Trustee Disclosure Obligations: Longmeyer’s Implications

July 29, 2010 By Leave a Comment

Do corporate trustees have a duty to inform beneficiaries of changes to a revocable trust?

The recent Kentucky Supreme Court decision in JP Morgan Chase Bank, N.A., v. Longmeyer[1] has disturbing implications for corporate trustees.  In Longmeyer, the Court held that the trustee’s duty to keep the beneficiaries of the trust “reasonably informed of the trust and its administration” created an absolute, affirmative duty to notify beneficiaries of the revocation or the trust when the revocation was done under suspicious circumstances.

The case involved egregious facts that contributed to the troubling result.  Ollie Skonberg had her attorney draft a revocable trust in 1984.  The trust named Bank One as the trustee.  The trust provided Ms. Skonberg with income for her life and left the remainder to various charitable beneficiaries.

By 1997, Ms. Skonberg was 93 years old and not in good health.  Her caregiver contacted attorney John Longmeyer and asked him to make changes to Ms. Skonberg’s estate plan.  The new estate plan increased the gift to the caregiver from $20,000 to $500,000, appointed Longmeyer as the trustee with annual compensation of $100,000, and removed all of the charitable beneficiaries of the trust.  The new estate plan was drafted by Longmeyer’s son-in-law (an out-of-state attorney) and witnessed by Longmeyer’s wife and secretary.  Longmeyer’s brother-in-law, who was a physician, made the assessment of Ms. Skonberg’s testamentary capacity.  Ms. Skonberg died six weeks later.

Bank One was originally engaged by Longmeyer to serve as an investment agent for the trust, but that relationship ended shortly after Ms. Skonberg died.  At the advice of counsel, Bank One notified the charitable beneficiaries that they had been removed as beneficiaries and explained the circumstances surrounding their removal.  The charities sued, claiming that the changes to the estate plan were the result of undue influence.  And, not surprisingly, they had a good case.  The charities ended up with a $1.875 million settlement on the eve of trial.

Here’s where it gets interesting for corporate trustees.  After the settlement, attorney Longmeyer sued Bank One, claiming that the bank breached its fiduciary duty by disclosing the circumstances under which the charities were removed as beneficiaries of Ms. Skonberg’s trust.

The bank countered that, instead of breaching its fiduciary duty, it had actually followed its fiduciary duty by keeping the beneficiaries of the trust reasonably informed of the trust and its administration as required by Kentucky law (which is based on the Uniform Probate Code).  This was a reasonable argument for the bank to make, but in winning the battle they may have lost the war.  Both the lower court and the Kentucky Supreme Court agreed with the bank, but stated as a matter of law that the bank had an absolute, affirmative duty to notify the charities that they had been removed.  The Court rejected the argument that the revocability of the trust negated the duty to disclose the changes to the charitable beneficiaries.

In holding that trustees of revocable trusts have a duty to notify the charities of the change to the trust, the Kentucky Supreme Court arrived at a standard that was out of touch with common practice.  The opinion states as much:

In fact, many laypersons who create revocable living trusts as will substitutes might be shocked to learn that a trustee has a duty to inform contingent beneficiaries of their potential interests, given the understanding of many settlors that so long as they are living and competent the trust assets remain essentially under their control and that they may freely change their mind about beneficiaries’ interests. But if our trust statutes are out of touch with modern policy or with the expectations of today’s community, it is the legislature’s task to amend the statutes, not this Court’s role to re-write them.[2]

While this act of judicial restraint is laudable, it may not have been required in the circumstances (for more information, see the July/August 2010 issue of Probate & Property).  But the court’s failure to distinguish between revocable and irrevocable trusts is disturbing.  Both clients and practitioners commonly regard revocable trusts as will substitutes.  As such, they are generally viewed as “ambulatory” instruments that can be modified freely during the creator’s lifetime without duty to others.  The existence of an affirmative, absolute duty on the part of a third party bank trustee to notify beneficiaries of changes to the trust instrument would come as a surprise to most corporate trustees and attorneys alike.

Some states have recognized the distinction between irrevocable and revocable trusts, treating revocable trusts more like will substitutes that are freely changeable without the need for notification of third parties.  For example, California’s statutes do not require a trustee to account or report for the trust if the trust is revocable.  Instead, the settler is treated as a beneficiary, and all rights that would otherwise vest in the beneficiaries vest in the settler instead.  The Alabama Supreme Court has found in favor of a trustee in a breach of fiduciary duty suit, holding that the trustee owed duties to the settlor alone.  And Kentucky amended its own laws to correct the result reached in Longmeyer.  But in most states, this is likely to be an unsettled issue.

