Lead Stories

A court-appointed receiver for Ponzi-schemer Thomas J. Petters and his affiliated companies has no standing to sue to recover gifts under the Federal Debt Collection Procedures Act, even where the government is one of the creditors, a federal District Court in Minnesota has ruled.  It has also held that the receiver was barred by the newly passed state statute of limitations from recovering a $2 million gift from a Petters foundation to College of St. Benedict.  (Kelley v. College of St. Benedict, D. MN, No. 12-822, 10/26/12.)

Despite the recommendation of the state Attorney General to terminate a $600,000 trust for the benefit of three separate charities because of a high proportion of trustee’s fees, the Appellate Court of Illinois has refused to terminate the trust.  It has reversed a trial court decision authorizing the termination.  (Church of the Little Flower v. US Bank, No. 4-12-0266, 11/5/12.)

Erma Donelan established a trust in 1991, with income and emergency funds to herself for life.  Any assets exceeding $750,000 at her death were to be distributed 20% to Church of the Little Flower, 20% to St. Joseph’s Home, and 60% to Friends of the Sisters of St. Francis, now a Foundation.  Property worth $750,000 was to retained in further trust to pay 7% income to her four sisters-in-law, with any remainder worth more than $500,000 at the death of the last of them to be held in further trust for the three charities.

An appellate court in Georgia has allowed a residual beneficiary of her mother’s trust to sue a University to recover a $1 million contribution allegedly given by the trustee without authority.  It has affirmed a trial court decision refusing to dismiss the claim. (Reinhardt University v. Castleberry, Ct. of App. GA, No. A12A1651, 11/8/12.)

The Tax Court has denied another deduction for the gift of a conservation easement to a charitable land trust.  The Court denied the deduction on the ground that the easement was not protected in perpetuity because an existing mortgage was not subordinate to the easement.  The Court denied the deduction even though the bank subsequently agreed to a subordination agreement.

Family beneficiaries of the estate of Charles R. Walgreen, Jr. have been unable to convince two Illinois courts that gifts of 10,000 shares of stock in the Walgreen drugstore company designated to two Rotary Foundations in his will and trust were made before he died and should not be made out of shares in his estate.  The courts have refused to find a “latent ambiguity” in his estate documents based on the evidence produced in the litigation.  (Koulogeorge v. Campbell, App. Cit. IL, First Dist., Fourth Div., No. 1-11-2812, 12/31/12.)

A Los Angeles church has been ordered to pay $62,000 to the Los Angeles Regional Food Bank pursuant to the indemnification clause in the contract under which it obtained food to distribute to needy families.  The Foodbank had spent that much in defending itself against a negligence claim bought by a volunteer for the Church who was injured while picking up food at the Foodbank’s warehouse.  (New Life in Christ Full Gospel Church v. Los Angeles Regional Food Bank, Ct. of App., CA, Second Dist., Div. 7, No. B232701, 12/27/12.)