TRUSTS & ESTATES, WILLS, AND TAX LAW UPDATE

ESTATES: Insane Delusions and Their Impact on the Validity of a Last Will and Testament

mmcdavitt@nlrg.com (Matthew T. McDavitt) — Wed, 23 Jul 2025 20:56:49 GMT

Under U.S. law, a testator drafting a Last Will and Testament must possess testamentary capacity for the document to be legally valid. Testamentary capacity generally requires that the testator understands the nature of their act, knows the extent of their property, and recognizes the natural objects of their bounty (typically family members or loved ones). However, even when these basic requirements are met, a will may still be invalidated if the testator suffered from an "insane delusion" that materially affected the disposition of their estate.

The Legal Framework of Insane Delusion

The concept of insane delusion emerges from the broader requirement of mental soundness in estates law. As articulated in one seminal case, an insane delusion is not merely an eccentric belief or prejudice but "a persistent belief in that which has no existence in fact, and which is adhered to against all evidence.” Colo. Nat'l Bank v. Cole, 75 Colo. 264, 269, 226 P. 143, 145 (1924). For such a delusion to invalidate a will, it must actually influence the testator’s testamentary dispositions—meaning the delusion must be a "causative factor" in how the estate is distributed. "The delusion may have no basis whatever and no evidence may suffice to dispel it, but, if it did not [in fact] influence the testator with respect to the terms of his will, its existence does not invalidate the will." In re Estate of Gammon, No. C7-89-556, 1989 Minn. App. LEXIS 1002, at *4 (Sept. 11, 1989) (quoting In re Estate of Olson, 148 Minn. 122, 124, 180 N.W. 1009, 1010 (1921)). This actual “influence” factor distinguishes insane delusions from harmless quirks or irrational opinions that do not otherwise affect the testator’s testamentary gifts.

Courts typically require evidence that the delusion lacks any rational basis and that it materially altered the testator’s intent. “The contestant bears the burden of proving that the testator suffered from an insane delusion, that he was under such a delusion at the time of making his will, that the insane delusion materially affected the disposition made in the will, and that the will was the product of the insane delusion.” Romero v. Vasquez (In re Estate of Romero), 126 P.3d 228, 232 (Colo. App. 2005).

Examples of Insane Delusions

One recurring example involves a testator’s unfounded belief that their spouse was unfaithful or that their children were illegitimate. In In re Honigman's Will, 8 N.Y.2d 244, 248, 203 N.Y.S.2d 859, 168 N.E.2d 676 (1960), a New York court invalidated a will where the testator disinherited his wife based on his unfounded suspicion of her infidelity. Despite no evidence supporting this belief—and substantial evidence to the contrary, including a long, stable marriage—the testator clung to the delusion, writing his wife out of the will entirely. The court found that this fixed false belief materially affected the disposition, rendering the will invalid. The decision emphasized that the delusion must be more than mere suspicion; it must be a belief so irrational and persistent that it overrides reality.

Conversely, note that solely testamentary gifts made or denied based on a testator’s delusions potentially support a finding of insane delusion; a testator’s mere conspiratorial beliefs not impacting any testamentary gift will not support invalidation of a will. See Breeden v. Stone (In re Estate of Breeden), 992 P.2d 1167, 1169 (Colo. 2000) (because a decedent's insane, but immaterial, delusions regarding his friends and government agencies did not affect or influence the disposition of his property by will, such that delusions did not vitiate the will).

Accordingly, the party contesting the will must show that but for the delusion, the will would be materially different. Thus, the test is whether the testator suffered from an insane delusion that gave rise to the will, or materially affected the will, by rendering the testator incapable of understanding the extent of his or her property, the natural or proper objects of his or her bounty, or the nature of his or her testamentary act.

In re Estate of Kottke v. Parker, 6 P.3d 243, 246 (Alaska 2000).

Conclusion

Under U.S. law, an insane delusion sufficient to invalidate a Last Will and Testament must be more than a mistaken belief or prejudice—it must be a persistent, irrational conviction that lacks any evidentiary basis, and materially affects the will’s provisions. While the subjects of insane delusions are multifarious, such unsupported belief must demonstrably drive the testamentary disposition. These examples underscore the delicate balance courts strike between honoring a testator’s autonomy and ensuring their decisions reflect a sound mind, offering a robust framework for challenging wills tainted by mental incapacity.

