Death and Taxes Blog

I finally finished reading James Joyce's Ulysses yesterday, and boy, is my brain tired!  It's not always fun to read, but I think it's a great book, and a book that really rewards in-depth study.  Let me give an example relating to (appropriately) probate and Wills.  (Page numbers below are to The Gabler Edition of the text.)

The story centers on two characters, Leopold Bloom and Stephen Dedalus.  Throughout the book similarities between the two characters often become apparent (such as: each has rejected the religious beliefs of a parent; each is in some sense homeless because he is without his key and has been rejected by his "roommate"). 

Bloom and Dedalus finally meet near the end of the book, and in the Ithaca chapter, written in a style Joyce referred to as a "mathematical catechism", we (and they) learn of another link between the two (page 556):

Did their conversation on the subject of these reminiscences reveal a third connecting link between them?

Mrs. Riordan (Dante), a widow of independent means, had resided in the house of Stephen's parents from 1 September 1888 to 29 December 1891 and had also resided... in the City Arms Hotel... where, during parts of the years 1893 and 1894, she had been a constant informant of Bloom who resided also in the same hotel....

Apparently Bloom performed "special corporal work of mercy" for Mrs. Riordan: "[h]e had sometimes propelled her on warm summer evenings... in her convalescent bathchair with slow revolutions of its wheels as far as the corner of the North Circular road opposite Mr Gavin Low's place of business...."  (pages 556-557) We also find out that one of Bloom's memories of Mrs. Riordan is of her "suppositious wealth."  (page 557)

Was Bloom attempting to ingratiate himself with Mrs. Riordan so that he might be named as one of her beneficiaries?  It certainly seem so.  Here's Molly Bloom, Leopold's unfaithful wife, talking about Mrs. Riordan in her famous soliloquy in Penelope, the book's last chapter (page 608 -- I've added forward slashes to make it easier to read):

Yes/because he never did a thing like that before/as ask to get his breakfast in bed with a couple of eggs/since the City Arms Hotel/when he used to be pretending to be laid up with a sick voice/doing his highness to make himself interesting for that old faggot Mrs Riordan that he thought he had a great leg of/and she never left us a farthing/all for masses for herself and her sould/greatest miser ever was...

A couple of notes here:

1. "Faggot" is being used here as a term of abuse or contempt applied to a woman.

2. "Had a great leg of" apparently means something like "had the favor of."

The book is more explicit about Bloom and Mrs. Riordan in the Circe chapter.  This chapter is written like a play and, according to Vladimir Nabokov (pretention alert!), represents not the dreaming of any one character but instead shows that the book is dreaming.  In the chapter Bloom is put on trial for his various "crimes" (mostly perversions), and Mrs. Riordan makes a brief appearance:

MRS RIORDAN

(tears up her will) I'm disappointed in you! You bad man!

This morning's Ask Amy column (available without registration through the Washington Post, here) addresses  prenuptial agreements.  Here's a portion of the question:

I am engaged to a woman whom I have been dating for 18 months. We plan to get married next year. We each have children from previous marriages, are 50 years old and are well-paid professionals. I am financially secure, and she is tens of thousands of dollars in debt because of poor spending habits.

I told my fiancee that I want a prenuptial agreement. I will ay off a portion of her debts and take care of all of our common living expenses -- housing, cars, food, utilities, insurance, etc., so that she can pay off her debts with her income, then put away some savings for herself. We will keep our finances separate. I can do whatever I see fit with my money; she can do the same with hers.

I told my sons about my marriage plan and my intention of leaving them a portion of my money if something happens to me. I will also leave some to my fiancee and some to my ex-wife to give her a bit of a financial safety net should she need it....

When my fiancee found out what I told my sons, she became very upset. She bitterly complained that it was not fair to her and that she was being slighted. I have no doubt that she loves me, and I love her. We really do enjoy being with each other.

I do think that she is not being gracious enough.

I think Amy's answer is a good one.  Prenuptial agreements are a negotiation, and involve two parties.  There is no way a prenup (or a marriage?) is going to work if the one party makes all the decisions and forces them down the other party's throat.

