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.

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.

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).

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.

Brad Pettit, Senior Attorney, National Legal Research Group

            A recent decision by the U.S. Tax Court serves as a reminder that if an individual elects to take funds from his or her tax-favored retirement account before he or she attains the age of 59½, the distribution from the account to him or her is not only subject to federal income tax, as are all distributions from retirement accounts, but is also subject to the 10% additional tax that is imposed upon early withdrawals from retirement accounts, such as individual retirement accounts ("IRAs"). In Lashua v. Commissioner, T.C. Memo. 2020-151, 2020 WL 6559172 (Nov. 9, 2020), the Tax Court reminded us that if we decide to withdraw funds from an otherwise tax-deferred retirement account before we reach the age of 59½, we should be prepared, under 26 U.S.C. § 61(a), to report the distribution as "gross income" on our individual or joint federal income tax return and, pursuant to 26 U.S.C. § 72(t)(1), to pay an "additional tax" equal to 10% of the funds that were withdrawn.

Jim Witt—Senior Attorney, National Legal Research Group

            Once in a while, the estate planning steps taken by a decedent make you wonder if he or she was intentionally leaving a mess. When Aretha Franklin, the Queen of Soul, died as a result of pancreatic cancer at age 76 on August 16, 2018, no will was filed. Her family believed that she died intestate. If that had been the case, her net estate would have simply been divided under Michigan law into four equal shares, one for each of her sons, Clarence, Edward, Ted, and Kecalf. In May 2019, however, the family discovered three wills written by Franklin, two from 2010 were found in a locked cabinet, and one from 2014 was found in a spiral notebook left under a couch cushion. The wills seemed fairly evenhanded as among the four sons, but there were questions raised as to the documents' validity by a number of contradictory provisions and the problem with deciphering some of the writing, not to mention numerous underlinings, strikeouts, and marginal notes; much of the writing seemed to be in a stream of consciousness mode.

Matt McDavitt—Senior Attorney, National Legal Research Group

            When a person dies without a will, the decedent’s estate is passed via the statutory regime of intestate succession, representing the presumed intention of most people to gift their estate at death to their close heirs.

            A decedent’s intestate heirs encompass one’s closest blood relatives (plus more remote relatives via representation through deceased family members who have died leaving surviving issue), plus any children that were legally adopted by the decedent, or their issue. However, while it is common nowadays for out-of-wedlock children to petition estate administrations in order to prove their relation to a claimed deceased father, the related circumstance also arises where the paternity of a presumptive child of marriage is challenged.In such a situation, may the parties interested in the estate contest the legitimacy of presumptively marital children where there is evidence that such a child was not, in fact, a blood relative of the decedent, as in the case of marital infidelity?

Brad Pettit—Senior Attorney, National Legal Research Group

     It is not uncommon for trustees of trusts to encounter beneficiaries that pressure them into retaining a particular asset or investment even though the retention thereof might pose an unreasonable risk with respect to the performance of the overall portfolio and subject the trustee to potential liability to the beneficiaries for breach of the fiduciary duty to diversify the trust's investments. P.G. Guthrie, Annotation, Duty of Trustee to Diversify Investments, and Liability for Failure to Do So, 24 A.L.R.3d 730 (1969). In such a situation, the trust instrument itself may contain a provision that expressly or impliedly relieves the trustee from liability for retaining certain assets that might pose a risk to the performance of the overall trust portfolio. M.L. Cross, Annotation, Construction and Effect of Instrument Authorizing or Directing Trustee or Executor to Retain Investments Received Under Such Instrument, 47 A.L.R.2d 187 (1956). But in a case where a trust instrument does not excuse the trustee from potential liability for retaining risky investments, such as an overconcentrated position in a particular stock or class of investments, is there anything that the trustee can do to avoid liability to a beneficiary who is exerting extreme pressure on him or her to retain a favored parcel of real estate, stock, or class of stocks?

James Witt—Senior Attorney, National Legal Research Group

            Johnny Hallyday ("Johnny"), an iconic French rock star for six decades,  modeled himself on Elvis Presley and James Dean. He died on December 6, 2017, leaving an estate possibly worth over $100 million. Born Jean-Philippe Smet, he adopted the last name of an uncle and was survived by his fourth wife, Laeticia, whom he married in 1996 when she was 21. Johnny's first wife was Sylvie Vartan, who was one of a group of French popstars in the sixties known as the Yeh-Yeh Girls. He also had a liaison with French actress Nathalie Baye, with whom he had one of his two older children, Laura Smet. The other older child is David Hallyday. Two younger children were adopted from Vietnam by Johnny and Laeticia.

            A controversy arose concerning the proper jurisdiction over the estate. Johnny built a house in Los Angeles and spent a good portion of his last seven years in California, where he indulged his passion for motorcycles. He executed a will in California under which he left his entire estate to Laeticia, thereby disinheriting all of his children, apparently believing that his two older children were wealthy in their own right and that the younger ones would be well-provided for by Laeticia. Under California Probate Code § 21621, a parent may disinherit a child if that intention is manifested in the testamentary instrument. In February 2018, Laura Smet and David Hallyday commenced a suit in France seeking to annul the California will on the basis that under a regulation adopted by the European Union (effective August 2015), the law of succession that applies to a decedent's estate is the law of the country of the decedent's habitual residence.

The Lawletter Vol 44 No 4

Matthew McDavitt—Senior Attorney, National Legal Research Group

            The phrase "personal effects" is a descriptor that commonly leads to litigation regarding its usual or intended scope. Unqualified, the word "effects" in a testamentary context generally denotes personal property of any description. Adler v. First-Citizens Bank & Trust Co., 4 N.C. App. 600, 603, 167 S.E.2d 441, 443 (1969). However, pairing the adjective "personal" with the noun "effects" expressly modifies and limits its scope:

The adjective "personal" would be unnecessary and useless if it did not restrict the meaning of "effects," which standing alone would have covered all personalty. . . . [T]he words "personal effects" . . . [usually] cover only those articles of tangible personal property that in their use or intended use had some intimate connection with the person of the testatrix.

Gaston v. Gaston, 320 Mass. 627, 628, 70 N.E.2d 527, 528 (1947).  Thus, "[t]he term 'personal effects' ordinarily does not include cash and property held for investment." Beasley v. Wells, 55 So. 3d 1179, 1185 (Ala. 2010); In re Estate of Stengel, 557 S.W.2d 255 (Mo. Ct. App. 1977) (the term "personal effects" meant tangible property worn or carried about the person or tangible property having some intimate relation to the person of the testatrix; the term did not include the bonds, stocks, savings and loan accounts, cash, coins, or currency).