Probate & Trust Law Section Conference Manual ... - Minnesota CLE

trust assets. Trust was established for beneficiary, with beneficiary’s
mother as trustee. After some time, trustee withdrew the remaining trust
funds from the trust. The statute provided that in the case of statutory
theft, tremble damages are to be awarded. The Court held that the award
of treble damages was appropriate.
M. Special or Supplemental Needs Trust
1. Lewis v. Alexander, 685 F.3d 325 (3rd Cir. 2012). The state statute
which seeks to impose additional requirements on special needs trust
was invalid and was preempted by federal statute. A class action of
special needs trusts and beneficiaries was filed against Pennsylvania
Department of Public Welfare seeking to preempt by federal statute the
Pennsylvania statute. The Court first held that the plaintiffs had
constitutional standing because they were facing imminent injury due to
the likelihood of the Pennsylvania statute being enforced. The Court also
held that the claims of the plaintiffs were ripe for adjudication because
they are entitled to have their rights examined and clarified. Additionally,
the Court held when states are determining Medicaid eligibility, states are
required to exempt any trust that meets the federal requirements of 42
U.S.C. § 1396p(d)(4). Finally, the Court held that the Medicaid statute
confers on the plaintiffs the private right of action to enforce the
application of the special needs exemptions found in the federal statute.
IV. NON-PROBATE, NON-TRUST ASSETS (JOINT TENANCY, LIFE INSURANCE,
BENEFICIARY DESIGNATIONS)
A. Joint Tenancy/Joint Accounts
1. Stephenson v. Spiegle III, 58 A.3d 1228 (N.J. Super. Ct. App. Div.
2013). Rescission of a bank account that had a pay-on-death
provision naming the decedent’s attorney as the beneficiary was
appropriate to remedy the decedent’s unilateral mistake of naming
the attorney the “pay-on-death” beneficiary instead of funding a trust
benefiting family members which was referenced in his will. The
decedent executed a will on December 19, 2006, leaving his estate to
family members or trusts for the benefit of family members. The will was
prepared by his attorney. On February 2, 2007, the decedent opened an
account payable on death to his attorney. The decedent died on December
19, 2007. At the time of his death, the subject account held approximately
1/3 of his estate. The executor discovered the account during the estate
administration, but the attorney took the position that the decedent
probably established the account to take the money out of the estate and
denied any knowledge of the opening of the account. The trial court held
that rescission was appropriate because the decedent made a unilateral
mistake by naming his attorney the “pay-on-death” beneficiary on a bank
account instead of funding a trust referenced in his will. In his decision,
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