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How to Series: Wills

Kristi C. Hartmann

Barnes Law Firm, LLC

June 17, 2015

The Missouri Bar

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TABLE OF CONTENTS

TOPIC - WILLS PAGE

INFORMATION TO GATHER FROM YOUR CLIENTS 3 ESSENTIAL DOCUMENTS 4

WILL CONTENTS 4

NAMING A GUARDIAN AND TESTAMENTARY TRUSTS 7

DIFFERENCES BETWEEN WILLS AND TRUSTS 8 WILL EXECUTION 9

CASE LAW UPDATES

TESTAMENTARY TRUST - DEFINITION OF "DESCENDANT" 10

BREACH OF JOINT, MUTUAL WILL 10 JOINT, MUTUAL WILL AND DIVORCE 12

TIME LIMITS FOR PRESENTMENT OF POUR-OVER WILL 13

WILL WITH CHARITABLE TESTAMENTARY TRUST 14

TRUSTEE SELF-DEALING AND NO-CONTEST CLAUSE 15 TESTAMENTARY CAPACITY 17

UNDUE INFLUENCE - Nonprobate Transfers 18

AUTHORITY OF ATTORNEY IN FACT 19

TAX APPORTIONMENT CLAUSE 20

BANKRUPTCY AND SPENDTHRIFT CLAUSES 21 ETHICS 23

ESTATE PLANNING AND DIVORCE 24

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INFORMATION TO GATHER FROM YOUR CLIENTS

1. Create a confidential information packet and provide it to the client prior to the initial meeting. Sometimes, clients will resist completing the packet because it is

daunting, or they do not understand its importance to the "simple" plan they have in mind.

2. Packet should ask the for the following information: a. personal information, i.e. full name, age, SSN

b. domicile c. beneficiary information, i.e. full names, relation, age, address,

disability, marital status, etc. d. professional relationships, i.e. accountant/CPA, financial advisor, insurance agent, family/business attorney, etc.

e. safety deposit box; f. bank accounts;

g. CD's; h. investment and retirement accounts; i. stocks/bonds;

j. life insurance; k. annuities; l. vehicles;

m. real estate investments; n. business interests;

o. large value personal items, i.e. jewelry, artwork, etc.; p. firearms; ?? q. liabilities;

r. digital assets s. fiduciary preferences, i.e. executors, trustees, attorneys-in-fact; t. end-of-life preferences;

u. charitable intent; v. prior estate planning and directive documents;

w. divorce documents; x. real property deeds; y. funeral and burial preferences;

z. business documents, i.e. operating agreements, buy/sells, etc.

and more... 3. Get an idea of the family dynamic. Did family members attend the meeting

with the client? Do children get along? Are clients in second or subsequent marriages? Spousal secrets?

4. Preferred distribution schedule - outright or over time?

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ESSENTIAL DOCUMENTS

1. Last Will and Testament

2. Revocable Trust and Pour-Over Will, etc. 3. Durable Power of Attorney

4. Health Care Directive

5. Living Will

6. Letter of Instruction 7. Specialized Trusts

8. Acknowledgments (if client going against advice)

9. Personal Property Sheets

10. Other Nonprobate transfers, i.e. beneficiary/TOD deeds, POD designations

and more...

WILL CONTENTS

1. Who may make a will? 474.310, RSMo.

A. Anyone of sound mind – can be sticky

B. 18 years or older or emancipated

C. Real and personal property D. And donation of body

2. Wills should include self-proving affidavits

474.337, RSMo., provides sample language 3. Although subsequent wills revoke prior wills under most circumstances, a will

should begin with some form of the following: “I, Jane Doe, presently a resident of Jackson County, Missouri, and being over the

age of eighteen and believing myself to be competent, do make, publish, and declare this to be my Last Will and Testament, and I hereby revoke all my prior Wills and

Codicils.”

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4. Provision for the payment of “legally enforceable” expenses:

A. Costs of administration, i.e. court, attorney, PR

B. Claims against estate, i.e. funeral/burial, creditors, medical, Medicaid estate recovery

C. Taxes, i.e. income, estate

D. How debts are allocated?

i. For example, mortgage balance is paid by sale of decedent’s residence securing the note rather than by residue

ii. Or, personal property tax paid by share of beneficiary who receives that personal property

5. Include a personal property exhibit with the will – 474.333, RSMo.

A. Signed or in testator’s handwriting B. Can be prepared before or after will execution

C. Can be altered at any time

6. After payment of expenses and distribution of specific personal property:

A. Specific devises – I leave my 300 shares of AT&T stock to… B. General devises – I leave the first $10K to…

C. Residuary clause – All the rest, residue, and remainder to…

D. Order of distribution is important for clarity

7. You want to describe your client’s beneficiaries in sufficient detail

A. To my daughter, Justina Doe B. To Children’s Mercy Hospital

○ For charitable devises, you want to give your PR the discretion to

choose a charity that embraces the same business purposes and

principles should your named charity not exist or be disqualified under the IRC

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8. You want to talk through distribution with clients because clients do not realize that distribution does not have to be “all or nothing”

Children at a certain age, then descendants

How to distribute to a child who predeceases and leaves no

descendants, etc.

