Death and Taxes Blog

I've spoken before (here) about reasons why you might be reluctant to act as executor of an estate.  That's the decision Hayley Kissel has made with respect to the estate of her husband, Andrew Kissel, and it's pretty easy to see why from this article:

Andrew Kissel was found stabbed multiple times and bound hand and foot in the basement of his 10 Dairy Road mansion the morning of April 3. His body was found days before he was scheduled to be sentenced to five years or more in prison on federal bank fraud charges.

Police have declined to discuss possible motives, but have investigated the theory that Kissel may have hired someone kill him so his children could collect a hefty life insurance payout....

Although Hayley Kissel filed for divorce in March 2005, she and Andrew Kissel lived together in the Dairy Road home until just a few days before the murder, police said. She was the sole beneficiary of the estate.

Saying "thanks but no thanks" to a request to act as executor is easy -- Cook County even has a form (entitled "Declination of Office") for it, here.

As this letter shows, John D. Washington of Richmond, Indiana has really worked himself into a lather over Indiana's Probate Code.  More specifically, Mr. Washington has a problem with the idea that a debtor [sic - I assume he means creditor] of a decedent may petition the court to be named as administrator of the decedent's estate.  A similar law applies in Illinois (see §9-3 of the Illinois Probate Act (755 ILCS 5/9=3)).

According to Mr. Washington, "[a]fter reading all 20 chapters of Title 29, Article 1 [Indiana's Probate Code], I challenge any attorney or any judge to show the Indiana legislature intended for any Tom, Dick or Harry debtor to use IC 29-1-7-7 to get Letters of Administration and raid an estate."  While I am not an Indiana attorney, I think I'm up to the challenge - let's see how I do.

First of all, the goal of probate administration is the orderly wrapping up of the decedent's affairs.  This is usually accomplished by an executor (if the decedent named one in his or her Will) or an administrator (if the decedent didn't name one or didn't have a Will), working together with a judge via the probate process. 

Probate basically consists of four steps:

1. Locating and collecting the decedent's assets.

2. Compiling a list of the decedent's debts.

3. Paying the decedent's debts (and expenses of administration).

4. Distributing the rest of the decedent's assets as per the decedent's Will (or, if there is no Will, pursuant to the applicable intestacy law).

As the above indicates, there's an order at work here, which is what prevents the possibility of a "raid" by a creditor (or anyone else), or the use of a "first come, first served" regime.  For instance, in Illinois, the executor or administrator must give actual notice to all known creditors AND publish a newspaper notice for unknown/potential creditors.  This gives all creditors the chance to file a claim against the estate, in order to prevent their claim from being barred.  If the value of all claims exceeds the value of the estate, the Illinois Probate Act classifies which claims are to be paid first, in a manner similar to that used in bankruptcy.

Mr. Washington is concerned that "any judge in the state of Indiana... makes a will worthless when they allow a debtor" to become the administrator of an estate.  Yet I'm not sure that Mr. Washington understands why a creditor might wish to become appointed as administrator of an estate, or even how a creditor gets appointed. 

First of all, note that we are talking about an administrator -- if the decedent had a valid Will, and that Will named an executor who meets the statutory requirements to act (not a felon, a US citizen, etc.), then the named executor can petition the court for appointment.  And the court undoubtedly will appoint him or her. 

But what if John Smith dies without a Will, with a credit card debt of $100,000?  The credit card company wants to collect their money, but no one comes forward to open an estate for Mr. Smith.  At that point, Illinois law (and, presumably, Indiana law) allows the credit card company to petition the court to be named as administrator, so its claim for money owed -- which should and does survive Mr. Smith's passing -- does not disappear.  (Actually, in Illinois, there is a priority list of who may act as -- or nominate someone to act as --administrator.  The decedent's surviving spouse is at the top of that list.  Creditors are at the bottom, meaning that they may only act if no one else does.)

May the credit card company/administrator "raid" the decedent's estate?  It may not.  The credit card company/administrator must follow the rules -- and fulfill the fiduciary duties -- applicable to all administrators under the probate law.  If there are other creditors, they must receive the correct notice; assets must be collected; debts and expenses must be paid following the statutory scheme; and any assets then remaining must be distributed to the estate beneficiaries.  In all events, the administrator is accountable to the judge overseeing the probate.

Wrapping up a deceased person's affairs is often a dirty job, but somebody has to do it.  Allowing creditors to act as administrator when no one else comes forward to act isn't "unconstitutional" or even bad public policy -- rather, it's good sense, and helps promote the efficient administration of estates.

I've always been a big believer in the importance of good legal drafting.  My feeling has only been reinforced since I've recently encountered the following:

1. A buy-sell agreement that tells how to value the company's shares upon the employee's death, but makes no mention of the valuation date to be used;

2. A premarital agreement that requires one spouse's estate to pay "for the support, health care and maintenance" of the other spouse, but doesn't define these terms or set a timeframe for payments; and

3. A trust (in the same case as the above premarital agreement) that includes numerous gifts to the surviving spouse, but doesn't indicate whether the gifts are in satisfaction of -- or in addition to -- the gifts required under the premarital agreement.

