Estates and Trusts Outline

Estates & Trust Outline
Fall 2016 – Prof. Hamann
 
General Info:
Importance of Wills:
Not always about money, Wills are also a way to appoint guardianship of your children if you die. 
If you are divorced, your kids guardianship automatically goes to your ex-spouse – NOT Matter what you put in your will. 
Taxes: not covered in this course, but .2% of people are affected by estate taxes because 5 million is the cut off point for paying estate taxes. 
Probate Process: very easy – get a formbook and fill it out, mostly done by paralegals. 
INTESTATE: means that you died WITHOUT a will. 
TESTATE: means that you died WITH a will. 
You can do almost whatever you want in your Will, EXCEPT you cannot cut out your spouse! 
Note: you can get them to sign a contract, that they won’t contest your will, if you do want to cut them out. 
Note: you can also get them to sign a PRE-NUPTIAL agreement. 
Real Estate / Real Property: is Land & Property that you have. 
Types of Property that are NOT included in Intestate Estate:
Joint-Tenancy: is NOT included in intestate estate and DOESN’T pass, because at the moment of death the property transfers to the joint-tenant owner. 
Tenancy by Entireties: is NOT included in intestate estate and DOESN’T pass!
Life Estate: is NOT included in Intestate Estate and DOESN’T pass, because you lose your interest when you die, i.e. you only had a legal interest while you were alive. 
Other Property that DOESN’T pass intestate:
401k: DON’T pass intestate – you are required to name a beneficiary so it is not part of your intestate Estate. 
Life Insurance: DOESN’T pass intestate – you are required to name a beneficiary.
TRUSTS: in a trust you transfer ownership interest in a trust to the trustee – and this trust document says what happens when you die – therefore it won’t pass by intestate succession because you are saying how you want it to transfer. 
REAL PROPERTY – is ALWAYS probated in the State where the real property is PHYSICALLY LOCATED! ALWAYS!
Personal Property / Estate: Tangible items 
Examples of types of personal property “tangible items”
Checking Accounts
Car
Furniture
Jewelry
PERSONAL PROPERTY – is Probated in the State where you are a RESIDENT!
“After all just claims”  – “just claims” are claims that you owe to creditors, which must be paid off first before any of your property transfers intestate. 
i.e. your mortgage and credit cards are “just claims” and must be paid off first before any money is distributed intestate. 
Example: a debt you had that is 10 years old and the SOL ran on this debt, would NOT be considered a “just claim”
Executor of Estate: is the person who pays off all of your debts, but if for some reason the executor doesn’t pay off your claims outstanding against you, the creditor would file a claim against the Estate – then court decides if it is a “just claim”. 
 
 
755 ILCS 5/2-1 “Rules of descent and distribution – of an INTESTACY ESTATE where there is NO WILL!
§2-1: The intestate real and personal estate of a resident decedent and the intestate real estate in this state of a nonresident decedent, after all “just claims” against his estate are fully paid, descends and shall be distributed as follows:
(a) If there is a surviving spouse and also a descendant of the decedent:
=> ½ of the entire estate to the surviving spouse and ½ to the decedents per stirpes. 
(b) If there is no surviving spouse but a descendant of the decedent:
=> The entire estate to the decedent’s descendants per stirpes.
(c) If there is a surviving spouse but no descendant of the decedent:
=> The entire estate to the surviving spouse. 
(d) If there is no surviving spouse or descendant but a parent, brother, sister or descendant of a brother or sister of the decedent:
=> The entire estate to the parents, brothers and sisters of the decedent in equal parts, allowing the surviving parent if one is dead a double-portion and to the descendants of the deceased brother or sister per stirpes the portion which the deceased brother or sister would have taken if living. 
(e) If there is no surviving spouse, descendant, parent, brother, sister or descendant of a brother or sister of the decedent but a grandparent or descendant of a grandparent of the decedent:
=> (1) 1⁄2 of the entire estate to the decedent’s maternal grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes, AND…
AND
=> (2) 1⁄2 of the entire estate to the decedent’s paternal grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes.
If there is no surviving paternal grandparent or descendant of a paternal grandparent, but a maternal grandparent or descendant of a maternal grandparent of the decedent:
=> the entire estate to the decedent’s maternal grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes.
If there is no surviving maternal grandparent or descendant of a maternal grandparent, but a paternal grandparent or descendant of a paternal grandparent of the decedent:
=> the entire estate to the decedent’s paternal grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes. 