Charitable giving

9. PR appointments and powers

A. List a string of PR’s B. Grant the PR authority under will provisions and per MO law

C. Corporate fiduciaries?

10. Independent administration and bonding:

“My Personal Representative is authorized and empowered, but is not required, to conduct the administration of my estate as an independent or unsupervised administration, without adjudication, order, supervision, or direction of any court.”

“No bond shall be required of my Personal Representative, whether appointed in this

Will or by a court of competent jurisdiction.” 11. Survivorship Clause –

“If any legatee or devisee and I die simultaneously or under circumstances that do not show that the legatee or devisee survived me, it shall be conclusively presumed

for all purposes of this Will that I survived the legatee or devisee.”

12. In Terrorem clauses – 474.395.1, RSMo.

A. When there is a no-contest clause, an interested person may petition the court for determination of whether their particular complaint would trigger the

clause B. Forfeiture of the estate must be enforceable under applicable law and

public policy C. Best to include a probable clause exception and define it.

13. If a client wants to disinherit one or more children, the will should expressly

state that client's intention.

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14. May want to include a definitions section for non-layman terms, i.e. per

stirpes, by right of representation, per capita, RSMO, devise/bequest, incompetent, personal representative, descendant, etc.

TESTAMENTARY TRUSTS AND NAMING A GUARDIAN

1. Testamentary trusts A. Effective upon death – 456.4-401, RSMo. – Missouri Uniform Trust

Code

B. Provide for the scheduled distribution to beneficiaries C. Appoint a trustee to manage assets until final distribution of principal

D. Will want to refer to the trust as a “spendthrift trust”

2. Naming a guardian

A. May direct who shall have the care and custody of minor or adult disabled children

B. It is not always a family member

C. May instruct that guardian/conservator serve without bond D. Can appoint a succession of possible guardians

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DIFFERENCES BETWEEN WILLS AND TRUSTS

WILLS TRUSTS

Positive Negative Positive Negative

1. Court supervision, if

desired, to protect from fraud,

embezzlement, and mismanagement

by fiduciaries 2. Less expensive

up front

3. Perfectly good estate administration

tool

4. Basic and easy to establish

1. Estate may be tied up in probate

court for a long time

2. Administrative expenses

3. Estate becomes public record

4. No ability to

schedule distributions w/o testamentary

trust

5. Easier to dispute validity and capacity

6. Out-of-state assets require

out-of-state administration

7. Need conservatorship if

incapacitated (if no POA)

8. Little opportunity for

tax planning

1. Privacy

2. More efficient administration

3. Harder to dispute validity

and capacity 4. Control over

trust assets while living and

postmortem 5. Avoidance of

conservatorship through

appointment of successor trustee (if no POA)

6. Easier to administer out-of

state property

7. Tax planning strategies available

8. Forced

organization of assets

1. More expensive up front

2. Trust funding

hassle 3. No court

supervision, if desired

4. Will still need a last will and

testament 5. Longer time in

which to contest trusts (subject to

SOL)

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WILL EXECUTION

1. Technical requirements - 474.320, RSMo.

A. In writing B. Signed by testator (or by person at testator’s direction and in

testator’s presence) C. Subscribed by at least 2 competent, disinterested witnesses who sign

in testator’s presence

2. Who may witness? 474.330.1, RSMo. A. Anyone competent

B. Interested witnesses may, but that witness shall, unless the will is also

attested by two disinterested witnesses, forfeit so much of the estate given to him as in the aggregate exceeds in value, as of the date of the testator's death, what he would have received had the testator died intestate

C. Creditors and executors of the estate may witness unless they have a personal or beneficial interest

3. Provisions benefitting a spouse will be revoked by operation of law upon

divorce – 474.420, RSMo. This is also the case with settlor trusts under 456.1-112.1, RSMo.

4. Have the client initial on the bottom of each page

5. Include a self-proving affidavit

6. Review the document with the client before bringing in witnesses and executing; Wills are not exciting reads.

7. There may be times in which videotaping is recommended, but that could haunt you, too.

8. Beware of family members and family dynamic in the room. 9. See below in Case Law Updates - In re Estate of Fearn.

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CASE LAW UPDATES

TESTAMENTARY TRUST - DEFINITION OF "DESCENDANT"

In re Stix, 2015 Mo. App. LEXIS 444 (April 28, 2015) - Not Final Until Expiration of

the Re-Hearing Period Facts: Appellants are the grandchildren of Charles Stix and the great-

grandchildren of Clara Stix, Charles's mother. Both Charles and Clara die with wills that create testamentary trusts for their descendants. Both trusts benefitted

Ann, Charles's daughter, and upon Ann's death, the estate would pass to Ann's "descendants" per stirpes. The trust did not define the meaning of "descendants." Ann passed away with 5 children, two of whom predeceased Ann (Robert and John).

