Trusts and Estates
Morgan
Fall 2016
Chapter 1- Freedom of Disposition
Succession- passage of property at death by decedent
Probate succession- property passes by will or intestacy
Intestate succession- property passes when person dies w/out a will
Testate succession- property passes under decedent’s will
Non-probate succession- inter-vivos trust, pay on death contracts, will substitutes
Succession embraces freedom of disposition
Types of Gratuitous Transfers
Probate succession- passes under decedent's will or according to statute at death
FL 731.201(13) Estate- property that is subject to probate administration
Testacy or testate succession- will determines who gets property at death
Statues determine how to make valid will
Statutes determine how to construe will when ambiguous
FL 731.201(2) Beneficiary- devisee
Intestacy- default rules, statute determines how property transfers at death
Statutes based on “presumed intent” (relatives)
FL 731.201 (2) Beneficiary- Heir at law
Functions of Probate
Provide evidence of transfer of title to new owners
Protect creditors by providing procedure for debt payments
Distributes decedent's property to intended recipients after creditors are paid
Choice of Law
Generally, law of state where decedent was domiciled at death governs disposition
Probate proceedings
Submit will for admission to probate
Administration of estate by circuit court
Court appoints personal representative (fiduciary)
Non-probate transfers- inter-vivos trusts, pay-on-death contract, will substitutes, life insurance policy, joint tenancy
Not subject to court order
Statutory protections based on public policy (spouse, children)
Fairness and common sense
Freedom of disposition- allows owner of property to control disposition of property at death
Dead hand controls
Subject to wealth transfer taxation and policy limitations
Must pay taxes and creditors, forced share for surviving spouse, Rule of Perpetuities
Allowed to put limits on gifts, but restrictions can NOT effect rights of individual
Incentive trusts- conditional gifts
Lifetime vs Testamentary Conditions- once testator dies re-contracting is impossible
Restraints of marriage- must be reasonable
If a marriage permitted by the restraint is unlikely to occur then the restraint on marriage is unreasonable (Shapira v. UNB)
Contrary to public policy- conditions that disrupt or discourage familial relationships
Mechanics of Succession
Probate property- passes through probate under decedent's will
Non-probate property- passes outside of probate through will substitute
Inter vivos trust- property put in trust during descendent lifetime and passes according to terms of trust
Life insurance- proceeds of policy paid to beneficiary names in insurance contract
POD or TOD contract- account custodian distributes property at decedents death to named beneficiary (retirement accounts, bank accounts)
Joint tenancy- decedent's interest in property vanishes at death and survivor owns whole property
Ethical Issues in Probate
The client is the person who is drafting instrument (will/ trust)
Duties owed to intended beneficiaries
Erosion of privity
Conflicts of interest
Have parties sign waiver at outset of representation so parties know they are waiving confidentiality
Chapter 2- Intestacy: An Estate Plan by Default
Testate- one who dies with a will, probate property distributed according to will
Intestate- one who dies w/out a will, probate property distributed according to default rules of intestacy
Estate plan by default
FL § 732 Part 1
Partial intestacy- will only disposes of portion of probate property, remaining property subject to intestacy rules
Intestacy- background law that supplies estate plan by default for intestate decedents
Default rules
Probable intent of decedent
“Dead hand” controls
Intestacy Statutes
Statute of descent and distribution
Principal of “freedom of disposition” still applicable
Objective of intestacy is to carry out probable intent of typical intestate decedent
American law – Spouses first, then descendants, then other relative (parents/ grandparents) and collaterals
If no surviving relations w/in statute, then property escheats to state
Choice of Law
Real property- jurisdiction where property is located
Personal property- where decedent is domiciled at death
Domicile- law of state where decedent domiciled at death
Uniform Probate Code (UPC) and Uniform Trust Code (UTC)
Uniform laws promulgated and adopted by states
Heirs- no living person has heirs
Heirs apparent- those who would inherent property of living person if death occurred
Interest is mere expectancy contingent upon person surviving testator
Devisee/ beneficiary- person named in a will
Interest is mere expectancy contingent upon person surviving testator
Expectancy is NOT same as legal interest
Intestate Estate
FL § 732.101 Any part of estate not disposed of by will pass to heirs in accordance w/ intestacy statutes
Decedent's death is event that vests the heir
AME as whole blood
Negative Will- express disinheritance provision bars heir from inheriting anything from decedent
Disinherited heir is treated as predeceased
Formal Adoption- by court order, statute
UPC creates parent/ child relationship when step-parent adopts step-child
Most states treat adopted child of both parents as if it were biological child of adoptive parents
States spilt on whether adopted child can continue to inherit from biological parents
FL § 732.108-
(1) adopted child is descendent of adopting parent(s) and natural kindred of adopting parent's family and adopted child is NO LONGER descendent of natural parents
EXCEPTIONS:
(a) Adoption of a child by spouse of natural parent has NO effect on relationship between child and natural parents
(b) Adoption of child by spouse of natural parent when spouse adopts child after other natural parent's death has NO effect on relationship between child and family of deceased parent
(c) Adoption of child by close relative has NO effect on relationship between child and family of deceased parents
Adult adoption- can adopt adult in Florida
Equitable adoption -aka virtual adoption or adoption by estoppel, recognized in FL
Protects interests of person who was supposed to be formally adopted but whose adoptive parents failed to meet legal requirements of formal adoption
Gives “adopted child” same entitlement to to estate property had child been formally adopted
Doctrine, certain terms must be met
Based on contract law
Elements of virtual adoption (FL)
Agreement between natural and adoptive parents- must have legal authority to contract for child's adoption
Performance
Natural parents giving up custody of child
Child must live w/ adoptive parents
Adoptive parents must raise child, treat child as own
Children born posthumous- child conceived and developing in womb at time father dies intestate
FL § 732.106- heirs of decedent conceived before death but born after death inherit intestate property as if born during decedent’s lifetime
