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Wills, Trusts, and Estates
South Texas College of Law Houston
Festa, Matthew J.

Ch. 1 – Intro: Freedom of Disposition
Re: Gratuitous Transfers. (Our focus is on the passing of property at death, i.e., succession.)
Q: Historically, have persons had the right to transmit prop @ death?
–          Jefferson: “The earth belongs in usufruct to the living; the dead have neither powers nor rights over it. The portion occupied by any indiv. ceases to be his when he himself ceases to be, & reverts to society.”
–          Pre-1540 –> No wills allowed; “Forced heirs”/primogeniture
o   1540 Statute of Wills –> Freedom to direct disposition of prop @ death
§  19th-20th century –> Married Women’s’ Prop acts; Elective share statutes
1.       Freedom of Disposition & the Dead Hand
·         The Dead Hand – Control from Beyond the Grave.
o   Definition: “Dead hand” control arises where a decedent conditions a gift to a beneficiary upon a beneficiary behaving in a certain way.
§  Property rights, in general, are for the living.  At some point, society has to draw the line & cut off a person's influence so it doesn't run into perpetuity.
§  Problem: can't change your mind after you are dead.
·         Freedom of Disposition (US) = The decedent’s prop could pass in accordance with the decedent’s declared wishes if they are reliably preserved, or if not, then in accordance with a default system of succession that tracks the probable intent of a typical decedent.
o    “The organizing principle of the US law of donative transfers is freedom of disposition. Prop owners have the nearly unrestricted right to dispose of their prop as they please.  US law does NOT grant cts any general authority to Q the wisdom, fairness, or reasonableness of the donor’s decisions. The main function = to facilitate rather than regulate.  The law serves this function by establishing rules under which sufficiently reliable determinations can be made regarding the content of the donor’s intention.” R 3d of Prop: Wills & Other Donative Transfers §10.1 cmt c.
·         Shapira v. Union National Bank – Will gave all to 3 kids, contingent upon: if son is married at the time of Dr.’s death to a Jewish girl whose parents were Jewish; if not, he has 7 yrs to do so; if he doesn’t within 7 years, his share goes to Israel. Issues:  Whether the will is unconstitutional, contrary to public policy, and unenforceable because of its unreasonableness.  Ct: Enforcing this doesn’t constitute state action.; Public policy draws a line @ wills contingent upon heir divorcing their spouse. Ct won’t do something that incentivizes families to be broken up. (wills can’t encourage divorce) Held: Conditions in will valid.
o   Is the right to receive/inherit property protected?  NO it’s a MERE EXPECTANCY.
o   *The court gives effect to the testator’s intent, regardless of whether it agrees with him.*
·         Dead Hand Control – Other situations – conditions:
There is a GR against conditions that are contrary to public policy, which includes conditions that disrupt or discourage familial relationships. (i.e., courts are more hesitant to enforce things that disrupt living families (can’t be “unreasonable”)).
o   Absolute restraints on marriage – INVALID. Right to marry is a fundamental right.
§  Partial restraints okay, but this is a fact sensitive issue. Cts pay particular attention to age and timeframe of intended restriction or condition.
o   Bequest to SS conditioned on survivor not remarrying is invalid,
§  unless the purpose is to provide support while the survivor is not married.
o   Provisions that encourage separation or divorce is invalid. – BUT –
§  provision that is meant to provide support in the event of separation of divorce is valid.
o   Provisions that require or encourage beneficiary to commit a crime or tortious act are invalid.
·         Destruction of Property
o   Tension:  Effect Testator’s Intent – VS. – Preventing Waste(highest & best use of prop)
§  Tear down house after death?  Ct: No. Waste.
o   Courts weigh: Motivation of testator & the social utility of destruction – VS. – The loss to society
·         Freedom of Disposition & its Alternatives: Freedom of Disposition: U.S. law
o   Forced Succession: most countries; Confiscation by the State: failed Soviet experiment
2.       Justifying Freedom of Disposition
·         Public Policy Arguments – Should we allow you to pass on & control who gets your shit after you croak?
o   PRO: encourages wealth; gets highest/best use of land; incentivizing behavior among those that will inherit; property rights
o   CON: current system permits waste (i.e. leaving money to a dog); concentration of wealth; judicial economy; fairness; unearned wealth
§  Efficiency and Fairness and Control Rationales (basically)
·         Historically: US has tried to balance competing PP arguments by permitting transfer of wealth at death, but imposing an estate & gift tax significantly higher tax rates on estates/gifts than on earned income.
o   Modern Trend:  Most recent amendments to fed tax increase exemption over next several years.  (this likely to change though)
·         Politics of Death
o   2010 was the one year where the estate tax was 0.
o   2013 “Fiscal cliff” law
3.       Is Freedom of Disposition a Constitutional Imperative?
·         Is freedom of disposition a right?
o   Blackstone: “The permanent right of property… was not natural, but merely a civil right.”
o   Standard View (Ye Olden Days – 1980s):
§  No natural or constitutional right to inherit property.
