Articles Posted in Wills and Estates

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Trusts can provide a way for an owner to enjoy her or his property during life, while ensuring the property held in trust pass to certain parties after her or his death.  In Mond vs. Pitts (15-P-686), the Massachusetts Appeals Court reviewed whether property held in two trusts with the same primary trustee and beneficiaries terminated, allowing the property to pass to the trustee’s heirs, or remained intact, passing to the beneficiaries after the settlor’s death.  At trial, the judge of the Land Court held the trust terminated after one of the trustees resigned and assigned her interest as trustee in both trusts at issue.  The beneficiaries appealed, and the appellate court reversed the prior ruling, agreeing with their argument that the trust remained intact.

As with all trusts, the construction of the document is the first place administrators and courts look at to determine the intent of the trustee. Winter landBoth trusts in this case were created in the 1980s, for a term of forty hears and thirty years, unless the death of the settlor occurred first.  The 40 years trust named the settlor as the beneficiary, and then the two appellants, or their survivors, as the next beneficiaries if he died.  The trustees named in the document were the settlor and another woman, with a provision that either will become the sole trustee if the other dies or resigns.  The 30 years trust had similar language, with the same trustees and beneficiaries named.  It also had a similar provision assigning the remaining trustee as the sole trustee if one dies or resigns.  The settlor eventually became the sole trustee for both trusts after the other trustee resigned as trustee and assigned her interest.

The heirs of the settlor filed suit after his passing, arguing that the trusts terminated when the settlor became the sole trustee.  The land judge agreed, finding the paragraphs within the trust to be inconsistent with one another – with one paragraph naming the two appellants as beneficiaries and another within the trust document as heirs.  The judge also found that the doctrine of merger applied when the settlor became the sole trustee, becoming the sole lifetime beneficiary and trustee of each trust.  The appellate court disagreed with this analysis, finding that the second paragraph in question dictated the proceeds to be divided among the “beneficiaries if living”.  Both appellants were alive at the time of the settlor’s death.  The appellate court found reading the document as a whole consistently pointed to the appellants as beneficiaries of the trust.  The appellate court also disagreed with the land judge’s view of merger, pointing out that the designation of contingent beneficiaries precluded any merger.  The appellate court reversed the ruling of the land judge and remanded it to the lower court for the trust property to be distributed to the beneficiaries, as intended by the settlor.

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The Commonwealth’s Appeals Court recently released an opinion looking at whether or not a niece appointed as attorney-in-fact interfered with an inheritance by not releasing funds held in a joint account from the sale of a house that would have been distributed as part of the estate. In Sarro vs. Ciancarelli (14-P-230), the testator’s health began to diminish in the 1980s, and her niece began providing care and assistance with financial matters. frosty neighborhoodDuring this time period, the niece opened a joint account to help pay for her aunt’s living expenses. This account was in both of their names and became a focal point of this appeal.

After the niece was made attorney-in-fact, she sold a residence that was a part of the estate to her own son and his girlfriend for $135,000. This residence had previously been conveyed to her brothers, with the testator retaining a life estate, but was eventually restored to the testator after the niece advised her uncles that the transfer to their sister was necessary for Medicare purposes. The proceeds of the sale were placed in the joint account, and some were used for the funeral and final expenses of the testator. $90,000 was left in the account but was retained by the niece.

The testator’s brothers eventually filed a complaint against the niece with several allegations, including interference with inheritance and unjust enrichment. The case went to a jury trial. During deliberations, the jury asked a question about whether the funds from the sale of the house would have gone to the testator’s estate. The judge answered that it would depend on the intentions of those on the account and the terms under which the account was opened. The jury found the niece liable for interference with inheritance and unjust enrichment, awarding the testator’s brothers $45,000 each.
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There are many documents you can and should use for your Massachusetts estate plan. Medical care considerations can become especially complicated as you weigh the resources available to help cover the cost. The recent Massachusetts Appeals Court case of Heyn vs. Dir. of the Ofc. of Medicaid (15-P-166) reinforces a grantor’s ability to create an irrevocable trust, which could then make him or her eligible for Medicaid benefits.

helping-the-elderly-1437135-639x738.jpgIn this case, the grantor, now deceased, created a self-settled irrevocable inter vivos trust, transferring the title to her home to the trust, while retaining a life estate interest that would not make her ineligible for Medicaid benefits. The grantor moved into a skilled nursing facility and applied for Masshealth benefits to pay for the cost of her care, which were originally approved. After a little over a year at the nursing facility, she was notified that her benefits were terminated based on the agency’s determination that the home held by the trust should be considered a countable asset, rendering her ineligible for benefits.

