In the past month, we have seen significant developments in estate planning, business law, elder law, and special needs planning. We have highlighted the most noteworthy developments to ensure you and your firm stay informed of any changes. From court rulings addressing spendthrift trusts, updated spousal impoverishment standards, new statutes restricting the use of noncompetition agreements, and a new law prohibiting the unauthorized use of an individual’s forged digital likeness, read on to learn how these developments may impact your practice.

Estate Planning

California Law, Not Nevada, Governed Whether Land Held in Nevada DAPT Was Subject to Enforcement of IRS Lien

United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP, 2026 WL 587784 (E.D. Cal. Mar. 3, 2026)

In 2005, Robert Huckaby and Joyce Tritsch, California residents, acquired real property in California as joint tenants. In 2011, Robert and Joyce created the Circle T Bar T Trust (Trust) and transferred the real property into the Trust. The Trust’s terms stated that it was a Nevada spendthrift trust (also known as a domestic asset protection trust, or DAPT). Robert and Joyce were the Trust’s settlors, trustees, and sole beneficiaries.

In 2018, a judgment was entered against Robert in favor of the United States for failure to honor Internal Revenue Service (IRS) levies. Robert did not satisfy the judgment, and in 2023, the United States filed a civil action against Robert and Joyce to enforce it. In 2025, the US filed a motion for summary judgment seeking a declaration that Robert and Joyce individually were the true owners of the property, that its judgment lien encumbered Robert’s one-half interest in the property, and that the United States could submit a proposed order of foreclosure of the property.

The federal district court first addressed whether California or Nevada law governed whether the United States, as a creditor, could reach the property held in the Trust to satisfy its judgment. Robert asserted that under Restatement (Second) of Conflict of Laws § 277, an instrument creating a trust of an interest in land should be construed in accordance with the rules of the state designated for that purpose in the trust instrument, i.e., Nevada. The court rejected his argument, determining that the interpretation of the Trust was not at issue; rather, the issue before it was whether the United States, as a judgment creditor, could reach the land. Therefore, the court applied Restatement (Second) of Conflict of Laws § 280, which states: “[w]hether the interest of a beneficiary of a trust of an interest in land is assignable by him and can be reached by his creditors, is determined by the law that would be applied by the courts of the situs.” United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP, 2026 WL 587784, at *3 (E.D. Cal. Mar. 3, 2026) (emphasis added). Because the real property was located in California, the court determined that California law governed whether the property was subject to enforcement of the judgment lien.

The court ruled that because California law does not recognize self-settled asset protection trusts, the United States’s judgment liens were enforceable against the real property to the extent that Robert had an interest in it. The court further found that Robert had an interest in the property: he held both a legal interest as trustee and an equitable interest as a beneficiary. The court granted the United States’s motion for summary judgment and declared that its judgment lien encumbered Robert’s interest in the property and that the United States could submit a proposed order of foreclosure with regard to the property.

Takeaways: Although the Huckaby court determined that Robert’s attempt to protect his California real property interest using a Nevada DAPT failed because the conflicts of rules applicable to real property required the application of California law, which does not recognize self-settled asset protection trusts, his trust planning was also vulnerable for other reasons. For a Nevada DAPT to be enforceable, there must be an independent, qualified Nevada trustee; in the present case, Robert and Joyce, the settlors, were also the Trust’s sole trustees and beneficiaries. Moreover, although DAPTs provide strong asset protection under many circumstances, they may be vulnerable to federal tax liens: I.R.C. § 6321 provides that a federal tax lien attaches to “all property and rights to property” belonging to the taxpayer. Federal—not state—law governs what constitutes “property or rights to property” for this purpose.

