Case Law Update
Missouri Legislative Changes, effective August 28, 2011
2012 Proposed Changes to Missouri Legislation
Case Law Update
1. Nelson v. Missouri Department of Social Services, MO Healthnet
Division (Mar. 30, 2012)
Keywords – RSMo. § 473.398 | estate
recovery | Healthnet
The State
of Missouri sought reimbursement from probate estate of Medicaid assistance
funds allegedly paid on behalf of decedent during her lifetime. Trial court held for probate estate and the State
appealed. Court of Appeals affirmed, concluding
that computer printouts of the payments made to third parties on behalf of
decedent and testimony from an analyst regarding such payments was insufficient
evidence of actual payment and holding that the State must prove that the
checks had actually been cashed and cleared the bank as proof of payment.
Practice Pointer – Avoid reimbursement claim by avoiding probate. Utilize non-probate transfers and/or
revocable trust.
2. France v. Hunter (Apr. 6, 2012)
Keywords – RSMo. § 475.075 |
notice | guardianship
France
was a 95 year old woman found to have dementia and depression. Following a DHSS investigation, a petition
for appointment of guardian/conservator was filed. Following the appointment of the public
administrator as temporary guardian/ conservator,
France was examined by a doctor in private practice who completed a medical
certificate advising a guardianship/conservatorship. Following a hearing, the public administrator
was appointed as her guardian and conservator. France’s daughter, who resided out of state,
was never made aware of the proceedings or appointment and the appointments
were subsequently set aside for failure to comply with RSMo. § 475.075.
France
filed a due process claim under 42 USC § 1983 against the public administrator
and her examining doctor. The trial
court granted summary judgment in favor of the public administrator and the examining
doctor and France appealed. The Court of
Appeals affirmed , holding that the public administrator acted pursuant to a
facially valid court order and was granted qualified immunity and that there
was insufficient evidence to conclude that the public administrator and the
examining doctor had an understanding to deprive France of her rights.
Practice
Pointer – Proper notice is essential for jurisdiction. Must determine the names and addresses of the:
(1) spouse, parents, and children who have
reached eighteen (if no such spouse, parent or child is known, notice shall be
given to at least one of his closest relatives who has reached eighteen);
(2) any person serving as his guardian,
conservator, limited guardian or limited conservator;
(3) any person having power to act in a
fiduciary capacity with respect to any of the respondent’s financial resource; and
(4) any person having his care and custody known to the petitioner.
3.
River Oaks
Homes Assn. v. Lounce (Jan. 17, 2012)
Keywords – revocable/living
trust
Lounce,
transferred interest to her real estate, via quitclaim deed, to her revocable
trust (of which she was the trustee).
Homeowners association assessed Lounce individually for association fees
which Lounce did not pay. Homeowners
association brought a claim against Lounce individually and as trustee. Trial court held that Lounce was liable both individually
and as trustee and Lounce appealed. The Court
of Appeals affirmed liability as a trustee but reversed individual liability, holding
that the transfer to her revocable trust was duly recorded and the obligation
to pay the fees transfers with the property to the new owner.
Practice Pointer – Generally understood that a revocable trust is ignored for income
tax purposes but a revocable trust is recognized as a separate entity under
state law.
4. In Re: The Estate of Charles Ray Cassidy v. Cassidy (Nov. 16, 2011)
Keywords
–RSMo. §§ 474.120, 474.160, 474.250, 474.260, 474.290 | pre-marital agreement
Six
hours before Ray and Carolyn were to be married, upon Ray’s demand, they
executed a pre-marital agreement which included joint waivers of the parties
right of election to take against the other’s Will. On Ray’s death, his Will, which he executed
prior to his marriage to Carolyn, left everything to his daughter. Carolyn brought a claim to declare the
agreement void. The trial court set
aside the agreement and the personal representative appealed. The Court of Appeals affirmed, noting that
the burden was on the personal representative trying to enforce the agreement
and holding that Ray had overreached and defrauded Carolyn in the making of the
agreement, that he had concealed several of his assets from her, and that
Carolyn had not received full disclosure regarding the agreement.
Practice Pointer – RSMo. § 474.235 allows an omitted spouse who married the decedent
after his or her Will was executed to receive an intestate share of the estate.
5. In Re: Stephen M. Gunther Revocable Living Trust (Oct. 4, 2011)
Keywords – RSMo.
§ 456.6-603.1 | revocable/living trust | fiduciary duty
Settlor
created a revocable trust naming his two children as beneficiaries upon his
death. Initially, settlor was not the
trustee but named Gunther as trustee.
Settlor subsequently amended the trust naming himself trustee and
Gunther as successor. Settlor subsequently
died, survived by his wife and two children.
Settlor’s children filed a petition for an accounting for the trust for
the period that Gunther was trustee (both before and after the settlor’s death),
for enforcement of trust and for removal of trustee. The trial court granted summary judgment in
favor of the trustee for the period during which the settlor was alive. The Court of Appeals affirmed, holding that the
trustee of a revocable trust owed no duty to the beneficiaries before the
settlor’s death.
