Estates and Trusts Commons^™

Death Taxes On Completed Transfers Inter Vivos, Lorentz B. Knouff

Michigan Law Review

The subjection of transfers inter vivas to the death tax under each of the above categories has been based upon the proposition that, for a transfer inter vivas properly to be subject to the death tax, it must bear some reasonable relationship to transfers at death either by will or under the law relating to intestacy. This rule has been applied both in problems of statutory construction and in problems of constitutionality. The recent decision of the United States Supreme Court in Helvering v. Bullard seems to have abandoned this test for the inclusion of transfers inter vivas within the …

Parent And Child - Effect Of Adoption On Legal Status Of Child, Marcus L. Plant

Michigan Law Review

In 1933 the appellants adopted the child of the appellees, and the decree declaring them to be the adoptive parents concluded with the words, "With leave to parents to occasionally see the child." The natural parents, who were living apart, filed several petitions in the court to see the child at stated intervals. These petitions were granted. The adoptive parents, in 1936, filed a petition alleging that the repeated visits of the natural father and mother were prejudicially affecting the child's nervous condition, and impairing his health, and praying that the provision under the decree be altered. Upon submission of …

Taxation - Federal Estate Tax - Claims Arising Out Of An Antenuptial Agreement As Deductions From Gross Estate, Charles E. Nadeau

Michigan Law Review

An antenuptial agreement provided that in the event the wife survived her husband she would receive $50,000 in lieu of her dower rights. After his death the executors paid this sum, and then sought to deduct it from the gross estate as a claim against the estate. In affirming the Board of Tax Appeals the court held that marriage and relinquishment of dower were not "an adequate and full consideration in money or money's worth" and hence the claims were not deductible under the Revenue Act of 1926. Empire Trust Co. v. Commissioner of Internal Revenue, (C. C. A. …

Testamentary Conditions Against Contest, Olin L. Browder Jr.

Michigan Law Review

It is the natural desire of any testator that his will be speedily probated after his death and that there be no rancorous bickerings over his estate by his beneficiaries. One might, therefore, expect that no-contest conditions--conditions prescribing forfeiture of any interest under the will if a beneficiary contests probate-would be of common occurrence and that the rules regulating a testator's right to employ them would be well settled. As a matter of fact, conditions of this type have appeared from time to time ever since cases were first reported, but their validity is far from settled; the state of …

Restricted Testation In New Zealand, Australia And Canada, Joseph Dainow

Michigan Law Review

One of the long accepted differences between the common law and the civil law has been the freedom of testamentary disposition of the former as contrasted with the limitations of the latter. Thus, while the continental testator was limited in the amount of property that he could leave away from the members of his immediate family, the Englishman could cut them all off without a penny. In other common-law countries the same liberty was continued; but recent years have witnessed important departures.

Torts - Negligent Misrepresentations - Information Gratuitously Supplied, Michigan Law Review

Michigan Law Review

Plaintiffs, who were liquidating trustees of a building and loan association, alleged that the association requested defendant to send it a copy of a certain will, but that defendant, who was trustee under the will, sent the association a copy of another will. Since the testators bore the same name, the association did not realize the error, but relied on the copy and suffered a loss which it would not have suffered if it had known the true state of facts. Plaintiffs sued to recover the loss. Held, plaintiffs have not stated a cause of action, inasmuch as they …

Constitutional Law - Act Changing Pensions - Impairing Obligation Of Contracts - Due Process, Bertram H. Lebeis

Michigan Law Review

An Illinois statute provided for the compulsory retirement of teachers at the age of seventy with an annuity of $1500 a year for life, and an amendment thereto granted annuities on a sliding scale from $1000 to $1500 a year to teachers voluntarily retiring between the ages of sixty-five and seventy. These provisions were changed by an act of 1935 which abolished the provisions for voluntary retirement and .fixed compulsory retirement at the age of sixty-five, with annuities reduced to a flat rate of $500 annually. Plaintiffs, who either had retired or were eligible for retirement at the time the …

Associations - Massachusetts Trusts - Personal Liability Of Trustees On Contracts, Michigan Law Review

