WILLS AND TRUST (SPRING 2011), Lois Schwartz
a. The Power to Transmit Property at Death: Justifications and Limitations
i. “There is really no automatic right to inherent property. However, there is a right to convey or transfer property.
1. Hodel v. Irving (1987): The US Supreme Court had to address issue if the Indian Land Consolidation Act. The issue was whether taking the property by statute was constitutional (just compensation). The court held that it was an unconstitutional taking.
2. Summary: there is a right to transfer but not to receive property. Right to receive is a legislative creation. State has authority to regulate property but not federal. Some scholars believe that control and transferring money is good and natural. It benefits society. Two views: 1) avoid perpetuation of ownership or 2) stability to society and incentive for people to work hard to try to accumulate property.
ii. Dead Hand Control: testators control—RULE is that a decedent can condition a request on the beneficiary’s status or conduct as long as it does not violate public policy.
1. Dead hand control that suppresses marriage, religion , encourages divorce and family or strife or excessive control that calls for destruction of the property. Why? Because seen as wasteful.
2. Invalid conditions:
a. Absolute restraint on marriage
i. Exception: partial restraints on reasonable restrictions
ii. Exception: temporal/religion requirement—gifts requiring a beneficiary to marry within a reasonable time or someone of a particular religion. Restatement 2nd of Property: Donative transfers provides that a restraint to induce a person to marry within a religious faith is VALID if and only if, under the circumstances, the restraint does not unreasonably limit the tranferee’s opportunity to marry. (ask: how likely will marriage occur?)
1. Shapira case: gift to son was conditioned to be married to Jewish girl whose was born to Jewish parents. Will also contains a little compliance period. If not married by father’s death, gift goes to state of Israel. Court held that the provision is reasonable considering that times have changed so it is easier to meet people who are Jewish, etc.
b. Requiring beneficiary to practice a particular religion is held invalid because it violates PP concerning freedom of religion
c. Gifts encouraging separation or divorce are considered invalid
i. Exception: if the gift is to provide for beneficiary if a divorce occurs
d. Gifts that promote family strife/disruption in the family/family disputes are invalid
e. Gifts with directive that property be destroyed are considered invalid. Court frowns upon destruction of property because it goes economic and social policy (less for society)
b. Transfer of the Decedent’s Estate
i. Probate vs. Non Probate Property
1. Probate property is property that passes under the decedent’s will or by intestacy.
2. Non probate is property passing under an instrument other than a will. Non probate property includes:
a. Joint tenancy property, both real and personal.
b. Life insurance
c. Contracts with payable on death provisions/Legal Life Estates
d. Interest in trust
ii. Administration of Probate Estates
1. probate performs 3 functions:
a. provides evidence of transfer of title to the new owners by a probated will or decree of intestate succession
b. protects creditors by requiring payment of debts
c. distributes the decedent’s property to those intended after the creditors are paid.
a. The will should be probated first in the jxs where the decedent was domiciled at the time of death. (primary jxs)
b. If real property is located in another jxs, ancillary jxs is required.
3. Statute of Limitations:
b. UPC § 3-108: no proceeding, formal or informal, may be initiated more than 3 YEARS from the date of death. If no will is probated within 3 years after death, a presumption of intestacy is conclusive.
c. CL: any time/no SOL
4. Time for Contesting a Will:
a. UPC: is dependent on a statute in the particular jxs—thus see Ca Law
5. Barring creditors of the decedent:
a. Every state has a statute (nonclaim statutes) requiring creditors to file claim within a specific time period; claims filed thereafter are barred. These statutes come in two forms:
i. They bar claims not filed within a relatively short period after probate proceedings have begun. (4 months under UPC)
ii. Whether or not probate proceedings are commenced, they bar claims not filed within a longer period after the decedent’s death. (5 years under UPC)
c. Is Probate Necessary?
i. No. Probate can be avoided if, during the life of the property owner he transfers all his property into a joint tenancy or a revocable or irrevocable trust. He can also execute a contract providing for the distribution of contract assets to named beneficiaries on the owner’s death.
ii. In some cases, probate is not necessary. Ex. Some personal assets—so long as the person claiming the property retains an affidavit and goes to judge.
