Justia Trusts & Estates Opinion Summaries

A company was the beneficiary of life insurance policies held in a trust formed by Daniel Carpenter. After the insurer paid proceeds to the trust, the beneficiary sought to recover the full amount and alleged that Carpenter hid assets through hundreds of shell companies. Carpenter was convicted of fraud, and the beneficiary obtained a judgment in the United States District Court for the Southern District of New York, later registering the judgment in the United States District Court for the Western District of Oklahoma. That court entered judgment against several Carpenter entities, including a limited liability company that owned another company incorporated in Oklahoma. A receiver was authorized to preserve the assets of the debtor company.An entity called Phoenix Charitable Trust, apparently linked to Carpenter, entered the Oklahoma proceedings as an “interested party” through its counsel, who had represented Carpenter and related entities in other courts. Phoenix objected to several orders issued by the district court: an award of attorney fees and costs against Carpenter, an order authorizing the sale of the Oklahoma company’s insurance portfolio, and an order denying Phoenix’s motion to vacate a prior injunction against Carpenter and his entities.On appeal, the United States Court of Appeals for the Tenth Circuit considered whether Phoenix had standing to challenge these orders. The court found that Phoenix failed to demonstrate it was injured by the attorney fees order or the sale-of-assets order, as required for Article III standing. Regarding the injunction, the court concluded that Phoenix lacked prudential standing because it was asserting the rights of others rather than its own. The Tenth Circuit dismissed the appeal for lack of standing and did not reach the merits of Phoenix’s challenges. View "Universitas Education v. Phoenix Charitable Trust" on Justia Law

The case involves disputes among the descendants of Roy and Grace Whittenburg, who were beneficiaries of separate trusts holding interests in a large ranch spanning New Mexico and Colorado. After years of litigation over the ranch’s ownership, the parties signed two settlement agreements: a Partial Settlement Agreement (PSA) and a later Compromise Settlement Agreement (CSA). These agreements were intended to resolve their disputes, with provisions for partitioning the ranch and a clause designating Texas as the forum for enforcement. When the parties could not agree on partitioning, a group led by Angela Kate initiated partition proceedings in New Mexico, as allowed by the agreements. Another group, led by John Burk, opposed the partition, resulting in protracted litigation and additional attorney’s fees.The 251st District Court of Randall County, Texas, after a bench trial, found John Burk had breached the settlement agreements by opposing the partition in the New Mexico litigation, causing Angela Kate to incur $216,112 in extra attorney’s fees. Despite these findings, the trial court entered a take-nothing judgment, holding that the attorney’s fees from the New Mexico litigation were not recoverable as damages. The Court of Appeals for the Seventh District of Texas affirmed, reasoning that the American Rule barred recovery of such fees as damages for breach of contract.The Supreme Court of Texas reversed the Court of Appeals. It held that the American Rule does not bar recovery of attorney’s fees incurred in prior litigation as damages for breach of a settlement agreement, provided the breach was not itself the basis for that prior litigation. Because the fees at issue resulted from litigation initiated before John Burk’s breach, Angela Kate was entitled to recover those excess fees as actual damages. The Court also held she could seek reasonable attorney’s fees for the Texas suit, remanding for reconsideration of the appropriate amount. View "WANG v. WHITTENBURG" on Justia Law

