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

Wills, Trusts, and Estates—Fall 2013—Prof. Shuman

Two types of property:

1. Property that passes through Probate (Chapters 1-5 discuss all probate property: wills, property that passes when the decedent passed intestate), property owned jointly as tenants in common,

2. Property that does not pass through Probate (non-probate): life insurance, pension plans (plans that set up a transfer on death to a designated beneficiary), assets held in joint ownership with right to survivorship, inter vivos trusts

The laws of intestate succession and the laws of wills only apply to PROBATE property.

· The Right to Transfer Property at Death

A decedent has the right to dispose of his property at death; provided, however, that his right to do so is subject to the state’s broad authority to regulate that process so long as

Policy Considerations: our society wants families to support each other, to reward productivity, promote a strong economy, to prevent waste, and to limit dead hand control/orderly transfer of title.

Underlying Goal of Donative Transfers: to apply the donor’s intent

Will provision void as public policy

You can challenge a will provision if its against public policy

– Shapira: Court says a partial restraint on a beneficiary’s right to marry is okay

– Feinberg: Trial court says restriction is against public policy/void and state Supreme Court overturns saying that it is okay.

Dead hand control is not permissible if:

1. it is unconstitutional (see 5th and 14th amd.) OR

2. it violates public policy in general (requires a person to practice a certain religion; it encourages divorce or any other kind of family strife; or it directs the destruction of property/is wasteful.

· Professional Responsibility

In all professional functions, a lawyer should be competent, prompt, and diligent.

– Be competent and careful, maintain client confidentiality, avoid conflicts of interests and if you have not, deal with it immediately. Have a thorough engagement letter that coves the scope of representation, permission for you to talk to other advisors, consent to join representation, an agreement regarding confidentiality, and a place for client to sign and return it to you.

Duty to Intended Beneficiaries

– Common law says that attorney-client relationship is between attorney and client (testator) via the privity rule. Attorney owes duty only to the client he has the contract with, not intended beneficiaries.

– Modern trend/majority of states: permit exceptions to privity rule when there is a foreseeable injury. The trend is that the attorney may owe a duty, which allows the beneficiaries standing to sue the attorney for malpractice. The attorney owes duties to the intended beneficiaries as 3rd party beneficiaries of the attorney-client relationship. The beneficiaries would have standing to sue under negligence and breach of contract actions.

– There are some states that limit the 3rd party beneficiaries standing to only those who were actually named in the documents and not anyone and everyone who may have expected to inherit from the testator.

· Intestacy: The Default Estate Plan

Heirs

UPC §1-201(20) heirs: persons, including the surviving spouse and the state, who are entitled under the statutes of intestate succession to the probate property of a decedent.

Heirs apparent (heirs expected during decedent’s life) vs. heirs at law (heirs recognized at decedent’s death)

UPC §2-102(1) Surviving spouse takes 100%

The decedent’s surviving spouse gets 100% in 2 situations:

(1) the decedent has no surviving descendants and no surviving parent

OR

(2) the decedent’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent.

Parents of decedent will not take if there are any surviving issue/lineal descendants.

UPC §2-102(2)-(4): Surviving spouse gets less than 100% when:

– The decedent has no surviving issue but s/he is survived by at least one parent-then surviving spouse will get the first $300,000 of probate assets and ¾ of the remainder (see UPC §2-103 for remaining ¼)

– The decedent’s surviving descendants are also descendants of the surviving spouse but the surviving spouse also has one or more surviving descendant who is not a descendant of the decedent–then surviving spouse gets the first $225,000 plus ½ of the remainder (see UPC §2-103 for the remaining ½).

– The decedent has surviving descendants who are not also descendants of the surviving spouse, then the surviving spouse gets the first $150,000 plus ½ of the balance (see UPC $2-203 for the remaining ½).

– If no surviving spouse or parents or descendants, estate is distributed to the descendants of the decedent’s parents by representation (aka siblings, normally)

– If no spouse, parents, descendants, no descendants of parents, but the decedent is survived on both paternal and maternal sides by grandparents, ½ to paternal and ½ to maternal by representation.

– If no spouse, parents, descendants, no descendants of parents, no grandparents, then to descendants of grandparents. UPC ends distribution at grandparents’ descendants.

– If no one under UPC, state takes.

UPC §2-104 The Survivorship Rule

– No heir can inherit under the intestacy scheme unless s/he survives the decedent by 5 days (120 hours).

o This rule only applies in intestacy situations.

– Except in situations wherein the testator has expressly included a survivorship clause in his/her valid Last Will and Testament.

– Enacted as a result of the Janus case.

Ø Taking by representation (per stirpes, modern per stirpes, per capita/per generation)

What is “by representation”?

Three main schemes, pg. 87

– Old English per stirpes

– Modern per stirpes

– Per capita per generation

UPC uses per capita per generation

: advancements and other bars to succession

· Wills

Ø capacity/contests

UPC 2-501 says in order to make a will you must be 18 years old and of sound mind.

A will cannot be valid unless the testator is an adult with the requisite testamentary capacity.

Test of Testamentary Capacity

The testator (must be 18) and must be capable of knowing and understanding in a general way:

– The nature and extent of his property

– The natural objects of his bounty (his heirs-at-law)

– The disposition he or she is making of that property, and the significance of the disposition.

The law presumes one has testamentary capacity. UPC 3-407:

– Burden on person challenging will to prove incapacity.

– Burden shifts if testator declared incompetent during his/her lifetime.

Common law grounds to challenge a will:

– Lack of testamentary capacity

o Example: Alzheimers, mental deficiency, etc. General lack of capacity, often a problem in ol

– Insane delusion:

o Some states don’t recognize insane delusion as a separate ground to challenge a will, insane delusion may be part of a showing of another ground such as lack of testamentary capacity (S.C. is one of these). Someone suffering from an insane delusion is a person who would otherwise have testamentary capacity except for the false conception of reality that no other reasonable person could believe.

o This conception will be held by the person even if they are presented with clear and convincing evidence of its falsity.

o Requirements for insane delusion (majority view):

§ You must prove the person is suffering from an insane delusion-a false belief that is not a mistake but is a false conception of reality that no other reasonable person could believe and

§ You must show that the insane delusion was the direct cause of the disposition in the Will that is being challenged.

– Undue influence

– Duress:

o Duress is extreme undue influence. Duress is always undue influence, but undue influence isn’t always duress — duress is overtly coercive undue influence.

o Duress is proved when a donative transfer is procured by a 3rd party who threatens to perform and does perform a wrongful act that coerced the donor into making the donative transfer when the donor would not have otherwise done so.

o Any transfer procured by duress is invalid.