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Arbitration Clause Held Not Enforceable as to the Validity of the Trust Amendment
/in Administration of Estate, Administration of Trust, Arbitration, Estate Planning, Fiduciary Litigationby Carol Warnick
There has been considerable discussion regarding including arbitration clauses in estate planning documents over recent years. Some estate and trust attorneys are actively pushing for the inclusion of such clauses. Recently, an Arkansas Appellate Court held that an arbitration provision in a trust, if enforceable at all, would not be enforced to determine the validity of a trust document – in this case a trust amendment.[1]
The decedent’s revocable trust already provided an arbitration clause, but just before his death, he signed a trust amendment expanding the arbitration clause to purportedly cover all disputes and be binding on all trustees and beneficiaries.
Read moreFinding Lost Life Insurance Policies
/in Administration of Estate, Administration of Trust, Estate Planning, Life Insuranceby Jody H. Hall
As a probate paralegal, I often assist personal representatives, trustees and family members in collecting information about their loved one’s assets. Life insurance proceeds can be a blessing to the family to pay for expenses and in relieving the financial burden after a death. However, while the client may think they remember the deceased person having life insurance, they may not be able to locate any existing policies or have access to related documents. In addition, the life insurance company may have changed names or merged, many times more than once, since the policy was issued. If the policy was paid up, no correspondence may have been sent to the insured for literally decades. A non-family member or professional fiduciary may not have any information about insurance at all.
In 2016, the National Association of Insurance Commissioners (NAIC) created the Life Insurance Policy Locator to help address the growing problem of millions of dollars in unclaimed life insurance proceeds. The Life Insurance Policy Locator along with Frequently Asked Questions can be found here: https://eapps.naic.org/life-policy-locator/#/welcome
The client should continue to review the deceased’s important papers, research bank accounts for evidence of premium payments, and search online to find successor companies for old policies. But when specific information cannot be located, this resource could potentially find those lost benefits for the family. The requestor should need to be a person authorized to received information (note that the Attorney or Legal Representative for the Deceased is an option on the NAIC request) and will need to provide pertinent details about the deceased. According to the Colorado Department of Regulatory Agencies, more than $92.5 million in life insurance proceeds was matched with beneficiaries in just the first year of the locator.
I have not yet used the Life Insurance Policy Locator, but I am thankful to have a resource to provide to those clients where that illusive policy just cannot be located.
Trustees Beware: Provide Timely Information to Beneficiaries
/in Administration of Estate, Administration of Trust, Fiduciary Duties, Fiduciary Litigation, Personal Representative, Removal of Fiduciary, Surcharge of Fiduciary, Trusteeby Carol Warnick
Individual trustees often fail to fulfill the duties imposed on trustees, not only by the trust instrument, by also by the trust statutes applicable in the jurisdiction. It is often the case that the individual trustee is a member of the family and seems to believe that the rest of the family won’t care if he or she doesn’t follow the applicable statutory and trust requirements.
A recent Nebraska case, In Re Estate of Forgey, 906 N.W. 2d 618, (Neb. 2018), featured a decedent who died in 1993. By 2013, when one of the family members initiated litigation, the trustee, a son of the decedent, had neither distributed out the property of the trust into the separate shares called for by the trust document, nor had provided annual accountings to the beneficiaries as required by both the Nebraska statutes and the trust document itself. In addition, he failed to sign and file the timely prepared federal estate tax return, resulting in an IRS assessment of penalties and interest of over $2 million.
Read moreWalk on the Wild Side – Pet Trusts
/in Administration of Trust, Estate Planningby Brooke Simons
Anyone who has a pet knows that they are more than just companions, they are members of your family. Often, when people make decisions about their estate plans, they want to take these furry members of their family into consideration – you may remember that Leona Helmsley famously left $12 million to her dog, Trouble. Amount aside, the general concept of pet trusts might be something to consider.
Creating a trust for your pet is not only prudent from a planning perspective, as it provides the person who will be taking care of your furry friend in the future the assets they need to do so, but also comforting to the owner in that they have taken all their loved ones into account in their plan.
Read moreSafeguarding Estate Planning Documents
/in Administration of Estate, Administration of Trust, Estate Planningby Carol Warnick
In light of the recent dramatic weather events, including hurricanes and tornadoes, it is a good time to discuss preservation of estate planning documents. In many instances, people escape from their homes with only the clothes on their back, or even if they do have a bit of time to gather items to take, they may not think about their estate planning documents.
Read moreNew IRS Addresses for Filing Estate Tax Returns
/in Administration of Estate, Administration of Trust, Court Procedures, Fiduciary Duties, Taxesby Jody H. Hall, Paralegal
The Instructions for Form 706 released in November 2018 included new addresses; however, we felt a reminder could be useful since the filing address changed mid-year. Effective for United States Estate (and Generation-Skipping Transfer) Tax Returns (Form 706) filed after June 30, 2019, Form 706’s should no longer be sent to the Cincinnati campus for filing, but should instead be sent to:
Department of the Treasury
Read moreInternal Revenue Service
Kansas City, MO 64999