ESTATE PLANNING UPDATE
2013 TEXAS LEGISLATION
MAJOR CASES
SPECIAL ASSET PLANNING Digital Assets Weapons Pets
GERRY W. BEYER
Governor Preston E. Smith Regents Professor of Law Texas Tech University School of Law 1802 Hartford St. Lubbock, TX 79409-0004
(806) 742-3990 [email protected] http://www.ProfessorBeyer.com http://www.BeyerBlog.com
SOUTH PLAINS TRUST & ESTATE COUNCIL
Lubbock, Texas
September 19, 2013
© 2013 Gerry W. Beyer Revised 9/17/2013
GERRY W. BEYER
Governor Preston E. Smith Regents Professor of Law Texas Tech University School of Law Lubbock, TX 79409-0004
(806) 742-3990, ext. 302 [email protected] www.ProfessorBeyer.com EDUCATION B.A., Summa Cum Laude, Eastern Michigan University (1976) J.D., Summa Cum Laude, Ohio State University (1979) LL.M., University of Illinois (1983) J.S.D., University of Illinois (1990)
SELECTED PROFESSIONAL ACTIVITIES Bar memberships: United States Supreme Court, Texas, Ohio (inactive status), Illinois (inactive status) Member: American Law Institute; American College of Trust and Estate Counsel (Academic Fellow); American Bar Foundation; Texas Bar Foundation; American Bar Association; Texas State Bar Association
CAREER HISTORY Private Practice, Columbus, Ohio (1980) Instructor of Law, University of Illinois (1980-81) Professor, St. Mary’s University School of Law (1981-2005) Governor Preston E. Smith Regent’s Professor of Law, Texas Tech University School of Law (2005 – present) Visiting Professor, Boston College Law School (1992-93) Visiting Professor, University of New Mexico School of Law (1995) Visiting Professor, Southern Methodist University School of Law (1997) Visiting Professor, Santa Clara University School of Law (1999-2000) Visiting Professor, La Trobe University School of Law (Melbourne, Australia) (2008 & 2010) Visiting Professor, The Ohio State University Moritz College of Law (2012)
SELECTED HONORS AND ACTIVITIES Order of the Coif Excellence in Writing Awards, American Bar Association, Probate & Property (2012, 2001, & 1993) Chancellor’s Council Distinguished Teaching Award (Texas Tech University) (2010) Outstanding Professor Award – Phi Alpha Delta (Texas Tech University Chapter) (2010) (2009) (2007) (2006) President’s Excellence in Teaching Award (Texas Tech University) (2007) Professor of the Year – Phi Delta Phi (St. Mary’s University chapter) (1988) (2005) Student Bar Association Professor of the Year Award – St. Mary’s University (2001-2002) (2002-2003) Russell W. Galloway Professor of the Year Award – Santa Clara University (2000) Outstanding Faculty Member – Delta Theta Phi (St. Mary’s University chapter) (1989) Distinguished Faculty Award – St. Mary’s University Alumni Association (1988) Most Outstanding Third Year Class Professor – St. Mary’s University (1982) State Bar College – Member since 1986 Keeping Current Probate Editor, Probate and Property magazine (1992-present) Guest lecturer on estate planning topics for attorney and non-attorney organizations
SELECTED PUBLICATIONS Author and co-author of numerous law review articles, books, and book supplements including WILLS, TRUSTS, th AND ESTATES: EXAMPLES AND EXPLANATIONS (5 ed. 2012); FAT CATS AND LUCKY DOGS – HOW TO LEAVE (SOME OF) YOUR ESTATE TO YOUR PET (2010); TEACHING MATERIALS ON ESTATE PLANNING (4th ed. 2013); 9 & th 10 TEXAS LAW OF WILLS (Texas Practice 2002); TEXAS WILLS AND ESTATES: CASES AND MATERIALS (5 ed. 2006); 12, 12A, & 12B WEST’S TEXAS FORMS — ADMINISTRATION OF DECEDENTS’ ESTATES AND rd GUARDIANSHIPS (3 ed. 2007); When You Pass on, Don't Leave the Passwords Behind: Planning for Digital Assets, PROB. & PROP., Jan./Feb. 2012, at 40; Will Contests – Prediction and Prevention, 4 EST. PLAN. & COMM. PROP. L.J. 1 (2011); Digital Wills: Has the Time Come for Wills to Join the Digital Revolution?, 33 OHIO N.U.L. REV. 865 (2007); Pet Animals: What Happens When Their Humans Die?, 40 SANTA CLARA L. REV. 617 (2000); Ante-Mortem Probate: A Viable Alternative, 43 ARK. L. REV. 131 (1990); The Will Execution Ceremony — History, Significance, and Strategies, 29 S. TEX. L. REV. 413 (1988); Videotaping the Will Execution Ceremony — Preventing Frustration of Testator’s Final Wishes, 15 ST. MARY’S L.J. 1 (1983).
TABLE OF CONTENTS
2013 TEXAS LEGISLATION ...... 1
I. THE ESTATES CODE ...... 1
II. INTESTATE SUCCESSION ...... 1 A. Children from Surrogate Parents ...... 1 B. Determination of Heirship ...... 1
III. WILLS...... 2 A. Self-Proving Affidavits...... 2 B. Court Orders Restricting New Wills...... 2 C. Forfeiture Clauses ...... 2
IV. ESTATE ADMINISTRATION ...... 2 A. Attorney ad Litem ...... 2 B. Application for Letters Testamentary ...... 2 C. Proof of Facts...... 3 D. Bond...... 3 E. Independent Administration ...... 3 F. Creditors...... 3 G. Inventory...... 3 H. Exempt Property ...... 4 I. Power of Sale...... 4 J. Final Account...... 4 K. Registry of the Court ...... 4
V. TRUSTS ...... 4 A. Venue...... 4 B. Definition of “Property” ...... 5 C. Spendthrift Protection ...... 5 D. Forfeiture Clauses ...... 5 E. Decanting...... 5 F. Purchase of Insurance ...... 5 G. Allocation of Trustee Compensation ...... 5
VI. OTHER ESTATE PLANNING MATTERS ...... 5 A. Disclaimers...... 5
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B. Durable Power of Attorney...... 5 C. Medical Power of Attorney...... 6 D. McKeehan v. McKeehan Overruled...... 6 E. IRAs ...... 6
VII. CONVERSION CHART PROBATE CODE TO ESTATES CODE ...... 6
VIII. CONVERSION CHART ESTATES CODE TO PROBATE CODE...... 27
MAJOR CASES ...... 49
I. INTRODUCTION ...... 49
II. INTESTACY ...... 49
III. WILLS...... 49 A. Formalities ...... 49 B. Interpretation and Construction...... 49 C. Contests ...... 50
IV. ESTATE ADMINISTRATION ...... 51 A. Jurisdiction ...... 51 B. Statute of Limitations to Probate Will...... 52 C. Bill of Review ...... 52 D. Personal Representative...... 53 E. Executor’s Ability to Recover Estate Property...... 53 F. Bank Account Recovery ...... 54 G. Attorney Fees...... 54
V. TRUSTS ...... 55 A. Trust Intent...... 55 B. Statute of Frauds ...... 55 C. Discovery...... 55 D. Revocability...... 56 E. Breach of Fiduciary Duty...... 56 F. Arbitration...... 57 G. Receivership...... 57 H. Bankruptcy ...... 58
VI. OTHER ESTATE PLANNING MATTERS ...... 58 A. Life Insurance...... 58
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B. Beneficiary Designations on Non-Probate Assets ...... 58 C. Community Property Survivorship Agreements...... 59
DIGITAL ASSETS...... 60
I. INTRODUCTION ...... 60
II. TYPES OF DIGITAL ASSETS...... 60 A. Personal...... 60 B. Social Media...... 61 C. Financial Accounts ...... 61 D. Business Accounts...... 61 E. Domain Names or Blogs...... 61 F. Loyalty Program Benefits ...... 61 G. Other Digital Assets ...... 62
III. IMPORTANCE OF PLANNING FOR DIGITAL ASSETS ...... 62 A. To Make Things Easier on Executors and Family Members ...... 62 B. To Prevent Identity Theft ...... 62 C. To Prevent Financial Losses to the Estate...... 62 D. To Avoid Losing the Deceased’s Personal Story ...... 63 E. To Prevent Unwanted Secrets from Being Discovered...... 63 F. To Prepare for an Increasingly Information-Drenched Culture...... 64
IV. USER AGREEMENTS ...... 64 A. Terms of Service ...... 64 B. Ownership ...... 65
V. FEDERAL LAW ...... 65 A. Stored Communications Act...... 65 B. Computer Fraud and Abuse Act...... 65 C. Interface With User Agreements ...... 65
VI. PLANNING SUGGESTIONS ...... 66 A. Specify Disposition According to Provider’s Instructions...... 66 B. Back-Up to Tangible Media...... 66 C. Prepare Comprehensive Inventory of Digital Estate ...... 67 D. Provide Immediate Access to Digital Assets ...... 67 E. Authorize Agent to Access Digital Assets ...... 67 F. Place Digital Assets in a Trust ...... 68
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G. Place Digital Asset Information in a Will...... 68 H. Use Online Afterlife Company...... 69
VII. OBSTACLES TO PLANNING FOR DIGITAL ASSETS ...... 70 A. Safety Concerns...... 70 B. Hassle...... 70 C. Uncertain Reliability of Online Afterlife Management Companies...... 71 D. Overstatement of the Abilities of Online Afterlife Management Companies ...... 71 E. Federal Law Restrictions ...... 71
VIII. FIDUCIARY ACCESS TO DIGITAL ESTATE...... 71 A. Existing State Law...... 72 B. Proposed State Legislation...... 73 C. States Studying Digital Asset Legislation...... 76 D. Shortcomings of Existing State Digital Asset Legislation ...... 76 E. Fiduciary Access to Digital Assets Act...... 77 F. Cases ...... 77
IX. FUTURE REFORM AREAS ...... 77 A. Agents ...... 77 B. Personal Representatives ...... 78 C. Guardians of Incapacitated Adults...... 78 D. Providers Gather User’s Actual Preferences ...... 78 E. Federal Law ...... 78
X. CONCLUSION...... 79
APPENDIX – DIGITAL ESTATE INFORMATION SAMPLE FORM...... 80
WEAPONS ...... 91
I. FEDERAL AND STATE GUN LAWS...... 91 A. Federal Law ...... 91 B. State Law...... 92
II. TRANSFER, OWNERSHIP, AND INHERITANCE OF NON-NFA WEAPONS ...... 92 A. Purchase and Possession...... 92 B. Inheritance ...... 92
III. ISSUES WITH INDIVIDUAL OWNERSHIP OF NFA WEAPONS...... 93 A. Transfer...... 93
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B. Constructive Possession ...... 93 C. Death or Incapacity of the Individual Owner...... 94
IV. THE GUN TRUST...... 94 A. Why form a trust rather than a corporation or LLC? ...... 95 B. Drafting an NFA Gun Trust...... 95 C. Generic Trust Forms When Drafting an NFA Trust ...... 95
V. CONCLUSION...... 96
PETS ...... 98
I. INTRODUCTION ...... 98
II. HISTORY...... 99 A. Common Law...... 99 B. Uniform Probate Code ...... 99 C. Uniform Trust Code...... 100 D. Other Approaches ...... 101
III. SHORT-TERM PLANNING STEPS ...... 101 A. Animal Card ...... 101 B. Animal Document...... 102 C. Door Sign...... 105 D. Power of Attorney ...... 105
IV. TRADITIONAL TRUST ...... 106 A. Determine Whether to Create Inter Vivos or Testamentary Trust...... 106 B. Designate Trust Beneficiary/Animal Caregiver...... 106 C. Nominate Trustee ...... 107 D. Bequeath Animal to Trustee, in Trust...... 107 E. Determine Amount of Other Property to Transfer to Trust ...... 107 F. Describe Desired Standard of Living ...... 108 G. Specify Distribution Method ...... 108 H. Establish Additional Distributions for Caregiver ...... 108 I. Limit Duration of Trust ...... 108 J. Designate Remainder Beneficiary...... 109 K. Identify Animal to Prevent Fraud ...... 109 L. Require Trustee to Inspect Animal on Regular Basis ...... 110 M. Provide Instructions for Final Disposition of Animal ...... 110
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N. Sample Provisions ...... 110
V. “STATUTORY” PET TRUST...... 112 A. Authorization...... 113 B. Termination...... 113 C. Enforcement...... 113 D. Use of Property...... 113 E. Rule Against Perpetuities...... 113
VI. CONSIDER OUTRIGHT CONDITIONAL GIFT...... 114
VII. CONSIDER OUTRIGHT GIFT TO VETERINARIAN OR ANIMAL SHELTER...... 114
VIII. CONSIDER GIFT TO LIFE CARE CENTER ...... 114
IX. TAX CONCERNS ...... 114 A. Income Tax...... 115 B. Gift Tax...... 115 C. Estate Tax...... 115
X. “CLIENT FRIENDLY” FREQUENTLY ASKED QUESTIONS ...... 116
XI. CONCLUSION ...... 119
APPENDIX – CITATIONS TO PET TRUST STATUTES ...... 119
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2013 TEXAS LEGISLATION
This section reviews the highlights of the his or her mother for intestacy purposes, the child legislation enacted by the 2013 Texas Legislature must either be biologically related or adopted. relating to the Texas law of intestacy, wills, estate When a surrogate mother is used, the child may administration, trusts, and other estate planning not be biologically related or adopted and thus the matters. The reader is warned that not all recent intended mother is not considered a mother for legislation is presented and not all aspects of each inheritance purposes even though she is for family cited statute are analyzed. You must read and law purposes. Effective for the estates of study the full text of the legislation before relying individuals who die on or after January 1, 2014, on it or using it as authority. the intended mother is the child’s mother for intestacy purposes. Likewise, the intended father will be considered to be the child’s father. See I. THE ESTATES CODE rd Acts 2013, 83 Leg., ch. 1136, §§ 11-12, eff. Jan. 1, 2014 (amending Estates Code §§ 201.051 & The 2009 Legislature began the process of 201.052). codifying the current Probate Code into the new Estates Code. It is interesting to note that although called a “Code,” the Probate Code is not B. Determination of Heirship a true “code” because it was enacted in 1955 1. Statute of Limitations which was before the 1963 Legislature began the process of codifying Texas law into 27 codes. The 2013 Legislature added Estates Code The codification process is supposed to be § 202.0025 to make it clear that there is no statute nonsubstantive. See Acts 2009, 81st Leg., ch. of limitations with regard to a proceeding to 680, § 11, eff. Jan. 1, 2014. declare heirship of a decedent. See Acts 2013, 83rd Leg., ch. 1136, § 13, eff. Jan. 1, 2014. The portion of the Estates Code passed by the Although the provision is effective on January 1, 2009 Legislature focused on intestacy, wills, and 2014, the Legislature stated that this section is estate administration. The guardianship and “intended to clarify current law” and that “an durable power of attorney provisions were added inference may not be made regarding the statute in 2011. The 2011 Legislature also made changes of limitations for a proceeding to declare heirship to the previously enacted portions of the Estates filed before the effective date.” See Acts 2013, rd Code to be consistent with amendments it made to 83 Leg., ch. 1136, § 62(g). the existing Probate Code. The 2013 Legislature continued to fix issues with the 2009 and 2011 2. Unsecured Creditors codifications as well as made substantive changes. The 2013 Legislature removed the restriction The entire Estates Code will become effective on that only secured creditors could commence a January 1, 2014. proceeding to declare heirship. If a decedent dies on or after January 1, 2014, any creditor, Comprehensive conversion charts are found at unsecured or secured, may initiate an heirship the end of this section of the article starting on proceeding. See Acts 2013, 83rd Leg., ch. 1136, page 6. § 14, eff. Jan. 1, 2014 (amending Estates Code § 202.004). II. INTESTATE SUCCESSION 3. Attorneys ad Litem A. Children from Surrogate Parents Estates Code § 202.009 was amended to Under current law, for a person to be a child of impose a mandatory duty on the court to appoint
1 ESTATE PLANNING UPDATE an attorney ad litem in a heirship proceeding to Leg., ch. 1136, § 20, eff. Jan. 1, 2014 (amending represent the heirs whose names or locations are Estates Code § 253.001). unknown. The court retains the discretion to appoint an attorney ad litem for an incapacitated C. Forfeiture Clauses heir. See Acts 2013, 83rd Leg., ch. 1136, § 15, eff. Jan. 1, 2014. The Legislature clarified the party who has the burden of proof with regard to the enforceability 4. Citation of forfeiture clauses. A forfeiture clause is presumed enforceable unless the party who wants Estates Code § 202.056 now provides that the clause to be unenforceable establishes by a citation may be waived only for a minor preponderance of the evidence that just cause distributee who is under twelve years old. If the existed for bringing the action and the action was minor is twelve or older, citation may not be brought and maintained in good faith. See Acts waived. See Acts 2013, 83rd Leg., ch. 1136, § 16, 2013, 83rd Leg., ch. 351, § 1.01, eff. Sept. 1, 2013 eff. Jan. 1, 2014. (amending Probate Code § 64) & § 2.01, effective January 1, 2014 (amending Estates Code 5. New Requirement § 254.005). A court cannot enter an order determining heirs unless the applicant files (1) a copy of the notice and proof of delivery sent to interested IV. ESTATE ADMINISTRATION parties and (2) an affidavit of the applicant or a certificate signed by the applicant’s attorney A. Attorney ad Litem stating that notice was given, the name of each A probate court judge may now appoint an person who received the notice if not shown on attorney ad litem for a broader range of the proof, and the name of each person who individuals including missing heirs and unknown waived citation. See Acts 2013, 83rd Leg., ch. or missing persons for whom cash was deposited 1136, § 17, eff. Jan. 1, 2014 (amending Estates into the court’s registry. In addition, the court Code § 202.057). must tax the attorney ad litem’s compensation as a cost of the probate and order that compensation to III. WILLS be paid out of the estate, by any party, or, in the case of funds in the court’s registry, from those funds. See Acts 2013, 83rd Leg., ch. 1136, § 5, A. Self-Proving Affidavits eff. Jan. 1, 2014 (amending Estates Code The 2011 Legislature amended Civil Practice § 53.104). & Remedies Code § 132.011 to permit the use of unsworn written affidavits made under penalty of B. Application for Letters Testamentary perjury in lieu of written sworn affidavits. The 2013 Legislature added a provision to Estates The requirements for the contents of an Code § 21.005 providing that this procedure is not application for letters testamentary have changed. applicable to self-proving affidavits on wills There are two key differences. First, the executed on or after January 1, 2014. See Acts application must contain the state of residence and 2013, 83rd Leg., ch. 1136, § 1, eff. Jan. 1, 2014. physical address where service can be had of the executor named in the will or the person to whom the applicant desires that letters be issued. B. Court Orders Restricting New Wills Second, the application no longer needs to contain A person may disregard without penalty or the addresses of the witnesses. See Acts 2013, sanction any portion of a court order that attempts 83rd Leg., ch. 1136, § 22, eff. Jan. 1, 2014 to prohibit a person from executing a new will or (amending Estates Code § 256.052). a codicil to an existing will. See Acts 2013, 83rd
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C. Proof of Facts property. In addition, removal is authorized with mere written notice by certified mail if the The Legislature added Estates Code § 301.155 executor does not timely qualify or file the to provide that any fact that must be provided, inventory or affidavit in lieu thereof. See Acts e.g., in applications for the issuance of letters, 2013, 83rd Leg., ch. 1136, § 56, eff. Jan. 1, 2014 may be provided by live testimony, or if the (amending Estates Code § 404.003 and adding witness is unavailable, by disposition on written Estates Code §§ 404.0035, 404.0036, & questions. See Acts 2013, 83rd Leg., ch. 1136, 404.0037). § 34, eff. Jan. 1, 2014. 3. Distribution D. Bond If the court becomes involved in the A new provision, Estates Code § 305.004, distribution of an estate being independently addresses the procedure for bond in the few cases administered, the court is now permitted to order where bond is required. If the bond is timely distribution of undivided interests in property if it filed, but the court fails to take timely action on is incapable of distribution without a prior the bond, the personal representative may file a partition or sale. See Acts 2013, 83rd Leg., ch. motion for a hearing at which the judge must 1136, § 58, eff. Jan. 1, 2014 (amending Estates specify any objections to the bond on the record. Code § 405.001). See Acts 2013, 83rd Leg., ch. 1136, § 38, eff. Jan. 1, 2014. F. Creditors The deadline for a creditor to submit a claim E. Independent Administration was changed from four months to 120 days which 1. Consent Rules could make a difference depending on the number New rules govern the individuals who must of days in the relevant months (31 day long months or the short month of February). See Acts consent to an independent administration if the rd decedent did not provide for one in his or her will. 2013, 83 Leg., ch. 1136, §§ 39, 45, & 53 eff. (1) If the will contains a pour-over provision, the Jan. 1, 2014 (amending Estates Code §§ 308.054, beneficiaries of the trust who receive property 355.060, & 403.055). outright upon the decedent’s death must consent. See Acts 2013, 83rd Leg., ch. 1136, § 51, eff. Jan. G. Inventory 1, 2014 (amending Estates Code § 401.004). (2) 1. Use of Affidavit in Lieu of Inventory A minor’s natural guardian may consent to the Expanded appointment of a successor on the minor’s behalf if there is no conflict of interest. See Acts 2013, The affidavit in lieu of inventory option is 83rd Leg., ch. 1136, § 57, eff. Jan. 1, 2014 available even if the will requires the filing of (amending Estates Code § 404.005). (3) If the inventory as long as the will does not specifically beneficiary of a testamentary trust is prohibit the filing of an affidavit in lieu of incapacitated, the trustee may file an application inventory. See Acts 2013, 83rd Leg., ch. 1136, to continue the administration or consent for the § 41, eff. Jan. 1, 2014 (amending Estates Code beneficiary as long as the trustee is not the § 309.056). proposed successor. Id. 2. Liability Protection 2. Removal An executor cannot be held liable for the In specified circumstances, the court may now executor’s decision to file either a traditional remove an independent executor without notice inventory or the affidavit in lieu of inventory. See such as if there are sufficient grounds to believe Acts 2013, 83rd Leg., ch. 1136, § 41, eff. Jan. 1, the executor has misapplied or embezzled estate 2014 (adding Estates Code § 309.056(d)).
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3. Remedies supporting the child at the time of the decedent’s death. See Acts 2013, 83rd Leg., ch. 1136, § 44, A person unhappy with an inventory in lieu of eff. Jan. 1, 2014 (amending Estates Code inventory now has the same remedies as a person § 353.101). dissatisfied with a traditional inventory. See Acts 2013, 83rd Leg., ch. 1136, § 43, eff. Jan. 1, 2014 (amending Estates Code § 309.103). I. Power of Sale Estates Code § 401.006 was clarified to make 4. Penalty for Failure to File clear that a court may grant a power of sale over The Legislature added Estates Code § 309.057 personal property, as well as real property, if the to allow the court to impose a fine, not to exceed court authorizes the independent personal $1,000, on any personal representative who does representative the power to sell property even not file an inventory (or affidavit in lieu of though the will failed to grant a power of sale. inventory) after being cited for failing to do so. See Acts 2013, 83rd Leg., ch. 1136, § 52, eff. Jan. See Acts 2013, 83rd Leg., ch. 1136, § 42, eff. Jan. 1, 2014 (amending Estates Code § 401.006). 1, 2014. J. Final Account 5. Successor Personal Representative The personal representative must now provide A successor personal representative only needs a copy of the final account to everyone entitled to to file an inventory listing the undistributed assets citation on the final account and thereafter file an remaining on the date of the successor’s affidavit (or attorney’s certificate) listing details qualification if the previous representative had including the names of these individuals and that already filed an inventory. See Acts 2013, 83rd each of them was provided with a copy of the Leg., ch. 1136, § 46, eff. Jan. 1, 2014 (amending final account. See Acts 2013, 83rd Leg., ch. 1136, Estates Code § 361.155). § 47, eff. Jan. 1, 2014 (amending Estates Code § 362.005). H. Exempt Property 1. Homestead K. Registry of the Court The homestead will be protected from most Property passing to an unknown or missing creditors only if the decedent was survived by a person may be turned over to the court’s registry. person entitled to claim homestead occupancy This causes a problem because a court is ill- rights, that is, a spouse or minor child. See Acts equipped to store grandmother’s china and dad’s 2013, 83rd Leg., ch. 1136, § 8, eff. Jan. 1, 2014 lawnmower. The court is now required to order (amending Estates Code § 102.004). the representative to convert all the assets to cash and then deposit the cash. This procedure, 2. Allowances however, could cause irreparable loss to family rd The allowance in lieu of homestead was raised heirlooms. See Acts 2013, 83 Leg., ch. 1136, to $45,000 from $15,000. The allowance for § 48, eff. Jan. 1, 2014 (amending Estates Code other exempt property was raised to $30,000 from § 362.011). $5,000. See Acts 2013, 83rd Leg., ch. 647, § 1.01, eff. Sept. 1, 2013 (amending Probate Code § 273) V. TRUSTS & § 2.01, eff. Jan. 1, 2014 (amending Estates Code § 353.053). A. Venue
3. Family Allowance The Legislature made changes to the venue provisions for trust actions when there are A family allowance will not be available for an multiple trustees. These sections need to be adult incapacitated child if the decedent was not carefully studied to ascertain proper venue. Note
4 ESTATE PLANNING UPDATE that the sections may be in conflict if there are F. Purchase of Insurance multiple noncorporate trustees plus at least one A corporate trustee may now purchase corporate trustee. See Acts 2013, 83rd Leg., ch. insurance unwritten or distributed by an affiliate 699, § 5, eff. Sept. 1, 2013 (amending Property unless the settlor expressly prohibited doing so in Code § 115.002). the trust. See Acts 2013, 83rd Leg., ch. 1137, § 1, eff. Sept. 1, 2013 (amending Property Code B. Definition of “Property” § 113.053). The “property” definition now expressly includes “property held in any digital or electronic G. Allocation of Trustee Compensation medium.” See Acts 2013, 83rd Leg., ch. 699, § 1, Rather than being required to allocate trustee eff. Sept. 1, 2013 (amending Property Code compensation equally between income and § 111.004). principal, the trustee may now allocate in any manner as long as it is consistent with the C. Spendthrift Protection trustee’s fiduciary duties. See Acts 2013, 83rd A settlor will not be considered a beneficiary Leg., ch. 1137 §§ 2 & 3, eff. Sept. 1, 2013 of a trust merely because the settlor’s interest in (amending Property Code §§ 116.201 & 116.202). the trust was created by the exercise of a power of appointment by a third party. Likewise, property contributed to a laundry list of trusts will not be VI. OTHER ESTATE PLANNING considered to have been contributed by the settlor. MATTERS These changes help trusts retain spendthrift protection by assuring that the settlor is not treated A. Disclaimers as a beneficiary. See Acts 2013, 83rd Leg., ch. 699, § 2, eff. Sept. 1, 2013 (amending Property As of January 1, 2014, an heir or will Code § 112.035). beneficiary will no longer be able to disclaim property if that person is in arrears in paying child support. Every disclaimant must state in the D. Forfeiture Clauses disclaimer whether the beneficiary is a child rd The Legislature made a parallel change to support obligor. See Acts 2013, 83 Leg., ch. Property Code § 112.038 to be consistent with the 689, §§ 1 & 2, eff. Jan. 1, 2014 (amending Estates changes discussed above which were made to the Code § 122.051 and adding § 122.107). Note that Probate and Estates Codes. See Acts 2013, 83rd trust beneficiaries may still disclaim to avoid their Leg., ch. 351, § 3.01, eff. Sept. 1, 2013. child support obligations.
E. Decanting B. Durable Power of Attorney Texas has joined the growing number of states Several changes were made to the optional which have statutes granting the trustee the power form provided in Estates Code § 752.051: (1) to decant, that is, to distribute trust principal to adding a more detailed explanation in the another trust for the benefit of one or more of the instructions section on how a power of attorney beneficiaries of the original trust under specified operates, (2) requiring the principal to initial in circumstances. These provisions are lengthy and front of powers to be granted (rather than crossing highly complex. See Acts 2013, 83rd Leg., ch. out powers the principal does not desire to grant), 1699, § 3, eff. Sept. 1, 2013 (adding Subchapter D (3) including the exercise of a general power of to Property Code Chapter 112). appointment if the principal initials the gifting power, and (4) adding a comprehensive explanation of the agent’s duties. See Acts 2013, 83rd Leg., ch. 700, eff. Jan. 1, 2014.
