Informality is the enemy of estate and trust administration. What do I mean by that? I mean that, when a decedent handled his affairs informally prior to death, or when informality reigns following his death, then you can be assured of a mess. Let me share three examples:

1. Ray Danner died in August of 2008. As this article explains, Mr. Danner made a number of loans prior to his death. His estate is now trying to collect on these loans. The defendants' defense:

?It was the accepted practice of the parties that Danner would loan the money with the expectation of repayment only if the entity were profitable. The parties have no reason to believe other than that in this case.?

If that's true, then -- yikes! I don't know if I want to live in a world where someone is loaned money and signs a note, yet all of the parties understand that the loan needn't be repaid.

2. I am involved in a series of connected probate cases. The cases involve three siblings and their aunt (who predeceased them). The aunt died in 1999 -- since then, very little has been done with respect to her property. So it sits, vacant, awaiting sale and distribution to her 35 heirs (because the aunt died without a Will). But wait! We now find out that perhaps the property wasn't owned by the aunt at all, but rather by her sister. And did I forget to mention the "agreement" that may or may not have existed between two siblings, in which they tried to bypass probate by informally dividing up the property of deceased relatives?

3. Remember Redd Foxx? The star of "Sanford and Son," a surprisingly blue standup comedian, and the man who once remarked that ?[t]here's nothin' uglier than an old white woman"? Mr. Foxx died 19 years ago, but his estate is still... in the Red(d). (Sorry, couldn't resist. I'll be here all week.) His estate owes back taxes, but what's been collected or done since his death? Not much of anything, it appears. Is there money to pay the bill or, if not, does the estate own anything that could be sold? The article is here.

I got this question twice in one day, so that's probably a sign from someone that I should answer it: Why do trust documents typically recite that the trust creator (sometimes known as the grantor) has transferred $10 (or some other sum) to the trustee?

The answer is that a trust cannot exist without assets. The trust must contain something (known as the trust corpus) in order to be a valid trust. Of course, this is a bit of a silly rule, especially when the grantor and the trustee are the same person. Do you take $10 from one pocket and put it into a different pocket?

The Art of the Steal is a new documentary currently playing in limited release in Philadelphia and New York City. Hopefully it will come to Chicago and/or DVD soon.

The film focuses on the art collection of Albert C. Barnes, who died in 1951. The collection, which is valued at more than $25 billion (yes, billion) dollars, was displayed for many years in his own museum, away from Philadelphia and its art establishment. This was by Mr. Barnes's choice. But after his death, and the death of a close friend who ran his foundation, the "big money" folks from Philly took over. They appear to have violated both the letter and the spirit of Mr. Barnes's Will, in loaning out some of his works and eventually moving the collection to a new museum in Philadelphia.

Some relevant pages:

IMDB page

Trailer in HD [edit: and a clip focusing on Mr. Barnes's Will]

This should make for an interesting film.

Here's a (seemingly) new credit card company practice that looks like a scam:

A decedent dies in early 2007, and her estate goes through probate. The administrator discovers an outstanding credit card balance of about $17,000, and sends notice to the credit card company of decedent's death and the probate. (The administrator also asks for more information about the balance, as there's some evidence that the decedent's credit card may have been stolen prior to her death.)

In response to the administrator's questions, the credit card company does nothing. It files no claims against the estate and, as time passes, all claims against the estate become barred under Illinois law. The estate is closed in late 2008, and all is quiet.

Then, out of the blue, a form 1099-C for the year 2009 arrives in the administrator's mail. On it, the credit card company shows that it forgave indebtedness to the decedent in the amount of $17,000 on November 11, 2009.

A form 1099-C has two effects:

1. Generally speaking, debts that are forgiven are treated as income to the debtor. And the form 1099-C is sent to the IRS.

2. Forgiven debts can be deducted by the credit card company on their tax returns.

To me, it looks like the credit card company is running a scam. The credit card company knows that, because of its own incompetence, the debt is no longer valid under Illinois law. Yet the credit card company wants its deduction, so it pretends that the debt is valid. And the fact that an innocent estate has to pay -- by forking over the tax on the "income," or by hiring professionals to fight the tax -- is beside the point to them. This seems like the credit card company's modus operandi -- I've heard from other attorneys who encountered the same situation with the company.

The March 2010 issue of Wired has an interesting article about companies that deal with your online assets after you die. The article says that the companies:

... keep customers' passwords, usernames, final messages, and so on in a virtual safe-deposit box. After you're gone, these companies carry out last wishes, alert friends, give account access to various designated beneficiaries, and generally parse out and pass on your online assets. Digital remains that are not bequeathed to an inheritor are incinerated, closing the book on PayPal accounts, profiles, even alternate identities....

Here is a link.