ESTATES: Enactments of the Uniform Electronic Wills Act

mmcdavitt@nlrg.com (Matthew T. McDavitt) — Thu, 27 Feb 2025 19:26:10 GMT

Lawletter Vol. 49 No. 4

ESTATES: Enactments of the Uniform Electronic Wills Act

Matt McDavitt—Senior Attorney

Traditionally, to be valid, a last will and testament had to be executed on paper with the requisite will execution formalities, with the testator and the dual attesting will witnesses physically signing the instrument together at the will execution ceremony. In recent years, however, an increasing proportion of contracts and instruments nationally are executed wholly electronically, wherein the requisite signatures and witness attestations are now often made via digital means. Similarly, in states exacting the Uniform Electronic Wills Act, the testator, attesting witnesses, and notary may now appear via video conference in the “electronic presence” of each other, rather than in person. The Uniform Electronic Wills Act thus empowers testators in jurisdictions that have enacted this model statutory text to execute wills electronically, with the attesting witnesses able to appear and witness the will execution via video conference. Additionally, a valid electronic will under the Act must be a “tamper-evident electronic record” to guard against fraudulent tampering with such digital testamentary instrument post execution. Also, under the model Act, an electronic will, once validly executed, may be revoked via (1) a subsequent inconsistent will, or (2) by “physical act,” which, though not defined, may mean deletion of the authenticated, executed digital will file.

In its summary of its model Uniform Electronic Wills Act, the Uniform Law Commission explains that the purpose of this model electronic will statutory text is to bring wills into the computer age, empowering states to authorize the digital drafting, execution, and archiving of wills:

These requirements for executing wills are still important, but in the internet age paper is no longer necessary. Electronic documents can also be securely signed, witnessed, and archived until needed. Moreover, people who use the internet to communicate, shop, and transact business also expect to find legal services online. The Uniform Electronic Wills Act (“E-Wills Act”) brings estate planning into the digital age by allowing the online execution of wills while preserving the legal safeguards to ensure a will’s authenticity.

The E-Wills Act requires a testator to make a will that is readable as text at the time the testator electronically signs the document. The testator’s signature must be witnessed by two people who add their own electronic signatures. Adopting states can opt for a version of the E-Wills Act that requires the witnesses to be physically present with the testator at the time of signing, or for a version that allows remote witnessing.

Uniform Law Commission, Electronic Wills Act, Summary (2019).[1] To date, a total of eight U.S. states, districts, and territories have enacted iterations of the Uniform Electronic Wills Act:

Colorado Uniform Electronic Wills Act (§§ 15-11-1301 to 15-11-1311)
District of Columbia Uniform Electronic Wills Act (§§ 18-901 to 18-911)
Idaho Uniform Electronic Wills Act (§§ 15-2-1101 to 15-2-1111)
North Dakota Uniform Electronic Wills Act (§§ 30.1-37-01 to 30.1-37-07)
Oklahoma Uniform Electronic Estate Planning Documents Act (§§ 911–927)
Utah Uniform Electronic Wills Act (§§ 75-2-1401 to 75-2-1411)
Virgin Islands Uniform Electronic Wills Act (§§ 51–62)
Washington Uniform Electronic Estate Planning Documents Act (§§ 11.135.005–11.135.902)

As a result, in the listed eight jurisdictions that have enacted iterations of the Uniform Electronic Wills Act, testators and their attorneys now have the option to create a valid last will and testament via solely electronic means.

[1] https://www.uniformlaws.org/committees/community-home?communitykey=a0a16f19-97a8-4f86-afc1-b1c0e051fc71.

ESTATES: Personal Representatives/Methods for Determining Fair Compensation

mmcdavitt@nlrg.com (Matthew T. McDavitt) — Thu, 25 May 2023 20:24:12 GMT

Matt McDavitt, Senior Attorney

A common issue to be resolved in any administration of a decedent estate is the determination of the rightful value of the compensation due to the serving personal representative. While the will of the decedent may validly dictate the amount of compensation due to the serving personal representative (though, subject to judicial scrutiny), more commonly, the value of such fiduciary compensation follows statutory strictures. Lacking an appropriate testamentary personal representative compensation provision, states employ an array of calculation methods to determine the proper value of such remuneration based on one of several methods.