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A statutory probate court will have jurisdiction represents “the fundamental policy of [Texas] for of actions brought by an agent under a power of the protection of its residents and [is] intended to attorney arising out of the agent’s performance of prevail over the law of another state or the agent’s duties as of January 1, 2014. jurisdiction, to the extent those laws are in conflict Previously, the statutory probate court’s with Texas law.” See Acts 2013, 83rd Leg., ch. jurisdiction extended only to actions against the 1136, § 61(a). agent. See Acts 2013, 83rd Leg., ch. 1136, § 3, eff. Jan. 1, 2014 (amending Estates Code E. IRAs § 32.006). The 2013 Texas Legislature clarified that Roth IRAs (both regular and inherited) are protected C. Medical Power of Attorney rd from creditors. See Acts 2013, 83 Leg., ch. 649, The statutory form for the medical power of § 2, eff. Sept. 1, 2013. attorney was revised to reflect changes made in 2009 permitting the principal to have the power acknowledged before a notary rather than having Acknowledgment: Portions of this section are it witnessed. See Acts 2013, 83rd Leg., ch. 134, adapted from William D. Pargaman, Out With the § 1, eff. Jan. 1, 2014 (amending Health & Safety Old [Probate Code] and In With the New [Estates Code § 166.163). Code]: 2013 Texas Estate and Trust Legislative Update (July 1, 2013). This comprehensive and If a county has a statutory probate court, it now highly recommended article is available at has concurrent jurisdiction with the district court www.snpalaw.com. over actions to set aside the power due to the principal’s lack of competency or being under duress, fraud, or undue influence. Id. at § 2, eff. VII. CONVERSION CHART Sept. 1, 2013 (adding Health & Safety Code § 166.165(a-1)). PROBATE CODE TO ESTATES CODE D. McKeehan v. McKeehan Overruled Probate Code Estates Code According to McKeehan v. McKeehan, 355 New 21.001 S.W.3d 282 (Tex. App.—Austin 2011, pet. New 21.002 denied), an agreement relating to a nonprobate New 21.003 asset which contains a choice of law clause causes New 21.005 that state’s law to govern the asset such as New 112.001 whether the asset has the survivorship feature. The 2013 Legislature added Estates Code New 305.001 § 111.054 to provide that if more than 50% of that New 405.012 asset (e.g., a bank account, retirement plan, New 1104.401 annuity, or insurance contract) was contributed by New 1105.001 a Texas resident, Texas law will determine New 1301.001 whether the asset has the survivorship feature irrespective of any choice of law provision. See New 1355.101 Acts 2013, 83rd Leg., ch. 1136, § 10, eff. Jan. 1, 2(a) (part) 21.006 2014. The applicability of this new provision is 2(c); New 21.004 based on the date of the owner’s death being on or 3 (part) 22.001 after January 1, 2014 rather than the date on 3(a) 22.002 which the decedent entered into the agreement. 3(b) 22.004 To enhance the likelihood of a court upholding this statute, the Legislature stated that the change 3(c) 22.005
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Probate Code Estates Code Probate Code Estates Code 3(d) 22.006 5C 34.002 3(e) 22.007 6 33.001 3(f) 22.019 6A 33.002 3(g) 22.007 6B 33.003 3(h) 22.008 6C 33.004 3(i) 22.009 6D 33.005 3(j) 22.010 8(a) (part) 33.051, 33.052, 33.055 3(k) 22.011 8(b) (part) 33.053, 33.101 3(l) 22.012 8(c)(1) 33.102 3(m) 22.013 8(c)(2) 33.103 3(o) 22.015 8(d) 33.104 3(p) 22.016 8(e) 33.054 3(q) 22.017 9 54.002 3(r) 22.018 10 55.001 3(s) (part) 22.020, 22.021 10A(a) (part) 55.051, 55.052 3(t) 22.022 10A(b) 55.053 3(u) 22.023 repealed 10B (part) 55.101, 55.102 3(v) 22.024 10C 54.001 3(w) 22.025 11 52.051 3(x); New 22.027 11A 53.053 3(z) 22.028 11B 53.054 3(aa) 22.031 12(a) 53.051 3(bb) 22.029, 31.001 12(b), (c) 53.052 3(dd) 22.030 13 (part) 52.001 3(ee) 22.032 13(e) (part) 52.051 3(ff) 22.034 14 52.002 3(ii) 22.007 15 52.052 3(jj) 22.026 16 52.003 3(kk) 22.003 17 52.004 3(ll) 22.014 17A 52.053 3(mm) 22.033 18 54.052 4A 32.001 19 53.101 4B 31.002 20 53.102 4C 32.002 21 55.002 4D 32.003 22 (part) 51.203, 54.051 4E 32.004 23 53.105 repealed 4F 32.005 23 (part) 53.103 4G 32.006 24 53.001 4H 32.007 25 53.106 5B 34.001 26 (part) 55.151
7 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 26 (part) 55.152 37A(i) 122.056 27 (part) 55.201 37A(j) 122.005 27 (part) 55.202 37A(k) 122.004 27 (part) 55.203 37A(l) 122.151, 112.152 28 351.053 37A(m) 122.153 29 351.002 37A(n) 122.104 31 (part) 55.251, 55.252 37A(o) 122.105, 122.106 32 351.001 37A(p) 122.057 33(a) 51.001 37B(a) 122.201 33(b) 51.001 37B(b) 122.202, 122.203 33(c) 51.002, 51.003 37B(c) 122.204 33(d) 51.151 37B(d) 122.205 33(e) 51.056 37B(e) 122.206 33(f)(1) (part) 51.101, 51.051 37C(a) 255.101 33(f)(2) 51.053 37C(b) 255.102 33(f)(3) 51.054 38(a) 201.001 33(g) 51.104 38(b) 201.002 33(h) 51.102 39 (part) 201.102, 201.103 33(i) 51.103 40 201.054 33(j) 51.202 41(a) 201.056 34 51.055 41(b) 201.057 34A 53.104 41(c) 201.060 35 51.201 201.058, 201.059, 351.352, 351.353, 41(d) (part) 201.061 36(a) 351.354 41(e) 201.062 36(b) 351.355 41(f) 201.062 36B 151.001 42(a) 201.051 36C 151.002 42(b)(1) 201.052 36D 151.003 42(b)(2) 201.053 36E 151.004 42(c) (part) 102.001, 353.001 36F 151.005 42(d) 201.055 101.001, 201.003, 43 201.101 37 101.051 44(a) 201.151 37A(a) 122.002 44(b) 201.151 37A(b) 122.003 44(c) 201.152 37A(c) 122.101 45 201.003 37A(d) 122.102 46(a) (part) 101.002, 111.001 37A(e) 122.001 46(b) 111.002 37A(f) 122.103 47(a) 121.051‐121.053 37A(g) 122.051 47(b) 121.151 37A(h) 122.052‐112.055 47(c) (part) 121.101, 121.102
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Probate Code Estates Code Probate Code Estates Code 47(d) 121.152 55(c) 202.205 47(e) 121.153 56 202.206 47(f) 121.001 57 251.001 47A(a) 123.101 58(a) 254.001, 251.002 47A(b), (c) 123.102 58(b) 251.002, 254.003 47A(d), (e) 123.103 58(c) 255.002, 255.003 47A(f) 123.104 58(d) 255.001 48(a) (part) 202.001, 202.002 58c 255.351 48(a) 202.003 repealed 251.051, 251.052, 48(b) 202.006 252.102, 251.103, 59(a) 251.104 48(c) 202.003 repealed 59(a‐1) 251.1045 49(a) 202.004, 202.005 251.101, 251.104, 49(b) 202.007, 202.008 59(b) 251.105 50(a) 202.051, 202.054 59(c) 251.102, 251.106 50(b) 202.052 59A 254.004 50(c) 202.053 60 251.052, 251.107 50(d) 202.055 61 254.002 50(e) 202.056 62 254.002 51 202.101‐202.103 63 253.002 52 203.001 64 254.005 52A 203.002 67(a) 255.052 53(a) 202.151 67(a)(1) 255.053 53(b), (c) 202.009 67(a)(2) 255.054 53A(a) 204.051 67(b) 255.055 53A(b) 204.052 67(c) 255.051 53A(c), (d) 204.053 67(d) 255.052 53A(e) 204.054 67(e) 255.056 53A(f) 204.055 68(a) 255.153, 255.154 53A(g) 204.056 68(b) 255.152 53B(a) 204.101 68(c) 255.152 53B(b) 204.102 68(d) 255.152 53B(c) 204.103 68(e) 255.151 53C(a) 204.151 69(a) 123.001 53C(b), (c) 204.152 69(b) 123.001 53C(d) 204.153 69(c) 123.002 53D 204.201 69A 253.001 53E 204.001 70 255.201 repealed 54 202.201 70A(a) 255.252 55(a) 202.202, 202.203 70A(b) 255.253 55(b) 202.204 70A(c) 255.251
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Probate Code Estates Code Probate Code Estates Code 71(a) (part) 252.001 88(d) 301.153 71(a) (part) 252.003 88(e) 301.154 71(b) 252.002 89 256.201 71(c) 252.004 89A(a) (part) 257.051, 257.052 71(d) 252.051, 252.052 89A(b) 257.053 71(e) 252.101‐252.105 89B 257.054 71(f) 252.151, 252.152 89C(a) 257.001 71(g) 252.153 89C(b) 257.101 71A(a) 255.301 89C(c) 257.102 71A(b) 255.302 89C(d) 257.103 71A(c) 255.303 90 256.202 256.002, 301.001, 91 256.203 454.001, 454.002, 92 362.002 454.004, 454.051, 93 256.204 72(a) 454.052 94 256.001 72(b) 454.003 95(a) 501.001 73 256.003 95(b)(1), (2) 501.002, 501.003 74 301.002 501.003, 503.002, 75 252.201‐252.204 95(c) 505.052 76 256.051, 301.051 95(d)(1) (part), 77 304.001 (2) (part) 501.004, 501.005 78 304.003 95(d)(2) (part) 504.003 79 304.002 95(e) 501.007 80(a) 301.201 95(f) 501.008 80(b) 303.201, 301.202 96 503.001, 503.003 80(c) 301.203 97 503.001 81(a) 256.052, 256.053 98 503.051 81(b) 256.054 99 503.052 82 301.052 100(a) 504.001 83(a) 256.101 100(b) 504.002, 504.004 83(b) 256.102 100(c) 504.003 83(c) 256.103 101 504.051, 504.052 84(a) 256.152 102 504.053 84(b) 256.153 103 502.001 84(c) 256.154 104 502.002 84(d) 256.155 105 501.006 85 256.156 105A(a) 505.001, 505.003 87 256.157 105A(b) 505.004, 505.005 88(a) 256.151, 301.151 105A(c), (d) 505.002 88(b) 256.152 105A(e) 505.006 88(c) 301.152 106 505.051
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Probate Code Estates Code Probate Code Estates Code 107 505.052 132(b) 452.052 107A(a), (b) 505.101 133 (part) 452.101, 452.102 107A(c) 505.102 134 452.151 107A(d) 505.103 135 452.152 108 152.001, 152.004 137(a) (part) 205.001‐205.004 109 152.001 137(b) 205.008 110 152.001 137(c) 205.006 111(a) 152.002 137(d) 205.005 111(b) 152.003 138 205.007 112 152.002 139 451.001 113(a) 152.051 140 451.002 113(b) 152.052 141 451.003 113(c) 152.054 142 451.004 113(d) 152.055 143 354.001 114(a) 152.053 145(b) 401.001 114(b) 152.055 145(c) 401.002, 401.003 115(a), (b) 152.101 145(d) 401.002 115(c), (d) 152.102 145(f) 401.004 128(a) (part) 258.001, 303.001 145(g) 401.003 128(b) 258.002 145(h) 402.001 128(c) 258.003, 303.002 145(i) 401.004 128A(a) 308.001 145(j) 401.004 128A(a‐1) 308.0015 145(k) 401.004 128A(b), (c), (d) 308.002 145(l) 401.004 128A(e) 308.003 145(m) 401.004 128A(f) 308.002 145(n) 401.004 128A(g), (h) 308.004 145(o) 401.001 128B(a), (b), (c) 258.051 145(p) 401.005 128B(d) 258.052 145(q) 351.351, 401.007 128B(e) 258.053 145(r) 401.008 129A 258.101, 303.003 145A 401.006 131A(a) 452.001, 452.003 145B 402.002 131A(b) 452.002 145C(a) 402.051 131A(c) 452.003 145C(b) 402.052 131A(d) 452.004 145C(c) 402.053 131A(e) 452.005 145C(d) 402.054 131A(f), (g), (h) 452.006 146(a)(1)‐(3) 403.051 131A(i) 452.007 146(a)(4) 403.001 131A(j) 452.008 146(a‐1) 403.051 132(a) 452.051 146(b) 403.052
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Probate Code Estates Code Probate Code Estates Code 146(b‐1) 403.053 181 306.003 146(b‐2) 403.054 182 306.004 146(b‐3) 403.055 183 306.005 146(b‐4), (b‐5) 403.056 186 306.007 146(b‐6) 403.057 187 306.006 146(b‐7) 403.058 188 307.001 146(c) 403.0585 189 305.002 147 403.059 190(a) 305.051 148 403.060 190(b) 305.052 149 404.002 190(c) 305.053 149A 404.001 190(d) 305.054, 305.055 149B 405.001 192 (part) 305.003, 305.054 149C 404.003 194 (part) 303.101, 305.106 149D 405.003 194(1), (2) 305.151 149E 405.003 194(3) 305.152 149F 405.003 194(5) 305.154 149G 405.011 194(6) 305.155 150 405.008 194(7) 305.156 151(a) 405.004 194(8)(a) 305.157 151(a‐1) 405.005 194(8)(b), (c), 151(b) 405.006 (d) 305.156 151(c), (d) 405.007 194(8)(e) 305.158 151(e) 405.002 194(9) 305.159 152 405.009 194(10) 305.201 153 405.010 194(11) 305.202 154 404.004 194(12) 305.201, 305.207 154A 404.005 194(13) 305.153 154A(i) (part) 351.351 194(14) 305.160 101.052, 453.001, 195 305.101 155 453.002 196 305.108 156 101.052, 453.006 197 305.107, 305.109 160(a) 453.003 198 305.103 160(b) 453.003, 453.004 199 305.104 160(c) 453.003, 453.004 200 305.105 168 453.006‐453.008 201(a) 305.203 176 453.005 201(b) 305.204 177 453.009 201(c) 305.205 178(a), (c) 306.001 202 305.204 178(b) 306.002 203 305.251 179 301.101 204 305.251 180 301.153 205 305.252
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Probate Code Estates Code Probate Code Estates Code 206(a) 305.252 233(a) 351.151 206(b) 305.253 233(b), (c), (d) 351.152 207 305.254 233(e) 351.153 208 305.255 233A 351.054 209 305.257 234(a) 351.051 210 305.256 234(b) 351.052 211 305.206 235 351.103 212 305.206 238(a) 351.201 213 305.110 238(b) 351.202 214 305.102 238(c), (d), (e) 351.203 215 305.102 238(f) 351.202 216 305.102 238(g) 351.204 217 305.102 238(h), (i) 351.205 218 305.111 238A 351.104 220(a) 361.102 239 351.301‐351.303 220(b) 361.103 240 307.002 220(c) 361.104 241(a) 352.002‐352.004 220(d) 361.105 241(b) 352.001 220(e) 361.106 242 352.051 220(f) 361.101 243 352.052 220(g) 361.151 244 352.053 221(a) 361.001 245 351.003 221(b) 361.002 248 309.001 221(c) 361.003 249 309.003 221(d) 361.004 250 309.051 221(e), (f) 361.005 250(c), (d), (e) 309.056 221A 56.001 251 309.052 221B 56.002 252 309.053 222(a)(1) 361.051 253 309.002 222(a)(2) 361.054 255 309.054 222(b) 361.052 256 309.101 222(c) 361.053 257 309.102 222A 361.054 258 309.103 223 361.152 259 309.104 224 361.153 260 309.055 225 361.153 261 309.151 226 361.154 262 354.051 227 361.155 263 354.052 230 351.101 264 354.053 232 351.102 265 354.054
13 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 266 354.055 304 355.005 267 354.056 306(a) 355.151 268 354.057 306(b) 355.152 269 354.058 306(c), (c‐1) 355.153 270 102.004 306(d) 355.154 271 353.051 306(e) 355.155 272 353.052 306(f) 355.156 273 353.053 306(g) 355.157 274 353.055, 353.056 306(h), (i)(1) 355.158 275 353.054 306(i)(2) 355.159 277 353.151 306(j) 355.158 278 353.152 306(k) 355.160 279 353.153 307 355.003 280 353.154 308 355.002 281 353.155 309 355.051 282 102.002 310 355.052 283 102.003 311 355.053 284 102.005 312(a) 355.054 285 102.006 312(b) 355.055 286 353.101 312(c) 355.056 287 353.102 312(d) 355.057 288 353.101 312(e) 355.058 289 353.103 313 355.064, 355.066 290 353.104 314 355.065 291 353.105 315 355.111 292 353.106, 353.107 316 355.202 293 353.107 317 355.201 294(a) 308.051 318 355.063 294(b) 308.052 319 355.101 294(c) 308.051 320(a) 355.103 294(d) 308.054 320(b) 355.104 295 308.053 320(c) 355.105 296 308.055 320(d) 355.106 297 308.056 320A 355.110 298(a) 355.001, 355.060 321 355.108 298(b) 355.061 322 355.102 299 355.008 322A(a) 124.001 301 355.004, 355.059 322A(b) 124.005 302 355.007 322A(c), (d), (e), 303 355.006, 355.062 (f) 124.006 322A(g) 124.007
14 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 322A(h) 124.008 346 356.256 322A(i) 124.009 347 356.601, 356.602 322A(k) 124.010 348(a) 356.301, 356.302 322A(l) 124.003 348(b) 356.351‐356.353 322A(m) 124.010 349(a) 356.401 322A(n) 124.014 349(b) 356.402 322A(o) 124.015 349(c) 356.403 322A(p) 124.004 349(d) 356.404 322A(q) 124.011 349(e) 356.405 322A(r) 124.012 350 356.451 322A(s) 124.001 351 (part) 356.501 322A(t) 124.013 351 (part) 356.502 322A(u) 124.015 352(a) 356.651 322A(v) 124.016 352(b) 356.652 322A(w) 124.017 352(c) 356.653 322A(x) 124.002 352(d) 356.654 322A(y) 124.018 352(e) 356.655 322B 355.109 353 356.551 323 355.112 354 356.553‐356.555 324 355.203 355 356.552, 356.556 326 355.107 356 356.557 328 355.113 357 356.558 329(a) 351.251 358 356.559 329(b) 351.252 359 357.001 329(c) 351.252, 351.253 360 357.001 331 356.001 361 357.002 332 356.002 362 357.005 333 356.051 363 357.003 334 (part) 356.101, 356.102 364 357.004 335 (part) 356.151‐356.155 365 357.051 336 356.103 366 357.052 337 356.104 367(a) 358.001 338 (part) 356.201‐356.203 367(b) 358.051 339 356.105 367(c) 358.051‐358.060 340 356.257 368(a) 358.101 341 356.251 368(b) 358.102 342 356.252 369(a) 358.151 344 356.253 369(b) 358.151‐358.155 345 356.254 370 358.201 345A 356.255 371 358.251‐358.254
15 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 373(a), (b) 360.001 405 362.003, 362.004 373(c) 360.002 405A 362.007 374 360.051 406 362.051 375 360.052 407 362.005 377 360.101 408(a) 362.006 378 360.102 408(b) 362.011 378A(a) 124.052 408(c) 362.012 378A(b) 124.051 408(d) 362.013 378B(a) 310.003 409 362.009 378B(b), (c), (d) 310.004 410 362.010 378B(g) 310.005 412 362.008 378B(h) 310.001, 310.006 414 362.052 378B(i) 310.002 427 551.001‐551.004 379 360.251 428 551.005 380(a) 360.151 429 551.101 380(b) 360.152 430 551.006 380(c) 360.153 431 551.102 380(d) 360.154 432 551.103 380(e) 360.155 433(a) 551.051, 551.052 380(f) 360.156 433(b) 551.052, 551.055 380(g) 360.157 433(c) 551.052, 551.053 381(a) 360.201 433(d) 551.054 381(b), (c) 360.202 436(1), (2), (3) 113.001 381(d) 360.203 436(4), (5) 113.004 382 360.252 436(6) 113.003 384 360.301 436(7) 113.002 385 360.253 436(8), (9) 113.001 386 360.254 436(10) 113.004 387 360.103 436(11), (12), 398A 351.105 (13) 113.001 399(a) 359.001 436(14) 113.004 399(b) 359.002 436(15) 113.001 399(c) (part) 359.003, 359.004 437 113.101 399(d) 359.005 438(a) 113.102 400 359.101 438(b) 113.103 401(a), (b), (c), 438(c) 113.104 (d) 359.051 438A(a) 113.004 401(e) (part) 359.052‐359.054 438A(b), (c) 113.105 402 359.006 438A(d) 113.154 403 359.102 438A(e) 113.105 404 362.001 438A(f) 113.206, 113.208
16 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 438A(g) 113.208 460(g) 112.208 438B 113.106 461 (part) 112.251‐112.253 439(a) 113.151 462 112.002 439(b) 113.152 471 123.051 439(c) 113.153 472(a) 123.052 439(d) 113.155 472(b) 123.053 439A(a) 113.051 473(a) 123.054 439A(b) 113.052 473(b) 123.055 439A(c), (d) 113.053 481 751.001 440 113.156, 113.157 482 751.002 441 113.158 483 751.004 442 113.251‐113.252 484 751.051 443 113.201 485 751.052 113.003, 113.005, 485A 751.053 444 113.202 486 751.054 445 113.203, 113.207 487(a), (b), (c), 446 113.204 (d) 751.055 447 113.205 487(e) 751.056 448 113.209 487A 751.057 449 113.210 488 751.058 450(a) 111.051, 111.052 489 751.151 450(b) 111.053 489B(a) 751.101 450(c) 111.051 489B(b) 751.102 451 112.051 489B(c) 751.103 452 112.052 489B(d), (e) 751.104 453 112.151 489B(f) 751.103 454 112.152 489B(g) 751.105 455 112.054 489B(h) 751.106 456(a) 112.035, 112.101 489B(i) 751.005 456(b) 112.102 489B(j) 751.006 456(c) 112.103 752.001‐752.003, 456(d) 112.101 490(a) 752.051 457 112.104 490(b) 752.004 458 112.053, 112.105 491 752.101 459 112.106 492 752.102 460(a) 112.203 493 752.103 460(b) 112.204 494 752.104 460(c) 112.206 495 752.105 460(d) 112.205 496 752.106 460(e) 112.207 497 752.107 460(f) (part) 112.201, 112.202 498 752.108
17 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 499 752.109 603(a) 1001.002 500 752.110 603(b) 1001.003 501 752.111 609 1022.008 502 752.112 610 1023.001 503 752.113 611 1023.002 504 752.114 613 1023.004 505 752.115 621 1052.051 506 751.003 622(a) 1053.051 601 1002.001 622(b), (c) 1053.052 601(1) 1002.002 623(a) 1052.001 601(2) 1002.003 623(b) 1052.051 601(3) 1002.004 624 1052.002 601(4) 1002.005 625 1052.052 601(5) 1002.006 626 1052.003 601(6) 1002.007 627 1052.004 601(7) 1002.009 627A 1052.053 601(8) 1002.008 628 1055.102 601(9) 1002.010 629 1053.101 601(10) 1002.011 630 1053.102 601(11) 1002.012 632(a), (b) 1051.001 601(12) 1002.013 632(c) 1051.002, 1051.003 601(12‐a) 1002.014 632(d) 1051.201 601(13) 1002.016 632(e) 1051.056 601(14) 1002.017 632(f)(1) 1051.051 601(15) 1002.018 632(f)(2) 1051.053 601(16) 1002.019 632(f)(3) 1051.054 601(18) 1002.020 632(f)(4) 1051.052 601(19) 1002.021 632(g) 1051.154 601(20) 1002.022 632(h) 1051.152 601(21) 1002.023 632(i) 1051.153 601(22) 1002.024 632(j) 1051.252 601(23) 1002.028 633(a), (g) 1051.101 601(24) 1002.025 633(b) 1051.102 601(25) 1002.015 633(c) 1051.103 601(27) 1002.026 633(d), (d‐1) 1051.104 601(28) 1002.027 633(e) 1051.105 601(29) 1002.008 633(f) 1051.104, 1051.106 601(30) 1002.029 634 1051.055 601(31) 1002.030 635 1051.251 602 1001.001,1101.105 636 1151.301
18 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 641 1055.002 659(c), (d) 1106.003 642 1055.001 660 1106.005 643 1055.052 661 1106.004 644 1055.051 662 1151.002 645(a) 1054.051 663 1106.006 645(b) 1054.055 665(a) 1155.002 645(c) 1054.054 665(a‐1) 1155.004 645(d) 1054.055 665(b) 1155.003 645(e) 1054.052 665(c), (d) 1155.006, 1155.007 645(f) 1054.053 665 (d‐1) 1155.007 645A 1054.056 665(g) 1155.002 646(a) 1054.001, 1054.003 665(e) 1155.008 646(b) 1054.201 665(f) 1155.005 646(c) 1054.203 665(h) 1155.001 646(d) 1054.005 665A 1155.051 646(e) 1054.002 665B 1155.054 647 1054.004 665C(a), (b), (c) 1155.053 647A(a), (b) 1054.201 665C(d) 1155.102 647A(c) 1054.202 665D 1155.052 647A(d) 1054.203 666 1155.101 647A(e) 1054.202 667 1155.103 648(a) 1054.102, 1054.105 668 1155.152 648(b) 1054.103 669 1155.151 648(c), (d) 1054.104 670(a) 1155.201 648(e) 1054.105 670(b), (c) 1155.202 648(f) 1054.101 671(a) 1201.001 648A(a) 1054.151 671(b), (c) 1201.002 648A(b) 1054.152 671(d) 1201.002, 1201.003 648A(c) 1054.153 671(e) 1201.004 648A(d) 1054.154 672(a) 1201.052 649 1051.253, 1055.101 672(b), (c) 1201.053 650 1053.103 672(d) 1201.054 651 1053.001 672(e) 1201.051 653 1056.001 673 1164.001 654 1056.051, 1056.052 674 1164.002 655 1152.001 675 1151.001 656 1152.002 676(a) 1104.054 657 1056.101, 1056.102 676(b) 1104.051 659(a) 1106.001 676(c) 1104.052 659(b) 1106.002 676(d), (e), (f) 1104.053
19 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 676(g) 1202.002 683A 1102.003 677(a) 1104.101, 1104.102 684(a), (b) 1101.101 677(b), (c), (d) 1104.103 684(c) 1101.101, 1101.102 677(e) 1202.002 684(d) 1101.154 677A(a), (b), (c) 1104.152 684(e) 1101.106 677A(d) 1104.156 685(a) 1101.051 677A(e) 1104.160 685(b) 1101.052 677A(f) 1104.159 685(c) 1101.051 677A(g) 1104.153 686 1101.053 677A(h) 1104.151 687(a), (b) 1101.103 677A(i), (j) 1104.154 687(c) 1101.104 677B(a) 1104.157 689 1104.002 677B(c) 1104.155 690 1104.001 677B(d) 1104.158 692 1101.155 677B(e), (f) 1104.157 693(a) 1101.151 678 1104.353 693(b) 1101.152 679(a) 1104.202 693(c), (d), (e) 1101.153 679(b) 1104.202 694 1202.001 679(c) 1104.203 694A(a) 1202.051 679A(d) 1104.209 694A(b), (c) 1202.054 679(e) 1104.207 694A(d) 1202.053 679(f) 1104.202, 1104.212 694A(e) 1202.055 679(g) 1104.210 694B 1202.052 679(h) 1104.211 694C(a), (b) 1202.101 679(i) 1104.204 694C(c) 1202.102 679(j) 1104.201 694D 1202.151 679(k), (l) 1104.205 694E 1202.153 679A(a) 1104.201 694F 1202.152 679A(b) 1104.208 694G 1202.155 679A(c) 1104.206 694H 1202.156 679A(e), (f) 1104.208 694I 1202.157 680 1104.054 694J 1202.154 681 1104.351‐357 694K 1202.103 682 1101.001 694L 1202.102 682A(a) 1103.001, 1103.003 695(a) 1203.102 682A(a‐1), (a‐2) 1103.002 695A(a), (a‐1) 1203.151 682A(b) 1103.004 695A(b) 1203.152 683(a) 1102.001, 1102.004 695A(c) 1203.153 683(b) 1102.002 696 1104.301 683(c) 1102.005 696A 1104.251
20 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 696B 1104.253 703(n) 1105.160 697(a) 1104.302, 1104.303 703(o) 1105.161 697(b) 1104.303 703(p) 1105.160, 1105.162 697(c) 1104.304 703(q) 1105.154 697(d) 1104.305 703(r) 1105.163 697(e) 1104.306 703(s) 1105.152 697A(a) 1104.257 704 1105.109 697A(b) 1104.258 705 1105.108, 1105.110 697B(a) 1104.251 706 1105.104 697B(b) 1104.255 707 1105.105 697B(c) 1104.256 708 1105.106 697B(d) 1104.254 708A 1105.107 697B(e) 1104.252 709(a) 1105.201 698(a) 1104.402 709(b) 1105.202 698(a‐1), (a‐2), 709(c) 1105.203 (a‐3) 1104.406 710 1105.202 698(a‐4) 1104.407 711 1105.251 698(a‐5) 1104.403 712 1105.251 698(a‐6) 1104.404 713 1105.252 698(b‐1) 1104.408 714(a) 1105.252 698(c‐1) 1104.410 714(b) 1105.253 698(b) 1104.405 715 1105.254 698(c) 1104.409 716 1105.255 698(d) 1104.411 717 1105.257 698(e) 1104.402 718 1105.256 698(f) 1104.412 719 1105.204 699 1105.002 720 1105.204 700 1105.051 721 1105.111 701 1105.003, 1105.052 722 1105.103 702 1105.101 723 1105.103 702A 1105.102 724 1105.103 703(a) 1105.003, 1105.151 725 1105.103 703(b) 1105.152 726 1105.112 703(c) 1105.153 727 1154.001 703(d) 1105.154 728 1154.003 703(e) 1105.155 729 1154.051 703(f) 1105.156 730 1154.052 703(g), (h), (i), 731 1154.053 (j), (k) 1105.157 732 1154.002 703(l) 1105.158 733 1154.054 703(m) 1105.159
21 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 734 1154.101 759(b) 1203.103 735 1154.102 759(c) 1203.104 736 1154.103 759(d) 1203.105 737 1154.104 759(e) 1203.106 738 1154.055 759(f) 1203.101 739 1154.151 759(g) 1203.201 741(a) 1163.001 759(h) 1203.107 741(b) 1163.002 760(a) 1203.001 741(c) 1163.003, 1163.004 760(b) 1203.002, 1203.102 741(d) 1163.004 760(c) 1203.004 741(e), (f) 1163.005 760(d) 1203.005 741(g) 1163.006 760(e), (f) 1203.006 742(a), (b), (c), 760(g) 1203.003 (d), (e) 1163.051 760A 1057.001 742(f) 1163.052‐1163.054 760B 1057.002 743(a), (b) 1163.101 761(a) 1203.051 743(c) 1163.103 761(b) 1203.056 743(d), (e), (f) 1163.104 761(c), (c‐1) 1203.052 743(g) 1163.101, 1163.102 761(d) 1203.053 743(h) 1163.102 761(e) 1203.057 743(i) 1163.102 761(f) 1203.054, 1203.102 743(j) 1163.105 761(g) 1203.055 744 1163.151 762 1203.056 745 1204.001 763 1203.202 746 1204.051 764 1203.202 747 1204.108 765 1203.203 748 1204.052 767 1151.051 749 1204.101, 1204.102 768 1151.101, 1151.151 750 1204.201 769 1151.004 751 1204.105 770(a) 1151.052 752(a) 1204.106 770(b), (c), (d) 1151.053 752(b) 1204.109 770A 1151.054 752(c) 1204.151 771 1151.152 752(d) 1204.152 776(a‐2) (part), 753 1204.107 (a‐3) 1156.003 754 1204.053 772 1151.105 755 1204.002 773 1151.104 756 1204.103 774(a) 1151.102 757 1204.104 774(b) 1151.103 758 1204.202 775 1151.153 759(a) 1203.102 776(a), (a‐1) 1156.001
22 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 776(a‐2) 1156.002 800 (part) 1157.063, 1157.065 776(b) 1156.004 801 1157.064 776A 1156.052 802 1157.107 777 1156.051 803 1157.201 778 1151.003 804 1157.101 779 1151.155 805(a), (b) 1157.103 780 1151.154 805(c) 1157.105 781(a), (a‐1), (a‐ 806 1157.106 2) 1151.201 807 1157.202 781(b) 1151.202 808 1157.104 781(c) 1151.202, 1151.203 809 1157.108 782(a) 1151.251 811 1158.001 782(b) 1151.252 812 1158.051 783(a) 1153.001 813 1158.101, 1158.102 783(b) 1153.002 814(a) 1158.151 783(c) 1153.001 814(b) 1158.151, 1158.152 784(a), (b), (c), 814(c) 1158.153‐1158.155 (d) 1153.003 815 1158.103 784(e) 1153.004 816 1158.104 785 1153.005 817 1158.201‐1158.203 786(a) 1157.001, 1157.060 818 1158.105 786(b) 1157.061 819 1158.257 787 1157.008 820 1158.251 788 (part) 1157.004, 1157.059 821 1158.252 789 1157.007 823 1158.253 790 1157.006, 1157.062 824 1158.254 791 1157.005 824A 1158.255 792 1157.102 825 1158.256 793(a), (b) 1157.151 826 1158.601, 1158.602 793(c) 1157.152 827(a) 1158.301, 1158.302 793(d) 1157.153 827(b) 1158.351‐1158.353 794 1157.003 828(a) 1158.401 795 1157.002 828(b) 1158.402 796 1157.051 828(c) 1158.403 797 1157.052 828(d) 1158.404 798 1157.053 828(e) 1158.405 799(a) 1157.054 829 1158.451 799(b) 1157.055 830 1158.501, 1158.502 799(c) 1157.056 831(a) 1158.651 799(d) 1157.057 831(b) 1158.652 799(e) 1157.058
23 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 831(c) 1158.653 854(a) 1161.001 831(d) 1158.654 854(b), (c) 1161.007 832 1158.551 855(a), (a‐1) 1161.002 833 1158.552‐1158.556 855(b) 1161.003 835 1158.557 855(c), (d), (e), 836 1158.558 (f) 1161.004 837 1158.559 855(g) 1161.005 839 1159.001 855A 1161.006 840 1159.001 855B(a), (a‐1) 1161.051 841 1159.002 855B(b), (e) 1161.052 842 1159.005 855B(c) 1161.053 843 1159.003 855B(d) 1161.054 844 1159.004 857(a) 1161.101 845 1159.051 857(b) 1161.102 846 1159.052 857(c) 1161.104 847(a) 1160.001 857(d) 1161.103 847(b), (c) 1160.051 857(e) 1161.103 847(d) 1160.052 857(f) 1161.106 847(e) 1160.053 857(g) 1161.103 847(f) 1160.054 857(h) 1161.105 847(g) 1160.055 857(i) 1161.104 847(h), (i) 1160.056 857(j) 1161.106 847(j) 1160.057, 1160.058 858(a) 1161.202, 1161.203 847(k) 1160.059 858(b) 1161.202 847(m) 1160.060 858(c) 1161.205 848(a) 1160.101 858(d), (e), (f) 1161.203 848(b) 1160.102 858(g) 1161.204 849(a), (b) 1160.151 860(a) 1161.151 849(c) 1160.152 860(b) 1161.152 849(d) 1160.153 860(c) 1161.153 849(e) 1160.154 860(d) 1161.151 849(f) 1160.155 861 1161.203 850 1160.201 862 1161.204 851 1160.251‐1160.254 865(a) 1162.001 853(a) 1158.701 865(b) 1162.002 853(b) 1158.702, 865(c) 1162.008 853(c) 1158.703 865(d) 1162.002 853(d) 1158.704 865(f) 1162.004 853(e) 1158.705 865A(a), (b) 1162.005 853(f) 1158.706 865A(c) 1162.006 865A(d) 1162.006, 1162.007
24 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 865A(e) 1162.007 875(f)(1) 1251.006, 1251.008 865A(f) 1162.008 875(f)(2), (3), (4) 1251.006 865A(g) 1162.007 875(f)(5) 1251.007 866(a) 1162.051 875(f)(6) 1251.009 866(b) 1162.052 875(g) (part) 1251.010, 1251.012 866(c) 1162.053 875(h) 1251.151 867(a) 1301.057 875(i) 1251.013 867(a‐1) 1301.051 875(j) 1251.011 867(b) 1301.053 875(k) 1251.051 867(b‐1) 1301.054 875(l) 1251.052 867(b‐2) 1301.052 876 1251.101 867(b‐3) 1301.054 877 1251.102 867 (b‐4) 1301.055 878 1251.152 867(c) 1301.057 879 1251.152, 1251.153 867(d) 1301.057 881(a), (b) 1252.051 867(e) 1301.057 881(c) 1252.052 1301.053, 1301.054, 881(d) 1252.053 867(f) 1301.056 881(e) 1252.054 867A 1301.052 881A 1252.055 868(a) 1301.058, 1301.101 882 1252.001‐1252.003 868(b) 1301.102 883(a) 1353.002, 1353.003 868(c) 1301.103 883(b) 1353.002, 1353.003 868(d) 1301.101 883(c) 1353.004 868(e) 1301.102 883(d) 1353.005 868(f) 1301.153 883(e), (f) 1353.001 868A 1301.152 883(g) 1353.004, 1353.005 868B 1301.058 883(h) 1353.006 868C 1301.202 883A 1353.103 869 1301.201 883B(a) 1353.051 869A 1301.155 883B(b) 1353.052 869B 1301.002 883B(c) 1353.051 869C 1301.151 883B(d), (e) 1353.052 870 1301.203 883C(a) 1353.101, 1353.102 871 1301.154 883C(b), (c) 1353.102 872 1301.156 883D 1353.151 873 1301.204 884 1353.054 874 1251.002 884A 1353.053 875(a), (b) 1251.001 885(a) 1354.001‐1354.003 875(c) 1251.003 885(b) 1354.004 875(d) 1251.004 885(c) 1354.005 875(e) 1251.005
25 ESTATE PLANNING UPDATE
Probate Code Estates Code Probate Code Estates Code 885(d) 1354.006 890A(g), (h) 1352.104 885(e) 1354.007 890A(i) 1352.107 885(f) 1354.008 890A(j) 1352.105 885(g) 1354.009 890A(k) 1352.108 887(a) 1355.001, 1355.051 891(a) 1253.001 887(b) 1355.052 891(b) 1253.002 887(c) 1355.102, 1355.103 891(c), (d) 1253.003 887(d) 1355.104 892(a) 1253.051 887(e) 1355.002 892(b) 1253.052 887(f) 1355.105 892(c) 1253.055 887(g) 1355.151‐1355.154 892(d), (e), (f), 889(a) 1351.001, 1351.006 (g) 1253.053 889(b) 1351.002 892(h) 1253.056 889(c), (d) 1351.003 893 1253.054 repealed 889(e) 1351.004 894(a) 1253.101 889(f) 1351.005 894(b) 1253.102 889A(a) 1352.001 894(c) 1253.103 1352.051, 1352.052, 894(d) 1253.102 889A(b) 1352.056 895(a) 1253.151 889A(c) 1352.053 895(b) 1253.152 889A(d) 1352.054 901 1356.001 889A(e) 1352.055 902 1356.002 889A(f) 1352.054 903(a) 1356.051, 1356.052 889A(g) 1352.057, 1352.058 903(b), (c) 1356.051 889A(h), (i) 1352.055 903(d) 1356.055 889A(j) 1352.052 903(e) 1356.053 889A(k) 1352.059 904(a) 1356.001 890(a) 1351.051 904(b) 1356.054 1351.052, 1351.053, 905 1356.056 890(b) (part) 1351.057 910 1302.001 890(c) 1351.053 911 1302.002 890(d), (e) 1351.054 912 1302.003 890(f) 1351.055 913 1302.004 890(g) 1351.056 914 1302.005 890A(a) 1352.001 915 1302.007 890A(b) 1352.101 916 1302.006 1352.101, 1352.102, 890A(c) 1352.106 890A(d) 1352.103 890A(e) 1352.104 890A(f) 1352.105
26 ESTATE PLANNING UPDATE
VIII. CONVERSION CHART Estates Code Probate Code ESTATES CODE TO PROBATE 22.033 3(mm) CODE 22.034 3(ff) Estates Code Probate Code 31.001 3(bb) 21.001 New 31.002 4B 21.002 New 32.001 4A 21.003 New 32.002 4C 21.004 2(c); New 32.003 4D 21.005 New 32.004 4E 21.006 2(a) (part) 32.005 4F 22.001 3 (part) 32.006 4G 22.002 3(a) 32.007 4H 22.003 3(kk) 33.001 6 22.004 3(b) 33.002 6A 22.005 3(c) 33.003 6B 22.006 3(d) 33.004 6C 22.007 3(e), (g), (ii) 33.005 6D 22.008 3(h) 33.051 8(a) (part) 22.009 3(i) 33.052 8(a) (part) 22.010 3(j) 33.053 8(b) (part) 22.011 3(k) 33.054 8(e) 22.012 3(l) 33.055 8(a) (part) 22.013 3(m) 33.101 8(b) (part) 22.014 3(ll) 33.102 8(c)(1) 22.015 3(o) 33.103 8(c)(2) 22.016 3(p) 33.104 8(d) 22.017 3(q) 34.001 5B 22.018 3(r) 34.002 5C 22.019 3(f) 51.001 33(a), (b) 22.020 3(s) (part) 51.002 33(c) (part) 22.021 3(s) (part) 51.003 33(c) (part) 22.022 3(t) 51.051 33(f)(1) (part) 22.023 repealed 3(u) 51.052 33(f)(4) 22.024 3(v) 51.053 33(f)(2) 22.025 3(w) 51.054 33(f)(3) 22.026 3(jj) 51.055 34 22.027 3(x); New 51.056 33(e) 22.028 3(z) 51.101 33(f)(1) 22.029 3(bb) 51.102 33(h) 22.030 3(dd) 51.103 33(i) 22.031 3(aa) 51.104 33(g) 22.032 3(ee)