When I was a young associate, I handled an estate involving a number of charitable beneficiaries.  Under the decedent's Will, money was also to go to a charity that didn't exist (something like the Pet Society of Chicago), which raised all sorts of questions about the decedent's intent.  Most of the other charities agreed that the money should go to another of the animal-related charities mentioned in the decedent's Will, but one charity (we'll call it ARThur's Institute) resisted.  Essentially, their argument was, "we're not going to leave money on the table -- we want a share of the money that was to pass to the Pet Society of Chicago, even if we're not entitled to it."

I was reminded of that case when I read this article, about the UW (University of Wisconsin) Foundation and the estate of Harold Mennes.  The timeline is fairly clear:

1996: Mr. Mennes executes a Will leaving most of his estate (about $800,000) to UW.  In the Will, he disinherits his daughter, Mary Ellen Jenson, from whom he was then estranged.

2000: Mr. Mennes and his daughter reconnect and are close until Mr. Mennes' death.

2001: Mr. Mennes, in a letter that was notarized and witnessed, leaves his daughter $100,000 from an investment account upon his death.

2004: Mr. Mennes dies.

Did the letter constitute a codicil (amendment) to Mr. Mennes' 1996 Will?  What about the fact that Mr. Mennes got rid of the investment account before he died?

This case was finally settled, although the UW Foundation's tactics have been criticized by the administrator of the estate.   As the article puts it:

The case highlights a dilemma for nonprofit groups: how hard to pursue money they believe is theirs. Fight too hard and they risk antagonizing potential donors, but too soft might mean they lose money for their cause.

Blogging will be light the rest of the week, so as not to interfere with my turkey brining, pie making, etc. etc. 

But before I go, let me share my Top 5 recent searches by which people wound up at this blog:

steven+spielberg+cheated+on+amy+irving

health+references+in+shakespearean+plays

federline+prenup+arrangement (and numerous variations thereon)

dumb+laws+in+Virginia

how+can+the+probate+system+be+abused

Once a probate estate is opened, is there any timeframe for getting it closed?  Generally, the answer is no.  Each estate's timeframe is going to vary depending on whether there's litigation, whether an estate tax is due, and other similar factors.  Of course, judges LOVE to dispose of estates, and are always moving the attorneys toward the end of the process. The desire to wrap up estates has led the Cook County Probate Court to require a 14-month "checkup."  Essentially, when you open a probate estate in Cook County, you also have to set up a date -- approximately 14 months later -- on which the estate representative will (1) file a final report, (2) file an accounting, or (3) appear in court to explain why the estate is still open.  The hope is that this provision -- which is found in the court form for an order appointing an executor (paragraph 4), but which also applies in cases of intestacy -- will light a fire under estate representatives and their attorneys.

One of the most essential elements of a probate -- the death of the person whose estate you are trying to open -- requires no outside proof under Illinois law.  Instead, the petition for probate includes a statement by the petitioner that the person died, along with the particulars (where, when).

But what if you aren't sure whether the person died?  In some cases, facts and circumstances can create a presumption of death.  Illinois law has specific procedures for handling these cases.  Section 6-20 of the Illinois Probate Act addresses a petition to admit will to probate on presumption of death of testator; §9-6 deals with the same issue in the case of a person who died without a Will (i.e. intestate).

Bankrate.com has a nice article (here) summarizing what an in terrorem (or "no contest") clause can do for you:

The in terrorem provision, known less formally as a "no-contest" clause, is a paragraph or more of legal boilerplate aimed, as its Latin name implies, to scare off legal challenges by heirs who don't feel they've been given their fair shares of               the enchilada.

In essence, the provision states that if you contest this will or trust, you forfeit your inheritance. In fact, to continue with the spooky theme, typical language instructs the court to consider contentious heirs as having died childless before the deceased.

The article also presents some interesting differences in state laws.  Evidently in terrorem clauses are not recognized (or enforced) by Florida courts, and in a few states you can actually have your Will declared valid while you are still alive.

I previously blogged about in terrorem clauses here.

