Trusts and Estates Outline

Trusts and Estates Outline/Exam Aid
Professor Fogel, Fall 2008

1 Basics
A) Competing interests
1) Donative freedom: Right to give your property away during life and to pass it on at death, the right to choose who gets it, the right to choose the form in which they get it, and the right to give another person the right to make those choices after your death.
· Encourages gifts to family
· This motivates industry, creativity, entrepreneurship, saving, and investment
2) Entitlement by birth is not inherently healthy.
· It is the distinguishing feature of an aristocratic society.
· Unearned windfall to those who have healthy relatives
a) GOVERNMENT POWER TO REGULATE
Irving Trust Co. v. Day, US, 1942: It was generally presumed that the power to pass one’s property at death was not a constitutionally protected right.
Expectations or hopes of succession, whether testate or intestate, to the property of a living person, do not vest until the death of that person.
· Stated that the state legislature could regulation the testamentary disposition
· This means for the LA statute, that it is constitutional. State can limit or abolish rights of succession.
· State can do whatever it wants
· 14th A. doesn’t prohibit a state from granting a S.S. an elective share in the decedent’s estate.
· the dead hand rules succession only by sufferance.
· Policy: Continue as obligations of his estate social responsibilities which he had assumed during life; safeguard against casual, informal, or ill-considered abandonment of statutory protection; safeguard against overreaching or fraud
b) GOVERNMENT CAN’T ABORGATE COMPLETELY
· Limitation: Hodel v. Irving, US 1987: A law requiring a fractional interest less than 2% to revert to the tribe was unconstitutional.
(a) Case held that the escheat provision of the Indian Land Consolidation Act constituted an unconstitutional taking of decendent’s property without just compensation. (Law of Unintended Consequences)
(b) The Act completely deprived Indian landowners, without compensation, to the right to dispose of their fractional interests in Indian land by intestacy or devices but not through probate means, if the decendent’s interest represented 2 percent or less of the total acreage in the tract and earned less than 100.00 during proceeding year.
(c) The decedent’s fractional interest would escheat to the tribe.
· Complete abolition of both descent and devise of a particular class of property may be a taking in circumstances where the Court felt that alternative means of passing property at death were not realistically available.
B) Complete abolition of dissent and devise may be a taking.
1) They way you reconcile this is:
a) Constitutionally ok forcing you to give property to your spouse. That is not an abolition of dissent and devise, but when it comes to something governmentish, we don’t agree.
b) The other spin is that they are taking a western view of property in the statute. The tribe is completely different from giving the property to your family.
c)
· If the statute violates by devise and decent then you can limit it through the law.
B) Terms
1) Die intestate – without a will, follows intestate succession
2) Descent – inheritance of land by heirs
3) Distribution – succession to personal property through a personal representative to distributes or the next of kin
4) Die testate – with a will
a) Testator/testatrix – person who dies with a will
5) Die partially intestate – will does not dispose of all property
6) Devise – disposition of land by will to the devisee
7) Legacy, bequest – disposition of personal property by will to the legatee
a) Modern usage is devise and devisee for all types of dispositions by will
8) Personal property typically passes to an administrator (no will) or executor (will).
a) This personal representative must use the personal property to pay estate creditors.
9) Trusts are either testamentary or lifetime/inter vivos/nontestamentary
10) Four main will substitutes constitute the core of the nonprobate system:
a) life insurance,
· Benefits paid to beneficiaries
b) Legal life estates,
c) joint accounts
· Key component is the right of survivorship, and
d) revocable trusts.
e) With all accounts, the owner has complete lifetime dominion, including the power to name and to change beneficiaries until death.
11) Probate estate: property owned by decedent at death, property that comes into estate after death, backup to everything else (reversions, missing/dead beneficiaries)
C) Venue and Jurisdiction
1) 1-301. The Code applies to the affairs of decedents domiciled in this state.
2) 473.010. The will of any decedent shall be probated in the county in which the domicile of the deceased is situated.
2 Intestate Succession
A) Always ask if there is a will.
B) Generally, property flows through blood line except for surviving spouses and adopted children.
C) Survivorship:
474.015: 120 hour survival rule applies except when state would take property (escheat). (U 2-105)
1) Janus v. Tarasewicz: Couple ingested Tylenol laced with cyanide. In order to determine survivorship, it must be proven by a preponderance of evidence by the party claiming to survive.
a) Must survive by 120 hours
2-104: 120 hour survival rule applies except when state would take property (escheat).
b) Must be established by clear and convincing evidence

Missouri
2) 474.030: Partial intestacy allowed.
3) HALF-BLOODS 474.040: Count whole blood relatives double if there are half blood relatives inheriting.
a) But, courts allows half blood relatives to take even if there are no whole blood relatives.
b) UNDER UPC 2-107: Everyone is treated the same
· 472.010(16): Issue includes adopted and lawful lineal descendants.
(a) Except when other descendants separate issue from the decedent.
4) ADOPTION 474.060.1: An adopted person is the child of an adopting parent and not of the natural parents
a) Stranger: plucked out completely
· Murray v. Citizens Fidelity Bank and Trust
· Therefore, the adoption of an adult for the purposes of bringing that person under the provisions of the pre-existing testamentary instrument when he or she was clearly not intended to be so covered, should not be permitted
b) Marriage: step-parent adopts
2-114(b): Adopted persons are children of their adoptive parents for inheritance purposes and not of their adoptive parents.
c) Except that adoption of a child by the spouse of a natural parent has no effect on the relationship between the child and such natural parent (step-dad’s adoption does not break relationship with mother)
d) Child and descendents can inherit through both natural parents and adoptive parents.
2-114(c): [Noncustodial] parent and family do not have a right to inherit from or through the child
e) Unless that natural parent has openly treated the child as his and has not refused to support the child
2-114(a): Marital status of parents does not matter except under 2-114(b) and 2-114(c).
f) Historically, “filius nullius” – the child of no one. No inheritance through either parent.
5) ILLEGITIMATE CHILDREN: FAMILY RELATIONSHIPS 474.070: Illegitimate children recognized if parents marry and father acknowledges child
a) 474.060.2(1): Failed/void marriage does not affect relationship between child and father
b) 474.060.2(2): Illegiti