The grantor of the estate appealed, but she died before a decision was issued upholding the termination of benefits. The hearing officer determined that the trust allowed the trustee to sell the assets and invest the proceeds of the sale in other forms of investments, like an annuity. The officer reasoned that annuity payments can create income for the grantor, which should be considered a “countable asset” for determining Medicaid/Masshealth benefits eligibility. The Superior Court upheld the hearing officer’s ruling, and the case went on to the Appeals Court of Massachusetts.
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A named executor of a will holds a lot of power and responsibility over a Massachusetts estate. An executor’s tasks can go beyond distributing the testator’s assets. He or she can also manage trust funds or file and defend lawsuits on behalf of the estate. A recent appellate court case, In The Matter of the Estate of Elizabeth Lawry (15-P-374), looks at the obligations an executor has to the estate and its heirs. The executor appealed a ruling made at trial, in which the court ordered the executor to return $20,000 of his $30,000 fee to the estate, as well as pay $7,500 in attorneys’ fees.

buried-alive-1241454-639x477.jpgUnder a Massachusetts law, G.L. C. 190b, § 3-720, a personal representative of an estate who defends or prosecutes a proceeding in good faith is entitled to receive the necessary expenses and disbursements from the estate, including reasonable attorneys’ fees, regardless of whether or not the action is successful. However, a personal representative is also expected to act in good faith. Without this, the entitlement to attorneys’ fees becomes void. At trial, the judge looked at the overall picture of the executor’s performance of his duties. The judge ultimately did not feel that the executor acted in good faith because he did not record the time he spent settling the estate consistently with due diligence, charged a higher fee because the beneficiaries did not get along, made several mistakes while handling the estate, and caused unnecessary delays with the distribution of the assets.

One of the duties mentioned by the trial court in its order awarding the heirs attorneys’ fees was the duty to settle the estate expeditiously and efficiently. The court also looked at the excessive fee the executor paid himself. While an executor is entitled to attorneys’ fees for litigation, the court pointed out it was the executor’s own conduct that led to the litigation, so it was only fair that he pay the expenses of the litigation rather than the estate. The Court of Appeals agreed with this analysis and did not find any abuse of discretion on behalf of the trial court judge. The reduction of the executor’s fees and the award of the heirs’ attorneys’ fees was upheld.
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After a family member dies, the settlement of the estate often accompanies the natural process of grieving. It can be difficult to accept the choices the testator made during her or his lifetime and how those choices echo in their last will and testament. Sometimes, questions are raised as to whether or not those choices were actually made by the testator, and heirs may question the will in probate court. The law, however, created a high bar for those who choose to object. sundown-family-1553623-640x480.jpgMassachusetts law states that a person is capable of creating a will if he or she is free from delusion, understands the purpose of the will, and understands the nature of his or her property.

In a Massachusetts appeals court case, In The Matter Of The Estate Of William E. Weaver (15-P-714), the appellate court declined to uphold the objections of the children to the will of their father. The plaintiffs protesting the testator’s will were children of his first marriage, and they alleged that his second wife and her daughter exerted an undue influence over their father’s will. In the affidavit submitted, the second wife was portrayed as an enabler of their father’s drug abuse and alcoholism. The second wife actually predeceased their father after they created reciprocal wills that left their estates to each other.