Trust Was Part of Bankruptcy Estate Despite Spendthrift Provision Because Debtor-Beneficiary Had Control and Unfettered Access to Trust Assets

In re Samatas, Bankr. No. 20 B 17355, 2026 WL 612553 (Bankr. N.D. Ill. Mar. 2, 2026)

In 1988, George Samatas formed a trust for the benefit of his son, James Samatas. James and a family friend, Craig Labus, were named co-trustees. James was also named as an investment advisor for the trust. The trust held interests in a variety of personal property and in entities that owned and operated nursing facilities. The trust instrument contained a spendthrift provision stating that the income and principal could not be transferred, assigned, or encumbered by the trust beneficiary and could not be subject to interference or control by any of the trust beneficiary’s creditors. Other trust provisions allowed the trustees to make discretionary distributions, but also stated that trustees who were also beneficiaries—restricted trustees—did not have the authority to make such distributions. Thus, under that provision, James was not allowed to make discretionary distributions because he was a restricted trustee. The trust document further provided that discretionary distributions were required to be approved and executed by the co-trustee, Craig, who was not a trust beneficiary and thus was not a restricted trustee. According to the terms of the trust, as investment advisor, James had absolute discretion over how the trust assets were invested, including directing the trustees to lend trust assets to him. The trust terms specified that James, as investment advisor, was required to provide written instructions to Craig, who would execute James’s investment decisions.

In 2020, James filed a petition for relief under Chapter 11 of the Bankruptcy Code, which the bankruptcy court later converted to a Chapter 7 case. In a request for directed findings, James asserted that the trust assets were not part of his bankruptcy estate under section 541(c)(2) of the Bankruptcy Code, which excludes valid spendthrift trusts from a debtor’s bankruptcy estate. The bankruptcy trustee argued that the trust was part of James’s bankruptcy estate because it was not a valid spendthrift trust under Illinois law: The trust’s terms allowed James exclusive dominion and control over and unfettered access to trust assets, and, therefore, the trust’s assets were not protected from creditors’ claims.

Under Illinois law, to be a valid spendthrift trust, a trust must restrict a beneficiary from alienating his interest in the trust, must not be self-settled, and must place the trust assets beyond the debtor’s control. Although the court noted that the trust contained an anti-alienation provision, it determined that it was unnecessary to determine whether the trust remained self-settled because James exercised more control over the trust assets than permitted under Illinois spendthrift trust law.

The court found that James’s conduct demonstrated his exclusive and effective dominion and control over the trust corpus. The court found that James’ actions—for example, in forgiving a loan from the trust to himself using a waiver of claim on behalf of the trust in his bankruptcy case—amounted to unauthorized distributions; moreover, he opened trust bank accounts and treated the accounts as if they were his own and sold property held by the trust.

Although the trust required James, as investment advisor, to inform Craig, as co-trustee, of his decisions in writing, there was no evidence that this was done or that Craig took any action regarding investments or was aware of James’s transactions. The court described Craig as “essentially a nonfunctioning trustee.” In re Samatas, Bankr. No. 20 B 17355, 2026 WL 612553, at *36 (Bankr. N.D. Ill. Mar. 2, 2026). Further, James did not provide any evidence that transfers of funds to himself characterized as loans were documented or required interest payments or repayment within a specified time. As a result, the court determined that the transfers should be characterized as distributions rather than loans. The court held that, by unilaterally executing those transfers despite lacking the authority to do so as an investment advisor and as a restricted trustee, James had violated the terms of the trust.

The court determined that the trust’s language, James’s and Craig’s interpretations of its terms, James’s actions, and Craig’s lack of involvement in or authorization of James’s transactions showed that James exercised dominion and control over the trust. Therefore, the court invalidated the trust’s spendthrift provision. As a result, the court found that the trust assets were part of James’s bankruptcy estate and could be reached by his creditors.

The court further found that the trust was merely the alter ego of James, who had unfettered access to the trust assets and disregarded the trust instrument’s requirements. As a result, the court allowed the trust’s veil to be pierced, enabling the bankruptcy trustee to reach its assets for James’s creditors.

In addition, the court found that certain transfers of personal property by James to the trust were fraudulent under the Illinois Uniform Fraudulent Transfer Act because James made them with the intent to hinder, delay, or defraud his creditors.

Takeaways: The court’s decision in In re Samatas emphasizes that a trust containing a spendthrift provision will not automatically protect a debtor’s assets against creditors’ claims if a trustee-beneficiary has unfettered or de facto control over the trust’s assets. Moreover, a passive co-trustee who does not require adherence to the terms of the trust and allows the beneficiary to make de facto distributions to himself weakens a debtor’s argument that the trust should not be part of his bankruptcy estate.

