Upstate Estate Law, P.C. Blog

One question that can come up when administering an estate is whether a caregiver can be entitled to be compensated from an estate for services rendered to the Decedent before death. Often what happens is a family member or significant other serves as a caregiver believing that he or she will be compensated via a bequest from the Decedent’s estate. After the Decedent passes away, the caregiver discovers that there was in fact no bequest made to them.  In that case, is there a right to recover for caregiving services from the estate?

Yes, there is such a right, but it is pretty narrowly drawn. The Courts of South Carolina have dealt with this issue.  The right to recover is through a contract right called quantum meruit, or unjust enrichment. The South Carolina Supreme Court defined this right generally in Myrtle Beach Hospital, Inc. v. City of Mrytle Beach, when it said that quantum meruit requires “1) a benefit conferred by the plaintiff upon the defendant; 2) the realization of that benefit by the defendant; and 3) retention of the benefit by the defendant under circumstances that make it inequitable for him to retain it without paying its value.” 341 S.C. 1, 8-9 (2000).

This seems pretty encouraging for our hypothetical caregiver. But not so fast. The Supreme Court further required in Sauner v. Public Service Authority of South Carolina, that the services must be given non-gratuitously. 354 S.C. 397, 409 (2003). Now here is the problem for our caregiver. Most of the time a caregiver provides care because of some familial blood relation or love and affection.  Thus, the caregiver acts gratuitously, not expecting any compensation for their work.

This was the case in Church v. McGee, et al, where the Court of Appeals recently held that a caregiver could not receive compensation from an estate because the caregiver’s own testimony supported the finding that the caregiver did not expect compensation for the services.

It is likely the Circuit Court would have held differently had there been a written contract in place between the caregiver and the Decedent regarding monetary compensation to be paid from the estate.  This raises an interesting question as well. Can you agree via contract to make a bequest to a certain person? Is such a contract enforceable? Stay tuned for a future post……..        

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

This question comes up alot, and most of the time I cringe when I hear it. I hate to see an inheritance needlessly get eaten up by attorney’s fees, and the removal of the personal representative is one of those proceedings that can lead to unnecessary attorneys fees. I find that most of the time this question arises due to a lack of understanding of the administration of an estate (some people erroneously believe that being appointed as personal representative means they are then entitled to the entire estate), or through a lack of effective communication between the personal representative of the estate and one or more of the estate beneficiaries.

Be that as it may, there are situations that call for the removal of the estate beneficiary, and not surprisingly, S.C. statute lays out the parameters. South Carolina Code Section 62-3-611 (b) says “cause for removal exists when removal would be in the best interests of the estate, or if it is shown that a personal representative or the person seeking his appointment intentionally misrepresented material facts in the proceedings leading to his appointment, or that the personal representative has disregarded an order of the court, has become incapable of discharging the duties of his office, or has mismanaged the estate or failed to perform any duty pertaining to the office.” There you go. You can seek the removal of the personal representative by showing that the personal representative lied to the court on the Application for Appointment (in regard to the identity of estate beneficiaries), offering a knowingly fraudulent Last Will for probate, willfully misrepresenting the value of estate assets, paying invalid claims, commingling estate assets with personal assets, or failure to abide by the time limits imposed on the submission of inventories and accountings.

Absent one of the above circumstances, it will be nearly impossible to have the personal representative involuntarily removed. Particularly when a Last Will nominates a personal representative, there will be great judicial deference to this choice, as again recently stated by the South Carolina Court of Appeals in the case of Church v. McGee et al, “[T]here is a strong deference shown to the personal representative chosen by the testator.” Blackmon, 366 S.C. at 251 “The Courts have ever been reluctant to take management of an estate from those to whom it has been confided by the testator, for to that extent the intention expressed in his will would be defeated.” Id. (quoting Smith v. Heyward, 115 S.C. 145, 164, 105 S.E. 275, 282 (1920). “The power to remove a personal representative should be exercised with great caution, and not at all, unless it is made to appear to be necessary for the protection of the estate, to prevent loss or injury to it from misappropriation, maladministration, or fraud.” Id. quoting Smith, 115 S.C. at 164-65, 105 S.E. 282.

If you believe you are a beneficiary of an estate that is not being appropriately administered, you should consult with an attorney before embarking on a path that may cause needless stress and anxiety.  Sometimes a phone call or letter to the attorney representing the estate will lead to clarification of what is going on with the estate, and when inventories and acountings can be expected to be received.           

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

I originally wrote this post last week, but for some reason it did not publish to the blog.  Anyway, a deal has been announced by President Obama between Republicans and Democrats concerning the federal estate tax. It seems that the Blanche Lincoln/John Kyl proposal is currently winning the day, with a $5,000,000.00 exemption per estate and a 35% tax rate.  I previously wrote about this proposal here.  The devil is in the details, and unfortunately details are a bit scanty at this time.  This proposal of course has to be passed by both the Senate and the House of Representatives, and there is fierce opposition at the moment from some Congressional Democrats.  There may be a provision as well to allow estates of persons dying in 2010 the option of filing an estate tax return under the 2011 law, or to elect to use the 2010 law with its carry over basis scheme, which would eliminate the possibility of litigation over the constitutionality of retroactive estate tax legislation.  Stay tuned…..

In 2009, it was inconceivable that in 2010 there would be no federal estate tax or generation skipping tax.  Now with 29 days left in 2010, it is inconceivable that in 2011 there will be a resurrected federal estate tax with a one million dollar exemption level and a 55% top rate, and a generation skipping transfer tax exemption of approximately 1.3 million dollars with a 55% rate.  The change over from 2010 to 2011 may usher in monumental changes in U.S. tax law.  The Congress continues to debate.  Will anything get done? Stay tuned.  If your net worth is anywhere in the one million dollar range, you need to be paying attention over the next few weeks.

Attorneys can be a strange lot.  They make up terms that nobody understands seemingly for no reason.  One such term is the intentionally defective grantor trust.  What is a grantor trust? Why would it ever be defective? And why would this be done intentionally?  Good questions all.

First, what is a grantor?  Well, a grantor is the person that sets up the trust and transfers his/her assets to it.

Second, what is a grantor trust? A grantor trust is a trust that is deemed to be owned by the grantor. This is important because it is the owner who is responsible for paying and filing the income taxes.  When the trust is a grantor trust, then it is the grantor that owns the income from the trust, and gets the benefit of the deductible expenses of the trust.  This allows the trust income tax brackets to be avoided in favor of the more favorable individual income tax brackets.  A grantor trust does not have to apply for a new taxpayer identification number because the grantor’s social security number is used.

How do you know whather a trust is a grantor trust? You determine this by reference to the trust instrument itself. What does the trust say? What powers does it grant? How is it structured? When you know this, you then take a look at the Internal Revenue Code, Sections 672 through 678. These sections are commonly known as the Grantor Trust rules.  As an example, a trust that is revocable by the Grantor is a grantor trust, and we know this by reference to IRC Section 676.  A trust that allows the Grantor to amend it to add beneficiaries (other than after adopted or born children) is a grantor trust and we know this by reference to IRC Section 674.  There are many other powers that can be granted in the trust to cause the trust to be a grantor trust.

Now that we know what a grantor trust is, why would we ever set up an intentionally defective grantor trust? An intentionally defective grantor trust is a trust that intentionally contains a provision that causes the trust to be a grantor trust.  This is done in the situation where it is desirable to structure a trust in a way that allows the trust assets to not be includible in the grantor’s estate, but still taxable for income tax purposes to the grantor.

The Irrevocable Life Insurance Trust (ILIT) is an example of Click here to finish this post.