Articles Posted in Trusts & Estates

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Appellant James Corn appealed a circuit court order denying his petition to establish a special-needs trust pursuant to 42 U.S.C. 1396p(d)(4)(A). Corn was disabled because of a head injury from which he suffered short-term memory loss. Because of the severity of his injury, he received Social Security Disability (SSD) and Supplemental Security Income (SSI). Corn’s eligibility made him automatically eligible for Medicaid. However, SSI had an asset test which stated that Corn would become ineligible if he were to have assets of more than $2,000. Because of this, Corn’s partner, Ms. Yelvington, now deceased, established a special-needs trust for him. Yelvington also designated Corn as a beneficiary on life insurance policies and her bank accounts. There was approximately $260,000 that was not transferred into the special-needs trust created by Yelvington, and because Corn was designated as the beneficiary on these assets they would pass directly to Corn upon Yelvington’s death. Because these assets would be passing directly to Corn rather than through a special-needs trust, Corn would be ineligible to receive SSI benefits. In order to prevent this, Corn attempted to create a "D4A" trust. At the time of the circuit court hearing, Yelvington had passed away and her estate was in probate. Corn had not yet received any funds from her estate or from her beneficiary designations. In its order denying Corn’s motion for reconsideration, the circuit court found that the establishment of the trust would be against Arkansas public policy and that there was insufficient evidence presented to support that a special-needs trust should be established. The Supreme Court found that through his testimony at the hearing and by attaching letters from the Social Security Administration to his motion for reconsideration, Corn provided the circuit court with sufficient evidence of his disability. Therefore, the Court held that the circuit court erred in finding that there was insufficient evidence that Corn was disabled. The circuit court’s order was reversed and the case remanded for a determination of whether the proposed D4A trust met the requirements set forth in the statute. View "In re Corn" on Justia Law

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The circuit court granted Janet Autry’s petition to be appointed temporary guardian of Louise Sheperd. Pam and Don Beckham were allowed to intervene. The circuit court appointed the Beckhams guardians of Sheperd and First Community Bank of Searcy as the guardian of Sheperd’s estate. The court of appeals reversed. Before the mandate issued, Timothy Whaley filed an ex parte petition to be appointed temporary guardian and permanent guardian of Sheperd. Before the circuit court took action, the Beckhams filed another petition to intervene and for appointment as guardians. The circuit court denied Whaley’s motion to dismiss the Beckhams’ motion to intervene, granted the Beckhams’ intervention, and reappointed the Beckhams as temporary guardians of the person of Sheperd and First Community Bank as guardian of the estate. The Supreme Court affirmed, holding that the circuit court did not err in denying Whaley’s motion to dismiss the Beckhams’ motion for leave to intervene in the probate proceedings. View "Whaley v. Beckham" on Justia Law

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Appellee filed a notice of appeal from a probate order approving a settlement agreement among Appellants. Upon Appellee’s motion, the circuit court extended the time to lodge the record. Appellee subsequently filed a motion asking the court to enter a nunc pro tunc order clarifying its findings of fact relating to the order granting the extension because that order did not include the findings required by Ark. R. App. P.-Civ. 5(b). The circuit court entered the nunc pro tunc order. Appellants appealed, arguing that the circuit court erred in entering the nunc pro tunc order because Rule 5(b) had not been complied with at the time the original motion for extension of time was granted. The Supreme Court (1) affirmed the circuit court’s nunc pro tunc order, as the extension order complied with Rule 5(b); (2) affirmed the circuit court’s order approving the settlement agreement, as the settlement was in the best interest of the Estate of J.D. Ashley, Sr.; and (3) denied Appellants’ motion to dismiss Appellee’s appeal and their motion for sanctions, as Appellee timely lodged the record for his appeal and Appellee’s appeal was not frivolous. View "Ashley v. Ashley" on Justia Law

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Settlor executed a will stating that First Presbyterian and First Baptist churches were to receive the remainder of his estate, which consisted largely of farmland. The Settlor named a trustee and directed it to hold the farmland as a testamentary trust during the life of the will’s lifetime beneficiaries and, thereafter, to distribute the proceeds of the property to the churches. First Presbyterian later dissolved its congregation and transferred its assets to Covenant Presbytery. The trustee for the Settlor’s trust requested that the circuit court determine the rights of First Baptist and Covenant Presbytery to the farmland and its income. The circuit court applied the cy pres doctrine and reformed the trust to provide that First Presbyterian’s distributions should be transferred to First Baptist. Covenant Presbytery appealed. The Supreme Court reversed, holding (1) because the will did not create a charitable trust, the cy pres doctrine was inapplicable; and (2) per the parties’ stipulation, First Presbyterian assigned its rights under the trust to Covenant Presbytery. View "Covenant Presbytery v. First Baptist Church" on Justia Law

