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QUINNIPIAC PROBATE

LAW JOURNAL

VOLUME 32 2018-2019 ISSUE 1

2018-2019 EDITORIAL BOARD

BRITTANY M. BARBET Editor-in-Chief

LEEZA N. TIRADO

Executive Managing Editor ALISSA BANG JEFFREY D. BAUSCH Manuscript Editor Supervising Editor

CATHERINE A. FIORE GINA M. GEARY

Articles & Opinions Editor Articles & Opinions Editor

RAYMOND J. ALTIERI OLIVIA T. KNOTT Business Managing Editor Alumni Affairs & Events Editor

*****

Associate Editors KORRIN N. AMARAL EDWARD A. DUARTE SHAINA M. HIRSCHKORN MYSLINSKI ELIZABETH A. WEIKEL

***** Staff Members

MARK C. BACHMAN REBECCA L. DEBIASE EVAN G. MARLOW JAMES N. ROTONDO ALICIA N. COOK TIMOTHY R. FRAY MATTHEW J. PARENTI MEGAN L. SPICER GABRIEL D’ANTONIO EMILY M. HALL BRANDY M. PARRY MORGAN L. ZIEGLER

***** Advisors

Quinnipiac University School of Law DEAN JEFFREY A. COOPER DEAN KATHY A. KUHAR

PROFESSOR LEONARD J. LONG PROFESSOR LINDA R. MEYER

PROFESSOR SUZANNE H. NATHANSON

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Copyright © 2018 by The Quinnipiac Probate Law Journal Association.

The Quinnipiac Probate Law Journal (ISSN 1096-1054) is published quarterly by the Quinnipiac University School of Law. The Journal acknowledges the support of the National College of Probate Judges and the Connecticut Probate Assembly. The views expressed in this publication are those of the authors and are not necessarily the views of the National College of Probate Judges nor the Connecticut Probate Assembly. This publication was formerly known as the Connecticut Probate Law Journal (ISSN 1897-1234).

Publication Office: The Quinnipiac Probate Law Journal, Quinnipiac University School of Law, 275 Mount Carmel Avenue, Hamden, CT 06518-1950. A one-year subscription, comprising four issues, is $36.00. Address all subscription inquiries to the Business Managing Editor or call (203) 582-3223. Subscriptions will be automatically renewed unless cancellation is received before the beginning of the next volume. POSTMASTER: Send address changes to the Quinnipiac Probate Law Journal, 275 Mount Carmel Avenue, Hamden, CT 06518-1950.

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NOTE TO READERS

The Quinnipiac Probate Law Journal publishes the text of judicial opinions in edited form. Text not material to the substantive accuracy of the opinion may be modified. Minor adjustments have been made so as to conform to the style and layout requirements of the Journal.

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4 Natl College of Probate Judges 11/11/2018 4:20 PM

2018-2019 NATIONAL COLLEGE OF PROBATE JUDGES OFFICERS:

HON. TAMARA C. CURRY

CHARLESTON, SC PRESIDENT

HON. RITA COBB

WASHINGTON, OR IMMEDIATE PAST PRESIDENT

HON. ANNE MEISTER WASHINGTON DC PRESIDENT ELECT

HON. CHRISTINE BUTTS HARRIS, TX

SECRETARY / TREASURER

2018-2019 NATIONAL COLLEGE OF PROBATE JUDGES EXECUTIVE COMMITTEE:

HON. DIANNE E. YAMIN; DANBURY, CT

HON. JAMES P. DUNLEAVY; AROOSTOOK, ME HON. AMY MCCULLOCH; COLUMBIA, SC

HON. BRENDA HULL THOMPSON; DALLAS, TX HON. JAMES PURNELL III; ELLINTON, CT HON. JAMES T. WALTHER; ELYRIA, OH

2018–2019 CONNECTICUT PROBATE ASSEMBLY OFFICERS:

HON. PHILIP WRIGHT, JR. PRESIDENT-JUDGE

HON. MICHAEL BRANDT

FIRST VICE PRESIDENT-JUDGE

HON. EVELYN DALY SECOND VICE PRESIDENT-JUDGE

HON. MICHAEL DARBY EXECUTIVE SECRETARY

HON. LEAH SCHAD

RECORDING SECRETARY

HON. MICHAEL MAGISTRALI TREASURER

6 Faculty List 11/11/2018 4:21 PM

QUINNIPIAC UNIVERSITY SCHOOL OF LAW OFFICERS OF ADMINISTRATION AND FACULTY

Judy D. Olian, B.A., The Hebrew University, Jerusalem; M.Sc., Ph.D. University of Wisconsin; President,

Quinnipiac University Mark A. Thompson, B.S., Bentley College; M.B.A., Western New England College; Ph.D., Georgia State University; Executive Vice President and Provost, Quinnipiac University Joshua D. Berry, B.A., Eastern Connecticut State University; University Registrar James A. Benson, B.S., Southern Connecticut State University; Assistant Registrar for Law

_________________________ Adam Barrett, B.A., University of New Hampshire; J.D., Ohio Northern University—Claude W. Pettit

College of Law; Associate Vice President and Dean of Law Admissions Jennifer Gerarda Brown, A.B., Bryn Mawr College; J.D., University of Illinois; Dean of School of Law,

Professor of Law Robert C. Farrell, B.A., Trinity College; J.D., Harvard University; Associate Dean for Academic Affairs

and Professor of Law Shelley Sadin, B.A. Yale College; J.D. Georgetown University Law Center; Associate Dean of

Professional & Career Development Jeffrey A. Cooper, B.A., Harvard University; J.D., Yale University; LL.M., New York University;

Associate Dean for Faculty Research and Development and Professor of Law Kathy A. Kuhar, B.S. Eastern Connecticut State University; J.D., Quinnipiac University; Assistant Dean

of Students Joan Metzler, B.A., Widener University; J.D., Temple University; Director of Law School Admissions Doretta Sweeney, B.A., Mt. Holyoke College; J.D., University of Connecticut; Director of Professional

and Career Development Odette G. Franceskino, B.S., Teikyo Post University; M.B.A., Quinnipiac University; Director of

Financial Aid Ann M. DeVeaux, B.A., J.D., University of Bridgeport; M.L.S., Southern Connecticut State University;

Director of the Law Library Colleen Raftrey Entenman, B.A., Michigan State University; M.B.A., University of Michigan; Director of

Development & Alumni Affairs Neeta M. Vatti; B.A., University of Connecticut; J.D., Albany Law School; Assistant Director of Career

Services Katherine E. Mills, B.A., Fairfield University; J.D., Quinnipiac University School of Law; Associate

Director of Law Admissions Robin L. Shea, B.S., M.A., Fairfield University; Business Manager

__________________________ Kevin M. Barry, B.A, Boston College; J.D., Boston College Law School; LL.M., Georgetown University;

Professor of Law Dale L. Carlson, B.S., M.B.A., State University of New York at Buffalo; J.D., Syracuse University;

LL.M., New York University; Distinguished Practitioner in Residence, Intellectual Property Law William V. Dunlap, B.A., New School for Social Research; M.Phil., University of Cambridge; J.D., Yale

University; Professor of Law Leonard A. Dwarica, B.A., St. Peter’s College; M.S., New York University; J.D., Pace University;

Distinguished Practitioner in Residence, Health Law Neal R. Feigenson, B.A., University of Maryland; J.D., Harvard University; Professor of Law Marilyn J. Ford, B.A., Southern Illinois University; J.D., Rutgers University; Professor of Law Stephen G. Gilles, B.A., St. John’s College; J.D., University of Chicago; Professor of Law Sheila Hayre, B.A., M.A., Stanford University; J.D., Yale University; Visiting Professor of Law Jennifer L. Herbst, A.B. Dartmouth College, M.B.I.O., J.D., University of Pennsylvania; Professor of Law Carolyn Wilkes Kaas, B.A., Cornell University; J.D., University of Connecticut; Associate Professor of

Law, Director of Experiential Learning Stanton D. Krauss, B.A., Yale University; J.D., University of Michigan; Professor of Law Sandra Lax, B.A., Brooklyn College; M.L.S., Queens College; J.D., University of Bridgeport;

Distinguished Practitioner in Residence, Family Law Jennifer Bell Levine, B.A. Duke University; J.D., Columbia University; Professor of Law William DeVane Logue, B.A., Brown University; J.D., University of Connecticut School of Law;

Distinguished Practitioner in Residence, Dispute Resolution Leonard J. Long, B.S., Illinois Institute of Technology; M.A., Ph.D., University of Illinois; J.D.,

University of Chicago; Professor of Law Alexander M. Meiklejohn, A.B., Amherst College; J.D., University of Chicago; Professor of Law

6 Faculty List 11/11/2018 4:21 PM

QUINNIPIAC PROBATE LAW JOURNAL

Linda R. Meyer, B.A., University of Kansas; J.D., Ph.D., University of California, Berkeley; Professor of Law

Suzanne H. Nathanson, A.B., Harvard University; J.D., Case Western Reserve University; Assistant Professor of Legal Skills

Joseph M. Olivenbaum, B.A., New York University; J.D., Northeastern University; Director of Academic Support Programs

Charles A. Pillsbury, B.A., Yale University; M.A.R., Yale Divinity School; J.D., Boston University; Distinguished Practitioner in Residence, Dispute Resolution

Emanuel Psarakis, A.B., University of Connecticut; J.D., Boston University; LL.M., Columbia University; Distinguished Practitioner in Residence, Employment Law

Sarah F. Russell, B.A., J.D., Yale University; Professor of Law Brad Saxton, B.A., College of William and Mary; J.D., University of Virginia School of Law; Professor

of Law and Dean Emeritus Mark Schroeder, B.A., Williams College; J.D., University of Connecticut; Assistant Professor of Legal

Skills G. Alex Sinha, B.A., New York University; Ph.D., University of Toronto; J.D., New York University,

Professor of Law Sara V. Spodick, B.A., Southern Connecticut State University; J.D., Quinnipiac University; Staff Attorney

of the Tax Clinic W. John Thomas, B.A., J.D., University of Arizona; LL.M., M.P.H., Yale University; Professor of Law Robert White, B.A., Tufts University; J.D., New York University; Distinguished Practitioner in

Residence, Commercial Law _________________________

Melanie B. Abbott, B.A., Bates College; M.S., Syracuse University; J.D., University Of Bridgeport;

Professor of Law Emeritus Fredick Tse-shyang Chen, J.D. University of Chicago; L.L.B. Soochow University; LL.M. Yale

University; Professor of Law Emeritus Susan R. Dailey, B.A., M.A., Ph.D., Catholic University of America; Professor of Legal Writing Emeritus Mary Ferrari, B.A., University of Notre Dame; J.D., Cornell University; LL.M., New York University;

Professor of Law Emeritus Charles A. Heckman; Professor of Law Emeritus Joseph Hogan, A.B., St. Joseph’s University; J.D., Widener University; Associate Professor of Legal

Skills Emeritus Richard E. Litvin, B.A., Dickinson College; J.D., Temple University; LL.M., Yale University; Associate

Professor of Law Emeritus Martin B. Margulies, B.A., Columbia University; LL.B., Harvard University; LL.M., New York

University; Professor of Law Emeritus Elizabeth Phillips Marsh, A.B., Harvard University; J.D., New York University; Professor of Law

Emeritus John T. Morgan, B.A., Southwest Missouri State University; J.D., Washington University; LL.M.,

Harvard University; Professor of Law Emeritus Toni Robinson, B.A., Sarah Lawrence College; J.D., Columbia University; LL.M., New York University;

Professor of Law Emeritus Gail S. Stern, B.A., Boston University; M.A.L.S., Wesleyan University; J.D., Quinnipiac University

School of Law; Associate Professor of Legal Skills Emeritus Sheila Taub, B.A. Brandeis University; J.D., Harvard University; Professor of Law Emeritus James Trowbridge, B.A., Fairfield University; LL.B., Georgetown University; Professor of Law Emeritus Jamison V. Wilcox, A.B., Amherst College; J.D., Columbia University; Professor of Law Emeritus

6. ATTORNEYGAFFEYDEDICATION.DOCX (DO NOT DELETE) 11/11/2018 4:21 PM

Thomas E. Gaffey, Esq.

This Issue of the Quinnipiac Probate Law Journal is dedicated to Thomas E. Gaffey, Esq. upon his retirement as Chief Counsel at the Office of the Probate Court Administrator. During his twenty-eight years of service, Attorney Gaffey elevated the professionalism of Connecticut’s Probate Courts.

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QUINNIPIAC PROBATE LAW JOURNAL

VOLUME 32 2018 ISSUE 1

TABLE OF CONTENTS

OPINION OF THE CONNECTICUT PROBATE COURT IN RE: THE ESTATE OF WILLIAM GROSSMAN, DECEASED 1 (Joint Survivorship)

ARTICLES RETHINKING CONNECTICUT PROBATE: 10 Jeffrey A. Cooper TWO CHEERS FOR DECANTING: A PARTIAL DEFENSE OF DECANTING STATUTES AS A TOOL FOR IMPLEMENTING FREEDOM OF DISPOSITION 23 Stephanie Vara

NOTE DISABLING THE FUNDS OF THE DISABLED: HOW THE “SOLE BENEFIT” RULE FRUSTRATES THE ADMINISTRATION AND PURPOSE OF SUPPLEMENTAL NEEDS TRUSTS 60 Elizabeth A. Weikel

APPENDIX CUMULATIVE TOPIC INDEX 87

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QUINNIPIAC PROBATE

LAW JOURNAL


OPINION OF THE CONNECTICUT PROBATE COURT

IN RE: THE ESTATE OF WILLIAM GROSSMAN, DECEASED

PROBATE COURT, WESTPORT/WESTON DISTRICT

MAY 4, 2017

EDITOR’S SUMMARY & HEADNOTES

Husband bequeathed most of his estate, consisting of personal tangible and real properties, to Wife. Husband’s Will specified that if Wife did not survive him by sixty days, the property would be divided equally among Husband’s four nieces and nephews, and Wife’s daughter. Wife died intestate, fifty-six days after the death of Husband. Since the heirs to each estate differed, the Court was tasked with determining what personal property located in the marital home, belonged to which estate. The Court held that personal property brought into a marriage belongs to the initial owner and will pass to that individual’s estate. Additionally, it held that property acquired during the marriage belonged to the couple as joint tenants with rights of survivorship; therefore it would pass by operation of law to the survivor, regardless of how many days he or she survived the decedent. Therefore, the marital property belonging to the Husband and Wife passed to the heirs of the Wife’s estate.

1. Property, Joint Survivorship: Generally

Pursuant to Conn. Gen. Stat. § 46b-36, personal property brought into a marriage belongs to the initial owner and may pass to the estate of that individual upon death. A spouse shall not acquire by marriage any right to or interest in that property, except as provided by sections 45a-436 and 45a-437.


English common law provides that joint property is owned with


2 QUINNIPIAC PROBATE LAW JOURNAL [Vol. 32

rights of survivorship.


With respect to real property, survivorship language must be set forth in the deed or other transferring instrument.


In Connecticut, jointly owned personal property inherently includes rights of survivorship.


For the purpose of determining title of household goods and furnishings between husband and wife, the property that has been acquired in anticipation of or during the marriage, and which has been possessed and used by both spouses, will, in the absence of evidence showing otherwise, be presumed to be held jointly.

Opinion

INTRODUCTION

The facts of this case presented itself to the Court as reminiscent of a television drama. Husband died, and his Will was discovered with many handwritten alterations. Wife died only fifty-six days later, found dead by her daughter on a chaise lounge in the backyard. Allegations of theft were brought among siblings, accompanied by evidence of Facebook postings with Wife’s property in the background, which rose to the seriousness of a police investigation. Both estates were left in serious disarray, with assets consisting of valuable real estate, antiques, and artwork, encumbered by substantial debt owed to both third-party creditors and family members. If Wife had ever made a will, it was not discovered. Her estate was held to be intestate.

The administration of these estates required this Court to decide various aspects of law as they arose. This opinion centers on the issue of what personal property belongs to which estate. Because Husband’s Will provided that Wife could inherit only if she survived him by sixty days, and she only survived him by fifty-six days, the question for this Court is whether, and to what extent, the tangible personal property that was physically located in the marital home belonged to Husband or to Wife. Because the heirs to each estate are different, the answer is relevant to the administration of both estates.

FACTS

William Grossman (“Husband”) passed away on March 25, 2014. He left a will, dated October 3, 2007, which was admitted to this Court on May 28,


2018] IN RE: THE ESTATE OF WILLIAM GROSSMAN, DECEASED 3

2014 (“Husband’s Will”). Husband’s Will provided for a series of specific bequests of tangible personal property and money to various entities.

Article Second A of Husband’s Will provides: “I give and bequeath all of my tangible personal property pertaining to items of Jewish memorabilia and interest, including all of my works of art dealing with Jewish themes, to The Jewish Museum in New York City.”

Article Second B of Husband’s Will states:

I give and bequeath the balance of my tangible personal property (including, without limitation, all of my jewelry, clothing, books, pictures, personal effects, household furnishings and equipment, automobiles and boats and all certificates of stocks or bonds issued by, or other evidences of membership in any clubs), wheresoever situated, together with all insurance policies upon said tangible personal property, to my wife, Adrienne Grossman, if she survives me, and if she does not survive me, then I give and bequeath the same to Elizabeth Ricci, Daniel Grossman, Tuvie Grossman, Joel Grossman, and Roni Dagani, as shall survive me, to be divided among such beneficiaries in as nearly equal shares as possible . . . .1

Article Third of Husband’s Will gives all real property to his wife, Adrienne Grossman (“Wife”), “if she shall survive me.” Finally, paragraph eight of Article Fourth of Husband’s Will provides:

I give, devise and bequeath the balance of my residuary estate to my wife, Adrienne, if she shall survive me. In the event that my wife shall predecease me, I give, devise and bequeath the balance of my residuary estate to Elizabeth Ricci, Daniel Grossman, Tuvie Grossman, Joel Grossman, and Roni Dragoni, as shall survive me, in equal shares.

Wife did survive Husband, but only by fifty-six days. She passed away on May 21, 2014. The significance of this date is manifested in Article Eighth of Husband’s Will, which states:

[i]f any beneficiary or beneficiaries under this Will . . . should . . . fail to survive me by sixty (60) days, then all the provisions of this Will shall take effect as if each beneficiary had in fact predeceased me or such other person, as the case may be.

1 Husband’s Will was crossed out in some places, including in this section devising personal property. The Court admitted the Husband’s Will by decree dated July 17, 2014, finding that because the writing underneath the cross-out was legible, the Will would be admitted and would be enforced as originally written.



Wife died intestate, leaving four children who are each an heir-at-law. Those children are not the children of Husband. Under the terms of Husband’s Will, his estate was intended to pass in equal shares to four nieces and nephews, and Elizabeth Ricci, who is the daughter of Wife, if Wife did not survive him by sixty days.

The marriage of Husband and Wife was a second marriage for both, but it was a lengthy marriage. The couple resided together at 29 Ferry Lane East, Westport, Connecticut (“Ferry Lane Home”), which was owned solely by Wife. Wife came into the marriage with significant personalty she retained after her divorce settlement from her first marriage in 1981. She retained her own clothing, jewelry, household furnishings, antiques, china, silverware, and other numerous household items from her home in Scarsdale, New York. Her son, Sean Kaltenbach, both testified under oath and swore through an affidavit that he personally moved those possessions from the first marriage, and others that she had inherited from her own parents, into the Ferry Lane Home. Mr. Kaltenbach further swore that when Wife and Husband merged their households, “the great majority of William’s home furnishings were either disposed of or given away and did not end up at the Ferry Lane Home of the decedent.” Mr. Kaltenbach asserts that Wife had acquired so much personalty during her life that she maintained storage units for such property while occupying several other homes in Westport. It was only upon her move to the Ferry Lane Home, which the Court notes is a large residence, that Wife consolidated all her possessions in one space. Furthermore, Mr. Kaltenbach noted that he and his brother, Christopher, would live with their mother sometimes, in each of these residences, and therefore, had personal knowledge as to these facts.

In 1996, Husband filed a petition under Chapter 7 of the Bankruptcy Code while married to Wife, and was discharged on February 2, 1999, discharging millions of dollars in debt previously owed to creditors. As a condition of discharge, Husband was not permitted to own personalty of any value. There was little testimony regarding Husband’s efforts to rebuild his fortune and whether he had accumulated assets in his own name since that date. However, the Court does know that the real estate in Connecticut, owned by Husband, was in foreclosure at the time of his death. Husband also borrowed extensively from family members and owed significant sums in back taxes.

Husband did amass a collection of Jewish memorabilia that he still owned at the time of his death. Those items were specifically bequeathed to institutions affiliated with the Jewish community, and there are no objections to that bequest. For this opinion, therefore, the Court can exclude this category of personalty, as there are no disputes with respect to its disposition.

The inventory submitted by the Administratrix sets forth four categories of personal property, whose ownership must be decided by the Court, as follows:

All personal property listed on a Chubb Masterpiece Insurance Policy, set forth with a value of $1,195,300.00 (“Chubb Property”);



All personal property listed on the Inventory of Furniture on Consignment, set forth with a value of $44,181.92 (“Consignment List Property”);

Additional personal property, estimated with a value of $5,000.00 (“Exhibit 3B3 Property”);

Proceeds of an Estate Sale of Personal Property, which as of May 3, 2017, equaled the sum of $95,568.51, which is held by the Administratrix (“Estate Sale Property”).

The Court will address each classification of property.

A. Chubb Property

Chubb Property was insured pursuant to a Chubb Masterpiece Insurance Policy naming Wife as the sole insured. The policy was in effect when both Husband and Wife died. In the Class of Fine Arts, one hundred and sixty (160) separate items are enumerated, described in detail, and valued. In the Class of Silverware, five separate items are enumerated and described in detail. In the Class of Musical Instruments, a mahogany grand piano is valued at $125,000.00.

B. Consignment List Property

Consignment List Property itemizes eight hundred and fifty-five (855) items, consisting of linens, furniture, furnishings, kitchen items, tablecloths, and costume jewelry. There are no specific indicia of ownership of these items, except in their joint physical possession by Husband and Wife. The vast majority of these items are of little worth, with pages of descriptions of items valued under twenty dollars.

C. Exhibit 3B3 Property

This consists of miscellaneous personal property, which the parties concede belonged to Wife and is part of her estate.

D. Estate Sale Property

This consists of a list of items that were sold. The Court is informed that these items included clothing belonging to Wife, as well as furniture and furnishings located at the Ferry Lane Home. Some items were on the Chubb Property while others were on Consignment List Property; and many were not on either list. The items range in variety from paintings, figurines, and lamps, to vintage top hats, books, and dolls. The items continue to be sold, adding to the amount of cash held by the Administratrix.

LAW AND DISCUSSION

A. Previously-Owned Property



The first question the Court must answer is whether a person retains title to personal property she owned before she married, or if the event of marriage changes the ownership status of such property.

[1] Connecticut General Statutes section 46b-36 answers that question by stating, in relevant part:

[a] spouse shall not acquire by marriage any right to or interest in any property held by the other spouse before or acquired after such marriage, except as to the share of the survivor in the property as provided by sections 45a-436 [the elective share after death] and 45a-437 [the intestate share after death].

Conn. Gen. Stat. § 46b-36 (2017). Connecticut law is clear that, to the extent the Court finds that Wife brought personal property into the marriage, the property remained hers after the marriage, and now belongs solely to her estate.

In deciding whether Chubb Property came to the marriage with Wife, the Court looks to the evidence. The master Chubb Property Policy in effect at the time of death of both decedents lists Wife as sole owner of all the insured personalty. Ms. Ricci submitted an itemized list of personalty from January 19, 1967, as set forth in a “Public Auction Sale,” complete with photographs showing many of these items belonging to Wife that long ago. The testimony that Wife carried her belongings with her to the Ferry Lane Home from storage units and other houses, both in Connecticut and New York, was not contradicted.

The Court finds by clear and convincing evidence that Chubb Property belonged to the estate of Wife, because the overwhelming majority of such personalty were valuables she collected throughout her life and brought into the marriage. To the extent there were any items of Chubb Property that may not have been originally brought into the marriage, the Court finds that the couple intended for such personalty to belong to Wife, and therefore holds that such property shall be part of her estate.

Exhibit 3B3 consists of an itemized list of miscellaneous personal property, which the Administratrix asserts belongs to Wife’s estate. This assertion is undisputed. The Court holds that this property belongs to Wife’s estate.

B. Property Acquired During Marriage

The parties, and this Court, could find no Connecticut Probate Court decisions that discuss how one determines the ownership of tangible personal property between cohabitating spouses who die within a short time of each other. Most likely, this is because the items are rarely in dispute. Both the Administratrix and heirs of Wife’s estate argue that this property belongs to her estate, on the grounds of common law.

[2][3][4] The original English common law rule was that joint property



is owned with rights of survivorship. See Phelps v. Jepsen, 1 Root 48, 49 (Conn. Super. Ct. 1769). Over time, this rule changed with respect to real estate, and Connecticut courts have said that survivorship language must be set forth in the deed or other transferring instrument. See Hughes v. Fairfield Lumber & Supply Co., 143 Conn. 427, 429-30 (1956). Such rule has been codified in Connecticut General Statutes section 47-14a. See Conn. Gen. Stat. § 47-14a (2017). However, Connecticut courts appear to never have abolished the original English common law rule with respect to personal property. Therefore, one can conclude that jointly-owned personal property inherently includes rights of survivorship.

The predominant question, therefore, becomes the following: can we properly characterize property used by a marital couple as joint property? Does it matter who paid for the property or who used the property? Does it matter if a husband paid for the dining room set, and then ate his meals on it for twenty years? Or if a wife bought a watch for her husband’s birthday, gifting it to him before he died? Who gets what?

[5] A review of American Jurisprudence law of other jurisdictions confirms that:

[t]he common-law presumption that ownership of household goods used and possessed by both spouses was in the husband is no longer recognized. For the purpose of determining title of household goods and furnishings between husband and wife, the property that has been acquired in anticipation of or during marriage, and which has been possessed and used by both spouses, will, in the absence of evidence showing otherwise, be presumed to be held jointly. It is rebuttably presumed that a spouse who uses individual property to purchase household goods for the family unit makes a gift resulting in joint ownership. The presumption of joint ownership gives way to direct or circumstantial evidence to the contrary, sufficient to lead to a different conclusion. Property acquired during a marriage represents the fruit of the labors of both spouses even if the actual title to that property lies with only one.

41 Am. Jur. 2d Husband and Wife, § 17 (2017) (internal citations omitted).

Examining the detailed list of Consignment List Property, the Court finds most of these items to be household items which are typically purchased by a couple setting up a house together. Sheets, linens, pillowcases, bathroom accessories, kitchen supplies, knick-knacks, cookie jars, coasters, plates, and tablecloths are just a sample of the items found on that list. Wife already occupied a home in Scarsdale, New York and two homes in Westport before she moved to the marital residence at Ferry Lane Home. It is undisputed that Wife loved to collect fine things and to furnish homes. The Court therefore finds that all Consignment List Property items belong to the Wife’s estate on the following grounds:



(a) it is likely that Wife owned most of these items before her marriage to Husband, and therefore, pursuant to Connecticut General Statutes section 46b-36, they remain hers;

(b) to the extent any of these items were purchased during the marriage, they belonged to the couple as joint tenants with right of survivorship and therefore passed to Wife by operation of law at the moment of Husband’s death. The provision in the Husband’s Will regarding the requirement of sixty days before title can vest is irrelevant with respect to the personal property located in the marital residence;

(c) there are items on Consignment List Property obviously belonging to Wife, such as her costume jewelry and hair accessories;

(d) there are no items on Consignment List Property that are specifically claimed to belong to Husband. In fact, the Court notes that the Executor of Husband’s estate never filed an inventory, although it was due on September 29, 2014;

(e) in her listing of personal property on June 15, 2015, the Administratrix concluded that “there was no personal property belonging to the Estate of William Grossman” based on her assertions of fact and law as outlined in her brief submitted to the Court. The Administratrix, who was appointed by this Court as a neutral party given the acrimony between Wife’s children, was tasked with examining and eventually cataloguing each item at Ferry Lane Home. The Court finds her opinion to be persuasive as well.

The Court finds that a rebuttable presumption has been met and challenged with respect to items of Judaica collected by Husband. Husband was Jewish and active in his local congregation. Husband clearly wished his collection to be accepted by the Jewish Museum of New York because he specified this in his Will; he would not have excepted that category of tangible personal property from all the other personal property in his life if he did not consider that property his own to devise. Therefore, the Court holds that such collection belongs to Husband’s estate. There is no dispute among the parties with respect to what specific items comprise this collection.

The Court is informed that certain items located in Ferry Lane Home were sold, including furniture and furnishings whose titles were unspecified (Estate Sale Property). For the reasons enumerated herein, the Court finds that all the proceeds of such sales shall belong to the Wife’s estate, as they derived from the sale of items which belonged to her, by operation of law at the time of the death of Husband.

CONCLUSION

Based on the foregoing, the Court concludes that almost all the personal property located in Ferry Lane Home belongs to Wife’s estate. Such property was a combination of (1) property which Wife brought into the marriage and to



which she retained legal title, and (2) property acquired by Husband and Wife together, during their marriage, which the Court finds to be joint property passing to Wife by operation of law at the time of Husband’s death. The only personal property that the Court finds to belong to the estate of Husband are those consisting of his collection of Judaica, which he specifically devised in his Will.

Dated at Westport, Connecticut, this 4th day of May 2017.

__________/s/___________

Lisa K. Wexler, Judge

9.COOPER.ARTICLE.FINAL.DOCX (DO NOT DELETE) 11/11/2018 4:22 PM

QUINNIPIAC PROBATE

LAW JOURNAL


RETHINKING CONNECTICUT PROBATE

JEFFREY A. COOPER*

I. INTRODUCTION

In the American lexicon, probate has become a dirty word.1 In his influential book on the subject, Norman Dacey sought to foster a nationwide nonprobate revolution, and had a few choice words for the probate system and the “viciously corrupt, greedy” lawyers and judges who ride its “gravy train.”2 Closer to home, Connecticut’s probate system has been called a “scandal,” with critics calling it among the nation’s worst court systems, and offering blunt advice: “try not to die in Connecticut.”3

* Carmen Tortora Professor of Law and Associate Dean for Research and Faculty Development, Quinnipiac University School of Law. My thanks to Brittany Barbet (class of 2019) for her able research assistance. Thanks also to Professors John Langbein and Grayson McCouch and the many probate lawyers and judges who provided helpful comments on preliminary versions of this essay. 1 John H. Martin, Non-Judicial Estate Settlement, 45 U. MICH. J.L. REFORM 965, 968 (2012) (“[T]he general public vilifies probate.”). 2 Dacey’s “tone was anything but subtle; typical descriptive phrases included ‘viciously corrupt,’ ‘greedy,’ a ‘gravy train,’ and ‘openly scandalous.’” Kent D. Schenkel, The Trust-As-Will Portmanteau: Trill or Spork?, 27 QUINNIPIAC PROB. L.J. 40, 50 (2013) (quoting NORMAN F. DACEY, HOW TO AVOID PROBATE!, 7-8 (National Estate Planning Council 1965)). 3 John H. Langbein, The Scandal of Connecticut’s Probate Courts, Statement of Prof. John H. Langbein to Connecticut Leg. Comm. (October 11, 2005), https://law.yale.edu/yls-today/news/scandal-connecticuts-probate-courts-statement-prof-john-h-langbein-conn-legislature-committee (“When citizens of our state ask me about Connecticut probate, I give this simple advice: Try not to die in Connecticut.”). This reputation is nothing new. As Professor Langbein points out in his testimony, “[o]ur bad reputation is long standing. More than [fifty] years ago, in 1949, Professor Thomas Atkinson of NYU, then the leading American authority on the field, wrote that ‘Connecticut is just about at the bottom of the list so far as its probate court system is concerned.’” Id. (quoting Charles E. Clark & Elias Clark, Court Integration in Connecticut: A Case Study of Steps in Judicial Reform, 59 YALE L.J. 1395, 1409 n. 59 (1950)). An even earlier source reached a similar conclusion:

in the great majority of cases, probate business is in the hands of incompetent and unlearned men, whose decision, while it must be given on all questions whether


2018] RETHINKING CONNECTICUT PROBATE 11

Probate’s poor reputation lingers despite recent meaningful reform. In 2011, a major restructuring accelerated the pace of prior reform efforts and resulted in a more centralized, efficient, and professional court system.4 Now, the probate courts have their own rules of practice designed to streamline proceedings, minimize unnecessary paperwork, and deter litigious behavior and destructive litigation tactics.5 The system is overseen by an administrative office that takes great pains to educate judges and the public, update and standardize major probate forms, and maintain a website that is comprehensive and user-friendly.6 In contrast to our often overburdened superior court system, the probate courts can handle cases more expeditiously and cost-effectively, and deal with complex family matters in an environment that is more approachable, less adversarial, and easier to navigate for pro se parties.

Why then do many trusts and estates lawyers routinely counsel their clients to avoid Connecticut probate?7 Why has a revocable living trust become the cornerstone of most sophisticated Connecticut estate plans?8 Why is there a continued reference to Connecticut’s probate courts as a scandal, among the worst such courts in the nation?9

easy or involved, carries no weight of authority and can generally be presumed to be wrong if it involves a question of law.

Thomas E. Gaffey, Probate Reform in Connecticut: A Historical Perspective, 78 CONN. B.J. 65, 86-87 (2004) (quoting DWIGHT LOOMIS AND J. GILBERT CALHOUN, THE JUDICIAL AND CIVIL HISTORY OF CONNECTICUT, 155 (The Boston History Company 1895)). 4 The 2011 reforms built upon numerous earlier reform efforts. See Clark & Clark, supra note 3, at 1409-18; Gaffey, supra note 3, at 87-104. Included among the many reforms made in 2011 were: a consolidation of 117 probate districts into fifty-four, a requirement that all courts be open forty hours per week, and a requirement that probate judges be attorneys. See Margaret E. St. John, The Connecticut Probate Court System Reform: A Step in the Right Direction, 24 QUINNIPIAC PROB. L.J. 290, 301 (2011). 5 See generally PROBATE COURT ADMINISTRATOR STATE OF CONNECTICUT, RULES OF PROCEDURE (2017). 6 See generally Office of the Probate Court Administrator, CONN. PROBATE COURTS, http://www.ctprobate.gov/Pages/Probate-Administration.aspx (last visited Sept. 4, 2018). One of the many recent accomplishments of the Office of the Probate Court Administrator is the rollout of an extremely comprehensive yet user-friendly website. See CONN. PROBATE COURTS, www.ctprobate.gov (last visited Sept. 4, 2018). 7 It is crucial to realize that for those who are well-advised, and/or of sufficient means, the probate system is rather easy to avoid. Whether motivated by good advice, or perhaps outdated misperceptions, individuals may place property in joint tenancy with rights of survivorship, add payable on death (“POD”) or beneficiary designations to their accounts, or establish and fund revocable living trust documents. See, e.g., MARY RANDOLPH, 8 WAYS TO AVOID PROBATE (12th ed. 2018) (providing a layperson’s guide to avoiding probate). All those approaches can efficiently and effectively convert what would otherwise be probate assets into nonprobate ones, and thus avoid probate court jurisdiction over the assets at death. 8 See Ralph H. Folsom and Laura Weintraub Beck, Revocable Trusts and Trust Admin. in Connecticut, § 1:1 (2018) (calling a revocable trust “the cornerstone of modern estate planning” for many clients). 9 See, e.g., Jim Powell, How Did Rich Connecticut Morph Into One Of America’s Worst Performing Economies?, FORBES (Aug. 1, 2013 08:00 AM), https://www.forbes.com/sites/jimpowell/2013/08/01/ how-did-rich-connecticut-morph-into-one-of-americas-worst-performing-economies/#73ae0f2f3af5 (reporting that Professor Langbein maintains that the 2011 probate court reforms did not meaningfully alter his opinion of the court system). “In 2011, there were some changes in Connecticut law applicable to probate courts, and Judge Paul J. Knierim, Connecticut Probate Court Administrator, claimed that those reforms ‘addressed all of Langbein’s core concerns.’ Langbein emphatically disagreed . . . .” Id.



I contend that Connecticut’s probate courts have become far more desirable than their detractors would acknowledge, and far more efficient and effective than their reputation would suggest.10 Part of the disconnect is attributable to the fact that old reputations die slowly. At the same time, both the legislature and the courts can do more to build upon recent progress and continue to bring Connecticut’s probate system into the twenty-first century. In this essay, I explore the lingering challenges facing Connecticut’s probate courts, and proffer solutions that a thoughtful legislature and the courts themselves should embrace.

II. THE CURRENT REGIME

Before turning to a critique of the current system, it is important to address two preliminary issues about the current probate court system.

First, as noted above, we must acknowledge, and appreciate, significant reforms that have already been made. The 2011 restructuring was thorough and meaningful, building significantly upon prior reform efforts. Many critiques of the Connecticut probate system penned prior to 2011 are largely outdated. The suggestions that follow should be taken as an attempt to continue to build upon all these prior improvements.

Second, especially in our internet age, we must recognize just how difficult a bad reputation can be to overcome. Bad news sells newspapers.11 Internet archives allow outdated information to linger for decades. Authors of estate planning guides, and even lawyers who practice in the courts, often stand to benefit from perpetuating probate’s poor reputation.12 Accordingly,

10 The extent of the public’s, arguably misguided, contempt for the probate system is seen in this sobering advice offered to attorneys by Professor Folsom and Attorneys Wilhelm and Beck:

[t]he cost of the Court’s services is relatively modest, and in the large majority of estates ‘going through probate’ does not cause any difficulties for the family. Nonetheless, many of your clients will have been convinced by friends, promoters or the media that probate is to be avoided at all costs. Any attempt on your part to persuade them otherwise is likely to generate a certain amount of mistrust; attorneys and their fees are one of the features of probate most vociferously attacked by promoters of these trust. While those attacks may be dead wrong, your perceived self interest in defending probate is likely to doom your efforts from the start.

Gayle B. Wilhelm, et. al., Drafting Trusts in Connecticut, § 1:12 (2d ed. 2018). An article by a Connecticut probate judge reached the same conclusion:

the popular notion that the probate process should be avoided has endured as well and it has left probate courts as the recipients of an undeserved disdain, especially among those who know least what probate is, how it works and what it costs. Conventional wisdom, however misinformed, continues to denigrate the will and the probate process, and elevate the living trust and probate avoidance unjustifiably.

Hon. William P. DeFeo, Avoiding Probate Court: A Judge’s Perspective, 19 QUINNIPIAC PROB. L.J. 53, 54 (2005). 11 See Roy Greenslade, The Good News About Bad News – It Sells, THE GUARDIAN (Sept. 4, 2007), https://www.theguardian.com/media/greenslade/2007/sep/04/thegoodnewsaboutbadnews. 12 Indeed, clients might not see the need to buy books on probate-avoidance, hire high-priced counsel, or draft revocable trusts if the probate system were universally loved. See John H. Langbein, Richard



Connecticut’s probate courts are already working far more efficiently than many critics are prepared to concede.13 Any improvements, be they the ones already made, or the ones suggested herein, cannot expect to bring about an immediate change in public perception.