A common methodology employed in personal representative compensation statutes is to examine a suite of elements characterizing the relative complexity of the estate administration, the objectively reasonable effort required to perform the necessary tasks, the diligence of the personal representative, and results attained therefrom:

(b) In determining the reasonableness of any . . . compensation as provided in subsection (a) of this section, the Court shall consider the following factors (as shown in the verified statements of the personal representative or of any other recipient of such compensation), as well as any other factors deemed relevant by the Court:

(1) the reasonable relationship of the compensation to the nature of the work performed;

(2) any estimate of such compensation provided to the personal representative (or to the interested persons, in the case of compensation to the personal representative who is also counsel for the estate);

(3) the reasonableness of the time spent, including the number of hours spent and the usual hourly compensation for the work performed;

(4) the nature and complexity of the matters involved and difficulties encountered, and the results achieved; and

(5) whether or not all relevant time limitations have been met (or the reasons for any delay).

D.C. Code Ann. § 20-753(b).

In contrast, other states, including California, determine the proper personal representative fee based on the value of the administered assets to determine the rightful compensation of the personal representative via decreasing scaled percentages of the total administered asset value, that is:

4% on first $100,000

3% on next $100,000

2% on next $800,000

1% on next $9,000,000

½ of 1% on next $15,000,000

Amount requested from the court for estates above $25,000,000

Cal. Rules of Court, Rule 7.705. A variation on the asset-value fee calculation analysis is to calculate the fee using a simple flat rate percentage of the entire estate value. In re Estate of Harrison, 2000 PA Super 19, 745 A.2d 676, 683 (executor's commission of a flat rate of 5% of the value of the estate was not excessive, where the probate period was for an extended length and the administration of the estate was complex).

Finally, courts in a few states follow a hybrid approach, allowing such fee to be calculated on either a percentage of asset-based or a reasonable hourly rate basis:

Sec. 19.09. Fee Guidelines. When fixing the fees of personal representatives and attorneys, the Court will consider the value of the decedent's gross estate, including real estate and personal property passing outside the estate but subject to the filing of estate and/or inheritance tax return(s), and will use the following guidelines in determining the appropriate fees for the personal representatives and attorneys:

VALUE OR GROSS ESTATE—FEES

First $100,000.00: 3% to 5%

Next $900,000.00: 2% to 4%

Over $1,000,000.00: 1% to 3%

These guidelines reflect what may be considered to be reasonable fees, but are not binding on the Court, the parties, or the attorneys. The Court may also award fees based on an hourly rate rather than setting the fees as a percentage of the gross estate.

Tenn. 13th District Chancery Court, Rule 19.

Thus, while some states allow percentage-based commissions based on the value of the estate assets in fact administered by the personal representative, and other jurisdictions look at the hours reasonably and necessarily expended by the personal representative in administering the estate, as well as the fair hourly rate in the region for equivalent work, taking into the account the relative complexity of the estate in question, whether litigation was involved, and similar factors, still other states allow either approach to be employed in the fee calculus.

Foster-Home or Difficulty-of-Care Health Services by Individuals

bpettit@nlrg.com (D. Bradley Pettit) — Wed, 07 Dec 2022 14:44:45 GMT

Brad Pettit—Senior Attorney, National Legal Research Group

In a very recent Chief Counsel Advisory, the Internal Revenue Service (“IRS”) clarified prior advisories and rulings regarding both the federal income and employment tax implications of payments made to and received by individuals for foster-home or difficulty-of-care services. In IRS Chief Counsel Advisory 202243009, 2022 WL 16551520 (Oct. 28, 2022), the IRS made it clear that although qualified payments received by individuals for providing qualified foster-home or difficulty-of-care services are not gross income to the payee, the payor is still responsible for the Federal Insurance Contributions Act (“FICA”) and the Federal Unemployment Tax Act (“FUTA”) employment taxes if there is an employer-employee relationship between the payor and payee, and no statutory exemption from employment tax obligations applies, such as the parent-child exemption. The IRS's 2022 advisory reads in pertinent part as follows:

The 2002 Field Service Advisory (FSA) stated in-home care payments to the service providers, whether related or not, are generally remuneration for employment. As such, the payments were subject to federal income tax as well as to FICA and FUTA taxes, unless there's an exception.

Notice 2014-7 reverses the conclusion for federal income tax purposes. Prior to Notice 2014-7, the IRS usually took the position the payments to care/service providers are includible in gross income. With Notice 2014-7, payments to service providers, including parents who receive payments from the Medicaid waiver program for the care of their child, are treated as difficulty of care payments under IRC § 131 and therefore excluded from gross income. As such, taxpayers are not required under IRC §§ 6041 or 6051 to report the payments as wages subject to income tax and income tax withholding.

