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Trusts and Estates
Temple University School of Law
Anderson, Mark F.

Anderson
Trusts & Estates
Fall 2012
 
 
 
 
 
The Fundamentals
        I.            Constitutional Right?
a.       Irving Trust v. Day (US 1942): nothing limits the government’s authority to regulate property rights at death
b.      Hodel v. Irving (US 1987): Congress’s abolishment of devise and intestacy in order to solve fractionation problem of Native American lands constituted a takings under the 5th amendment because it was a lot of land in sum, especially since these could consolidate rather than further subdivide lands.
c.       Shaw Family Archives (US 2007): Since Marilyn Monroe did not know about the T-shirts created by the photographs of her, she did not have the prerequisite intent to devise copyrights that were later created by utilizing those photos.
                                                              i.      Testamentary disposition is controlled by the law in effect as of the date of death
                                                            ii.      Can only dispose of property rights that the deceased was entitled to at the time of death.
      II.            Policy Issues:
a.       Freedom of testation: law in favor of the intent of the testator
b.       Destruction of Property at Death? No tolerance for waste
c.        Estate Tax:
                                                               i.      Charitable contributions exempt from it, so encourage giving
                                                              ii.      Accumulation of capital can be invested
                                                            iii.      Unearned reward
                                                            iv.      Perpetuates disparities in the distribution of wealth
                                                             v.      Development of an Aristocracy
1.       Discourage large inheritances with the estate tax, or
2.       Redistribute to the government or others?
   III.            How Much Control? Dead-Hand Control
a.       Testator has the right to completely disinherit children, so why not enforce conditions?
b.       Shapira (Ohio 1974): The testators condition that his son marry a Jewish girl before he inherit is not unreasonable because it operates on the choice of wife, which is too remote be considered coercion of religious faith, and the pool of women from which he can choose is not so small anymore.
                                                               i.      Not all courts use reasonable test, for some Intent Controls
                                                              ii.      Against Public Policy: encouraging sham marriage?
  IV.            Probate Process: anything that passes through a will or intestacy rules
a.       Non-Probate: life insurance, jointly owned property, Inter vivos trusts, revocable trust, contracts P.O.D.
b.      Open probate in primary or domiciliary jurisdiction; ancillary jurisdiction for property in another state
c.       Informal probate cheaper
d.      Non Claim Statutes for Creditors:
                                                              i.      Short term: 2-6 months; notice required
                                                            ii.      Long term: 1-5 years, no notice required
Providing for the Family
        I.            The Default Plan: UPC (1990, as amended by 2008): probable intent
a.       §2-101 Intestate Estate: any part of estate not disposed by will
b.       §2-102 Share of Spouse:
                                                               i.      (1)100% if
1.       (a) no descendant nor parent, or
2.       (b) all descendants are of both decedent and spouse
a.       no matter if they are minors vs. adults,
b.       nor the size of the estate
                                                              ii.      (2) If no descendant, but there is a parent, then first $300K + ¾ balance of estate
                                                            iii.      (3)If descendants of decedent are all the spouse’s, but spouse has other descendants, then the first $225K + ½ of balance
                                                            iv.      (4) If decedent has descendants outside of the marriage, then the first $150K + ½ balance
c.        §2-103 Share of Heirs other than Surviving Spouse
                                                               i.      (a) anything the spouse doesn’t get goes to…
1.       descendants equally by representation
2.       if no descendants, then parents (equally if both survive)
a.       some states give half to the mom and half to the kids (siblings)
3.       if no descendants or parents, then descendants of parents (siblings) by representation.
4.       If none of the above, then grandparents (half to each side) or if they’re dead, then their descendants (aunts/uncles of decedent) by representation
                                                              ii.      (b) if no takers under (a), but decedent has
1.        a deceased spouse with descendants, they get it by representation
2.       multiple deceased spouses with more descendants, equal shares pass to them by representation
d.      §2-105 No Taker, the estate passes to the state.
e.       §2-106 Distribution: initial division of shares is at the first level of living descendants, but the shares of deceased persons on that level are dropped down and divided equally of next generation representatives.
f.       Half-Bloods
                                                              i.      Majority/§2-107: treated the same as whole-blood
                                                            ii.      Minority: half-shares
g.       UPC §2-101(b) changes old rule of disallowing negative will.
h.      Degree of Relation System (MA): the person with the lowest degree of relation on the table of consanguinity (pg. 93) would inherit
                                                              i.      no laughing heir cut-off
                                                            ii.      Parentellic system used to break tie: closest line of descendants wins.
i.        Parentelic System: distribution by line of descendants
                                                              i.      Descendants; if not then descendants of parents; if not then descendants of GPs
                                                            ii.      Laughing heirs: grand-parent line cut-off (majority rule)
     II.            Other systems of Distribution:
a.       UPC 1990 is Per capita at each generation
                                                               i.      divide beginning at the closest living generations,
                                                              ii.      distribute only to living descendants, take the remaining sum and divide it by the number of living descendants at the remaining generation.
                                                            iii.      Each individual of each generation is given equal shares.
b.      English per stirpes: each line where there is a living descendant is treated equally, meaning start dividing at that the ancestor’s generation, even if there is no other living heir at that generation.
c.       Modern per stirpes (UPC 1969): each line beginning at the closest living generation is treated equally.
   III.            Special Rules:
a.       Same-sex marriage/relationships: if state recognizes domestic partner intestacy rights, then must register; should marriage-like relationship (economic partnership) standard be adopted?
b.      Uniform Simultaneous Death Act:
                                                              i.      Janus (Ill. 1985): if there is “no sufficient evidence of the order of deaths, beneficiary predeceased the donor”
                                                            ii.      UPC §§ 2-104, 2-702 amended to provide that heir/devisee or beneficiary of life insurance policy must survive by 120 hours (to avoid Janus evidence problem)
                                                          iii.      If joint tenants die simultaneously, they each half distributed as if the other predeceased
                                                          iv.      Life insurance: insured survived beneficiary (no pay-out)
c.       Slayer Statutes: UPC §2-803: the intentional killer is treated as having disclaimed; which at §2-1106 states that a disclaimer is treated as immediately predeceasing the decedent.
                                                              i.      Voluntary manslaughter counts, not involuntary (Mahoney)
                                                            ii.      Anti-lapse: if a devisee of an estate (by will) predeceases the devisor, then the gift will go to the deceased devisee’s descendants.
                                                          iii.      Exceptions for Killers?
1.      By statutes: so that descendants of the killer do not benefit.
2.      Common law:
a.       Allow devise (formalistically follow statute; killer’s heirs technically innocent)
b.      Complete bar (judicial engrafting): no chance that killer will inherit from his own heirs
c.       Constructive Trust for decedent’s next of kin (equitable remedy)
                                                          iv.      §2-803(g)/Majority: final conviction of intentional killing is conclusive
1.      no conviction, probate court applies civil standard
2.      if conviction is appealed, civil standard
3.      Plea agreement for unintentional killing, civil BOP (in probate ct)
                                                            v.    