Whether Longmeyer reached a right result as a matter of policy is debatable.  Most charitable institutions named in revocable trusts (or wills for that matter) are completely unaware that they are beneficiaries.  The charities’ first notification of the existence of the trust would be a notification by a trustee that they once stood to acquire a substantial sum of money but now do not.  This will create a clear incentive for the charities to challenge the trust.  But what about Ms. Skonberg’s case?  In situations like hers, can we really say that alerting the charities was a bad thing?

[1] 275 S.W.3d 697 (Ky. 2009).

 

[2] 275 S.W.3d at 701-02 & n. 9.

Filed Under: Trusts & Trustees Tagged With: ,

Constructive Trust in Pearl River County Probate Case

July 28, 2010 By Leave a Comment

Constructive trusts are not like other trusts.  They aren’t set up by one person for the benefit of another.  In fact, a constructive trust isn’t really a trust at all; it is a judicial remedy that courts use to award property to someone who has been wrongfully deprived of his or her rights.

In Mississippi, a constructive trust will arise “against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.”[1]

A recent Pearl River County probate case involves the application of constructive trust remedy to a live-in situation between a widow and her boyfriend.  The boyfriend argued that the court should apply the remedy constructive trust to give him a life estate in the home that he shared with the widow.

Barbara Parker began a romantic relationship with Edward Bourgeois in 1990, after the death of her husband. When she entered into the relationship, she owned a piece of land and a mobile home. Edward moved in with her and they opened a joint checking account together. In 1995, Barbara began building a house on her land. She invested approximately $70,000 out of her checking account. Edward claims to have also contributed $20,000 from his retirement fund to put into the home.

Barbara and Edward began living in the home after it was built and lived together up until Barbara’s death in 2005. Barbara died without a will (intestate).  Edward claimed that Barbara had orally agreed to allow him to live in the home after her death, with the home to pass to her children after his death. He claimed that the $20,000 that he contributed to the construction of the home was consideration for the life estate that Barbara gave him in the property.

By the time of Barbara’s death, the relationship between Barbara and Edward had cooled. Their joint checking account had been closed with the money divided between them equally. She had also revoked the power of attorney that she had granted Edward. And she had written a note stating that Edward was to be paid back the $20,000 he put into the home from one of her CDs.  Edward was named as the beneficiary of that CD, which had a total amount of $41,000.

When Edward received the $41,000 check he offered to pay Barbara’s children $20,000 so he could remain living in the home. The children refused. Edward then locked the children out of the property. This action prevented them from getting their mother’s documents and belongings.

Edward claimed he was entitled to live in the home as a matter of equity and asked the court to award him a constructive trust in the home.  For support, Edward attempted to show that there was “abuse of confidence”. Specifically, Edward claimed that confidential relationship existed between him and Barbara and that he had relied upon her promise that he could remain in the house after her death.  Were it not for that promise, Edward claims that he would not have contributed $20,000 to the construction of the house.  This was essentially a claim that Barbara had used her close relationship with Edward to influence him to contribute to the construction of the home. Edward claimed that the constructive trust remedy should be used to address this wrong.

Like many undue influence cases, this case turned on the existence of a confidential relationship.  Relying on prior law, the court noted that in order for a confidential relationship to exist between two persons, there must be a relation in which one person is in a position to exercise a dominant influence upon the other.[2] The Pearl River County Chancery Court felt that there was no evidence that Barbara was in any position to exercise dominant influence upon Edward.  And there was evidence that Edward knew the relationship was ending, yet he failed to get anything in writing from Barbara.

The absence of evidence to support a finding of confidential relationship was fatal to Edward’s case. There was little evidence of receipts or records that linked the $20,000 directly to the building of the house. In fact, the record showed that the $20,000 had been withdrawn after the house was built. And there was no proof that Barbara’s children would be unjustly enriched if the life estate was not awarded to Edward. The Pearl River County Chancery Court held, and the Mississippi Court of Appeals affirmed, that Edward did not meet his burden of proof that required him to prove by clear and convincing evidence (the highest standard for evidence) that Barbara’s children would been unjustly enriched were they to receive the property or that he was the rightful owner based on his past contributions to the property.