Michigan Law Review

The trustees of a business trust, by their agent, accepted seven trade acceptances in which there was no stipulation against the personal liability of the trustees. The trust instrument under which the business was operating provided that the trustees were to be under no "personal obligation or liability of any kind," and that all having transactions with the trustees are put on notice that no trustee or subscriber is personally liable, and further, that in all contracts made by the trustees, "specific mention shall be made therein of this trust to the end that any and all parties must look …

Executors And Administrators - Comparison Of Nonclaim Statutes And The General Statutes Of Limitations, Dan K. Cook

Michigan Law Review

An overwhelming majority of the states possess nonclaim statutes, which, in one form or another, purport to bar all claims against decedent's estates not presented to the decedent's personal representative within a stipulated period. It is the purpose of this comment to compare such statutes with the general statutes of limitations, giving particular regard to those situations where the operation of the two types of statute upon one cause of action may appear to conflict.

Trusts - Effect Of Exculpatory Clauses On The Liability Of Corporate Trustees, Milton A. Kramer

Michigan Law Review

The average investor doubtlessly relies upon the fact that some banking institution is a trustee for the bond issue in which he places his savings, and expects a degree of care commensurate with the confidence he has in that institution. The fact is, however, because of innumerable exculpatory clauses found in the corporate mortgage, the trustee's duties in regard to the protection of the bondholders' interests are practically negligible. But before proceeding further with the subject, it is necessary to distinguish two situations: first, a case where the trustee has no duty whatsoever to act; and secondly, where a duty …

Taxation - Estate Tax - Trust With Reservation Of Life Estate, Wallace Mendelson

Michigan Law Review

In 1923 decedent created an irrevocable trust, reserving to herself the income for life with remainders over. Upon decedent's death, it was held that the corpus of the trust was properly a part of decedent's gross estate for Federal Estate Tax purposes. Helvering v. Bullard, (U. S. 1938) 58 S. Ct. 565.

Trusts - Validity - Subject Matter - Profits To Be Acquired In The Future, Paul R. Trigg

Michigan Law Review

The plaintiff contemplated trading in the stock market and in 1927 declared a trust of the proceeds of his stock trading for the year 1928 in favor of various members of his immediate family, agreeing to assume all losses personally and to distribute all profits equally among the beneficiaries after deducting a reasonable compensation for his services. At the expiration of the year 1928, plaintiff deducted $10,000 as compensation, which he reported in his tax return for that year, and credited the named beneficiaries with the remainder on his books, these amount being reported in their respective tax returns for …

Wills - Right Of Assignee Of An Expectancy To Contest The Probate Of A Will, Ralph Winkler

Michigan Law Review

The plaintiff filed a bill in equity to set aside the probate of a will which disinherited the testator's heir apparent. The plaintiff alleged that the will was void because of undue influence and the testator's incompetency and that his right to contest was based on an assignment by the heir apparent of his interest in his living ancestor's estate as security for a loan. Held, the plaintiff received no interest in the testator's estate by the assignment and therefore is not a proper contestant within the statute. Burk v. Morain, (Iowa, 1937) 272 N. W. 441.

Trusts - Participation In Breach Of Trust By Depositary Of Trust Funds - Tracing, Michigan Law Review

Michigan Law Review

A township treasurer, elected custodian of school funds by the trustees of schools, paid a personal debt to the bank in which those funds were deposited with a check drawn by him as treasurer on the trust account. Subsequently, in like manner, he transferred some $2,000 from the trust account to his personal account in the same bank to meet an overdraft of $ 1,000, using the balance then left in his personal account for his personal advantage without benefit to the bank. Held, that the surety who had paid a judgment in favor of the school trustees for …

Wills - Attestation - Order Of Signing In Execution Of Wills, James W. Mehaffy

Michigan Law Review

Testator procured A and B to witness his will. Both signed in the blank spaces provided for that purpose, but the testator had not yet signed. Four days later testator again brought the will to A and B, stating that he wished to sign it in their presence. Both witnesses recognized the paper as the one to which they had previously affixed their signatures, and recognized their signatures thereon. Testator signed in their presence, and nothing further was done. Held, the will was validly executed. Bloechle v. Davis, 132 Ohio St. 415, 8 N. E. (2d) 247 …

Wills - Probate - Contest - Appearance By Trustee And Executor Named In Earlier Will, Edward D. Ransom

