The Georgia Supreme Court recently handed down the case of Smith v. Ashford (full text below the break), in which it dealt with a testator's use of a "power of appointment."
What is a power of appointment?
In estate-planning parlance, a power of appointment is used when a benefit is given, together with a right (a "power," as it were) to decide who gets that benefit when the initial beneficiary dies. The possessor of that right has a "power of appointment."
In a common example, parents may leave their wealth in trust to a child, together with an unlimited power of appointment. The child draws benefits pursuant the trust during his lifetime and has the power to decide, in his own will, who will inherit his share of the trust when he dies.
Drafters of trusts governing large estates like to use powers of appointment when they trust the beneficiary (often their child) to decide who most deserves to receive the benefit of the trust years or decades into the future.
In Smith v. Ashford the Supreme Court interpreted a will in which the holder of a power of appointment sought to give the power itself to his wife. Without holding on the question of whether you can inherit a power of appointment itself (you can), the Court said that it didn't matter - the original power of appointment stated that it had to be exercised before its holder died. Since it was not so exercised, the power lapsed.
The Georgia Supreme Court handed down the probate case of Myers, Executor v. Myers, today.
In some ways, the case is an unremarkable example of an executor using an estate as a cash cow for his personal expenditures and, among other things, granting himself
$53,000 in executor's fees while so doing.
The case books are littered with such fact patterns. Perhaps the most important take-away from Myers is the holding that an executor may not continue to run a single-member-LLC business in the estate, when that LLC's operating agreement calls for its dissolution upon the death of a member.
This is particularly useful information for the estate practitioner, because nearly all form operating agreement forms call for exactly this. Yet, it is common enough for an executor to continue to run and fund an estate business for months after a decedent's death. According to the Supreme Court today, so doing may be grounds for the executor's removal.
Full text of the opinion follows after the "read more" break.
Responding to the needs of its consumers, Facebook now allows users to name a "legacy" contact who may use the deceased's page for certain purposes. Notably, this FB "executor" may not continue to make new posts. He can, however,
The new user may not, however, access private messages sent to the deceased.
This law firm has encouraged its clients to name a "digital executor" and to make online passwords and account information an essential part of their estate plan.
In Georgia, most estate attorneys recommend use of a will rather than a living trust. Probate in this state is a simple affair, if the will is properly drafted, and living trusts are expensive to manage and administer during life.
The situation may differ when the testator knows she has 79 heirs.
In a recent case, we were called upon to probate a simple will, leaving an entire estate to the decedent's god-daughter. The problem? The deceased was one of twelve siblings, all of whom predeceased her. Not only this, but the decedent died at age 101, meaning that most of her siblings' children have already died.
The result has been that the decedent has 79 heirs at law. Why does this matter, given that there is only one beneficiary of the will? It matters because the Georgia Code requires service of the petition to probate upon all heirs at law, even if those heirs are not beneficiaries. And by "service," we typically mean a sheriff's deputy delivering the petition to the heirs' doorstep - although out-of-state heirs need only get certified mailings.
Living trusts are better estate planning devices in such cases. When the maker of a living trust dies, and the trust becomes irrevocable, the Georgia Code requires notice only to the beneficiaries of that trust, not to the heirs of the trust-maker (the "settlor"). OCGA § 53-12-242.
Tracking down 79 heirs is a daunting and expensive challenge. In our firm's present case, paying a little more to draft a living trust would have meant great savings for the decedent's heirs.
On Tuesday, the Court of Appeals of Georgia handed down its opinion in In re Estate of Loyd.
The details of that case are fairly mundane in the world of probate litigation. A will was challenged on grounds of undue influence by a disinherited nephew of the deceased.
This blog post is primarily to highlight the take-away from the case for would-be challengers to a will: you may still have rights even if a deadline to object to a will has passed, but the probate court has discretion to limit those rights.
In Loyd, the caveator (objector) to the will filed a late caveat, less than a week past its due date. He was in default, as it is known in our law. This situation can be cured. But, unfortunately for him, the caveator waited ten months before filing his motion to re-open his default as a matter of right.
The Court of Appeals made short work of the issue. The probate court had denied the motion to re-open default, and the Court of Appeals said simply that it had the discretion to do so.
It is a time-honored rule of common law that parties are not usually compensated for emotional loss, and the rule is only overcome by statute, as in cases of severe emotional distress. Likewise, our land title law has so evolved to favor marketable, fee simple title, not family or emotional ties to land.
When it passed the new Uniform Partition of Heirs Property Act, effective June, 2013, the Georgia legislature bucked the common law and enshrined certain "subjective factors" for judges to consider when determining how to partition "heirs property" land.
I will not address the motivation for the new law. It is done better here in the Georgia Bar Journal and here in a College of William and Mary law review article. Suffice it to say, there are millions of acres in the South that are fractionally owned in such a way that the costs of consolidating the title are prohibitive for their owners. Ethnic minority owners of land are particularly affected because of historical economic hardship.
