Death and Taxes - The Blog

Lawyer Fun

Before I head off for the holidays, I wanted to share two quick items:

1. Evidently, Britney Spears is suing US Weekly for $20 million over their allegation that Ms. Spears and her husband, Kevin Federline, "feared the release of a secret sex tape, which they had viewed with their estate planning lawyers."  ABC News has the story here.  I think Ms. Spears has a good case -- in my experience, estate planning lawyers are rarely called in to view secret sex tapes.

2. Last night's episode of "Arrested Development" featured an appearance by Scott Baio as attorney Bob Loblaw.  In the episode, we learned that Mr. Loblaw also has his own website, known as (what else?) The Bob Loblaw Law Blog.

State Estate Taxes: Problems in '06

Deirdre R. Wheatley-Liss, the author of the You and Yours Blawg, has a great new post entitled "Beware the Snare - State Estate Tax on the Rise."  This is a stealth issue, one that's sure to cause problems but is not getting much publicity from the mainstream media.

I'll be out of the office for Christmas through January 3rd.  Happy Holidays to all of my readers!

Only in California

Law.com's newswire has an interesting article about a recent California case.  Here are the facts:

Soon after crane operator Raymond Corder died in a construction accident in May 2001, Shaoping "Sherry" Corder -- his wife of eight months -- and Lisa Corder -- his adult daughter from a first marriage -- filed wrongful death actions that were consolidated.

The two got a $1.1 million settlement, but couldn't agree how to apportion it. At a subsequent trial, Lisa Corder presented evidence that she and her father were very close and that he had been preparing to divorce his new wife because she allegedly was working as a prostitute against his wishes.

Giving the seemingly imminent divorce great weight, Orange County Superior Court Judge Randell Wilkinson allocated 90 percent of the settlement money to Corder's daughter and 10 percent to his second wife.

Surprisingly enough, Santa Ana's 4th District Court upheld the ruling.  If this case had occurred in Illinois, I have to assume that our courts would have ignored woulda/coulda/shoulda scenarios about possible divorce, and would have awarded Mr. Corder's wife half of his probate property (with the other half passing to his descendants). 

Citation to Discover Information: Cook County Procedures

There are a lot of good resources on substantive probate law available to Illinois attorneys, but finding information about how actual court procedures work is much trickier. As a result, I’d like to spend today talking about the procedure an attorney would use to get a citation to discover information issued in Cook County. (In the near future, I'll provide more information about what such a citation can do.)

1. No notice needs to be given to anyone in order to set up a hearing on a citation petition. Just schedule the hearing date with the clerk for the judge who's handling the estate (you can also file a copy of the petition at this time).

2. You'll want to bring the following to the hearing:

• Two copies of the petition (one for you and one for the judge)
• Two copies of a blank order (more on this below)
• Five copies of the citation itself (there's a form for this in Cook County, available here as a .pdf document -- note that a copy of the petition needs to be attached to the citation)

3. At the hearing, the judge will (as long as the petition is correctly drafted) agree to issue the citation. 

4. Talk with the judge's clerk about a "return date" (that's the date the respondent in the citation will actually appear in court to answer your questions).  Note the return date on the citation itself and on the order the judge will then sign.  (The order should indicate specifically that a citation shall issue against respondent, and should specify the particulars -- return date, place, and time.)

5. Take the judge's order and the five copies of the citation to the main probate clerk's office on the 12th floor.  Go to line 7a, and the clerk will (a) stamp one of your citations as the original, (b) keep one citation copy for himself, and (c) give you back the remaining three citation copies.

6a. If you are having the citation served by the Sheriff, take the original citation and two copies to the Civil Process Division of the Sheriff's office, on the 7th floor.  When you walk in the door, one clerk will write the cost of issuing the citation at the top of the original citation; you then go to a cashier and pay that amount.

[added 1/31/06:

6b. You can also have the citation served by a "special process server," such as a private investigator. 

