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Trusts and Estates
Southern Illinois University School of Law
Drennan, William A.

TRUSTS and ESTATES – Professor Drennan – Spring 2013
{755 ILCS 5/__-__}
CH. 1: Lawyers, Estates, & Trusts
        I.            §1.02 An Overview of Inter-Generational Wealth Transfer
a.       Probate
                                                               i.      = System developed to collect the assets of decedents, satisfy creditors, resolve conflicts among beneficiaries, & distribute what’s left to appropriate persons or institutions
                                                             ii.      Basic Requirements of a Will
1.      In writing
2.      Signed by Testator
3.      Witnessed by 2 people
                                                           iii.      Types of Probate
1.      Formal – supervised by ct.
2.      Informal – less expensive, will contests not expected
                                                           iv.      Probate: The Process
1.      Intestate (w/o will)
2.      Will (“a will speaks at death”)
a.       Note: a testamentary trust is created under a will, so it passes through probate
                                                             v.      Probate Property
1.      In decedent’s name
2.      Tenancy in Common
                                                           vi.      5 Big Ways to Avoid Probate
1.      Lifetime gift
2.      Joint Tenancy w/ Right of Survivorship
3.      Payable on Death/ Transfer on Death
4.      Contract designations (i.e., life insurance, 401(k), IRAs, etc.)
5.      Trust
                                                         vii.      4 Functions of Executor of Estate
1.      Collects assets
2.      Pays creditors
3.      Resolves conflicts among beneficiaries; &
4.      Distributes what’s left to beneficiaries
                                                       viii.      Illinois Statutes
1.      [755 ILCS 5/6-8] Issuance of Letters Testamentary
a.       “Letters Testamentary” — Evidences executor’s power to act on behalf of estate
b.      When a will is admitted to probate, letters testamentary shall be issued to the executor named in the will if he qualifies and accepts the office, unless the issuance of letters is excused.
2.      [755 ILCS 5/9-3(a)] Persons Entitled to Preference in Obtaining Letters
a.       Fall back executors:
                                                                                                                                       i.      Surviving spouse (#1 priority)
                                                                                                                                     ii.      Children
                                                                                                                                   iii.      Grandchildren
3.      [755 ILCS 5/6-13] Who May Act as Executor
a.       18 yrs. old, US resident, sound mind,
b.      NOT disabled persons, NOT convicted felons
4.      [755 ILCS 5/6-10] Notice—Waiver
a.       No more than 14 days after will admitted into probate, living kin & beneficiaries must be given notice
5.      [755 ILCS 5/28-1] Independent Administration
a.       Permits an executor or administrator to administer the estate w/o court order or filings
b.      Lifetime Transfers (AKA will substitutes, probate avoidance devices)
                                                               i.      Elements:
1.      Property (principal)
2.      Held by someone (trustee)
3.      To benefit someone else (beneficiary)
                                                             ii.      Lifetime Trusts avoid probate; Testamentary Trusts do not avoid probate
                                                           iii.      Trusts are flexible & therefore a very useful estate planning tool
c.       Guardianships
                                                               i.      People need guardians when they can’t handle their own affairs (minors, disabled, etc.)
                                                             ii.      Guardians of Person; Guardians of Property/Estates; Guardian Ad Litem
d.      The Uniform Codes & the Restatements
                                                               i.      IL has not adopted UPC or UTC
                                                             ii.      Restatements might not be the law anywhere;
                                                           iii.      UPC/UTC might be proposed laws that states may adopt
      II.            §1.04 Duties Lawyers Owe to Clients (& Others)
a.       How a Will Works: “A will speaks @ death”
b.      NO “special duty” – the general rules of professional responsibility apply to estate planners (i.e., loyalty, confidentiality, etc.)
c.       Historically, attys could dodge malpractice claims by the “lack of privity” element
d.      Schneider v. Finmann
                                                               i.      Estate is suing b/c the estate has an actual harm or damage due to careless tax planning for estate
                                                             ii.      Atty can be sued here b/c it’s “close enough” to privity – privity exists b/t personal representative of estate & estate planner
1.      Estate is entitled to “step into the shoes of decedent” 
                                                           iii.      Policy: allowed to go forward and sue atty b/c we’re trying to send a message – here, estate needs some recourse against a negligent atty
e.       Robinson v. Benton
                                                               i.      Dorothy came to D to have current will revoked & destroyed. D didn't end up destroy or revise will before Dorothy died
1.      1991 will is then probated – P/Robinson gets 25% (if will destroyed & Dorothy died intestate, P gets 100%)
                                                             ii.      At C/L, atty owes duty of care only to his client, not to 3rd parties who may have been damaged by atty’s negligent representation of client
1.      Preserves bright-line privity rule which denies COA to all beneficiaries whom atty did not represent
                                                           iii.      Policy:
1.      Attys won’t exclusively focus on client’s wants and will start to focus on what the beneficiaries want; &
2.      Atty’s would be exposed to almost unlimited liability
3.      If privity defense abandoned, we’ll have inevitable problem of angry heirs
f.         Needham v. Hamilton, et al. [CORPAK p. 18]                                                                i.      Several drafts of will demanded by P; in preparing 1 of drafts, D leaves out residuary clause & that’s the 1 P signed… P dies 5 yrs. later & mistake discovered 2 days later (atty admits to it too)
                                                             ii.      Robert supposed to get:
1.      100% under residuary clause
                                                           iii.      Robert actually got:
1.      50% when residuary clause passed by intestacy
                                                           iv.      RULE: intended beneficiary of will could bring malpractice COA against drafting atty despite lack of privity b/t atty & beneficiary
1.      Policy:  if you’re doing a will, you know the main purpose of drafting will is to accomplish the future transfer of the estate of testator to the beneficiaries named in the will
                                                             v.      So, damages = $1mil b/c if atty didn’t mess up, P would’ve got $2mil
1.      BUT, holding atty liable gives a windfall to Nancy’s heirs
 