Here's where it gets weird. Previously, Robert had married a woman while she was pregnant. Although the child, who is the Respondent in this case, was not his

biologically, Robert was listed as the father on the birth certificate. When Robert and the child's mother divorced, the decree stated that one child was born of the

marriage and granted Robert liberal visitation rights. Appellants unsuccessfully argue that Respondent is not a qualified beneficiary

as Robert's descendant. Rule: Missouri law states that a child born during the marriage is legally presumed

to be the husband's offspring for all purposes, including matters of probate and inheritance.

BREACH OF JOINT, MUTUAL WILL Boucek v. Boucek, 297 Kan. 865, 305 P.3d 597 (2013).

“This trust and estate case began with family intrigue, betrayal, and revenge.” – J. Carol Beier, who wrote majority opinion.

Facts: In 1989, Bernice and Frank executed a joint, mutual, and contractual will in which they agreed that, after the death of the second of them, all of their property should be distributed to their four children in equal shares.

In 1996, after Frank learned that he had cancer, he and Bernice created and

executed an irrevocable trust. Both the 1996 Trust and the 1989 Will reference the homestead, which was the hot item in this case. The 1996 Trust's distribution provisions are largely similar to those of the 1989 Will, except the couple's two sons

are granted life estates rather than fee simple in the homestead. Ownership of the homestead was never transferred to the 1996 Trust.

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In 1998, Frank died. A copy of the 1989 Will was filed with Bernice's affidavit more than 6 months after Frank's death. The 1989 Will apparently was never

probated.

Over the next few years, familial disharmony led to John filing several lawsuits against members of his family, including Bernice, after he was excluded from the family business.

In August 2004, Bernice executed a new, revocable trust (2004 Trust) and a

new, pour-over will with the express intent to disinherit John. The 2004 Trust

provided that, at Bernice's death, all of the 2004 Trust property would be distributed to Richard, Diana, and their sister. No property was to pass to John. On

September 8, 2004, Bernice funded the 2004 Trust. John filed the suit in 2006 against his mother, Bernice Boucek, both

individually and in her capacity as trustee for two trusts. He claimed constructive fraud and that her 2004 Trust violated the terms of the 1989 Will and the 2004

Trust. Bernice died during litigation, and Richard and Diana stepped into her shoes in their capacities as executors for her estate and as successor cotrustees of the 2004 Trust.

At the same time, Bernice’s 2004 Will was probated, and a will contest ensued. The probate court found that the 1996 Trust revoked the 1989 Will and

that the 2004 Will should be admitted to probate, not the 1989 Will.

Rules: -On Breach of Contract Claim Relating to the 1989 Will

1. Once one of the parties to a contractual will dies and the other party accepts benefits under the will, the survivor cannot then revoke or alter the terms of the

will.

2. If a contractual will is probated after the death of the first testator, the third-party beneficiary obtains an enforceable interest at that time.

-On the Effect of the 1996 Irrevocable Trust

1. A later testamentary document that does not expressly revoke a prior will but contains inconsistent dispositions operates as revocation by implication only to the extent of the discordant provisions.

Holding:

1. -On Breach of Contract Claim Relating to the 1989 Will –

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In 2004, Bernice was still bound by any contractual provisions in the 1989 Will that had survived the creation and execution of the irrevocable 1996 Trust. The

homestead was never transferred to the 1996 Trust.

2. -On the Effect of the 1996 Irrevocable Trust - The 1996 Trust affected only the items of personal property and parcels of real property whose joint or individual ownership was transferred to it before Frank's death. As the homestead never

became part of the corpus of the irrevocable 1996 Trust, it remained--at a minimum, between July 15, 1996, and September 8, 2004--subject to the fee simple disposition recited in the 1989 Will rather than the life estate disposition recited in

the 1996 Trust.

JOINT, MUTUAL WILL AND DIVORCE Pence v. Haddock (In re Estate of Pence), 327 S.W.3d 570 (S.D. Mo. 2010).

Facts: Linda married Ray L. Pence ("Ray") on August 23, 1978. Linda and Ray

each had a daughter by a prior marriage. Linda's daughter, Lisa, was four years old when the parties married and she then lived with them. Sheila Gay Haddock ("Sheila") is Ray's daughter by his prior marriage.

On December 22, 1988, Linda and Ray signed a joint, mutual will, which included a provision not to revoke the will unless both parties agreed. The will

directed their property would be left to the surviving spouse and named the survivor as the personal representative. At the death of the survivor, the 2 daughters were

equal beneficiaries under the will, and neither Linda nor Ray was to defeat the intent of the other.

After living together continuously for twenty-eight years, Linda and Ray separated on December 11, 2006, and were divorced on February 29, 2008.

Ray dies first, and Linda files to probate the will. Sheila objects as to Linda’s standing.

The probate division ordered that all provisions concerning Linda in the "Last Will and Testament of Ray Pence," including her right to serve as personal

representative, were revoked by operation of Section 474.420, RSMo. Linda appeals.

Holding: Affirmed.

Rule: If after making a will the testator is divorced, all provisions in the will in favor of the testator's spouse so divorced are thereby revoked, but the effect of the revocation shall be the same as if the divorced spouse had died at the time of the

divorce. 474.420, RSMo.

