Newsletter Mary Alice Smolarek, Editor Cristin C

msba section of estate and trust

John P. Edgar, Chair Richard T. Wright, Chair-Elect Newsletter Mary Alice Smolarek, Editor Cristin C. Lambros, Secretary Aryeh Guttenberg, Editor

Winter 2008 Vol. 18 No. 1 Notes From The Chair

John P. Edgar, Esq.

he Section of Estate and Trust (5) enact rules governing powers of islative agenda in 2010 or later years. TLaw is one of the largest and attorney based on the Uniform Power most active sections in the MSBA. of Attorney Act, (6) allow the use of Another very important activity of the The 1,495 members of the section in- a settlement statement in certain situ- Section Council is to meet three times dicate how many Maryland attorneys ations to establish the value of real each year with representatives of the are interested in this fascinating and property for probate and inheritance Orphans’ Courts, Registers of Wills, rewarding area of law. The Section tax purposes, (7) specifi cally autho- Maryland Attorney General, and Rules Council, consisting of 14 members rize personal representatives and other Committee to discuss current issues. and 3 offi cers from around the state, fi duciaries to become limited partners These meetings often are a source of meets monthly to coordinate the ac- and members in limited liability com- ideas for new legislation and a way to tivities of the section. As Chair of panies, (8) clarify the effect of divorce keep all the participants informed of the Section Council, I welcome ques- on the Will of a divorced person, and their respective legislative goals. The tions, suggestions, input, involvement, (9) add a cross-reference to existing meetings also provide a forum to dis- and even constructive criticism from Criminal Law section 8-801, which cuss procedures, rules and court deci- all section members. We are here to prohibits estate distributions to per- sions affecting our practice area. serve your interests and meet your sons convicted of abusing vulnerable needs, and we are always looking for adults. This is an ambitious agenda, Continuing legal education is anoth- ways to do better! but we hope the General Assembly er important mission of the Section. will support our efforts in the coming The Section Council works closely The Section Council usually spends legislative session. with MICPEL to plan programs, de- much of its time discussing ways to sign curricula, and provide speakers improve Maryland law. This year, Two longer-term legislative projects and other assistance as needed. The it approved a legislative agenda of 9 are also worth noting. The Section Section Council also arranges for pro- items. The agenda includes bills that Council has studied the Uniform Trust grams at the Section’s annual dinner would: (1) enact a procedure to autho- Code for several years to determine if meeting, held in May, as well as the rize the Orphans’ Court to allow the it would be desirable in Maryland. We MSBA Annual Meeting in June. admission of a photocopy of an origi- are currently working with a commit- nal executed will to administrative tee from the Maryland Bankers Asso- These are just a few activities of the probate, (2) allow limited use of attor- ciation to get their input on the UTC. Section Council. I could go on de- ney’s trust accounts for estate funds, Second, a Section Council committee scribing our other efforts, such as this (3) increase the jurisdictional limit for is studying the elective share statute, newsletter and our website. But there Orphans’ Court determination of title along with similar statutes from across is always room for more. Again, I to personal property to $50,000, (4) the nation, to see if this important area welcome your ideas on ways to im- allow Maryland estate tax returns to of law can be improved. Both these prove the law, and the practice of law, be fi led directly with the Comptroller, efforts may result in items on the leg- of estates and trusts in Maryland. ESTATE PLANNING FOR PETS

Lauren D. Burger Krauthamer, Esq. Pasternak & Fidis, P.C.

wo out of three American households own a pet. In tablish such trusts for the benefi t of their pet, both during T2008 Americans will spend an estimated $43 billion on the life of the owner and after death. Therefore, in D.C. their pets. Pets have become more than just companions; and Virginia, pet trusts are legally enforceable. Maryland, they have become family members. We pamper them and however, has not yet adopted such a law. A pet trust, if es- bring them wherever we go. What we do for pets today has tablished in Maryland, is merely an “honorary trust.” In this expanded far beyond simply feeding them old fashioned pet situation the decedent must rely on the trustee to honor the food and providing shelter. Not only are entire aisles of terms of a trust for the benefi t of the pet for the lifetime of food stores dedicated to pet food and other products, spe- the pet; the terms are not enforceable in court. cialty stores have cropped up offering faux mink coats for dogs, ultra gourmet food, and even massages. Seeing pets Although a pet trust sounds like a great idea, clients should being wheeled around in strollers is no longer a particularly be warned of their downside. Maintaining a trust, as with unusual sight. However, pet owners may not have asked non-pet trusts, involves administrative costs. If the trust has themselves who will care for their pet when they are un- any taxable income for the tax year, the trust will need to able to do so. Unlike our two-legged family members, our fi le an income tax return. In addition, if the client does not animal friends are unable to care for themselves for even a have a family member or a friend willing to administer a brief absence. Therefore, pet owners need to make plans for trust, it might be diffi cult to fi nd a corporate trustee, such as their pets in the event of death or disability. a bank, to administer the trust because the value of the trust assets is likely to be less than a corporate trustee is willing Planning for Death to handle. The law generally treats pets as tangible personal property, despite the fact that many pet owners think of their pets as a Depending upon the amount of assets a client wants to set part of the family. Therefore, if a pet owner does not make aside for a pet, there are other alternatives to establishing a a specifi c bequest of a pet in his or her will, the pet will trust. For example, you could recommend to the client that be distributed to the recipient of the late owner’s tangible he or she make a bequest of a certain amount of money to personal property. But what if the recipient of the tangible the person whom they designate to care for their pet. Al- personal property does not want to care for the pet? The pet ternatively, the client could request that the personal rep- could be sent to an animal shelter, with the animal’s future resentative of his or her estate or the trustee of his or her determined by a stranger. Therefore, estate planners should revocable living trust designate a caretaker for the pet and advise clients to have a plan for their pet in the event that the distribute a certain sum of money to that caretaker. client predeceases their pet. Planning for Disability Pet Trusts and Other Arrangements Not only must pet owners consider what will happen to their A trust established for the benefi t of a pet typically des- pets upon their death, they also need to consider what will ignates a caretaker of the pet and a trustee and is funded happen in the event of an emergency, such as the pet owner with assets to care for the pet. The trustee need not be the being hospitalized, even for a short period of time. There- caretaker. The trust typically provides that the trustee will fore, pet owners should be advised to carry a note in their have the discretion to make distributions to reimburse the wallets indicating that they have a pet, what type of pet it is, caretaker for costs associated with caring for the pet. Al- and who should be contacted in the case of an emergency. ternatively, the trustee may directly reimburse those who The client should make the emergency contact aware of any provide services for the pet, such as the veterinarian. special medical conditions the pet has or specifi c instructions to be followed if an emergency arises. The client can The majority of trusts established for pets are done so under accomplish this by providing the emergency contact with the pet owner’s testamentary document, such as a will or a a brief letter or telling them where they can fi nd written revocable living trust. Some individuals will go so far as instructions in the client’s home. The client should be sure to create a trust for the benefi t of a pet during the owner’s to give the emergency contact access to their home by either lifetime. Many jurisdictions, including the District of Co- lumbia and Virginia, have laws that allow individuals to es- (continued on page 5)