III. A PATH FORWARD

Despite its recent reforms, the probate court system is not perfect. A few lingering criticisms are justified. The system can continue to improve. In that spirit, I suggest three areas for reform.

A. Taxes and Fees

Although both are unavoidable, nobody likes death or taxes.14 Connecticut’s probate courts are intimately involved with both evils. The first, “death,” is an integral part of the jurisdiction of Connecticut probate. But the courts’ involvement with the second dirty word, “taxes,” has been wrongfully foisted upon them by the General Assembly.

Historically, Connecticut’s probate courts played a major role in overseeing the Connecticut succession tax.15 Now, they are the reviewer and arbiter of all estate tax returns for estates of $2.6 million or less, which are filed with the probate court rather than the Department of Revenue Services.16 Though it is a long-standing Connecticut tradition, using the courts to review estate tax returns has always been an ill-conceived way to create more work for the probate courts and take the pressure off an overburdened Department of Revenue Services.

But the probate courts’ role as the reviewer of tax returns has now effectively morphed into the role of tax collector. Specifically, Connecticut’s probate courts now assess and collect a massive “probate fee” computed based on the size of an estate without regard to the extent to which, or even if, those

Wellman and the Reform of American Probate Law, 40 GA. L. REV. 1093, 1095 (2006) (referring to “those who profit from dysfunction in probate procedure.”). See also Ralph H. Folsom and Laura Weintraub Beck, supra note 8 (“This . . . arises . . . from the vast number of articles and books written by persons seeking to profit from the general public’s apprehension about the probate process. Lawyer-bashing, court-bashing, and bank-bashing are popular pastimes. The mere suggestion that revocable trusts can avoid probate, and by implication the corresponding legal, court, and bank fees, sells such publications in vast quantities, much to the profit of the authors and the detriment of the public.”). 13 Several attorneys who reviewed drafts of this essay observed that not all of the state’s probate courts have become more efficient in recent years, with some courts taking far longer than others to perform a variety of administrative functions. I address this lack of uniformity from jurisdiction to jurisdiction in Section III.B of this essay. 14 “[I]n this world nothing can be said to be certain, except death and taxes.” BENJAMIN FRANKLIN, THE WORKS OF BENJAMIN FRANKLIN, 161 (The Knickerbocker Press 1904). 15 See Gayle B. Wilhelm and Laura Weintraub Beck, Death Taxes in Connecticut, § 6:68 (4th ed. 2018) (stating that before 1972, filling an inventory of the assets with the probate court was used as the basis for determining the succession tax). 16 Form CT-706 NT Instructions Connecticut Estate Tax Return (for Nontaxable Estates), (June 2018), http://www.ct.gov/drs/lib/drs/forms/1-2018/estate/ct-706_nt_instructions_0518.pdf.



assets pass through the probate court system.17 In its design and function, this fee is an inaccurately-named supplemental estate tax.18 Disliking the tax collector is a long-standing American tradition.19 Unwilling to call an unpopular tax by its proper name, the legislature passed the hot potato into the hands of the probate court system, leaving the courts and judges to take the reputational hit as they collect a “fee” that bears no relationship to the services they provide.20

The solution to this problem is as obvious as its cause. If there is a real scandal in the Connecticut probate system, it is the state’s inexcusable failure to fund the system. Our state government should reverse a terrible legislative decision and fund the probate courts as it does the state’s other courts, rather than leaving this entire court system to fend for itself. Whether they wish to generate that funding through an unpopular estate tax or through other means, Connecticut’s elected officials need to make that decision transparent to the electorate and stop allowing the probate courts to be blamed for a problem created by the Governor and the General Assembly.

B. Standardization

In our modern society, predictability is considered a virtue. Much of the success of McDonald’s hamburger chain is attributable to the fact that a Big Mac served in an urban center looks and tastes the same as one purchased in a small town. As noted by sociologist George Ritzer, the indisputable success of this corporate philosophy of uniformity has been emulated across a variety of settings and has coined a phrase: the McDonaldization of America.21 As Professor Ritzer observes,

[i]n a rational society, people prefer to know what to expect in

17 While the Connecticut probate courts have always collected a “probate fee” computed on the size of the estate and not on the amount of probate assets, legislation in 2015 dramatically increased the fees imposed, particularly on larger estates. See Probate Fees, OFFICE OF THE PROB. COURT ADMIN. (Nov. 17, 2015), https://www.cga.ct.gov/fin/tfs%5C20140929_State%20Tax%20Panel%5C20151117/Probate%20 Fee%20 Briefing%20Note%20Final.pdf. 18 Keith M. Phaneuf, New Probate Court Fees Come Under Heavy Fire (January 4, 2016), https://ctmirror.org/2016/01/04/new-probate-court-fees-come-under-heavy-fire/ (quoting State Senator Scott Frantz, ranking member of the finance panel: “[p]eople keep calling them fees, but they are really a tax . . . .”). The imposition of this type of veiled tax at a time when other states are aggressively reducing estate taxation led one commentator to ask, “[w]hat are Connecticut legislators thinking?” Ashlea Ebeling, The $250,000 Connecticut Probate Fee & The $20 Million Estate Tax Cap, FORBES, (Oct. 16, 2015), https://www.forbes.com/sites/ashleaebeling/2015/10/16/the-250000-connecticut-probate-fee-the-20-million-estate-tax-cap/. 19 See, e.g., BENJAMIN WOODS LABAREE, THE BOSTON TEA PARTY (Northeastern University Press, 1979) (discussing the Boston Tea Party and its role in precipitating the Revolutionary War). See also LIN-MANUEL MIRANDA, YOU’LL BE BACK (Atlantic Records 2015) (“You say the price of my love’s not a price that you’re willing to pay. You cry in your tea which you hurl in the sea when you see me go by.”). 20 Further compounding the probate fee issue is the fact that a decedent’s estate bears much larger fees than many other essential probate functions, such as guardianships, conservatorships, and parental rights matters. The system of a decedent’s estate is thus funding these other vital functions that arguably should be supported out of the state’s general fund. See Probate Fees, supra note 17. 21 GEORGE RITZER, THE MCDONALDIZATION OF SOCIETY, 1 (Pine Forge Press 2004).

https://ctmirror.org/2016/01/04/new-probate-court-fees-come-under-heavy-fire/

https://www.forbes.com/sites/ashleaebeling/2015/10/16/the-250000-connecticut-probate-fee-the-20-million-estate-tax-cap/

https://www.forbes.com/sites/ashleaebeling/2015/10/16/the-250000-connecticut-probate-fee-the-20-million-estate-tax-cap/



most settings and at most times . . . . They want to know that when they order their Big Mac today it will be identical to the one they ate yesterday and the one they will eat tomorrow . . . . They want to know that the McDonald’s franchise they visit in Des Moines, Los Angeles, or Paris will appear and operate much the same as their local McDonald’s. . . . From the consumer’s point of view, predictability makes for much peace of mind in day-to-day dealings.22

For decades, Connecticut’s probate courts were anything but McDonaldized. Some judges were lawyers while others were not.23 Some courts were open full-time, while others had extremely limited hours.24 Courts had wildly different, often idiosyncratic, requirements for various paperwork and filings.25 Nearly seventy years ago, Professors Charles and Elias Clark bemoaned this lack of uniformity in Connecticut’s probate courts and the unwillingness of probate judges to embrace standardized best practices.26

Much has improved since the Clarks made their assessment of Connecticut’s probate courts, but the improvement is incomplete. At bar meetings and Continuing Legal Education programs, attorneys continue to

22 Id. at 86. 23 See Langbein, supra note 3 (“Connecticut law does not require probate judges to be legally trained, even though probate judges make legal decisions that affect the property and liberty of our citizens. These judges decide who owns the property of a decedent, they decide whether to strip a citizen of his or her liberty by declaring the citizen incompetent. Such powers ought not to be in the hands of persons who lack legal training. If you exercise the power to take away somebody’s liberty or property, you should have a strong command of the complex substantive and procedural rules that are meant to govern such decisions.”) This criticism was redressed by an amendment to Connecticut General Statutes section 45a-18 which provides,

[e]ach judge of probate elected for a term that begins on or after January 5, 2011, shall be a member of the bar of the state of Connecticut, except that the requirements of this subsection shall not apply to any judge of probate who was in office on January 4, 2011, for the period such judge of probate continues to serve as a judge of probate on and after January 5, 2011, without a break in service.

CONN. GEN. STAT. § 45a-18(e) (2018). 24 See Connecticut Probate Court System, LEGIS. PROGRAM REVIEW AND INVESTIGATIONS COMM. (Jan. 2006), https://www.cga.ct.gov/2005/pridata/Studies/pdf/Probate_Court_System_Final_Report.pdf (indicating that some courts were open full time while others were open for ten or fewer hours per week). Effective July 1, 2007, Connecticut General Statutes section 45a-79c(a) required that “[a] court of probate shall be open to the public for the conduct of court business not less than twenty hours each week, Monday through Friday, excluding holidays, on a regular schedule between the hours of eight o’clock a.m. and five o’clock p.m.” 2007 Conn. Acts 07-184. Effective January 1, 2011, the requirement of “twenty hours” was expanded to “forty hours.” See 2009 Conn. Acts 09-114; CONN. GEN. STAT. § 45a-79c(a) (2018). 25 See JULIE JASON, GUIDE TO CONNECTICUT PROBATE: WHAT EVERY CONNECTICUT FAMILY NEEDS TO KNOW ABOUT PROBATE, 7 (Author House 2007) (“In the past, the judges ran their own courts completely independent of each other, with their own budgets, and there were no requirements for uniformity of procedures . . . .”). 26 “Despite the efforts of the Connecticut Probate Assembly to establish uniformity, it is obvious that in a system where each judge is a court unto himself no amount of reform can standardize practice and procedure.” Clark & Clark, supra note 3, at 1410.



grumble about the remaining lack of uniformity in probate practice, telling tales of how one probate court has refused to accept a document formatted in the exact manner required by another court.27

Certainly, some judges may argue, perhaps correctly, that McDonald’s has it all wrong—that consistency for consistency’s sake is foolish, perhaps even a hobgoblin of little minds.28 Those same sources might contend, again likely correctly, that plenty of local restaurants make a better burger than McDonald’s,29 but that argument misses the point. Predictability and uniformity lead to efficiency and consumer confidence, virtues which are arguably even more important in a judicial system than in the fast food business.30

If Connecticut’s probate courts wish to further enhance their own reputation, they can thus learn a vital lesson from the purveyors of burgers and fries, and work toward an increased standardization of forms and procedures.31

C. Rethinking the Whole Process

A final area for reform may require a more fundamental reconsideration of the probate court’s role. Currently, probate court jurisdiction over a decedent’s estate necessitates several mandatory procedural steps. For example, an executor must file an inventory, must file a return and list of claims, and must file a final financial report or account.32 While the specific steps in an estate settlement may vary widely based on the facts and circumstances, there are a minimum number of mandatory steps that must be undertaken in every case.

We may rightly ask whether we need all these filings and procedures in every estate. To the extent we do not, these mandatory requirements introduce inefficiency and perpetuate the “make work” reputation of our courts.

There are two ways to address this concern.

i. More Streamlining

27 Attorneys report a continuing lack of uniformity on a variety of issues beyond courts’ preferred document formats. Other areas of concern include response times and administrative procedures. 28 See generally RALPH WALDO EMERSON, SELECTED ESSAYS (Penguin Classics 1982). Professor Ritzer himself may well agree. See RITZER, supra note 21, at 105 (“[A] predictable world can easily become a boring world . . . . Tedium may now be a far greater threat than a bit of unpredictability.”). 29 According to the popular website Yelp, McDonald’s is the twenty-eighth best place to get a burger in North Haven, Connecticut. See The Best 10 Burgers, YELP, https://www.yelp.com/search?cflt=burgers& find_loc=North+Haven%2C+CT+06473 (last visited Oct. 21, 2018). 30 See State v. Peeler, 140 A.3d 811, 881 (Conn. 2016) (Espinosa, J., dissenting) (“This court’s appearance as an impartial decision-making body, governed by the rule of law rather than the proclivities of individual panel members, is vital. No one disputes that, nor does anyone question the integral role that stability and predictability play in our legal system.”). 31 This is not to say that the probate process is inflexible or rigid, but merely an argument that arbitrary differences in forms and procedures among courts undermine satisfaction within the system. 32 See Probate Court User Guide Admin. of Decedents’ Estates, OFFICE OF THE PROB. COURT ADMIN., http://www.ctprobate.gov/Documents/User%20Guide%20%20Administration%20of%20Decedents'%20Estates.pdf (last visited Oct. 21, 2018).



First, the courts and the legislature must consider whether any of the mandatory steps and required filings in a probate proceeding can be eliminated or streamlined. Recent reforms have made some improvements in this area, such as by allowing hearings to be waived and by offering more efficient ways to satisfy other mandatory steps in the probate process. But there is likely more such progress to be made.

In undertaking this effort, the legislature should be guided by the success of Connecticut’s revised approach to financial accountings. For decades, Connecticut required a unique, state-specific format for probate accountings—the dreaded “Rule 6” accounting.33 The structure was cumbersome, convoluted, and so uniquely Connecticut that neither national banks nor software companies found an efficient way to generate accountings in the requisite format. With the recent promulgation of the new Probate Court Rules of Procedure, the Rule 6 accounting is gone, replaced with a more streamlined, more flexible, financial account prepared in accordance with general industrywide practices rather than state specific requirements.34 Furthermore, the rules make provision for a second, even more streamlined, financial report.35 Creation of these additional options went a long way toward moving Connecticut from having rigid state specific requirements that achieve no meaningful purpose, to aligning its paperwork requirements with those of other states and reducing those requirements wherever possible. From both an efficiency and a public relations standpoint, the move was a great success.

The legislature and the probate courts should consider whether other forms or processes can be similarly liberalized or otherwise eliminated.

One specific candidate might be the “return and list of claims.”36 This document requires an executor to detail all claims made against the estate and to report whether those claims were paid or rejected. But given the overarching structure of the statutes governing claims, the form seems to serve little purpose other than to invite a probate court to exceed its statutory authority. 33 The “Rule 6” accounting was named after the rule of the prior Probate Practice Book that created, and required, this dreaded form. See Gayle B. Wilhelm, Settlement of Estates in Connecticut, § 9:8 (2d ed. 1996). 34 See CONN. PROBATE RULES OF PROC. § 38 (2017). 35 See CONN. PROBATE RULES OF PROC. § 37 (2017). 36 The filing of this document is mandated by Connecticut General Statutes section 45a-361, which provides:

[w]ithin sixty days following the expiration of the one-hundred-fifty-day period set forth in subsection (a) of section 45a-356, the fiduciary shall file in the Court of Probate a return and list of claims signed under penalty of false statement by the fiduciary containing (1) a list of all persons notified pursuant to section 45a-357 and (2) a list of all claims presented to the fiduciary within such one-hundred-fifty-day period stating as to each such claim whether and to what extent such claim was allowed or rejected.

CONN. GEN. STAT. § 45a-361 (2018). The Probate Court Administrator’s Office created a standardized “return of claims and list of notified creditors,” Form PC-237, available at http://www.ctprobate.gov/Forms/PC-237.pdf.



A closer look at the full claims procedure points out the problem. As a starting matter, Connecticut General Statutes section 45a-358 directs anyone seeking to bring a claim against an estate to file that claim directly with the fiduciary.37 Connecticut General Statutes section 45a-360 then directs the fiduciary to respond directly to the claimant.38 It is only if a claim is denied that Connecticut General Statutes section 45a-364 brings the probate court into the mix, authorizing a claimant, whose claim is denied, to timely appeal that denial to the probate court.39

The probate court’s role in the typical claims process is thus strictly limited: it may hear an appeal of a denied claim if that appeal is filed by the claimant within thirty days of the denial.40 If such an appeal is timely filed, then the court may hear it. If not, the court has no jurisdiction.41 Given this rather limited statutory role in a process otherwise handled directly between claimant and fiduciary, it is unclear why the fiduciary must file an informational document with the probate court detailing all the claims and their disposition. This additional step seems only to generate unnecessary paperwork and to invite a probate court to intervene in a process from which the legislature has largely removed it.42

37 “Every claim shall be presented to the fiduciary in writing.” CONN. GEN. STAT. § 45a-358(a) (2018). 38 “The fiduciary shall: (1) Give notice to a person presenting a claim of the rejection of all or any part of his claim, (2) give notice to any such claimant of the allowance of his claim, or (3) pay the claim.” CONN. GEN. STAT. § 45a-360(a) (2018). 39 Connecticut General Statutes section 45a-364(a) provides in relevant part,

[w]henever a claim has been rejected, in whole or in part, as provided in section 45a-360, the person whose claim has been rejected may, within thirty days from and including the date of such rejection, make application to the Probate Court to hear and decide such claim or, in the alternative, may apply to said court to refer the claim to a probate magistrate or attorney probate referee to hear such claim.

CONN. GEN. STAT. § 45a-364(a) (2018). 40 Id. In fairness, in specific circumstances, the probate court may play other statutory roles in the claim process. For example, Connecticut General Statutes section 45a-360, provides for a claimant to mail a claim to a fiduciary in care of the probate court, provides for a probate court to decide disputed claims, and provides for a probate court to review the claims of a prior fiduciary when a successor takes office. See CONN. GEN. STAT. § 45a-360. However, these events are not typically part of the probate process, and thus the requirement for a filing of a return of claim in all estates remains unnecessary and overbroad. 41 See Wright v. Prob. for Dist. of Region #22 Southbury, No. UWYCV156029355S, 2017 WL 1333968, at * 4 (Conn. Super. Ct. Mar. 21, 2017) (“[The] failure to meet the timeframes provided [by statute] bars a claim from being heard . . . .”). 42 While I maintain that it is odd for a fiduciary to be required to inform the probate court of matters over which it lacks jurisdiction, reviewers of drafts of this essay have raised two counterarguments. The first is that the return of claims may be relevant to a court insofar as it may inform the court of claims upon which the fiduciary has improperly failed to act. I agree that such information may be relevant in certain circumstances (such as when the fiduciary is requesting approval of distributions or a discharge), but contend that the necessary information should be provided at that time and in the form needed for that purpose. The second counterargument is that the return of claims may alert the probate court to claims a fiduciary mishandled in violation of its fiduciary duties. My response is that this allegation should be handled in the context of the fiduciary’s account, which presumably will detail all claims paid by the fiduciary. Accordingly, the return of claims is in large part a duplicative filing of information the fiduciary typically will show on a periodic or final account. We should strive to avoid situations in which



The return of claims is just one minor example of a larger theme—that the legislature and the probate courts should revisit the entire probate process and determine whether any of the forms and filings required in a typical estate can be further simplified, streamlined, or even eliminated. Doing so will further address the long-standing criticism that the probate courts look to “drum up busywork” to justify their own existence.43 It might even result in a probate court system akin to that of Texas, a state where the probate process is so streamlined and efficient that it is considered unethical conduct for an attorney to suggest otherwise.44

ii. Opting Out

Even if everything resembling busywork is eliminated from the probate system, a larger question will remain: should the interested parties be able to opt-out of the probate system entirely? The question may seem revolutionary, but it is not.

As an initial matter, a decedent already has the ability to opt-out of the probate system by titling property in joint tenancy, adding a beneficiary designation, or funding a revocable trust.45 It is important to realize that by doing so, the decedent does not forever deprive her beneficiaries of access to the probate courts. To the contrary, those beneficiaries may be able to access the probate courts to settle estate–related disputes when a party in interest wishes to invoke the court’s jurisdiction.46 Avoiding probate thus effectively puts the court in a standby role, available if needed to resolve disputes, but without authority to dictate specific procedural steps in the estate administration or the filing of specific forms.

In contrast, when a decedent does not proactively plan to avoid probate, her estate will be subject to court jurisdiction and associated procedures over all

fiduciaries must file the same information in two different formats at two different times. 43 Jane Gordon, Judges and Lawyers Debate Probate System, NEW YORK TIMES, (Feb. 5, 2006), https://www.nytimes.com/2006/02/05/nyregion/nyregionspecial2/judges-and-lawyers-debate-probate-system.html. 44 See Michael Hatfield, Pro Se Executors-Unauthorized Practice of Law, or Not?, 59 BAYLOR L. REV. 329, 333–34 (2007).

While the expenses and complications of probate systems elsewhere sustain substantial probate avoidance planning, Texans have never had the same generalized need to avoid probate. Indeed, because the Texas probate system is much different and typically much simpler than other systems, the State Bar of Texas considers it unethical for Texas lawyers to make undue comparisons between the Texas system and others. It is also unethical for Texas attorneys to claim that the Texas probate system is inherently lengthy, expensive, complicated, or always to be avoided.

Id. (internal citations and quotations omitted). My thanks to Professor Gerry Beyer for alerting me to the existence of this ethical prohibition. 45 See supra note 7 and accompanying text. 46 An example of this is petitioning for an accounting or removal of a fiduciary. See CONN. GEN. STAT. § 45a-175(c) (2018); CONN. GEN. STAT. § 45a-242 (2018).



aspects of estate settlement for at least the duration, and perhaps, if the will establishes long-term trusts, for generations thereafter. Like flies caught in a web, there is no simple way for the beneficiaries themselves to thereafter opt out of this supervision.47

But why does the choice between probate and nonprobate have to be so stark? Why does the choice have to be made by the decedent and her estate planner rather than by the estate beneficiaries? Shouldn’t those with an actual interest in the estate assets be the ones to decide if the cost and complexity of probate court oversight is warranted, and to be able to move between these two regimes as advisable?

The answer to these questions might inspire a fundamental rethinking of our approach to probate court jurisdiction. Perhaps a probate court should continue to play the vital role of determining the validity of a will, appointing a competent executor, and framing the initial steps in an estate settlement—but then thereafter only provide that degree of oversight requested by the interested parties.48 Specifically, if none of the interested parties saw a need for further court involvement, the court would shift to a standby role (akin to the role it now plays when a decedent “avoided probate” by funding a revocable trust). If a party wanted the court’s ongoing supervision, then the court would provide it. The only real difference from the current system would be that the parties in interest, rather than the decedent, would be the ones making that decision, and their wishes—not those of the dead testator, her lawyers, or the probate judge—would dictate the degree of judicial oversight.

This vision of how a probate court should operate is becoming the norm outside of this state. The Uniform Probate Code provides for two types of probate—“supervised” and “unsupervised”—which empower fiduciaries and beneficiaries to move between these types as they see fit.49 In a supervised

47 There may be some “not-so-simple” ways of achieving this goal. For example, a sophisticated estate planner might recommend establishing a new trust under the laws of a different jurisdiction and then transferring (or “decanting”) trust assets into that new trust. See generally Alan Newman, Trust Law in the Twenty-First Century: Challenges to Fiduciary Accountability, 29 QUINNIPIAC PROB. L.J. 261, 286-92 (2016). 48 By framing my hypothetical in this manner, I have assumed that the initial step in Connecticut probate will remain a “formal” one—a probate court proceeding to admit a will and appoint an executor. The Uniform Probate Code and many other jurisdictions do not necessarily require a formal opening of the estate but rather might provide for an expedited estate opening procedure. See generally 79 AM. JUR. 2D WILLS § 721 (2018) (discussing the differences between “(1) formal probate, which involves a judicial determination after notice to all interested persons, and (2) informal probate, which is a nonadjudicative determination conducted without notice (with certain exceptions), by an officer of the court acting as a registrar . . . .”). I am not advocating for Connecticut to abandon its current formal procedures for admission of a will to probate, as they work efficiently and serve important public policy goals. 49 See generally UNIF. PROBATE CODE Art. III (2017). Unsupervised probate is justified as follows:

the [c]ourt’s role in regard to probate and administration, and its relationship to personal representatives who derive their power from public appointment, is wholly passive until some interested person invokes its power to secure resolution of a matter. The state, through the [c]ourt, should provide remedies which are suitable



probate system, the court sets deadlines, requires forms, and oversees a fiduciary much in the way our Connecticut probate courts currently do. But in an unsupervised probate system, the court would drop into a stand-by posture, similar to the role the court now plays when the decedent has funded a revocable trust, or otherwise “avoided probate.”

Connecticut’s northern neighbor, Massachusetts, a state not generally thought of as being on the cutting edge of probate reform, recently altered its probate statutes to offer this choice between supervised and unsupervised probate regimes.50 We can learn much from its experience and should seriously consider following its lead.51

IV. CONCLUSION

Connecticut’s probate system, long branded a national scandal, is already more efficient and effective than outdated memories and Internet archives might suggest. A series of meaningful reforms, including a complete restructuring and enactment of robust rules of practice, have gone a long way toward redressing critiques of the prior system. Time will allow probate’s reputation to catch up to its reality.

At the same time, there is room for more progress. In the essay above, I have suggested three main avenues for reform. First, the legislature must develop a rational funding model for the courts, eliminating the poorly-named, reputation-killing, “probate fee.” Second, judges and their staffs should continue to strive for increased uniformity and predictability from case to case and jurisdiction to jurisdiction. Finally, the courts and the legislature should work together to continue to streamline the existing probate process and to embrace

and efficient to protect any and all rights regarding succession, but should refrain from intruding into family affairs unless relief is requested, and limit its relief to that sought.

UNIF. PROBATE CODE Art. III, cmt. Alaska, Arizona, Colorado, Hawaii, Idaho, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Pennsylvania, South Carolina, South Dakota, and Utah have adopted the Uniform Probate Code. Legislative Fact Sheet - Probate Code, UNIFORM LAW COMMISSION, http://www.uniformlaws.org/LegislativeFactSheet.aspx? title=Probate Code (last visited Sept. 6, 2018). The District of Columbia and several other states have similar provisions for optional, less-supervised, probate processes. See D.C. CODE § 20-406 (2018); CAL. PROB. CODE § 10401 (2018); IND. CODE § 29-1-7.5-3 (2018); LA. CODE CIV. PROC. ANN. art. 3396 (2018); NEV. REV. STAT. §§ 143.300 – 143.815 (2018); TEX. PROB. CODE ANN. § 402.0001 (2017). 50 Compare MASS. GEN. LAWS. §§ 3-301 to 3-311 (2018) (providing for informal, unsupervised probate), with MASS. GEN. LAWS. §§ 3-501 to 3-505 (2018) (providing for formal, supervised probate). 51 Connecticut lawyers, judges, and policy-makers have already begun to consider what an unsupervised probate process might look like in Connecticut. For example, in April 2018, the Connecticut Bar Foundation James W. Cooper Fellows and the Quinnipiac Probate Law Journal jointly sponsored a symposium entitled “Exploring Unsupervised Probate,” which included a discussion of the Massachusetts experience. Materials for that symposium are available at https://www.ctbarfdn.org/ctbar/Probate%20 Symposium%2004.20.18%20%20Full%20Materials%20%28Reduced%29.pdf. While I was a co-chair of that symposium and my participation has informed my view of the topic, the opinions expressed in this writing are entirely my own and are not intended to represent those of any of the other participants in that symposium.



the concept of unsupervised probate—thereby allowing the parties in interest, rather than decedents and their estate planning lawyers, to determine whether, and to what extent, judicial oversight is required in the settlement of an estate.

10.VARA.ARTICLE.FINAL.DOCX (DO NOT DELETE) 11/11/2018 4:23 PM

QUINNIPIAC PROBATE

LAW JOURNAL


TWO CHEERS FOR DECANTING: A PARTIAL DEFENSE OF DECANTING STATUTES AS A TOOL FOR IMPLEMENTING

FREEDOM OF DISPOSITION

STEPHANIE VARA*

I

Freedom of disposition is the cornerstone of United States trust law. Most trust doctrines are designed to implement settlor intent, and the few that frustrate intent do so purposefully for public policy reasons.1 Statutorily authorized trust decanting—a relatively recent innovation in which a trustee with discretion is statutorily granted a default power to unilaterally modify an irrevocable trust2—is noteworthy because it is not obvious at first glance that the underlying rationale is freedom of disposition. In fact, some commentators have

* Stephanie Vara is an associate at Milbank, Tweed, Hadley & McCloy LLP’s New York office. She is a member of the firm’s Trust & Estates Group. This article is her own and does not purport to represent the positions, strategies, or opinions of her employer. 1 See RESTATEMENT (THIRD) OF PROP.: WILLS AND OTHER DONATIVE TRANSFERS § 10.1 cmts a, c (2003). 2 See UNIF. TRUST DECANTING ACT PREFATORY NOTE (2017). While the Uniform Act and a handful of other recent statutes characterize decanting as a form of trust modification—which consequently permits but does not demand use of a second, distinct trust—others define it as the trustee’s power to invade trust property, subject to the trustee’s discretionary distribution power, and place it into a separate trust without court or beneficiary approval. Id. Whether conceived of as a modification or distribution power, the receiving trust need not have the same terms as the original trust. Id. While decanting through a statute is a recent development in United States trust law, decanting, as a general principle, is not. Common law has effectively authorized decanting since at least 1940 when the Florida Supreme Court decided Phipps v. Palm Beach Trust Co. See Phipps v. Palm Beach Trust Co., 196 So. 299, 300–01 (Fla. 1940) (authorizing a trustee to make discretionary distribution in further trust that essentially results in a modification to the terms governing how the trustee holds the trust property for the beneficiaries). Similarly, some trust instruments drafted before enactment of any decanting statute explicitly conferred decanting powers onto trustees. Attorney Jonathan Blattmachr, the author of the first decanting statute, based the statute on form language he included in trust instruments. David Restrepo, New York’s Decanting Statute: Helping an Old Vintage Come to Life or Spoiling the Settlor’s Fine Wine?, 34 PACE L. REV. 479, 487 (2014).



expressed concern that decanting statutes disregard settlor intent too easily.3

Nonetheless, decanting by statute is quickly becoming the majority-view in the United States. As of October 2018, twenty-six states have already enacted legislation, while Alabama and Illinois have proposed legislation to make decanting a default rule.4 This trend appears to have picked up even greater 3 See Stewart E. Sterk, Trust Decanting: A Critical Perspective, 38 CARDOZO L. REV. 1993, 1996 (2017); Restrepo, supra note 2, at 480-81; Letter from Nancy A. McLaughlin, Robert W. Swenson Professor of Law S.J. Quinney College of Law, to Susan T. Bart, Reporter, Unif. Trust Decanting Act, Sidley Austin LLP (Oct. 29, 2014) (on file with the Uniform Law Commission Trust Decanting Committee). 4 In 1992, New York passed the first decanting statute. See N.Y. EST. POWERS & TRUSTS LAW § 10-6.6 (1992) (current version at N.Y. EST. POWERS & TRUSTS LAW § 10-6.6 (2018)). The 1992 New York statute presumptively authorized a trustee with absolute discretion to invade a trust and distribute trust property subject to the trustee’s discretion in favor of another trust. See 1992 N.Y. Sess. Laws Ch. 591 A. 6848. In 1998, Alaska became the second state to statutorily authorize decanting. See ALASKA STAT. § 13.36.157 (1998) (current versions at ALASKA STAT. §§ 13.36.157 to -.159, 13.36.215 (2018)). Like New York, the Alaska statute required a decanting trustee to have absolute discretion. See 1998 Alaska Sess. Laws Ch. 105 S.B. 354. Delaware became the third state to adopt a decanting statute in 2003. See DEL. CODE ANN. tit. 12, § 3528 (2003) (current version at DEL. CODE ANN. tit. 12, § 3528 (2018)). Unlike New York and Alaska’s statutes, Delaware’s only required a decanting trustee to have authority to invade principal. See 2003 Del. Laws Ch. 81 S.B. 123. It did not matter whether a trustee had absolute or limited discretion. See id. Wyoming also adopted a decanting statute in 2003. See WYO. STAT. ANN. § 4-10-816 (2003) (current version at WYO. STAT. ANN. § 4-10-816 (2018)). Between 2004 and 2011, nine states—Tennessee, Florida, South Dakota, New Hampshire, Arizona, Nevada, Indiana, Missouri, and North Carolina—adopted decanting statutes, and Alaska amended its statute. See TENN. CODE ANN. § 35-15-816(b)(27) (2018) (effective 2004; amended 2013); FLA. STAT. § 736.04117 (2018) (effective 2007; amended 2018); S.D. CODIFIED LAWS §§ 55-2-15 to -21 (2018) (effective 2007; amended 2008, 2009, 2011, 2012, 2013, and 2017); N.H. REV. STAT. ANN. § 564-B:4-418 (2018) (effective 2008); ARIZ. REV. STAT. ANN. § 14-10819 (2018) (effective 2009; amended 2011 and 2018); NEV. REV. STAT. § 163.556 (2018) (effective 2009; amended 2011, 2015, and 2017); IND. CODE § 30-4-3-36 (2018) (effective 2010; amended 2014); MO. REV. STAT. § 456.4-419 (2018) (effective 2011); N.C. GEN. STAT. § 36C-8-816.1 (effective 2009; amended 2010 and 2013; repealed 2017 and replaced with N.C. GEN. STAT. § 36C-8B-1 (2018)); ALASKA STAT. §§ 13.36.157 to -.159, 13.36.215 (effective 1998; amended 2013). Except for the Florida statute, which requires a decanting trustee to always have absolute discretion, these new statutes and the Alaska amendment took a more liberal approach to decanting, like the 2003 Delaware statute. See 2003 Del. Laws Ch. 81 S.B. 123. These variations permitted trustees with absolute and limited discretion to decant under identical rules. In 2011, New York amended its decanting statute, permitting trustees with both absolute and limited discretion to decant, but setting out different, more restrictive rules for the latter. See 2011 N.Y. Sess. Laws Ch. 451 A. 8297-A. Between 2012 and 2016, ten states adopted decanting statutes. Six of these states—Michigan, Minnesota, Ohio, Texas, Illinois, and Wisconsin—followed New York’s bifurcated model, and four—Kentucky, Rhode Island, Virginia, and South Carolina—followed Delaware’s more permissive 2003 model. See MICH. COMP. LAWS §§ 556.115a and 700.7820a (2018) (effective 2012); MINN. STAT. § 502.851 (2018) (effective 2016); OHIO REV. CODE ANN. § 5808.18 (2018) (effective 2012; amended 2013); TEX. PROP. CODE ANN. §§ 112.071-112.087 (2018) (effective 2013; amended 2017); 760 ILL. COMP. STAT. § 5/16.4 (2018) (effective 2013; amended 2015); WIS. STAT. § 701.0418 (2018) (effective 2014); KY. REV. STAT. ANN. § 386.175 (2018) (effective 2014); 18 R.I. GEN. LAWS § 18-4-31 (2018) (effective 2012; amended 2013); VA. CODE ANN. § 64.2-778.1 (2016) (effective 2012; amended 2017; repealed 2017 and replaced with VA. CODE ANN. §§ 64.2-779.1 to -.25 (2018)); S.C. CODE ANN. § 62-7-816A (2018) (effective 2014). In addition, Alaska amended its statute a second time in 2013, adopting the bifurcated approach. See 2013 Alaska Sess. Laws Ch. 45 S.B. 65. Delaware also revised its statute to insert a provision that required a decanting trustee to adhere to the distribution standard specified in the original trust, which achieves similar results as a bifurcated statute. See 2013 Del. Sess. Laws Ch. 172 S.B. 138.


2018] TWO CHEERS FOR DECANTING 25

speed after the Uniform Law Commission published the Uniform Trust Decanting Act (“Uniform Act”) in July 2015. Six states—Colorado, New Mexico, North Carolina, Virginia, Washington, and California—have already enacted the Uniform Act, while Alabama’s will be effective January 1, 2019.5 One state—Illinois—recently introduced a bill proposing to adopt the Uniform Act,6 while Alaska is considering amending its statutes in ways that closely resemble the Uniform Act.7 Except for Colorado, New Mexico, and Washington, the Uniform Act or Uniform Act-like rules have replaced or will replace these states’ current state-authored decanting statutes. Only one state, Minnesota, has passed its own decanting statute.8

While the recent trend is to adopt the Uniform Act or a comparable statute, the Uniform Act is only one model for statutorily authorized decanting and merely the most recent one to gain popularity. Patterns indicate that the Uniform Act and similar statutes have become, and will remain, the majority approach for the foreseeable future. In addition to these statutes, other states, notably South Dakota, Nevada, and Delaware, have strong footholds and will likely remain relevant, as well.9

Despite the rapid proliferation of decanting statutes, wide divergence in their approaches, and continuing disagreement as to whether decanting violates or protects freedom of disposition, there has been little to no research attempted to thoroughly understand and explain how decanting statutes fit into the larger body of United States trust law, which centers on freedom of disposition. Moreover, decanting statutes are not mere codifications of common law in jurisdictions with a decanting statute, except in Florida.10 Therefore, it cannot be said that courts have already performed enough analysis to determine whether these statutes square with overarching trust law and policy, including freedom of disposition.