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Reasoning: Although the Will contained an otherwise valid provision not to revoke the Will, the Will did not specifically contemplate whether the parties' agreement

would survive a divorce.

TIME LIMITS FOR PRESENTMENT OF POUR-OVER WILL State ex. rel. Unnerstall v. Berkemeyer, 298 S.W.3d 513 (Mo. 2009).

Facts: The deceased established a trust and purportedly executed a pour-over will during his life. On the first anniversary of his death, the widow (Ms. Unnerstall)

filed a petition in the probate court to administer his estate. Later, the will was presented to the probate court. Ms. Unnerstall asserted that the deceased's assets

should be subject to probate as though he died without a will because the will was not presented to the probate court within one year as required by § 473.050, RSMo. (2000). The judge admitted the deceased's will to probate and granted letters

testamentary to a nephew, Gary Unnerstall (Gary), whom the will named as executor.

Prior to that, Gary had offered Ms. Unnerstall $92,306 (10% of the trust estate) -- about seven months after Mr. Unnerstall's death -- as the amount due to

Ms. Unnerstall pursuant to Mr. Unnerstall's trust and will. Ms. Unnerstall did not accept this payment. Basically, Ms. Unnerstall will get more intestate than pursuant to the trust's terms.

On the day of the hearing, Gary Unnerstall filed an affidavit stating he had

not opened a probate estate on behalf of Mr. Unnerstall because he believed that all of the assets Mr. Unnerstall owned at the time of his death were held in a revocable living trust and not subject to probate administration. – Oops! Turns out that was

not the case. Holding: Reversed.

Rule: § 473.050, RSMo. (2000) prevents a will from being presented more

than one year after the death of a decedent if notice of letters had not been published already.

Reasoning: Notice of letters was not published within the statutory requirement. Accordingly, the judge should not have admitted the deceased's will to probate, nor

should letters testamentary have been issued in accordance with the will. WILL WITH CHARITABLE TESTAMENTARY TRUST

In the Matter of the Gertrude Lischesky Scholarship Trust, 291 P.3d 1073,

2013 Kan. App. Unpub. LEXIS 31 (January 11, 2013).

Facts: Lischesky died in 1967 and made the following bequest in her will:

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“To . . . Chapter . . . all the J. S. Dillon and Sons capital stock [Dillons stock] which I may own at the time of my death. Such stock shall be held in trust and shall be

administered by a permanent committee consisting of Mrs. David Shivel, Mrs. R.G. Rumble and Mrs. Ernest Harms and the income therefrom and increments and

additions thereto shall be used to provide financial aid for a girl graduate of the Great Bend, Kansas, High School . . . .”

The probate court entered a decree of final settlement, naming the Chapter as a legatee.

In 1988, the permanent committee petitioned for a sale of some or all of the stock to allow the charity to expand its charitable activities. Petition was granted.

Through 2009, Jean Rumble petitioned at various times for letters of trusteeship and change of trustee appointments. All petitions were granted.

In 2011, the Chapter moved to set aside all previous orders and dismiss the

court’s jurisdiction because, among other things, the original bequest was made outright to the Chapter rather than in trust.

The district court held for the Chapter that no trust was created, but that a permanent committee shall continue to administer the funds per Lischesky’s wishes.

Issue: Did the will create a trust, and if so, who holds legal title as trustee?

Yes, a charitable trust was created, and the Chapter holds legal title of the stock “in trust” with management of the stock held by the permanent committee.

Rules: 1. In the absence of definite evidence to the contrary, a decree of final settlement

in a testate estate should be construed to operate in conformance with the terms of the will and the statutes pertaining thereto.

2. Though title to the trust property is in a trustee, the terms of a trust may commit the whole management of the trust property to a third person - someone

other than the trustee. (Note: This trust is a directed trust rather than a delegated trust; see, K.S.A. 58a-808 – “Powers to Direct”).

3. The third person, referred to as the "power holder" in the Restatement (Third) of Trusts § 75 (2005), is still bound by a fiduciary duty to the beneficiaries of the

trust.

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TRUSTEE SELF-DEALING AND NO-CONTEST CLAUSES Hamel v. Hamel, 296 Kan. 1060, 299 P.3d 278 (2013).

Facts: Lawrence Hamel ("Lawrence") sought termination of his deceased father trust

and removed of the trust's Trustees for self-dealing and breach of fiduciary duties. He also moved to set aside a contract for deed executed between his brother, Dennis, as buyer, and the Trustees (one of which is Dennis), as sellers, for the sale

of farmland owned by the trust.

Father's trust, as amended, included the following provision, allowing Dennis the option to purchase the family farm:

"It is my intention that my son, Dennis Hamel, have the first option to purchase any or all of the farmland . . . . Dennis Hamel has the option to

purchase any or all of the farmland for three years immediately following my death at the appraised price . . . . If Dennis Hamel has not purchased the farmland within the allotted time period, then it shall be divided in

accordance with the above beneficiary's fractional shares." (Emphasis added).

