florida resident dies intestate, and owns a house in his own name in Illinois, then two probates will be needed: (1) the main probate in Florida (to administer all property owned by the decedent in Florida), and (2) the ancillary probate in Illinois (to administer the Illinois house).

Lately I've been working on estates in Chicago's so-called "collar counties" -- one estate in Will County and one in Kane County. 

One of the nice things about going to court in a small county is that you may not actually have to go to court (as much or at all).  In Cook County probate court, where I spend most of my time, I have to set up (or have my assistant set up) court hearings in person, and then actually attend the hearings.  By contrast, Will County allows hearings to be scheduled via phone. 

Even better, Kane County allows most uncontested estates to be administered by mail.  The attorney sends all of the documents to the county's probate administrator (another nice touch), who makes sure everything gets passed along to the judge. 

My hope is that the idea of handling cases by mail or phone (or, even better, via the internet) will catch on among court clerks and judges.  This won't work for every case, but it probably makes sense for the majority of cases.  I spend a lot of time on court hearings, but most of that time doesn't relate to anything substantive.  I can easily devote an hour (or more) to traveling to and from court, and another 45 minutes to an hour waiting for my case to be called.  In many cases, my actual appearance in front of the judge takes 5 minutes or less.  If the judge and his or her assistant could review and process my documents without requiring me to actually appear in court, it would save me a lot of time and my clients a lot of money.  This is the type of initiative that a real probate reform group should pursue.

This month's Illinois Bar Journal has an interesting discussion of the recent 4th district case entitled In re Estate of Doyle (the discussion is available to members of the Illinois State Bar Association here).

The Doyle case involved a power of attorney for property executed by Mary Doyle in favor of her daughter, Rose Marie Doyle, in 1998.  Mrs. Doyle then tried to revoke the power of attorney.  In 2004, Mrs. Doyle's son and son-in-law sought a guardianship for Mrs. Doyle, which was eventually granted (apparently because the court found that Mrs. Doyle's daughter had abused her position as agent under the power of attorney).  The question before the court was this: was Mrs. Doyle's revocation of the power of attorney effective, even though Mrs. Doyle may have executed such revocation when she was incompetent?

The case generated three opinions:

The majority ignored the question of Mrs. Doyle's attempted revocation, finding instead that the court had "implicitly revoked" the power of attorney under a provision in the Power of Attorney Act (755 ILCS 45/2-10) allowing an agent to be removed for cause.

The concurring opinion agreed with that result, but said that an incompetent person can't revoke a power of attorney.

The dissent agreed that an incompetent person can't revoke a property power of attorney (noting that revocation of a health care power of attorney by an incompetent person is specifically allowed under the statute).  But the dissent went on to say that a power of attorney is not implicitly revoked through a guardianship proceeding -- instead, you have to specifically use the procedure set forth in §2-10.

The majority's opinion has evidently been somewhat controversial among practitioners, since it appears to weaken the effect of §2-10.