This case proves the old attorney adage: If it ain’t in writing, it don’t exist. If Barbara had really intended to give Edward a life estate in the home, nothing would have prevented her from going to a estate planning attorney and drafting the documents necessary to do so. This would have given Edward enforceable rights in the property. But since she failed to do so, Edward was left in the uncomfortable position of having to prove Barbara’s subjective intent. As between he and Barbara’s children, he had the best opportunity to prevent this situation by having documents drawn up to protect himself.

In Re Estate of Parker, 2008-CA-00693-COA (July21,2009).

[1] Planters Bank & Trust Co. v. Sklar, 555 So. 2d 1024, 1034 (Miss. 1990).

[2] Tatum v. Barrentine, 797 So. 2d 223, 230 (¶32) (Miss. 2001).

Filed Under: Estate Planning, Mississippi Probate Tagged With: , ,

Trustee’s Duty to Beneficiaries of Revocable Trust

July 27, 2010 By Leave a Comment

Alabama Case of Raines v. Synovus Trust Company addresses duties owed to beneficiaries of revocable trust

Do trustees owe fiduciary duties to beneficiaries (other than the settlor) of a revocable trust?  No, according to the Alabama Supreme Court.  A recent Alabama Supreme Court case recently held that the duties of the trustee are owed exclusively to the settlor of a revocable trust.

The facts of the case are typical of a breach-of-fiduciary-duty case.  Acting on the advice of Synovus Trust Corporation, which allegedly had promised big returns, Robert and Helen Raines created revocable trusts in on March 31, 2000.  The trusts were each funded with $1 million in assets.  Both trusts were fully revocable.  The beneficiaries included Robert, Helen, and their three children.

Synovus was named as the trustee of both trusts.  The investment agreements allegedly gave Synovus broad discretion in managing the trust, including the authority to invest the trust in accordance with the Raines’ investment objectives.

The relationship between the Raines family and Synovus soured, with Synovus resigning as trustee in 2005.  The Raines alleged that Synovus didn’t do much besides collect a $130,000 fee.  Specifically, the Raines claimed that Synovus failed to administer the trust, diversify assets, generate income, maximize growth, or otherwise carry out its duties as trustee.  Not surprising, the Raines sued, claiming breach of fiduciary duty, fraud by misrepresentation or suppression of material facts, promissory fraud, and breach of contract.

Synovus moved to dismiss the breach-of-fiduciary claim by the Raines children, claiming that they lacked standing to bring those claims (standing is a legal principle that only those with a legally protected right can bring suit).  The trial court denied the motion, and Synovus appealed.

On appeal, the issue was whether the beneficiaries of a revocable trust, other than the settlor of the trust, have standing to bring a breach-of-fiduciary duty lawsuit against the trustee when the trust is revocable at any time by the settlor.  The applicable Alabama statute[1] provides:

While a trust is revocable, rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor.

Given the statute its plain meaning, the Alabama Supreme Court had little trouble finding for Synovus.  Since both Mr. and Mrs. Raines’ trusts were under their control while they were revocable, Synovus’ duties extended exclusively to Mr. and Mrs. Raines during that time.  The Raines children had no legally protected rights and lacked standing to bring the lawsuit.  The trial court was ordered to dismiss their claims.

Practitioners in most states assume that a third party trustee’s duties will extend only to the settlor of a fully revocable trust.  This makes sense given that most revocable trusts serve as will substitutes.  Just as a person can freely amend his or her will without liability to the named beneficiaries, the settlor/trustee of a revocable trust should be able to manage and change his or her trust without liability to the beneficiaries.  In other words, both wills and revocable trusts are ambulatory instruments, meaning that they can be freely amended without liability to anyone while the person who established them is alive.  The Alabama statute is a legislative recognition of this general principle.

But in cases like this one—where the revocable trust is used more for traditional asset management than to avoid probate—one could question whether the “will substitute” theory is applicable.  We will revisit this issue in upcoming weeks when we look at the recent case of J.P. Morgan Chase Bank, N.A., v. Longmeyer, which reached a different conclusion under Kentucky law, holding that that the trustee of a revocable trust had an affirmative duty to charitable remainder beneficiaries of a revocable trust that had been amended under suspicious circumstances to remove the charities as beneficiaries.

The Synovus case is not groundbreaking.  It simply applies the Alabama statute to the situation at hand. But while Alabama has a statute to address this issue, many states do not.  Trustees would be well-advised to seek counsel in situations that could potentially involve duties to contingent beneficiaries of revocable trusts.

