April 18, 2014 § 4 Comments
The anniversary of the Boston Marathon bombing has brought with it reruns of those horrific hours. We have borne witness again to that cataclysmic moment when the explosion ripped Boylston Street, followed in only a minute or two by a second blast within feet of the first. Victims are fallen and bleeding, there is shattered glass and shards of metal. People are dying, bleeding out, gasping for life, in shock, limbs torn off. Chaos is everywhere.
Within seconds of the explosions we see people throwing twisted barricades aside off of the victims, applying tourniquets, comforting, calling for help, picking up broken bodies and running with them to find aid. They did all this with the uncertainty whether they might be in danger from even more blasts.
There was a news report this week from the west coast in which a young father, hanging out with some friends, intervened to stop a group of men from roughing up a homeless person. For his trouble, the young man, only 39, was stabbed in the chest and killed. His wife said that he was only ” … trying to help somebody who needed help.”
I heard a minor’s settlement a few days ago that arose from the Deepwater Horizon disaster. It was the last claim from among those of the eleven workers who were killed. The evidence was that this particular worker, a crane operator, was not killed by the first blast, but he turned back from the rescue boats and climbed up into his crane, repositioning and “cradling” it so that the rescue boats could get away. As he scrambled down from the crane, there was a second explosion, and he was blown off the ladder and killed.
In each of these events, people ran toward danger when any sane person would have run away. What impels them to do this?
Some might say it is simple heroism. Others may attribute it to extreme courage that most people don’t possess. Still others may see in their actions the hand of God, or destiny, or fate, or karma, or predestination, or any number of motivating factors. There are as many possibilities as there are possible human actions.
To me, though, the evidence lies in the testimony of the witnesses who knew these people best. In the aftermath of a catastrophe, relatives, neighbors and friends often reminisce that the person who ran toward was an ordinary person who led an ordinary life, doing all of the ordinary things that folks like you or I do every day.
I believe that’s because those people who run toward danger are really no different than you or I. I believe that each of us carries inside the gene for courage and selflessness that impels us to lay aside our first instinct for self-preservation in favor of an overriding desire to help, or to rescue, or to avert a greater disaster with full knowledge that we may not come through it alive or intact.
Still, the question remains: what makes these people act on what that gene drives us to do, while others do not. Why do some run toward, while some run away? It’s hard to know what any of us would have done in those fearsome and fatal events. If you’re like me, you’d like to believe that you would be one who ran toward, not away. But we can’t be certain until we are ourselves faced with a similar situation, God forbid.
Most times, I am sure, running toward is a spur-of-the-moment, reflexive decision made when there simply is no time for rational thought or reflection on the pros and cons. The individual’s character structure and personality, then, influence whether one allows the courage and selflessness impulse to trump the survival instinct.
That is not to say that there is anything wrong in wanting to escape harm. Animals are hard-wired to do that very thing, to survive at almost any cost.
But the idea that some will somehow cancel their fear and run toward the chaos to try to bring help, rescue, redemption, and humanity to a situation where all those things have been torn violently away from others is an uplifting and consoling thought. It’s comforting to know that there are people like that. It’s comforting to know that we have the same ingredients within each of us.
April 17, 2014 § 2 Comments
Reprise replays posts from the past that you may find useful today.
NOTE: Some of these links have been affected by later case law and amendments to statutes. Always search for later posts and later case and statutory law before relying on these link.
A COMPENDIUM OF ESTATE POSTS
July 5, 2011 § 4 Comments
- Before you file the pleadings, ask yourself whether it is necessary to open an estate in this case.
- And here’s some more info on how to pass assets without an estate.
- Exempt property is not a part of the estate. Here’s a guide to what is exempt and what is not.
- The original will must be probated and retained by the clerk.
- Bonds in testate and intestate estates.
- Probating a will in common form.
- How to probate a copy or a lost will.
- Administering an intestate estate.
- Determining the heirs in an intestate estate.
- When can inventory and appraisement be waived?
- Oops, you filed that estate in the wrong county. Here’s why it can not be transferred.