Other relevant provisions:

Trustee has "absolute ownership and control of property . . . to lend money to . . . any beneficiary under [the] Trust . . . as may be agreed upon between my Trustee and such parties, provided, however, that any such

loan shall be adequately secured and shall bear a reasonable rate of interest." 3. After father died, Dennis and his wife executed a contract for deed with

Trustees (Dennis and sibling) to purchase the farmland over 6 years at 5% interest. Lawrence argued that the terms of the contract violated the trust provisions.

District Court’s Relevant Findings: 1. Trustee had authority to sell the farm under the contract for deed terms; 2. Father did not intend for trust to terminate

immediately upon death; and 3. Lawrence lacked standing to seek Trustees' removal because he lost status of "qualified beneficiary" when he violated the no-contest

clause of trust. Disposition: Affirmed in part, reversed in part.

Rules:

1. A trust terminates to the extent the trust is revoked or expires pursuant to its terms, no purpose of the trust remains to be achieved, or the purposes of the trust

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have become unlawful, contrary to public policy, or impossible to achieve. K.S.A. 58a-410(a). 2. An in terrorem clause is a clause in a will in which a testator imposes upon a

devisee or legatee a condition that he or she shall not dispute the provisions of the will or the gift shall be void. Kansas has consistently held that in terrorem clauses

in wills are valid and enforceable against a beneficiary who attacks the validity of the will, or provisions therein, unless the beneficiary had probable cause to challenge the will or its provisions.

3. A no-contest clause in a trust serves the same purpose as such a clause in a

will and is construed according to the same rules applied to wills. K.S.A. 58a-112. 4. Courts apply a two-part analysis to determine whether a no-contest clause

should be enforced against a beneficiary. First, the court must determine whether the beneficiary's action or actions violated the express terms of the no-contest

clause. Second, the court must determine whether the beneficiary had probable cause to take the action or actions that violated the no-contest clause. Holdings:

1. The language of the Trust conveys Arthur's clear intent that the farmland would be disposed of within 3 years of his death--either through Dennis's purchase

of the farm or by a division of the farm property among the beneficiaries. The Trustees frustrated that intent when they entered into a contract for deed with

Dennis to pay the purchase price over a 6-year period with title passing at the end of that period.

Kicker: The KS Supreme Court did not void the contract for deed because Dennis happened to pay the full purchase price just within the 3-year requirement despite the 6-year amortization.

2. Lawrence had probable cause to challenge the Trustee's actions in violation of

the no-contest clause. Dissent: Dennis had 3-years to opt to purchase the farmland, but trust does not

require final payout within 3 years.

TESTAMENTARY CAPACITY In re Estate of Fearn, 314 P.3d 900, 2013 Kan. App. LEXIS 1130 (December 13,

2013). Facts:

1. Gene Fearn (Gene) executed a will in 2005. Gene's son, Kenneth, was named

executor, and the will left Gene's estate to his living trust.

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2. In 2011, Gene was peeved at Kenneth and decided to disinherit his seven natural and adopted children. He wished to leave his estate to his wife, if she

survives, then to two charities.

3. Gene and his adopted daughter, Kari, met with his estate attorney at which time Gene expressed his wishes to the attorney. The attorney was slow getting back to Gene.

4. Because Gene was anxious to execute the new will, Kari went online and prepared a new will using a Word template. She and Gene went to Gene's bank to

execute the will.

5. When Gene died in 2012, Kari submitted the 2011 will to the probate court. Kenneth denied that Gene was of sound mind and sought to probate the 2005 will.

Issue: Did Kari make a prima facie case as to Gene's testamentary capacity at the time of execution of the 2011 will? NO.

Rules: 1. In addressing the issue of testamentary capacity, the KS Supreme Court has

stated that when offering a will to probate, the burden of proof is initially upon the proponent to make a prima facie case showing capacity and due execution of the will.

2. After the proponent of a will establishes a prima facie case of capacity, the

burden shifts to the opponent of the will to prove the testator's incapacity by clear, satisfactory, and convincing evidence.

3. In Kansas, it is well settled that in order for the testator to have testamentary capacity, the testator, at the time the will is executed, must know and understand the nature and extent of his or her property and have an

intelligent understanding of the disposition he or she desires to make of it; realize who his or her relatives are and who the natural objects of his or her

bounty are; and comprehend the nature of the claims of those he or she desires to include and exclude from participation in the property distribution.

NOTE: The court did not find that Gene lacked testamentary capacity. Rather, it found that Kari presumably could have proven capacity, but failed to do so. Yikes!

UNDUE INFLUENCE - Nonprobate Transfers

Leppke v. Heier, 308 P. 3d 31, 2013 Kan. App. Unpub. LEXIS 835 (September 13, 2013).

Facts: Lillian Leppke and her husband (now deceased) executed a deed to the two properties they owned from themselves to themselves and their 3 children as joint

tenants. Later, Lillian filed a suit requesting that the deed be declared void on the

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grounds that it had been executed under undue influence by their daughter, Marilyn, and that Marilyn breached her fiduciary duties as her attorney-in-fact.