Raines v. Synovus Trust Company, No. 1080100, 2009 WL 3173510 (Ala. Dec. 30, 2009).

[1] Ala. Code § 19-3B-603(a).

Filed Under: Estate Planning, Trusts & Trustees Tagged With: , ,

Undue Influence in Beneficiary Designations

July 26, 2010 By Leave a Comment

As we discussed in What is Undue Influence?, many undue influence cases turn on whether or not there is a “confidential relationship.”  And while most of these cases involve will contests, the doctrine of undue influence can be used to set aside lifetime transfers.

A recent Forrest County probate case involved a beneficiary designation that was set aside on grounds of undue influence.  In the case, four siblings petitioned the court to return a beneficiary designation to its original state before their sister had allegedly exercised undue influence over their mother.

Helen Simpson passed away at age 86 in March of 2005. She left behind five children, Alfred, Audrey, Kathryn, Olivia, and Willie. She also left behind four accounts at her local bank that were payable on death (POD) to named beneficiaries. When the accounts were originally set up, all five children were the beneficiaries on each account. By the time of Mrs. Simpson’s death, Audrey was the only beneficiary named on the accounts.

After her mother’s death, Audrey petitioned the court to have the funds in the accounts distributed to her. This normally wouldn’t have been necessary, but Willie and Kathryn had been appointed conservators of Mrs. Simpson’s in February 2005 and had frozen her assets. The bank and the remaining children joined the action regarding the accounts in order to get a judicial determination of whether the beneficiary designation was enforceable.

As is often the case with undue influence situations, the case turned on the finding of a confidential relationship.  A presumption of undue influence will extend to any confidential relationship where one person becomes dependent on another in some capacity.  Once the presumption arises, the burden of disproving the undue influence falls upon the person allegedly benefiting from the undue influence.  In other words, once the confidential relationship is found, it is up to the alleged influencer to disprove undue influence.

The Forrest County Probate (Chancery) Court had no trouble finding a confidential relationship between Audrey and her mother at the time her mother changed the beneficiaries on the account.  Audrey had pushed her other siblings out of her mother’s life and served as her mother’s sole caregiver. Audrey visited her mother on a daily basis and drove her to doctor’s appointments. And her mother was of advanced age, being 85 when she made the beneficiary changes.

Once the confidential relationship was established, it was up to Audrey to prove that the change in beneficiary designations were not the product of undue influence.  To do this, Audrey had to prove that she had not exerted undue influence upon her mother to change the beneficiary designation. And Audrey didn’t put up much of a case, responding simply that there was no reason to discuss the issue. The only evidence supporting Audrey was her testimony that it was her mother’s idea to change the beneficiaries and that Audrey did not pressure her mother to do so. But this evidence alone did not rebut the presumption of undue influence.

The Mississippi Court of Appeals affirmed the lower court’s decision.  Because the court found the confidential relationship to exist and little to no evidence to rebut the presumption, the appellate court had no choice but to invalidate the newest beneficiary designation.  This meant that all five siblings took equally.

McGee v. Simpson, 2007-CA-02048-COA

Filed Under: Mississippi Probate Tagged With: , ,

Mississippi Tax Lien Foreclosure Voided: Tax Sale Ineffective

July 22, 2010 By Leave a Comment

Mississippi Tax Lien Case: A procedural error in a tax sale resolves in favor of the original landowner

I posted yesterday on the Mississippi tax sale and tax lien process and how tax sales are generally disfavored by the courts.  In my experience, if a court can find a reason to invalidate a tax sale, it will.  It is important for tax lien attorneys who represent tax lien purchasers to follow the formalities to the tee.  And it is important for tax lien attorneys who represent owners to know the formalities well enough to bring a successful challenge.

To illustrate the importance of strict adherence to the tax lien requirements, I want to look at a recent Mississippi appellate case involving the issue of notice and whether the court’s failure to execute an affidavit detailing due diligence in serving notice voided the tax deed granted to the purchaser.   Roleh, Inc., lost its commercial property in August 2004 after failing to pay their 2003 real property taxes. The property was sold at a tax sale to an investment group called Maitland Investors. In December 2004, after the sale of the commercial property, the Mississippi Secretary of State administratively dissolved Roleh At the time of the dissolution, the registered agent for Roleh was T.N. Roberts, who died in 2003.