This article walks through how the different decanting statutes treat major substantive changes—beneficiary removal, beneficiary additions, fixed

Georgia enacted its decanting statute on July 1, 2018. See GA. STAT. § 53-12-62 (2018). Alabama is following suit by enacting its own decanting statute, similar to the Uniform Trust Decanting Act, effective January 1, 2019. See ALA. CODE 19-3D-1 (2019). California also has adopted the Uniform Trust Decanting Act. See CAL. PROB. CODE §§ 19501-19530 (2018). 5 See COLO. REV. STAT. §§ 15-16-901 to -931 (2018); N.M. STAT. ANN. §§ 46-12-101 to -129 (2018); N.C. Gen. Stat. §§ 36C-8B-1 to -26; VA. CODE ANN. §§ 64.2-779.1 to -.25; WASH. REV. CODE §§ 11.107.010 to -.080 (2018); CAL. PROB. CODE §§ 19501-19530; ALA. CODE § 19-3D-1. 6 See H.B. 6312, 99th Gen. Assemb., Reg. Sess. (Ill. 2016); H.B. 2526, 100th Gen. Assemb., Reg. Sess. (Ill. 2017). 7 See H.B. 208, 30th Leg., 1st Sess. (Alaska 2017). 8 See MINN. STAT. § 502.851. 9 See Steve J. Oshins, South Dakota and Nevada Remain at the Top of the Trust Decanting State Rankings, TRUST ADVISOR (Jan. 6, 2015), https://www.thewealthadvisor.com/article/south-dakota-and-nevada-remain-top-trust-decanting-state-rankings. 10 See William R. Culp, Jr. and Briani Bennett Mellen, Trust Decanting: An Overview and Introduction to Creative Planning Opportunities, 45 REAL PROP. TR. & EST. L.J. 1, 8-9 (2010).



interest modifications, distribution standard modifications, accelerated vesting, postponed vesting, creation of supplemental needs trusts, and the reduction, elimination, and expansions of powers of appointment—that decanting can achieve, to assess the extent these decanting statutes protect or frustrate freedom of disposition. To make this assessment, this article evaluates the statutes in terms of how well they adhere to the two settled doctrines that respect and further settlor intent: (1) the greater-includes-the-lesser principle—the presumption that a more expansive grant of a trustee power includes any and all less expansive iterations of that power unless there is clear evidence of a contrary intent;11 and (2) probable intent—basic understandings about what a settlor would likely have preferred, given certain circumstances. In comparing how various decanting statutes approach key substantive modifications that decanting can theoretically achieve, this article concludes—although no statute perfectly 11 See Phipps, 196 So. at 301; Wiedenmayer v. Johnson, 254 A.2d 534, 536 (N.J. Super. Ct. App. Div. 1969); Morse v. Kraft, 992 N.E.2d 1021, 1024, 1026 (Mass. 2013). Phipps, Wiedenmayer, and Morse demonstrate why the greater-includes-the-lesser principle serves as a legitimate justification for a decanting power, as well as an adequate benchmark against which to assess decanting statutes when determining the extent to which they protect settlor intent. As the Phipps court asserted, common law has long recognized that “the power vested in a trustee to create an estate in fee includes the power to create or appoint any estate less than a fee[,] unless the donor clearly indicates a contrary intent.” Phipps, 196 So. at 301. In short, if a grantor structures a trust so that its structure alone permits the trustee to take certain actions or achieve certain results, then the grantor has implicitly authorized the trustee to take those actions or achieve those results. Therefore, simply authorizing a trustee to take those actions in a more efficient and direct manner does not frustrate freedom of disposition and may even further it. See Morse, 992 N.E.2d at 1025. These justifications can, and have been, summed up as the greater-includes-the-lesser principle. In his article, Stewart Sterk takes issue with using the non-general power of appointment analogy, or the greater-includes-the-lesser principle, as a justification for statutorily authorized decanting. See Sterk supra note 3. He argues that the principle is a problematic basis for decanting statutes for three reasons. First, “a trust instrument gives the trustee power to invade principal for the benefit of a single beneficiary, the trustee has the power to exclude other beneficiaries in only one way: by distributing the principal to that single beneficiary.” Id. at 2002. Second, trustees, who are typically compensated, stand to gain financially by extending the term of the trust, while family members who hold general powers of appointment stand to gain nothing from exercising powers. Id. at 2002-03. Third, Sterk asserts that “the trust settlor may not regard the role of the trustee, who is often chosen primarily for investment and management expertise, as equivalent to the role of a power of appointment holder selected primarily for knowledge of the needs and wants of family members.” Id. at 2003 (internal citation omitted). This argument ignores several key possibilities about settlor intent and trustee powers. First, it is simply not true that a trustee may only distribute principal to a single beneficiary in one way; a trustee, especially one with absolute discretion, may generally apply the principal subject to the trustee’s distribution power for the benefit of a single beneficiary, distribute the principal to that single beneficiary in further trust, or distribute it outright to that beneficiary who may then validly place it into a new trust. Second, the fact that a trustee receives compensation for being a trustee is not, in and of itself, incompatible with freedom of disposition. Maintaining assets in further trust, or in a new trust, may better effectuate settlor intent. Moreover, even if family members who are power holders do not stand to gain directly in a financial way from exercising a power of appointment, they may sometimes gain an indirect, personal advantage. Sterk’s third argument may serve as justification for placing greater limitations on decanting institutional trustees, especially those with limited discretion, but not for generally prohibiting all trustees from decanting. These arguments demonstrate that it is necessary to place some limitations or restrictions on when a trustee can decant and draft detailed, statutes to avoid risking freedom of disposition. However, these arguments do not at all demonstrate, as Sterk suggests, that decanting as a default rule justified by the greater-includes-the-lesser principle is generally incompatible with freedom of disposition.



balances settlor intent and flexibility—the Uniform Act and similar bifurcated statutes protect freedom of disposition reasonably well, while the Nevada statute and similar approaches tend to permit a trustee to disregard freedom of disposition too easily. If the goal of United States trust law is to maintain a coherent body of law with the objective of furthering freedom of disposition, then it will be crucial for states to adopt decanting statutes like the Uniform Act, as opposed to statutes similar to the Nevada model.

II

Part II of this article looks closely at how each of the intent-implicating substantive changes—beneficiary removal, beneficiary additions, fixed interest modifications, distribution standard modifications, accelerated vesting, postponed vesting, creation of supplemental needs trusts, and reduction and expansions of powers of appointment—can affect freedom of disposition.12 This article treats each potential modification separately, except for beneficiary addition and accelerated vesting. Accelerated vesting is a form of beneficiary addition that requires adding later vesting interests as earlier vesting interests. For each possible change, this article first determines how an ideal statute would treat decanting trustees with limited and unlimited discretion, given the greater-includes-the-lesser principle and probable intent. Then, the article compares the Uniform Act and the state approaches to the “ideal statute,” noting converging and diverging approaches not only between actual statutes and the ideal solution, but also between actual statutes. Based on how the real statutes compare to an ideal statute, this article then draws conclusions about how well the statutes adhere to the greater-includes-the-lesser principle and common understandings of probable intent, thus furthering freedom of disposition.13

12 This article does not generally analyze tax-related modifications and restrictions, since their consequences for settlor intent are generally uncontroversial for two reasons. First, certain limitations, such as those prohibiting decanting that affects a charitable trust, are designed to prevent tax abuses; the public interest in preventing such abuses generally overrides an interest in preventing freedom of disposition. Second, both grantors and beneficiaries widely desire certain tax benefits, and planners and trustees are keenly aware of this desire. Even the most liberal decanting statutes consistently protect settlors’ tax-saving plans. This article, however, discusses tax consequences and tax-driven modifications where it is relevant to assess the statutes based on the substantive modifications identified. 13 Although no two statutes take identical approaches, the statutes can be classified and categorized based on settlor intent protections. This article, therefore, discusses most statutes as a collective group, while identifying relatively minor idiosyncrasies in footnotes. While this article discusses the approaches that are currently effective state decanting statutes and the Uniform Act take to the key substantive changes, it pays special attention to the Uniform Act, Nevada, and Delaware approaches because of their importance and uniqueness. This article only refers to the Uniform Act when discussing it, but it is important to note that the Colorado, New Mexico, and Virginia statutes reach the same results because these states have adopted the Uniform Act. This article only analyzes how well the statutes provide settlor intent protections during the original trust term. It does not discuss how, if at all, the statutes treat settlor intent in a receiving trust during an extended trust term. It should be noted, however, that some statutes give trustees more liberal or expansive decanting powers if the original trust term has expired and the trust’s duration has been extended.



Beneficiary Removal

In theory, a trustee can decant to remove one or more beneficiaries of a trust. Whether such a power furthers or frustrates freedom of disposition turns primarily on how much discretion the trust instrument gives the trustee.

Given the greater-includes-the-lesser principle, allowing a trustee with absolute discretion to remove a beneficiary is compatible with freedom of disposition for multiple reasons. First, the trustee can achieve the same result, albeit sometimes less efficiently, by making a distribution from the old trust to only some of the beneficiaries. The trustee can do this in at least three ways after determining that it will benefit at least one beneficiary: outright, but contingent on the beneficiaries placing those assets into a new trust;14 in further trust; or by applying the distribution for the benefit of those beneficiaries. If the trustee concludes it will benefit a beneficiary, a trustee with absolute discretion may also simply refrain from making distributions to one or more beneficiaries, which achieves the same result as a beneficiary removal without making any changes to the trust and without violating any governing law or trust terms. In other words, the grantor effectively built a beneficiary removal power into the trust structure by giving the trustee absolute discretion.

The mere fact that the grantor gave the trustee absolute discretion may also cut in favor of the argument that removal provisions are compatible with freedom of disposition when the trustee has absolute discretion. Absolute discretion suggests it is the grantor’s probable intent for the trustee to have relatively unrestricted decision-making power. As the Phipps court acknowledged, absolute discretion suggests that the grantor intended for the trustee to have significant power and flexibility to make decisions, and respond to changed circumstances.15 Permitting the trustee to use these powers furthers the grantor’s intent, particularly when the trust instrument implicitly authorized actions identical to beneficiary removal.16 Allowing a decanting trustee to remove a beneficiary will not frustrate freedom of disposition more than existing trust law does, and many even promote freedom of disposition in some cases, while simultaneously increasing desired flexibility and decreasing administrative complexities.

In contrast, permitting a trustee with limited discretion to remove a beneficiary fails to adequately protect freedom of disposition for two reasons. First, the requirement that the trustee reasonably determine that the distribution would further one of the purposes of trust identified in the trust instrument is

14 See Wiedenmayer, 254 A.2d at 536 (authorizing a trustee with absolute discretion to distribute all the trust property to a new trust benefitting the trust’s current beneficiary, thereby extinguishing the remainder beneficiaries’ interest because a “distribution of the Corpus of the trust . . . made to the [current beneficiary] absolutely, as permitted within the unqualified discretion of the trustee [sic] . . . [would result in] the same loss of the contingent remaindermen’s interest . . . .”). 15 See Phipps, 196 So. at 301. 16 See id.



more restrictive because the purposes of the trust are more limited.17 In other words, the trust instrument itself does not explicitly authorize the trustee to remove a beneficiary because it does not functionally give the trustee the power to make a valid distribution at any time or for any reason. A trustee with limited discretion is not able to achieve a permanent removal without decanting, judicial intervention, or violation of some governing law or trust terms.

Second, probable intent is more difficult to discern when the trustee has limited discretion. It is clear from the trust instrument that the grantor intended to give the trustee some decision-making power and flexibility, but not expansive power. Unlike other changes, such as postponed vesting, that provide obvious tax and creditor protections most settlors desire, whether a grantor would want a beneficiary removed depends on facts and circumstances that are unique to every case. For example, a grantor would likely (but not necessarily) prefer removal if an irrevocable trust settled by the grantor benefits the soon-to-be ex-spouse of the grantor’s child. Instead, suppose that an irrevocable trust is created for the education of beneficiaries A, B, and C, but beneficiary C has dropped out of school and is unlikely to return. The grantor would probably (but, again, not necessarily) prefer that C remain a beneficiary, even if C does not receive any more distributions, just in case C chooses to return to school.

When the trust instrument does not explicitly authorize a similar but less efficient action and probable intent is not obvious, prohibiting the trustee from taking that action errs on the side of protecting freedom of disposition because it adheres to what the grantor stated as his or her wishes in the trust instrument. In short, prohibiting the action does not frustrate freedom of disposition more than the trust instrument itself. For these reasons, a default decanting rule that adheres to the greater-includes-the-lesser principle and probable intent as best as possible would prohibit decanting to remove a beneficiary when the trustee has limited discretion but not when the trustee has absolute discretion.

Under the Uniform Act and similar statutes, a trustee with absolute discretion may remove current or remainder beneficiaries with non-vested interests over which the trustee has discretion.18 In other words, a trustee may remove a beneficiary so long as the individual is not a current beneficiary with the right to receive mandatory distributions.19 However, a trustee with limited discretion may not remove a beneficiary under a bifurcated beneficiary removal rule.20 Because this bifurcated approach adheres closely to the greater-includes-

17 See Marsman v. Nasca, 573 N.E.2d 1025, 1030 (Mass. App. Ct. 1991). 18 See UNIF. TRUST DECANTING ACT § 11(b) (2017); ALASKA STAT. § 13.36.157(a); COLO. REV. STAT. § 15-16-911(2); 760 ILL. COMP. STAT. § 5/16.4(c); FLA. STAT. § 736.04117(2)(a); MICH. COMP. LAWS § 556.115a(1); MINN. STAT. § 502.851(3)(a); N.M. STAT. ANN. § 46-12-111(B); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(b); N.C. GEN. STAT. § 36C-8B-7(a); OHIO REV. CODE ANN. § 5808.18(A)(1); S.C. CODE ANN. § 62-7-816A(a); TEX. PROP. CODE ANN. § 112.072(a); VA. CODE ANN. § 64.2-779.8(B); WIS. STAT. § 701.0418(2). 19 See UNIF. TRUST DECANTING ACT § 11(c)(1). 20 UNIF. TRUST DECANTING ACT § 12(c) (2017) (“Under this section, the second trusts, in the aggregate,



the-lesser principle, regardless the level of discretion, as well as to the doctrine of probable intent, the statutes that follow it, including the Uniform Act, take an ideal approach to beneficiary removal.21

In contrast, the remaining decanting statutes’ approach to beneficiary removal, exemplified by Nevada’s non-bifurcated model, do not sufficiently protect freedom of disposition. The non-bifurcated statutes generally permit a trustee to remove a beneficiary of trust property as long as the trustee has some discretion over the trust property being decanted; these statutes do not distinguish between absolute and limited discretion.22 In general, the statutes only limit a trustee’s power to remove a beneficiary: (1) if doing so would interfere with a presently exercisable power of withdrawal, or (2) with qualification for the marital deduction, charitable deduction, or some other tax benefit.23 Some minority-view statutes have additional exceptions to the removal power, but these exceptions are not found consistently across the minority statutes.24

must grant each beneficiary of the first trust beneficial interests which are substantially similar to the beneficial interests of the beneficiary in the first trust.”) (emphasis added); see ALASKA STAT. § 13.36.157(d); COLO. REV. STAT. § 15-16-912(1)-(3); 760 ILL. COMP. STAT. § 5/16.4(d); FLA. STAT. § 736.04117(3)(a); MICH. COMP. LAWS § 700.7820a(1)(a); MINN. STAT. § 502.851(4)(a); N.M. STAT. ANN. § 46-12-112(E); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c); N.C. GEN. STAT. § 36C-8B-11(b)(1) (2018); OHIO REV. CODE ANN. § 5808.18(C)(1)(a); S.C. CODE ANN. § 62-7-816A(d)(1); TEX. PROP. CODE ANN. § 112.073(b); VA. CODE ANN. § 64.2-779.9(C); WIS. STAT. § 701.0418(2)(a)(3)(a). 21 In addition to the Uniform Act, fourteen states take this approach: Alaska, Colorado, Illinois, Florida, Michigan, Minnesota, New Mexico, New York, North Carolina, Ohio, South Carolina, Texas, Virginia, and Wisconsin. See supra note 18. 22 See ARIZ. REV. STAT. ANN. § 14-10819(A); DEL. CODE ANN. tit. 12, § 3528(a)(1); IND. CODE § 30-4-3-36(a)(1) (ambiguously authorizing a trustee with discretion to decant “for the benefit of one (1) or more persons . . . as long as . . . the beneficiaries of the second trust are the same as the beneficiaries of the first trust . . . .”) (emphasis added); MO. REV. STAT. § 456.4-419(2)(1); NEV. REV. STAT. § 163.556(2); TENN. CODE ANN. § 35-15-816(b)(27)(A); N.H. REV. STAT. ANN. § 564-B:4-418(b)(2); WYO. STAT. ANN. § 4-10-816(a)(xxviii). Although Delaware technically permits a trustee with limited discretion to remove a beneficiary at any time, a trustee with limited discretion would only be permitted to remove a beneficiary under limited circumstances. See DEL. CODE ANN. tit. 12, § 3528(a)(1). This is because Delaware requires that a trustee exercising decanting power under its statute “in all respects comply with any standard that limits the trustee’s authority to make distributions from the first trust . . . .” DEL. CODE ANN. tit. 12, § 3528(a) (flush language). 23 See ARIZ. REV. STAT. ANN. § 14-10819(A)(1)-(4); DEL. CODE ANN. tit. 12, § 3528(a)(1)-(3); IND. CODE § 30-4-3-36(a)(3); MO. REV. STAT. § 456.4-419(5)(a)-(d); NEV. REV. STAT. § 163.556(3)(a)(1)-(2); N.H. REV. STAT. ANN. § 564-B:4-418(h); TENN. CODE ANN. § 35-15-816(b)(27)(A), (G); WYO. STAT. ANN. § 4-10-816(b). Although section 4-1-816(a)(xxviii) of Wyoming’s statute explicitly allows a trustee to decant any amount of principal, despite a lack of discretion over that principal, section 4-1-816(b) prohibits decanting if it interferes with a tax benefit. WYO. STAT. ANN. § 4-10-816(b). Because of the tax benefits that a presently exercisable power of withdrawal usually facilitate, it appears that, in practice, the Wyoming statute rarely gives a trustee the power to eliminate a presently exercisable power of withdrawal, despite the statute’s liberal approach. 24 An example of a minority-view statute is Nevada’s, which does not allow a trustee to decant property that was specifically allocated to one beneficiary in the original trust, unless the beneficiary consents in writing. NEV. REV. STAT. § 163.556(3)(c). It also prohibits a trustee from decanting to remove a beneficiary if the property would be held under both the original and second trust after decanting, and the



The minority-view fails to adequately protect freedom of disposition when the trustee has limited discretion. Permitting a trustee with limited discretion to remove a beneficiary is permitting the trustee to take an action that the original trust instrument did not authorize in cases where probable intent is difficult to discern. Furthermore, some of the exceptions to beneficiary removal present in the minority statutes appear to prioritize beneficiaries’ wishes even when they are incompatible with a settlor’s wishes.25

Adding Beneficiaries

Another modification that decanting can theoretically achieve is the addition of a beneficiary. Unless the trustee has absolute discretion and only a current beneficiary is being added as a remainder or successor beneficiary, permitting a trustee to add a beneficiary by decanting allows the trustee to do something that a trust instrument and trust law would not otherwise permit him or her to do. Unlike beneficiary removal, a trustee must generally rely on a court or the cooperation of at least one beneficiary to achieve an addition without a decanting provision or explicit authorization in the trust instrument; a trustee cannot typically act unilaterally to make a valid addition.

Adding a current beneficiary as a remainder beneficiary when the trustee has absolute discretion merely follows the greater-includes-the-lesser principle and probable intent. It is, therefore, one addition that conforms to the principle of freedom of disposition. A trust instrument that gives a trustee absolute discretion implicitly authorizes the trustee to add a current beneficiary as a remainder beneficiary, because a trustee with absolute discretion may make a distribution outright to, in further trust for, or for the benefit of a current beneficiary that would diminish or eliminate the remainder beneficiaries’ interests. Permitting such an addition also increases flexibility for the trustee, which the grantor must have wanted if he or she gave the trustee absolute discretion.

In contrast, all other types of additions, including adding a current beneficiary as a remainder beneficiary when there is limited discretion, adding a remainder beneficiary as a current beneficiary26 regardless the level of

value of the property when held in the two trusts would be lower than if it had been held only in the original trust—unless the benefit provided to the beneficiary is limited to a specific amount and the trust property could still adequately provide that amount. NEV. REV. STAT. § 163.556(3)(d). Unlike the presently exercisable power of withdrawal or tax benefit exceptions, these other exceptions to beneficiary removal do not have obvious ties to either discretion or settlor intent as expressed in the trust instrument. 25 For example, suppose that the primary purpose of a trust is to care for one beneficiary but gives $10,000 income from specific property to a different beneficiary. Suppose further that for the primary beneficiary’s best interests, the trust should be decanted, as provided for in the Nevada exception, but doing so would reduce the value of the set amount for the other beneficiary below $10,000. See NEV. REV. STAT. § 163.556(3)(c), (d). The Nevada statute would likely not permit the decanting, even though one clearly knows the settlor’s intent from the trust instrument. See id. 26 Adding a remainder beneficiary as a current beneficiary is equivalent to accelerating vesting. The reasons why accelerated vesting may, or may not, accord with freedom of disposition are identical to the reasons why adding a remainder beneficiary as a current beneficiary may, or may not, do so. For these



discretion, and adding an entirely new beneficiary, do not conform to the greater-includes-the-lesser principle. If a trustee has limited discretion, he or she does not have the authority to make a distribution for the sole purpose of giving one (current) beneficiary trust property to the exclusion of any other beneficiaries, including remaindermen; he or she certainly does not have the authority to make a distribution for the purpose of benefitting a non-beneficiary.27 The trustee does not have the authority to make a distribution to a remainder beneficiary until a specific event or time occurs.28 The trustee must only make distributions in accordance with the distribution standard.

Similarly, decanting to add an entirely new beneficiary or to accelerate a remainder interest does not align with probable intent under normal circumstances. The mere fact that a grantor chose to exclude some individuals as beneficiaries either entirely or conditionally is strong evidence of intent to limit the benefit those individuals may receive. It is difficult to imagine normal circumstances under which a grantor would feel differently, let alone circumstances that recur frequently enough to justify a default rule permitting an expansion beyond the limitations explicitly stated in trust instruments.

No decanting statute permits a trustee to add an entirely new beneficiary.29 Beyond that, statutes diverge on how they treat additions of

reasons, this article treats these two substantive modifications together in this section. 27 A basic tenet of trust law requires that a trustee’s actions (and the trust) be for the benefit of the beneficiaries. See UNIF. TRUST CODE § 404 (2017). Giving trust property to a non-beneficiary would rarely, if ever, benefit an original beneficiary. Additionally, absent mistake or a scrivener’s error, it is also unlikely—and extremely difficult to know with any certainty—that a grantor would have wanted someone added as a beneficiary who is not named in the trust instrument. One exception to this general statement is that the addition of an entirely new beneficiary does not generally benefit any beneficiaries of the original trust in a special needs trust. A special needs trust permits a disabled beneficiary to receive supplemental financial support from a trust while continuing to receive government benefits that are typically need-based. State law sometimes requires that a special needs trust be a pooled or payback trust. See UNIF. TRUST DECANTING ACT § 13 cmt (2017). 28 The choice to make some beneficiaries current beneficiaries and others remainder beneficiaries may also indicate intent to prioritize some beneficiaries (the current beneficiaries) over others (the remainder beneficiaries). This may certainly be true for some, but not all, grantors. For example, suppose that a grantor leaves trust property to his or her children as current beneficiaries. Once the grantor’s children are deceased, the property is to benefit the grantor’s grandchildren as remainder beneficiaries. It may very well be the case that the grantor felt closer to his or her children, or felt a stronger need to support his or her children. But, it may be the case that he simply assumed that the grandchildren would enjoy the trust property indirectly through their parents (the grantor’s children). For this reason, the grantor may have chosen to have his or her grandchildren benefit indirectly to the greatest extent possible to reduce the possible generation-skipping transfer tax. So, probable intent here is a less satisfactory justification than the greater-includes-the-lesser principle. 29 See, e.g., UNIF. TRUST DECANTING ACT § 11(c)(1); ALASKA STAT. § 13.36.157(a); ARIZ. REV. STAT. ANN. § 14-10819(A)(3); COLO. REV. STAT. §§ 15-16-911(3)(b), 15-16-912(3); DEL. CODE ANN. tit. 12, § 3528(a)(1); FLA. STAT. § 736.04117(2)(a)(1); 760 ILL. COMP. STAT. § 5/16.4(d); IND. CODE § 30-4-3-36(a)(1); KY. REV. STAT. ANN. § 386.175(4)(a); MICH. COMP. LAWS § 700.7820a(1)(a); MINN. STAT. § 502.851(3)(a), (4)(a); MO. REV. STAT. § 456.4-419(2)(1); NEV. REV. STAT. § 163.556(2); N.H. REV. STAT. ANN. § 564-B:4-418(b)(1); N.M. STAT. ANN. §§ 46-12-111(C)(1)-(3), 46-12-112(C); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c); OHIO REV. CODE ANN. § 5808.18(B); 18 R.I. GEN. LAWS § 18-4-31(a)(1); S.C. CODE ANN. § 62-7-816A(d)(1); S.D. CODIFIED LAWS § 55-2-15(1); TEX. PROP. CODE ANN.



individuals who already receive some benefit under the original trust instrument.

Some state statutes allow a trustee with absolute discretion to add a current beneficiary as a remainder or successor beneficiary.30 They do not permit the trustee with limited discretion to do so.31 Additionally, these statutes do not permit any trustee, even one with absolute discretion, to add entirely new beneficiaries, or to add remainder beneficiaries as successor beneficiaries.32 For these reasons, the Uniform Act and similar statutes take an ideal approach to adding beneficiaries: they protect freedom of disposition by prohibiting additions where they would not otherwise be supported—by trust law, the trust instrument, and intuitive notions about probable intent—while simultaneously increasing flexibility where it is reasonably certain intent would not be frustrated.

A second group of statutes is like the Uniform Act in all respects, except these statutes permit a decanting trustee with absolute discretion to name remainder beneficiaries as current beneficiaries.33 This rule deviates from the greater-includes-the-lesser principle because it allows some trustees to make distributions to remainder beneficiaries before the original trust instrument

§ 112.073(a), (b), (d); WIS. STAT. § 701.0418(2)(a)(3)(a). 30 See COLO. REV. STAT. § 15-16-911(4)(d); MICH. COMP. LAWS §§ 556.115a(1)(a), 700.7820a(1)(a); MINN. STAT. § 502.851(3)(a); N.M. STAT. ANN. § 46-12-111(C)(1)-(3); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c); OHIO REV. CODE ANN. § 5808.18(A)(3)(a); S.C. CODE ANN. § 62-7-816A(a). However, New York and Minnesota’s position on whether a trustee with absolute discretion may add a current beneficiary as a remainder or successor beneficiary are somewhat ambiguous. Both statutes explicitly state that the remainder or successor beneficiaries of the second trust may be none, one, some, or all of the remainder or successor beneficiaries of the first trust, but are silent on whether a current beneficiary may be a remainder or successor beneficiary. MINN. STAT. § 502.851 (3)(a); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c). Because all the original remainder or successor beneficiaries may be excluded from the second trust, but at least one current beneficiary must remain a current beneficiary, this article takes the position that current beneficiaries may be remainder or successor beneficiaries. The following example illustrates this point. Under the language of the statute, it seems that a trustee can create a valid second trust with only current beneficiaries, and no remainder beneficiaries, that grants the current beneficiaries’ testamentary power of appointment, and identifies them as takers in default, should they fail to exercise their powers. The result is substantively equivalent to adding the current beneficiaries as remainder beneficiaries. Although it is not bifurcated, Delaware’s statute reaches almost the same result as the Uniform Act and similar bifurcated statutes, because it requires the trustee to comply, in all respects, with any standard that limits the trustee’s authority. See DEL. CODE ANN. tit. 12, § 3528(a). Delaware only differs from the Uniform Act model in two ways. First, Delaware law permits a trustee with limited discretion to decant to add a current beneficiary as a remainder beneficiary. Id. However, to do so, the trustee must determine before decanting that such an addition would benefit the beneficiary in a way that the original trust’s distribution standard permits or requires. Id. In contrast, a trustee limited by an ascertainable standard, and governed by the Uniform Act, must appoint the distribution in further trust to achieve the same result. See UNIF. TRUST DECANTING ACT § 12(c). Additionally, while Delaware’s statute is technically as protective as the Uniform Act, while simultaneously being more flexible in some ways, Delaware’s statute appears to be an easier target for abuse, because of the extent to which a trustee with limited discretion is restricted by its terms is less obvious. Compare DEL. CODE ANN. tit. 12, § 3528(a) (flush language), with UNIF. TRUST DECANTING ACT § 12. 31 See supra note 29. 32 Id. 33 See FLA. STAT. § 736.04117(2)(a)(1); 760 ILL. COMP. STAT. § 5/16.4(c); TEX. PROP. CODE ANN. § 112.072(a); WIS. STAT. § 701.0418(2)(a)(3).



otherwise would. Moreover, it is not obvious that probable intent justifies this approach as a default rule. While the grantor did express an interest in benefitting the original remainder beneficiaries, the original trust instrument also gave them conditional interests. The conditions placed on such remainder interest usually suggest the settlor’s desire that either the current beneficiaries be fully provided for first or that the remainder beneficiaries reach a certain level of maturity—conditions that have not been met if the remainder beneficiaries still only have remainder interests. Even considering the possibility of changed circumstances, there is insufficient evidence and understanding about grantor preferences with respect to accelerated remainder interests to justify a default rule that goes beyond the plain terms of the trust instrument. Because it permits remainder interests to be accelerated, the second approach does not protect freedom of disposition as best as possible.

Two more states, Alaska and Virginia, follow a different rule, which is becoming obsolete.34 These states, like the Uniform Act, prohibit a trustee from adding an entirely new beneficiary, or from adding a remainder beneficiary as a current beneficiary, but permit a trustee with absolute discretion to add current beneficiaries as remainder beneficiaries.35 However, these two statutes go one step further and also prohibit a trustee from adding remainder beneficiaries of the first trust as remainder beneficiaries of the second trust.36 In other words, they only allow a trustee to decant for the benefit of a trust’s current beneficiaries. This model frustrates settlor intent because, in naming the remainder beneficiaries as beneficiaries of the trust, the grantor expressed an interest in benefitting them upon the occurrence of a condition—whether that be when the current beneficiaries no longer need support, or otherwise. It is true that a remainder interest is merely an expectancy conditioned on the existence of enough property at the time the remainder interest vests—a condition that may not be satisfied. However, the approach employed by Alaska and Virginia eliminates the possibility for that condition to be satisfied, and it does so without enough justification.

With respect to non-bifurcated statutes, one can classify beneficiary-addition provisions into three similar groups: (1) statutes that permit a trustee to add current beneficiaries as remainder beneficiaries, but prohibit any remainder interests from the original trust that are not eliminated from being accelerated into current interests;37 (2) statutes that permit a trustee to add current beneficiaries as remainder beneficiaries, but require the trustee to eliminate the

34 See ALASKA STAT. § 13.36.157(b), (d); VA. CODE ANN. § 64.2-778.1(B) (repealed 2017). Virginia recently enacted the Uniform Act, effective July 1, 2017, replacing its current state-authored statute, so this result will soon be irrelevant for purposes of Virginia law. VA. CODE ANN. § 64.2-779.8(C). Alaska has introduced an amendment to section 13.36.157(a) that, if enacted, would explicitly authorize a trustee to maintain original remainder and successor beneficiaries as such in a receiving trust. See H.B. 208, 2017 Legis., 1st Sess. (AK 2017). 35 ALASKA STAT. § 13.36.157(b), (d); VA. CODE ANN. § 64.2-778.1(B) (repealed 2017). 36 ALASKA STAT. § 13.36.157(b), (d); VA. CODE ANN. § 64.2-778.1(B) (repealed 2017). 37 See, e.g., KY. REV. STAT. ANN. § 386.175(4)(a)–(b).



remainder interests from the original trust;38 and (3) statutes that permit current interests to be added as remainder interests, and vice versa.39 In general, these statutes fail to protect freedom of disposition for the same reasons as their bifurcated counterparts. However, one can conclude that most of these non-bifurcated statutes protect freedom of disposition to a lesser degree than their bifurcated counterparts. This is because these non-bifurcated statutes permit not only a trustee with unlimited discretion, but also a trustee with limited discretion, to make these changes.40

Of these common approaches, those of the Uniform Act and similar bifurcated statutes are the best because they adhere most closely to the greater-includes-the-lesser principle, while successfully balancing flexibility and settlor intent, including probable intent. On the other side of the spectrum, the Nevada-style statutes encourage flexibility but fail in multiple respects to adhere to intent as stated in the trust instrument and as understood under relevant circumstances.

Altering Fixed Interests

Another modification that decanting can achieve is a change to a fixed interest, or mandatory distribution. In other words, if a trust instrument requires a trustee to give a beneficiary a specific amount or percentage of the principal, the trustee can deviate from this requirement by increasing, decreasing, or eliminating that gift. Whether altering a fixed interest is compatible with freedom of disposition depends primarily on two factors: (1) the amount of discretion a trustee possesses over other beneficial interests that are governed by the same trust instrument, and (2) the method used to interpret ambiguous trust instrument language.

First, whether changes to mandatory distributions comport with freedom of disposition depends on the amount of discretion that the grantor permitted the trustee to exercise over other beneficial interests derived from the same pool of trust property. If the trust instrument affords the trustee absolute discretion to make distributions to other beneficiaries with vested interests from the same pool of trust assets, then the trust instrument unilaterally gives the trustee the power to alter any fixed interests by simply making distributions to those other beneficiaries. In contrast, if a trustee is afforded no discretion at all in deciding how to make distributions from a given pool of trust assets, then the trust instrument plainly does not authorize the trustee to make changes to mandatory

38 See, e.g., 18 R.I. GEN. LAWS § 18-4-31(a)(1); TENN. CODE ANN. § 35-15-816(b)(27)(A). 39 See, e.g., ARIZ. REV. STAT. ANN. § 14-10819(A)(3); IND. CODE § 30-4-3-36(a)(1); MO. REV. STAT. § 456.4-419(2)(1); NEV. REV. STAT. § 163.556(2); N.H. REV. STAT. ANN. § 564-B:4-418(b)(1); S.D. CODIFIED LAWS § 55-2-15(1); WYO. STAT. ANN. § 4-10-816(a)(xxviii). New Hampshire’s statute is materially different from all other statutes because it theoretically permits a trustee without discretionary distribution power to make these additions. N.H. REV. STAT. ANN. § 564-B:4-418(a)–(b), (d). 40 It is important to note that although Delaware does not have a bifurcated statute, a trustee has virtually identical beneficiary addition powers under Delaware law and the Uniform Act, so this conclusion is not true of Delaware.



distributions.41 The greater-includes-the-lesser principle demands such results in these two cases, absent additional evidence of settlor intent.

Permitting a trustee with limited discretion to make a decanting distribution at any time, and for modifying a mandatory distribution, also appears to violate settlor intent. This is because the settlor only authorized the trustee to make distributions under certain circumstances outlined in the trust instrument.42 Although the settlor conferred significant decision-making power onto the trustee with limited discretion, he did not authorize the trustee to reduce, or to completely eliminate, any beneficiary distributions at any time or for any reason that the trustee deemed valid. It may be coincidental that exercising due regard for the beneficiaries and the existence of certain circumstances happens to result in some beneficiaries receiving less, or nothing, even when the trustee has only limited discretion. Therefore, under the greater-includes-the-lesser principle, a default decanting rule that permits a trustee to alter a fixed interest would be inappropriate when there is less than full discretion that is allowed by the trust instrument.

In addition to questions of degree of discretion granted to a trustee, evaluating how well changes to fixed interests conform to the principle of freedom of disposition depends on how one chooses to interpret ambiguous trust instrument language, namely whether one places more emphasis on substance or form when reading a trust instrument to discern actual or probable intent. When a grantor gives a trustee absolute discretion to distribute principal or income to some beneficiaries, while simultaneously giving the trustee less than absolute discretion to make other distributions from the same pool of principal or income, the greater-includes-the-lesser principle permits a trustee, in theory, to reduce the fixed interests of some beneficiaries by making distributions that the trustee is authorized to make in his or her sole and absolute discretion. In this way, the “fixed interest” or mandatory distribution is not truly fixed. Importantly, it is unclear whether grantors generally recognize that giving the trustee absolute discretion functionally permits a trustee to reduce or eliminate mandatory distributions. For example, on the surface, a mandatory distribution, such as 41 Some examples better illustrate how these two kinds of distribution mechanisms work. If the terms of the trust give beneficiaries A, B, and C $10,000 each per year for the next five years, the trustee must simply give each beneficiary $10,000 per year for the next five years. The trust instrument does not authorize the trustee to do anything differently. But if the trust terms give beneficiaries A and B $10,000 per year for the next five years and give the trustee the power to make distributions to C in the trustee’s absolute and sole discretion, then the trustee has the power to distribute all the trust property to C at any time. A large enough distribution to C will reduce or eliminate the annual distributions to A and B. Absent a trust provision explicitly requiring the trustee to preserve enough of the trust property to give A and B $10,000 per year over five years, the trust is structured in such a way that the trustee has the power to change A and B’s “fixed interests.” In other words, A and B do not have a right to mandatory distributions. 42 The term “limited discretion” means a complete absence of absolute discretion over other distributions that come from the same pool of trust assets. If a trustee has absolute discretion over some interests but limited discretion over others, then, as in the first example, the trustee can make changes indirectly by using his or her absolute discretion to make distributions that indirectly reduce or eliminate any fixed interests derived from the same pool of trust property.



$5,000 or five-percent of the principal annually, appears to be something over which the trustee does not have any discretion at all, and there is no reason to believe that most grantors would know or think otherwise.43 As a result, a mandatory distribution may create ambiguities that must be interpreted and resolved, either by giving the distribution mechanism within a trust instrument more significance than the instrument’s plain meaning would suggest, or vice versa. Under the principle of freedom of disposition, and absent overriding policy concerns, the correct outcome for a default rule should be the one that best aligns with most donors’ wishes. However, it is not always clear what most donors, particularly those who indicate a desire for flexibility by giving a trustee unlimited discretion, would prefer.

Decanting provisions concerning changes to mandatory distributions generally protect freedom of disposition more than they frustrate it. All but a handful of decanting statutes restrict the ability of a trustee with discretion to alter mandatory distributions, including fixed income annuity, and unitrust interests in both a formal and functional sense.44 However, no decanting statute perfectly protects freedom of disposition, because each statute must, and does, make a tradeoff between the desired flexibility and the plain meaning of the term “fixed interest” when the trustee has absolute discretion over some interests but not others.

The approach to fixed interests employed by the Uniform Act, as well as Ohio, Delaware, and South Carolina, is arguably the more effective at protecting freedom of disposition.45 The Uniform Act’s approach never permits a trustee

43 The fact that many well-drafted decanting statutes, including New York’s, favor plain meaning over substance seems to indicate that most grantors probably do not realize that a trustee with absolute discretion may have the power to indirectly alter supposedly mandatory distributions. See, e.g., N.Y. EST. POWERS & TRUSTS LAW § 10-66(n)(1)-(5). 44 See supra note 29. 45 Ohio prohibits any trustee from modifying

current right[s] to a mandatory distribution of income or principal of the first trust; . . . current mandatory annuity or unitrust interest[s] in the property of the first trust; [and] . . . right[s] annually to withdraw a percentage of the value of the first trust or a specified dollar amount [but makes explicit that an income interest] is not considered to be mandatory if . . . current distributions of principal may be made to any person other than that current beneficiary.

OHIO REV. CODE ANN. § 5808.18(C)(1)(a), (b). Because the Ohio statute prohibits a trustee with limited discretion from materially changing beneficial interests, the result under section 5808.18(C)(1)(a) and (b) would appear to be that a trustee with absolute discretion over principal that produces income used for mandatory distributions may modify or reduce those mandatory income distributions. See id. Unlike the Uniform Act, however, the Ohio statute would not permit a trustee with absolute discretion over some of the principal to modify mandatory distributions of principal. Compare UNIF. TRUST DECANTING ACT §§ 11(c)(3), 12(c), with OHIO REV. CODE ANN. § 5808.18(C)(1)(a), (b). Under the Delaware Code, a trustee with discretion over principal, whether limited or unlimited, may decant to modify an income or unitrust interest so long as doing so does not interfere with any marital deduction that may have been taken. DEL. CODE ANN. tit. 12, § 3528(a)(3). But the Delaware statute requires the decanting trustee to “in all respects comply with any standard that limits the trustee’s authority to make distributions from the first trust.” Id. Such language closely reflects the greater-includes-the-lesser principle, and it allows a trustee to achieve virtually the same results under the



with less than absolute discretion to alter mandatory distributions made from the same pool of trust property as the discretionary distributions.46 Yet, if the trustee has absolute discretion and can use the structure of a trust to indirectly alter a fixed interest without decanting and without violating fiduciary duty, then the Uniform Act permits the trustee to alter the fixed interest directly.47 This rule strictly adheres to the greater-includes-the-lesser principle and therefore protects freedom of disposition well.