Practice Pointer – So long as the trust is revocable and the settlor has capacity, all
rights that the beneficiaries would otherwise possess are subject to the
settlor’s control and the settlor is treated as the sole beneficiary.
6. Thomas R. Hammack, Trustee v. Coffelt Land Title, Inc. (Sept. 6, 2011)
Keywords –
RSMo. §§ 461.031, 461.033 | beneficiary deed | relation back doctrine
Hammack
executed a revocable trust and concurrently executed and recorded a beneficiary
deed transferring his ½ interest in real estate to the trust. In December 1998, Hammack sold his ½ interest
in the real estate to a third party under an escrow arrangement whereby the
executed deed was to be transferred at closing within 23 – 43 days. Hammack died prior to closing. The sale closed in February 1999 but new
deeds were executed at closing and recorded thereafter. Two weeks later, Hammack’s successor trustee discovered
the existence of the beneficiary deed and made demand of the sales proceeds
from Hammack’s widow and the title company.
Trustee subsequently filed suit against the title company for breach of
its duty of care and breach of contract in distributing the sales proceeds to
Hammack’s widow rather than to the trust.
The trail court found for the title company and the trustee
appealed. The Court of Appeals affirmed,
holding that title transferred under the escrow arrangement prior to the date
of Hammack’s death and the beneficiary deed had no effect.
Practice Pointer –Beneficiary under a beneficiary deed has no rights in the property prior
to the death of the owner of the property.
A transfer during the owner’s lifetime of the owner’s interest in the
property terminates the beneficiary designation with respect to the property.
7. In the Matter of: William R. Knichel (Aug. 16, 2011)
Keywords – RSMo.
§§ 456.1-103, 512.020 | interested persons | special trustee | trust protector
Knichel
executed a revocable trust, naming his companion as trustee, his children and
companion beneficiaries and the drafting attorney’s law firm as special
co-trustee. The special co-trustee had the
power to manage trust assets, act as arbiter of disputes between beneficiaries and/or
the trustees, issue binding proclamations regarding trust distributions between
beneficiaries, and grant or refuse permission to bring legal action by
beneficiaries or trustees. Knichel
subsequently died. The beneficiaries
made numerous demands of the trustee for a trust accounting. Eventually, the beneficiaries filed suit
against the trustee for breach of fiduciary duty, undue influence and unjust
enrichment. The beneficiaries also filed
suit against the drafting attorney for removal as special co-trustee and
counsel to the trustee due to conflicts of interest. The drafting attorney subsequently withdrew
as counsel for the trustee and the court suspended the trustee and special
co-trustee and appointed a trustee ad litem.
The trial court found for the beneficiaries, removed the trustee and special
co-trustee and amended the trust agreement to remove the position of special
co-trustee. The drafting attorney
appealed his removal as special co-trustee and the removal of the special
co-trustee provision from the trust agreement.
The Court of Appeals dismissed the appeal, holding that he lacked
standing as an aggrieved party because any trustee fees he may have received in
the future and potential harm to his professional reputation were
self-interested grievances unrelated to the pecuniary interests of the trust’s
beneficiaries.
Practice Pointer – Fiduciary only has standing to pursue the rights of and protect the
interests of the beneficiaries.
Fiduciary appointment is not a personal right but rather a legal duty
subject to the oversight of the court.
8. Felderman v. Zweifel, Trustee of the Lee Zweifel Revocable Trust (Aug.
9, 2011)
Keywords – donative
intent
Zweifel
executed deed transferring ownership of real estate from himself to himself and
Felderman (his ex-wife) as joint tenants with right of survivorship. The parties resided at property for 12 months
after the transfer. Approximately 27
months after the transfer, Felderman filed suit to partition the property. Trial court found for Felderman and ordered
the property sold and the proceeds distributed ½ to each. Zweifel appealed. The Court of Appeals affirmed, holding that
Zweifel had donative intent when he retitled the property into their joint
names.
Practice Pointer – Presumption that co-tenants hold equal ownership in property in the
face of an otherwise silent deed.
Presumption can be rebutted by evidence that the co-tenants contributed
unequally toward the purchase of the property.
Unequal contributions can be explained by evidence that party
contributing a greater amount intended the disparity as an enforceable
gift. The relationship between the
parties can be suggestive of donative intent.
Missouri Legislative Changes, effective August
28, 2011
1.
Modifications to the Missouri Uniform Trust Code
a. Virtual Representation. Acts of representative are binding on certain people, even when person
being represented objects to being represented.
(§ 456.3-301.2)
b. Decanting. Certain trustees are allowed to move trust assets
from the original trust to another trust.
By moving the trust assets to a new trust, the trust can be modified
without a court’s approval. This second
trust may only have beneficiaries that were eligible to receive property under
the first trust, or may in the future
receive property from the first trust.