However, the analysis and conclusions regarding the FICA and FUTA tax treatment of the payments described in the 2002 FSA and Notice 2014-7 have not changed. These payments are still generally subject to FICA and FUTA taxes, and therefore may be required to [be] reported under IRC § 6051, unless an exception applies.

Id. (emphasis added).

IRS Chief Counsel Advisory 202243009 and its predecessor rulings provide welcome relief from both income and employment taxes in cases involving qualified foster-home and difficulty-of-care payments and receipts, but makes it clear that in most cases, the payor must pay over to the federal government FICA and FUTA taxes unless a specific statutory exception applies, such as the “parent-child” exemption from employment taxes. For an additional summary of IRS Chief Counsel Advisory 2022433009, see RIA Federal Tax Update, 2022 WL 16550156 (Oct. 31, 2022) (Copyright © 2022 Thomson Reuters Tax and Accounting).

Is It Legal to Inherit Objects Made from Endangered Species Parts?

mmcdavitt@nlrg.com (Matthew T. McDavitt) — Wed, 07 Dec 2022 14:35:48 GMT

Matthew McDavitt—Senior Attorney, National Legal Research Group

It is not uncommon for the estates of individuals at death to possess one or more souvenirs, pieces of jewelry, trophies, collectibles, or artworks made from animal parts, such as carved ivory, fur rugs, tortoise-shell ornaments, crocodile skin leather, and the like. What legal issues might an estate or beneficiary face if he were bequeathed animal parts listed in Endangered Species Act?

The U.S. Congress enacted the Endangered Species Act (“ESA” or the “Act”) (currently codified at 16 U.S.C. §§ 1531-1544) on December 28, 1973, with the aim of barring commerce in the endangered and threatened species listed in the Act, as such financial value contributes to the continuing depletion of such species and the contraction of their populations and range.

Importantly, among the acts prohibited under the ESA, it is forbidden for an individual to “possess, sell, deliver, carry, transport, or ship, by any means whatsoever, any such species taken in violation [of the Act].” Id. § 1538(a)(1)(D) (emphasis added). However, this statutory language barring possession of an ESA-regulated species part applies solely to animals “taken in violation” of the Act, i.e., the animal was captured and/or killed and transformed into a commercial product after such species had been listed to the ESA.

Therefore, a propriety of the gifting of an object fashioned from an ESA-listed animal species depends upon proof that the item was possessed by the owner (here, the decedent) before the subject species was listed to the ESA and was not bought or sold thereafter. Indeed, construing case law confirms that “Congress chose not to prohibit the mere possession of lawfully-taken listed species in section 9(a)(1) of the Act.” Animal Legal Def. Fund v. Olympic Game Farm, Inc., No. C18-6025RSL, 2022 WL 683212, at *6 (W.D. Wash. Mar. 8, 2022), on reconsideration in part, No. C18-6025RSL, 2022 WL 4080657 & 4080658 (W.D. Wash. Sept. 6, 2022).

While no construing case law has apparently addressed this issue, the U.S. Fish & Wildlife Service has supplied guidance confirming that where no commercial intent is involved, an endangered species part may be legally gifted, even interstate: “[A] [l]awfully taken and held endangered and threatened species [part] may be shipped interstate as a bona fide gift or loan if there is no barter, credit, other form of compensation, or intent to profit or gain.” U.S. Fish & Wildlife Service, Permits for Native Species Under the Endangered Species Act (Nov. 23, 2013), https://digitalmedia.fws.gov/digital/collection/document/id/1841/.

Importantly, the regulations implementing the ESA further contain several instructive fact patterns, one of which confirms that where the original owner of an ESA-regulated animal part reduced such item to personal possession prior to the listing of such species to the ESA, then such possession is legal, as such item was removed from the chain of commerce prior to that species’ ESA listing, rendering such item nonregulated “Pre-Act wildlife.” 50 C.F.R. § 17.4(a)(2) (Example 2).

Note, however, that if the propriety of the ownership of the recipient of a testamentary or intestate gift of a Pre-Listing possessed animal part was challenged by the agencies that administer the Act (the U.S. Fish & Wildlife Service and/or the National Marine Fisheries Service) in court, then the defendant beneficiary or heir would likely have the burden to prove that the subject animal part was reduced to private, noncommercial possession by the decedent prior to the date such species was added as a protected species under the ESA, using documentation showing chain of custody since the object was obtained. See, e.g., Animal Legal Def. Fund, 2022 WL 683212, at *5.

