Estates and Trusts Outline

 
Estates and Trusts
Professor Dawson
Spring 2014
 
 
 
Introduction
 
 
 
·         The Living and the Dead: Whose Money Is It?
·         Shapira v. Union National Bank p 1: son can only get devise if he marries a Jewish girl within 7 years
·         Constitutional Challenge:
§  The right to marry is protected by the 14th Am – State action through enforcement of will
§  Court: no state action – court only giving direction to executor to carry out will. Court not enforcing restriction on son's right to marry, but enforcing restriction on his inheritance.
§  Right to receive property by will is not a constitutionally protected right. Testator may legally disinherit his children.
·         Public Policy Challenge
§  Against public policy to impart a total or general restraint on marriage
§  Court: only a partial restraint on marriage (imposes only reasonable restrictions). Condition is not that devisee cannot marry anyone.  Maddox v. Maddox: small number of eligible bachelors resulted in virtual prohibition, no “gift over” – if condition not met, no designation of where money was to go (state).  Distinguishable from this case.
§  Does not encourage devisee to divorce or separate (violation of public policy) after satisfying conditions of will – not going to impart bad motives on people.
·         Operation as a Trust
§  If devisee is not married, executor holds funds for 7 years. If viewed as a trust rather than a will public policy implications are different.
·         Slayer Statute (732.802)
·         Ford v. Ford p 17: daughter killed mother – wants to benefit under will – daughter found insane – no slayer statute
·         Court created slayer rule: cannot benefit from will when killing of testator was intentional.  Cannot be intentional if insane at the time.  Public policy against allowing one to profit from their own wrongdoing.
·         Hypotheticals:
·         M died intestate of natural causes. Six years earlier R killed two of M's siblings (his father – R would not have been able to take intestate if father had been alive at M's death). 
§  Dead people don't inherit. Normally, child or descendant will take what the parent would have taken if the parent had been alive. R not involved in the death of M (732.802(1) – “decedent”). R can inherit M's property
·         C kills father. Can C's children inherit from C's father?
§  732.802(1): property disposed of as if the slayer predeceased the testator. Leaves the family situation otherwise intact – children will take what their parent (C) would have taken if he had survived. Only murderer suffers.
·         The Role of the Lawyer
·         Hotz v. Minyard p 30: Father drafts first will leaving a dealership to son and daughter each. Father later comes back and changes will to give both dealerships to son. Daughter claims attorney misrepresented father's will when he did not inform her of the changes.
·         Breach of fiduciary duty to daughter:
§  Fiduciary duty created when daughter went to attorney to seek legal advice about the effect of her father's will.
§  Prior relationship between daughter and attorney.  Fiduciary duty exists when one has a special confidence in another so that the latter, in equity and good conscience, is bound to act in good faith.
§  Attorney had no duty to disclose second will – but did have a duty to deal with her in good faith and not actively misrepresent the first will.
·         Conflict issues generally
·         Common for husband and wife to have reciprocal wills.  Issue of conflict of interest – attorney representing two separate parties. If one later comes in to change will (thereby affecting disposition to spouse) does attorney have duty to inform spouse? Keep quiet? Best to inform clients up front about potential conflicts. If conflict arises, would likely have to withdraw from representing either party. 
·         Rules of Professional Conduct
·         1.6: Confidentiality of Information
·         1.7: Conflict of Interest
·         Barcelo v. Elliot p 36: harmed beneficiaries under the will suing attorney for negligently drafting the will.
·         Malpractice claim will only lie against the lawyer if the person bringing the claim is the client.
·         Pour over will – all assets to be deposited into trust – trust invalidly executed – estate passes by intestacy.
·         Grandchildren who would have benefited from the trust (not intestate) claim they were harmed by attorney's negligence – however, since they were not the attorney's clients there is no standing to sue the attorney.
·         Contrary holding would create a duty to third party beneficiaries, dividing loyalty between client and beneficiaries, and would create unforeseeable plaintiffs.
·         In FL – standing to bring suit against attorney
·         If the document (will) names beneficiaries, but as a result of the attorney's negligence those beneficiaries do not benefit, those people will have standing to sue the attorney.
·         Standing limited to those who can show that the testator's intent as expressed in the will is frustrated by the negligence of the attorney.
·         Probate and Non-Probate Transfers
·         What happens at death:
·         Intestate: person will generally petition for appointment as personal representative. Local statutes will prescribe priority when more than one person is interested in being the personal representative.
·         Will: named executor will petition for letters testamentary which entitle the executor to serve as personal representative.
·         Personal representative has legal authority to act on behalf of decedent's estate.  Will offer the will to probate (if there is one).
·         Can avoid probate by divesting yourself of your property before death.
·         Gifts:
§  Gruen v. Gruen p 47: Father gave son remainder interest in painting (reserved life estate).
·         To make a valid inter vivos gift there must be:
·         Intent on the part of the donor to make a present transfer.
·         If the intention is to make a testamentary disposition only effective upon death, the gift is invalid unless made by will. Father intended present transfer of irrevocable remainder interest.
·         Delivery of the gift
·         What is sufficient to constitute delivery must be tailored to suit the circumstances of the case. Letters to son are instruments of the gift.
·         Acceptance by the Donee
·         Proponent of the gift has burden to prove each element by clear and convincing evidence.
§  Gifts causa mortis (in contemplation of death)
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