              i.      Moving from Separate Prop to Community Prop State: poorer spouse has community property interest (half share) in richer spouse’s estate if richer spouse dies first; no reciprocal interest if poorer spouse dies first.
1.      DO NOT advise changing prop to jointly owned, because have to pay capital gains tax for inheritance
2.      Quasi-community property: poorer spouse has community property interest (half share) in richer spouse’s estate if richer spouse dies first; no reciprocal interest if poorer spouse dies first.
a.       Not real property situated outside of the state
                                                            ii.      Moving from Community Property to Separate Property State: community property remains so unless parties agree.
                                                          iii.      Pre or Post-Nuptial Agreements (Waiver):
1.      Separate Prop States enforce pre-nup waiver of elective share, and most will enforce a post-nup waiver
2.      Waiver enforced if it was made (Reece Tenn. 2006)
a.       “freely & knowledgably”:
                                                                                                                                      i.      chance for due diligence,
                                                                                                                                    ii.      full disclosure of assets- “extent, nature and value”
                                                                                                                                  iii.      independent counsel.
b.      Focus on procedural, not substantive, fairness; failure to state value of stock not fatal because she had resources and could have investigated
3.      Majority/UPAA (pre-nup)/UPC §2-213 (extends to post-nup):
a.       can waive elective share, but not enforceable if
b.      involuntary; or
                                                                                                                                      i.      independent counsel relevant, not dispositive
                                                                                                                                    ii.      some statutes require. In re Barry Bonds
c.       unconscionable if
                                                                                                                                      i.      no fair and reasonable disclosure of prop or financial obligations of decedent
                                                                                                                                    ii.      did not waive right to full disclosure in writing
                                                                                                                                  iii.      reasonably could not have an adequate knowledge of prop or financial obligations of decedent
                                                          iv.      Omitted Spouse because will executed before Marriage:
1.      Obsolete rule: if omitted, will revoked as to spouse® elective share
a.       Statutes begin to allow rebuttal (unintentional)®intestate share
                                                                                                                                      i.      NV: rebut by provision for spouse in marriage K, in will, or will expressed intent not to provide (Prestie)
                                                                                                                                    ii.      Rebutting w/ provision in a trust not allowed
2.      Modern Rule/ UPC §2-301 (1990):
a.       Presumed intent to include ® intestate share of portion of estate not devised to testator’s children born before marriage &/or not child of surviving spouse. Remainder of will in tact.