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Myers v. Myers: Executor may not run estate as his personal business

7/6/2015

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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. 

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Clarke County Superior Court totally reversed on appeal in trust matter

3/6/2015

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The superior court judge of Athens-Clarke County apparently totally botched a trust litigation matter, according to the Georgia Court of Appeals. 

The lower court had determined that a trust's maker (the "settlor") had improperly amended the trust, when she attempted to name her son its new trustee only two months before she died. (And, in so doing, to "un-name" her other two children).

Among other things, the "amendment" to the trust was written out by a non-lawyer; improperly used the word "executor" instead of "new trustee;" was captioned as a "general durable power of attorney;" and stated that the original trust was, in fact, revoked. Nevertheless, the Court of Appeals reversed the trial court's decision, declaring that the amendment was correct. 

What was going on here? It's possible that the trial court saw that one of a group of children had taken the settlor, his mother, into his confidence only weeks before she died and had exerted undue influence over her, including having her write the extremely poorly worded trust amendment, allegedly naming him as the new trustee. 

The problem may have been that the trial court didn't find that undue influence exists. (This issue is, after all, notoriously hard to prove). Instead, it relied only on the poorly written "general power of attorney," finding that the alleged trust amendments in it simply weren't done properly. 

That led to the reversal. If an amendment isn't the product of fraud or duress, the courts will look not to whether it's worded perfectly but to the intent of the drafter. Clearly, the Court of Appeals said, the intent was that the trustee of the trust be changed. 

A full text of the opinion is below the "read more" break. 



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Probate court deadlines - In re Estate of Loyd

7/17/2014

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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. 


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He had a power of attorney; there's nothing I can do . . . 

10/11/2012

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 . . . 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.
 
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James Brown trustee in contempt battle

1/30/2012

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Brown
The estate of Georgia singer James Brown, who died in 2006, has been plagued by trouble almost even before the testator's death. 

Recently, reported Forbes magazine, owing to court disputes and problems getting income streams from estate assets, the estate faced some $20 million in debt as against $14,000 in cash and other holdings. 

The Augusta Chronicle reported, furthermore, in January that an irrevocable trust established by Brown to benefit children's charities has been fleeced at least to the tune of $373,000 by  its former trustee, David Cannon. 

Presently, Cannon is battling a contempt charge in the South Carolina Supreme Court for failure to pay restitution of this amount, plus attorney fees and penalties. 

Working against Cannon in his efforts to argue the fees and fine are excessive is the fact that he owns a $1 million home in Honduras purchased, in large part it would seem, with funds from the Brown trust.  

Tanner Pittman, LLC is an estate planning and probate law firm that assists clients in pursuing cases of breach of fiduciary duty against executors and trustees in estates.  

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"Tithe" claim against Kathryn Johnson estate

1/17/2012

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92-year-old Kathryn Johnson
Most wills contain standard language requiring executors to pay charitable pledges "whether enforceable or not" out of the estate before any amounts are paid to heirs. 

In August of last year, the Rev. Markel Hutchins strained the "enforceable or not" language farther than it was ever intended to go by suing the estate of Kathryn Johnson, the 92-year-old notoriously shot to death by police return-fire in a mistaken drug raid. 

Johnson's estate famously won a settlement against the City of Atlanta in the amount of $4.9 million for, among other things, her wrongful death in the raid.

Hutchins is suing for $490,000, which represents a "tithe" from the $4.9 million estate, reports AtLaw. The tithe is owed him, Hutchins has said in pleadings because of his role as "principal strategist and issue manager; public relations expert; crisis intervention and crisis management expert; investigator; project manager; government relations expert; and other duties as requested by the Defendants and those acting in concert with them."

The case is presently before the Georgia Court of Appeals on interlocutory appeal from an early trial court ruling.  