Two brothers became parties to a dispute over the inheritance of their father’s estate after the father died intestate. One brother, Christopher, asserted that his sibling, Daniel, was not the biological child of their father, Ernest, and therefore not entitled to inherit. Christopher petitioned for letters of administration in the probate court, claiming to be Ernest's sole heir. The probate court granted him letters of administration. Christopher then sought to remove the estate administration to the circuit court, filing a petition that was not verified under oath as required by Alabama law. The circuit court entered an order removing the administration and later, based on DNA evidence, an affidavit from the mother, and Daniel’s marriage certificate, declared that Daniel was not Ernest’s biological child or heir.After the circuit court’s order, Daniel filed a postjudgment motion arguing that the removal of the estate administration was invalid because Christopher’s initial removal petition was not sworn, as required by Ala. Code § 12-11-41. Around the same time as the hearing on this motion, Christopher submitted an amended, sworn petition for removal, and the circuit court then entered a new order granting removal. However, this action occurred after the circuit court had already issued its prior order resolving the inheritance dispute.The Supreme Court of Alabama held that the circuit court’s jurisdiction over the estate administration was not properly invoked until a sworn petition was filed, as mandated by statute. Thus, the July 2025 order declaring Daniel not an heir was void due to lack of subject-matter jurisdiction at the time it was entered. The Supreme Court of Alabama reversed the circuit court’s order and remanded the case with instructions to vacate the July 2025 order. View "Thomas v. Thomas" on Justia Law

A trust was established for the primary benefit of an individual, with his family members as secondary beneficiaries. The trustee, Austin Trust Company, purchased a residential property in the District of Columbia for the trust in 2007, paying the required transfer and recordation taxes at that time. Fourteen years later, the trust was dissolved and the trustee transferred the property, without consideration, to the primary beneficiary, who then recorded the deed and paid additional transfer and recordation taxes. The beneficiary later sought a refund, claiming that the deed was exempt under District of Columbia law as either a supplemental deed or under regulations for nominal grantees.The Office of Tax and Revenue denied the refund, finding that the deed did not qualify for an exemption. The beneficiary appealed to the Superior Court of the District of Columbia. The Superior Court granted summary judgment to the District, concluding that the trust and the beneficiary were legally distinct entities and that District law imposes transfer and recordation taxes on each change in legal ownership of real property. The court also determined that the applicable exemptions did not apply.Reviewing the case, the District of Columbia Court of Appeals affirmed the Superior Court’s decision. The Court of Appeals held that the supplemental deed exemptions do not apply when property is conveyed between two distinct legal entities, even if one is the beneficiary of the other. The court further held that the nominal grantee regulations did not apply, as the trustee held and managed the property as more than a nominal grantee and owed duties to multiple beneficiaries. Accordingly, the grant of summary judgment to the District was affirmed. View "Barlow v. District of Columbia" on Justia Law

A group of family trusts, managed by a corporate trustee, owned two C corporations with significant appreciated assets, including farmland and investment portfolios. In the early 2000s, the trusts sought to sell these corporations. To maximize after-tax proceeds, they pursued a stock sale rather than an asset sale, aiming to avoid double taxation on built-in gains. The trusts conducted an auction and ultimately sold the corporations’ stock to a newly formed entity, Humboldt Shelby Holding Corporation (HSHC), which financed the purchase with substantial loans. After the transaction, HSHC promptly liquidated the corporations’ assets and engaged in tax shelter transactions to offset the resulting gains, resulting in no taxes paid. The IRS later determined these losses were artificial and assessed taxes, penalties, and interest against HSHC, which went unpaid. The IRS then sought to hold the trusts liable as transferees of HSHC under federal law.The United States Court of Federal Claims found that, under New York’s Uniform Fraudulent Conveyance Act, the trusts could be held liable as transferees. The court determined that the stock sale and subsequent asset sales should be treated as a single transaction and that the trusts had constructive knowledge of the entire scheme to avoid taxes. The court also held the trusts liable for the full amount of HSHC’s unpaid taxes, penalties, and interest, and rejected the trusts’ argument that their liability should be limited to the value received.On appeal, the United States Court of Appeals for the Federal Circuit affirmed the Court of Federal Claims’ rulings. The Federal Circuit held that the trusts had constructive knowledge of the fraudulent scheme, upheld the imposition of transferee liability for the full amount owed, including penalties, and rejected the claim for refund of interest accrued after a deposit was made with the IRS, finding the IRS did not act unlawfully or abuse its discretion in handling the deposit. View "DILLON TRUST COMPANY LLC v. US " on Justia Law

