WILLS ANDTRUSTS
INTRODUCTION TO ESTATE PLANNING – CHAPTER 1
A. THE POWER TO TRANSMIT PROPERTY AT DEATH: ITS JUSTIFICATION AND LIMITATIONS
GEN. NOTES
– It is probable that the right of inheritance arose from the following plainer and more simple principle: a man’s children or nearest relations are usually about him on his death-bed, and are the earliest W’s of his decease; therefore, they become generally the next immediate occupants or where no children, the man’s servants, who were born under his roof, became his heirs.
– Testament = written or oral instructions properly witnessed and authenticated, according to the pleasure of the deceased, which we, therefore, style his will.
– The rights to will, inheritance, and successions ofproperty (succession rights) are not natural rights, but rather civil rights created thru statute
o The Const. does not forbid the states from limiting or abolishing testamentary disposition over property
– Descent = transmission of personal or real property upon the death of someone w/o a will, i.e intestate
– Devise = transmission of property by will
CONST. RIGHT TO DEVISE PROPERTY
Hodel v. Irving (1987)
Rule – Complete abolition of both the descent and devise of a particular class of property is a taking and thus UnConst.; however, the states are allowed to regulate and limit the descent of property.
Here – Congress tried escheating Indian land back to the tribe due to a problem of multiple ownership of Indian lands.
Rationale – As in KAISER, the CT identified several factors that have particular significance, such the economic impact of the regulation, its interference w/reasonable investment-backed expectations, and the character of the gov’t. The gov’t’s action was the key factor in the CT’s holding. It held that the action served to abolish the long known right to pass on property, a right considered to be an essential stick in the bundle. The CT held that it maybe appropriate to abolish the descent of property interests by rules of intestacy; however, it is not appropriate to abolish both descent and DEVISE. That type of regulation goes too far.
Notes:
– The CT regarded the gov’t action as an extinguishing of core strands in the bundle of property rights, namely the right to devise, which if taken away, must be compensated for
– Take note of the difference b/t the protected right to devise and the unprotected right to descending property
PARTIAL RESTRAINTS ON MARRIAGE
Shapira v. Union Nat’l Bank (1974)
Rule – Where a testator conditions the receipt of property to a decedent based on the religion of who he marries, the condition does not violate the 14TH nor does it violate public policy
Here – Father wrote in will that son would receive property on the condition that he marries a Jewish girl having Jewish parents. If not done by a certain age or w/in a specific grace period, the property would be gifted o
n the event of separation or divorce
– Rest. 3rd of Trusts provides that trusts contrary to public policy are invalid
o It frowns upon restraints on beneficiary behavior, including restraints on marriage or religious freedom, disrupting family relationships, and choice of careers, but calls for balancing of conflicting social values
B. TRANSFER OF THE DECEDENT’S ESTATE
1. PROBATE AND NONPROBATE PROPERTY
– Probate property is property that passes under the decedent’s will or by intestacy (w/o a will)
– Nonprobate property is that property which passes under any other instrument other than by will, which became effective before death
– Examples of nonprobate property are:
o Joint tenancy property – where the decedent’s interests vanishes and the survivor merely must file a death certificate to clear title
o Life insurance – where the insurance company disburses any monies from a policy
o Contracts with payable-on-death provisions – pensions, stock plans, investments plans that already have instructions as to any beneficiaries
Interest in trust – property transferred in trust for the benefit of another
