April 30, 2007

Claims Vs. Citations

Claims and citations are both meant to deal with a situation where you have a potential right to something in the possession of a deceased person or his or her estate. What's the difference?

A claim is filed when a decedent owed you money. For instance, credit card companies and mortgage companies file claims when a person to whom they have loaned money passes away. Similarly, if you loaned a friend $5,000 and the friend dies before paying you back, then you have a claim against the friend's estate.

A citation is filed when a decedent was holding property belonging to you at the time of his or her death (and vice versa -- a decedent's estate may file a citation against you if it believes you were holding property belonging to the decedent when the decedent died). In many citation cases, we aren't talking about a particular piece of property -- "hey, the estate has a car that belongs to me!" -- but are talking about a TYPE of property. Maybe the decedent was an attorney and overbilled you for fees (or is holding a personal injury settlement in his client trust account). You're trying to get that property back, and have the court rule that it belongs to you. In some cases, you may believe property belonging to you is being held by the estate, but you don't know how much. That's why the citation process has two steps: (1) citation to discover information (like discovery -- enables you to find out what the estate has) and (2) citation to recover assets (asks the court to rule that the property belongs to you).

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Probate Litigation

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April 27, 2007

Dr. Atkins Trust Litigation

Bread-hating diet guru Dr. Robert Atkins died in 2003, but his trust lives on, and is now the subject of some juicy (greasy?) litigation. Today's Wall Street Journal has the scoop here (registration is required).

After Dr. Atkins' death, his widow (Veronica) became very depressed. She also had a huge amount of money to deal with, and no bank or trust company acting as adviser. Instead, Ms. Atkins turned to three individuals she referred to as "The Three Musketeers" -- a "self-described entrepreneur" (yikes!), an accountant, and a lawyer. Mrs. Atkins had the three appointed as trustees of the marital trust created for her benefit, and officers of her husband's foundation. She also...


-agreed to pay each of the men $1.2 million per year, including some money out of her own pocket (since their salaries "exceeded statutory limits on trustee commissions");

-signed them to 10-year contracts with built-in extensions which the three now claim "made them employees for the rest of her life"; and

-allowed each of them to purchase a $5 million life insurance policy on her life, with themselves as beneficiaries.

Is it just me, or does something smell here? Is that a hamburger fried in bacon grease, hold the bun, or something else? Something rotten smelling?

Anyway, the relationship has now gone downhill, possibly because of the presence of Ms. Atkins' new husband, Alexis Mersentes, "a Palm Beach socialite who opposing lawyers call an 'opportunist skilled in the art of seduction'". The Musketeers say that their positions were terminated improperly. Ms. Atkins says that the three took part in self-dealing and waste with respect to trust assets (a press release, here, details the citation proceeding -- that's a first).

Meanwhile, my sourdough starter survived the Atkins Diet craze, and is resting comfortably in my fridge, subject to my removal of a cup or two every week or so to make some bread.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Estate Plans of the Rich and Famous

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April 25, 2007

More on Divorce and Estate Planning

I recently blogged (here) about the effect of divorce on a person's estate planning documents. That post referred to a testator's divorce from his or her spouse, but there's also a different way in which divorce can affect your estate plan. Every family is different, but in some close-knit families a spouse of a family member (like a sibling's spouse) is named as a fiduciary or even a beneficiary. For example: you name your sister's husband as successor executor and trustee, and name him and your sister as guardians of your children if something happens to you and your husband.

That's admirable, but it's important to think about whether you'd still want to have someone named in your estate planning documents if the person ceases to be married to your family member. For instance, you might want to make your sister's husband a fiduciary only so long as he is married to your sister (or was married to your sister at the time of her death).

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Estate Planning

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April 23, 2007

Sibling Agreements About Parental Care

"Family settlement agreements" are one of those great ideas that rarely get used. The concept is that the family (parents and kids) sits down and discusses what will happen after the parents pass away, and everyone agrees to accept the way in which the parents' estates or trusts will be handled.

This article covers a similar concept, but involves siblings agreeing on the care for a parent if he or she becomes incapacitated. This type of sibling agreement can cover issues such as "where Dad will live [if he is incapacitated], how his savings will be spent and even how he will die."

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Estate Planning

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April 13, 2007

Estate Disputes Among Fairies

I'm currently reading The Ladies of Grace Adieu and Other Stories, written by Susanna Clarke. Ms. Clarke is the author of Jonathan Strange & Mr. Norrell, one of my favorite books of the past few years. Ms. Clarke's work is like an alternative history of England, where magic and fairies are real. The Ladies of Grace Adieu is a collection of short stories in the same vein as Jonathan Strange (who, along with his partner, appears in one of the stories).

Surprisingly, one of the stories -- "Mr Simonelli or The Fairy Widower" -- contains a passage where the (seemingly half-fairy) narrator, Mr. Simonelli, and the fairy John Hollyshoes discuss a fairy estate dispute involving Mr. Simonelli's father:

Then [John Hollyshoes] began to speak of how my father's affairs had been left in great confusion at his death and how, since that time, the various rival claimants to his estate had been constantly fighting and quarrelling among themselves.