27 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 51.151 33(d) 56.001 221A 51.201 35 56.002 221B 51.202 33(j) 101.001 37 (part) 51.203 22 (part) 101.002 46(a) (part) 52.001 13 (part) 101.003 37 (part) 52.002 14 101.051 37 (part) 52.003 16 101.052 155 (part), 156 (part) 52.004 17 102.001 42(c) (part) 52.051 11, 13(e) (part) 102.002 282 52.052 15 102.003 283 52.053 17A 102.004 270 53.001 24 102.005 284 53.051 12(a) 102.006 285 53.052 12(b), (c) 111.001 46(a) (part) 53.053 11A 111.002 46(b) 53.054 11B 111.051 450(a) (part), (c) 53.101 19 111.052 450(a) (part) 53.102 20 111.053 450(b) 53.103 23 (part) 112.001 New 53.104 34A 112.002 462 53.105 repealed 23 (part) 112.051 451 53.106 25 112.052 452 54.001 10C 456(a) (part, 458 54.002 9 112.053 (part) 54.051 22 (part) 112.054 455 54.052 18 112.101 456(a) (part), (d) 55.001 10 112.102 456(b) 55.002 21 112.103 456(c) 55.051 10A(a) (part) 112.104 457 55.052 10A(a) (part) 112.105 458 (part) 55.053 10A(b) 112.106 459 55.101 10B (part) 112.151 453 55.102 10B (part) 112.152 454 55.151 26 (part) 112.201 460(f) (part) 55.152 26 (part) 112.202 460(f) (part) 55.201 27 (part) 112.203 460(a) 55.202 27 (part) 112.204 460(b) 55.203 27 (part) 112.205 460(d) 55.251 31 (part) 112.206 460(c) 55.252 31 (part) 112.207 460(e) 112.208 460(g)
28 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 112.251 461 (part) 121.001 47(f) 112.252 461 (part) 121.051 47(a) (part) 112.253 461 (part) 121.052 47(a) (part) 436(1), (2), (3), (8), 121.053 47(a) (part) (9), (11), (12), (13), 121.101 47(c) (part) 113.001 (15) 121.102 47(c) (part) 113.002 436(7) 121.151 47(b) 113.003 436(6), 444 (part) 121.152 47(d) 436(4), (5), (10), (14), 121.153 47(e) 113.004 438A(a) 122.001 37A(e) 113.005 444 (part) 122.002 37A(a) 113.051 439A(a) 122.003 37A(b) 113.052 439A(b) 122.004 37A(k) 113.053 439A(c), (d) 122.005 37A(j) 113.101 437 122.051 37A(g) 113.102 438(a) 122.052 37A(h) (part) 113.103 438(b) 122.053 37A(h) (part) 113.104 438(c) 122.054 37A(h) (part) 113.105 438A(b), (c), (e) 122.055 37A(h) (part) 113.106 438B 122.056 37A(i) 113.151 439(a) 122.057 37A(p) 113.152 439(b) 122.101 37A(c) 113.153 439(c) 122.102 37A(d) 113.154 438A(d) 122.103 37A(f) 113.155 439(d) 122.104 37A(n) 113.156 440 (part) 122.105 37A(o) (part) 113.157 440 (part) 122.106 37A(o) (part) 113.158 441 122.107 new 113.201 443 122.151 37A(l) (part) 113.202 444 (part) 122.152 37A(l) (part) 113.203 445 (part) 122.153 37A(m) 113.204 446 122.201 37B(a) 113.205 447 122.202 37B(b) (part) 113.206 438A(f) (part) 122.203 37B(b) (part) 113.207 445 (part) 122.204 37B(c) 113.208 438A(f) (part), (g) 122.205 37B(d) 113.209 448 122.206 37B(e) 113.210 449 123.001 69(a), (b) 113.251 442 (part) 123.002 69(c) 113.252 442 (part) 123.051 471 113.253 442 (part)
29 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 123.052 472(a); New 152.054 113(c) 123.053 472(b) 152.055 113(d), 114(b) 123.054 473(a) 152.101 115(a), (b) 123.055 473(b) 152.102 115(c), (d) 123.101 47A(a) 201.001 38(a) 123.102 47A(b), (c) 201.002 38(b) 123.103 47A(d), (e) 201.003 45 123.104 47A(f) 201.051 42(a) 124.001 322A(a), (s) 201.052 42(b)(1) 124.002 322A(x) 201.053 42(b)(2) 124.003 322A(l) 201.054 40 124.004 322A(p) 201.055 42(d) 124.005 322A(b) 201.056 41(a) 124.006 322A(c), (d), (e), (f) 201.057 41(b) 124.007 322A(g) 201.058 41(d) (part) 124.008 322A(h) 201.059 41(d) (part) 124.009 322A(i) 201.060 41(c) 124.010 322A(k), (m) 201.061 41(d) (part) 124.011 322A(q) 201.062 41(e), (f) 124.012 322A(r) 201.101 43 124.013 322A(t) 201.102 39 (part) 124.014 322A(n) 201.103 39 (part) 124.015 322A(o), (u) 201.151 44(a), (b) 124.016 322A(v) 201.152 44(c) 124.017 322A(w) 202.001 48(a) (part) 124.018 322A(y) 202.002 48(a) (part) 124.051 378A(b) 202.003 repealed 2.54 124.052 378A(a) 202.004 49(a) (part) 151.001 36B 202.005 49(a) (part) 151.002 36C 202.006 48(b) 151.003 36D 202.007 49(b) (part) 151.004 36E 202.008 49(b) (part) 151.005 36F 202.009 53(b), (c) 152.001 108 (part), 109, 110 202.051 50(a) (part) 152.002 111(a), 112 202.052 50(b) 152.003 111(b) 202.053 50(c) 152.004 108 (part) 202.054 50(a) (part) 152.051 113(a) 202.055 50(d) 152.052 113(b) 202.056 50(e) 152.053 114(a) 202.101 51 (part)
30 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 202.102 51 (part) 251.104 59(a) (part), (b) (part) 202.103 51 (part) 251.1045 59(a‐1) 202.151 53(a) 251.105 59(b) (part) 202.201 54 251.106 59(c) (part) 202.202 55(a) (part) 251.107 60 (part) 202.203 55(a) (part) 252.001 71(a) (part) 202.204 55(b) 252.002 71(b) 202.205 55(c) 252.003 71(a) (part) 202.206 56 252.004 71(c) 203.001 52 252.051 71(d) (part) 203.002 52A 252.052 71(d) (part) 204.001 53E 252.101 71(e) (part) 204.051 53A(a) 252.102 71(e) (part) 204.052 53A(b) 252.103 71(e) (part) 204.053 53A(c), (d) 252.104 71(e) (part) 204.054 53A(e) 252.105 71(e) (part) 204.055 53A(f) 252.151 71(f) (part) 204.056 53A(g) 252.152 71(f) (part) 204.101 53B(a) 252.153 71(g) 204.102 53B(b) 252.201 75 (part) 204.103 53B(c) 252.202 75 (part) 204.151 53C(a) 252.203 75 (part) 204.152 53C(b), (c) 252.204 75 (part) 204.153 53C(d) 253.001 69A 204.201 53D 253.002 63 205.001 137(a) (part) 254.001 58(a) 205.002 137(a) (part) 254.002 61, 62 205.003 137(a) (part) 254.003 58(b) 205.004 137(a) (part) 254.004 59A 205.005 137(d) 254.005 64 205.006 137(c) 255.001 58(d) 205.007 138 255.002 58(c) (part) 205.008 137(b) 255.003 58(c) (part) 251.001 57 255.051 67(c) 251.002 58(a), (b) 255.052 67(a) (part), (d) 251.051 59(a) (part) 255.053 67(a)(1) 251.052 59(a) (part), 60 (part) 255.054 67(a)(2) 251.101 59(b) (part) 255.055 67(b) 251.102 59(a) (part), (c) (part) 255.056 67(e) 251.103 59(a) (part) 255.101 37C(a)
31 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 255.102 37C(b) 257.102 89C(c) 255.151 68(e) 257.103 89C(d) 255.152 68(b), (c), (d) 258.001 128(a) (part) 255.153 68(a) (part) 258.002 128(b) 255.154 68(a) (part) 258.003 128(c) (part) 255.201 repealed 70 258.051 128B(a), (b), (c) 255.251 70A(c) 258.052 128B(d) 255.252 70A(a) 258.053 128B(e) 255.253 70A(b) 258.101 129A 255.301 71A(a) 301.001 72(a) (part) 255.302 71A(b) 301.002 74 255.303 71A(c) 301.051 76 (part) 255.351 58c 301.052 82 256.001 94 301.101 179 256.002 72(a) (part) 301.151 88(a) (part) 256.003 73 301.152 88(c) 256.051 76 (part) 301.153 88(d), 180 256.052 81(a) (part) 301.154 88(e) 256.053 81(a) (part) 301.201 80(a), (b) (part) 256.054 81(b) 301.202 80(b) (part) 256.101 83(a) 301.203 80(c) 256.102 83(b) 303.001 128(a) (part) 256.103 83(c) 303.002 128(c) (part) 256.151 88(a) (part) 303.003 129A 256.152 84(a), 88(b) 304.001 77 256.153 84(b) 304.002 79 256.154 84(c) 304.003 78 256.155 84(d) 305.001 New 256.156 85 305.002 189 256.157 87 305.003 192 (part) 256.201 89 305.051 190(a) 256.202 90 305.052 190(b) 256.203 91 305.053 190(c) 256.204 93 190(d) (part), 192 257.001 89C(a) 305.054 (part) 257.051 89A(a) (part) 305.055 190(d) (part) 257.052 89A(a) (part) 305.101 194 (part), 195 257.053 89A(b) 305.102 214, 215, 216, 217 257.054 89B 305.103 198 257.101 89C(b) 305.104 199 305.105 200
32 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 305.106 194 (part) 308.001 128A(a) 305.107 197 (part) 308.0015 128A(a‐1) 305.108 196 308.002 128A(b), (c), (d), (f) 305.109 197 (part) 308.003 128A(e) 305.110 213 308.004 128A(g), (h) 305.111 218 308.051 294(a), (c) 305.151 194, Subdivs. 1, 2 308.052 294(b) 305.152 194, Subdiv. 3 308.053 295 305.153 194, Subdivs. 4, 13 308.054 294(d) 305.154 194, Subdiv. 5 308.055 296 305.155 194, Subdiv. 6 308.056 297 194, Subdivs. 7, 8(b), 309.001 248 305.156 (c), (d) 309.002 253 305.157 194, Subdiv. 8(a) 309.003 249 305.158 194, Subdiv. 8(e) 309.051 250 305.159 194, Subdiv. 9 309.052 251 305.160 194, Subdiv. 14 309.053 252 194, Subdivs. 10, 12 309.054 255 305.201 (part) 309.055 260 305.202 194, Subdiv. 11 309.056 250(c), (d), (e) 305.203 201(a) 309.101 256 305.204 201(b), 202 309.102 257 305.205 201(c) 309.103 258 305.206 211, 212 309.104 259 305.207 194, Subdiv. 12 (part) 309.151 261 305.251 203, 204 310.001 378B(h) (part) 305.252 205, 206(a) 310.002 378B(i) 305.253 206(b) 310.003 378B(a) 305.254 207 310.004 378B(b), (c), (d) 305.255 208 310.005 378B(g) 305.256 210 310.006 378B(h) (part) 305.257 209 351.001 32 306.001 178(a), (c) 351.002 29 306.002 178(b) 351.003 245 306.003 181 351.051 234(a) 306.004 182 351.052 234(b) 306.005 183 351.053 28 306.006 187 351.054 233A 306.007 186 351.101 230 307.001 188 351.102 232 307.002 240
33 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 351.103 235 353.105 291 351.104 238A 353.106 292 (part) 351.105 398A 353.107 292 (part), 293 351.151 233(a) 353.151 277 351.152 233(b), (c), (d) 353.152 278 351.153 233(e) 353.153 279 351.201 238(a) 353.154 280 351.202 238(b), (f) 353.155 281 351.203 238(c), (d), (e) 354.001 143 351.204 238(g) 354.051 262 351.205 238(h), (i) 354.052 263 351.251 329(a) 354.053 264 351.252 329(b), (c) (part) 354.054 265 351.253 329(c) (part) 354.055 266 351.301 239 (part) 354.056 267 351.302 239 (part) 354.057 268 351.303 239 (part) 354.058 269 145(q) (part), 154A(i) 355.001 298(a) (part) 351.351 (part) 355.002 308 351.352 36(a) (part) 355.003 307 351.353 36(a) (part) 355.004 301 (part) 351.354 36(a) (part) 355.005 304 351.355 36(b) 355.006 303 (part) 352.001 241(b) 355.007 302 352.002 241(a) (part) 355.008 299 352.003 241(a) (part) 355.051 309 352.004 241(a) (part) 355.052 310 352.051 242 355.053 311 352.052 243 355.054 312(a) 352.053 244 355.055 312(b) 353.001 42(c) (part) 355.056 312(c) 353.051 271 355.057 312(d) 353.052 272 355.058 312(e) 353.053 273 355.059 301 (part) 353.054 275 355.060 298(a) (part) 353.055 274 (part) 355.061 298(b) 353.056 274 (part) 355.062 303 (part) 353.101 286, 288 355.063 318 353.102 287 355.064 313 (part) 353.103 289 355.065 314 353.104 290
34 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 355.066 313 (part) 356.201 338 (part) 355.101 319 356.202 338 (part) 355.102 322 356.203 338 (part) 355.103 320(a) 356.251 341 355.104 320(b) 356.252 342 355.105 320(c) 356.253 344 355.106 320(d) 356.254 345 355.107 326 356.255 345A 355.108 321 356.256 346 355.109 322B 356.257 340 355.110 320A 356.301 348(a) (part) 355.111 315 356.302 348(a) (part) 355.112 323 356.351 348(b) (part) 355.113 328 356.352 348(b) (part) 355.151 306(a) 356.353 348(b) (part) 355.152 306(b) 356.401 349(a) 355.153 306(c), (c‐1) 356.402 349(b) 355.154 306(d) 356.403 349(c) 355.155 306(e) 356.404 349(d) 355.156 306(f) 356.405 349(e) 355.157 306(g) 356.451 350 355.158 306(h), (i)(1), (j) 356.501 351 (part) 355.159 306(i)(2) 356.502 351 (part) 355.160 306(k) 356.551 353 355.201 317 356.552 355 (part) 355.202 316 356.553 354 (part) 355.203 324 356.554 354 (part) 356.001 331 356.555 354 (part) 356.002 332 356.556 355 (part) 356.051 333 356.557 356 356.101 334 (part) 356.558 357 356.102 334 (part) 356.559 358 356.103 336 356.601 347 (part) 356.104 337 356.602 347 (part) 356.105 339 356.651 352(a) 356.151 335 (part) 356.652 352(b) 356.152 335 (part) 356.653 352(c) 356.153 335 (part) 356.654 352(d) 356.154 335 (part) 356.655 352(e) 356.155 335 (part) 357.001 359, 360
35 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 357.002 361 359.102 403 357.003 363 360.001 373(a), (b) 357.004 364 360.002 373(c) 357.005 362 360.051 374 357.051 365 360.052 375 357.052 366 360.101 377 358.001 367(a); New 360.102 378 358.051 367(b), (c) (part) 360.103 387 358.052 367(c) (part) 360.151 380(a) 358.053 367(c) (part) 360.152 380(b) 358.054 367(c) (part) 360.153 380(c) 358.055 367(c) (part) 360.154 380(d) 358.056 367(c) (part) 360.155 380(e) 358.057 367(c) (part) 360.156 380(f) 358.058 367(c) (part) 360.157 380(g) 358.059 367(c) (part) 360.201 381(a) 358.060 367(c) (part) 360.202 381(b), (c) 358.101 368(a) 360.203 381(d) 358.102 368(b) 360.251 379 358.151 369(a), (b) (part) 360.252 382 358.152 369(b) (part) 360.253 385 358.153 369(b) (part) 360.254 386 358.154 369(b) (part) 360.301 384 358.155 369(b) (part) 361.001 221(a) 358.201 370 361.002 221(b) 358.251 371 (part) 361.003 221(c) 358.252 371 (part) 361.004 221(d) 358.253 371 (part) 361.005 221(e), (f) 358.254 371 (part) 361.051 222(a)(1) 359.001 399(a) 361.052 222(b) 359.002 399(b) 361.053 222(c) 359.003 399(c) (part) 361.054 222(a)(2), 222A 359.004 399(c) (part) 361.101 220(f) 359.005 399(d) 361.102 220(a) 359.006 402 361.103 220(b) 359.051 401(a), (b), (c), (d) 361.104 220(c) 359.052 401(e) (part) 361.105 220(d) 359.053 401(e) (part) 361.106 220(e) 359.054 401(e) (part) 361.151 220(g) 359.101 400 361.152 223
36 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 361.153 224, 225 403.058 146(b‐7) 361.154 226 403.0585 146(c) 361.155 227 403.059 147 362.001 404 403.060 148 362.002 92 404.001 149A 362.003 405 (part) 404.002 149 362.004 405 (part) 404.003 149C 362.005 407 404.004 154 362.006 408(a) 404.005 154A 362.007 405A 405.001 149B 362.008 412 405.002 151(e) 362.009 409 405.003 149D, 149E, 149F 362.010 410 405.004 151(a) 362.011 408(b) 405.005 151(a‐1) 362.012 408(c) 405.006 151(b) 362.013 408(d) 405.007 151(c), (d) 362.051 406 405.008 150 362.052 414 405.009 152 401.001 145(b), (o) 405.010 153 401.002 145(c), (d) 405.011 149G 401.003 145(c), (g) 405.012 New 145(f), (i), (j), (k), (l), 451.001 139 401.004 (m), (n) 451.002 140 401.005 145(p) 451.003 141 401.006 145A 451.004 142 401.007 145(q) 452.001 131A(a) (part) 401.008 145(r) 452.002 131A(b) 402.001 145(h) 452.003 131A(a) (part), (c) 402.002 145B 452.004 131A(d) 402.051 145C(a) 452.005 131A(e) 402.052 145C(b) 452.006 131A(f), (g), (h) 402.053 145C(c) 452.007 131A(i) 402.054 145C(d) 452.008 131A(j) 403.001 146(a)(4) 452.051 132(a) 403.051 146(a)(1)‐(3), (a‐1) 452.052 132(b) 403.052 146(b) 452.101 133 (part) 403.053 146(b‐1) 452.102 133 (part) 403.054 146(b‐2) 452.151 134 403.055 146(b‐3) 452.152 135 403.056 146(b‐4), (b‐5) 453.001 155 (part) 403.057 146(b‐6)
37 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 453.002 155 (part) 505.002 105A(c), (d) 453.003 160(a), (c) 505.003 105A(a) (part) 453.004 160(b), (c) 505.004 105A(b) (part) 453.005 176 505.005 105A(b) (part) 453.006 156 (part), 168 (part) 505.006 105A(e) 453.007 168 (part) 505.051 106 453.008 168 (part) 505.052 95(c) (part), 107 453.009 177 505.101 107A(a), (b) 454.001 72(a) (part) 505.102 107A(c) 454.002 72(a) (part) 505.103 107A(d) 454.003 72(b) 551.001 427 (part) 454.004 72(a) (part) 551.002 427 (part) 454.051 72(a) (part) 551.003 427 (part) 454.052 72(a) (part) 551.004 427 (part) 501.001 95(a) 551.005 428 95(b)(1) (part), (2) 551.006 430 501.002 (part), (c) (part) 551.051 433(a) (part) 95(b)(1) (part), (2) 433(a) (part), (b) 501.003 (part) 551.052 (part), (c) (part) 95(d)(1) (part), (2) 551.053 433(c) (part) 501.004 (part) 551.054 433(d) 95(d)(1) (part), (2) 501.005 (part) 551.055 433(b) (part) 501.006 105 551.101 429 501.007 95(e) 551.102 431 501.008 95(f) 551.103 432 502.001 103 751.001 481 502.002 104 751.002 482 503.001 96 (part), 97 751.003 506 503.002 95(c) (part) 751.004 483 503.003 96 (part) 751.005 489B(i) 503.051 98 751.006 489B(j) 503.052 99 751.051 484 504.001 100(a) 751.052 485 504.002 100(b) 751.053 485A 504.003 95(d)(2) (part), 100(c) 751.054 486 504.004 100(b) (part) 751.055 487(a), (b), (c), (d) 504.051 101 751.056 487(e) 504.052 101 (part) 751.057 487A 504.053 102 751.058 488 505.001 105A(a) (part) 751.101 489B(a) 751.102 489B(b)
38 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 751.103 489B(c), (f) 1002.013 601(12) 751.104 489B(d), (e) 1002.014 601(12‐a) 751.105 489B(g) 1002.015 601(25) 751.106 489B(h) 1002.016 601(13) 751.151 489 1002.017 601(14) 752.001 490(a) (part) 1002.018 601(15) 752.002 490(a) (part) 1002.019 601(16) 752.003 490(a) (part) 1002.020 601(18) 752.004 490(b) 1002.021 601(19) 752.051 490(a) (part) 1002.022 601(20) 752.101 491 1002.023 601(21); New 752.102 492 1002.024 601(22) 752.103 493 1002.025 601(24) 752.104 494 1002.026 601(27) 752.105 495 1002.027 601(28) 752.106 496 1002.028 601(23) 752.107 497 1002.029 601(30) 752.108 498 1002.030 601(31) 752.109 499 1022.008 609 752.110 500 1023.001 610 752.111 501 1023.002 611 752.112 502 1023.004 613 752.113 503 1051.001 632(a), (b) 752.114 504 1051.002 632(c) (part) 752.115 505 1051.003 632(c) (part) 1001.001 602 (part) 1051.051 632(f)(1) (part) 1001.002 603(a) 1051.052 632(f)(4) 1001.003 603(b) 1051.053 632(f)(2) 1002.001 601 (part) 1051.054 632(f)(3) 1002.002 601(1) 1051.055 634 1002.003 601(2) 1051.056 632(e) 1002.004 601(3) 1051.101 633(a), (g) 1002.005 601(4) 1051.102 633(b) 1002.006 601(5) 1051.103 633(c) 1002.007 601(6) 633(d), (d‐1), (f) 1002.008 601(8), (29) 1051.104 (part) 1002.009 601(7) 1051.105 633(e) 1002.010 601(9) 1051.106 633(f) (part) 1002.011 601(10) 1051.151 632(f)(1) (part) 1002.012 601(11) 1051.152 632(h) 1051.153 632(i)
39 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 1051.154 632(g) 1054.203 646(c), 647A(d) 1051.201 632(d) 1055.001 642 1051.251 635 1055.002 641 1051.252 632(j) 1055.051 644 1051.253 649 (part) 1055.052 643 1052.001 623(a) 1055.101 649 (part) 1052.002 624 1055.102 628 1052.003 626 1056.001 653 1052.004 627 1056.051 654 (part) 1052.051 621, 623(b) 1056.052 654 (part) 1052.052 625 1056.101 657 (part) 1052.053 627A 1056.102 657 (part) 1053.001 651 1057.001 760A 1053.051 622(a) 1057.002 760B 1053.052 622(b), (c) 1101.001 682 1053.101 629 1101.051 685(a), (c) 1053.102 630 1101.052 685(b) 1053.103 650 1101.053 686 1054.001 646(a) (part) 1101.101 684(a), (b), (c) (part) 1054.002 646(e) 1101.102 684(c) (part) 1054.003 646(a) (part) 1101.103 687(a), (b) 1054.004 647 1101.104 687(c) 1054.005 646(d) 1101.105 602 (part) 1054.051 645(a) 1101.106 684(e) 1054.052 645(e) 1101.151 693(a) 1054.053 645(f) 1101.152 693(b) 1054.054 645(c) 1101.153 693(c), (d), (e) 1054.055 645(b), (d) 1101.154 684(d) 1054.056 645A 1101.155 692 1054.101 648(f) 1102.001 683(a) (part) 1054.102 648(a) (part) 1102.002 683(b) 1054.103 648(b) 1102.003 683A 1054.104 648(c), (d) 1102.004 683(a) (part) 1054.105 648(a) (part), (e) 1102.005 683(c) 1054.151 648A(a) 1103.001 682A(a) (part) 1054.152 648A(b) 1103.002 682A(a‐1), (a‐2) 1054.153 648A(c) 1103.003 682A(a) (part) 1054.154 648A(d) 1103.004 682A(b) 1054.201 646(b), 647A(a), (b) 1104.001 690 1054.202 647A(c), (e) 1104.002 689
40 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 1104.051 676(b) 1104.304 697(c) 1104.052 676(c) 1104.305 697(d) 1104.053 676(d), (e), (f) 1104.306 697(e) 1104.054 676(a), 680 1104.351 681 (part) 1104.101 677(a) (part) 1104.352 681 (part) 1104.102 677(a) (part) 1104.353 678, 681 (part) 1104.103 677(b), (c), (d) 1104.354 681 (part) 1104.151 677A(h), 677B(a) 1104.355 681 (part) 1104.152 677A(a), (b), (c) 1104.356 681 (part) 1104.153 677A(g) 1104.357 681 (part) 1104.154 677A(i), (j) 1104.401 New 1104.155 677B(c) 1104.402 698(a), (e) 1104.156 677A(d) 1104.403 698(a‐5) 1104.157 677B(b), (e), (f) 1104.404 698(a‐6) 1104.158 677B(d) 1104.405 698(b) 1104.159 677A(f) 1104.406 698(a‐1), (a‐2), (a‐3) 1104.160 677A(e) 1104.407 698(a‐4) 1104.201 679(j), 679A(a) 1104.408 698(b‐1) 679(a) (part), (b), (f) 1104.409 698(c) 1104.202 (part) 1104.410 698(c‐1) 1104.203 679(a) (part), (c), (d) 1104.411 698(d) 1104.204 679(i) 1104.412 698(f) 1104.205 679(k), (l) 1105.001 New 1104.206 679A(c) 1105.002 699 1104.207 679(e) 701 (part), 703(a) 1104.208 679A(b), (e), (f) 1105.003 (part) 1104.209 679A(d) 1105.051 700 1104.210 679(g) 1105.052 701 (part) 1104.211 679(h) 1105.101 702 1104.212 679(f) (part) 1105.102 702A 1104.251 696A, 697B(a) 1105.103 722, 723, 724, 725 1104.252 697B(e) 1105.104 706 1104.253 696B 1105.105 707 1104.254 697B(d) 1105.106 708 1104.255 697B(b) 1105.107 708A 1104.256 697B(c) 1105.108 705 (part) 1104.257 697A(a) 1105.109 704 1104.258 697A(b) 1105.110 705 (part) 1104.301 696 1105.111 721 1104.302 697(a) (part) 1105.112 726 1104.303 697(a) (part), (b) 1105.151 703(a) (part)
41 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 1105.152 703(b), (s) 1151.104 773 1105.153 703(c) 1151.105 772 1105.154 703(d), (q) 1151.151 768 (part) 1105.155 703(e) 1151.152 771 1105.156 703(f) 1151.153 775 1105.157 703(g), (h), (i), (j), (k) 1151.154 780 1105.158 703(l) 1151.155 779 1105.159 703(m) 1151.201 781(a), (a‐1), (a‐2) 1105.160 703(n), (p) (part) 1151.202 781(b), (c) (part) 1105.161 703(o) 1151.203 781(c) (part) 1105.162 703(p) (part) 1151.251 782(a) 1105.163 703(r) 1151.252 782(b) 1105.201 709(a) 1151.301 636 1105.202 709(b), 710 1152.001 655 1105.203 709(c) 1152.002 656 1105.204 719, 720 1153.001 783(a), (c) 1105.251 711, 712 1153.002 783(b) 1105.252 713, 714(a) 1153.003 784(a), (b), (c), (d) 1105.253 714(b) 1153.004 784(e) 1105.254 715 1153.005 785 1105.255 716 1154.001 727 1105.256 718 1154.002 732 1105.257 717 1154.003 728 1106.001 659(a) 1154.051 729 1106.002 659(b) 1154.052 730 1106.003 659(c), (d) 1154.053 731 1106.004 661 1154.054 733 1106.005 660 1154.055 738 1106.006 663 1154.101 734 1151.001 675 1154.102 735 1151.002 662 1154.103 736 1151.003 778 1154.104 737 1151.004 769 1154.151 739 1151.051 767 1155.001 665(h) 1151.052 770(a) 1155.002 665(a), (g) 1151.053 770(b), (c), (d) 1155.003 665(b) 1151.054 770A 1155.004 665(a‐1) 1151.101 768 (part) 1155.005 665(f) 1151.102 774(a) 1155.006 665(c), (d) (part) 1151.103 774(b) 1155.007 665(d) (part), (d‐1)
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Estates Code Probate Code Estates Code Probate Code 1155.008 665(e) 1157.065 800 (part) 1155.051 665A 1157.101 804 1155.052 665D 1157.102 792 1155.053 665(C)(a), (b), (c) 1157.103 805(a), (b) 1155.054 665B 1157.104 808 1155.101 666 1157.105 805(c) 1155.102 665C(d) 1157.106 806 1155.103 667 1157.107 802 1155.151 669 1157.108 809 1155.152 668 1157.151 793(a), (b) 1155.201 670(a) 1157.152 793(c) 1155.202 670(b), (c) 1157.153 793(d) 1156.001 776(a), (a‐1) 1157.201 803 1156.002 776(a‐2) (part) 1157.202 807 1156.003 776(a‐2) (part), (a‐3) 1158.001 811 1156.004 776(b) 1158.051 812 1156.051 777 1158.101 813 (part) 1156.052 776A 1158.102 813 (part) 1157.001 786(a) (part) 1158.103 815 1157.002 795 1158.104 816 1157.003 794 1158.105 818 1157.004 788 (part) 1158.151 814(a), (b) (part) 1157.005 791 1158.152 814(b) (part) 1157.006 790 (part) 1158.153 814(c) (part) 1157.007 789 1158.154 814(c) (part) 1157.008 787 1158.155 814(c) (part) 1157.051 796 1158.201 817 (part) 1157.052 797 1158.202 817 (part) 1157.053 798 1158.203 817 (part) 1157.054 799(a) 1158.251 820 1157.055 799(b) 1158.252 821 1157.056 799(c) 1158.253 823 1157.057 799(d) 1158.254 824 1157.058 799(e) 1158.255 824A 1157.059 788 (part) 1158.256 825 1157.060 786(a) (part) 1158.257 819 1157.061 786(b) 1158.301 827(a) (part) 1157.062 790 (part) 1158.302 827(a) (part) 1157.063 800 (part) 1158.351 827(b) (part) 1157.064 801 1158.352 827(b) (part)
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Estates Code Probate Code Estates Code Probate Code 1158.353 827(b) (part) 1160.053 847(e) 1158.401 828(a) 1160.054 847(f) 1158.402 828(b) 1160.055 847(g) 1158.403 828(c) 1160.056 847(h), (i) 1158.404 828(d) 1160.057 847(j) (part) 1158.405 828(e) 1160.058 847(j) (part) 1158.451 829 1160.059 847(k) 1158.501 830 (part) 1160.060 847(m) 1158.502 830 (part) 1160.101 848(a) 1158.551 832 1160.102 848(b) 1158.552 834 (part) 1160.151 849(a), (b) 1158.553 833 (part) 1160.152 849(c) 1158.554 833 (part) 1160.153 849(d) 1158.555 833 (part) 1160.154 849(e) 1158.556 834 (part) 1160.155 849(f) 1158.557 835 1160.201 850 1158.558 836 1160.251 851 (part) 1158.559 837 1160.252 851 (part) 1158.601 826 (part) 1160.253 851 (part) 1158.602 826 (part) 1160.254 851 (part) 1158.651 831(a) 1161.001 854(a) 1158.652 831(b) 1161.002 855(a), (a‐1) 1158.653 831(c) 1161.003 855(b) 1158.654 831(d) 1161.004 855(c), (d), (e), (f) 1158.701 853(a) 1161.005 855(g) 1158.702 853(b) 1161.006 855A 1158.703 853(c) 1161.007 854(b), (c) 1158.704 853(d) 1161.008 863 1158.705 853(e) 1161.051 855B(a), (a‐1) 1158.706 853(f) 1161.052 855B(b), (e) 1159.001 839, 840 1161.053 855B(c) 1159.002 841 1161.054 855B(d) 1159.003 843 1161.101 857(a) 1159.004 844 1161.102 857(b) 1159.005 842 1161.103 857(d), (e), (g) 1159.051 845 1161.104 857(c), (i) 1159.052 846 1161.105 857(h) 1160.001 847(a); New 1161.106 857(f), (j) 1160.051 847(b), (c) 1161.151 860(a), (d) 1160.052 847(d) 1161.152 860(b)
44 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 1161.153 860(c) 1201.004 671(e) 1161.201 858(h) 1201.051 672(e) 1161.202 858(a) (part), (b) 1201.052 672(a) 858(a) (part), (d), (e), 1201.053 672(b), (c) 1161.203 (f), 861 1201.054 672(d) 1161.204 858(g), 862 1202.001 694 1161.205 858(c) 1202.002 676(g), 677(e) 1162.001 865(a) 1202.051 694A(a) 1162.002 865(b), (d) 1202.052 694B 1162.003 865(e) 1202.053 694A(d) 1162.004 865(f) 1202.054 694A(b), (c) 1162.005 865A(a), (b) 1202.055 694A(e) 1162.006 865A(c), (d) (part) 1202.101 694C(a), (b) 865A(d) (part), (e), 1202.102 694C(c), 694L 1162.007 (g) 1202.103 694K 1162.008 865(c), 865A(f) 1202.151 694D 1162.051 866(a) 1202.152 694F 1162.052 866(b) 1202.153 694E 1162.053 866(c) 1202.154 694J 1163.001 741(a) 1202.155 694G 1163.002 741(b) 1202.156 694H 1163.003 741(c) (part) 1202.157 694I 1163.004 741(c) (part), (d) 1203.001 760(a) 1163.005 741(e), (f) 1203.002 760(b) (part) 1163.006 741(g) 1203.003 760(g) 742(a), (b), (cd), (d), 1163.051 (e) 1203.004 760(c) 1163.052 742(f) (part) 1203.005 760(d) 1163.053 742(f) (part) 1203.006 760(e), (f) 1163.054 742(f) (part) 1203.051 761(a) 1163.101 743(a), (b), (g) (part) 1203.052 761(c), (c‐1) 1163.102 743(g) (part), (h), (i) 1203.053 761(d) 1163.103 743(c) 1203.054 761(f) (part) 1163.104 743(d), (e), (f) 1203.055 761(g) 1163.105 743(j) 1203.056 761(b), 762 1163.151 744 1203.057 761(e) 1164.001 673 1203.101 759(f) 695(a), 759(a), 760(b) 1164.002 674 1203.102 (part), 761(f) (part) 1201.001 671(a) 1203.103 759(b) 1201.002 671(b), (c), (d) (part) 1203.104 759(c) 1201.003 671(d) (part) 1203.105 759(d)
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Estates Code Probate Code Estates Code Probate Code 1203.106 759(e) 1251.051 875(k) 1203.107 759(h) 1251.052 875(l) 1203.108 695(c), (d), (e) 1251.101 876 1203.151 695A(a), (a‐1) 1251.102 877 1203.152 695A(b) 1251.151 875(h) 1203.153 695A(c) 1251.152 878, 879 (part) 1203.201 759(g) 1251.153 879 (part) 1203.202 695(b), 763, 764 1252.001 882 (part) 1203.203 765 1252.002 882 (part) 1204.001 745; New 1252.003 882 (part) 1204.002 755 1252.051 881(a), (b) 1204.051 746 1252.052 881(c) 1204.052 748 1252.053 881(d) 1204.053 754 1252.054 881(e) 1204.101 749 (part) 1252.055 881A 1204.102 749 (part) 1253.001 891(a) 1204.103 756 1253.002 891(b) 1204.104 757 1253.003 891(c), (d) 1204.105 751 1253.051 892(a) 1204.106 752(a) 1253.052 892(b) 1204.107 753 1253.053 892(d), (e), (f), (g) 1204.108 747 1253.054 1204.109 752(b) repealed 893 1204.151 752(c) 1253.055 892(c) 1204.152 752(d) 1253.056 892(h) 1204.201 750 1253.101 894(a) 1204.202 758 1253.102 894(b), (d) 1251.001 875(a), (b) 1253.103 894(c) 1251.002 874 1253.151 895(a) 1251.003 875(c) 1253.152 895(b) 1251.004 875(d) 1301.001 New 1251.005 875(e) 1301.002 869B 875(f)(1) (part), (2), 1301.051 867(a‐1) 1251.006 (3), (4) 1301.052 867(b‐2), 867A 1251.007 875(f)(5) 1301.053 867(b), (f) (part) 1251.008 875(f)(1) (part) 867(b‐1), (b‐3), (f) 1251.009 875(f)(6) 1301.054 (part) 1251.010 875(g) (part) 1301.055 867 (b‐4) 1251.011 875(j) 1301.056 867(f) (part) 1251.012 875(g) (part) 867(a), (b‐5), (c), (d), 1301.057 (e) 1251.013 875(i)
46 ESTATE PLANNING UPDATE
Estates Code Probate Code Estates Code Probate Code 1301.058 868(a) (part), 868B 1352.056 889A(b) (part) 1301.101 868(a), (d) 1352.057 889A(g) (part) 1301.102 868(b), (e) 1352.058 889A(g) (part) 1301.103 868(c) 1352.059 889A(k) 1301.151 869C 1352.101 890A(b), (c) (part) 1301.152 868A 1352.102 890A(c) (part) 1301.153 868(f) 1352.103 890A(d); New 1301.154 871 1352.104 890A(e), (g), (h) 1301.155 869A 1352.105 890A(f), (j) 1301.156 872 1352.106 890A(c) (part) 1301.201 869 1352.107 890A(i) 1301.202 868C 1352.108 890A(k) 1301.203 870 1353.001 883(e), (f) 1301.204 873 883(a) (part), (b) 1302.001 910 1353.002 (part) 1302.002 911 883(a) (part), (b) 1353.003 (part) 1302.003 912 1353.004 883(c), (g) (part) 1302.004 913 1353.005 883(d), (g) (part) 1302.005 914 1353.006 883(h) 1302.006 916 1353.051 883B(a), (c) 1302.007 915 1353.052 883B(b), (d), (e) 1351.001 889(a) (part) 1353.053 884A 1351.002 889(b) 1353.054 884 1351.003 889(c), (d) 1353.101 883C(a) (part) 1351.004 889(e) 1353.102 883C(a) (part), (b), (c) 1351.005 889(f) 1353.103 883A 1351.006 889(a) (part) 1353.151 883D 1351.051 890(a) 1354.001 885(a) (part) 1351.052 890(b) (part) 1354.002 885(a) (part) 890(b) (part), (c); 1351.053 New 1354.003 885(a) (part) 1351.054 890(d), (e) 1354.004 885(b) 1351.055 890(f) 1354.005 885(c) 1351.056 890(g) 1354.006 885(d) 1351.057 890(b) (part) 1354.007 885(e) 1352.001 889A(a), 890A(a) 1354.008 885(f) 1352.051 889A(b) (part) 1354.009 885(g) 1352.052 889A(b) (part), (j) 1355.001 887(a) (part) 1352.053 889A(c) 1355.002 887(e) 1352.054 889A(d), (f) 1355.051 887(a) (part) 1352.055 889A(e), (h), (i) 1355.052 887(b)
47 ESTATE PLANNING UPDATE
Estates Code Probate Code 1355.101 New 1355.102 887(c) (part) 1355.103 887(c) (part) 1355.104 887(d) 1355.105 887(f) 1355.151 887(g) (part) 1355.152 887(g) (part) 1355.153 887(g) (part) 1355.154 887(g) (part) 1356.001 901, 904(a) 1356.002 902 1356.051 903(a) (part), (b), (c) 1356.052 903(a) (part) 1356.053 903(e) 1356.054 904(b) 1356.055 903(d) 1356.056 905
48 ESTATE PLANNING UPDATE
MAJOR CASES
I. INTRODUCTION Moral: A prudent attorney should have the testator and the witnesses initial each page of the This section discusses judicial developments will. This practice will make it easier to rebut relating to the Texas law of intestacy, wills, estate claims of page substitution. administration, trusts, and other estate planning matters. The reader is warned that not all recent B. Interpretation and Construction cases are presented and not all aspects of each cited case are analyzed. You must read and study 1. Outright Gift v. Fee Simple Determinable the full text of each case before relying on it or using it as precedent. Writ histories were current Roberts v. Wilson, 394 S.W.3d 45 (Tex. as of September 3, 2013 (KeyCite service as App.—El Paso 2012, no pet.). provided on WESTLAW). Testatrix’s will provided that if a named child died without a descendant, the property devised to The discussion of each case concludes with a that child would pass to his siblings. The moral, i.e., the important lesson to be learned from specified child survived Testatrix and later died the case. By recognizing situations that have led intestate. The child’s surviving spouse claimed to time consuming and costly litigation in the past, that Testatrix’s will made an outright gift to her estate planners can reduce the likelihood of the husband so that she would inherit one-half of this same situations arising with their clients. property by intestacy while the child’s siblings and their descendants asserted that Testatrix’s For summaries of cases decided after the devised only a fee simple determinable allowing closing date for this article, please visit my them to receive the entire property now that the website at www.ProfessorBeyer.com and click on named child has died. the “Texas Case Summaries” link. Both the trial and appellate courts held that Testatrix’s devise was outright to the named child. II. INTESTACY The statement that “in the event [specified child] dies without child or children or their [no significant cases] descendants” referred to the child dying before Testatrix, not thereafter. The court explained that the devise did not contain language traditionally III. WILLS used to create a defeasible fee, such as the term “revert.” The court referenced Flores v. De A. Formalities Garza, 44 S.W.2d 909 (Tex. Comm’n. App. 1932, In re Estate of Pilkilton, 2013 WL 485773 judgm’t adopted), and stated: (Tex. App.—Dallas 2013, no pet. h.). a provision in a will providing for a devise A dispute arose whether pages of a properly over to another after the remainderman dies executed will were replaced by different without issue means death prior to the (“corrected”) pages at a later date. The appellate termination of the intervening estate, and court agreed with the trial court that the evidence that the remainderman is vested with fee was legally sufficient to support a finding that simple title at the termination of such prior page substitution did not occur, especially because intervening estate, unless the language of no one testified that the testator executed the will the will discloses a different intent. prior to all corrections being made.