From 2006 to 2009, Marilyn regularly served as her parent's caregiver. In

2008, Marilyn attended meetings with the Leppke's estate planning attorney, who advised the Leppkes that they should retain full ownership of their real estate for their own care and maintenance down the road.

In April 2009, Marilyn drove Lillian and husband to a title company and left them in the car while she inquired into including herself and her siblings on her

parent's real estate titles. The title company prepared the deed, and Marilyn and a notary went to the car where the Leppkes were sitting. The Leppkes executed the

deed in the car. The notary stated in her affidavit that the Leppkes "signed the deed at Marilyn K. Heier's direction."

PP: The trial court granted Lillian's request, at summary judgment, to void the deed and awarded her attorneys fees pursuant to K.S.A. 2012 Supp. 58-657(g). Holding: Reversed because Lillian's motion for summary judgment and Marilyn's response to it presented disputed facts that precluded summary judgment. The

award of attorney fees should be reversed in light of our ruling on the summary judgment issue.

AUTHORITY OF ATTORNEY-IN-FACT

Kirchhof v. Williams (In re the Estate of Qualls), 436 S.W.3d 743 (W.D. Mo. 2014).

Facts: On December 6, 2006, Martha Lutisha Qualls (the "decedent") executed a Last Will and Testament, naming her son, John Qualls, her stepdaughter, Bonnie

Williams, and her step-granddaughter, Debra Kirchhof, as the equal beneficiaries of: "[A]ll of my estate, whether real, personal or mixed, wheresoever situated which I may own at the time of my death." Additionally, in the Will, the decedent named

Qualls and Kirchhof as co-personal representatives of her estate. Decedent also executed a power of attorney, naming Kirchhoff as her

attorney-in-fact.

On March 24, 2007, at the instruction of decedent, Callaway Bank amended the signature card for a checking account that decedent opened in 1966 (the "Callaway Account"). The amended signature card named Kirchhof as an authorized

signatory, and named Kirchhof and Qualls as pay-on-death beneficiaries, each to share fifty percent of the funds in the Callaway Account upon the death of the

decedent. On August 23, 2009, Kirchhof, acting as attorney-in-fact, sold the decedent's

home, acreage, and household contents at auction. The net proceeds from the

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auction were $80,240.00 — $5,395.00 from the household contents and $74,845.00 from the home and acreage. Kirchhof deposited the $80,240.00 into the Callaway

Account. Kirchhof testified that her deposit of the proceeds into the Callaway Account was not at the direction of the decedent.

Decedent later died, and Kirchhof filed a small estate affidavit with the probate court, claiming that the estate assets were less than $40K. The

stepdaughter, Bonnie Williams, filed a petition for order to direct application of letters testamentary, arguing that the estate exceeded $40K due to the proceeds deposited into the bank account.

Circuit court ordered that Kirchhof exceeded her authority as attorney-in-fact

and ordered that the funds be turned over to the estate. Kirchhof appealed. Holding: Affirmed.

Rules:

1. A person who is appointed an attorney in fact under a power of attorney . . . who undertakes to exercise the authority conferred in the power of attorney, has a

fiduciary obligation to exercise the powers conferred in the best interests of the principal, and to avoid self-dealing and conflicts of interest . . . and in the absence of explicit authorization, the attorney in fact shall exercise a high degree of

care in maintaining, without modification, any estate plan which the principal may have in place . . . . § 404.714.1, RSMo.

2. Section 404.710.6(3), RSMo., states that, in order for an attorney-in-fact to "make or revoke a gift of the principal's property in trust or otherwise," the power of

attorney must "expressly authorize[ ]" such action. Reasoning:

1. The decedent did not expressly authorize Kirchhof’s actions.

2. Although Kirchhof did not acquire any ownership interest in the auction proceeds when she deposited the funds in the bank account, she profited from depositing the

$80,240.00 into that account. Kirchhof stood to gain financially as a result of the deposit, and the ultimate effect of the deposit was to increase the amount of

Kirchhof's inheritance. 3. The decedent’s POA stated:

So long as the said DEBRA M KIRCHHOF, is personally acting as attorney hereunder, she is authorized to make gifts or transfers in my name out of my

property and assets to such recipients as her sole discretion may seem appropriate and proper . . . . Said attorney-in-fact, may herself be a recipient as to gifts by my

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said attorney. If I have a current Will, the terms thereof shall be respected as to gifts by my said attorney.

TAX APPORTIONMENT CLAUSE

Almond v. Almond (In re Estate of Ginn), 427 S.W.3d 291 (W.D. Mo. 2014).

Facts: Ginn, a widower, died on April 16, 2003, leaving a substantial estate. On May 9, 2003, Ginn's will (which he executed in 1999) and a first and second

codicil (both executed in 2000) were admitted to probate. The will made certain specific devises to Ginn's only two children (Nancy Almond and Sally Hood) and to his five grandchildren (Carrie, Callie, Christopher, and Carl Almond, and Elizabeth

Hood Lynn). It then disposed of the remainder of his estate under the following clause:

. . . and after payment of all expenses and taxes of my estate, an amount of $600,000.00 present worth to Sally Hood and, the remainder to Nancy

Almond. The estate was well over $17 million, and after the taxes were paid out of the

residue, Nancy Almond would still receive $5 million. Almond sought to apply the doctrine of equitable apportionment, which the circuit denied.

