Chapman
Wills & Trusts
Fall 2011
Outline
Give full faith and credit for will drafted in OH and is valid in NC, unless will gives real property by way not recognized in NC.
ancillary administration – file the will and go through minimum probate process in state where real estate is.
Escheat – if you die with no heirs and no will, your property escheats to the state.
Intestate Sucession – die w/out will or will doesn’t cover everything you own.
Will Substitutes – not subject to probate. Ex. Life insurance, JT w/ Rights of Survivorship, Trusts, Joint Bank Account, 401K/IRA, Pension Plan, Payable on Death Bank Accounts, Transfer on Death Deeds (property in FSA, on death goes to X). Things contracted with people/companies.
Who can own property? Individual persons (minors cant sell house but can own it. Guardian appointed to take care of it), Corporations, Govt, Trusts (trustee can own property), Estates. These people pay income tax.
Breach of fiduciary duty of trustee or executor makes you personally liable.
Can’t write yourself in a will unless it is close family member (spouse, children, parents, sibling).
Rule is no privity between tortfeasor and beneficiary historically and they cant sue for malpractice (beneficiary cant sue atty). Some states give limited cause of action to people named in the will or trust who suffered and know who testator was trying to give stuff to.
Once you devise someone something, can’t put unreasonable restraints (cant condition it on a crime, race, religion, restricting marriage, limiting marriage based on religion, encourage divorce/marriage, generally accepted social norms.
NC 31A-4 – Slayer shall not take. Slayer shall be deemed to die immediately before decedent. Slayers children can still take by intestate succession. A slayer is someone who was convicted as principal or accessory for willfully/unlawfully killing (1st degree murder, voluntary manslaughter), pleaded guilty, plea of nolo condendere, civil action brought 2 years or 90 days after criminal proceedings and found guilty (ex. OJ), a juvenile treated as a delinquent. If you are adjudicated insane, you still inherit since you don’t have the intent to kill. Some states say slayers cant be beneficiaries of life insurance plans, etc. In NC, slayer doesn’t apply to will substitutes.
Gifts (need to give up dominion and control)– need: 1. Donative intent 2. Delivery (sometimes helps find intent. Actual, Constructive (car keys) and symbolic (deed, letter) delivery. Need evidence of intent to deliver. If we know intent was to be made, delivery is a lot less important.) 3. Acceptance (done quietly). Ex. If you have a large piece of land with toxic waste on it, and it costs more than its worth, you leave it to a charity (so they have to clean it up). Environmental law says the person who is liable for cleanup is the person who owns the property (not person who did the damage). An attempt to make a gift in the future that is revocable up until that time in the future is not a gift.
Intestate Succession – State statute. Traditionally, property would pass to 3 sets of heirs. 1. Lineal descendents (children, grandchildren, great grandchildren, adopted children but not step children), heirs of your body, not the spouses of those people. Blood relative lineal descendants. 2. Ancestorial heirs (mother, father, grandparents) 3. Collateral heirs (people related to you by blood who are not lineals or ancestors. Ex. Brother, uncle, nephew, cousin). P. 71 – table showing your heirs, and how property passes at death through intestancy. Straight down is lineal decedents It is called a Parentella. Going up diagonally are your ancestors (parents, grandparents). Under your parents are your brothers and sisters. The table misses the spouse. The table only has people related by blood. We insert the surviving spouse with trump cards who often get everything. If there is a second spouse, some goes to spouse and some goes to decedents blood relatives. Goes to and stops at the first lineal descendants. Once you come to a living person, don’t give it to anyone beyond the living person.