Michigan Law Review

Petitioner, who was the widow of the testator, sought probate of a will dated December 1934 which gave her practically the entire estate. The bank filed opposition to the will. The bank was named both as executor and as trustee in an earlier alleged will. The earlier will contained certain legacies not included in the later one and a trust of the residue for various beneficiaries. The probate court denied appearance of the bank both as executor and as trustee. Held, the bank is not entitled to contest the will as executor but may as trustee. Reed v. Home …

Dower - Power Of Husband To Defeat His Surviving Spouse's Statutory Succession Rights By An Inter Vivos Transaction, Elbridge D. Phelps

Michigan Law Review

Ferdinand Straus died July 1, 1934, leaving a will dated May 5, 1934, which named his wife life beneficiary of a trust composed of one-third of his real and personal property, this being the minimum provision which he could make for her and yet preclude an election on her part to take against the will under the New York Decedent Estate Law. Three days before his death testator executed trust agreements by which he transferred all his real and personal property to trustees, who are defendants herein, and which named plaintiff herein as ultimate beneficiary. In general, all powers granted …

Trusts - Investments - Amortization Of Bond Premium On Bond Callable Before Maturity, Anthony L. Dividio

Michigan Law Review

In 1929, the trustee, who was also beneficiary for life, invested $11,187.50 in bonds to mature in 1947, subject to prior call, worth $10,000 at par, which were called in and paid off October 1, 1936 at $10,500. Meanwhile, the trustee had amortized to the maturity date, setting aside one-eighteenth the amount of the premium out of interest annually, a total of $461.41, which, added to the $500 paid above par, left a balance of $226.09. In an accounting prior to her resignation in favor of a corporate trustee, held, amortization should have been to the call date and …

Trusts - Tentative Trusts - Right Of Settlor To Set-Off Against Insolvent Bank, Ralph Winkler

Michigan Law Review

Plaintiff brought this bill in equity to compel the receiver of an insolvent bank to set off a deposit against the plaintiff's liability as an indorser on a note, the maker of which was unable to discharge the debt. The account was opened by the plaintiff as "trustee" for his minor son. He had exercised complete control over the account and had made numerous withdrawals for his own purposes. Held, set-off denied. The deposit created a tentative trust; and until revocation the son was the equitable owner thereof. Since the right of set-off is determined by the state of …

Wills - Lapse - Construction - Execution Of Codicil After Death Of Legatee As Indicating Intent To Avoid Lapse, Bertram H. Lebeis

Michigan Law Review

Testator provided in his will for the division of his real and personal estate into twenty-five equal parts, one part for each of his nieces and nephews. One of the nephews predeceased testator by seven months, leaving a minor son. Thereafter testator executed a codicil expressing his desire that a nephew by marriage be a distributee of his estate, and directing that his personal and real estate be divided into twenty-six equal parts in order to include the new distributee. In proceedings brought for construction of the will, held, that the legacy to the nephew who predeceased testator did …

Trusts - Power Of Trustee To Invest By Savings Deposit, James W. Mehaffy

Michigan Law Review

The guardian of an incompetent veteran placed trust funds in his hands in the savings department of a trust company. The trust company was closed by order of the state bank commissioner on March 4, 1933, and failed to reopen. Held, the guardian is not chargeable with the loss, this being a proper investment of the funds. Hines v. Ayotte, (Me. 1937) 189 A. 835.

Executors And Administrators -Abatement Of Legacies - Intention Of Testator As Determined From Nature Of Legacy And Surrounding Circumstances, Victor P. Kayser

Michigan Law Review

When testator's estate is insufficient to pay all bequests provided for in his will, they normally abate in a definite order. For example, specific and demonstrative legacies are payable in toto before general legacies, which in turn must be paid before residuary gifts of personalty. Specific devises are free from abatement to pay pecuniary bequests; the same has been said of residuary devises. If there are insufficient assets to satisfy any class in full, bequests therein abate pro rata.

