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Estates and Trusts
UMKC School of Law
Hood, Edwin T.

ESTATES & TRUSTS               
Succession – the passing of property at death.
Probate Succession – by will & intestacy.
Nonprobate Succession – by inter vivos trust, pay-on-death contract, & other will substitutes.
Escheat – the reversion of the property of a deceased person to the state when there are no legal heirs.
Residuary Clause – a clause in a will that disposes of any estate property that remains after satisfaction of all other gifts.
1. Freedom of Disposition & the Dead Hand
Shapira v. Union National Bank (1974) – Provision in T’s will requiring son to marry a Jewish girl w/in 7 years of T’s death was valid & not against public policy, b/c the condition didn’t violate son's constitutional right to marry & was reasonable.
Incentive Trust – conditional gifts to encourage the beneficiary to do or not do something.
2. Justifying Freedom of Disposition
a. The Donor’s Prerogative
Possibilities for orderly succession:
·         Forced Succession – the decedent’s property could pass by simple rule of mandatory or forced succession, such as primogeniture (first-born’s right of inheritance) or to the spouse, children, or other dependents, or if the decedent has no dependents, then the property would escheat to the state.
o    Most other countries follow this, honoring the decedent’s wishes only w/respect to property that remains after the forced shares are satisfied.
·         Freedom of Disposition – the decedent’s property could pass in accordance w/the decedent’s declared wishes if they are reliably preserved, or if not, then in accordance w/a default system of succession that tracks the probable intent of a typical decedent.  Wealth transfer taxation.
o    American law generally follows this, tempered by certain mandatory succession rights for spouses & by
·         Confiscation by the State – the decedent’s property could be confiscated by the state on the theory that the decedent’s property rights terminate on death.
b. Concentrations of Wealth
Arguments against freedom of disposition:
·         It perpetuates inequalities in the distribution of wealth
·         It concentrates economic power in the hands of a few, distorting politics & markets
·         It denies equal opportunity to the poor
Estate Taxes – estates in excess of $5 million (indexed for inflation) are taxed at a rate of 40%.
c. Human & Cultural Capital
3. Is Freedom of Disposition a Constitutional Imperative?
Hodel v. Irving (1987) – SC held that the 5th Am curtailed the power of the govt to limit the right to pass property at death.
·         Substantive due process test -> does it do what it was intended to do?
2004 American Indian Probate Reform Act – takes a new approach to resolving the problem of fractionation.
·         Supplants state probate law w/a federal probate code for most reservations, though tribes are permitted to enact their own probate codes if they want.
·         Trust land may be conveyed by will to other Native Ams or to the tribe.
·         W/o a will, decedent’s spouse generally receives only a life estate in 1/3, w/the rest going to decedent’s descendants.
o    If an intestate decedent owns < a 5% interest in a parcel, interest isn’t divided further, & oldest child/grandchild takes all of it, subject to the right of a surviving spouse to remain on the land. o    Tribe or the other co-owners may buy decedent’s interest during probate w/heir’s consent, unless decedent owns < a 5% interest, in which event consent isn’t required unless heirs live on the land. 4. Posthumously Acquired Property Rights   Shaw Family Archives Ltd. V. CMG Worldwide, Inc. (2007) - ∆s’ right of publicity claims were dismissed. Regardless of public figure's domicile at time of her death, & regardless of any rights purportedly conferred after her death by IN Right of Publicity Act or by Cal. Civil Code § 3344.1, the public figure could not devise by will a property right she did not own at the time of her death.   Residuary Beneficiary – after all fees & taxes have been paid & all distributions in the will have been made, the beneficiary named in the residuary clause gets whatever’s left over.   Example: T dies owning Blackacre. T has 1 intestate heir, X, but before dying, T executed a will giving all of T’s property to Y. Blackacre will pass under the will to Y.                                 T -----(will)-----> Y
2 years later, A dies, leaving Whiteacre “to T if T survives me, but if T does not survive me, then to T’s estate.”
·         Who takes Whiteacre, X or Y?
o    Issue is whether T’s will controls the disposition of ppy not owned by T at death but subsequently acquired by T’s estate.
§  If T’s will controls, Y takes as the residuary beneficiary under the will.
§  If not, X takes as T’s intestate heir.
·         UPC provides that all property owned at death as well as “all property acquired by the estate after the testator’s death” may pass under the testator’s will.
1. Probate & Nonprobate Property
All the decedent’s property at death can be divided into probate & nonprobate property.
Probate property – passes through probate under the decedent’s will or by intestacy.
Nonprobate property – passes outside of probate by way of a will substitute.
Examples of nonprobate transfer:
·         Inter Vivos Trust
·         Life Insurance
·         Pay-on-Death (POD) & Transfer-on-Death (TOD) Contracts
·         Joint Tenancy
2. Probate Terminology:
Personal Representative – a fiduciary who collects & inventories the property of the decedent; manages & protects the property during the administration of the estate; processes the claims of creditors & files federal & state tax returns; & distributes the property to those entitled.
·         The powers of the PR relate back to actions undertaken prior

D; no P; BorS
§ 2-103(a)(3)
All to BorS (per capita at each generation)
No S; no D; no P; no BorS; G or GD
§ 2-103(a)(4)
If both pat & mat G or GD, ½ to paternal G/GD & ½ to maternal G/GD (all to G or, if none, per capita at each GD generation); or
§ 2-103(a)(5)
If survivors on one side only, all to G or GD on that side (all to G or, if none, per capita at each GD generation)
No S; no D; no P; no BorS; no G or GD
§ 2-103(b); § 2-105
Stepchildren or, if none, then escheat to state; therefore, no laughing heirs
S = Surviving Spouse                              
D = Surviving Descendants
BorS = Surviving Sibs; Surviving Descendants of Decedent’s Parents
P = Surviving Parents
G = Surviving Grandparents
GD = Surviving Descendants of Grandparents
No living person has heirs.
·         A’s heirs can be identified only by reference to the applicable statute of descent & distribution at the moment of A’s death.
The persons who would inherit the property of A, a living person, if A died w/in the next hour, are A’s heirs apparent.
·         They have a mere expectancy that is contingent on their surviving A & defeasible by A’s contrary disposition by will, will substitute, or lifetime gift.
o    An expectancy of an inheritance is not a legal interest. It cannot be transferred at law.
A person named in a will is a devisee, legatee, or beneficiary, not an heir.
B. The Basic Structure of Intestate Succession
·         In all states, after the spouse’s share, descendants take to the exclusions of ancestors & collaterals.
·         In nearly all states, intestacy favors only spouses & blood relations (encompasses adopted persons & those born of assisted reproductive technology).
1. Surviving Spouse
a. The Spouse’s Share
MO 474.010:
o    If no surviving issue of decedent: entire intestate estate.
o    If surviving issue, all of whom are also issue of the SS: first $20k of the estate + ½ of the remaining balance.
o    If surviving issue, 1 or more of whom are NOT issue of SS: ½ of the intestate estate.
c. The Problem of Simultaneous Death
Janus v. Tarasewicz (1985) – held that there was sufficient evidence to find that wife placed on respirator survived husband, & that determination of legal death must be made in accordance with usual & customary standards of medical practice.