CHAPTER 1—INTRO TO ESTATE PLANNING
A. Power to Transmit Property at Death
1. Right to Inherit and Right to Convey
2. The Policy of Passing Wealth at Death
3. An introduction to the Problem of the Dead Hand
Rest. 3rd of Property: Wills and Other Donative Transfers
§10.1: Donor’s Intention Determines the meaning of a donative document
The controlling consideration in determining the meaning of a donative document is the donor’s intention. The donor’s intention is given effect to the maximum extent allowed by law.
Things that prohibit or restrict freedom of disposition in certain instances:
Spousal rights, creditors’ rights, unreasonable restraints on alienation or marriage, provisions promoting separation or divorce, impermissible racial or other categoric restrictions, provisions encouraging illegal activity, and rules against perpetuities and accumulations.
Shapira v. Union National Bank (1974)
Shapira’s dad died and conditioned his son’s inheritance upon his marrying a Jewish girl within 7 years of the dad’s death. If he didn’t do it, the inheritance should go to Israel.
Issue: Are restrictions upon marriage as a condition of inheritance unconstitutional, contrary to public policy, and unenforceable?
Decision: No. Restrictions upon marriage as a condition of inheritance are constitutional, valid, and enforceable. It is not that the will is keeping him from marrying, he just has to marry a Jewish girl.
It is considered a partial restraint on marriage. Just cannot be total restraint.
A will or trust provision is generally invalid if it is intended or tends to encourage disruption of a family relationship.
Trusts contrary to public policy are also invalid.
B. Transfer of the Decedent’s Estate
1. Probate and Nonprobate property
Probate property: passes under decedent’s will or by intestacy.
Nonprobate property: property passing under instrument other than will. Done according to a contract.
Joint tenancy property, both real and personal
Life insurance
Contracts with payable-on-death provisions (pension plans, etc.)
Interests in trust
2. Administration of Probate Estates
a. history and terminology
When person dies and there must be probate, 1st step is to appoint personal representative to oversee.
Executor: if decedent dies testate and names in the will the person who is to execute the will.
Administrator: when person in charge of administering the estate is not named in the will.
Surviving spouse, children, parents, siblings, creditors.
A person dying testate devises real property to devisees and bequeaths personal property to legatees.
Real property descends to heirs; and personal property is distributed to next of kin.
Now, heirs and next of kin generally means the same thing.
b. Summary of Probate Procedure
Opening Probate
Should begin in the jurisdiction where decedent was domiciled at time of death.
No probate proceeding, formal or informal, may be initiated more than three years from the date of death.
Time for contesting probate of a will is dependent upon a statute in the particular jurisdiction.
Creditors also have a specific time period in which to bring their claims.
Supervising the representative’s actions
Actions of personal representative are supervised by the court.
UPC authorizes unsupervised administration as well as supervised admin.
Closing the Estate
Creditors must be paid, titles cleared, taxes paid, real estate sold, etc.
Judicial approval of the personal representative’s action is require to relieve the representative from liability, unless some statute of limitations runs upon a cause of action against the rep.
c. Is probate necessary?
It can be avoided provided the property owner during life transfers all his or her property into a joint tenancy or a revocable or irrevocable trust, or, in many states, executes a contract providing for distribution of contract assets to named beneficiaries on the owner’s death.
Statutes in all states permit heirs to avoid probate where the amount of property involved is small, but the states differ as to how much and what kind of property.
Martha and Aaron Green problem pg. 38-39.
d. Universal Succession
The heirs or the residuary devisees succeed to the title of all the decedent’s property; there is no personal rep appointed by a court.
The heirs or the residuary devisees step into the shoes of the decedent at the decedent’s death, taking the decedent’s title and assuming all the decedent’s liabilities and the obligation of paying legacies according to the decedent’s will.
Available to a limited extent in the US.
C. An Estate Planning Problem
HOWARD AND WENDY BROWN
D. Professional Responsibility
1. Duties to Intended Beneficiaries
Simpson v. Calivas (1994)
Action brought by heir against lawyer, alleging that lawyer failed to draft a will which incorporated the actual intent of heir’s dad to leave all his land to the heir in fee simple. The will left all real estate to son except homestead at Piscataqua Rd., which was left to deceased’s second wife.
Probate court allowed extrinsic evidence to determine whether “homestead” meant just the house or the house and land.