2 MARYLAND LAW DEVELOPMENTS

Charles S. Abell, Esq. L. Laurel Lea, Esq. Furey, Doolan & Abell, LLP

CASELAW DEVELOPMENTS a fraud on her marital rights, and claimed a right to elect Maryland Elective Share against those assets. The Circuit Court interpreted Knell to apply only where there is an actual intent to defraud, how- In Schoukroun v. Karsenty, 177 Md. App. 615, 937 A.2d ever, and, fi nding no such intent, ruled against Kathleen. 262 (Md. App. 2008), and Karsenty v. Schoukroun, 406 Md. 469, 959 A.2d 1147 2008 WL 4865191 (Md. Nov. 12, 2008), The Court of Special Appeals agreed with the Circuit Court the Court of Special Appeals and the Court of Appeals each judge’s fi nding that there was no intent to defraud but held considered the application of a surviving spouse’s elective that intent to defraud was not dispositive. The Court of Spe- share to non-probate assets. The two courts arrived at dra- cial Appeals held that Gilles’ ability to revoke the trust during matically different conclusions. his lifetime, and to access and change the designations on the TOD accounts, required the inclusion of those assets for pur- These decisions address a topic that has vexed Maryland poses of calculating Kathleen’s statutory share. Thus, it ap- practitioners for some time. By its terms, Section 3-203 peared to adopt a “dominion and control” test – if a decedent of the Estates & Trusts Article appears to limit a surviving retains control over assets during his life, then those assets are spouse’s statutory share to the probate estate, but Maryland includible for purposes of calculating the statutory share. courts have extended the spousal share beyond the probate estate, most notably in Knell v. Price, 318 Md. 501, 569 The Court of Appeals rejected the dominion and control A.2d 636 (Md. 1990). Knell involved unique and extreme test in its opinion. Citing § 3-203, which expressly limits facts, however. Among other things, the case involved a the statutory share to probate property, the Court opined straw-man transaction by which Mr. Knell ended up with a that such a standard effectively would impose, “by judi- life estate and his girlfriend with a remainder interest. The cial fi at, a kind of augmented estate model eschewed by Court of Appeals held that there had been a fraud on Mrs. the Legislature.” Knell’s marital rights and that the property was subject to Mrs. Knell’s elective share. It was uncertain in the wake of While rejecting the standard established in the Court of Knell whether non-probate property always was includible, Special Appeals, however, the Court agreed that Maryland or whether actual intent to defraud was required. law has long endorsed the inclusion of certain non-probate property for the purpose of calculating the surviving The Schoukroun case involved less egregious facts. The spouse's statutory share, when equity requires such inclu- decedent, Gilles Schoukroun and his fi rst wife, Bernadette, sion. The Court discussed several of its previous decisions were married for eight years, and had one daughter, Lau- on this topic, to set the stage for its synopsis of the state of ren. Gilles remarried and was living with his wife Kath- Maryland law. At least some of these cases had turned on leen at the time of his death. Just four months before his the notion of a fraud on the surviving spouse's rights, which death, Gilles created a revocable trust for the benefi t of his likely is the reason why fraud had been the focus of the daughter, Lauren, with his sister Maryse as the successor Circuit Court's analysis. trustee (and with Kathleen named as successor to Maryse). Gilles funded the revocable trust with three different bro- The Court opined that the concept of "fraud," is perhaps kerage accounts and named the trust as transfer-on-death misleading and should not be the focus of future inquiry. It benefi ciary on two additional accounts. At the time of suggested instead that inclusion should turn on an analysis Gilles’ death, his probate estate was worth about $20,000 of the character of an inter vivos transfer. A transfer that is and the assets in or payable to the trust were worth about "complete and bona fi de" or done "in good faith," should $422,000. Kathleen was not left destitute – she received a not be invalidated, and the transferred property should not $200,000 life insurance policy, a $22,000 car (Gilles had be included in the calculation of the statutory share. In con- paid off the loan on the car before his death), and other trast, a transfer that is "a mere device or contrivance" or a death benefi ts of about $13,000. "sham," might be invalid, and the transferred property could be included. The Court held it is not possible to establish a Kathleen asserted that the transfer of the brokerage accounts to the trust and the transfer-on-death designations were (continued on page 7)

3 Estate and Gift Tax Study Group Upcoming Events 2008-2009

DATE TOPIC SPEAKER October 23, 2008 Maryland Estate Tax Update Norman R. Evans

November 13, 2008 Intersection of Estate Planning Sheila K. Sachs (Second Thursday) and Family Law

December 11, 2008 Current Developments in Lawrence J. Macklin (Second Thursday) Life Insurance

January 22, 2009 Heckerling Institute Update To Be Determined (Fourth Thursday) February 26, 2009 Maryland Inheritance Tax James D. Walsh March 26, 2009 Ethics in Estate Planning Charles S. Winner

April 23, 2009 Legislative Update To Be Determined

May 28, 2009 Issues relating to Special Needs Michael Levine Trusts and Medicaid Liens

June 18, 2009 (Center Club) To Be Determined Angela M. Vallario

MSBA Annual Meeting Ocean City, Maryland The MSBA annual meeting in Ocean City will be held from Wednesday, June 10 through Saturday, June 13, 2009.

Starting Jamuary 15, you can visit www.msbaannualmeeting.org or call Wanda Claiborne of the MSBA at 410-685-7878.

4 Estate Planning for Pets. . . (continued from page 2) providing them with a key or telling them where they can • Whom do they want to designate as the caretaker ﬁ nd a hidden key. Your client may want to consider having of their pet? two emergency contacts just in case one of them is out of • If the caretaker will be an individual, does the cli- town or unavailable. ent anticipate that the caretaker will be able to care for the pet during his or her lifetime? These simple measures can go a long way to providing your • Does this person want to care for the client’s pet? client with peace of mind that their pets will be taken care • Does the client anticipate that the caretaker’s life of, whether upon their death or during even a brief period may change in the future so that he or she may no of disability. longer be able to care for the client’s pet? • What does the client anticipate as the cost to care If you have a client that lives alone, is elderly, has multiple for their pet during the pet’s lifetime? Typically, like pets and would like them all to stay together after their death, people, as a pet gets older, the medical and other ex- or your client has a pet, such as a parrot, that may outlive penses for the pet will increase. them, then you may want to advise your client to consider including their pets in their estate planning documents. Just as any responsible pet owner makes arrangements for pets during the owner’s life, whether for an extended absence Questions to Consider or short trips to the grocery store, so must plans be made in the event that the owner or other regular caretaker is not avail- Some questions you may want to ask a client who owns a pet able to provide the desired level of care. Fortunately there are when planning for the client’s death or disability include: options that you can discuss with your clients.

MEMBER NEWS

Please send your professional news or announcements to one of the Editors at:

Aryeh Guttenberg Mary Alice Smolarek Law Ofﬁ ces of Aryeh Guttenberg Wright, Constable & Skeen, LLP 2835 Smith Avenue One Charles Center 16th Floor Suite 201 100 North Charles Street Baltimore, MD 21209 Baltimore, Maryland 21201-3812 (410) 484-7711 phone (410) 659-1318 phone (410) 484-3533 fax (410) 659-1350 fax [email protected] [email protected]

