Taxability of Injury Claims

 For the most part, injury settlements are largely non-taxable depending on what the settlement is meant to compensate for.   As a result, it matters how the release is drafted.  You can see how the IRS taxes settlements on the link here.  

Sexual Abuse and DHS

On Tuesday, the Missisippi Court of Appeals decided Andrew Cornell f/k/a Andrew Faulkner v. Mississippi Department of Human Services located here.   Andrew was placed in the foster home (and later adopted) by Ricky Faulkner. MDHS did not frequently visit the home as policy required and ignored a report from another foster parent that the Faulkner foster home was not safe. Ricky Faulker was ultimately convicted of unlawful touching of a minor and sexual assault. 

Circuit Court granted summary judgment ruling that causation was "too remote" The Court of Appeals reversed and remanded 8-1. This case is a huge win for sexual abuse victims and giving them some ways to recover against the State for negligence in the foster system.  

TENANCY BY THE ENTIRETY in Tennessee: an old concept with a new twist

 

TENANCY BY THE ENTIRETY in Tennessee:  an old concept with a new twist

A statute which became effective 7/1/2014 has made it important that you make yourself aware of how a very old legal concept works, called “tenancy by the entirety.” The summary below is meant to act as a quick guide to make you familiar with tenancy by the entirety. Remember, Tennessee recognizes tenancy by the entirety in the common law, while some other states do not. Tennessee now allows the long-standing asset protection exemption of Tenancy by the Entirety to apply even after a transfer is made into a trust – so this is a timely and important topic.

1. What is Tenancy by the Entirety? A tenancy by the entirety is a form of joint ownership similar to the more familiar joint tenancy form of ownership where the surviving spouse has a right of survivorship, but offers exemption from the claims of creditors of either of the spouses.  A tenancy by the entirety can be created only between husband and wife, because the couple is considered to be one person or one unit. As such, the spouses do not take the estate in equal shares, but rather they hold title as one unit, with each being deemed to have full ownership.

2. How does a couple create a Tenancy by the Entirety? In Tennessee, where a conveyance is not clearly intended otherwise, it is presumed that a conveyance to a husband and wife creates a tenancy by the entirety. The marital designation (such as “husband and wife” or “married”) generally is the only “legalese” that is required to take ownership as a tenancy by the entirety, although it is appropriate to be clearer as to intent for assets other than the marital home.

3. Can one spouse or any other event sever a Tenancy by the Entirety? Although the tenancy by the entirety resembles a normal joint tenancy, it is very different from the joint tenancy because severance of the tenancy by one tenant (an individual spouse) is not possible. Neither spouse acting alone can destroy or disrupt the nature of the tenancy (as would be possible in a typical joint tenancy). In other words, an individual spouse cannot convey his or her interest individually. The interest must be conveyed by the marital unit.  A divorce terminates the unity of husband and wife and, therefore, the tenancy by the entirety; in Tennessee, the tenancy by the entirety is converted into a tenancy in common at divorce.  The death of either spouse terminates a tenancy by the entirety (see below).  

4. What rights (or limitations) do creditors have? Since the property is held by the marital unit, an individual spouse’s creditor cannot seize that individual’s interest (and then force the sale of the property). Only a creditor of the marital unit may enforce a lien against the property – meaning that both spouses must be liable before the tenancy by the entirety property will be subjected to creditors.  Note that, in bankruptcy, Tennessee has an odd rule about an “expectancy” value so this is not an absolutely effective exemption.   If upon the death of one spouse the surviving spouse has a creditor, that creditor can reach the property after the death of a spouse.  However, if the deceased spouse is the one with a creditor, the surviving spouse will not be subject directly to the claims of the deceased spouse’s creditors (although there are some circumstances where the exemption is limited in scope after the death of a spouse in probate court or in a trust administration).

5. Why does this new statute matter?  As indicated above, a new Tennessee statute specifically makes the creditor protection exemption continue to apply to property that is tenancy by the entirety prior to being transferred into a joint revocable living trust where the spouses are the sole beneficiaries (and other conditions are met).  In the past, it was common that property would be left outside of a trust to retain that exemption – but now all married couples should examine whether property should now be moved into a trust.

Hair Straighteners/Relaxers Linked to Increased Risk of Cancer

 Hair Straighteners/Relaxers Linked to Increased Risk of Cancer

 The Journal of the National Cancer Institute recently published a study by the National Institute of Environmental Sciences that found a link between certain hair products, like straighteners or relaxers, and uterine cancer. The paper noted that a prior study linked these hair products with a higher risk of ovarian cancer.

 Which Products May Be Harmful?

 Currently, the class action is investigating products from the following companies:

 

• L’Orèal (Softsheen-Carson): Optimum Care, Dark & Lovely, Precise, and Bantu;
• Revlon (Colomer Beauty Brands): Revlon Brand, Crème of Nature, and Fabulaxer; and
• Strength of Nature Global (Godrej Consumer): Just For Me, Motions, TCB, Soft & Beautiful, and African Pride.

What Health Conditions Being Investigated?

• Uterine Cancer;
• Ovarian Cancer;
• Breast Cancer;
• Uterine Fibroids (benign or non-cancerous growths on the uterus that can be painful and may lead to pregnancy loss or infertility; and
• Endometriosis (a painful condition in which tissue similar to the tissue that grows on the inside of a uterus instead grows on the outside).

Diminished Capacity Resources

 I found several interesting resources on determining the mental capacity of clients to change their estate plan.   At least one Court has recommended using a client worksheet such as located here.   A good book on the subject is also located here.  

Holographic Codicil

 Today, the Mississippi Court of Appeals handed down In re Estate of Obert located here.  This is the first case I am aware of discussing holographic codicils to a will.    The Court found that a handwritten note signed by the deceased acted as a cancellation of a debt that was due.   As such, might be worth have clients search the deceased home at times.  

Quirky Issue in the Mississippi Wrongful Death Statute

Typically, creditors of the deceased are not entitled to wrongful death proceeds in Mississippi.   However, Mississippi Code   11-7-13 has a quirky provision.  

 “Any amount, but only such an amount, as may be recovered for property damage, funeral, medical or other related expenses shall be subject only to the payment of the debts or liabilities of the deceased for property damages, funeral, medical or other related expenses. All other damages recovered under the provisions of this section shall not be subject to the payment of the debts or liabilities of the deceased, except as hereinafter provided, and such damages shall be distributed”

My reading is that any money designed for property damage, funeral, medical or other related expenses are subject to creditors.    Additionally what are "other related expenses"?    One can argue is is only expenses related to funeral or medical expenses or maybe that they are truly other expenses related to the death outside of pain and suffering.   

Food for thought.