Holding: Affirmed.

Rules:

1. While federal law mandates that estate tax on the gross estate be paid "out of the whole estate," state law governs the "ultimate thrust of the tax and who should bear the burden of it."

2. Because Missouri has no apportionment statute addressing the ultimate burden of federal estate tax, our courts first look to the . . . testamentary

instruments in order to discern the decedent's intent.

3. The doctrine of equitable apportionment, which imposes the burden of paying estate taxes on the property that generates the tax and exonerates the property which does not, is appropriately applied only if the court cannot determine the

testator's intent.

BANKRUPTCY AND SPENDTHRIFT CLAUSES In re Robben, 502 B.R. 572, 2013 LEXIS 5308 (Bankr. D. Kan. Feb. 10, 2014)

Issue: Whether Robben’s interest in a revocable trust that contains a spendthrift clause is a part of Robben’s bankruptcy estate upon debtor’s filing a bankruptcy

petition?

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Facts: Robben filed a Chapter 7 petition in 2004 and did not disclose that he was

named a beneficiary of a revocable trust which would entitle him to certain property. Settlor died 6 years later, and Robben reopened the bankruptcy case

asking the court to order the trustee to abandon whatever interest the bankruptcy estate might have in the trust.

The spendthrift provision read: To the extent permitted by law, none of the beneficiaries hereunder shall

have any power to dispose of or to charge by way of anticipation or otherwise any interest given to such beneficiary; all sums payable to any beneficiary

hereunder shall be free and clear of debts, contracts, alienations and anticipations of such beneficiary, and of all liabilities for levies and attachments and proceedings of any kind, at law or in equity.

Rules:

1. 11 U.S.C. § 541(c)(2) excludes from property of the estate a debtor’s beneficial interest in a spendthrift trust.

2. A spendthrift trust is created when the settlor clearly manifests the intention not only to create a trust, but to create it with the spendthrift effect. The

intent need not be stated in express terms but may come from construction of the trust instrument as a whole.

3. The court will look at whether the creditors or transferees had any right to rely upon the trust for satisfaction of their claims.

4. Debtors must satisfy 3 criteria to exclude property from the bankruptcy estate under 11 U.S.C. § 541(c)(2): 1) debtor must show that they have a beneficial

interest in a trust; 2) debtor must show that there is a restriction on the transfer of the interest; and 3) debtor must show that the restriction is enforceable under

nonbankruptcy law. Holding: The court held that the trust had a valid spendthrift clause, but denied

debtor’s motion as moot because the trustee did not and does not have an interest in the trust to abandon.

In re Skubitz, 2014 Bankr. LEXIS 264 (Bankr. D. Kan. January 21, 2014) – J. Somers

Issue: Whether any part of the debtor’s beneficial interest in a trust established by debtor’s husband’s last will and testament is subject to creditors’ claims in a

Chapter 7?

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Facts: The trust contains a spendthrift clause (called a “prohibition of anticipatory assignment” provision) pursuant to K.S.A. 58a-502. The debtor was trustee of the

trust and had the power to make distributions to herself as a “power of withdrawal” under KS UTC. Trust had language that gave trustee the discretionary power to

distribute what is “required to provide adequately for [debtor’s] reasonable support, maintenance and health, taking into consideration the other sources of funds available….”

Trustee argued that creditors are authorized to reach trust property because debtor held a power of withdrawal.

Rules: 1. K.S.A. 58a-505 authorizes creditors of either the trust settlor of a

revocable trust or holder of a power of withdrawal in an irrevocable trust to reach trust property despite a spendthrift provision.

2. K.S.A. 58a-502(d): “Whether or not a trust contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that is subject to

the trustee’s discretion even if: (1) The discretion is expressed in the form of a standard for distribution; or (2) the trustee has abused the discretion.” (Note that the trustee is subject to a good faith standard under K.S.A. 58a-814.)

3. K.S.A. 2012 Supp. 58a-103(10) defines “power of withdrawal” as “a presently exercisable general power of appointment other than a power: (A)

Exercisable by a trustee and limited by an ascertainable standard relating to an individual’s health, education, support or maintenance within the meaning of

section 2041(b)(1)(A) or 2514(c)(1) of the Internal Revenue Code of 1986. . . or (B) exercisable by another person only upon consent of the trustee or a person holding an adverse interest.”

Holding: Court granted debtor’s motion to summary judgment because debtor’s interest is not subject to creditors’ claims. A trustee’s discretionary distributions to herself as beneficiary are not a “power of withdrawal” under the KS UTC. The

Chapter 7 Trustee’s theory would fail even if the trust did not include a spendthrift provision because the distributions are subject to the trustee’s discretion, not the

beneficiary’s power. Reasoning: 1. Chapter 7 Trustee overlooked a provision in the KS UTC that

would prevent the debtor’s creditors from attaching her interest in the trust even if trust contained no spendthrift provision.