5 REALITY BYTES NO. 5.0 A PERSONAL VIEW ON TECHNOLOGY Robert C. Young, Esq. Stewart, Plant & Blumenthal, LLC

The remote control changed our lives ---The remote control time that any song plays was probably around one minute. took over the timing of the world. That’s why you have road A song came on, plays for a while, then “click”, the iPod ad- rage. You have people who have no patience, because you vances to another song, then “click”, another song, “click”, got immediate gratifi cation. You got click, click, click. If it another song, “click” . . . and so forth. doesn’t explode within three seconds, click, click, click. Of course, this impatience still prevails exactly where Sid Sid Caesar Caesar fi rst encountered it: the remote control. It seems that my family combats commercials by switching channels Click - Click - Click on the television or the radio. As a consequence, we are usually jumping among three or four television shows or ra- When Sid Caesar, one of the most brilliant creators of dio stations at a time, never becoming completely absorbed the early days of television, spoke those words on PBS, I by any of them. Even CD players and docking stations for thought immediately how relevant his insight still is to our MP3 players come with remote controls now. (I occasion- current world. The rise of computers and the Internet has ally try to point out that you can watch or listen to certain its own “click, click, click” metronome of acceleration in channels, like PBS or NPR or movie channels where there our lives. Several years ago, at the in- are no commercials, but “click – click – click” is a vitation of a client, I had an opportunity hard habit to break.) to visit a staff meeting at an Internet company. One of the most prominent Fast forward into our offi ces and homes. We sit visual cues during that meeting was a in front of computer screens, clicking through e- hand and fi nger motion simulating the mail, web pages, blogs, social networking sites, clicking of a computer mouse, the new documents, spreadsheets, calendars, contact data, symbol of money, of revenue, measured and other programs. We punch buttons to listen by the number of clicks of a mouse on to voice-mail and music and podcasts and to read Internet links. and write text messages and to make telephone calls. Click – Click – Click. To see the acceleration of the modern world wrought by remote con- If there is not enough for us to cycle trols, computers, the Internet, and through in the course of a day, the tech- a myriad of related devices, let’s look again at my daughter nology behind Web 2.0 is finding ways to create ever- and her iPod. A few weeks ago, while waiting in the car for newer doses of immediate gratification. Do you Twit- her, I picked up her iPod and started scrolling through the ter? Flickr? Digg? Buzz? Del.icio.us? Utterz? Plurk? artists and songs. The rapidity with which you can do this Slashdot? Stumble? Cork’d? Librivox? AppScout? on an iPod is already an indication of the tempo of modern Have a MySpace or Facebook page? A LinkedIn entry? life. What I noticed in this rapid-fi re tour is that my daugh- Gather.com? ter has hundreds of songs, but rarely more than one or two by the same artist. In a way, we have gone back the future, The assumption that we have an ever shorter attention span back to the era of the 45-rpm record’s dominance over the that demands ever shorter and more varied content is chang- long-playing “LP” album. ing even our traditional forms of communication. Music and television now come song by song, episode by episode, My daughter arrived and took control of her iPod, which to be downloaded onto a computer, an iPod or Zune or other she can play through the car stereo system (for our pre-iPod MP3 player. vehicle this is done with the assistance of an ICarPlay Wire- less adapter cable by Monster that transmits the iPod signal Many American newspapers are struggling to compete, los- to the car radio by using an unused FM frequency). It being readers and reducing staff. Some of these papers have came apparent that my daughter rarely listens to an entire gone so far as to downsize the product as well. The Balti- song from beginning to end. In fact, the average length of (continued on page 15)

6 Maryland Law Developments. . . (continued from page 3) bright line rule for this analysis, which must be performed ing spouse received other assets from the decedent, includ- on a case-by-case basis. ing non-probate assets such as life insurance (if the spouse received signifi cant assets, a transfer is far less likely to be The Court discussed the elements of this analysis in some invalid), (5) the extent to which the decedent actually exer- detail. It held fi rst that, as a threshold matter, a surviving cised his dominion and control (if actual access is limited, spouse must show that the decedent retained at least some the transfer is less likely to be invalid), and (6) whether there dominion and control over the transferred property. If the was a familial relationship between the decedent and the decedent retained no interest in the transferred property, transferee (the closer the relationship, the more likely the then the transfer cannot be invalidated, no matter what the transfer was made in good faith). With respect to the sixth decedent's purpose might have been. Second, the Court said factor, the Court observed that bona fi de motivations are that judges should not try to second guess legitimate estate likely strongest when a decedent seeks to benefi t his chil- planning arrangements, allowing that this requirement im- dren, and particularly children from a previous marriage, poses a "high hurdle" for a surviving spouse to overcome. and that such an arrangement "facially appears legitimate."

Finally, the Court described a number of factors, derived The Court of Appeals therefore reversed the Court of Spe- from existing caselaw, that are relevant to the consideration cial Appeals and remanded the case, for further remand to of whether a transfer is made in good faith. Among these the Circuit Court for determination of facts and application factors are (1) the extent of control retained (the more re- of law. While clearly stating that it did not wish to usurp tained, the less likely to be good faith), (2) the decedent's the Circuit Court’s analysis, the Court of Appeals discussed motives in making the transfer (are there likely good faith certain facts that it found signiﬁ cant in the context of the reasons for it), (3) the transferee's motives (was there collu- sion with the decedent), (4) the degree to which the surviv- (continued on page 8)

JOIN THE ESTATE AND TRUST LAW LISTSERV

The Section of Estate and Trust Law has a listserv open to members of the Section. The focus of the MSBAETL list is a discussion of issues relevant to Maryland estate and trust lawyers. The MSBAETL list also is intended as a means for members of the Section to communicate among themselves on issues of importance to the Section.

To subscribe to the MSBAETL list, go to the home page of the Section’s website and use the link on the right-hand side marked: “Listserve.” The link will take you to a page where you can enter you name and e-mail address. The person signing up will then receive an e-mail that they must reply to in order to conﬁ rm their address. They will then be a member of the list and receive a welcome message.

Questions or comments about the list may be directed to the MSBA care of John An- derson at [email protected] or to the Estate & Trust Law Section care of Richard T. Wright at [email protected].

7 Maryland Law Developments. . . (continued from page 7) factors listed above. It noted that Kathleen received sig- cording to certain criteria. Not only was Figgins unable to nifi cant assets -- the $200,000 life insurance, a $22,000 car, satisfy these criteria, she admitted that she had never even about $13,000 of death benefi ts, and also monthly contri- attempted to determine whether the gift was reasonable un- butions of $1,200 toward her mortgage. The Court further der the power of attorney. observed that Gilles apparently took no distributions from the TOD accounts or from most of the trust accounts, which Figgins fi nally argued that she was empowered to execute perhaps suggests that he did not intend to have unfettered the deed because she had been so directed by Cochrane’s control over these accounts. Finally, the Court noted that attorney. The Court rejected this argument as well, holding Gilles had a duty under his separation agreement to provide that the attorney had no authorization to execute the deed, for his daughter, and that the transfers in Lauren’s favor and therefore could not authorize Figgins to do so. might be seen as in line with his familial and contractual obligations to her. Lien Against Joint Property

Validity of Gift under Power of Attorney The Court of Special Appeals considered the attachment of a lien to joint property in Chambers v. Cardinal, 177 Md. In Figgins v. Cochrane, 403 Md. 392, 942 A.2d 736 (Md. App. 418, 935 A.2d 502 (Md. App. 2007). Richard Cham- 2008), the Court of Appeals affi rmed the decision of the bers and Elizabeth Chambers were divorced in April 2003. Circuit Court (which had been affi rmed by the Court of In August 2003, Elizabeth obtained a judgment against Special Appeals, 174 Md. App. 1, 920 A.2d 572 (Md. App. Richard. By that time, Richard had remarried and acquired 2007)) that appellant Diane Figgins had improperly con- real property as joint tenant with his new wife Alon Cham- veyed property to herself for no consideration shortly be- bers. Richard and Alon contracted to sell the property in fore the death of her father, Robert Cochrane, Jr. October 2004 to Michael Cardinal and Jamie Gross; they closed on that sale in February 2005. Figgins had lived with her parents nearly all her life and was primarily responsible for her father's care. Cochrane appar- At the time of the contract and of the closing, Elizabeth had ently expressed an interest in giving his house to Figgins dur- not recorded her judgment against Richard. Nonetheless, in ing a meeting with his lawyer, and his attorney prepared a June of 2006, she sued to obtain a lien against the property deed, but he slipped into a coma before executing the deed. (now owned by Cardinal and Gross). The Circuit Court dis- Figgins used her power of attorney to sign the deed convey- missed her suit, and the Court of Special Appeals affi rmed. ing the house to herself. Her father died two days later. The Court agreed with Elizabeth that a properly recorded and indexed judgment would have attached as a lien to The Court affi rmed the lower courts’ fi nding that Figgins Richard’s property. Jointly held property is not subject to was in a confi dential relationship with her father. Under such a lien, however, unless the creditor also levies against Maryland law, this created a rebuttable presumption of un- the property in execution of her judgment – without levy or due infl uence, imposing on Figgins a “heavy burden” to execution the lien does not sever the joint tenancy. demonstrate fairness. Elizabeth argued that the joint tenancy was severed when Figgins argued that her actions were fair because her father Richard and Alon executed the contract of sale, and there- received independent advice from his attorney. The Court fore that her judgment operated as a lien on Richard’s interest held that while independent legal advice can rebut the pre- as of that time. The Court disagreed, noting that Elizabeth sumption, it can do so only if the grantor actually executes could have executed her judgment – and therefore severed the the transaction. In the present case, Cochrane did not ex- joint tenancy and obtained an enforceable lien – at any time ecute the deed, and therefore his lawyer’s advice was insuf- prior to the contract and sale of the property. The Court held fi cient to carry Figgins’s burden. Indeed, the Court noted that by waiting until after the property was sold, she waited that Cochrane had only recently executed a codicil to his too long, and therefore could not enforce her judgment as a will giving Figgins the right to reside in the house for three lien against the property, which now had new owners. years after his death, but not leaving her the fee interest. Guardianship Commissions After Death Figgins next argued that the power of attorney authorized the gift, but the Court rejected this argument as well. The In Battley v. Banks, 177 Md. App. 638, 937 A.2d 846 (Md. power of attorney authorized gifts to Cochrane’s descen- App. 2007), the Court of Special Appeals examined the de- dants, but only if they were reasonable, as determined ac- (continued on page 9)