7. Note that, under §16-1(b) of the Illinois Probate Act, "[t]he citation must be served not less than 10 days before the return day designated in the citation and must be served and returned in the manner provided for summons in civil cases."  You'll want to check in with the Sheriff or special process server regularly to make sure that service of the citation has been completed.

8. If the citation isn't served by the date provided above (10 days before the return date), you'll need to go back to court on the return date and ask the court to issue a new citation, known as a First Alias Citation.  If you used a Sheriff on the first attempt at service, you may want to get a special process server this time.  You don't need to ask the court's permission to do this, but it's not a bad idea -- I prepare a Motion For Issuance of First Alias Citation and Appointment of Special Process Server, thereby killing two birds with one stone.]

More Thoughts on the Lender Report Card

Yesterday I presented a report card for lenders involved in two recent closings that I handled.  You may agree (or disagree) with the letter grades I gave, but the better question is: how can I use this information?

My main intention in grading lenders is to let people know that there's more to a lender than the interest rate it offers.  I think there's a tendency to believe that loans (and lenders) are fungible, and that a 5.5% loan is always better than a 5.6% loan.  That isn't necessarily so.

But part of my problem is that I am very affected by a lender's competence or lack thereof.  It can mean the difference between 1 or 2 hours spent at a closing and 5 or 6 hours spent at a closing.  Does that mean you should choose your lender to make your attorney happy?  Of course not.  Even the worst closing day may be worth it if your savings (in terms of monthly payments) are substantial. 

I think lender service (or lack thereof) is important for two reasons:

1. So that you can accurately assess the worst case scenario, and decide if you can live with it.  The 5 hour closing I recently attended was made somewhat easier because the sellers had already moved in to their new home.  But what if this hadn't been the case?  What if you were trying to sell your house in the morning and buy another house in the afternoon?  What if the funds for your purchase aren't ready in the afternoon?  Do you have to cancel movers? Do you have a place to store your stuff?  What about your family?  Bad lenders can create logistical nightmares.

2. So that you can ask tough questions of your lender before you hire them.  Questions like:

-will I work with one dedicated individual to get my loan approved?

-will one of your representatives be at the closing?

-if not, will a dedicated person be available by phone at the closing?  what is that person's name?

-when you send you loan documents to the closing, do you also send a check for the loan proceeds? if not (i.e. if you send the proceeds by wire), when is the wire sent? 

Lender Report Card

A few months ago, I wrote this open letter to lenders and mortgage brokers, explaining what I (as a buyer's attorney) need from them. 

Evidently some people didn't get the letter, as I spent much of the day on Monday (8:30 a.m. to approximately 1:30 p.m.) at what should have been a fairly simple real estate closing.  The delay was the direct result of my client's lender, Lending Tree.  For whatever reason, neither the loan proceeds nor the loan documents were at the title company when the closing began.  In fact, the loan documents didn't arrive until about 11:00 a.m, even though the closing had been confirmed well in advance, and even though the buyer and I had both asked the lender (repeatedly) if they needed anything else to close the deal (they said no).  Lending Tree offered some excuses for this delay -- computer problems, the fact that they are located on the West Coast -- but excuses don't cut it.  The buyer, the sellers, the attorneys, and the title company personnel were all inconvenienced by the lender's failure to fulfill their obligations.  Grade for this transaction: F

Another closing (held yesterday) had a far better result, because of some good work by my client's lender, Rose Mortgage.   Weeks prior to closing, they assigned a closing specialist to my client, and she did a great job of making herself available to answer questions.  There were a couple of last-minute glitches, but the closing was completed in less than 2 hours.  Grade for this transaction: B+

Slate on Mortgage Foreclosures

Slate's Daniel Gross has an interesting article about "why banks are so afraid to foreclose on you."  The article explores a number of reasons why this is so, but this quote in particular stood out to me:

"[T]he mortgage industry is working hard to avoid coming down too hard on overextended borrowers. It has... everything to do with a healthy corporate regard for self-interest, stock value, and public image."

The mention of "public image" is interesting in light of an experience I had recently. 

