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Wills, Trusts, and Estates
Charleston School of Law
Shuman, Virginia

Wills, Trusts, and Estates

Professor Shuman

Spring 2013

Introduction

· Right to transmit property at death is not constitutionally granted, but is statutorily created

· Federal Gift/Estate Tax

o Currently you can gift up to $5.12 million

o After that gov’t takes about 40%

o Arguments Against

§ Double taxed

§ Difficult to administer

o Arguments for

§ Eliminates classes/dynasties

§ Redistributes wealth

§ Forces people to work for their keep

Limits on Ability to Transmit Property

· Certain amounts going to family members like spouses

o SC requires at least 1/3 to spouse

o Promotes family support and stability

· Ensure property ownership goes to living people so property can be used

o Limits dead hand control

o Orderly transfer at death

o Rewards productivity

o Promotes strong activity

· Limits cannot be unconstitutional

o (3) Hodel v. Irving, US SC 1987

§ Indian land was so subdivided administration of the land became more expensive than the land was worth

· Congress tries to limit the devises further to remedy it

§ Court says if state totally takes away ability to transmit property there is a taking and is thus unconstitutional

§ Decedent has a right to dispose of its property at death

· Provided his right to do so is subject to the state’s broad authority to regulate it

· As long as state doesn’t totally abrogate the right

· (10) Shaw Family Archives v. CMG Worldwide

o Marilyn Monroe Estate v. Photographer’s Estate

o Neither NY or CA had right to publicity when MM died, but her estate claimed they had a right to receive money from the shirts the photographer’s estate was selling with her face on it

o Court says MM could not dispose of her right of publicity b/c it did not exist at the time of her death

§ Can’t dispose of property you don’t have

§ Wasn’t a stick in the bundle of property rights when she died

o Interpret the will at the time of death

Dead Hand Control

· Not permissible if:

o Unconstitutional under 5th or 14th Amendments

§ Most involve state action

§ (28) Shapira v. Union National Bank

· P alleges father’s will is unconstitutional b/c it requires P to marry a Jewish girl within 7 years of father’s death to receive inheritance

· Court says Father is allowed to do this b/c it doesn’t force the son to practice a certain religion, instead only to marry a certain type of girl

o Also no state action involved in this case

o Will shows father’s true intent is to further Jewish people b/c it would go to State of Israel if son doesn’t get it

o Violates Public Policy in General (Subjective)

§ Requires a person to practice a certain religion

§ Encourages divorce or any other kind of family strife

§ Directs the destruction of property or is wasteful in anyway

Professional Responsibility

· Send engagement letter that gives notice of waiver of confidentiality and other things like scope of representation, joint representation, and how confidentiality will be handled

· Avoiding conflicts of interest is difficult to do in estate planning b/c you will likely represent multiple people who all know each other and may leave things to one another

Duty to Intended Beneficiaries

· Common law says attorney-client relationship is between attorney and client only

o Privity Rule

o No duty to client’s beneficiaries

· Modern Trend

o Exceptions to privity rule when there is foreseeable injury

§ Attorney may owe a duty to beneficiaries who have standing to sue under negligence and breach of contract actions

o Some states limit beneficiaries to those actually named in the documents

· (58) Simpson v. Calivas

o Father dies testate, leaving homestead to 2nd wife as life estate

§ Probate court rules homestead refers to the house and property in it

o Son sues drafting attorney, alleging the notes show father only wanted to leave the house, not the property as well

§ Attorney argues the son didn’t have privity with him so no standing

o Court allows suit b/c of foreseeable injury to the son (intended beneficiary)

· Defenses

o No negligence

o Public policy

§ How are you going to get anyone to practice law if cases like this continue

Rules

1.1 Competence

· Lawyer shall provide competent representation to a client

· Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation

1.2 Scope of Representation

· Lawyer may limit the scope of representation if the limitation is reasonable under the circumstances and the client gives informed consent

1.3 Diligence

1.4 Communication

· (a) Lawyer shall

o (3) keep the client reasonably informed about the status of the matter

· (b) Lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding representation

1.5 Fees

1.6 Confidentiality in General

· Lawyer shall not reveal info relating to the representation of a client unless the client gives informed consent

o The disclosure is impliedly authorized in order to carry out the representation or is permitted below

· This rule does not deal expressly with the duty of confidentiality in the context of representation of multiple clients

o Should get the agreement of the parties done when all parties are present in how you will deal with confidentiality

1.8 Conflict, Special Rules

· Lawyer shall not solicit any substantial gift from a client including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer/relative is related to the client

o Related persons includes anyone with a close familial relationship

1.9 Duties to Former Clients

· Lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same/substantially related matter unless the former client gives written informed consent

1.18 Duty to Prospective Client

· Send a letter and keep it on record for prospective clients that you turn away/go to another attorney

Multiple Party Representation

· Often, clients are best served by joint representation b/c estate planning is typically non-adversarial

o More economical and provides better coordinated estate plans b/c attorney has whole lay of the familial lands

· (64) A v. B

o Conflict of interest b/c of clerical error about Husband’s illegitimate child and the firm’s repre

share among living children or predeceased children with living descendants

· Always stays the same based on living children or dead children with grandchildren

· Grandchildren then divide their parent’s share equally amongst themselves

Modern Per Stirpes

· SC uses this under § 62-2-106

· Go to the first generation below the decedent where there is a living descendant, then divide evenly among living descendants on that level

· Difference is where you stop and divide the shares

o Old, next generation down and divide

o New, next generation where there is a living person and divide

· If there is a living person on the first level down from decedent, Modern = English

Per Capita Per Generation

· UPC uses this under §1-106

· Go to the first generation where there is a live descendant and divide into equal share among those living descendants/predeceased descendants with living descendants

· Give each living descendant in that 1st generation w/ living person its equal share of the estate

· Remainder then gets divided equally and given to the next generation if the person in the 1st generation predeceased the decedent

Who Counts as Representation?

(97) Hall v. Vallandingham

· Father of 4 dies, wife remarries and 2nd husband adopts the 4 children

o Biological father’s brother dies intestate

§ Children question whether they receive biological uncle’s estate

§ Uncle’s heirs at law are his siblings by representation

· Court does not allow the children to take father’s share of uncle’s estate

o Children take on adoptive father’s family ancestors and thus need to lose out on their biological father’s lines

o Once a child is adopted, it loses the rights of their biological lines of intestacy

· Some states differ on this application of the law though

o Prevent adoptive parents to be enriched from biological parents, only the child can do this

o UPC looks to see if a parent/child relationship exists

Adoption

· Heirs at law are the ones that automatically have standing to challenge any will or trust

o Can circumvent this by adopting someone you would have in your will to make them a superseding descendant

§ Other heirs at law can still challenge the adoption though

§ Also, adoptions are typically irrevocable

(103) Minary v. Citizens Fidelity Bank & Trust Co.

· Mother leaves trust to her descendants

· One of the sons adopted his wife to continue the trust to her once he died

o His siblings had children, so it would be continued to them

· Court rules on public policy reasoning that this is an act of subterfuge and should not be encouraged