However, the result under the Uniform Act remains imperfect, leaving open a small possibility for a trustee to disregard settlor intent under certain conditions. Reaching the conclusion that the Uniform Act’s approach to fixed interests protects freedom of disposition assumes that most settlors who give trustees absolute discretion would prefer a substantive reading of the trust instrument to a formal one. Because external checks on a trustee’s power to alter mandatory distributions exist, and because a settlor who granted a trustee absolute discretion must have desired some degree of flexibility, making this assumption appears to facilitate the most agreeable statutory default decanting rule; it adheres to the greater-includes-the-lesser principle while maximizing flexibility. The Uniform Act’s approach simply furthers freedom of disposition better than other solutions, given the inherent ambiguity that a grant of absolute discretion over only certain interests derived from the same pool of trust assets poses.

In contrast to the Uniform Act, most bifurcated statutes, and several non-bifurcated statutes, interpret fixed interests or mandatory distributions using plain meaning and, therefore, place greater limitations on the trustee’s ability to modify such interests. All of the statutes that take this majority-view prohibit trustees with both limited and absolute discretion from altering current fixed income, annuity, or unitrust interests, even when the trustee has absolute discretion over other vested interests.48 Some statutes similarly restrict a trustee’s

Uniform Act and Delaware statute. Compare UNIF. TRUST DECANTING ACT §§ 11(c)(3), 12(c), with DEL. CODE ANN. tit. 12, § 3528(a). Like Delaware’s, South Carolina’s statute is not bifurcated but imposes an ascertainable standard limitation and consequently reaches substantially the same results with respect to mandatory distribution modifications. See S.C. CODE ANN. § 62-7-816A. South Carolina only differs in that it explicitly places greater limitations on this fixed interest modification power when a change would interfere with tax benefits. Compare S.C. CODE ANN. § 62-7-816A(d)(3), with DEL. CODE ANN. tit. 12, § 3528(a). 46 See UNIF. TRUST DECANTING ACT § 11(c)(3). 47 See UNIF. TRUST DECANTING ACT § 11 cmt. Expanding on previous examples, supra note 41 illustrates how the Uniform Act treats modifications to fixed interests. If the terms of the trust give beneficiaries A, B, and C $10,000.00 a year for the next five years, then the trustee may not decant under the Uniform Act. If the trust term gives beneficiaries A and B $10,000.00 a year for the next five years but gives the trustee the power to make distributions to C in the trustee’s absolute and sole discretion, then the trustee may decant to reduce or eliminate the distributions to A and B. In contrast, a trustee is not able to decant to increase the mandatory distributions to A and B, given the same trust terms, because the trustee does not have direct discretion over the gifts to A and B. 48 See ALASKA STAT. § 13.36.158(i)(1); ARIZ. REV. STAT. ANN. § 14-10819(A)(1), (2); FLA. STAT. § 736.04117(2)(a); 760 ILL. COMP. STAT. § 5/16.4(n)(1); IND. CODE § 30-4-3-36(a)(2); KY. REV. STAT. ANN. § 386.175(4)(c); MINN. STAT. § 502.851(15)(1); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(n)(1);



power to modify future mandatory distributions.49 Others permit modifications to such future interests.50 In general, this majority-view encapsulates the greater-includes-the-lesser principle but sacrifices some of the flexibility which a settlor who granted absolute discretion likely wanted the trustee to have. Because other mechanisms, such as fiduciary duty and notice to beneficiaries, may eliminate the same risks that a blanket prohibition against changes to all fixed interests eliminates, the majority rule can be characterized as protective of settlor intent, but less so than the Uniform Act.

A few states, including Nevada and South Dakota, take yet a different approach. These states generally permit a trustee with limited discretion to modify mandatory distributions, unless doing so would interfere with certain tax-saving strategies.51 The result under such a provision is that a trustee can modify mandatory distributions if the trustee has only limited discretion over other

18 R.I. GEN. LAWS § 18-4-31(a)(2); TEX. PROP. CODE ANN. § 112.085(1)(A)-(D); WIS. STAT. § 701.0418(2)(a)(1). 49 See ARIZ. REV. STAT. ANN. § 14-10819(A)(1), (2); FLA. STAT. § 736.04117(a)(2); IND. CODE § 30-4-3-36(a)(2); KY. REV. STAT. ANN. § 386.175(4)(c); 18 R.I. GEN. LAWS § 18-4-31(a)(2); WIS. STAT. § 701.0418(2)(a)(1). 50 See ALASKA STAT. § 13.36.158(i)(1); 760 ILL. COMP. STAT. § 5/16.4(n)(1); MINN. STAT. § 502.851(15)(1); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(n)(1); TEX. PROP. CODE ANN. § 112.085(1). The rationale behind permitting a trustee to alter future mandatory distributions, but not current nominally mandatory distributions, is that the former are not truly mandatory because they are contingent upon enough trust assets remaining in the trust long enough for the material purposes of the trust to be satisfied with respect to all the current beneficiaries. This approach follows the greater-includes-the-lesser principle better than the even more formal plain meaning approach (but perhaps not probable intent). 51 MO. REV. STAT. § 456.4-419(2)(5)(a)-(d); NEV. REV. STAT. § 163.556(3)(a)(1), (2); S.D. CODIFIED LAWS § 55-2-15(6)(a)-(c); TENN. CODE ANN. § 35-15-816(b)(27)(G); WYO. STAT. ANN. § 4-10-816(b). The Nevada statute does not explicitly address a trustee’s powers in relation to a mandatory distribution because it merely states that “[p]roperty specifically allocated to one beneficiary” cannot be decanted unless the beneficiary consents. NEV. REV. STAT. § 163.556(3)(c). While this vague prohibition will prohibit a trustee from altering some truly mandatory distributions and permit a trustee to alter others that are not truly fixed, it is simultaneously over- and under- inclusive. For example, suppose a trust instrument states that Beneficiaries A and B must each receive $10,000 worth of principal or income. There are a variety of assets in the trust other than cash. The trust instrument does not specify which property should be used to make these distributions. It appears that the trustee may decant regardless of the lack of real discretion because the gift does not come from specific property. Suppose instead that Beneficiary A is supposed to get all of the income from a trust but the trustee has absolute discretion to give Beneficiary B any amount of principal. The trustee in this latter case would not be able to decant under the Nevada statute, even though the trustee could nonetheless eliminate A’s interest altogether simply by distributing the entire principal to B. As these two examples demonstrate, there is room in the Nevada statute to disregard freedom of disposition because it does not perfectly adhere to the trust instrument and the greater-includes-the-lesser principle. The existence of an exception in the Nevada statute for cases in which the beneficiary consents also suggests a clear disregard for settlor intent in this approach. New Hampshire generally permits any trustee to modify fixed interests, regardless of the trustee’s amount of discretion, unless the fixed interests are vested, i.e. fixed in a functional sense, as in the Uniform Act definition. N.H. REV. STAT. ANN. § 564-B:4-418(g)(1). For this reason, the New Hampshire approach is slightly more protective of freedom of disposition than the traditional Nevada, or South Dakota style approaches, but not substantially so. Tennessee’s statute is also somewhat more protective than the other statutes in this group because it prohibits a trustee from modifying a fixed income interest. TENN. CODE ANN. § 35-15-816(b)(27)(A)(i). However, Tennessee’s approach still fails to respect settlor intent well because it permits any trustee with discretion to alter any annuity or unitrust interest, as long as doing so would not interfere with a tax benefit. Id.



beneficial interests derived from the same pool of assets as the fixed interest, but not if all the beneficial interests are truly mandatory. Because trustees with less than absolute discretion cannot make distributions at any time or for any reason, such an approach disregards the greater-includes-the-lesser principle and, in turn, fails to sufficiently protect freedom of disposition on that basis alone.

Altering Distribution Standards

A trustee may also decant to alter a trust’s distribution standard. In general, material changes to a distribution standard align with settlor intent if the settlor granted the trustee absolute discretion, but not if the settlor granted the trustee limited or no discretion.

The greater-includes-the-lesser principle enables a trustee with absolute discretion to unilaterally restrict the trust’s distribution standard. Without decanting, the same trustee can validly make distributions for any reason that the trustee deems reasonable. For example, he or she can make distributions only for the beneficiaries’ health, or only for their education, if the trustee determines that doing so is appropriate. The trustee may also validly distribute the trust property to the beneficiaries in further trust with a more restrictive standard.

Probable intent also supports the determination that the trustee with unlimited discretion has the authority to restrict a distribution. It can be said that the grantor wanted the trustee to exercise his or her discretion and make distribution decisions. That is why the grantor gave the trustee absolute discretion. As a result, a default rule that authorizes a trustee with absolute discretion to restrict a trust’s distribution standard simply increases flexibility, efficiency, and transparency without violating settlor intent.

When one considers probable intent in the context of certain tax consequences associated with different distribution standards, permitting a trustee with absolute discretion to decant to restrict a distribution standard may even further settlor intent. Imagine a situation in which a trust gives the current trustee and all successor trustees absolute discretion to determine how the trust property is appointed. A situation in which decanting may be beneficial is one in which the current trustee is set to retire soon, and a current beneficiary would otherwise be the best successor trustee, but for the fact that a trustee-beneficiary with absolute discretion is considered to hold a general power of appointment and would lead to adverse tax consequences.52 Decanting to restrict the distribution standard would permit the beneficiary to become the trustee without these negative consequences, thereby preserving trust resources for the beneficiaries, which was likely an important goal for the grantor.53 Furthermore,

52 See I.R.C. § 2514(c) (2018). 53 See Morse, 992 N.E.2d at 1026 (permitting decanting because, given changed circumstances, a provision prohibiting beneficiaries from serving as trustees no longer had any purpose, and eliminating it was not only authorized by the trust instrument, but also in furtherance of settlor intent because appointing the beneficiaries trustees preserved trust resources for their support, the primary purpose of the trust).



use of a broad ascertainable standard, such a health, support, education, or maintenance, coupled with powers of appointment, may closely approximate an absolute discretion standard—without the negative tax consequences associated with that unlimited standard.

In the absence of a decanting power or court intervention, a trustee limited by an ascertainable standard cannot arbitrarily make or withhold a distribution for any reason whatsoever, even one that he or she deems proper. As a result, a trustee with limited discretion alone cannot use his or her discretion to impose a distribution standard or plan in practice that is substantively different from that laid out in the trust instrument. Moreover, narrowly-tailored, ascertainable standards speak to the purposes of the trust—whether they are simply tax-saving plans or something else—and, in turn, probable intent. For this reason, permitting a trustee with limited discretion to substantively alter an ascertainable standard in any material way violates the greater-includes-the-lesser principle and risks frustrating settlor intent.54

Every decanting statute, except Delaware’s, permits a trustee with unlimited discretion to decant to restrict a distribution standard.55 The majority and minority rules, exemplified by the Uniform Act and Nevada, differ in that the majority disallows any meaningful change in the distribution standard when the trustee has limited discretion, whereas the minority does not.

The Uniform Act and several of the bifurcated state statutes permit a trustee to alter a distribution standard but treat trustees with limited and absolute discretion differently with respect to this power.56 A trustee with absolute discretion may alter the distribution standard by making it more restrictive. This approach aligns with the greater-includes-the-lesser principle and probable intent in the ways that an ideal statute should. It therefore protects freedom of 54 Only substantive changes to distribution standards necessarily frustrate settlor intent when an ascertainable standard limits the trustee’s distribution power. Changes to a distribution standard may be necessary for administrative purposes and in such an event would protect, if not further, freedom of disposition. 55 See UNIF. TRUST DECANTING ACT § 12(b), (c); ALASKA STAT. § 13.36.157(a); ARIZ. REV. STAT. ANN. § 14-10819(A)(4); COLO. REV. STAT. § 15-16-912(3); FLA. STAT. § 736.04117(2)(a); 760 ILL. COMP. STAT. § 5/16.4(c); IND. CODE § 30-4-3-36(a); KY. REV. STAT. ANN. § 386.175(4)(h); MICH. COMP. LAWS ANN. §§ 556.115a(1), 700.7820a(1); MINN. STAT. § 502.851(3)(a); MO. REV. STAT. § 456.4-419(1); N.C. GEN. STAT. § 36C-8B-21; NEV. REV. STAT. § 163.556(1), (4)(a)(2); N.H. REV. STAT. ANN. § 564-B:4-418(d); N.M. STAT. ANN. § 46-12-112(C); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c)(2); OHIO REV. CODE ANN. § 5808.18(A)(1); 18 R.I. GEN. LAWS § 18-4-31(a)(1); S.C. CODE ANN. § 62-7-816A(a); S.D. CODIFIED LAWS § 55-2-15(1)(a); TENN. CODE ANN. § 35-15-816(b)(27)(A)(i)-(ii); TEX. PROP. CODE ANN. § 112.073(a), (c); VA. CODE ANN. § 64.2-779.18; WIS. STAT. § 701.0418(2)(a)(2); WYO. STAT. ANN. § 4-10-816(a)(xxviii). Several of these statutes are silent as to whether any trustee may alter the distribution standard, and, in the case of few bifurcated statutes, as to whether a trustee with absolute discretion may alter it. Presumably, trustees decanting under any of these statutes may change a distribution standard if they have the requisite level of discretion if they do not violate any other provisions in doing so. 56 See UNIF. TRUST DECANTING ACT § 12 (b), (c); COLO. REV. STAT. § 15-16-912(2), (5); MICH. COMP. LAWS § 700.7820a(1)(a); N.M. STAT. ANN. § 46-12-112(B), (C); OHIO REV. CODE ANN. § 5808.18(A)(3)(b).



disposition.

Under the Uniform Act and comparable statutes, a trustee with limited discretion is fairly restricted to, but not altogether prohibited from, altering a distribution standard.57 The Uniform Act approach requires all interests over which a trustee has limited discretion to remain “substantially similar.”58 This means that a trustee with limited discretion cannot broaden, narrow, or otherwise materially alter a distribution standard because it would affect distributions. However, a “substantially similar” approach permits a trustee to modify a distribution standard to preserve settlor intent when changed circumstances would otherwise frustrate it.

The following example illustrates how this would work. A common limited distribution standard is for “health, education, support, or maintenance” of a beneficiary because this specific language affords desirable tax treatment.59 Suppose Congress changes the Internal Revenue Code (“Tax Code”) so that not “health, education, support, or maintenance,” but rather, some other phrase provides those desirable tax consequences. Under statutes with a “substantially similar” provision, a trustee would be able to modify the trust instrument so that the distribution standard would adhere to the updated Tax Code and provide the desired tax benefits. Permitting decanting in such situations efficiently preserves settlor intent by effectuating the settlor’s desire to obtain the favorable tax treatment, which would better maintain the beneficial interests the settlor originally imagined.

Relatedly, the substantially similar requirement prevents the trustee with limited discretion from decanting to change the distribution standard in a way that deviates from the settlor’s chosen distribution standard. This approach assumes that the grantor’s stated plan accurately expresses his or her intent. As with adding beneficiaries, this appears to be the more rational approach. It seems nonsensical to think that a grantor’s intentions are often something other than his or her stated intentions. Even if that is the case, it would be difficult to accurately discern any unstated intentions.

Most bifurcated, and a couple of non-bifurcated, state statutes take a similar but somewhat more formalistic approach than the Uniform Act. They permit a trustee with unlimited discretion to modify a distribution standard but prohibit a trustee with limited discretion from making any changes at all to the distribution standard.60 This bright-line rule protects freedom of disposition 57 See UNIF. TRUST DECANTING ACT § 12 (b), (c); COLO. REV. STAT. § 15-16-912(2), (5); MICH. COMP. LAWS § 700.7820a(1)(a); N.M. STAT. ANN. § 46-12-112(B), (C); OHIO REV. CODE ANN. § 5808.18(A)(3)(b). 58 UNIF. TRUST DECANTING ACT § 12(c). 59 I.R.C. § 2041(b)(1)(A) (2018); I.R.C. § 2514(c)(1). 60 See ALASKA STAT. § 13.36.157(d); DEL. CODE ANN. tit. 12, § 3528(a); FLA. STAT. § 736.04117(2)(a), (3)(a); 760 ILL. COMP. STAT. § 5/16.4(c), (d); MINN. STAT. § 502.851, subd. 3(a), 4(b); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(b), (c)(1); S.C. CODE ANN. § 62-7-816A(a); TEX. PROP. CODE ANN. § 112.073(c). In substance, Delaware follows a similar approach to these more formalistic bifurcated



better than the minority approach but does not further freedom of disposition as well as the Uniform Act. This majority approach prevents a trustee from making administrative changes to an ascertainable standard, such as those that may be necessary to preserve tax-saving plans.

In general, the minority approach permits a trustee with either absolute or limited discretion to alter the distribution standard unless the trustee is an interested trustee.61 This rule is unproblematic if the trustee has absolute discretion, because it does not permit the trustee with absolute discretion to do any more than the trust instrument otherwise permits. However, such a rule disregards freedom of disposition if the trustee has limited discretion, because it is indifferent to both the greater-includes-the-lesser principle and probable intent. Under the minority rule, a trustee with limited discretion could change a “health, education, maintenance, or support” standard to a standard only permitting distributions for educational or medical expenses.62 Alternatively, a trustee limited by a “health, education, maintenance, or support” standard may validly change the standard to a happiness standard, which is equivalent to absolute discretion. Whether such a provision is used to make a distribution standard restrictive gives the trustee with limited discretion more decision-making power than the trustee was originally entrusted with by the grantor. This not only makes it too easy for the trustee to disregard the grantor’s intent as expressed in the trust instrument, but also allows the trustee to disregard probable intent. Allowing a trustee to expand a distribution standard also violates the greater-includes-the-lesser principle because the trustee cannot justify an expense using only the terms of the trust instrument.

The Supplemental Needs Trust Exception

A trustee can also decant to create a special needs trust for a disabled beneficiary.63 If the trustee has absolute discretion, an explicit power to decant

statutes, as do South Carolina and Florida. Delaware prohibits any trustee from altering the distribution standard. DEL. CODE ANN. tit. 12, § 3528(a). When a trustee has absolute discretion, this prohibition does not have much force because, as explained earlier, the trustee can selectively make distributions without changing the standard. This rule is simply less transparent than an explicit power to alter the distribution standard. Like these more formalistic bifurcated statutes, Delaware’s statute may impede potentially desirable administrative changes, such as those necessary to maintain certain tax-saving plans. See id. 61 See ARIZ. REV. STAT. ANN. § 14-10819(A)(4); KY. REV. STAT. ANN. § 386.175(4)(h); MO. REV. STAT. § 456.4-419(2)(a); NEV. REV. STAT. § 163.556(4)(a)(2); N.H. REV. STAT. ANN. § 564-B:4-418(d)(2), (k)(2) (granting permission explicitly unless chartable interest implicated); S.D. CODIFIED LAWS § 55-2-15(1)(a), (2)(b) (flush language); WIS. STAT. § 701.0418(2)(a)(2). 62 ARIZ. REV. STAT. ANN. § 14-10819(A); NEV. REV. STAT. § 163.556(4)(a)(2); N.H. REV. STAT. ANN. § 564-B:4-418(d); S.D. CODIFIED LAWS § 55-2-15(2)(a)(3); WIS. STAT. § 701.0418(2)(a)(2) (authorizing trustees with either limited or unlimited discretion to restrict a distribution standard but not expand it). 63 Special needs trusts are

designed to allow a disabled beneficiary to maintain eligibility for public benefits that cover basic needs, while also receiving resources from his or her family that provide a higher quality of life. Special needs trust must be established by a parent, grandparent, legal guardian, or court for the sole benefit of a disabled individual



into a special needs trust is uncontroversial because it conforms to both the greater-includes-the-lesser principle and probable intent. In giving the trustee unlimited discretion, the grantor gave the trustee the power to make distributions to the beneficiary for any reason that the trustee determines appropriate. Moreover, decanting into a special needs trust would certainly benefit a beneficiary with a disability. Similarly, it would be uncontroversial to permit special needs trust decanting when all the trust’s distribution standards are generally ascertainable standards, such as health and support, because the distribution into the new special trust would meet that standard and fulfills a purpose of the trust.

However, assuming freedom of disposition is the priority, decanting into a special needs trust becomes controversial when the trustee has little to no discretion, particularly if the disabled beneficiary has a remote or minor interest in the trust. Suppose that, under the terms of a trust, the trustee may distribute income and principal for the health, education, support, or maintenance of A, B, and C and shall distribute $1,000 of income or principal each year to D, E, and F who are A, B, and C’s children, respectively. Further assume that there is enough money in the trust to continue giving D, E, and F $1,000 for several years and to provide for any of A, B, and C’s foreseeable needs. If D has a disability and may receive government benefits, should the trustee be permitted to decant into a special needs trust and give D more than $1,000 a year? What if decanting into a special needs trust for D’s benefit will result in less than adequate support for the other beneficiaries? The answer depends on how one interprets the purpose of the trust. One can interpret the purpose of the trust as giving some support to D, E, and F, but less than A, B, and C. Alternatively, a purpose of the trust could be to only give D $1,000 per year. In such a case, it will be difficult to know not only what an individual settlor would have wanted had he or she known of the beneficiary’s disability, but also what most settlors would prefer. If the purpose of the trust is the latter, then a special needs trust decanting rule that permits a trustee to make substantive modifications may be problematic if one is concerned with protecting freedom of disposition. This example illustrates how the power to decant into a special needs trust can risk frustrating freedom of disposition when a trust has a narrow distribution standard.

Only a handful of state decanting statutes and the Uniform Act explicitly permit a trustee to decant into a special needs trust.64 Moreover, the state-authored rules and the Uniform Act take diverging approaches to special needs

under the age of sixty-five. Katherine B. McCoy, The Growing Need for Third-Party Special Needs Trust Reform, 65 CAS. W. RES. L. REV. 461, 464 (2014) (internal citations omitted). 64 See UNIF. TRUST DECANTING ACT § 13(b)(1); ALASKA STAT. § 13.36.157(e); COLO. REV. STAT. § 15-16-913(2); 760 ILL. COMP. STAT. § 5/16.4(d)(4)(i); MINN. STAT. § 502.851, subd. 15(1); N.M. STAT. ANN. § 46-12-113(B); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(n)(1); VA. CODE ANN. § 64.2-779.10(B); WIS. STAT. § 701.0418(4)(c).



trust exceptions.65

The Uniform Act takes a unique and progressive approach to special needs trust decanting. Under the Uniform Act, any trustee who makes distributions may decant into a special needs trust for the benefit of a beneficiary with a disability who may qualify for government benefits.66 The Uniform Act does not require the trustee to have any discretion over those distributions, nor does the act require a trustee with limited discretion to decant into a “substantially similar trust.”67 Section 13 of the Uniform Act only places two limits on a trustee looking to decant into a special needs trust. First, the decanting cannot change the interest of the other beneficiaries, except to the extent that they are affected by the changes to the interest of the beneficiary with a disability.68 Second, the decanting must “further the purposes of the first trust.”69 The Comment to Section 13 provides the following guidance for determining whether something furthers the purpose of the first trust:

if a trust was created solely for the purpose of funding college education for the settlor’s grandchildren, the authorized fiduciary may not decant to pay for the support of a grandchild who is a beneficiary with a disability. Conceivably, however, a trust for the education at all levels of the settlor’s grandchildren might be decanted to a trust that permits distributions to a grandchild who is a beneficiary with a disability for such grandchild’s occupational therapy and vocational training.70

Section 13 of the Uniform Act takes a position on nondiscretionary trusts that is not well-supported by the greater-includes-the-lesser principle because it permits some trustees to exercise more discretion and perhaps give more to a disabled beneficiary than the trust instrument itself allows. In other words, Section 13—unlike Sections 11 and 12—does not appear to require the trustee to adhere to the grantor’s intent as expressed in the trust’s structure.

Furthermore, Section 13 permits a trustee to go beyond the greater-includes-the-lesser principle when probable intent may not be evident. In contrast to other provisions of the Uniform Act, Section 13 also appears to make assumptions about probable intent that may very well fail to be true when a trustee has limited discretion. To conclude that Section 13 furthers freedom of disposition more often than not, despite the fact that it does not adhere to the 65 See UNIF. TRUST DECANTING ACT § 13(b)(1); ALASKA STAT. § 13.36.157(e); COLO. REV. STAT. § 15-16-913(2); 760 ILL. COMP. STAT. § 5/16.4(d)(4)(i); MINN. STAT. § 502.851, subd. 15(1); N.M. STAT. ANN. § 46-12-113(B); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(n)(1); VA. CODE ANN. § 64.2-779.10(B); WIS. STAT. § 701.0418(4)(c). 66 UNIF. TRUST DECANTING ACT § 13(b). 67 See id. (referring to the special needs decanting power as a Section 11 decanting power, i.e. a power usually granted to trustees with absolute discretion). 68 See UNIF. TRUST DECANTING ACT § 13 cmt. 69 UNIF. TRUST DECANTING ACT § 13(b)(2). 70 UNIF. TRUST DECANTING ACT § 13 cmt.



greater-includes-the-lesser principle, it is necessary to make two assumptions: (1) most grantors would want to provide additional support for a disabled beneficiary if they had been aware of the beneficiary’s disability; and (2) most trustees would refrain from decanting in a way that expands a disabled beneficiary’s beneficial interest if they have reason to believe that a grantor would disapprove of altering the trust.

Perhaps it is more desirable from a policy perspective to disregard freedom of disposition in order to provide greater resources and support for disabled individuals.71 Absent such overriding policy concerns, the Uniform Act’s approach to special needs trusts is problematic as a default rule in trust law; it fails to adhere to the policy that the greater-includes-the-lesser, and it easily leads to results that do not align well with probable intent when the trustee has little to no discretion, or when the disabled beneficiaries are not the primary beneficiaries of the trust.

The state-authored statutes that do explicitly allow a trustee to decant into a special needs trust are structured to provide better protection for freedom of disposition than the Uniform Act. Unlike the Uniform Act, they do require a trustee to have discretionary distribution power to decant into a special needs trust. Similar to the Uniform Act, these models provide the trustee with a somewhat more relaxed decanting power in the case of a special needs trust.72 Although some of these exceptions expand the trustee’s power more than others, all these states permit the trustee to modify mandatory distributions to decant into a special needs trust if necessary.73 Requiring some discretion in order to decant into a special needs trust better protects freedom of disposition than the Uniform Act’s approach because it seems it would conform more closely (although not perfectly) with the greater-includes-the-lesser principle and probable intent in a greater number of cases.

71 See RESTATEMENT (THIRD) OF PROP.: WILLS AND DONATIVE TRANSFERS § 10.1 cmts a, c (explaining freedom of disposition); UNIF. TRUST CODE § 503(b)(1) (2017) (spousal and child support limitation on spendthrift trusts for public policy reasons). 72 See ALASKA STAT. § 13.36.157(e); COLO. REV. STAT. § 15-16-913(2); 760 ILL. COMP. STAT. § 5/16.4(d)(4)(i); MINN. STAT. § 502.851, subd. 15(1); N.M. STAT. ANN. § 46-12-113(B); N.Y. EST. POWERS & TRUSTS § 10-6.6(n)(1); VA. CODE ANN. § 64.2-779.10(B); WIS. STAT. § 701.0418 (4)(c)(1), (2). 73 See ALASKA STAT. § 13.36.157(e); COLO. REV. STAT. § 15-16-913(2); 760 ILL. COMP. STAT. § 5/16.4(d)(4)(i); MINN. STAT. § 502.851, subd. 15(1); N.M. STAT. ANN. § 46-12-113(B); N.Y. EST. POWERS & TRUSTS § 10-6.6(n)(1); VA. CODE ANN. § 64.2-779.10(B); WIS. STAT. § 701.0418 (4)(c)(1), (2). The only expanded power that the Alaska, Minnesota, and New York statutes grant a trustee decanting into a special needs trust is the power to alter mandatory distributions. See ALASKA STAT. § 13.36.157(e); MINN. STAT. § 502.851, subd. 15(1); N.Y. EST. POWERS & TRUSTS § 10-6.6(n)(1). Illinois maintains that a trustee decanting into a special needs trust possess at least limited discretionary distribution power, but these states lift the ordinary limitations imposed on decanting trustees with limited discretion in the case of special needs trust decanting. See 760 ILL. COMP. STAT. § 5/16.4(d)(4). Other than allowing a trustee with limited discretion to alter a mandatory distribution, Wisconsin only permits a trustee with limited discretion decanting into a special needs trust to make the distribution standard more expansive. See WIS. STAT. § 701.0418(2)(a)(2).



The remaining state-authored decanting statutes do not explicitly permit a trustee to decant into a supplemental needs trust.74 Therefore, a trustee seeking to create a special needs trust under most state-authored statutes will simply have to rely on the standard decanting powers or seek court approval. The lack of an explicit special needs trust exception will not hinder a trustee’s power to unilaterally create the special needs trust in many situations. This is especially true if a trustee seeks to decant under a liberal decanting statute, such as the South Dakota or Wyoming statutes.75

Nonetheless, a trustee may run into problems decanting into a special needs trust if he or she is: (1) a trustee with limited discretion seeking to decant under a bifurcated statute that does not have a special needs trust exception, or (2) is seeking to decant into a special needs trust in a jurisdiction that will require the remainder beneficiary of the special needs trust to be a community trust. These problems underscore why statutes containing no special needs trust exception frustrate settlor intent. In the former case, such a narrow rule creates unjustifiable obstacles to effectuating settlor intent when the trustee is only limited by a broad ascertainable standard, such as health, education, support, or maintenance. Decanting into a special needs trust will be difficult to do given all the restrictions bifurcated statutes place on a trustee with limited discretion. However, given the broad support standard, decanting into the special needs trust not only follows the greater-includes-the-lesser principle, but also probable intent and the purpose of the first trust.

In the latter case, the community trust is a non-beneficiary of the original trust, and all states prohibit a decanting trustee from adding a non-beneficiary. Therefore, the trustee will not have the power to unilaterally decant into a special needs trust under those circumstances. Although it is unclear to what extent this second limitation will hinder freedom of disposition, in most situations where the grantor would have wanted the trustee to create a special needs trust for a disabled beneficiary, the trustee probably has enough discretion to simply appoint a distribution in further trust for the disabled beneficiary. This achieves virtually the same result. A lack of a special needs trust decanting rule creates unnecessary obstacles to facilitating settlor intent.76

Postponing Vesting

Decanting may also help the trustee postpone the vesting of a 74 See ARIZ. REV. STAT. ANN. § 14-10819; DEL. CODE ANN. tit. 12, § 3528(a)(1) (requiring same distribution standard in first and second trust); IND. CODE § 30-4-3-36; KY. REV. STAT. ANN. § 386.175; MICH. COMP. LAWS §§ 556.115a, 700.7820a; MO. REV. STAT. § 456.4-419; N.H. REV. STAT. ANN. § 564-B:4-418(i) (allowing a decanting if the beneficiary is an applicant for public benefits, but the trustee does not have to decant into a supplemental needs trust); OHIO REV. CODE ANN. § 5808.18; S.C. CODE ANN. § 62-7-816A (requiring same distribution standard if ascertainable); S.D. CODIFIED LAWS §§ 55-2-15 to -21; TENN. CODE ANN. § 35-15-816(b)(27); TEX. PROP. CODE ANN. § 112.071 to -087; W.S. § 4-10-816. 75 See S.D. CODIFIED LAWS §§ 55-2-15 to -21; WYO. STAT. ANN. § 4-10-814. 76 This is particularly true given that the alternative to carving a special needs trust out of an existing trust via decanting is usually a court-approved modification, which is less efficient and much more expensive.



beneficiary’s interest. This means that if a trust instrument requires a trustee to distribute a specific amount—including, but not limited to, the entire trust corpus or a terminating distribution—to a beneficiary at a certain time or age, the trustee may modify the trust instrument so that the beneficiary receives the interest later.

If the trustee has absolute discretion, the power to postpone vesting does not conflict with the greater-includes-the-lesser principle or freedom of disposition. Without decanting, a trustee with absolute discretion has the power to achieve this result, because the trustee can make a distribution in his or her sole and absolute discretion before the interest that the trustee wishes to postpone will vest. Trust law generally permits that distribution to be made into a further trust. The new trust instrument can simply state that the interest vests later than specified in the original trust instrument. Therefore, giving the trustee with absolute discretion the power to modify the trust instrument to postpone the vesting date simply streamlines and codifies a process that the trustee already has the power to carry out.

Postponement may sometimes interfere with freedom of disposition if the trustee has limited discretion. Decanting is analogous to a power to make a distribution in further trust at any time, including when the distribution standard does not require a trustee to make a distribution. If the trustee has limited discretion, he or she cannot make a distribution at any time for any reason. For this reason, decanting to postpone vesting may sometimes conflict with the greater-includes-the-lesser principle if the trustee is limited by an ascertainable standard.

With certain limitation or restrictions in place, a postponement power can be compatible with freedom of disposition and is less controversial than other changes that decanting can achieve—even if the trustee lacks absolute discretion and the postponement power does not perfectly embody the greater-includes-the-lesser principle. Setting aside decanting power, a trustee with limited discretion cannot unilaterally modify an interest before the interest vests, but he or she can distribute it in further trust at the time of vesting.77 Moreover, when an interest does vest, neither a grantor nor a trustee can compel the beneficiary to take the gift; the beneficiary always has the right to disclaim or give the gift to someone else once he or she obtains the fee simple interest.78 A postponement power for trustees with limited discretion that incorporates and approximates these two doctrines may therefore be compatible with settlor intent.

Understandings of probable intent also make a postponement power uncontroversial, even when it does not adhere to the greater-includes-the-lesser principle. It is widely known and accepted that grantors convey gifts in trust

77 See UNIF. POWERS OF APPOINTMENT ACT § 305(a) (2017) (explaining powers of a general power of appointment). 78 See UNIF. PROBATE CODE § 2-1105(a) (2017).



because of the creditor protections and asset management that trusts afford.79 Postponement extends the amount of time over which a gift in trust has these advantages, while tools such as powers of appointment can nonetheless give beneficiaries control over trust interests very similar to the amount of control a beneficiary would enjoy with an outright gift.80 If decanting can further at least one of a grantor’s goals of creditor protection or asset management while simultaneously doing very little to disrupt a competing goal—beneficiary freedom after a certain event or time—then decanting to postpone vesting may respect settlor intent even when the trust instrument imposes an strict standard.

Almost all decanting statutes permit a trustee to postpone vesting in at least some ways.81 Most statutes nominally permit a trustee to postpone vesting of both current and remainder interests—unless postponement would violate any applicable perpetuities period or any other limitations, such as prohibitions against altering mandatory distributions or eliminating tax savings that the statutes impose on decanting trustees.

In practice, this means that both bifurcated and non-bifurcated statutes allow a trustee with absolute discretion to postpone vesting or extend the terms of a trust, though the two take diverging approaches to trustees with limited discretion.82 When there is absolute discretion, this rule conforms to the greater-includes-the-lesser principle, probable intent, and overriding trust policy. A trustee with absolute discretion may validly appoint trust assets to the current beneficiaries in further trust using a trust instrument that vests both current and remainder interests later than the first trust requires. To distribute assets in this way, the trustee need only determine at some point that doing so would benefit at least one beneficiary. In addition, absolute discretion indicates that the grantor had a strong desire for the trustee to simply do what he or she deems to be in the best interest of the beneficiaries; there are many reasons why postponement may benefit the beneficiaries in the ways intended by the grantor, including better asset management and creditor protection. Lastly, no matter what the settlor’s intent may be, overarching trust law never permits a trust to terminate after any applicable perpetuities period ends, and it never compels a beneficiary to take a gift that the beneficiary does not want.

79 But cf. UNIF. TRUST CODE § 501 (2017) (indicating that courts may authorize a creditor to reach the beneficiary’s interest by attachment). 80 See UNIF. POWERS OF APPOINTMENT ACT § 305(a) (explaining that powers of appointment are routinely included in trusts to add flexibility to the arrangement). 81 See ALASKA STAT. § 13.36.157(f); COLO. REV. STAT. § 15-16-911(3)(c); DEL. CODE ANN. tit. 12, § 3528(c); FLA. STAT. § 736.04117(2)(b)(5); 760 ILL. COMP. STAT. § 5/16.4(g); IND. CODE § 30-4-3-36(c); KY. REV. STAT. ANN. § 386.175(4)(e); MICH. COMP. LAWS § 700.7820a(3)(b); MINN. STAT. § 502.851, subd. 4(c); N.Y. EST. POWERS & TRUSTS § 10-6.6(e); TENN. CODE ANN. § 35-15-816(b)(27)(C); TEX. PROP. CODE ANN. § 112.085(6); WIS. STAT. § 701.0418(3)(e). 82 See ALASKA STAT. § 13.36.157(f); COLO. REV. STAT. § 15-16-911(3)(c); DEL. CODE ANN. tit. 12, § 3528(c); FLA. STAT. § 736.04117(2)(b)(5); 760 ILL. COMP. STAT. § 5/16.4(g); IND. CODE § 30-4-3-36(c); KY. REV. STAT. ANN. § 386.175(4)(e); MICH. COMP. LAWS § 700.7820a(3)(b); MINN. STAT. § 502.851, subd. 4(c); N.Y. EST. POWERS & TRUSTS § 10-6.6(e); TENN. CODE ANN. § 35-15-816(b)(27)(C); TEX. PROP. CODE ANN. § 112.085(6); WIS. STAT. § 701.0418(3)(e).