8 Maryland Law Developments. . . (continued from page 8) tails of who was entitled to control of property when the specifi cally gave this decision prospective effect only. ward of a guardianship dies. Preparation of Will by Lawyer with Benefi cial Interest Michael Banks had been serving as court-appointed guard- ian of Dorothy Battley. After Battley’s death in 2004, Banks The Court of Appeals’ decision in Attorney Grievance v. petitioned the Circuit Court to terminate the guardianship Saridakis, 402 Md. 413, 936 A.2d 886 (2007), is a must and authorize transfer of the guardianship assets to her es- read for any lawyer with an unrelated client who wants to tate. The Circuit Court granted the petition and awarded leave him or her a bequest. Banks $550 in commissions. More than one year later, however, no one had come forth to open a probate estate, Mr. Saridakis had been asked by a long-standing client to so Banks himself petitioned for appointment as personal prepare a will that included him as benefi ciary. He had not representative. At that time, Robert Battley fi nally fi led the solicited the bequest; indeed, he tried to dissuade her from decedent’s will and eventually was appointed personal rep- including him in her will. When she insisted, he told her resentative. Subsequent to that appointment, Banks asked that she must consult with another attorney. She said she the Orphans’ Court to allow him to pay his guardianship did not know any other attorneys and asked Saridakis to fi nd commission, plus $300 in fees and $52.84 in probate fees he one for her. incurred in his efforts to open decedent’s estate. He sought authorization to pay himself directly from the guardianship Saridakis wrote the will as requested by the client. He assets, before he delivered those assets to the personal rep- asked an attorney with whom he shared offi ce space, but resentative. The Orphans’ Court granted Banks’s petition. who had a separate lease and a distinct practice, to review the will and advise the client. The attorneys visited the cli- The Court of Special Appeals affi rmed the Orphans’ Court’s ent together, but the other attorney, Mr. Lawlor, reviewed award of commissions and attorneys’ fees, but reversed the the will with the client outside of the presence of Saridakis. order permitting Banks to pay himself prior to delivering He determined that the client was of sound mind and her the guardianship assets to the personal representative. The intent was fully represented in the will. Court held that once the guardianship was terminated because of the ward’s death (per the Circuit Court order), The hearing judge had found, and the Court of Appeals Banks was not permitted to do anything other than turn the agreed in its de novo review of the record, that Lawlor had guardianship accounts over to the personal representative. consulted with the client in a manner in which the inde- If the guardianship had been terminated because the ward’s pendent counsel would be expected to do. Based on the disability had ceased, then Banks would have been autho- evidence presented, the hearing judge concluded Saridakis rized to pay himself, but the Court of Special Appeals deter- had not violated the rules of professional conduct. mined that this is not the case when the ward has died. The Court of Appeals ruled in a 5-2 decision that Saridakis The Court of Special Appeals also reversed the award of had violated Rules 1.8(c) and 8.4(d) of the Maryland Rules of the probate fees, because the personal representative disal- Professional Conduct. The Court held that because Saridakis lowed that claim, and Banks did not petition for allowance shared a space with the other lawyer, he had not complied within the time period dictated by §8-107(b) of the Estates with requirements of Rule 1.8 (as it existed in 1994, when & Trusts Article. the will was written). That Rule prohibits a lawyer from pre- paring an instrument for an unrelated client that would give Therefore, while Banks remains entitled to his commissions the lawyer or close relation of the lawyer a testamentary gift, and attorneys’ fees, they are merely claims against the es- except where the client is represented by independent coun- tate, to be paid in the hierarchy set forth in §8-105(a). In an sel in connection with the gift. The Court of Appeals relied estate with few assets – such as this one – he runs a signifi - heavily on its opinion in Attorney Grievance Commission v. cant risk of receiving less than the total amount due. Stein, 373 Md. 531, 819 A.2d 372 (2003). There, the Court had stated in dicta that the requirement of Rule 1.8(c) would The Court of Special Appeals acknowledged that there was not be satisfi ed by the client's consultation with a lawyer who some division in court practice on this issue, and that no shares offi ce space with the drafting attorney. Even though doubt many guardians in the past had been permitted to do Stein involved much more egregious conduct by the attorney what Banks sought to do in this case. The Court did not involved -- and was decided nine years after Saridakis pre- want to disturb those who had operated in the past under “decades-old practices of their localities,” and therefore (continued on page 10)

9 Maryland Law Developments. . . (continued from page 9)

pared the will in question -- the court found that the "rule of counsel. A good friend or an attorney with whom the law- law" articulated in Stein existed in 1994. yer exchanges referrals might not sufﬁ ce.

The Court held that Saridakis's good faith effort to com- Payment by Debtor to Person Posing as Agent ply with Rule 1.8 did not save him from the rules violation. Nor did that fact that the client in fact received advice com- In Jackson v. 2109 Brandywine, LLC, 180 Md.App. 535, parable to what would have been afforded by independent 952 A.2d 59 (Md. App. 2008), the Court of Special Ap- counsel. The Court of Appeals was concerned with the appeals considered a case in which a debtor made payments to pearance of impropriety created by the relationship of law- someone who was not in fact the personal representative of yers who share offi ce space, and stated that this is enough to a deceased payee. establish a violation of the rule. Brandywine, LLC, signed a contract to purchase property For largely this same reason, the Court also ruled that Sarida- from Edward Saunders on March 11, 1998. In connec- kis had violated Rule 8.4(d)'s prohibition against engaging in tion with the purchase, Brandywine signed a promissory conduct that is prejudicial to the administration of justice. note for $200,000, which was secured by a Deed of Trust on the property. Dr. Saunders died on November 6, 2002. In considering a sanction, the Court found that these violations Following his death, his girlfriend, Francina Mitchell, al- were not egregious and that Saridakis had made a good faith legedly represented to Brandywine’s agent that she was the effort to comply with his ethical obligations. It also took into personal representative of his estate, and requested that the account that Saridakis enjoyed a clean record and fi ne reputa- remaining payments be directed to her. Brandywine deliv- tion. The Court remanded for a dismissal with a warning. ered to her nineteen payments of $5,000 each, payable to “Edward Saunders,” and one payable to “Estate of Edward Judge Wilner, in a trenchant dissent, took issue with the Saunders.” Mitchell deposited the checks into an account majority's decision. He noted that in 1994, when the will titled jointly in both her and Saunders’s name. was drafted and executed, there was no authority that would have alerted Saridakis to this interpretation of the Rule. He In fact, Mitchell never had been appointed personal repre- asserted that it was unfair to tarnish, especially since the sentative of the estate. On December 18, 2003, Walter S.B. Court decided to order a dismissal with a warning. Childs was appointed Special Administrator. Childs asserted that Brandywine owed the full amount of the debt to the es- The Court of Appeals added in a lengthy footnote that in tate, and that the payments to Mitchell did not offset that obli- an appropriate case (though not this one), it would order gation. Brandywine fi led a declaratory action, arguing among disgorgement of the gift received by the drafting attorney. other things that an offset was appropriate since Mitchell had Previously, in Stein, the Court had held that disgorgement used the money to pay debts of the estate. The trial court would not be proper, as it too closely resembled a form of ruled in favor of Brandywine, concluding that Brandywine civil liability not contemplated by the Rules. had made the payments in good faith and therefore it was not responsible for making the payments again. It is hard not to empathize with Mr. Saridakis. He had an "exemplary good character" and an "unblemished record." The Court of Special Appeals reversed. It noted that Bran- He had gone beyond a lawyer's duty in helping his client dywine’s good faith was not suffi cient, and that Maryland over the years. Far from seeking a gift, he had recom- law has a long-established standard that payment of a debt mended and asked that it not be made. He recognized the to someone who is not the holder of the note, does not dis- ethical issue and tried to address it in a manner that he charge the debtor or provide a defense to an action by the believed in good faith followed the rules. And indeed his actual holder of the note. Whatever Brandywine believed, efforts had resulted in the kind of independent advice re- Mitchell was not an agent for the estate, and there was no quired by the Rule. evidence from which Brandywine could have inferred that she was. This decision is a cautionary tale for estate planners. While Rule 1.8(c) was rewritten in 2005, it contains the same pro- Having ruled that the payments to Mitchell did not relieve hibitions. This decision makes clear that a lawyer who ben- Brandywine of its obligation under the note, however, the efi ts under the estate plan of an unrelated client (or whose Court did agree that Brandywine should be credited for the own relative benefi ts) should go the extra mile to make sure (continued on page 11) that the client is fully advised by completely independent

