MinnesotaBarwebsite-ebook-460x90-LawPay

MSBA News

MSBA PROBATE & TRUST LAW SECTION E-NEWSLETTER | November 2015


MSBA PROBATE & TRUST LAW SECTION E-NEWSLETTER
November 2015

Hello from the Chair

Greetings, Members!

I thank you for your membership in and work on behalf of the Probate and Trust Law Section of the Minnesota State Bar Association. As I consider our Section’s recent activities, including our multi-year commitment to study the Uniform Trust Code; our legislative initiatives (including the passage of the UTC); our continuing legal education seminars and the always excellent Probate & Trust Law Conference; the Wills for Heroes initiative that has grown beyond anyone’s most optimistic projections; the Greater Minnesota Involvement Committee; and, this revitalized newsletter, I am grateful to be part of our uniquely engaged and collegial section. As chair of the Section’s governing council, it is my goal to sustain our collaborative efforts as we work on behalf of our members and the public to assist with and improve the practice of estate planning, probate, and trust law. The governing council, with your assistance and input, will do so by continuing to provide excellent and affordable legal education, refining Minnesota law through legislative initiatives, and fostering the provision of sound, ethical legal advice.

I am privileged to serve with outstanding council officers and look forward to working with them. You can find their names and contact information here. Feel free to reach out to any of us with your questions, concerns, or recommendations. 

The council’s committees often identify section priorities and undertake many of our projects.  We all benefit from the commitments the committee members have made to our Section.  Presently constituted committees include education, legislation, newsletter, litigation, federal taxation, consumer protection and publications, greater Minnesota involvement, technology, ethics and professional responsibility, diversity, and mentoring. If you are interested in participating on a committee, please contact the committee chairperson. Opportunities for immediate participation are especially abundant if you are interested in drafting an article for the newsletter or if you would like to take on legislative research or analysis. Section committees, descriptions of their activities, and their chairpersons can be found here.

As you likely know, the Uniform Trust Code is scheduled to take effect on January 1, 2016. Chris Hunt and his committee members deserve special commendation for their extraordinary dedication to studying and securing passage of the UTC legislation. As a consequence of the UTC’s passage, the council has prioritized educational outreach to our members.  Please note that a CLE regarding the UTC and trust decanting is scheduled for December 4, 2015. Look for more UTC CLEs in the new year, including several UTC-oriented sessions at the section conference in June. 

Though the UTC legislation has passed, the legislation committee is not without work. Recent legislative initiatives that are now being promoted for passage include revisions to the Uniform Probate Code that reflect amendments recently instituted by the Uniform Law Commissioners, a proposed update to the property tax code governing the classification of certain trust-owned agricultural property as “agricultural homestead” property, and an update to the Corporate Farms Act creating an express exemption for revocable trusts that own farm property. 

Thank you once again for your participation in our section’s activities.

With best regards,

Peter S. Hatinen

Wills For Heroes

Wills For Heroes is currently still in need of volunteers (attorney and data entry positions) for an upcoming clinic at the St. Cloud Police Department on November 23, 2015.

For those interested in volunteering, please contact Andrea Bischoff (andrea.bischoff@maslon.com) or Susan Link (susan.link@maslon.com) or visit the Wills For Heroes website here.

Upcoming Events and CLE Programs 

  • Greater MN Probate & Trust Study Group Conference Call
    • Wednesday, December 16, 2015 at 9 a.m.  (the 3rd Wednesday of every month)

*Note: The November call was held earlier in the month due to scheduling conflicts. There will not be a call on 11/18/15.

  • Call-in Number: (800) 406-9170 passcode: 1491722
  • Contact either Bradley Hanson (320-251-1414 ext. 1119) or JoEllen Doebbert (320-763-7838) with any questions or to join the group.

  • MSBA Probate & Trust Law Section Monthly Meeting
    • Thursday, November 19, 2015 at 3:30 p.m.
    • Location: MSBA Offices
    • Call-in Number: (800) 406-9170 passcode: 1491722 

Case Law Update 

(The following excerpts are republished with permission from the Notes & Trends section of the October 2015 issue of Bench & Bar of Minnesota. These were submitted by Robin R. Tutt of Lindquist & Vennum LLP and can be found at: http://mnbenchbar.com/2015/10/notes-trends-october-2015/)

•     Revocatory acts on photocopy of will do not constitute valid revocation of will. The Minnesota Court of Appeals confirmed that a validly executed will cannot be revoked by alterations to a photocopy of the will. In order for a revocatory act on a will to be effective, the act must be performed on “a will executed according to statutory formalities,” and a photocopy is not a will executed according to statutory formalities. In re Estate of Sullivan, ___ N.W. 2d ____, 2015 WL 4877796 (Minn. Ct. App. 2015).

•     Priority to nominate personal representative linked to qualification to serve. The court of appeals held that when a person with priority to serve as personal representative is unsuitable or does not qualify to serve in such capacity, that person is divested of his/her statutory authority to nominate a personal representative. In re Estate of Nething, No. A15-0543, 2015 WL 5312315 (Minn. Ct. App. 9/14/2015).