49 ESTATE PLANNING UPDATE Moral: To avoid this type of claim, clear Accordingly, the court did not address any of the temporal references should be included when appellant’s substantives issues. referring to events such as a future death of a beneficiary. Moral: A person who believes a will is invalid must contest that will on a timely basis. 2. Vesting of Interests Otherwise, even meritorious claims will be lost.
Netherton v. Cowan, 2013 WL 4091773 2. Lack of Testamentary Capacity (Tex. App.—San Antonio 2013, no pet. h.). a. Insufficient Evidence Testator’s will devised Beneficiary a remainder interest in certain real property but if In re Estate of Pilkilton, 2013 WL 485773 Beneficiary predeceases Testator “or dies before (Tex. App.—Dallas 2013, no pet. h.). the property * * * vests in him,” the property passes to Alternate. Beneficiary died prior to the A dispute arose whether the testator had holder of the life estate. When the life estate testamentary capacity. The appellate court agreed owner died, a dispute arose between Beneficiary’s with the trial court that the evidence was legally estate and Alternate over the ownership of the sufficient to support a finding that the testator had land. testamentary capacity. Although there was evidence that the testator suffered from dementia, Both the trial and appellate court held that the Alzheimer’s disease, and a closed head injury, the property was part of Beneficiary’s estate. The testimony of the attorney who supervised the court explained that Texas law favors a execution ceremony, the two witnesses, and the construction that results in vesting at the earliest notary was convincing in showing that the testator possible time and thus the remainder interest had testamentary capacity. vested in Beneficiary immediately upon Testator’s death. In addition, the court noted that Testator’s The court also reaffirmed the long-standing will did not include language requiring the holder principle that testamentary capacity is based on a of the remainder interest to outlive the life tenant different standard than that used to determine as a condition of the devise. whether a person is incapacitated for guardianship purposes. The fact that a person is under a Moral: “[W]hen a testator bequeaths [sic] a guardianship does not necessarily mean that the life estate in property and a remainder interest in person lacked testamentary capacity when he or the same property, the remainder interest is she executed the will. considered vested upon the death of the testator.” Id. Thus, if a testator wants the interest to be Moral: The most important evidence of contingent on the remainder beneficiary outliving testamentary capacity is likely to come from the the life tenant, the devise should include express individuals who were actually present during the survivorship language. execution ceremony: the attorney, the witnesses, and the notary.
C. Contests b. Sufficient Evidence
1. Statute of Limitations Le v. Nguyen, 2012 WL 5266388 (Tex. App.— Houston [14th Dist.] 2012, no pet. h.). Omohundro v. Ramirez-Justus, 392 S.W.3d Testator executed a will on December 1, 2009, 218 (Tex. App.—El Paso 2012, pet. at which time his capacity was not challenged. denied). Testator’s condition deteriorated rapidly and later The appellate court affirmed a summary in the month, an attorney met with Testator to judgment because the suit was time-barred under discuss the changes he wanted to make to his will. Probate Code § 93 (two years from date of The attorney returned several times to have probate to contest a will subject to limited Testator sign the new will but Testator was unable exceptions not applicable to this case). to sign. At the end of his last visit on December
50 ESTATE PLANNING UPDATE 31, he left the will with Testator’s fiancée. Later ended its opinion with the phrase, “May she rest that evening, Testator executed the will in front of in peace.” two witnesses. Moral: A contestant who claims that a will The court first admitted the December 1 will to was the product of undue influence must be probate but later set aside the order and probated certain to present evidence showing that the the December 31 will. The proponent of the influence was actually exerted because evidence December 1 will then contested the December 31 showing only susceptibility is insufficient to will. After a jury trial, the court found that prevent a summary judgment that the will was not Testator lacked testamentary capacity when he the product of undue influence. executed the new will. The proponent of the December 31 will appealed. b. Insufficient Evidence – Another Case
The appellate court affirmed. The court made In re Estate of Pilkilton, 2013 WL 485773 a careful review of the conflicting evidence (Tex. App.—Dallas 2013, no pet. h.). presented to the jury. The court explained that A dispute arose whether the testator was there was “more than a scintilla of evidence unduly influenced to make his will. The appellate supporting the jury’s finding that [Testator] did court agreed with the trial court that the evidence not have testamentary capacity” and that the was legally sufficient to support a finding that the finding was “not so contrary to the overwhelming testator was not subject to undue influence. weight of evidence as to be clearly wrong and Although there was evidence that the testator was unjust.” susceptible to undue influence and certain individuals had the opportunity to exert undue Moral: A will proponent will have a difficult influence, there was no solid evidence that any time overturning a jury finding that a testator undue influence was actually exerted. lacked testamentary capacity. Accordingly, a proponent needs to present the jury with Moral: Undue influence cannot be inferred convincing evidence the testator possessed merely because the testator was susceptible and testamentary capacity. individuals had the opportunity to exert the influence. 3. Undue Influence a. Insufficient Evidence IV. ESTATE ADMINISTRATION In re Estate of Sidranksy, 2012 WL 3363710 (Tex. App.—El Paso 2012, pet. A. Jurisdiction denied). Haga v. Thomas, 2013 WL 3716672 (Tex. The trial court conducted a bench trial and App.—Houston [1st Dist.] 2013, no pet. h.). found that Testatrix had testamentary capacity. Decedent was a North Carolina resident at the The court then granted a summary judgment time of his death. Beneficiary was successful in motion that Testatrix was not subject to undue getting a court in North Carolina to admit influence when she executed her will. Decedent’s will to probate. After Decedent’s parents had a Texas probate court admit the will On appeal, the court conducted a careful to probate and construe that will with regard to review of the evidence and found that it did not how it disposed of Texas real property, raise “a genuine issue of material fact on the Beneficiary appealed, claiming that the North existence and exertion of influence.” The court Carolina court had exclusive jurisdiction over stressed that evidence showing that Testatrix was Decedent’s will and the administration of his susceptible to undue influence because of a estate. weakened physical and mental condition did not constitute evidence that any undue influence The appellate court affirmed. The court began actually was exerted. Accordingly, the appellate its analysis by examining Probate Code § 95(a), court affirmed the trial court’s judgment and which allows a will probated elsewhere to be 51 ESTATE PLANNING UPDATE admitted to probate in Texas. However, the court affidavit of heirship, Wife filed the will for pointed out that this section “does not address probate. whether a Texas probate court has jurisdiction to resolve disputes concerning the administration of The court reviewed the evidence and found an estate or the construction of a will of a that it was sufficient to support the trial court’s decedent who died in another estate and was finding that Wife was not in default. She relied domiciled in that other state, but who owned real on the advice of an attorney in not probating the property in Texas.” Id. The court reviewed will in a timely manner. She had no legal training leading Texas cases and concluded that “the and had no reason to distrust her attorney when he existence of real property in Texas gives Texas asserted that she would receive all of Husband’s courts jurisdiction over an administration property under an affidavit of heirship. Once she concerning that real property.” Id. realized that her first attorney had given her bad advice, she promptly filed the will for probate. Moral: Texas courts have jurisdiction regarding the administration of Texas real Moral: Texas courts are “quite liberal in property regardless of where the will was admitted permitting a will to be offered as a muniment of to probate. title after the statute of limitations has expired upon the showing of an excuse by the proponent B. Statute of Limitations to Probate Will for failure to offer the will earlier.” Id. at *4. Also, if a decedent dies with a will, it is better In re Estate of Allen, 2013 WL 1914938 practice to probate that will rather than to use a (Tex. App.—Eastland 2013, no pet. h.). technique designed for an intestate death, such as Wife filed Husband’s will for probate as a an affidavit of heirship. muniment of title more than four years after his death. The will left his entire estate to his wife of C. Bill of Review over fifty-six years. The trial court admitted the In re Estate of Aguilar, 2013 WL 520282 (Tex. will to probate under Probate Code § 73(a) after App.—San Antonio 2013, no pet. h.). finding that Wife was not in default in failing to probate the will within the four year period. Son Son One probated Father’s will as a muniment appealed. of title. Seven months later, Son Two attempted to set aside the probate by filing an equitable bill The appellate court affirmed. The court of review (not a statutory bill of review under reviewed the facts, which showed that Wife had Probate Code § 31). Both the trial and appellate consulted an attorney shortly after her husband’s courts denied the application. death. The attorney told her she had the option of probating the will as a muniment of title or The appellate court explained that to obtain an executing an affidavit of heirship and that equitable bill of review, regardless of which option she selected, she would receive the entire estate. Because Wife wanted the applicant must plead and prove: (1) a the estate handled quickly and inexpensively, she meritorious defense to the underlying cause of opted for the affidavit of heirship. action, (2) which the applicant was prevented from making by the fraud, accident or When Wife and Son had a dispute over wrongful act of the opposing party or official keeping livestock on certain real property, Wife mistake, (3) unmixed with any fault or consulted a different attorney. This attorney negligence on its own part. discovered that Husband owned hundreds of acres of land as his separate property in which his Son Two attempted to rely on a special children would have a substantial interest under situation where absence of service or lack of intestacy (e.g., two-thirds outright plus a life notice of the dispositive trial setting acts to relieve estate in Wife’s life estate in the other one-third of the applicant from showing the normal elements the property). Within a month of learning of her for an equitable bill of review. The court rejected children’s interest in the property under the this argument because the evidence showed that Son One gave proper notice of the muniment of 52 ESTATE PLANNING UPDATE title action by posting as required by Probate (permission) rather than take the action and then Code § 128(a) (this notice also demonstrates that seek ratification (forgiveness). element two was not satisfied). 3. Removal – Another Case Moral: A party seeking an equitable bill of review must be certain to prove the required Kirkland v. Schaff, 391 S.W.3d 649 (Tex. elements. App.—Dallas 2013, no pet. h.). The probate court removed decedent’s D. Personal Representative surviving spouse as the administrator of her husband’s estate under Probate Code § 222, 1. Appointment of Administrator finding that she was guilty of gross misconduct In re Estate of Arizola, 401 S.W.3d 664 and mismanagement in the performance of her (Tex. App.—San Antonio 2013, pet. filed). duties. The appellate court reviewed the evidence and affirmed the removal. The list of grounds The applicant for letters of administration supporting the removal was lengthy and included failed to list an heir in violation of Probate Code such conduct as misappropriating property, which § 82(e). The trial court nonetheless appointed the would pass to her step-children by intestacy, applicant. The appellate court held that this error failing to account for the value of the decedent’s did not lead to an improper judgment as the business, and under reporting income from that applicant was qualified and had a superior right to business to the I.R.S. serve as the administrator. Accordingly, the court held that the appointment was proper. Moral: A stepparent may not be pleased that the deceased spouse’s one-half of the community With regard to a different estate, the court property, along with a majority of the deceased examined a claim that the appointment of an spouse’s separate property, passes to stepchildren administrator was improper because the upon an intestate death and thus fails to protect complaining party was not personally served with the stepchildren’s rights. notice of the application. The court rejected this claim pointing to Probate Code § 128(a), which E. Executor’s Ability to Recover Estate requires service only by posting of the citation, Property which was properly done. In re Estate of Hutchins, 391 S.W.3d 578 Moral: An application for letters should (Tex. App.—Dallas 2012, no pet. h.). contain all of the statutory required items and One of Testatrix’s children obtained notice of the application by posting rather than possession of certain items of estate property mail or personal service, which is sufficient. without proper authority. Independent Executrix filed a “Motion for Turnover Order” in her 2. Removal attempt to force the child to return the estate The appellate court affirmed the trial court’s property. She based her request on Probate Code refusal to remove an administrator for § 37, which provides that the personal misapplication, waste, or embezzlement of estate representative has “the right to possession of the assets under Probate Code § 222(a)(F) merely estate as it existed at the death of the testator.” because he filed a motion seeking ratification of The trial court denied the turnover motion on the certain conduct. The court explained that basis that Independent Executrix was not a although seeking prior court approval may be a judgment creditor and thus could not use the better approach, failure to do so is not clear and turnover procedure provided in the Civil Practice convincing evidence of a misapplication or and Remedies Code § 31.002. Independent embezzlement. Executrix petitioned for a writ of mandamus.
Moral: A dependent personal representative The appellate court granted mandamus. The should usually seek prior court approval court explained that Independent Executrix was not seeking a turnover order under the Civil Practice and Remedies Code § 31.002. Instead, 53 ESTATE PLANNING UPDATE Independent Executrix was specifically requesting appointed. The court held that even if this were relief under Probate Code § 37, which gives the the case, Executrix did not report the alleged not personal representative the right to possession of properly payable checks to Bank until after the all estate property. time period had run. The court explained that merely filing a lawsuit within that time was The court made two other findings. First, that insufficient as the pleading did not specifically a separate lawsuit under Probate Code § 233A, identify the checks at issue. granting the personal representative the right to sue to recover estate property, is not necessary to Moral: An executor who wishes to claim that recover estate property under Probate Code § 37. a decedent’s checks were not properly payable Second, that even if an alleged family agreement must act promptly to provide detailed notice to the actually existed, the personal representative is financial institution. In addition, the executor nonetheless entitled to possession of the estate as must remember that survivorship, trust, and it existed on the date of death; the court found no P.O.D. accounts are non-probate assets and that case which concluded that § 37 is superseded by a the new owner of the account should bring any family settlement agreement. claims associated with the account.
Moral: Family members have a tendency to G. Attorney Fees grab a decedent’s assets even if they have no authority to do so. The personal representative 1. Fees Denied – Late Request has a right to possession of all estate assets and a duty to acquire that possession. Obtaining a Kirkland v. Schaff, 391 S.W.3d 649 (Tex. turnover order under the authority of Probate App.—Dallas 2013, no pet. h.). Code § 37 is one way for the personal The appellate court held that the probate court representative to satisfy that duty. erred in allowing a trial amendment to request attorney’s fees under Probate Code § 245. The F. Bank Account Recovery probate court had already issued a final order Coffey v. Bank of America, 2013 WL removing the administrator from office. 257363 (Tex. App.—Beaumont 2013, no Accordingly, “the probate court abused its pet. h.). discretion by granting the trial amendment and awarding appellees attorney’s fees after the After Depositor died, Executrix claimed that probate court’s final order removing appellant as Bank paid checks that were not properly payable administrator was signed.” Id. at 655. and thus the estate should recover the amounts of those checks. Both the trial and appellate courts Moral: A party to a probate dispute who rejected Executrix’s claims on a variety of wishes to recover attorney’s fees should request grounds based on the Uniform Commercial Code. them in the original complaint or answer, or as shortly thereafter as possible. The account at issue was a pay-on-death account. Bank proved that it provided monthly 2. Fees Denied – Not in Estate Best Interest statements to Depositor and, after Depositor’s death, to the pay-on-death payee. Because they In re Estate of Bessire, 399 S.W.3d 642 did not report the alleged unauthorized (Tex. App.—Amarillo 2013, pet. denied). transactions within sixty days (the statutory one year period having been shortened by contract), it Son was appointed as the independent executor was too late to recover from Bank. Besides, the of Mother’s estate. Son later accused Daughter account was a non-probate asset and not in (his sister) of improperly taking money from Depositor’s estate. Mother’s estate before she died. Extensive discovery proceedings and legal maneuvering The court pointed to Jefferson State Bank v. subsequently occurred resulting in Son being Lenk, 323 S.W.3d 146 (Tex. 2010), as support for removed as the executor and Daughter being Executrix’s claim that the time period did not appointed in his place. In addition, Son was actually begin to run until Executrix was 54 ESTATE PLANNING UPDATE denied his attorney’s fees, which amounted to no language showing that the parties intended to over $80,000. Son appealed. create a trust.
The appellate court affirmed. After writing Moral: The court will not turn a contract extensively on the procedural aspects of the claim, relationship into a trust relationship merely the court focused on whether the evidence because the word “trust” is used without evidence supported a legal theory justifying the trial court’s that the alleged settlor had trust intent. denial of Son’s attorney fees. The court began its analysis by recognizing that Son was a fiduciary B. Statute of Frauds and was charged with collecting estate property Wolfe v. Devon Energy Production Co., LP, under Probate Code § 233. However, this duty 382 S.W.3d 434 (Tex. App.—Waco 2012, must be exercised with reasonable care. The court pet. denied). examined the evidence, which revealed that Son actually admitted that he had no basis for his In a highly complex case regarding the claim that Daughter had taken estate property. ownership of oil and gas properties, one of the Accordingly, Son’s attorney’s fees were not claimants attempts to demonstrate that the expended in the best interest of the estate and property was held in trust. Although there was should not be paid out of estate funds under neither a trust instrument nor any document Probate Code § 242. The court explained that setting out the terms of the trust, the claim was “when the personal representative’s own omission made that the use of the word “trustee” in a deed or malfeasance is at the root of the litigation, the was sufficient to establish the existence of a trust. estate will not be required to reimburse the The court explained that when the term “trustee” personal representative for his attorney fees.” Id. is used in a deed without more, the term “is at 659. merely a description and of no legal effect.” Id. at 445. The court likewise rejected a claim that a Moral: An executor should have an actual trust was nonetheless created because the alleged basis in fact before seeking to recover estate trustee did not actually comply with the terms of property. If an executor makes wild and the alleged oral trust. However, the court unsupported accusations that then trigger recognized that there was a fact issue with regard attorney’s fees, the court is unlikely to permit the to whether a purchase-money resulting trust recovery of those fees from the estate. existed.
V. TRUSTS Moral: A trust should be clearly documented in a trust instrument. A. Trust Intent C. Discovery Coterill-Jenkins v. Texas Medical Ass’n, 383 S.W.3d 581 (Tex. App.—Houston [14th In re Paschall, 2013 WL 474368 (Tex. Dist.] 2012, pet. denied). App.—Waco 2013, no pet. h.). A medical group purchased a professional Testatrix died with a will leaving her entire liability policy from an insurer on behalf of a estate to the trustee of her inter vivos trust. Seven physician. Shortly thereafter, the physician died years later, a dispute arose regarding the validity and the insurer returned the premiums to the of the will and thus the passage of the estate under medical group. The executor contended that the the trust. Distant intestate heirs (first cousins, premiums should have been returned to the twice removed) were successful in getting the trial physician’s estate. Both the trial and appellate court judge to order the production of the trust court rejected the claim, especially the assertion instrument. Executor sought a writ of mandamus that the medical group was the trustee of a trust asserting that the contestants lacked standing. for the physician’s benefit. The appellate court explained that merely because the word “trust” is The appellate court denied the writ. The court contained in the medical group’s name does not explained that the contestants have a contingent create a trust. Instead, the word was merely pecuniary interest in the estate, that is, if they are descriptive. In addition, the insurance policy had successful in setting aside the will and proving 55 ESTATE PLANNING UPDATE they are the intestate heirs, they would be entitled administering the settlor’s (the children’s to the property that is now being held in grandfather) trust. The trial court granted Testatrix’s trust. Accordingly, they have standing summary judgment in favor of Trustee and to seek discovery of the trust instrument. Beneficiaries appealed.
Moral: An inter vivos trust may not be as 1. Evidence private as believed because even remote claims to The appellate court reviewed the record and the trust property may result in the trust determined that there was plenty of evidence instrument being discoverable. raising material issues of fact that precluded the trial court from rendering a no-evidence summary Moral: Transfers to a trust of a homestead or judgment. The court pointed to a laundry list of other exempt property are unlikely to be set aside deposition questions that addressed Trustee’s self- as fraudulent transfers. dealing. Trustee consistently answered inquires D. Revocability with answers such as “I’m not sure,” “I can’t remember,” and “I don’t recall.” The court also Vela v. CRC Land Holdings, Ltd., 383 rejected Trustee’s assertion that he deferred to the S.W.3d 248 (Tex. App.—San Antonio judgment of other professionals and that such 2012, no pet.). deferral justified his inability to prove the fairness The settlor created an inter vivos trust, of the self-dealing transactions. conveyed property to that trust by deed, and later removed one of the trust beneficiaries. After the 2. Statute of Limitations settlor’s death when the remaining beneficiaries The court also addressed Trustee’s claim that sought to partition the property, the removed even if he had breached his duties, Beneficiaries beneficiary claimed that the trust was made were aware of the conduct so long ago that the irrevocable when the settlor deeded property to statute of limitations on their claims would have the trust. The trial court rejected this claim and run. The court began its discussion by the appellate court affirmed. recognizing that the statute of limitations for breach of fiduciary duty is four years under the The court explained that under Texas law an Civil Practice & Remedies Code § 16.004(a)(5) inter vivos trust is presumed revocable unless the and that the discovery rule is applicable. Trustee trust expressly provides otherwise. Trust Code alleged that the time period began to run at the § 112.051. Although the removed beneficiary latest in 1998 based on various conversations and agreed with this rule of law, he claimed that the a letter. The court explained that the date on settlor’s deed of the property to the trust made the which Beneficiaries knew or should have known trust irrevocable because it used the term of the breach is a fact question, unless reasonable “forever” in the granting language. The court minds could not differ on when the period began held that this type of standard form language in a to run under the facts. The court held that Trustee warranty deed did not reflect an intent on the did not prove as a matter of law that Beneficiaries settlor’s part to transform a revocable trust into an knew about the breach in 1998. Accordingly, the irrevocable one. trial court’s summary judgment for Trustee was improper. Moral: Standard language used in a deed to transfer property to a trust does not have the effect Moral: Trustees should not self-deal and will of making the trust irrevocable. have a difficult time justifying the self-dealing by not remembering what they did or by telling E. Breach of Fiduciary Duty Beneficiaries to consult with the trustee’s Cluck v. Mecom, 401 S.W.3d 110 (Tex. advisors. In addition, a court will be reluctant to App.—Houston [14th Dist.] 2011, pet. determine that the statute of limitations has run on denied). a breach of fiduciary claim unless it is clear from the facts that the beneficiaries were aware of the Beneficiaries (children) sued Trustee (father) breach and did not take timely action to pursue alleging the he breached fiduciary duties in their claim. 56 ESTATE PLANNING UPDATE F. Arbitration result if the arbitration provision was contained in a will. Rachal v. Reitz, 2013 WL 1859249 (Tex. 2013). Although beneficiaries do have the ability A beneficiary brought suit asserting that the to disclaim before accepting benefits, it is trustee misappropriated trust property and failed unlikely that beneficiaries read the trust and to provide a proper accounting. Because the seek legal advice about the consequences of settlor included a provision in his inter vivos trust accepting benefits. Instead, beneficiaries requiring the beneficiaries to arbitrate any dispute just collect the benefits and study the trust with the trustees, the trustee moved to compel instrument in detail only when something arbitration. Both the trial and intermediate goes wrong. appellate courts held that this provision was unenforceable. The appellate court explained that The court does not discuss how to handle a person cannot be compelled to arbitrate a the situation where the beneficiaries are dispute if the person did not agree to relinquish minors or incompetent individuals. the person’s ordinary right to litigate. The beneficiary is merely a recipient of equitable title Arbitration provisions may become to property and not a party to the trust instrument. boilerplate so that the justification that the A trust is a conveyance of property coupled with a settlor intentionally imposed the split of legal and equitable title and the imposition requirement may be problematic. of fiduciary duties on the trustee. A trust is not an agreement or contract. If a settlor really wanted to mandate arbitration, the settlor could include a The Texas Supreme Court reversed, holding provision requiring the trustee to obtain the that the arbitration provision is enforceable beneficiary’s written consent to arbitrate as against the beneficiaries for two reasons. First, a condition precedent to receiving trust the court will enforce conditions the settlor distributions. attached to the gifts to carry out the settlor’s intent. The settlor included a clear statement that Moral: An arbitration clause in a trust is he wanted all disputes to be arbitrated and thus the enforceable. court will give effect to that provision. G. Receivership Second, the Texas Arbitration Act requires the Elliott v. Weatherman, 396 S.W.3d 224 enforcement of agreements to arbitrate. Even (Tex. App.—Austin 2013, no pet. h.). though the beneficiaries did not expressly agree, they are deemed to have agreed through the After settlors died, their three children became doctrine of “direct benefits estoppel” because they co-trustees of their trust. Two of the trustees sued accepted benefits of the trust and filed suit to the third trustee alleging that he had violated the enforce the terms of the trust. These actions are terms of the trust, breached fiduciary duties, and the assent required to form an enforceable converted some of the trust property. To resolve arbitration agreement. If a beneficiary is unhappy this dispute, the trial court appointed a receiver with the arbitration provision, the beneficiary may upon the request of the allegedly breaching trustee disclaim under Trust Code § 112.010. The court over certain assets of the trust as authorized by stated that “it would be incongruent to allow a Trust Code § 114.008(a)(5). The other two beneficiary to hold a trustee to the terms of the trustees appealed. trust but not hold the beneficiary to those same terms.” Id. at 535. The appellate court reversed. The court stated that “[e]ven if a specific statutory provision Comments: authorizes a receivership, a trial court should not appoint a receiver if another remedy exists at law Although this was a trusts case, it would or in equity that is adequate and complete.” Id. at seem likely the court would reach the same 228. The court also explained that the two other trustees did not have sufficient notice that the
57 ESTATE PLANNING UPDATE receivership remedy was requested, that is, a VI. OTHER ESTATE PLANNING minimum of three days notice under the Tex. R. MATTERS Civ. P. 695 because real property was involved. Even with respect to the personal property subject A. Life Insurance to the receivership, the court held that the evidence was insufficient to justify the Hillman v. Maretta, 133 S. Ct. 1943 (2013). appointment of a receiver without notice and the Insured named his then wife as the beneficiary opportunity to be heard. of a life insurance policy covered by the Federal Employees’ Group Life Insurance Act of 1954. Moral: Receivership is an “extreme” remedy Insured later divorced the beneficiary and and will be granted “only where great emergency remarried but he neglected to change the or imperative necessity requires it.” Id. at 229, beneficiary of the policy. After his death, both his quoting Krummnow v. Krummnow, 174 S.W.3d current wife and his former wife claimed the 820, 828 (Tex. App.—Waco 2005, pet. denied). proceeds. His current wife claimed that the divorce acted to revoke Insured’s designation of H. Bankruptcy his now ex-wife as a beneficiary under Virginia Bullock v. BankChampaign, 133 S. Ct. law. On the other hand, his former wife asserted 1754 (2013). that local law was preempted by federal law and thus the designation of her as the beneficiary Settlor created a trust for his children and remained effective. In addition, the former wife named one of the children as the trustee. The also claimed that the Virginia statute holding her trustee breached his fiduciary duties by borrowing liable for the proceeds even if preemption funds from the trust and thus his siblings obtained occurred was likewise preempted. a judgment against him for the benefits he received from his self-dealing. The trustee had The Supreme Court of the United States agreed previously repaid all borrowed funds with interest that the Virginia statute was preempted and that and the trial court determined that he had no the ex-wife was entitled to the proceeds of the life malicious motive. The trustee later filed for insurance policy. bankruptcy and sought discharge of the judgment. The Bankruptcy Court held that the debt was not Moral: Upon divorce (or even while the dischargeable under 11 U.S.C. § 523(a)(4), which divorce is pending), life insurance beneficiary provides that discharge is not available “for fraud designations need to be updated to reflect the or defalcation while acting in a fiduciary insured’s intent because policies governed by capacity.” Both the Federal District Court and the federal law will not get the benefit of state law, Eleventh Circuit Court of Appeals agreed. which automatically voids a beneficiary designation in favor of an ex-spouse. The Supreme Court of the United States in a unanimous opinion reversed. The Court B. Beneficiary Designations on Non-Probate explained that the debt could be discharged Assets because the trustee was not (in my words) “evil.” The Court held that for the debt to be non- In re Estate of Abernethy, 390 S.W.3d 431 dischargeable, the trustee must have acted with a (Tex. App.—El Paso 2012, no pet.). culpable statement mind “involving knowledge of, Decedent and Beneficiary were very close, or gross recklessness in respect to, the improper personal friends. In addition, Beneficiary was a nature of the fiduciary behavior.” certified public accountant who prepared tax returns for Decedent. Decedent named Moral: A bankrupt trustee, who breached Beneficiary as the beneficiary of an IRA and as fiduciary duties but not in an evil manner, may be the party with survivorship rights on various bank successful in getting a judgment based on that accounts. After Decedent died and Beneficiary breach discharged. collected approximately $1.2 million from these accounts, Independent Executor asserted that Decedent and Beneficiary were in a fiduciary relationship and that Beneficiary breached her 58 ESTATE PLANNING UPDATE duties by allowing herself to be named as the adjudicate the agreement as valid. Four months beneficiary of these accounts. The trial court later, one of Husband’s children (Wife’s stepson) rejected Independent Executor’s claim and filed a bill of review under Probate Code § 31 granted summary judgment in favor of claiming that the court made a substantial error Beneficiary. because some of the property allegedly covered by the agreement was actually Husband’s separate The appellate court affirmed. The court began property. The trial court denied the bill of review. its analysis by recognizing “[t]here are two types of fiduciary relationships: formal fiduciary The appellate court reversed. The court relationships that arise as a matter of law, such as explained that the community property attorney-client, partnership, trustee, and principal- survivorship agreement, although purporting to agent relationships and informal fiduciary include “all inheritance property” within its scope, relationships or ‘confidential relationships’ that did not meet the requirements of Family Code may arise from moral, social, domestic, or §§ 4.203 and 4.205 to act as a conversion of personal relationships.” Id. at 437. The court separate property (the inherited property) into recognized that whether an informal relationship community property which would then be covered gives rise to fiduciary duties depends on “the by the survivorship agreement. For example, the actualities of the relationship between the agreement did not state that Husband and Wife persons” and that duties will not be “lightly were converting separate property into community created.” Id. at 438. The court also explained that property. In addition, there was no evidence merely “trusting” someone does not mean that a showing that either spouse received the required fiduciary relationship has been created. fair and reasonable disclosure of the legal effect of converting separate property to community The court then examined the evidence. property. Because the survivorship agreement did Although the evidence showed that Decedent and not convert Husband’s separate property into Beneficiary had a long-standing close personal community property, the original order was relationship, there was no evidence of a fiduciary substantially in error and the trial court erred in relationship. The court explained that there was not granting the bill of review. no competent evidence that Decedent was “accustomed to being guided by the judgment or Moral: A community property survivorship advice” of Beneficiary. Id. at 438. Accordingly, agreement is designed to provide survivorship there were no fiduciary duties that Beneficiary rights to community property, not to convert could have breached when she was named as the separate property into community property. beneficiary of the IRA and bank accounts. Unless the agreement also meets the requirement of a conversion agreement, it will be ineffective to Moral: A person attempting to set aside a create survivorship rights in separate property. beneficiary designation needs to present solid evidence of a legitimate reason other than simply being unhappy with the designation such as breach of a genuine fiduciary duty, undue influence, fraud, or lack of capacity.