10 Maryland Law Developments. . . (continued from page 10) amounts that Mitchell actually used to satisfy the estate's an independent personal representative appointed to deter- obligations. The Court reasoned that otherwise the estate mine whether or not to commence an action against her for would be unjustly enriched. the alleged pre-death fraud. The Circuit Court granted the motion to dismiss, agreeing that if Fisher had indeed com- Action for Accounting mitted fraud prior to Mrs. Kroll’s death, the personal representative had an obligation to seek redress, and she could be The Court of Appeals considered the question of who can removed and replaced if she refused to do so. seek an accounting and redress for fraud against a decedent in Kroll v. Fisher, 182 Md.App. 55, 957 A.2d 205 (Md.App. Kroll appealed, asserting that the Circuit Court was incor- 2008). John Kroll, a benefi ciary of the estate of Mary Kroll, rect that only a personal representative could pursue an ac- alleged that Barbara Fisher, Mrs. Kroll’s personal represen- tion for fraud, because in this case there was an inherent tative, had committed fraud in managing Mrs. Kroll’s fi - confl ict of interest. The Court of Special Appeals affi rmed nances as attorney-in-fact prior to Mrs. Kroll’s death. He the Circuit Court, agreeing that Kroll could seek Fisher’s re- also sought an accounting of Fisher’s actions. moval as personal representative in the Orphans’ Court, and therefore that there was a complete and adequate remedy Fisher moved to dismiss the complaint, on the grounds that available to Kroll, just not the one he chose. The Court fur- Kroll lacked standing and that the proper remedy would be to seek her removal as personal representative and to have (continued on page 12)

Editor’s Note

Our goal is for the Estate and Trust Law Section Newsletter to provide current, useful information on areas of interest to Section members. The Newsletter can be better tailored to suit members’ needs with input from you. If you would like to suggest a future topic, change of format, or submit an article, please contact the Editors at:

11 Maryland Law Developments. . . (continued from page 11) ther agreed that redress of the alleged fraud must be sought accounting, and damages for breach of ﬁ duciary duty. by the personal representative, since any funds recovered would be paid to the estate, and not to Mr. Kroll himself. The Senator’s will contained a somewhat complicated formula for determining the share of the estate passing to the Personal Jurisdiction in a Foreign Estate Senator’s children and the share passing for the beneﬁ t of the Senator’s surviving spouse. Brewster alleged that Brennan In Kortobi v. Kass, 182 Md.App. 424, 957 A.2d 1128 (Md. was going to apply the formula incorrectly (and underfund App. 2008), the Court of Appeals considered whether a per- his share) and sought a declaratory judgment to that effect. sonal representative in a foreign estate can be sued in a Mary- Brennan argued that he had not yet made any calculations un- land court simply because the individual serving as personal der the formula, and therefore that the claims were not ripe. representative resides in the State. The case involved a car The Court agreed with Brennan and dismissed this request. accident between M’hamed Kortobi and James Leach. The accident occurred in the District of Columbia, and both Ko- Brewster also sought a declaratory judgment that Brennan rtobi and Leach were D.C. residents. Leach subsequently could not make any distribution to the Senator’s spouse, passed away (from causes unrelated to the accident), and arguing that under the will such distributions could not be Brian Kass was appointed personal representative of Leach’s made until the children’s share had been calculated and paid. estate by the Probate Division of the Superior Court of the The Court held that this claim was ripe, but the Court’s au- District of Columbia. There was no indication that Leach thority to issue a declaratory judgment was discretionary, had any connections to the State of Maryland, and no probate and that it did not see that declaratory relief was necessary proceedings were commenced in the State. or would serve any purpose.

Nevertheless, Kortobi dismissed an action he had fi led in The Court also dismissed the demand for an accounting, the District of Columbia and fi led suit in Prince George’s noting that such a request must be made at a reasonable time County, Maryland. Kass moved to dismiss the suit for lack and place, and that Brennan had agreed to provide one when of personal jurisdiction. Kortobi argued that Kass, who re- he had suffi cient information available. Finally, the Court sided in Maryland, could be sued in Maryland as a foreign also dismissed as unripe the claim for breach of fi duciary personal representative under Section 5-502(a) of the Es- duty, since that claim was based on the calculations under tates & Trusts Article, which provides that a foreign person- the will, which had yet to be completed. al representative “may sue and be sued in Maryland.” The Circuit Court granted the motion to dismiss, fi nding that the Transmission Issues from the Orphans’ Court to Circuit Court mere residence of a foreign personal representative was in- suffi cient to establish personal jurisdiction for the suit In Russell v. Gaither, 181 Md.App. 25, 952 A.2d 1013 (Md. App. 2008), the Court of Special Appeals analyzed the au- The Court of Special Appeals agreed that “the fortuitous ba- thority of the Orphans’ Court to deny a petition under § sis of the residence of the personal representative” could not 2-105(b) of the Estate and Trusts Article to transmit issues confer personal jurisdiction. It reasoned that, as a foreign per- to the Circuit Court. The Orphans’ Court was hearing a sonal representative, Kass must be viewed as a non-resident, caveat petition fi led by Marquitta Russell, who requested whatever his actual personal residence. Since the record was transmittal of issues to the Circuit Court after the Orphans’ devoid of any actual contacts between Leach and his estate Court’s deadline for pre-trial motions. The Orphans’ Court and Maryland, the Court found that jurisdiction rested solely denied the request. in the District of Columbia and affi rmed the Circuit Court. Russell argued that the court that should have transmitted Timing of Review the issues as requested, because it had not yet decided the facts at issue. The Court of Special Appeals agreed with The United States District Court considered the question of Russell and reversed the Orphans’ Court. Citing extensive when a benefi ciary may seek an injunction against a person- precedent, the Court noted that, while the Orphans’ Court is al representative in a Maryland estate in Brewster v. Bren- authorized to deny transmittal in certain cases, this authority nan, 567 F.Supp.2d 791 (D. Md. 2008). The case involved to deny does not extend to caveat proceedings. Therefore, the estate of former Maryland Congressman and Senator the Court held that the Orphans’ Court should have granted Daniel Brewster. Daniel Brewster, Jr., his son, brought suit the request for transmission in this caveat proceeding, since against J. Michael Brennan, personal representative of the the request had been made before there had been any testi- estate, seeking a declaratory judgment on certain issues, an mony or fi nal adjudication or determination of fact.

