Juergensmeyer, Julian C.

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University of Kentucky

Kentucky Law JournalVolume 55 | Issue 3 Article 151967How to Avoid Probate by Norman F. DaceyJulian C. JuergensmeyerIndiana UniversityFollow this and additional works at: https://uknowledge.uky.edu/kljClick here to let us know how access to this document benefits you.This Book Review is brought to you for free and open access by the Law Journals at UKnowledge. It has been accepted for inclusion in Kentucky LawJournal by an authorized editor of UKnowledge. For more information, please contact UKnowledge@lsv.uky.edu.Recommended CitationJuergensmeyer, Julian C. (1967) "How to Avoid Probate by Norman F. Dacey," Kentucky Law Journal: Vol. 55 : Iss. 3 , Article 15.Available at: https://uknowledge.uky.edu/klj/vol55/iss3/15Booic REvvsHow To Avom PRoBATE. By Norman F. Dacey. New York: CrownPublishers, 1965. Pp. 341. $4.95.The mere suggestion that the means to prescribe medicines beplaced in the hands of the general public because many physicians areincompetent and charge excessively for writing prescriptions wouldcertainly cause public outrage. Yet, How to Avoid Probate, by non-lawyer Norman F. Dacey, does just that in the field of trusts andestates. It places forms for the creation of trusts and the arrangementsfor settling estates on perforated pages for any member of the publicwho is willing to expend $4.95 for the book, tear out the pages, andfill in the blanks. The consequences for the estates of those who do somay be just as dire as for patients who mixed and prescribed today'smiracle drugs for themselves.To show the American probate system at its worst, Mr. Dacey tellsof dishonest appraisers, guardians, and judges and indicates that up totwenty percent of a small estate may be expended in probate expensesalone. These selected examples do indeed drive home the point towhich nearly all lawyers accede-probate is too expensive and tootime-consuming. However, Mr. Dacey's object is not to reform theprobate process but to tell his readers how to avoid it.The "inter vivos" or living trust is the legal concept Mr. Daceychooses as the device for avoiding probate. The basic pattern of eigh-teen of the twenty-three trusts suggested by Mr. Dacey is that theowner executes a declaration of trust, declaring himself trustee of hisproperty and providing at his death for a successor trustee to payover the property to the named beneficiaries. The person executing thedeclaration of trust retains all powers in respect to the trust propertyproviding at his death for a successor trustee to pay over the propertyto the named beneficiaries. The person executing the declaration oftrust retains all powers in respect to the trust property during hislifetime. The trust form provides:2. I reserve unto myself the power and right . . . to collect anyrental or other income which may accrue from the trust property and, inmy sole discretion as trustee, either to accumulate such income as anaddition to the trust assets being held hereunder or pay such income tomyself as an individual.3. I reserve unto myself the power and right at any time during mylifetime to amend or revoke in whole or in part the trust hereby createdwithout the necessity of obtaining the consent of the beneficiary andwithout giving notice to the beneficiary. The sale or other dispositionby me of the whole or any part of the property held hereunder shallconstitute as to such whole or part a revocation of this trust.11 DAcEY, How TO Avowo PROBATE 20 (1965).KENTucKY LAw JourNAL.[V.As if the language of the trust forms left any doubt as to the meaningof these provisions, the author explains to the reader:Bear in mind that we are speaking here of a revocable trust. Theproperty-owner can cancel it at any time or amend it-to change thebeneficiary, for example. The existence of the trust does not alter in theslightest degree the right and privilege of the property-owner to sell orotherwise dispose of the property in any way he chooses during his life-time.2In order to permit the reader to create inter vivos trusts with abandon,Mr. Dacey provides separate trusts, and duplicates, for each type ofproperty that a man has-real estate, bank accounts, mutual fundshares, stocks, personal effects and interest in an unincorporatedbusiness.Unfortunately for all concerned, these trusts are not worth severingthe perforations to obtain. They are nullities. Their sole effect and in-tent is to provide for distribution of property at death. For centuriesthe law has required such distribution to be accomplished withformalities, so as to avoid uncertainty, lessen chances of undue in-fluence, and encourage thought by those wishing to provide for thedisposition