II. INTESTACY (without a will): AN ESTATE PLAN BY DEFAULT
Step 1: Did somebody die? Pull out all the property that would NOT pass through intestacy scheme (JT, etc),
Step 2: Determine if deceased left SS
Step2a: Determine jxs—because in Ca it is important if you left SS or Not.
Step2b: If in California, separate the property between community or separate property
Step 3: Did the H and W die simultaneously?
Step 4: Determine if deceased left any kids (what type of kid, i.e adoptive, child out of wedlock?)
Step 5: Determine if there was any advancements made and deduct it from child’s inheritance.
Step 6: Once the kid takes, is he a minor/incompetent? –see if he needs guardianship/conservator
a. Share of Surviving Spouse (SS):
i. Common Law
1. Husband /Wife (SS) and NO Kids:
a. SS gets ½ and other ½ goes to next of kin.
i. Wife gets so little because of Dower right where she would automatically get 1/3 of real property.
2. SS w/Kids (issues)
a. SS gets 1/3 and issues gets 2/3
ii. UPC §2-102: The intestate of a decedent’s SS is:
1. SS gets entire share if:
a. If all of the decedent’s surviving descendants are also the descendants of the SS (kids) and there is no other descendant of the SS who survives the decedent (no step kids)
b. No descendant or parent of the decedent survives; or
2. If decease’s parents are alive but no kids
a. SS gets first 200k, plus 2/3 of any balance of the intestate estate.
3. If decease left issues (kids and stepkids)
a. SS gets first 150k, plus ½ of the balance of the intestate estate.
4. If decease left NO kids but stepkeds
a. SS gets first 100k, plus ½ of any balance of the intestate estate.
5. Any property that does not pass to SS goes as follow:
a. Issue = equally
b. Parents = equally
c. Issue of parents = equally
d. Grandparents =
i. 50% to paternal grandparents or survivor; otherwise to their issue equally;
ii. 50% to maternal grandparents or survivor; otherwise to their issue equally
e. If no surviving grandparents or issue on one side; all to the other side
f. Escheat to state (under UPC property escheats much quicker than state (Ca) laws)
iii. Cal Probate Code § 6401 and 6402
1. If Married at time of death (CCP 6401)
a. COMMUNITY PROPERTY: SS gets everything! (the intestate share of SS is the half that the deceased owned)
b. SEPARATE PROPERTY:
i. The entire estate if the decedent did not leave any surviving issue, parent, brother, sister, or issue of deceased brother or sister
ii. SS gets entire estate if
1. No kids, no parents, no siblings, no nieces/nephews
iii. SS gets ½ of estate if
1. 1 child or grandchild
2. no kids, but parents or sibling is still alive
iv. SS gets 1/3 of estate when
1. More than 1 kid: 1 + issue
2. Children or grandchildren (1 child plus issue of that child)
3. 2+ grandchildren
c. §6402(f): Absent above takers → estate goes to next of kin
d. §6402 (g): Can also go to in-laws, specifically parents or issue of parents (wife’s sisters/brothers) before the estate escheats to estate.
2. when decease was NOT MARRIED at time of death (6402)
a. To children equally. If one of the kid is predeceased the decedent than it goes to the decedent of that child (grandchildren)
b. If there is no living children the court looks to the grandchildren equally
c. If there are no children or grandchildren than the shares goes to the greatgrandchildren
d. Then the court looks upward: goes to parents of the deceased equally or surviving parent in full if one parent is dead.
e. If there are no parents, it goes to brothers and sisters (half blood is treated the same)
f. If that doesn’t work, than the grandparents equally.
g. If none of these people are available you start getting into remotely related people: aunts, uncles, cousins, etc.
h. If all of that falls apart, you give it to step children, etc.