- What happens when a testator leaves a bequest that can not be satisfied? It’s called ademption.
- And here’s how to handle lapsed legacies.
- Can you set aside an inter vivos gift between spouses? Here’s the rule.
- Contesting probated claims.
- Will contests: Undue Influence.
- Will contests: Lack of testamentary capacity.
- Five tips to improve your probate practice.
- A few random estate matters.
- What you need to know before trying to sell real property in an estate.
- Navigating your way through an insolvent estate.
- You need to know how to deal with this wrinkle in publishing process to close an estate.
- Waiving accounting.
- A checklist for an accounting.
- Reading the duties of an attorney in a probate matter might give you second thoughts about taking that case.
- Sure, you want to get paid. Here’s what you need to prove to get an award of an attorney’s fee in a probate matter.
- A checklist for closing an estate.
- Handling estate matters in District 12, Place 2.
April 16, 2014 § Leave a comment
David “Junior” Kimbrough was a world-renowned bluesman of the North Mississippi hill country. He died after suffering a heart attack in 1998. He had a will leaving his entire estate to his long-time girlfriend, Mildred Washington, and it was admitted to probate shortly after Junior’s death.
The matter languished on the docket for reasons not disclosed in the record. A will contest was filed finally some eleven years after the estate was opened. Litigation snowballed, including an interlocutory appeal, and the matter culminated in a 2012 trial.
The proof was that Matthew Johnson, an officer of Fat Possum Records and Mockingbird Music, prepared the will that Kimbrough signed at the same time that he signed record deals with Johnson’s companies. The contestants claimed that Johnson had a confidential relationship with Kimbrough, and that he exercised undue influence over the bluesman to have Kimbrough’s girlfriend named as sole beneficiary. They claimed that the will should be set aside, putting them into position to inherit Kimbrough’s estate.
The chancellor granted a R41(b) motion dismissing the contestants’ claims, and they appealed. Although they raised IX points (that’s the Super Bowl version of “nine points”), the MSSC, which kept the case, addressed only whether the chancellor was in error in granting the R41(b) motion.
In Kimbrough, et al. v. Estate of Kimbrough and Washington, handed down March 20, 2014, Justice Pierce wrote for the unanimous court (Chandler not participating).
The court first addressed the question whether Johnson had abused his confidential relationship:
¶12. In re Estate of Laughter defines a confidential relationship as “ . . . between two people in which one person is in a position to exercise dominant influence upon the other because of the latter’s dependency on the former arising either from weakness of mind or body, or through trust[.]” In re Estate of Laughter, 23 So. 3d 1055, 1063 (Miss. 2009) (quoting Hendricks v. James, 421 So. 2d 1031, 1041 (Miss. 1982)). Further, this Court has identified the following seven factors to consider when determining whether a confidential relationship exists:
(1) whether one person has to be taken care of by others, (2) whether one person maintains a close relationship with another, (3) whether one person is provided transportation and has their medical care provided for by another, (4) whether one person maintains joint accounts with another, (5) whether one is physically or mentally weak, (6) whether one is of advanced age or poor health, and (7) whether there exists a power of attorney between the one and another.
Laughter, 23 So. 3d at 1063 (citing In re Estate of Holmes, 961 So. 2d 674, 680 (Miss. 2007) (citing Wright v. Roberts, 797 So. 2d 992, 998 (Miss. 2001))).
¶13. If it is determined that a confidential relationship exists, an abuse of that relationship must be shown for the Contestants to raise a proper presumption of undue influence. Costello v. Hall, 506 So. 2d 293, 298 (Miss. 1987). The existence of a confidential relationship, standing alone, does not raise a presumption of undue influence. Laughter, 23 So. 3d at 1064 (citing Wright, 797 So. 2d at 999 (citing Croft v. Alder, 237 Miss. 713, 723-24, 115 So. 2d 683, 686 (1959))); see also Matter of Will of Adams, 529 So. 2d 611, 615 (Miss. 1988); Matter of Will of Wasson, 562 So. 2d 74, 78 (Miss. 1990).
