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
o Rest. 3rd of Property: Wills and Other Donative Transfers
§ §10.1: Donor’s Intention Determines the meaning of a donative document
ú 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.
o 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.
o 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.
ú It is considered a partial restraint on marriage. Just cannot be total restraint.
o A will or trust provision is generally invalid if it is intended or tends to encourage disruption of a family relationship.
o Trusts contrary to public policy are also invalid.
B. Transfer of the Decedent’s Estate
1. Probate and Nonprobate property
o Probate property: passes under decedent’s will or by intestacy.
o 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.
ú Executor: if decedent dies testate and names in the will the person who is to execute the will.
ú 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.
ú Now, heirs and next of kin generally means the same thing.
b. Summary of Probate Procedure
§ Opening Probate
ú Should begin in the jurisdiction where decedent was domiciled at time of death.
ú No probate proceeding, formal or informal, may be initiated more than three years from the date of death.
ú Time for contesting probate of a will is dependent upon a statute in the particular jurisdiction.
ú Creditors also have a specific time period in which to bring their claims.
§ Supervising the representative’s actions
ú Actions of personal representative are supervised by the court.
ú UPC authorizes unsupervised administration as well as supervised admin.
§ Closing the Estate
ú Creditors must be paid, titles cleared, taxes paid, real estate sold, etc.
ú 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
o 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.
ú 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.
ú 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
o 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.
ú 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
o About ½ of the population dies intestate—forsaking wills and legal advice.
o UPC §2-101: Intestate Estate
o §2-102: Share of Spouse
o §2-103: Share of Heirs other than Surviving Spouse
o §2-105: no taker
o 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
o Primary policy is to carry out the probable intent of the avg intestate decedent.
o Under current law, the surviving spouse usually receives at least a ½ share of decedent’s estate.
o Under UPC, if all decedent’s descendants are also descendants of the surviving spouse, and the surviving spouse has no other descendants, the surviving spouse takes the entire estate to the exclusion of the decedent’s descendants.
o If there is no descendant, nearly half of the states provide, as does the UPC, that the spouse share with the decedent’s parents, if any. If no parent survives, the spouse usually takes all to the exclusion of collateral kin, as the UPC provides, but in a number of states the spouse shares with brothers and sisters and their descendants.
o Simultaneous death
§ A person succeeds to the property of a decedent only if the person survives the decedent for an instant of time.
§ Uniform Simultaneous Death Act: if there is no sufficient evidence of the order of deaths, the beneficiary is deemed to have predeceased the donor. Thus, neither inherits from the other.
§ With respect to life insurance, when the insured and the beneficiary die simultaneously, the proceeds are distributed as if the insured survived the beneficiary.
§ Typical case involves spouses.
§ Janus v. Tarasewicz (1985)
ú Mother sued for the life insurance proceeds on her son’s life, after her son and daughter in law died from taking cyanide-laced Tylenol.
ú Issue: Was there sufficient evidence to establish that Theresa Janus survived her husband Stanley?
ú Decision: Yes. The diagnosis of death must be made in accordance with the usual and customary standards of medical practice.
· Survivorship is a fact which must be proven by a preponderance of the evidence by the party whose claims depend on survivorship.
· Evidence showed that Theresa had survived Stanley and thus the life insurance proceeds properly passed to her and upon her death, to her estate.
§ Under UPC 2-104 and 2-702, an heir or devisee or life insurance beneficiary who fails to survive by 120 hours (5 days) is deemed to have predeceased the decedent.
ú Must be established by clear and convincing evidence.
3. Shares of Descendants
o After the
re not allowed to inherit when their deceased natural father’s brother died intestate.
ú Issue: Did the trial court err in denying the four kids the right to inherit through their natural paternal uncle when those kids were adopted by their stepfather?
ú Decision: No. 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.
· An adopted child is treated as a natural child of his adoptive parents.
§ Under UPC 2-113, An individual who is related to decedent through two lines of relationship can only get a single share based on the relationship that would entitle the individual to a larger share.
§ Also see UPC 2-114: Parent and Child relationship.
§ The majority of inheritance statutes draw no distinction between adoption of a minor and adoption of an adult.
§ Minary v. Citizens Fidelity Bank and Trust Co. (1967)
ú Testator’s son adopted his wife for the purpose of making her an heir so she could take under the residuary clause of his mom’s will.
ú Issue: Is an adult, who was adopted for the sole purpose of making her an heir, entitled to share in a distribution of trust assets to the heirs of a testator?
ú Decision: No. Adoption of an adult for the purpose of bringing that person under the provisions of a preexisting testamentary instrument, when clearly was not intended to be so covered, should not be permitted.
§ O’Neal v. Wilkes (1994)
ú A child was denied intestate inheritance from her adoptive father’s estate because her aunt had no authority to contract for her adoption.
ú Issue: Was there a valid K to adopt O’Neal, such that she is entitled to inherit Cook’s estate property?
ú Decision: NO. The first essential of a contract for adoption is that it be made between persons competent to contact for the disposition of the child.
· The aunt had no authority to enter into a K for adoption.
ú Equitable adoption permits an equitably adopted kid to inherit from the foster parents, but they cannot inherit from the kid.
b. Posthumous Children
§ Definition: A child who is conceived before, but born after, her father’s death.
§ Courts have established for this purpose that the normal period of gestation is 280 days.
§ Uniform Parentage Act §204 (2002) (UPA) established a rebuttable presumption that a child born to a woman within 300 days after the death of her husband is a child of that husband.
· c. Nonmarital Children:
o All jurisdictions permit inheritance from the mother for a child that was born out of wedlock.
o Trimble v. Gordon (1977): US Sup Ct held that state discrimination against nonmarital kids, although not a suspect classification subject to the SS test, must have substantial justification for serving an important state interest.
o The UPA states that a parent-child relationship is presumed to exist between a father and a child (1) while the child is less than age 2, the father lives in the same household as the child and openly hold out the child as his natural child, or (2) the father acknowledges his paternity in a writing that is filed with an appropriate court or administrative agency.
· d. Reproductive Technology and New Forms of Parentage
o Woodward v. Commissioner of Social Security (2002)
§ Issue: If an H and W arrange for sperm to be withdrawn from the H for the purpose of artificially impregnating the W, and the W is impregnated with the sperm after H has died, will kids resulting from the pregnancy have inheritance rights of natural kids under the law of intestate succession?
§ Holding: Yes! A posthumously conceived kid will be considered issue if there is (1) a genetic relationship between the child and the decedent and (2) proof that the decedent consented to the conception and to the support of any resulting child.
