Trust & Estates Outline – Ryan, Spring 2014
FREEDOM OF DISPOSTION
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OVERVIEW
· Inheritance is not a property interest, but a mere expectancy
· DONEE HAS NO RIGHT TO INHERIT PROPERTY IN AMERICA – do in other countries
· Rst 3rd Property 10.1 cmt. (c)
o The freedom is disposition is paramount and the law attempts to further the donor’s intent
o Courts cannot question the wisdom, fairness, or reasonableness of a donor’s decisions
o Law serves the function of facilitating transfers, not regulating them
§ Establishes rules sufficient only to determine the content of the donor’s intentions
· Dead hand control
o Arguments for: freedom of disposition
o Argument against: current generations don’t know what the most efficient use of assets will be in the future
· Vocabulary
o Intestacy – die w/o a will
· Need to go back for
o Representation
o Slayer alternative
§ Specifically UPC
o Disclaimer & Representation
o Go through all wills and Place on a spectrum for validity as attested and holographic
§ Include: If harmless error wasn’t applied would it have made the will valid
§ For pre-printed will forms: IF it was not analyzed as holographic would it have met standard for attested wills under harmless error?
§ Need to have outline like this
· Issue:
o Outcome in UPC
o Rst
o CL
§ Give cases here
· **Will be repeating cases in outline several times but its worth it
LIMITS ON THE RIGHT OF DISPOSITION – 3
· Spousal/creditor’s rights, superseding law & public policy
o No provisions unreasonably restraining alienation or marriage
o No provisions promoting separation or divorce
o No provisions w/ racial or other categorical restrictions
· Public Policy as limit on freedom of disposition
o Reasonable restriction test – (fact specific, spectrum analysis)
§ Rule – T may not put unreasonable restriction on inheritance
§ Test – Whether compliance with condition is reasonable
· Marriage context: generally, gifts conditioned on beneficiary marrying w/n particular religion are reasonable.
o Unreasonable = general/total, or permitted marriage is unlikely to occur
o Reasonable = Partial restraint
§ Shapira – Condition on inheritance: Must marry girl of Jewish parents w/n 7 years of father’s death. IF not, son’s share to Israel.
· Son argued: Unreasonable restriction upon marriage rights violates PP. Then argued will incentivize sham marriage.
· Held: Reasonable – only a partial restraint. T and court should be able to assume son has proper motives. Bad argument to try to avoid condition based on own impropriety.
· Rationale: T’s intent is clear = want to further Jewish religion
· Argument that not enough Jewish girls was not supported by census data, plus times have changed, airplanes, freeways. No issue w/ 7-year restriction.
§ Could argue: Void for uncertainty: who is Jewish? FN p. 7
· 7 years not enough time to finish school.
· Online dating = probably no bite to region argument
· Reasonableness = never a slam dunk, facts!
§ Invalid = Bequest to SS on condition of not remarrying, unless the purpose of the bequest was to provide support while unmarried
· Provision that encourages separation or divorce, unless provision meant to support in event of divorce
§ Minority Rule – Rst. Trusts 29
· Trust provision is ordinarily invalid if tends to seriously interfere w/ or inhibit the freedom to marry by limiting the choice of spouse.
PROBATE V. NONBATE
· Probate – passes under will or by intestacy
· Nonprobate – passes under different instrument, not a will
· Testate – die w/ will
· Intestate – die w/o will
· Testamentary Trust – Trust created under will so goes through probate
· Community property goes through probate
· JTRoS does not – decedent’s interest vanish at death, death cert perfects title, heirs get nothing
· Functions of probate
o Provides evidence of title transfer so property is marketable
o Protects creditors by providing procedure for payment of debts
o Ensures distribution of T’s property is according to intent
o Good thing about probate – Nonclaimed statutes: Probate trips SoL for creditors to lay claim on property
· Probate not always required
o PP may be distributed in private
§ Value small – can submit affidavit of successor in summary administration
· Requires death cert + proof you are heir (marriage cert)
· Works for motor vehicles
o Why have will: name executor, name guardian of minor child, provide detailed instructions for asset distribution
· Probate process: Administration: Formal or Informal
o Administration: Gap filler when didn’t use nonprobate transfer & heirs cant agree
§ Occurs in probate court (PC)
· Step 1: submit will – PP where T domiciled (primary juris), RP where located (ancillary juris)
· Step 2: Prove validity
o Informal = Attach self-proving affidavit in lieu of going to court
o Formal = if will challenged
· Step 3: Appoint personal representative (executor/
gap between T’s actual intent and PC’s reading of intent
· Malpractice as a next best solution
o This is hard because it’s a fact specific inquiry, and
o Uses a reasonableness test so never clear cut
o Also monetary damage might not make beneficiaries whole depending on the property they are loosing out on – family farm
o When going malpractice analysis – make sure to cite Simpson and say “in a jurisdiction allowing an exception to the privity of contract defense for beneficiaries”
§ If in a jurisdiction that doesn’t allow argue for it to allow it
· Equitable to place harm at closest person to its cause – that’s the lawyer not the beneficiaries
o Rule – MUST be able to point to evidence that attorney’s drafting error failed to correctly convey T’s intent
INTESTACY
INTESTACY IN GENERAL
· Intestacy – w/o a will
o May be partially testate and partially intestate (maybe don’t update will to include all assets)
o Partial testacy – property not included in will passes through intestacy
o Issues: Who will take What
§ Choice of Law – RP = location; PP = T’s domicile
· Descendants & Representation
o In all states priority = SS, children C, Children’s children/grandchildren GC
§ IF 1 of several C predeceases T, then issue of who represents that C and thus takes their share – 3 completing systems of representation
§ UPC applies per capita at each generation representation
o 3 systems of representation
o Looking at who would take next so if no descendant’s split among those w/
§ Per capita at each generation -1990 UPC 2-106(b)
· Furthers horizontal equity – heirs share according to degree of proximity to T “equally near, equally dear” (C get equal share; GC get equal share)
· Rule – initial division is made at closest generation in which 1 or more descendants (D) are alive. (Divided among all member, living and dead)
o Then shares that are not distributed because taker in generation is deceased get aggregated and dropped down where they get equally divided among next generation