Virginia Enacts Statute Establishing Presumption of Undue Influence in Favor of Plaintiff in Trust Contests

Va. S.B. 540

On April 8, 2026, Virginia Governor Abigail Spanberger signed Virginia Senate Bill 540, which changes the standard in trust contests involving assertions of undue influence by establishing a presumption of undue influence in favor of the plaintiff challenging the trust’s validity. Current law places the burden of persuasion on the plaintiff, who must show clear and convincing evidence of undue influence. The new law provides as follows:

In addition to any other relevant provision of law, where a presumption of undue influence arises in any action contesting the validity of a trust or trust instrument created pursuant to the provisions of Article 1 (§ 64.2-700 et seq.), the finder of fact shall presume that the undue influence was exerted over the decedent unless, based on all the evidence introduced at trial, the finder of fact finds that the decedent did intend for such real or personal property to be conveyed or transferred as indicated in the contested document or instrument.

Va. S.B. 540. The law is effective as of July 1, 2026.

Takeaways: The new statute will make the presumption of undue influence in trust contests consistent with the standard for will contests set forth in Virginia Code § 64.2-454.1, enacted in 2022. The statute provides that plaintiffs challenging a trust based on undue influence have the presumption of undue influence, shifting the burden of proof to the defendant to prove, based on all the evidence produced at trial, that the decedent intended for property to be transferred according to the trust instrument. Consequently, the defendant will have the burden of proving to the judge or jury that no undue influence occurred. If the defendant fails to meet this burden, the court may declare the trust instrument void. If so, the court may enforce a previous version of the trust or other estate planning documents. In the absence of other estate planning documents, the assets held in the trust will pass as required by the state’s intestacy statute. Estate planning attorneys may wish to consider including a no contest provision in trust instruments under which a beneficiary who challenges the validity of the trust will forfeit their interest.

Elder Law and Special Needs Law

Updated Spousal Impoverishment Standards Released

On April 27, 2026, the Centers for Medicare & Medicaid Services released an updated spousal impoverishment standard, specifically the minimum monthly maintenance needs allowance (MMMNA), which is annually adjusted in accordance with changes to the federal poverty level. Effective July 1, 2026, the baseline MMMNA will increase from $2,643.75 to $2,705.00, with Alaska’s and Hawaii’s baseline MMMNA increasing to $3,381.25 and $3,111.25, respectively.

Takeaways: Each state determines its own MMMNA figures, which must remain within the thresholds set by the federal figures. The state-specific numbers are generally updated annually in Elder Docx™ by the end of July.

Imposing Transfer-of-Asset Penalty Without Considering Evidence that Personal Care Contract Was Executed for Purpose Other than to Qualify for Medicaid Benefits Violated Federal Law

Estate of Brown v. Dep’t of Health & Hum. Serv., No. 368825, 2026 WL 843956 (Mich. Ct. App. Mar. 26, 2026)

After surgery and two months in the hospital, Charla Brown was admitted to a nursing home. She returned home in July 2019. Charla received in-home care from her husband, daughter, and a family friend for two years. During those two years, Charla’s caregivers helped her move in and out of a wheelchair, helped with personal care and bathing, gave her medication, cooked her meals, and fed her. Pursuant to oral agreements, Charla and her husband, Harold, paid their daughter, Lynette, a total of $45,758.64, and their friend, Loreen, a total of $10,668.75 for those services.

In July 2021, Charla was again admitted to a nursing home. Harold met with an elder law attorney and learned that the DHHS required a written and notarized personal care contract and a doctor’s recommendation before the provision of services under its Bridges Eligibility Manual 405, BPB 2021-013 (April 1, 2021) (BEM 405) to avoid a Medicaid transfer of assets penalty. In August 2021, Charla’s doctor provided a letter stating that she had needed assistance with activities of daily living since June 2019. In September 2021, Charla and Lynette entered into a written personal care contract specifying Lynette’s duties and rate of compensation. The contract stated that it was binding on the parties for services beginning in June 2019.

Charla then applied for long-term care Medicaid benefits. The DHHS issued a determination notice stating that, based on BEM 405, Charla was eligible after a penalty period from September 1, 2021, to February 20, 2022, the month the written contract was formalized, but not before, because she had transferred assets for less than fair market value in the amount of $54,427.39.