Good drafting is like insurance -- it can save you a LOT of time, trouble and money down the road.

One of the concerns many people have about probate is that it will prevent close family members from accessing the decedent's property for an extended period of time.  For example, if a married man with two small children dies owning only probate property, what will his wife and kids live on during the probate period?

An answer can be found in the form of awards for the surviving spouse and minor and dependent adult children, set forth in Article XV of the Illinois Probate Act.  The awards allow a surviving spouse to receive "a sum of money that the court deems reasonable for the proper support of the surviving spouse for the period of 9 months after the death of the decedent." The term "proper support" takes into account the surviving spouse's standard of living and the size of the estate.  The minimum award for a surviving spouse is $10,000.

Similar awards may be made to the surviving spouse for the benefit of any minor and dependent children of the decedent living with such spouse.  In cases where the minor and dependent children of the decedent don't live with the surviving spouse (or where there is no surviving spouse), awards may be made for the benefit of the child "to such person as the court directs."

These awards can be obtained by filing a petition with the court probating the decedent's estate.

Warren Buffett has decided to start giving away his fortune, in what has to be the largest charitable gift ever -- around $40 billion.  Fortune magazine has the details here.

Andrew Sullivan makes somewhat of a link between the gift and the estate tax debate here.  One of his points:

Nepotism is indeed a corrosive element in a democratic society; dynasticism is poison to democracy. I know it's only natural to want to hand over all your wealth to your children, and I'm not saying there's anything wrong with it as such.  But it is not the only moral claim; and those who elevate the biological family to supreme status in our society seem to me to be missing something important.

I'm on record as saying that "I see no reason why the government should try to topple family dynasties when (1) such social engineering rarely if ever works, and (2) family dynasties (usually via incompetent and/or lazy members of following generations) do such a good job of toppling themselves." 

That being said , I don't have any problem with first generation folks deciding to stop a family dynasty before it starts.  In that sense, I agree with Mr. Buffett's statement that "when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money."  I love my daughter, but how will leaving all of my property to her at my death really make her life better?

Diane Levin just sent me an e-mail letting me know that her excellent directory of alternative dispute resolution (ADR) blogs has a new url -- it's now at www.adrblogs.com.  I highly recommend it -- and not just because this blog is listed there as an "ADR-Friendly Blog"!

Gayle White had a couple of nice articles in yesterday's Tribune about inheriting personal property from your parents -- the big one (here) is about valuing the property, and the shorter sidebar (here) is about avoiding family disputes.  (Registration required for both articles.)  The sidebar links to this nice University of Minnesota Extension service workbook, entitled "Who Gets Grandma's Yellow Pie Plate?"  Hopefully, I do! But I won't fight you for it.

Last June I blogged about probate litigation involving the widow of a former Eli Lilly executive,  Robert E. Koffenberger -- the link is here.  Now there's word of a probate (guardianship) case involving Eli Lilly's sole surviving great-grandchild, Ruth Lilly (who is 90).  This article discusses in more detail, although the way it's written raises a lot of questions:

1. The article says that "the family of Ruth Lilly wants the court to give them supervision over all of her affairs," but it also notes that Ms. Lilly has been "under court supervision for the handling of her financial affairs" since 1981.  It goes on to say that the petition filed by Ms. Lilly's heirs "proposes to give oversight for Lilly's personal and medical decisions to a niece and nephew Ted Lilly."  Does that mean Ms. Lilly currently doesn't have a guardian of the person (to make health care decisions and the like)?

2. It's unclear from the article who is currently acting as the guardian of Ms. Lilly's estate.  According to the article:

Pictures from a 1998 Eyewitness News investigation showed a frail Lilly who sources said had only limited awareness of her circumstances at the time. The investigation documented questionable spending for things like lavish overseas trips for large groups.

A resulting court review prompted an acknowledgement of lax oversight by National City Bank and a reduction in fees by both the bank and Lilly's personal attorney, Tom Ewbank.

Was National City Bank acting as guardian of the estate?  Was Mr. Ewbank?  I assume it was Mr. Ewbank, since he evidently consented to the above petition, but then why did National City Bank have any duty of oversight regarding Ms. Lilly's finances?  And if the guardian of the estate was acting inappropriately in 1998, why weren't they (or he) removed?

Darrell "Wayne" Perry was a songwriter whose tunes were performed by The Backstreet Boys, Tim McGraw and Toby Keith, among others.  Mr. Perry died of throat cancer last year, and now a probate battle has pitted his children against his sister, Darlene Bishop (who is a pastor).  The details can be found here and here.

The children are trying to remove Ms. Bishop as executor of Mr. Perry's estate, alleging that:

-the estate should be worth more than $1 million (Ms. Bishop claims there isn't enough money to pay the estate's bills);

-assets have disappeared from the estate (including $300,000 in insurance proceeds);  and

-estate assets have been used by Ms. Bishop personally and commingled with her own assets.

