WILLS & TRUSTS; PROFESSOR WENGER; SPRING 2016
Wills and Trusts:Class Outline
Introductory Key Terms
Succession – passing of property at death.
Probate succession – succession by will and intestacy
Nonprobate succession – succession by inter vivos trust, pay-on-death contract, and other will substitutes.
What does a will do?
Describes where your property goes when you pass away.
Example – paper says laptop goes to Anders. You’re not alive to enforce it. Who enforces it?
A: The state steps in and enforces. State gets involved in distribution of estate. Creates complications.
Central Principle of Succession
Principle of freedom of disposition.
Law of succession authorizes dead hand control.
A property owner has the right to dispose of her property on terms that she chooses.
Limits on freedom of disposition
The law will protect a decedent’s creditors and surviving spouse.
Rule Against Perpetuities
Other policy limitations
The Dead Hand (THE POWER TO TRANSMIT PROPERTY AT DEATH)
The Dead Hand Rule – The law opens the door to a certain amount of post-mortem control. The dead hand can rule from beyond the grave up to a point.
This can be done through a will.
Will – you have the right if you follow certain formalities to specify who gets what when you die.
Intestate Succession – if there is no will, a body of rules of law (the law of intestate succession) gives you by default an estate plan.
– Son will only receive share if marries a Jewish girl. This is the state forcing him to marry somebody of certain religion in order to get money. Unconstitutional. Court discusses Shelley. State can’t create a park for white people. Son says this is like having a park for white people. This is the state getting involved and state enforced religious discrimination. Court says you can still do this. How is this different than Shelley? Court says it’s not about access to Public Park or other basic right; it’s about getting that money. When the dad says he wants to give it to people part of this religious community, it’s not the same. Holding: the upholding and enforcement of the provisions of Dr. Shapira’s will conditioning the bequests to his sons upon their marrying Jewish girls was constitutional.
Public Policy Rule
The general rule is that conditions that are contrary to public policy are invalid, and includes conditions that (1) disrupt or discourage familial relationships, and (2) unreasonable restraint on marriage.
i.e., provision about a surviving spouse conditioned on him not remarrying is invalid, unless the purpose is to provide support while he is unmarried.
Provision that encourages separation or divorce is invalid.
But, a provision that is meant to provide support in the event of separation or divorce is valid.
Condition that requires or encourages the beneficiary to commit a crime or a tortious act is invalid – is contrary to public policy.
What can you put in a will (that is enforceable)?
Examples – Son gets Blackacre if he…
Goes to college (yes/valid)
Becomes a bank robber (no/invalid)
Marry a Jewish Girl (yes/valid)
Marry a bank robber (no?)
Son gets $100 and daughter gets $200 (yes/valid)
You can give distinctions. But if you want the state to get involved, public policy kicks in.
Follow up Questions
What if Daniel was gay and Dr. Shapira’s will required Daniel to marry a Jewish woman? Enforceable?
A: if the court had found that the restraint on Daniel’s marrying was unreasonable it would have struck the condition down and awarded him the bequest.
Destruction of Property at Death
Should a court order destruction of property at death?
US is dead hand friendly.
US is open to the dead hand’s wishes as long as not too crazy.
How much are we going to respect the wishes of the dead hand?
US is a relatively dead hand jx. In US, we give a lot of power to dead hand. Other jx, don’t.
Why respect the dead hand?
Freedom of testation supports a market for the provision of social services.
Freedom of testation creates an incentive to industry and saving.
Promotes more intelligent estate planning by allowing the testator to take account of the differing needs of members of her family.
Power of Disposition
Questions of equality
Most powerful argument against freedom of disposition is that it perpetuates inequalities in the distribution of wealth; concentrates economic power in the hands of a few, distorting politics and markets; and denies equal opportunity to the poor.
Langbein and changing trends
Human capital – it used to be that wealth transmission from parents to children tended to center upon major items of patrimony such as the family farm; now, for the middle class, wealth transmission centers on a
nd car. Land and money want state/courts to figure out; but not the car.
Land & money = probated property.
Through a will
Car = non-probate property.
Basics of intestacy
The law of intestacy is the State’s default estate plan for figuring out what to do when a person dies without a valid will. Intestacy is a set of rules for distributing the property. §6400 allows all property not disposed of by a will to pass to decedent’s heirs.
§ 6400: Intestacy – Any part of the estate of a decedent not effectively disposed of by will, passes to the decedent’s heirs.
The primary objective – The intestacy statute is intended for carrying out the probable intent of the typical intestate decedent.
§100/Community Property (CP); §101/Quasi-Community Property (QCP); §6401/Surviving Spouse; §6402/Property not passing to spouse; §6404/Escheat.
Testate: a person who dies with they will decide to die testate. The probate property of such a person is distributed in accordance with the terms of the person’s will.
Intestate: a person who dies without it will is said to die intestate. Distribution of the probate property is governed by the default rules of the law of intestacy.
Partial intestacy: if they will disposes of the only part of the probate estate, The result is a partial intestacy in which the probate property not disposed of by the will passes by intestacy.
Escheat – if there are no surviving relations within the degree of kinship specified by the intestacy statute, the decedent’s property escheats to the state.
Three Property types – 3 ways to hold property
Community Property (CP) – all property acquired during the marriage.
Quasi-Community Property (QCP) – property acquired during the marriage outside of the state.
Separate Property (SP) – property acquired during the marriage/and spouse doesn’t own any property.