Trusts & Estates I, Beck Spring 2005
Intro to Estate Planning
Power to transmit property at death: justifications and limits
Two ways transmit prop at death:
1) devise: passing real property property in will to a devisee, property owner/person executing the will (testator) decides who gets prop
Testator executes the will
Beneficiary or devisee takes under the will
A bequest is of personal property and it goes to a legatee
2) descent: intestate succession, § control, §/state decides where prop goes/who gets it/ who the heirs are
Heir just people who takes as intestate succession
Hodel v Irving: Constitutionality of Fed. Indian land consolidation Act
? of devise typically controlled by st law, but here fed law control sb/c prop owned by native am living on land held by feds on their behalf
§ addresses fractionalization: one prop and lots of owners and prob b/c unmanageable and no one person can use/posses prop, hard to distrib rent from lease, expensive to get all $ to owners
This happened b/c fed holds land in trust and restrictions on alienation of the land and the heir could not just sell it – so got fractionalization, normally heir could sell it and split or partition the prop
Congress soln’ that could not pass less than 2% interest by devise or descent – interest goes back to the tribe
Did the Π has any prop taken by the §? NO, BUT takes interest of potential heirs/devisees – but they just have expectancy interest
These heirs can assert rt of decedent/standing as 3rd party
The rt to devise prop by will and to pass intestate was taken
§ Took rt/ability to pass prop at death, but decedent could pass prop as intervivos gift
§ Congress took stick in that bundle, took rt to alienate/transfer prop at death, BUT owner could use prop (lease), could transfer interest in prop while still alive
§ Ct look at factors from reg takings: where govt pass reg that impose too much and takes prop rts
Here took some rts/left some rts so must look if goes too far and b/m a taking
Ct talks about value of remainder interest, but that value to person who receives it, but here rt taken from person who gives it
Were these prop interests the subject of investment backed expectations? Not really, these decedents not spend $ to invest in propr interest
Ct determine that YES it was a takings and require just compensation – focus on fact that congress completely took away impt rt: rt to pass on prop at death
§ in many jxn provide for elective share – when married person dies the living spouse has rts: can chose to go w/ will or can elect to ignore the will and go w/ the §
Suppose § and it says spouse can elect 1/3 and then change § to ½ of decedent’s estate – is that a taking under Hodel opinion?
No b/c not take all still ½ of decedent left – st has broad auth to adjust
“Rts of succession to prop of a deceased, whether will or by intestacy, are of statutory creation, and the dead hand rules succession only by sufferance. Nothing in the federal constitution forbids the legislature of a state to limit, condition, or even abolish the power of testamentary disposition over property within its jurisdiction.”
§ What options left to congress to deal with fractionalization prob?
Ct: could just get rid of intestate succession (which often produces multiple takes) and require you to leave it in will or else escheat to tribe
What if congress pass § that land held as jt tenancy (rt of survivorship, goes to surviving jt tenant and you don’t get to decide who gets it) and not tenancy in common – would that be a taking?
Lose rt to leave prop but gain rt of survivorship over interest of all others
§ Could congress just leave the reg in place and pay? Yes
§ What did congress do? That can devise the fractional interest to any other owner
NO that was UNC b/c only a lim group could devise to and not enough of a rt to device b/c can’t devise to the most common people you usually want to devise to- kids
Ct: could pass prop w/ revocable trust – was that an option? Author suggests that’s a simple alt to will
If alt to will that prop owner could use – is that still a takings?