¶14. The person who allegedly is taking advantage of the confidential relationship “ . . . must have used that relationship for his personal gain or to thwart the intent of the testator.” Costello, 506 So. 2d at 298 (citing Croft, 237 Miss. at 723, 115 So. 2d at 686); see Barnett v. Barnett, 155 Miss. 449, 457, 124 So. 498, 500 (1929) (undue influence over the execution of a will arises when the testator’s will is replaced by the will of another); and Wasson, 562 So. 2d at 79 (undue influence results in a will reflecting the beneficiary’s wishes rather than the wishes of the testator); Matter of Will of Adams, 529 So. 2d 611, 615 (Miss. 1988) (To effectively raise the presumption of undue influence, there must be a showing that the confidential relationship was abused through dominance over the testator or by replacement of the testator’s intent for that of the beneficiary.).
¶15. Laughter reaffirmed that a presumption of undue influence arises when the following circumstances are present:
where the beneficiary has been actively concerned in some way with the preparation or execution of the will[;] or where the relationship is coupled with some suspicious circumstances, such as mental infirmity of the testator; or where the beneficiary in the confidential relation was active directly in preparing the will or procuring its execution, and obtained under it a substantial benefit.
Laughter, 23 So. 3d at 1064 (quoting Croft, 237 Miss. at 723-24, 115 So. 2d at 686) (internal citations omitted)).
¶16. Commonly, undue influence is exerted by a person who is a named beneficiary in the will. However, this Court has extended the doctrine to nonbeneficiaries. The extension to nonbeneficiaries is seen in Weston v. Lawler’s Estate, in which this Court stated, “Undue influence over a testator, while not exercised by a beneficiary under the will, may be done so through an agency or a third person.” Weston v. Lawler’s Estate, 406 So. 2d 31, 34 (Miss. 1981) (citations omitted); see also Wasson, 562 So. 2d at 79.
The court went on to distinguish the cases from this one, and concluded that there was no abuse of the relationship by Johnson. As Justice Pierce pointed out:
¶22. The chancellor also determined that the testimony overwhelmingly showed that Kimbrough “called his own shots.” The chancellor went on to conclude that, even though Kimbrough was uneducated, he was not ignorant, and in fact, he was an extremely intelligent man. The chancellor pointed to the testimony revealing that, since Kimbrough could not read or write, all of his songs were performed from his memory alone. He further pointed to testimony providing that Kimbrough was hardheaded and did not let others pressure him. The chancellor ultimately decided that the Contestants hadid not meet their burden of proof, because their allegations were nothing more than “a lot of suspicions.”
¶23. Lastly, it should be noted that, when reviewing a will contest, the polestar consideration is to carry out the intent of the testator. Wasson, 562 So. 2d at 79 (citing Tinnin v. First United Bank of Mississippi, 502 So. 2d 659, 667 (Miss. 1987)). During the chancellor’s ruling, he discussed that Kimbrough had a child with Washington, that Washington was the last woman Kimbrough lived with, and that he was on her couch the day before he died. Testimony provided that Washington and Kimbrough had a relationship for many years. Washington is pictured on the inside cover of his last-released album. Johnson testified that when Kimbrough became ill, he was instructed to pay Washington any sums owed to Kimbrough by his companies, because Washington was the person who took care of Kimbrough.
Aside from the fact that this case is an exposition on how the analysis of undue influence works, it demonstrates how undue influence is not limited to one who benefits from it.
The case also eloquently illustrates what I have told lawyers in my court many times: “The longer you leave open an estate, the more problems it attracts.” How much money would Mildred Washington have saved in attorney’s fees had the estate been closed ten years before the contest was filed? There may have been meritorious reasons that this particular estate stayed open for as many years as it did, but 99% of estates have no business remaining open this long.
A noteworthy aspect of this opinion is that it includes a mere single footnote consisting of a hyperlink to Fat Possum Records’ web site. Thank you, Justice Pierce for sharing your analysis in plain sight, and not in a plethora of footnotes.