The children have filed a second suit as well:

A second civil lawsuit was filed in Butler County Common Pleas Court claiming wrongful death and fraud. The lawsuit alleges Bishop persuaded Perry to “go to God” instead of the hospital to treat his cancer. The lawsuit alleges Bishop stated she was healed of breast cancer by faith; that she was planning to use Perry’s illness as a squeal [sic] to her book “Your Life Follows Your Words: Releasing the Prayer of Faith” attesting to yet another recovery; and that Bishop refused to take Perry for chemo and radiation treatments for his cancer and that he was left unsupervised.

Family members say on one occasion, Perry was found to be malnourished, dehydrated and suffering from bedsores while under Bishop’s care, according to the lawsuit.

This month's New Yorker has a fascinating article by D. T. Max (available online here) devoted to the subject of James Joyce's grandson, Stephen Joyce.  Stephen Joyce controls his grandfather's literary estate, and has angered many academics with his aggressiveness on copyright issues.  The article is rather lengthy, but it's extremely interesting, and does a pretty good job of presenting both sides of the issue.  It also talks a good deal about the present state of copyright law, and about other "difficult" literary executors.  Of course, as the article points out,...

Most prickly literary estates are interested in suppressing unflattering or intrusive information, but no one combines tolltaker, brand enforcer, and arbiter of taste as relentlessly as Stephen [Joyce] does, and certainly not in such a personal way.

This past weekend I saw The Break-Up, the Jennifer Aniston-Vince Vaughn comedy about an unmarried couple that decides to part ways.  One of their problems involves the condo that they bought together -- each of them feels entitled to it.  (At one point Vince Vaughn says something like the following to their realtor: "I've thought about it, and the only fair thing would be for her to move out and pay me some kind of penalty.")

Dealing with unmarried clients and their property is difficult for attorneys.  Unmarried couples have either chosen to have a less formal relationship than married couples, or (in the case of same-sex couples) have been prevented from having a more formal relationship.  As a result, many of them don't think about taking other steps (like executing Wills and trusts, or creating a co-tenancy agreement for jointly-owned real estate) that can make the relationship more formal.  Helen W. Gunnarsson talks about this issue in June's edition of the Illinois Bar Journal, in an article called "What to Do When There's No 'I Do.'" (I can't tell, but access to this article may be restricted to members of ISBA (the Illinois State Bar Association.)

After I reviewed The Investigation (here and here), I had a few e-mail exchanges with Greg Magnesen (the author's son) and Robert Deiro (the author's key witness).  While my review wasn't the most positive, Mr. Magnesen and Mr. Deiro have always been very cordial.   

After my post on Wednesday about the return of Melvin Dummar, I received another e-mail from Greg Magnesen, who graciously agreed to allow me to post it as a rebuttal:

I noticed a new blog on your site.  I suppose it is not too surprising given the new developments.  Just thought I would comment on the points you brought up in the latest installment. 

As to #1- Mutually exclusive ways to put Hughes on the road--
The outing to the Mizpah and subsequent search was a completely separate occasion of Hughes leaving (with employees and aides- thereby making their assertions in court that Hughes never left his penthouse perjury, and the destroying of the records from that time period evidence tampering).  The event when Melvin picked Hughes up was when Deiro flew Hughes to the Cottontail Ranch- a completely separate event (also proving there were witnesses to him leaving).  Deiro has also said that he took Hughes out flying on other occasions, not only to brothels, but on practice approaches in scouting locations for a supersonic airport Hughes was thinking of building in Southern Nevada.

#2- Deiro's story
Deiro was like most other people in thinking that Dummar's story was comical at best.  It was not until the Las Vegas Review Journal published an article mentioning the connection between the Dummar-Hughes incident and the proximity to the Cottontail Ranch that he started to realize his own role in the events. He was told that Hughes left with someone, so he flew a few circles in his plane, and went home.  Whether or not taking his boss to a brothel is appropriate is beside the point.  When Hughes said jump, his employees lept with all they were worth or would find themselves in a much less lucrative position.  (Just a quick example- Employees found out Baskin Robbins was discontinuing Banana Nut Ice Cream- Hughes favorite at the time- so they bought up as much as they could out of fear of the repercussions, only to have him change his favorite to vanilla shortly thereafter).  You did not question Mr. Hughes if you were in his employ.  He was weird, and did whatever he wanted.  Why did Deiro circle?  Since Hughes did not come with anyone but him, he may have thought they were mistaken and Hughes did not leave with someone else.  He did not see him anywhere nearby in the desert, so headed home- thinking maybe he did leave with someone else.

#3- '67 incident=validity of will
As I stated in a previous email- the '67 incident only adds to the evidence supporting the validity of the will.  In his investigation, my dad spoke with one of the living jurors who did not remember tesitimony from an aide about Hughes actually leaving.  The foreman of the jury had typewritten notes each night and handed them out the next day, and this testimony was left out of the typed notes as far as he could remember.  This juror said the jury's decision was based almost entirely on whether or not Melvin could actually have picked the old man up in the desert.  As the notes from the foreman were what they were working from, and the notes said the aides were all lock-step on the fact that Hughes never left, they found the will to be a forgery. He said that if the jury had heard enough evidence that Hughes was out of the Desert Inn at any time, they would have found in favor of the will.  That is the reason the '67 incident was so crucial to the case.  As far as the will itself being legitimate standing on its own, Stein says they are prepared with evidence to argue that as well.  Stay tuned--