An individual, R., who had previously been placed under the guardianship of the Department of Health and Human Services due to multiple strokes and a diagnosis of moderate vascular dementia, petitioned to terminate his guardianship. R. resided in an assisted living facility, needed help with daily living activities, and demonstrated poor understanding of his own cognitive limitations. He was also expected to inherit a substantial sum, raising concerns about his susceptibility to financial exploitation. The Department sought to be appointed as his conservator, citing his impaired ability to manage his finances and personal affairs.The Cumberland County Probate Court consolidated R.’s petition to terminate the guardianship with the Department’s petition for conservatorship and held a hearing. After considering evidence, including testimony from medical providers and behavioral observations, the court denied R.’s request to terminate the guardianship and appointed the Department as his conservator, finding by clear and convincing evidence that R. remained incapacitated and in need of protection. R. appealed, arguing that the evidence did not support the Probate Court’s findings and that he received ineffective assistance of counsel because his attorney failed to obtain an independent psychological evaluation.The Maine Supreme Judicial Court affirmed the Probate Court’s judgment, holding that the evidence supported the denial of the petition to terminate guardianship and the grant of conservatorship. The court expressly recognized, for the first time, that individuals in guardianship or conservatorship proceedings have a right to the effective assistance of counsel, and adopted the Strickland v. Washington standard for evaluating such claims. The court articulated a procedure for raising ineffective assistance claims in these proceedings but found that R.’s claim lacked merit because he did not show that his counsel’s alleged deficiencies prejudiced the outcome. Judgment was affirmed. View "Adult Guardianship and Conservatorship of R." on Justia Law

A decedent passed away leaving a will that provided, among other things, a bequest to one son, Chris, of $50,000, equipment of his choosing, and “any business or interest in any business I own at my death.” The will’s residuary clause distributed the rest of the estate, including real and personal property, to another son, Kyle, and three others. The central disagreement arose over whether certain real estate, specifically a commercial property used by a construction business, was included in the bequest of “any business or interest in any business.” Chris argued that the property constituted a business asset or business interest, while Kyle, serving as personal representative, contended it was personal property not covered by the business bequest.The County Court for Douglas County admitted extrinsic evidence, including affidavits from both sons and the decedent’s accountant, but ultimately concluded that there was no ambiguity in the will’s language. The court ruled that it could not consider extrinsic evidence, found that Chris had already received all business assets to which he was entitled, and denied Chris’s request for other estate assets and supervised administration.On appeal, the Nebraska Supreme Court reviewed the county court’s order for error on the record and considered the interpretation of the will de novo. The Nebraska Supreme Court held that, although there was no patent ambiguity on the face of the will, the extrinsic evidence revealed a latent ambiguity regarding whether the decedent intended the commercial real estate to be included in the business bequest. Because the county court did not consider the possibility of a latent ambiguity and refused to assess the extrinsic evidence for that purpose, its decision was contrary to law. The Supreme Court reversed the county court’s order and remanded the case for further proceedings. View "In re Estate of Schneider" on Justia Law

A married couple, Richard and Penny, entered into a separate property regime through an antenuptial agreement. Richard had two sons from a prior marriage. Upon his death, his son Bruce was named executor, and Penny was granted a usufruct over certain properties and a share in a partnership interest. After Richard’s death, Bruce, as executor, sought reimbursement from Penny for (1) Richard’s funds used to purchase a townhouse where both were listed as co-owners, (2) costs of improvements made to the townhouse, (3) a $1,000,000 check Richard gave Penny shortly before his death that she deposited into her separate account, and (4) a tax overpayment made by Richard that Penny used to pay her tax liabilities.The Twenty-Fourth Judicial District Court for the Parish of Jefferson denied most of Bruce’s reimbursement claims, finding that the Civil Code did not authorize reimbursement for the initial property purchase price and that Bruce had not met his burden to prove the value of improvements. The Louisiana Court of Appeal, Fifth Circuit affirmed. Bruce then sought review in the Supreme Court of Louisiana.The Supreme Court of Louisiana reversed in part and affirmed in part. The Court held that, although Richard and Penny were equal co-owners for title purposes, Bruce was entitled to claim reimbursement for Richard’s initial purchase price contribution to the townhouse because the Civil Code does not prohibit such reimbursement and principles of equity prevent unjust enrichment. The Court also ruled that the estate was entitled to reimbursement for the $1,000,000 check, finding Penny failed to prove donative intent by clear and convincing evidence, and for the tax overpayment, since it was paid solely from Richard’s funds. The Court affirmed the denial of reimbursement for alleged improvements, finding no manifest error in the lower courts’ factual determination that Bruce had not sufficiently proved the value of improvements. The matter was remanded for further proceedings. View "O'KREPKI VS. O'KREPKI" on Justia Law