April 15, 2014 § Leave a comment
The COA’s decision in Hall v. Hall, decided March 25, 2014, is not one of those milestone cases that stands out from others.
It does, however, include a nifty selection of legal authority that you can use as a refresher and file away for future use. It’s nothing that you don’t already know or aren’t acquainted with, but it is set out in handy, bite-sized portions for ease in serving up later.
From Judge Fair’s opinion:
¶9. The burden of proof is on the movant to show by a preponderance of the evidence that a material change in circumstances has occurred in the custodial home. Riley v. Doerner, 677 So. 2d 740, 743 (Miss. 1996). To successfully move to modify custody of a child, a noncustodial parent must prove (1) that a substantial change in circumstances has transpired since issuance of the custody decree, (2) that this change adversely affects the child’s welfare, and (3) that the child’s best interests mandate a change of custody. McDonald [v. McDonald], 39 So.3d at 880 (¶37). “A modification of custody is warranted in the event that the moving parent successfully shows that an application of the Albright factors reveals that there had been a material change in those circumstances which has an adverse effect on the child and modification of custody would be in the child’s best interest.” Johnson v. Gray, 859 So. 2d 1006, 1013 (¶33) (Miss. 2003) (citing Sanford v. Arinder, 800 So. 2d 1267, 1272 (Miss. Ct. App. 2001)).
¶10. “The chancellor must consider the totality of the circumstances to determine ‘whether there was a material change in circumstances.’” Cantin v. Cantin, 78 So. 3d 943, 948 (¶15) (Miss. Ct. App. 2012) (citation and quotation omitted). If, after examining the totality of the circumstances, a material change in circumstances is found to have occurred, the chancellor “must separately and affirmatively determine that this change is one which adversely affects the children.” Bredemeier v. Jackson, 689 So. 2d 770, 775 (Miss. 1997) (citation omitted).
¶15. … In his judgment, the chancellor stated that there are no facts in the record to support that Dana’s cohabitation with a romantic partner had an adverse effect on the children. The chancellor also stated that the existence of an extramarital relationship, by itself, fails to provide a sufficient basis for a finding of an adverse material change. See Sullivan v. Stringer, 736 So. 2d 514, 517 (¶16) (Miss. Ct. App. 1999) (finding that cohabitation alone fails to give rise to a material change in circumstances). However, the existence of the relationship coupled with another adverse impact on the child provides a sufficient basis to warrant a custody modification. Id. at 518 (¶20). The chancellor did not err in considering this issue in his material-change analysis.
Comment: Modification of child custody requires what I refer to as a three-legged stool of proof. You must first prove that there has been a material change in the circumstances of the child and/or custodial parent. If you have proven the material change, then you must prove that the change has had some adverse effect on the child OR, per Riley, that the circumstances are so inherently dangerous or inimical to the child’s welfare that the court can assume an adverse effect. And, third, you must prove that it is in the child’s best interest to change custody. As with any three-legged stool, if any leg fails, the whole thing falls.
¶17. “If the court finds an adverse material change, then the next step is to apply the Albright factors to determine whether modification is in the child’s best interest.” White v. White, 26 So. 3d 342, 351 (¶28) (Miss. 2010) (citing Sturgis v. Sturgis, 792 So. 2d 1020, 1025 (¶18) (Miss. Ct. App. 2001)). The Albright factors are as follows: (1) age, health, and sex of the child; (2) a determination of the parent who had the continuity of care prior to the separation; (3) which parent has the best parenting skills and which parent has the willingness and capacity to provide primary child care; (4) the employment of the parent and responsibilities of that employment; (5) the physical and mental health and age of the parents; (6) the emotional ties of parent and child; (7) the moral fitness of the parents; (8) the home, school, and community record of the child; (9) the preference of the child at the age sufficient to express a preference by law; (10) the stability of the home environment and employment of each parent; and (11) other factors relevant to the parent-child relationship. Albright, 437 So. 2d at 1005.