And now- you state that: "The article ends by stating that, if Mr. Dummar is successful with his lawsuit, Mr. Magnesen will collect 10% of the court award.  That fact raises a significant question about Mr. Magnesen's motives in writing his book -- is he uncovering The Truth, or a moneymaking endeavor?"  The original intent of this book was to help a man suffering from cancer and years of vilification as a liar to be able to have his story told after so many years, and before he dies.  My dad was interested in trying out his "sea legs" in the investigative field again, and the story interested him.  He is a born investigator.  We as a family have seen his endeavors and the excitement when he came up with new findings.  Seriously, you should have heard how almost giddy he was when he found out Hughes owned the mines at the end of the road Melvin picked him up on and many others in the area after pouring through tomes of lists of claims.  When he finally did get a publisher to take a chance on a brand new writer, he has never wanted to talk about money.  He did not even want to know from the publisher how many books he has sold.  I still do not know, as he does not want to find out.  He has said on multiple occasions that, and I quote, "I just hope I get back enough in book sales to cover my expenses."  Up until recently, his only thought about the legal ramifications of his findings were that the statute of limitations on the estate ran out long ago.  Then he contacted Stuart Stein after the radio show, and they got to talking.  They contacted Melvin, and he was initially hesitant to get back into the legal course of things, as it did not go well for him the first time.  Finally he decided he had little to lose, and the show got on the road.  It has always been about the justice that Melvin had stolen from him 30 years ago.  Call it karma or the universe realigning or whatever.  This stolen justice would have originally entitled Melvin to a fortune, and justice still does.  My father did not ask for anything, but Melvin said that it was all because of his investigation that any of this was even occurring, so he offered the 10%.  I don't know a person who would turn that down.  If you worked hard to build someone else a house on your own dime, then found out later there was possibly a large cache of oil under it, and the new owner offered to share with you, I think we all know we would accept it.  I know I would.

Anyway- thanks again for the attention you have given the book (which sales are the only sure money in this whole thing anyway), and for the healthy skepticism.

Sincerely-

Greg Magnesen

Property taxes in Illinois are paid in arrears -- '05 taxes get paid in '06, '06 taxes get paid in '07, and so on.  To make matters worse, in Cook County you have to wait for the second installment tax bill to come out in order to figure the whole year's taxes, since the first installment bill is always 50% of the previous year's taxes. 

This weird way of handling real estate taxes makes it difficult on sellers and buyers of real estate (and their attorneys).  Sellers of real estate typically give buyers a prorated credit at closing for real estate taxes, because the buyer will be receiving tax bills for time periods when he or she didn't own the home.  Determining the amount of this credit involves a LOT of guesswork and negotiation.  Do we assume that taxes will increase by 5%? By 10%?  By more (or by less)?

I belong to a transactional law e-mail group made up of members of the Illinois State Bar Association (ISBA).  Today, a Chicago attorney named Sherwin Abrams presented a thoughtful and fairly revolutionary post about these tax prorations.  Mr. Abrams' post also makes some interesting comments about the state of residential real estate transactions.  Mr. Abrams has graciously agreed to allow me to present his post in full -- here it is:

Why do we make such a big deal about prorating real estate taxes?  Would not life be simpler if we changed our practice so that the seller paid all taxes that were due and payable prior to closing and the buyer paid all taxes that become due and payable after closing?  In other words, let’s abolish prorations.

Not fair, you say.  It is the 2005 taxes that are paid in 2006, and the seller should pay the taxes that accrued while he/she owned the property.  But what’s in a name?   Does it matter  that we say that it is the 2005 tax that is being paid in 2006?  What if we call the tax that is paid in 2006 the 2004 tax or the 2007 tax?  The fact is that tax must be paid in 2006, and we do not expect there ever to be a year when there is no real estate tax.

Even if you hold to the fiction that we are always paying last year’s taxes so that it would be unfair to the buyer not to prorate, everything will even out when this year’s buyer becomes next year’s seller.  Not having received a credit when he/she bought, our buyer would not have to give a credit when he/she sells.

Even if you are not willing to eliminate prorations altogether, it does not make much sense to argue over the amount of the proration.  OK, you might agree, in most years taxes are not going to change all that much so that it costs more to make an issue of whether the proration should be at 105% or 110% than it is worth.  But what about years when the tax might increase by as much as 50%?  Yes, indeed, the buyer should be wary of buying when taxes might jump, but not just for the year of purchase.  The buyer should be concerned with whether he/she will be able to pay the taxes in all the years to come when that 50% increase will remain in effect.

No, I do not expect the bar to change its practice so that we can rid ourselves of this unnecessary complication to what used to be called a simple house closing, no more than I expect another of my proposals to be widely adopted: namely, that the buyer should choose and pay for his/her own title insurance just as the buyer chooses and pays for his/her own home inspector.

Let me warn you, though, that the residential real estate practice is broken.  Negotiations are too contentious; contracts are too complicated; mortgage documentation is too voluminous; closings take too long and are too stressful.  The entire process of buying a home is much too expensive.  If the lawyers and the brokers and the lenders and the title companies do not try to do something to simplify the process, the People, acting through their duly elected representatives, will.  And that will make matters even worse.