12 2008 Advanced Estate Planning Institute

Edwin G. Fee, Jr., Esq. Whiteford, Taylor & Preston L.L.P.

his article discusses selected topics from programs Astleford v. Comm’r, T.C. Memo 2008-128 (5/5/08), the Tpresented at MICPEL’s 2008 Advanced Estate Plan- Tax Court approved a 35% discount for minority interest ning Institute. and lack of marketability for a gift of an interest in a family limited partnership. Recent Developments in Estate Planning, Estate Administration, and Trust Administration Beware if you use a family limited partnership across the Charles D. “Skip” Fox, IV border in Pennsylvania. In Estate of Helen H. Berry, 921 McGuire Woods LLP, Charlottesville, Virginia A.2d 1261 (4/24/07), the Pennsylvania Commonwealth Court held that no discount was appropriate for an estate’s All of the major presidential candidates (which at the time interest in a family limited partnership, despite that fact that of the program included Senators Clinton, McCain, and the IRS had allowed a 33% discount. Obama) pledged to sign whatever estate tax reform legislation ultimately passes Congress. In Estate of Thompson v. Comm’r, 499 F. 3d 129 (2007), the Second Circuit looked very unkindly upon estate ad- In Letter Ruling 200729028 (7/20/07), the Internal Revenue ministration techniques that went beyond creative and into Service (“IRS”) ruled that a qualifi ed terminable interest egregious. A New York estate hired an Alaska attorney and property (“QTIP”) election was void, because the election an Alaska accountant in an attempt to avoid review by the was not necessary to reduce estate tax liability to zero. What IRS offi ce in New York. is most interesting about this ruling is that the taxpayer decided to request it in the fi rst place, given the cost of obtain- A proposed regulation (112196-07) provided that the alter- ing a ruling (the fi ling fee alone is $10,000) and the clear nate valuation date may be used only if the decrease in value position of the IRS on this issue in Rev. Proc. 2001-38. results from market conditions, and not if the decrease results from other post-death factors. This is a reaction to the In Letter Ruling 200729004 (7/20/07), the IRS ruled that IRS loss in the Kohler case. a vacation home could qualify as a personal residence for purposes of a qualifi ed personal residence trust (“QPRT”), In Letter Ruling 200718031 (5/4/07), the IRS permitted as long as the vacation home is comparable to other resi- a late election to opt out of automatic allocation of the dences in the area. generation-skipping transfer (“GST”) tax exemption. In a typical irrevocable life insurance trust (“ILIT”), the grant- In Letter Ruling 200728018 (7/13/07), the IRS approved or would not want the GST tax exemption to apply. So it the sale of a remainder interest in a personal residence. This would be necessary to opt out of the automatic allocation transaction does not cause any section 2036 problems and of the exemption on a gift tax return. At the time of the is an alternative to a QPRT. It also should qualify for the fi rst contribution to the ILIT, the grantor could opt out of $250,000 capital gains tax exclusion. automatic allocation for the fi rst contribution as well as all future contributions. The U.S. Tax Court denied valuation discounts for family limited partnerships in a string of cases involving par- Tennessee and Wyoming have joined the list of states that ticularly bad facts. Many of the unfavorable partnership have domestic asset protection statutes permitting self-set- decisions were written by Judge Laro, who has gone on tled discretionary spendthrift trusts. senior status. The IRS released Proposed Regulation Section 1.67-4 re- The news regarding family limited partnerships and fam- garding the deductibility of fi duciary expenses. The regu- ily limited liability companies was not all bad. In Estate lations apply the 2% fl oor on miscellaneous deductions to of Anna Mirowski, T.C. Memo 2008-74 (3/26/08), the Tax all expenses of an estate or trust except expenses that are Court rejected the efforts of the IRS to include the full “unique” to an estate or trust. Expenses that are “unique” to value of a limited liability company interest in an estate based on sections 2035, 2036, and 2038. In addition, in (continued on page 14)

13 Advanced Tax Institute. . . (continued from page 13) an estate or trust are fully deductible. Examples of “unique” 2008 Chapter 548 (House Bill 1534) authorized a new expenses include the following: fi duciary accountings, re- Maryland Broker-Dealer College Investment Plan and per- quired judicial fi lings, fi duciary income tax returns, distri- mitted Maryland taxpayers to obtain state income tax bene- butions and communications to benefi ciaries, will or trust fi ts from using other states’ college savings plans distributed contests or constructions, and fi duciary bonds. Examples by broker-dealers. of expenses that are not “unique” include the following: custody and management of property, investment advice, The following legislation failed during the 2008 regular ses- preparation of gift tax returns, defense of claims by credi- sion of the Maryland General Assembly: Uniform Power of tors of the grantor or the decedent, and the purchase, sale, Attorney Act (House Bill 412/Senate Bill 87); authority of maintenance, repair, insurance, or management of property a fi duciary to deal with limited liability companies in the not used in a trade or business. same manner that fi duciaries already are permitted to deal with corporations and partnerships (Senate Bill 771); direct fi ling of the Maryland estate tax return with the Comptroller 2008 Maryland Legislation Affecting Estates and Trusts of Maryland, rather than with the Register of Wills (Senate John P. Edgar Bill 961); authority of a county or Baltimore City to request that the General Assembly prescribe qualifi cations for Or- During the 2007 special session and the 2008 regular ses- phans’ Court judges (House Bill 387 and Senate Bill 293); sion, the Maryland General Assembly enacted legislation and Uniform Prudent Management of Institutional Funds regarding income tax rates, recordation and transfer taxes, Act (House Bill 1467). domestic partnerships, advance directives, anatomical gifts, and college savings plans. Current Developments in Charitable Giving 2007 Special Session Chapter 3 (Senate Bill 2) and 2008 Emanuel J. “Emil” Kallina, II Chapter 10 (Senate Bill 46) created new income tax rates Kallina & Associates, LLC, Towson up to 6.25% for individuals and fi duciaries, 7.5% for non- resident individual members of pass-through entities, and The applicable federal rate dropped so low (e.g., the May 8.25% for corporations and for non-resident entity mem- section 7520 rate was 3.2%, the lowest since 2003) that it bers of pass-through entities. precluded gift annuities at the rates recommended by the American Council on Gift Annuities for a donor aged 53 or 2007 Special Session Chapter 3 (Senate Bill 2) also im- younger. In addition, a charitable remainder annuity trust posed recordation and transfer taxes on certain transfers of that pays the minimum required 5% payout would fail the controlling interests (generally 80%) in entities owning real “5% probability of exhaustion test” for a donor aged 64 or property with a value of $1 million or more. younger. Many two-life annuity plans also would be precluded by the low rate. 2008 Senate Bill 566 conferred rights regarding visitation and medical decision-making on members of a “domestic In Letter Ruling 200817038, the IRS approved an arrange- partnership,” which is defi ned as a relationship between two ment under which a university proposed to issue units, or adult, unrelated, unmarried individuals who agree to be in “contract rights,” in its endowment funds to charitable re- a relationship of mutual interdependence in which each in- mainder trusts of which it is the trustee. dividual contributes to the maintenance and support of the other individual and the relationship. 2008 Senate Bill 597 For split interest trusts, the IRS issued new form 5227, extended certain recordation and transfer tax exemptions to which replaced old form 5227 and form1041-A. This domestic partners. change was not refl ected in form 1041-A or its instructions. Non-grantor charitable lead trusts still must fi le both form 2008 Chapter 79 (House Bill 510) authorized electronic 1041-A and form 5227. advance directives and the electronic signature of advance directives. In Rev. Rul. 2008-22, the IRS ruled that retaining a power to substitute property of equivalent value in a trust will not, 2008 Chapter 214 (House Bill 906/Senate Bill 766) required by itself, cause the trust to be includible in the grantor’s the creation of a donor registry which a donor may use to gross estate under section 2036 or section 2038. This pow- make an anatomical gift. (continued on page 15)

14 Advanced Tax Institute. . . (continued from page 14) er may be used to obtain “grantor” trust status for income more benefi cial to use an LLLP due to the long history of tax purposes. For example, this power could be included partnership law. in a charitable lead trust if the grantor wanted to claim an income tax deduction for the present value of the income In a sale to an intentionally defective grantor trust, the rule of (lead) interest. thumb is that there should be an initial contribution or gift to the trust of 10% of the value of the assets sold to the trust. It Estate Planning for Real Estate – Mining for Gold in the has been suggested that a benefi ciary guarantee could be used New Minefi eld in lieu of a cash contribution to the trust. The trust document Wayne D. Eig generally should include provisions so that grantor trust sta- Paley, Rothman, Goldstein, Rosenberg, Eig & Cooper, tus could be “turned off” during the grantor’s lifetime. Chartered, Bethesda Because estate planning with real estate often involves mul- The limited liability company (“LLC”) is the modern ve- tiple generations and multiple entities, an attorney must be hicle of choice for owning operating real estate. Unlike a aware of the ethical rules concerning confl icts of interest. limited liability limited partnership (“LLLP”), an LLC is Maryland Rules of Professional Conduct 1.7, 1.8, and 1.13 not impacted by the death of an individual general part- deal with confl icts of interest and representing an organi- ner. Nevertheless, if an owner anticipates needing to rely zation. American Bar Association Ethics Opinion 08-450 upon case law in order resolve a problem, then it may be deals with entity planning and multiple generations.