In practice, the statutes with stringent distribution standard restrictions, requiring trustees with limited discretion to maintain the same distribution standards in a receiving trust, do not authorize those same trustees to postpone vesting—unless the statutes provide a special exception for trusts with extended terms.83 Without an extended trust exception, this model does not balance flexibility and settlor intent as much as possible. Even without a decanting power, a trustee with limited discretion may appoint any kind of terminating distribution in further trust. So, following the greater-includes-the-lesser principle, a trustee with limited discretion should at least be able to decant to extend a trust term or vest remainder interests later than the trust instrument specifies. Moreover, understandings of probable intent usually cut in favor of preserving assets in trust as opposed to giving them as outright gifts. The bifurcated statutes with special exceptions that allow a trustee with limited discretion to extend a trust term cure these problems, but, otherwise, this group of statutes takes a less-than-ideal approach.84

Meanwhile, the more pragmatic bifurcated statutes that utilize “substantially similar” requirements, like the Uniform Act, take a better approach. They allow trustees with limited discretion to postpone vesting in all the ways the trust instrument itself would allow under the greater-includes-the-lesser principle, but not in any other ways.85 The Comment to Section 12 provides an example illustrating how this works:

[i]f the first trust requires that a trust be distributed at age [thirty-five], a second trust that permits the beneficiary to withdraw any part or all of the trust at any time after age [thirty-five] would be substantially similar. A second trust that delayed the distribution to age [forty] would not be substantially similar.86

This position on postponement respects the greater-includes-the-lesser principle and our understandings of probable intent. Therefore, it can be 83 See ALASKA STAT. § 13.36.157(f) (providing an exception for trusts with extended terms); DEL. CODE ANN. tit. 12, § 3528(a)(1), (c) (providing that the second trust may have a longer term than the first); FLA. STAT. § 736.04117(3)(d); MINN. STAT. § 502.851, subd. 4(c) (providing an exception for trusts with extended terms); N.Y. EST. POWERS & TRUSTS § 10-6.6(c)(2) (providing an exception for trusts with extended terms); WIS. STAT. § 701.0418(4)(4). Unlike most bifurcated statutes, Wisconsin’s statute takes a less than ideal approach to distribution standards, because it allows trustees with either absolute or limited discretion to restrict a distribution standard. See WIS. STAT. § 701.0418(2)(a)(2). However, pursuant to this statute, this approach to distribution standards does not result in different postponement results compared to other bifurcated statutes. An act of postponement would be an expansion of distribution power and is therefore invalid under the Wisconsin rule. See WIS. STAT. § 701.0418(3)(e). 84 See ALASKA STAT. § 13.36.157(f); DEL. CODE ANN. tit. 12, § 3528(a)(1), (c); FLA. STAT. § 736.04117(3)(d); MINN. STAT. § 502.851, subd. 4(c); N.Y. EST. POWERS & TRUSTS § 10-6.6(c)(2); WIS. STAT. § 701.0418(4)(4). 85 See UNIF. TRUST DECANTING ACT § 12(c); COLO. REV. STAT. § 15-16-912(3); MICH. COMP. LAWS § 700.7820a(1)(a), (18); N.M. STAT. ANN. § 46-12-112(C); OHIO REV. CODE ANN. § 5808.18(B). 86 UNIF. TRUST DECANTING ACT § 12 cmt.



reasonably concluded that the Uniform Act and similar statutes’ approach to postponement protects freedom of disposition.

Unlike bifurcated statutes, most non-bifurcated statutes generally permit trustees with limited discretion to postpone vesting of both current and remainder interests in many ways.87 This approach does not conform to the greater-includes-the-lesser principle and, as a result, does not sufficiently protect freedom of disposition. These statutes tend to allow trustees with limited discretion to alter distribution standards. By virtue of this power, a current interest subject to vest later than the trust instrument would otherwise be allowed if the contingency that causes the remainder interests to vest is an event other than the death of all of the current beneficiaries.88 Such a rule conflicts with the terms of the trust instrument in a way that also suggests conflict with the greater-includes-the-lesser principle and probable intent. Therefore, most non-bifurcated statutes take a less than ideal approach when a trustee is limited by an ascertainable standard.

Only two states, Illinois and Texas, appear to prohibit virtually all postponements.89 While such a rule does not frustrate settlor intent more so than the trust instrument itself would, it does unnecessarily sacrifice flexibility in each case where the trustee has absolute discretion. If it is assumed that a grant of absolute discretion indicates a desire for maximum flexibility, then this rule fails to further freedom of disposition as best as possible.

Creating Powers of Appointment

A trustee can also modify a trust by giving the beneficiaries new powers of appointment. Practically speaking, this means that a trustee can decant to allow a beneficiary to distribute trust property to a non-beneficiary or an individual who is not a permissible appointee.90 This also means that a trustee can give a beneficiary a right to withdraw trust property.91

If a trustee has absolute discretion, one can conclude that such a decanting power does not frustrate settlor intent because a trust instrument that gives a trustee absolute discretion over a beneficiary’s interest implicitly authorizes a trustee to achieve these same results without decanting. A trustee with absolute discretion can validly make a distribution to a beneficiary for any reason that the trustee reasonably deems beneficial to the beneficiary, including, 87 See ARIZ. REV. STAT. ANN. § 14-10819(A)(4), (6); IND. CODE § 30-4-3-36(c); KY. REV. STAT. ANN. § 386.175(6)(b); S.D. CODIFIED LAWS § 55-2-18; TENN. CODE ANN. § 35-15-816(b)(27)(C); WYO. STAT. ANN. § 4-10-816(xxviii)-(xxix). 88 See ARIZ. REV. STAT. ANN. § 14-10819(A)(4), (6); IND. CODE § 30-4-3-36(c); KY. REV. STAT. ANN. § 386.175(6)(b); S.D. CODIFIED LAWS § 55-2-18; TENN. CODE ANN. § 35-15-816(b)(27)(C); WYO. STAT. ANN. § 4-10-816(xxviii)-(xxix). 89 See 760 ILL. COMP. STAT. § 5/16.4(n)(4); TEX. PROP. CODE ANN. §112.085(6). 90 See UNIF. TRUST DECANTING ACT § 11(d). 91 See 26 C.F.R. § 20-2041-1(c)(b) (2018) (providing that a power of withdrawal is considered a general power of appointment).



as done in Phipps, so that the beneficiary may give it to someone else.92 As a result of permitting the trustee with absolute discretion to create powers of appointment, trustees are able to achieve certain results more efficiently.

As with permitting a trustee to alter a fixed interest, permitting a trustee with absolute discretion to create a power of appointment takes a functional, rather than formal, approach to freedom of disposition. It is unclear how many grantors realize that by giving the trustee absolute discretion, they may be unintentionally giving the trustee the power to ultimately use trust property for the benefit of an individual who is neither a beneficiary nor a permissible appointee. Nonetheless, in the context of powers of appointment and absolute discretion, a substantive approach better protects freedom of disposition than a formal approach for several reasons. First, grantors who give the trustee so much discretion necessarily desire to defer decision-making power to the trustee and create flexibility, which powers of appointment help to achieve. Second, grantors are also aware that beneficiaries themselves may do what they wish with any distributions they receive outright. Third, powers of appointment are vital to the success of certain tax-driven estate plans, so a trustee power that helps to efficiently preserve certain tax benefits despite changed circumstances, including changes in tax law, may help to further settlor intent in many cases. Although such a functional approach to settlor intent may be considered imperfect, it does conform to both the greater-includes-the-lesser principle and probable intent—and therefore to settlor intent—better than the alternative.

A default provision that permits a trustee with limited discretion to create powers of appointment and fails to align with the greater-includes-the-lesser principle may nonetheless align with probable intent under certain circumstances. Absent explicit authority from the trust instrument, court, or statute, a trustee with limited discretion cannot generally give the beneficiaries of a trust a distribution at any moment. The trustee would only be able to create a new power of appointment if he or she made a distribution in further trust in accordance with the first trust’s distribution standard. In this way, statutes that allow the trustee to create powers of appointment when there is limited discretion may permit the trustee to do more than the distribution mechanism of a trust alone permits. That is, however, unless the statute severely limits the trustee’s ability to create powers of appointment in a way that makes the modification look more administrative than substantive, or in a way that requires the trustee to decant in accordance with the distribution standard. This is particularly true because of the tax benefits that powers of appointment may help to realize and which many grantors desire.

Some decanting statutes permit trustees with absolute discretion to give beneficiaries powers of appointment.93 The ability to create powers of

92 See Phipps, 196 So. at 301. 93 See UNIF. TRUST DECANTING ACT § 11(d); ALASKA STAT. § 13.36.157(b); ARIZ. REV. STAT. ANN. § 14-10819(C); COLO. REV. STAT. § 15-16-911(4)(a); DEL. CODE ANN. tit. 12, § 3528(a) (flush language);



appointment is merely an extension of the trustee’s virtually unlimited distribution power. Permitting a trustee with absolute discretion to create powers of appointment also better aligns with probable intent, restricting the powers of appointment. For this reason, almost all decanting statutes can be said to respect freedom of disposition when absolute discretion is at issue.

Decanting statutes diverge on how they treat trustees with limited discretion and can be classified into three groups: (1) strict adherence to the greater-includes-the-lesser principle; (2) creation of powers of appointment only if interests remain substantially similar; and (3) creation of powers of appointment but without any significant restrictions on such power. Some states prohibit a trustee with limited discretion from decanting to create powers of appointment.94 This model simply adheres to the greater-includes-the-lesser principle. It does not permit the trustee to do any more than the trust instrument’s distribution standard. If the ascertainable standard and purpose of the trust, in combination with circumstances, call for the trustee to create powers of appointment, then the trustee must fall back on a different solution, such as appointing a distribution in further trust. Although this model is protective, it is inflexible even when settled notions about probable intent tell us that a grantor would likely prefer modification. A more flexible approach that adheres to the greater-includes-the-lesser principle would be preferable.

The Uniform Act, as well as some state-authored statutes, allow a trustee with limited discretion to create powers of appointment, but only if the beneficiaries’ interests remain substantially similar.95 In theory, this approach

FLA. STAT. § 736.04117(3)(b)(c) (allowing trustees with limited discretion to appoint a beneficiary as trustee if the first trust grants such power); 760 ILL. COMP. STAT. § 5/16.4(c)(1); KY. REV. STAT. ANN. § 386.175(4)(i); MICH. COMP. LAWS § 556.115a(2)(a); MINN. STAT. § 502.851, subd. 3(b); NEV. REV. STAT. § 163.556(8)(a); N.H. REV. STAT. ANN. § 564-B:4-418(c); N.M. STAT. ANN. § 46-12-111(D)(3); N.C. GEN. STAT. § 36C-8B-11; OHIO REV. CODE ANN. § 5808.18(A)(3)(a); S.C. CODE ANN. § 62-7-816A(d)(7); S.D. CODIFIED LAWS § 55-2-15 (flush language); TENN. CODE ANN. § 35-15-816(b)(27)(F); TEX. PROP. CODE ANN. § 112.072(b); VA. CODE ANN. § 64.2-779.5(C); WIS. STAT. § 701.0418(19)(b). 94 See ALASKA STAT. § 13.36.157(b); FLA. STAT. § 736.04117(a) (allowing trustees with limited discretion to create powers of appointment if the first trust gives the trustee that power); 760 ILL. COMP. STAT. § 5/16.4(c)(1), (d)(3) (allowing power of appointment in the second trust if the first trust grants such power); MINN. STAT. § 502.851, subd. 4(e); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c)(4); TEX. PROP. CODE ANN. § 112.073(e); WIS. STAT. § 701.0418(4)(b) (providing that power of appointment be granted only if the trustee of the first trust has the absolute power to invade income and principal). 95 UNIF. TRUST DECANTING ACT § 11(d); COLO. REV. STAT. §§ 15-16-911(4), 15-16-912(3); DEL. CODE ANN. tit. 12, § 3528(a) (flush language); MICH. COMP. LAWS § 700.7820A(1)(a); N.M. STAT. ANN. § 46-12-112(C); OHIO REV. CODE ANN. § 5808.18(A)(3)(b). Other than the substantially similar requirement, the only specific limit that the Uniform Act places on this power is that if the trustee is creating a power of appointment in a remainder beneficiary, then the power cannot be exercisable until the remainder beneficiary’s trust interest vests. See UNIF. TRUST DECANTING ACT § 11(d). Because Delaware requires a trustee making a decanting distribution to decant in compliance with the trust’s ascertainable standard, it appears that a trustee with limited discretion is only authorized to create a power of appointment if he or she concludes that doing so is in line with the ascertainable standard. This approach arguably provides marginally better protection for freedom of disposition than the Uniform Act because the limitation on the trustee’s power is clearer. Yet, this slightly different approach also appears to



not only follows the greater-includes-the-lesser principle but also possesses the desired flexibility that the Florida model lacks. This approach sometimes risks frustrating the freedom of disposition because the limitation is ambiguous and unintuitive when attempting to create powers of appointment. Furthermore, neither the statutes nor case law provide guidance on how to interpret the meaning of “substantially similar” in this context. It seems obvious that a trust containing an ascertainable standard in which the trustee creates a new power of appointment exercisable in favor of non-beneficiaries under any conditions is not substantially similar. Beyond that, the meaning of substantially similar in this context remains unclear. Would the second trust be substantially like the first if it gives a beneficiary who was financially supported by his or her spouse a power of appointment exercisable in favor of said spouse, under the premise that this new power of appointment somehow helps to provide support for the beneficiary? Would a second trust that gave each current beneficiary a non-general power of appointment exercisable in favor of the other current beneficiaries be substantially similar? In this second case, the new power of appointment would only benefit individuals whom the grantor wanted to benefit with the trust. However, the grantor gave discretion to make distributions to the trustee, not the beneficiaries. Because the authority to create powers of appointment where there is only limited discretion does not perfectly adhere to the greater-includes-the-lesser principle and an undetailed “substantially similar” limitation does little to successfully implement probable intent, the Uniform Act’s model for creating powers of appointment does not perfectly protect freedom of disposition, although it does get close. An amended rule that permits a trustee with limited discretion to create powers of appointment but curtails this power with a clear and detailed substantially similar requirement would more closely align this approach with the ideal outcome.

The remaining statutes also allow a trustee with limited discretion to create powers of appointment, but do not generally place any significant restrictions on this power.96 These statutes not only deviate from the greater-includes-the-lesser principle but also provide less guidance than the Uniform Act on how to create powers of appointment that enhance flexibility while adhering to probable intent.

give the trustee less flexibility to make administrative changes. DEL. CODE ANN. tit. 12, § 3528(a). 96 See ARIZ. REV. STAT. ANN. § 14-10819(C); IND. CODE § 30-4-3-36; KY. REV. STAT. ANN. § 386.175(4)(i); NEV. REV. STAT. § 163.556(8)(a), (b); N.H. REV. STAT. ANN. § 564-B:4-418(c) (prohibiting a trustee from granting powers of appointment to non-beneficiaries of the first trust); S.C. CODE ANN. § 62-7-816A(d)(7); S.D. CODIFIED LAWS § 55-2-15 (flush language); TENN. CODE ANN. § 35-15-816(b)(27)(F). Although South Carolina requires decanting trustees with limited discretion to maintain the same distribution standard in the second trust, this restriction does not appear to apply to a limited trustee if he or she is creating powers of appointment. S.C. CODE ANN. § 62-7-816A(d)(6), (7). “The second trust may confer a power of appointment upon a beneficiary of the original trust to whom or for the benefit of whom the trustee has the power to distribute principal or income of the original trust.” S.C. CODE ANN. § 62-7-816A(d)(7).



Reducing or Eliminating Powers of Appointment and Withdrawal

Another modification that decanting can achieve is the reduction or elimination of a power of appointment, including a power of withdrawal. Reducing or eliminating a power of withdrawal is an uncontroversial modification when the trustee has absolute discretion. When the trustee has absolute discretion, permitting a reduction or elimination perfectly conforms to the greater-includes-the-lesser principle.

When the trustee has little to no discretion, permitting such a modification generally allows the trustee to exercise more discretion than the trust instrument itself allows. This is particularly true with respect to a presently exercisable power of withdrawal, because the trustee does not have discretion over the trust property subject to the power during the period it is exercisable.97 For these reasons, allowing a trustee to reduce or eliminate a power of appointment when there is less than absolute discretion may not always adhere to the greater-includes-the-lesser principle.

Moreover, grantors’ preferences are unclear on whether any trustee, who possesses discretion, should have the power to reduce or eliminate powers of appointment. Powers of appointment and withdrawal are extremely important to certain tax-driven estate plans. It may be desirable to grant the trustee a default power to efficiently tailor powers of appointment in light of changed circumstances to preserve tax benefits. However, as with beneficiaries, naming an individual a permissible appointee suggests that the grantor had some desire to benefit that individual. But unlike beneficial interests, non-beneficiary permissible appointees have no right to sue for breach of fiduciary duty if a trustee eliminates their interests.

All decanting statutes permit a trustee with unlimited discretion to eliminate or reduce a non-general power of withdrawal, as well as a general power of withdrawal that is not presently exercisable.98 This rule simply reflects existing trust law and conforms to both the greater-includes-the-lesser policy and probable intent. A trustee with absolute discretion cannot make distributions that interfere with a current beneficiary’s presently exercisable right to withdraw trust property and, therefore, does not have discretion over such property subject to a

97 The trustee must ensure that enough property remains in the trust to satisfy the power while it can be exercised. 98 See UNIF. TRUST DECANTING ACT § 11(d); ALASKA STAT. §§ 13.36.157(b), (h), 13.36.158(i)(1); ARIZ. REV. STAT. ANN. § 14-10819(A)(2); COLO. REV. STAT. §§ 15-16-911(3)(c), 15-16-912(3); DEL. CODE ANN. tit. 12, § 3528(a)(4); 760 ILL. COMP. STAT. § 5/16.4(c)(1), (d)(3), (n)(1); KY. REV. STAT. ANN. § 386.175(4)(f); MICH. COMP. LAWS §§ 556.115A(2)(a), 700.7820A(1)(a); MINN. STAT. § 502.851, subd. 3(c), 4(e), 15(1); MO. REV. STAT. § 456.4-419(2)(6); NEV. REV. STAT. § 163.556(3)(b); N.H. REV. STAT. ANN. § 564-B:4-418(g)(2)(B); N.M. STAT. ANN. § 46-12-111(D); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(b)(2), (3); N.C. GEN. STAT. § 36C-8B-11; OHIO REV. CODE ANN. § 5808.18(A)(3), (B), (C)(3)(a)(iii); S.C. CODE ANN. § 62-7-816A(d)(5), (d)(6); S.D. CODIFIED LAWS § 55-2-15(7); TENN. CODE ANN. § 35-15-816(b)(27)(F); TEX. PROP. CODE ANN. §§ 112.073(e), 112.085(1); VA. CODE ANN. § 64.2-779.8; WIS. STAT. § 701.0418(3)(b).



presently exercisable power of withdrawal. However, without decanting, a trustee with absolute discretion can make distributions at any time for any reason that eliminate or impact all other powers of appointment, namely non-general powers and general powers that are not presently exercisable.

Nine statutes, including the Uniform Act and Florida’s model, prohibit a trustee with limited discretion from reducing or eliminating powers of appointment in any meaningful way.99 The Uniform Act and similar power-of-appointment modification provisions take the correct approach if our guiding policy is the greater-includes-the-lesser principle and if probable intent is ambiguous. Absent a decanting provision or rule, if a trustee has limited discretion, he or she would not have the power to unilaterally reduce or eliminate a power of appointment. Because probable intent is unclear with respect to the power to reduce or eliminate powers of appointment, an ideal default decanting rule would simply adhere to the trust instrument. The Uniform Act and comparable statutes do exactly this.

Most statutes, including all non-bifurcated statutes, such as Nevada’s, give trustees with limited discretion the same modification power of reducing or eliminating powers of appointment.100 The majority approach does not

99 See UNIF. TRUST DECANTING ACT § 11(d); ALASKA STAT. §§ 13.36.157(b), 13.36.158(i)(1); COLO. REV. STAT. §§ 15-16-911(3)(c), 15-16-912(3); FLA. STAT. § 736.04117; 760 ILL. COMP. STAT. § 5/16.4(c)(1), (d)(3), (n)(1); MICH. COMP. LAWS §§ 556.115(2)(A), 700.7820A(1)(a); MINN. STAT. § 502.851, subd. 3(c), 4(e), 15(1); N.M. STAT. ANN. §§ 46-12-111(C), 46-12-112(C); N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(c)(4); OHIO REV. CODE ANN. § 5808.18(A)(3), (B), (C)(3)(a)(iii); TEX. PROP. CODE ANN. §§ 112.073(e), 112.085(1). New York prohibits trustees with limited discretion from reducing or eliminating a power of appointment, unless the trustee is converting a general power of appointment into a special power. N.Y. EST. POWERS & TRUSTS LAW § 10-6.6(b)(2), (3), (c)(4). In this respect, the New York statute takes a slightly better approach than most minority-view statutes because it increases flexibility and adherence to probable intent without materially increasing risks to freedom of disposition. Under the Uniform Act, a second trust that omits a power of appointment granted in the first trust does not maintain substantially similar beneficial interests, so a trustee with limited discretion cannot decant to omit or substantively reduce a power. UNIF. TRUST DECANTING ACT § 12(c). However, under the Uniform Act, a trustee could probably convert a general power of withdrawal that is not presently exercisable into a non-general power. See id. Michigan prohibits trustees with limited discretion from making material changes to the trust instrument and therefore seems to reach the same results as the Uniform Act. MICH. COMP. LAWS § 700.7820A(1)(a). 100 See ARIZ. REV. STAT. ANN. § 14-10819(A)(2); DEL. CODE ANN. tit. 12, § 3528(a); IND. CODE § 30-4-3-36(a); KY. REV. STAT. ANN. § 386.175(4)(f), (i); MO. REV. STAT. § 456.4-419(2)(6); NEV. REV. STAT. § 163.556(3)(b), (8)(a); N.H. REV. STAT. ANN. § 564-B:4-418(c), (g)(2); S.C. CODE ANN. § 62-7-816A(d)(5), (6); S.D. CODIFIED LAWS § 55-2-15(7) (flush language); TENN. CODE ANN. § 35-15-816(b)(27)(F); WIS. STAT. § 701.0418(4)(b) (prohibiting a trustee with limited discretion from granting any powers of appointment in the second trust). Recall that Delaware requires a decanting to comply in all respects with the trust’s distribution standard. See DEL. CODE ANN. tit. 12, § 3528(a). Although it is unclear from the language of the statute how such a requirement would apply in practice if the trustee is reducing powers of appointment, the requirement does little to restrict a trustee with limited discretion reducing powers of appointment if he or she reasonably determines that the change furthers the purposes of the trust. In this way, the Delaware rule is more akin to the majority view than to the Uniform Act. Compare DEL. CODE ANN. tit. 12, § 3528(a), with UNIF. TRUST DECANTING ACT § 12(c). Similarly, South Carolina’s requirement that a



adequately protect freedom of disposition because it deviates, in most respects, from the greater-includes-the-lesser principle without overriding reasons concerning probable intent for doing so. These statutes only adhere to the greater-includes-the-lesser rule and to trust instrument distribution standards in their treatment of presently exercisable powers of withdrawal.

III

In theory, all statutorily authorized decanting has the potential to violate freedom of disposition because it gives a trustee explicit authority to alter a trust in certain ways that the grantor did not contemplate. On the other hand, decanting creates flexibility, and flexibility provides a trustee who is aware of the grantor’s intent and acting in good faith with opportunities to better implement that intent when unforeseen circumstances arise. The extent to which statutorily authorized decanting furthers or frustrates freedom of disposition therefore turns largely on what a statute permits and prohibits trustees to do, considering what is known and understood about the grantor’s probable or actual intent.

If the greater-includes-the-lesser principle and probable intent are concerned with protecting and promoting settlor intent, this article evaluates how well decanting statutes respect and incorporate these key understandings about settlor intent to determine the success with which each statute protects and furthers freedom of disposition. In order to evaluate the overall impact of each statute on freedom of disposition, this article set out to (1) examine the key substantive modifications decanting statutes can achieve and typically address; (2) explain how an ideal statute that incorporates the greater-includes-the-lesser principle and probable intent would address the modification, both when the trustee has limited and unlimited discretion; and (3) compare how closely real decanting statutes achieve what an ideal decanting statute would achieve. While no statute perfectly protects freedom of disposition, this exercise makes it apparent that some protect and further freedom of disposition settlor intent reasonably well, while others consistently disregard settlor intent.

A close look at the mechanics of the Uniform Act shows that it protects freedom of disposition best—almost perfectly—as it uses the greater-includes-the-less doctrine and probable intent as benchmarks. In general, the Uniform Act only permits decanting where the trustee already has implicit authority to achieve the desired result by other means, and decanting would instead simply be a more efficient and transparent mechanism for reaching that result. Sometimes the Uniform Act not only adheres to settlor intent, but also furthers it by increasing flexibility. Wherever the trust instrument does not implicitly provide authority to make a modification, the Uniform Act generally prohibits decanting, requiring the trustee to adhere to the original trust instrument or use

decanting trustee with limited discretion maintain the same ascertainable standard and beneficiaries does not appear to restrict the trustee’s power to reduce powers of appointment. S.C. CODE ANN. § 62-7-816A(d)(5), (6).



other means to modify the instrument. In sum, the Uniform Act takes a more ideal approach to most substantive modifications that decanting otherwise would.

Only three of the Uniform Act’s provisions arguably fail to protect freedom of disposition: (1) the power to alter a fixed interest when the trustee has absolute discretion that can affect the interest; (2) the power to create powers of appointment; and (3) the power to decant into a special needs trust when there is little to no discretion. More importantly, it is apparent that the Uniform Act does not really disregard freedom of disposition with respect to these three weak points. On these three points, settlor intent is inherently ambiguous or unclear– the Uniform Act simply promotes the idea that settlor intent is the more pragmatic and flexible manner. While perhaps progressive, such an approach is consistently reasonable and has the advantage of creating the desired flexibility. Despite these possible weak points, the desire to further freedom of disposition has evidently guided the Uniform Act’s drafters, and the result does in fact successfully respect and further that freedom.

State-authored, bifurcated statutes also appear to protect freedom of disposition reasonably well, although not as well as the Uniform Act. In taking a bifurcated approach to discretion, these statutes are generally able to adhere closely to the greater-includes-the-lesser principle, and in turn, to settlor intent, as stated in the trust instrument. The bifurcated structure also tends to respect probable intent because it acknowledges and responds to the fact that a conferral of absolute discretion necessarily suggests a desire that the trustee make decisions using his or her own judgment in place of the settlor’s, whereas a conferral of limited discretion does not.

However, even the best of these statutes—notably the New York’s and Minnesota’s—do not further freedom of disposition quite as well as the Uniform Act. The state-authored, bifurcated statutes all contain a few provisions that are too formal and rigid in their approaches, sacrificing flexibility without any countervailing justification. Furthermore, some of these statutes, like the Texas model, contain multiple unnecessary or unreasoned rigidities and ultimately do not protect freedom of disposition any more than a simple and thoughtful non-bifurcated statute, such as Delaware’s does. A “substantially similar” requirement that gives trustees with limited discretion some flexibility helps to cure the problems that more formal approaches to bifurcation create, but this does not make up for numerous unjustifiable limitations.

Because Florida, Delaware, and South Carolina do not use bifurcated structures, but do treat trustees with limited and unlimited discretion differently, these states take hybrid approaches that are more protective of freedom of disposition. These three statutes have the virtues of simplicity and conciseness, making them better than an overly formal and rigid bifurcated statute, but is still far from ideal. In their simplicity, these statutes sometimes become too rigid and leave open too many ambiguities, which can be abused and lead to risks of undermining settlor intent. Their hybrid approach ultimately lacks the nuance



and flexibility necessary to best protect freedom of disposition.

Except for Delaware, Florida, and South Carolina’s decanting statutes, non-bifurcated statutes tend to provide significantly less protection for freedom of disposition than most bifurcated statutes. Each of these non-bifurcated statutes exhibit idiosyncrasies, making it difficult to generalize further about the entire group based on statutory provisions alone. However, a handful of states, notably Nevada, South Dakota, and Wyoming, can be characterized as extremely intent-frustrating. None of these statutes take the best approach to any substantive change when the trustee has limited discretion. When the trustee has less than absolute discretion, these models consistently defy both the greater-includes-the-lesser principle and probable intent. Although it is difficult to know the extent to which these statutes lead to violations of settlor intent in practice, they do pose significant risks to settlor intent in theory and, therefore, make for inadequate default rules.

Considering all these observations about decanting statutes, it is evident that some iterations of decanting statutes do pose a risk to freedom of disposition. However, decanting statutes can certainly protect such freedom while simultaneously building flexibility into an irrevocable trust instrument and, as a result, further freedom of disposition.

Moving forward, as more states continue to grapple with the decision of whether to enact decanting statutes and how to draft these statutes, they should consider the consequences that various substance-altering mechanisms have on freedom of disposition and choose mechanisms like those present in the Uniform Act, or comparable statutes. Doing so will help to ensure a consistent, principled body of trust law that squares with what United States trust law has deemed its most important guide and goal: freedom of disposition.

11.WEIKEL.NOTE.FINAL.DOCX (DO NOT DELETE) 11/11/2018 4:24 PM

QUINNIPIAC PROBATE

LAW JOURNAL


DISABLING THE FUNDS OF THE DISABLED: HOW THE “SOLE BENEFIT” RULE FRUSTRATES THE ADMINISTRATION AND

PURPOSE OF SUPPLEMENTAL NEEDS TRUSTS

ELIZABETH A. WEIKEL*

“[S]implicity is the most deceitful mistress that ever betrayed man.”

-Henry Adams1

Floyd Brown was charged with murder in 1993.2 Found incompetent to stand trial, he was sentenced to a psychiatric institution.3 In 2007, after fourteen years of confinement, he was exonerated.4 The appellate judge held that the lone piece of evidence, an elaborate six-page confession, was entirely too sophisticated for Mr. Brown to have dictated.5 Mr. Brown is intellectually disabled; he has an IQ of less than sixty and the mental capacity of a seven-year-old child.6

Following his release, Mr. Brown was awarded approximately nine million dollars for his wrongful confinement.7 The net settlement was put into a

* Quinnipiac University School of Law, J.D., May 2019; University of Connecticut, B.A. The author would like to thank her fiancé, Gregory M. Weaver, Jr., and her parents, Susan J. Weikel and Anthony M. Weikel, for their unwavering support and encouragement. The author would also like to thank the Staff and Editorial Board for their assistance in editing this Note, in particular Andrew B.F. Carnabuci, Quinnipiac University School of Law, J.D., May 2018. 1 HENRY ADAMS, THE EDUCATION OF HENRY ADAMS: AN AUTOBIOGRAPHY 441 (Houghton Mifflin, 1918). 2 Elizabeth Leland & Bruce Henderson, Wrongfully Held, Floyd Brown Won Millions, But His Money is Locked Up, THE CHARLOTTE OBSERVER (Mar. 29, 2015, 08:22 AM), https://www.charlotteobserver.com/news/local/crime/article16528667.html. 3 Id. 4 Id. 5 Id. 6 Id. 7 Leland & Henderson, supra note 2.

https://www.charlotteobserver.com/news/local/crime/article16528667.html


2018] DISABLING THE FUNDS OF THE DISABLED 61

supplemental needs trust (“SNT”),8 a special kind of trust available for people with disabilities which allows the beneficiary to exclude the trust corpus from asset calculation when applying or recertifying for means-tested government programs.9 The trust was meant to enhance his quality of life.10 Yet, with millions of dollars accruing interest, Mr. Brown’s simple request for a bouquet of flowers for his mother’s grave was denied, and he was living below the poverty line.11

Why? Because the flowers and other items Mr. Brown requested were not strictly for his benefit.12 According to the Social Security Administration’s (“SSA”) interpretation of the statutory language, which established SNTs, the trust must be established for the “sole benefit” of the beneficiary.13 Likewise, until very recently, the SSA required that all trust disbursements be made for the “sole benefit” of the beneficiary.14 On April 30, 2018, the SSA relaxed its interpretation of the “sole benefit” rule in limited circumstances: trust disbursements made to third-parties for certain goods or services may now be for the “primary benefit” of the beneficiary.15 However, outside of this limited exception, any other disbursement that violates this stringent rule ensures that the beneficiary will lose eligibility for essential government benefit programs, including Medicaid and Supplemental Security Income (“SSI”).16 Although Mr. Brown had millions of dollars, losing eligibility for public benefits meant the trust would likely be expended in a short time to provide medical care and necessities, and to repay state and federal programs for previous expenditures related to his cost of care.17

8 Id. 9 See 42 U.S.C. § 1382b(e)(5) (2018); 42 U.S.C. § 1396p(d)(4)(A), (C) (2018); POMS SI 01120.203A; POMS SI 01120.203.B.1; Stuart D. Zimring, Et Al., Fundamentals of Special Needs Trusts, § 1.02 (2018) (“Special needs trusts (SNTs) are trusts that protect a fund of money for the beneficiary who is disabled while maintaining eligibility for public benefits.”). 10 See Leland & Henderson, supra note 2. 11 Id. 12 Id. 13 POMS SI 01120.203.B.6; POMS SI 01120.201F.1. 14 Under the former POMS interpretations, all trust disbursements were required to be made for the “sole benefit” of the beneficiary; any disbursement which provided even an incidental benefit to another was prohibited:

[POMS] SI 01120.203B.2., and sub-paragraph e. echoes the requirements for special needs trusts as follows . . . the individual trust account must be established for the sole benefit of the disabled individual . . . . this exception does not apply if the trust account: provides a benefit to any other individual or entity during the disabled individual’s life time . . . .

John Staunton, Esq., Special Needs Trusts and the Sole Benefit Rule, NAT’L C. OF PROB. JUDGES 1, 7 (Nov. 2014), http://www.centersweb.com/wp-content/uploads/2014/05/SNTs-and-the-Sole-Benefit-Rule-NCPJ-11.13.14.pdf. 15 POMS SI 01120.201F.3.a. 16 POMS SI 01120.203B.6. (“[A]ny provisions will result in disqualification from the special needs trust exception if they: provide benefits to other individuals or entities during the disabled individual’s lifetime . . . .”). 17 “If the government determines that someone has the assets to meet their own needs, they will become



I. Introduction

An SNT, also referred to as a special needs trust, is a unique type of trust which allows persons with disabilities to remain eligible for means-tested government benefits by sheltering excess resources in the trust.18 To qualify, the beneficiary must have a disability as defined by section 1614(a)(3) of the Social Security Act,19 the trust must be irrevocable, it must be established for the benefit of the individual beneficiary, it must be settled before the beneficiary turns sixty-five-years-old, and it must contain a payback provision which entitles the state Medicaid Program to receive the remainder of the funds upon the beneficiary’s death.20 If the trust meets the above requirements, it will not count as a resource when determining or recalculating eligibility for federal or state public benefit programs such as SSI and Medicaid.21

Persons with disabilities frequently rely upon public benefit programs due to their inability to obtain gainful employment because of “severe physical or mental impairments.”22 To qualify for public benefits, an individual must fall within strict resource limits.23 The purpose of an SNT is to allow disabled beneficiaries to shelter excess resources in the trust which can then be used to supplement their quality of life, without disqualifying them from eligibility for public benefits.24 Disbursements from the trust for goods and services, such as a home computer or massage therapy, which do not displace means-tested government programs, are generally allowed.25 Disbursements for necessities, such as food or shelter, are generally not allowed because these expenditures

indelible for benefits until they spend down their assets. Sometimes the government can even come in and take away assets to reimburse itself for benefits that were provided in the past.” Gerald Winters, Special Needs Trusts Help Prevent a Horrible Situation, GERALD WINTERS, P.C. (Oct. 31, 2016), https://wintersfirm.com/blog/special-needs-trusts-help-prevent-horrible-situation/. 18 Zimring et al., supra note 9 (“Special needs trusts (SNTs) are trusts that protect a fund of money for the beneficiary who is disabled while maintaining eligibility for public benefits.”). See 42 U.S.C. § 1382b(e)(5); 42 U.S.C. § 1396p(d)(4)(A), (C). 19 See 42 U.S.C. § 1396p(d)(4)(A), (C); POMS SI 01120.203B.4. 20 See POMS SI 01120.203B.1; Valerie J. Bogart, Esq. et al., Supplemental Needs Trusts: Impact on Medicaid and Other Public Benefits, NYLAG 1, 7 (2018), http://www.wnylc.com/health/afile/44/9/. 21 See POMS SI 01120.203A. See generally Joseph A. Rosenberg, Supplemental Needs Trusts for People with Disabilities: The Development of a Private Trust in a Public Interest, 10 B.U. PUB. INT. L. J. 91 (2000) (discussing the development of SNTs and how they supplement public benefit programs); Jan P. Myskowski, Special Needs Trusts in the Era of the Uniform Trust Code, 46 N.H. B. J. 16 (2005) (discussing, in part, SNT distributions and possible conflicts with public benefits). 22 See Bogart et al., supra note 20, at 9. 23 See generally Introduction to the Supplemental Security Income (SSI) Program, CENTER ON BUDGET AND POLICY PRIORITIES, https://www.cbpp.org/research/introduction-to-the-supplemental-security-income-ssi-program (last visited Oct. 27, 2018) (providing a brief history and overview of who qualifies for means-tested benefits); infra Section III. B (discussing, in part, resource limits for SSI and Medicaid eligibility). 24 “The SNT is designed to enhance a beneficiary’s quality of life through the purchase of additional goods and services that are not covered or adequately provided by SSI and Medicaid.” Rosenberg, supra note 21, at 94-95. 25 See POMS SI 01120.201I.1.c; Spotlight on Trusts, U.S. SOC. SECURITY ADMIN., https://www.ssa.gov/ssi/spotlights/spot-trusts.htm (last visited Oct. 27, 2018).

https://wintersfirm.com/blog/special-needs-trusts-help-prevent-horrible-situation/

https://www.ssa.gov/ssi/spotlights/spot-trusts.htm



supplant the beneficiary’s need for public benefits.26 Further, the statutory language which created SNTs requires that the trusts be established “for the benefit” of the individual.27 This simplified overview leads one to believe that determining whether a disbursement will affect a beneficiary’s continued eligibility for means-tested programs is relatively objective and straightforward. Nonetheless, the SSA’s interpretation of the statutory language serves to frustrate the both the administration and purpose of SNTs.

The SSA interprets the “for the benefit” language to mean that most SNT disbursements must be strictly “for the sole benefit” of a beneficiary.28 “[A]ny provisions will result in disqualification from the special needs trust exception if . . . [the disbursement] provide[s] benefits to other individuals or entities during the disabled individual’s lifetime . . . .”29 Although the SSA has recently allowed certain disbursements–such as payments to third-parties for certain goods and services–if the same is for the “primary benefit” of the beneficiary, the SSA’s interpretation, referred to as the “sole benefit” rule, still controls most disbursements and the administration of SNTs in general.30

The fundamental flaw with the “sole benefit” rule31 is that it is too rigid and violates the purpose of SNTs. These trusts were created to allow the beneficiary to shelter resources so that the trust corpus could be used to “improve a beneficiary’s quality of life while still protecting that beneficiary’s ability to access governmental resources such as Medicaid and Social Security.”32 Compared to the general population, persons with disabilities require more assistance from others to participate in activities of daily life.33 For many, this assistance comes from family members or friends.34 In almost any

26 See POMS SI 01120.201I.1.a-c. 27 See 42 U.S.C. § 1396p(d)(4)(A); 42 U.S.C. § 1396p(d)(4)(C)(iii). 28 “Under the special needs trust exception, the trust must be established and used for the benefit of the disabled individual. SSA has interpreted this provision to require that the trust be for the sole benefit of the individual . . . .” POMS SI 01120.203B.6 (emphasis added). 29 Id. 30 As direct support for this proposition, the SSA offers the following explanation of the sole benefit rule:

Consider a trust established for the sole benefit of an individual if the trust benefits no one but that individual, whether at the time the trust is established or at any time for the remainder of the individual’s life. Do not consider a trust that allows for the trust corpus or income to be paid to, or for the benefit of, a beneficiary other than the SSI applicant or recipient as a trust established for the sole benefit of the applicant or recipient, except as provided in SI 01120.201F.3. and SI 01120.201F.4. in this section.