Sherwin D. Abrams (e-mail)
Abrams & Chapman
321 S. Plymouth Ct.
Suite 1200
Chicago, IL 60604-3996
312-360-9207
312-360-9212 (fax)

In two posts last year, I reviewed Gary Magnesen's book The Investigation (part 1 and part 2 of my review can be found here).  The book's subtitle gives an accurate description of what its author is trying to do: A Former FBI Agent Uncovers the Truth Behind Howard Hughes, Melvin Dummar, and the Most-Contested Will in American History.

Evidently Mr. Magnesen's work has reignited Mr. Dummar's interest in proving that Howard Hughes' so-called "Mormon Will" (which named Mr. Dummar as a 1/16th beneficiary) is authentic.  Yesterday's Wall Street Journal contains an article by Jonathan Karp entitled "Mr. Dummar Is Back, Taking Another Shot At the Hughes Estate."  The article -- which can be found here (subscribers only) -- states that Mr. Dummar has filed a lawsuit against two of Mr. Hughes beneficiaries (William Lummis and Frank Gay), and "alleges fraud, unjust enrichment and racketeering during the probate case... contend[ing], among other allegations, that Mr. Dummar was cheated out of a fair trial because Messrs. Lummis and Gay allegedly concealed evidence of Mr. Hughes's movements."  Many of Mr. Dummar's allegations are based on comments made by Robert Deiro in Mr. Magnesen's book.

My review of The Investigation details some of the problems with Mr. Dummar's (and Mr. Magnesen's) position:

1. Mr. Magnesen presents two potential (and mutually exclusive) ways to put Mr. Hughes on the road where Mr. Dummar allegedly rescued him (I refer to this rescue, which supposedly took place in 1967, as the "'67 Incident").  If Mr. Hughes was picked up in the desert after fleeing the Cottontail Ranch, then he couldn't have been picked up after leaving the Mizpah Hotel.  Similarly, if Mr. Hughes was picked up in the desert after leaving the Mizpah Hotel, then he couldn't have been picked up after fleeing the Cottontail Ranch.

2. Mr. Deiro's comments also raise some questions -- for instance, Mr. Deiro says he only recently learned about the '67 Incident from an AP newspaper article.  More importantly, Mr. Deiro's comments about Mr. Hughes' departure from the Cottontail Ranch strike me as bizarre -- consider this passage from pages 237-238:

"[Mr. Deiro] explained he wasn't very concerned [about Mr. Hughes leaving the Ranch] because, if his memory is accurate, he was told that Hughes had left with someone.  He doesn't recall who it was.  He explained he was more concerned about the possible loss of his job.

Deiro took off in the Cessna as the sun was breaking in the east. He circled the area a few times gaining altitude, but he didn't see Hughes wandering in the desert.... As a good-bye, he buzzed the brothel while laughing to himself as he knew the noise would stir those inside.

Deiro didn't know what to think about Hughes disappearing, but he never heard a word about the incident.  It turned out to be the last time Hughes spoke with him or flew with him.  Deiro says he didn't think much about the cold shoulder because most everything he had done for Hughes was strange and out of the ordinary.  He felt, "No news was good news."

If you took your boss to a brothel (which I don't recommend!) in the middle of the desert and awoke to find him gone, wouldn't you do a little more follow-up?  And if you were told that your boss had left with someone, why would you bother flying over the desert to look for him?

3. Mr. Magnesen believes that, if he can prove the '67 Incident actually occurred, then the Mormon Will must be authentic.  I'm not sure the two events should be connected in this way.  If the '67 Incident didn't occur, then perhaps we can assume that the Mormon Will is a forgery, since Mr. Hughes would have had no other way of knowing Mr. Dummar.  But I don't know if the converse is true; that is, I think that you still have to prove that the Mormon Will is authentic even if you have already proved that the '67 Incident occurred.

According to Mr. Karp's article, Mr. Dummar is represented by Albuquerque estate planning attorney Stuart Stein, who hosted Mr. Dummar and Mr. Magnesen on his radio show in January.  The article ends by stating that, if Mr. Dummar is successful with his lawsuit, Mr. Magnesen will collect 10% of the court award.  That fact raises a significant question about Mr. Magnesen's motives in writing his book -- is he uncovering The Truth, or a moneymaking endeavor?

I've spoken about the case of Lillian Glasser -- the New Jersey woman who was taken against her wishes from Florida to Texas by her daughter -- on a number of occasions:

1/4/06 (Thoughts on the Lillian Glasser Case)

1/10/06 (More on Lillian Glasser)

1/16/06 (Lessons from the Lillian Glasser Case)

2/14/06 (Lillian Glasser and the Second Power of Attorney)

My previous posts have focused on the probate litigation aspects of the case, as opposed to the guardianship aspects.  The reason for this is simple: it's impossible for me to have any kind of educated opinion about Mrs. Glasser's mental capacity.  I'm not a medical expert, and I haven't spoken with Mrs. Glasser, so rather than go Bill Frist on the situation, I'd prefer to remain silent. 