By 2006, the commercial property had been sold by Maitland and ended up in the possession of C.F.P. Properties, Inc. Two years after the tax sale, Roleh had failed to redeem the property and the clerk of the Chancery court mailed notice of the final sale to Roleh. Notice was returned to the court with the message that Roleh was no longer at the address that had been on record with the Secretary of State.  The clerk then published notice in the newspaper announcing the expiration of the tax redemption period. Another written notice was sent to Roleh and it too was returned. It is alleged that the clerk filed an affidavit reciting the attempts at providing notice to Roleh. However, the affidavit was not in the tax-sale record.

Roleh filed to have the sale of the property voided based on the fact that the affidavit proving notice was not in the official tax sale records regarding the property.  The lower court found in Roleh’s behalf, holding that the lack of an affidavit by the court documenting attempts to provide notice was sufficient grounds to set aside the tax sale.  On appeal, the Court of Appeals affirmed the lower court’s holding and voided the final sale of the commercial property. The Court of Appeals stated that the policy in Mississippi is to favor and protect the original landowner from sale of land for failure to pay taxes.

C.F.P. Properties, Inc. v. Roleh, Inc., NO. 2009-CA-00391-COA.

Filed Under: Mississippi Real Estate Tagged With: , ,

Mississippi Tax Sales and Tax Liens

July 21, 2010 By 1 Comment

Today I want to pick back up on what is becoming a series on Mississippi real estate.  As indicated in Mississippi Probate and Real Estate, the issues of real estate and probate law are so intertwined that to be capable in one requires an understanding of the other.

Last week, I looked at the general topic of adverse possession in Mississippi and a Mississippi adverse possession case.  This week, I want to look at Mississippi’s tax sale statutes. There seems to be an increased interest in this topic at this time of year, in advance of the tax sales in August.  We will begin with a general overview of Mississippi tax liens and tax sales.  Tomorrow, we will take a look at a recent Mississippi tax lien case to see how tax sales play out in real life.

A tax sale occurs when there are overdue taxes on real estate. Mississippi tax sales are typically held the last Monday in August and are well-noticed in local newspapers.  At the tax sale, the taxes are auctioned by competitive bid using an overbid system. The successful bidder will pay the taxes due for the property.  That payment of taxes becomes a lien on the property in favor of the buyer.  The buyer is given a tax lien certificate to evidence his claim against the property.

The original owner has two years to “redeem” the property. Redemption occurs when the original owner pays the amount he owed plus any taxes since paid on the property and interest and fees that are charged by the court. If the original owner is unable to redeem the property, the buyer will be given a sales deed at the end of the two-year period.

Mississippi tax sales are fraught with technical formalities.  And since they are generally disfavored by the court, failure to comply with the formalities usually results in invalidation of the tax sale.  For example, one requirement is that, at the end of the redemption period, the county Chancery Clerk is required to send notice to the original owner that the final sale of the property will take place.[1] Under this statute, the sheriff must make service of notice, and notice must also be sent by registered or certified mail.  Failure to give proper notice could be grounds for invalidating the tax sale.

[1] Miss. Code Ann. § 27-43-3 (Supp. 2009).

 

Filed Under: Mississippi Real Estate Tagged With: , ,

Estate Planning for the Generations Conference

July 20, 2010 By Leave a Comment

The 2010 Planning for the Generations Conference is set to kick off on August 11-13, 2010, in Chicago, Illinois.  The conference, which is put on by WealthCounsel, ElderCounsel, and the Advisor’s Forum, is targeted to estate, elder law, and financial professionals. Here’s the description from their website:

The 2010 Planning for the Generations Symposium presents a unique forum for wealth planning professionals from all disciplines to explore solutions to today’s most challenging estate planning and elder law issues.  Participants will gain new insight and perspectives from industry leaders while earning continuing education credits and meeting and collaborating with colleagues.

Even though I am not a member of any of the hosting organizations, the conference looks tempting. The seminars include a variety of topics affecting the estate planning and elder law practitioner, including both substantive law and client relations/marketing strategies. I have attended a handful of WealthCounsel conference calls and found them to be well-done.

I joined WealthCounsel earlier this year, but canceled within the 30-day trial period.  They offer a well-regarded drafting system, educational seminars (like this one), and networking opportunities.