Thus, if the animal utilized to make a trophy, artwork, or curio was lawfully taken prior to the addition of that species to the ESA as protected, then a later testamentary or intestate gift (i.e., noncommercial, gratuitous transfer) of such pre-ESA product would be legal. However, if the propriety of such gift were challenged in the court by the agencies enforcing the Act, the donee must produce evidence of the pre-ESA listing take of the species involved. Thus, under proper facts, a decedent gift of a Pre-ESA animal part is legal, though such item would remain subject to the ESA strictures barring any subsequent sale or purchase of the object, as ESA-regulated species parts that are less than 100 years old (antique) cannot be bought or sold, and verified antique objects may be bought and sold solely via an agency-issued Letter of Determination for Protected Species Parts and Products that supplies the government’s permission to import, export, and/or sell the item after agency scrutiny regarding the piece, showing a clear chain of custody to establish its pre-listing take and no post-ESA listing purchase or sale.

Estate Planning—Gifts by an Attorney-in-Fact

bpettit@nlrg.com (D. Bradley Pettit) — Wed, 13 Apr 2022 14:14:37 GMT

Brad Pettit—Senior Attorney, National Legal Research Group

Although most states now have statutes that address the scope of powers of an agent under a durable or general power of attorney, it is safe to say, as a general proposition, that an agent cannot make a gift of his or her principal's property to himself or to a third party unless such a power is given to the designated attorney-in-fact in the power-of-attorney instrument. Dingle v. Prikhdina, 59 So. 3d 326 (Fla. Dist. Ct. App. 2011). Thus, in the absence of specific provision in a power-of-attorney document that authorizes the agent to make gifts of the principal's assets or property, if the attorney-in-fact makes a gift of the principal's money or property to himself, herself, or a third party, a court will presume that the gift was improper or constituted an act of prohibited self-dealing, and the agent carries the heavy burden of proving, with clear evidence, that the principal intended to allow him or her to make the gift in question. In re Estate of Curtis, 83 A.D.3d 1182, 923 N.Y.S.2d 734 (2011).

Even if a power-of-attorney instrument authorizes gifts by the attorney-in-fact to third parties, the agent can make only those gifts of the principal's money or property that are within the scope of the gift-giving powers conferred upon the agent by the governing document and that are in the best interests of the principal. Goldberg v. Meyers, 181 A.D.3d 653, 121 N.Y.S.3d 1 (2020) (citing, inter alia, N.Y. Gen. Oblig. Law § 5-1505(2)(a)(2)). In a case where a nephew, acting as attorney-in-fact for his uncle, made gifts of the uncle's property to other nephews and nieces and also to himself, the court upheld the gifts to the principal's other nieces and nephews, but it struck the gifts by the agent/nephew to himself because the power-of-attorney document authorized the agent to "make gifts," but it did not permit self-dealing by the agent. Stehlik v. Rakosnik, 24 Neb. App. 34, 881 N.W.2d 1 (2016).

In short, an attorney-in-fact under a durable or general power of attorney must exercise extreme caution when contemplating a gift of the principal's money or property to himself, herself, or a third party. The agent must consult state law regarding gifts by attorneys-in-fact and carefully read the power-of-attorney instrument in order to make sure that the contemplated gift would be upheld by a court in the event of a post-gift challenge to the gratuitous transfer. No matter how strongly the agent under a power of attorney may believe that his or her principal would "want" him or her to make a contemplated gift of the principal's money or property to a third-party donee or to himself or herself, the law or the governing instrument must authorize the contemplated gift or it will be deemed void by a court.

WILLS: Virginia Construction Survival Clause—Beneficiaries Who Predecease Distribution

mmcdavitt@nlrg.com (Matthew T. McDavitt) — Thu, 18 Nov 2021 15:26:08 GMT

Matthew McDavitt—Senior Attorney, National Legal Research Group

In some wills, testators expressly condition the beneficiaries’ receipt of legacies upon their survival to the date of actual distribution of the gift during the estate administration. In such circumstances, the question occasionally arises regarding the propriety of such survival mandate where (1) the administration is delayed beyond the average length due to dilatory conduct by the executor or due to litigation, and (2) one or more legatees survived the testator’s death but died prior to the distribution of the legacy. A handful of courts nationally have addressed this fact pattern, arriving at a logical rule applicable when unusual delay in distribution results in the one or more legatees predeceasing distribution.