That being said, I have handled guardianships in the past, so I know about guardianship procedure.  I have continued to receive e-mails about the proceedings from Mrs. Glasser's son, Mark, and the thing that struck me was this: even if Mrs. Glasser "wins" in the guardianship proceeding, she has in a very real way "lost" because of the immense cost of the proceeding.

Mr. Glasser recently forwarded me an e-mail showing legal and related fees incurred by his mother in the Texas guardianship proceeding. 

Temporary guardian: $71,286

Attorney for temporary guardian: $33,955

Guardian ad litem: $98,856

Attorney for guardian ad litem: $164,375

Mediator: $10,887

Bookkeeping: $3,401

Guardianship accounting: $15,941

The total of the above amounts is $398,701. 

As Mr. Glasser notes, "[t]his is only fees not care for my Mother -- This does not include several hundred thousand dollars in expenses that have not yet been either considered or approved." It also doesn't include New Jersey temporary guardian fees and travel expenses, as well as attorney's fees.  These fees are currently pending in New Jersey and amount to about $125,000.

It's tricky business deciding whether a person is incapacitated and, if so, who should act as their guardian.  However, it can be done.  And it should be done fairly quickly, and with attention to the fees involved.  The fact that Mrs. Glasser has a lot of money doesn't mean that the parties to the guardianship proceeding should be allowed to siphon huge amounts of that money out of her estate.

Last week I posted a link to a satirical article about the estate tax.  In my post, I assumed that Clark Allison -- who had posted about how Karl Marx would have been in favor of the estate tax -- was also being satirical.  According to Mr. Allison, this was not the case.

It might surprise Mr. Allison to learn that I too am philosophically against the estate tax.  I see no reason why the government should try to topple family dynasties when (1) such social engineering rarely if ever works, and (2) family dynasties (usually via incompetent and/or lazy members of following generations) do such a good job of toppling themselves.  (Note that, if you run through the profiles of the wealthy families who are most actively lobbying for repeal -- like the ones listed in this pdf report on "The Campaign of the Super Wealthy to Kill the Estate Tax" -- you won't run across many first generation business creators.)

My philosophical objection to the estate tax is tempered by two interrelated points:

1. As The New York Times again pointed out in yesterday's magazine, under the current administration,  the budget deficit has risen from about $5.7 trillion (as of September 7, 2000) to more than $8.3 trillion today -- and projections indicate it will be about $12.8 trillion in a decade. 

I've read where some people believe the estate tax is immoral.  I guess morality is relative, because I tend to think that saddling my daughter and her children and grandchildren with increasingly enormous amounts of debt is a fairly huge moral failing. 

Mr. Allison states that "Like with all tax issues, it comes down to this: Who do you trust to make better use of your money - you and your family or the government?" But that's non-responsive -- this administration has already spent a ton of my money.  In fact, they've spent a ton of my money, and a ton of money they don't even have.  The question now is, who is going to pay for all of that spending?  "Repeal the estate tax" isn't an answer to that question.

2. To continue from above, if you want to repeal the estate tax, you have to show either that (a) doing so will not result in a loss of revenues or (b) the loss in revenues will be made up elsewhere.  I don't believe I've heard many people address either of these points.  Instead I've heard:

a. "Our polling says Americans hate the 'death tax.'"  Never mind the fact that pro-repeal folks have consistently distorted what the "death tax" is (even inventing a new name for it!) and who it affects when they do their polling.

b. "Farmers and small businesspeople are devastated by the tax!"  Of course, no one can locate any specific farmers who have been devastated. 

c. "The estate tax is bad because it affects too many people."  And yet the latest estimate is that about 13,000 estates will pay federal estate tax this year.

d. "The estate tax is bad because it affects too few people -- it just doesn't generate revenue!"  What about the huge predicted increases in estate tax revenues in the coming years? 

e. "The estate tax is bad because it causes people to want to make less money."  A tax that almost no one understands, that affects very few estates, is acting as some huge deterrent to the accumulation of wealth?  Is there evidence of any real, specific cases where this actually happened?  Do we have significantly fewer wealthy people now than we did before the estate tax was enacted?

f. "The estate tax amounts to double taxation!"  Except on all of that property that hasn't yet been subject to tax even once, of course.

g. "Look at all of the countries that don't have or have gotten rid of the tax."  Remember the Republican outrage over the Supreme Court's consideration of foreign law in Roper v. Simmons?  Evidently it has dissipated -- WWJD has been replaced with WWCD (What Would China Do?).

h. "Karl Marx liked the estate tax."  Yikes!  I don't even know what to say to that.

As I've stated previously, this isn't really an issue that impacts me professionally -- I did a lot of estate tax work back in my associate days, but about 1% (or fewer) of my current clients will have any sort of taxable estate.  I spend most of my days handling probate and probate litigation, or doing simple estate plans.

On a personal basis, though -- as a taxpayer and a citizen -- I'm just tired of the pro-repeal "arguments." If you don't like the estate tax because you think it's unfair to the rich, and you want to spread the revenue lost by the tax over the general population (by raising income tax rates, via a carryover basis regime, or something else), then just say that.  I'll probably agree with you.  But I'm sick of hearing ridiculous arguments (and even some outright lies) trotted out in an attempt to convince the American public of a course of action.  If we've learned anything over the past 4 years, it's that that kind of thing doesn't work.

