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Trusts and Estates
University of Georgia School of Law
Milot, Lisa

Trusts & Estates I Outline
Prof. Milot
Spring 2013
 
 
 
 
 
INTRODUCTION
    I.            Terminology
A.     Intestate Succession Terms:
                                                           i.      Intestate Succession/Intestacy/Descent & Distribution: Passage of property when the decedent dies w/o a valid will
1.      Descent—succession to real property
2.      Distribution—succession to personal property
                                                         ii.      Intestate: dying w/o writing/executing a will
                                                       iii.      Administrator: person in charge of administering the estate of an intestate decedent
                                                       iv.      Heir: person entitled to take under intestacy laws
1.      **No one has an heir while they are alive**
a.       While alive—presumptive heirs or heirs apparent
2.      NOTE: even when person dies testate, necessary to identify his heirs in case will fails for some reason
3.      NOTE: Heirs/Devisees NOT mutually exclusive; often the devisees of a will are also heirs of the testator
                                                         v.      Ancestor: person related to the decedent in a ascending lineal line[parents/ grandparents]                                                        vi.      Descendant: person related to the decedent in a descending lineal line[children/ grandchildren]                                                      vii.      Collateral Relative: person related to the decedent by blood but NOT in a lineal line [siblings/aunts & uncles/nieces&nephews/cousins] B.     Will Terms:
                                                           i.      Will: written doc or oral declaration directing who will own the decedent’s property upon his death
                                                         ii.      Codicil: a type of will that merely amends an already existing one
                                                       iii.      Testator; Testatrix: person who has a written and executed will
1.      Testator dies intestate
                                                       iv.      Testate Succession: passage of property under decedent’s will
                                                         v.      Executor/Executrix: person in charge of administering the estate of a testate decedent
                                                       vi.      Devise: a gift of real property in a will
1.      Devisee—person who receives the devise
                                                     vii.      Bequest: a gift of personal property in a will
                                                   viii.      Legacy: a gift of money in a will (type of bequest)
1.      Legatee—person who receives legacy
                                                       ix.      Beneficiary: generic term for a person who receives property under a will—either real or personal
                                                         x.      Escheat: when property passes to the state (decedent has no devisees and no heirs)
1.      NOTE; Courts often strain to avoid escheat
C.     Trust Terms:
                                                           i.      Trust: legal way to divide up ownership
                                                         ii.      Trustee: Legal Ownersàhold assets for the benefit of some 3rd party
1.      Have right to sell assets, buy new assets
                                                       iii.      Beneficiary: person who receives equitable title to trust property
                                                       iv.      Settlor: person who creates trust; also called trustor, grantor, donor
                                                         v.      Principal: the property conveyed in trust form
                                                       vi.      Income: the profits or other earnings made by the property after it is conveyed in trust form
1.      EX: rent collected from real property
 
 
PROBATE AND NON-PROBATE TRANSFERS
 
    I.            Probate v. Non-Probate Distinction
A.     Probate: the process of establishing that a decedent’s will is valid and enforceable—validates the will
                                                           i.      Process: Once a will is probated, the estate is administered according to the terms of the will and any relevant statutes (tax)
1.      First—have to pay taxes, creditor claims, and expenses of administering the estate
2.      Then—can distribute the assets as stated in the will
                                                         ii.      Perform 3 Essential Functions:
1.      (1). Title Clearing—making property owned at death marketable again
2.      (2). Creditor Protection—paying off decedent’s debts
3.      (3). Distribution—implementing the decedent’s donative intent
B.     Will Substitutes: AKA nonprobate transfers—are arrangement respecting property or K rights that are established during the donor’s life under which:
                                                           i.      The right to possession or control of property shifts outside of probate to the donee at the donor’s death; and
                                                         ii.      Substantial lifetime rights of dominion and control are retained by the donor
C.     Will Substitutes differ in 3 ways:
                                                           i.      Most are asset specific (life insurance, bank balance, mutual funds)
                                                         ii.      Formal requirements of Wills Act do NOT apply
                                                       iii.      Property that passes through a Will Substitute avoids probate
D.     4 Main Will Substitutes:
                                                           i.      (1). Life Insurance
                                                         ii.      (2). Pension Accounts
                                                       iii.      (3). Joint Accounts
                                                       iv.      (4) Revocable Trusts
 