The new partition statute, however, may go too far in its attempts to correct these ills. In attempting to honor the importance and sentiment tied to land ownership, the law requires judges in partition actions to consider, among other factors, "whether the land has ancestral or sentimental value to heirs; whether a co-tenant would be harmed if not allowed to continue to use the property in the same manner following the conclusion of the action; . . . and other factors relevant to the court."
Adding such factors will make it difficult for attorneys and land owners or investors to know how a partition will turn out and is likely to have a chilling effect on important legal work to consolidate land title.
Economically, land is a capital resource, and society gains when it is put to its highest and most valuable use. Placing sentimental, subjective considerations into our land partition law may have the perverse effect of raising the costs to consolidation and efficient use of land and, thus, stunt economic growth in the region.
. . . or is there?
Often, a child or close friend of an elderly person will be granted a power of attorney to help the elder handle her financial affairs. Such power of attorney is usually quite broad, granting the trusted agent the ability to, among other things, sell property, open and close bank accounts, and the like.
Far too common is the case where the trusted person then uses the power of attorney for his own financial gain. Family of the exploited elderly person find out only later (often after her death) about the misdeeds.
Given that the wrongdoer was granted a full power of attorney to do anything they thought proper with the grantor's financial affairs, isn't it impossible to sue the agent for misappropriating money or property, for re-titling assets in the agent's name?
No. In Georgia, as in most other states, an "agent . . . cannot have any interest or do any act adverse to the interest of his principal . . ." Furthermore, "[t]he agent shall not make a personal profit from his principal's property; for all such he is bound to account." First National Bank of Paulding County v. Cooper, 252 Ga. 215, 215 (1984).
If a loved one dies and the family fears he has been exploited through misuse of a power of attorney, what can be done? Foremost, an attorney should be contacted immediately. Placing an injunction on distribution of mis-titled insurance policies and accounts early on can save an estate large sums. A "constructive trust" may likewise be placed over the assets of the wrongdoing agent to ensure the stolen property isn't dissipated before the case comes to trial.
Often, such matters settle early. Faced with the reality of their misdeeds and the plain wording of Georgia law, many power-of-attorney-abusing agents will simply allow the matter to progress without putting up a fight. Even in absence of a settlement, a court showing that an agent did some act contrary to the interests of his principal is not as difficult as - say - showing that a will signer was incompetent, and litigation is often worthwhile for the estate.
Unlike Michael Jackson's, the Huffington Post reports, the Whitney Houston estate will not make much money from the bump her singles will inevitably get in radio play and record sales due to her untimely death.
But Dolly Parton will.
Parton was the writer of the popular Houston single, "I Will Always Love You," and as such commands a much larger share of the song's royalties than its singer, whose cut, according to the HP article, is diluted severely by, among other things, recording and promotion costs.
Because Houston never actually wrote her songs, most of her income streams would have been in the form of fees for tours and appearances, which of course cannot now continue.
Tanner Pittman, LLC is a Georgia law firm that handles probate and administration of complex estates.
Not infrequent is the case in which an executor of an estate or relative of a decedent begins to parcel out estate property before granted authority by the court.
In a recent case handled by this firm, the son of the decedent began giving furniture and heirlooms to grandchildren long before the will was found and probated. Fortunately for that son, the matter was settled before the son was could be sued for his misdeeds.
Explaining why family members of a deceased do this is not hard: they "know the deceased wishes" or are "just doing what's fair."
In the case of In re Estate of Tarpley, just handed down by the Court of Appeals, the high price of doing this is made manifest. In it, an executrix and sole heir of an estate sold an automobile belonging to the deceased for $12,000 before probate was complete. Later, and after the will was overturned for lack of testamentary capacity, the executrix found herself trying to cover up what was an improper disposition of estate property.
Before the appeal was finished in Tarpley, the executor (since removed from office) owed the estate $96,433.73 in compensatory and punitive damages.
About half of this damages award was overturned on appeal; nevertheless because of the Georgia law regarding executors de son tort, damages in the case of bad actors in estates can be quite harsh.
The full text of the case follows below. Click on the "read more" link.
This firm also publishes content at the lawyer directory and rating site Avvo.com. Most recently, we posted a 16-step guide to petitioning for year's support in Georgia.
Year's support is the right of every surviving spouse or minor child of a deceased to inherit certain property from the estate, regardless of what is stated in the will. Attorneys have also used year's support as a strategic way of legally avoiding certain debts of the estate, ensuring a maximum tax break on certain real property of the estate, and quickly administering some intestate estates without the need for a full court-supervised administration and all of the complicated steps that can involve.
Tanner Pittman, LLC regularly advises clients and assists with petitions for year's support, year's support litigation, and other probate and estate matters.
Tanner Pittman, LLC is a West Georgia law firm that specializes in estate services, civil litigation, and legal transactions.
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