POMS SI 01120.201F.1. 31 See generally id. (defining the “sole benefit” rule). 32 In re Estate of Skinner, 804 S.E. 2d 449, 462 (N.C. 2017) (Morgan, J., dissenting). 33 See generally Disability and Health, WORLD HEALTH ORG. (Jan. 16, 2018), http://www.who.int/news-room/fact-sheets/detail/disability-and-health (discussing the greater, unmet needs for additional healthcare within the disabled community). 34 Many family members and friends assist loved ones, providing the care needed:

[a]bout [forty-four] million Americans provide [thirty-seven] billion hours of unpaid, “informal” care each year for adult family members and friends with

https://secure.ssa.gov/poms.nsf/lnx/0501120201#f3



http://www.who.int/news-room/fact-sheets/detail/disability-and-health

http://www.who.int/news-room/fact-sheets/detail/disability-and-health



given situation, a trust disbursement may incidentally “benefit” someone other than the beneficiary, especially when the beneficiary is surrounded by caregivers and relies upon them for frequent assistance. Yet, many requests for disbursements that would improve a beneficiary’s quality of life are denied by the trustee because to allow the same would violate the “sole benefit” rule.35 The refusal to disburse funds for items intended to improve a beneficiary’s quality of life defeats the purpose of the SNT carve-out created by Congress.

To alleviate these concerns, the SSA’s current interpretation of the established “for the benefit” requirement for first-party supplemental needs trust disbursements should be amended from the “sole benefit” rule to a less stringent “predominant purpose” test.36 Under this revised rule, the funds could be used for reasonable distributions to enhance the beneficiary’s quality of life even if the disbursements were to incidentally benefit someone other than the beneficiary. Indeed, the SSA has recently issued an “explanation” of the “sole benefit” rule which cautions against applying the rule so strictly as to “prevent any collateral benefit to anyone else” when evaluating third-party payments.37 However, many trustees remain wary of using the trust in a manner which provides even an inconsequential benefit to another since this practice area is rife with inconsistency.38 The “predominant purpose” test is more consistent with the realities faced by persons with disabilities as well as the underlying policy behind the creation of SNTs. The test would also facilitate easier trust administration by eliminating confusion as to what degree of “collateral benefit” is acceptable and which surpasses the rule’s limitations by applying objective factors to evaluate whether the disbursement is for “predominate purpose” of enhancing the beneficiary’s quality of life.39

This end could be accomplished by changing the “sole benefit” rule contained within the policy manual relied upon by the SSA, the Program Operations Manual System, or POMS,40 to a “predominant purpose” test.

chronic illnesses or conditions that prevent them from handling daily activities such as bathing, managing medications or preparing meals on their own. Family caregivers, particularly women, provide over seventy-five percent of caregiving support in the United States.

Caregiving, FAMILY CAREGIVER ALLIANCE, https://www.caregiver.org/caregiving (last visited Oct. 27, 2018). 35 See generally In re Estate of Skinner, 787 S.E. 2d 440, 449 (N.C. Ct. App. 2016), (providing a scathing commentary on the application of the “sole benefit” rule to disallow an incidental benefit to another), rev’d 804 S.E. 2d 449 (N.C. 2017). 36 See infra Section VI for a discussion of the parameters of the “predominant purpose test.” 37 POMS SI 01120.201F.3.a. 38 “Perhaps the most challenging aspect of first party trust practice is the lack of clear and credible guidance in the area of administration, leaving the trustee unsure of the criteria being used to measure its conduct.” Edward V. Wilcenski, Establishment and Administration of First Party Supplemental Needs Trusts: The Framework for an Improved Approach, 28 NYSBA ELDER & SPECIAL NEEDS L.J. 5, 10 (2018), https://www.mid-hudsonlaw.com/wp-content/uploads/2018/01/ElderLawJournalWinter18.pdf. 39 See infra Section VI for a discussion of the parameters of the “predominant purpose” test. 40 Staunton, supra note 14, at 4.

https://www.caregiver.org/caregiving




Currently, POMS guidelines are not binding on courts; however, “courts have long relied on agency interpretations regarding SSI and Medicaid.”41 Due to this reliance, trustees must comply with the POMS to avoid disqualifying the beneficiary from eligibility for SSI and Medicaid.42 Consequently, SNT trustees must obey the arbitrary and rigid “sole benefit” rule. If the rule were to be revoked and replaced with a “predominant purpose” test, a distribution which incidentally benefited someone else would be allowed so long as the “predominant purpose” of the disbursement was to enhance the beneficiary’s quality of life. Although very recent guidance has suggested that some collateral benefit is allowed in first-party SNT trust distributions to third-parties, a full revocation and replacement of the rule would significantly diminish confusion, increase consistency, and ease trust administration.

II. Applications of the “Sole Benefit” Rule43

The following two hypothetical situations illustrate how the SSA’s “sole benefit” rule severely inhibits the ability of disabled beneficiaries to utilize their trusts in a manner consistent with the purpose of SNTs.

A. Disney World

A thirty-year-old autistic woman is awarded damages from a personal injury lawsuit. She is dependent upon her family and does not have the ability to obtain gainful employment. To maintain eligibility for SSI and Medicaid, which provide for her basic needs, the funds are put into a pooled first-party SNT administered by a non-profit organization.

The beneficiary has had a life-long fascination with all things Disney. She enjoys watching Disney movies ad nauseam and can recite dialogue verbatim. Her room is decorated with Disney characters, and she listens to Disney music to calm herself when she is upset. Her dream has always been to go on a Disney World vacation, but her family has never had the money to take her. Now, her family hopes the trust may be used to make her dream a reality. However, due to her disability, she requires a companion to accompany her. Her primary care physician has even provided a note to this effect. The beneficiary’s family requests that the trust pay for the cost of both her and her sister to go, and submits the note from her physician as supporting documentation.

The request is ultimately denied as this disbursement is not for her “sole benefit.” The trustee explains that the specific nature of the request would exceed the parameters of the “sole benefit” rule, even in light of recent changes. The trustee is concerned that upon the State’s review of the trust for Medicaid

41 Id. (citing Barnhart v. Thomas, 540 U.S. 20, 26 (2003)). 42 See generally Staunton, supra note 14 (discussing the “sole benefit” rule as it relates to the administration of SNTs). 43 This section presents a hypothetical application of the “sole benefit” rule created from a compilation of personal anecdotes from the author’s past experiences.



recertification, the expenditure, particularly the Disney World park tickets, would be characterized as providing a significant benefit to the beneficiary’s sister and not simply a necessary expense for the beneficiary’s enjoyment.

The trustee then goes on to qualify that other disbursements, which do not violate the SSA’s “sole benefit” rule, are generally allowed. For example, the beneficiary could request that the trust purchase a television or computer for her personal use or pay bills for items unrelated to her rent or utilities, such as a cell phone or internet bill. Alternatively, the trustee suggests that if the beneficiary preferred, she could take a beach vacation and the trust would pay for the cost of her and her sister’s travel and lodging.

The beneficiary’s family is frustrated and feels deceived by the attorney who assisted them with the trust application. The family thought this trust was established to afford the beneficiary a better quality of life. Without the trust to cover the cost of the park tickets, approximately one hundred and eighty-five dollars per day for one adult,44 the beneficiary cannot take the vacation, as her sister is unable to afford her portion of the park tickets. The beneficiary does not want a beach vacation; her dream has always been to experience Disney World. The family does not understand why the trust will pay for other things people could still use or benefit from, such as a television or internet service, but not the park tickets. They are further frustrated by the arbitrary distinction between the trustee’s explanation that paying for airfare and hotel lodging will not violate the “sole benefit” rule whereas paying for the park tickets will.45

B. Family Home

A thirteen-year-old, severely-intellectually-disabled young man is awarded damages in a medical malpractice settlement related to injuries he sustained at birth. Due to the young man’s age, together with his receipt of public benefits, the court orders that the funds be placed in an SNT, which will be administered by his mother as his natural guardian. After receiving permission from the court, the mother uses the trust to purchase a family home for the boy, where his mother and younger sibling also reside.46

Shortly thereafter, the mother submits the court ordered accounting to

44 Walt Disney World Ticket Prices, DIS http://www.wdwinfo.com/disney-world/ticket-prices.htm#tickettypes (last visited Sep. 25, 2018). 45 See POMS SI 01120.201F.3.b. On April 30, 2018, the SSA relaxed its prohibition against payments for third-party travel expenses. Id. The Administration will now allow the trust to pay for travel expenses of certain caregivers or family members when the same is necessary due to the beneficiary’s age or disability. Id. Previously, the Administration allowed such disbursements only when the trip was necessary for medical treatment. Id. Even now with recent changes, the payments are limited to food, travel, and lodging. Id. 46 See POMS SI 01120.201F.3.a. On April 30, 2018, the SSA published new guidance interpreting the “sole benefit” rule, which specifically states that disabled beneficiaries may reside with family members without violating the “sole benefit” rule. Id. “[I]f the trust buys a house for the beneficiary to live in, that does not mean that no one else can live there . . . .” Id.

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the trust, and is surprised when the Guardian Ad Litem (“GAL”) objects to her and the beneficiary’s sibling residing in the home as being in violation of the “sole benefit” rule. The GAL’s position is that because the trust was used to purchase the home, the home should be used only for the beneficiary. The GAL asserts that the beneficiary’s mother must pay rent for her and her other child to reside in the home.47

Due to the severe and profound nature of his disabilities, the beneficiary requires constant supervision. Accordingly, his mother has taken on this role and has not worked outside of the home since his birth. Now, due to the GAL’s objections, the mother must use the trust to pay caretakers (above the respite care available through Medicaid)48 to supervise her son while she earns money to cover her and her other child’s portion of the rent. The cost expended from the trust to pay for the caretakers exceeds the amount of income the trust receives from the rent because she works in a minimum wage job.

Moreover, the beneficiary, not accustomed to being with strangers, regresses and begins to lash out physically. The mother does not understand why the court and the GAL do not allow her to stay home and care for her child when the alternative is more expensive and adverse to her son’s best interests.

III. What’s Past is Prologue: Background and Overview49

A. Medicaid and SSI

Medicaid, authorized by Title XIX of the Social Security Act, was signed into law in 1965 to provide health insurance coverage for low-income people.50 SSI was created by Congress in 1972 to replace a prior system of federal grants to states which provided aid to the aged, blind, or disabled.51 While Medicaid provides health insurance to low-income individuals,52 SSI is intended to pay for a recipient’s shelter, utilities, food, and clothing.53 Medicaid 47 The beneficiary’s family members who reside in a home owned by the SNT should be aware of the “sole benefit” rule. “Trustee[s] should consider requiring such family members to contribute their share of household costs and expenses (Medicaid may insist), or to otherwise ‘earn their keep’ by rendering services to, or for the benefit of, the Beneficiary that they are not already legally obligated to provide.” Kristen M. Lewis, Esq., Special Needs Trusts: The Cornerstone of Planning for Beneficiaries with Disabilities, AMERICAN BAR ASSOCIATION, 1, 30 (2010), https://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/te_lewis.authcheckdam.pdf (last visited Oct. 27, 2018). 48 “Medicaid-eligible recipients potentially receive their covered respite care through waivers provided under Medicaid’s Home [and] Community-Based Care Services (HCBS) waiver program.” Medicaid and Medicare Respite Coverage, SENIORLIVING.ORG, https://www.seniorliving.org/healthcare/medicare-medicaid/respite-care-coverage/ (last visited Oct. 9, 2018). 49 The title of this caption was generously donated by Andrew B. F. Carnabuci, Quinnipiac University School of Law, J.D., May 2018. 50 Program History, MEDICAID.GOV, https://www.medicaid.gov/about-us/program-history/index.html (last visited Oct. 27, 2018). 51 Introduction to the Supplemental Security Income (SSI) Program, supra note 23. 52 Program History, supra note 50. 53 “SSI is a federal program that pays for basic living expenses of disabled individuals, such as food,

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and SSI are considered “dual entitlements” as they are both resource-based programs. Therefore, if a person is disabled under section 1614(a)(3) of the Social Security Act, he or she may qualify for both SSI and Medicaid.54 In thirty-three states and the District of Columbia, an individual who qualifies for SSI is automatically enrolled in Medicaid.55 In ten other states, if an individual qualifies for SSI and fills out a separate Medicaid application, he or she will be enrolled.56 If an individual loses his or her SSI eligibility, his or her Medicaid coverage, which was granted after qualifying for SSI, may also be terminated.57

B. Resource Limits and Trust Disbursement Characterizations

A person typically loses eligibility for SSI if he or she possesses more than $2,000 in “countable” income and assets.58 “Countable” income and assets are those which are used to compute an applicant’s or recipient’s eligibility or recertification for public benefits.59 Any money received in a current month is considered income and any remaining money left over on the first day of the next month is considered an “asset.”60

The trust corpus of an SNT is exempt from the resource calculation;61 however, certain “improper” trust disbursements can remove the trust from its exempt status.62 For example, disbursements that look like income to the beneficiary, such as a gift card, will jeopardize the beneficiary’s continuing eligibility for SSI and Medicaid.63 The same is true for disbursements which

clothing, and shelter.” Katherine B. McCoy, The Growing Need for Third-Party Special Needs Trust Reform, 65 CAS. W. RES. L. REV. 461, 469 (2014). See Introduction to the Supplemental Security Income (SSI) Program, supra note 23. 54 See Kalman Rupp & Gerald F. Riley, State Medicaid Eligibility and Enrollment Policies and Rates of Medicaid Participation Among Disabled Supplemental Security Income Recipients, 76 SOC. SECURITY BULLETIN 3, 17 (2016); see also POMS SI 01715.010.A.1-3. 55 See Rupp & Riley, supra note 54; POMS SI 01715.010.A.1-3. 56 See Rupp & Riley, supra note 54. 57 See McCoy, supra note 53 (“SSI is linked to Medicaid . . . . Generally, a person losses eligibility for SSI and Medicaid in he possesses more than $2,000 in countable assets.”); see also Special Needs Answers, What Can My Special Needs Trust Pay for Without Affecting My Disability Benefits?, SPECIAL NEEDS ANSWERS (Jan. 24, 2015) https://specialneedsanswers.com/what-can-my-special-needs-trust-pay-for-without-affecting-my-disability-benefits-14931 (explaining that “the additional one-third reduction could cause the beneficiary to actually lose SSI, and accompanying Medicaid benefits, entirely.”). 58 “SSI is linked to Medicaid . . . . Generally, a person loses eligibility for SSI and Medicaid in he possesses more than $2,000 in countable assets.” McCoy, supra note 53. 59 “‘Countable’ income means that it is used to compute eligibility and benefit amount.” Special Needs Alliance, Administering a Special Needs Trust: A Handbook for Trustees, 1, 9 (2018), https://www.specialneedsalliance.org/wp-content/uploads/2018/01/2018-Trustee-Handbook.pdf. 60 McCoy, supra note 53. 61 See 42 U.S.C. § 1382b(e)(5); 42 U.S.C. § 1396p(d)(4)(A), (C); see also Zimring et al., supra note 9 (“Special needs trusts (SNTs) are trusts that protect a fund of money for the beneficiary who is disabled while maintaining eligibility for public benefits.”). 62 POMS SI 01120.200.E.1.a; McCoy, supra note 53, at 469-70. 63 “Any distribution from a special needs trust made directly to the disabled beneficiary or spent on support rather than supplemental benefits could make the beneficiary ineligible for need-based government benefits.” McCoy, supra note 53, at 473 (internal citation omitted).

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subsume the need for the beneficiary to continue receiving SSI and Medicaid.64 Paying an SSI recipient’s utility bill from his SNT would violate SNT parameters since this payment should be made from the SSI check.65 Finally, trust disbursements which violate the “sole benefit” rule also may remove the trust from exempt status.66 In the Disney World hypothetical, disbursing money to pay for anything beside the very limited travel expenses of the beneficiary’s sister would violate the “sole benefit” rule.67 Likewise, in the Family Home hypothetical, allowing the beneficiary’s family to reside rent-free in a home purchased by the trust may be characterized as a violation of the “sole benefit” rule, as the cohabitating family members are presumably benefiting from the arrangement. While the beneficiary is allowed to legally shelter excess resources because of his or her qualifying disability,68 many disbursements which may benefit someone else violate the SSA’s interpretation of the SNT carve-out provisions created by Congress.69 If the disbursement benefits someone else and does not fall within a limited exception, the SSA will characterize the trust as an “available resource.”70 Once the trust is considered an “available resource” the corpus in no longer exempt in calculating SSI and Medicaid eligibility.71 Once the trust is viewed as a resource, the beneficiary’s eligibility for SSI and Medicaid coverage is terminated if the trust corpus exceeds the resource limit for public benefits.72 While such an administrative decision may be appealed, courts frequently defer to the judgment of local social services agencies, and a unified framework for evaluating such cases is sorely lacking.73

C. Life Before SNTs: The Harsh Reality

Prior to the creation of SNTs, persons with disabilities who could not work had to forgo financial assistance from family members or friends to remain eligible for government benefits.74 Alternatively, persons with disabilities could 64 Id. at 474. (“[T]he SSI definition of ‘food and shelter’ covers payments for ‘food, mortgage . . . , real property taxes, rent, heating, fuel, gas, electricity, water, sewer and garbage removal.’ If the trust attempts to pay for any of these expenses on the beneficiary’s behalf, it will jeopardize SSI eligibility.”). 65 Id. 66 POMS SI 01120.203B.6. 67 POMS SI 01120.201F.3.b. 68 See 42 U.S.C. § 1396p(d)(4)(A), (C); POMS SI 01120.203.A; POMS SI 01120.203.B.1; POMS SI 01120.203.B.4. 69 POMS SI 01120.203B.6. 70 Id. 71 See id. (“[A]ny provisions will result in disqualification from the special needs trust exception if they . . . provide benefits to other individuals or entities during the disabled individual’s lifetime.”). 72 See Special Needs Answers, supra note 57. 73 See Wilcenski, supra note 38 (discussing, in part, the lack of uniformity in first-party SNT administration and judicial enforcement resulting in uncertainty in SNT administration). 74 McCoy, supra note 53, at 464.

In the past, due to the strict income-limiting eligibility standards of government assistance programs, families of disabled individuals were often unable to provide support for them without making them ineligible for public benefits. Instead, they would have to choose between retaining eligibility for public assistance, knowing that their loved one would receive only the essentials, or losing government aid and



sacrifice their eligibility for SSI and Medicaid and, instead, rely solely upon the financial contributions of people in their lives.75 Either way, a disabled person was typically living at or below the poverty level.76 The means-tested government public benefits provided just enough support to cover basic living expenses and health care if a disabled individual elected to sacrifice financial assistance from outsiders.77 Conversely, persons with disabilities who disavowed eligibility for SSI and Medicaid found that the vast amount of money expended on their behalf by family or friends was applied toward their cost of health care, which ensured that their standard of living was almost always at or below the poverty level.78

D. The Creation of SNTs

In 1993, Congress passed the OMNIBUS Budget Reconciliation Act (“OBRA '93”), which, in part, allows disabled individuals to legally shelter excess resources to maintain eligibility for SSI and Medicaid in SNTs.79 The SNT provisions of the legislation were partially enacted to stop affluent and able-bodied individuals from qualifying for Medicaid before expending their assets by segregating these same assets in trust.80 “[T]rusts can enable . . . individuals to technically ‘own’ nothing at all, even though they may have access to substantial wealth. Such claimants may then qualify for Medicaid . . . . Congress understandably viewed this as an abuse and began addressing the problem with statutory standards . . . .”81 Implicit in Congress’s rationale was that it was inequitable to prevent disabled individuals, who overall do not have the ability to support themselves, from sheltering some resources in order to obtain small creature comforts and still maintain eligibility for essential public benefits. Conversely, the able-bodied, and in particular, the wealthy, have ample opportunies to generate income and therefore should be prohibited from sheltering resources to qualify for means-test public benefits.

After the ratification of OBRA ’93, all trusts were generally considered assets for Medicaid eligibility purposes.82 The legislation, however, carved out an exception for SNTs.83 Congress recognized that the trusts could be used to

attempting to provide for the disabled individual entirely on their own. Id. 75 Id. 76 See generally id. (explaining, in part, that prior to the inception of SNTs, persons with disabilities were forced to choose between financial assistance from family and friends, or eligibility for public benefits). 77 Id. 78 See McCoy, supra note 53, at 464. 79 See 42 U.S.C. § 1396p(d)(4)(A), (C). 80 See Lewis v. Alexander, 685 F. 3d 325, 332-33 (3rd Cir. 2012). 81 Id. at 333 (internal citation and quotation omitted). 82 Id. (“Congress established a general rule that trusts would be counted as assets for the purpose of determining Medicaid eligibility.”). 83 Id. at 333 (“But Congress also excepted from that rule three types of trusts meeting certain specific requirements. Taken together, these are generally called ‘special needs trusts’ or ‘supplemental needs trusts.’”.



pay for items not covered by public benefits, and these allowances could drastically improve the quality of life for millions of people with disabilities.84 No longer would so many disabled individuals have to forgo support from family members or friends, or refuse an inheritance or a settlement; the funds could be sheltered legally in an SNT to be used for items which did not disqualify the beneficiary from eligibility to receive quality health care and basic income assistance as a result of their disability.

E. Types of SNTs: “(d)(4)(A)” vs. “(d)(4)(C)”

There are six types of trusts which are classified as supplemental needs trusts.85 This Note focuses solely on first-party SNTs, because these trusts are funded with the beneficiary’s own assets, not third-party funds86 and are subject to the “sole benefit” rule.87 The two first-party SNTs are authorized under Title 42 of the United States Code section 1396p(d)(4). The disability special needs trust, authorized by (d)(4)(A), and the pooled special needs trust, authorized by (d)(4)(C), are statutory trusts created under OBRA ’93.88 To qualify as either a (d)(4)(A) or a (d)(4)(C) trust, the trust must never allow the beneficiary direct access to funds and the same must be irrevocable.89

A (d)(4)(A) SNT may be established by an individual, parent, grandparent, legal guardian, or by court order. The trust is funded by the individual with the disability, and a payback provision is required, whereupon the beneficiary’s death, funds held in the trust are used to repay the cost of state and federal assistance provided to the beneficiary during their lifetime.90 The trust must also be established and funded by the time the individual turns sixty-

84 McCoy, supra note 53, at 464 (“Special needs trusts are a subset of trusts designed to allow a disabled beneficiary to maintain eligibility for public benefits that cover basic needs, while also receiving resources . . . that provide a higher quality of life.”). 85 Zimring et al., supra note 9, § 1.05. 86 Myskowski, supra note 21, at 16 (“‘Self-settled’ trusts are those trusts created to hold assets belonging to the intended beneficiary of the trust. ‘Third party’ trusts are those created to hold assets belonging to someone other than the intended beneficiary of the trust.”). “The terms ‘first-party’ and ‘third-party’ refer to the source of assets used to fund the SNT. First-party trusts are funded with assets legally owned by the beneficiary (or assets to which the beneficiary would have been entitled outright) while third-party trusts are funded with assets legally owned by another.” Zimring et al., supra note 9, at § 1.02. 87 “[T]hird party special needs trusts are not subject to the [sole benefit] rule.” Staunton, supra note 14, at 3. 88 Zimring et al., supra note 9, § 1.05[1]. 89 POMS SI 01120.200.D.1.a.

Trust principal is a resource for SSI purposes if a trust beneficiary (applicant, recipient, or deemor) has legal authority to revoke or terminate the trust and then use the funds to meet his or her food or shelter needs. The trust principal is also a resource for SSI purposes if the trust beneficiary can direct the use of the trust principal for his or her support and maintenance under the terms of the trust . . . . Additionally, if the trust beneficiary can sell his or her beneficial interest in the trust, that interest is a resource.

Id. 90 See 42 U.S.C. § 1396p(d)(4)(A); see also Zimring et al., supra note 9, § 1.05 [2].



five.91

A (d)(4)(C) trust is a pooled trust run by a non-profit organization.92 The trust maintains one large account and individual beneficiaries have sub-trust accounts.93 Upon the beneficiary’s death, the account closes; any remainder is given to the non-profit to assist other persons with disabilities or to payback state and federal agencies for the beneficiary’s cost of care during their lifetime.94 The benefit of a pooled trust is that the sub-trust accounts are pooled together for investment and management purposes, making the cost of administration low (depending upon the choice of non-profit trustee).95 Furthermore, pooled trusts comprise professional trustees armed with more sophisticated knowledge of the complexities of SNT administration than the average family member of a disabled beneficiary serving as trustee.96

Both (d)(4)(A) and (d)(4)(C) trusts require that the trust account be established “for the benefit” of the disabled beneficiary.97 The statutory language of the (d)(4)(C) trust extends the requirement; the trust must be “established solely for the benefit of the disabled beneficiary.”98 “[A]rguably [this additional requirement] refers to the preservation of an individual’s pooled [sub-trust] account for that beneficiary and not other pooled trust beneficiaries.”99

IV. How the Social Security Administration Has Interpreted the “For the Benefit” Requirement of an SNT

A. The POMS

91 See Zimring et al., supra note 9, § 1.05 [2]. 92 Id. 93 Id. See Amber K. Quintal, Planning for Individuals with Disabilities: Special Needs Trusts, 22 PRAC. TAX. L. 17, 20 (2008). 94 See Quintal, supra note 93. 95 Id. See also Michele P. Fuller & Kevin P. Urbatsch, Pooled Trusts: An Approach to Special Needs Planning for Families of Modest Means, 34 BIFOCAL A J. OF THE ABA COMM’N ON L. & AGING 80, 84 (2013), https://www.americanbar.org/content/dam/aba/publications/bifocal/BIFOCALMay-June2013.authcheckdam.pdf. “When reviewing the pooled trusts available in the client’s state, it is important to consider several factors . . . the cost of membership, such as initial set-up, perpetual, disbursements, and extraordinary fees (which vary greatly) . . . .” Id. (internal citation omitted). 96 Fuller & Urbatsch, supra note 95 at 86.

[P]ooled trusts also help eliminate choice of trustee issues. Pooled trusts are administered by the nonprofits that created the trust, and typically do so with the assistance of highly experienced counsel or other professional trustees . . . . [SNT] administration is also complex because the trustee must not only comply with all the fiduciary duties required of all trustees but also must be aware of changing public benefit program policies . . . [and] anticipate the impact of distributions on public benefit eligibility.

Id. 97 42 U.S.C. § 1396p(d)(4)(A), (C). 98 42 U.S.C. § 1396p(d)(4)(C) (emphasis added). 99 Mary E. O’Bryne & Neal Winston, Where is the SSA Going with POMS Changes? Armchair Chat, SPECIAL NEEDS ALLIANCE (June 25, 2013), http://slideplayer.com/slide/3589655/.

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After an SNT has been established, the federal government, through the SSA, and state governments, through local Medicaid offices, monitor trust disbursements to make sure they comply with the applicable provisions of OBRA ’93.100 The SSA uses the POMS as a guide for its employees to evaluate Social Security claims, including eligibility and recertification for SSI.101 State Medicaid offices also utilize the POMS to determine whether the trust is considered a resource for Medicaid eligibility or recertification.102 Although not binding authority, courts will often follow “the construction placed on the statute by presumed experts in the field.”103 Therefore, trustees, as well as courts, frequently rely upon the POMS and give deference to the interpretations contained therein.104

B. The “Sole Benefit” Rule

The POMS interprets the established “for the benefit” requirement to mean that most trust disbursements must be for the “sole benefit” of the beneficiary.105 “Consider a trust established for the sole benefit of an individual if the trust benefits no one but that individual, whether at the time the trust is established or at any time for the remainder of the individual’s life.”106 The “sole benefit” rule sounds very straightforward; however, what appears simple in theory is difficult in practice, since “nearly any transaction involving a trust will probably benefit someone else too.”107 Trustees need to be both competent and vigilant to prevent a violation of this rule.108 Again, avoiding “sole benefit” rule violations seems straightforward but is often fraught with difficulty.109

100 See generally Staunton, supra note 14 (discussing the “sole benefit” rule as it relates to the administration of SNTs, including applying and recertifying for Medicaid and SSI). 101 See POMS Home, SOCIAL SECURITY ADMIN., https://secure.ssa.gov/apps10/ (last visited Oct. 27, 2018). 102 See POMS SI 01715.010. 103 In re Estate of Skinner, 787 S.E. 2d at 451 (citing Hobbs v. Zenderman, 542 F. Supp. 2d 1220, 1228 (D. N. M. 2008)). 104 See id. See generally Wilcenski, supra note 38 (discussing, in part, the lack of uniformity in first-party SNT administration and judicial enforcement resulting in uncertainty in SNT administration). 105 POMS SI 01120.203B.6 (emphasis added). 106 POMS SI 01120.201F.1. 107 Recent Case Proves “Sole Benefit” Rule is by No Means Cut and Dried, SPECIAL NEEDS ANSWERS (July 13, 2016), https://specialneedsanswers.com/recent-case-proves-sole-benefit-rule-is-by-no-means-cut-and-dried-15680. 108 See generally In re Estate of Skinner, 804 S.E. 2d at 461 (where husband was found not to be in violation of the “sole benefit” rule by purchasing a home and household items while living with his wife, the beneficiary, but was found to have wasted assets by spending ninety percent of the trust assets within sixty days of becoming trustee); Edward V. Wilcenski & Tara Anne Pleat, State Court Case Puts Trustees of Special Needs Trusts on Alert, 41 EST. PLAN. MAG. 26, 30 (Mar. 2014) https://www.specialneedsalliance.org/wp-content/uploads/2014/04/State-Court-Cases-Put-Trustees-on-Notice.Estate-Planning-Magazine.March-2014-1.pdf (explaining, in part, that SNT trustees have an affirmative duty to be proactive in identifying the needs of a disabled beneficiary despite the reality that many trustees have little experience with the system of supports for disabled individuals). 109 See infra Part V Sections A and B. See generally Wilcenski, supra note 38 (discussing, in part, the lack of uniformity in first-party SNT administration and judicial enforcement resulting in uncertainty in

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If a disbursement is not considered to be for the “sole benefit” of the beneficiary, the trust may be considered a resource for purposes of Medicaid and/or SSI eligibility.110 The beneficiary may suffer a dollar-for-dollar reduction in SSI for the month in which the disbursement is made.111 If the trust continues to pay for items which violate the “sole benefit” rule, the beneficiary’s trust may be disqualified altogether from the SNT carve-out, resulting in a disqualification of SSI eligibility.112 If the beneficiary loses his or her SSI, his or her Medicaid eligibility is also typically revoked since the programs are dual entitlements.113

C. “Clarifications”

“Clarifications” of the “sole benefit” rule can have devastating consequences on the quality of life for many disabled beneficiaries.114 For example, in 2013, the SSA “clarified” its policy on travel expenses for third parties.115 Beneficiaries could no longer use their trust to pay for the travel-related expenses of a third-party, even when the beneficiary required a companion as a result of their qualifying disability.116 The only exception to this policy was if the beneficiary needed to travel for medical treatment. 117

If vacations sound extravagant, imagine a beneficiary simply wanting to visit a sick relative. Maintaining familial relationships is something which undoubtedly improves the quality of life for many individuals. Yet, due to the SSA’s “clarification” of the “sole benefit” rule’s application, a beneficiary who required a travel companion could not make the trip unless the companion paid their own way.118 The “sole benefit” rule thus prohibited the trust from being used in one major way which could potentially improve the quality of life for many disabled beneficiaries: sustaining close interpersonal relationships with family and friends through travel.

Perhaps realizing the harsh consequences of this clarification, the SSA,

SNT administration). 110 See POMS SI 01120.203B.6. 111 “If a distribution runs afoul of these rules, the Social Security Administration will treat the distribution as unearned income on behalf of the beneficiary and reduce the beneficiary’s income dollar-for-dollar after the first $20 of the distribution.” How to Make Distributions to an SNT Beneficiary Without Disrupting Their SSI, SPECIAL NEEDS ANSWERS (Jan. 29, 2017), https://specialneedsanswers.com/how-to-make-distributions-to-an-snt-beneficiary-without-disrupting-their-ssi-15916. See also McCoy, supra note 53, at 468-70. 112 See POMS SI 01120.203B.6. 113 “The Medicaid special needs trust exceptions are closely connected with trust rules for qualifying for SSI (Supplemental Security Income).” Serious Consequences for Special Needs Trusts- Social Security’s Recent Policy Regarding the Sole Benefit Rule, LAW OFFICES OF BRADLEY J. FRIGON, LLC (Apr. 23, 2014), https://www.bjflaw.com/firm-news/serious-consequences-for-special-needs-trusts-social-security-s-recent-policy-regarding-the-sole-benefit-rule. 114 See O’Bryne & Winston, supra note 99. 115 See id. 116 See Serious Consequences for Special Needs Trusts supra note 113. 117 Id. 118 Id.

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on April 30, 2018, again “clarified” this policy.119 Currently, the SSA will allow third-party travel expenses, including food, lodging, and transportation when the beneficiary requires a travel companion due to their medical condition, disability, or age.120 Nonetheless, other expenses that do not fall within those categories, such as the cost of park tickets in the Disney World hypothetical would still be prohibited. Furthermore, even purchasing a small inexpensive gift, such as a bouquet of flowers, for the beneficiary to give to their sick relative would be strictly prohibited, as seen in Mr. Brown’s case.121

Concerning visits to the beneficiary, the SSA, prior to 2012, allowed family members to be reimbursed for such visits.122 In August 2012, however, the SSA changed its policy to prohibit family members of beneficiaries with first-party SNTs from being reimbursed.123 After outcry from disability rights groups, the policy was again amended in 2013.124 Family members could be reimbursed for travel expenses from a first-party SNT if the reason for the travel was so that the beneficiary could receive medical treatment.125 Additionally, family members could be reimbursed from a first-party SNT if the beneficiary was living in an institution.126 No such allowance was permitted if the beneficiary lived independently.127 Why was a distinction made between a disabled beneficiary living in a nursing home or other supervised environment and one living independently? The explanation provided was that third-party travel was only permitted for “ensuring the safety and/or medical well-being of the [trust beneficiary].”128 Even so, it seems that in certain circumstances, a disabled beneficiary living alone would be more vulnerable, and there would be a greater need to ensure their “safety and/or medical well-being” than an institutionalized beneficiary.

The policy was again amended on April 30, 2018. Currently, concerning first-party SNTs, both “service providers” visiting a beneficiary living in an institution and “a trustee, trust advisor . . . , or successor” visiting a beneficiary who lives independently may seek reimbursement from the trust for their travel expenses.129 The third-party may include a family member; however, all third-parties who plan to seek reimbursement are advised to check with their local regional SSA office concerning the permissibility of such expenditures prior to

119 POMS SI 01120.201F.3.b. 120 Id. 121 See Floyd Brown discussion, supra pp. 101. 122 Can Special Needs Trusts Reimburse Family Members for Travel Expenses?, SPECIAL NEEDS ANSWERS (Nov. 28, 2017), https://specialneedsanswers.com/can-special-needs-trusts-reimburse-family-members-for-travel-expenses-16451. 123 Id. 124 Id. 125 Id. 126 Id. 127 See Staunton, supra note 14, at 6. 128 Id. 129 POMS SI 01120.201.F.3.c.


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spending any money.130 The implication herein is that although such third-party expenses may be permissible according to the most recent interpretation of the “sole benefit” rule and its application, the SSA may still disallow such expenditures depending on the circumstances. The rule’s history and application in this instance is arbitrary and manifestly inconsistent.

Besides travel, beneficiaries frequently want to use the funds in a myriad of ways which may incidentally benefit others and may violate the SSA’s interpretation of the “sole benefit” rule. Yet, the allowances for trust disbursements based on the SSA’s so-called “clarification”131 of the rule’s application to different scenarios varies widely.132 For example, a vehicle may be purchased, but clearly, unless no one else ever rides in the vehicle, this disbursement is not made “for the sole benefit” of the beneficiary. Yet, “purchase of a vehicle and maintenance . . . is permitted under federal law.”133 The trust may even be utilized to purchase a vehicle when the beneficiary cannot drive.134

A trust disbursement to cover the cost of a home modification for a disabled beneficiary who lives with others presents another interesting conundrum. Does the family have to pay for their apportionment of the modification if it is only necessary due to the beneficiary’s disability?135 The beneficiary’s family is living in the home and therefore technically “benefiting” from the improvements, yet the same would not have been necessary but for the beneficiary’s disability. If the cost of improvements is $100,000 but five people reside in the home, will the trust only pay for one-fifth of the cost? What if the beneficiary’s family cannot afford to pay for the remaining cost of the modifications? Does the beneficiary have to live alone for the trust to pay for any of the modifications? Little guidance is available; however, trustees are advised to proceed with caution.136

In both travel and the home setting, it appears the “sole benefit” rule and its application work to prevent beneficiaries from maintaining normal interpersonal and interfamilial relationships. Surely these limitations were not intended when SNTs were created, the purpose of which was to allow disabled beneficiaries to shelter excess resources and use the funds to enhance their quality of life.137 Because the “sole benefit” rule and its application to different 130 Id. 131 See O’Bryne & Winston, supra note 99. 132 See generally Special Needs Alliance, supra note 59, at 10-12 (explaining, in part, the feasibility of using the trust for numerous different kinds of goods and services); Staunton, supra note 14, at 5-8 (discussing the “sole benefit” rule as it relates to the administration of SNTs). 133 Special Needs Alliance, supra note 59, at 11. 134 Special Needs Trusts and the Purchase of a Vehicle, SPECIAL NEEDS ALLIANCE (Sept. 2012), https://www.specialneedsalliance.org/the-voice/special-needs-trusts-and-the-purchase-of-a-vehicle-2/. 135 See Lewis, supra note 47, at 30. 136 Id. 137 “The SNT is designed to enhance a beneficiary’s quality of life through the purchase of additional goods and services that are not covered or adequately provided by SSI and Medicaid.” Rosenberg, supra

https://www.specialneedsalliance.org/the-voice/special-needs-trusts-and-the-purchase-of-a-vehicle-2/



circumstances is inconsistent and unpredictable, trustees are wary of making disbursements unless the same falls within some explicit “clarification” of the “sole benefit” rule.138 Even then trustees must always worry that the SSA will amend its interpretation, making a once permissible use of the trust impermissible, and thus potentially severely negatively impacting the disabled beneficiary’s quality of life. Considering how the rule frustrates both the administration and intent of SNTs, disabled beneficiaries, many of whom depend upon others, should be allowed certain trust disbursements if the predominant purpose of the disbursement is to enhance the beneficiary’s quality of life. The decision to allow disbursements should be made without regard to whether a third-party may enjoy an incidental secondary benefit.139

V. Trustees

A. Family Members: Issues of Competency and Trustworthiness

Due to the strict “sole benefit” rule, it is quite difficult to find competent trustees who may appropriately safeguard against administrative or judicial determinations that the rule has been violated.140 Family members, although well meaning, may be too willing to accommodate the wishes of a disabled beneficiary. “[M]any trusts fail because the family member who was well intentioned and willing to become trustee was ill equipped to handle the associated responsibilities.”141 Frequently, this will result in the family member allowing the beneficiary to utilize the trust in a way which may violate the “sole benefit” rule and subsequently jeopardize the beneficiary’s continued eligibility for or receipt of means-tested public benefits.142 Although a family member may

note 21, at 94-95. 138 See generally Staunton, supra note 14 (discussing the “sole benefit” rule as it relates to the administration of supplemental needs trusts).