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In re Estate of Tarpley: Executor fraud, part 2

1/10/2012

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The most common issue brought up in probate litigation is that of executor fraud and breach of fiduciary duty. Though difficult to prove, it is nevertheless alarmingly common. Executors of an estate sometimes deal with estate property as though it belonged to them, can "compensate" themselves handsomely for executor's services, and with surprising frequency favor one heir over others. 

In re Estate of Tarpley was previously up before our Court of Appeals and was blogged about by this firm here. 

The case involved an executor that treated the decedent's truck as though it were her own and wound up liable for high compensatory damages, punitive damages, and attorney fees. 

The recent opinion, reprinted in whole after the "read more" break below, deals primarily with procedural issues surrounding the award of damages, but the underlying message is clear: executors can be taken to task for their misappropriation of estate property. 

Tanner Pittman, LLC is an estate planning and probate law firm that assists clients in pursuing cases of breach of fiduciary duty against executors and trustees in estates. 

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The cutting edge of probate litigation: Bystander Struck By Flying Body May Sue Dead Man’s Estate, Appeals Court Says

1/6/2012

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This firm is clearly not tackling avant guarde issues in probate litigation, as demonstrated by this article in the Chicago Tribune. According to the story, a man died when struck by an express Amtrak train in 2008. Unfortunately a piece of his body also struck another woman during the accident. 

The woman hit by his flying body parts is now suing the dead man's estate. 

And apparently, she has a case. The Illinois Court of Appeals recently overturned the trial court opinion dismissing the suit. The injuries the plaintiff suffered were, according to the appellate court, a reasonably foreseeable result of the dead defendant's actions. 

The ABA has published a quick write-up of the story here.
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The anti-Laffer curve: Less estate taxation leads to "recession" among estate planning attorneys

12/30/2011

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From legalnews.com, we have the story that perhaps only two tenths of one percent of the population is subject to estate taxes. This, compared to "eight to ten percent of the population" in the 1970's. 

The reason is that the standard exemption from estate taxation rose to $5 million when President Obama signed a compromise budget bill into law in the last days of 2010. The compromise is, however, set to expire beginning in 2013, resetting the exemption level to $1 million if Congress fails to act. 

No tears should be shed, though, for estate and probate practitioners, we are later told in the same article. As the baby boom generation retires and (alas) begins to pass away, probate litigation is increasing at a brisk pace. 

Finally, opines the author of the article, "the recession has created more probate litigation since family members are disappointed with their inheritance."
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On not "splitting the baby" - how best to divvy up personal property

12/8/2011

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In divorce actions, the family dog often keeps couples in court longer than the bank accounts. 

In estates, it's the heirloom quilt, the favorite sweater, or the bird-hunting gun that causes the most acrimony among heirs. 

If drafters of wills and trusts want to avoid squabbling among their heirs, they would do well to give some thought to how their huge inventory of personal property should be divided . 

A frequently used method among estate attorneys is the  family "auction." An executor dividing up an estate may allow heirs to "bid" for items, using not cash but an "account" consisting of the total amount to which they would have been entitled pursuant to the will. 

As an example, suppose an estate has three heirs and (for simplicity's sake) fifteen items of personal property. The executor gives each heir five credits and tells them to select five pieces of property from the fifteen. Naturally, at some point, two heirs will want the same one piece of property - say an heirloom broach. The executor then allows these heirs to "bid" on the broach with their five credits. The highest bidder allocates four credits and is given the broach. The credits are then divvied up among the other two heirs , who use them to bid on the remaining property. 

This scheme can be used a myriad of different ways as long as the goal of the "auction" is an equal distribution of the property according to its subjective value. 

One more note: at least one website, E-divvy-up (edivvyup.com) allows heirs to do exactly this via an online auction. For $49 per auction, many estate executors may find its services well worth the price and a solid way to avoid family acrimony or possible litigation. 

Tanner Pittman, LLC advises clients on probate and estate settlements and is experienced in litigation involving probate matters. 

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