Estates and Trusts Outline

TRUSTS AND ESTATES

OREN

SPRING 2012

I. INTRODUCTION

a. Probate/Nonprobate Transfers

i. Probate

1. The probate system only applies to assets owned by the decedent at death

2. No-Will à If there is no will, a close relative will generally petition for an appointment as her personal representative (traditionally called her administrator)

a. when more than one person is interested in becoming administrator, local statutes will generally prescribe priority among the applicants

3. Will à If there is a will naming an executor, the executor will petition for letters of testamentary which entitle the executor to serve as the decedents personal representative

a. the personal representative then bears responsibility for collecting all of the assets

b. the personal representative will offer the will for probate, she will have to prove that the will was properly executed and she will provide notice to persons who might have reason to contest the will

ii. Gifts

1. Lifetime gifts are the most obvious form of non-probate transfers.

2. Gruen v. Gruen

a. Issues: Whether a valid inter vivos gift of a chattel may be made where the donor has reserved a life estate in the chattel and the donee never has had physical possession of it before the donor’s death? Holding: Yes.

i. Donative Intent:

1. Requires the donor intend to make an irrevocable present transfer of ownership; if the intention is to make a testamentary disposition effective only after death, the gift is invalid unless made by will.

2. Once the gift is made it is irrevocable and the donor is limited to the rights of a life tenant and not an owner

ii. Delivery: the delivery necessary to consummate a gift must be as perfect as the nature of the property and the circumstances and surroundings o the parties will reasonably permit

1. there must be either physical delivery of the subject of the gift or a constructive or symbolic delivery such as by an instrument of gift, sufficient to divest the donor of dominion and control over the property

iii. Acceptance: law presumes acceptance on a valuable gift

3. Gifts causa mortis:

a. however, gifts made on a death bed can be taken back if the gift was made in contemplation of death, and included an implicit condition that the car would revert back to the person who made the gift

iii. Joint-Interests

1. If two parties hold property as joint tenants or as tenants by the entireties, when the first of the two dies, the property passes to the other automatically, and there is no probate proceeding (taken by the terms of the instrument)

2. Franklin v. Anna National Bank

a. Issue: Whether there was clear and convincing evidence that a gift by Mr. Whitehead to Goddard for his bank account was not intended to be a gift in joint tenancy?

b. Holding: No, the decedent did not intend to make a gift to his account.

c. Synopsis of Rule of Law: A joint tenancy account presumptively creates a gift unless the party claiming adversely proves by clear and convincing evidence that a gift was not intended.

d. Reasoning: The decedent made Goddard and then Franklin a signatory for his own convenience, in case he could not get his money and not with intent to effect a present gift. The decedent’s attempts to change the account show his consistent view of the account as his own. The surrounding circumstances show decedent’s concern for his health and his relatively brief use of Goddard and Franklin to assure his access to his funds. The money in the account should have been found to be property of the estate.

e. When is the presumption rebutted?

i. Whitehead changed his mind and sent new letters, which shows it was the person he wanted to be his caretaker, not his beneficiary

3. Joint Accounts During the Depositor’s Lifetime

a. most courts have traditionally treated joint accounts as giving each party a right to the money he or she deposited in the account

b. in NY, by statute, a deposit of property in a joint bank account with a right of survivorship creates a presumption that the depositors have created a common law joint tenancy

4. Joint Accounts at Death

a. courts generally enforce survivorship provisions in joint bank accounts – assuming (1) that the depositor did not revoke the survivorship provision during his lifetime, as Mr. Whitehead did in Franklin and (2) that decedent’s estate does not introduce clear evidence that the now-deceased depositor established the joint account only for convenience

5. P.O.D. Accounts

a. Since its at death it needs will and needs testamentary formalities and since the depositor does not typically comply with those formalities when making a P.O.D. designation courts often held the designation invalid

6. Uniform Probate Code

a. provides that depositors may open either single-party or multiple-party accounts, and provides that either type of account may have a P.O.D. designation, an agency designation, or both

i. in addition, a multiple-party account may be either with or without a right of survivorship

b. UPC Section 6-302 authorizes registration of securities in beneficiary form whenever a security is owned by one individual or by two or more individuals with right of survivorship. Beneficiary form is defined as a registration which indicates the intention of the owner regarding the person who will become the owner of the security upon the death of the owner

II. INTESTATE SUCCESSION

Why Intestate Succession?

– People don’t always write wills for various reasons, their family’s shouldn’t be deprived of property

– We are trying to at least duplicate what we think people would do if they wrote wills

– We don’t have investigation into what the decedent would want, we have a fairly rigid scheme, this is to save time and money, and most lawyers would not be able to do this

– intestate succession statutes reward exclusively family members (typically spouses and lineal descendants); blood relatives generally don’t take even if they are lineal descendants

– spouses and lineal descendants take first, then collateral relatives if there are no spouses and lineal descendants

The Importance of Intestate Succession

1) Some people execute wills that are wholly invalid. Courts may invalidate wills and if the decedent has left no prior will, the intestacy statute directs distribution of decedent’s estate

2) Testator may have executed a valid will that fails to completely dispose of all of testator’s property. When that occurs, the property that testator’s will fails to distribute will be distributed in accordance with the intestacy statute

3) A will sometimes refers to the heirs of a particular person, either the heirs of the testator himself, or the heirs of some other person. Heirs is ambiguous

4) Intestate succession is often important for determining who has standing to contest a will

a. Share of Spouse

i. Patterns in Wills

1. the result in most wills, is a decedent leaves almost all of his assets to the spouse in a traditional family

2. when there are multiple spouses, it is not all left to one spouse

ii. Uniform Probate Code 2-102, The intestate share of decedent’s surviving spouse is –

(1) The entire estate if:

(i) No descendant or parent of the decedent survives the decedent, or

(ii) All of the D’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of surviving spouse who survives D.

Why? Because we trust the surviving spouse to provide for joint children.

(2) The first [300,000], plus three-fourths of any balance of the intestate estate, if no descendant of D survives D, but a parent of D survives D.

(3) The first [250,000], plus one-half of any balan