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Trusts and Estates
Temple University School of Law
Baron, Jane B.

Baron, Trusts and Estates, Fall 2010
 
I. Intro
A. Overview
Freedom of Testation v. Formalism. System heavily favors allowing T to do what he wants with his property at death, even if its irrational. But there is heavy regulation on how you go about doing it. Its all about reliability and intentions
Wills v Non-Probate Trnfrs. Wills not used much anymore in favor of non-probate trnfrs b/c its less costly, less public, and gets around formalities
Codification & “Real Story.” Used to be common law, that was codified by UPC 1969. Then law profs tried to harmonize state laws w/ UPC 1990 (b/c its written by law profs, it’s a mess). Cases are too often focused on the words of the document, rather than focusing on carrying out T’s intent (sticking to literal interpretation sometimes results in frustrating T’s intent).
1. Value of Inheritance. 
·         US has regime of Free testation. Why? Incentives wealth accumulation. Natural rt to fruit of our labor. Allows people to care for family after one’s own death. Cons: perpetuates inequalities of wealth
·         R3d Property s.10.1- donors intent determines meaning of doc and is given effect to max extent allowed by law.
·         Irving Trust Co (1941)- H: testamentary disposition is not Const protected right, states can alter or eliminate it.
·         Hodel v Irving. 1987- stands for idea that US has regime of free testation in the extreme. 
F: gov gives Indians land, but then limits their right to devise it b/c title become so fractured its meaningless. Gov passes law forcing return to tribe of tiny parcels at owners death. H: statute is unconst b/c it limits valuable prop right: right to pass on property. (JBB: case can’t be squared w/ Irving, should have gone the other way- only poss is Irving dealt w/ state leg, this case deals w/ Fed leg). 
2. Inheritance as Power/ Restraints on Beneficiary Behavior.
Shapira- F: Dr Shapira’s son only gets his 1/3 of the estate if he’s married to jewish girls who has 2 jewish parents w/in 7 yrs of Dad’s death.
R: “Dead hand control” is allowed her as long it’s not unreasonable/does not violate public policy.—shows how strong the preference for free testation is
H: ct upholds dad’s devise b/c it is reasonable to think son could find jewish girl in nxt 7 yrs. Ct says it is not restricting sons right to marry, its upholding father’s rt to restrict his property. Son has option of marrying non-jew and forfeiting $.
JBB: ct said no state action here anyway, but if Shelley v Kramer was state action, so is this. Ct is being pragmatic b/c it doesn’t want every will that goes through probate to be subject to Const challenge.
B. Probate Process
Process:
1. collect assets (figuratively- have exec/admin appt’d, file paperwork, and tally up assets)
2. pay all creditors
3. distribute remaining property
NB: not every estate needs probate. Ex- if T dies w/ will, leaving behind wife and two kids and gives all to his wife (no real property), then you don’t need to fire up the judicial machinery for this. Trnsfrs can all be done w/o ct (ex- stuff in house is not the wife’s b/c they lived together, auto title can be trnsfred at DMV w/ death cert. life ins is simply a k w/ wife as ben. If joint bank acct, death cert will get it in W’s name. etc.)
 
JBB: probate really for T’s w/ significant estate and/or real property
Simpson v Calivas- Reliability. Gen rule is that ct determines T’s intent from the words of the will, not extrinsic evidence. To do otherwise would allow interested parties to claim to know T’s intent (and T’s not around to contradict them).
Son sues lawyer for breach of K b/c he failed to capture his dad’s intent in his will. On appeal, ct agrees w/ son. Will gave step mom life estate in “homestead,” but failed to define this term. Mom said it meant whole property, not just house, which forced son to buy his biz bldgs from her. During disco, lawyer turns over notes that indicate T just meant for wife to get house. (not sure why ext evid. Is admitted here). 
 
JBB: standing rule of probate is that only party w/ pecuniary interest in will can bring claim in probate. Also, lawyer owes duty to intended beneficiary
 
A v. B- conflict of interest/confidentiality v T’s intents
Paternity action, law firm accidentally ends up on both sides of suit, reping both mom and dad. But firm also reps dad and new wife in estate planning. H and W are making duplicate wills, but she doesn’t know about the kid. If firm reveals this to her, it violates duty of confidentiality. If it doesn’t, it may be helping her create will that may not carry out her wishes (if she’d known of the son).
 
JBB: lawyer must be clear from start when clients are H and W- tell them that you either will/will not reveal any conflicts to other spouse if they arise.
 
II. Intestacy/UPC 2-101
A. Statutory Schemes
1. Basic Concepts
Intestacy Statute- default rules for devising property when person does intestate. Basically, gives decedent’s family his property roughly in the order of closeness to him. UPC 2-101 is model intestacy statute.
These are the default rules of estate planning
 
3 Big Issues Intestacy Stat answers:
who is eligible to take (no laughing heirs)
how much does each relative get
representation. Decedent’s of deceased relative take in his place
 
UPC 2-101- see p73 for chart detailing who takes and how much. 
 
2-102- share of spouse
Spouse gets everything if no surviving parents or descendents, or if all if his surviving descendent’s are also her descendants and she doesn’t have any other descendent’s who survive him
Spouse gets firt 300k, plus 75% of balance if no des

3 grandkids would all share equally (each get 1/3)
But, if one of the grandkids were dead, his children would have to split his 1/3 among them (English system).
 
When creating a will, you need to specify which per stirpes to follow
So, ON EXAM, you need to look for something that tells you which version of UPC/statutes have been adopted so that you know which type or per stirpes to apply
 
Baron’s hypo:
Grandma = H
3 kids- D,E,R
D- dies before H, no kids
E- dies before H, 3 kids= A,C,B
R- dies before H, 1 kid- J
 
1.       Determine “where you take the roots” from; where you start
a.       English Per Stirpes: you take the roots at first generation below H. So, you split property- 1/2 to kids of E, half to kids of R
                                                                     i.            Result- J gets 1/2, while A,C,B each only get 1/6
1.       This seems wrong b/c J,A,C,B are all same distance from H, but H gets much more. But there is no indication that H wanted the 4 grandkids treated differently
b.       Modern/1969 UPC- take the roots at the level of first living heir (“equally near, equally dear”)
                                                                     i.            Result- each grandkid (A,C,B, J) gets 1/4
1.       Seems more fair b/c each is equally related to H and gets equal share
·         Problem: sometimes, classic and UPC per stirpes give the same inequitable result (see prob at bottom of p89)
1990 UPC- take roots at first generation that you find surviving descendent. Surviving descendent gets 1 share. Each deceased descendent who has surving descendents gets a share. 
Result: the surviving descendent gets one share and then remaining shares are then re-combined and the process is started over, with the remaining shares being divided among the remaining survivors. 
 
B. Family Law & Inheritance
1. Unanticipated Aspects of Adoption Law
In some states, kid only inherits through adoptive parents (or adoptive and remarried natural parent). In others, kid can inherit through both adoptive and natural. Meaning in some states, if parents are divorced but mom remarries and kid is adopted by his new dad, then he gives up the right to inherit through natural dad (though