C. Community Property Survivorship Agreements In re Estate of Cunningham, 390 S.W.3d 685 (Tex. App.—Dallas 2012, no pet. h.). Husband and Wife entered into a community property survivorship agreement by using a fill- in-the-blank form with the assistance of family members rather than an attorney. After Husband died, the trial court granted Wife’s application to 59
DIGITAL ASSETS
I. INTRODUCTION The appendix contains a sample form that your clients may use to organize their digital assets. For hundreds of years, we have viewed personal property as falling into two major categories –tangible (items you can see or hold) II. TYPES OF DIGITAL ASSETS and intangible (items that lack physicality). The term “digital asset” does not have a well- Recently, a new subdivision of personal property established definition as the pace of technology is has emerged that many label as “digital assets.” faster than the law can adapt. One of the best There is no real consensus about the property definitions is found in a proposed Oregon statute: category in which digital assets belong. Some experts say they are intellectual property, some "Digital assets” means text, images, say they are intangible property, and others say multimedia information, or personal they can easily be transformed from one form of property stored in a digital format, whether personal property to another with the click of a stored on a server, computer, or other “print” button. See Scott Zucker, Digital Assets: electronic device which currently exists or Estate Planning for Online Accounts Becoming may exist as technology develops, and Essential (Part II), The Zucker Law Firm PLLC regardless of the ownership of the physical (Dec. 16, 2010). In actuality, some accounts that device upon which the digital asset is we consider “assets” are simply licenses to use a stored. Digital assets include, without website’s service that generally expires upon limitation, any words, characters, codes, or death. See Steven Maimes, Understand and contractual rights necessary to access the Manage Digital Property, The Trust Advisor digital assets. Blog (Nov. 20, 2009). Digital Assets Legislative Proposal, OREGON Digital assets may represent a sizeable portion STATE BAR (May 9, 2012). of a client’s estate. A survey conduct by McAfee, Inc. revealed that the average perceived Digital assets can be classified in numerous value of digital assets for a person living in the different ways, and the types of property and United States is $54,722. McAfee Reveals accounts are constantly changing. (A decade Average Internet User Has More Than $37,000 ago, who could have imagined the ubiquity of in Underprotected ‘Digital Assets’, McAfee.com, Facebook? Who can imagine what will replace it Sept. 27, 2011 (the $37,000 figure is the global in the next few decades?) People may average). accumulate different categories of digital assets: personal, social media, financial, and business. While estate planners have perfected The individual may also have a license or property techniques used to transfer types of property that ownership interest in the asset. See Laura Hoexter have been around for a long time, most estate and Alexandra Gerson, Who Owns My planners have not figured out how to address the Facebook? Estate Planning for Digital Assets disposition of digital assets. It is important to (June 25, 2012). Although there is some overlap, understand digital assets and to incorporate the of course, clients may need to make different plans disposition of them into clients’ estate plans. for each.
This section aims to educate estate planning A. Personal professionals on the importance of planning for the disposition of digital assets, provides those The first category includes personal assets planning techniques, and discusses how to stored on a computer or smart phone, or uploaded administer an estate containing digital assets. onto a web site such as Flickr or Shutterfly. These can include treasured photographs or
60 ESTATE PLANNING UPDATE videos, e-mails, or even playlists. Photo albums established presence and reputation. Lawyers can be stored on an individual’s hard drive or might store client files or use a Dropbox.com- created through an on-line system. (They also type service that allows a legal team spread can be created through social media, as discussed across the United States to access litigation below.) People can store medical records and tax documents through shared folders. documents for themselves or family members. The list of what a client’s computers can hold is, E. Domain Names or Blogs almost literally, infinite. Each of these assets A domain name or blog can be valuable, yet requires different means of access—simply access and renewal may only be possible through a logging onto someone’s computer generally password or e-mail. requires a password, perhaps a different password for operating system access, and then each of the F. Loyalty Program Benefits different files on the computer may require its own password. In today’s highly competitive business environment, there are numerous options for B. Social Media customers to make the most of their travel and spending habits, especially if they are loyal to Social media assets involve interactions with particular providers. Airlines have created other people including the websites Facebook, programs in which frequent flyers accumulate MySpace, LinkedIn, and Twitter, as well as e- “miles” or “points” they may use towards free or mail accounts. These sites are used not only for discounted trips. Some credit card companies messaging and social interaction, but they also offer users an opportunity to earn “cash back” on can serve as storage for photos, videos, and other their purchases or accumulate “points” which the electronic files. cardholder may then use for discounted merchandise, travel, or services. Retail stores C. Financial Accounts often allow shoppers to accumulate benefits Though some bank and investment accounts including discounts and credit vouchers. Some have no connection to brick-and-mortar members of these programs accumulate a buildings, most retain some connection to a staggering amount of points or miles and then die physical space. They are, however, increasingly without having “spent” them. For example, there designed to be accessed via the Internet with few are reports that “members of frequent-flyer paper records or monthly statements. For programs are holding at least 3.5 trillion in example, an individual can maintain an unused miles.” Managing Your Frequent-Flyer Amazon.com account, be registered with PayPal, Miles (last visited Oct. 21, 2012). See also Bitcoin, or other financial sites, have an e-Bay Becky Yerak, Online Accounts After Death: account, and subscribe to magazines and other Remember Digital Property When Listing Assets, media providers. Many people make extensive CHICAGO TRIB., Aug. 26, 2012. arrangements to pay bills online such as income taxes, mortgages, car loans, credit cards, water, The rules of the loyalty program to which the gas, telephone, cell phone, cable, and trash client belongs plays the key role in determining disposal. whether the accrued points may be transferred. Many customer loyalty programs do not allow D. Business Accounts transfer of accrued points upon death, but as long as the beneficiary knows the online login An individual engaged in any type of information of the member, it may be possible for commercial practice is likely to store some the remaining benefits may be transferred or information on computers. Businesses collect redeemed. However, some loyalty programs may data such as customer orders and preferences, view this redemption method as fraudulent or home and shipping addresses, credit card data, require that certain paperwork be filed before bank account numbers, and even personal authorizing the redemption of remaining benefits. information such as birthdates and the names of family members and friends. Physicians store patient information. eBay sellers have an
61 ESTATE PLANNING UPDATE G. Other Digital Assets guardian may have to be appointed to access these accounts, and some companies will still Your client may own or control virtually require a specific court order on top of that endless other types of digital assets. For example, before they release account information. your client may own valuable “money,” avatars, or virtual property in online games such as World B. To Prevent Identity Theft of Warcraft or Second Life. In addition to needing access to online III. IMPORTANCE OF PLANNING accounts for personal reasons and closing FOR DIGITAL ASSETS probate, family members need this information quickly so that a deceased’s identity is not stolen. A. To Make Things Easier on Executors and Until authorities update their databases regarding Family Members a new death, criminals can open credit cards, apply for jobs under a dead person’s name, and When individuals are prudent about their get state identification cards. There are methods online life, they have many different usernames of protecting a deceased’s identity but they all and passwords for their accounts. This is the involve having access to the deceased’s online only way to secure identities but this devotion to accounts. See Aleksandra Todorova, Dead protecting sensitive personal information can Ringers: Grave Robbers Turn to ID Theft, WALL wreak havoc on families upon incapacity or ST. J., Aug 4, 2009. death. See Andrea Coombes, You Need an Online Estate Plan, WALL ST. J. July 19, 2009. C. To Prevent Financial Losses to the Estate Consider A&E’s Hoarders, a reality-based television show that reveals the lives of people 1. Bill Payment who cannot part with their belongings and have Electronic bills for utilities, loans, insurance, houses full of floor-to-ceiling stacks of “junk” as and other expenses need to be discovered quickly a result. While most of us find this disgusting, and paid to prevent cancellations. This concern are we not also committing the same offense is augmented further if the deceased or online when we create multiple e-mail accounts, incapacitated ran an online business and is the social networking accounts, websites, Twitter only person with access to incoming orders, the accounts, eBay accounts, online bill-paying servers, corporate bank accounts, and employee arrangements, and more? Sorting through a payroll accounts. See Tamara Schweitzer, deceased’s online life for the important things Passing on Your Digital Data, INC., Mar. 1, can be just as daunting as cleaning out the house 2010. Bids for items advertised on eBay may go of a hoarder. unanswered and lost forever. To make matters worse, the rights of 2. Domain Names executors, agents, guardians, and beneficiaries with regard to digital assets are unclear as The decedent may have registered one or discussed later in this article. Thus, family more domain names that have commercial value. members may have to go to court for legal If registration of these domain names is not kept authority to gain access to these accounts. Even current, they can easily be lost to someone after gaining legal authority, the company waiting to snag the name upon a lapsed running the online account still may not registration. acquiesce to a family member’s authority without a battle. Here is list of some of the most expensive domain names that have been sold in recent This process is complicated further if years: someone is incapacitated rather than deceased 1. Insure.com: 2009 for $16 million because that person will continue to have expenses that a deceased person would not have. 2. Sex.com: 2010 for $14 million Without passwords, a power of attorney alone 3. Fund.com: 2008 for £9.99 million may not be enough for the agent to pay these expenses. If no power of attorney is in place, a 4. Porn.com: 2007 for $9.5 million 62 ESTATE PLANNING UPDATE 5. Fb.com: 2010 for $8.5 million Age of Wulin, a video game, which was sold for $16,000. Katy Steinmetz, Your Digital Legacy: 6. Business.com: 1999 for $7.5 million States Grapple with Protecting Our Data After 7. Diamond.com: 2006 for $7.5 million We Die, Time Tech (Nov. 29, 2012). 8. Beer.com: 2004 for $7 million D. To Avoid Losing the Deceased’s Personal 9. Israel.com: 2008 for $5.88 million Story 10. Casino.com: 2003 for $5.5 million Many digital assets are not inherently 11. Slots.com: 2010 for $5.5 million valuable, but are valuable to family members who extract meaning from what the deceased 12. Toys.com: 2009 for $5.1 million leaves behind. Historically, people kept special 13. Asseeontv.com: 2000 for $5.1 million pictures, letters, and journals in shoeboxes or albums for future heirs. Today, this material is 14. iCloud.com: 2011 for $4.5 million stored on computers or online and is often never 15. GiftCard.com: 2012 for $4 million printed. Personal blogs and Twitter feeds have replaced physical diaries and e-mails have 16. AltaVista.com: 1998 for $3.3 million replaced letters. Without alerting family 17. Candy.com: 2009 for $3.0 million members that these assets exist, and without telling them how to get access to them, the story 18. Loans.com: 2000 for $3.0 million of the life of the deceased may be lost forever. 19. Gambling.com: 2011 for $2.5 million This is not only a tragedy for family members, but also possibly for future historians who are 20. Tom.com: 1999 for $2.5 million losing pieces of history in the digital abyss. Rob List of most expensive domain names, Walker, Cyberspace When You’re Dead, N.Y. Wikipedia (Mar. 29, 2013). TIMES, Jan. 5, 2011.
3. Encrypted Files For more active online lives, this concern may Some digital assets of value may be lost if also involve preventing spam from infiltrating a they cannot be decrypted. Consider the case of loved one’s website or blog site. Comments from Leonard Bernstein who died in 1990 leaving the friends and family are normally welcomed, but it manuscript for his memoir entitled Blue Ink on is jarring to discover the comment thread his computer in a password-protected file. To gradually infiltrated with links for “cheap Ugg this day, no one has been able to break the boots.” Id. “It’s like finding a flier for a dry password and access what may be a very cleaner stuck among flowers on a grave, except interesting and valuable document. See Helen that it is much harder to remove.” Id. In the W. Gunnarsson, Plan for Administering Your alternative, family members may decide to delete Digital Estate, 99 ILL. B.J. 71 (2011). the deceased’s website against the deceased’s wishes simply because those wishes were not 4. Virtual Property expressed to the family. The decedent may have accumulated valuable E. To Prevent Unwanted Secrets from Being virtual property for use in on-line games. For Discovered example, a planet for the Entropia Universe sold for $6 million in 2011 and a space station for the Sometimes people do not want their loved same game sold for $635,000 in 2010. Naveen ones discovering private emails, documents, or Kumar, Most Expensive Virtual Real Estate other electronic material. They may contain Sales, Bornrich.com (Apr. 23, 2011) (also hurtful secrets, non politically correct jokes and discussing other high priced sales of virtual stories, or personal rantings. The decedent may property); Oliver Chiang, Meet The Man Who have a collection of adult recreational material Just Made a Half Million From the Sale of (porn) which he or she would not want others to Virtual Property, Forbes.com (Nov. 13, 2010). know had been accumulated. A professional There also reports of more “reasonable” prices such as an attorney or physician may have files for virtual items such as a virtual sword for use in containing confidential client information. 63 ESTATE PLANNING UPDATE Without designating appropriate people to take For example, Google’s terms of service do not care of electronically stored materials, the wrong include an explicit discussion of what happens person may come across this type of information when the account holder dies. The terms state that and use it in an inappropriate or embarrassing the individual agrees not to “assign (or grant a sub- manner. license of) your rights to use the Software, grant a security interest in or over your rights to use the F. To Prepare for an Increasingly Software, or otherwise transfer any part of your Information-Drenched Culture rights to use the Software,” although copyright Although the principal concern today appears remains in the user. Google Terms of Service, to be the disposition of social media and e-mail GOOGLE APPS. In a somewhat comical provision contents, the importance of planning for digital that seems to envision Google’s concern of a user assets will increase each day. Online information coming back as a vampire or zombie, the terms will continue to spread out across a growing provide that “upon receipt of a certificate or other array of flash drives, iPhones, and iPads, and it legal document confirming your death, Google will be more difficult to locate and accumulate. will close your account and you will no longer be As people invest more information about their able to retrieve content contained in that account.” activities, health, and collective experiences into Google’s e-mail service, Gmail, on the other digital media, the legacies of digital lives grow hand, does have its own policy, explained in its increasingly important. If a foundation for help section, for “Accessing a Deceased Person’s planning for these assets isn’t set today, we may Mail.” In the first sentence of the policy, Gmail re-learn the lesson the Rosetta Stone once taught emphasizes that it “may” be able to provide the us: “there is no present tense that can long contents of e-mails after a two-step process. After survive the fall and rise of languages and modes the second step, which (somewhat incoherently) of recordkeeping.” Ken Strutin, What Happens “will require you to get additional legal process to Your Digital Life When You Die?, N.Y. L.J., including an order from a U.S. court and/or Jan. 27, 2011 (For fifteen centuries, the meaning submitting additional materials,” there is still no of the hieroglyphs on the Rosetta Stone detailing guaranteed access. Accessing a Deceased the accomplishments of Ptolemy V were lost Person’s Mail, GMAIL HELP. when society neglected to safeguard the path to deciphering the writings. A Napoleonic soldier At the end of its terms of service, Yahoo! eventually discovered the triptych, enabling explicitly states that an account cannot be society to recover its writings.). transferred: “You agree that your Yahoo! account is non-transferable and any rights to your Yahoo! IV. USER AGREEMENTS ID or contents within your account terminate on your death. On receipt of a copy of a death A. Terms of Service certificate, your account may be terminated and all When an individual signs up for a new online contents therein permanently deleted.” Yahoo! account or service, the process typically requires Terms of Service, Yahoo!. an agreement to the provider’s terms of service. Service providers may have policies on what will Facebook, the world’s most popular online happen on the death of an account holder but social network, recognized a need to allow a individuals rarely read the terms of service deceased person’s wall to provide a source of comfort carefully, if at all. Nonetheless, the user is at least in 2009. See Jess Moore, Facebook Memorials a theoretically made aware of these policies before Part of Campus Life, USA TODAY (Mar. 22, being able to access any service. Anyone who has 2011); Matthew Moore, Facebook Introduces signed up for an online service has probably clicked ‘Memorial’ Pages to Prevent Alerts About Dead on a box next to an “I agree” statement near the Members, THE TELEGRAPH (Oct. 27, 2009; bottom of a web page or pop-up window signifying Facebook, Inc., The New York Times (Oct. 5, consent to the provider’s terms of use. The terms 2012). It permits someone to “Report a Deceased of these “clickwrap” agreements are typically Person’s Profile.” How Do I Report a Deceased upheld by the courts. User or an Account That Needs to be Memorialized or Deleted?, Facebook Help 64 ESTATE PLANNING UPDATE
Center?, Memorialization Request. When Guide to Amending It, 72 GEO. WASH. L. REV. Facebook receives proof of death through an 1208 (2004); Allan D. Hankins, Note, obituary or a news article, the page can be Compelling Disclosure of Facebook Content “memorialized,” so that only confirmed friends Under the Stored Communications Act, 17 will continue to have access. Because the “wall” SUFFOLK J. TRIAL & APP. ADVOC. 295 (2012). remains, friends can still post on the memorialized page. (Facebook “walls” are an interactive While the statutes themselves do not directly feature of a user’s “profile” page which reflect address issues involving fiduciary’s access to the user’s recent Facebook activity. Depending digital assets and accounts, they can create on user privacy settings, the wall enables a view constraints for individuals attempting to plan for of recent status updates, changes to the user’s their digital assets and their fiduciaries. profile information, photos posted by or of the user, sharing links and other Internet content, and A. Stored Communications Act interactive comments regarding all such content The Stored Communications Act, 18 USC between the user and his or her Facebook § 2701(a), makes it a crime for a person to “friends.” See John Miller, Is MySpace Really “intentionally access[] without authorization a My Space?: Examining the Discoverability of the facility through which an electronic Content of Social Media Accounts, 30 No. 2 Trial communication service is provided.” It also Advoc. Q. 28, 29 (2011).). criminalizes the intentional exceeding of access to the facility. The Act, however, does not B. Ownership apply to conduct which is authorized by the A problem may also arise if the client does user. not actually own the digital asset but merely has a license to use that asset while alive. It is Section 2702 prohibits an electronic unlikely a person can transfer to heirs or communication service or a remote computing beneficiaries music, movies, and books they have service from knowingly divulging the contents purchased in electronic form although they may of a communication that is stored by or carried transfer “old school” physical records (vinyl), or maintained on that service, unless disclosure CDs, DVDs, books, etc. without difficulty. It has is made “with the lawful consent of the been reported that actor Bruce Willis wants to originator or an addressee or intended recipient leave his large iTunes music collection to his of such communication, or the subscriber in the children but that Apple’s user agreement case of remote computing service.” prohibits him from doing so. See Brandon Griggs, Can Bruce Willis Leave His iTunes B. Computer Fraud and Abuse Act Music to His Kids, CNN.com (Sept. 4, 2012). The Computer Fraud and Abuse Act, 18 See also Roger Yu, Digital Inheritance Laws U.S.C. § 1030 also prohibits the unauthorized Remain Murky, USA TODAY, Sept. 19, 2012; access to computers. See Aileen Entwistle, Safeguarding Your Online Legacy After You’ve Gone, Scotsman. Com, C. Interface With User Agreements March 30, 2013 (iTunes and Kindle books are only lifetime licenses). Problems may arise if the terms of service prohibit a user from granting others access to V. FEDERAL LAW the account. If a user reveals his or her user name and password and another person uses Federal law regulates the unauthorized access that information to access an account, it could to digital assets and addresses the privacy of be in violation of these acts as being without online communication. See Deven R. Desai, “lawful consent.” Property, Persona, and Preservation, 81 TEMP. L. REV. 67 (2008); Molly Wilkens, Privacy and One approach being taken by some states, Security During Life, Access After Death: Are which either have or are considering granting They Mutually Exclusive?, 62 HASTINGS L.J. personal representatives the ability to access 1037 (2011); Orin S. Kerr, A User’s Guide to the the accounts, is to provide by statute that such Stored Communications Act, and a Legislator’s access is not a breach of any terms of the user 65 ESTATE PLANNING UPDATE agreement. For example, the proposed Nevada individuals with digital property are not taking statute states: steps to plan for that property. See Becky Yerak, Online Accounts After Death: Remember Digital The act by a personal representative to Property When Listing Assets, CHICAGO TRIB., take control of, conduct or continue any Aug. 26, 2012. (reporting that a survey by BMO account or asset of a decedent * * * does Retirement Institute revealed that 57% of not invalidate or abrogate any conditions, respondents who believed it was very or terms of service or contractual obligations somewhat important to plan for digital assets had the holder of such an account or asset has not made such plans). with the provider or administrator of the account, asset or Internet website. Currently, many attorneys do not include such planning as part of their standard set of services, Nev. Senate Bill 131 (as amended Apr. 17, however, they should begin to do so 2013). immediately. See Kelly Greene, Passing Down Digital Assets, WALL ST. J., Sept. 1, 2012. As another example, the proposed Virginia Digital assets are valuable, both emotionally and statute provides: financially, and they are pervasive.
This section supersedes any contrary A. Specify Disposition According to provision in the terms of service Provider’s Instructions agreement, and a fiduciary shall be Though most Internet service providers have a considered an authorized user who has policy on what happens to the accounts of the lawful consent of the person or estate deceased users, these policies are not prominently to whom he owes a fiduciary duty for posted and many users may not be aware of purposes of accessing or possessing such them. If they are part of the standard terms of person's or estate's digital accounts and service, they may not appear on the initial digital assets. screens as users quickly click through them.
Virginia S.B. 914, 2013 Session. In April 2013, Google took an innovative first step by creating the Inactive Account Manager Many issues may arise, however, with this which users may use to control what happens to type of provision. emails, photos, and other documents stored on Google sites such as +1s, Blogger, Contacts and Do such a statutory provisions interfere Circles, Drive, Gmail, Google+ Profiles, Pages with freedom of contract and/or already and Streams, Picasa Web Albums, Google Voice, established contract rights? and YouTube. The user sets a period of time Will contrary provisions in the terms of after which the user’s account is deemed inactive. service agreement be deemed unenforce- Once the period of time runs, Google will notify able as against public policy? the individuals the user specified and, if the user How will choice of law provisions in the so indicated, share data with these users. user agreements which indicate that the Alternatively, the user can request that Google agreement is governed by the law of some delete all contents of the account. See Plan Your other state or country be handled? Digital Afterlife With Inactive Account Manager, Google Data Liberation Blog (Apr. 11, 2013); Are statutes which attempt to circumvent Kashmir Hill, Will You Use Google's Death the federal statutes unconstitutional? Manager To Let Loved Ones Read Your Email When You Die?, Forbes.com (Apr. 11, 2013).
VI. PLANNING SUGGESTIONS B. Back-Up to Tangible Media Legal uncertainty reinforces the importance of The user should consider making copies of planning to increase the likelihood that an materials stored on Internet sites or “inside” of individual’s wishes concerning the disposition of devices on to tangible media of some type such digital assets will be actually carried out. Even 66 ESTATE PLANNING UPDATE as a CD, DVD, portable hard drive, or flash passcode in a separate location as a further drive. The user can store these materials in a safe safeguard. place, such as a safe deposit box, and then leave them directly to named beneficiaries in the user’s Another option is to use an online password will. Of course, this plan requires constant storage service such as 1Password, KeePass, or updating and may remove a level of security if my-iWallet. Your client would then need to pass the files on these media are unencrypted. along only one password to a personal However, for some files such as many years of representative or agent. See Nancy Anderson, vacation and family photos, this technique may You Just Locked Out Your Executor and Made be effective. Your Estate Planning a Monumental Hassle, FORBES, Oct. 18, 2012. However, this makes this C. Prepare Comprehensive Inventory of one password extremely powerful as now just Digital Estate one “key” unlocks the door to your client’s entire digital world. 1. Creation An initial estate planning questionnaire should Warning: Giving someone else the client’s include questions about the client’s digital assets. user name and password may be against the While people may think of bank accounts, stock terms of service in the contract. Accordingly, if accounts, real estate, and other brick-and-mortar someone uses your client’s access information, it items as property suitable for estate planning, may be deemed a state or federal crime because it they may not have considered their digital assets. exceeds the access to that information that is Accordingly, an attorney can help. In this stated in the user agreement. situation, individuals need to develop an inventory of these assets, including a list of how D. Provide Immediate Access to Digital Assets and where they are held, along with usernames, Your client may be willing to provide family passwords, and answers to “secret” questions. A members and friends immediate access to some sample form is included in the Appendix to this digital assets while still alive. Your client may article. Lawyers can then provide advice on what store family photographs and videos on websites happens in the absence of planning, the default such as Shutterfly and DropShots, which permit system of patchwork laws and patchy Internet multiple individuals to have access. Your client service provider policies, as well as the choices could create a YouTube channel. See Nancy for opting out of the default systems. Anderson, You Just Locked Out Your Executor and Made Your Estate Planning a Monumental 2. Storage Hassle, FORBES, Oct. 18, 2012. Careful storage of the inventory document is essential. Giving a family member or friend this E. Authorize Agent to Access Digital Assets information while alive and well can backfire on The client may include express directions in a your clients. For example, if a client gives his durable power of attorney authorizing the agent daughter his online banking information to pay to access their digital accounts. However, as his bills while he is sick, siblings may accuse her mentioned above, it is uncertain whether the of misusing the funds. Further, a dishonest agent can use that authority in a legal manner to family member would be able to steal your access the information depending on the terms of client’s money undetected. service agreement.