But testator may vary the order of abatement, may provide for the prior payment of any bequest he chooses. The most …

Trusts - Foreclosure Of Mortgage Held By Trustee - Disposition Of Proceeds Of Sale, Gerald M. Stevens

Michigan Law Review

Trustees foreclosed mortgages in which they had invested trust funds and which were in default. Sale of the land brought less than the principal and interest of the mortgages. Beneficiaries of the trust sued for an accounting to determine the respective rights of life tenant and remaindermen to the proceeds of the sale. Held, the net proceeds were to be apportioned between life tenant and remaindermen. To be treated as principal was a sum which, if invested at the rate of interest current for trust investments, would have produced during the period from default till final sale an income …

Executors And Administrators -- Quasi-Contract Liability Of Decedent's Estate -- Administrative Expenses As A Prior Charge On The Estate, Ralph Winkler

Michigan Law Review

After the supply of feed for the decedent's livestock had been depleted and before the appointment of an administrator, the plaintiff furnished some grain at the request of the decedent's daughter and son-in-law, no other parties attempting to assist in any way. It was understood that the plaintiff would look to the estate for payment. In an action of contract against the administrator in his representative capacity for the value of the grain the court held that the plaintiff had a valid claim in quasi-contract against the estate, basing the decision upon "broad considerations of policy." Since the estate was …

Future Interests -Validity Of A Power Of Appointment Under The Rule Against Perpetuities, Peter S. Boter

Michigan Law Review

Testator devised the income from his residuary estate to his two daughters for life, directing the trustee, on each daughter's death, to divide her share of the trust fund among the daughter's surviving children, and to hold the shares of the granddaughters for their lives and the shares of the grandsons until they severally reached the age of thirty years. The will then provided, "And in case of the death of any one of my grandsons before attaining the age of thirty years and in case of the death of my granddaughters, I direct that my Trustee shall distribute the …

Taxation - Validity Of Retroactive Inheritance Tax On Contingent Trust Remainders, Francis T. Goheen

Michigan Law Review

In 1877 the settlor created an irrevocable trust with reservation of the income for life. Under the terms of the trust deed, on the death of the settlor, the income was to be paid for twenty years after the settlor's death "to and among such of" settlor's children as may be living at the time of the payment. The living issue of deceased's children were to take by right of representation. On the death of the settlor in 1931 the state of Massachusetts by statute enacted in 1907 taxed the remainder as property passing by deed "intending to take effect …

Wills - Executors And Administrators -Titles - Effect Of The Revocation Of Probate Decrees On The Title To Realty Acquired By Bona Fide Purchase From Heir Or Devisee, Victor P. Kayser

Michigan Law Review

There are probably few chains of title to realty that do not contain at least one link consisting of a conveyance from one who claimed as heir or devisee of a decedent. The ability of the granter to convey resulted from the fact that he was heir of an intestate or was a devisee under the last will of his testator. Sometimes it has occurred that the grantee has purchased for value and with no knowledge or suspicion of an impending attack on his grantor's title, only to have it subsequently determined in a judicial proceeding that his grantor's ancestor …

Charities - Corporation Organized For Political Purposes As A Charitable Organization, Charles R. Linton

Michigan Law Review

A statute provided, in substance, that bequests in a will to charitable organizations may not collectively exceed one-third of the estate of a testator leaving heirs. Plaintiff, a legatee under a will, appealed from a decree which found the American Jewish Congress was not a charitable organization and therefore was entitled to the full sum bequeathed to it. Among the corporate purposes stated in the articles of incorporation were: (a) to further the development of the Jewish National Home in Palestine, and (b) to secure and maintain equality of opportunity for Jews everywhere. Held, decree reversed; although incorporated for …

Conditional Wills, Alvin E. Evans

Michigan Law Review

The discovery of what the language of a testator means is a constant duty of the courts. The task in the case of wills conditional in form frequently is to inquire whether the conditional language is merely formal and used by way of inducement or is intended to be taken literally. Clear cut and uniformly dependable tests as guides to such inquiry do not exist.

Trust Mortgages -- Construction Of No-Action Clause, William J. Isaacson

Michigan Law Review

Plaintiff, a trustee under a trust indenture securing two issues of defendant company's bonds, sought to recover a partial summary judgment for interest, premiums, and principal on the series of bonds then due. Defendant company conceded that the sums claimed were overdue and unpaid, but contended that the real right of action on the bonds was vested in the bondholders. The bonds on their face made a reference to the trust indenture for a description of the rights of the holders. The bonds further contained a stipulation that, except as otherwise provided for in the trust indenture, all rights of …