Trusts & Estates Outline
I. Introduction to Estate Planning
Power to Transmit Property at Death: Justification & Limits
Policy of Passing Wealth at Death
Introduction to Problem of Dead Hand
· “Dead Hand” = Ability of deceased individual to control behavior and decisions of heirs after death
· Donor’s “Intent” almost always determines not only the meaning, but also the effect of a donative document
Shapira v. Union National Bank
R: A testator may validly impose a restrain on the religion of the spouse of a beneficiary as a condition precedent to inheriting under the will.
– A partial restraint of marriage which imposes only reasonable restrictions is not void as public policy.
– A condition requiring the beneficiary not to marry a member of a specific religion is also valid. In re Clayton’s Estate (Penn.)
– Where the restriction based on religion unreasonably limits the beneficiary’s right to marriage, it will be deemed void. Maddox (Va.) (where there were only 4 or 5 unmarried members of sect)
Transfer of the Decedent’s Estate
Probate & Nonprobate Property
Administration of Probate Estates
a. History & Terminology
b. Summary of Probate Procedure
1. Opening Probate
2. Supervising the Representative’s Actions
3. Closing the Estate
c. Is Probate Necessary?
· In many states, Probate of Will is very expensive & time consuming
d. Universal Succession
· Not necessary to have a representative appointed by the Court, as heirs or the residuary devisees succeed to the title of all the decedent’s property
Duties to Intended Beneficiaries
Simpson v. Calivas
R: Attorney’s Drafting Wills owe a duty of reasonable care to the intended beneficiaries
– Ambiguity in will which leads to intended heir failing to receive inheritance, can result in legal malpractice claim
Conflicts of Interest
Hotz v. Minyard
R: Attorneys may owe a fiduciary duty to the beneficiaries of wills they have prepared
– Increased potential of legal complexities where the same attorney represents both the testator and the intended beneficiaries of a will
– Fiduciary relationship exists when one party has a “special confidence” in another so that the other is bound to act in good faith.
– Attorney’s owe clients a duty to deal with them in good faith and not to actively misrepresent an estate planning situation
II. Intestacy: An Estate Plan by Default
The Basic Scheme
Introduction – “Intestacy = ‘Default Rule’”
· UPC §2-101. Intestate Estate
a) Any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent’s heirs as prescribed in this Code, except as modified by the decedent’s will.(b) A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession. If that individual or a member of that class survives the decedent, the share of the decedent’s intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed his [or her] intestate share.
· UPC §2-102. Share of Spouse
The intestate share of a decedent’s surviving spouse is:
(1) the entire intestate estate if:
(i) no descendant or parent of the decedent survives the decedent; or
(ii) all of the decedent’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent;
(2) the first [$200,000], plus three-fourths of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent;
(3) the first [$150,000], plus one-half of any balance of the intestate estate, if all of the decedent’s surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent;
(4) the first [$100,000], plus one-half of any balance of the intestate estate, if one or more of the decedent’s surviving descendants are not descendants of the surviving spouse.
· UPC §2-103. Share of Heirs Other than Surviving Spouse
Any part of the intestate estate not passing to the decedent’s surviving spouse under Section 2-102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the individuals designated below who survive the decedent:
(1) to the decedent’s descendants by representation;
(2) if there is no surviving descendant, to the decedent’s parents equally if both survive, or to the surviving parent;
(3) if there is no surviving descendant or parent, to the descendants of the decedent’s parents or either of them by representation;
(4) if there is no surviving descendant, parent, or de
g shares, if any, are combined and then divided in the same manner among the surviving descendants of the deceased descendants as if the surviving descendants who were allocated a share and their surviving descendants had predeceased the decedent.
d. Negative Disinheritance
· Common Law – negative disinheritance of a child was impossible, unless the testator devises ALL of his property to other persons, due to statuto ry intestate distribution schemes.
· UPC §2-101(b) (1990) & Restatement (3rd) of Property §2.7 – changes the “common law rule” and authorizes a negative will. The barred heir is treated as if he disclaimed his intestate share, which means he is treated as having predeceased the intestate.
Shares of Ancestors & Collaterals
General Intestate Priority:
a. Descendants & Surviving Spouse
c. Collateral Kindred
i. Brothers or Sisters
ii. Nieces / Nephews (take by Representation
iii. Parentelic System (Grandparents and their descendants, if none, then Great-Grandparents and their descendants, etc.) vs. Degree of Relationship (Passes to closest of kin, counting degrees of kinship)
Common Law – Half-bloods not able to inherit
OCGA 53-2-1(a) – Half bloods are treated same as whole bloods
Transfers to Children
Meaning of Children
a. Adopted Children
Hall v. Vallandingham
R: (Maryland – 1988) Under Maryland Statute