Section 9-3(j) of the Illinois Probate Act allows a decedent's creditor to act as the administrator of the decedent's estate (but only if there's no one else able and willing to act).  I don't know of many cases where a creditor would want to assume this burden, but it's important to realize that, in doing so, the creditor-administrator assumes all of the regular duties of an administrator.  For instance, the creditor-administrator owes a duty to ALL beneficiaries and creditors of the estate, not just himself.  That includes a duty to maximize the value of estate assets.  A funeral director in Connecticut who was named administrator of a decedent's estate (presumably to get his own bill paid) ran into problems with this issue, as described here:

Bridgeport Probate Judge Paul J. Ganim made clear Monday that he plans close scrutiny of Coventry funeral director Kevin K. Riley's administration of an estate in which a deceased woman's home was sold for $175,000, then resold less than four months later for $305,000.

On an almost daily basis I hear stories about how this grandson or that daughter walked off with a decedent's property immediately after the decedent's death.  The biggest problem in most of these situations is one of proof -- you may know what grandson or daughter did, but can you prove it?  The executor in this case went to the police, who quickly connected the dots in the case of grandma's missing furniture:

The antique furniture was reported missing from the residence of the late Margaret Christian, 208 Center Ave., Surgoinsville [Tennessee], on Nov. 6 by the executor of her estate, her son Elbert Christian Jr.

Surgoinsville Police Department Officer Scott Fink said he interviewed Elbert Christian, who suspected that the burglary might have been committed by a relative. Fink said it was just by chance that the next relative he interviewed, Christopher Todd Christian, 34, 2114 Main St., Surgoinsville, admitted to taking the furniture with two accomplices.

Fink said he then went to speak to the two alleged accomplices, Mike Thomas Head, 54, and Ronald Keith Nunley, 48, both of 114 Henderson St., Surgoinsville, at their home and found the majority of the stolen antique furniture there.

The three men were arraigned today.  Bravo to the executor, for not letting the grandson get away with this, and bravo to the police for pursuing the wrongdoers.

I took in the new Will Ferrell movie, Stranger Than Fiction, over the weekend.  I don't want to give too much away, but the movie's plot centers on a novel entitled Death and Taxes, whose main character is an IRS agent. 

The film is kind of like a mashup of The Truman Show and a (more accessible version of a) Charlie Kaufman movie.  I liked the "debate" between good art and living a good life, although I felt like the film didn't make a lot of sense, and wasted some of its actors (especially Queen Latifah).  I'd probably give it 6 stars out of 10.

Also interesting: the movie was filmed entirely in Chicago.

I previously blogged (here) about how claims can be barred if they are not filed in a timely manner.   It would appear from the case of  In re McBride's Estate (249 N.E.2d 266, 110 Ill.App.2d 200 (Ill. App. 1 Dist., 1969)) that the claim statutes of limitations do not apply if the U.S. Government is the claimant.

McBride involved a claim filed by the IRS against an estate.  The claim was filed after the expiration of the 9-month claims period, but the Court allowed the claim, since "it is well settled that the United States is not bound by state statutes of limitation."  I presume that the same rule would apply to a claim filed after the 2-year claim I discussed in the above post.

Thanks to Patrick S. Sylvester for bringing this case to my attention on the ISBA Listserv.

Against my better judgment, I'm hitting you (baby!) one more time with information about the Britney Spears - Kevin Federline premarital agreement.

The Smoking Gun has this re-post of the couple's agreement re. their September 18, 2004 "faux" wedding ceremony.  What in the world is that? Some details:

At the time, Spears and Federline apparently were itching to get hitched, though negotiations over their pre-nuptial agreement had yet to be finalized. So the couple brought in the lawyers to draft a separate document regarding their planned "faux" marriage and "alleged" wedding ceremony. With no prenup in place, the couple signed the agreement--which was first obtained by Us Weekly--in advance of their purported September 18, 2004 "wedding." They agreed that their blessed union would not be legally valid until the pair later finalized details of Federline's dowry. In her divorce petition, Spears lists October 6, 2004 as the date of her marriage to Federline.

