Professor: Alan S. Medlin
Dukeminier, et al, Wills, Trusts and Estates (8th ed. Aspen Pub.)
WILLS, TRUSTS, AND ESTATES OUTLINE
NOTE: FIRST TWO ASSIGNMENTS ARE NOT ON EXAM
South Carolina Probate Law
· July 1, 1987: watershed date. Most of the law now has been in place since 1990. In 2006, South Carolina formed a version of the Uniform Trust Code, which has been popular among the states.
· Intestacy: when you die without a will or your will doesn’t cover all your property.
· Powers of Appointment
The Power to Transmit Property at Death: Justifications and Limitations
Ø The Right to Inherit and the Right to Convey
§ William Blackstone Commentaries
· Testament: by written or oral instructions properly witnessed and authenticated, according to the pleasure of the deceased, known as the will.
§ John Locke, Two Treatises of Government
· Recognizes inheritance as a natural right on parents desire to leave their children something as a continuation of themselves.
· Until the 1980s, the views of Jefferson and Blackstone prevailed over those of Locke. It was generally accepted that the right to transmit or inherit property at death was neither a natural right nor was it constitutionally protected.
Hodel v. Irving (1987): The Indian Land Acts enacted at the end of the 19th century provided that each Sioux Indian was allotted reservation land which was held in trust by the United States. The lands later shifted into multiple undivided interests with multiple fractional owners. The Indian Land Consolidation Act was an attempt to solve the problem of fractionated ownership of Indian lands. It provided that certain fractional interests could not be transferred by intestacy or devise but would escheat to the tribe. There was no provision made for the payment of compensation to the owners of the interest. Appellees (members of Sioux tribe) filed suit claiming that § 207 resulted in a taking of property without just compensation.
The Court found that the fractionation problem on Indian reservation is quite significant calling for dramatic action to encourage consolidation. The costs of the property are far exceeding their value and the amount of profit owners receive from these properties is minuscule. However, the regulation here does virtually abrogate the right to pass on a certain type of property (the right to pass property to one’s heirs). A right to pass property to one’s family has been part of the Anglo-Saxon legal system since feudal times. As such, the escheatable interests are not de minimis. While the fractional owners have the right to make inter vivos transfers of the interests does not obviate the total abrogation of the owner’s rights to devise the property.
Court appears to rest on the assumption that the right to transmit property, and, if this right is taken away, compensation must be paid. Basically held that the Fifth Amendment curtailed the power of the government to limit the right to convey property at death.
Shaw Family Archives v. CMG Worldwide (S.D.N.Y. 2007): Marilyn Monroe died in 1962, leaving the remainder of her estate to Lee Strasberg and naming her attorney Aaron Frosch as her executor. Strasberg died in 1982 and left his estate to his wife, Anna. When Frosch died in 1989, Anna was appointed Administratrix of the Monroe Estate, which remained open until 2001. When the estate was closed, the residuary assets were transferred to Marilyn Monroe, LLC. In 2006, MMLLC and CMG discovered that SFA, the company that owned the photographs taken by the famous photographer Sam Shaw, was selling t-shirts bearing Monroe’s likeness and was also issuing licenses for others to reproduced Monroe’s image from photographs that Shaw had taken. MMLLC sued SFA under Indiana’s right of Publicity Act alleging that Monroe’s right of publicity passed to MMLLC and that SFA could not sell Monroe’s image.
The Court found that a postmortem right of publicity does not pass through the residuary clause in a decedent’s will when the decedent did not have a statutory right of publicity at the time of her death. Monroe could not devise by will a property right she did not own at the time of her death. No such rights were recognized in New York, California, or Indiana at the time of her death in 1962. Any publicity rights she enjoyed during her life extinguished at the time of her death.
Shapira v. Union National Bank, Ohio Court of Common Pleas, Mahoning County (1974): Shapira’s will stated that his son Daniel could inherit only if, at the time of Shapira’s death or within seven years thereafter, he was married to a Jewish woman whose parents were both Jewish. Daniel alleged that the will was unconstitutional since it restricted his right to marry or that the clause was unconstitutional as against public policy.
The right to receive property by will is a matter of statutory law. A testator may either disinherit his children or condition their taking in any manner without offending the Constitution. Plaintiff argues that Loving v. Virginia recognized marriage as a fundamental right. While it appears the right to marry is constitutionally protected, the constitutional protection of the Fourteenth Amendment is extended from direct state legislative action to the enforcement by state judicial proceedings of private provisions restricting the right to marry. However, there is no state action present here. The courts are not being asked to enforce covenants. The only official action involves the probate of the will, which is insufficient to be deemed state action.
Plaintiff also contends that the condition violates public policy because the condition is unreasonable. However, public policy does prohibit a limited restriction on the right to marriage restricted to members of one religion. A partial restraint of marriage which imposes only reasonable restrictions is not void as a violation of public policy.