While WealthCounsel’s drafting system is called WealthDocx.  It is good, it was comparable to the Hot-Docs based drafting system that I had already developed (which cost under $500 one-time fee plus the years of experience I poured into the forms).  The bells and whistles were nice, but useful to only a small portion of my client base.  The bread-and-butter estate planning tools were not much different from my own.  WealthCounsel educational programs are similar to those offered through the Real Property, Trust, and Estate Section of the American Bar Association (and comparably priced).  And their networking opportunities were similar to what I get through the RPTE ABA listservs (for nada).  In the end, I just couldn’t justify the cost ($4,500.00 up front plus $450.00 per month for WealthDocx complete).  It was a tough decision, though, and I may change my mind at some point.

Filed Under: Estate Planning Tagged With:

Florida Probate: Heiress Leaves Millions to the Dogs

July 19, 2010 By Leave a Comment

In a Florida probate case waiting to happen, heiress Gail Posner recently died at age 67, leaving millions for the care of her beloved dogs and only a fraction of the estate to her son and sole surviving offspring, Bret Carr.

Posner’s 2008 will leaves $3 million in a trust for the continued grooming, dressing and luxurious pampering of her dogs and $27 million to maids, personal trainers and caregivers in exchange for the continued care of the animals. Ms. Posner has also provided her personal $8.3 million Sunset Island estate as the residence in which her dogs will live out their life. As the dog’s staff, many of the maids, trainers and caregivers will also be allowed to live on the estate rent-free.

So what did she leave her son? $1 million. The remainder of the estate has been left to charity.

On June 21, 2010, Bret Carr gave an exclusive interview on the Today Show announcing that he would be challenging his mother’s will. Carr believes that his mother’s caregivers and staff used their everyday influence to confuse and terrorize his mother into changing her will in 2008.  He claims that she lacked capacity to execute a new will because her mental state had been impaired by brain cancer and overmedication by her staff.

Bret claims to have cell phone video documentation that his mother was afraid of her staff and asked him to aid her escape from them.  Bret also claims that since early 2007 her caregivers have been pushing Ms. Posner to pamper her dogs, creating a diversion for most of her wealth that would indirectly benefit the caregivers.

When this case hits the courts, it will inevitably turn on issues of undue influence and lack of testamentary capacity.  The testimony of third party witnesses, Gail’s doctors, and the drafting attorney will help the court understand her state of mind and her reasons for redrafting her previous will.  Current reports allege that while Gail was sick, her staff gradually began secluding her from her friends and son.  The staff also physically removed Brett from the property and barred the gate, cutting off contact between mother and son.

Bret will probably argue the sum in trust for the dogs is excessive and should be reduced. This happened recently in the estate of Leona Helmsley, who left 12 million dollars in trust for her dog, Trouble.  The total amount was reduced to $2 million after other beneficiaries contested the gift to the pet.

Estate planning for pets is a concept that has gained popularity in recent years.  In 1990, Uniform Probate Code was amended to allow provision for pets that outlive their owners. As of June 2010, 44 states have adopted some type of legislation that governs trusts for pets. At this time, only Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, and West Virginia do not have laws allowing pet trusts.

If you are in a state that does not authorize the use of a pet trust to care for your animals, talk to an estate planning attorney about other testamentary tools that can secure the care of your pet in the event of your death. Alternatives to a pet trust may include a conditional bequest, where you leave money to a specific person on the condition that the money is used to care for your animal.  This area of the law is relatively new and to ensure your wishes are honored it is necessary to involve a reputable attorney who is familiar with the laws in your area.

Filed Under: Florida Probate Tagged With: , ,

Mississippi Adverse Possession: It Takes More than a Fence

July 15, 2010 By Leave a Comment

I wrote yesterday about adverse possession in Mississippi and how it relates to probate.  Today I want to look at a recent Mississippi Court of Appeals case in which the appellant tried to use adverse possession to claim a possessory right in the land of his neighbors to the north. The court tested the claim by applying the elements of adverse possession that we discussed yesterday to the facts of the situation and deciding whether the appellant had met his burden of proof by providing clear and convincing evidence.

In Niebanck v. Block, two families of landowners (the Dale and the Wimses families) had discovered that a Mr. and Mrs. Niebanck had a fence running across the southernmost part of their property and asked the Niebancks to remove it.  In response, the Niebancks wrote the Dale’s and Wimses’ each a letter offering to purchase their land for 5,000 dollars an acre. In the letter, the Niebancks stated that they had believed the property to the fence and including the fence was theirs. And that they had used and maintained said property for over 14 years. However, in fairness and with neighborly consideration they would like to make an offer to buy the property.