§  Inheritance rights are of statutory creation    (Irving trust co v. day, US 1942)
o   Minority View: Locke, e.g.
§  Q: Is it the right to inherit (receive) or the right to transmit that is important?
·         Hodel v. Irving (p.28) – The 1983 Act prohibited devise/inheritance of small fractional shares allotted to Native Americans & provided for escheat of such shares to the tribe. Issue: Whether “escheat” provision of the act effects a taking without just compensation.
o   Gvt: income from these tracts is de minimis; Is consolidating these props a good idea? Ct: yes.
o   Highest & best use for Indian lands?  What is the “right” in question?
§  The right to pass on the interest at death. (right to alienate our own prop).
o   Regulatory taking (in Hodel)
o   Test (Penn Central):
§  1. “Investment-backed expectations?”              Ct: No interference here.
§  2. Distribution of burdens/benefits?        OK – broad distribution here;  Good policy? Yep.
§  3. “Character of the gvt action”…                       O’Connor: “Extraordinary”
o   What makes it a taking? Statute abolishes descent/devise of small intrsts in prop (That’s a stick!)
§  This right was totally abrogated
o   Ok, so now there seems to be some sort of constitutional basis for inheritance.  Q – who has the protected right?   Right to receive property?   No – “mere expectancy”
§  The right to transmit property.
·         Post-mortem Acquisitions: HYPO –
o   T, intestate heir X; will leaves all to Y
o   A: “to T if T survives me, but if not then to T’s estate”
o   After T dies, T’s estate inherits Whiteacre
o   Who gets it, X or Y?    Inte

        Functions of probate?      Informal settlement probably OK.
§  b. Green died intestate.
·         Statute: ½ to spouse, ½ to kids
o   ½ to Martha, ¼ each to sons
o   Texas? See TEC 201. Which assets pass by survivorship?
·         Need for administration? Probably can work it out informally.
§  c. Green owned RE, deed: Aaron
·         Prob need probate – clear/mktable title.   What about mtge?
§  d. Green is alive with no will. Advise.
·         Prob doesn’t need it, if all goes well…
·         Minor grandchildren?
·         Intestacy: does he want sons to disclaim their shares of the estate?
·         Things change – assets, relationships
1.      Duties to Intended Beneficiaries
o   Barcelo v. Elliot (TS): Does drafting atty owe duty of care to intended BNFs of will or trust?
§  Problem: Atty for testator had no atty-client relationship w/ intended beneficiaries…
·         i.e., no privity w/ plaintiffs.
§  TX SC retains bright-line privity rule
·         No duty to intended beneficiaries.
§  Dissent: 40+ states have relaxed the privity barrier
·         COA would be limited. Would limit to named BNFs only.
o   Belt v. Oppenheimer (TS p.8) – Executors of Dad’s estate sue drafting attys.  T.Ct, App. Ct: Barcelo.  TX SC: Reversed!
§  Personal representative may sue for malpractice on behalf of the decedent’s estate.
·         Rationale: Estate “stands in the shoes” of decedent. Therefore, it is in privity w/ estate planning attys! Prevents total immunity for attys.
o   Smith v. O’Donnell – Executor sues dad’s attys for bad advice about mischaracterizing mom’s assets. Issue: May executor sue attys for malpractice committed outside the estate-planning context?
§  TX SCT: yes. Extends Belt rationale.   (Dissent: Barcelo should govern)
o   Duty to Intended Beneficiary – TX
§  Lack of strict privity prevents a malpractice action by the beneficiaries
·         i.e., TX hasn’t yet adopted the trend
§  Executor may sue for malpractice
§  Don’t forget: TX lawyer might be sued outside TX in certain situations
§  Generally a good thing to be ethical & competent, not screw up
2.      Conflicts of Interest
o   A. v. B. (p.57) – Case where the conflicts check didn’t work. Husband didn’t want to disclose to his W that he had an illegitimate kid. (A = the woman suing B for paternity). Law firm orders B to tell W about A.  (Duty to disclose material facts to client). B sues to prevent disclosure (Duty of confidentiality).
§  Court: disclosure to W is ok. Not to identify A or the kid, just the existence thereof.
o   Wills Pro Res – Bottom Line
§  Duties might run to intended BNFs– don’t commit malpractice!
§  Don’t engage in conflicts of interest!  Your client’s wishes are entirely in your hands (and they won’t be around when we realize you fucked up)
·         You are a menace to your clients.