WILLS
 
    I.            IS THE WILL VALID?
A.     If Unwitnessed, Handwritten Will—dealing w/ Holographic Will:
                                                           i.      May be valid depending on jurisdictional Requirement:
1.      Requirements[UPC 2-502(b)] :A holographic will is valid, whether or not witnessed IF:
a.       Signature AND material portions of the document are in the Testator’s handwriting
o A valid holograph can be executed on a printed will form if material portions of the document are handwritten
2.      GA APPROACH: Doesn’t allow holographic wills
3.      Other Jurisdictions: Some jxds require additional elements to be valid:
a.       (1). Date; or (2).Certain # of people to testify to Testator’s handwriting; or (3).Limiting the property that can be disposed
                                                         ii.      NOTE: There is NO Witness Requirement
B.     Issues arising w/ Holographic Wills:
                                                           i.      What about stuff that isn’t in the Testator’s handwriting?
1.      2 Theories:
a.       Intent Theory: Words or marks not intended by the testator to be part of the will need not be in their handwriting
b.      Surplusage Theory: Portions of document in Testator’s handwriting are given effect if they make sense standing alone, portions not in handwriting are ignored
C.     POLICY: Why allows holographs?
                                                           i.      Allow people to write their own wills w/o having  to go to an attorney
 
 
 II.            OTHERWISE, WERE WILL FORMALITIES MET?
A.     Formalities:
                                                           i.      In Writing:
1.      Never really a problem
 
                                                         ii.      Signed by Testator:
1.

stator from fraud, undue influence, mistake, and fraudulent suppression of a valid Will after the Testator’s death
2.      Cautionary: formalities require the Testator to reflect on the seriousness of the situation
a.       This is the stand-in for the requirement of delivery of an inter vivos gift
3.      Evidentiary: requires solid evidence of the existence and content of the decedent’s directions
4.      Channeling Function: meant to facilitate a substantial degree of standardization in the organization, language, and content of wills so that they can be prepared and administered by courts in a routine manner
 
III.            If Formalities NOT Met…Still May be Valid:
A.     Does Harmless Error or Substantial Compliance Doctrine Apply?
                                                           i.      Substantial Compliance[Restatement]: A Will is found validly executed IF:
1.      The document was executed in substantial compliance w/ the statutory formalities; AND
2.      The Proponent establishes by clear and convincing evidence that decedent’s intended document to constitute his will
                                                         ii.      Harmless-Error Rule[UPC 2-503]: Even though document doesn’t comply w/ formalities, it will be treated as if it had been executed in compliance IF:
1.      The proponent of the document establishes by clear and convincing evidence
2.      That decedent intended the document to constitute:
a.       The decedent’s Will;
b.      A partial or complete revocation of the Will;
c.       An addition to or alteration of the Will; OR
d.      A partial or complete revival of his formerly revoked Will or of a formerly revoked portion of his Will,
3.      Applied Most To:
a.       (1). Defects in Attestation procedures:
o Testator doesn’t get 1 or both to sign Will
b.      (2). Modifications / Revisions to Will:
o Testator “crosses” something out instead of drafting a new document
4.      NOTE: The larger the departure from the formalities, the harder it will be to satisfy the ct of the Testator’s intent
a.       LACK OF SIGNATUREàhardest to excuse; raises serious doubt about whether the Testator adopted the document
o Attractive Case for Excusing Lack of Signature: Crossed Will case—wife signs husbands Will and husband signs wife by mistake
5.      Estate of Hall – A executed an Original Will; 13 yrs later executed a Joint Will w/B; Attny sent them a “draft”; A&B made revisions and asked if it could be their Will until the final was ready; A&B sign, and Attny notarizes it; A tells B to rip up his old Will; Daughter of A from previous marriage claims that Joint Will is invalid so assets should pass under Original Will
a.       Issue: 2 Witnesses didn’t sign the will—can Will still be valid?
b.      Held: Ct invokes Harmless Error Doctrine—so B only has to prove by clear and convincing evidence that B intended the Joing Will to be his Will:
o Evidence of Intent: (1). attorney’s recollection; (2). fact that this Will revoked all other Wills; (3). instructions to W to tear up other Will; (4). wife’s testimony supports conclusion that decedent intended this document to be his will.
c.       RESULT: Joint Will probated under Harmless Error Rule