WILLS, TRUSTS & ESTATES – COURSE OUTLINE
PROF. DAN SUBOTNIK
I. INTRODUCTION TO ESTATE PLANNING
A) THE POWER TO TRANSMIT PROPERTY AT DEATH
-Wills, testaments and rights of inheritance and successions, are all creatures of the civil or municipal laws, and are in all respects regulated by them. Every country has different rules and requisite to make a valid will or testament. The United States has the freest testation in the world for example, a testator can disinherit his own children. However, one cannot disinherit his or her spouse.
-Until the 1980s, it was generally accepted that the right to pass property at death is not a constitutional protected right. However, the case of Hodel v. Irving decided in 1987 the U.S Supreme Court revived its interest in protecting the private property through the Just Compensation Clause changed all that.
-In the case of Hodel v. Irving, the Court held that the right to transmit property at death is a separate, identifiable stick in the bundle of rights called property, and, if this right is taken away, compensation must be paid.
-There are different views in support of or against the institution of inheritance. One of the justifications for inheritance is that it is natural and proper as both an expression and a reinforcement of family ties. Those whom one cares about can be provided for and may be able to enjoy better lives because of the inheritance that can be left to them. Furthermore, it can be used by society as an incentive to bring forth creativity, hard work, initiative and ultimately productivity that benefits others.
-The most powerful argument against inheritance is that the transfer of great fortunes perpetuates wide disparities in the distribution of wealth, concentrates inherited economic power in the hands of a few, and denies equality of opportunity to the poorer. In order to prevent an aristocratic class, the government has imposed substantial estate and gift taxes on the rich.
A) TRANSFER OF THE DECEDENT’S ESTATE
-All of the decedent’s assets at death can be divided into probate and nonprobate property. Probate property is property that passes under the decedent’s will or by intestacy. Nonprobate property is property passing under an instrument other than a will which became effective before death.
-The following are nonprobate properties: Joint tenancy property, life insurance, contracts with payable on death provisions and interest in trust. Distribution of nonprobate property does not involve a court proceeding, but it is made in accordance with the terms of a contract, trust or deed.
-Distribution of probate assets under a will or to intestate successors may require a court proceeding involving probate of a will or a finding of intestacy followed by appointment of a personal representative to settle the probate estate.
-TESTATE: A person who dies with a will. If the decedent dies testate and in the will names the person who is to execute or carry out the terms of the will, distr
parent or grandparent. Another term used is ancestor.
-DESCENDANT: One who follows in lineage, such as a child or grandchild but not a collateral relative. Another term used is issue.
-The words HEIRS and NEXT-OF-KIN usually mean the same thing. They refer to those persons designated by the applicable statute to take a decedent’s intestate property real and personal.
-An insurance policy is a testamentary substitutes, therefore the beneficiary of the policy will receive the money even if the beneficiary is not named in the will of the insured. Testamentary substitute is a device that allows property to be passed upon death independent of a will.
-A will is designed to last for a period of years. After the will is executed, the testator will continue to accumulate wealth. Therefore, a will must contain a residuary clause. If the testator fails to bequeath something then his personal property will pass to the residuary legatee.
I. INTESTACY: AN ESTATE PLAN BY DEFAULT
A) THE BASIC SCHEME
-Studies have shown that most people die intestate, forsaking wills and legal advice. However, the richer and older a person is, the more likely he or she has a will.