I am assisting in the administration of a decedent's estate -- she was survived by two adult sons (her only heirs).  After the decedent died, the lender (let's call it "The Bank That Works") decided to foreclose.  That was the lender's right under the mortgage documents, but it struck me and the two sons as unnecessary -- they were making the monthly payments on the loan (and had been since their mother's death), and were getting ready to pay it off entirely. 

I was then contacted by the bank's attorney, who told me that he was preparing to file a claim against the decedent's estate.  I indicated that this wouldn't be necessary, and asked him to hold off on doing so; after all, the bank had six months in which to file a claim, and the estate (and the bank) might be able to avoid court costs and attorney's fees if an out-of-court resolution could be reached.  The attorney agreed to wait on the filing of a claim.

The claim arrived in the mail about two weeks later.  (When I asked him about it, the attorney said he didn't recall our conversation, and stated that he had too many open files to be able to keep track of them all.)  The claim included $500 for attorney's fees.  When I told the attorney that my clients objected to paying these fees (since an out-of-court resolution could easily have been reached), the bank's attorney told me we could fight the fees in court, but that he would bill the estate for additional fees at a rate of over $200 per hour.  Frustrated, my clients then agreed to allow the claim, at which point the attorney tried to tack on an additional $200 in fees for speaking with me on the phone about this matter.

Needless to say, "The Bank That Works" shouldn't expect to get any business from me or from the decedent's sons in the future.   

Estate P.A.C.T.: A Service For Preparing Probate Property for Sale

It can be a royal pain for an estate representative to sell the decedent's house.  In many cases the house needs extensive cleaning and some repairs (often cosmetic) before it can be sold.  But where does the money for these services come from?  If the house is the major asset of the estate, then the representative will often wind up paying for services out of his or her pocket, and then getting reimbursement when the house is sold.  That's not always a good idea (and if your representative doesn't have a bunch of cash sitting around, it may not even be possible).

A Los Angeles-based realtor at Coldwell Banker, Lou Woolf, has a new service (called Estate P.A.C.T.) that could help in this area.  If you hire Mr. Woolf to sell your probate property, you gain access to a group of tradespeople who will (a) perform the necessary work on the house and (b) defer their fees until the house is sold.  (The fees are payable at the closing.)  Here is the press release.

Hopefully a Chicago-area realtor will institute a similar program -- I'm sure it would be a hit here.

Good Resource for Illinois Safety Deposit Boxes

One of the things probate attorneys hear quite a bit from executors and administrators is, "I think the decedent had a safety deposit box, but I can't find any information about it."  Luckily, for cases involving an Illinois decedent, you can contact the Illinois Safety Deposit Box Association, which will search their records to see if the decedent had a box in Illinois.  You can get the Association's info here.

Howard Hughes and the Mormon Will: Final Thoughts

What if the Mormon Will was authentic?  That certainly would turn Melvin Dummar into a victim.  But there would also be another victim in that case: Howard Hughes.  If the Mormon Will was authentic, then Mr. Hughes' wishes as a testator were not honored. 

Of course, you could say that this is in part due to Mr. Hughes' own mistakes.  The two biggies:

-(Self-Interest Alert!)  Not having his Will prepared by a skilled estate planning attorney: Such an attorney would have made sure that the Will was properly witnessed, and could have articulated Mr. Hughes' wishes and state of mind after his death.  (On a similar note, an attorney could have improved upon the language in the Mormon Will.  No estate planner worth his or her salt would have allowed a testator to leave hundreds of millions of dollars to "my personal aids [sic] at the time of my death" or to "the key men of the company's [sic] I own at the time of my death."  If the Mormon Will had been admitted to probate, I'm sure that extensive litigation would have been the result, as people argued over whether they qualified as personal aides or key men.)

-Not providing any type of documentation for the 1967 incident involving Mr. Dummar.  When you leave property to a strange beneficiary, it's a good idea to explain why you did so.  It's an even better idea to provide this explanation in writing.  If Mr. Hughes had given a letter to his attorney or banker immediately following the 1967 incident, stating that Mr. Dummar rescued him and would therefore be a beneficiary under his Will, all of this litigation could have been avoided.