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Estate Planning Council of Hampden County February 14, 2012 BULKLEY, RICHARDSON AND GELINAS, LLP.

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Presentation on theme: "Estate Planning Council of Hampden County February 14, 2012 BULKLEY, RICHARDSON AND GELINAS, LLP."— Presentation transcript:

1 Estate Planning Council of Hampden County February 14, 2012 BULKLEY, RICHARDSON AND GELINAS, LLP

2 Elizabeth H. Sillin Bulkley Richardson 1500 Main Street Springfield, MA William E. Hart Bulkley Richardson 7 N. Pleasant Street Amherst, MA

3  We have “conservators” and no more “guardians of the estate.” [MUPC §1-201(8)]  We can now call them “descendants” and not “issue.” [MUPC §1-201(9)]  “Devise” when a noun is a testamentary gift of real or personal property. “Devise” as a verb means “to dispose of real or personal property by will.” [MUPC §1-201(10)] Forget “bequeath,” “bequest” and “legacy.” 3

4  “Personal representative” includes both an executor of a will and an administrator of an intestate estate. [MUPC §1-201(37)]  We will have “testacy proceedings” to formally “establish a will or determine intestacy.” [MUPC §1- 201(52) and Article 3, Part 4]  “Informal Probate” obviates appointment of “temporary executors.” [See Mass. comment following MUPC §3-614] 4

5  The MUTC introduces the term “principal place of administration” of a trust which may be designated in the trust as long as the trustee’s principal place of business is there, the trustee resides there or “all or part of the administration occurs in the designated jurisdiction.” [MUTC §108(a) emphasis added] MUTC §204 defines the principal place of administration of a testamentary trust as the location of the court where the will was probated.  We will have “virtual representation” under MUTC Article 3 for trust proceedings and non-judicial settlements. 5

6 “Equally near equally dear” Mike Brady and Carol Brady Greg Peter Bobby Marcia Jan Cindy | | | | | | 1/61/6 1/6 1/6 1/6 1/6 v w x y z 6

7 If “per stirpes” and Greg and Peter are deceased Greg Peter Bobby Marcia Jan Cindy | | | | | | 1/6 1/6 1/6 1/6 1/6 1/6 v w x y z 1/12 1/12 1/18 1/18 1/18 1/6 ÷ 2 = 1/12 each 1/6 ÷ 3 = 1/18 each 7

8 Per capita at each generation [MUPC §§§ 2-103, 2-106, 2-709] Greg Peter Bobby Marcia Jan Cindy | | | | | | 1/6 1/6 1/6 1/6 1/6 1/6 v w x y z 1/15 1/15 1/15 1/15 1/15 (1/6 x 2=2/6=1/3; 1/3 ÷ 5 = 1/15 each) Can still specify “per stirpes” (or the synonymous “by right of representation”) in will – important to discuss with clients. 8

9  UPC Article III, Part 3 establishes “Informal Probate” of a will (original only) and “Informal Appointment” of a personal representative (“PR”) when neither the surviving spouse nor any heir is incapacitated or a minor. [MUPC §3-303(a)(8)]  Done by a magistrate. [MUPC §3-302]  As quickly as 7 days after death! [MUPC §§3-302 and 3-307(a)] 9

10  After giving 7 days’ notice to heirs by “ordinary mail.” [MUPC §3-306(a)]  Publication of notice in the newspaper is after probate (no later than 30 days). [MUPC §3-306(b)]  An informally appointed PR’s “powers pertaining to the office [are] fully established [and] not subject to retroactive vacation.” [MUPC §3-307(b)] 10

11  An “informally probated will is authority to administer and distribute the estate…” [MUPC §3-703(b)] “without order…or direction of the court…” [MUPC §3- 704]  “The personal representative shall take possession or control of the decedent’s property” whether appointed formally or informally. [MUPC §3-709]  Under the MUPC, filing an inventory [MUPC §3-706] and accounting [MUPC §§ and ] with the court are optional. 11

12  Planning tip: If a client is getting married make sure to look at the will.  Example: “I, Bill B, leave all my estate, including my football collection, to my children, Gisele and Tom…”  Under current, soon to be prior law, if Bill got married, will was revoked. [M.G.L.c.191 §9]  Mary, new wife, takes under rules of intestacy. [M.G.L.c. 190 § 1] 12

13  Under new law, spouse is entitled to intestate share of assets not devised to child of testator. [MUPC 190B §2-301] Unless: ◦Will made in contemplation of marriage ◦Will states it is effective regardless of later marriage ◦Testator has provided for spouse outside of will 13

14  Bill marries Mary and dies leaving all his estate to his children. ◦Bill’s will not revoked. ◦Devises to his children are preserved. ◦Mary gets intestate share of assets not devised to his children. ◦In this example, Mary gets nothing under will – but she is entitled to exempt property ($10k) [MUPC §2-403] and discretionary family allowance during the period of administration [MUPC §2-404] and she can elect against will. [GL c. 191 § 15] 14

15  Example: “I, Bill B, leave all my autographed footballs and $200,000 to the Football Hall of Fame and the rest of my estate, real and personal, to my children, Gisele and Tom…”  Bill marries Mary and dies ◦Mary gets intestate share of assets not devised to children. ◦New rules of intestacy [MUPC §2-102] Mary gets first $100,000 and half the balance, ($50,000 here) and half the autographed footballs, for a total of $150,000 plus half of the footballs. 15

