Chapter 1: Intro to Estate Planning
The Power to Transmit Property at Death
A. Will: a person’s declaration of how he desires his property to be disposed of after his death. Can be handwritten by the testator, oral, or otherwise. It is revocable and ambulatory (meaning it does nothing until death).
a. Will vs. Deed: will passes stuff upon death; deed passes things now
b. A will is the primary way to transfer wealth at death.
B. Testament: a statement of a person’s wishes concerning the disposition of his personal property after death
a. Testament vs. Will: testament is about personal property; will is about real estate
C. Witness: to observe the execution of an instrument and/or to sign their name to authenticate it
D. Pleasure: what the deceased wanted
E. Will contests: a separate judicial proceeding brought to challenge the validity of a will for things like fraud, undue influence, lack of capacity, etc.
F. Estate planner: a person who knows all the ins and outs of tax laws and wealth transfer (how to move money around while paying the least amount of taxes.
G. Why is there wealth transfer? Because you want someone you know and love to get your stuff, rather than the government
H. Escheat: the reversion of property to the state or sovereign
I. Natural object of bounty: a person likely to receive a portion of another person’s estate based on the nature and circumstances of their relationship
J. Property Rights: right to devise, right to exclude, right to transfer, right to enjoy
K. Argument against inheritance: the transfer of great fortunes perpetuates wide disparities in the distribution of wealth, keeps economic power in the hands of the few, and denies equal opportunity to the poor. It also does not reward merit, but being born with a silver spoon.
a. In response, Congress has imposed substantial gift and estate taxes on the rich.
L. Arguments for inheritance: it’s the least objectionable way of dealing with property when the owner dies; inheritance is an expression and reinforcement of family ties; it encourages the owner to be creative, work hard, and be productive with his current property.
M. The Dead Hand: the desire of some decedents to control the lives of their beneficiaries, at least the beneficiaries’ enjoyment of the decedent’s wealth, from the grave, typically through restrictive provisions in the dispositions that benefit those individuals.
N. Shapira v. Union National Bank, 1974: In this case, a father’s will conditioning his son’s inheritance on the son being married to a woman who was Jewish and whose parents both were Jewish was upheld. The freedom to marry is recognized as a personal right, so it is constitutionally protected. However, the court is not trying to enforce a restriction upon his constitutional right to marry, only a restriction by the testator upon inheritance. Also the right to inheritance is not constitutionally protected, so upholding restrictions by a testator is not unconstitutional. If the condition had been that the son not marry at all, it would have been void as against public policy; reasonable restrictions on marriage are valid. Authority in US says that gifts conditioned upon the beneficiary’s marrying within a religious group are reasonable. The restriction is upheld.
O. Gift over: a property gift that takes effect after the expiration of a preceding estate in the property
P. In terrorum clause “terror clause”: a provision designed to threaten one into action or inaction
a. When a provision like that is in someone’s will, you can’t change it after they die. If it’s in the will
ctors, and distribute remaining assets
b. Fiduciary Bond: a type of surety bond required of a trustee, administrator, executor, guardian, or other fiduciary to ensure the proper performance of duties
i. A will can waive the bond requirement
c. Statute of Distribution: state law regulating the distribution of an estate among an intestate’s heirs and relatives
d. Devisee: a recipient of real property
e. Legatee: one who is named in a will to take personal property
f. Heirs and Next-of-Kin
i. At common law, heirs and next of kin were not necessarily the same
1. Heir: a person who, under the laws of intestacy, is entitled to receive an intestate decedent’s real property
2. Next of Kin: the person entitled to inherit personal property from a decedent who has not left a will
ii. Today, they are the same thing
g. At common law, spouses weren’t heirs; they got curtsey or dower
h. Functions of Probate
i. Provides evidence of transfer of title to the new owners
ii. Protects creditors by requiring payment of debts
iii. Distributes the decedent’s property after creditors paid
i. Primary/Domiciliary Jurisdiction: primary probate jurisdiction is in the state of the decedent’s domicile at the time of death
Ancillary Administration: where the decedent owned property located in another state, ancillary probate proceedings are required in the other state to clear title to the property.