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.
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.
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.
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.
In Royal v. Blackwell, handed down by the Georgia Supreme Court on July 5, 2011, the court held that a lawsuit for an executor's breach of fiduciary duty was not moot, even though all parties except the executor had settled the case and the money that had been improperly distributed by the executor was returned to the proper party.
Executors of wills owe a strict duty to the estate, and the very fact that the executor had breached that duty, the Court explained, gave rise to damages, even if the breach had been corrected.
The judge of the trial court in the case had awarded attorney fees against the executor. The Supreme Court overruled this part of the lower court's decision, stating that it was for a jury to decide whether a party to a case has committed one of the acts that give rise to ground for awarding attorney fees.
Click "read more" below and to the right for the full text of the case.
The Wall Street Journal posted this about leaving unequal shares of your estate to your heirs.
Among the advice given by the columnist is a recommendation to write one's reasoning for unequal estate shares in a will. Similarly, one could write a letter of intent.
Experience in a litigation setting shows that such clauses and documents rarely carry much weight in court. The reason is that they are typically drafted by the law office preparing the will. If the testator lacked the capacity to make a will, the court will often think, then yet another piece of paper the lawyer drew up does little to add to that capacity.
Practical experience shows that the single best way to leave unequal shares in your will is to tell your children (or other heirs) you're doing it and why. Nothing leads to estate fights quicker than surprises in a will. Similarly, a child that has had months or years to digest the fact that he is receiveing a lesser share (and who has heard "why" straight from the testator) is much less likely to file a suit.
Second to this is some recording or document that demonstrates capacity. A handwritten note or letter; a video tape; a recording of the conversation with the lawyer; or (in extreme circumstances) examination by a physician competent to evaluate mental health are all ways to head off an estate fight before it begins.
This blog hosted a write-up of the estate of Huguette Clark, the hundred-millionaire heiress to the fotune of a Michigan copper baron here.
Well known Chicago estate planning attorney Joel Schoenmeyer, author of the blog Death and Taxes, derives some lessons from the Clark estate (or more precisely the Clark estate plan) in an excellent article here.
As stated in my previous post, the Clark estate was rife with warning signs that a dispute could come after the testatrix' death. Schoenmeyer distills the typical signs of a looming will contest into a few points in his article. Paraphrasing, these are
1. There are potential questions about the testator's mental capacity.
2. The testator has strained relations with his closest relatives.
3. The beneficiary of the will plays a role in having it written.
4. A non-relative fiduciary (e.g. the drafting attorney) is a beneficiary of the estate.
Schoenmeyer adds some advice to would-be estate planners on how to cover their legal anatomy when the above warning signs are present. To which, from arduous experience, I can add only my "amen."
Tanner Pittman, LLC is experienced in preparing estates that do everything possible to ward off potential will contests and, when the need arises, to defending estates from contesting "heirs."
This firm has already seen one case where the client sought to proffer Facebook evidence. Given the prevalence of that website as a medium of communication, it will only be a matter of time before Facebook evidence becomes an issue in probate and estate litigation.
Facebook comments and statuses are classic examples of hearsay evidence, but they generally may fall under one of several hearsay exceptions (notably, statements of party-opponents in probate litigation).
It is interesting to see the way in that Facebook evidence is being sifted by the country's appellate courts. Though not a Georgia probate law case, the case of State v. Eleck is one in which the appellate court agreed to exclude Facebook conversations as evidence, despite that they were crucial to the state's case. As part of its reasoning, the Connecticut Court of Appeals cited the "general lack of security of the medium," the implication being that someone else could have broken into the alleged declarant's Facebook account and posted the messages.
Chicago evidence law Professor Colin Miller disagrees with the appellate court's reasoning in an excellent blog post here. My sympathies are with Mr. Miller. In an age where the majority of a person's communications in a day may actually be by electronic means, it should be left to a jury to decide the likelihood that a particular communication was the result of alleged "hacking" into the declarant's account.
At Tanner Pittman, LLC, we combine adroit knowledge of trial skills and evidence law with expertise in estate planning and probate to bring value to our clients in will and estate contests.
UPDATE: The only Georgia case that seems to deal heavily with the use of Facebook evidence is the criminal stalking case of Placanica v. State. That case, however, does not set forth any new law regarding the admissibility of such evidence.
Huguette Clark, whose copper-baron father died in 1925, died in New York recently, leaving a will that devises most of her property to charities, gives a substantial gift to her lawyer and accountant, and completely disinherits all of her family members, reports MSNBC.
As if this alone didn't make the estate rife for a fight, Joel Schoenmeyer notes in his "Death and Taxes" blog that the attorney, who was also named co-executor of the will, cut off Clark's relatives from contact with her in 2005. Meanwhile, the accountant co-executor . . .yeah - he's a convicted sex offender, of the distributing-lewd-materials-to-minors stripe.
On March 7, the Supreme Court handed down the case of Norman v. Gober, in which it was held that a grandson had no standing to challenge the will of his grandmother, despite claims that the decedent was the victim of undue influence and that one of the co-executors was unfit to serve as a fiduciary.
The reason? The grandson "lacked standing." Standing to challenge a will, the Court noted, is determined on a case-by-case basis, the general rule being an "interested person" in the estate may challenge, but a "stranger" may not.
How is a grandson not "interested" in an estate that could eventually pass to him (after his parent's death)? The Court decided the real party who would benefit from the challenge was not the grandson, but his mother. Contrariwise, the Court found that the grandson would actually be harmed by a successful challenge. Stretching the common law rule on point slightly, it therefore decided the grandson lacked standing.
Careful reading between the lines in this case reveals that the whole affair probably didn't pass the high court's "smell test." The challenger of the will, the grandson, was actually assisted in the suit by his father. One read of this case would be to assume the mother and father of the challenger were estranged, divorced, or separated, and that the father saw more support to his son in a benefit to the mother. Another might be that the mother didn't want to challenge the will because of its in terrorem clause, disinheriting any contesting beneficiaries.
A safe bet is that the challenging grandson's lawyers were pretty surprised he didn't have standing to contest the will, as he seemed to meet the common law definition of an "interested party" and not that of a "stranger." But the case does serve the laudable role of closing off to some would-be will challengers a way to conduct an end-run around ad terrorem clauses. This is not surprising: too-clever-by-half legal strategies tend to fail, and perhaps they should. My take-away is that I'm glad Georgia wills (particularly in terrorem clauses) can't be defeated by the clever device of "well, then we'll just get our son to sue."
Tanner Pittman, LLC is a West Georgia law firm that specializes in estate services, civil litigation, and legal transactions.
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