of property at death. As the grand old man of trusts, Pro-fessor Scott, has said:If indeed the settlor reserves power to deal with the trust propertyduring his lifetime as he likes, the trust seems clearly testamentary. Thusif the owner of property declares himself trustee to dispose of the prop-erty in any way he chooses as long as he lives, and provides that, if hehas not otherwise disposed of the property during his lifetime, it is tobe held upon his death for a designated beneficiary, the trust is testamen-tary and invalid unless the requirements of the Statute of Wills are com-plied with.3Issue can also be taken with some specific points the author makesabout the inter vivos trust. For example, he states that creditors ofthe settlor cannot reach the assets of a revocable, inter vivos trust. Inmost, if not all jurisdictions, the creditors can reach the beneficialinterest of the settlor-in Mr. Dacey's trust, the reserved life estate.In several jurisdictions creditors of the settlor of a revocable trust canreach all assets of the trust. Furthermore, in presumably all Americanjurisdictions, if a settlor of a revocable trust becomes bankrupt, histrustee in bankruptcy must revoke the revocable trust and therebymake the assets available to creditors.The law of trusts has always had to strain to admit revocable truststo the ranks of valid trusts. This has been accomplished primarily in-2Id. at 16.8 ScoTr, TRusTs § 57.6 (abr. 1960).[Vol. 55,Boo:K REvmvscases where the trustee was an independent person or institutiondistinct in interest and control from the settlor. The law of trusts can-not and should not change so as to recognize the validity of the typeof revocable trust which Mr. Dacey proposes.In addition to the separate trusts, the author suggests an omnibusestate plan-the "Dacey Trust." The individual sets up such a trust byentering into a declaration of trust with a bank, whereby the bank ismade trustee. The bank is also made beneficiary of life insurancepolicies which, with other property, primarily mutual fund shares, aretransferred to it. The right of revocability and the right to receiveincome are retained by the settlor. The appointment of an independententity, and the formalities required of the settlor before he can regainproperty placed in the trust, suggests that the "Dacey Trust" is valid.However, as an estate planning device to save taxes, this practice is acomplete failure because it forecloses to its settlor the possibility ofavoiding estate taxes by creating irrevocable trusts of which the settloris not life beneficiary.Furthermore, the author is quite vague as to the fees which wouldbe paid to the bank as trustee. He states that the trustees will not"ordinarily make any annual charge during your lifetime since theyhave no duties to perform." The trust, however, imposes a number oflifetime duties on the trustee. In spite of the author's suggestion tokeep trying banks until you find one that will charge only a nominalfee, it seems unlikely that many trust companies would be willing toaccept and administer the Dacey Trust gratuitously-especially if thesettlor is active in adding and withdrawing property. If the bank wereto charge the prevailing rate, the annual fee for the $300,000 estateused by the author for exemplary purposes would be $900. For a fortyyear old man who lives to be sixty-five, this is $22,500, not to mentionthe annual and termination fee that will be charged after the settlor'sdeath. This is a rather large expense for someone whose sole purposein setting up the trust is to avoid probate expense; in fact, it is $300more than Mr. Dacey suggests at the beginning of the book as theprobate expenses of a $300,000 estate. Since Mr. Dacey still suggestsleaving a will, certain probate expenses will also be incurred, raisingthe total expenditure even further above the expenses the trust isestablished to avoid.Most of Mr. Dacey's suggestions will only result in pecuniary lossto his readers through sacrifice of tax savings which could have beenobtained by the execution of certain types of irrevocable trusts andthrough fees paid to attorneys to unscramble estates cursed by invalidor uncertain trusts. At least two suggestions, if followed, might con-1967]KENTucKy Lw JouR[o5stitute or encourage the commission of criminal fraud and result infines or even imprisonment. First is the suggestion in relation to thosestates in which safe deposit boxes of deceased persons can be openedonly by a representative of the probate court or a state inheritance taxappraiser:In states having such requirements on safe deposit boxes, it maybe desirable for husband and wife to have two boxes. His property isdeposited in her box and her property in his box. Under this arrange-ment, when the deceased husband's deposit box is opened, no propertybelonging to him is to be found-it's all in his wifes box, to which shehas ready, unquestioned access. 