(f) If there is no surviving spouse, descendant, parent, brother, sister, descendant of a brother or sister or grandparent or descendant of a grandparent of the decedent:
=> (1) 1⁄2 of the entire estate to the decedent’s maternal great-grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes, AND
AND
=> (2) 1⁄2 of the entire estate to the decedent’s paternal great-grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes.
BUT, If there is no surviving paternal great-grandparent or descendant of a paternal great-grandparent, but a maternal great-grandparent or descendant of a maternal great-grandparent of the decedent:
=> the entire estate to the decedent’s maternal great-grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes.
BUT, If there is no surviving maternal great-grandparent or descendant of a maternal great- grandparent, but a paternal great-grandparent or descendant of a paternal great-grandparent of the decedent:
=> the entire estate to the decedent’s paternal great-grandparents in equal parts or to the survivor of them, or if there is none surviving, to their descendants per stirpes.
****NOTE: in NO CASE is there any distinction between the kindred of the whole and the half blood.  i.e. step-siblings are treated the same!!!!!
(g) & (h) NOT INCLUDED, because we were told in class that she will not test us that far down!
**WHEN ALL OF THE ABOVE DOESN’T WORK because you CANNOT FIND ANYONE TO GIVE THE MONEY TO  – THEN AND ONLY THEN DOES THE MONEY “ESCHEAT” i.e. GO to the State!
Real Property à Escheats to the COUNTY
Personal Property à Escheats to the STATE
Illinois does not have common-law marriage, therefore if you are “unmarried” you are NOT a spouse!
Only BLOOD and/or ADOPTED relatives are entitled [and spouse of course] to INHERIT!
Children born of a marriage are governed by 2-1!
Children born out of WEDLOCK or ADOPTED are governed by OTHER STATUTES! So watch out for this. 
Stepchildren: NEVER INHERIT!!!!! (There is no statute in IL, because they literally never inherit under intestacy in ILLINOIS)
Handful of states allow step children to inherit, but VERY RARE.
Stepchild CAN become an ADOPTED Child, but if not properly adopted then cannot inherit.
Foster-Child can NEVER inherit under Intestacy, but if properly adopted can. 
Summary, stepchildren and foster children and any other random child cannot inherit, unless the child was properly adopted. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(C) Children Born out of WEDLOCK & ADOPTED (August 29, 2016)
Before 1977 the out-of-wedlock statute was simple…and stated that essentially the child could only inherit under intestacy from the mother or mothers family. 
Trible v. Gorden (1977) held that this statute violated equal protection and was unconstitutional. The court held that “children, regardless of whether or not they were born “of a marriage” or “out-of-wedlock” that they should have the same rights and treated the same. Thus, they should inherit from BOTH PARENTS!
The court did go on to say that there can be slight differences in how you treat an out of wedlock child based on the “proof” of who’s child it is. 
i.e. when a child born during a marriage that child is of mother and father
i.e. however, what if parents are not married? 
Easy to tell who the mother is – bc someone can witness the child being born.
How do we know who the father is?  Here is where problems of proof CAN be taken into account within the statute, but there CANNOT be a categorical prohibition on inheritance for the child that was born out-of-wedlock – thus, he WILL INHERIT FROM MOTHER & FATHER!
Who inherits from the out-of-wedlock child, when the child dies?
1. Figure out which parents are eligible:
1. Acknowledged the child as his own child
Paying child support will technically meet this element, but NOT enough to meet all of the elements if the only thing the father is doing is paying child support.
Held out to public as child
Financial support to the child
Have the child take their last name
Family pictures, cards, any facts you can use to show he acknowledged child
2. Established a parental relationship
If father visits once per month or more = there IS a parental relationship established!
If father only visits the kid once a year on his birthday = there is NOT a parental relationship established.
3. Supported the child like the child was his own
??? No examples given in class???
NOTE: these things do NOT have to be in writing to be able to show that elements are met for “eligible parent”
NOTE: seems like these all tend to blend together, so use the facts in the question to try and prove them all – maybe use same facts for more than one element if necessary. i.e. he paid support, which can be used to show that