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Trusts and Estates
Drexel University School of Law
Gordon, Deborah

Trusts and Estates Outline
Fall 2011
Prof Gordon
 
 
 
                  I.            Power to Transmit Property at Death: Justifications & Limitations
a.       Jefferson- said prop should revert to society after death
b.       Blackstone- explains how the common practice of leaving prop to family likely came about. 
                                                                        i.      Family around dying on deathbed.
                                                                      ii.      Is not a natural right.  Property rights used to only last during life, but made heirs disobedient, creditors were defrauded
                                                                    iii.      Testament: disposal of property by written or oral instructions, , witnessed and authenticated at the will of the deceased
c.       Jefferson & Blackstone’s views reigned until 1980s.  Was accepted that right to transmit/inherit prop at death was not natural right or constitutionally protected.
d.       Locke- said giving prop to kids after death is part of self-preservation
                                                                        i.      Self-propagating
e.       Irving Trust v Day, 1942- inheritance is statutory construction, so state legislatures could limit or abolish it if they so desired
f.        Until 1540 in England, owners of land had no right to dispose of property by will- oldest son would get the property.  Then….
g.       In Hodel (1980s)- Supreme Ct said you can’t restrict right to give property-
h.       Restrictions on passing property:  if you’re married, can’t cut your spouse out.  Can cut kids out of wills (except in Louisiana and Europe). 
i.         Donative freedom: right to pass property at death.
 
j.         Policing of Passing Wealth at Death
                                                                        i.      Halbach: An Intro to Death, Taxes, Family Property:  args in support of inheritance: said it’s a reinforcement of family ties, allows the deceased comfort/satisfaction to provide for family, affection.  Many benefits to donor
                                                                      ii.      Oliver: Them That’s Got Shall Get: Forbes richest, stats about concentration of wealth, perpetuates wide disparities in distribution of wealth, concentrates inherited eco power in hands of few, denies equal opp to poor.
                                                                    iii.      Ascher: Curtailing Inherited Wealth:  if we let gov take prop at death, could pay deficit, but nation won’t go for that.  Wants 6 exceptions: marital, descendants up to age 25, disabled, older ascendants like grandparents/parents, charity, etc. 
1.       Doesn’t want lucky kids to just inherit all parents’ property and wealth.  Thinks public policy should allow it in those 6 situations ONLY.
                                                                    iv.      Kristol: large inherited wealth poses problem for democracy- make a person dissolve wealth into smaller portions before death to anyone, but doesn’t think democrats will go for that.
 
 
k.       Pros and Cons of transmitting property at death:
                                                                        i.      PROS:
1.       Encourage investment/savings/productivity
2.       Having the gov redistribute it is bogus (THAT option is worse)
3.       Can’t stop them from taking $ offshore or giving it away during life
4.       They earned it
5.       Owner is best judge
                                                                      ii.      CONS:
1.       No equal opps.  Aristocracy
2.       Ppl act irresponsibly, put restrictions on prop that public might not like. 
3.       Encourages disparities which continue for generations
4.       Inherited wealth is not earned, so kids won’t go out and make it themselves. 
5.       Society should protect weaker, poorer citizens (old, dependent children)
6.       Might encourage economy/spending by restricting inheritance
7.       Dead hand control
l.         Problem of the dead hand:
                                                                        i.      R3P: 10.1: Donor’s Intention Determines the Meaning of a Donative Document and is Given Effect to max extent allowed by law
                                                                      ii.      Property owners have nearly unrestricted right to dispose of prop as they please- can’t do anything illegal or racially discrim in public policy
                                                                    iii.      Controlling consideration in determining the meaning of a donative document is the donor’s intention.  Donor’s intent is given effect the max extent allowed by law
                                                                    iv.      Leave money to someone if they marry a non-black person- cts are less comfortable with these than with religious restrictions
                                                                      v.      Leave money to someone as long as they divorce someone?  More of a restraint on marriage.
 
m.    Shapira v. Union National Bank:
                                                                        i.      Guy left prop to 3 kids with restrictions on sons- had to marry a Jewish girl with two Jewish parents, and if not, had 7 years to do so.  If didn’t do it, money went to Israel. 
                                                                      ii.      Son sued, wanted will to fail, and argued that it was constitutional infringements of his rights, but court said that donor’s intent was clear- wanted to promote Israel and the Jewish people by hook or crook, and the restriction wasn’t unreasonable. 
                                                                    iii.      Challenged on 2 grounds: unconstitutional and violated public policy:
1.       Right to receive prop by will is creature of statute. 
2.       David Shapira could have disinherited sons completely
3.       Restraint on marriage:
a.      Is only a partial restraint on marriage-
                                                                                                                                                i.      Ct says 7 yrs is plenty of time to get married
 
n.       Incentive Trusts: 3 categories: structured in a way that encourages certain behavior.
                                                                        i.      Conditions that encourage beneficiaries to get education
                                                                      ii.      Moral incentives
                                                                    iii.      Productive career   
 
o.       Destruction of Property at death
                                                                        i.      Can destroy property if so desire
p.       Partially intestate- written a will but it only governs part of it. 
q.       If you have a will, you have an executor.  If you have no will, you have an administrator. 
                                                                        i.      Will= executor
                                                                      ii.      No will= administrator
 
