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Trusts and Estates
Southern Illinois University School of Law
Hoke, Patricia A.

 
Hoke, Trust And Estates Outline, Fall 2015
 
CHAPTER 1: Lawyers, Estates, and Trusts
1. PROBATE
Probate is the process that the will goes thru once the decedent has died. The probate process has certain steps, which include:
1. Admit the will to probate; fill out a petition and get the court to approve the will
2. Collection of assets and notification of creditors
3. Resolution of Will Contests, if any
4. Payment of debts, taxes, admin expenses
5. Distribution of remainder of estate
           
Additionally, there must be personal representative an individual who oversees the assets, pays the debts, and distributes the estate. This person can be named in the will OR there are statutes to determine this.
 
Not subject to probate: life insurance, joint tenancy property, retirement account, trusts, designated survivors, etc.
 
2. GUARDIANSHIP; p.16
            These can be named in the will and are required for minors.
            3 types:
1. Guardians of the person: this is for minors and disabled adults and control where they live and what they do. Handles day-2-day stuff.
2. Guardians of the estate or property: care for the property and finances of a minor child or an incapacitated adult
                        3. Guardians ad litem: appointed to protect child’s interest in litigation
 
3. TRUSTS; p.15
A trust is property held by someone for the benefit of someone else. The property is the principle of the corpus of the trust and those who benefit are the beneficiaries. Very popular; and they avoid probate. Tax avoidance, and there is property management for minors and disabled parties, also good to give property to successive donees.
           
a. Lifetime trust: created by a lifetime transfer; resolved in courts of general jurisdiction; NOT subject to probate
b. Testamentary trust: created by will; subject to continuing jurisdiction; and subject to probate
 
4. TAXES; p.19
No gift tax in IL; and there is an Estate tax in IL but exempt if you have an estate worth $4 million. ASK ABOUT THE TAX STUFF
 
 
 
CHAPTER 2: Intestacy
1. OVERVIEW OF INTESTACY
The point of the intestate distribution is to keep property within the nuclear family; to encourage individuals to accumulate property; to reflect the presumed desires of the decedent; and to protect dependent family members.
            TERMS:
Heirs: people identified by statute to take the estate to the extent that the decedent dies intestate. (Do not have heirs until you are dead!)
–          Spouse
–          Descendants/issue (children/grandchildren, etc.)
–          Ancestors: includes parents, grandparents, and the like, extending back into history.
–          Collaterals: people out of the lines of ascent and descent: aunts/uncles/cousins/bros/sisters
 
If a person dies with a will: beneficiaries are those who take under the will NOT heirs.
 
2. SURVIVORSHIP; p.38
When is someone dead? The UPC explains that Section 1 of the Uniform Determination of Death Act provides that someone is dead if there is irreversible cessation of all circulatory and respiratory functions OR irreversible cessation of all functions of the entire brain including the stem. BUT if you haven’t heard from someone in 5 years, they are presumed dead.
           
Survival is regulated by UPC 2-104; this explains that you must be born before the decedent’s death and survive by 120 hours. This should be proven by clear and convincing evidence.
 
Illinois Simultaneous Death: If there is no sufficient evidence that the persons have died other than simultaneously and there is no other provision in the will, trust agreement, deed, contract of insurance, or other governing instrument . . .
(a) the property of each person shall be disposed of as if he had survived.
(c) & (d): special rules for joint tenancies and insurance benefits
 
 
3. CHOICE OF LAW; p.39
            Choice of law questions arise when decedents have ties to more than one state
Real property: generally governed by the law of the situs (SITUS means the place where the property sits).
Personal property: generally governed by the law of decedent’s domicile at death.
But, some states apply the law of the situs and others use the most significant contacts.
 
4. PROTECTIVE PROVISIONS
a. Homestead Exception: 735 ILCS 5/12-901: Every individual is entitled to an estate of homestead to the extent in value of $15,000 of his or her interest in a farm or lot of land and buildings thereon, a condominium, or personal property, owned or rightly possessed by lease or otherwise and occupied by him or her as a residence. This is exempt from attachment, judgment, level, or judgment sale.
 
b. “Off the top”: family members have a right to assets off the top before creditors’ claims and before distribution under the intestate statute. This is basically a homestead exception and there can also be a reasonable allowance for surviving members to protect those the decedent was obligated to support. There are 3 categories which include Homestead; Exempt; and Support.
 
i. Spouse/Child Award: Surviving spouse gets a sum that the court deems reasonable for the proper support of the surviving spouse for 9 months after the death of the decedent.
– Must be at least $20,000
– An additional sum for the support of minor or adult dependent children of the decedent
– Must be at least $10,000
 
 
5. STRUCTURE OF INTESTATE
1. Blood relatives are favored
2. Family lines matter
3. Stop when you find survivors
4. Degree of relationship matters
*These are the steps between decedent and various relatives
5. “Representation” can affect shares
*In IL, surviving spouses usually receive everything.
 
6. SPOUSES AND PARTNERS; p.48
Traditionally, spouse meant someone who was legally married. Keep in mind, in states recognizing same-sex marriage there is less of an issue. Different j

ior to the death.
 
d. Half-bloods: 2 people are in a half-blood relationship when they have one common ancestor. Most states allow half and full bloods to inherit equally.
Example:
Harry and Mary have ABE
Then they divorce.
Mary and Harvery have BARB and CAROL.
ABE and BARB are half-bloods; BARB and CAROL are full bloods.
 
• Majority view – No distinction between half-blooded relatives and full-blooded relatives
• Minority view – excludes half-bloods if there are full-bloods of the same degree of relationship
 
            e. Stepchildren: In IL, stepchildren are never children.
• General (majority view) – Intestacy laws are based upon blood relations; therefore, stepchildren have no inheritance rights.
• Minority view – Stepchildren may inherit if there are no other surviving blood relatives.
 
f. Posthumous children: Traditionally, a child was an heir if born within 9 months after the decedents death (IL).  For UPC, an individual in gestation is treated as living if the individual lives 120 hours or more after birth.
 
8. NEXT OF KIN
If there are no close relatives, many intestacy statutes provide for the “nearest kindred” of the decedent. How is “nearest kin” determined?
 
First, seek descendants, then move up 1 generation to parents, then down again seeking siblings and their offspring. The UPC then moves to grandparents and down their lines then they stop.
 
Using a table of consanguinity, the numbers represent the number of steps [aka degrees] from the decedent to various survivors. P.70 To avoid making this too murky, the UPC cuts off blood relatives more distant than descendants of the decedent’s grandparents.
 
Spouses: Size of the share may depend upon who else survives the decedent
• In some states (Illinois) spouses share with decedent’s children
• UPC: spouse might share with decedent’s parents or decedent’s descendants.
 
         Front money: Some states (not IL) give spouses a lump sum up front plus a share of the rest of the estate.
• UPC: gives spouse
– the first $300,000 plus ¾ of the balance if decedent had parents but no descendants
– the first $225,000 plus ½ of balance if all of decedent’s descendants are also those of spouse (but spouse also had other descendants)
– the first $150,000 plus ½ of the balance if the decedent had descendants who are not descendants of spouse