Carla requested a hearing before an administrative law judge (ALJ), but died before the hearing occurred. Her estate continued as the petitioner. The ALJ affirmed the DHHS’s decision imposing a divestment penalty period based on BEM 405’s requirement of a written personal care contract, despite noting that there was a compelling argument that Charla had paid for personal care to avoid a residential placement rather than in an attempt to qualify for Medicaid benefits. Charla’s estate appealed to the circuit court, which reversed the ALJ’s decision. The DHHS appealed.

The Michigan Court of Appeals noted that the federal Medicaid statute, 42 U.S.C. § 1396a(A)(17), authorized the DHHS to include reasonable standards for determining eligibility in its state Medicaid plan. Under 42 U.S.C. § 1396p(c)(1)(A), participating states are required to impose divestment penalties for the disposition of assets for less than fair market value during a five-year look-back period. However, states are prohibited under 42 U.S.C. § 1396p(c)(2)(C)(ii) from imposing a transfer of asset penalty without considering evidence that the assets were transferred exclusively for a purpose other than to qualify for medical assistance.

The court further noted that BEM 405 states that personal care contracts shall be considered a transfer for less than fair market value unless they meet the following requirements: Before the commencement of services, (1) a notarized written personal care contract must be executed, and (2) the Medicaid applicant’s physician must provide a written recommendation stating that the services are necessary.

The court held that BEM 405 was inconsistent with 42 U.S.C. § 1396p(c)(2)(C)(ii) because it created an irrebuttable presumption of divestment in the absence of a personal care contract that met its requirements and that BEM 405 must not be applied in a manner that creates such a presumption. It vacated the circuit court’s reversal of the ALJ’s decision and remanded for the ALJ to reevaluate divestment under the proper legal framework.

Takeaways: In Estate of Brown, Michigan Medicaid did not provide Carla with the opportunity to avoid a transfer-of-asset penalty by presenting evidence that she had entered into the contracts exclusively for a purpose other than qualifying for Medicaid. Federal law protects applicants against such irrebuttable presumptions. Elder law attorneys should advocate vigorously for their clients to ensure they are not penalized by state Medicaid policies that do not comply with federal law.

Wisconsin Enacts New Next-of-Kin Statute

Wis. Assemb. B. 598

On March 20, 2026, Wisconsin Governor Tony Evers signed a new next-of-kin statute applicable in situations involving hospitalized individuals who a physician or other clinician has determined to be incapacitated. The statute allows a patient representative—who may be the patient’s spouse, adult child, parent, or other family member set forth by statute—to consent to the patient’s admission to a nursing or assisted living facility without requiring a guardianship proceeding when the patient does not have a healthcare power of attorney designating someone to act on their behalf. The law generally allows the patient representative to make healthcare decisions for the incapacitated individual to the same extent as a guardian. The patient representative retains that authority until a court appoints a guardian, the individual is discharged from the facility, a healthcare power of attorney is identified, or the individual is no longer incapacitated. A person concerned that the patient representative is not acting in the incapacitated individual’s best interests or contrary to their wishes may petition the court for review.

Takeaways: The new law is designed to prevent incapacitated individuals who have not designated an attorney-in-fact to make healthcare decisions on their behalf from having to remain in the hospital, possibly for months, during the pendency of guardianship proceedings. The majority of states have similar laws (see the American Bar Association’s 2023 article, Recent Updates to Default Surrogate Statutes). Although next-of-kin statutes are helpful where no attorney-in-fact has been named, it is important to encourage all clients to execute a healthcare power of attorney or healthcare proxy so they can designate the individual they trust to carry out their wishes to make decisions on their behalf.

Business Law

Washington and Virginia Enact New Restrictions on Noncompetition Agreements

Wash. H.B. 1155

On March 23, 2026, Washington Governor Bob Ferguson signed Washington House Bill 1155, which prohibits noncompetition agreements between Washington-based employers and all workers—both employees and independent contractors—effective June 30, 2027. Noncompetition agreements for employees earning $100,000 or less per year and independent contractors earning $250,000 or less per year are already banned under current law.