It is well-settled that the “personal representative is under a duty to settle and distribute the estate of the decedent . . . as expeditiously and efficiently as is consistent with the best interests of the estate.” 31 Am. Jur. 2d Executors and Administrators § 686 (2021). As such, a handful of American courts examining the issue have concluded that the equitable rule in this circumstance is that legacies conditioned upon beneficiary survival to the date of distribution vest at the time such legacies could first have been distributed (often a year from when the estate was opened), to protect such gifts when the administration is unduly delayed. As summarized by one major secondary authority:

[T]he vesting of a beneficiary's interest under a will generally cannot be postponed by an unreasonable delay in preparing an estate for distribution, and when there is such a delay, contingent interests vest at the time distribution should have been made. Accordingly, a beneficiary's interest that depends upon survival of distribution cannot be defeated by an unreasonable delay in distribution.

80 Am. Jur. 2d Wills § 1162 (through 2021 Update); see also In re Estate of Dunning, 102 N.J. Super. 442, 246 A.2d 142 (App. Div. 1968) (where will's residuary clause bequeathed property to testatrix's children who survived and estate was ready for distribution and papers necessary to consummate transfer to son were approved by son but were not timely signed due to his illness, bequest to son who survived testatrix did not lapse by virtue of son's death prior to actual distribution and receipt of gift); In re Estate of Taylor, 66 Cal. 2d 855, 428 P.2d 301 (1967) (executor petitioned for distribution to the alternative beneficiaries; the Superior Court ordered distribution to primary beneficiary, and alternative beneficiary appealed; the supreme court held that where will provided that one-third of residue of estate should go to woman if she survived distribution of estate and but for belated decision to sell securities, estate could easily have been distributed before woman's death, woman's interest vested in her before her death); In re Estate of Laise, 18 N.J. Super. 395, 87 A.2d 362 (App. Div. 1952) (under will providing that gift to certain beneficiary should fail if such beneficiary should die prior to distribution of gift to her, such gift would not fail even if such beneficiary died before actual payment to her if executors, through due diligence in settling estate, could have made distribution prior to death of such beneficiary).

Therefore, when an estate distribution is unduly delayed and the will mandates that beneficiaries survive to the point of distribution, the majority rule is that the interests are held to vest on the date they could have been distributed in a normal administration, protecting these gifts from delays caused by circumstances outside of the beneficiaries’ control.

TAX: Sales Tax Pandemic—Facemasks

jwitt@nlrg.com (James P. Witt) — Thu, 23 Sep 2021 16:12:21 GMT

Jim Witt—Senior Attorney, National Legal Research Group

In addition to the direct health issues caused by the COVID-19 pandemic, given the economic disruption the pandemic has caused, it is obvious that the pandemic will indirectly be giving rise to countless legal issues (for instance, in the construction/real estate field alone, with government mandates halting some projects and granting waivers as to others, and with issues related to supply chain, employee safety, construction disputes, defaults, loans, and leases, there will be important questions up for decision for a long time to come). As exemplified by the case of McLean v. Big Lots Inc., No. 2:20-CV-02000-MJH, 2021 WL 2317417 (W.D. Pa. June 7, 2021), however, there will also be COVID-19-related cases concerning far less momentous topics.

In McLean, the plaintiffs in a putative class action asserted claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. §§ 201-1 et seq., against defendants Big Lots, Inc., Dollar General Corp., Jo-Ann Stores, LLC, Home Depot, Inc., and Wal-Mart, Inc., alleging that the defendants charged sales tax on otherwise exempt protective face masks. The plaintiffs alleged that the defendant retailers knowingly, negligently, or deceptively falsely advertised the price of protective face masks, representing that protective face masks were subject to Pennsylvania sales tax and collecting the tax from the plaintiffs. In fact, under sales tax exemptions for medical supplies and clothing, 72 P.S. §§ 7202, 7204, the masks were not subject to sales tax. The Pennsylvania Department of Revenue indicated on its website that protective face masks sold at retail during the March 6, 2020 emergency disaster declaration were exempt from sales tax. In effect, the designation of nonsurgical masks shifted to medical purposes. On January 20, 2021, the Department issued a Sales and Use Tax Bulletin with an effective date of October 30, 2020, explaining that face masks were taxable prepandemic, but nontaxable postpandemic. The plaintiffs alleged that the defendants’ conduct constituted unfair methods of competition and unfair or deceptive acts or practices under the UTPCPL because they represented that goods had characteristics they did not have.