Clark Allison's wonderfully satirical post on how Karl Marx would've loved the estate tax (it was supposed to be satirical, wasn't it?) now has some company -- check out The Swift Report's post entitled "'Death Tax' More Deadly than Gout, Polo Injuries Combined". My favorite part (besides the pictures):

In a recent survey, 43% of Americans said that they feared the death tax more than activist judges, Iranian President Mahmoud Ahmadinejad, gay migrants or fast-growing molds. Only an accidental plunge from a cruise ship or unwanted sexual advances from a female elementary school teacher incited greater fear among those surveyed. Sixty-four percent of respondents said they were "terrified" or "very anxious" about encountering misadventure on the high seas, while 57% said they worried about being hit on by a "hot" educator.

Many older people add another person (usually a child) as a joint tenant on their bank account.  The question when the older person dies is, did he or she have "donative intent" with respect to the account?  Put another way,...

1. Did the older person intend to make a gift of the account to the other owner upon the older person's death?

OR

2. Was the other owner simply listed as an owner for convenience (maybe it was easier for the other person to write out checks, make deposits, etc.)?

The recent case of In re Estate of Shea (from Illinois' Second District Court of Appeals) includes a lot of nice language talking about how to deal with the above issue.  I've tried to cobble this language into different statements to (hopefully) create an easy 3-step process for addressing the disposition of joint accounts.

Step 1: The Presumption of a Gift (Burden of Proof #1)

As the parties agree, when a sole owner of a bank account adds an apparent joint tenant to the account, the law presumes that the original owner intends a gift.... [T]he relevant presumption is that the joint account agreement alone governs the ownership of a joint account, i.e., speaks the whole truth.

Step 2: Overcoming the Presumption of a Gift - Convenience Accounts

A party challenging the presumption can overcome it only by clear and convincing evidence.... [C]lear and convincing evidence that the joint tenants had any understanding other than that in the joint account agreement can defeat the presumption that the joint account agreement speaks the whole truth.

Illinois authority treats evidence establishing that a joint account was used as a convenience account as overcoming the presumption of a gift....   A convenience account is an account that is nominally a joint account, but is intended to allow the nominal joint tenant to make transactions only as specified by, and on behalf of, the account's creator....  The typical purpose of such an account is to allow the nominal joint tenant to pay the true owner's bills while the true owner is unable to do so.  These cases reasonably assume that a person does not intend to give away the funds in the very account he or she relies on to pay bills.

Step 3: Burden of Proof #2

[O]nce the party challenging the ownership of the bank account has presented sufficient evidence to overcome the presumption of a gift, the presumption vanishes.... However, the burden of proof remains on the party challenging the ownership.... [That is, o]n meeting that first burden, [the challenging party] has the second burden of showing by the preponderance of the evidence that the estate is entitled to the accounts. 

Last year I posted a two-part series (part 1 and part 2) on statutory custodial claims. Here's a short summary of the law, adopted from one of my previous posts:

Section 18-1.1 of the Illinois Probate Act (which is referred to here as the "custodial claim law") expressly allows family caregivers to file what's called a "statutory custodial claim" against the estate of the relative to whom they provided care.

In order to take advantage of the custodial claim law, the family caregiver must have been a spouse, parent, brother, sister or child of the deceased person (referred to here as the "decedent"). Furthermore, the decedent must have been at least partially disabled, and the family caregiver must have dedicated himself or herself to the care of the decedent by living with and personally caring for the decedent for at least 3 years.

The custodial claim law even goes so far as to set minimum amounts to be awarded for a claim, depending upon the extent of the decedent's disability:

Extent of Disability		Minimum Claim Amount
100% 75% 50% 25%		$100,000 $75,000 $50,000 $25,000

So, for instance, if a family caregiver meets the criteria set forth above and the decedent had a 100% disability, then the family caregiver is entitled to at least $100,000.

One of the trickiest aspects of statutory custodial claims is the fact that there isn't much caselaw on them.  As a result, practitioners are often left wondering what the statute means when it says (to take one example) that the claimant "must have dedicated himself or herself to the care of the decedent by living with and personally caring for the decedent for at least 3 years."

The recent Second District Appellate Court case of Estate of Lower sheds at least a little light on this question.  The claimant in Lower (the decedent's wife) filed a statutory custodial claim against her husband's estate.  The executor of the estate argued that the claim was barred because the claimant didn't provide all physical care to the decedent -- instead, she sometimes supervised or oversaw the care provided by other individuals.

The court, citing with approval the case of Estate of Jolliff (199 Ill. 2d 510, 526 (2002)), stated the following:

...[T]here is no language in the statute indicating that, in order to qualify under section 18--1.1, the claimant must have provided all physical care to the deceased.  In fact, our supreme court has indicated just the opposite by declaring that to succeed in a section 18--1.1 claim, a claimant need not have been the exclusive caregiver.  See Jolliff, 199 Ill. 2d at 527 ("more than one immediate family member may make a statutory custodial claim if more than one meets the requirements of section 18--1.1"). Accordingly, we reject petitioner's argument that the statute requires that a successful claimant must have provided all care to the deceased.  For the same reasons, we also reject petitioner's argument that under section 18--1.1 the care provided must have been physical in nature.