Comment: Many attorneys base their trial tactics on the misconception that if they can prevail on more of the factors than the other side, their client wins. Not so. Here is what Judge Fair said about that approach:
- ¶19. An Albright analysis is not a mathematical equation. Lee v. Lee, 798 So. 2d 1284, 1288 (¶15) (Miss. 2001). Further, the “factors are not meant to be weighed equally in every case.” Id. (citing Divers v. Divers, 856 So. 2d 370, 376 (¶27) (Miss. Ct. App. 2003)). Our supreme court has held that “[a]ll the [ Albright] factors are important, but the chancellor has the ultimate discretion to weigh the evidence the way he sees fit.” Johnson, 859 So. 2d at 1013-14 (¶36).
Comment: As I have said here before, the judge can give much greater weight to one or more factors, depending on the facts in the case. For example, I had an original custody case where the mother prevailed on nearly every Albright factor save one: she had a history of mental illness and was actively delusional, would not take medication, and saw her children as part of her delusion. Dad got custody. That “mental health of the parent” factor outweighed all the others combined.
Even when a decision appears to be the “same old same old,” it just might be what you need to reacquaint yourself with the law on a given point.
April 14, 2014 § Leave a comment
We’ve visited the issue of modification of alimony in a previous post dealing with the COA case of Peterson v. Peterson, decided last year.
Peterson highlighted how difficult it can be, once alimony is ordered by the court, to terminate or reduce it.
That’s because the competing equities on both sides can be pretty strong.
The latest case dealing with similar issues is Cook v. Cook, handed down by the COA on March 24, 2014.
Cook, as is true with all of these cases, is quite fact intensive. I’m not going to rehash all of those facts here, but when you read Judge Carlton’s opinion affirming the chancellor’s decision to grant a 25% reduction in alimony, note how the trial judge, and then Judge Carlton following the chancellor’s analysis, seesawed their way down the factors, first favoring modification, and then not favoring, and then back, and then forth. It’s fairly representive of the way the judge has to weigh these matters.
The best way to avoid having to modify alimony is to avoid it in the first place. That can be difficult when there is a great discrepancy in income and ability to establish a decent earning capacity. Don’t forget that as equitable distribution expands, the entitlement to alimony contracts. So, given significant resources, you can advise your client to give more — sometimes much more — in equitable distribution so as to eliminate the need for alimony. It’s a strategy I used successfully when I practiced, and had used against me, too.
Cook also highlights the boomerang effect your client can suffer in asking for modification. Based on the principle that the best defense is a good offense, your petition to modify can be met with a counterclaim for contempt and upward modification. If the alimony was rehabilitative, you might even stir up a counterclaim to convert it to permanent periodic alimony. Oster v. Oster, 876 So.2d 428, 430-431 (Miss. App. 2004).
April 10, 2014 § Leave a comment
I won’t repeat the old saying about opinions being like a particular part of the body, everybody has one. Or maybe I just did.
Lay opinion testimony seems to draw objections like flies to day-old watermelon, but the rule on lay witnesses offering their opinions is pretty straightforward. MRE 701 says:
If the witness is not testifying as an expert, the witness’s testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness, (b) helpful to the clear understanding of the testimony or the determination of a fact in issue, and (c) not based on scientific, technical or other specialized knowledge within the scope of [testimony by experts].
That is all there is to it. Oh, and MRE 704 abolishes the old “ultimate issue” rule, which means that, if the lay person’s testimony meets the criteria of R701, it matters not at all whether it embraces an ultimate issue to be decided by the trier of fact.
So, if the witness is opining “rationally based” on his or her own perception, and it aids the fact-finder, and is not based on scientific or technical knowledge, it should come in.
- The detective opined that a particular document was not on a hard drive that he had examined. The court found it to be valid lay opinion because almost everybody nowadays has some knowledge of computer hard drives. Boone v. State, 811 So.2d 401 (Miss. 2001).
- Lay witnesses may offer their opinion whether someone had too much to drink or was intoxicated. Havard v. State, 800 So.2d 1193 (Miss. App. 2001).