2. Debtor’s power to distribute trust property to herself is not a power of withdrawal under the KS UTC. Rather, the power ran with the office of the trustee

as a fiduciary power. Also, the trust contained the correct “ascertainable standard” language required by IRC §§ 2041(b)(1)(A) and 2514(c)(1) so that the power was not a “power of withdrawal,” i.e. “health, education, support, or maintenance.”

Basically, so long as a trustee-beneficiary’s power to make discretionary

distributions to himself or herself is limited by an “ascertainable standard,” and so

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long as the trustee does not abuse her discretion, the trustee-beneficiary’s creditors cannot reach the trustee’s beneficial interest.

ETHICS

In re Stockwell, 296 Kan. 860, 295 P.3d 572 (2013) – per curiam Result: 1-year suspension

Facts: Respondent was hired by the surviving spouse of decedent, who died in

December 2010. Decedent had a last will and testament that named his 2 sons, from a prior marriage, as executors. The will left surviving spouse nothing and was

accompanied with a waiver of surviving spouse’s interest in decedent’s real property. Surviving spouse denied that she signed the waiver, so Respondent hired a handwriting expert who concluded that the signature was not the surviving spouse’s

signature.

The original will was produced to Respondent by the estate attorney. Despite this, Respondent met with the probate judge ex parte to discuss the decedent’s estate as though it were intestate. Respondent petitioned for appointment of

surviving spouse as administrator and for administration of decedent’s intestate estate and gave no actual notice to the sons or the estate attorney. The sons found

out about the probate case via publication. The sons’ attorney demanded that Respondent correct the pleadings given the

existence of the will, but Respondent refused, claiming that the will was invalid. Holding:

1. Respondent violated KRPC 3.3(a)(1) – Lawyers may not knowingly make

a false statement of material fact or law to a tribunal. Here, Respondent told the probate judge that the decedent had no will.

2. Respondent violated KRPC 3.5(c) – Prohibits ex parte communications. A lawyer shall not communicate or cause another to communicate as to the merits

of a cause with a judge or official before whom an adversary proceeding is pending. ESTATE PLANNING AND DIVORCE In re the Estate of McLeish, 49 Kan. App. 2d 246, 307 P.3d 221 (2013).

“In this appeal, we are faced with the unenviable task of imposing a hard lesson – that a party is bound by the contract he or she signs even if it creates (in the eyes of

some) an unfair or harsh result.” – J. Powell.

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Facts:

Edwin and Lois were married in 1950 and had two sons: Eddie and Bill. Edwin and Lois filed for divorce in 2006, and at a 2008 hearing, the parties testified

as to the settlement terms and that their primary goal was to pass their estate to their sons. Their attorneys announced the terms of their settlement agreement on the record, which the court accepted.

The relevant terms on the record were that “the home place plus 40 acres, . . .

[w]ill go to Edwin in fee simple, subject to a right of first refusal to Lois. . . . All other

land Edwin and Lois will hold in a life estate with their children as remaindermen.”

Lois’s attorney submitted a journal entry to Edwin’s attorney which identified specific tracts of land “including minerals, will be held by the parties as tenants in common as owners of a joint life estate” with the remainder to go to their sons, per

stirpes. Edwin’s attorney responded that Edwin’s understanding of the agreement was that Edwin and Lois would own the minerals in fee simple, to be divided by

mineral deed. That language was incorporated into the JE, and the parties signed and filed it.

Here is where it gets dicey. In 2009, Edwin executed a last will and testament, specifically disinheriting his sons and naming “Michelle” his executor and sole heir. Edwin died later in 2009.

Michelle petitions to probate the will. Of course, Eddie and Bill object to the

validity of the will and claim that they have valid demand against the estate per the settlement agreement. Also, Lois contends that she did not knowingly and voluntarily sign the JE. The court validated the will, but held that Edwin’s and

Lois’s oral proffer at the divorce hearing was their settlement agreement. Michelle appealed, and this court reversed.

Issue:

Did the district court err in finding the oral property settlement controlled distribution of mineral interests?

Holding: Yes. The oral separation agreement merged into the JE and decree by operation of statute per K.S.A. 60-1610(b)(3) (now repealed) and by application of

contract principles; further, Lois is bound by her signature on the written JE and decree.

Rules: 1. “Separation agreement. If the parties have entered into a separation

agreement which the court finds to be valid, just and equitable, the agreement shall be incorporated in the decree. . . . The provisions of the agreement on all matters

settled by it shall be confirmed in the decree . . . .” K.S.A. 60-1016(b)(3).

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2. Until a divorce decree is put into writing and filed, it is of no effect.

3. When a contract is complete, unambiguous, and free from uncertainty, parol

evidence of prior or contemporaneous agreements or understandings tending to vary the terms of the contract evidenced by the writing is inadmissible.

4. A party who signs a written contract is bound by its provisions regardless of the failure to read or understand the terms, unless the contract was entered into through fraud, undue influence, or mutual mistake.