Thanks to Patricia Brosterhous, the author of IICLE's "Estate Planning and Probate Law Flash Points," for pointing out this case in the June edition of her newsletter.

This month's IICLE Ethics Flash Points newsletter (written by Terrence P. McAvoy and Thomas P. Sukowicz of Hinshaw & Culbertson) presents an interesting case involving a probate attorney and a potential disciplinary violation.  The case is from New Hampshire, and is called In re Lane -- it's published at 889 A.2d 3.

Lane represented Dick, the executor of Robert's estate (Dick was also Robert's son).  After the estate was closed, Lane found out about a life insurance policy on Robert's life.  The policy was payable to Robert's surviving spouse (Jane), but Dick deposited it into a joint account owned by him and Jane.

Lane gave information about Dick's disposition of the insurance policy to the attorney for Robert and Jane's daughters, who was preparing a petition to remove Dick as Jane's guardian.  Dick's attorney reported Lane to the New Hampshire Supreme Court's Committee on Professional Conduct.

Did Lane do anything wrong?  According to the court, he didn't, because of New Hampshire Rule of Professional Conduct 1.6, which governs attorney-client confidentiality.  The Rule is as follows:

(a) A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation, and except as stated in paragraph (b).

(b)  A lawyer may reveal such information to the extent the lawyer reasonably believes necessary... to prevent the client from committing a criminal act that the lawyer believes is likely to result in death or bodily harm or substantial injury to the financial interest or property of another.... (emphasis added)

Unfortunately, a different result would be reached under Illinois' Rule 1.6, which provides an exception under 1.6(b) only "to the extent it appears necessary to prevent the client from committing an act that would result in death or serious bodily harm" -- Illinois doesn't have an exception for injury to someone's financial interest or property.  In other words, if I (as an Illinois attorney) had done what Lane did in the above case, I would be subject to discipline by the Illinois Attorney Registration and Disciplinary Commission.  That doesn't seem so fair, does it?

I try to address the issue of confidentiality when I enter into an engagement with an executor or administrator.  I require my clients to consent to my release of otherwise confidential information if it indicates that the clients engaged in wrongdoing.  Of course, this language appears to be ineffective, since Illinois Rule 1.6(a) prevents me from revealing client information "unless the client consents after disclosure" (emphasis added).

I've written extensively about ghostwritten blogs, most recently here and here.  Evidently the use of canned content isn't just limited to blogs.  In this month's issue of the IICLE Law Office Technology Flash Points newsletter, Alan Pearlman extols the virtues of a product called Custom WebExpress, which is put out by a company called NextClient.com.  Mr. Pearlman describes Custom WebExpress as "a unique product that allows you to instantly launch and manage a custom law firm website and includes practice-specific articles that feed directly into your website every week."  In other words, you are buying website content from NextClient.com.  As Mr. Pearlman puts it, "Like most lawyers, I need to spend most of my time performing billable tasks. However, this does not negate the need to keep my website updated with fresh information. Another way NextClient helps me is by including practice-specific content on my site that updates every week with newsletter articles my clients can understand and appreciate, and believe it or not, is included as part of the basic $99-a-month Custom WebExpress product."

I e-mailed Mr. Pearlman about my concern regarding the use of canned content.  I've said it before, but maybe it's worth saying again:

Simply put, if you are using a website to market your practice, then you are at least in some way trying to convince potential clients of your legal abilities.  Posting articles you have written is one way to do this.  Posting articles someone else has written doesn't accomplish much, although I've heard it argued that you are at least assisting the public by disseminating legal information.  The big problem arises when you use canned content and don't identify it as such -- that strikes me as an attempt to mislead potential clients about your knowledge and abilities.

Last year I blogged about the Printers Row Book Fair in downtown Chicago.  The Book Fair is taking place again this weekend and the speakers include some law-related authors:

Scott Turow (author and partner at Sonnenschein Nath & Rosenthal) today at 3:30 p.m. at the Harold Washington Library, talking with Elizabeth Taylor (the co-author of the excellent American Pharaoh, not the actress).

Judge (and blogger) Richard A. Posner today at 4:00 p.m. at the University Center Lake Room.

Jonathan Alter speaks with Sidley & Austin's Newton "Vast Wasteland" Minow at 2:00 p.m. tomorrow (also at the University Center Lake Room).

Other authors appearing include E.L. Doctorow (discussing The March) and Augusten Burroughs.  Full details are available here.

Thanks to the magic of Vicodin, I seem to be recovering fine from yesterday's surgery -- thanks to everyone who wished me well.  With any luck, my "hyena" should be better in no time.

This was the first opportunity I've had to submit the health care power of attorney I drafted for myself a couple of years ago.  I mentioned this fact to my nurse, and she told me, "Gosh, I really need to get one of those."  Talk about the cobbler having no shoes!