Posted in: Trusts & Estates

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Appellant was a signatory to a family settlement agreement concerning a will that was subsequently approved by the circuit court. The agreement distributed a portion of the assets of the decedent’s estates to the estate of a minor, K.P. Appellant later filed a motion to set aside the family-settlement agreement, alleging that, after the circuit court had approved the agreement, Appellant discovered that K.P. was not the decedent’s natural child and that K.P.’s mother had falsely claimed that K.P. was the decedent’s natural child. The circuit court dismissed Appellant’s motion on the basis of res judicata, finding that the issues of paternity and proportionate entitlement to inherit had already been litigated. The court also dismissed Appellant’s motion to compel discovery as moot. The Supreme Court affirmed, holding that the circuit court properly concluded that its ruling on res judicata rendered moot Appellant’s motion to compel discovery. View "Norris v. Davis" on Justia Law

Posted in: Trusts & Estates

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Bank of the Ozarks was designated as the successor trustee of the Hamilton Family Living Trust. The Trust’s primary beneficiaries were Larry Hamilton and Susan Cossey. The Bank had possession of the Trust’s assets through a custody agreement with the trustees. The Bank sent correspondence to Larry Hamilton rejecting the trusteeship but still reimbursed Hamilton for certain expenses. Cossey later brought a petition for an accounting against the Bank. The circuit court granted the petition, finding that once the Bank reimbursed Hamilton for certain expenses, the Bank accepted the trusteeship by performing duties as a trustee. The Bank appealed, arguing that it had explicitly rejected the trusteeship and was thus not required to perform an accounting. The Supreme Court affirmed, holding that the Bank accepted the trusteeship by exercising powers as a trustee. View "Bank of the Ozarks v. Cossey" on Justia Law

Posted in: Trusts & Estates

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After Decedent died in 2010, Appellee, Decedent’s wife, filed a complaint seeking to have a Will and Trust Decedent executed in 2009 set aside on grounds of incapacity and undue influence, or alternatively, to elect to take against the Will. The circuit court concluded (1) Appellee’s election take against the Will of Decedent was valid; and (2) Decedent’s intent in creating the Trust was to deprive Appellee of her elective share in his Estate, and therefore, the Trust assets would be included as part of the Estate for the limited purpose of calculating Appellee’s elective share. The Supreme Court affirmed, holding that the circuit court did not err in (1) including the assets of the Trust in Decedent’s estate; (2) finding that Decedent intended to defraud Appellee of her statutory rights to his property; and (3) finding that when a settlor creates an inter vivos revocable trust with the intent to deprive his or her surviving spouse of marital rights to property, then the trust assets will be included in the settlor probate estate for the limited purpose of calculating the elective share. View "In re Estate of Thompson" on Justia Law

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At issue in this case was real property owned by Lacy Bryant at the time of his death. Lacy left a will devising a life estate in the realty to his wife, Naomi, and devising the remainder to his youngest child, Brenda Osborn. Lacy’s will was never admitted to probate. Instead, Osborn filed an affidavit for collection of small estate, and later executed and filed an “Administrator’s Deed” transferring the real property from Lacy’s estate to herself. After Naomi died, Appellants, some of Lacy’s heirs, filed an action against Osborn, asking the court to, among other things, declare that the terms of the will were invalid and that Lacy had died intestate. Ultimately, the circuit court found that Osborn had fully complied with the requirements of Ark. Code Ann. 28-41-101, the statute governing the collection of small estates, and that the Administrator’s Deed was a valid conveyance of Lacy’s real property. The Supreme Court reversed, holding that the circuit court clearly erred in finding that Osborn satisfied the statutory procedures for collection of a small estate and that the Administrator’s Deed was a valid conveyance. Remanded. View "Bryant v. Osborn" on Justia Law

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Appellee, as special administrator of the estate of Rufus Owens and on behalf of the wrongful death beneficiaries of Owens, filed a lawsuit against Pine Hills Health and Rehabilitation, LLC and others for injuries Owens sustained during his care and treatment at Pine Hills. Appellants moved to dismiss the complaint and compel arbitration pursuant to an arbitration agreement. Appellee argued that the arbitration agreement was unenforceable because there was no evidence of mutual assent where the agreement was signed by Appellee as the "responsible party" but did not bear the signature of a representative of Pine Hills. The circuit court denied the motion to compel arbitration. The Supreme Court affirmed, holding that there was no objective evidence of mutual assent, and therefore, the arbitration agreement was unenforceable. View "Pine Hills Health & Rehab., LLC v. Matthews" on Justia Law

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After Decedent died, Decedent’s will was admitted to probate, and all of Decedent’s property was devised to his sister. Appellant petitioned to inherit from Decedent’s estate, claiming that she was the pretermitted child of Decedent and that she was entitled to receive all of his estate as his sole heir. The circuit court dismissed Appellant’s petition for failing to file her claim against the Estate and failing to establish her paternity within the 180-day period required under Ark. Code Ann. 28-9-209(d). The Supreme Court affirmed, holding that the circuit court did not err in dismissing Appellant’s petition due to her failure to satisfy the statutory requirements. View "Bell v. McDonald" on Justia Law