Wills, Estates, and Trusts
8/29/16
Right to Convey (transfer) —————- Right to Inherit
USA more towards convey but moving towards inherit. No right to inherit if youre a child unless youre a minor dependent child otherwise no right to inherit from parent/grandparent etc.
Married people have more limits when transfter. Have to give good chuck to surviving spouse.
We have testamary freedom, we have to right to give to whoever whatever we want.
Dead hand control – control after death, we can setup control of a trust even when dead.
Right to convey is part of the bundle of stick (fee simple absolute)
Law focused on dead person’s intent. Can be diffult because theyre dead so we focus on best evidence or whats left behind.
No regulation on how lawyers get to person’s intent.
First thing to say: Sorry
2nd – Ask or consider what assets were probate or non-probate but more respectful manner. (For example, I want to help you but I need to know about their assets)
Succession – encompasses wills, intestate, taxes, trust
Shapira v. Union National Bank (1974)
Facts: Will contains restriction that sons must marry jewish girl with jewish parents w/in 7 years. He controls not only who gets property after death but also how they get the property (control by dead hand). Plaintiff argues (1) this is unconstitutional under 14th amd and (2) public policy bc it crossed the line and (3) its unreasonable
Held: court says (1) no—it’s constitutional, a testator may restrict son’s inheritance, if we conceive this as state action (mere enforcement of a will) we’ll have so many more problems, the will does not say you cant marry rather it limit and thus no violation and (2) only against public policy when absolute restriction and here partial restriction—so we ask “is it reasonable”—here court looks to numbers—how many Jewish girls can he pick from
a. Not Like Maddox v. Maddox—where restriction was 5 or 6 people Tensions in this case: a) right to transfer wealth as one wishes (donor’s rights—wins), b) right to inherit (beneficiary’s rights), c) right to transfer as you wish, d) societal goals
Incentive trusts – makes people continue things or do things in order to get money. Most common is you’ll get money when you go to college, get money when you graduate, etc. Research has found that these trusts work but rewards limits future goals and outcomes. IE kids are told to draw as many pictures as they can vs kids who get candy for every picture. The kids with no rewards drew more pictures.
Pg 14 Restatement says what law should say and NOT what the law is.
Making someone get a divorce is NOT allowed under the right to convey.
Can’t encourage someone to destroy property.
Justify freedom of disposition – Right to convey is a constitutional right.
Why Transmit Property at Death: Justifications and Limitations
The right to inherit and the right to convey:
The right to inherit can easily be mistaken as something natural, when it has been established by long and inveterate custom
Wills and testaments, rights of inheritance and successions, are creatures of the civil or municipal laws.
Justifications for private transmission of wealth from generation to generation
Inheritance is natural and proper—reinforces family ties—good for a healthy society
We live in a society based on private property
A way to beget affection or responsibility
A way to bring forth creativity—so people work harder to pass something
along
Encourages savings—which are essential to society’s capital base
Arguments Against private transmission
Perpetuates wide disparities in the distribution of wealth
Concentrates economic power in the hands of a few
Denies equality of opportunity to the poor
General re: Inheritance in the US
80% of wealth is inherited.
Congress has established substantial estate and gift tax on the rich
Donor is the person giving or right to convey. Rememer the OR is the person giving, donor, grantor, trustor. Donee want the right to inherit. Remember EE is person getting. Third option is State getting everything.
Estate tax rarely effects most people. Have to be very wealthy.
Terminology
Probabte is court process where dead person’s affairs are wrapped up. All property is either probabte property and nonprobate property. Wills control PROBATE assets/property but not non-probate.
Probate (narrow): the process of proving a will valid
Probate (broad/common): administration of the estate, collecting assets,
distribution
Probate property—assets in dead person’s name alone and doesn’t transfer by any other operation of law and property that passes through A) a will or B) intestacy. Example – land in your name only. Joint tenents in common is probate and only your share would go under probabte.
(default sys)
Non-probate property—property passes outside of a
decedent by at least 120 hours.
The Uniform Simultaneous Death Act has a similar 120 hour requirement, but allows for an exception if there is clear and convincing evidence that the inheritor survived the decedent, even if it was less than 120 hours.
Share of Descendants
Who’s alive
What share
Did it vest
Competing systems of representation – ask what level you start dividing
English per stipres – vertical/up and down. Each line of descent treated equal. (MN) First line first! (Also divide at child)
Modern Per Stripes – Each line of descent treated equally beinging at first generation with living taker (look at whos alive) (divde at first living generation)
1990 UPC – Horizontal equalty – each taker at each generation treated equally (equally near, equally dear)
If parent has taken, then child gets nothing.
Laughing heirs – states don’t like that and will cut them off after family of grandparents.
Step and In laws don’t get jack in intestacy. But minority rule – step kids can step in after true last resort when no living heirs of grandparents side.
Whole and half blood are treated the same.
Adopted children are the same as blood children.
9/7/16
Guardianship and Conservatorship of Minors
Minors have no legal capacity to manage property nor legal power to make choice about how and where to live.
Guardian = responsibility for minor’s custody and care. One parent good enough. Parent can make someone guardian in will and although not formally binding, its persuasive in court.
Guardian has no authority to deal with the minor’s property but there are 4 alternatives for property management: 1. Guardianship of the property, 2. Conservatorship, 3. Custodianship and 4. Trusteeship.
Guardianship of the property – Guardian takes care of property until kid reaches 18. Guardian has to go through court if they wish to make changes.Not ideal alterative because of the constant court trips, fees, etc.