I) Chapter 1: Introduction to Wills and Trusts
A) Definition of a Will
1) A will is valid upon due execution by the testator. A will becomes effective upon the death of the testator, but only if the testator has not revoked the will.
(a) A will is not a deed (no present prop int, just hope of future gift) and not a K (no consideration, just donative/gratuitous, so freely revocable). These characteristics make wills sui generis (unique) instruments.
(i) **But being in a revoked will it does give you one right—the right to contest a new will.
(b) A will is ambulatory (walks w/ the testator) bc its freely revocable up to the testator’s death.
(c) Creating a valid will requires mental capacity and competence AND the right execution ceremony.
(d) “Willhood” is merely achieving testamentary status—a valid testamentary instrument that expresses your wishes.
(e) Anglo-American law prefers ppl to die testate—to carry out your right to dispose. But if you don’t, the state will use its right to regulate to dispose of your estate through intestacy.
B) Definition of a Trust Deed
1) A Trust Deed is both valid and effective upon due execution by the settlor.
2) The trust re or trust corpus = the property placed into trust.
3) Types of Trusts:
(a) Intervivos Trust: Made during life. Typically a trust deed is executed and two types of immediate property rights are created:
(i) Equitable title goes to the beneficiary (usually ppi and future possessory interests) and
(ii) Legal title goes to the trustee (usually ppi).
(iii) **The trustor/settlor may also be on the beneficiary side of the trust triangle
(iv) IVTs may be revocable depending on the trust deed’s terms.
(b) Testamentary Trust: Made in a will. Does not become effective until the will becomes effective. Revocable until will becomes effective (upon death).
C) 3 scenarios
1) Intestacy: Die w/o valid will or trust. At death, property goes into probate estate. Ct appoints an administrator to distribute the decedent’s estate according to the terms of the state’s intestacy laws.
2) Will/TT: Die with valid will but no IVT. At death, property goes into probate estate. Property is distributed by the person named as executor in the will according to the terms of the will only. TTs DO NOT avoid probate!
3) IVT: Die with property in an IVT. Title to the property is held by the IVT, not the decedent, so probate is not necessary. IVT property is distributed by the trustee according to the terms of the IVT.
D) Theoretical Background:
1) Old CL View: Until 1942, the SC said that rights were creatures of the state, not natural rights, and the state could regulate and even abolish these rights.
(a) Irving Trust Co. v. Day SC 1942: “Rights of succession to property of a deceased, whether by will or by intestacy, are of statutory creation, and the dead hand rules succession only by sufferance. Nothing in the Fed Constitution forbids the leg of a state to limit, condition, or even abolish the power of testamentary disposition over property within its jxn.”
2) Modern View: Hodel changed this theory, 9-0, by seemingly holding that the right to dispose and the right to inherit are fundamental protected property rights. This is a dramatic change but it is still embedded in Anglo-American jurisprudence: See Babbitt v. Youpee below—Solidifies the Hodel decision by holding that it’s still uncon’al to take away rights w/o giving just compensation.
E) The Three Important Rights
1) Right to dispose (decedent): Value of personal freedom aut
Owners had no investment backed expectations bc these lands were held in trust.
(ii) There is Average Reciprocity of Advantage: Even though individuals lose a little, the tribe as a whole benefits.
(iii) **Nature of the taking: COMPLETE/TOTAL abrogation of the right is impermissible. This was the only element in favor of unc’ality—controlled.
(b) “[T]he right to pass on property—to one’s family . . . —has been part of the Anglo-American legal system since feudal times.”
(i) Even tho they can still xfer the prop during life by gift, sale or IVT, the right to pass the prop at death is still a valuable stick in the bundle—life xfers not adequate substitutes.
(ii) Another Problem: § 207 always bars descent/devise, even when result is aggregation.
(iii) In this case, the rights to dispose and receive trumped the right to regulate. Case can also be applied in the trust context.
G) Congressional Response and Babbitt v. Youpee (1997 USSC p.10):
1) Cong amended § 207 to allow xfer of affected property if it worked a consolidation of property.
Babbitt v. Youpee: New statute still unc’al bc not likely to include lineal descendants—usually the primary object of the decedent’s bounty. Suggests that lineal descendants’ right to receive trumps the govt’s right to regulate unless the govt gives just compensation. Puts pub policy/c’al limits on the old rule that rights were subject to state regulation/abrogation.