The new prohibition includes agreements that require workers to return, repay, or forfeit benefits or compensation if they engage in competition. The law does not prohibit nonsolicitation agreements (under some circumstances), confidentiality agreements, nondisclosure agreements, noncompetition agreements entered into by the purchaser or seller of a business interest or a franchisee, or agreements to repay certain educational expenses. All employers must make reasonable efforts to provide written notice to current and former workers by October 1, 2027, that their noncompetition agreements are void and unenforceable.

The attorney general may pursue relief on behalf of individuals injured by violations of the statute. Individuals also have a private right of action to recover the greater of their actual damages or a statutory penalty of $5,000.

Va. S.B. 170; Va. S.B. 240

On April 13, 2026, Virginia Governor Abigail Spanberger signed two bills restricting noncompetition agreements. Virginia had previously enacted restrictions prohibiting employers from entering into noncompetition agreements with low-wage and nonexempt employees in Virginia Code 40.1‑28.7:8. In Virginia Senate Bill 170, Virginia further prohibits employers from enforcing noncompetition agreements against any employees who are terminated without cause in the absence of an agreement to make severance or other payments, which must be disclosed upon execution of the noncompetition agreement.

The second new law, Virginia Senate Bill 240, prohibits franchisors from entering into blanket noncompetition agreements with franchisees unless the franchisee sells the franchise to the franchisor or a third party at a mutually agreed-upon price—in which case a noncompetition agreement with a duration of no more than two years is permitted.

Virginia’s new laws do not invalidate noncompetition agreements entered into before their effective date, July 1, 2026.

Takeaways: State laws addressing the enforceability of noncompetition covenants have been dynamic over the past several years, with some states imposing additional restrictions and others creating presumptions of enforceability under certain circumstances. A few states—California (Cal. Bus. and Prof. Code §§ 16600, 16600.1), Minnesota (Minn. Stat. § 181.987), North Dakota (N.D. Cen. Code § 9-08-06), and Oklahoma (15 Okla. Stat. § 219A)—have enacted statutes completely banning noncompete clauses in employment under most circumstances. However, Kansas recently enacted Kansas Senate Bill 241, an employer-friendly statute that identifies circumstances under which nonsolicitation agreements are presumed enforceable (see our May 2025 monthly recap). Similarly, Florida enacted House Bill 1219, entitled the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act, which creates presumptions of enforceability for certain garden leave and noncompete agreements (see our June 2025 monthly recap).

SC Lawyers May Not Ethically Serve as Co-Counsel with or Own Interest in Alternative Business Structure or Split Fees with Nonlawyer Owners or Partners

S.C. Bar, Ethics Adv. Op. 25-02 (Mar. 23, 2026)

On March 23, 2026, the South Carolina Bar issued Ethics Advisory Opinion 25-02, which addressed whether South Carolina attorneys may serve as co-counsel for, split fees with, own an interest in, or invest in an alternative business structure (ABS) that provides legal services and has nonlawyer owners or partners with decision-making authority under the rules of the ABS’s jurisdiction who may receive some of the attorney’s fees paid to the ABS or referral fees.

According to the opinion, an Arizona ABS that advertised nationwide to take personal injury cases sought to co-counsel with a South Carolina lawyer to serve as local counsel on South Carolina personal injury cases. The ABS sought joint representation under which the fees would be split between the ABS, which was partially owned by nonlawyers, and the South Carolina lawyer. The opinion concluded that South Carolina Rule of Professional Conduct (SCRPC) 5.4 prohibits lawyers from sharing or splitting fees with nonlawyers, emphasizing South Carolina’s policy of preserving professional independence. Thus, a South Carolina lawyer may not ethically serve as co-counsel with, or own or invest in, the ABS.

Further, under SCRPC 8.5(a), a South Carolina lawyer’s conduct is subject to the SCRPC regardless of where the lawyer’s conduct occurs. A lawyer who is part of an ABS that provides or offers to provide services in South Carolina is also subject to the SCRPC. SCRPC 8.4(a) prohibits a South Carolina lawyer who knows that fees will be distributed contrary to South Carolina rules from knowingly violating or attempting to violate the rules prohibiting fee splitting with an ABS attorney by assisting or inducing another to violate them.

Takeaways: Most states continue to prohibit nonlawyer ownership of law firms and other alternative business structures. Arizona, Utah, and Washington (as a pilot project) are currently the only states that allow nonlawyer ownership of law firms. The District of Columbia and Puerto Rico also permit nonlawyer ownership of law firms.