Reality Bytes. . . (continued from page 6) more Sun and the Chicago Tribune recently went through of web campaigning on sites like YouTube, Facebook, and makeovers. The new Sun looks like a splashier, condensed MySpace, far outdistancing McCain in getting people to his version of its old self. Individual sections of the paper were messages during much of the campaign. not just renamed, but seem to have disappeared entirely as distinct parts of the paper. Articles are shorter, sometimes In early October, however, AdvertisingAge reported that the merely bullet points. Advertising is everywhere, even on 72-year-old McCain, whose daughter authored a campaign the front page. blog, was closing the gap with Obama online by using Inter- net advertising. McCain’s campaign began employing brief A few months before this remake, the Sun also launched YouTube video campaign ads, often negative in nature, to a new, free paper directly linked to a web-based version, go after Obama, while candidate McCain took the high road Bthesite.com, with the paper being styled on its front paper on the campaign trail. as just “B (free daily).” This new venture is clearly aimed at trying to attract a generation that has stopped reading pa- McCain also achieved an advantage by more effectively pers and wants its news online. Bthesite is even shorter than purchasing and using Google search terms. Google makes the new Sun, but they share an unmistakable master design big money “selling” search. People advertise on Google by strategy of a shorter, brighter, easier to scan appearance, placing links on pages to get viewers to click on their web- like browsing on the Internet. Click – Click – Click. site. Placing a random ad on Google is not very effective, so Google makes money by selling advertisers search terms, Not surprisingly, cyberspace has reached new prominence common words or phrases that people would use in search- in electoral politics. In this year’s Presidential campaign, it es. Advertisers buy search terms associated with their prod- was a pre-requisite that all of the candidates had websites, ucts. When someone searches one of the purchased terms, but there was so much more. Obama raised unprecedented a link for the advertiser will appear in the sponsored section amounts of money through small donations on the Internet. on the results page to entice the viewer to click on it and go Obama also effectively used text messaging with his ﬁ eld the advertiser’s website. For example, an automobile dealer campaign during the primaries, although his attempt to use would want to buy terms line “car” or “auto” so that viewers text messaging during his convention acceptance speech encountered problems. Obama pioneered a new generation (continued on page 16)

15 Reality Bytes... (continued from page 15) would see links to their dealership site. the target computer cannot do what it is normally designed to do. A denial of service attack cripples the functions of McCain and Obama used this Google method extensively an Internet site for legitimate users trying to reach the site. to draw people to their campaign sites and YouTube videos. In the case of Russian assault on the Georgian computers, For example, Obama might purchase the combination of the the attack stopped the Georgians from getting their point terms “Obama” and “Muslim” to take people to a site on of view to the outside world. As Future Tense reported, which he dispels the common misconception about his re- the Russians denied any responsibility. The Georgians ligious background. In September, McCain seemed to have launched a counter-attack on the Russian state news agen- achieved better success in selecting Google search terms and cy. This is apparently the fi rst cyber confl ict between to getting Google users to go to his sites to view his ads. When two nations. they got tired of campaign messages, maybe they moved on to view Tina Fey’s dead-on impersonation of Sarah Palin on You can expect this kind of warfare to increase. Bill the Saturday Night Live site at NBC. Click – Click – Click. Woodcock, director of research for Packet Clearing House, a non-profi t organization that works to develop global net- Oh, brave new world that has such blogs and websites and work infrastructure, was interviewed on Future Tense. He social networking in it. Remote controls, computers, and indicates that these types of attacks are inexpensive to em- other devices have changed the pace of our world, but also ploy because they use “botnets” – compromised computers give us control. They give us the ability to avoid the package that have been reached by viruses and used to launch the content of the media, skip overt advertising, and watch or attack without their owners realizing that the computers listen to what we want. They give us new ways of commu- have been hijacked. They are expensive to defend against, nicating like YouTube, MySpace, and Facebook, where ordi- however, and the Russian – Georgian confl ict was a true nary people can upload their thoughts and visions and share mismatch, as Georgia did not have computer defenses them with the whole world. And in all of this, they give us a against the Russian assault or the bandwidth to launch a greater freedom. With every new freedom, however, comes serious counter-attack. responsibility to use it wisely. Is America ready to repel a cyber assault of this kind? Gears of War Woodcock says that depends upon who attacks us. This kind of warfare depends upon bandwidth – who has the Anyone with a teenager, particularly a teenage boy, prob- most – the attacker or the defender. We could defend our- ably knows about the popular combat warfare video games selves against a Russian cyber attack, Woodcock says, but such as Halo, Gears of War, Call of Duty, Bad Company, or if China attacked us, it would be a struggle. even Star Wars. Forget about those diversions and let’s take a look at real cyber war. This summer, as President Bush and Capping Data Transfers Vladimir Putin mugged for the cameras at the Olympics in Beijing, the Russian military was putting on a display of its Speaking of bandwidth, Comcast has caused a stir by im- resurgence in the former Soviet Republic of Georgia. This posing a cap of 250 GB of data transfers per month for was an age old physical confl ict, rooted in ethnic differences its residential customers. More commonly, data transfers and territorial claims. The brazen Russian actions in Georgia mean downloads or uploads. Comcast sets out some exam- made headlines around the world and drew condemnation ples of how a customer might reach this limit in a month: from many nations. send 50 million e-mails, download 62,500 songs or 125 standard-defi nition movies, or upload 25,000 high-resolu- Less well-known is the cyber assault launched from Rus- tion digital photographs. For typical home users these ex- sian-controlled computers before the fi ghting on the ground amples seem fairly liberal, even if you have the proverbial even began. In August, the American Public Media tech- teenager who is texting, downloading songs, and upload- nology show Future Tense (www.publicradio.ord/columns/ ing pictures to Facebook or video to YouTube. Comcast futuretense) reported that the Russians launched a computer is rationing bandwidth so that it has more for commercial assault in July against Georgian computers. (Future Tense customers who pay higher prices. reports run fi ve-minutes and are available online and by podcast.) These were “denial of service” attacks, much like So what is the problem? Well, if you have used comput- hackers launch from time to time. Such attacks involve the ers for a while, and purchased a few over the years, you use of numerous computers that assault the target computers with malicious data, effectively eating up bandwidth so that (continued on page 17)

16 Reality Bytes... (continued from page 16) will notice that advances in technology tend to bring along took on these issues in a column advocating the metering of greater demand for memory, both RAM and hard drive stor- usage of bandwidth by the bit. Dvorak has long held this view, age. Recently, our IT people put another gigabyte of RAM which is rooted in the belief that the Internet is a resource, like in my ofﬁ ce computer to get it to run new programs faster, water or electricity, and needs to be regulated in much the same or more programs at the same time without reduction in way that utilities and communications companies are (or were speed. A year ago, I bought a hard-drive to put in our aging traditionally) regulated. In his view, the growth of Internet us- computer at home and I thought that 250 GBs was a vast im- age under a one-price-ﬁ ts-all pricing has encouraged consum- provement. In October, my son and I went to buy a brand- ers to think of Internet usage as an “all-you-can-eat” model. new, advanced model computer and we ended up with one Users now think that they are entitled to click-click-click end- that had 6GB of RAM and 640 GB of hard drive memory. lessly for one low price. Comcast and Verizon, of course, have Next year’s models are coming out with even more. created and encouraged this mindset with their pricing plans.

