TRUSTS AND ESTATES WEISBORD FALL 2017
CHAPTER 1: OVERVIEW
Testamentary freedom of Disposition:
Testators and settlors enjoy “the nearly unrestricted right to dispose of their property as they please
testamentary freedom consists of 2 parts:
1) dispositional control: the privilege of saying who gets your property and how much they get
2) dead hand control: impose terms & conditions on their estates that affect their beneficiaries or that last long after death
Eyerman v. Mercantile Trust Co (1975):
H: will directing the executor to demolish testator’s house after her death invalidated – violates pub policy
Will would adversely affect character of area/adjacent property values
Hodel v. Irving (1987) – SCOTUS
H: Court held that section 207 was unconstitutional as it ordered the escheat of fractional interest in real property, which had been given to members of the Oglala Sioux tribe.
Earlier statute gave 320 acres to male heads of household and 160 acres to others. Held in trust by the US.
Land was to pass to heirs which led to many owners over time. New statute was trying to correct this by saying the land would escheat to the tribe if it represented 2% or less of the total acreage and had earning of less than $100.
R: This new statute was held to be unconstitutional because there was no just compensation. Petitioners are asserting the rights of their descendants who could have passed property to their heirs but were being robbed of the opportunity at death.
Investment backed expectations: if you’re investing in something, it hurts even more when it is taken away from you. Plaintiff’s in this case did not have investment backed interests.
Average reciprocity of advantage: something is gained for you when others experience a taking but it is negative when it happens to you. This could balance out. What is being taken away in this case is the ability to pass on property. Right to pass on property is protected by the takings clause based on this decision.
Real Property must go through probate unless name on the deed is changed before the death of the owner. Anything under a will goes through probate. Non probate instruments include trusts, POD, life insurance, Pensions, etc.
Sources of Law, Probate Courts, and Probate Administration
Uniform Probate Code (UPC): sizable minority of states have enacted significant portions of UPC
Uniform Trust Code (UTC): a majority of US states have enacted significant portions of UTC
NJ adopted both with some modifications
Probate Courts: State cts empowered to oversee the administration of decedents’ estates (aka surrogate’s ct) – probate judges are typically elected
Probate may take one of two basic forms: formal or informal
Informal probate process
Letters of testamentary are granted to the executor after said executor petitions the probate ct to admit a decedent’s will (ct must deem will to be valid)
With intestacies (no will) ct will appoint an administrator and issue letters of administration
Formal probate process
If there is a will contest or a dispute about management of the decedent’s property, the case must go through formal probate
Primary or domiciliary jurisdiction: The estate must be probated in the jurisdiction where decedent was domiciled at death
Ancillary administration: any real property outside of the primary jurisdiction (where personal property will be administered) must be administered in the jurisdiction where it is located
3 primary ways of managing property on behalf of an INCAPACITATED PERSON:
1. Conservatorship: court appointed conservator has power over property similar to that of a trustee.
Under UPC, conservator of an incapacitated person can make a will on their behalf if said conservator notifies the appropriate court and all interested parties that he will be doing so
**NJ does NOT recognize this rule – conservator cannot make such a will in NJ
2. Revocable Trust: Successor trustee can act with respect to trust property immediately and without judicial involvement.
3. Durable Power of Attorney: Agent authorized to act with respect to any of the principal’s property, but only while principal is alive.
Advanced Medical Directive: Person can answer questions in advance about what to do if incapacitation occurs. This way, docto
People can disclaim assets along with rights of survivorship, powers of appointment, and fiduciary duties
Many states (and the Internal Revenue Code for gift tax purposes) require disclaimers to be made within 9 months of the decedent’s death
In re Estate of Gardner (2012): Ch 1 p. 48
Upon G’s death, Richardson granted life estate interest in his property
Under terms of G’s amended trust, at termination of Richardson’s life estate, the property would pass to decedent’s 2 kids
Estate came with obligation to pay taxes, upkeep on house, and 200k mortgage
**20 months after inheritance, creditors of property sent Richardson a bill – Richardson tried to DISCLAIM property
H: disclaimer ineffective: well past 9 month deadline to do so
Professional Responsibility: ch1 p. 50
2 ethical issues relevant to T&E attys:
1. Malpractice liability
2. Client communications and conflicts of interest
CHAPTER 2: INTESTACY: STATUTORY DISTRIBUTION
Intestate Estates: Introduction:
UPC 2-101(c): any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent’s heirs as prescribed in this Code, except as modified by decedent’s will
**UPC uses per capita for decedent’s descendant’s under UPC 2-103(a) (p. 25 of supplement)
3 Widely Used Systems of Representation:
English Per Stirpes:
Locate the generation nearest to the decedent with a living member OR a predeceased member survived by living issue.
Divide the estate into as many shares as there are living members AND predeceased members survived by living issue.
Distribute one share to each living member.
Repeat to distribute shares of predeceased members (treat each predeceased member as a new decedent).