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Trusts and Estates
Rutgers University, Newark School of Law
Knee, Peggy Sheahan

Knee
T&E
Fall 2011
 
Chapter 1
Section A. The Power to Transmit Property at Death: Justifications and Limitations
1.    The Right to Inherit and the Right to Convey
a.    Thomas Jefferson – “The earth belongs in usufruct to the living; the dead have neither powers nor rights over it. The portion occupied by any individual ceases to be his when he himself ceases to be, and reverts to society.”
b.    William Blackstone, Commentaries
i.       Preliminary stuff that refers to the bible and talks about how wills, testaments, rights of inheritance, etc. are all creatures of the civil or municipal laws.
c.    John Locke, Two Treatises of Government
i.       Argues that Children have a right to their Parent’s property
d.    Hodel v. Irving, 481 U.S. 704
i.       ISSUE: Whether the original Escheat provision of the Indian Land Consolidation Act of 1983 effected a taking of appellees’ decendents’ property without just compensation.
ii.      FACTS: Congress stopped descendants of Indian Americans from passing their land on to their descendants and instead requiring that the land pass back to the tribe. This effectively took one of the ‘sticks’ of rights (the stick of devising) from the people without just compensation
iii.     RULING: Yes. Escheatable Rights are not de minimis, and a total abrogation without compensation is not allowable.
iv.    EXTRA: This case showed a shift in jurisprudential thought where it was generally accepted that the right to transmit/inherit property at death IS a natural right and IS constitutionally protected.
e.    Shaw Family Archives v. CMG Worldwide
i.       ISSUE: Whether right of publicity statues passed postmortem  allow for a deceased individual to transfer publicity rights.
ii.      FACTS: After Marilyn Monroe died, she left the remainder of her estate to MMLLC. MMLLC argues that this includes publicity rights that were later conferred by statute (no such conference was provided for by either statute or common law at the time of Ms. Monroe’s death). A photographer disagreed with this and thus brought this action.
iii.     RULING: No.
2.    The Policy of Passing Wealth at Death
a.    Edward C. Halbach, Jr., An Introduction to Death, Taxes and Family Property
i.       General policy piece that says we should allow inheritence because of the incentive structure that makes the DONORS (as opposed to the donees) work that much harder, thus helping society.
b.    Melvin L. Oliver, Thomas M. Shapiro, and Julie E. Press, “Them That’s Got Shall Get”: Inheritance and Achievement in Wealth Accumulation
i.       Talks about the unequal opportunity created when large quantities of wealth are inherited as opposed to earned.
ii.      Studies of the inheritance of wealth; general policy arguments for the denial of equal opportunity; speaks briefly on the legislation regarding the estate tax
c.    Mark L. Ascher, Curtailing Inherited Wealth
i.       Thinks that all property should be sold and paid to US Gov’t at death except for
1.    marital exemption
2.    dependent lineal descendants, as limited by age
3.    disabled lineal descendants
4.    lineal ascendants
5.    charity
6.    general 250k exemption
ii.      Irving Kristol, Taxes, Poverty, and Equality
1.    Only allows donations to certain people to a limited extent with all amounts above the limit being taxed at 100%
iii.     Inheritance in the Erstwhile Soviet Union
1.    Shows that the abolition of inheritance was unpopular and unworkable. Inheritance operates as a method of providing for dependents of the deceased, without which, the state would have the burden.
iv.    Walter J. Blum and Harry Kalven Jr., The Uneasy Case for Progressive Taxation
1.    Discusses the investment in children as being one of the greatest forms of inheritance that clearly cannot be taxed
v.     John H. Langbein, The Twentieth-Century Revolution in Family Wealth Transmission
1.    Argues that the days where children expected to inherit farms and such property from parents, the need is no longer there and as such, inheritance does not serve its traditional purpose
3.    The Problem of the Dead Hand
a.    § 10.1 Donor's Intention Determines The Meaning Of A Donative Document And Is Given Effect To The Maximum Extent Allowed By Law
i.       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.
ii.      Comment:
1.    a. Rationale. The organizing principle of the American law of donative transfers is freedom of disposition. Property owners have the nearly unrestricted right to dispose of their property as they please. This section implements this fundamental principle by stating two well-accepted propositions: (1) that the controlling consideration in determining the meaning of a donative document is the donor's intention; and (2) that the donor's intention is given effect to the maximum extent allowed by law.
2.    c. Effect of a donative document. Unless disallowed by law, the donor's intention not only determines the meaning but also the effect of a donative document.
3.    American law does not grant courts any general authority to question the wisdo

ecutor
1.    Where the executor isn’t available or is unwilling, the personal representative is called an administrator (chosen statutorily)
iv.    Devise – how you give property to devisees
v.     Bequeath – giving personal property to legatees
c.    Summary of Probate Procedure
i.       Opening Probate
1.    Letters of administration are sought in the primary/domiciliary jurisdiction (where the decedent was domiciled at death) and ancillary administration if real property is located in another jurisdiction.
ii.      Formal v. Informal Probate
1.    Formal Probate
a.    Court supervises the actions of the personal representative and must approve inventory/appraisal of estate; payment of debt; family allowance; options on real estate; sale of real estate; borrowing of funds; mortgaging of property; proration of federal estate tax; etc.
2.    Informal Probate
a.    Personal respresentative administers the estate without going back into court and the estate may be closed by the personal representative by filing a sworn statement
iii.     Barring Creditors of the Decedent
1.    A statute of limitations requiring creditors to file claims within a specified period of time; usually a time period after the probate proceedings are begun or after the death
2.    Reasonably ascertainable creditors must receive actual notice
iv.    Closing the Estate
1.    Creditors must be paid; Titles must be cleared; Taxes must be paid and tax returns audited/accepted by tax authorities; Real estate or sole proprietorship may have to be soled
2.    Representative must be discharged from fiduciary responsibility by Court
d.    Cost of Probate
i.       It’s expensive to die
e.    Is Probate Necessary
i.       Can it be avoided? Yes, provided everything is taken care of by inter vivos trusts and where low amounts can be processed without probate
f.     Universal Succession
i.       Where heirs and residuaries step into the shoes of the decedent and take care of the affairs
ii.      No state has adopted this even though it’s provided for in the UPC (Except California in small part)