Estates & Trusts
Professor McCouch – Spring 2015
Chapter 1 – Introduction
A. The Probate System
Sources of Law
Statutory law (FL Probate Code)
Judge–made law (CL)
Uniform Probate Code
Only a marginal success as people still try to work around the old system and only a few states have adopted it.
Federal Law (ERISA – Employee retirement accounts)
Primary purpose of succession law is to carry out the current owner's intent as the owner should be free to choose who gets his property at death. Owner should also be free to determine who beneficiaries are and who does not get property. Beneficiaries do not have rights until T’s death.
If there are no heirs available after intestacy, then the property escheats to the state.
B. Testamentary Freedom and its Limitations
1. Constitutional Limitations
Hodel v. Irving
Tribal owners could only pass their lands through intestate succession. If the property was sufficiently small, Congress forbade current owners from leaving property by will or death. “De minimis” tracts would (revert back to the state).
escheat amounted to a “taking” as the interest taken is the right to pass property to heirs. The parents were deprived of the constitutional opportunity to devise property.
Even though there are will substitutes (revocable trusts), those substitutes are complex and cannot expect people to know how to use them as substitutes. Owners of tribal lands now can leave land by will.
Transferring property at death is statutory, so states can place restrictions on who gets property but taking away right to devise is a taking. Later cases do not allow laws that prevent property from being passed to descendants.
2. Public Policy Limitations
US National Bank of Portland v. Snodgrass
If daughter wants to get share of property, then she must not be a Catholic nor marry a Catholic man. Once 32 or older, she can do what she wants. Daughter marries a Catholic man before the age of 32.
Dead hand control – Conditions on whether beneficiaries get property.
Condition allowed because it was not unduly burdensome or against public policy.
Courts not going to step in unless the restrictions are over-burdensome or a clear violation of public policy. The limitations were not absolute because there were time limits, other options, and not too overbroad.
A condition cannot unreasonably intrude on a person’s life choice.
Conditions inducing a beneficiary to marry (or not to marry) a person of a particular religious faith are ordinarily valid, unless they impose an unreasonable restriction on the legatee's opportunity to marry.
Conditions that tend to disrupt existing family relationship may contravene public policy.
Girard Trust Co. v. Schmitz – Bequest on condition that siblings not talk to each other.
Under Restatement, there are more restrictive limitations that a T can place on inheritance.
Testamentary condition may be invalid if it is
Conditions Allowed
Must marry within religion
Marry at a certain time
Join military or go to medical school
Conditions Not Allowed
Unduly inhibit marriage
Interfere with existing familial relationships
Public policy like racial discrimination
Probate Process
Having will validated.
If not declared valid by probate court, the will has no legal effect (even if everything done correctly).
If more than one, Court can determine which will is valid
state administration by determining how property transfers at death.
Court appoints a personal representative to administer the decedent's estate (collect decedent’s assets, pay off enforceable claims and taxes, and distribute what is left to beneficiaries).
Requires notice and the collection of assets owned by the decedent at death.
The probate estate is property subject to disposition by will and identifies assets that personal representatives will be responsible for generating and administering to heirs or devisees.
If property is not in the probate estate, it is not subject to wills formalities (given away during lifetime or will substitute).
Benefits – Settle disputes between beneficiaries and clear title to property.
Will
Written instrument executed by T that disposes of probate assets and property that T owns at death.
If will still in physical existence at time of death, it must be offered for probate.
If will properly executed but cannot be found or lost, estate passes by intestacy (rebuttable presumption that will was revoked).
Before the will is confirmed, PR must give notice to all beneficiaries, heirs, creditors, and anybody who has an interest in having the will allowed or disallowed.
Under UPC, once notice given, a party has three months to contest the will. If no will is found, there is a three-month time limit to bring a will or else no will can be accepted.
In FL, there is no time limit in bringing a will.
Signed writing
Attested by two witnesses who are present at same time and provide signatures
When probate proceedings begin, inquiries are sent to people who witness will
If alive and competent, can send a summons to testify as to what they remember. This is the evidentiary foundation to determine if the will is allowed OR
Primary Functions of a Will
Allows T to take some control over what happens to property at death and control over the process by which the estate will be administered. It also allows T to choose who will be appointed as the administrator, establish guardians, and direct body disposition.
Probate Administration – Estate & Creditors
If property is left at death, some mechanism needs to be in place to distribute property and pay off creditors.
FL Homestead Exemption
Complete protection against creditor’s claims for people who own their residence and cannot vary by will.
If married at death with descendants, exemption requires the homestead property pass to the spouse for life, with a remainder vested immediately in lineal descendants.
Household Goods and Maintenance Exemptions – Furnishings and automobiles that spouse and descendants are entitled to, but beneficiaries must go to probate court. The court can set aside up to $18,000 of the estate for the maintenance support of spouse and kids.
Creditors – If proper notice is published, creditors have three months to submit claim. If there is no notice or probate is not used and the creditor waits two years after the death of T, then all claims will be barred.
PR must inventory assets and file annual accounting showing expenses.