CH. 2: Intestacy
        I.            §2.01 Overview
a.       In General
                                                               i.      Default rules/state’s plans that kick in when person dies w/o will or trust– wills & trusts made to override/avoid intestacy rules
                                                             ii.      Can die partially intestate (will explains some things, but forgets others)
1.      Residuary clause cures partial intestacy
                                                           iii.      Give us an idea of who has priority when intestacy occurs
b.      Terminology
                                                               i.      Heirs: people identified by statute to take estate to extent that decedent dies intestate
                                                             ii.      Ancestors: parents, grandparents, etc. extending into history
                                                           iii.      Descendants: describe a multi-generational group, including children, grandchildren, & continuing line
                                                           iv.      Collaterals: those out of the lines of ascent & descent (aunts, uncles brothers, sisters, cousins
c.       Survivorship
                                                               i.      Intestate statutes distribute property to a decedent’s survivors
                                                             ii.      How do we determine whether 1 person survives another?
1.      Medical Evidence
2.      Legal Rules or Presumptions
a.       UPC defines = legal presumption/rule that one must survive 120 hours.
b.      IL = medical evidence to prove who lived longest in a common disaster
                                                         

      Expires 61 days after it’s issued
b.      (2) Solemnization (ceremony)
                                                                                                                                       i.      Who can do Ceremony: Judge (or retired judge), county clerk, ordained ministers or “authorized by a religious organization”, or authorized by an Indian tribe
c.       (3) Registration
                                                                                                                                       i.      Presider of ceremony must forward certificate to county clerk so clerk can register marriage
2.      HOWEVER, so long as “both parties have a good-faith belief they have a valid marriage,” then marriage is valid
                                                           iii.      NOTE: in Federal Law, DOMA defines “spouse” as only a person of the opposite sex who is a husband or a wife
1.      If you’re technically a spouse in IL, you are NOT for Fed purposes (SS benefits, taxes, etc.)
2.      Fed law does not recognize civil unions
c.       Descendants (a Child)
                                                               i.      6 Topics in Regard to Children:
1.      Marital Children
a.       [750 ILCS 45/5] Presumption: if married & child born or conceived during such marriage, married couple = parents
2.      Non-Marital Children (born out-of-wedlock)
a.       Traditional Law: non-marital children could NOT inherit from anyone
                                                                                                                                       i.      USSC held that a denial of rights based upon status violated EPC & is unconst.
b.      Modern Statutes: allow children to inherit regardless of parent’s marital status
c.       Mother/Father can acknowledge paternity
3.      Adopted Children
a.       “Fresh Start” Approach (UPC approach)
                                                                                                                                       i.      Once adopted, adopted completely included in new family & completely excluded from genetic family
                                                                                                                                     ii.      Can inherit from new; cannot inherit from old
b.      IL Approach [755 ILCS 5/2-4]                                                                                                                                        i.      If adopting parent dies, then adopted children can take intestacy like all the natural children; also from the lineal & collateral kin of adopting parent
1.      Looks like “Fresh Start” Approach
                                                                                                                                     ii.      Restriction:
1.      If adult when adopted & adoptee has not lived previously w/adopted parents before age 18, adoptee still takes from parents in intestacy just like the natural kids
a.       But, CAN’T take from others in the family—just the parents
4.      Civil Union Issues
a.       IL Civil Union statute says nothing about children b/c it doesn’t say you’re married
5.      Half-Bloods
a.       Most (IL too) say half & whole bloods inherit equally
d.      Ancestors & Collateral Relatives
                                                               i.      IL is a “per stirpes” state
1.      Take by representation
2.      Divide up into as many shares as there are surviving children or deceased children who left descendants surviving the decedent à Survivors can “step into the shoes” of parents/grandparents
3.      Family viewed in vertical terms
a.       People in same generation may get widely differing shares