Federal & Minnesota State Tax Update

(The following excerpt is republished with permission from the Notes & Trends section of the October 2015 issue of Bench & Bar of Minnesota. This was submitted by Robin R. Tutt of Lindquist & Vennum LLP and can be found at: http://mnbenchbar.com/2015/10/notes-trends-october-2015/)

  • Projected 2016 indexed amounts. Based on the August 2015 Consumer Price Index released by the Labor Department, the following is a partial list of the projected indexed amounts applicable in 2016:
    • Unified estate and gift tax exclusion amount applicable to gifts made and estates of decedents dying in 2016 will be $5,450,000 (up from $5,430,000).
    • Generation-skipping transfer (GST) tax exemption amount will increase to $5,450,000 for transfers in 2016.
    • Gift tax annual exclusion amount remains steady at $14,000 for gifts made in 2016.
    • The decrease in value resulting from the use of special valuation is limited to $1,110,000 for decedents dying in 2016. This is an increase of $10,000 over the 2015 special use valuation reduction limit.
    • The annual exclusion amount for gifts made in 2016 to noncitizen spouses will be $148,000 (up from $147,000 in 2015).

Article

Dual-Track Jurisdiction for Trust Litigation Proceedings under the new UTC

By Julian C. Zebot[1]

At long last, Minnesota has a new trust statute—the somewhat confusingly titled Section 501C of the Minnesota Statutes (also commonly referred to as Minnesota’s Uniform Trust Code).  While the statute originated as an exercise in defensive drafting intended to stave off whole-sale adoption of the Uniform Trust Code—from which the new statute is partially derived, more than four and a half years later, the new statute’s drafters and proponents are excited about its enactment and what it will mean for Minnesota estate planners, clients, and fiduciaries when it takes effect on January 1, 2016. 

The new statute codifies, in substantial part, existing Minnesota trust law, but it does make some important substantive and procedural changes that attorneys and clients alike should be aware of.  One of the more noteworthy changes brought about by the new statute is the addition of an in personam jurisdiction option in trust litigation proceedings.  Prior to the UTC’s passage, Minnesota had been one of the few states that used in rem jurisdiction exclusively in such proceedings. Under the new statute, parties petitioning the court will be given a choice between proceeding in rem or proceeding in personam.  Their choice may well depend on the nature of the subject trust and the interests of the parties.

            In rem jurisdiction is binding on any current or future claim to the property, which provides for almost complete peace of mind upon entry of a final order.  Minnesota law, however, requires that in rem proceedings be commenced by publication, which may deter some parties who place a high value on personal privacy.  Despite this drawback, in rem jurisdiction will likely remain the preferred option for trusts with multiple beneficiaries because it still provides the cleanest and most certain way to comprehensively avoid future disputes or claims.  In addition, it remains, under the new statute, the only option for a party who wishes to submit the trust to the court’s continuing supervision.

            While not so comprehensively binding, in personam jurisdiction—think back to your first year of law school, International Shoe, and the analysis of a defendant’s “minimum contacts” with a particular jurisdiction—does away with the publication requirement.  Individual service of process removes the need for public notice.  Unlike an in rem proceeding, however, an in personam proceeding will not bind an interested person who was not given a chance to appear and who was not “virtually” represented by one of the litigants.  This may be of particular concern with respect to a trust with a large number of beneficiaries, or unascertained beneficiaries, with potentially diverse interests, as it may be difficult to identify and serve process on every interested person pursuant to Rule 4 of the Minnesota Rules of Civil Procedure.

            While in personam jurisdiction’s reach may not be as complete as in rem jurisdiction, it is broadened under the new statute by the simultaneous adoption of an expanded version of virtual representation, which allows an agent to stand in for a principal, a fiduciary for a beneficiary, and a parent for a child.  In certain circumstances, an unrepresented party will even be bound if his or her interest is substantially identical to a party who participated in the proceeding.  Notwithstanding the broadening effect of these virtual representation provisions, in personam jurisdiction will still likely be better suited to, and more commonly used with, trusts that value privacy, have fewer beneficiaries, and no need for continuing judicial supervision. 

Newsletter Committee Co-Chairs: Kimberly Prchal and Jennifer Santini

To access the PROBATE & TRUST LAW SECTION WEBSITE |Click here

************************************************************************

If you are interested in submitting an article, please contact Kimberly Prchal (kim@blahniklawoffice.com) or Jennifer Santini (jen@sykorasantini.com) with your idea.

If you do not wish to receive this E-Newsletter, send your request to be removed from the mailing list to Tram Nguyen at tnguyen@statebar.gen.mn.us.

Current and prior E-Newsletters are posted on the website for the MSBA Probate & Trust Law Section and are available at: Probate & Trust Law Section Newsletters


[1] The Author is a partner in Maslon LLP’s Litigation Group and focuses his practice on fiduciary and trust litigation, as well as commercial litigation involving claims of unfair business competition. He has broad experience litigating and resolving disputes involving fiduciary duties, trusts, probate, business torts, and other complex commercial litigation, including litigation involving banks, other financial service businesses, and closely held corporations. The Author would like to acknowledge and thank Kristian Weir, an associate with Maslon LLP, for his assistance with this article.  A version of this article was previously published on www.epilawg.com, as part of a continuing series on the new UTC.