Chapter 2 – Intestate Succession
Intestacy occurs when a person dies owning property that is not effectively disposed of by will.
Simple but rigid – Shares are based almost exclusively on family status or family relationship.
Intestacy statutes mean to mirror what the decedent would have done with his property.
§ 732.101 – Any part of the estate of the decedent not effectively disposed of by will passes to decedent's heirs as prescribed in the following sections.
A. Surviving Spouse
Surviving spouse (and usually lineal descendants) are going to take intestate share, but a surviving spouse has priority.
Marital status is always determined at death. If separated but not yet divorced, still married for inheritance purposes until divorce is final. If want to be treated as husband and wife in FL, need a marriage license.
If come from state with a valid CL marriage, FL will recognize the marriage.
§ 732.102 – Spouse’s Share (When spouse is taken care of, then go to .103 for next takers)
(1) If no surviving lineal descendants (children, grandchildren) of decedent, then surviving spouse gets everything.
(2) If descendants are lineal descendants of the decedent AND surviving spouse where the surviving spouse has no other descendants, then surviving spouse gets everything.
Surviving spouse has no children from another marriage.
(3) If descendants of decedent who are not lineal descendants of surviving spouse, then spouse gets ½.
Decedent had children that surviving spouse did not adopt. Ensures the spouse cannot transfer the entire estate for own purposes.
(4) If mutual descendants and the surviving spouse has descendants who are NOT also descendants of decedent, then ½.
Mutual children AND the surviving spouse has own children.
D dies intestate with an estate of $200,000. D survived by spouse S and the following:
(1) One parent and one sibling
No surviving descendantsS takes everything because parents get nothing when there is a surviving spouse.
(2) X, child of D and S
Descendant of both decedent and the surviving spouse, so spouse takes everything. Surviving spouse is going to provide for the child.
(3) X (child of D and S) and Y, D's child from a previous marriage
§ 732.102(3) – Spouse takes ½, and X and Y split remaining 50% (X takes ¼ and
gets 9/100.
2. Methods for Computing Shares for Ancestors and Collaterals
If none of the intestate’s descendants survive, the ancestors and collaterals will inherit the probate property that does not pass to the surviving spouse. There are two main methods to determine the intestate’s heirs.
Blood relatives are lineal descendants, lineal ascendants, or collaterals.
Lineal descendants (issue) – Children, grandchildren, great–grandchildren
Lineal ascendants (ancestors) – Parents, grandparents, great–grandparents
Collaterals – Blood relatives who are neither issue nor ancestors
Brothers and sisters
Uncles and aunts
Nephews and nieces
a. Parentelic System (Lines of Descent)
Priority is given to the nearer ancestors and their descendants over more remote ancestors and their descendants, without regard to degree of consanguinity.
Decedent's own issue take first priority, followed by decedent's parents and the parents’ other issue, then by decedent's grandparents and their issue.
Start with anybody found in the 2nd column. If nobody alive in 2nd column, move to third column.
A great-grandchild is superior to a sibling because in a closer parentala.
FL cuts off inheritance after the THIRD column, and the rest of estate escheats. Many states do not cut off inheritance if heir can prove next closest degree of relationship. In TX and CA, no limitation.
b. Gradual System (Degrees of Relationship)
Priority is given to relatives who are nearest in degree of consanguinity (next of kin). In computing degree of consanguinity, each generation counts as a degree, so count degrees between intestate and heir. Whoever is nearest kin wins. If same number of degrees, some jurisdictions give priority to heirs who have the nearest common ancestor.
If a first cousin twice removed, look at degrees of relationship. Count steps up to common ancestor and down to person involved. First cousin twice removed and intestate = 6 degrees.
§ 732.103 – Share of Other Heirs (Parentelic System)
The part of the intestate estate not passing to surviving spouse, or entire intestate estate if there is no surviving spouse, descends as follows:
To descendants of the decedent
If no descendants, to decedent's father and mother equally, or to the survivor of them
If none, estate gets divided 1/2 to paternal kindred, 1/2 to maternal kindred in the following order
Grandfather and grandmother equally, or to the survivor of them
To aunts and uncles and descendants of deceased aunts and uncles
If NO paternal or maternal kindred, estate shall go to other kindred who survive, in the order state above
If not kindred of either part, entire estate goes to the kindred of the last deceased spouse of the decedent as if the deceased spouse had survived the decedent and then died intestate (in–laws, not ex-spouse).
§ 732.105 – Half Blood
When property descends to collaterals where some are whole–blood and others half–blood, the half–blood inherits only half as much as the whole-blood. If all are half-blood, they inherit equally.
Half-blood – Husband with children from different marriage and parents of decedent’s offspring are not all the same.
§ 732.107 – Escheat
When a person dies leaving estate without being survived by any person entitled to it, estate to the state.
Review
§ 732.103 – No wife or descendants
§ 732.103(2)-(3) – Parents column where cut off at highest-level living
§ 732.103(5) – If no one from previous, go to last dead spouse’s kindred as if spouse was decedent