If you decide that a separate document with Below is a provision adapted from a clause digital asset information is the best route for your suggested by Keith P. Huffman, Law Tips: Estate clients, this document should be kept with your Planning for Digital Assets, Indiana Continuing client’s will and durable power of attorney in a Legal Education Forum (Dec. 4, 2012): safe place. The document can be delivered to the client’s executor upon the client’s death or agent Digital Assets. My agent has (i) the upon the client’s incapacity. You may consider power to access, use, and control my encrypting this document and keeping the digital device, including, but not limited 67 ESTATE PLANNING UPDATE to, desktops, laptops, peripherals, storage accounts. In addition, many digital assets take devices, mobile telephones, smart phones, the form of licenses that expire upon death. They and any similar device which currently may survive the death of the settlor if the trust exists or exists in the future as technology owns these accounts and assets instead. develops for the purpose of accessing, modifying, deleting, controlling or When a person accumulates more digital transferring my digital assets, and (ii) the assets, designating these assets as trust assets power to access, modify, delete, control, may be as simple as adding the word “trustee” and transfer my digital assets, including, after the owner’s last name. See John Conner, but not limited to, any emails, email Digital Life After Death: The Issue of Planning accounts, digital music, digital for a Person’s Digital Assets After Death, 4 EST. photographs, digital videos, software PLAN. & COMM. PROP. L.J. 301 (2011). licenses, social network accounts, file sharing accounts, financial accounts, G. Place Digital Asset Information in a Will domain registrations, web hosting When determining how to dispose of digital accounts, tax preparation service accounts, assets, one’s first instinct may be to put this on-line stores, affiliate programs, other on information in a will. However, a will may not line programs, including frequent flyer and be the best place for this information for several other bonus programs, and similar digital reasons. Because a will becomes public record items which currently exist or exist in the once admitted to probate, placing security codes future as technology develops. and passwords within it is dangerous. Further, amending a will each time a testator changes a F. Place Digital Assets in a Trust password would be cumbersome and expensive. One of the most innovative solutions for If a client actually wishes to pass on a digital dealing with digital assets is to create a revocable asset rather than the information of how to deal trust to hold the assets. See Joseph M. Mentrek, with the asset, a will may not be the proper Estate Planning in a Digital World, 19 Ohio transfer mechanism. Prob. L.J. 195 (May/June 2009). A trust may be a more desirable place for account information A will, however, is useful for limited than a will because it would not become part of purposes. For example, your client could specify the public record and is easier to amend than a beneficiaries of specific digital assets especially will. if those assets are of significant monetary value. A testator may also reference a separate The owner could transfer digital property into document such as the inventory discussed above a trust and provide the trustee with detailed that contains detailed account information which instructions regarding management and would provide the executor with invaluable disposition. Assuming the asset is transferable, information. the digital asset could be folded into an existing trust. See Jessica Bozarth, Copyrights & If the ownership of the digital asset upon Creditors: What Will Be Left of the King of Pop’s death is governed by the user agreement, the Legacy?, 29 CARDOZO ARTS & ENT. L.J. 85, asset may actually be of the non-probate variety. 104-07 (2011). An individual also could set up a Thus, like a multiple-party bank account or life separate trust just to hold digital property or to insurance policy, the digital asset may pass hold specified digital assets. However, creating a outside of the probate process. separate revocable trust for digital assets may be overkill for many individuals and only be Because only a few states have statutes practical for those with digital assets of authorizing a personal representative to gain substantial value. access to digital assets, it may be prudent to include a provision granting such authority in The client could register accounts in the name wills. The following provision is suggested by of the trust so the successor trustee would legally James Lamm. See Michael Froomkin, Estate (and, one hopes, seamlessly) succeed to these
68 ESTATE PLANNING UPDATE Planning for Your Digital Afterlife, Discourse.net the term “user account” includes without (Feb. 18, 2013). limitation an established relationship between a user and a computing device or The personal representative may between a user and a provider of Internet exercise all powers that an absolute owner or other network access, electronic would have and any other powers communication services, or remote appropriate to achieve the proper computing services, whether public or investment, management, and distribution private. of: (1) any kind of computing device of mine; (2) any kind of data storage device H. Use Online Afterlife Company or medium of mine; (3) any electronically Recently, entrepreneurs recognizing the need stored information of mine; (4) any user for digital estate planning have created account of mine; and (5) any domain name companies that offer services to assist in planning of mine. The personal representative may for digital assets. These companies offer a obtain copies of any electronically stored variety of services to assist clients in storing information of mine from any person or information about digital assets as well as notes entity that possesses, custodies, or controls and emails that clients wish to send post-mortem. that information. I hereby authorize any As an estate planning attorney, you may find this person or entity that possesses, custodies, additional service to be valuable and recommend or controls any electronically stored one to your clients. information of mine or that provides to me an electronic communication service or A non-exclusive list of the different remote computing service, whether public companies and the services they offer is set forth or private, to divulge to the personal below in alphabetical order. The author is not representative: (1) any electronically recommending any of these companies and no stored information of mine; (2) the con- endorsement should be implied because of a tents of any communication that is in company’s inclusion or exclusion from this list. electronic storage by that service or that is You must use due diligence in investigating and carried or maintained on that service; (3) selecting a digital afterlife company. For any record or other information pertaining example, in the two years I have been to me with respect to that service. This maintaining this list, about one-third of the authorization is to be construed to be my companies have gone out of business or merged lawful consent under the Electronic with another similar firm. Communications Privacy Act of 1986, as amended; the Computer Fraud and Abuse Name Services Offered Act of 1986, as amended; and any other 1000 Provides memorial websites for applicable federal or state data privacy law memories users to upload photos of loved or criminal law. The personal represent- ones. ative may employ any consultants or AfterSteps Provides users with a step-by-step agents to advise or assist the personal guide in planning their estate, representative in decrypting any encrypted financial, funeral, and legacy electronically stored information of mine plans, which will be transferred to or in bypassing, resetting, or recovering the users’ designated beneficiares upon passing. any password or other kind of authenti- AssetLock Enables users to upload cation or authorization, and I hereby documents, final letters, final authorize the personal representative to wishes, instructions, important take any of these actions to access: (1) any locations, and secret information to kind of computing device of mine; (2) any an online safe deposit box. Once kind of data storage device or medium of the user dies and a minimum mine; (3) any electronically stored inform- number of recipients confirm the ation of mine; and (4) any user account of user’s death, AssetLock will mine. The terms used in this paragraph are release pre-designated information to the pre-designated recipients. to be construed as broadly as possible, and 69 ESTATE PLANNING UPDATE Name Services Offered Name Services Offered Cirrus Enables users to keep track of Vital Lock Posthumously delivers text, Legacy their email accounts, online videos, images, audio recordings, banking, PayPal, ebay, Amazon, and links to pre-designated and web hosting, and how these recipients. will be passed on. Dead Man’s Enables users to write emails and Switch designate recipients. Once user VII. OBSTACLES TO PLANNING fails to respond to three emails, FOR DIGITAL ASSETS Dead Man’s Switch releases the emails to the recipients. Including digital assets in estate plans is a DeadSocial Sends messages after death via new phenomenon. Many of the kinks have not Facebook and Twitter. yet been straightened out. Some of the problem Deathswitch Enables users to write emails and areas include safety issues involved with designate recipients. passwords, the hassle of updating this Estate Map Moves an estate planning information, the uncertainty surrounding online attorney’s intake and enables afterlife management companies, and the fact that clients to securely store and pass some online afterlife management companies on importante estate information. overstate their abilities. Estate++ Enables users to upload important legal documents, photographs, notes, and instructions to a virtual A. Safety Concerns safe deposit box. Clients may be hesitant to place all of their E-Z-Safe Enables users to securely store, usernames, passwords, and other information in update, retrieve, and pass their one place. We have all been warned, “Never growing digital assets. write down your passwords.” This document If I Die Enables users to write notes that will be sent to pre-designated could fall into the hands of the wrong person, recipients at death. leaving your client exposed. One option to Legacy Enables users to save all online safeguard against this is to have your clients Locker account information in a digital create two documents; one with usernames and safe deposit box and assign one with passwords. The documents can be beneficiaries for each account. stored in different locations or given to different LivesOn Allows a person to “continue” individuals. With an online afterlife management tweeting after death and to name a company or an online password vault, clients person with authority to continue may worry that the security system could be the account. breached, leaving them completely exposed. See My Enables users to leave letters, Wonderful instructions, information, and Deborah L. Jacobs, Six Ways to Store Securely Life photographs for pre-designated the Keys to Your Online Financial Life, FORBES, recipients. Feb. 15, 2011. The same concern is present if Parting Enables users to draft online estate your client chooses to place all this information Wishes planning documents, design online in one document. memorials, create web pages about their lives, prepare final messages, B. Hassle document funeral wishes, and designate Keyholders to distribute Planning for digital assets is an unwanted this information. burden. Digital asset information is constantly Secured Safe Provides users with online storage changing and may be stored on a variety of [formerly for passwords and digital devices (e.g., desktop computers, laptop DataInherit, documents. computers, smart phones, cameras, iPads, CDs, Entrustet,and DVDs, and flashdrives). A client may routinely others] open new email accounts, new social networking SlightlyMorbid Enables users to leave behind or gaming accounts, or change passwords. emails, instructions, and personal online contacts. Documents with this information must be revised and accounts at online afterlife management companies must be frequently updated. For 70 ESTATE PLANNING UPDATE clients who wish to keep this information in a held that the Stored Communications Act’s document, advise them to update the document privacy rights protect Facebook contents and that quarterly and save it to a USB flash drive or in Facebook cannot be compelled to turn over the the cloud, making sure that a family member, contents). friend, or attorney knows where to locate it. See Tamara Schweitzer, Passing on Your Digital A second issue is whether the fiduciary can Data, INC., Mar. 1, 2010. request that the provider disclose records. In that situation, the fiduciary does not go online but C. Uncertain Reliability of Online Afterlife rather asks the provider for the records. The Management Companies critical question here is determining that the fiduciary becomes the subscriber for purposes of Afterlife management companies come and permitting access under one of the exceptions to go; their life is dependent upon the whims and the Stored Communications Act. While state law attention spans of their creators and creditors. can clarify that the fiduciary is an authorized Lack of sustained existence of all of these user, this is an issue of federal law. companies make it hard, if not impossible, to determine whether this market will remain viable. The problem of fiduciary access possibly Clients may not want to spend money to save being in violation of the law is also an issue in digital asset information when they are unsure other nations such as the United Kingdom where about the reliability of the companies. See id. using a deceased’s username and password could result in the person who gains access violating D. Overstatement of the Abilities of Online the Computer Misuse Act of 1990. See Aileen Afterlife Management Companies Entwistle, Safeguarding Your Online Legacy Some of these companies claim they can After You’ve Gone, Scotsman. Com, March 30, distribute digital assets to beneficiaries upon your 2013. client’s death. Explain to your clients that these companies cannot do this legally, and that they VIII. FIDUCIARY ACCESS TO need a will to transfer assets, no matter what DIGITAL ESTATE kind. Using these companies to store information to make the probate process easier is fine but they The rights of executors, administrators, cannot be used to avoid probate altogether. agents, and guardians with regard to digital assets David Shulman, an estate planner in Florida, are muddy. Their rights in the digital world can stated that he “would relish the opportunity to be analogized to their rights in the brick-and- represent the surviving spouse of a decedent mortar world, for which there are well- whose eBay business was ‘given away’ by established probate laws governing access, as Legacy Locker to an online friend in Timbuktu.” well as established procedures designed to David Shulman, Estate Planning for Your Digital safeguard the power of attorney process. See Life, or, Why Legacy Locker Is a Big Fat Lawsuit e.g., UNIFORM POWER OF ATTORNEY ACT Waiting to Happen, SOUTH FLORIDA ESTATE (2008); Kathryn T. McCarty & Mark R. Singler, PLANNING LAW (Mar. 21, 2009). Practical Estate Planning for the Elder Client, 24-Mar CBA Rec. 30, 31-32 (2010). However, E. Federal Law Restrictions the practical extension of these laws to digital assets is just beginning to be tested. There are at least two unresolved issues raised by Federal law. The first is whether the The Uniform Law Commission has fiduciary is “authorized” to access the digital established a Drafting Committee on Fiduciary property pursuant to the statutes prohibiting Access to Digital Information. “The Committee unauthorized access to computers and computer will draft a free-standing act and/or amendments data. See Jim Lamm, Facebook Blocks Demands to ULC acts, such as the Uniform Probate Code, for Contents of Deceased User’s Account, Oct. the Uniform Trust Code, the Uniform 11, 2012, (discussing In re Request for Order Guardianship and Protective Proceedings Act, Requiring Facebook, Inc. to Produce Documents and the Uniform Power of Attorney Act, that will and Things, the Daftary case, in which the court vest fiduciaries with at least the authority to 71 ESTATE PLANNING UPDATE manage and distribute digital assets, copy or statute is not specifically directed to personal delete digital assets, and access digital assets.” representatives and simply provides, “Unless New ULC Drafting Committees and Study otherwise permitted by law or contract, any Committees, Uniform Law Commission (Aug. provider of electronic mail service shall provide 15, 2012). each customer with notice at least 30 days before permanently terminating the customer’s In advance of that proposal, states have begun electronic mail address.” CAL. .BUS. & PROF. to consider and enact their own laws. Since CODE § 17538.35 (West 2010). Providers are 2000, a small number of states have passed likely to provide this notice via e-mail. See legislation relating to the power of executors and Jonathan J. Darrow & Gerald R. Ferrera, Who administrators to have access to and control of Owns a Decedent’s E-Mails: Inheritable Probate the decedent’s digital assets. Other states are Assets or Property of the Network?, 10 N.Y.U. J. considering legislation. These statutes vary in Legis. & Pub. Pol’y, 281, 296 (2006-2007). form and substance, and their power and impact Consequently, in the case of a deceased account remains unclear due to the limited judicial holder, the notice will be “wholly useless” unless interpretation that has occurred to date. None of the personal representative has rapid access to the the laws, however, cover the rights of other decedent’s e-mail account and monitors it fiduciaries (e.g., successor trustees or agents regularly. Tyler G. Tarney, A Call for acting pursuant to a power of attorney). Legislation to Permit the Transfer of Digital Assets at Death, 40 Cap. U. L. Rev. 773, 788 A. Existing State Law (2012). Existing legislation takes a variety of forms, and can be divided into different “generations.” b. Connecticut Each generation is a group of statutes covering Connecticut was one of the first states to similar (or identical) types of digital assets, often address executors’ rights to digital assets. In under an analogous access structure. The first 2005, the legislature passed S.B. 262, requiring generation, comprising California, Connecticut, “electronic mail providers” to allow executors and Rhode Island, only cover e-mail accounts. and administrators “access to or copies of the Perhaps recognizing the shortcomings of such a contents of the electronic mail account” of the limited definition, Indiana’s second-generation deceased, upon showing of the death certificate statute, enacted in 2007, is more open-ended, and a certified copy of the certificate of covering records “stored electronically.” The appointment as executor or administrator, or by third generation statutes, enacted since 2010 in court order. S.B. 262, 2005 Leg., Reg. Sess. Oklahoma and Idaho, explicitly expand the (Conn. 2005) (codified at CONN. GEN. STAT. definition of digital assets to include social media ANN § 45a-334a (West 2012)). The bill and microblogging (e.g., Twitter). These specifically defined “electronic mail service generations are not necessarily distinct in time as providers” as “sending or receiving electronic legislation of each generational type has recently mail” on behalf of end-users. Id. been proposed in various states. See generally see Jason Mazzone, Facebook’s Afterlife, 90 N. c. Rhode Island AR. L. REV. 1643 (2012). C In 2007, Rhode Island passed the Access to Decedents’ Electronic Mail Accounts Act, 1. First Generation requiring “electronic mail service providers” to The first generation statutes, enacted as early provide executors and administrators “access to as 2002, only cover e-mail accounts. They do or copies of the contents of the electronic mail not contain provisions enabling or permitting account” of the deceased, upon showing of the access to any other type of digital asset. death certificate and certificate of appointment as executor or administrator, or by court order. a. California H.B. 5647, 2007 Leg., Jan. Sess. (R.I. 2007) The first and most primitive first generation (codified at R.I. GEN. LAWS § 33-27-3 (2012)). statute was enacted by California in 2002. This Rhode Island uses a definition of “electronic mail service provider” similar to Connecticut’s: “an 72 ESTATE PLANNING UPDATE intermediary in sending or receiving electronic H.B. 2800, 52nd Leg., 1st Sess. (Okla. 2010) mail” who “provides to end-users . . . the ability (codified at OKLA. STAT. tit. 58, § 269 (2012)). to send or receive electronic mail.” Id. b. Idaho 2. Second Generation (Indiana) On March 26, 2012, Idaho amended its Perhaps in acknowledgement of changing Uniform Probate Code to enable personal technological times, one state has a second representatives and conservators to “[t]ake generation statute which uses a broad definition control of, conduct, continue or terminate any of covered digital assets. While an open-ended accounts of the decedent on any social definition may allow the law to remain relevant networking website, any microblogging or short as new technologies are invented and new types message service website or any e-mail service of digital assets gain prominence, its generality website.” S.B. 1044, 61st Leg., Reg. Sess. (Idaho may also create confusion and uncertainty as to 2011). Sponsors declared that the purpose of the what assets will actually be covered and how best bill was to “make it clear” that personal to engage in planning for them. representatives and conservators can control the decedent’s or protected person’s “social media . . In 2007, the Indiana legislature added a . such as e-mail, blogs instant messaging, provision to its state code requiring custodians of Facebook types of accounts, and so forth.” records “stored electronically” regarding or for Statement of Purpose, 1044–RS20153, Leg. 61, an Indiana-domiciled decedent, to release such Reg. Sess. (Idaho 2011). records upon request to the personal decedent’s personal representative. IND. CODE § 29-1-13- 4. Specialized State Legislation (Virginia) 1.1 (2007). The personal representative must In 2013, Virginia enacted § 64.2-110 which furnish a copy of the will and death certificate, or grants the personal representative of a deceased a court order. Id. After the custodian is notified minor access to the minor’s digital accounts such of the decedent’s death, the custodian may not as those containing e-mail, social networking dispose of or destroy the electronic records for information, and blogs. The personal two years. Custodians need not release records representative assumes the deceased minor’s “in violation of any applicable federal law” or “to terms of service agreement for the purposes of which the deceased person would not have been consenting to and obtaining the disclosure of the permitted in the ordinary course of business.” Id. contents of the account. 3. Third Generation The reason this legislation is limited to minors Third generation legislation acknowledges the is because its chief proponent, Ricky Rash, wants changes to the digital asset landscape, since to obtain information from his son’s Facebook California enacted its first generation e-mail account which he hopes will explain why his son legislation in 2002. These third generation laws committed suicide. See Evan Carroll, Virginia expressly recognize new and popular digital Passes Digital Assets Law, The Digital Beyond, assets – social networking and microblogging. Feb. 19, 2013. While these laws may better serve the current population than the limited first generation B. Proposed State Legislation statutes, they share the same risk of becoming This section discusses proposed state obsolete in only a few years. legislation, both pending at the time this article was revised and legislation that was unsuccessful. a. Oklahoma See also Jim Lamm, List of State Laws and In 2010, Oklahoma enacted legislation with a Proposals Regarding Fiduciary Access to Digital fairly broad scope, giving executors and Property During Incapacity or After Death, administrators “the power . . . to take control of, Digital Passing (last updated Apr. 1, 2013) conduct, continue, or terminate any accounts of a (including the states of Colorado, Missouri, and deceased person on any social networking Ohio). website, any microblogging or short message service website or any e-mail service websites.” 73 ESTATE PLANNING UPDATE 1. Massachusetts The Nebraska Bar Association, sponsor of the bill, worked with Facebook lobbyists on the The Massachusetts Senate approved a bill precise wording of the proposed bill “so it giving personal representatives and authorized meshes with Facebook’s service contracts.” Paul family members “reasonable access” to a Hammel, Nebraska Legislature: what happens to decedents “electronic mail account[s].” S. 2313, your Facebook page when you die?, OMAHA 187th General Court, Reg. Sess. (Mass. 2012); WORLD-HERALD (January 30, 2012). Mass. Senate Eyes Law Governing Access to the Nebraska’s proposed bill was referred to the Deceased, 90.9 WBUR (June 27, 2012). The bill Judiciary Committee in January, 2012, before specifically demands that access be given even if being indefinitely postponed. it conflicts with a provider’s terms of service, unless the decedent expressly declined to have A substantially similar bill was introduced on their e-mail account released after death. S. January 10, 2013. L.B. 37, 103rd Leg., 1st Sess. 2313, 187th General Court, Reg. Sess. (Mass. (Neb. 2013). After hearings late in January 2013, 2012). The bill appears to have died in the no further action appears to have been taken on Massachusetts House. the bill. 2. Maryland 5. Nevada The Maryland Senate considered a very A bill has passed the Nevada Senate and has simple statute which permits a personal been sent to the Nevada Assembly, which would representative to deal with email, social adopt a third generation approach to grant the networking sites, microblogging, and SMS decedent’s personal representative the power to services. Senate Bill 29. The bill received an deal with most non-financial electronic and unfavorable report on February 18, 2013. digital assets. Nev. Senate Bill 131 (as amended Apr. 17, 2013). 3. Michigan The Michigan House considered a very To avoid problems with federal law, the bill simple statute that would permit a personal states: representative to deal with email, social networking sites, microblogging, and SMS The act by a personal representative to services. House Bill 5929 (Sept. 20, 2012). The take control of, conduct or continue any bill appears to have gained little or no support. account or asset of a decedent * * * does not invalidate or abrogate any conditions, 4. Nebraska terms of service or contractual obligations Legislative Bill 783, introduced in 2012, the holder of such an account or asset has “provides the personal representative of a with the provider or administrator of the deceased individual the power to take control of account, asset or Internet website. or terminate any accounts or message services 6. New Hampshire that are considered digital [sic] assets,” and notes that “[t]he power can be limited by will or court The New Hampshire House is considering a order.” L.B. 783, 102nd Leg., 2nd Sess. (Neb. very simple statute that would permit a personal 2012), Introducer’s Statement of Intent – L.B. representative to deal with email, social 783, Leg. 102, 2nd Sess. (Neb. 2012). If enacted, networking sites, microblogging, and SMS the bill would amend Nebraska’s statute to give services. HB 0116 (Jan. 3, 2013). In late personal representatives “the power . . . to take January 2013, the House voted to give the control of, conduct, continue, or terminate any sponsor of the bill, Peter Sullivan, time to prepare account of a deceased person on any social an amendment to establish a study of the digital networking web site, microblogging or short asset issue. Norma Love, Who Controls Your message service web site, or e-mails service Facebook Page After Death? N.H. Lawmakers website,” in addition to the personal Examine It, Seacoastonline (Jan. 31, 2013). representative’s pre-existing authority to take Some House members believed that the bill was title to the estate’s real property. Id. 74 ESTATE PLANNING UPDATE premature and perhaps unenforceable. Id. Adds “digital assets and accounts” to (quoting Timothy Horrigan). the list of powers a principal may grant an agent in the statutory short form for 7. New Jersey a general power of attorney. The 2012 New Jersey Assembly considered a Grants the guardian of the estate of an very simple statute that would permit a personal incompetent individual access to the representative to deal with email, social ward’s digital assets. networking sites, microblogging, and SMS services. N.J. A2954 (as amended). The bill 10. North Dakota appears to have gained little or no support. The New Dakota Legislature considered a 8. New York very simple statute that would permit a personal representative to deal with email, social In February 2012, Brooklyn Assemblyman networking sites, microblogging, and SMS Felix Ortiz introduced legislation that authorizes services. H.B. 1455, 63rd N.D. Leg. Ass. After a decedent’s fiduciary to take control of certain passing House, the bill failed to pass the Senate web accounts. New York Bill A09317 (2012) on April 9, 2013. (amending N.Y. EST. POWERS & TR. L. § 11- 1.1(b)(23)). This third generation statute 11. Oregon provides that “unless expressly prohibited by the will or court order, [the executor has authority] to The Oregon Senate is currently considering a take control of, conduct, continue or terminate bill to deal with digital assets issues. Senate Bill any account of the decedent on any social 54, 77th Oregon Legislative Assembly, 2013 Reg. networking web site, microblogging or short Sess. As introduced, this bill: message service web site or email service web site.” The bill was referred to the Judiciary clarifies that a fiduciary has the legal right, Committee on February 16, 2012 and no votes as an authorized user, to access online have been taken as of October 20, 2012. See accounts and information. In short, SB 54: generally Melissa Holmes, Social Media Users Can Create "Online Executor" In Will, 1. Defines digital accounts and assets. WGRZ.com, Feb. 5, 2012. This statute did not 2. Confirms a fiduciary has the right to pass. access, take control of, possess, handle, conduct, continue, distribute, dispose of In January 2013, a similar statute was or terminate digital assets and digital introduced into the New York Assembly. A823- accounts. 2031. After being referred to the Judiciary on January 9, 2013, no action has yet been taken. 3. Instructs the custodian of a digital asset as to the process by which a fiduciary 9. North Carolina can access or possess information. North Carolina is considering a 4. Provides indemnification so that a comprehensive bill to address a wide variety of custodian can provide information digital asset issues. Senate Bill 279 (Mar. 13, without liability. 2013 revision). Here are some of the key Testimony of Victoria Blachly, Senate features of the bill: Judiciary Committee (Feb. 11, 2013).
Grants personal representatives access 12. Pennsylvania to non-financial digital assets. The Pennsylvania General assembly Includes the control of digital assets considered a very simple statute that would and accounts in the list of powers permit a personal representative to deal with which a settlor may incorporate by email, social networking sites, microblogging, reference into a trust instrument. and SMS services. H.B. 2580, Session of 2012.
75 ESTATE PLANNING UPDATE It was referred to Judiciary on August 23, 2012 financial records, assets related to business and appears to have died there. conducted over the Internet, online storage and domain hosting, gaming and entertainment 13. Virginia accounts, etc. Though judicial interpretations of The Virginia Senate considered a bill to the relatively recent statute remain limited, the address various issues dealing with fiduciary caveat that custodians need only release records access to digital assets and the interface with user that were available to the decedent in the agreements. S.B. 914, 2013 Session. Less than “ordinary course of business” may be a valuable one month after its introduction, however, the bill defense angle for reluctant online service was stricken at the request of Patron in Courts of providers. Justice. One criticism that has been levied against C. States Studying Digital Asset Legislation state digital asset legislation is that these laws may fail to address the contractual relationship The Maine Legislature issued a resolution in between service providers and their end users. March 2013 to study the issue of the inheritance Some of the legislation includes caveats that of digital assets. The legislature directed the record release or access will only occur where Probate and Trust Law Advisory Commission o consistent with other state and federal laws, or “conduct a review of the legal impediments to the “where otherwise authorized” (as Oklahoma put disposition of digital assets upon an individual’s it). Through standard terms of service (either death or incapacity and develop legislative expressly consented to by the decedent, or recommendations based on the review.” The increasingly through passive notification methods report is due no later than December 1, 2013. like a clickwrap agreement), it is possible that the th 126 Me. Leg. Doc. 850, H.P. 601 (Mar. 5, decedent has already entered into a legally 2013). enforceable contract waiving his or her rights under digital asset laws. This may occur due to D. Shortcomings of Existing State Digital simple boilerplate language like Asset Legislation “nontransferable,” or under more explicit and Many of the statutes are creatures of the detailed provisions. It remains unclear whether precise time period in which they were passed, digital service providers can use these provisions limited by the technology available at the time. to avoid release or access. Connecticut’s 2005 statute and Rhode Island’s 2007 law cover only “electronic mail.” Idaho’s Even if digital asset legislation covers the 2012 statute, Nebraska’s proposed legislation and particular provider and asset at issue in a Oklahoma’s 2010 statute include social particular matter, there is still no guarantee that networking, microblogging, e-mail, and “short the type of access sought will be ultimately message service[s].” None were comprehensive provided. Much like the existing deceased user even at the time of drafting, and will likely policies of digital service providers themselves, become less relevant to contemporary digital the existing legislation provides varying degrees asset issues as time goes on and sources of digital of access. A fiduciary might be interested only in assets cycle in and out of popularity. copying the contents of a file or deleting the account, or might want full management Of the states that have passed or attempted authority, including transferring it to another digital asset legislation, only Indiana’s arguably person. The type of access permitted or required includes any type of digital assets beyond social by statute may not be of the type sought by an networking, e-mail, and other social and estate. communication-type services. Indiana defined records covered under its statute as those For example, an executor or administrator electronically stored by the custodian, available who seeks to continue the digital operation of a to the decedent in the normal course of the decedent’s asset (e.g., a blog, message board, or custodian’s business. Indiana’s statute arguably digital store on eBay or Amazon) may be covers other types of digital assets, such as disappointed even in states that have taken the initiative to legislate in this area. Connecticut and 76 ESTATE PLANNING UPDATE
Rhode Island grant “access or copies,” but their Governing Access to the Deceased, 90.9 WBUR statutory language does not specify who makes (June 27, 2012). that decision – whether it is the estate’s choice, or the digital service provider gets the final say. IX. FUTURE REFORM AREAS Indiana merely requires “release” of digitally The increasing use of digital assets, the need stored records; its statute does not even mention for planning, and the existing uncertainty over full access or transfer as a possibility. By the application of current laws ensures changes in contrast, the Oklahoma and Idaho laws are much the legal landscape. Some of the areas for future broader in granting access to the accounts reform include addressing digital assets from the themselves. perspectives of an agent, a decedent’s personal E. Fiduciary Access to Digital Assets Act representative, and a guardian. The National Conference of Commissioners A. Agents on Uniform State Laws is in the process of All states allow powers of attorney and drafting a model state law entitled the Fiduciary approximately one quarter have enacted some Access to Digital Assets Act. “The purpose of this act is to vest fiduciaries with the authority version of the Uniform Power of Attorney Act. to access, manage, distribute, copy or delete To ensure that agents have the appropriate digital assets and accounts. It addresses four authority, states could adopt explicit legislation different types of fiduciaries: personal recognizing that digital assets can be controlled representatives of decedents’ estates, through powers of attorney. In the absence of conservators for protected persons, agents such legislation, businesses may not recognize acting pursuant to a power of attorney, and the authority of the agent over digital accounts and assets, even though the standard form could trustees.” Prefatory Note to Feb. 7, 2013 draft. easily be construed to cover these situations. For F. Cases example, Eve Kripke held a power of attorney for her husband, who suffered from Lewy body There are few appellate court cases, although dementia, a disease affecting cognition, numerous media stories recount the difficulties of movement, and emotions. She managed his accessing a deceased’s online accounts. In one online bank account with Bank of America for well-publicized case, after Lance Cpl. Justin several years until she was informed that she had Ellsworth was killed in 2004 while serving with the wrong password. Though she was able to the United States Marine Corps in Afghanistan, answer a series of questions on the website, his parents began a legal battle with Yahoo! to including her husband’s Social Security number, gain access to messages stored in his e-mail she could not answer questions about the account. Yahoo Will Give Family Slain Marine’s numbers on his Bank of America credit card — E-mail Account, USA TODAY (April 21, 2005). which she had cut up and disposed of because her Yahoo! initially refused the family’s request, but husband could no longer use it. Jon Yates, ultimately did not fight a probate court order to Problem Solver: Readers Crack BofA Code, Help hand over more than 10,000 pages of e-mails. Id. Woman Gain Access to Account, CHICAGO However, the family remained disappointed TRIBUNE (Aug. 23, 2011). Bank of America when the data CD provided by Yahoo! contained offered several compromises including listing only received e-mails and none their late son had Eva as a joint account holder. The power of written. Id. A Wisconsin couple sought court attorney, however, was insufficient for granting orders against Google and Facebook to help them access to online banking. “‘You must be an understand their 21 year-old son’s suicide. account holder or user,’ a bank spokesperson Jessica Hopper, Digital Afterlife: What Happens explained. ‘The reason we do this is to protect to Your Onlife Accounts When You Die?, Rock the customer and mitigate risk.’” Jon Yates, Center, June 1, 2012. Similar difficulties have Power of Attorney Powerless in Online Baking: prompted state legislators to introduce legislation Bank Says Caretaker Spouse Will Have to Rely on the issue including the Massachusetts proposal on Monthly Statements, CHICAGO TRIBUNE (May previously discussed. Mass. Senate Eyes Law 26, 2011).
77 ESTATE PLANNING UPDATE To ensure that powers of attorney will be D. Providers Gather User’s Actual respected, states have two options. They might Preferences establish separate, distinct powers of attorney Though most Internet service providers have specifically for digital assets, developing a some kind of policy on what happens to the special form tailored to the digital world that accounts of deceased users, these policies are not could be executed in addition to powers of prominently posted and many consumers may not attorney that cover health care and other financial be aware of them. If they are parts of the decision-making. In the alternative, they can standard terms of service, they may not appear on simply adapt, or amend (if necessary) existing the initial screens, as Internet users quickly click legislation and sample forms. For example, the past them. See Kevin W. Grierson, Annotation, UPoAA recognizes that some grants of authority Enforceability of “Clickwrap” or “Shrinkwrap” to an agent require explicit conferrals of Agreements Common in Computer Software, authority. Control over digital assets could Hardware, & Internet Transactions, 106 simply be added to the list. UNIFORM POWER OF A.L.R.5th 309 (2003). ATTORNEY ACT § 201 (2008). The principal could be required to list the specific accounts, Internet service providers should follow such as Facebook or Twitter or PayPal, on the Google’s lead and develop procedures for a form, or could check off a box allowing for person to indicate what happens upon the user’s access to any and all such accounts. death. To ensure that more people make provisions, providers should provide an easy B. Personal Representatives method at the time a person signs up for a new As discussed earlier, states are beginning to service so the person can designate the address the power of executors to deal with disposition of the account upon the owner’s digital assets. Especially with the formation of incapacity or death. the Uniform Law Commission’s Drafting Committee on Fiduciary Access to Digital E. Federal Law Information, it is likely that this trend will Ultimately, Congress will need to enact continue and at a rapid pace. It is anticipated that national legislation, to ensure uniformity among the legislation will: (1) enumerate with some the states and to guarantee that Internet service precision the exact nature of the executor’s providers will respect each state’s forms. Such power to manage and distribute digital assets, (2) laws could use existing Internet regulation provide guidance as to whether an executor may legislation as a model. Federal law could require access, decrypt, copy, or delete electronically Internet providers to respect state laws on stored data, and (3) recognize the testator’s fiduciary powers, or even to ensure that all ability to limit use and access to digital assets in Internet users click through an “informed some method either by testamentary provisions consent” provision when they sign up for new or by agreement with the entity storing the data. services. This will at least provide default rules.
C. Guardians of Incapacitated Adults At the moment however, there is little Given that a guardian is appointed by the movement in Congress to address digital asset court and generally has the ability to force third issues according to the office of Sen. Mark Pryor parties to accept the guardian’s authority, a who heads the Senate Commerce subcommittee guardian theoretically will have the same access on communications and technology. Lauren and control over digital assets as the owner. Gambino, Loved Ones’ Online Assets Could Be However, a problem may arise because contracts Lost Forever, Associated Press (Mar. 1, 2013). with providers and other entities may attempt to In fact, Rep. Darrell Issa has proposed a two-year limit the power of a guardian. Legislation moratorium on legislation impacting the Internet. regarding a decedent’s personal representative Katy Steinmetz, Your Digital Legacy: States should cover guardians as well. See Memo from Grapple with Protecting Our Data After We Die, Suzanne Brown Walsh to Uniform Law Time Tech (Nov. 29, 2012). Commission Scope and Program Committee (June 21, 2012). 78 ESTATE PLANNING UPDATE X. CONCLUSION Yes, complications surround planning for digital assets, but all clients need to understand the ramifications of failing to do so. Estate planning attorneys need to comprehend fully that this is not a trivial consideration and that it is a developing area of law. Cases will arise regarding terms of service agreements, rights of beneficiaries, and the success of online afterlife management companies. Until the courts and legislatures clarify the law, estate planners need to be especially mindful in planning for these frequently overlooked assets.
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APPENDIX – DIGITAL ESTATE INFORMATION SAMPLE FORM1
Digital Estate Information
I. LOCATIONS OF HARD COPY FILES AND MEDIA BACKUP Personal records = The location of traditional Financial = paper records as well as where back ups of digital information are Home/apartment records = stored is very helpful.
Media backups =
II. DEFAULT INFORMATION User names = Many clients have default information Passwords = which they use for many accounts. If no specific access information is provided, this at Secret questions: least provides a starting point.
Mother’s maiden name = Some clients may also have a method of Grade school = assigning passwords. If so, the client should provide this information.
1 For another sample form, see James D. Lamm, Digital Audit: Passwords & Digital Property (2012).
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Street where grew up =
III. ELECTRONIC DEVICE ACCESS Device Website Username PIN Password
Computer – home
Computer – office
Operating System
Voice mail – home
Voice mail – work
Voice mail – cell phone
Security system
Tablet
e-Reader
GPS
Router
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DVR/TiVo
Television
IV. E-MAIL ACCOUNTS Description E-mail address Username PIN Password Disposition Desires
Work
Home
School
V. DOMAIN NAMES Website/Domain Name Webhost Username PIN Password
Personal
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Business
VI. ON-LINE STORAGE Name Website Username PIN Password
Dropbox
Google Drive
VII. FINANCIAL SOFTWARE Item Website User Name PIN Password
Quicken
TurboTax
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VIII. BANKING Institution Website User Name Password ATM PIN Security Image
Checking
Savings
PayPal
IX. STOCKS, BONDS, SECURITIES Institution Website User Name Password Other Information
X. INCOME TAXES Item Website User Name PIN Password
Federal Income tax payment https://www.eftps.com/eftps/
State Income tax payment
Prior computerized tax returns
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XI. RETIREMENT Institution Website User Name Password Other Information
XII. INSURANCE Institution Website User Name Password Other Information
Health
Life
Property
XIII. CREDIT CARDS Institution Website User Name Password PIN
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American Express
Visa
XIV. DEBTS Institution Website User Name Password Other Information
Mortgage
Cars
Student Loan
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XV. UTILITIES Institution Website User Name Password Other Information
Electric
Gas
Internet
Phone(landli ne)
Phone (cell)
TV
Trash
Water
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XVI. BUSINESSES Institution Website User Name Password Other Information
Amazon.co m
e-Bay.com
XVII. SOCIAL NETWORKS Institution Website User Name Password Disposition Desires
MySpace
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XVIII. DIGITAL MEDIA ACCOUNTS Institution Website User Name Password Other Information
Netflix
iTunes
YouTube
Hulu
Nook
Kindle
XIX. LOYALTY PROGRAMS Name Website User Name Password
Delta
Southwest Airlines
Best Buy
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Name Website User Name Password
Office Depot
XX. OTHER ACCOUNTS Name Website User Name Password
Skype
LoJack
WoW
HalfLife
Flickr
Medical records
90
WEAPONS
Many Texans are proud owners of a variety of The $200 transfer tax dictated by the Act in 1934 firearms and many young Texans hope to inherit remains in force today. or purchase firearms in the future. In fact, a 2006 See http://www.atf.gov/firearms/nfa. poll reported that 43% of Americans keep a gun in their home. Americans By Slight Margin Say The Alcohol Tobacco and Firearms division Gun In the Home Makes it Safer, Gallup Poll, of the United States Department of Treasury Oct. 20, 2006. Another study, conducted by the provides resources on how to identify whether a Bureau of Justice Statistics, found that 240,000 weapon falls under NFA regulations. machine guns are registered with the Bureau of http://www.atf.gov/publications/download/p/atf- Alcohol Tobacco, Firearms, and Explosives. p-5320-8/atf-p-5320-8.pdf. NFA firearms include Through legislation, federal and state weapons such as machine guns, suppressors, governments have tightened the reigns on the short-barreled shotguns (sawed-off shotguns), purchase, transfer, and ownership of weapons. and destructive devices (mortars, howitzers, Regulations with regard to machine guns and grenade launchers). 27 C.F.R. 479 (2003). NFA other similar weapons have received the most firearms are also commonly referred to as “Title scrutiny and reform. II weapons” because these firearms are defined in this title of the National Firearms Act and Gun This section aims to educate estate planning Control Act. professionals on how to protect their client’s ownership, transfer, and possession rights of The most commonly owned NFA weapon is National Firearms Act (NFA) weapons, while the machine gun. United States v. Carter, 530 alive, when incompetent, and at death. In U.S. 255, 257-58 (2000), and 26 U.S.C. addition, this article addresses how to protect a § 5845(b) define machine gun as “any weapon client’s family members and friends from which shoots, is designed to shoot, or can be illegally possessing or transferring NFA readily restored to shoot, automatically more than classified weapons during and after the owner’s one shot, without manual reloading, by a single lifetime. function of the trigger.”
