ESTATE BENEFICIARY & EX-WIFE PROBATE LITIGATION: LAWSUIT OVER 2 YEAR MARRIAGE & MONEY : 16 years after divorce — recent Minnesota case involves ex-wife as estate creditor, stepchildren & estate beneficiary

Uncategorized • Feb 25, 2014

Marriages can be expensive ! Even if they only last 2 years and even if one spouse dies 16 years later ! This recent Minnesota probate case highlights how “busy” estate lawsuits can be after your dead. This probate litigation case involves a charitable remainder trust, a revocable trust, a power of attorney and the moving of bonds from a trust account to a pay on death account, and ex-wife, a friend who inherits the whole estate, and children who are disinherited and are contesting the will — based on undue influence and lack of capacity to make a will. Oh yes, who pays the income tax on those trust distributions?

Robert created a revocable trust.
He was the trust settlor of his revocable trust
Robert died on July 21, 2010
He had three adult children– evidently he did not have a good relationship with his children
Robert married Elfi from 1992 to 1994
Divorce: until her death or remarriage, Robert would pay his ex-wife $3,000 per month + cost-of-living adjustment (COLA)

TRUST GRANTOR (TRUST SETTLOR) CREATES IRREVOCABLE CHARITABLE REMAINDER TRUST

To fund the $3,000/month, Robert created an irrevocable trust, known as a charitable remainder annuity trust. This type of charitable remainder trust is also known by its acronym: CRAT.

Q: what type of property should you put into a charitable remainder trust?

2^ND TRUST CREATED IN 2006 — a revocable trust

In 2006, Robert created a second trust, his Revocable Trust.
Robert was his own trustee
At the trust settlor’s death, his revocable trust would become irrevocable
His friend and his ex-wife would then be co-trustees
The remainder beneficiary was his friend and her children.

DOES IT MAKE SENSE TO HAVE A TRUST WITH YOUR FRIEND AND EX-WIFE AS CO-TRUSTEES AND LIFETIME & REMAINDER BENEFICIARIES ?

The revocable trust was funded with $522,361 in bonds
September 2007: Robert amended his revocable trust
Ex-wife & a bank became the new, successor co-trustees

Q: why would you give up the right to be trustee of your own revocable trust ? ( Would Palm Beach estate planning lawyers advise this ? )

EX-WIFE GIVEN POWER TO REPLACE BANK CO-TRUSTEE

Robert gave his ex-wife the power to replace the bank with a new co-trustee.
The bank resigned as co-trustee in 2007

Q: who pays the income tax and the cost of living adjustment to the ex-wife ? Which trust ? Which taxpayer?

1994 WILL PUTS “FRIEND” IN CHARGE OF ESTATE

Robert had a will in 1994 creted with a “self-help legal services form”
On January 2, 2008, he hired estate-planning attorneys to sign a new professionally drafted will, giving his entire estate to his friend
His friend was named as the personal representative of his estate

Q: why wasn’t Robert more generous to his children ? Was Robert disinheriting his children?

BROKEN HIP: WAS HE COMPETENT ? Change to trust !

On January 17, 2008, Robert fell and broke his hip
He underwent surgery
He became confused, delirious, and disoriented.
On January 21, 2008, he revokes his revocable trust.

MONEY IS MOVED FROM TRUST ! Bonds are switched to transfer on death account from trust

4 bonds in the trust were transferred to a transfer-on-death (TOD) account
The friend was the beneficiary of the transfer on death account

TRANSFER ON DEATH ACCOUNT: NON PROBATE ASSET

A transfer on death account is sometimes referred to as a
beneficiary designation,
will substitute,
nonprobate asset, or
Totten trust

FRIEND USES POWER OF ATTORNEY TO SELL BONDS

CHILDREN CHALLENGE WILL — more probate litigation

In October 2010, the children, the heirs-at-law, or next of kin, filed a petition in probate court challenging the January 2008 will
this will contest wanted to void the last will
why? due to lack of capacity and undue influence.
They also sued for breach of fiduciary duty, conversion, and fraud
the friend filed a motion to dismiss, arguing to the probate court that the court did not have subject matter jurisdiction or personal jurisdiction

In November 2011, the probate court ruled that it “has jurisdiction over trust matters….”

The probate court concluded that the issues of undue influence and lack of testamentary capacity should go to trial.

If you think that there were a lot of moving pieces in this estate lawsuit, and a lot of money being moved around B4 death, with multiple entities, like trusts, and estates, and a power of attorney: you are correct. This recent case reminds Florida probate litigators that the Florida trust code has specific trust laws on personal jurisdiction, and subject matter jurisdiction.

Palm Beach probate, and Palm Beach probate lawsuits, & throughout Florida are guided by specific Florida estate laws and the Florida trust code which tell us which probate courts have jurisdiction, and when a Florida probate court may have jurisdiction over a claim, an inheritance lawsuit, and the beneficiary or heir at law.