1. PRELIMINARY ISSUES BEFORE PROBATE
A. Tritt’s Overarching Question:
I. Whose interests should take priority in making property transfers, the property owner or the beneficiaries?
1. Majority view is the beneficiaries
2. Tritt’s view: Decedent, Grantor, Testator, or Settlor Intent! Dead Hand Control!
B. Fid Admin is 2 Parts: 1-Probate Procedure and 2-Fid Duties (policy)
C. Terms
I. Fiduciaries
1. A person entrusted with another person’s property
2. A person having a duty to act primarily for another’s benefit
3. Includes terms such as good faith, trust, special confidence and candor
4. You can act in your own capacity, or in a fiduciary capacity
5. Hallmark of ET: High degree of good faith
6. Most common is a trustee of a trust, but fiduciaries can include business advisers, attys, guardians, administrators of estates, real estate agents, bankers, stockbrokers, title companies or anyone who undertakes to assist someone who places complete confidence and trust in that person or company
7. Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled
8. Fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person
a. He must avoid “self-dealing”/“conflicts of interests” in which the potential benefit to fiduciary is in conflict with what is best for the person who trusts him
9. Fiduciary relationship: where one person places complete confidence in another in regard to a particular transaction or one’s general affairs or business. The relationship is not necessarily formally or legally established as in a declaration of trust, but can be one of moral or personal responsibility, due to the superior knowledge and training of the fiduciary as compared to the one whose affairs the fiduciary is handling
10. Important to know when you’re acting in a fiduciary capacity bc if you blur the line they can come after your personal assets – so need to make sure that people know
11. For all fiduciary matters three questions are raised:
a. Did the F have a particular duty?
b. Did the F breach that duty?
c. What are the remedies of the beneficiary if the duty was breached?
12. UTC §105 and UTC §801 say F’s over-aching duty is to follow terms of instrument
II. Executors/PRs
1. Executor, Administrator, PR used interchangeably (FL uses PR) (correct?*)
2. UPC §3-703 Defines Executor (uses phrase PR)
3. The person appointed to administer the estate of a decedent who’s will nominates that person
a. Unless there is a valid objection, the judge will appoint the person named in the will to be executor
b. The executor must insure that the person’s desires expressed in the will are carried out
c. Practical responsibilities include gathering up and protecting the assets of the estate, obtaining information in regard to all beneficiaries named in the will and any other potential heirs, gathering payment for estate’s debts, approving creditor’s claims, making sure estate taxes are calculated, forms filed and tax payments made, and in all ways assisting the attorney for the estate (which executor can select)
III. Trustees
1. A person or entity who holds the assets (corpus) of a trust for the benefit of the beneficiaries and manages the trust and its assets under the trust terms stated in the declaration of trust which created it
2. Trustee – legal title B – equitable title
3. With few exceptions, the duties of the trustee are default rules – your instruments will take precedent however
4. Will/Trust will always trump state law with a few exceptions (you can waive state law)
5. In many “living trusts” the creator of the trust (settlor/trustor) names himself as the original trustee who will manage the trust until his death when it is taken over by a successor trustee.
6. In many “charitable remainder unitrusts” the trustee must be independent and therefore cannot be the creator of the trust
IV. Guardians
1. A person who has been appointed by a judge to take care of a minor child or incompetent adult (both called “ward”), personally or to manage their affairs
2. Petition court the appoint the guardian
a. Person intending to be guardian, another family member, a close friend, or a local official responsible for a minor’s welfare will petition
b. In the case of minor, guardianship remains in crt’s supervision until child is 18
c. So, naming a guardian in will in case of death of parent is merely a nomination
i. The judge doesn’t have to honor that request, but usually does
d. Sadly, often a parent must petition to become the guardian of child’s estate if the child inherits/gifted substantial assets
i. That’s why such gifts should be avoided and trusts created instead
e. Conservator is used in conservatorship instead of term guardian for cases where person is appointed to take care of incompetent or incapable
V. Conservators
1. A guardian and protector appointed by a judge to protect and manage financial affairs and/or the person’s daily life due to physical or mental limitations or old age
2. The conservator may be only of the “estate” (meaning financial affairs), but may be also of the “person,” when he takes charge of overseeing the daily activities, such as health care or living arrangements of the conservatee
3. The process is that a relative or friend petitions for local crt appointment of a specific conservator, with written notice served on the potential conservatee
4. The person with the limitation is interviewed by a court-appointed investigator to determine need, desire, and understanding of the potential conservatee as well as the suitability of the proposed conservator
5. An open hearing is held before the appointment is made
6. Conservator is required to make regular accountings which must be approved by the court
7. Conservator may be removed by order of the Court if no longer needed, upon the petition of the conservatee or relatives, or for failure to perform his duties
VI. Custodians
VII. Atty-in-Fact
1. Someone specifically names another through a written “power of attorney” to act for that person in the conduct of the appointer’s business
2. “General Power of Attorney” the attorney-in-fact can conduct all business or sign any document
3. “Special Power of Attorney” he can only sign documents or act in relation to special identified matters
4. *Too often, people sign themselves as atty-in-fact for relatives or associated w/o any power of atty
5. If someone claims to be able to sign for another, a demand to see the written power of attorney is reasonable and necessary
a. In RE matters the power of attorney must be formally acknowledged before a notary public so that it can be recorded along with the RE deed, deed of trust, mortgage or other document