Why the ever increasing thirst for memory? It is because the Capping tries to change this model, but capping bandwidth things we do with our home computers are ever more com- usage has been unpopular, because it is a “cliff”: If you plex. We are not just creating basic documents and spread- exceed the cap, your Internet service provider may cut off sheets and playing simple computer games. We are doing your service. Instead, some ISPs “throttle” service, i.e., cut desktop publishing, webpage design, digital photography of back speeds on your connection so that they can conserve increasingly better quality, and home video production. We bandwidth for other users. This is similarly unappealing in are playing more sophisticated games and loading our com- an age in which ISPs compete with claims of providing the puter with MP3 fi les and videos and enjoying an increasing best high-speed connection. Consumers who think they are supply of audio/video stream, from downloadable episodes paying for high-speed are short changed by throttling. of our favorite television shows, to YouTube clips, to full length movies. Dvorak thinks that metering web connections would provide a more appropriate model. It would eliminate the need Most of us have not reached the level cited in the Comcast for capping or throttling because everyone would pay for examples, but we may not be far from the time when we what they use. It would also promote the building of faster will. As the era of high-defi nition broadcast arrives next connections by compensating the ISPs for the higher usage year to our television screens, it will bring with it an ever generated by such connections. People who use less band- increasing availability of higher quality video downloads. width would pay less and the “download junkies” would Those downloads will require more bandwidth than the pay more. It would make it more costly for spammers who “standard-defi nition” movies used in Comcast’s examples. may be sending 50 million e-mails a month or more. It would also encourage energy effi ciency by providing con- Then there are the home entrepreneurs, i.e., those folks sumers a cost-savings incentive to turn off their machines tinkering in their computer rooms and garages to develop when they are not physically using them, much like turning some new aspect of cyberspace. Commentators point to off your lights or adjusting heating/cooling system. Finally, examples of people who have changed the landscape of Dvorak thinks metering would largely solve the problems technology (Bill Gates and Steve Jobs and Steve Wozniak of net neutrality. did not start out in shiny offi ce complexes (see the picture on Woz’s website: http://www.woz.org/)). The next genera- With more and more demand on the horizon, the way in tion of these innovators is out there now. They probably which we pay for our usage of the Internet is bound to cannot afford to pay for a commercial line to their home, so change. Dvorak is correct when he says that the “all-you- they are getting by with the residential service. Capping the can-eat” model does not work. Capping and throttling ser- bandwidth will surely cause them some problems. vice are also inequitable ways to control what has become a major, if not the predominant, source of communication and Interestingly, Verizon, Comcast’s major competitor in the information exchange. market for one-stop connectivity, does not have an interest in capping bandwidth. This may be because Verizon is Browsers Galore! busy building out its Fios fi ber optic network which provides greater capacity. The hegemony of Internet Explorer is long gone. Internet Explorer survived early rivals like Netscape, but even the In a June article entitled Eight Reasons Your Web Connection Should Be Metered, technology commentator John C. Dvorak (continued on page 18)

17 Reality Bytes... (continued from page 17 dominance of Windows as an operating system could not Microsoft is not idly watching this new entry. It has been keep Internet Explorer from losing market share. beta testing IE8, and getting impressive reviews. Expect Chrome to stick around and get better, and watch this duel To be sure, Internet Explorer is still widely used, and has between Microsoft and Google unfold. gotten much better with the advent of strong competition. One of IE’s problems, however, is the weakness of Micro- Even before the resurgence of Apple and its browser, Safari, soft on the Internet. In gaming, Microsoft has built a pres- and the emergence of Chrome, IE had strong competition. ence with Xbox Live which is a consoled-based system, Mozilla’s Firefox has been eating into IE’s market share independent of PCs, so it establishes little Internet presence for several years now, and is the leading alternative to IE. for Microsoft (Mozilla is a non-proﬁ t organization.)

The fact that Internet Explorer comes with Windows on a Firefox is my default browser. The Wall Street Journal’s vast number of computers sold around the world has guar- Walt Mossberg dubbed Firefox 3.0 the best web browser anteed that Internet Explorer will be used as a browser by in June, but quickly added “for now.” Safari and IE were many of those users. The use of Internet Explorer has not competitive. When Chrome came out in September, Moss- been able to drive signiﬁ cant business to Microsoft’s online berg liked much of what he saw, but essentially concluded search or MSN portal, however, largely because those ser- that Chrome was a work in progress. With Firefox 3.0 out, vices are not competitive enough with other alternatives on Mozilla announced in August its plan for a new web brows- the web. er, Aurora. A report on PCMag.com states that Aurora will provide such key components as: “natural interaction, con- AppScout (appscout.com) and PC Mag.com report that Mi- tinuity, multi-user applications, and context awareness.” crosoft’s continued weakness in online searches has recent- Whatever that means, Aurora should be something to which ly resulted in Microsoft paying for people to use its search we can all look forward. engine. Remember the skee-ball machine at the games ar- cade, where you roll wooden balls up a ramp into a target area with holes, scoring points depending on the hole into ERRATA which the ball drops? Your score produces a reward in the way of tickets redeemable for prizes. Well, this is pretty In Reality Bytes 5.0, the Los Lobos recording listed should much Microsoft’s incentive program. Users sign up and have been identiﬁ ed as Just Another Band from East L.A. use a special tool bar, which counts the number of searches that are performed and gives the user points that can be re- deemed for prizes when the program ends next April. This is all designed to get people to switch over from using Google. The rewards? A cookbook and an Xbox control- ler. (The New York Times Law Blog reported something similar in October: college students were being enticed to apply to The University of Alabama Law School by an offer to waive their application fee and give them $20 worth of downloads from iTunes!)

So who has the new browser on the block this year? If you guessed Google, you are correct! With fanfare and hype, Google launched its open-source Chrome browser earlier this year. Google does not need much help promoting anything, so let’s just say that Chrome is supposed to streamline surﬁ ng the web. Early reviews found that Chrome is a good browser, with innovations that need some work, and some features that do not live up to all the hype when compared to the competition. (I have not tried Chrome yet, being a con- ﬁ rmed user of Firefox. See below.) The real news here is that Google is trying to use its dominance in Internet search to entice users to Chrome and away from Internet Explorer.

18 SECTION COUNCIL COMMITTEES

Listed below are some of the Section Council Committees for which Section members may wish to volunteer their time. Please feel free to contact the individuals listed below if you have suggestions or are interested in helping out.

Committee Contact

Chair John P. Edgar Legislation Richard T. Wright Website/Technology Mary Beth Beattie Publications Aryeh Guttenberg Mary Alice Smolarek Probate Rules/Reform Allan J. Gibber Alternative Dispute Resolution Robert C. Young Membership John M. Burdette Programs Frank S. Baldino Section Meetings Eileen O’Brien Matthew A. Mace Orphans’ Court liaison Sharon J. Ritter Registers of Wills liaison Jonathan D. Eisner Elder Law Section liaison Agnes C. Powell Estate and Gift Tax Study Group Liaison Cristin C. Lambros

SEARCHING THE MSBA ESTATE AND TRUST LAW LISTSERV ARCHIVES

For those persons wishing to review past messages on the MSBA Estate and Trust Law Listserv, they are archived and can be accessed as follows:

1. Enter the following address in your Internet browser: www.msba.org/?lyris 2. Login using the email address used on the listserv. 3. You will then see listservs of those lists you are subscribed to. 4. Choose the list you wish to view. 5. You will then see a list of recent messages. 6. To search past messages choose “search” from the navigation menu on the left. 7. By using the advanced search options you can search the archives for particular words in the entire message, header, or body, and you can exclude words from the search.

19 MICPEL CURRICULUM

The Maryland Institute for the Continuing Professional Education of Lawyers is offering the following programs for the 2009 year:

Title Date Location

Using and Drafting Trusts February 18, 2009 University of Maryland Estate Planning Shady Grove, MD

February 25, 2009 University of Baltimore Baltimore, MD

Advanced Estate Planning Institute May 8, 2009 Hilton 5485 Twin Knolls Road Columbia, MD

For more information, please contact Kim Barranco, Program Director of MIC- PEL, at 410-659-6730. If you are interested in helping to plan programs for the 2009-2010 year, please contact Section Council member Frank S. Baldino at (301) 657-0175.