I attended the annual Consumer Electronics Show for the 6th time in the past seven years. Here are my observations. Attendance was steady. Gambling is up. There were more people at the tables than last year. That’s two good signs for the economy. But, the Fortune 500 stayed away, which is a bad sign for …
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2007 – Where is the Economic Pain?
I read a recent article in the Consumer Finance Law Quarterly Report about bankruptcy filings after the 2005 reform act. The author (Jon Ann H. Giblin) compared 2006 filings with 2007 filings (in her table). I asked myself – Which states have more filings, on a percentage basis? (This, of course, begs the question of …
Professor John Langbein Discusses the Modern Trust as a Will Substitute
Legal scholar John Langbein addresses a question that has been on my mind – When did trust agreements evolve from classic fiduciary relationships into will substitutes? The answer is – a long time ago. Explains Prof. Langbein, “Trust law is an ancient field. The enforcement of trusts in the English court of Chancery can be …
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Fiduciary Duties Arising From Charitable Contributions – Section 17510.8
Relationship-based fiduciary duties (as counterposed with contract-based fiduciary duties) arise in many different situations. I recently came across an extension of the fiduciary concept in the field of charitable solicitations. Specifically, California Business and Professions Code section 17510.8 states, “There exists a fiduciary relationship between a charity or any person soliciting on behalf of a …
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A Revocable Trust Is Not a Separate Legal Entity – Part 2
A second recent opinion reinforces the fundamental rule that an inter-vivos revocable trust is not an entity separate from the trustee. In Presta v. Tepper, 2009 DJDAR 16603 (Nov. 27, 2009), the court provided the following analysis: “Two men enter into a real estate investment partnership, each acting in his capacity of trustee of a …
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A Revocable Trust Is Not a Separate Legal Entity – Part 1
A pair of decisions from last month reinforce the fundamental rule that an inter-vivos revocable trust is not an entity separate from the trustee. The first opinion, 1680 Property Trust v. Newman Trust, 2009 DJDAR 16161 (Nov. 17, 2009) states the rule with elegant simplicity, to wit: “Unlike a corporation, a trust is not a …
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Underwater and Not Walking Away – or, Why Don’t Lenders Refinance?
I have been approached by numerous potential clients asking if I can help with the restructuring of their mortgages. The short answer is that I can provide no assurance regarding a refinancing. The rules are murky, and the literature indicates that lenders are not providing meaningful reductions. A recent article by Prof. Brent White from …
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King vs. Johnson – Trustee de Son Tort
A decision handed down this month involved an all-too-common situation. In King v. Johnson, 2009 DJDAR 15871 (Nov. 9, 2009), the husband provided for a testamentary trust. After the husband’s death in 1991, his widow became the trustee. The widow later suffered from declining health. One of the daughters was apparently close to her mother. …
Berg & Berg – California Obligations of Corporate Directors to Creditors
A growing body of case law during the past 20 years has addressed the issue of whether and when corporate directors owe fiduciary duties to creditors. A California appellate court has finally weighed in on this issue, and provided clear guidance on the question. (We can only hope that the California Supreme Court will not …
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Mexican Land Trust
The diverse use of trusts is represented in a recent case from the federal Fifth Circuit Court of Appeals. In Gale v. Carnrite, 559 F.3d 359 (5th Cir. 2009), the dispute involved tax liabilities arising from the sale of membership interests in a Nevada limited liability company. The underlying facts were as follows: In 1999, …