D. General Administrative Issues Concerning Class
I. Administration of a trust or will is the flip side to drafting it.
1. Includes interpreting the instruments that some other lawyer has drafted
2. In addition to interpreting the statutes and codes
3. It’s the time when the instruments are tested.
II. For will administration, this is when the validity of a Will is determined, and then dealing with the directions in the Will as per the distribution of the decedent’s estate
III. For trust administration, this takes longer
1. Usually direction comes from the trust instrument
2. Arcane process
3. Many probate matters that should be done administratively are often done in a litigation framework
IV. Most probate is uncontested, yet it’s done in an adversarial manner
V. A fiduciary has NO friends – everything you do is subject to being challenged
1. Fiduciaries try to do things in a way that will bring about the least litigation
2. Every act you do as a F you have to account for (all your investment, administrative, etc. decisions)
3. Procedural rules vary from state to state, county to county
UPC §3-703 GENERAL DUTIES; RELATION/LIABILITY TO PERSONS INTERESTED IN ESTATE; STANDING TO SUE
A PR is a fiduciary who shall observe the standards of care applicable to trustees.
Duty to settle and distribute the estate in accordance with terms of probated and effective will
Expeditiously and efficiently
-Wrap up estate quickly and efficiently
– No duty to beneficiaries
UTC §801 DUTY TO ADMINISTER TRUST
Trustee shall administer trust in good faith, in accordance with it’s terms and purposes and the interests of beneficiaries, and in accordance with UTC
Comments
-Unlike wills, trust law still cares about beneficiaries.
-A trust instrument bifurcates legal title, so beneficiaries have a legal interest.
-So trustee has a duty to both the beneficiaries and the grantor
-But, to which
n back)
1. PR’s duties commence upon appointment
2. When one knows there are tasks to be done, they can begin them before appointment and will be ratified after the “Letters Testamentary” given
3. Bc it is a Crt appointment, it is the Cr that must give “Letters Testamentary”
4. Order of appointment must be entered into the Crt
UPC §3-701 TIME OF ACCRUAL OF DUTIES AND POWERS
Duties and powers commence upon appointment (when Letters Testamentary)
PR powers relate back to acts prior to appointment
Named executor may carry out funeral instructions prior to appointment
Other individuals’ actions on behalf of estate prior to appointment can be ratified by PR too
FS §733.601 TIME OF ACCRUAL OF DUTIES AND POWERS
The duties and powers of a personal representative commence upon appointment. The powers of a personal representative relate back in time to give acts by the person appointed, occurring before appointment and beneficial to the estate, the same effect as those occurring after appointment. A personal representative may ratify and accept acts on behalf of the estate done by others when the acts would have been proper for a personal representative.
2. Death of Client/Proof of Death
a. Complication in cases when the body is not found, so when to start probate
UPC §1-107 EVIDENCE AS TO DEATH AND STATUS
(4) In the absence of prima facie evidence of death under paragraph (2) or (3), the fact of death may be established by clear and convincing evidence, including circumstantial evidence.
(5) An individual whose death is not established under the preceding paragraphs who is absent for a continuous period of 5 years, during which he [or she] has not been heard from, and whose absence is not satisfactorily explained after diligent search or inquiry, is presumed to be dead. His [or her] death is presumed to have occurred at the end of the period unless there is sufficient evidence for determining that death occurred earlier.
(6) In the absence of evidence disputing the time of death stated on a document described in paragraph (2) or (3), a document described in paragraph (2) or (3) that states a time of death 120 hours or more after the time of death of another individual, however the time of death of the other individual is determined, establishes by clear and convincing evidence that the individual survived the other individual by 120 hours. <A doc can disprove Simultaneous Death
Shortened after 9/11 to move forward more quickly
FS §731.103 EVIDENCE AS TO DEATH AND STATUS
In proceedings under this code and under chapter 736, the following additional rules relating to determination of death and status are applicable:
(1) An authenticated copy of a death certificate issued by an official or agency of the place where the death purportedly occurred is prima facie proof of the fact, place, date, and time of death and the identity of the decedent.
(2) A copy of any record or report of a governmental agency, domestic or foreign, that a person is alive, missing, detained, or, from the facts related, presumed dead is prima facie evidence of the status and of the dates, circumstances, and places disclosed by the record or report.
(3) A person who is absent from the place of his or her last known domicile for a continuous period of 5 years and whose absence is not satisfactorily explained after diligent search and inquiry is presumed to be dead. The person’s death is presumed to have occurred at the end of the period unless there is evidence
