ESTATES & TRUSTS OUTLINE – 09F MALDONADO
INTRODUCTION
I. Transfer of the Decedent’s Estate
a. Probate v. Non-Probate
i. Probate – property in will or intestate
ii. Non – instrument other than will
1. Joint tenancy property
2. Life insurance
3. Contracts (401(k), IRA) or POD provisions
4. Trusts
b. 3 Core Functions of Probate
i. Evidence of Transfer of Title → Clears Title
ii. Protect Creditors
iii. Distribute Decedent’s Property
iv. Protects Heirs vis-à-vis CR’s, by means of SOL
v. **You go to probate if die intestate or partially intestate; OR if the will must be verified or if it is disputed.
c. Probate Procedure
i. Formal (solemn form) Probate (i.e. an actual hearing)
ii. Informal (common form) Probate (i.e. ex parte probate)
d. Shapira v. Union National Bank
i. Father leaves son money, but only if he marries Jewish within 7yrs after death
ii. Does this violate Constitutional rights or contrary to Public Policy?
1. Constitutional → No. right to inherit is given by law, not natural right. T can disinherit children, so can also restrict their devise.
2. Pub. Policy → partial restraint on marriage which imposes reasonable restrictions is valid.
a. Vast majority of US case law supports conditioned gifts related to marrying in-faith.
i. → however wouldn’t support gift conditioned on raising a child in certain faith (freedom of religion)
b. Would be devisee can always do as he pleases and forego the gift
iii. NOTE: Unreasonable restraints might be unenforceable
1. i..e father knew son was gay, but included marriage condition…up to courts to sort these issues out in future.
II. Professional Responsibility (not tested on)
a. Duties to Intended Beneficiaries?
i. Simpson v. Calivas – p. 58
1. Majority Rule → YES, drafter of will owes duty to intended beneficiaries
2. New York rule → No Duty (privity defense)
INTESTACY
I. Intro and Uniform Probate Code
a. §2-101. Intestate Estate
i. Any probate property not effectively disposed of by will passes by intestacy laws
b. §2-102. Share of Spouse
i. 100% of the Estate, IF:
1. married, and no descendants or parents (or all descendants are also descendants of spouse, and no step-children)
ii. Statutory Amounts where parents, kids from outside marriage, or step-children
iii. Cannot disinherit your spouse
1. Always a right to some share
c. §2-103. Share of Heirs other than Spouse
i. Distributes parts of the estate not passing to spouse under §2-102, or if no spouse
ii. Policy Choice → No “laughing heirs”
1. See ancestors & collaterals discussed below…
d. §2-105. No Taker → goes to State
II. Surviving Spouse’s Share
a. Simultaneous Death
i. If no sufficient evidence of order of death, the beneficiary is deemed to have predeceased the donor → thus, neither H or W inherits from the other.
1. Person claiming to be beneficiary must prove they actually survived.
ii. 120 Hour Rule [5 day rule] (p. 86) → for Probate Assets only.
1. For intestate, a person who doesn’t survive the decedent by 120 hrs is deemed to have predeceased him, and is not an heir.
2. Wills can expressly override the rule
iii. Insurance Proceeds
b. Janus v. Taraseweicz
i. .
III.Shares of Descendants
a. English Per Stirpes (≈15 states)
i. Start dividing right below decedent
ii. Each child gets equal shares
1. Each grandchild (etc., etc.) gets equal amounts of a deceased child’s share. (i.e. grandchild represents their dead parent)
b. Modern Per Stirpes (≈25 states)
i. Divide equally at first generation with living descendants
1. (if any children of decedent surviving, then same as English)
c. 1990 UPC – Per Capita at Each Generation (§2-106(b))
i. “Equally Near, Equally Dear”
ii. Divide like Modern Stirpes
iii. Then take shares of dead “takers” and move them down to next generation & divide equally
d. Questions, page 73-74.
IV. Shares of Ancestors & Collaterals – p. 92
a. Tables of Consanguinuity
i. Where intestate decedent has descendant, ancestors & collaterals don’t take
ii. All persons related by blood to decedent, but not descendants or ancestors are called collateral kindred
b. First Line Collaterals
i. Consist of descendants of the decedent’s parents, other than decedent & his descendants
ii. *Second Line→of the decedents grandparents (other than parents &descendants)
c. No First Line
i. Parentelic System
1. Intestate estate passes to grandparents & their descendants, or, if none then to great-grandparents & descendants, or if none then to great-great and so on…
ii. Degree-of-Relationship System
1. Intestate estate passes to closest of kin, counting degrees of kinship
2. Count the steps (one for each generation up from the decedent to the nearest common ancestor of the decedent and the claimant, and then you count the steps down to the claimant from the common ancestor)
a. The total number of steps is the degree of kinship
V. Transfers to Children
a. “children” → includes adopted children
i. Adopted children lose right to inherit from biologica
e
VIII. Disclaimers
a. If you disclaim, State law says you never had the property
i. But see Drye v. U.S. (Federal law treatment)
b. People in high tax brackets may disclaim so inheritance goes to next in line
c. May also try to disclaim to avoid your CR’s → Drye
i. IRS tax lien on donee → he disclaims to minor daughter
ii. Supreme Ct. → Not Allowed.
1. Donee DID exercise some control by determining who would get it (i.e. a known other) → therefore, Drye held a “right to property” and subject to IRS tax lien
d. Trusts → better idea. Much harder for CR’s to attack
e. Disclaim for medical reasons → i.e. maintain Medicaid eligibility
i. Some States say you must disclaim w/i 9 months of transfer, or w/i 9 mos. of becoming eligible for transfer
f. Operation of Disclaimer
i. Legal fiction → treats disclaimant as having pre-deceased the donor
ii. Stirpes/UPC treatment
1. When heir disclaims, we don’t divide shares equally as if predeceased
a. Treat disclaimant as alive for distribution purposes.
WILLS: CAPACITY & CONTESTS
THEMES
1. Burden of Proof → can be outcome determinative
a. Will proponent or contestant?
2. Jury or Judge?
a. Jury more sympathetic to disinherited family members
3. Social Norms?
a. Who do we believe should be getting the property?
I. Mental Capacity
a. Basic Test of Mental Capacity (“Sound Mind”) → Restatement §8.1(b)
i. Testator must “know & understand in a general way”:
1. Nature & Extent of Property
2. Natural Objects of His Bounty (family & heirs)
3. Dispositions that He is Making
4. Able to Relate These Elements to One Another, & form Orderly Desire Regarding the Disposition
a. i.e. understand the reasons you’re doing it, even if they seem irrational to ordinary people
→ Must Also Be of Legal Age
b. Burdens of Proof
i. Majority (& UPC) → burden stays with Contestants throughout
ii. Minority → presumption of capacity (i.e. sanity), rebuttable by contestant
a. If successful, shifts to Proponent to prove actual capacity