16  “Upon the death of a person, the decedent’s real and personal property devolves to the persons to whom it is devised…or in the absence of testamentary disposition, to the decedent’s heirs…” [MUPC §3-101 emphasis added]  But “every personal representative has a right to, and shall take possession or control of, the decedent’s property, except that any real property…may be left with or surrendered to the person presumptively entitled thereto…” [MUPC §3-709 emphasis added] 16

17  So we expect to see deeds of distribution from personal representatives to devisees of real estate. [referred to in MUPC §3-908 and the comment following MUPC §3-913]  The statutory powers (listed in MUPC §3-715 as authorized “transactions”) of all personal representatives, held without needing court authority or being set forth in the will, include repairing, razing, subdividing, leasing, removing natural resources from and abandoning real property [MUPC §3-715(7)-(11)] but not mortgaging or selling real property. 17

18  So wills should continue to authorize PRs to sell and mortgage real property without court authority.  How about an early sale under power contained in the will by an informally appointed PR? ◦An informal PR has full powers not subject to retroactive vacation. [MUPC §§3-307(b) and 3-704] ◦But a formal testacy proceeding can “set aside an informal probate of a will” [MUPC §3-401] if commenced within three years of death. [MUPC §3-108]  Will the buyer take clear title? Go ask REBA! 18

19  Example: IRA Beneficiary designation for Newt Gingrich 100% to Marianne Gingrich signed, Newt  Newt is now divorced from Marianne and married to Callista.  Under current MA law, Marianne would receive the IRA proceeds if Newt forgot to revoke. 19

20  Under new law divorce causes revocation of any revocable disposition or appointment to former spouse and to relative of former spouse. [MUPC §2- 804(b)] ◦Will ◦Revocable trust ◦Life insurance ◦Retirement plans ◦TOD accounts 20

21  Divorce also revokes provisions naming former spouse and relatives of former spouse: power of attorney, general or limited power of appointment, and nomination of former spouse as trustee, personal representative, guardian, conservator, agent under POA.  Those provisions not revoked are treated as if former spouse disclaimed or has died.  Severs joint tenancies and transforms them into tenancies-in-common. [MUPC §2-804(b)(2)]  Does not automatically insert new spouse as beneficiary. 21

22  Massachusetts lawyers have never liked testamentary trusts because the trustees have had to account annually to the court, and that is expensive and open to inspection by others.  But people whose trusts are quite contingent, e.g., trusts for young children, prefer the simplicity of a single document.  So we will have MUTC §201(b), which states: “A trust is not subject to continuing judicial supervision unless ordered by the court.” 22

23  Example: “My Memorandum 1. The flowered casserole dish from Aunt Gertie to Martha 2. My plastic golf clubs to Tiger signed, The Donald”  Under current law, may make a memorandum separate from the will, but is not admissible or binding.  May make reference to items not specifically disposed of by the will. 23

24  Will must refer to the written statement and state that the memo shall be binding.  Must be signed by the testator and describe items with reasonable specificity. Can be prepared before or after the will is executed. Will be admissible as part of the will.  Can dispose only tangible personal property (cannot be money).  Essentially may make it binding. [MUPC §2-513] 24

25  Example: “I name Madonna to serve as my Personal Representative, but if she is not willing or is unable to serve, I give her the authority to name a person to serve in her place and stead…”  Under new law person may be given authority to nominate someone to serve as PR. [MUPC §3-203]  May be useful if testator wants to give trusted person or advisor authority to name a Personal Representative. 25

26  If no one is named or if all have renounced, surviving spouse who is a devisee serves as PR.  Then other devisees.  Then the surviving spouse who not a devisee.  Then other heirs.  If the person entitled to serve chooses not to, may nominate a “qualified person” to serve. 26

27  “After notice to the qualified beneficiaries, the trustee of a trust…having a total value less than $200,000 may terminate the trust [if its value] is insufficient to justify the cost of administration.” [MUTC §414(a)] 27

28  Example: Trust names second spouse as life beneficiary and Settlor’s children of first marriage are remaindermen. Accounting provision silent as to who is entitled to accounting.  Under common law, trustees have duty of loyalty, so we can infer that trustees should give information and account to remaindermen.  Many trusts now exist and beneficiaries don’t know about them. 28

29  MUPC and MUTC both impose a duty on the trustee to inform. [MUTC §813 or MUPC §7-303] ◦MUPC not clear that requirement may be overridden by language in trust instrument. ◦Under MUTC the trust instrument may override! 29

30  When ◦When trust becomes irrevocable. ◦If a new trustee is appointed after trust becomes irrevocable and also if requested by beneficiary.  What ◦Beneficiaries need to be “reasonably informed.” ◦Accountings – under MUPC must provide annual accountings upon request. [MUPC §7-303] ◦Under MUTC, must send accounts annually to distributees and persmissible distributees, and to other “qualified people” who request. [MUPC §813] 30

31  Who ◦MUPC: “beneficiaries.” [MUPC §1-201(3)] ◦MUTC: “qualified beneficiaries.” [MUTC §103 (10)]  Is a distributee or permissible distributee  Would be a distributee or permissible distributee if trust terminated on that date. 31

32  “The Settlor of a charitable trust, among others, may maintain a proceeding to enforce the trust.” [MUTC §405(c)]  P.S. We will also have “pet trusts” [MUTC §408] and other non-charitable “purpose trusts.” [MUTC §409] 32


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