There is no right to inherit. This case illustrates the dead hand concept. However, a will or trust provision is ordinarily invalid if it is intended or tends to encourage disruption of a family relationship.
§ Note: Incentive Trusts and the Dead Hand
· Conditional gifts tend to be made in trust, otherwise known as incentive trust. There are normally three types of conditions that incentive trusts might impose: (1) conditions that encourage the beneficiaries to pursue an education; (2) conditions that provide moral incentives; and (3) conditions designed to encourage the beneficiaries to have a productive career. As long as these incentives do not violate public policy, courts will likely enforce them.
§ Note: Destruction of Property at Death
· A fundamental justification of private property is that society’s total wealth usually is maximized by permitting individuals to decide what is the best use of their property. We assume that each person makes rational choices to maximize her wealth.
Ø Professional Responsibility
§ (1) Duties to Intended Beneficiaries
Simpson v. Calivas, Supreme Court of New Hampshire (1994): the decedent’s will left all his real property to his son except for a life estate in “our homestead located at Piscataqua Road, Dover, New Hampshire,” which was left to the decedent’s second wife. The probate court ruled that the will devised a life estate in all the real property located at Piscataqua Road, not just the house and a limited amount of land. Simpson Jr. sued the attorney who drafted the will alleging negligence and breach of contract. He claimed the decedent intended that the stepmother receive a homestead only in the house, with the remaining land to go to Simpson Jr.
The New Hampshire Supreme Court adopted the modern trend, which extends the duty and privity beyond the client to include intended beneficiaries, but only those intended beneficiaries identified in the testator’s estate planning instruments.
South Carolina has not done away with the privity defense.
§ (2) Conflicts of Interest
A v. B, (1990): Mother’s former law firm, which also represented the father and his wife in planning their estates, sought to disclose to the wife the existence of father’s illegitimate child. The devisees in the father and wife’s wills created the possibility that the other spouse’s issue, whether legitimate or illegitimate, ultimately would acquire the decedent’s property. Due to a clerical error, the computer did not reveal the conflict of interest. When they learned of the conflict, the firm withdrew from representing Mother. The husband requested restraints against the firm disclosing to his wife the existence of the child.
RPC 1.6(c) permits a lawyer to disclose a confidential communication to the extent the lawyer believe necessary “to rectify the consequences of the client’s criminal, illegal or fraudulent act in furtherance of which the lawyer’s services had been used. This case involves the duty of confidentiality and the duty to inform clients as to material facts. The husband’s deliberate omission of the existence of his illegitimate child constitutes a fraud on his wife. The existence of the illegitimate child could affect the distribution of the wife’s estate if she predeceased him or deplete that part of his estate that would otherwise pass to wife.
CHAPTER 2: INTESTACY: AN ESTATE PLAN BY DEFAULT [WILL BE ONE OR MORE QUESTIONS ON EXAM ABOUT INTESTACY]
THE BASIC SCHEME
o People that die leaving a will = died testate.
o People that die without a will = died intestate. (S.C. § 62-2-101)
§ The law of intestacy governs the distribution of an intestate decedent’s probate property. Despite the advantages of having a will, roughly half of the population die intestate. Generally, if a person dies without a will, the law of the state where the decedent was domiciled at death governs the disposition of personal property, and the law of the state where the decedent’s real property is located governs the disposition of real property.
§ There are two types of relationships: (1) relationship by blood and (2) relationship by marriage. These relationships vary in closeness, the smaller the number, the more closely related you are. See Table of Consanguinity Chart (pg. 93).
o Note: The Meaning of Heir and the Transfer of an Expectancy
§ No living person has heirs. The persons who would be the heirs of A, a living person, if A died within the next hour, are not the heirs of A but are the heirs apparent. The only have an expectancy, which can be destroyed by A’s deed or will.
Ø Share of Surviving Spouse
o Under current intestacy laws in most states, the surviving spouse usually receives at least a one-half share of the decedent’s estate. (S.C. § 62-2-102 – no issue = entire estate; issue = ½ of estate).
o Note: Same-Sex Marriage, Domestic Partners, and Intestate Succession
§ An important issue in the states that recognize intestacy rights for domestic partners is the criteria for qualifying as a domestic partner. Usually, couples must make use of a registry (i.e. registering the relationship with the state).
o Simultaneous Death
§ A person succeeds to the property of a decedent only if the person survives the decedent for an instant of time. The Uniform Simultaneous Death Act stated that if “there is no sufficient evidence of the order of deaths, the beneficiary is deemed to have predeceased the donor.” (S.C. § 62-2-104 – must survive decedent for 120 hours to claim estate by intestacy; if not, considered to have predeceased).
§ Applies to intestacy, testacy and nonprobate transfers such as life insurance.
