Presentation Transcript

1. Today’s class Joint tenancies in realty as our final example of a nonprobate way to transfer property Spouses holding a joint tenancy in their home Planning for incapacity Revocable trusts (pp. 439-440) Durable powers of attorney Advance directives for medical care (first week) Disposition of the body Practice exam questions
2. Joint tenancies in land The joint tenants have equal interests; most important actions require the agreement of all tenants Not unilaterally revocable, so an imperfect will substitute (though Brousseau, p. 448, suggests some exceptions) Joint tenants cannot devise their shares in a will. Upon death, the decedent’s share vanishes and is taken by the other joint tenant(s). To pass by will, the joint tenants must sever the joint tenancy and convert it into a tenancy in common. Creditors can reach a joint tenant’s interest only during the tenant’s lifetime.
3. Durable powers of attorneypp. 448-449 Powers of attorney terminate upon principal’s incapacity; durable powers of attorney survive the principal’s incapacity (though not the principal’s death) Trustees versus agents under durable powers Trustees can retain powers after settlor’s death Courts will appoint successor trustees if trustee dies; only principal can provide for successor agents Trustees enjoy broad powers to conduct transactions with the trust property; agents are much more limited (though principal can grant broad powers) Third parties more comfortable dealing with trustees
4. What were the facts in Kurrelmeyer?, p. 449 Once again, we have children from a first marriage pitted against the wife from a second marriage Kurrelmeyer appointed one of his children and his wife as agents under durable powers of attorney After Kurrelmeyer lost capacity, his wife created a trust for him, with herself and child as co-trustees, and transferred the Clearwater property into the trust Under the trust, the wife had greater rights to the Clearwater property than she would have received per Kurrelmeyer’s will, and the children had lesser rights
5. In re Estate of Kurrelmeyer In re Estate of KurrelmeyerSupreme Court of Vermont Life Estate in Clearwater Martina First Wife Louis Clearwater in Trust Remainder in Clearwater Nancy Louis, Jr. Ellen
6. Did the wife have authority to create a trust? Under traditional agency law, any powers of an agent have to be expressly stated, with terms of appointment construed strictly This court took a more flexible approach, based on the intent of the principal Note the trade-off between ability to benefit the principal and the potential for abuse Courts can err on the side of protecting against abuse by construing the powers very strictly, or they can err on the side of benefiting the principal by construing powers more flexibly, and rely on agent liability to protect against abuse
7. Did the wife have authority to create a trust? Which provisions of the power of attorney suggested the wife could create a trust? “In addition, I authorize my said attorney to: (1) execute and deliver any . . . trust instruments” (p.451) The agent also was authorized “to add all of my assets deemed appropriate by my said attorney. . . to any trust of which I am the Donor” (p.451) What suggests the wife could not create this particular trust? The power of attorney authorized the making of gifts “to members of my family (other than himself or herself)” (p.452) Did Kurrelmeyer really contemplate his wife revising his will?
8. Could Kurrelmeyer delegate the power to create a trust? Trusts serve important purposes in estate planning and asset management, and there are not countervailing considerations that would justify a prohibition on delegation of the trust-creation power, as with the power to execute a will (p. 453) But if agents can’t execute wills, how can they use trusts to rewrite wills? The court observed that Kurrelmeyer could and did delegate the power to “convey any real estate . . . which I may own” But principles of ademption address the problem of agents rewriting wills by conveying property
9. Could Kurrelmeyer delegate the power to create a trust? A better way to explain why agents can rewrite wills through their trust-creating power: The prohibition on agents writing or amending a will is rooted in longstanding statutory interpretation that would need legislative revision. But it is not rooted in a powerful public policy against surrogate decisions. Indeed, there will be many cases in which changes in circumstance make a change in estate planning desirable after the principal loses decision-making capacity.
10. Did the wife breach her fiduciary duties as agent? By conveying the Clearwater property to the trust, she gained greater property rights The power of attorney prohibited her from making gifts to herself Fiduciary principles prohibit agents from using their authority for their own benefit except as authorized On the other hand, the wife argued that the conveyance was justified by prudent tax and estate planning objectives In addition, the approval of the co-trustee provided a safeguard against abuse Case remanded for further proceedings on this question
11. What happened on remand? As note 1 indicates, p. 454, the trial court found that the trust carried out Kurrelmeyer’sintentions, which he had discussed with an estate planning attorney He hadn’t executed his intentions because he wasn’t sure whom to name as his wife’s co-trustee, and he lost his decision-making capacity before resolving the question (too much deliberation can defeat an estate plan) In the trial court’s view, the wife was simply carrying out Kurrelmeyer’s intent (which was to give her the freedom to move out of the Clearwater property) The Vermont Supreme Court upheld the trial court’s holding (992 A.2d 316 (Vt. 2010))
12. Advance directives Treatment directives (i.e., living wills) Specifies treatment in the event of incompetence, usually for life-sustaining treatment decisions. Proxy appointments Designates an agent to make health care decisions for the patient. Hybrid or combined documents Incorporates both of the first two approaches, that is, directs treatment preferences and designates an agent to make substituted decisions. Important to make sure that people share preferences about organ donation with family