The father had a good relationship with the children of his first marriage, but he had difficulties with the daughter of the second wife. His relationship with the step-daughter deteriorated after her mother’s death, especially after he learned she had stolen money from him. The children alleged that their father told them he was aware of the contents of his will, but that his second wife and her daughter pressured him into leaving his estate to her daughter if she died before her. The children claimed the father expressed his desire to leave his estate to his children.
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The Massachusetts Appeals Court reviewed an appeal by an ex-husband to quiet title on a mortgage taken out by his ex-wife in 2002 for property that they co-owned. In Poulos vs. Financial Freedom (14-P-1287), the husband appealed, seeking to reverse a summary judgment issued in favor of the lending institution and the family trust created by his deceased ex-wife. landscapes-5-1540981-640x480.jpgThe husband wanted the mortgage granted to the lending institution to be declared void because he felt that it encumbered his share of the property rather than just the 50% of the property originally held by the wife as part of their 1987 settlement agreement, now owned as part of a trust she established prior to her death.

The court affirmed the summary judgment and discussed the effects of the settlement agreement, or the lack thereof, on their respective interests in the property after the escrow period in their separation agreement. While there was language in the property settlement agreement that the parties were not to encumber the property with a mortgage during the escrow period, nothing in the agreement prevented the parties from seeking mortgages or other potential encumbrances after this period ended.

The court did agree that the ex-husband initially had standing to pursue this course of action with the lending institution’s original position that the mortgage encumbered all of the property, rather than just the decedent’s and trust’s interest in it. The reverse mortgage documents clearly indicated that the institution believed that the mortgage the ex-wife granted covered 100% of the property. The ex-wife represented in the paperwork that she owned the entirety of the property and all the rights to mortgage, grant, and convey it, failing to mention her ex-husband’s interest. However, during the course of litigation, the lending institution eventually conceded that the mortgage could only cover the wife’s half of the property.
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In Massachusetts, a testator can include an “in terrorem” clause that creates a large disincentive for any beneficiary to challenge the validity of the will. In this clause, the testator declares that anyone who contests the will as a whole, or a provision of the will, forfeits his or her share, and the remainder is re-distributed to the other beneficiaries as if they had pre-deceased the testator and had no heirs of their own. An in terrorem clause may be invalidated along with the rest of the will if the testator was subject to undue influence or incompetent, but this is a difficult endeavor for the contester with potentially a lot at stake to lose.

family-game-1-1309406-639x426.jpgIn all contract matters, judges strive to strictly construe the terms of the document as written. This is seen in a recent Appeals Court decision, Sinnott vs. Sinnott (14-P-1653). In this case, one of two brothers disputed the assets of his mother’s estate, which included an in terrorem clause. He did not object to the probate of the will but later chose to file an equity action more than two years later, claiming other beneficiaries fraudulently or improperly caused the mother to divert assets to them during her lifetime. The judge presiding over the case agreed with the contesting brother that he had standing under estate law to pursue the claim as a residuary legatee, but the claim, even in equity, enacted the in terrorem clause and blocked any recovery.

The plaintiff disagreed with the judge’s ruling, arguing that the contest was not to the will as a beneficiary, but as a residuary legatee. The Appeals Court agreed with the judge’s determination that the suit was an attack on the will’s provisions, thereby enacting the in terrorem clause. The contesting son, at one point of the litigation, even agreed to that description of the suit. The Appeals Court felt the language of the will was very clear on when an in terrorem clause would take effect, and it affirmed the summary judgment in favor of the defendants.
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In Massachusetts, when you plan for your future, you may consider purchasing special insurance policies to cover unforeseen events. Insurance policies are complex legal documents with specific language that should be carefully read by its holder. When you create an estate plan, it is advisable to have experienced Massachusetts wills and estates helping-the-elderly-1437135-639x738.jpgattorneys at your side to assist with the creation and understanding of legal documents like a disability income policy.

The Commonwealth’s Appeals Court recently rendered a decision in Yunes vs. Unum Group (14-P-1871) regarding a disability income policy. The insurance company issued a disability policy to the holder that provided a benefit in the event that the holder became disabled at 64 but before the age of 65. If this event occurred, he was to receive $10,000 a month (including a cost of living adjustment) for 30 months. This was considered to be a “Total Disability Benefit.” Also included in the policy was a “Lifetime Total Disability Benefit Rider,” which was designed to provide additional benefits after the 30 month period of the Total Disability Benefit. However, this benefit distinguished between a disability by reason of injury and one by reason of sickness. The amount for an injury benefit included a cost of living adjustment in addition to the amount featured on the policy schedule. For sickness, the cost of living adjustment was also included, but the scheduled amount must be multiplied by a factor.