The decedent, Herman Stille, executed a will leaving most of his sizable estate to the Floyd County Medical Center (FCMC) to establish a cancer center, provided the hospital remained independent. The will included a contingency: if FCMC lost its independent status and merged with a major healthcare corporation, the estate would instead go to Mayo Clinic for Alzheimer’s research. After Stille’s death, FCMC began planning the cancer center but discovered it was impossible to provide on-site radiation treatment due to regulatory, financial, and logistical constraints. Mayo Clinic, as the contingent beneficiary, argued that the gift to FCMC failed because the hospital could not meet all the specifications in the will, including radiation therapy.The Iowa District Court for Chickasaw County held a bench trial, considering evidence about Stille’s intent and the practicalities faced by FCMC. The court found that FCMC satisfied the main conditions of the gift: it remained independent and could build a cancer center meeting five out of six specified features, except radiation therapy. The court determined that Stille would not have withdrawn his bequest had he known radiation treatment was impossible. Applying Iowa precedent, the district court upheld the bequest to FCMC and ordered the estate’s residual assets to be distributed to FCMC.The Iowa Supreme Court reviewed the case de novo. It focused on whether Mayo Clinic, as a contingent beneficiary, had standing to challenge the bequest. The court found that under the unambiguous terms of the will, Mayo Clinic’s interest was contingent on FCMC losing its independence—a condition that had not occurred. Therefore, Mayo Clinic lacked standing to contest the bequest. The Iowa Supreme Court affirmed the district court’s judgment, holding that a contingent beneficiary whose condition for receiving a gift has not occurred has no standing to challenge the gift. View "In The Matter of The Estate of Stille" on Justia Law

A decedent, James, established a Panamanian private interest foundation (PIF) called the Harris 6 Foundation and, shortly before marrying Nancy, transferred twelve Arizona properties into the PIF. He created the PIF to protect his assets in anticipation of marriage without a prenuptial agreement. At his death, the PIF still held several properties. The foundation was structured so that, upon James’s death, its assets would pass to several named beneficiaries, none of whom was Nancy.After James’s death, Nancy sought to claim an elective share of his estate under Iowa Code section 633.238, which allows a surviving spouse to claim a portion of certain property, including assets held in a revocable trust. The guardian ad litem for a minor beneficiary asked the Iowa District Court for Polk County for a declaratory judgment that the PIF’s assets were not subject to Nancy’s statutory share. The district court found that the PIF, as a separate juridical entity under Panamanian law, was not a revocable trust and that its assets were not included in the categories subject to Iowa’s elective share statute. The Iowa Court of Appeals affirmed, relying on In re Estate of Myers, which limits the elective share to property specifically listed in the statute.The Supreme Court of Iowa reviewed the statutory language and the nature of the PIF, finding that the statute’s list of property subject to the elective share is exclusive and does not extend to property held by a nontrust entity like a PIF. The court held that a Panamanian PIF is not a trust under Iowa law, and its assets are not included in the surviving spouse’s elective share under section 633.238(1)(d)(1). The decision of the Court of Appeals and the judgment of the district court were affirmed. View "In the Matter of the Estate of Ibeling" on Justia Law