Justia Trusts & Estates Opinion Summaries

Articles Posted in US Court of Appeals for the Fifth Circuit
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The Commission issued the Estate a notice of deficiency, determining that the Estate had a $491,750.00 tax liability which differed from the Estate's tax return valuation. The Fifth Circuit affirmed the tax court's decision sustaining the Commission's determinations. The court held that the Estate holds a substituted limited partnership interest in SILP.The court also held that the Notice of Deficiency (including its attachments) fulfills the statutory requirement under 28 U.S.C. 6212. However, even assuming arguendo that the notice description was inadequate, the court could not invalidate it on that basis because Internal Revenue Code 7522(a) explicitly prohibits it from setting aside a notice for lacking the descriptive element. Finally, the court rejected the Estate's argument under the Administrative Procedure Act as without merit. View "Estate of Frank D. Streightoff v. Commissioner" on Justia Law

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This appeal arose out of disputes related to trusts formed by the late Texas oil baron, H.L. Hunt. At issue was the settlement involving plaintiff, H.L.'s grandson, in which he agreed to not contest the last will and testament of his father in exchange for a nine-figure payout. After his father's death, plaintiff challenged the will in Texas probate court, lost, and appealed. Plaintiff's sisters then asked the federal court to enforce the settlement agreement and to enjoin plaintiff's will challenges, which the district court granted.The Fifth Circuit held that plaintiff's appeal of the injunction was mostly moot, because the Texas appeals court has lost jurisdiction over plaintiff's state appeal and plaintiff has withdrawn his failed will challenges in the probate court. In this case, the terms of the injunction related to those probate proceedings have been irrevocably fulfilled. However, in regard to the terms of the injunction that prohibit plaintiff from challenging his father's will ever again, those terms were not moot. As to those terms, the court held that plaintiff's challenges failed.Accordingly, the court dismissed the appeal as to the following, already-fulfilled terms of the injunction: its prohibition on contesting plaintiff's will in the current probate proceedings; its prohibition on appealing the probate court's order regarding the settlement agreement; its prohibition on appealing the probate court's admission of the will; and its obligation to dismiss or withdraw his claims in probate court, including through appeal. The court affirmed the remainder of the order, including the following, future-looking terms of the injunction: its prohibition on contesting plaintiff's will "in any manner," in any court; and its prohibition on "filing, pursuing, or prosecuting any action . . . that violates the terms of the Settlement Agreement or Final Judgment." The court remanded to the district court for consideration of whether the sisters were entitled to additional costs and fees. View "Hill v. Washburne" on Justia Law

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Payments owed to a shareholder by a bankrupt debtor, which are not quite dividends but which certainly look a lot like dividends, should be treated like the equity interests of a shareholder and subordinated to claims by creditors of the debtor. The Fifth Circuit affirmed the district court's judgment and held that the deemed dividends gave the Estate benefits normally reserved for equity investors and thus subordination of all of the Estate's claims was appropriate. The court also held that the bankruptcy court did not abuse its discretion in denying discovery. Likewise, the court held that the Estate's due process right to discovery was not violated. View "French v. Linn Energy, LLC" on Justia Law