So the timeframe looks like this:

September 14, 2004: "Faux " wedding agreement is signed.

September 18, 2004: "Faux" wedding takes place.

October 6, 2004: Actual wedding takes place.

We still don't know when the prenup was signed, although I've heard it was the day of the wedding (which one?).

There has been speculation that the faux wedding/real wedding stuff was necessary to avoid problems with prenup validity under California law.  The section of the California Family Law code governing premarital agreements can be found here.  Note the language of §1615(c)(2), which requires that:

The party against whom enforcement is sought had not less than seven calendar days between the time that party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed. (Emphasis added)

So, it may have been that the couple intended to marry for real on September 18, 2004, but Mr. Federline wasn't given a draft of the premarital agreement and advised to hire an attorney until September 12th or even later.

A couple of other points:

1. The Smoking Gun's statement that the couple "agreed that their blessed union would not be legally valid until the pair later finalized details of Federline's dowry" may be funny (K-Fed has a hope chest?), but it really isn't accurate.  The September 18 agreement says that the parties intend to sign a prenup, but it doesn't make the wedding conditional upon a prenup.

2. Courts have traditionally hated to enforce premarital agreements in cases where there is unequal bargaining power between the spouses.  This reluctance stems from the fear that the "poor" spouse is under duress to sign the agreement.  I think this provision from the September 18 agreement may be an attempt to solve this problem while actually making things worse:

KEVIN waives the right to allege at a later date that he was under duress in entering into a Cohabitation/Prenuptial Agreement in the future before a valid wedding between the parties as a result of their "faux" wedding ceremony on September 18, 2004.

Would you as a judge give any weight to a statement by Mr. Federline that he wasn't under duress when he signed an agreement he hasn't yet signed, but plans to sign in the future?  I certainly wouldn't.

And by again, I mean "split up with someone" -- in this case, husband Kevin Federline.  You'll remember that Ms. Spears' union with Mr. Federline came soon after her quick marriage to Jason Alexander (childhood friend, not the pear-shaped "Seinfeld" star) was annulled.

This article on Ms. Spears' divorce plans suggests that her prenuptial agreement played a big role in the timing of the divorce:

She filed [for divorce] two years and one month from the day of her marriage, on Oct. 6, 2004. Her prenup, according to legal theorists, evidently carried increases for Federline for every year of their marriage. And those deadlines, they say, likely had 30-day grace periods.

Hence, Nov. 6 would have been Britney's last chance to get out of paying a third year of alimony settlement to a basically talentless slacker who was a drain on her finances.

I love the term "legal theorists" -- makes it sound like there's a thinktank somewhere with folks pondering the terms of various prenups.  However, if I was a member of such a thinktank, I would point out the following (which I previously reported here):

There's also a question of whether Britney Spears' prenup with Kevin "K-Fed" Federline would be invalidated if the two divorced -- the prenup was signed on the day of their wedding (a definite no-no).  The prenup appears to have so confused and disoriented Mr. Federline that he wound up wearing a tracksuit with the words "Pimp Daddy" on the back to the actual ceremony.

Chapel Hill, North Carolina-based attorney Gregory Herman-Giddens has started the North Carolina Estate Planning Blog.  Mr. Herman-Giddens' blog looks like it is off to a nice start.

Dahlia Lithwick of Slate is one of my favorite legal writers, and she has a nice article (here) about Virginia's proposed state constitutional amendment, by which the state would "refuse to recognize any legal arrangement between 'unmarried individuals'—gay or straight—that confers marriagelike benefits."

The article mentions a "70-page memo detailing the unanticipated legal consequences of the gay marriage amendment," consequences that might include (among other things) "nullifying trusts, wills, and medical directives between unmarried couples."  The actual memo can be found (in pdf format) here.  Pages 52-56 address trusts and Wills; pages 56-61 talk about medical directives.  A summary of what the constitutional amendment could do in the areas of trusts, Wills and medical directives:

-increase the amount of litigation by family members seeking to overturn an unmarried individual's ability to leave property to his or her partner;

-allow courts to decide that leaving property to your partner (or naming your partner as your agent in a power of attorney) is a "marriagelike benefit," and therefore shouldn't be allowed.  This would make your Will, trust or power of attorney (or certain provisions thereof) invalid; and

-allow courts to decide that a gift of property to your partner (or naming your partner as your agent in a power of attorney) is void on public policy grounds.