Generally, a trustee may not move the trust assets to the second trust
if the trustee is a beneficiary of the first trust, or if the trustee of the
first trust can be replaced by a beneficiary with a person who is related to
that beneficiary. Generally, a trustee
is prohibited from moving the trust assets to a second trust if it would
increase the distributions to the trustee or to a beneficiary who could replace
the trustee, or if it would remove restrictions that were in the document
creating the first trust. The act
restricts how the second trust can operate for certain types of property and
trusts, based on federal tax law. A
provision in the original trust document that prohibits amendment or revocation
of the trust will not prevent the trustee from moving the trust assets to a new
trust. The trustee is required to notify
people who might get property from the second trust of the decision to
distribute the property to the second trust. A trustee does not have a duty to move trust
assets to a second trust. (§ 456.4-419)
c. Self-Settled Spendthrift Protection.
Creditors of a person who creates a trust may
not reach the person’s interest in that trust, regardless of whether the person
retains the ability to dispose of their interest through a testamentary power
of appointment. (§ 456.5-505)
d. Property Interest in Power of Appointment. Creditors
of certain beneficiaries of a trust are prohibited from reaching certain
property of the trust to satisfy the beneficiary’s debts. (§ 456.5-508)
e. Notice. The time within which a trustee must notify beneficiaries of the
existence of the trust, the trustee’s contact information, and beneficiaries’
rights to the trust document and a report was extended from 60 to 120 days. (§
456.8-813)
f. Qualified Spousal Trust. Husband and wife can utilize a new form of
revocable trust. These trusts, known as
qualified spousal trusts, include trusts that hold tenancy by the entirety
property in one trust and trusts that hold such property in two separate
shares. If the property is transferred
to the trustee of a qualified spousal trust, the property will have the same
immunity from the separate creditors of the husband and wife that would have
existed if the husband and wife had not transferred the property to the trust,
as long as certain conditions are met.
The rights of creditors to any property that is not held by the husband
and wife as tenants by the entirety shall not be affected by the transfer of
that property to the qualified spousal trust.
When the husband or wife die, the property in the trust shall be
distributed as directed by the terms of the trust, which may include having the
property pass to an irrevocable trust for the benefit of the surviving
spouse. These provisions apply to trusts
that were created before or after the effective date. (§ 456.950)
2.
Modifications to the Uniform Principal and Income Act
a. Modifies
how unitrust amounts are calculated.
Also requires that the amounts be paid from sources in a particular
order. (§ 469.411)
b. Trustees of
trusts qualifying for the marital deduction under federal tax law are required
to take action regarding retirement plan payments to the trust when the
surviving spouse requests. (§ 469.437)
c. Requirements
for how the trustee must pay taxes from trust income and principal has been
modified to allow the trustee to adjust income receipts. (§ 469.459)
3. Guardianship – These
provisions modify what information is required in a petition for guardianship
for a minor or an incapacitated person and adopt the Uniform Adult Guardianship
and Protective Proceedings Jurisdiction Act (UAGPPJA).
4. Modifications to Power of Attorney –
The Revised Uniform Anatomical Gift Act is now referenced with regard to powers
which must be expressly authorized in the Power of Attorney and the attorney in
fact may be granted the express authorization to make decisions concerning the
disposal of the principal’s body. (Section 404.710)
2012
Proposed Changes to Missouri Legislation
- SB 628 Provisions Relating to the Judiciary
- Qualified Spousal Trust. Section
456.950; HB 1165 (2012) & HCS/SB 628 (2012). Currently, trusts that hold a certain
kind of property owned by a husband and a wife will be considered a
qualified spousal trust if the property is held in one trust or the
property is held in two separate shares of one trust. This act allows a trust to be considered
a qualified spousal trust if the trust consists of both property held in
one trust for both spouses and property held in two shares of one trust
for each spouse.
- Trust Protectors.
Section 456.8-808; HB 1166 (2012) & SB 761 (2012). This act modifies the law regarding
trusts to specifically allow for the appointment of a trust protector.
The trust protector is a person who is given power over the trust by the
document that creates the trust.
The trust protector’s powers may include: the power to remove and
appoint a trustee, or name a successor trust protector, the power to modify or
amend the documents that created the trust, the power to modify the interests
of a beneficiary of the trust, the power to terminate the trust in favor of the
beneficiary, the power to change which law applies to the trust and which state
the trust is located in, and any powers that are expressly included in the
trust documents.
The trust protector is not a trustee but shall act in a fiduciary
capacity in carrying out the duties and powers granted by the trust instrument
to the trust protector. The trust protector will not be liable for his or her
acts or omissions unless they are done in breach of the trust protector’s duty,
in bad faith, or with reckless indifference. Unless it is established that the
trust protector acted in bad faith or with reckless indifference, the trust
protector will be reimbursed from the assets of the trust for the costs and
expenses of defending a lawsuit against him or her. A trust protector is
entitled to reasonable compensation from the trust assets for carrying out the
powers given to them by the trust document.
The act also provides that the trust protector is entitled to certain
information about the trust, provides authority for a trust protector to resign
by providing written notice to the trustee, and specifies that the courts have
jurisdiction over a trust protector while the administration of the trust is in
Missouri.
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