For their part, and given the ad hoc and inconsistent decisional law in this area, court examiners and judges will often default to a general and uncircumscribed “best interest” standard to pick and choose which expenditures are deemed appropriate and which should be disapproved and subject to surcharge. This leaves the trustee . . . hesitant to make distributions for fear of being second-guessed by someone with little or no first-hand knowledge of the beneficiary’s day-to-day circumstances.

Wilcenski, supra note 38, at 11. 139 See infra Section VI. 140 “To ensure that your beneficiary’s eligibility is never compromised, a trustee’s knowledge of public benefit programs, such as Social Security and Medicaid, is crucial.” Choosing a Trustee for a Special Needs Trust, SPECIAL NEEDS ANSWERS (Aug. 1, 2014), https://specialneedsanswers.com/choosing-a-trustee-for-a-special-needs-trust-13808.

[T]he rules governing . . . [SNT] distributions often conflict from one government benefit program to another, distribution standards are often ambiguous and difficult to apply in practice and . . . many of those who review the actions of the trustee . . . have very little practical appreciation of how tough it can be to make the right decision about the use of trust money for a beneficiary with a cognitive disability.

Wilcenski & Pleat, supra note 108 at 30 (internal citations omitted). 141 McCoy, supra note 53, at 472 (internal citation omitted). 142 “[The trustee’s] relationship with the disabled beneficiary can cloud [the trustee’s] judgment.



have the beneficiary’s best interests at heart, it is often prudent to find someone with less of an emotional connection to the beneficiary to administer the trust.

Conversely, others may seek to take advantage of a disabled beneficiary and serve as trustee with the intention of disbursing funds from the trust for items which only facially meet the “sole benefit” rule.143 An unscrupulous trustee could easily purchase a computer, television, refrigerator, or other tangible item “for the benefit” of the beneficiary and simply convert the item to their own use.144 On paper, it may appear that the item was legitimately bought for the beneficiary, but the beneficiary may not even be aware of the transaction.145 This is especially true in a situation where the beneficiary has limited cognitive ability due to an intellectual disability, a traumatic brain injury, or mental illness.146 If no one is available to advocate for the beneficiary, and the trustee is responsible for purchasing items for the beneficiary’s “sole benefit,” it may be all too easy for certain dishonest family members to become trustees and steal directly from the trust.147 One of the “sole benefit” rule’s implicit purposes, to protect disabled beneficiaries from being taken advantage of, is therefore easily defeated.

Because of the possible questionable motives driving family members to become trustees of SNTS, courts are often left to sift through the specific facts and circumstances behind certain disbursements to determine whether they were made for the “sole benefit” of the beneficiary. Adding to the problem of sifting through the facts and circumstances, is the SSA’s inconsistent application of the “sole benefit” rule. This culminates in the perfect storm, making it unsurprising that courts have trouble interpreting and applying the POMs in such a manner as to provide a workable framework for trustees to identify what is and is not permissible in SNT administration. Specifically, there is a sizable lack of clear guidance as to whether a trustee has in fact violated the “sole benefit” rule.148

In re Estate of Skinner is illustrative. Respondent, Mark Skinner,

Circumstances and emotions may pressure a trustee to make distributions for the immediate well-being or happiness of the disabled individual that will ultimately result in loss of government benefits.” Id. 143 See generally In re Estate of Skinner, 804 S.E.2d at 461 (where husband was found not to be in violation of the “sole benefit” rule by purchasing a home and household items while living with his wife, the beneficiary, but was found to have wasted assets by spending ninety percent of the trust assets within sixty days of becoming trustee). 144 See generally Dave Stafford, Lawyer Accused of Stealing from Special Needs-Trusts, THE INDIANA LAWYER (Sept. 6, 2017), https://www.theindianalawyer.com/articles/44716-lawyer-accused-of-stealing-from-special-needs-trusts (reporting on a particularly egregious instance where an attorney, serving as trustee of multiple SNTs, was accused of stealing large amounts of money from various beneficiaries’ trust accounts for items such as casino trips and dry cleaning bills). 145 See id. 146 See generally In re Estate of Skinner, 804 S.E. 2d at 461 (where husband was found not to be in violation of the “sole benefit” rule by purchasing a home and household items while living with his wife, the beneficiary, but was found to have wasted assets by spending ninety percent of the trust assets within sixty days of becoming trustee). 147 See generally id. 148 See generally id.

https://www.theindianalawyer.com/articles/44716-lawyer-accused-of-stealing-from-special-needs-trusts

https://www.theindianalawyer.com/articles/44716-lawyer-accused-of-stealing-from-special-needs-trusts



appealed from the lower court’s decision to remove him as the trustee of his wife, Catherine Bass Skinner’s, SNT.149 This removal occurred after Mr. Skinner used the trust to purchase a home where he and Mrs. Skinner lived together.150 The North Carolina Court of Appeals determined that the trial court had interpreted the “sole benefit” rule to mean that it would be violated if “Mr. Skinner used or enjoyed–and thus ‘benefitted’ from–the house, furniture, and appliances.”151 The court of appeals then reversed, finding the lower court’s holding that the purchase of the home and appliances violated the “sole benefit” rule was erroneous because “the term ‘sole benefit’ does not mean that a disabled person . . . must live in a state of bizarre isolation in which no other person may ‘benefit’ from her house or furnishings.”152 The application was “particularly absurd given the likelihood that a disabled person may need some assistance from someone living in the home.”153 The court of appeals subsequently reinstated Mr. Skinner as trustee.154

The Supreme Court of North Carolina reversed the appellate court order after finding that Mr. Skinner breached his fiduciary duties by expending “more than ninety percent of the monies that had been deposited in the Special Needs Trust . . . within sixty days of obtaining control of those monies.”155 However, the court distinguished between complying with the applicable provisions of the beneficiary’s SNT, which the intermediate appellate court found he had not violated, and “the broader issue of whether the guardian or trustee acted in such as manner as to violate the fiduciary duty that he or she owes to the ward or beneficiary.”156 The court found that the trial court properly removed Mr. Skinner as trustee because his actions “constituted waste and mismanagement” of trust assets and not due to a violation of the SNT trust provisions.157

Justice Morgan dissented, opining that Mr. Skinner acted in his wife’s best interest and that no fiduciary duty was breached.158 Moreover, Justice Morgan agreed with the appellate court’s view that the trial court misinterpreted the “sole benefit” rule. “Contrary to [the trial court’s] misapprehension of the law, the purchases of the house and related expenditures were authorized by the Special Needs Trust consistent with the purposes of a special needs trust.”159 Forcefully asserting that the new house was appropriate because it suited the beneficiary’s needs and did not subsume resources available from state or federal government, Justice Morgan argued: “[t]he failure of the [trial court] to 149 In re Estate of Skinner, 787 S.E. 2d at 442. 150 Id. at 443. 151 Id. at 450. 152 Id. at 449-50. 153 Id. at 450. 154 In re Estate of Skinner, 787 S.E. 2d at 453. 155 In re Estate of Skinner, 804 S.E. 2d at 460. 156 Id. 157 Id. 158 Id. at 461 (Morgan, J., dissenting). 159 Id. at 463 (Morgan, J., dissenting).



recognize Mr. Skinner’s sanctioned fulfillment of his duties as Trustee of Mrs. Skinner’s Special Needs Trust, coupled with [its] concomitant negative view of these permissible expenditures, constitutes a clear misapprehension of the law.” 160

Despite the dissenting opinion of Justice Morgan, together with the intermediate appellate court’s holding that the “sole benefit” rule was not violated, the trial court’s determination is more consistent with the SSA’s application of the rule in these circumstances.161 While Justice Morgan may have argued passionately that the purchases of the home and related appliances were consistent with the purpose of a SNT, the current application of the “sole benefit” rule would seem to prevent a married beneficiary from using his or her trust on household items, because the same will presumably “benefit” the cohabitating spouse.162 Justice Morgan and the intermediate appellate court understood the unreasonableness of the SSA’s interpretation, but failed to comprehend that this was in fact the exact logical, albeit, absurd conclusion of the rule’s application. This example illustrates the confusion courts, as well as trustees especially family members, without sophisticated knowledge of trust administration, may feel when dealing with the “sole benefit” rule.163

Recently, the SSA has stated in its explanation of the “sole benefit” rule that family members may cohabitate with the beneficiary.164 The explanation, however, is still silent on whether the trust may purchase items used in the household which would benefit more than just the beneficiary or whether the trust will charge rent to a family member residing in a home purchased by the trust.165

B. Institutionalized Trustees: Problems with Advocacy

The institutionalized trustee administering a pooled SNT may have more specialized knowledge of SSA POMS than the average lay person.166 However, due to the volume of trust activity, institutional trustees may not advocate as effectively, or at all, for beneficiaries to receive certain support and individualized attention in the same way that a trusted friend or family member

160 In re Estate of Skinner, 804 S.E. 2d at 463 (Morgan, J., dissenting). 161 “If members of the Beneficiary’s family also reside in a home owned by the SNT, beware violation of ‘the sole benefit’ rule.” Lewis, supra note 47, at 30. 162 See id. 163 See generally Wilcenski, supra note 38, at 10 (discussing, in part, the lack of uniformity in first-party SNT administration and judicial enforcement resulting in uncertainty in SNT administration). 164 On April 30, 2018, the SSA published new guidance interpreting the “sole benefit” rule, which specifically states that disabled beneficiaries may reside with family members without violating the “sole benefit” rule. SI POMS SI 01120.201.F.3.a. “[I]f the trust buys a house for the beneficiary to live in, that does not mean that no one else can live there . . . .” Id. 165 See id. 166 “[P]ooled trusts also help eliminate choice of trustee issues. Pooled trusts are administered by the nonprofits that created the trust, and typically do so with the assistance of highly experienced counsel or other professional trustees.” Fuller & Urbatsch, supra note 95, at 86.



could in a (d)(4)(A) trust.167 This is caused by myriad factors, including the delegation of duties to less educated employees, the sheer volume of sub-trust accounts, and the lack of a personal connection between the institutionalized trustee and individual beneficiary.168

In the pooled trust setting, those who review requests may not be the trustees themselves, but rather employees of the institution, armed with far less sophisticated knowledge and training.169 Employees may be directed to simply deny requests based on certain criteria or in accordance with strict internal policies which may demand absolute unquestioning adherence to the SSA’s “sole benefit” rule.170 Conversely, the trustee of an individualized SNT may have the luxury of petitioning the court to allow a disbursement or checking with a local Social Security office to see if the same is permissible, whereas case managers at pooled trusts are beholden to the rules and regulations of their employer.171

Adding to this problem, a pooled trust, by definition, is one large trust account filled with many sub-trust accounts.172 This means that a non-profit must administer hundreds of individual SNTs, comprised of countless disabled beneficiaries. Because of the number of beneficiaries contained within the pooled trust, it is impossible to attend to the needs of every beneficiary contemporaneously. As a result, beneficiaries who lack communication skills or the benefit of having a family member, friend, or guardian to represent their interests, may be neglected.173 This is not out of cruelty, but only because those who are employed by the SNT can only keep up with the large volume of beneficiaries who are actively attempting to utilize their trusts. Further, in certain

167 Explaining the potential pitfalls of institutional trustees, in particular the institution’s lack of personal connection with the beneficiary:

Professional [and institutional] trustees also lack the personal touch that many families desire in a trustee. They do not have a relationship with the beneficiary or knowledge of his or her needs and preferences. Depending on the nature of the beneficiary’s disability, he or she may have very specific or unique needs, or may be completely self-sufficient in some areas and totally helpless in others. Without knowledge of these details, the trustee may make some completely unnecessary distributions while neglecting to cover other important needs.

McCoy, supra note 53, at 473 (internal citations omitted). 168 “Pooled trusts are only as good as the nonprofit that is managing it. Some may do a good job for a while, but in the face of financial problems or management changes, may end up doing a terrible job or even going out of business altogether.” Betsy Simmons Hannibal, Pooled Special Needs Trusts, NOLO, https://www.nolo.com/legal-encyclopedia/pooled-special-needs-trusts.html (last visited Oct. 12, 2018). 169 This statement is based on the Author’s own experience and observations working at a SNT: I was a Case Manager for a Pooled Supplemental Needs Trust, tasked with determining whether disbursements could be paid out of sub-trust accounts without jeopardizing beneficiaries’ eligibility or receipt of public benefits. 170 Id. 171 Id. 172 See Quintal, supra note 93, at 20; see also Fuller & Urbatsch, supra note 95, at 84. 173 “[I]n those cases where the beneficiary is unable to communicate and has no one . . . there is typically little activity.” Wilcenski & Pleat supra note 108, at 27.

https://www.nolo.com/legal-encyclopedia/pooled-special-needs-trusts.html



circumstances, institutionalized trustees may be more concerned with collecting fees for administering the trust and less concerned with getting to know the beneficiary, including what disbursements would improve his or her quality of life.174

The combination of these factors presents a situation wherein the trust may become dormant. This is further exacerbated by stringent SSA interpretations which inhibit ease of use in disbursing trust funds. The biggest predictor of this occurrence, in the Author’s experience, is when the beneficiary lacks an effective advocate.175

For example, in Matter of JP Morgan Chase Bank, N.A. (Marie H.), the beneficiary was a profoundly disabled young man, and his SNT, worth millions of dollars, was left to languish.176 The co-trustees consisted of an experienced estates attorney who was well versed in the world of SNTs and a well-known banking institution. 177 Yet, for almost five years, no disbursements were made.178 The attorney acting as trustee had not seen the beneficiary since he was six years old and admitted he was involved only as a favor to the beneficiary’s late mother.179 The reason proffered by the institutional trustee for the lack of disbursements was that it lacked the “capacity to ascertain or meet the needs of this severely disabled, institutionalized young man.”180 In response, the judge ordered the trustees to “obtain the services of someone who could assess [the beneficiary’s] situation and ascertain his needs.”181 After hiring a certified care manager, the beneficiary was permitted to utilize his trust for “apparently trivial expenditures.”182 This resulted in a significant improvement in his quality of life, including his ability to communicate with the outside world, interact with others and integrate himself into the community.183 Such disbursements included a trampoline, computer, and various sensory items together with communication devices.184

174 “Investigate the nonprofit trustee’s policy regarding the fees associated with disbursement of the residual funds to the designated beneficiaries, and whether the trust retains a percentage or charges a flat fee for wrapping up the affairs of the trust. In some pooled trusts, this fee can be extraordinarily large.” Fuller & Urbatsch, supra note 95, at 84 n. 2. See generally Matter of JP Morgan Chase Bank, N.A. (Marie H.), 956 N.Y.S.2d 856 (Sur. Ct. 2012) (where beneficiary’s SNT, worth millions of dollars, was left to languish while trustees attempted to collect fees for maintaining the trust). 175 See supra note 169. 176 Matter of JP Morgan Chase Bank, N.A. (Marie H.), 956 N.Y.S.2d. at 856-57. 177 Wilcenski & Pleat, supra note 108, at 27. 178 Matter of JP Morgan Chase Bank, N.A. (Marie H.), 956 N.Y.S.2d at 860. “The almost negligible amount paid to Staver [the care manager hired as a result of the article 17-A proceeding] . . . is the only money paid out for the benefit of . . . the disabled beneficiary, in five years.” Id. 179 Id. at 861. 180 Id. 181 Id. 182 Matter of JP Morgan Chase Bank, N.A. (Marie H.), 956 N.Y.S.2d at 862. 183 Id. 184 Id. at 863.



Although not directly addressed, one can imagine a primary reason the trust remained dormant was resistance toward the complexity of SNT administration. Rather than expending effort to comply with the SSA’s strict interpretations for allowable SNT trust disbursements, including the “sole benefit” rule and its inconsistent application, it was easier to forgo making expenditures altogether. No one was there to insist the trust be utilized for the disabled beneficiary’s benefit, so it was more convenient to let it lie dormant.

Discussing the problem of under-utilized SNTs, Attorneys Edward V. Wilcenski and Tara Anne Pleat185 say this is not an uncommon situation: “[w]e regularly encounter trusts that have sat ‘dormant’ for years. The trustees . . . do not mishandle or misappropriate trust money . . . . But in those cases where the beneficiary is unable to communicate and has no one . . . there is typically little activity.”186 In fact, in Matter of JP Morgan Chase Bank, N.A., those at the facility where the beneficiary lived had no idea that the beneficiary had substantial assets until the certified care manager became involved.187 Were the beneficiary to have had an effective advocate from the inception of his trust, the trustee most likely would have made expenditures from the trust to improve the beneficiary’s quality of life without the necessity of court intervention. Further, were the POMS, including the “sole benefit” rule and its application, less rigid and more consistent, use of trust funds would be less onerous. The trustees would be faced with less doubt as to whether they were complying with the POMS and therefore less apprehensive regarding the permissibility of certain disbursements.

Ultimately, the trial court judge held that the trustees were not entitled to the full amount of their charged commissions:

it was not sufficient for the trustees merely to prudently invest the trust corpus and to safeguard its assets. The trustees here were affirmatively charged with applying trust assets . . . [for the beneficiary’s] benefit . . . . Both case law and basic principles of trust administration and fiduciary obligation require the trustees to take appropriate steps to keep abreast of . . . [the beneficiary’s] condition, needs, and quality of life, and to utilize trust assets for his actual benefit . . . . [The trustees’] failure to fulfill their fiduciary obligations should result in denial or reduction of their commissions for the period of their inaction.188

The case stands for the proposition that a trustee, even while not in 185 Attorneys Edward V. Wilcenski and Tara Anne Pleat are experienced and accomplished leaders in the administration of SNTs in the State of New York. Mr. Wilcenski serves on the board of the pooled SNT where this Author was previously employed. 186 Wilcenski & Pleat, supra note 108, at 27. 187 Id. at 27 n. 10. 188 Matter of JP Morgan Chase Bank, N.A. (Marie H.), 956 N.Y.S.2d at 867-68.



violation of requisite fiduciary duties, needs to be cognizant of how to administer SNTs and ascertain the needs of a disabled beneficiary. The institutional trustee, including trustees administering pooled SNTs, should not forgo individualized attention to the beneficiaries in the interest of expediency or to avoid compliance with the POMS through atrophy.

Despite the chance of less individualized attention, a pooled SNT is an attractive option for many beneficiaries because the cost of administration may be relatively low.189 However, without an advocate, the beneficiary’s sub-trust may be left to languish as was the beneficiary’s in Matter of JP Morgan Chase Bank, N.A. (Marie H.). One reason these particular kinds of trusts are left to wither is the difficulty of properly safeguarding disbursements so as not to violate the SSA’s “sole benefit” rule.190 The disabled beneficiary may request the funds be utilized; however, much to the beneficiary’s frustration, the same may be denied because it would violate the “sole benefit” rule.191 Without an effective advocate who can communicate with the trustee and formulate a plan as to how to obtain the beneficiary’s desired objectives without violating the “sole benefit” rule, the beneficiary’s requests may continue to be flatly denied.192 At a certain point, it becomes highly probable that the beneficiary will give up trying to use their trust altogether, resulting in a dormant fund.193

VI. Proposed Solution

To distinguish sole benefit from “predominant purpose,” the disbursement request should be examined comprehensively without regard to whether the disbursement will incidentally benefit someone else. Rather, an objective test is needed to determine if the request is reasonable and if the “predominate purpose” is to enhance the beneficiary’s quality of life. Factors to be considered should include: 1) the nature of the request, including the facts and circumstances behind the request; 2) the beneficiary’s age; 3) the beneficiary’s living situation; 4) the size of the trust corpus; and, 5) the type of government benefits the beneficiary receives. No one factor is dispositive; however, if under

189 See generally Fuller & Urbatsch, supra note 95, at 84 (explaining, in part, that because assets are pooled together, a pooled trust may be more affordable due to reduced administrative costs). 190 Wilcenski & Pleat, supra note 108, at 30.

[T]he rules governing . . . [SNT] distribution often conflict from one government benefit program to another, distribution standards are often ambiguous and difficult to apply in practice and … many of those who review the actions of the trustee … have very little practical appreciation of how tough it can be to make the right decision about the use of trust money for a beneficiary with a cognitive disability.

Id. 191 See generally Staunton, supra note 14 (discussing the “sole benefit” rule as it relates to the administration of SNTs). 192 See generally Wilcenski & Pleat, supra note 108 (explaining, in part, the Court’s holding in Matter of JP Morgan Chase Bank, N.A. (Marie H.), that SNT trustees have an affirmative duty to be proactive in identifying the needs of a disabled beneficiary despite the reality that many trustees have little experience with the system of supports for disabled individuals). 193 Id.



the totality of the circumstances, the request is objectively reasonable, does not subsume the beneficiary’s need for benefits, and the request’s predominant purpose is to enhance the beneficiary’s quality of life, the distribution should be allowed.

For example, in the Disney World scenario,194 the facts and circumstances indicate that the beneficiary has long desired to travel to Disney World but requires a travel companion due to her disability. Although she is young, her needs are met through SSI and Medicaid, and she is unlikely to expend the trust quickly. While her sister may also enjoy the vacation and thus “benefit” from the same, the predominant purpose of the trip is for the beneficiary to fulfill a life-long dream. The sister’s presence is necessary due to the beneficiary’s qualifying disabilities and not because the sister wishes to exploit the beneficiary. The request should be honored, especially given that other related expenses would be permitted to be paid from the trust and it is only the cost of the park tickets themselves which would be considered a violation of the “sole benefit” rule.

Conversely, suppose that a six-year-old beneficiary wants to go on a Disney cruise and requests that the trust pay for her and her entire immediate family to accompany her on an all-expenses-paid trip. Under these circumstances, the request should be denied. The beneficiary is quite young and will need the trust for the rest of her life. The request is also facially exploitative because a young child should not be paying for the cost of a family vacation. Even if the beneficiary had obtained the age of majority, the number of third-parties who accompany her on the trip should be limited to those who must attend to ensure the beneficiary’s health, safety, or comfort.

In the second example, Family Home,195 the beneficiary’s mother would prefer to stay home and care for the beneficiary rather than employ strangers while she works to reimburse the trust for her portion of the rent. The advantages gained by the beneficiary in this scenario are manifest and outweigh any loss in monetary compensation. This arrangement provides that the beneficiary is in a stable and supportive environment, with a loving caregiver who is focused on his best interests. The arrangement also alleviates some taxpayer burden as the mother is not using respite aides paid for by the state through its Medicaid waiver program. This is a reasonable use of trust assets and improves the beneficiary’s quality of life exponentially. The arrangement should be allowed.

VII. Conclusion

The purpose of an SNT is to supplement and improve the quality of life for disabled individuals while they continue to remain eligible for governmental means tested programs. The SSA’s interpretation of the “for the benefit”

194 See supra Part II Section A. 195 See supra Part II Section B.



language of the SNT statutes should reflect the reality that most, if not all, disabled beneficiaries require additional assistance from friends, family members and other caregivers to navigate their world. Disbursements which are made with the predominant purpose of helping the beneficiary, while not subsuming the need for means-tested programs, should be allowed even if the same benefits someone else other than the beneficiary. The requests should be examined by looking at the beneficiary’s age, their living situation, the type of benefits they receive, and the nature of the request. Rather than narrowly construing the “for the benefit” requirement to mean “sole benefit” the SSA should be more flexible in its interpretation of the statutory language which will allow disabled beneficiaries to achieve a better quality of life while ensuring they remain eligible for vital public benefit programs.

Cumulative Topic Index 11/11/2018 4:25 PM

CUMULATIVE TOPIC INDEX OF THE OPINIONS PUBLISHED IN THE QUINNIPIAC PROBATE LAW JOURNAL

TOPIC ................................................................................... VOLUME:PAGE Abandonment ...................................................................... 29:2

defined .............................................................................. 3:250; 21:222; .......................................................................................... 23:3; 30:200 forfeiture ........................................................................... 3:35

generally .......................................................................... 23:2-4; 29:2; 29:2 insufficient cause .............................................................. 3:250; 29:366 intent ................................................................................. 3:250; 12:422; .......................................................................................... 29:366; 30:200; 30:306 intestate share ................................................................... 3:274 physical abuse .................................................................. 12:421 question of fact ................................................................. 3:35; 3:274-75; .......................................................................................... 12:421; 29:2; 29:366 .......................................................................................... 30:200; 30:306 separation ......................................................................... 3:274 statutory share .................................................................. 12:421 testate and intestate estates ............................................... 3:35, 3:249; .......................................................................................... 12:422

Accounts .............................................................................. 9:11; 31:244 Administratrix removal of ....................................................................... 16:231; 17:255 Adoption

best interests of the child .................................................. 26:38 child’s preference ............................................................. 18:76 consequences of ................................................................ 23:193 establishment of parental rights ........................................ 26:38 Full Faith and Credit Clause ............................................. 23:194-95; .......................................................................................... 24:14-15 generally ........................................................................... 23:192; 26:38 interstate recognition ........................................................ 24:22 maintenance & support agreemenmts ............................... 17:83



Pennsylvania Adoption Act .............................................. 18:76 procedures......................................................................... 23:192 purpose ............................................................................. 23:192-93 rights of inheritance .......................................................... 12:268 standing in loco parentis ................................................... 17:286 statutory construction ....................................................... 23:192 statutory requirement ........................................................ 12:265; 24:14; .......................................................................................... 24:20 vacate, Vermont law ......................................................... 12:266

Agency fiduciary duty .................................................................. 31:377 generally .......................................................................... 24:360; 31:377 roles .................................................................................. 24:360

Aggrievement generally .......................................................................... 2:8; 27:385 subject matter jurisdiction ............................................... 2:8

Allowance to Widow ........................................................... 1:198 Ambiguity ........................................................................... 13:171 extrinsic evidence .............................................................. 22:25; 25:271 generally ........................................................................... 23:4; 31:30

parol evidence ................................................................... 22:25 testamentary instrument .................................................... 22:25; 31:30 Ancient Documents Rule ..................................................... 3:10 Animals ownership of...................................................................... 29:105 Antenuptial Agreements

enforceability.................................................................... 6:184 generally ........................................................................... 6:184

Appeals ................................................................................ 1:68; 3:280-81 standard of review ............................................................. 27:161; 27:385

standing ............................................................................ 27:385 Appointment of Conservator ................................................ 2:15

generally ........................................................................... 27:391 Appointment of Counsel ...................................................... 14:373; 30:199 Appointment of Executor ..................................................... 22:350 Athens Convention


2018] CUMULATIVE TOPIC INDEX 89

damages ............................................................................ 22:83 application ........................................................................ 22:83

Attorney Disqualification .................................................... 16:245; 21:36; advocate-witness rule ....................................................... 21:36; 21:35

Attorney’s Fees extraordinary circumstances ............................................. 22:194 factors and reasonableness ................................................ 22:104; 22:105; 30:210 fee agreement ................................................................... 22:194; 30:210; 30:211 substantial services ........................................................... 22:194 waiver limitation ............................................................. 31:244

Beneficiaries ........................................................................ 10:17; 16:45 indebtedness ..................................................................... 27:153

Benefits ................................................................................ 9:11 Bequests

charitable ......................................................................... 16:219 churches ........................................................................... 12:451

Bond ..................................................................................... 3:80; 13:146 Burden of Proof.................................................................... 3:10; 3:52

abandonment or non-support ............................................ 21:222; 29:366 domicile ............................................................................ 7:253 lack of good faith ............................................................. 21:248 paternity ........................................................................... 8:196 preponderance .................................................................. 22:202 shift to beneficiary ............................................................ 26:107 tax exemption ................................................................... 6:179 undue influence ................................................................ 3:24; 3:42; 30:297 .......................................................................................... 5:197; 6:189 .......................................................................................... 7:225; 10:212; .......................................................................................... 18:6 wills, execution ................................................................ 6:3; 12:301 wills, fraud ....................................................................... 3:83 wills, lost .......................................................................... 2:149; 2:150 wills, shift of..................................................................... 6:3; 9:198

Caregiver Services family members ................................................................ 24:233 Cause for Appointment ........................................................ 1:20



Charitable Nature of Organization ....................................... 1:12 Charitable Organizations

fees ................................................................................... 4:207 nature of .......................................................................... 1:12 private donations .............................................................. 4:205 qualifications .................................................................... 4:204 State Attorney General’s common law powers ................ 17:382 tax exemptions ................................................................. 4:204

Charitable Purposes activities ........................................................................... 4:208 broad purpose ................................................................... 4:208

Charity ................................................................................ 1:11 Choice of Law ..................................................................... 1:69; 10:9 Claim

notice of ........................................................................... 9:187; 31:364 rejection of ...................................................................... 9:188

Claims Against Estate ......................................................... 2:39; 31:654 anti-mortem claims .......................................................... 26:9 burden of proof ................................................................ 2:31; 28:136; 30:210; .......................................................................................... 30:215; 30:239 .......................................................................................... 31:365 care and companionship .................................................. 2:29; 3:73 creditor defined ............................................................... 31:22 claims defined ................................................................. 31:21 college education ............................................................. 2:43 contracts ........................................................................... 28:136; 30:215; 30:240 lack of familial relationship ............................................. 28:136-37 liens ................................................................................. 2:39 measure of recovery ........................................................ 30:240 notes ................................................................................ 2:39 personal services ............................................................. 3:18; 30:215; 30:239 .......................................................................................... 31:365 professional personal services ......................................... 30:215

Claims by Estate repayment of loans ........................................................... 22:125

Code of Professional Responsibility .................................... 12:468; 15:36



extraordinary compensation ............................................. 12:435 factors, reasonableness of compensation .......................... 12:435, 12:468 .......................................................................................... 15:176; 18:61; 30:211 generally ........................................................................... 4:189; 14:208 .......................................................................................... 14:373; 15:188

Codicils due execution ................................................................... 17:1; 25:19

Collateral Estoppel .............................................................. 6:4 Community Property

acquirement of property .................................................. 4:198, 4:200 equitable distribution jurisdiciton .................................... 4:198; 4:200 obtained through laws of another jurisdiction .................. 4:197 property rights at death .................................................... 4:198 rebuttable presumption .................................................... 4:198; 4:200

Compensation of Fiduciaries .............................................. 3:287 compensation standards ................................................... 3:287 multiple fiduciaries .......................................................... 3:287 public policy .................................................................... 3:288 theory .............................................................................. 3:288

Competency ........................................................................ 1:75 Conduct

defined, Ohio law ............................................................ 25:29 Confidential Relationship ................................................... 3:24-5; 3:42 Confidentiality of Information disclosure ........................................................................ 24:33-34 exceptions ........................................................................ 24:32 generally ........................................................................... 24:31 presumption...................................................................... 24:33 scope of affected representation ....................................... 24:32-33 scope of applicable material ............................................. 24:32 Confidentiality of Probate Court Records ............................ 10:203

test .................................................................................... 10:203 Conflicts of Law .................................................................. 23:4

marriage ........................................................................... 12:283 Conservator

appointment of ................................................................ 2:15



approval of ...................................................................... 9:2 consent of ........................................................................ 9:3 duties of ........................................................................... 9:2; 15:130 .......................................................................................... 18:35; 20:1; .......................................................................................... 22:215; 27:2; 27:391 generally .......................................................................... 3:1; 3:2; 9:2 .......................................................................................... 10:10; 16:10; .......................................................................................... 17:298; 27:2; 27:391 powers of ......................................................................... 9:2; 10:10; 15:46 special needs trust ............................................................ 15:129 suits against ...................................................................... 14:39; 15:77

Conservatorship application for voluntary representation .......................... 28:1 appointment of ................................................................. 23:132 control of property ........................................................... 2:169; 23:129 executor of ........................................................................ 14:39 generally .......................................................................... 2:16; 5:184; 10:10 jurisdiction ....................................................................... 2:169 restrictions ........................................................................ 22:215 review of ......................................................................... 9:3

Consolidation appellate review .............................................................. 25:122

Constitution, Federal 14th Amendment, Right to Privacy ................................. 10:204 Full Faith and Credit Clause ............................................ 24:20; 24:21

Constitution, State Article 1, § 7, Right to Privacy ........................................ 10:204

Construction generally .......................................................................... 13:171 power of attorney ............................................................ 8:201 proceedings to construe will ............................................ 3:65 role of the Probate Court .................................................. 12:267 will .................................................................................. 3:65; 12:409 .......................................................................................... 12:410; 12:451 .......................................................................................... 15:60, 15:69

Constructive Trusts



elements .......................................................................... 21:238 generally ........................................................................... 17:9; 25:150 .......................................................................................... 29:444

Consultation defined ............................................................................. 24:34 scope ................................................................................ 24:34 Contracts

duty of disclosure ............................................................ 7:24 evidence required ............................................................ 30:215 generally ........................................................................... 27:12; 31:22 pre-nuptial ....................................................................... 7:24 requirement of good faith in ............................................. 7:23 unconscionability ............................................................ 27:13

Control of Property alleged incapable ............................................................. 2:169

Controversy generally ............................................................................ 23:2 Corporation

redemption of shares ....................................................... 7:269 Costs and Fees American rule ................................................................... 24:257-58 Delaware courts ............................................................... 24:257 trust proceedings, Delaware law ...................................... 24:257 Courts

succession tax assessments............................................... 12:287 Custody

“abused” ........................................................................... 24:94-5 generally .......................................................................... 1:60; 29:19 right to ............................................................................. 1:21 standard of assessment ..................................................... 24:97-8 temporary custody ........................................................... 31:354 temporary emergency custody ......................................... 24:94-5

Damages comparattive negligence ................................................... 22:83 shares, Delaware law ........................................................ 24:255

Dead Bodies (Human Remains)



custody and control of ..................................................... 6:202 generally ........................................................................... 1:60; 6:202 right to possesion of ........................................................ 6:202

Death on the High Seas Act exclusive remedy .............................................................. 22:84 generally ........................................................................... 22:84 Decree ................................................................................. 2:8; 3:48 Deduction

compensation of executor/administrator .......................... 12:467 discretion of Commissioner ............................................. 12:439 expenses, sale of real estate .............................................. 12:440 inclusion in a ................................................................... 9:26 reasonable expenses ......................................................... 12:439 selling expenses ................................................................ 12:440 what is a proper ............................................................... 9:26

Delaware Courts powers ............................................................................... 24:256 Dependency ......................................................................... 1:25 Descent and Distribution

care and control of estate property .................................. 7:239 distribution of property .................................................... 7:263 occupation of family home during .................................. 7:240 statutory share ................................................................. 7:24; 23:4

Determination of Intent ........................................................ 12:433 Determination of Transfer ................................................... 1:185 Disclaimers ......................................................................... 4:196; 12:440; ............................................................................................. 29:2; 31:256; 29:2 method .............................................................................. 31:256 procedure .......................................................................... 29:2 Disposition of Property

distribution ...................................................................... 4:198 generally ........................................................................... 24:344; 29:234 limitation on disposition .................................................. 4:201 mental capacity ................................................................. 23:129 testamentary disposition .................................................. 4:201

Distribution .......................................................................... 31:256



intestate ........................................................................... 3:275 joint accounts .................................................................. 9:10 spousal share, New York law ........................................... 24:40; 24:41

Distributors duties of ............................................................................ 24:204 Doctrine of Approximation defined .............................................................................. 26:234 Doctrine of Cy Pres .............................................................. 18:25; 23:184 application ......................................................................... 23:184-85 application, Pennsylvania law .......................................... 25:277 comparison to doctrine of approximation ......................... 26:234 defined .............................................................................. 23:184; 26:234 determination .................................................................... 23:184 exercise of power .............................................................. 23:185 judicial authority in Connecticut ....................................... 26:234 limitations ......................................................................... 26:234 trusts and wills .................................................................. 26:233 Doctrine of Cy Pres and Approximation remedy .............................................................................. 26:234 Doctrine of Dependent Relative Revocation ........................ generally ............................................................................ 27:243 Doctrine of Substituted Judgment ....................................... 3:2 Domicile .............................................................................. 1:68

abandonment of ............................................................... 2:157; 12:267; .......................................................................................... 13:18 by operation of law ............................................................ 19:8 burden of proof of ........................................................... 7:253; 19:8 change of domicile .......................................................... 19:9 choice of law .................................................................... 12:266 defined .............................................................................. 19:8; 22:355 determination.................................................................... 13:17; 22:356 elements ........................................................................... 22:356 factors in determination .................................................... 13:18; 19:8 intent ................................................................................. 13:18 jurisdiction ....................................................................... 3:60 of conserved ..................................................................... 19:9



probate of will .................................................................. 13:17 undue influence ................................................................ 19:9

Do-Not-Resuscitate Order Michigan law .................................................................... 24:115 Due Process ......................................................................... 9:2

final accounting ................................................................ 25:123 generally ........................................................................... 21:18; 25:122

property rights ................................................................. 25:122 property rights after death ................................................ 21:17 property rights, Colorado .................................................. 21:18

Election ................................................................................ 4:198 Emancipation

burden of proof ................................................................. 22:201 effect on minors ................................................................ 22:201; 31:2 effect on parents ............................................................... 22:201; 31:2 generally .......................................................................... 31:2 grounds ............................................................................. 22:201; 31:1

Equal Protection ................................................................... 23:194 Equitable Divation

application ........................................................................ 22:37 generally ........................................................................... 22:37

Equitable Jurisdiction administering .................................................................... 4:188 equity ................................................................................ 4:189 generally ........................................................................... 24:351 judge’s equity power ........................................................ 4:188

Equity Powers ...................................................................... 1:25 Estate Assets

business inventory and assets ........................................... 12:410 distribution ....................................................................... 12:411 inter vivos gifts ................................................................. 12:398 life insurance proceeds ..................................................... 12:410 satisfaction of encumbrances ........................................... 12:411 settlement of ..................................................................... 15:38 unsatisfied loans ............................................................... 12:397 valuation ........................................................................... 12:411



wrongful death action ....................................................... 12:410 Estate

attorney’s duty to .............................................................. 22:104 attorney’s duty of loyalty .................................................. 22:104 best interests of ................................................................. 27:385 distribution ....................................................................... 31:11 nonseparate Legal Entity .................................................. 21:36

Estate Fees liability to third parties ..................................................... 13:1; 30:228 .......................................................................................... 31:97 trustees ............................................................................. 13:11; 13:12

Estates expenses of adminstration ............................................... 24:195-96; 26:10 settlement expenses .......................................................... 24:195

Estates and Future Interests ................................................. 29:229 Estate Taxation

annuities ............................................................................ 5:2, 5:182 deductions ......................................................................... 13:300; 13:301 exemption ......................................................................... 6:180 federal estate tax ............................................................... 24:197 fiduciary fees .................................................................... 5:193 gifts ................................................................................... 5:5, 5:13; .......................................................................................... 24:198-99