i. If none of those are available, it would be the parent or surviving parent of the deceased previous spouse.
j. Next of kin, near of relative to the predecease spouse
k. If there is nobody, then property is given to state of California…so we have every scheme possible to prevent converting private property to public.
iv. Significant others/Domestic Partners
1. Jxn. that recognize C/L marriage: Domestic partner is protected
2. No C/L marriage recognition: Domestic partner is generally unprotected if no will.
3. Some states recognize non-marital cohabitants where the relationship continues throughout joint lifetime. (Primarily contract/quasi-contract based)
a. CA, Vermont, Hawaii, NJ, Connecticut, Massachusetts and Maine (limited)
4. Hawaii- “reciprocal beneficiaries” → where they can share intestate succession as that of a S
i. Child can still inherit from natural parent if child lived with biological parent at some point; OR the natural parents were cohabiting with each other at the time person was conceived and died before the person’s birth; AND
ii. The adoption was by spouse of either natural parent or after the death of either natural parent.
c. UPC- §2-114(b)(ii)- Step-parent adoption does not preclude the adopted stepchild’s right to inherit from and through the child’s non-custodial biological parent. However, does not establish right of non-custodial parent to inherit from adopted child.
d. (NOT UPC OR CPC approach) Hall Case: (Maryland case)—prior family tree is severed and the child is attached only to the new family tree. (Father died and was survived by widow and kids. Widow remarried and the new husband adopted the kids. In 1983, brother of biological father died. His heirs, if there were no complications, would have been brothers, sisters and their children. BUT now that the children were adopted away, it gets tricky) Court goes for bottom line: since children were adopted by step father they lossed all rights to inherent from their biological relatives: can’t inherent from or through their biological father. Court says that to allow them to obtain rights, “would confer upon the adopted child more rights and privileges than those possess by a natural child.”
4. Equitable Adoption (a judicially created equitable remedy that protects interest of child)
a. Most common in situations where foster parents want to adopt the child, but cannot for some formality reasons, child loses in the end b/c they thought they were adopted. (See Ford case)
b. Traditional requirement for Equitable Adoption to apply:
i. An agreement between the natural parent and adoptive parent (need not be in writing)
ii. The natural parent fully performs by giving up child
iii. The child fully performs by moving in with adoptive parents
iv. The adoptive parent partially performs by taking child as their own
v. Adoptive parent dies intestate
c. CPC § 6455 (same as traditional approach)
i. Ford Case (CA)- Where inheritance to the foster child was never formalized, gave estate to nieces/nephews that Ford has rarely seen. Court said there must be a relationship b/w minor and parents and attempt to adopt or a legal barrier preventing the person to adopt. Not the case, so estate went to next of kin. Must show intent to adopt by clear and convincing evidence.
d. UPC: takes different approach:
i. if someone openly take the child and treated as their own
ii. AND, the foster parents agree with natural parents that the child would be legally adopted by the foster parents but some error occured, equitable adoption can be applied. Some states will treat foster child as an heir for purpose of intestacy.
e. Must have agreement between adoptive parent and natural parent/legal guardian!
i. O’neal v. Wilkes (Georgia case): Issue of whether there is a valid contractual agreement and official consent by authority to consent at time of adoption. Court held that the aunt did not have authority to contract with the adoptive parents and therefore the adoption is void. See Dissent: dissenting judge discuss reason based on contract theory and precludes that the aunt that place kid with cooks did have authority.
5. Adult Adoption
a. Minary v. Citizens (Kentucky case): clear rule before this case that adopted children are included in gifts to heirs…but what the rule in this case said is that when adult is adopted for sole purpose to become heir, under the terms of the instrument known at time of adoption, this attempt to thwart the attempt of the ancestors who’s property is distributed or cheat the rightful heirs of the property—under those circumstances the adoptee will not be included in scheme.
6. When you adopt a child you CANNOT un-adopt a child!!! (you can disinherent a child from will but not dis-adopt a child)