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Trusts and Estates
Temple University School of Law
Bartow, Robert J.

Trusts & Estates – Integrated Program with Professional Responsibility
Fall 2009
Prof. Bartow / Prof. Myers

I. WEALTH TRANSFER UPON DEATH :THE FUNDAMENTALS
a. Terminology –
i. Devise – a gift in a will of real property
ii. Bequest – a gift in a will of personal property
iii. Inheritance and legacy – general terms – doesn’t distinguish – apply to both
b. Probate Property
i. Passes under the decedent’s will or by intestacy
a. If you do things properly you can pick whom you want your property to pass to when you die and we’ll honor it
b. Devise real property to devisees
c. Bequeath personal property to legatees
c. Non Probate Property
i. Passed under an instrument other than a will
a. Life insurance – paid to beneficiary
b. Contract with payable on death provision – IRA, pension
c. Joint tenancy property – decedent’s interest vanishes at death
d. Interests in trust
d. Probate Process:
i. Opening Probate:
a. Executor must probate the will to give it effect – take death certificate, will, and list of assets and values to Registrar of Wills Office to get letters testamentary – authorize executor to act on behalf of estate
a. Executor – appointed by the will – Administrator – appointed by probate court if no will or executor not named (spouse, children, parents, siblings, creditors)
i. Inventory and collect assets
ii. Manage assets during administration
iii. Receive and pay claims of creditors and tax collectors
iv. Clear any titles – car, real estate, etc.
v. Distribute assets to those entitled
b. Personal representative is supervised by the court
i. Formal – Inventory, appraisal, payment of debt, sale/mortgage/lease of real estate, commissions, attorneys fees, distributions, and discharge of rep
ii. Informal – if no party demands formal
b. Will must be proved
a. Judge questions witnesses to make sure formalities of will were accomplished
b. Can also be done by an attestation clause – better option
c. Witnesses won’t have to come in if there is also a self-proving affidavit
i. Piece of evidence signed in presence of notary
c. Most states require notice to interested parties prior to appointment of a personal representative or probate of a will – formal probate
a. Some allow ex parte proceedings – informal probate
d. Time for contest – depends on jurisdiction
e. Creditors must file claims within specified time period
ii. Closing the estate:
a. Complete the administration and distribute assets as promptly as possible – pay creditors, clear title, pay taxes
b. Judicial approval of discharge from fiduciary duties
iii. 3 functions of probate:
a. Transfers title – evidence of transfer to new owner by a probated will or decree of intestate succession
b. Protects creditors – requires that debts are paid
c. Distributes property – makes sure intended beneficiaries get the remaining property
iv. Can avoid probate in two common situations – by statues:
a. Automobiles –
a. Go to the DMV with death certificate will transfer title
b. Small Bank Accounts –
a. For accounts generally under $3,500 can transfer to close relative w/o probate
v. Policy Considerations:
a. Do we need probate?
a. Expensive
b. Preserves inequality of wealth – allows wealthy to influence
c. May not always match societal goals
b. Basic Policies –
a. Donor’s intent is used as much as legal to determine the meaning and effect of a donative document
b. Uphold donor’s intent as much as legally possible, even if trying to control someone’s behavior or against societal values
i. Shapira v. Union National Bank –a testator may restrict a child’s inheritance by placing partial restraint on marriage [would not be okay to condition inheritance on getting a divorce, this is a complete restraint] 1. Cannot violate the constitution but:] a. Government isn’t allowed to place restraints but his father can
ii. Limitations on doing what you want with your assets
1. Drafting documents correctly, etc. will probably prevent limitations and also if its contrary to public policy
iii. What do you do to exercise the power that doctor Shiparo did?
1. You need a valid will-testate
2. There are will substitutes-probate property
iv. Why may a person not have a will

Dealing with death is uncomfortable
Not enough assets

People may not know that they have that right

Some people are just not organized

**They don’t think they are going to die anytime soon

They don’t want to pay a lawyer

v. What advantage is there to a system allowing power of the dead to decide who will get your property?
vi. What is a disadvantage
1. Beneficiaries getting rich without putting in any work
vii. Destruction of property?
1. If personal yes
2. If something of societal value courts may say no