Issue: Does a drafting attny owe a duty of reasonable care to an intended beneficiary, and does collateral estoppel prevent the beneficiary from bringing a malpractice action against the attorney?
Decision: A duty of reasonable care runs from a drafting attorney to an intended beneficiary, and even an explicit finding of actual intent by a probate court cannot be the basis for collateral estoppel.
When an attorney undertakes to fulfill the testamentary instructions of his client, he realistically and in fact assumes a relationship not only with the client but also with client’s intended beneficiaries.
Where, as here, a client has contracted with an attorney to draft a will and client has identified to whom he wishes the estate to pass, that identified beneficiary may enforce the terms of the K as a third-party beneficiary.
2. Conflicts of Interest
Holtz v. Minyard (1991)
Sister sued her brother and her father’s attorney after she was misled regarding the contents of her father’s will and cut out of the family business.
Issue: Was there a factual issue presented as to whether Dobson (def) breached a fiduciary duty to sister such that summary judgment was improperly entered on this cause of action.
Decision: A fiduciary relationship exists when one has a special confidence in another so that the latter, in equity and good conscience, is bound to act in good faith.
Dobson, the attorney, failed in his professional duty as well as in his fiduciary capacity by continuing to represent sister as a legal advisor while also representing her father in a matter adverse to sister’s interests.
CHAPTER 2: INTESTACY
A. The Basic Scheme
1. Introduction
About ½ of the population dies intestate—forsaking wills and legal advice.
UPC §2-101: Intestate Estate
§2-102: Share of Spouse
§2-103: Share of Heirs other than Surviving Spouse
§2-105: no taker
In the eyes of the law, no living person has heirs—they are heirs apparent.
They have a mere expectancy. An expectancy cannot be transferred at law
2. Share of Surviving Spouse
Primary policy is to carry out the probable intent of the avg intestate decedent.
Under current law, the surviving spouse usually receives at least a ½ share of decedent’s e
sed persons on that level are treated as one pot and are dropped down and divided equally among the representatives on the next generational level.
Ex: A has three kids, B, C, and D. B has a kid, E. C has two kids, F and G. D has no kids. B and C predecease A. D survives A. E, F, and G also survive A. Under this system, D gets 1/3, E gets B’s 1/3, and F and G split C’s 1/3 and each get 2/9.
This system treats each taker at each generation equally with the other takers at that generation.
Negative Disinheritance
An express statement in a will disinheriting a child.
To disinherit a kid, you must give EVERYTHING to someone else.
UPC §2-101(b) authorizes a negative will
The barred heir is treated as if he disclaimed his intestate share, which means he is treated as having predeceased the intestate.
4. Shares of Ancestors and Collaterals
When intestate decedent is survived by a descendant, the decedent’s ancestors and collaterals do not take. When there is no descendant, after deducting the spouse’s share, in nearly ½ of states, the rest of the intestate’s property is usually distributed to the decedent’s parents.
If there is no spouse or parent, the decedent’s heirs will be other ancestors or collateral kindred.
Collateral Kindred: all persons who are related by blood to the decedent but who are not descendants or ancestors.
First-Line Collaterals: Descendants of the decedent’s parents other than decedent and decedent’s issue.
Second-Line Collaterals: Descendants of the decedent’s grandparents, other than decedent’s parents and their issue.
If the decedent is not survived by a spouse, descendant, or parent, in all jurisdictions intestate property passes to brothers and sisters and their descendants. The descendants of any deceased brothers and sisters (nephews and nieces) take by representation in the same manner as decedent’s descendants.
Look at table of consanguinity pg 79.
If there are no first-line collaterals, then 2 schemes are used based on the state:
Parentelic System
The intestate estate passes to grandparents and their descendants and if none then to great grandparents and their descendants and if none then to great great grandparents and their descendents and so on down the line until and heir is found.
Degree-of-relationship System
The intestate estate passes to the closes of kin, counting degrees of kinship.
To count the degree of kinship, count the steps up from decedent to nearest common ancestor of decedent and claimant, and then count steps down to the claimant from the common ancestor. The total number of steps is the degree of relationship.
If the intestate leaves no survivors entitled to take under the intestacy statute, the intestate’s property escheats to the state.
Look at problems pg 82.
Half-bloods
Majority of states: a relative of the half-blood (half-sister, etc.) is treated the same as a relative of the whole-blood.
In a few states, ½ blood is given a ½ share.