"Two duels have been fought to my certain knowledge," he said, "and as a natural consequence of this two claimants are dead. Another -- whose passion to possess your father's estate was exceeded only by his passion for string quartets -- was found three years ago hanging from a tree by his long silver hair, his body pierced through and through with the bows of violins, violoncellos, and violas like a musical Saint Sebastian. And only last winter an entire houseful of people was poisoned. The claimant had already run out of the house into the blizzard in her nightgown and it was only her servants that died.,,,

As you can tell, Ms. Clarke's writing is a bit of an acquired taste, but if you enjoy historical fiction and tales of the fantastic, you might want to give her a try.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Book Notes

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April 11, 2007

The Andrew Kissel Estate: Another State v. Federal Problem?

You may remember the case of Andrew Kissel, which I discussed here and here.

A quick refresher (taken 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....

Now, according to this article, the attorney for Mr. Kissel's estate is running into problems as well:

A motion filed by two creditors, Fidelity National and Chicago Title Insurance companies, asks that Patrick Gil, appointed to handle Kissel's heavily indebted estate, be held in contempt and blocked from using $235,682 gained by the sale of Kissel's interest in Epona Stables to pay his [Kissel's] ex-wife an allowance awarded in Greenwich Probate Court.

The motion, filed in U.S. District Court in Bridgeport, complains that Gil violated a 2005 federal court order giving the two companies the right to garnish Kissel's assets up to $10.3 million, according to court records.

The problem appears to be that Mr. Gil has an obligation to comply with the probate court order giving Mr. Kissel's wife an allowance. The article goes on with the following:

Furthermore, the money in question was generated by selling Kissel's half-interest in Epona Stables on Riversville Road, which a state Superior Court judge had ordered be distributed through the Greenwich Probate Court, [Mr. Gil's attorney, David] Moger said.

"Mr. Gil is caught between conflicting orders," Moger said. "As an administrator he has relatively little decision-making power and does things at the direction of the probate court. I have been looking in vain for an order which he directly violated."

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Probate Litigation

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April 9, 2007

Per Stirpes vs. Per Capita

"Per stirpes" and "per capita" are two terms that often appear in estate planning documents. What do they mean?

Both terms relate to a situation where you leave property to a group of people, some of whom die before you do. For instance, let's say that you have five children. Four of your children survive you; one of your children (Stanley, who has five children of his own) predeceases you.


PER CAPITA

You could leave your property "in equal shares per capita to my descendants who survive me." In this case, nine equal shares will be created, one for each living descendant (so one for each child of yours, and one for each child of Stanley). That overcompensates Stanley's children for their father's death, doesn't it? More than 50% of your property would pass to that family line.

Another option used in bigger families would be to leave your property "in equal shares per capita to my children who survive me." Here, only four shares are created, and no share is created for Stanley (he didn't survive) or his children (they aren't your children). Doesn't this undercompensate Stanley's children?

PER STIRPES

If you have left your property "in equal shares per stirpes to my descendants who survive me" in your will, then your property will be divided into five equal shares. Each surviving child receives a share, and Stanley's five children each receive one-fifth of his share.

If Stanley predeceased you but didn't have children of his own living at your death, then only four shares are created.

I think the preference of most estate planners is in favor of "per stirpes." "Per capita" is like a bowl of porridge, and can be "too hot" or "too cold." "Per stirpes" may not be "just right," but I think it's closer to what most decedents want to do.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Estate Planning

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April 6, 2007

"Little Sweetie" and Probate on Presumption of Death

Sixty-nine-year-old pigtailed billionaire Nina "Little Sweetie" Wang died this week of cancer. The circumstances surrounding the death of her husband Teddy were far more unconventional. According to this article, "Teddy was kidnapped in 1990 and was nine years later declared dead after no trace of him was ever found. After his disappearance, his wife inherited his fortune."

There were also allegations that "Little Sweetie" had forged Teddy's Will.

The Illinois Probate Act contains (here) provisions for admitting a person's Will to probate on the presumption of his or her death. There's a similar provision (here) for a presumably deceased person who didn't have a Will.

Posted by Joel A. Schoenmeyer | | Email This Post

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April 4, 2007

Northern Trust Formbook Online

In this month's Estate Planning & Probate Flashpoints newsletter from IICLE, Patricia Brosterhous mentions that the Northern Trust's estate planning formbook is online, here. Most estate planners I know have their own way of drafting things, but it's always nice to take a look at other approaches. My favorite thing about these forms is that they include notations, explaining why provisions are included and how they can be changed.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Estate Planning

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April 2, 2007

"The Office" on Negotiation

Last season I blogged about the "The Office" and its take on conflict resolution (here). This week's episode (Thursday, April 5th at 7:00 CST) is in the same vein:

SALARY NEGOTIATIONS DRIVE MICHAEL TO THINK ABOUT HIS OWN PAY - Darryl (Craig Robinson) decides to meet with Michael (Golden Globe winner Steve Carell) to negotiate a pay increase. Meanwhile, Jim (John Krasinski) deals with the consequences of Pam's (Jenna Fischer) confession to Roy (David Denman) .

My sources tell me that Michael attempts what might be described as a Lysistrata-inspired maneuver with his boss and girlfriend, Jan.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Alternative Dispute Resolution , Movie and TV Notes

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