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Trusts and Estates
University of Georgia School of Law
Love, Sarajane N.

Trusts and Estates I outline
 
Professor Love
Spring 2010
 
I.        ESTATE PLANNING
A.     Passing wealth at death  
1)      Partial restraints on marriage permissible
a)      Cf. Shapira (OH, 1974): “To my son, P, provided he is married to Jewish girl at my death or does so w/in 7 yrs. If not, to the state of Israel.” Held:
(i)     Partial restraint on marriage in will is not violation of right to marriage protected by 14th amendment (equal protection). Also, 14th amendment usu. applies only to state action, not to private wills.
(ii)   Also, if restraint imposes only reasonable restrictions, it is valid and not contrary to public policy
B.     The probate process
1)      Probate v. non-probate property
a)      Probate property: Passes under decedent’s will or by intestacy
b)      Non-probate property: Passes under instrument other than will, such as
(i)     Joint tenancy property (T’s estate vanishes; survivor takes whole)
(ii)   Life insurance
(iii)Ks w/ payable-on-death provisions
(iv)Interests in trust
2)      Functions of probate
a)      Gives evidence of transfer of title to new owners
b)      Protects creditors by req. payment of debt
c)      Distributes decedent’s property after creditors are paid
3)      General steps in probate process (done by personal rep)
a)      Open estate by offering will for probate (Ct in jxn. at time of death and also Ct
(i)     Primary/domiciliary jxn: where D was domiciled at time of death – open probate here
(ii)   If real property is located in another jxn., ancillary administration in this jxn. is req.
b)      Collect decedent’s assets
c)      Pay any family allowance and set aside homestead and exempt personal property
d)      Pay creditors and taxes
e)      Distribute assets when Ct enters decree of distribution
4)      Probate process in GA
a)      Probate is the norm – relatively efficient and cheap
b)      Two tiered system
(i)     Larger counties – probate judge must be an atty.; courts have add’l that smaller probate courts don’t have – expanded jxn. (similar to superior courts)
(ii)   Smaller counties – probate judges don’t have to be lawyers; probate courts are “lower” courts
(iii)Common v. solemn form probate – you get to choose
(a)    Common form: not final until 4 yrs pass or 4 yrs after heirs reach majority – don’t have to give notice, but w/in 4-yr waiting period caveats may be filed and solemn form probate req.
(b)   Solemn form: notice to interested parties; testimony of attesting witnesses; greater court participation in administration of estate
(c)    Similar to UPC formal/informal probate
5)      Other probate matters
a)      Non-claim statutes: requires creditors to file claims w/in specified period of time.
(i)     Most states – claims thereafter are barred
(ii)   GA – creditor loses priority, goes to back of line
6)      Universal succession
a)      LA system (civil law): heirs or residuary devisees succeed to title of all decedent’s property – no personal rep appt. by Ct
(i)     Heirs step into shoes of decedent at his death, taking title and responsibility for payment of debts and legacies
(ii)   UPC authorizes universal succession as alternative to probate administration  
C.     Professional responsibility
1)      Duties to intended beneficiaries
a)      Simpson (NH): D drafted will for T, leaving all real estate to son, P, except for life estate in “our homestead” to P’s stepmother. Debate over whether “homestead” encompasses property used for family business. Trial ct held that it meant all property. P then brings malpractice action against D: prof’l negligence and 3rd party beneficiary theories.
(i)     HELD: Atty. who drafts will owes duty to intended beneficiaries
(a)    Who is beneficiary?
1.      Minority rule: only those named in will
2.      Majority rule: all foreseeable beneficiaries (3rd party beneficiary)
(b)   Collateral estoppel issue
1.      Probate courts will not admit as evidence direct declarations of intent – these are thought to be suspect. Usu. just intent as expressed in the will.
2.      Thus, no CE b/c T’s intent was not essential to probate ct’s holding
2)      Conflicts of interest
a)      Hotz (SC): Atty. Dobson (D) had prepared will for P’s father and had also done P’s taxes and will. P consulted D about father’s will before he died. D led P to believe she’d inherit car dealership (not true). Issue is whether D owed and breached fiduciary duty to P?
(i)     HELD: D did owe and breach fiduciary duty b/c of conflict of interest on D’s part to work for both father and daughter.  He shouldn’t have actively misrepresented that there was a first will.
(ii)   HE could have withdrawn (noisy withdrawl)
 
