Wills, Trusts, and Estates Outline

Wills, Trusts, and Estates Class Notes

Chapter 1: Introduction to Estate Planning
I. The Power to Transfer Property at Death
A. Introduction
1. Historical Perspective: The scope of one’s power to transfer at death is generally considered to be a matter of civil law as opposed to natural right

B. Rights v. Privilege
1. Governmental power to regulate: Nothing in the Federal Constitution forbids the legislature of a state to limit, condition, or even abolish the power of testamentary disposition over property within its jurisdiction
a. Irving Trust Co. v. Day

2. Government cannot abrogate completely: Government cannot totally prevent the transfer of property, although it may regulate it.
a. Hodel v. Irving

3. Right to transfer vs. Right to receive: The protections apply only to the decedent’s power to dispose of his or her property at death, not necessarily to a particular heir’s or beneficiary’s right to receive property from a decedent.

C. Public Policy Arguments
1. Pro: a person should be able to transfer his or her property at death because such a policy is consistent with a system of private property

2. Con: Person should not have the power to transfer property at death because such a policy perpetuates economic disparity and discrimination and constitutes an unearned windfall.

II. “Dead Hand” Control
A. Definition: To some degree, money is power. “Dead hand” control arises where a decedent conditions a gift to a beneficiary upon a beneficiary behaving in a certain way.
1. Arguments in support: It is the decedent’s property.

2. Arguments against: Donor is deceased and has no capacity to control the property

B. Valid Conditions:
1. Testamentary gifts are valid unless they violate public policy, or judicial enforcement of the condition would constitute state action violating constitutionally protected fundamental rights. The courts have been reluctant to find that upholding conditional terms of the gift constitutes sufficient state action to offend the Constitution, and the courts have been very reluctant to hold conditional gifts as contrary to public policy.

C. Invalid Conditions: Conditions that generally are held to be against public policy
1. Absolute restraints on Marriage: Gifts conditioned on the beneficiary not marrying anyone (at least as to first marriages) generally are considered to violate the fundamental right to marry and are void.

a. Exception-Partial Restraints: must be a reasonable restraint to be valid. What is reasonable is very fact specific, courts look at the age of the intended beneficiary and the time frame of the intended restriction or condition

b. Exception-temporal/religion requirement: condition requiring beneficiary to marry within a reasonable time period, or to someone of a particular religious background have been held valid. Do not restrict the right to marry, but encourage to marry within a certain time period or within a religion.
– Shapira v. Union National Bank

2. Religion Requirement
a. Gifts that require a beneficiary to remain faithful to a particular religion generally are held to violate public policy concerning religious freedom and are invalid

3. Encouraging Separation or Divorce
a. Gifts that require a beneficiary to separate or divorce before receiving the gift generally are deemed against public policy and are void.

b. Gifts that provide for a beneficiary only in the event of separation and/or divorce are not necessarily deemed to encourage divorce.

c. The controlling factor is the decedent’s intent: to encourage separation/divorce or merely to provide support in the even of separation/divorce.

4. Promoting Family Strife
a. Gifts conditional upon family members ostracizing and/or not communicating with other family members generally have b