Wills and Trusts Outline

Amy Ronner

Wills and trust

Fall 2012

WILLS AND TRUSTS

A. Power to transmit property at death

v _ Whether transmission of property is given by the constitution

v _ Whether inheritance should be abolished

Until 1980s, the views of Jefferson and Blackstone prevailed over those of Locke [who stated that the right to transmit or inherit property at death was natural]. According to them the right to transmit or inherit property at death is neither natural nor is it constitutionally protected.

Although there is a right to transmit property at death after Hodel, there is no right to receive.

Prior to Hodel [Native Amer. could transmit land through generation until it becomes unmanageable thus the creation of the Indian Land Consolidation Act of 1983. The Act abolished transmission of undivided fractional land by will. Land escheat to tribe with or without will.]

Hodel [First time S.Ct. acknowledges the right to give away property as an actual right O’Connor says the right to give by will or intestacy is so important that it is unconstitutional to take it away without compensation.]

Ø O’Connor held that the Land Consolidation Act is unconstitutional because it abolishes the right to transmit after death which is sacrosanct

Ø O’Connor is saying that non probate procedures are too complex, however, today most property are transferred through will substitute

Ø O’Connor believes that the act could be reformed if the act gives the Indians the right to pass the land through a will. However, the act had already given the Indians the right to transmit their property through non probate procedure, which means it did not completely close the door for transmission as O’Connor’s opinion seems to suggest.

Ø Test used by Justice O’Connor [impact of reg., reasonable investment-backed expectation, reciprocity.]

Abolishing inheritance

Pros

Cons

· Creates inequality of opportunity

· Emergence of oligarchy

· Creates a generation of spoiled brat

· Encourages people to save for distribution at death rather than waste assets during life

· Creates incentives for potential transferees to maintain relations with transferors

· Death is inevitable so right allows people a means for putting their affairs in order

· Provides a mean for controlling state taxation of estates (though estate tax not that onerous and not a “double” tax b/c of generous exemptions and fact that tax touches on much property with unrealized gain which has never been taxed before)

· Create an incentive for people to work hard.

Ascher (Socialist) – All property owned at death, after payment of debts & administration expenses, should be sold & proceeds paid to US govt.

Kristol – Should discourage the inheritance of large fortunes—shouldn’t outlast lifetime of the one who made it; should dissolve into smaller fortunes upon death.

The problem of the dead hand

R(3d) Wills § 10.1 – With limited exceptions relating to creditors rights, spousal and children’s rights, and public policy, American law’s goal is to effectuate donor’s intent regardless of the soundness or reasonableness of that intent in eyes of court.

Policy against dead hand control: property is best controlled by the living

Shapira v. Union Nat’l Bank: Father left will with bequest to son on condition that son was married to a good Jewish girl at time of father’s death. Son, who did not qualify, sought to hold enforcement of will unconstitutional or against public policy. Rule: A partial restraint of marriage which imposes only reasonable restrictions is valid, and not contrary to public policy

Ø Amplified the concept that there is no constitutional right to inherit property. Testators are free to disinherit their children

Ø Not impinge on son’s right to marry b/c he can still marry whomever he wants – although it’s an example of dead hand control b/c son must comply with dead father’s wishes if he wants to inherit under the will

Ø Son’s arg. Loving + Shelley = unconstitutional cond. here

Ø Ct. arg: unlike in Loving and Shelley the ct here is being asked to enforce the testator’s restriction upon his son’s inheritance, but the ct. is not being asked to enforce any restriction upon Daniel’s constitutional right to marry.

Ø Son’s arg. : cond. is void as against public policy of the state because free choice of religious practice cannot be circumscribed or controlled by K.

Ø Ct. arg. : the cond. here is a partial restraint upon marriage and not a covenat to restrain the freedom of religious practice, and the ct. is not being asked to hold the P in contempt for failing to marry a Jewish girl of Jewish heritage.

Probate Non probate

Intestacy/will Joint tenancy

Life insurance

POD K.

Trust.

Transfer of the decedent’s estate

Obligations of the personal representative

In a testate estate, this is the executor; in intestacy it’s the administrator

Ø PR has to inventory and collect assets of decedent, including pursuing assets that are wrongly taken from the estate

Ø PR has to manage assets of the probate estate during probate

Ø PR is to receive and pay claims of creditors and tax collectors

Ø PR is to clear title to any realty and personalty and other assets if there is exoneration language in the instrument

Ø PR is to make distributions as provided under the will

Ø PR has to file tax returns: estate tax return, income tax return for the year in which decedent died, an