Several states, in addition to South Carolina, have explicitly opposed ABS in ethics opinions and legislation: For example, the South Carolina Bar’s advisory opinion cited opinions from Texas (Texas Pro. Ethics Comm. Op. 707 (May 2025)) and Maryland (MSBA Ethics Comm. Op. 2025-01 and MSBA Ethics Comm. Op. 2012-12) to support its conclusion. Further, in October 2025, California enacted California Assembly Bill 931, prohibiting California attorneys from sharing legal fees with out-of-state ABS-associated attorneys under most circumstances from January 1, 2026, until January 1, 2030. Please see our September 2021, February 2022, and April 2025 monthly updates for related developments.

AI and Legal Tech

Washington Amends Personality Rights Law to Prohibit Unauthorized Use of a Person’s Forged Digital Likeness (i.e., a Deepfake)

Wash. S.B. 5886

On March 16, 2026, Washington Governor Bob Ferguson signed Washington Senate Bill 5886, which amends Washington’s Personality Rights Law to recognize an individual’s property rights in their forged digital likeness (commonly known as a deepfake) and prohibit its use without the individual’s consent. The amended law defines forged digital likeness as a visual representation or audio recording of an actual and identifiable individual that has been digitally created or modified to be indistinguishable from an actual video or audio recording of the individual, misrepresents the individual’s appearance, speech, or conduct, and is likely to deceive a reasonable person into believing that it actually is the individual.

The amended law authorizes injunctive relief, a civil penalty of $3,000, actual damages, profits attributable to the infringement, and—if the infringement is of a living or deceased person’s forged digital likeness—noneconomic damages sustained as a result of the infringement, regardless of whether the infringer profited from the infringement.

Takeaways: By providing victims with a remedy even if the infringer did not profit, the amended law recognizes that damages from deepfakes may be noneconomic where the infringer’s motive was to harass or embarrass a nonconsenting victim.

In the estate planning context, estate planning professionals who operate in virtual or remote environments may use online platforms for video conferencing, client meetings, and document execution for their convenience and flexibility. However, the use of online platforms creates more opportunities for wrongdoers to use deepfakes, which could result in fraudulent estate planning documents, forged electronic signatures, and misappropriated client data. Washington’s amended law protects the rights of a living or deceased individual’s forged digital likeness and may provide remedies for infringement in the estate planning context.

For additional information about the dangers of deepfakes in the estate planning context and how to avoid them,  see our recent article, Digital Deceptions: Estate Planning in the Age of Deepfakes, and our course, Trust No One? Deepfakes in Estate Planning. 

Oregon and Washington Enact Laws Regulating AI Companion Chatbots

Ore. S.B. 1546; Wash. H.B. 2225

On March 24, 2026, Washington Governor Bob Ferguson signed Washington House Bill 2225, a new law regulating artificial intelligence (AI) companion chatbots. Oregon Governor Tina Kotek signed similar legislation, Oregon Senate Bill 1546, on March 31, 2026. Both laws take effect January 1, 2027.

The new laws, though not identical, similarly define AI companion chatbots as AI that provides responses simulating human interactions and retains information from prior interactions. Certain AI chatbots or software are excluded from the new laws’ definitions of an AI companion chatbot, for example, those used solely for business operations and customer service. Both laws require disclosure to users that they are interacting with an AI companion and not a human being. Additional enhanced disclosures are required for users who are minors. In addition, operators of AI companions must implement protocols designed to detect and address suicidal or self-harm ideation or intent by users, including providing contact information for suicide and crisis hotlines.

Oregon’s law provides that individuals injured as a result of a violation may recover the greater of the actual damages or $1,000 per violation.

Washington’s law provides for relief under the Washington Consumer Protection Act, which may include actual damages, treble damages, injunctive relief, and attorney’s fees and costs.

Takeaways: In the absence of federal law that preempts state AI companion laws, additional states are likely to pass similar statutes. California also recently enacted a law regulating AI companions, California Senate Bill 243, which took effect January 1, 2026, and requires disclosure and protections for minors. Although the laws mentioned exclude AI chatbots used solely for business operations, operators of AI companion chatbots should take steps to ensure compliance.