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Trusts and Estates
Southern Illinois University School of Law
Noble-Allgire, Alice M.

Southern Illinois University School of Law

Trusts and Estates

Noble-Allgire

Fall 2014

Overview of Wealth Transfers

Probate

Only probate property passes through probate to designated survivors

Property can pass through probate through will Or intestacy

Probate Property:

In decedent’s name only

Non-probate property:

Has named beneficiary/designated survivors; Or surviving co-owner

Life insurance

Joint property

Retirement benefits

Property in living trusts

Property in POD/TOD accounts

After will is admitted to probate, probate estate is used to pay debts, taxes, And administrative expenses, with remainder distributed to designated survivors

Guardianships

Guardians of Person:

Minors:

Permanent Guardian:

High standard to show an unfit parent

Standby Guardian:

Appointed by Court upon death/disability of parent

Guardianship for 60 days, but typically becomes permanent

Short-term Guardian:

Appointed by Parent, for up to one year

Elderly Parent:

Children often attempt when unnecessary

Can’t withdraw after filing w/o court consent

Disabled adults:

mental illness, gambling, drugs

Guardians for incompetent adults may have more authority than those for competent minors

Uniform Probate Code (UPC) § 5-202:

guardian named in will may assume office upon probate of will without court approval

Guardians of Estate:

used for Property

UPC §§ 5-424, 425(a):

grants guardian broad management powers, exercisable without court approval, as if trustee of trust

Guardians Ad Litem:

appointed to protect minor’s interests in litigation

Duties held by lawyers to clients

Traditional view:

duty only to those in Privity with lawyer

No Privity between lawyers and intended beneficiaries

Modern view (two theories) (Ing)

Tort: balancing test factors

Extent transaction was intended to affect P

Foreseeability of harm to P

Degree of certainty that P suffered injury

Closeness of connection between D’s conduct and injury

Policy of preventing harm

Whether imposing liability places undue burden on lawyers

Contract (K): third-party beneficiary theory

Focuses on whether primary purpose of attorney-client relationship was to benefit non-client

Only intended beneficiaries may bring malpractice actions

Some jurisdictions preclude use of extrinsic evidence to prove person is intended beneficiary

If testamentary instrument valid on its face, malpractice cause of action defeated

Other jurisdictions allow claim in this situation, since it is only possible relief for intended beneficiary

Possible that malpractice action by intended beneficiary only allowed if there is No other remedy to prevent future harm

Statute of limitations (SoL)

Traditional view:

occurrence rule: time begins when document drafted

Modern view:

discovery rule: time begins when P knew Or should have known about mistake

Intestacy

Overview

Survivorship:

Person is dead if there is irreversible cessation of all circulatory And respiratory functions Or irreversible cessation of all brain functions

UPC § 2-104:

person must survive another for 120 hours before being deemed to have “survived” the other person

Alternative is “simultaneous death” approach:

if two people die simultaneously, their property is disposed of as if they survived

Problem: ability to prove bare evidence of bare survival defeated purpose of rule to minimize having property pass through deceased person’s estate

Illinois Probate Code (IPC) § 5/3-1:

adopts “simultaneous death” approach

person who takes last breath is survivor)

For property held in joint tenancy;

treat each share as if that joint tenant survived

For life insurance;

treat as if insured survived

UPC § 2-104 is Not to be applied if doing so would lead state to take under UPC § 2-105

Choice of law:

Courts usually apply law of Where Property is situated for real property, while applying law of decedent’s domicile for personal property

Some states apply law of where property is to personal property

Generally, choice-of-law principles require application of whole law of state deemed to control, so distinction between real and personal property likely irrelevant

Protective provisions:

Give survivor right to part of estate before creditors

s

UPC § 2-114(b):

adopted child is child of adoptive parents only, but adoption by birth parent’s spouse does Not interfere with:

Relationship between child and natural parent, Or

Right of child Or descendant to inherit from other birth parent

Illinois:

adopted child is Not child of natural parent unless:

Child is adopted by descendant, Or spouse of descendant, of child’s great-grandparent, Or

Natural parent of child died before child was adopted

Fact that adopted person is adult makes No difference to inheritance

Half-Bloods:

Majority view:

No distinction between half-blooded relatives and full-blooded relatives (UPC § 2-107)

Minority view:

excludes half-bloods if there are full-bloods of same degree of relationship

Stepchildren:

Majority view:

intestacy laws are based upon blood relations, so stepchildren have No inheritance rights

Stepchildren may be able to inherit through equitable adoption

Minority view:

stepchildren may inherit if No surviving blood relatives

UPC 2-103(b): Step-children

Posthumous Children:

Traditional:

child in Gestation could Inherit if born within 9 months after decedent’s death

Modern:

may include children conceived after decedent’s death if decedent gave consent to posthumous conception

UPC § 2-108: requires child to live 120 hours after birth

This requirement also applies to traditional view

UPC § 2-108: complaint must be filed before final distribution of parent’s estate And within three years of parent’s death

Identifying Next of Kin:

If there are No close relatives, many intestacy statutes provide for “nearest kindred” of decedent

UPC cuts off search after grandparents And descendants of grandparents

Some states resolve ties for closest survivor by choosing closest ancestor Or someone down closest ancestor’s line

Other states make survivors share equally