Estoppel: Equitable Defense ................................................ 23:277 Evidence ............................................................................... 1:177-78; 14:1; ........................................................................................... 22:14

admissibility .................................................................... 25:138 attorney-client privilege .................................................... 21:37 due execution .................................................................... 25:357 marriage certificate ........................................................... 12:283 proxy marriages, Connecticut ........................................... 12:284 proxy marriages, Costa Rica ............................................. 12:283 standard of proof ............................................................... 14:1; 22:14; 29:105; . ........................................................................................ 30:297

Ex Parte Communications generally ........................................................................... 31:36



Ex Parte Orders parties’ rights .................................................................... 25:123

Execution ............................................................................. 1:191; 13:180 Ohio .................................................................................. 27:413

Executor attorney’s fees .................................................................. 31:36 compensation of ............................................................... 31:264 appointment of successor .................................................. 2:166 death of ............................................................................. 2:166 fiduciary duties ................................................................ 30:12 generally ........................................................................... 13:145; 16:24; 31:244 of deceased fiduciary’s estate ........................................... 2:166

Executors and Administrators actions of ......................................................................... 7:270 compared to trustees ....................................................... 4:15 court acceptance of ......................................................... 6:189 disqualification of ........................................................... 21:37 duties ............................................................................... 4:15; 24:199-200 duty of ............................................................................. 7:269; 25:124 duty to inventory ............................................................. 21:196 generally ......................................................................... 1:60; 31:244 holding and managing assets .......................................... 4:15 investment by .................................................................. 4:16 obligations of .................................................................. 4:15, 4:16 ........................................................................................ 24:199-200; ........................................................................................ 24:216; 24:218 removal of ....................................................................... 7:270; 16:39 ........................................................................................ 18:12; 18:13 ........................................................................................ 20:178; 23:24 rights ............................................................................... 21:37 waiver of rights ............................................................... 15:60 Exempted Bequest ............................................................... 1:11 Exemption of Organization .................................................. 1:11 Expectancy ........................................................................... 2:8 Family .................................................................................. 1:24 FDIC power over ................................................................. 10:17



fees of.............................................................................. 7:38, 7:39; 10:2 ........................................................................................ 12:467; 14:207-08 ........................................................................................ 14:358; 15:36 generally ......................................................................... 1:57; 2:4 ........................................................................................ 3:57; 8:200-01 impartiality ..................................................................... 13:165 loyalty ............................................................................ 13:165; 15:25 removal of ....................................................................... 10:17 revocation of ................................................................... 3:56 Federal Rules of Civil Procedure discovery laws................................................................. 22:84 Fees and Costs attorney ........................................................................... 2:2; 4:189 ........................................................................................ 10:1-2; 12:468 ........................................................................................ 21:117-18; 31:244 executor’s fees ................................................................ 24:105 fiduciary .......................................................................... 2:7; 3:56; 7:38-39 ........................................................................................ 10:2; 12:467; 30:228; ....................................................................................... 30:98; 31:244 generally ......................................................................... 1:69; 2:1 NY method as compared to CT method.......................... 7:264 objection to ..................................................................... 7:263 reasonableness of ............................................................ 7:38-9; 12:468; ........................................................................................ 24:105; 24:109 ........................................................................................ 25:6; 25:126 ....................................................................................... 30:11-12 records of ........................................................................ 7:39 reimbursement of ............................................................ 24:102 Fiduciaries appointment of ................................................................ 9:17; 21:132; ........................................................................................ 23:284 choice of .......................................................................... 21:132; 23:285 compensation of .............................................................. 3:287; 15:36 ........................................................................................ 16:202; 17:28; ........................................................................................ 21:117; 31:244 discretion to appoint ........................................................ 9:18; 23:281



duty to collect succession taxes ...................................... 14:35 refusal to appoint ............................................................ 9:18 Fiduciary accountability of ............................................................. 2:163; 3:80 as object of decedent’s bounty ........................................ 7:257 attorney’s duty ................................................................ 22:104 breach of trust, Delaware law ......................................... 24:250 compensation of .............................................................. 3:287; 17:28; ........................................................................................ 25:6; 29:424; ........................................................................................ 31:264; 31:365 compensation standards ................................................. 31:365 court supervision ............................................................. 15:28; 30:227 diligence ......................................................................... 13:165 disclosure ........................................................................ 15:26 discretion of .................................................................... 9:200 duty of ............................................................................. 6:3; 13:11; 13:12; ........................................................................................ 21:259; 24:368; ........................................................................................ 26:10 duty of loyalty ................................................................. 21:196; 30:228 ........................................................................................ 31:365 final accounting of fees ................................................... 17:28; 26:10 generally ......................................................................... 21:210; 23:23 generally, Delaware law ................................................. 24:251; 24:252 improper payments ......................................................... 17:237 judgment ......................................................................... 22:37-38 liability of ........................................................................ 17:50; 30:98 realtors’ duty .................................................................. 25:147 removal of ...................................................................... 16:237; 21:93-94; ........................................................................................ 23:23; 27:2 ........................................................................................ 31:264 representation..................................................... ............. 21:35 standing....................................................... .................... 21:101 Fiduciary Relationship burden of proof .............................................................. 25:12 creation of ...................................................................... 25:146; 25:155 ........................................................................................ 31:377



standard .......................................................................... 25:146 Floride Settlement Statute. ................................................... 22:84 Frivolous Conduct culpability, Ohio law ...................................................... 25:29 defined, Ohio law ........................................................... 25:29 Future Interests..................................................................... 13:306 Gift authorizing conservator ................................................... 18:35 by check .......................................................................... 17:279 constructive delivery ...................................................... 30:2 delivery .......................................................................... 30:1 generally ........................................................................ 30:1 Guardian ............................................................................... 3:1 powers, Michigan law ..................................................... 24:115-16 Guardian Ad Litem .............................................................. 1:20 Guardian and Ward .............................................................. 1:2 Michigan law .................................................................. 24:114-15 Guardianship appointment ...................................................................... 29:98 best interests test ............................................................... 26:229 duties and powers .............................................................. 26:229 generally ............................................................................ 1:21; 1:175; 5:16 ........................................................................................ 26:228; 29:19; 29:98 ........................................................................................ 31:355 of an incompetent .............................................................. 2:33; 17:298; 29:384 ........................................................................................ 18:54; 29:18; 29:19 preference .......................................................................... 26:229; 31:355 removal ............................................................................ 29:2 surviving spouse ................................................................ 5:23 Guardian of Estate of a Minor authority ........................................................................... 31:349; 31:350 benefit of a minor ............................................................. 31:350 level of care ...................................................................... 31:350 restricted account ............................................................. 31:350 use of assets....................................................................... 31:350 Hearsay Rule



exceptions ......................................................................... 23:2; 27:12 generally ........................................................................... 27:12 Montana law .................................................................... 25:167

Heirs putative father................................................................... 3:32

Holographic Wills ................................................................ 17:271 authentication, Montana law ........................................... 25:167 Montana law ..................................................................... 25:167

Implied Contracts ................................................................. 28:136; 30:240 Incapable Person .................................................................. 10:9 Incapacity ............................................................................. 6:189; 17:292 Incompetency ....................................................................... 2:33 Inheritance ………………………………………………. ..

distribution ….……………………………………..…… 29:2

state’s claim …………………………………………... 29:2; 29:2 Inheritance Rights ............................................................... 16:17; 22:7-8; 29:1 common law rule .............................................................. 24:227 courts’ powers .................................................................. 24:226; 24:228 generally .......................................................................... 29:1 Institutionalized Spouse ....................................................... 27:3 Interpretation

cash assets ........................................................................ 12:410-11 In Terrorem Clauses ............................................................. 17:58

Inter Vivos Gifts …………………………………………… 29:105

burden of proof …………………………………………. 29:105 Intestacy ............................................................................... 3:9; 8:1; 8:2 ............................................................................................. 8:228; 21:229; ............................................................................................. 22:7 Ohio .................................................................................. 27:413 partial .............................................................................. 25:270 Intestacy Shares rights of surviving spouse ................................................ 13:5; 31:255

rights of children ……………………………………….. 31:255 Intestate Shares

determination .................................................................... 13:5; 21:222 .......................................................................................... 22:84; 23:3; 24:6



disqualification ................................................................. 21:221-22 domicile ........................................................................... 13:156-57 exceptions ........................................................................ 24:6 rights ................................................................................ 22:85

Investment by Executors ...................................................... 4:16 Joint Accounts

establishment of ................................................................ 26:1, 2 Joint and Survivorship Property

college education .............................................................. 2:43 exoneration ...................................................................... 30:235 Florida ............................................................................. 30:12 generally ........................................................................... 1:46; 2:38 joint bank account ............................................................. 2:33; 30:228 liens ................................................................................. 2:39 notes ................................................................................. 2:39

Judges recusal and disqualification ............................................. 31:35

Judgment .............................................................................. 2:8 collateral attack ............................................................... 30:298 Judicial Review .................................................................... 4:16 Jurisdiction

based on domicile ............................................................. 3:60; 15:21 based on property ............................................................. 3:59 common law ..................................................................... 3:59 equitable ........................................................................... 4:3; 4:188 .......................................................................................... 4:189; 9:201 generally ........................................................................... 2:4, 2:7; 3:64 .......................................................................................... 4:3; 9:10 .......................................................................................... 13:155; 13:157 implied powers ................................................................. 7:37 inter vivos trustee ............................................................. 2:4; 9:200 .......................................................................................... 29:423 limited .............................................................................. 7:37 over title ........................................................................... 1:1,1:68; 1:185 .......................................................................................... 25:151 paternity ........................................................................... 8:195;



probate court..................................................................... 2:4; 12:266-67; .......................................................................................... 27:378; 29:104; .......................................................................................... 29:105; 31:17; .......................................................................................... 31:98; 31:243-44 proceedings ...................................................................... 12:267 statutory ............................................................................ 4:3; 12:428 subject matter ................................................................... 3:64; 12:428 .......................................................................................... 18:35; 18:49 subject matter, New York law .......................................... 24:39 superior court ................................................................... 27:378 to construe inter vivos trust .............................................. 21:2 to construe testamentary trust ........................................... 21:2 to construe trust ................................................................ 21:2 to construe will ................................................................. 1:179 trust................................................................................... 2:4; 29:443 trustees ............................................................................. 21:3; 29:443 Uniform Gifts to Minors Act ............................................ 12:427 Uniform Transfer to Minors Act ..................................... 12:428

Laches .................................................................................. 14:358 administrative claims ...................................................... 26:10 equitable defense .............................................................. 23:277 Legal Father

adjudication ...................................................................... 3:32 Legal Fees ........................................................................... 13:165-66; 23:33

factors ............................................................................... 10:1, 10:2 Legal Party ........................................................................... 1:19 Legislative Intent ................................................................. 2:23-24; 5:2; 22:8 ….. ....................................................................................... 23:4 Letters of Administration application for original letters, New York law .................. 26:364 de bonis non, New York law ............................................. 26:364 judicial sua sponte power, New York law ........................ 26:364 kinship, New York law ..................................................... 26:364 materially false facts, New York law ................................ 26:364 protection of estates, New York law ................................. 26:364 revocation, New York law ................................................ 26:364



standing for creditors, New York law ............................... 26:364 standing to revoke, New York law .................................... 26:363 Life Estate

beginning of ..................................................................... 15:15 computation of ................................................................. 15:15 taxation of ....................................................................... 15:15

Living Wills limited objective test ....................................................... 22:184 pure objective test ........................................................... 22:184 requirements .................................................................... 22:184 subjective test .................................................................. 22:184

Lost Will burden of proof ................................................................. 2:149; 2:150 contents ............................................................................ 2:149 generally ........................................................................... 2:39; 2:149 proof of ............................................................................. 2:149; 2:150 revocation ......................................................................... 2:150; 12:301

Maritime Law duty of reasonable care ..................................................... 22:83 application ........................................................................ 22:83 liabilitiy ............................................................................ 22:83

Marriage common law ..................................................................... 15:53 parents of illegitimate child .............................................. 3:32 recognition ....................................................................... 23:193

Medicaid elective shares .................................................................. 5:23 eligibility .......................................................................... 5:22; 12:457 .......................................................................................... 17:175 resources available ........................................................... 12:458 resource limitations .......................................................... 5:22 minimum monthly maintenance needs allowance ............ 27:3

Medicaid Estate Recovery Program.................... ................. 21:16 capitation payments ......................................................... 21:17 generally .......................................................................... 21:17 notice ............................................................................... 21:17; 21:18



Mortgage execution of second promissory note ............................... 12:401 satisfaction of original obligation ..................................... 12:401

Motion for transfer ........................................................................ 2:23 leave to amend.................................................................. 22:125 to strike ............................................................................. 27:12 to dismiss .......................................................................... 2:7; 22:124

Motion to Stay Appeal of Probate Court ................................................... 27:385

Name Change ....................................................................... 1:182; 8:205 of a minor ......................................................................... 8:206; 29:37; 30:109 .......................................................................................... 31:360 evidence .......................................................................... 30:109; 31:360

Named Beneficiaries ........................................................... 16:212 Natural Objects of Bounty

exclusion under will ......................................................... 28:2 Next of Kin

rights ................................................................................. 20:184 Non-testamentary Transfers

insufficient bequest .......................................................... 24:7 joint bank accounts ........................................................... 13:6

Notice ................................................................................... 3:280; 4:8; 4:9 Notice of Pendency

cancellation ...................................................................... 21:247-49 generally ........................................................................... 21:247-48

Obligations of Parenthood .................................................. 28:10; 30:305 Ohio Rule of Civil Procedure 11 .......................................... 25:30 Omitted spouse rule

generally ........................................................................... 27:13 Order .................................................................................... 2:8 Ownership ............................................................................ 9:11; 12:401 Parentage .............................................................................. 13:312; 23:194; 29:2; .......................................................................................... 29:37 alternative methods .......................................................... 23:192, 194 common law ..................................................................... 23:192



presumption...................................................................... 23:194 procedures ........................................................................ 23:192

statute of limitations for action of .................................... 13:312 Parental Rights ..................................................................... 17:261

Artificial insemination ..................................................... 29:37 determination of minor’s best interest .............................. 22:116 generally ........................................................................... 24:98; 29:19; 30:200 reinstatement .................................................................... 22:116 removal ............................................................................. 24:97; 30:305 termination ....................................................................... 19:205–06; 20:22

Parol Evidence ..................................................................... 18:320; 22:25 generally .......................................................................... 24:14; 27:13 scrivener’s error ............................................................... 22:25

Party ..................................................................................... 1:19 Paternity

acknowledgment of .......................................................... 23:194; 29:376 burden of proof ................................................................. 8:196; 29:376 determination.................................................................... 23:194; 29:375 equitable estoppel ............................................................. 17:131 full faith and credit ........................................................... 23:195 generally ........................................................................... 8:196; 21:26; 22:7 .......................................................................................... 22:14 jurisdiction ....................................................................... 8:195; 23:195; 29:375 posthumous ...................................................................... 17:150; 21:26 .......................................................................................... 29:375 presumptions .................................................................... 18:60; 22:7 presumptions, Delaware law ........................................... 25:365

Patient Advocate Michigan law ................................................................... 24:115 Patient Transfers .................................................................. 9:195

Personal Claims

notice and hearing ………………………………………. 30:11 Power of Attorney

accounting of ................................................................... 16:228; 21:260 construction of .................................................................. 8:201



duties ................................................................................ 24:360 fidiciary duty .................................................................... 27:391 generally ........................................................................... 8:200; 21:258-60 .......................................................................................... 24:360; 27:390 .......................................................................................... 31:377

Pre-emption .......................................................................... 10:17 Preliminary Injunction ......................................................... 21:237-38 Pre-nuptial Agreement

duty of disclosure in ......................................................... 7:24 generally ........................................................................... 7:24; 27:13

Prior Pending Action Doctrine ............................................. 21:3 Probate

appeals .............................................................................. 1:68; 3:280-81 bond .................................................................................. 2:163; 3:80

Probate Court accounting ........................................................................ 10:202 confidentiality of records ................................................. 10:203 decree ............................................................................... 2:8; 3:48 duty................................................................................... 22:104; 23:284 filing ................................................................................ 31:35 jurisdiction ....................................................................... 2:4; 10:10; 23:267 .......................................................................................... 10:202; 21:1; 22:14 .......................................................................................... 22:214; 23:128-29 .......................................................................................... 24:350; 25:266; .......................................................................................... 27:147; 29:365; .......................................................................................... 31:22; 31:364 order ................................................................................. 2:8 powers .............................................................................. 8:200; 12:444; .......................................................................................... 23:267, 269, 285 .......................................................................................... 21:196; 22:2 .......................................................................................... 23:129-30, 132 .......................................................................................... 24:351; 26:11; .......................................................................................... 27:148; 27:385; .......................................................................................... 29:424; 30:220 .......................................................................................... 30:298; 31:364 procedures ........................................................................ 23:2; 22:83



.......................................................................................... 22:98; 22:214 public access to court files ............................................... 10:203

Probate Court Authority ascertaining distributee ..................................................... 3:65 change of name ................................................................ 8:205 claims against the estate ................................................... 4:8 equitable powers .............................................................. 26:11 power to order partition ................................................... 26:11 sale of real property .......................................................... 3:64

Probate Court Discretion ...................................................... 1:25 Probate District of West Hartford ........................................ 2:23 Probate of Wills

ancillary ............................................................................ 1:57; 25:264 creditor protection ............................................................ 1:57

Procedure ex parte orders .................................................................. 5:9 final accounting ............................................................... 15:315 notice ................................................................................ 5:9

Property, Joint/Survivorship college education .............................................................. 2:43 deeds, attested by one or no witnesses ............................. 12:295 deeds, presumption of delivery ........................................ 12:295 generally ........................................................................... 1:46; 2:38 joint bank account ............................................................ 2:33 jurisdiction ....................................................................... 3:59 liens .................................................................................. 2:39 notes ................................................................................. 2:39 valuation ........................................................................... 20:7

Public Assistance exceptional circumstances standard .................................. 27:3 significant financial duress standard ................................. 27:3 fair hearing ........................................................................ 27:3 Public Interest: Representation of ........................................ 23:270 Putative Father

claims for paternity .......................................................... 4:11 dismissal of claims ........................................................... 4:11



jurisdiction of claims ........................................................ 4:11-12 Real Estate

generally ........................................................................... 21:236; 25:137 sale of ............................................................................... 2:160; 25:135 .......................................................................................... 25:143

Realtors’ Code of Ethics & Standards of Practice Article 2 ........................................................................... 25:141 Article 4 ........................................................................... 25:140 Article 9 ........................................................................... 25:140 Article 13 ......................................................................... 25:141 Article 14 ......................................................................... 25:141

Refusal of Treatment ............................................................ 22: 185 Reimbursement Principle ..................................................... 4:187 Rejection of Claim .............................................................. 30:215 Remedies breach of trust, Delaware law .......................................... 24:249

quantum meruit ................................................................ 31:346 state of limitations against decedent’s estate ................... 31:355

Removal of Executor ........................................................... 22:350 conflict of interest ............................................................ 22:350

Removal of Trustee .............................................................. 17:267 Residue of Estate .................................................................. 10:28 Res Judicata ......................................................................... 6:4; 10:17 ............................................................................................. 25:266 Resulting Trusts ................................................................... 2:34 Resolution of Claims

Settlement agreement ....................................................... 30:228 Retirement ............................................................................ 17:111 Retroactivity

application, retroactive effect ........................................... 12:268 Revocation

alteration by partial revocation ........................................ 25:22 effect of alteration ........................................................... 25:21; 25:24 generally ........................................................................... 1:57; 1:191 .......................................................................................... 1:201; 12:302 .......................................................................................... 13:179; 13:180



.......................................................................................... 25:20; 25:21 lost codicil ....................................................................... 25:19 lost will ............................................................................. 2:150; 12:301 partial .............................................................................. 25:21 subsequent marriage ......................................................... 15:161

Right of Retainer .................................................................. generally ........................................................................... 27:152-53

Rights of Claimants .............................................................. 18:49 Rights of Incompetents ........................................................ 3:2 Right to Die Laws

duty of conservator/guardian ............................................ 3:267 generally ........................................................................... 3:266 generally, Michigan law ................................................... 24:116; 24:116-17 legal guardian defined ...................................................... 3:267 medical liability ................................................................ 3:267 substantive right ............................................................... 3:267

Sanctions generally, Delaware law .................................................. 25:368 generally, Ohio law .......................................................... 25:31

Settlement of estates ............................................................ 1:24 Simultaneous Death Act....................................................... 17:338 Social Services

qualification for ................................................................ 15:46 Sovereign Immunity

generally ........................................................................... 30:98 Specialty ............................................................................... 2:38 Standard of Proof ................................................................ 14:1-2 Standing

aggrieved party ................................................................ 3:47 generally ........................................................................... 1:19; 14:189 .......................................................................................... 18:36 objection to jurisdiction .................................................... 3:60 other litigation .................................................................. 3:48 removal of administratrix ................................................. 17:255

Standing in Loco Parentis .................................................... 17:286 Statute of Limitations



administrative expenses ................................................... 26:10 breach of fiduciary duty ................................................... 21:258; 23:276 breach of trust ................................................................... 23: 277 continuing obligation ....................................................... 22:124 contracts ........................................................................... 22:124 conversion ........................................................................ 21:258 generally ........................................................................... 13:312; 21:258; .......................................................................................... 23:277; 26:9; 30:215 tolling ............................................................................... 22:125

Statute of Nonclaims ............................................................ 1:46 Statute of Wills .................................................................... 3:9

requirements ..................................................................... 3:180 Statutory Construction ......................................................... 4:206; 6:179 ............................................................................................. 12:288; 13:301 ............................................................................................. 29:6

determination, mandatory or directory ............................. 12:287; 30:98 multiple interpretations .................................................... 27:148 plain meaning rule ambiguity .......................................... 30:98 plain meaning rule ............................................................ 27:148; 30:97 .......................................................................................... 31:256 presumption ...................................................................... 24:201

Statutory Interpretation C.G.S. § 12-344(b)(3) ...................................................... 10:29 C.G.S. § 12-350(k) ........................................................... 10:29 C.G.S. § 45a-175 .............................................................. 10:202-03 C.G.S. § 45a-257a ............................................................ 24:6 C.G.S. § 45a-360 .............................................................. 9:188 C.G.S. § 45a-655 .............................................................. 10:9 C.G.S. § 45a-656 .............................................................. 10:9 C.G.S. § 45a-731(a) ......................................................... 24:17-18 generally .......................................................................... 13:156; 24:7; .......................................................................................... 24:195; 30:97; 30:98 N.Y. Surr. Ct. Proc. Act Law § 707(2) ............................ 23: 281 Ohio .................................................................................. 27:413 spouse, New York law ..................................................... 24:40 wills ................................................................................. 24:18



Statutory Share abandonment ................................................................... 15:273; 15:289 generally ........................................................................... 24:194; 24:198 income payable................................................................. 24:204

proxy marriage ..................................................................... 12:284 surviving spouse .............................................................. 15:267; 15:279

Statutory Support Allowance ............................................... 1:198; 6:184 Sterilization.............................................................. ............ 21:10

best interests of the respondent ......................................... 21:11 best interests of the respondent, factors ............................ 21:11 inability to consent ........................................................... 21:10 proponent’s good faith ...................................................... 21:12 reasonable opportunity for sexual activity ........................ 21:11

Subscription ......................................................................... 3:10 Substituted Judgment

doctrine of ........................................................................ 3:2 Succession Taxation

burden on recipient of non-testamentary property ........... 14:35 computation of ................................................................. 15:2; 15:3 custodial remittance ......................................................... 14:35 generally ........................................................................... 1:45; 194-95 .......................................................................................... 2:21; 10:28-29 .......................................................................................... 12:288 proration of ....................................................................... 14:35

Summary Judgment ............................................................. 21:258-59; 23:277; .......................................................................................... 26:117; 27:12 .......................................................................................... 29:456-57 burden of proof, Montana law ......................................... 25:166; 25:167 evidence ........................................................................... 27:12 Montana law ..................................................................... 25:166

Support child’s assets..................................................................... 4:22 criteria .............................................................................. 4:22 court ordered .................................................................... 27:2

Support Allowance ............................................................... 5:187 Surrogate Court



powers .............................................................................. 22:38 Surrogate Decision-making.................................................. 22:185 Taxation

amendments...................................................................... 1:64 ascertainable standard ...................................................... 1:188 assessments ...................................................................... 1:9 comfortable support ......................................................... 1:188 construction ...................................................................... 7:17 deduction .......................................................................... 9:26 domicile ............................................................................ 13:18 exemption, burden of proof .............................................. 6:179 fractional values ............................................................... 9:39 generally ........................................................................... 1:38; 1:45 gifts................................................................................... 7:16 gross taxable estate ........................................................... 1:194 interest .............................................................................. 2:21 joint accounts ................................................................... 9:39; 16:1 proration, death taxes paid ............................................... 12:116 refunds .............................................................................. 1:64 revise computations .......................................................... 1:9 succession taxes ............................................................... 1:45; 1:194-5 .......................................................................................... 2:21; 10:28-29 temporary payment ........................................................... 2:21 time of .............................................................................. 9:39 transfer ............................................................................. 7:16 transferor’s intent ............................................................. 1:34

Taxation, Estate annuities ........................................................................... 5:2, 5:182 deductions ........................................................................ 13:300-01 exemption ......................................................................... 6:180 fiduciary fees .................................................................... 5:193 generally ........................................................................... 17:317 gifts................................................................................... 5:5, 5:13 inheritance ........................................................................ 15:64 state .................................................................................. 17:317

Taxation, Succession



generally ........................................................................... 1:45; 1:194-5 .......................................................................................... 2:21; 10:28-29

Temporary Administrator appointment of ................................................................. 27:385

Termination of Parental Rights abandonment .................................................................... 21:74; 28:11;

......................................................................................... 30:200; 30:306 abandonment by incarcerated parent ................................ 28:12 attorney general ................................................................ 26:354 best interests of the child .................................................. 21:75; 26:28, 29, .......................................................................................... 37, 38; 26:354; 30:200 burden of proof ................................................................. 21:73; 28:10; 29:366 .......................................................................................... 30:199-200; 31:355 consensual termination ..................................................... 26:354 consent of parent to termination ....................................... 26:353 denial of petition ............................................................. 26:28, 37 generally ........................................................................... 3:285; 15:305 .......................................................................................... 16:31; 17:261; .......................................................................................... 26:27–29, 36, .......................................................................................... 37, 39; 28:11; 29:2 grounds ............................................................................. 28:11 hearing .............................................................................. 21:72-73 lack of ongoing parent-child relationship ......................... 28:11 legislature’s intent ............................................................ 26:354 non-consensual termination.............................................. 26:354 ongoing parent-child relationship ..................................... 21:74-75; 28:11; 30:200 parents’ financial conditions ............................................ 26:354 post-adoption .................................................................... 26:39 public policy ..................................................................... 26:355 statutory grounds .............................................................. 21:73; 29:366

Testamentary Capacity burden of proof ................................................................. 6:188-89; 7:249 .......................................................................................... 21:101; 22:2; .......................................................................................... 24:344; 27:242; .......................................................................................... 28:2; 29:457 .......................................................................................... 30:114



burden of proof, Montana law ......................................... 25:168 burden shifting ................................................................ 25:357 burden shifting, Montana law .......................................... 25:168 determination of ............................................................... 7:249; 24:344 effect of ............................................................................ 10:212 evidence of ....................................................................... 7:224; 7:249 .......................................................................................... 10:212; 17:72 .......................................................................................... 25:358; 27:242; 30:114 generally ........................................................................... 1:75; 3:22 .......................................................................................... 5:197; 7:224 .......................................................................................... 7:225; 10:212 .......................................................................................... 24:344; 24:345 .......................................................................................... 25:357; 25:358; .......................................................................................... 26:106; 26:107; .......................................................................................... 27:378; 28:2 generally, Montana law ................................................... 25:168 Ohio .................................................................................. 27:413 presumption of ................................................................. 10:212; 22:2; .......................................................................................... 27:242; 28:1 rebuttable presumption ..................................................... 28:1 requirements of................................................................. 6:187; 26:107

Testamentary Intent ............................................................. 1:68; 1:201 ............................................................................................. 10:17; 12:409 ............................................................................................. 12:410; 12:451; ............................................................................................. 22:350 Testamentary Trust

accounting ........................................................................ 6:210 allocation of principle and income ................................... 6:210 distribution ...................................................................... 29:229 formation .......................................................................... 26:98

Testator burden of proof ................................................................. 22:37 determination.................................................................... 13:172; 15:28 .......................................................................................... 15:147; 17:271 .......................................................................................... 22:25

intent ............................................................................... 13:171; 24:365



power ............................................................................... 23:271 Testimony

burden of proof, compensation for services ..................... 12:443 expert witness .................................................................. 29:384 preclusion ......................................................................... 21:236; 21:237 weight of evidence, living claimant ................................. 12:444

Transfer of Property ............................................................ 1:185; 22:98 Trust Assets ......................................................................... 15:321 Trust Administration

generally ........................................................................... 27:154 Trust Funds

interest .............................................................................. 3:45 Trustee

authority ........................................................................... 23:271; 24:214 breach of trust, Delaware law ........................................... 24:249 defense to breach of trust ................................................. 24:252 defense to breach of trust, Delaware law ......................... 24:252 discretion of ...................................................................... 19:28, 29; 23:271 .......................................................................................... 24:365; 24:368 .......................................................................................... 29:423; 29:424 discretion of, Pennsylvania law ....................................... 25:277 duties of ........................................................................... 8:231; 19:28; .......................................................................................... 24:215; 24:250 .......................................................................................... 29:424 duties of, Pennsylvania law ............................................. 25:276 duty of loyalty, Delaware law .......................................... 24:250 fees ................................................................................... 17:279 functions of ...................................................................... 8:231 liability of ........................................................................ 8:231; 21:259 .......................................................................................... 24:365 liability of, Delaware law ................................................. 24:252; 24:253 obligations of ................................................................... 10:17; 15:46 removal of ....................................................................... 10:17; 17:267; .......................................................................................... 23:24; 24:365 rights of in a will .............................................................. 18:36 settlor’s intent .................................................................. 29:424



standard of care ................................................................ 8:231 Trusts

authority to create ............................................................. 15:46 beneficiary accounts ........................................................ 26:2 class gifts .......................................................................... 21:26 construction of .................................................................. 9:201; 13:306 .......................................................................................... 15:48; 21:25 constructive ...................................................................... 17:9 creditor’s reach ................................................................. 7:4 disabled individuals .......................................................... 15:126; 29:5 distribution ....................................................................... 23:129 elements ........................................................................... 22:98; 26:98; 31:29 exercise discretion under .................................................. 7:4; 12:458 extrinsic evidence ............................................................ 15:257 form, determination of ..................................................... 21:27 generally ........................................................................... 14:358; 21:236; .......................................................................................... 23:129 imposition, equitable trust ................................................ 12:295-6 intended beneficiaries ....................................................... 26:2 living trusts ....................................................................... 15:133 payments from .................................................................. 7:5-6 revocation of..................................................................... 20:14 settlor’s intent ................................................................... 22:98 settlor’s intent, Pennsylvania law .................................... 25:276 special needs..................................................................... 15:122; 26:98; .......................................................................................... 26:99; 29:6 spendthrift ........................................................................ 7:4; 12:458-59 supervision ...................................................................... 13:172 supplemental needs .......................................................... 26:98-99 support .............................................................................. 7:5; 12:459 termination of ................................................................... 23:269 validity ............................................................................. 21:236; 23:130

Undue Influence attorney’s fees .................................................................. 15:173 burden of proof ................................................................. 3:24, 3:42 .......................................................................................... 5:197; 6:189



.......................................................................................... 7:225; 10:212 .......................................................................................... 18:6; 19:1; 19:9 .......................................................................................... 21:101; 21:132 .......................................................................................... 21:210; 22:2; .......................................................................................... 23:131; 24:345 .......................................................................................... 25:12; 25:146 .......................................................................................... 25:360; 26:107 .......................................................................................... 26:224; 27:378; .......................................................................................... 28:2; 29:235; .......................................................................................... 30:114-15; 30:298 burden of proof, New York law ....................................... 26:118 circumstantial evidence ................................................... 25:13; 26:107 .......................................................................................... 26:224; 27:378; 30:114 elements of ....................................................................... 6:5; 21:132; 22:2 .......................................................................................... 23:130; 25:13; .......................................................................................... 25:148; 26:107; .......................................................................................... 27:378; 30:298 evidence of ....................................................................... 6:4; 6:188; .......................................................................................... 7:225; 10:212; .......................................................................................... 18:6; 22:2; .......................................................................................... 25:13; 27:13; 30:298 execution of will ............................................................... 17:65 fiduciary relationship ....................................................... 5:197; 17:71; .......................................................................................... 25:12; 25:13; .......................................................................................... 25:146; 26:224 generally ........................................................................... 3:23-24; 6:3; .......................................................................................... 7:225; 10:212; .......................................................................................... 17:72; 18:6; .......................................................................................... 19:8; 21:210 .......................................................................................... 23:130-31; 25:13; .......................................................................................... 25:157; 25:360; .......................................................................................... 26:107-08; 26:224 .......................................................................................... 27:13; 28:2; 30:114 generally, New York law ................................................. 26:118 intent of ............................................................................ 6:5 inter vivos transfer ........................................................... 25:147



Maryland law ................................................................... 27:264-65 not favored ....................................................................... 7:225; 10:212 presumption ...................................................................... 3:24; 3:40; 21:101; .......................................................................................... 25:147; 25:361 shifting of burden of proof ............................................. 19:2; 25:12; ......................................................................................... 25:146; 25:147 ......................................................................................... 25:360 standard exception ........................................................... 19:2 standards of ...................................................................... 6:189; 7:225; .......................................................................................... 10:212; 19:1 .......................................................................................... 23:131; 25:156

Uniform Child Custody and Jurisdiction Enforcement Act “home state” .................................................................... 24:94 jurisdiction ...................................................................... 24:94 standard of review ........................................................... 24:97 Unjust Enrichment elements .......................................................................... 26:11 generally .......................................................................... 21:18; 26:10 trial court discretion ........................................................ 26:10 Virtual Visitation ................................................................. 17:361 Waiver .................................................................................. 23:277 Ward

estate management ........................................................... 15:46 Will Contest

burden of proof ................................................................. 3:83; 21:210 consisting of .................................................................... 30:98 expenses of defending ..................................................... 31:98 fraud ................................................................................. 15:87; 15:88 .......................................................................................... 29:457-58 interested parties ............................................................... 15:87

Will Provisions restraints of marriage ........................................................ 3:65

Wills ademption ......................................................................... 18:2 admission ......................................................................... 13:155; 15:293



.......................................................................................... 21:93; 25:264 .......................................................................................... 26:223 anti-lapse statute ............................................................... 29:230 appointment of executor ................................................... 13:157 burden of proof - execution .............................................. 6:3; 26:106 .......................................................................................... 26:224 burden of proof - execution, New York Law ................... 26:118 burden of proof - fraud ..................................................... 3:83; 22:98 burden of proof - generally............................................... 19:9; 25:357; .......................................................................................... 26:106; 29:235 burden of proof - shift of .................................................. 6:3; 9:198; 26:106 .......................................................................................... 26:224; 29:235 burden of proof - shift of, New York law ......................... 26:118 class gifts .......................................................................... 8:216 conclusiveness of probate of ............................................ 7:263 condition precedent in ...................................................... 7:244 conditions ......................................................................... 13:149 conditions of privilege ..................................................... 13:149; 13:156 conflicting with public policy .......................................... 7:38 construction ...................................................................... 3:65; 6:211; .......................................................................................... 7:243; 8:231; .......................................................................................... 10:28; 13:306-08; .......................................................................................... 14:195-96; 14:363; .......................................................................................... 18:25; 18:30; .......................................................................................... 22:25; 24:16; 30:221; .......................................................................................... 31:11 contest of .......................................................................... 6:187 contesting ......................................................................... 26:106 contingency phrases ........................................................ 13:157 contrary intent in .............................................................. 8:228 decedent’s estate ............................................................... 18:1 determination of form ..................................................... 13:150 devises of real property .................................................... 18:1 discretionary admission .................................................... 19:10 dissolution of marriage .................................................... 13:155 distribution of shares ........................................................ 14:363; 21:228



......................................................................................... 23:24 due execution ................................................................... 3:83; 23:129 .......................................................................................... 25:20; 25:357 due execution, New York law .......................................... 26:118; 29:457 effect of a subsequent marriage ........................................ 13:5; 24:4-5 effect of presuming sanity ................................................ 26:107 exception to principle of construction ............................. 29:230 execution ......................................................................... 13:149-50; 21:229; .......................................................................................... 26:106; 26:223; 27:377; .......................................................................................... 30:114; 31:29 execution, New York law ................................................. 26:118 extrinsic evidence ............................................................. 15:143; 24:14; .......................................................................................... 24:19; 25:271; .......................................................................................... 28:136; 30:221 extrinsic evidence of scrievener’s error............................ 28:136 fraud ................................................................................. 15:87 fraud, New York law ........................................................ 26:118 generally ........................................................................... 1:60; 7:243 .......................................................................................... 8:216; 8:228 .......................................................................................... 13:156; 26:98 holographic wills ............................................................. 13:149; 27:160-61 impossible conditions in ................................................... 7:244 intent ................................................................................ 31:10 invalid amendments ........................................................ 13:171 invalidation due to undue influence ................................. 19:9 lapse ................................................................................. 14:363 lost .................................................................................... 2:149; 27:161 Ohio .................................................................................. 27:413 partial invalidity ............................................................... 19:9; 22:7 payment of federal estate taxes ........................................ 12:116 period of operation .......................................................... 13:156 property ............................................................................ 13:156 reformation ....................................................................... 22:39 requirements of................................................................. 3:9; 25:12; 29:234 requirements of, Montana law ......................................... 25:166; 25:168 revocation ......................................................................... 21:228



right of election ................................................................ 5:23 rights of elevtion, New York law .................................... 29:462 rights of trustees ............................................................... 18:35 signature requirement ....................................................... 26:106 strict compliance with statute ........................................... 26:106 testamentary capacity, New York law .............................. 26:118 testator’s intent ................................................................. 7:38; 21:228; .......................................................................................... 22:26; 24:15; 26:98; .......................................................................................... 29:97; 29:98; .......................................................................................... 30:220; 30:221; 31:10 testator’s state of mind ..................................................... 24:15-16 undue influence ................................................................ 19:9; 20:163; 29:235 validity ............................................................................. 23:131; 26:108 .......................................................................................... 27:160-61; 29:105; 29:235

Wrongful Death Proceeds amount of recovery, New York law ................................. 24:40 disqualification, New York law ....................................... 24:40 distribution, New York law .............................................. 24:40