UPC 2-102 – Share of Spouse – give surviving spouse his/her share of decedents estate. Lineal descendant’s get what surviving spouse doesn’t. Surviving spouse gets entire estate if no descendant (kids) of decedent or parent of decedent survives decedent. Or goes to entire spouse if surviving spouse has kids with decedent and none form another marriage. (2) Survising spouse gets first 200K plus 3/4 of any balance of intestate estate if no descendants of decedent survives decedent, but a parent of decedent survives (if decedant has no kids, give to spouse and decedents parent). (3) If decedent only has kids with current spouse and spouse has children from former marriage, surviving spouses gets 150K plus 1/2. Other ½ goes to their kids now. (4) Spouse gets first 100K plus 1/2 of estate if one or more of decedent’s surviving descendants are not descendants of the surviving spouse.
29-14, Real Property and Personal Property Share with Spouse – Real Property – Surviving spouse gets real property when: (1) if one child of decedent or if decedent had child and is now dead and has lineal descendant, surviving spouse gets 1/2 (2) If decedent has 2 or more children (or one child who has a child), surviving spouse gets 1/3. (3) if no kids, but parents survive, surviving spouse get 1/2. (4) If no kids, no lineal descendants, no parents, give all to surviving spouse. Personal Property – (1) If one child (or one child’s lineal descendant) and property does not exceed 30K, give spouse 30K plus ½ balance on remaining (2) if 2 or more kids, get all of 30K plus 1/3 value of remaining (3) if no children but a parent, spouse gets 50K plus 1/2 the excess (4) If no kids, lineal’s or parents, spouse gets all.
2 representational systems – Per stripes – primary share level is the first generation below the decedent. Share given to current living heirs for that generation. Per Capita – The primary share level is the first level you come to going down generationally where you find living people. Per Capita with representation and with Twist (NC and modern trend) – Divide equally at first generation level where takers living, remaining shares combined and redivided equally at next generational level with living takers. Give kid primary share, take all the grandkids and divide up and share equally. Each generation at the end will get an equal share.
NC Article 29-16 – Distribution Among Classes – A. Children and lineal descendants get: 1. Children – divide property by living children + number of deceased children leaving kids 2. Surviving Grandchildren by deceased child – take total property and divide by # of grandchildren and deceased grandchildren leaving lineals. 3. Great Grandchild – divide property by # of GGchildren and deceased GGchildren leaving lineals.
NC/UPC – Every body at every level gets equal share (per capita with representation and twist). Each generation gets equal share.
Uniform Simultaneous Death Act – If can’t determine order of death between decedent and named heir, it is presumed that devisor survived the devisee. If you put in will that in the event that they die at the same time, it is presumed that that person survived me (and rebuts the presumption). Presumption is decedent survives the taker (spouse, kids, etc). Even if we could determine order of death, if survivor does not live for 120 hours, they are not considered to survive. Is this state specific? LOOK UP in packet. He didn’t give it all to us, look online.
Adoption makes the child your natural child. What happens to the real natural parents? Can the child inherit for the adoptive AND natural parents? UPC says that once adopted it severs all the old relationships, that the natural parents are out of the picture. Exception – Husband and wife have child and divorce. Wife marries husband 2. She has custody of child. They want to adopt the child. Husband 1 agrees. H1 is not cut off as an inheritor or inheritee (child can inherit from him and he can inherit from the child). H1 has to continue acting as a parent. He can’t disappear and come back 30 years later.
Only issue is if we go outside original natural parents. UPC tried to cut them out, but with one exception where one spouse remarries and wants to adopt the child and natural parent consents.
Most states permit one adult to adopt another adult. Adults started to adopt the significant other (gay people, so they can guarantee a share). Most states shut this down. Only if the adoptee was a physically/mentally disabled or seriously dependant upon the parent. Health care.
Courts stopped this (gay pepople)
Advancements (trick question on test) – Occurs when you gift property to an heir and die intestate. Does the transfer count for what they would get intestacy? If you make a true gift, it is a gift and there are no strings attached. If it wasn’t a true gift, but an advancement on the intestate share, you have to adjust for it. NC – Presumed to be a gift unless there is clear and convincing evidence to the contrary. Transfer you made during life is not an advancement unless it can be shown by clear and convincing evidence it is an advancement.
