Select Page

Wills, Trusts, and Estates
South Texas College of Law Houston
Siegel, Mark R.

 
PROFESSOR SIEGEL
WILL, TRUSTS AND ESTATES
SPRING, 2015
 
A = Mom/Dad

B = Child

____________
↓           ↓
C             D à Children of B
 
Who is B’s ancestor?  A (Ancestors are up)
Who are the descendents?  B = C&D       A = B,C,&D
Trust: transfer of assets; gratuitous tranfers        §102 tax code = gifts
Testamentary Trusts = created in will
Estate = all your assets at time of death.  Death creates an estate.
Escheat = means property goes to the government.
CONSANGUITY:   If individuals are related by blood, they are related by consanguity
 
AFFINITY:  relations by marriage.
 
PROBATE & NON-PROBATE PROPERTY
–          Probate property:  Property that passes through probate under the decedent’s will or by intestacy.
–          Non-probate property:  Property that passes outside of probate through a non-probate mode of transfer.
 
THE MECHANICS OF SUCCESSION
                Decedents
                           
Prob. Prop.         Non-probate property
-Will                     -Inter vivos gift
-Intestacy           -Life insurance, POD’s, JTWROS
 
  A           à           W            (A married to W)l
                ↓
                B
A’s will leaves everything to X
Assets = 1M life insurance policy (non-probatable); JTWROS of 500K (non-probatable asset)
X gets nothing b/c there are no assets of the estate.
 
 
FUNCTIONS OF PROBATE
–          Three core conditions of probate:
o   Provide evidence of title transfer to new owners;
o   Protect creditors by providing a procedure for payment of debts; and
o   Distribute the decedent’s property to those intended after the decedent’s creditors are paid.
EXECUTOR DUTIES
o   Inventory and collect assets
o   Manage assets during administration
o   Receive & pay claims of creditors
o   Clear title to any assets
§  Real estate is more important than personal property
o   Distribute remaining assets to proper party
FORMAL V. INFORMAL PROBATE
–          Formal probate (Dependent administration)
o   Court supervises the actions of the personal representative in administering the estate through a potentially costly & time consuming process.
–          Informal probate (Independent administration)
o   Unsupervised administration
o   The personal representative may administer the estate w/o court supervision unless an interested party asks for court review.
WEALTH TRANSFER TAX OVERVIEW – CHP. 1
 
Donor                   à           Donee
$14K per done; non-taxable gift = gift tax free
For 2014, $5,340,000.00: APPLICABLE EXEMPTION AMOUNT (lifetime/death)
–          Gifts in excess of the 14K reduce the available amount of the 5.34M applicable exemption.
–          This reduction applies to subsequent gifts & the amount available to the decedent upon death.
–          The 5.34M amount isn’t doubled for transfers occurring during life & at death.
o   Example:  Class, I hope the following example adds to your understanding of this topic.  Individuals A and B are wealthy but have never made gifts until now.  A decides to give $14k cash to 10 family members.  Because of the $14k per donee annual exclusion,  A's aggregate transfer of $140k to the 10 donees would not use up any of his $5.43M transfer tax exemption amount.  In contrast, B gives $140k to his sibling.  The first $14k of this transfer qualifies as part of the $14k per donee annual exclusion.  However, there is another $126k to address.  The $126k excess over the $14k is covered by the available $5.

perly be amended to provide 1/3 for spouse?
o   The challenge by the children as an impermissible takings would fail since Hodel does not protect the right to receive.  It protects the right to transmit.
PERSONAL REPRESENTATIVE
–          Executor (testate)
–          Administrator (intestate)
–          Independent executor (testate – informal probate)
 
§304.001 – PERSONAL REP.
–          Court shall grant letters testamentary or of admin to persons qualified to act, in the following order:
o   `Person named as executor in will
o   D’s surviving spouse
o   Principal devisee of the D
o   Any devisee of the D
o   Next of kin
o   Creditor of the D
§401.001 – EXPRESSION OF TESTATOR’S INTENT
–          Any person capable of making a will may provide that no other action shall be had in the probate court in relation to the settlement of the person’s estate.
–          Any person capable of making a will may provide in their will that no independent admin is allowed.  In this case, if estate is administered, it will be through the direction of the probate court.
§305.101 – BOND REQUIREMENTS
–          Bond is required unless stated otherwise in will.
–          Bond can be waived per 305.101
–          Waiving bond does not affect the type of administration.  No bond does not automatically equal an independent administration.
–          DEFAULT RULE:  Dependent administration w/bond