TRUSTS AND ESTATES
VALLARIO
SPRING 2016
INTRODUCTION
Overview of Trusts and Estates
· Intestate Succession: statutory default rules that dictates what happens to a decedent’s probate assets upon death
o Must survive by:
§ MD: 30 days. Spouse is instant
§ UPC: 120 hours
· Testate Succession: will dictates what happens to testator’s probate assets upon death; statutory formalities
· Probate Assets: Something that is solely titled in your name
· Non-Probate Assets: NOT in the sole name of the decedent inter vivos transfers; by contract, trust, joint property w/ right of survivorship, gift
· Descendant: anyone inheriting from a decedent in a descending line
· Ancestor: related in an ascending line. Only valid in intestacy if a surviving spouse or descendant does not exist
· Collateral: someone related to the descendent through a common ancestry (brothers and sisters)
· Settlor: person who settles property on trust law for the benefit of beneficiaries.
· Inter vivos: gift between living people
· Irrevocable trust: a trust that can’t be modified or terminated w/o the permission of the beneficiary.
· Heirs: Blood relatives who survives. Wont know your heirs until you die
Ancillary Documents
· Power of Attorney:
o Where a competent principal designates to an agent (attorney in fact) financial powers creating a fiduciary relationship
o Can become effective immediately or “spring” into effectiveness
o 2 types of POA:
§ Specific: property
§ General
o King v. Bankerd: General financial powers
§ Rule: An agent, must act for the benefit of his principal unless that power is expressly conferred, arises as a necessary implication from conferred powers, or is clearly intended by parties as evidenced by surrounding facts and circumstances.
§ Facts:
· Specific POA to maintain any finances w/ the property.
· Separated/disappeared husband. Wife requested to exercise POA in order to convey the marital home to her. Wife then sold the house to a 3rd party.
· Lawyer attempted to contact the husband with no success. Then conveyed the property for no consideration.
§ Holding:
· The language of the POA did not authorize the attorney to gift away the owner’s property. It must be “expressly conferred.” Husband won.
o Gruen v. Gruen: Gift of a future interest
§ Rule: A valid gift consisted of a donative intent, delivery, and acceptance by the done.
§ Facts:
· Seeking a declaration that plaintiff was the owner of a painting gifted to him prior to his father’s death
§ Holding:
· Rule: Delivery can be both actual and constructive
· P’s acceptance is explained by contemporaneous statements acknowledging the gift to his friends and associates, even showing some of them his father's gift letter, and that he had retained both letters for over 17 years to verify the gift after his father died (He proved constructive)
o Franklin v. Anna Nat. Bank of Anna: Intent of gift
§ Rule: A joint tenancy account presumptively creates a gift unless the party claiming adversely proves by clear and convincing evidence that a gift was not intended.
§ Holding:
· Decedent didn’t intend to make a gift through joint account
o He intended to keep the account as his own because he made repeated attempts to change the name on the account (clear and convincing). He was afraid of losing his eyesight. These changes were done so Goddard can conveniently pay what is necessary.
· Advance Medical Directive:
· Will Substitutes:
Ethical Issues in Estate Planning
Who is the client?
· Meet the client alone and make sure there is an express conversation about whom you represent.
o Ex. Don’t want undue influence, elderly, husband and wife, children
§ Approach the client and ask him to disclose his other will to his wife. In the end you will most likely have to withdraw.
· Strict Privity (MD): a 3rd party not in privity with an attorney has no cause of action against the attorney for negligence in the absence of fraud of collusion
o Problems:
§ We don’t extend the negligence aspect to other parties. So what can they do?
· Balancing of factors:
o Extent to which the transaction was intended to affect the plaintiff
o Foreseeability of harm to him
o Degree of certainty that the plaintiff suffered injury
o Policy of preventing future harm
o Whether recognizing liability in such cases would impose an undue burden on the legal profession
· Hotz v. Minyard: Attorney had a fiduciary obligation only to the father (the drafter of the will) and had no obligation to disclose the will to another family member. Attorney must not knowingly mislead a family member and owes the family member the duty to deal in good faith.
· Barcelo v. Elliott: Attorney has no duty to the beneficiaries. Liability dies with the client. Beneficiaries cannot sue the decedent’s attorney since strict privity applies.
Intestate Succession
Statutes:
· Dictates what happens to one’s probate property when they die without a will, with a bad will, with an invalid will, or there are heirs to determine standing.
· Jurisdiction is domicile as of date of death!
o If the intestate owned property in other states, then you will look at that state in how to distribute that property.
1) Surviving Spouse:
· If there is a surviving s
Posthumous Conception
o In MD, the definition of a child includes a child born of genetic material.
o Woodward v. Comm’r: Decedent must have consented to the conception of the children and to supporting the children as they come into existence
Additional Statutes
Survival
· Applies to both intestacy and testate
· Md. Est. & Trusts 3-110. P. 55
o Certain heirs must survive by 30 days or will have deemed to have predeceased the descendent and have no rights as an heir.
· UPC 2-104
o All heirs must survive by 120 hours or will have deemed to have predeceased the decedent and have no rights as an heir
o UPC does not exempt the spouse!
Simultaneous Death
· Where two people die together and neither party survives.
o Treats each person as if he or she survived the other person with who he or she died simultaneously.
o When there is no sufficient evidence to prove someone died before/after
· The survivorship analysis should be straight forward if she gives us a fact pattern of a simultaneous death. (Exam Q)
o A did not survive B. And B did not survive A.
o On their estate, you just say each survives the other.
· What do you do with respect to joint property?
o You split/sever the joint assets of A’s estate and B’s estate. 50% to A & 50% to B. There will be administrative inconvenience. You have to do it twice to just get to the same place.
Disclaimer
· Saying “no” to an inheritance.
· If within 9 months of death, someone decides they do not want the inheritance, they can designate in writing their irrevocable request and are treated for estate purposes as if they had predeceased the decedent.
· Cannot disclaim with contingency or have accepted any of the benefits
· Partial disclaimer is okay.
· This applies to intestacy, testate, and non-probate.
· Use this if you want to bypass an inheritance
· Exceptions: Federal government and the state of MD will not be short changed (if the inheritance is a recipient of Medicaid)
· MD it goes to your descendant
· UPC it will technically take what the share was and “combine” and everyone
