The Michigan Supreme Court on June 21, 2018 issued their much-anticipated opinion in the case of In re Mardigian Estate. In that case attorney Mark Papazian prepared a trust amendment and corresponding will for his client and friend Robert Mardigian. The new estate planning documents left the bulk of Mardigian's very substantial ($ millions) estate to Papazian and his children. Mardigian died six months later. Not surprisingly, Mardigian's family, comprised of his nieces and nephews, as he did not have any children, challenged the documents and accused Papazian of exerting undue influence in obtaining Mardigian's signature on the documents. The probate court summarily set the documents aside as contrary to public policy because Michigan Rule of Professional Responsibility 1.8(c) prohibits an attorney from preparing a document, such as a will or a trust, that gives the attorney or his family "any substantial gift." There is little doubt that the preparation of the will and trust was prepared in violation of this rule.
Effective April 6, 2017, dower rights in Michigan are abolished. Dower is a centuries old legal principle that a wife has an interest in a portion of all real property owned by her husband during their marriage. The common law principal of dower was codified in MCL 558.1, et. seq. It provided a widow with the use, during her lifetime, of 1/3 of all real property owned by her husband during their marriage. It is because of dower rights that a male grantor's marital status appears on deeds in Michigan. It is also the reason a wife must sign a deed when her husband is transferring real property only he owns.
"Release Me" was a popular song written by Eddie Miller and Robert Yount in 1949 and made into an international hit by Englebert Humperdinck in 1967. The opening line of the song "[Please release me, let me go," is also a constant refrain of trustees who (understandably) want to be released from liability in exchange for distributions of trust assets to the beneficiaries. This is especially true when beneficiaries have expressed concerns or complaints about a trustee's work as trustee. And why not? Contractors are asked to provide releases of lien in exchange for payment. Others in the context of fulfilling contractual obligations frequently seek a release in exchange for full performance. Should trustees be treated any differently? Under Michigan law, they are; probably.
2015 saw the end of legendary bluesman B.B. King. While the 15-time Grammy winner died peacefully in his sleep, the time since his passing has been decidedly less so. King's estate, which is estimated to be anywhere between $5 and $30 million, is being fought over by King's 15 children from 15 different women.
A California judge dismissed a challenge to the mental competency of 92 year old billionaire Sumner Redstone (Viacom and CBS's controlling shareholder) after reviewing videotaped testimony where Mr. Redstone appeared to be competent and clearly indicated his desires to cut Ms. Herzer (his former girlfriend) out of his life.
Is it acceptable practice for a lawyer to prepare estate planning documents that leave a client's assets to him or her? A very interesting case pending before the Michigan Supreme Court should answer this question. The Michigan Code of Professional Conduct, that governs lawyers licensed by the State Bar, states very clearly that a lawyer shall not prepare an instrument giving the lawyer (or a close relative) a substantial gift, including by will, from a client MRPC 1.8(c). Yet, this is exactly what happened in the case of Papazian v Goldberg, where lawyer Mark Papazian prepared the will for his long-time friend and client, Robert D. Mardigian, that left Papazian an estate of about $20,000,000 to the exclusion of Mardigian's longtime girlfriend, nieces and nephews.
Many lawyers have multiple specialties that seem to go hand in hand. People often think of lawyers with dual specialties as having only one. Tax AND estate planning, medical malpractice AND personal injury, corporate AND securities are but a few examples that come immediately to mind. Let me add another natural combination of which I am one of a very few members; real estate AND probate.
One of the most fruitful and confused areas of estate and trust litigation involves the mental capacity of the grantor of a trust. Not too long ago, the Michigan legislature made it clear that the mental capacity necessary to create a trust is the same as the mental capacity necessary to make a will. But a significant problem remains. How do you know?
Don't forget the IRS. It sounds like a silly platitude. The IRS always gets theirs, doesn't it? But in a decedent's estate it is essential that someone (a personal representative) file a final tax return for the decedent. Again, this seems simple, but not always. Let's say Grandpa Bill, who was working up until his death, died March 15, 2014. Let's say all of his financial assets were jointly owned with daughter. Since Grandpa died before April 15 he hadn't yet filed his 2013 return AND he had income in 2014 for which another return has to be filed.