IN CLASS DEBATE re: Resolved – that rt to transmit prop at death by devise and descent should be abolished or sig curtailed
Change the status quo: stop dominating wealthy families/bad to have dynastic families, only pass on prop that used for productive purposes, still have inequality in amt of $ spent on kids, but if permit transmission of prop at death get an extra boon
BUT, advantage to have wealthy family to counter the state
Discourages work if can’t transmit prop, to much power to the state, detrimental to families, family unit limited since can’t inherit family bus
Shapira v. Union Natl’ Bank: Son not like restriction in bequest that be must marry Jewish girl w/in 7 yrs or all $ to Israel, dad did it to encourage preservation of the Jewish faith and blood
Π argues enforcement of will w/ restriction is UNC, infringes 14th A rt to marry, argues st action here b/c judiciary arm of govt and to enf will is govt essentially restricting rt by ct enforcement
Cites: Shelly v Kramer: racial restriction in deeds, if ct enf then violate equal protection clause through st action
Ct: NO, not asked to enf restriction on rt to marry, just enf restriction on will. Const NOT restrict action of private individs, but a gen restriction on govt
DIFF from Shelly b/c ct not enf or prevent son from marrying, just whether to enforce the will, BUT in Shelly ct would have to issue injunction vs white family to stop them from selling to black family
Suppose ct said this was st action, what other wil bequests subject to constitutional scrutiny? Suppose left gift to religious org? Then Shelly in that context would prevent $ to religious orgs
Π argues violates pp of free choice of religious practices and in favor of marriage
Suppose will had a condition that son NOT marry? NO that would be viod vs pp b/c total restraint on marriage is a gen violation of pp
What if condition to get divorced? NO also vs pp and ct not enf that kind of restriction b/c pp in favor of marriage
What about particular restraint – marry w/in religious group – ct OK that valid
[one case struct provision that beneficiaries must remain true to the catholic church BUT upheld that ok to have membership in good standing in Presbyterian church] the difference is in the type of d ask the ct to make: to remain true need true Cathlic doc – what person believe and that’s not an approp decision
BUT just good standing – just get church membership role – easy and keep ct out of eval religious doc issues
§ Π suggests that marriage restriction invalid b/c of the place he lives
Maddox- similar condition to remain member of soc of friends but only 5 or 6 people for her to marry
Π here tries to argue that # of eli
Green dies – to W or kids = shares, he has 2 adult sons and several grandkids
W asks you ? do I need to offer to probate ct? Maybe small estate probate process that can avoid complexity
A lot of assets are nonprobate: K, pension w/ W names
Only things that are probate prop are car and savings
§ What would probate do for her? Does she need probate process to collect assets of the estate?
NO b/c most in her possession already – doesn’t need help for jt checking or pensions that names her as ben, life ins names her as primary ben
Only ? is savings acct that is in his name alone, does she need cts help? Sometimes st § that will let her get access OR may need probate
Probate protects you vs creditors who don’t collect in timely fashion – here the debt seems small
Does she need to be worried about debts she doesn’t know about? Not major concern here b/c married and likely to know about, maybe if the H had a small bus
Does she need probate for taxes? IRS will tax
Title to prop? car? Maybe st § to get that taken care of w/o opening probate
§ What if there were minor kids? In probate good to have guardian appointed for kids – is there a down side to going through probate and having guardian appointed? YES the cost
Could she conclude in GF that may be better for kids not to go through probate w/ guardian? She opens herself up to risk of suit by kids when them b/m adults
If that enough of a risk?
§ What if real estate involved? Creditor involved? Can’t avoid that debt – title issue b/c she wants to get title to that prop in her name – does she have to go through probate to do that?
Depends on the jxn, there may be less formal probate proceedings, some jxn allow alt means, § heirs/devisees estb title to real prop w/o probate proceedings
o Green tells you NO will and lays out circ that no real estate – does he need a will? Depends if want all to W or split b/w kids, will is catch all if overlook anything
Probably NEVER good advice not to get will b/c not know what circ will be when pass away
If he wants W to get it all it’s better to have a will executed
What might be different later?
Conflict w/in the family, want clear estate plan
He might get prop later a/f talk to attn, one of kids could pass away b/f him leaving minor grandkids, W could die b/f him and then can’t rely on rt of survivorship for some of jt property
o In a WILL Do you need a clause that just debts, funeral expenses be paid?
NO, debts will be paid even w/o testator’s instructions, law will provide for debt payment anyway
Is there a risk to having language like this in a will? Does it require paying off mortgage on house? Not sure? Would it be desirable to pay off mortgage on real prop?