Estate planning professionals must familiarize Congress has amended and expanded the NFA themselves with national and state gun laws and as the political culture of our nation has evolved. use approved estate planning techniques to For example, Congress enacted the following represent clients effectively who own or are additional provisions to regulate firearms: the interested in owning firearms. Failure to comply Gun Control Act of 1968 (GCA) and, most with national and state laws can lead to fines of recently, the Firearm Owners’ Protection Act up to $250,000 and 10 years in prison. 26 U.S.C. (FOPA). The FOPA, although intended to protect § 5861(d),(j) (2005); 26 U.S.C. § 5872 (2005); Second Amendment rights, changed the GCA so 49 U.S.C. §§ 781-788 (2003). severely that it made the transfer and ownership of machine guns illegal, subject to two exceptions: I. FEDERAL AND STATE GUN LAWS Transfer and possession of machine guns by government agencies (18 A. Federal Law U.S.C. § 921 (1986)); and Congress enacted the NFA in 1934 under Transfer and possession of machine Congress’ Sixteenth Amendment power of guns that were lawfully possessed in taxation and it largely governs the purchase, sale, compliance with the NFA at the time of transfer, use, and ownership of certain weapons. the prohibition in 1986 (House Amend. 91 ESTATE PLANNING UPDATE
777 to H.R. 4332). and ownership of non-NFA weapons. TEX. PENAL CODE § 46.01 et seq. and TEX. GOV’T. The second exception protects any legal CODE § 411.171 et seq. These weapons typically transfer of machine guns lawfully possessed in include rifles, shotguns, and handguns. It is 1986, whether through sale or inheritance. unlawful to sell, rent, loan, or give a handgun, Unlawful possession of NFA firearms, be it shotgun, or rifle to any person if the transferor actual or constructive, comes with strictly knows that the recipient intends to use the enforced criminal penalties and a no tolerance weapon unlawfully. It is also unlawful to policy. As previously mentioned, the NFA knowingly sell, rent, give or offer to sell, rent or authorizes a fine of up to $250,000, up to ten give any firearm to a person under 18 years of years in prison, and the forfeiture of the weapon age, without the written consent of his or her and any “vessel, vehicle, or aircraft” used to parent or guardian. Likewise, it is unlawful to conceal or convey the firearm. Therefore, the knowingly or recklessly sell any firearm or seemingly tedious procedures and processes that ammunition to an intoxicated person. accompany ownership of an NFA weapon are Texas law places additional restrictions on the important and relevant for any estate that purchase and possession of firearms on persons contains one or more of these weapons. convicted of a felony or a Class A misdemeanor The trend in NFA gun legislation and involving the person’s family or household and regulation is to restrict transfer and ownership in persons subject to certain orders issued under the ways that are designed to weed out civilian Family Code or Code of Criminal Procedure. ownership entirely. This allegedly laudable Otherwise, Texas does not require its citizens to purpose tends to ignore the monetary and acquire any type of license to possess a rifle, sentimental value that these firearms may shotgun, or handgun. represent. Texas distinguishes between possessing a handgun and carrying a handgun. The B. State Law Department of Public Safety regulates the issuance of licenses to carry a handgun. An Although the federal government has a applicant must submit the following to the comprehensive framework established to regulate Department: a completed application form, two the rights associated with certain firearms, state recent color passport photographs, fingerprints, and local governments are not prohibited from proof of age (at least 21), proof of residency in imposing additional restrictions. The Texas Texas, a handgun proficiency certificate from a Legislature has not placed additional restrictions qualified handgun instructor, an affidavit stating or regulations on Texas residents. Currently, that applicant has read and understands the law estate planners in Texas must only comply with concerning a license to carry and the laws on use federal law, but it is important to pay attention to of deadly force and that the applicant fulfills all new legislation in case Texas does establish eligibility requirements, and an authorization to stricter regulations. Compliance with the NFA, access records. The license will be granted if the GCA, and FOPA is not a defense to violating applicant meets the eligibility requirements local laws of gun purchase, sale, transfer, and including no record of felonies, certain possession. misdemeanors, addictions, mental illness, and delinquency in child support payments or tax payments. II. TRANSFER, OWNERSHIP, AND INHERITANCE OF NON-NFA WEAPONS B. Inheritance Although the risks and criminal penalties A. Purchase and Possession associated with the transfer of rifles, shotguns, The Texas Penal Code regulates the transfer and handguns are not as high as with NFA 92 ESTATE PLANNING UPDATE weapons, estate planners should understand the transferor in the National Firearm Register and laws set forth in the Texas Penal Code and Texas Transfer Record. Transferring, possessing, or Government Code to provide sound estate receiving an NFA weapon that is not legally planning advice for clients with firearms. As registered is a criminal act. Once a weapon has mentioned above, Texas law prohibits the been determined registered, the administrative transfer of firearms under certain circumstances. steps of transfer are as follows: completing ATF These circumstances also apply if the transfer of Form 4, paying of required taxes, and obtaining a the firearm occurs through estate administration. signed law enforcement certification from the Therefore, estate planners should be familiar with Chief Law Enforcement Officer of your transfer limitations to plan for the distribution of jurisdiction. ATF NATIONAL FIREARMS ACT firearms upon a client’s death or incapacity. This HANDBOOK 59-66 (Rev. Apr. 2009), requires performing a reasonable investigation http://www.atf.gov/publications/download/p/atf- into the background and status of the designated p-5320-8/atf-p-5320-8.pdf. Form 4 can be recipient of the firearm. downloaded from http://www.atf.gov/forms/firearms/. Applicants must submit duplicate forms with To avoid issues if the designated recipient is original signatures. An individual transferee must ineligible at the time of the decedent’s death, attach (1) a 2” x 2” photograph of the frontal estate planners should encourage clients to view of the transferee taken within 1 year prior to include a provision naming alternative recipients. the date of the application, and (2) two properly If alternative recipients are not named, then the completed FBI Forms FD-258. personal representative must take possession until a proper beneficiary is determined and eligibility Although in theory these administrative steps confirmed. Although the recipient is only are just tedious and lengthy, practically they have required to meet the standards set forth in the become unmanageable. Most notably, chief law Texas Penal Code regarding a lawful transfer, it enforcement officers have stopped signing the may be important to advise clients of the law enforcement certification without cause. This additional restrictions associated with carrying a obstacle is particularly hard to overcome because handgun. A designated recipient may be eligible there is no legal avenue or remedy to compel to receive a handgun, but ineligible for a license chief law enforcement officers to sign the to carry. This could potentially affect to whom certification. your client wishes to give the handgun upon death or incapacity. B. Constructive Possession Individual ownership of an NFA weapon may III. ISSUES WITH INDIVIDUAL put your client’s family at risk due to the doctrine OWNERSHIP OF NFA of constructive possession. When an individual WEAPONS owns an NFA weapon, that individual, and only that individual may possess the firearm. United A. Transfer States v. Turnbough, No. 96-2531, 1997 WL 264475 (7th Cir. May 14, 1997), is the landmark Transfer of a Title II NFA firearm to an constructive possession case. Although the case individual is a long and tedious process. Because is not specific to an NFA firearm, the principles improper transfer can result in major fines and and issues are identical to those confronted with jail time, a personal representative must take the NFA firearms. Mr. Turnbough kept an illegal transfer of these weapons very seriously. Chapter firearm in the home he shared with his girlfriend 9 of the NFA Handbook describes the necessary and his girlfriend’s daughter. The court ruled that steps to transfer NFA firearms. The NFA defines “the government may establish constructive transfer as “selling, assigning, pledging, leasing, possession by demonstrating the defendant loaning, giving away, or otherwise disposing of” exercised ownership, dominion, or control over an NFA firearm. Although the definition of the premises in which the contraband is transfer is fairly general, it only lawfully applies concealed.” The court does not require that the to NFA weapons that are registered to the 93 ESTATE PLANNING UPDATE defendant exercised ownership, dominion, or personal representative would be criminally control over the actual contraband itself. To be liable, because even consignment and charged with and convicted of constructive safekeeping are transfers subject to the possession or any violation of the NFA, the requirements of the NFA. However, the personal prosecution is not required to prove intent. representative may seek assistance from a Something as simple as a spouse knowing the licensee to identify potential purchasers. access code to the gun safe can lead to prosecution of both the spouse and the weapon Although this process is burdensome for a owner. This is particularly important to personal representative, the benefit of a probate understand due to the criminal penalties transfer is that the transfer is exempt from the associated with unauthorized possession. $200 tax when transferred to a will beneficiary or, if the owner died intestate, an heir. ATF Form 5 is used when applying for a tax-exempt transfer C. Death or Incapacity of the Individual to a beneficiary or heir. These procedures are the Owner same as a transfer to any other individual. If the Another common dilemma relates to the firearm is to be transferred out of the estate, the transfer of NFA weapons in a person’s estate transfer is no longer tax-exempt and the transfer following death or incapacity. Because the is subject to the requirements of ATF Form 4. If registration information compiled in the National the firearm is unserviceable then the transfer is Firearms Registry and Transfer record is tax tax-exempt. ATF, TRANSFERS OF NATIONAL information, the personal representative of an FIREARMS ACT FIREARMS IN DECEDENTS’ estate is the only person to whom this ESTATES 1 (2006). information may be disclosed. Any unregistered firearms should be handed over to law enforcement immediately and cannot be IV. THE GUN TRUST retroactively registered by the estate. For The solution to most of the obstacles registered firearms, the executor is responsible associated with acquiring an NFA weapon as an for completing the necessary steps to register the individual is simple. The National Firearms Act firearm to him/herself. That means the personal defines “individual” to include corporations, representative must comply with all of the trusts, and other similar legal entities. Because it requirements discussed in Part III(A). The estate is lawful to transfer a registered NFA firearm to planner should discuss these requirements with an individual, barring any specific state clients when determining who to name as the legislation stating otherwise, it follows that you executor of their will. can transfer a registered NFA firearm to a trust – a “gun trust.” If drafted properly, an NFA Gun Although technically the personal Trust should give guidance to the grantor, representative unlawfully possesses the firearm trustee(s), and beneficiaries of the trust to avoid until the registration is cleared, ATF does allow any NFA violations. 27 C.F.R. § 479.11 (2003). the personal representative a reasonable amount of time to complete the transfer. Generally, the The Gun Trust expedites the purchase of process should be completed prior to the end of firearms as well as provides a comprehensive probate. The personal representative is wholly estate plan to maintain ownership and ease responsible for the firearm registered to the transfer at death. Additional benefits of the gun decedent, therefore, the weapon should remain in trust include (1) ease of administration as no the personal representative’s custody and control. finger prints, photos, or law enforcement Although the personal representative may seek certification are required; (2) the ability of advice and support from a federally licensed anyone acting as a trustee lawfully to possess the firearms owner or dealer, he or she may not firearms held in trust; (3) removal of the weapons transfer the firearm to the licensee. If the personal from probate proceedings; and (4) subject to the representative were to transfer the firearm to a Rule Against Perpetuities, the trust continues to licensee for consignment or safekeeping, the protect a client’s assets if the transfer of NFA 94 ESTATE PLANNING UPDATE firearms is later prohibited. Although a beneficiary if your client is also the sole trustee traditional trust may satisfy the purchase as then no trust will actually be created. requirements and even expedite the process, it Therefore, if the trust purchases a firearm, your will not provide for the complexities of the future client will be deemed an individual illegally nor comprehensively protect against unlawful possessing an NFA firearm. Also, be weary of possession in case of death or incapacity. including too many people in the trust because anyone designated as a trustee is free to use the firearms. This presents significant risks because A. Why form a trust rather than a each trustee is jointly and severally liable for all corporation or LLC? of the actions of co-trustees under the partnership A gun trust is often more efficient for the issues addressed in the NFA. average firearms owner because these trusts usually do not need to submit state filing fees and One of the most important steps in creating a may not need to file tax returns. Business entities Gun Trust is determining the powers, duties, and such as corporations and LLCs are not private. other terms in the trust. Because the duties and Typically, information about the persons terms are so drastically different from the involved in these business formations is on the traditional purposes for trust arrangements, it is public record and these entities are usually ill-advised to include other assets in an NFA Gun required to file tax returns with the IRS. To Trust. Additional assets would only create change anything regarding whom can use, confusion and unnecessary risk for the client. purchase, or possess the corporation’s or LLC’s A generic Gun Trust is almost impossible to firearms, the Secretary of State must be notified. create because of the variety of circumstances With an NFA Gun Trust, however, there are no that present themselves in each client’s life. But, annual fees or documents that must be filed with there are a few key elements that should always the state. And, to amend an NFA Gun Trust, the be addressed. An NFA Gun Trust must include gun owner merely changes the trust in the following information to determine necessary compliance with the terms of the trust and Texas actions to ensure proper transfer upon death or law making it easy to designate who can use, incapacity: whether it is permissible in the purchase, or possess the firearms. jurisdiction to transfer the items, whether the items are legal in the state to where they will be B. Drafting an NFA Gun Trust transferred, whether the beneficiary is legally able to be in possession of or use the items, and When creating a Gun Trust, it is important to whether the successor trustee is given the ability help clients think through the specifics of their to determine whether the beneficiary is mature situation. Ultimately, this process requires your and responsible enough to have control of the client to determine their present and future goals firearms. David M. Goldman, How is a NFA Gun and with whom these goals relate. Sometimes it Trust Different than a Revocable Trust? July 15, can be difficult to determine how someone would 2009, like property handled at death or incapacity, but http://www.guntrustlawyer.com/2009/07/how-is- it is important so that the trust can outline a-nfa-gun-trust-differe.html. specific instructions and powers for the trustee in case of unplanned events. Considering that NFA weapons cannot be transferred like traditional C. Generic Trust Forms When Drafting an personal property, without proper trust creation, NFA Trust the risk of criminal penalties and confiscation is Clients may be tempted to use forms they find significant. on the Internet or in bookstores to create a trust. Basic underlying principles of trust formation Although this is risky conduct with regard to any apply to the creation of a Gun Trust. When property, there are substantial risks involved determining the people to involve, keep in mind when NFA weapons are included in the trust that your client cannot be named as the only property. For example, a significant number of 95 ESTATE PLANNING UPDATE these forms, when used for NFA weapons, fail to forms with regard to trust property usually create a valid trust. If the trust does not legally permits the trustee to buy, sell, lease, or alter the exist, regardless of whether the ATF approved property. If a trustee were to act according to the the transfer to the trust, your client, as an trust and without following protocol, the trustee individual, would be deemed to be in unlawful would be subject to criminal penalties. possession of the firearm and would be subject to the penalties the NFA imposes. If a valid trust Although not a complete list of issues were formed, but exists with the terms of a involving generic trust forms, it should be clear generic trust instrument, the transfer of the that the risks associated with making a mistake or weapon may be lawful but other problems may improperly forming the trust agreement are arise. Traditional trusts do not address death or severe. Remember, ATF approval of a purchase incapacity with regard to firearms and often by a trust does not shield purchasers if a problem instruct trustees to transfer the property in ways with the trust is later discovered. Basically, ATF that create liability to the beneficiary, puts the assumes the validity of the trust but in no way assets as risk of seizure, and put both the trustee guarantees the validity of the trust. David M. and beneficiary at risk of violating the NFA. Goldman, Why Do I Need an NFA Trust?, Oct. 6, David M. Goldman, BATFE Seeks to Seize NFA 2009, Firearms from an Invalid Quicken Trust, May http://www.guntrustlawyer.com/2009/10/why- 22, 2009, do-i-need-an-nfa-firearms.html http://www.guntrustlawyer.com/2009/05/batfe- seeks-to-seize-nfa-firea.html. V. CONCLUSION Another short cut clients may be tempted to The Gun Trust has proven to be a powerful take is to use a free NFA Gun Trust Form tool in estate planning when an estate contains provided by their gun dealer. Typically, gun NFA firearms. Not only does a properly drafted dealers are not attorneys nor are they well versed gun trust minimize the many risks associated in estate planning techniques. Therefore, not only with ownership, possession, and transfer, it are these forms inadequate in establishing even insulates owners from future legislation. As the most basic of trusts, they will not create the legislation continues to become more restrictive, kind of trust necessary to protect NFA firearms. many Texans fear losing NFA weapons to government seizure and confiscation. There is a plethora of issues that can arise Considering the least expensive legally registered when using generic forms to create a trust machine gun sells for an average of $4,000, consisting of NFA weapons. Most trust forms are owners have a strong personal and economic set up for one settlor and one trustee. If you were interest in preserving their ownership and transfer to form an NFA Gun Trust under those rights. limitations, you would completely defeat the trust’s potential to protect against constructive Special interest groups are campaigning and possession. Another common issue with generic lobbying Congress to prevent future transfers of forms is that they create revocable trusts. Title II weapons. If this occurs, any weapons that Considering that the trust is the registered owner remain part of the probate estate would be of the firearm, revocation of the trust would lead forfeited at death and any economic or personal to unlawful possession by anyone possessing the value lost. The beauty of a Gun Trust is that an firearms owned by the revoked trust. Traditional adult child, family member, or friend can easily revocable trusts also risk being revoked by be designated a co-owner of the trust. Being that someone acting under the settlor’s power of the Gun Trust is the registered owner, the actual attorney. Sub-trusts for children are often created ownership of the trust can be easily changed. As by these forms and should not be for NFA long as the trust remains the registered owner, weapons because of their restrictive nature and then no transfer, within the meaning of the NFA, the possibility that a minor may end up illegally has occurred. Therefore, future transfer owning the firearms. The language used in trust
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Portions of this article are adapted from Gerry W. Beyer & Jessica B. Jackson, What Estate Planners Need to Know About Firearms, EST. PLAN. DEV. TEX. PROF., April 2010, at 1.
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PETS
I. INTRODUCTION households in the United States own dogs and 37.7 million own cats. In addition to these Dogs, cats, parrots, and other pet animals play traditional pets, Americans also own a wide extremely significant roles in the lives of many variety of other animals. For example, there are individuals. People own pets for a variety of 14.7 million households with fish, 6.4 million reasons – they love animals, they enjoy engaging with birds, over 5 million with small animals in physical activity with the animal such as such as hamsters and rabbits, and 4.4 million playing ball or going for walks, and they enjoy with reptiles. See Melissa A. Monroe, Creature the giving and receiving of attention and Comforts, SAN ANTONIO EXPRESS-NEWS, May 4, unconditional love. Research indicates that pet 2005, at E1 (reporting statistics gathered from the ownership positively impacts the owner’s life by American Pet Products Manufacturers lowering blood pressure, reducing stress and Association's 2005/2006 National Pet Owners depression, lowering the risk of heart disease, Survey). shortening the recovery time after a hospitalization, and improving concentration and The investment pet owners make in their pets mental attitude. See A Dog’s Life (or Cat’s) is rapidly increasing. According to the American Could Benefit Your Own, SAN ANTONIO Pet Products Manufacturers Association, Inc., EXPRESS-NEWS, May 18, 1998, at 1B (explaining spending on pets has more than doubled since how some insurance companies lower life 1994 and now exceeds $40 billion per year. See insurance rates for older owners of pets). Anne R. Carey & Keith Carter, USA Today Snapshot – Spending on Furry Friends, USA Over two-thirds of pet owners treat their TODAY, Aug. 25, 2006. animals as members of their families. See Cindy Hall & Suzy Parker, USA Snapshots – What We The love owners have for their pets transcends Do For Our Pets, USA TODAY, Oct. 18, 1999, at death as documented by studies revealing that 1D. Twenty percent of Americans have even between 12% and 27% of pet owners include altered their romantic relationships over pet their pets in their wills. The popular media disputes. See Andre Mouchard, Book Prepares frequently reports cases that involve pet owners Pet Owners For Loss of Their Loved Ones, SAN who have a strong desire to care for their beloved JOSE MERCURY NEWS, Mar. 16, 1999, at 2E. Pet companions. See Anne R. Carey & Marcy E. owners are extremely devoted to their animal Mullins, USA Snapshots – Man’s Best Friend?, companions with 80% bragging about their pets USA TODAY, Dec. 2, 1999, at 1B (12%); Elys A. to others, 79% allowing their pets to sleep in bed McLean, USA Snapshots – Fat Cats—and Dogs, with them, 37% carrying pictures of their pets in USA TODAY, June 28, 1993, at 1D (27%); Vital their wallets (or in their cellular telephones), and Statistics, HEALTH, Oct. 1998, at 16 (18%). 31% taking off of work to be with their sick pets. See Hall & Parker, supra. During the December Billionaire Leona Helmsley left $12 million in 1999 holiday season, the average pet owner spent her will to a trust to benefit her white Maltese $95 on gifts for pets. See Anne R. Carey & named Trouble. Singer Dusty Springfield’s will Marcy E. Mullins, USA Snapshots – Surfing For made extensive provisions for her cat, Nicholas. Man’s Best Friend, USA TODAY, Dec. 16, 1999, The will instructed that Nicholas’ bed be lined at B1. with Dusty’s nightgown, Dusty’s recordings be played each night at Nicholas’ bedtime, and that The number of individuals who own animals Nicholas be fed imported baby food. See Dusty’s is staggering. As many as 43.5 million Cool Fat Cat, PEOPLE, Apr. 19, 1999, at 11.
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Doris Duke, the sole heir to Baron Buck Duke care for their pets? The common law courts of who built Duke University and started the England looked favorably on gifts to support American Tobacco Company, left $100,000 in specific animals. See In re Dean, 41 Ch. D. 552 trust for the benefit of her dog. See Walter Scott, (1889). This approach, however, did not cross Personality Parade, PARADE MAG., Sept. 11, the Atlantic. “Historically, the approach of most 1994, at 2; In re Estate of Duke, No. 4440/93, American courts towards bequests for the care of slip op. (N.Y. Sur. Ct. N.Y. County July 31, specific animals has not been calculated to 1997) (upholding trust and quoting relevant gladden the hearts of animal lovers.” Barbara W. provisions of Duke’s will). Schwartz, Estate Planning for Animals, 113 TR. & EST. 376, 376 (1974). Attempted gifts in favor Natalie Schafer, the actress who portrayed of specific animals usually failed for a variety of Lovey on the television program Gilligan’s reasons, such as for being in violation of the rule Island, provided that her fortune be used for the against perpetuities because the measuring life benefit of her dog. See Beverly Williston, was not human or for being an unenforceable Gilligan’s Lovey Leaves It All to Her Dog, SAN honorary trust because it lacked a human or legal ANTONIO STAR, Apr. 28, 1991, at 5. entity as a beneficiary who would have standing to enforce the trust. The wills of well-known individuals who are still alive may also contain pet provisions. For The persuasiveness of these two traditional example, actress Betty White is reported as legal grounds for prohibiting gifts in favor of pet having written a will which leaves her estate animals is waning rapidly under modern law. In estimated at $5 million for the benefit of her pets. at least one-half of the states, courts and See Betty White Leaves $5M to Her Pets, SAN legislatures have been increasingly likely to ANTONIO STAR, Nov. 4, 1990, at 25. Likewise, permit such arrangements by applying a variety Oprah Winfrey’s will purportedly mandates that of techniques and policies. her dog live out his life in luxury. See Janet Charlton, Star People, SAN ANTONIO STAR, B. Uniform Probate Code Mar. 3, 1996, at 2. In 1990, the National Conference of The primary goal of the pet owner’s attorney Commissioners on Uniform State Laws added a is to carry out the pet owner’s intent to the fullest section to the Uniform Probate Code to validate extent allowed under applicable law. “a trust for the care of a designated domestic or Accordingly, the attorney should select a method pet animal and the animal’s offspring.” UNIF. that has the highest likelihood of working PROB. CODE § 2-907, cmt. (1990). This successfully to provide for the pet after its provision, as amended in 1993, provides as owner’s death. (The pet owner should also follows: determine if any special arrangements need to be made to care for the pet if the owner becomes § 2-907. Honorary Trusts; Trusts for Pets. disabled.) After discussing the history of providing for a pet after the owner’s death, this (a) [Honorary Trust.] * * * article discusses the variety of techniques currently available and comments on the (b) [Trust for Pets.] Subject to this advisability of each. subsection and subsection (c), a trust for the care of a designated domestic or pet animal is valid. The trust terminates when II. HISTORY no living animal is covered by the trust. A governing instrument must be liberally A. Common Law construed to bring the transfer within this Will the legal system permit animal owners to subsection, to presume against the merely accomplish their goal of providing after-death precatory or honorary nature of the
99 ESTATE PLANNING UPDATE disposition, and to carry out the general (5) Except as ordered by the court intent of the transferor. Extrinsic evidence or required by the trust instrument, no is admissible in determining the filing, report, registration, periodic transferor’s intent. accounting, separate maintenance of funds, appointment, or fee is required by reason (c) [Additional Provisions Applicable of the existence of the fiduciary to Honorary Trusts and Trusts for Pets.] In relationship of the trustee. addition to the provisions of subsection (a) or (b), a trust covered by either of those (6) A court may reduce the amount subsections is subject to the following of the property transferred, if it determines provisions: that that amount substantially exceeds the amount required for the intended use. The (1) Except as expressly provided amount of the reduction, if any, passes as otherwise in the trust instrument, no unexpended trust property under portion of the principal or income may be subsection (c)(2). converted to the use of the trustee or to any use other than for the trust’s purposes or (7) If no trustee is designated or no for the benefit of a covered animal. designated trustee is willing or able to serve, a court shall name a trustee. A court (2) Upon termination, the trustee may order the transfer of the property to shall transfer the unexpended trust another trustee, if required to assure that property in the following order: the intended use is carried out and if no successor trustee is designated in the trust (i) as directed in the trust instrument or if no designated successor instrument; trustee agrees to serve or is able to serve. A court may also make such other orders (ii) if the trust was created in a and determinations as shall be advisable to non-residuary clause in the transferor’s carry out the intent of the transferor and will or in a codicil to the transferor’s will, the purpose of this section. under the residuary clause in the transferor’s will; and At least ten states have enacted this provision including Alaska [unofficial text], Arizona, (iii) if no taker is produced by Colorado [unofficial text], Hawaii, Illinois the application of subparagraph (i) or (ii), [unofficial text], Michigan, Michigan, Montana, to the transferor’s heirs under Section 2- North Carolina, South Dakota, and Utah. In 711. addition, several other states have used the UPC provision as a model for their own enabling (3) For the purposes of Section 2- legislation. 707, the residuary clause is treated as creating a future interest under the terms of a trust. C. Uniform Trust Code Likewise, the Uniform Trust Code completed (4) The intended use of the in 2000 provides that a “trust may be created to principal or income can be enforced by an provide for the care of an animal alive during the individual designated for that purpose in settlor’s lifetime.” UNIF. TRUST. CODE § 408 the trust instrument or, if none, by an (2000). This provision reads as follows: individual appointed by a court upon application to it by an individual. § 408. Trust for Care of Animal.
(a) A trust may be created to provide
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for the care of an animal alive during the models. These states include California settlor’s lifetime. The trust terminates [unofficial text], Connecticut [unofficial text], upon the death of the animal or, if the trust Delaware, Idaho, Indiana [unofficial text], Iowa was created to provide for the care of more [unofficial text], Massachusetts, Nevada, New than one animal alive during the settlor’s Jersey [unofficial text], New York [unofficial lifetime, upon the death of the last text], Oklahoma, Rhode Island, Texas [unofficial surviving animal. text], and Washington [unofficial text].
(b) A trust authorized by this section One state, Wisconsin, authorizes trusts for the may be enforced by a person appointed in benefit of pets, but does not make them the terms of the trust or, if no person is so enforceable. In other words, in this state, the appointed, by a person appointed by the trust is merely honorary. court. A person having an interest in the welfare of the animal may request the The remaining states have not yet legislatively court to appoint a person to enforce the authorized pet trusts. trust or to remove a person appointed.
(c) Property of a trust authorized by III. SHORT-TERM PLANNING this section may be applied only to its STEPS intended use, except to the extent the court determines that the value of the trust The owner should take four important steps to property exceeds the amount required for assure that the animal will receive proper care the intended use. Except as otherwise immediately upon the owner being unable to look provided in the terms of the trust, property after the animal. not required for the intended use must be distributed to the settlor, if then living, A. Animal Card otherwise to the settlor’s successors in The owner should carry an “animal card” in interest. the owner’s wallet or purse. This card should contain information about the pet, such as its At least twenty jurisdictions, including name, type of animal, location where housed, and Alabama Arkansas [unofficial text], District of special care instructions along with the Columbia [unofficial text], Florida, Georgia, information necessary to contact someone who Kansas [unofficial text], Maine, Maryland, can obtain access to the pet. If the owner is Missouri, Nebraska, New Hampshire, New injured or killed, emergency personnel will Mexico [unofficial text], North Dakota recognize that an animal is relying on the [unofficial text], Ohio, Oregon [unofficial text], owner’s return for care and may notify the named Pennsylvania [unofficial text], South Carolina person or take other steps to locate and provide [unofficial text], Tennessee [unofficial text], for the animal. The animal card will help assure Vermont, Virginia, West Virginia, and Wyoming that the animal survives to the time when the [unofficial text], have already adopted this owner’s plans for the pet’s long-term care take provision or have modeled their statutes after this effect. provision. The following sample animal card is D. Other Approaches reproduced with the permission of the Humane Many other states have developed their own Society of the United States. statutes, often using the uniform provisions as
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Front
Back
The following sample animal document is B. Animal Document reproduced with the permission of the Humane The owner should prepare an “animal Society of the United States. document” which contains the same information as on the animal card and perhaps additional details as well. The owner should keep the animal document where it is likely to be found by anyone caring for the pet such as near where the pet’s food is stored. In addition, a copy should be kept in the same location where the pet owner keeps his or her estate planning documents. The benefit of this technique is basically the same as for carrying the animal card, that is, an enhanced likelihood that the owner’s desires regarding the pet will be made known to the appropriate person in a timely manner.
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ASSISTANTS DIVISION, LAU SEMINAR (2001). C. Door Sign The Humane Society of the United States The owner should provide signage regarding recommends and supplies self-stick door/window the pets on entrances to the owner’s dwelling. signs for emergency workers and emergency These notices will alert individuals entering the contacts stickers for the inside of the dwelling house or apartment that pets are inside. The which provide information about the pet owner, signage is also important during the owner’s life veterinarian, neighbors familiar with the pets, to warn others who may enter the dwelling (e.g., emergency pet caregivers, pet sitters, etc. A police, fire fighters, inspectors, meter readers, sample sticker is reproduced below with friends) about the pets. See M. Keith Branyon, permission of the Humane Society of the United What Do You Do With Four-Legged States. Beneficiaries, STATE BAR OF TEXAS, LEGAL
also wish to grant the agent the power to place the D. Power of Attorney pet with a long-term caregiver. For a sample form The owner should consider including special drafted to comply with New Hampshire law, see instructions pertaining to the pet in the owner’s Durable Power of Attorney for Pet Care, durable power of attorney. These instructions ElderPet, University of New Hampshire. See also should authorize the agent to care for the pet and Providing for Your Pet’s Future Without You, 69 to spend the owner’s money on the pet’s care TEX. B.J. 1025 (2006). (day-to-day, veterinarian, etc.). The owner may
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IV. TRADITIONAL TRUST trust. The inter vivos trust, could, however, be nominally funded. Additional funding could be The most predictable and reliable method to tied to a nonprobate asset, such as a bank account provide for a pet animal is for the owner to create naming the trustee (in trust) as the pay on death an enforceable inter vivos or testamentary trust in payee or a life insurance policy naming the trustee favor of a human beneficiary (the pet’s caregiver) (in trust) as the beneficiary, to provide the trust and then require the trustee to make distributions with immediate funds after the owner’s death. If to the beneficiary to cover the pet’s expenses appropriate, the pet owner could provide provided the beneficiary is taking proper care of additional property by using a pour over provision the pet. This technique avoids the two traditional in the owner’s will. Inter vivos trusts will almost problems with gifts to benefit pet animals. The always be changeable and revocable until the pet actual beneficiary is a human and thus, there is a owner’s death. beneficiary with standing to enforce the trust and there is a human measuring life for rule against perpetuities purposes. Even if the owner lives in a B. Designate Trust Beneficiary/Animal state like Texas, which enforces animal trusts, the Caregiver conditional gift in trust may provide for more The pet owner must thoughtfully select a flexibility and a greater likelihood of the owner’s caregiver for the animal. This person becomes the intent being carried out. For example, some states actual beneficiary of the trust who has standing to limit the duration of an animal trust to 21 years. If enforce the trust if the trustee fails to carry out its a long-lived animal (such as a parrot) is involved, terms. Thus, the caregiver should be sufficiently the trust may end before the animal dies. savvy to understand the basic functioning of a trust and his or her enforcement rights. A wide variety of factors and considerations come into play in drafting a trust to carry out the It is of utmost importance for the pet owner to pet owner’s desires. This section discusses the locate a beneficiary/caregiver who is willing and issues that the pet owner should address. able to care for the animal in a manner that the owner finds acceptable. The prospective A. Determine Whether to Create Inter Vivos caregiver should be questioned before being or Testamentary Trust named to make certain the caregiver will assume the potentially burdensome obligation of caring The pet owner must initially determine for the pet, especially when the pet is in need of whether to create an inter vivos trust or a medical care or requires special attention as it testamentary trust. An inter vivos trust takes ages. The pet and the prospective caregiver effect immediately and thus will be in operation should meet and spend quality time together to when the owner dies, thereby avoiding the delay make sure they, and the caregiver’s family, get between the owner’s death and the probating of along harmoniously with each other. the will and subsequent functioning of the trust. Funds may not be available to provide the pet The pet owner should name several alternate with proper care if there is a delay after death caregivers should the owner’s first choice be because the trust is not already in place. The pet unable to serve for the duration of the pet’s life. owner can also make changes to the inter vivos To prevent the pet from ending up homeless, the trust more easily than to a testamentary trust owner may authorize the trustee to select a good which requires the execution of a new will or home for the pet should none of the named codicil. individuals be willing or able to accept the animal. The trustee should not, however, have the On the other hand, the inter vivos trust may authority to appoint him- or herself as the have additional start-up costs and administration caregiver as such an appointment would eliminate expenses. A separate trust document is needed the checks and balances aspect of separating the and the owner must part with property to fund the caregiver from the money provider.