- A lay witness may offer an opinion as to how fast, in mph, a person was driving, based on what he observed. Moore v. State, 816 So.2d 1022 (Miss. App. 2002).
- A licensed counselor could not offer lay opinion testimony about whether the wife was addicted to internet pornography because he did not have personal knowledge of the extent of her use of the internet. Bower v. Bower, 758 So.2d 405 (Miss. 2005).
Remember that if you try to offer lay opinion testimony and the judge sustains an objection to the offer, you must preserve the point by making an offer of proof. If you don’t, you can’t argue the point on appeal. See, Redhead v. Entergy Miss., Inc., 828 So.2d 801 (Miss. App. 2001).
Don’t assume that if your expert witness is excluded that you will be able to get that witness’s same testimony as lay opinion. As the Bower case above illustrates, the lay witness must have some perception of the event — some personal knowledge — and if he does not, his testimony would be inadmissible. Many experts have only theoretical knowledge upon which to base an opinion.
One mistake inexperienced lawyers make is to ask lay witnesses who actually saw or experienced an event their opinions about it. Most of the time it is far more powerful and effective to ask the witness to relate what she saw, felt, smelled, or heard. For example: “Can you tell me whether Johnny was dying?” is far less effective than to ask, “Tell us what you observed about his head when you arrived.” Answer: “His face was smashed up; his skull was cracked open so you could see his brains, he was covered with blood; blood was spattered on the wall behind his head, his eyes were rolled back, and he wasn’t breathing.”
Lay opinion testimony can be a useful tool in many trials, particularly in family law cases. Standing alone it may not carry the day for you, but it could be just the featherweight of advantage you need to tip the scales in a close case.
April 9, 2014 § 1 Comment
Tom Freeland posted this on his blog not too long ago:
Over the years, I’ve seen several estate cases where some family members were claiming the deceased had a lock box with hundreds of thousands of dollars in cash in it, and even were willing to swear under oath to its existence.
But I’ve never seen one with a shred of actual tangible evidence of the existence of the lock box.
I can second that. His post brough to mind some experiences I have had in that vein.
- When I took the bench I inherited a case in which my predecessor had authorized the administrator to hire a professional treasure hunter to search the decedent’s property for the buried pelf that all of the heirs were convinced was there. Successive authorizations for further excavations were granted until, in the words of one of the attorneys involved, the decedent’s home was perched on a ten-foot pedestal of red-clay dirt with devastation of strip mining all about. It took a ladder to climb onto the front porch. After the heirs exhausted their savings in their quixotic, unsuccessful quest, I authorized them to dig on their own, until at length they gave out. The case took a bizarre turn when I was asked to order that the body of the decedent be dug up and autopsied. No.
- A woman hired me to recover money in her mother’s intestate estate. Her mother had squirrelled money away each month from her meager Social Security payments in a safe deposit box. She and her sister took turns accompanying momma to the bank, so both knew of the cash. Both sisters were on the card authorizing access. After momma’s death they met at the bank and went through the safe deposit box contents. There was $18,000 there. They decided to leave the money in the box and not tell their husbands. It would be their own little trove of mad money. A couple of days later, my client claimed she had a pang of worry about the money, so she drove to the bank. Her heart sunk when she went to sign the access card and saw that her sister had been there without her the day before. All the money was gone. Her sister denied getting the money. I explained to my client all of the problems in proving her claims, and set out all the lies the sister could spin to cover her tracks. We filed a petition with the court and, to make a long story short, were able to recoup the funds because the sister made the miscalculation of revealing to an honest lawyer what she had done, and he made her do the right thing. The worst aspect for the sisters, aside from the attorney’s fees, was that when all the dust cleared their husbands knew about the money.
- Some grandchildren of an old woman in Kemper County came in to my law office one day with a cardboard box filled with rusty tin cans. That’s where grandma would stash her money over the years, depositing the cans under the concrete steps up to the front porch. She would sit on the porch all day with a switch to ward off anyone who tried to get at her riches. When we tried to count it, we discovered that the money was wet, mildewed, worm-eaten, and stuck together. The family had to get a consultant with the Treasury Department to advise how to restore the bills, mostly ones. They followed the instructions and got a Treasury check in return for the currency in the grand total of $3,000. A little more than the expenses of administration.