II. PROVIDING FOR THE FAMILY
[A] Introduction to Intestacy: An estate Plan by Default-
i. the probate property of a person who dies without a will is governed by the state’s statute of decent and distribution.
ii. 1990 UPC 2-101 Intestate Estate
(a) Any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent’s heirs as prescribed in this code, except as modified by the decedent’s will.
(b) A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession. If that individual or member of that class survives the decedent, the share of the decedent’s intestate estate to which that individual or class would have succeeded [passes as if that individual or each member of that class had disclaimed his/her intestate share.
a. Testate- when a person dies leaving a will that provides for the disposition of their property at death.
b. Intestacy
i. Intestate- when a person dies without a will
a. What happens if there is no will – every state has intestate succession statutes that provide default rules of what happens
b. Based on what we think the “average person” would want
[B] Rights of a Surviving Spouse
ii. The Intestate Share of the Surviving Spouse:
a. 1969 UPC 2-102 – Share of the Spouse – PA uses this with $30,000
The intestate share of the surviving spouse is:
a. If there is no surviving issue or parent – entire intestate estate
i. If no issue but parents – first $50,000 plus half of the balance
b. If there are issue (all children of surviving spouse) – first $50,000 plus half of the balance
i. If minor children inherit will need a trust
c. If there are issue (at least one) not the children of surviving spouse – half of the estate
b. 1990 UPC 2-102 – Share of the Spouse
The intestate share of th

b. The Rationale for the elective share
a. Policy reason-the surviving spouse contributed to the decedent’s acquisition of wealth and deserves to have a portion of it
1.
c. The Estate tax and the Dependency of Women
a. Congress amended the Internal Revenue Code to eliminate the tax advantages of community property.
i. Congress permitted married couples to split their earned income equally between them by filing a joint return.
ii. Congress solved the estate problem by giving the husband an estate tax marital deduction up to 50% of the value of his estate, for property left to his surviving wife outright ownership that a wife would have under community property
d. Same-Sex marriage and Domestic Partners
a. More recently, public opinion has begun moving toward a consensus in favor of legal recognition for same-sex couples
b. In some states a surviving spouse of a same-sex marriage is entitle to an elective share of the decedent spouse’s estate. (CT, MA, VT)
e. An Incompetent Surviving Spouse:
a. In re Estate of Cross- where a surviving spouse is under legal disability, the probate court is given the authority to appoint a suitable person to ascertain the surviving spouse’s adequate support needs and to compare the value of the surviving spouse’s rights under the will with the value of her rights under the statute of descent and distribution …the court may elect for the surviving spouse to take against the will…to the extent necessary to provide adequate support for the surviving spouse during his life expectancy
i. Court will appoint someone to look into that person’s interests and decide whether or not to make the election
ii. Look at support not ownership when dealing with incompetent individual
f. Property Subject to Elective Share
a. 1969 UPC 2-202 –
i. How much:
1. Spouse gets 1/3 of the probate estate and certain non probate property = augmented estate(the probate estate with certain nonprobate transfers)
ii. Of what:
1. Non probate and inter vivos transfers included in estate if made w/o consideration at any time during the marriage, when
a. D retains right to possession or income
b. D can revoke or invade or dispose of principal for his own benefit – revocable trust
c. Transfer in joint tenancy other than with spouse
d. Transfer w/I two years before death over $11,000 per donee per year
e. Property given to surviving spouse during life , including life estate in trust, and property received by spouse at death including life insurance and pensions
f. Ensures spouse doesn’t get too much
iii. 1990 UPC 2-202 – move towards community property
1. How much:
a. Based on sliding scale depending on how long they’ve been married
b. 3% after 1 year – up to 50% after 15 years
2. Of what:
a. Augmented estate = both spouse’s assets at death of decedent spouse
b. Value of decedent’s net probate estate
c. Value of non probate transfers to others
d. Value of non probate transfers to surviving spouse
b. Value of the surviving spouse’s net assets at the decedent’s death plus non probate transfers to others
vi. Rights of a Spouse Omitted in a Premarital Will