Both neighbors responded to the Niebancks letter with a request that the fence be removed and the use of the property be returned to them. The Niebancks then sought an injunction from the court to prevent the removal of the fence and asserted their claim that the property was actually theirs under the legal principle of adverse possession. The Niebancks argued that they had maintained possession of their neighbors’ land for the statutory 10-year period in an adverse way.  Specifically, the Niebancks asserted that they owned 0.7 and 0.4 acres of each of their northern neighbors’ land.

The lower court found that the Niebancks had failed to meet certain elements of adverse possession. In particular the Neibancks had failed to establish by clear and convincing evidence that they had maintained 2) actual or hostile possession and 3) open, notorious, and visible possession.  The Niebancks appealed.

On appeal, the Mississippi Court of Appeals reviewed the lower court’s decision regarding adverse possession.  The Court noted that in order for the possession to be considered hostile, the landowner of the disputed property could not believe that the possessors presence on the property was by permission.  In this case, the previous owner of the Dale’s and Wimses’ property had given Mrs. Niebanck permission to ride her horse on his property. This made the Niebancks occasional use of their property permissive as oppose to hostile.

The element of actual or hostile possession is there to put the current landowner on notice to the fact that their land is being occupied by another. Setting up a dwelling or making a spectacle of your use of the land is often enough to meet this requirement. But if you have received permission to use the land, all subsequent acts become permissive possession rather than actual or hostile.

The court also discussed whether the Niebancks met the element of having open, notorious, and visible possession of their neighbors land. The court held that mere possession of the land is not enough for it to be considered open and notorious. This requirement is also there to give the landowner notice that a person other than them is occupying their land. Thus giving them a chance to regain possession of their land.

The Niebancks asserted that their possession was open and notorious based on the fact that there was an old barb wired fence north of their actual boundary line.  Previous cases have said that if a fence encloses the property for a period of ten or more years, title of the land will vest in the adverse possessor, even if the fence is in disrepair.[1]

However, the Niebancks did not build the fence.  It was there when they came into possession of their land. The previous owner, who owned all the acreage that was subsequently subdivided and sold to the Niebancks, Dales and Wimses, had put the fence up as part of a corral for cows. Therefore, the fence was not used to show open, visible and notorious possession.  And the Niebancks did not fulfill the burden of proving, by clear and convincing evidence, that the element of open, notorious and visible possession was met.

The Mississippi Court of Appeals held that the husband and wife failed in their claim of adverse possession and consequently needed to remove their fixtures from their neighbors land.

Niebanck v. Block, NO. 2009-CA-00530-COA.

[1] Roy v. Kayser, 501 So. 2d 1110, 1112 (Miss. 1987).

 

Filed Under: Mississippi Real Estate Tagged With: ,

Adverse Possession in Mississippi

July 14, 2010 By 1 Comment

Probate law is often intertwined with real-estate law.  In fact, many people learn of the need for probate only when they get ready to deal with a piece of family property and discover an unprobated estate in the chain of title (for more information, see our Section on Probate & Real Estate or, for a good example of how this can come up, see the recent case of Tatum v. Wells)

One of the real-estate-related issues that can surface in a probate proceeding is called adverse possession.  Adverse possession is a function of the law that allows a person to acquire title to another person’s land by maintaining possession of the land for a continuous period of 10 years or more.

Mere possession will not meet the standard set for receiving title by adverse possession. In order for a court to find adverse possession, the possessor must prove that the possession is 1) under claim of right; 2) actual or hostile; 3) open, notorious, and visible; 4) exclusive; 5) continuous and uninterrupted for 10 years; and 6) peaceful.[1] The person seeking the title to the land must also show by clear and convincing evidence that each element has been met.

Clear and convincing evidence is the highest standard for proving your case that the court has. It is defined as a showing of evidence that produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established. It is evidence so clear, direct, weighty and convincing that the fact finder comes to a clear conviction, without hesitancy, of the truth of the precise facts of the case.[2]

Tomorrow, we will see how this plays out in a recent Mississippi case involving adverse possession.

[1] Stallings v. Bailey, 558 So. 2d 858, 860 (Miss. 1990).

 

[2] Moran v. Fairley, 919 So. 2d 969, 975 (¶24) (Miss. Ct. App. 2005).

Filed Under: Mississippi Real Estate Tagged With: ,
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