Keep in mind that these problems aren't limited to same-sex couples -- they would seem to apply to unmarried heterosexual couples as well.

The term "Kafka-esque" tends to be overused, but it's probably an appropriate description for the case of Patrick White.  Mr. White, Australia's only Nobel Prize winner for literature (in 1973), died in 1990.  According to this article,

if White's wishes - as expressed in his will - had been followed, all his unfinished work was to be burnt after his death.

But... the author's literary executor Barbara Mobbs just couldn't do it.

Mr. White's personal papers have now been acquired by The National Library of Australia.

The article goes on to list other similar cases where a writer's work wasn't destroyed even though that was the writer's wish -- a list that includes Hemingway, Orwell, Dickinson, Nabokov, Maugham and, of course, Kafka (whose case I discussed briefly here).

Yesterday I talked a little bit about conflicts of interest.  Today, I wanted to make a couple more points.

I think (1) planning ahead and (2) communication are the most important skills an attorney can employ when considering conflicts of interest.  Many of my conflict of interest issues arise in connection with probate litigation.  For instance, if I represent two beneficiaries in an action against the trustee, I need to consider -- from the beginning of the representation -- what happens if the beneficiaries can't agree on a course of action, and discuss this possibility with the beneficiaries so there is no confusion.

Another possible conflict exists in cases where I represent multiple generations of the same family (for instance: mom and dad, and daughter and her husband).  As I said yesterday, I do not keep secrets between spouses -- anything one spouse tells me can be conveyed to the other spouse.  But that isn't the case in a multi-generational representation, and I make this clear from the get-go.  (I also get the consent of the existing client -- usually the parents -- to represent the new clients.) As a result, if mom and dad decide to disinherit daughter in THEIR estate plan, I can't and won't say anything about this to daughter when I prepare HER estate plan.  Is this a hindrance to my work as attorney?  I don't think so, since I always tell my clients not to plan on an inheritance. 

Last year I talked briefly (here) about ethical conflicts in representing a husband and wife.  I was reminded of this post by something Professor Beyer wrote about at his blog yesterday, here.  Professor Beyer's post discusses an attorney who represented spouses in their estate planning, and later prepared a new Will for the wife (a Will in which she disinherited her husband).  The attorney was reprimanded, although there are some pieces missing in the disciplinary report (why was the husband an ex-client?).

What disturbs me is Professor Beyer's introduction to the post, in which he says that "[d]espite repeated warnings of the risks associated with representing both spouses in preparing an estate plan, many attorneys continue the practice."

Here's how I see it:

1. It's not "many attorneys" who continue the practice of representing both spouses in preparing an estate plan -- it's pretty much every estate planning attorney in America.

2. That being said, there are obvious cases where such representation should be stopped after it's started (or shouldn't be started at all) -- the husband and wife seem at odds about the disposition of their property from the outset, one spouse attempts to disinherit the other, etc.

3. The issues mentioned in 2 above can be solved quite easily through the use of an engagement letter that spells out the potential conflicts, and talks about what happens if conflicts actually occur.  The letter should also detail how (or whether) information will be shared by the attorney with each spouse.  I take the approach that anything one spouse tells me can be conveyed to the other spouse.  Other attorneys favor the "priestly" approach -- all confidences are kept.  It doesn't matter which approach you choose, as long as the clients understand and consent to it.

4. "Potential conflicts" are just that -- potential conflicts. For the large majority of married couples, hiring two separate estate planners makes no sense whatsoever.   

5. Most people don't like paying for estate planning, but it's much cheaper to hire one estate planner to do the job for both than to hire two separate estate planners.  In my experience, no one wants to do that.

6. The case discussed above isn't an example of the dangers in representing a husband and wife -- it's an example of the dangers in not dealing with a conflict between clients when it arises.