Wills, Trust and Estates
I. Transfer of the Decedent’s Estate
A. Probate and Nonprobate Property
1. Probate – property that passes under the decedent’s will or by intestacy
a. Why probate?
1) To pass title
2) To maintain the “chain of title”
i. When do you need a “beautiful” chain of title?
1. When purchasing/selling property
2. When there is a dispute over something
2. Nonprobate – property passing under an instrument other than a will.
a. Most property is transferred at death outside of probate, through nonprobate transfers.
b. Nonprobate property includes the following:
1) Joint Tenancy property (real and personal) – under this theory, the decedent’s interest vanishes at death – all the survivor has to do is file a death certificate
2) Life Insurance
3) Contracts with payable-on-death provisions
4) Interest in trust – when property is transferred in trust, the trustee holds the property for the benefit of the named beneficiaries, who may have life estates or remainders or other types of interests.
i. The property is distributed to the beneficiaries by the trustee in accordance with the terms of the trust instrument.
B. Administration of Probate Estates
1. First step is to appoint a personal representative whose duties include:
a. To inventory and collect the assets of the decedent
b. To manage the assets during administration
c. To receive and pay the claims of the creditors and tax collectors
d. To clear any titles to cars, real estate, or other assets; and
e. To distribute the remaining assets to those entitled
2. If the person to do this is named in the will they are called the executor; if they are not named, they are called an administrator.
3. Terminology:
a. A person dying testate devises real property to devisees and bequeaths personal property to legatees.
b. A person dying intestate’s property descends to heirs; personal property is distributed to next-of-kin.
4. Summary of Probate Procedure:
a. Opening Probate
1) Informal Probate:
i. Without giving notice to anyone, the representative petitions for appointment; the petition contains pertinent information about the decedent and the names and addresses of those involved.
ii. If the petition is for probate of a will, the original will must accompany the petition; the executor swears that, to the best of his or her knowledge, the will was validly executed; proof by the witnesses is not required
2) Formal Probate:
i. This is a judicial determination after notice to interested parties – any interested party can demand formal probate.
ii. This may be used to probate a will, to block an informal proceeding, or to secure a declaratory judgment of intestacy.
3) Time to Contest:
i. The time for contesting probate of a will is dependent upon a statute in the particular jurisdiction
4) Barring Creditors of the decedent:
i. Every state has a statute requiring creditors to file claims within a specified time period; claims filed thereafter are barred. (these are called nonclaim statutes)
b. Supervising the representative’s actions
1) The courts must approve the inventory and appraisal; payment of debts, family allowance, granting options on real estate, sale of real estate, borrowing of funds and mortgaging of property, leasing of property, proration of federal estate tax, attorney’s fees, preliminary and final distributions and discharge of the personal representative.
c. Closing the Estate:
1) The personal representative of an estate is expected to complete the administration and distribute the assets as promptly as possible.
2) Judicial approval of the personal representative’s action is required to relieve the representative from liability, unless some statute of limitations runs upon a cause of action against the representative.
C. Rules:
1. California Civil Code §710
a. Conditions imposing restraints upon marriage, except upon the marriage of a minor, are void; but this does not affect limitations where the intent was not to forbid marriage, but only to give the use until marriage.
2. Restatement (2d) of Property §8.1
a. An otherwise effective provision in a donative transfer which is designed to prevent the acquisition or retention of property on account of adherence to or rejection of certain religious beliefs or practices on the part of the transferee is invalid
3. Restatement (3d) of Trust §29
a. An intended trust or trust provision is invalid if:
1) Its purpose is unlawful or its performance calls for the commission of a criminal or tortious act;
2) It violates rules relating to perpetuities; or
3) It is contrary to public policy
b. Comment to Section 29
1) Exerting a socially undesirable influence on the exercise of fundamental rights that significantly affect the personal lives of beneficiaries and often of others as well
II. Professional Responsibility
A. Duties to Intended Beneficiaries
1. Simpson v. Calivas
a. Facts
1) Beneficiary suing deceased father’s attorney to recover damages from attorney not following the intent of the father
2) Used negligence and breach of contract theories
b. Holding
1) Duty
i. There exists a duty to intended beneficiaries
ii. This duty relies on the idea of foreseeability of harm
2) Collateral Estoppel
i. The probate court is always permitted to consider the surrounding circumstances
ii. Where the terms of a will are ambiguous, extrinsic evidence may be admitted to the extent that it does not contradict the express terms of the will
iii. The probate court only ruled on what the will said, not the intent of the father, so this may be appealed, and is not subject to res judicata (collateral estoppel)
2. IN THE END:
a. Probate Court
1) The purpose of the probate court is to discover the intent of the deceased, therefore much extrinsic evidence is admitted
b. Professional Duties
1) A duty is owed not only to the person for whom the will is drafted, but also to the intended beneficiaries
2) This duty is owed based on the notion of foreseeability
B. Conflicts of Interest
1. Hotz v. Minyard
a. Facts
1) Sister (Hotz) is suing brother (Minyard) on many issues … but this case actually revolves around a specific claim of the sister against the attorney (Dodson) for breach of fiduciary duty
b. Holding
1) A fiduciary relationship exists when one has a special confidence in another so that the latter is bound to act in good faith
2) Dodson did have an ongoing a/c relationship with Judy and there is evidence that she had a ‘special confidence’ in him
3) Dodson owed Judy the duty to deal with her in good faith and not actively misrepresent the
nt by an ancestor not of the half-blood’s line
III. Transfers to Children
A. Meaning of Children
1. Adopted Children
a. Hall v. Vallandingham
1) Facts
i. Kids from a woman’s first marriage were adopted by her second husband
ii. When the kid’s paternal uncle died childless, they wanted their father’s share… but the court said no, that they were now the kids of someone else
2) Holding
i. Upon entry of a decree of adoption, the adopted child shall lose all rights of inheritance from its parents and from their natural collateral or lineal relatives
ii. To allow a dual inheritance for adopted children would bestow upon an adopted child a superior status
iii. Because an adopted child has no right to inherit from the estate of a natural parent who dies intestate, it follows that the same child may not inherit through the natural parent by way of representation
b. Statutes from Uniform Probate Code (1990)
1) 2-113 Individuals Related to Decedent Through Two Lines
i. Only allowed a single share of the inheritance
2) 2-114 Parent and Child Relationship
i. Except as provided, a child is the child of their parents regardless of marital status
ii. An adoption of a child by the spouse of either natural parent has no effect on
1. the relationship between the child and that natural parent or
2. the right of the child or a descendant of the child to inherit from or through the other natural parent
3) Inheritance from/through a child is presumed unless the parent has cut them off and not supported them
c. Minary v. Citizens Fidelity Bank & Trust Co.
1) Facts
i. Woman died, leaving her estate in trust for her 3 sons and husband until their deaths, then to go to her “surviving heirs”
ii. Her youngest son married a woman, then adopted her to make sure she was an “heir”… yeah, I know… dirty
2) Holding
i. Beginning in 1950, KY acknowledged that adopted children enjoy all the perks of blood children
ii. Even though this is technically legal, this practice is an act of subterfuge which in effect thwarts the intent of the ancestor whose property is being distributed and cheats the rightful heirs
iii. Adoption of an adult for the purpose of bringing that person under the provisions of a pre-existing testamentary instrument when he clearly was not intended to be so covered should not be permitted and we do not view this as doing any great violence to the intent and purpose of our adoption laws
d. O’Neal v. Wilkes
1) Facts
i. Woman, O’Neal, was passed around from person to person, ending up in the home of decedent, Roswell Cooks
ii. Cooks cared for her, and referred to her as a daughter