The policy holder submitted a claim under the policy and was approved for total disability benefits due to sickness when he turned 64. He received payments of $12,500 a month for his Total Disability Benefit, which eventually rose to $13,500 a month until its expiration. Upon its end, the calculation for the monthly Lifetime Disability payment was set at $1,350. The holder filed suit, alleging breach of contract, and sought a declaratory judgment, arguing that he was entitled to $12,500 a month for the remainder of his disabled life. As part of his justification, the holder pointed to a letter sent by the insurance company 10 years before the benefit was issued, which stated that the current benefit was for $12,500 after a 90-day waiting period for Total Disability, followed by $12,500 for his lifetime for accident or sickness. The letter also noted that the quoted benefit did not replace the actual contract issued by the insurance company.
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A carefully written will is often the hallmark of thorough estate planning. Hiring experienced wills and estates counsel can help avoid a distribution that strays from the original intent of the grantor. Massachusetts laws, federal tax obligations, and grammar are all items that must be considered when drafting any estate-related document. work-at-my-office-1240827-639x427.jpgHowever, even in the presence of a clearly written document, courts may look to the behavior and actions of the grantor prior to her or his death to determine whether or not someone was entitled to a portion of the estate.

This can be seen in a recent Massachusetts Appeals Court decision that allowed a former employee, previously promised life insurance benefits, to recover the amount from the estate of her boss, who changed the beneficiary to his wife. In Shuttle v. Ligor (14-P-1670), the employee filed suit against the wife and the executor of the estate to obtain the proceeds of a life insurance policy after the benefits were distributed to the wife. The employee was previously the designated beneficiary of the policy after several years of working for the employer. Her boss advised her that she would be the beneficiary under a life insurance policy because he intended it to be a part of her “retirement plan as compensation for her working for less money than her performance merited.”

After he made this promise, his company began to struggle and was forced to lay off several employees and cut back salaries. The employee continued to work, even without a traditional salary, due to the promise of being designated the beneficiary of the policy. After the boss suffered a stroke, the employee asked whether or not he wished to change the beneficiary on his insurance policy, and he clearly expressed to her that he didn’t. The employee then used her own funds to pay some of the premiums of the life insurance policy and continued to perform work for the company. However, in the year following the stroke, the boss changed the beneficiary to his wife and did not inform the employee.
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When a trust is established, the grantor intends to convey a benefit to a designated person or persons. As a trust is written, it is important to have experienced attorneys to help draft the trust in a way that best considers state law and the needs of the beneficiary. a-morning-at-the-hospital-1-1440095-639x852.jpgIt can continue to be a balancing act after a trust is administered, and reforms may need to be considered.

In the Massachusetts Appeals Court case of Needham vs. Dir. of the Ofc. of Medicaid (14-P-182), the Appeals Court reviewed whether or not it was appropriate for the Superior Court to go against the agency’s denial of long-term care benefits under the Commonwealth’s Medicaid program. The Superior Court judge had previously concluded that the reformed trust must be considered during the assessment of eligibility for long-term care benefits. The Appeals Court differed, reversing the lower court’s ruling and determining that the state agency, Masshealth, is bound by federal law that prohibits the recognition of the reformation of the trust within the statutory look-back period.

The beneficiary of the trust applied for MassHealth long-term care benefits when he was 64, disclosing two trusts on his application. One trust only held the family home, which was valued at over $400,000. The reviewing agency included this trust in its accounting for eligibility, due to the terms in the trust that directed the trustee to accumulate principal and use it for the benefit of the man. The state agency concluded that the man applying for benefits was ineligible because he had monthly assets in excess of the $2,000.00 limit. The beneficiary then went to probate court to remove the provision from the trust that prevented him from obtaining benefits. The change to the trust was approved by the probate court, but the hearing officer determined that the transfer of assets during the look-back period (after the beneficiary was in a nursing facility) caused the man to remain ineligible for benefits. The Superior Court reversed the hearing officer’s determination, focusing on the reformed trust.
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