- In an estate my former law partner handled decades ago, the decedent left a will giving his eldest son his diamond ring and his bank accounts, and his daughter his home. The youngest son, somewhat of a n’er-do-well, got the decedent’s briefcase, hat and cane, all of which were handed over to him unceremoniously. The young man came back later and told my partner that the briefcase was full of US savings bonds. If that were true, and he found a way to cash them in, he came out pretty well.
Before you leap into that estate with stars in your eyes, step back and be skeptical about tales of untold wealth that needs to be dug up. Most people don’t handle their business that way. In many estates, you would do well to make sure your fees and the expenses of adminstration can be paid.
April 8, 2014 § 7 Comments
The MSSC has four rules posted for public comment at this link. In a nutshell, they are, with their respective deadlines for comment:
- Appellate Mediation Pilot Program, deadline May 2, 2014. Would create a voluntary procedure to hold appeals in abeyance so that they can be mediated. This proposal arose out of the practice in other states, where the result has been a reduction in pending appeals and the time it takes to resolve them.
- Amendment to MRCP 16, deadline May 26, 2014. Would amend MRCP 16 to require that, once a trial date is set, deadlines for summary judgment motions, expert motions, propounding and completion of discovery, and other procedural matters would automatically be in place. The provision that the parties or the judge may call for a pretrial conference remains unchanged.
- Amendment to MRE 105, deadline April 28, 2014. Would amend the rule to put the responsibility on the court to ensure that there is a jury instruction as to the proper scope of evidence whenever the court admits evidence for a limited purpose. The requirement may be waived by the party affected.
- Amendment to MRCP 3(c), deadline May 2, 2014. Would change the procedure for filing in forma pauperis to conform to statutes.
All of our rules of court directly affect your everyday practice of law. This is your opportunity to have a voice in those rules. You do not have to be a senior partner in a high profile law firm for your opinion to count.
April 7, 2014 § 3 Comments
Prudent investment and management of a ward’s assets is a fundamental duty of a guardian or conservator.
The task is complicated by the language of MCA 93-13-17, which states:
Every guardian, before he shall have authority to act, shall, unless security be dispensed with by will or writing or as hereinafter provided, enter into bond payable to the state, in such penalty and with such sureties as the court may require; . . . .
A guardian need not enter into bond, however, as to such part of the assets of the ward’s estate as may, pursuant to an order of the court in its discretion, be deposited in any one or more banking corporations, building and loan associations or savings and loan associations in this state so long as such deposits are fully insured, such deposits there to remain until the further order of the court, and a certified copy of the order for deposit having been furnished the depository or depositories and its receipt acknowledged.
MCA 91-13-1, et seq. set out the rules for fiduciary investments, including the types of investment instruments permitted and the manner of holding and trading such investments. No matter what the investment instrument, however, bond is required by 93-13-17, unless the money is deposited into a “fully insured” account at either (a) a banking corporation located in Mississippi; or (b) a building and loan association located in Mississippi; or (c) a savings and loan association located in Mississippi; AND the institution signs acknowledgment of receipt of the court order that no funds will be expended without court authorization.
That thicket of requirements is what Natalie Deason encountered when she tried to get chancery court authorization to invest the substantial settlement proceeds that her son, Blaine, received as a result of his father’s death in the Deepwater Horizon oil rig explosion. Natalie was appointed guardian, and she proposed to remove the guardianship to Louisiana, where she had moved, and to make certain investments of the funds without bond. The chancellor appointed a guardian ad litem for Blaine.
Following a hearing, the chancellor rejected both the request to take the guardianship out of Mississippi and the investment plan, and Natalie appealed.