Based on appellate decisions from Pennsylvania, Massachusetts, and Connecticut, the McLean court granted the defendants' motion to dismiss:

The collection of sales tax is divorced from private profit. Retailers, like the Defendants here, collect sales tax on behalf of the Commonwealth's Department of Revenue because state law requires them to do so. See 72 P.S. § 7237(b)(1). Once collected, retailers hold the tax in trust before remitting to the Commonwealth. See 72 P.S. §§ 7225 and 7217(a)(2)-(4). A retailer's conduct in collecting taxes is not for purposes of profit, private gain, or greed. The retailer realizes no increase in revenue or profit in a transaction that charges a sales tax. Indeed, a retailer has little incentive to engage in "deceptive" or "unfair" practices by charging more than it must at the expense of its competitors charging a better price. Therefore . . . , the collecting of sales tax would appear to not fit the definition of "trade or commerce" under the UTPCPL.

2021 WL 2317417, at *4. As trivial as this case seems in the face of the upheaval wrought by the pandemic, it is cases like this that are bound to clog court calendars in the near future.

ESTATE PLANNING: Pet Trusts

bpettit@nlrg.com (D. Bradley Pettit) — Fri, 20 Aug 2021 15:34:34 GMT

D. Bradley Pettit, Senior Attorney, National Legal Research Group

According to a treatise on revocable trusts,

[t]he number of individuals who own animals is staggering. As many as 56.7 million households in the United States own dogs and 45.3 million own cats.

2 George M. Turner et al., Revocable Trusts, 5th § 78:1 (Westlaw current through November 2020 update).

As to pet trusts, the Uniform Probate Code provides as follows:

Subject to this subsection and subsection (c), a trust for the care of a designated domestic or pet animal is valid. The trust terminates when no living animal is covered by the trust. A governing instrument must be liberally construed to bring the transfer within this subsection, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the transferor. Extrinsic evidence is admissible in determining the transferor’s intent.

Unif. Prob. Code § 2-907(b) (Westlaw current through 2019 Annual Meeting of the National Conference of Commissioners on Uniform State Laws).

The following provisions of the Uniform Trust Code exemplify pet trust statutes that have been adopted in a growing number of states:

408. Trust for Care of Animal.

(a) A trust may be created to provide for the care of an animal alive during the settlor’s lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor’s lifetime, upon the death of the last surviving animal.

(b) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed.

(c) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor’s successors in interest.

Unif. Trust Code § 408.

Courts stand ready to enforce and protect valid pet trusts in the face of attempts by executors or others to either invalidate or reduce the funding thereof. For example, a New York Surrogate’s Court sitting in Westchester County held that an executor’s petition for approval of a reduction in funding of a decedent’s testamentary pet trust was not appropriate because the petition sought to cast aside the decedent’s specific instructions as to care of her cats following her death:

In actuality, Copland’s prayer casts aside the decedent’s wishes. The decedent gave very specific instructions as to how she wanted her cats to be cared for. That care included Eugenia [pet caregiver], her home, a salary and bonus to Eugenia, maintenance for the home and a stipend for the cats.

Furthermore, after the decedent’s daughter and her husband predeceased her, her instrument makes clear that the primary object of her bounty became her cats (and not the charities). If she had wanted to dispose of her assets to give more money to the charities right away, she could have. Indeed, she gave $115,000 in cash bequests to the charities (including $25,000 to PETA). The face of the instrument makes plain that she knew that choice was available to her. She also could have chosen a less expensive option for the care of her pets. But she did not. Instead, as evidenced by Article FIFTH of her will, she painstakingly planned out the care for her pets and set forth that the charities were to take only on the death of her last cat. Again, if she intended to benefit the charities over her pets, and create a charitable deduction, the instrument would have been drafted differently.

In essence, Copland is asking for this court to rewrite the decedent’s will. The court may not override the expressed intention of a testator (see Matter of Knapp, 1 Misc. 3d 1202[A], 977 N.Y.S.2d 667, 2013 NY Slip. Op. 51556[U] [Sur. Ct., NY County 2013]; Matter of Kastin, NYLJ, 2013 NYLJ LEXIS 4505, Aug. 1, 2013 at 30 [Sur. Ct., NY County 2013]). Similarly, the very purpose of the statute was to provide certainty to a pet owner regarding the care of her animals. Given the existence of the statute and the facts present, the court could not sanction the premature termination of this trust.

In re Abels, 44 Misc. 3d 485, 489, 988 N.Y.S.2d 458, 461 (Sur. Ct. 2014) (footnotes omitted).

Since pets usually are regarded as family members, it is not surprising that individuals want to include them in their estate plans and courts are eager to make sure that incapacitated persons’ or decedents’ expressed desires regarding care for their surviving pets are carried out.