Most states have statutes saying it is not an advancement unless there is a writing by the transferor indicating the intent to make an advancement and not a gift and the writing must exist prior to or simultaneously with the transfer. OR recipient can acknowledge in writing that it is intended to be an advancement. Take what they actually have (270K) and add back to it the advancement. Divide by number of heirs and take out advancement to advance person. The person who gets the advancement should get less under intestate succession.
Disclaimer – Disclaimer has to be clear and unequivocal (give up any rights you have), has to be in writing, has to be done no later than 9 months after the transfer of property (death) or within 9 months after reaching age of 21 (if transferee was under 21) in writing delivered to donor or personal representative of estate that you disclaim right to the property. Disclaimer is not valid if after declaimer, disclaiming person is getting the benefit. Exception – Surviving spouse. Give property to spouse by will too much an
ife or mention in will to go to trust (then goes through probate). Pour over trust allows you change beneficiaries (so you don’t have to re execute a will). So you can say all assets go to pour over trust.
To include something, can argue integration or incorporation by reference.
Acts of Independent Legal Significance – something that the testator did or has done that will directly cause property to pass to an individual but is not really part of the will (ex. class of beneficiaries where membership changes, general devises that change). A testator may effectively change the disposition of his property without changing the text of the will, so long as the acts or events changing the disposition have some significance other than avoiding the requirements of the will. Ex. Selling the house and replacing it has independent significance other than reason of devising property to Suzie. Acts of independent legal significance – something that seems to control where we want our property to go that is not part of the will. Ex. give 10K to everyone working at my company at the day I died. Will said it but will didn’t know who would be working. That is an act of independent legal significance. They didn’t take the job because it said that in the will. It has independent legal significance to themselves. Give 10K to every 3L. The reason you are 3Ls has independent legal significance. If you give 10K to people on piece of paper, that does not have independent legal significance. Explain what is and isn’t an act of independent legal significance. Isnt – list of people in drawer. No idependant reason they are there. Can be incorporated by reference (need to be in existence, identify, cant change). Has to be identified not just because to take property (ex. did it take job, be relateive didn’t know was going to be named in will. There is independent siginifance other than being a tesitmentar taker).
UPC 2-513 – You can make a separate document to deal with tangible personal property other than money as long as it’s not specifically disposed of in the will. Do it with a signed writing by the testator but it can be changed. Doesn’t have to be in existence at time of the will. Can be dated after or before the will. Don’t care when you write it. Can’t be otherwise disposed of by the will, cant be money, has to be personal property.
4 types of death devise transfers (ranked in hierarchy, best to worst) – (1) Specific Devise – a devise that refers to a particular identified piece of property or a specifically identified source of property. If you leave the corvette and sell it and die, you get nothing. Feel bad if they get nothing, so court doesn’t want to screw them and created 1 1/2, called a demonstrative devise – looks like a specific devise, falls in between specific and general. Ex. Will leaves 25K from BBT account. If there is only 20K in there, that is all you get with specific. Treat it as specific devise up to amount that is available, so the other five is a general devise. (2) General Devise/Bequest –Leave 10K to each kid. No mention of the source. (3) Residuary Devise/Bequest – whatever is left. The rest. Ex. rest in residue to Elon Law School. If you leave a residuary devise, you wont have intestacy (won’t have anything left). (4) Intestacy (not really a devise, determined by statute).
Abatement – Not enough to pay devisees or expenses of estate/taxes/creditors. Expenses are generally allocated proportionally across all of the devises, unless altered by the will itself. You want to exempt certain devises/people from having the expenses and have the residuary devise get the rest. NC says take expenses first out of intestacy, the residuary devise, then general devise proportionally (ex. if 300K goes to 3 people, each person takes 1/3 of expenses out). If those don’t cover it, go to specific devises. NC 28(a)1-15 – personal property is abated in following order: property not disposed of by will (intestacy), residuary devise, general devise, specific devise. For purposes of abatement, a demonstrative devise of money or property is a specific devise out of available money and general devise for the excess.
