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Trusts and Estates
Drexel University School of Law
Gordon, Deborah

1)      General
a)      Overview
i)        Probate
(1)   Property the decedent held alone or as a tenant in common is subject to probate, generally.
(2)   Non-probate property:
(a)    Life Insurance; Joint Property; Retirement Benefits; Property in Living Trusts; P.O.D. Accounts
ii)      Lifetime Transfers
(1)   Inter-vivos trusts v. Testamentary Trusts
(a)    Inter vivos trusts are not subject to ongoing judicial supervision, whereas testamentary trusts are subject to supervision by the probate court.
(2)   Other lifetime transfers
(a)    Real estate, bank accounts, stocks, and bonds can all be held in “joint with survivorship” form.
(b)   Contracts: e.g. life insurance. Questions handled by contracts law and not by probate law.
(i)     Term life insurance – covers the risk of someone dying during the term of the policy
(ii)   Whole life insurance – incorporate an investment feature.
1.      Life insurance bypasses probate because they are not viewed as property of the decedent.
iii)    Guardianships
(1)   Guardian of the person – a court appointed person takes care for child and child’s property
(2)   Guardian of the property – a court-appointed person (may be same person as (1), or another (like a bank).
(3)   Guardian ad litem – attorney appointed to protect the children’s interest in litigation.
(4)   Note: guardianship may be appropriate when adults lost their capacity to care for themselves or their property.
(5)   UPC: UPC §5-202: Guardians named by parents’ will can assume office upon probate of the will without court approval. Even in jurisdictions in which courts must confirm appointments, the directions in the will normally control.
(6)   UPC §5-424, 425(a): Conservator (guardian in UPC terms) has broad powers of management, exercisable without court approval, much as though the guardian were trustee of a privately established trust.
iv)    Uniform Codes
b)      Federal Wealth Transfer Taxes
i)        Unified System
ii)      Gift Tax
(1)   Exemption is up to $12,000.
(2)   Question is whether there has been a “gift” – use valuation.
(a)    E.g. if Monica sells Doug her car for $2k, but it’s worth $5k, that’s a $3k gift.
(b)   Only if the donor has part with all “dominion and control” is there a gift. Revocable trusts – not a gift.
iii)    Estate Tax
(1)   Gross Estate
(2)   Marital Deduction
(3)   Unified Credit
iv)    Generation-skipping Transfer Tax
c)      Duties Lawyers Owe Clients
2)      Intestacy
a)      2.01
i)        Terminology
(1)   Heirs – those people identified by statute to take the estate to the extent that the decedent dies intestate
(2)   Ancestors – parents, grandparents, etc.
(3)   Issue and Descendants – children, grandchildren, etc.
(a)    Note on adopted children: because the inheritance rights of adopted children have grown, many states now use “descendants” instead of “issue.”
(4)   Collaterals – those people out of the lines of ascent and descent: aunts, uncles, brothers, sisters, cousins.
ii)      Survivorship
(1)   §1 of the Uniform Determination of Death Act provides that someone is dead if there is irreversible cessation of all circulatory and respiratory functions or irreversible cessation of all functions of the entire brain, including the stem.
(2)   More common question: who died first?
(a)    Uniform Simultaneous Death Act – where “there is no sufficient evidence that the persons have died otherwise than simultaneously, the property of each person shall be disposed of as if he had survived.”
(b)   UPC §2-104: requires one person to have survived another by 120 hours before being deemed to have survived that person.
iii)    Choice of Law
(1)   Courts usually apply the law of the situs of the property to questions surrounding realty, and the law of the decedent’s domicile to questions concerning personalty.
iv)    Protective Provisions
(1)   The set of rules that, while not limited to intestacy, influences survivors’ shares.
(2)   Family members have a right to estate assets “off the top,” before creditors’ claims and before distribution according to the intestate statute (or the will, if there is one). Size and shape of these protections varies, but fall into two categories:
(a)    Homestead and exempt property
(b)   Support
(3)   UPC provides the surviving spouse or children a monetary homestead allowance of $15,000 and an exempt property allowance of $10,000. UPC §§ 2-402, 2-403.
(a)    States differ in this number
(4)   A common protection comes in the form of support allowances to help the family live while the estate administration is open. This can take the form of a fixed benefit; an amount set by the probate court; a maximum amount; and some require adult children to be dependents in order to benefit.
(a)    UPC §2-404 grants a “reasonable allowance” to the surviving spouse, minor children the decedent was obligated to support, and children the decedent was in fact supporting.
v)      UPC Intestate Scheme
(1)   UPC §2-102 Share of Spouse, p.47
(2)   UPC §2-103 Share of Heirs other than Surviving Spouse
(a)    Passes in the following order:
(i)     To the decedent’s descendants by representation;
(ii)   If there is not surviving descendant, to the decedent’s parents equally is both survive, or to the surviving parent;
(iii)If there is no surviving descendant or parent, to the descendants of the decedent’s parents or either of them by representation
(iv)If there is no surviving descendant, parent, or descendant or a parent, but the decedent is survived by one or more grandparents or descendants of grandparents, half to the decedent’s paternal grandparents equally…
(3)   UPC §2-104
(a)    Individual who fails to survive the decedent by 120 hours is deemed to have predeceased the decedent for purposes of homestead allowance, exempt property, and intestate succession, and the decedent’s heirs are determined accordingly. If it is not established by clear and convincing evidence that an individual who would otherwise be an heir survive the decedent by 120 hour

this type of statute to be an unconstitutional denial of equal protection. The Court made it a question of establishing parentage.
(ii)   Lalli v. Lalli (1978)
1.      Supreme Court upheld NY’s statute, which allowed children born out of wedlock to inherit from the father only if the child had secured an adjudication of paternity.
(iii)States have different rules, and different ways to establish parentage for inheritance purposes.
1.      Could just be marriage; could be paternity established before or after father’s death; could be father acknowledges paternity in writing; father’s name is on birth certificate, etc.
iv)    Adopted Persons
(1)   General rule is that adopted children can inherit from their adoptive parents, but statutes vary in the specifics.
(2)   UPC §2-114
(a)    Removes the child from the families of the genetic parents and puts it into the adoptive parents’ families for all purposes.
(b)   This approach has the advantage of clarity and giving the kid a “fresh start.”
(c)    UPC’s solution to stepparent adoptions is to place the child in the adoptive-stepparent’s family, but then to distinguish between the genetic parents. The full parent-child relationship is maintied with the spouse of the adopting stepparent; each can inherit from the other. But the relationship with the non-custodial genetic parent’s family, runs only to the benefit of the child. The child can inherit from members of the non-custodial side of the birth family, but they cannot inherit from her.
(3)   Text of UPC §2-114: Parent and Child Relationship
(a)    Except as provided in subsections (b) and (c), for purposes of intestate succession by, through, or from a person, an individual is the child of his [or her] natural parents, regardless of their marital status. The parent and child relationship may be established under…state statutes
(b)   An adopted individual is the child of his adopting parent or parents and not of his natural parents, but adoption of a child by the spouse of either natural parent has no effect on (i) the relationship between the child and that natural parents or (ii) the right of the child or a descendant of the child to inherit from or through the other natural parent.
(c)    Inheritance from or through a child by either natural parent or his kindred is precluded unless that natural parent has openly treated the child as his, and has not refused to support the child.