Fall 2013 – Estates and Trust Outline – Oren
I. Introduction
A. The Living and the Dead: Whose Money Is It?
1. In General
a. Decedents are frequently using trusts to provide incentive to their designated beneficiaries by:
i. Conditions that encourage the beneficiary to pursue and education;
ii. Conditions that provide what might be termed moral incentives (Feinberg);
iii. Conditions designed to encourage the beneficiaries to have a productive career.
b. The testator’s power to bequeath encourages beneficiaries to provide her with care and comfort.
2. Definitions
a. A testator devises real property to devisees and bequeaths personal property to legatees.
b. Personal Representative: The first step of the probate process is the appointment of a personal representative to oversee the winding up of the decedent’s affairs. Personal representatives are appointed by, under the control of, and accountable to the court. His principle duties are:
i. To inventory and collect the assets of the decedent;
ii. To manage the assets during administration;
iii. To receive and pay the claims of creditors and tax collectors; and
iv. To distribute the remaining assets to those entitled.
c. Executor: When the person in charge of administering the estate is named in the will.
d. Administrator: When the person in charge of administering the estate is not named in the will.
B. The Role of the Lawyer and the Lawyer-Client Relationship
1. In General
a. 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 (Minyard).
C. Probate and Non-Probate Transfers
1. Probate, What Is It And Who Needs It?
a. All of the decedent’s assets at death can be divided into probate and non-probate property.
b. Probate Property: Property that passes under the decedent’s will or by intestacy. Distribution of probate assets under a will or by intestacy may require a court proceeding and appointment of a personal representative to settle the probate estate. Probate performs three functions:
i. Provides evidence of transfer of title to the new owners by a will or a decree of intestacy;
ii. Protects creditors by requiring payment of debts; and
iii. Distributes the decedent’s property to those intended after the creditors are paid.
c. Non-probate Property: Property passing under an instrument other than a will or by operation of law, which became effective before death. Non-probate property includes the following:
i. Joint Tenancy Property;
ii. Life Insurance;
iii. Contracts with POD provisions;
iv. Interests in Trust;
v. Bank Accounts with POD provisions.
d. Distribution of Non-probate Property: Distribution of non-probate property does not involve a court proceeding; all that is required is that the death certificate be filed with the proper entity.
e. Non-probate matters are not public records; whereas, wills are a matter of public record and must be filed on record with the county. Non-probate property is not as technical to create or distribute; whereas a will is a technical document, with technical distribution procedures.
2. Gifts
a. In order for an inter vivos gift to be valid, there must be (Gruen):
i. Intent on the part of the donor to make a gift;
ii. Delivery by the donor to the donee; and
iii. Acceptance of the gift by the donee.
b. Gifts Causa Mortis: A gift done or made in contemplation of one's own death
3. Joint Interests With Right of Survivorship
a. 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 (Franklin).
II. Intestate Succession
A. Introduction and Representative Statutes
1. In General
a. The distribution of a person’s probate property, who dies without a will, or whose will does not make a complete disposition of the estate, is governed by the statute of the pertinent state.
b. Generally, the law of the state where the decedent was domiciled at death governs the disposition of personal property; and the law of the state where the decedent’s real property is located governs the disposition of such real property.
c. UPC §2-101: Intestate Estate
i. Any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent’s heirs as proscribed, except as modified by the decedent’s will.
ii. A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession. If that individual or a
o ½ of the estate goes to:
· The paternal grandparent, if alive, if not THEN:
· To the paternal aunts and uncles, in alive, if not THEN:
· To the paternal cousins taking by representation.
o Other ½ goes to:
· To the maternal side in the same manner.
o If there are no surviving grandparents, or aunts or uncles on one side, then to the other side in the same manner.
4. UPC §2-105: No Taker
a. If there is no taker under the provisions of this Article, the intestate estate escheats to the state.
C. The Share of Lineal Descendants
1. In General
a. After the spouse’s share is set aside, the decedent's issue and the issue of any of the decedent’s deceased children take the remainder of the property to the exclusion of everyone else.
b. If one of the children dies before the decedent, leaving descendants, all states provide that the child’s descendants shall represent the dead child and divide the child’s shares among themselves.
c. Representation: The principle upon which the issue (all persons descended from a common offspring) of thec decedent takes or inherits the share of the estate, which their immediate ancestor would have, taken or inherited, if living: The taking or inheritance per stripes.
2. Modern Per Stirpes
a. In most states, representation is achieved by dividing the decedent’s estate into shares at the generational level nearest the decedent where one or more issue of the decedent are alive and provide for representation of any deceased descendant on that level by his or her descendants.
i. Thus, representation is used only to bring the surviving descendants of the deceased descendants (i.e. grandkids) up to the level where a descendant is alive.
ii. Thus, in modern per stirpes, the generations with all dead descendants are skipped and equal division begins in the generation with the first living person.
