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Wills, Trusts, and Estates
South Texas College of Law Houston
Moore, Shelby A. Dickerson

Wills Trusts & Estates

Prof S. Moore

STCL

Spring 2014

Chapter 1. Introduction: Freedom of Disposition

1) The Power to Transmit Property at Death

a) Intro

i) The right of a property owner to dispose of her property on terms that she chooses has come to be recognized as a separate stick in the bundle of rights called property

ii) American law of succession embraces freedom of disposition, authorizing dead hand control

iii) Limits on freedom of disposition

(1) Spousal rights

(2) Creditor’s rights

(3) Unreasonable restraints on alienation or marriage

(4) Provisions promoting separation or divorce

(5) Impermissible racial or other categorical provisions encouraging illegal activity

(6) The rule against perpetuities and accumulations

iv) American law facilitates rather than regulates the carrying out of the decedent’s intent

v) “succession” includes the law of wills, the law of intestacy, the law of trusts, the law of charitable foundations, and in some aspects the law of future interests

b) Freedom of Disposition and the Dead Hand

i) Hobhouse argued against the influence of the dead hand

ii) Thomas Jefferson: the portion occupied by any individual ceases to be his when himself ceases to be, and reverts to the society

iii) No constraint on freedom of disposition arises from the interest of an expectant beneficiary in receiving a future inheritance

(1) The donee’s interest in a future inheritance is a mere expectancy that is derivative of the donor’s right to dispose of his property as he pleases, and that is defeasible at the whim of the donor

iv) Restatement 3d of Property

(1) American law does not grant courts any general authority to question to wisdom, fairness, or reasonableness of the donor’s decisions about how to allocate his or her property.

(2) The main function of the law is the facilitate rather than regulate

v) Shapira v. Union National Bank

(1) Facts: father’s will required sons to marry a Jewish girl with 2 jewish parents within 7 years of his death in order to inherit from the estate. Son raises constitutional and public policy arguments

(2) Rules

(a) Upholding the enforcement of the provisions of the will conditioning the bequests to his sons upon their marrying jewish girls does not offend the constitution of Ohio or the united states

(b) A partial restraint of marriage which imposes only reasonable restrictions is valid, and not contrary to public policy

(c) Restraint unreasonably limits the transferee’s opportunity to marry if a marriage permitted by the restraint is unlikely to occur

(3) Notes:

(a) Re: society of friends: if only a few people are marriageable under the restriction it may be unreasonable

(b) Incentive Trusts are conditional gifts that usually take a form similar to the facts in Shapira. Often intended to prevent the beneficiary from adopting a slothful or frivolous lifestyle

(i) Three broad categories of incentive trusts:

1. Conditions encouraging beneficiaries to pursue education

2. Conditions that provide moral incentives (moral, religious, or a certain way of living)

3. Conditions encouraging a productive career

(ii) Generally courts will enforce them as long as they do not violate public policy

(c) Lifetime versus testamentary conditions: Posner: where the donor is still alive the donee can seek to have the terms modified, if the donor is dead, the donee cannot recontract

(d) Restraints on Marriage: the prevailing rule (as in Shapira) is that “restraint unreasonably limits the transferee’s opportunity to marry if a marriage permitted by the restraint is not likely to occur”

(e) Contrary to Public Policy: includes a general rule against conditions that disrupt or discourage familial relationships, encourage or require crimes or tortious acts

(i) The court has differentiated between a valid gift in trust to the testator’s wife “so long as she remains my widow” from an invalid gift in trust that would terminate if the spouse remarries

(ii) Court has upheld a condition prohibiting granddaughters from using tobacco, but did not uphold the provision as to their husbands because they could not be controlled by the granddaughters and it would be provocative of marital discord

(f) R3 Trusts § 29 in reckoning what is contrary to public policy courts should balance the donor’s freedom of disposition “against other social values and the effects of deadhand control on the subsequent conduct or personal freedoms of others” if “a condition is unnecessarily punitive or unreasonably intrusive into significant personal decisions or interests the provision may be invalid”

(i) ARA argument considered

(g) Destruction of property at death

(i) “a well ordered society cannot tolerate waste,”

(ii) A court would not order the testator’s house be torn down

c) Justifying Freedom of Disposition

i) The Donor’s Prerogative

(1) Halbach: Arguments in support of the institution of inheritance

(a) In a society based on private property, it may be the least objectionable arrangement for dealing with property on the owner’s death

(b) Inheritance is natural and proper as both an expression and a reinforcement of family ties which are important to a healthy society and a good life

(c) Inheritance rights bring forth creativity, hard work, initiative and productivity that benefits others and encourages individual responsibility

(2) Hirsch and Wang: Qualitative theory of the dead hand

(a) Traditional rationale: testators have a natural right to bequeath, having created wealth by the sweat of her brow, she is naturally free to do with it what she pleases, including passing it to others

(b) Bracton: freedom of testation creates an incentive to industry and saving, people get satisfaction out of bequeathing property to others. Limiting the power to bequeath will cause the subjective value of property to drop as it has lost one of its potential uses. Accumulated wealth will shrink

(c) The testators power to bequeath encourages

r public burdens which, in all fairness and justice, should be borne by the public as a whole”

(ii) When the right to transmit property is taken away, compensation must be paid

(b) Forced Shares and the Constitution

(c) Transfer Taxes and the Constitution

(d) Nonprobate Transfers

(e) The Antebellum South

e) Posthumously Acquired Property Rights

i) Shaw Family Archives Ltd v. CMG Worldwide, Inc. p. 35

(1) Rules

(a) The law and domicile of the testator at his or her death applies to all questions of a will’s construction

(b) Monroe did not have any postmortem right of publicity under the law of any relevant state. As a result, any publicity rights she enjoyed during her lifetime were extinguished at her death by operation of law

ii) Notes

(1) Posthumously Acquired Property

(a) Suppose T dies owning Blackacre. T has one intestate heir, X, but before dying, T executed a will giving all of T’s property to Y. Blackacre will pass under the will to Y. Two years later, A dies, leaving Whiteacre “to T if T survives me, but if T does not survive me, then to T’s estate.” Who takes Whiteacre?

(b) In re Estate of Braman (PA) the court held the property subsequently acquired by T’s estate passed to X, the intestate heir, rather than Y, the residuary devisee under the theory that T lacked the power to control the disposition of property acquired after T’s death

(c) UPC § 2-602 rejects Braman, providing all property owned at death “as well as all property acquired by the estate after the testator’s death” may pass under the will

2) The Mechanics of Succession

a) Probate and Nonprobate Property

i) Probate property: the property that passes through probate under the decedent’s will (chapter 3, 5) or by intestacy (chapter 2)

ii) Nonprobate property: property that passes outside of probate by way of a will substitute

iii) Alternatives to probate

(1) Inter Vivos Trust: property in a testamentary trust in a will passes through probate, property in an inter vivos trust during the decedent’s life passes in accordance with the terms of the trust

(2) Life Insurance: the company pays the beneficiary on receipt of the death certificate of the insured

(3) Pay-On-Death and Transfer-On-Death Contracts: custodian just files death certificate

(4) Joint Tenancy: the decedent’s interest vanishes at death. The survivor owns the whole property free of the decedent’s participation