GIFTS: Beneficiaries/Disqualification to Take/Ingratitude

mmcdavitt@nlrg.com (Matthew T. McDavitt) — Thu, 06 May 2021 16:27:33 GMT

Matt McDavitt—Senior Attorney, National Legal Research Group

It is well-settled that in most states, completed inter vivos gifts are deemed irrevocable, even in circumstances where the donor’s relationship with the donee later deteriorates or the purpose of the gift dissipates. “Many gifts are made for reasons that sour with the passage of time. Unfortunately, gift law does not allow a donor to recover/revoke an inter vivos gift simply because his or her reasons for giving it have soured.” Dayal v. Lakshmipathy, 2020-Ohio-5441, ¶ 37, 163 N.E.3d 683 (quotation formatting and citations omitted). However, Louisiana has a unique statute that allows completed lifetime gifts to be revoked upon proper facts showing “ingratitude” to the donor, either through attempted murder or through cruel treatment, where an action is brought within a year of the injurious act or imputed knowledge of such.

Revocation on account of ingratitude may take place only in the following cases:

If the donee has attempted to take the life of the donor; or
If he has been guilty towards him of cruel treatment, crimes, or grievous injuries.

La. Civ. Code Ann. art. 1557. If the donor has died within the limitations period, then the donee may file suit against the successors in interest of the deceased donor. La. Civ. Code Ann. art. 1558. What constitutes “cruel treatment” or “grievous injuries” to the donor sufficient to revoke a gift has been defined in the construing case law:

“[i]njuries” include any act naturally offensive to the donor. It may be the adultery of one of the spouses. . . . The act may consist of slanderous charges; of a seizure levied by the donee against the donor of whom he is creditor; or, in a proper case, even of the refusal to consent to the revocation.

Weiser v. Weiser, 19-433 (La. App. 5 Cir. 3/17/20); 293 So. 3d 747, 753, writ denied, 2020-00831 (La. 10/14/20); 302 So. 3d 1117; Perry v. Perry, 507 So. 2d 881 (La. Ct. App. 1987) (son's conduct in directing sheriff to seize personal property of his parents pursuant to his judgment against father constituted cruel treatment and grievous injury, thus meeting first requirement for revocation of donations made by parents to son on account of ingratitude), writ denied, 512 So. 2d 465 (La. 1987); Sanders v. Sanders, 33,865 (La. App. 2 Cir. 09/27/00); 768 So. 2d 739 (proof that donee denied donor was his father and told him he wished donor and his wife would die would be evidence of ingratitude sufficient to revoke donation); Laviolette v. Dubose, 14-148 (La. App. 5 Cir. 12/23/14); 167 So. 3d 145 (plaintiff's petition, in which she alleged assault and battery and subsequent course of conduct by defendant designed to intentionally inflict emotional distress upon plaintiff, sufficiently stated a cause of action for revocation of her inter vivos donation to defendant due to ingratitude). But cf. Watts v. Watts, 2017-0369 (La. App. 1 Cir. 12/29/17); 241 So. 3d 330 (although husband told wife that he no longer loved her, filed for divorce, sought to evict her, and refused to consent to a voluntary revocation of donation, his actions did not demonstrate grievous injury to wife that would be sufficient to warrant revocation of her donation), writ denied, 2018-0185 (La. 3/23/18); 239 So. 3d 294; In re Succession of Rachal, 2008-1379 (La. App. 3 Cir. 04/01/09); 7 So. 3d 132 (evidence was insufficient to annul testator's will on the basis of ingratitude; girlfriend's action in telling testator that she was involved with another man while he was confined in nursing home did not constitute cruel treatment such that revocation of testator's will, which left his estate to girlfriend, was warranted).

Note that the ingratitude sufficient to revoke a gift must be ill treatment to the donor personally. Didier v. Simmons, 2019-1100 (La. App. 1 Cir. 5/11/20) (allegations that former son-in-law committed adultery during his marriage to donors' daughter did not constitute cruel treatment toward donor parents for purposes of revoking inter vivos gift given to son-in-law on the basis of ingratitude, even if the act of adultery would clearly constitute cruel treatment toward their daughter), writ denied, 2020-00700 (La. 9/29/20); 301 So. 3d 1162.

Finally, where a revocation for ingratitude has been factually established, the remedy is that the donor return the gifted interest, or its value if the gift cannot be conveyed back to the donor. La. Civ. Code Ann. art. 1560.