               II.            Transfer of Decedent’s Estate
a.       Probate and Nonprobate property
                                                                       i.      Probate prop: prop that passes through probate under decedent’s will or by intestacy (not having a will when you die)
                                                                      ii.      Nonprobate: passes outside probate under instrument other than a will. 
1.       Most prop passes this way:
2.       Joint tenancy, life insurance, contracts with payable-on-death provisions, interests in trusts. 
a.       Don’t require court proceedings- are in accordance with terms of the controlling contract, trust, deed
b.       Functions of Probate
                                                                        i.      1.  Provides evidence of transfer of title to new owners
                                                                      ii.      2.  Protects creditors by providing procedure for payment of debts
                                                                    iii.      3.  Distributes prop to those intended after decedent’s creditors are paid.
                                                                    iv.      Resolve conflicts among beneficiaries
c.       Probate property (stuff that goes through probate court)
                                                                        i.      Everything in decedent’s name (sole or as Tenants In Common)à passes through Probate by Will or Intestacy
                                                                      ii.      So anything held in just your name (or jewels, car, bank account)
d.      Non-Probate Prop
                                                                        i.      Life insurance, joint property (joint tenancy or TIE), retirement benefits (IRs or Pensions), property in trusts, P.O.D. Accounts
                                                                      ii.      Doesn’t go through probate court unless you name your estate as the beneficiary. 
 
e.      Steps of Probate
                                                                        i.      Person dies, locate and read will; file in Probate Ct where person lived. personal rep is appointed (fiduciary)- all happens with supervision of probate court. 
                                                                      ii.      “administrator” is for intestate (no will)
                                                                    iii.      Executor is for testate (with a will)
                                                                    iv.      If person dies testate, can name the executor they choose. 
                                                                      v.      Devises real property to devisees
                                                                    vi.      Bequeaths personal prop to legatees
                                                                  vii.      When intestacy happens, real prop descends to heirs, person prop is distributed to next-of-kin
 
f.        Summary of Probate Procedure:
                                                                        i.      Opening probate
1.       Each state has own statutes/court rules for this
2.       Will is first probated in the primary or domiciliary juris (where the dead guy was domiciled at death)
3.       Exe

ntestacy applies if they make a will, so in these cases, make them make a will since you have donative freedom. 
m.    Simultaneous Death
                                                               i.      Used to be that under the Uniform Simultaneous Death Act (USDA) – said that if there’s no sufficient evidence of the order of deaths, the beneficiary is deemed to have predeceased the donor.  Thus, neither inherits from the other. 
                                                             ii.      Later revised law (in 1991) because of cases like Janus
                                                           iii.      Simultaneous death problem arises more in intestacy than elsewhere because well drafted instruments typically require beneficiary to survive donor by stated pd of time time (30 or 60 days)
1.       So if a beneficiary dies in a common disaster with the donor, doesn’t qualify to take.
2.       Also occur a lot between spouses because husbands/wives travel together/ commonly are each other’s primary beneficiary
                                                           iv.      What’s the problem with these cases where you have deaths in such close proximity?
1.       When they die so quickly after the donor, the person who technically gets it doesn’t really get a benefit from the property which is the intent. 
n.       Janus v. Tarasewicz, Illinois App Ct, 1985
                                                               i.      Declaratory judgment-
                                                             ii.      Husband and wife died – Stanley and Theresa Janus- ingested Tylenol capsules laced with cyanide-
                                                           iii.      Stanley pronounced dead at hospital, Theresa was on life support for almost 2 days after.
                                                           iv.      Pl is Stanley’s mother- brought action for proceeds of his $ 100,000 life insurance which named Theresa as primary beneficiary and pl (mother) as the contingent beneficiary (i.e. if both died at same time).
                                                             v.      Insurance Co (Metropolitan) was a def- paid the money to def Jan Tarasewicz, Theresa’s father/admin of her estate.
                                                           vi.      This court agrees that there was enough evidence to prove that Theresa survived Stanley and thus that the money rightfully went to her father/her estate
1.       Said that Theresa survived Stanley, so the money goes to her and then to her father, even though husband had said his intent was to have it go to HIS own mother if not to his spouse. 
o.       UPC 2-104: Survival
                                                               i.      Must survive by 120 hrs
                                                             ii.      Clear and convincing evidence
                                                           iii.      So in Janus, the “clear and convincing” standard probably would not have been met. 
                                                           iv.      Survival requirement does not apply if its application would cause property escheat under 2-105.  So if you have no heirs that would take if you applied the survivorship rules (i.e. if Theresa had no line of survivors), then it would go back to the husband’s line. 
                                                             v.      (PA uses 5 days, no clear and convincing evidence requirement)
 
p.       Estate of Marshall Gardiner, 2002
                                                               i.      Father died w/o will (intestate), dies with $3 mil, had been married for about a year, son claimed he was sole heir and that marriage between dad and post-op maleà transsexual was void.
                                                             ii.      This court (Supreme Ct of Kansas) held that:
1.       Post op male to female transsexual is NOT a woman within meaning of statutes recognizing marriage, and
2.      Marriage between post op male to female transsexual and a man is void- against public policy.
3.      Ct overlooks what the decedent would have wanted.  Clearly would have chosen his wife over his estranged son.  Didn’t go after what his intent was.