On appeal, the MSSC affirmed March 27, 2014, in Guardianship of Roshto: Deason v. Stinson. You can read the court’s ruling on the removal issue for yourself, as well as Justice King’s cogent dissent. As for the investment issue, Justice Coleman wrote for the majority:
¶17. The chancellor determined that, because Natalie’s proposed investment plan would not limit the funds to being placed in FDIC insured accounts from which funds could not be withdrawn without a court order, Mississippi Code Section 93-13-17 required the guardian post a bond in the full amount of the guardianship funds. The chancellor noted, and the parties had conceded, that “such a bond would be extremely difficult to find and that the annual premium would be exorbitant.” Regarding the use of a structured settlement, the chancellor expressed concern that “the minimal savings on income taxes would be offset by the cost of the bond and by the loss of potential increased earnings when the interest rates rise.” As to the proposal to put half of the money into a trust account, the chancellor held that “[a]llowing the funds to be placed outside the control of the [c]ourt, without bond, would be an abuse of the authority of the [c]ourt and neglectful of the duty to the minor.” The chancellor ordered Natalie to deposit the funds in an FDIC insured bank account in the state of Mississippi and to “avail herself of the benefits of investing through the CDARS plan to maximize protection of Blaine’s assets and minimize her record keeping.”
¶18. Natalie asserts that the trial court erred in requiring that the entirety of Blaine’s settlement funds be placed into CDs. She argues that doing so violates both the reasonably prudent investor standard that governs fiduciaries [Fn 4 See MCA 91-13-3] and the duty of a guardian to improve a ward’s estate. [Fn 5 See MCA 93-13-38]. She claims that interest rates and other considerations related to investment in CDs effectively garner a negative return on the investment. She also argues that bond requirements for the investments should be waived because, if they are not, “[Section] 93-13-17 effectively prohibits a guardian from investing in any investment other than a fully insured bank account when a ward’s assets are substantial – because either the guardian could not obtain a bond, or could not afford one.” She asserts that such a requirement conflicts with the prudent investment statute.
¶19. The plain language of the guardianship statutes unequivocally requires a bond to be posted if the ward’s estate is placed in non-insured investments … While we understand the desire to diversify Blaine’s money and the difficulties surrounding obtaining such a large bond, the plain language of the statute simply tied the chancellor’s hands. The testimony was that, for such a large amount, CDARS was the only practical manner in which the statute could be complied with – the only way that the funds could be deemed placed in Mississippi institutions and be fully insured such that the guardian’s bond could be waived. Under Section 93-13-17, the chancellor had no option but to place the investment in a fully insured program such as CDARS, or to require that Natalie post a bond. Thus, the chancellor did not err in requiring that the entire settlement be put into CDARS.
¶20. The chancellor heard extensive testimony on all the investment options, asked questions regarding the proposed investment strategies, requested additional research on various investment strategies, and issued a lengthy and detailed judgment explaining her decision on the investment of the ward’s settlement. In her order, the chancellor noted the guardian ad litem’s “serious reservations” about the proposed investment of Blaine’s funds, such as “the fluctuating stability of the economy, the recent failures of large investment companies . . . , the historically low interest rates [that] would affect the return on investment rate of any structured annuity, and the requirement that the guardianship assets be bonded for moneys not held in FDIC insured accounts.” The chancellor cited the court’s “duty to wards under its protection to ensure the proper management of the ward’s estate,” and it was evident throughout the proceedings that her primary concern was Blaine’s best interest. The record is clear that the chancellor very carefully considered all the options and made lengthy, detailed, and thorough findings of fact and conclusions of law. Even had the statute not tied the chancellor ’s hands, we would not find an abuse of discretion under such a circumstance.
CDARS is the Certificate of Deposit Account Registry Service, described earlier in the court’s opinion this way:
Through CDARS, someone with large sums of money can deposit and manage CDs through only one bank. That bank distributes the money among other banks for placement in CDs, ensuring that less than $250,000 goes to each bank. The depositor works only with the “base” bank, but his entire sum of money is FDIC insured because it is properly distributed among various financial institutions.
From time to time, lawyers present me with an investment plan that would in all likelihood benefit the ward over the long run. No matter how favorable the terms, however, we are bound by the restrictions of the statutes.