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If the pet owner is unable to name a caregiver for the caregiver and the trustee. Many factors and does not want to leave the selection up to the will go into this decision, such as the type of trustee, the pet owner could appoint several animal, the animal’s life expectancy (see Dr. individuals, such as veterinarians, family Bob's All Creatures Site which sets out the life members, and friends, to an animal care panel expectancies for dogs, cats, parrots, reptiles, which is charged with the responsibility of amphibians, rodents, and some exotics), the locating a suitable caregiver. The panel could use standard of living the owner wishes to provide for various means to locate a proper caregiver, such the animal, and the need for potentially expensive as advertising in a local newspaper and consulting medical treatment. Adequate funds should also be with local animal welfare organizations. The included to provide the animal with proper care, panel would interview the prospective caregivers be it with an animal-sitter or at a professional and select the person it felt would provide the best boarding business, when the caregiver is an care for the pet under the terms of the trust. vacation, out-of-town on business, receiving care in a hospital, or is otherwise temporarily unable to C. Nominate Trustee personally provide for the animal. As with the designation of the caregiver, the The size of the pet owner’s estate must also be pet owner needs to select the trustee with care and considered. If the owner’s estate is relatively check with the trustee before making a large, the owner could transfer sufficient property nomination. The trustee, whether individual or so the trustee could make payments primarily corporate, must be willing to administer the from the income and use the principal only for property for the benefit of the animal and to emergencies. On the other hand, if the owner’s expend the time and effort necessary to deal with estate is small, the owner may wish to transfer a trust administration matters. If the pet owner has lesser amount and anticipate that the trustee will sufficient funds, a set stipend for the trustee may supplement income with principal invasions as be appropriate. Note that professional and necessary. corporate trustees typically charge for their services. The pet owner should name alternate The pet owner must avoid transferring an trustees should the named trustee be unable to unreasonably large amount of money or other serve until the trust terminates. In addition, an property to the trust because such a gift is likely to alternate trustee may have standing to remove the encourage heirs and remainder beneficiaries of the original trustee from office should the original owner’s will to contest the arrangement. The pet trustee cease to administer the trust for the benefit owner should determine the amount that is of the pet. reasonable for the care of the animals and fund the trust accordingly. Even if the owner has no desire D. Bequeath Animal to Trustee, in Trust to benefit family members, friends, or charities until the demise of the animal, the owner should The pet owner should bequeath the animal to not leave his or her entire estate for the animal’s the trustee, in trust, with directions to deliver benefit. If the amount of property left to the trust custody of the pet to the beneficiary/caregiver. If is unreasonably large, the court may reduce the the owner has left animal instructions in an animal amount to what it considers to be a reasonable card or document, the animal may actually already amount. See, e.g., Templeton Estate, 4 Fiduciary be in the possession of the caregiver. 2d 172, 175 (Pa. Orphans’ Ct. 1984) (applying “inherent power to reduce the amount involved E. Determine Amount of Other Property to . . . to an amount which is sufficient to accomplish Transfer to Trust [the owner’s] purpose”); Lyon Estate, 67 Pa. D. & C. 2d 474, 482-83 (Orphan’s Ct. 1974) (reducing The pet owner should carefully compute the the amount left for the animal’s care based on the amount of property necessary to care for the supposition that the owner mistook how much animal and to provide additional payments, if any,
107 ESTATE PLANNING UPDATE money would be needed to care for the animals). the caregiver a fixed sum each month regardless Cf. UNIF. PROB. CODE § 2-907(c)(6) (1993) of the actual care expenses. If the care expenses (authorizing the court to reduce amount if it are less than the distribution, the caregiver enjoys “substantially exceeds the amount required” to a windfall for his or her efforts. If the care care for the animal); UNIF. TRUST CODE § 408(c) expenses are greater than the distribution, the (providing that “[p]roperty of a trust authorized by caregiver absorbs the cost. The caregiver may this section may be applied only to its intended however, be unable or unwilling to make use, except to the extent the court determines that expenditures in excess of the fixed distribution the value of the trust property exceeds the amount that are necessary for the animal. Thus, the owner required for the intended use”). should permit the trustee to reimburse the caregiver for out-of-pocket expenses exceeding It is often a good idea to state expressly in the the normal distribution. trust that if a court determines that excess funds were placed into the trust, that they pass to a Alternatively, the owner could provide only certain person or charity who in the pet owner’s for reimbursement of expenses. The caregiver opinion would be very unlikely to ever make a would submit receipts for expenses associated claim that the funds were excessive. Thus, an with the animal on a periodic basis. The trustee incentive to contest the amount is removed. would review the expenses in light of the level of care the pet owner specified and reimburse the F. Describe Desired Standard of Living caregiver if the expenses are appropriate. Although this method may be in line with the The owner should specify the type of care the owner’s intent, the pet owner must realize that beneficiary is to give the animal and the expenses there will be additional administrative costs and for which the caregiver can expect reimbursement an increased burden on the caregiver to retain and from the trust. Typical expenses include food, submit receipts. housing, grooming, medical care, and burial or cremation fees. The pet owner may also want to H. Establish Additional Distributions for include more detailed instructions. Alternatively, Caregiver the owner may leave the specifics of the type of care to the discretion of the trustee. If the pet The owner should determine whether the owner elects to do so, the pet owner should trustee should make distributions to the caregiver seriously consider providing the caregiver with above and beyond the amount established for the general guidelines to both (1) avoid claims that animal’s care. An owner may believe that the the caregiver is expending an unreasonable addition of the animal to the caregiver’s family is amount on the animal and (2) prevent the sufficient, especially if the trustee will reimburse caregiver from expending excessive funds. For the caregiver for all reasonable care expenses. On example, in the case of In re Rogers, 412 P.2d the other hand, the animal may impose a burden 710, 710-11 (Ariz. 1966), the court determined on the caregiver and thus additional distributions that the caregiver was acting in an unreasonable may be appropriate to encourage the caregiver to manner when he purchased an automobile to continue as the trust’s beneficiary. In addition, transport the dog while stating that it was a matter the caregiver may feel more duty bound to of opinion whether the purchase of a washing provide good care if the caregiver is receiving machine to launder the dog’s bed clothing was additional distributions contingent on providing reasonable. the animal with appropriate care.
G. Specify Distribution Method I. Limit Duration of Trust The owner should specify how the trustee is to The duration of the trust should not be linked make disbursements from the trust. The simplest to the life of the pet. The measuring life of a trust method is for the owner to direct the trustee to pay must be a human being unless state law has
108 ESTATE PLANNING UPDATE enacted specific statutes for animal trusts or has this step is not taken, an unscrupulous caregiver modified or abolished the rule against could replace a deceased, lost, or stolen animal perpetuities. For example, the pet owner could with a replacement so that the caregiver may establish the trust’s duration as 21 years beyond continue to receive benefits. For example, there is the life of the named caregivers and trustees with a report that “[a] trust was established for a black the possibility of the trust ending sooner if the pet cat to be cared for by its deceased owner’s maid. dies within the 21 year period. Inconsistencies in the reported age of the pet tipped off authorities to fact that the maid was on J. Designate Remainder Beneficiary her third black cat, the original long since having died.” Torri Still, This Attorney is for the Birds, The pet owner should clearly designate a RECORDER (San Francisco), at 4 (Mar. 22, 1999); remainder beneficiary to take any remaining trust Sue Manning, Estate Planning: Who will care for property upon the death of the pet. Otherwise, your pet?, SEATTLE TIMES, June 24, 2011. court involvement will be necessary with the most likely result being a resulting trust for the benefit The pet owner may use a variety of methods to of the owner’s successors in interest. See Willett identify the animal. A relatively simple and v. Willett, 247 S.W. 739, 741 (Ky. 1923) (noting inexpensive method is for the trust to contain a that the pet owner neglected to provide for the detailed description of the animal including any distribution of the remaining trust property upon unique characteristics such blotches of colored fur the pet’s death and thus the property would pass and scars. Veterinarian records and pictures of the through intestate succession). The pet owner must animal would also be helpful. A professional be cautioned not to leave the remaining trust could tattoo the pet with an alphanumeric property to the caregiver because the caregiver identifier. A tattoo, however, could later cause would then lack a financial motive to care for the problems for the pet because a pet thief could animal and thus might accelerate its death to gain mutilate the pet to remove the tattoo, such as immediate access to the trust corpus. The pet cutting off an ear or leg, if the pet’s primary owner may also want to authorize the trustee to function is breeding. A more sophisticated terminate the trust before the pet’s death “if the procedure is for the pet owner to have a microchip remaining principal is small and suitable implanted in the animal. The trustee can then arrangements have been made for the care of the have the animal scanned to verify that the animal animals.” Frances Carlisle & Paul Franken, the caregiver is minding is the same animal. Of Drafting Trusts for Animals, N.Y. L.J., Nov. 13, course, an enterprising caregiver could surgically 1997, at 1. remove the microchip and have it implanted in another physically similar animal. The best, albeit The pet owner may wish to consider naming a expensive, method to assure identification is for charity that benefits animals as the remainder the trustee to retain a sample of the animal’s DNA beneficiary. “Hopefully the charity would want to before turning the animal over to the caregiver assure the well-being of the animals and an added and then to run periodic comparisons between the advantage is that the Attorney General would be retained sample and new samples from the animal. involved to investigate if any misappropriation of funds by the trustee occurred.” Id. The pet owner A pet owner, however, may be less concerned must precisely state the legal name and location of with providing for the animals owned at the time the intended charitable beneficiary so the trustee of will execution, but rather wants to arrange for will not have difficulty ascertaining the the care of the animals actually owned at time of appropriate recipient of the remainder gift. death. “It would be onerous for [the owner] to execute a new trust instrument or will whenever a K. Identify Animal to Prevent Fraud new animal joins the family.” Carlisle & Franken, at 1. In this situation, the owner may wish to The pet owner should clearly identify the animal that is to receive care under the trust. If
109 ESTATE PLANNING UPDATE describe the animals as a class instead of by N. Sample Provisions individual name or specific description. Below are sample will provisions to provide for a pet animal. These provisions are generic, L. Require Trustee to Inspect Animal on that is, they are not designed to comply with the Regular Basis specifics of any particular state statute authorizing The owner should require the trustee to make pet trusts. Instead, these sample provisions create regular inspections of the animal to determine its a “traditional” trust, which after appropriate physical and psychological condition. The adjustments for local law, should be effective inspections should be at random times so the regardless of whether the jurisdiction has enacted caregiver does not provide the animal with extra a special pet trust statute. food, medical care, or attention merely because I would greatly appreciate your comments and the caregiver knows the trustee is coming. The suggestions so that I may enhance the quality of inspections should take place in the caregiver’s these provisions. If you are willing to donate your home so the trustee may observe first-hand the pet trust provisions, I would be pleased to post environment in which the animal is being kept. them on my website and acknowledge your A “quality of life” provision may be authorship at appropriate to prevent the caretaker from keeping http://www.professorbeyer.com/Articles/Sample_ the pet alive when the pet no longer is able to Provisions.htm. enjoy life. For example, “the owner of a German shepherd left relatives the use of an entire estate as [include in section of will devoted to specific long as the dog lived. ‘They kept it alive almost gifts and legacies] two years on life support. The dog was totally incapable of moving.’” Sue Manning, Estate I leave [description of pet animal] and [amount Planning: Who will care for your pet?, SEATTLE of money adequate for animal’s care and trust TIMES, June 24, 2011. administration expenses] to [name of trustee], in trust, under the terms of the [name of trust] M. Provide Instructions for Final Disposition created under Article [] of this will. If [animal] of Animal does not survive me by [survival period], this provision of my will is of no effect. The pet owner should include instructions for the final disposition of the animal when the animal dies. The will of one pet owner is reported [include as separate will article creating as containing the following provision: “[U]pon the trust for animal’s benefit] death of my pets they are to be embalmed and their caskets to be placed in a Wilbert Vault at Pine Ridge Cemetery.” The Last Laugh—Wills ARTICLE [] With a Sense of Humor, FAM. ADVOC., Summer [name of animal] TRUST 1981, at 60, 62. The owner may want the animal to be buried in a pet cemetery or cremated with the ashes either distributed or placed in an urn. A. Conditions of Creation The cost for a pet burial ranges from $250 to $1,000 while pet cremations are significantly less This trust is to be created upon the conditions expensive. A memorial for the pet may also be stated in Article []. created for viewing on a variety of Internet sites. See In Loving Memory of our Very Best Friends; B. Governing Law In Memory of Pets. This trust is to be governed by [name of state] law unless this Article provides to the contrary.
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C. Trustees The trustee shall visit [caregiver]’s home at least [monthly] [quarterly] [annually] to make I appoint [primary trustee] as the trustee of this certain [animal] is receiving proper care. If in the trust. If [primary trustee] is unwilling or unable to trustee’s sole discretion [animal] is not receiving serve, I appoint [alternate trustee] as trustee. proper care as defined above, trustee shall immediately remove [animal] from the D. Bond beneficiary’s possession and deliver the animal to the alternate beneficiary. No bond shall be required of any trustee named in this Article. H. Distribution of Trust Property While [Animal] is Alive E. Trustee Compensation The trustee shall be entitled to reasonable 1. Care of [Animal] compensation from the trust for serving as trustee. The trustee shall distribute [amount] to the [or] beneficiary each [month] [year] provided the beneficiary is taking proper care of [animal] as No trustee shall be entitled to compensation for defined in Section G of this Article. serving as trustee. [or]
F. Beneficiaries of Trust The trustee shall reimburse [caregiver] for all reasonable expenses [caregiver] incurs in the [Caregiver] is the beneficiary of this trust proper care of [animal] as defined in Section G of provided [Caregiver] receives [name of animal] this Article. Reasonable expenses include, but are into [his] [her] home and provides [animal] with not limited to, [food, housing, grooming, medical proper care as defined in Section G of this Article. care, and burial or cremation fees.] The trustee shall deliver [animal] into [Caregiver’s] possession after securing a written [2. Caregiver Compensation] promise from [Caregiver] to provide [animal] with proper care. If [Caregiver] (1) dies, (2) is unable The trustee [shall] [may] pay [dollar amount] to provide [animal] with proper care, or (3) is not to trustee on a [monthly] [annual] basis provided providing [animal] with proper care, [alternate [caregiver] is taking proper care of [animal] as beneficiary] will then become the beneficiary of defined in Section G of this Article. this trust provided [alternate beneficiary] provides [animal] with proper care. [continue in like manner for additional alternates] [3. Liability Insurance]
If there is no qualified alternate beneficiary, The trustee [shall] [may] use trust property to [allow the trustee to select caregiver, other than purchase liability insurance to protect the trust, the the trustee] [create animal care panel to select trustee, and [caregiver] from damage [animal] caregiver] [donate animal]. causes to property or persons.]
[4. Offspring of [Animal]] G. Proper Care Proper care means [description of care The trustee [shall] [may] [shall not] use trust including, for example, requirement of regular property to reimburse [caregiver] for expenses visits to a veterinarian]. associated with any offspring of [animal].
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[5. Excess Principal] L. Principal and Income The trustee shall have the discretion to credit a If a court determines that this trust contains receipt or charge an expenditure to income or excess property and orders the trustee to distribute principal or partly to each in any manner which that property other than as described above, then the trustee determines to be reasonable and that excess shall be distributed under Subsection equitable. (I) as if this trust were terminating] [to [name of beneficiary]]. M. Trustee Powers I. Termination of Trust The trustee shall have [all powers granted to trustees under [name of state] law. This trust terminates on the earlier of (a) 21 years after [testator’s] death, or (b) upon the death [or] of [animal]. The trustee shall have the following powers: [consider including how death of animal is to [enumerate trustee powers] be proved, e.g., death certificate from a vet]
[consider having trust also terminate when N. Exculpatory Clause animal is deemed “lost” – require evidence to prove loss of pet, e.g., copies of police reports, ads The trustee shall not be liable for any loss, in newspapers seeking the pet’s return, copies of cost, damage, or expense sustained through any posters placed in the community, etc.] error of judgment or in any other manner except for, and as a result of, a trustee’s own bad faith or gross negligence. J. Distribution of Property Upon Trust Termination [Note: Additional provisions will be necessary if the animal and its offspring are valuable from a Upon the termination of this trust all remaining monetary standpoint.] trust property shall pass to [remainder beneficiary] if [he] [she] is alive at the time of trust termination. If [remainder beneficiary] is not V. “STATUTORY” PET TRUST alive at the time of trust termination, all remaining trust property shall pass to [alternate remainder [This section is based on Texas law. For beneficiary] if [he] [she] is alive at the time of the pet trust statute in other states, see page trust termination. [continue in like manner for 119.] additional alternates] With the enactment of Trust Code § 112.037, which took effect on January 1, 2006, Texas K. Spendthrift Provision joined the growing number of states which authorize statutory pet trusts. This type of trust is This is a spendthrift trust, that is, to the fullest a basic plan and does not require the pet owner to extent permitted by law, no interest in the income make as many decisions regarding the terms of the or principal of this trust may be voluntarily or trust. involuntarily transferred by any beneficiary before payment or delivery of the interest by the trustee. The statute “fills in the gaps” and thus a simple provision in a will such as, “I leave $1,000 in trust for the care of my dog, Rover” may be effective. As discussed in detail below, the statute would provide the following with respect to this bequest:
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The trust ends when Rover dies. D. Use of Property The court may appoint a person to 1. General Rule enforce the trust, that is, to make certain the $1,000 is actually used for Rover. The property in the trust may be used only for the care of the animal unless the exception Any person interested in Rover’s discussed below applies. welfare may ask the court to appoint a person to enforce the trust. 2. Exception Any person interested in Rover’s welfare may ask the court to remove a If the court determines that the value of the person who is taking care of Rover if trust property exceeds the amount required for the Rover’s care in not up to par. care of the animals, the court may authorize trust property to be used in a different manner. In The $1,000 may be used only for priority order, here is the list of the ways in which Rover’s care unless the court determines the court may allow the excess property to be that $1,000 is excessive. Any excess used: must be distributed to the pet owner of, if the pet owner is deceased, to the pet As specified by the settlor in the trust. owner’s successors in interest If the settlor is still alive, to the settlor. When Rover dies, the remaining money (if any) will return to the pet owner of, if If the settlor is deceased and died the pet owner is deceased, to the pet testate, under the terms of the settlor’s owner’s successors in interest. will. If the settlor is deceased and died A. Authorization intestate, to the settlor’s heirs. The statute permits the pet owner to create a trust to provide for the care of an animal alive E. Rule Against Perpetuities during the settlor’s lifetime (that is, not animals Instead of exempting pet trusts from the Rule born after the settlor’s death). Against Perpetuities which would have been problematic given that perpetuities are prohibited B. Termination by the Texas Constitution, the legislature created a special rule for determining measuring lives. The The trust ends when the last surviving animal measuring lives include: for which the trust was created dies. The human beneficiaries of the trust. C. Enforcement The humans named in the trust In a traditional pet trust, the named beneficiary instrument, even if not beneficiaries. has standing to enforce the trust but a statutory pet If the settlor is living at the time the trust trust may lack a human beneficiary. To make becomes irrevocable, the settlor of the certain someone has standing to enforce the trust, trust. the statute permits the settlor to appoint a trust enforcer. If the settlor does not appoint an If the settlor is not living at the time the enforcer, the court may appoint someone. Any trust becomes irrevocable, the person having an interest in the welfare of the individuals who would have inherited animal may request the court to appoint a person the settlor’s property had the settlor died to enforce the trust or remove a person previously intestate at the time the trust became appointed. irrevocable.
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VI. CONSIDER OUTRIGHT VII. CONSIDER OUTRIGHT GIFT CONDITIONAL GIFT TO VETERINARIAN OR An outright gift of the animal coupled with a ANIMAL SHELTER reasonable sum to care for the animal, which is A simple option available to the pet owner is to conditioned on the beneficiary taking proper care leave the pet and sufficient property for its care to of the animal is a simpler but less predictable a veterinarian or animal shelter. This alternative method. Both drafting and administrative costs will not, however, appeal to most pet owners who may be reduced if the owner does not create a do not like the idea of the pet living out its life in trust. Only if the pet owner’s estate is relatively a clinic or shelter setting. The animal would no modest should this technique be considered longer be part of a family and is not likely to because there is a reduced likelihood of the receive the amount and quality of special attention owner’s intent being fulfilled as there is no person that the pet would receive in a traditional home. directly charged with ascertaining that the animal Nonetheless, this option may be desirable if the is receiving proper care. Although the owner may owner is unable to locate an appropriate caregiver designate a person to receive the property if the for the animal. pet is not receiving proper care, such person might not police the caregiver sufficiently, especially if the potential gift-over amount is small or the VIII. CONSIDER GIFT TO LIFE alternate taker does not live close enough to the CARE CENTER caregiver to make first-hand observations of the animal. In exchange for an inter vivos or testamentary gift, various organizations promise to provide care If the owner elects this method, the owner for an animal for the remainder of the animal’s needs to decide if the condition of taking care of life. The amount of the payment often depends on the pet is a condition precedent or a condition the type of animal, age of animal, and age of pet subsequent. If the owner elects a condition owner. One of the nation’s most notable life care precedent, the caregiver receives the property only centers is the Stevenson Companion Animal Life- if the caregiver actually cares for the animal. Care Center located at Texas A & M University. Thus, if the animal were to predecease the owner, For additional information on life care centers in the caregiver would not benefit from the gift. On Texas, see M. Keith Branyon, What Do You Do the other hand, the owner could create a condition With Four-Legged Beneficiaries, STATE BAR OF subsequent so that the gift vests in the caregiver TEXAS, LEGAL ASSISTANTS DIVISION, LAU and is only divested if the caregiver fails to SEMINAR (2001). For an extensive list of life care provide proper care. The owner should expressly centers, see state what happens to the gift if the pet http://www.professorbeyer.com/Articles/ predeceases its owner. In the absence of express Animals.html. language, the caregiver would still receive a condition subsequent gift but not one based on a condition precedent. See In re Andrews’s Will, IX. TAX CONCERNS 228 N.Y.S.2d 591, 594 (Sur. Ct. 1962) (holding This section provides an overview of basic tax that the beneficiary received the legacy even issues that are associated with pet trusts. For a though the pet died before the testator because the detailed discussion, see Gerry W. Beyer & condition was subsequent). Jonathan Wilkerson, Max’s Taxes: A Tax-Based Analysis of Pet Trusts, 43 UNIV. RICHMOND L. REV. 1219 (2009).
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A. Income Tax 1. Revocable Pet Trust Both the federal and state governments may No gift tax will be imposed if the pet owner impose an income tax on the income earned by retains the power to revoke the trust because an property in a pet trust just as these entities do with irrevocable transfer has not occurred. regard to other trusts. Depending on how the trust is structured, the following individuals or entities 2. Irrevocable Pet Trust may be responsible for the tax. Transfers to a pet trust rarely qualify for the annual exclusion. Accordingly, the pet owner will 1. The Settlor (Pet Owner) be responsible for the gift tax imposed on the If the pet owner retained the power to revoke transfer. However, most transfers will be the trust, then the pet owner is responsible for the protected from gift tax liability by the pet owner’s tax on the income earned by the trust property. $1 million lifetime gift tax exemption.
2. The Beneficiary (Pet Caregiver) C. Estate Tax If the settlor cannot revoke the trust (e.g., the 1. Revocable Pet Trust settlor created an irrevocable trust or a testamentary trust), then the beneficiary will be If the pet owner created a revocable trust, the responsible for the income tax on trust property remaining in the trust at the time of the distributions up to the amount of the trust’s pet owner’s death will be subject to the federal distributable net income for the year of estate tax if the pet owner died before January 1, distribution. 2010 or after December 31, 2010.
For wealthy pet owners, the estate tax issue 3. The Trust that may arise is whether the estate would be If the settlor cannot revoke the trust (e.g., the entitled to a charitable deduction if the remainder settlor created an irrevocable trust or a beneficiary is a recognized charity. Rev. Ruling testamentary trust), then the trust will be 78-105 indicated that the answer is “no” unless responsible for the income tax on trust income the trust is void so that the entire corpus passed which is retained in the trust (i.e., not distributed directly to a charity without ever being used for to the beneficiary). the pet. As recently as 2007, legislation was introduced in Congress, the Morgan Bill, which 4. Tax Reduction Strategy would allow charitable remainder pet trusts to enjoy the charitable estate tax deduction. To avoid income tax concerns, the settlor could require that all trust investments be in 2. Irrevocable Pet Trust municipal bonds which are exempt from the federal income tax and any applicable state or If the pet owner properly structured an inter local income tax. vivos irrevocable trust, none of the property in the pet trust will be subject to estate tax upon the pet B. Gift Tax owner’s death. If the pet owner creates an inter vivos pet trust, gift tax issues may arise.
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X. “CLIENT FRIENDLY” no longer care for the animal, and the disposition FREQUENTLY ASKED of the pet after the pet dies. QUESTIONS 5. What if my state does not have a special 1. What is a “pet trust”? law authorizing pet trusts? A pet trust is a legal technique you may use to You may still create a traditional pet trust even be sure your pet receives proper care after you die if your state does not have a pet trust statute. or in the event of your disability. 6. When is a pet trust created? 2. How does a pet trust work? You may create a pet trust either (1) while you You (the “settlor”) give your pet and enough are still alive (an “inter vivos” or “living” trust) or money or other property to a trusted person or (2) when you die by including the trust provisions bank (the “trustee”) with the duty to make in your will (a “testamentary” trust). arrangements for the proper care of your pet according to your instructions. The trustee will 7. Which is better – an inter vivos or deliver the pet to your designated caregiver (the testamentary pet trust? “beneficiary”) and then use the property you Both options have their advantages and transferred to the trust to pay for your pet’s disadvantages. expenses. An inter vivos trust takes effect immediately 3. What are the main types of pet trusts? and thus will be functioning when you die or There are two main types of pet trusts. become disabled. This avoids delay between your death and the property being available for the The first type, called a “traditional pet trust,” is pet’s care. However, an inter vivos trust often has effective in all states. You tell the trustee to help additional start-up costs and administration fees. the person who is providing care to your pet after you die (the beneficiary) by paying for the pet’s A testamentary trust is the less expensive expenses according to your directions as long as option because the trust does not take effect until the beneficiary takes proper care of your pet. you die and your will is declared valid by a court (“probating the will”). However, there may not be The second type of pet trust, called a “statutory funds available to care for the pet during the gap pet trust,” is authorized in almost 40 states. A between when you die and your will is probated. statutory pet trust is a basic plan and does not In addition, a testamentary trust does not protect require the pet owner to make as many decisions your pet if you become disabled and unable to regarding the terms of the trust. The state law care for your pet. “fills in the gaps” and thus a simple provision in a will such as, “I leave $1,000 in trust for the care 8. What does it mean to “fund” your pet of my dog, Rover” may be effective. trust? Funding means to transfer money or other 4. Which type of pet trust is “better”? property into your trust for the care of your pet. Many pet owners will prefer the traditional pet Without funding, the trustee will not be able to trust because it provides the pet owner with the provide your pet with care if you become disabled ability to have tremendous control over the pet’s and after you die. care. For example, you may specify who manages the property (the trustee), the pet’s caregiver (the 9. How much property do I need to fund my beneficiary), what type of expenses relating to the pet trust? pet the trustee will pay, the type of care the animal You need to consider many factors in deciding will receive, what happens if the beneficiary can how much money or other property to transfer to
116 ESTATE PLANNING UPDATE your pet trust. These factors include the type of property to the trustee. You need to be certain to animal, the animal’s life expectancy (especially document the transfer and follow the appropriate important in case of long-lived animals), the steps based on the type of property. For example, standard of living you wish to provide for the if you are transferring money, write a check which animal, the need for potentially expensive medical shows the payee as, “[name of trustee], trustee of treatment, and whether the trustee is to be paid for the [name of pet trust], in trust” and then indicate his or her services. Adequate funds should also be on the memo line that the money is for included to provide the animal with proper care, “contribution to [name of pet trust].” If you are be it an animal-sitter or a professional boarding transferring land, your attorney should prepare a business, when the caretaker is on vacation, out- deed naming the grantee with language such as of-town on business, receiving care in a hospital, “[name of trustee], in trust, under the terms of the or is otherwise temporarily unable personally to [name of pet trust].” provide for the animal. If you create the trust in your will, you should The size of your estate must also be include a provision in the property distribution considered. If your estate is relatively large, you section of your will that transfers both your pet could transfer sufficient property so the trustee and the assets to care for your pet to the trust. For could make payments primarily from the income example, “I leave [description of pet] and [amount and use the principal only for emergencies. On of money and/or description of property] to the the other hand, if your estate is small, you may trustee, in trust, under the terms of the [name of wish to transfer a lesser amount and anticipate that pet trust] created under Article [number] of this the trustee will supplement trust income with will.” principal invasions as necessary. Pour over will provision: If you create your You should avoid transferring an unreasonably pet trust while you are alive, you may add large amount of money or other property to your property (a “pour over”) from your estate to the pet trust because such a gift is likely to encourage trust. your heirs and beneficiaries to contest the trust. If the amount of property left to the trust is Life insurance: You may fund both inter vivos unreasonably large, the court may reduce the and testamentary pet trusts by naming the trustee amount to what it considers to be a reasonable of the trust, in trust, as the beneficiary of a life amount. insurance policy. This policy may be one you take out just to fund your pet trust or you may 10. When do I fund my pet trust? have a certain portion of an existing policy payable to your pet trust. This technique is If you create an inter vivos pet trust, that is, a particularly useful if you do not have or anticipate trust which takes effect while you are alive, you having sufficient property to transfer for your need to fund the trust at the time it is created. pet’s care. Life insurance “creates” property You may also add additional funds to the trust at a when you die which you may then use to fund later time or use the techniques discussed below. your pet trust. Be sure to consult with your If you create a testamentary pet trust, that is, lawyer or life insurance agent about the correct the trust is contained in your will and does not way of naming the trustee of your pet trust as a take effect until you die, then you need to fund the beneficiary. trust by a provision in your will or by using one of Pay on death accounts, annuities, retirement the techniques discussed below. plans, and other contracts: You may have money 11. How do I fund my pet trust? in the bank, an annuity, a retirement plan, or other contractual arrangement that permits you to name Direct transfers: If you create your trust while a person to receive the property after you die. you are alive, you need to transfer money or other You may use these assets to fund both inter vivos
117 ESTATE PLANNING UPDATE and testamentary trusts by naming the trustee of Breeding. your pet trust as the recipient of a designated Medical care, including preferred portion or amount of these assets. Be sure to veterinarian. consult with your lawyer, banker, or broker about the correct way of naming the trustee of your pet Compensation, if any, for the caretaker. trust as the recipient of these funds. There may be Method the caretaker must use to income tax consequences to your estate when document expenditures for retirement plans are used in this way. reimbursement. 12. How do I decide on the individual to name Whether the trust will pay for liability as my pet’s caretaker? insurance in case the animal bites or otherwise injures someone. The selection of the caretaker for your pet is extremely important. Here are some of the key How the trustee is to monitor caretaker’s considerations: services. How to identify the animal. Willingness to assume the responsibilities associated with caring Disposition of the pet’s remains, e.g., for your pet. burial, cremation, memorial, etc.
Ability to provide a stable home for Consider making a video with instructions and your pet. demonstrations. Harmonious relationship between the caretaker’s family members and your 15. Who should be the trustee of my pet trust? pet. The trustee needs to be an individual or corporation that you trust to manage your property 13. Should I name alternate caretakers? prudently and make sure the beneficiary is doing a Yes. You should name at least one, preferably good job taking care of your pet. A family two or three, alternate caretakers in case your first member or friend may be willing to take on these choice is unable or unwilling to serve as your responsibilities at little or no cost. However, it pet’s caretaker. To avoid having your pet end up may be a better choice to select a professional without a home, consider naming a sanctuary or trustee or corporation that has experience in no-kill shelter as your last choice. managing trusts even though a trustee fee will need to be paid. 14. What types of instructions should I include in my pet trust regarding the care 16. Should I name alternate trustees? of my pet? Yes. You should name at least one, preferable Here are some examples of the types of two or three, alternate trustees in case your first concerns about which you may wish to provide choice is unable or unwilling to serve as a trustee. instructions: 17. Is it a good idea to check with the trustees Food and diet. before naming them in my pet trust? Daily routines. Yes. Serving as a trustee can be a potentially burdensome position with many responsibilities Toys. associated with it. You want to be sure the Cages. persons you name as your trustees will be willing to do the job when the time comes. Grooming. Socialization.
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18. What happens to the property remaining APPENDIX – CITATIONS TO PET in the trust when my pet dies? TRUST STATUTES You should name a “remainder beneficiary,” Alabama: that is, someone who will receive any remaining ALA. CODE § 19-3B-408 (2007). trust property after your pet dies. Note that it is not a good idea to name the caretaker or trustee Alaska: because then the person has less of an incentive to ALASKA STAT. § 13.12.907 (2006). keep your pet alive. Many pet owners elect to have any remaining property pass to a charitable Arizona: organization that assists the same type of animal ARIZ. REV. STAT. ANN. § 14-2907 (2005) that was covered by the trust. [unofficial text].
19. What happens if the trust runs out of Arkansas: property before my pet dies? ARK. CODE ANN. § 28-73-408 (West 2006) If no property remains in the trust, the trustee [unofficial text]. will not be able to pay for your pet’s care. Perhaps the caretaker will continue to do it with California: his or her own funds. If the caretaker is unwilling CAL. PROB. CODE § 15212 (West Supp. 2007) or unable to do so, you should indicate in your pet [unofficial text]. trust the person or organization to whom you Colorado: would like to donate your pet. COLO. REV. STAT. § 15-11-901 (2006) 20. How do I get a pet trust? [unofficial text]. You should consult with an attorney who Connecticut: specializes in estate planning and, if possible, who CONN. GEN. STAT. § 45A-489A. also has experience with pet trusts. You may find it helpful to give your attorney a copy of this Delaware: article. DEL. CODE ANN. tit. 12, § 3555.
District of Columbia: XI. CONCLUSION D.C. CODE § 19-1304.08 (2006) [unofficial text]. Estate planning provides a method to provide for those whom we want to comfort after we die Florida: and to those who have comforted us. Family FLA. STAT. § 736.0408 (2012). members and friends can be a source of tremendous support, but they may also let you Georgia: down in a variety of ways ranging from minor GA. CODE ANN. § 53-12-28 (2012) [unofficial betrayals to orchestrating your own death. Pet text]. animals, however, have a much better track record in providing unconditional love and steadfast Hawaii: loyalty. It is not surprising that a pet owner often HAW. REV. STAT. § 560.7-501 (2006) wants to assure that his or her trusted companion [unofficial text]. is well-cared for after the owner’s death. By using a properly constructed traditional trust or a Idaho: statutory pet trust, you may carry out your client’s IDAHO CODE ANN. § 15-7-601 (2006) intent to protect his or her non-human family [unofficial text]. members.
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Illinois: Nevada: 760 ILL. COMP. STAT. 5/15.2 (West Supp. NEV. REV. STAT. ANN. § 163.0075 (2006) 2006). New Hampshire: Indiana: N.H. REV. STAT. ANN. § 564-B:4-408 (2006). IND. CODE ANN. § 30-4-2-18 (West Supp. 2006). New Jersey: N.J. STAT. ANN. § 3B:11-38 (West Supp. Iowa: 2006). IOWA CODE ANN. § 633A.2105 (West Supp. 2006). New Mexico: N.M. STAT. ANN. § 46A-4-408 (2003) Kansas: [unofficial text]. KAN. STAT. ANN. § 58A-408 (2005). New York: Kentucky: N.Y. EST. POWERS & TRUSTS LAW § 7-8.1 No statute enacted. (amended 2010).
Louisiana: North Carolina: No statute enacted. N.C. GEN. STAT. § 36C-4-408 (2006).
Maine: North Dakota: ME. REV. STAT. ANN. tit. 18-B, § 408 (West N.D. CENT. CODE § 59-12-08 [unofficial text]. Supp. 2006). Ohio: Maryland: OHIO REV. CODE ANN. § 5804.08 (West Supp. MD. CODE ANN., EST. & TRUSTS § 14-112. 2007).
Massachusetts: Oklahoma MASS. GEN. LAWS ch. 203, § 3C. OKLA. STAT. tit. 60, § 199.
Michigan: Oregon: MICH. COMP. LAWS § 700.2722. OR. REV. STAT. ANN. §130.185 (West 2005) [unofficial text]. Minnesota: No statute enacted. Pennsylvania: 20 PENN. PA. STAT. ANN. § 7738 (West Supp. Mississippi: 2006) [unofficial text]. No statute enacted. Rhode Island: Missouri: R.I. GEN. LAWS § 4-23-1 (2006). MO. REV. ANN. STAT. § 456.4-408 (West Supp. 2007). South Carolina: S.C. CODE ANN. § 62-7-408 (2006) [unofficial Montana: text]. MONT. CODE ANN. § 72-2-1017 (2005) [unofficial text]. South Dakota: S.D. CODIFIED LAWS § 55-1-21 (2006). Nebraska: NEB. REV. STAT. § 30-3834 (2006)
120 ESTATE PLANNING UPDATE
Tennessee: TENN. CODE ANN. § 35-15-408 (2006) [unofficial text].
Texas: TEX. PROP. CODE ANN. § 112.037 (West 2007) [unofficial text].
Utah: UTAH CODE ANN. § 75-2-1001 (West Supp. 2006).
Vermont: VT. STAT. CODE tit. 14A, § 408.
Virginia: VA. CODE ANN. § 55-544.08 (2006).
Washington: WASH. REV. CODE ANN. §§ 11.118.005 -.110 (West 2006).
West Virginia W. VA. CODE § 44D-4-408.
Wisconsin: WIS. STAT. ANN. § 701.11 (West 2001).
Wyoming: WYO. STAT. ANN. § 4-10-409 (2006) [unofficial text].
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