Janus v. Tarasewicz, Illinois Appellate Court (1985): Stanley and Theresa Janus, a married couple, unknowingly took Tylenol capsules laced with cyanide. Stanley collapsed and within minutes, Theresa started having seizures. They were both taken to the hospital. Stanley had no blood pressure, pulse, or signs of respiration. He was pronounced dead on September 29, 1982. Theresa also exhibited no vital signs when she first arrived at the hospital. Once she arrived, hospital personnel were able to get her heart beating without a pacemaker and detected a blood pressure. She was in deep coma and placed in intensive care. The nurse saw a response to light in Theresa’s right pupil. After determining Theresa was brain dead, she was pronounced dead on October 1, 1982. Stanley’s life insurance policy was paid to the administrator of Theresa’s estate. Plaintiff, the contingent beneficiary, sued the administrator for the proceeds. The trial court found that there was sufficient evidence that Theresa survived Stanley. Janus appealed.
The Court held that the determination of legal death must be made in accordance with the usual and customary standards of medical practice. Survivorsh
that a contract to adopt may not be specifically enforced unless the contract was entered into by a person with the legal authority to consent to the adoption. Consent may only be given by a child’s parent or legal guardian. O’Neal’s aunt was not her legal guardian, but was merely caring for the child. As such, she could not consent to O’Neal’s adoption. The contract was invalid and there is no claim for equitable adoption.
The dissent argues that the decision was not equitable and harming the child in the process.
Under the equitable adoption doctrine, recognized in a majority of states, an oral agreement to adopt A, between H and W and A’s genetic parents, is inferred if H and W take baby A into their home and raise A as their child. As against H and W, equity treats A as if the contract to adopt had been performed by H and W. They are estopped to deny a formal adoption took place.
o (b) Posthumous Children (conceived while the natural father is alive but born after his death) (S.C. § 62-2-108 – must be born 10 months after death)
§ Common law treats a posthumously born child as alive from the moment of conception if it were to the child’s benefit. The issue is whether the posthumously conceived child should be treated as a child of the predeceased natural parent for purposes of distributing her estate.
o (c) Nonmarital Children (S.C. § 62-2-109(2))
§ At common law, a child born out of wedlock was considered an illegitimate child (i.e., the child of no one). The child could not inherit from or through either natural parent, and neither natural parent could inherit from or through the child.
§ Under the modern trend a child has a parent-child relationship with both natural/genetic parents regardless of their marital status. A child has an automatic parent-child relationship with the mother and can inherit from and through her. Inheritance from and through the natural father typically requires proof of paternity.
o (d) Reproductive Technology and New Forms of Parentage
§ A posthumously conceived child differs from the posthumous child in that the former is both born and conceived after the death of one or both of the child’s genetic parents. By definition, a posthumously conceived child is a nonmarital child even though the child’s parents might have been married prior to the child’s conception.
Woodward v. Commissioner of Social Security, Supreme Judicial Court of Massachusetts (2002): James Woodward married the appellant in 1993. Three years later, Woodward learned that he had leukemia. He was advised that the leukemia treatment my leave him sterile. Therefore he decided to arrange for a quantity of his semen to be preserved. Woodward died later that year. In 1995, the appellant gave birth to two children. She applied two forms of social security, “child’s” benefits and “mother’s” benefits. The Social Security Administration rejected her claim on the ground that she had not shown that the twins were the husband’s children under the meaning of the Act because they were not entitled to inherit under the Massachusetts intestacy and paternity laws.
The Court ruled that posthumously conceived children may enjoy inheritance rights of “issue” under the state’s intestacy scheme where the surviving parent or child’s legal representative demonstrates (1) a genetic relationship between the child and the decedent; and (2) that the decedent affirmatively consented to the posthumous conception and to the support of any resulting child.
In re Martin B., Surrogate’s Court, New York County (2008): Grantor established 7 trusts for the benefit of his “issue/descendants.” Grantor’s son died six months earlier with no children, but before he died he banked sperm and authorized his wife to use it. Three years later, she gave birth to a son, and then two years later to a second son. The trust gave the trustees the discretion to use the principal for the settlor’s issue during the grantor’s wife’s life, and upon her death, to distribute the principal to their issue.
The Court held that “where a governing instrument is silent, children born of this new biotechnology with the consent of their parent are entitled to the same rights ‘for all purposes as those of a natural child.’”
§ Note: Surrogate Motherhood and Married Couples
· There can be a genetic connection of both husband and wife to the child, or a genetic connection of only one of them to the child, or no genetic connection between the husband and wife and the child. The states are not uniform in their treatment of surrogacy matters. Some states accept surrogacy contracts and some do not declaring the main consideration to be the best interests of the child.
UPC § 2-121 provides that in the absence of a court order to the contrary, the surrogate does not have a parent-child relationship with the child unless the surrogate is the child’s genetic mother and no one else has a parent-child relationship with the child. An intended parent of the child, meaning a person who entered into an agreement with the surrogate stating that the person would be the parent of the child, has a parent-child relationship with the child if the person functioned as a parent