4It does not take a prophet to divine the consequences of such ascheme in case of marital difficulties, the need of the widow to haveaccess to her own property at her husband's death, or the failure ofthe widow to include all of her husband's property in her safe depositbox on tax returns.The second suggestion also speaks for itself in suggesting criminalfraud and loss from theft:A used car frequently has a very limited sale value, and the troubleand expense of going through the probate process in order to dispose ofit is way out of proportion to that value. Be careful, then, that you don'tforce your estate into probate just because of your automobile.On the back of nearly all automobile registration certificates is a placewhere you are to sign if you sell the car or turn it in on a new one.Sign it-now. If anything happens to you, your spouse or other familymember can take it down to the Motor Vehicle Department and freelytransfer it to another name without having to forge any signature orapply to the probate court for 'letters testamentary." 5One wonders why the author, who purports to be so familiar with thefaults of the probate system, does not mention the purpose of probate-the need at death to find out exactly what a man owns, what he owes,and what is owed to him to insure that creditors and debtors as wellas heirs, legatees, and tax collectors are fairly treated. No other legalinstitution or concept can fully satisfy this need, and the process isonly made more difficult by the person who follows Mr. Dacey'sadvice and indiscriminately pronounces the magic word "trust" overhis assets. In view of the rapid turnover rate of a man's assets in ourpresent economy, it is staggering to think of the problems of inventoryand tracing which would arise, should the person using any of Mr.Dacey's trusts not carefully declare a new trust and keep copious re-cords each time he sells, gives away, or trades-in an old asset andobtains a new one.4 DACEY, op. cit. supra note 1, at 11.5 Id. at 237.[Vol. 55,BooK REvmIvsThe properly employed inter vivos trust is, of course, a helpful,frequently-used and estate planning device, that in this day of empha-sis on trusts and estate planning in law schools, bar journals, and con-tinuing legal education programs, is familiar to both lawyers andlaymen. Yet, Mr. Dacey has the gall to state:Few laymen know about a living trust. Indeed, only a small proportionof attorneys know about it or understand its use. At least half of theattorneys who do know of it will either deny that knowledge or stronglyadvise against its use. The inter vivos trust, you see, is exempt from pro-bate. Most attorneys derive a substantial proportion of their income fromseeing the estates of deceased clients through probate. Seriously, now, doyou expect them to tell you how to avoid probate? I would put the pro-portion of attorneys who know about and recommend the inter vivos trustat less than 1%.6One wonders how Mr. Dacey reached his figure. The book establishesone statistic beyond question, however. At least one of "America'sleading estate planners" does not fully understand the concept of aninter vivos trust.Julian C. Juergensmeyer*0 LL.B., Duke University; member, Ohio Bar; Assistant Professor of Law,Indiana University.T rhiA AN = AuToMOBILE. Edited by William J. Curran and NeilL. Chayet. Cincinnati: W. H. Anderson Company, 1966. Pp. 475.$14.50.A book which is a composite of articles by many authors usuallyfails for lack of continuity and a central theme. Trauma and the Auto-mobile is, for the most part, an exception.Fifty thousand dead, one million injured, and two billion dollars-property damage each year, and rising each year, reads like thestatistics of an international holocaust; however, these are the figuresfor yearly automobile accidents in the United States. Little wonder,then, that Curran and Chayet of the Boston University Law-MedicineInstitute have made the reduction or even the stabilization of suchfigures the central theme of this bookBelieving that past approaches to the problem have tended toplace the blame on one of three causes-the driver, the vehicle, orthe highway-the editors state that what is presently lacking is ajoining of forces so that the problem can be attacked from all sides.The book, therefore, is a compilation of articles. It is divided intoO ld. at 13.1967]

How to Avoid Probate by Norman F. Dacey

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How to Avoid Probate by Norman F. Dacey

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