II.     INTESTACY
A.     The basic scheme
1)      Reasons testators need to be familiar w/ intestacy statutes
a)      If T drafts will that substantially disinherits one or more of T’s legal heirs, those heirs have standing to challenge the will. T needs to know who his heirs would be if T died at that moment.
b)      If T has written previous will that appears to be valid, then beneficiaries named in that previous will would have standing to challenge current will.
2)      Steps to follow
a)      Figure out who family is
b)      Then, figure out who heirs are (intestacy statute)
c)      Then, figure out how to divide up property among multiple heirs (intestacy statute)
d)      Governing law
(i)     Law of state where D was domiciled at death for personal property
(ii)   Law of state where real estate is located for real property
B.     Fundamentals of Intestacy
1)      Share of Surviving Spouse
2)      Descendants take to the Exclusion of Collaterals
3)      Distribution among Collaterals
a)      Degrees of kinship – D’s bros and sis (descendants of parents) are over D’saunts and uncles, who are descendants of D’s grandparents.
(i)     Laughing Heir Statutes: preclude inheritance FAR TOO REMOTE from D, because this inheritance by relatives whose glee at their new found wealth is unmitigated by any grief over the death of the D.
4)      Only blood relatives(and Surviving Spouse) Inherit
a)      Virtually all intestate schemes exclude relatives by marriage, other than spouse. Includes step children
5)      A bit more terminology
a)      Descent = real property = “heirs”
b)      Distribution = personal property = ‘next of kin’
C.     Sample intestacy laws
1)    UPC intestacy  § 2-102
a)      Intestate estate
(i)     Anything not covered by will goes to heirs (see below)
(ii)   Will may expressly exclude or limit what legal heirs would get
b)      Share of surviving spouse
(i)     Entire estate if…
(a)    No descendant or parent of decedent survives OR
(b)   All of D’s surviving descendants are also descendants of SS and no other descendant of SS survives D
(ii)   First $200K + ¾ balance of estate if…
(a)    No descendants BUT
(b)   Surviving parent(s)
(iii)First $150K + ½ any balance if…
(a)    Descendants are all descendants also of SS, and
(b)   SS has surviving descendant(s) not related to D
(iv)First $100K + ½ balance if…
(a)    One or more surviving descendants are not descendants of SS
c)      Share of heirs other than SS §2-103
(i)     Any share not going to SS passes in following order
(a)    Descendants by representation
(b)   Parents equally or surviving parent
(c)    Descendants of D’s parents or representation
(d)   If survived by one or more grandparents or descendants or grandparents
1.      ½ to paternal GPs/descendants by representation
2.      ½ to material GPs/descendants by representation
3.      or it all goes to one side if the other side is all dead
d)      No taker – escheats to state
2)      GA intestacy laws
a)      Children – definitions 
(i)     After-born children: Count if conceived prior to D’s death, born w/in 10 months, and survive at least 120 hrs
(ii)   Half-blood: considered equally w/ whole blood
b)      If D dies w/o will, heirs –
(i)     SS but no child or other descendants à SS is sol

tives of same degree
G.     Transfers to children
1)      Adopted children
a)      Loss of inheritance rights from or through natural parents
(i)     Hall: V died, survived by widow, E. E then married J, who adopted E’s children. V’s brother, W, died childless, unmarried, intestate. V’s children tried to take intestate share.
(a)    HELD: Children adopted after death of natural parent lose all rights of inheritance through natural parent.
(ii)   UPC  § 2-114
(a)    Unless adopted, person is child of natural parents, regardless of marital status
(b)   Adopted children – child of adopting parent(s), but adoption by step-parent has no effect on
1.      relationship b/w child and natural parent (married to step-parent)
2.      right of child/descendant to inherit through other natural parent
(c)    Inheritance from/through child by either natural parent or kindred is precluded unless natural parent has treated child as his/hers and not refused to support child [minority rule, applied only to natural fathers] (iii)GA law
(a)    “Rebirth” theory – adopted child treated as natural child of adoptive family (every right/privilege); no legal relationship w/ natural parents/family
1.      exception: spouse and spouse’s family
(b)   If parent of child dies w/o relationship of parent/child having been previously legally terminated, child’s right of inheritance not affected by adoption.
(c)    Cf. Nunnally: T’s will left trust to daughter for life, then to daughter’s 4 children or their issue. Grandchild W adopts two children after T’s death – issue is whether they are trust beneficiaries.
1.      Ct has to apply old adoption statute, which follows stranger-to-adoption rule
2.      Lesson: drafting error – ask T if he wants to include later adopted relatives
3.      Disconnect b/w intestacy rule (would inherit) and will rule (no inheritance)
b)      Adopted child’s relationship to other family members
(i)     Stranger-to-the-adoption rule (old rule): Legal relationship is created by affirmative legal act of adoption; other relatives are strangers to adoption, so no inheritance rights.
(ii)   Modern rule: Adopted child is considered same way as natural children – related to rest of family (GA law and majority rule)
c)      Equitable adoption
(i)     O’Neal (GA): P filed suit in equity seeking declaration of “virtual” adoption. P had lived w/ the Cooks for yrs and was seen as part of family. Mr. Cook’s executor refused to recognized P’s asserted interest in the estate.
(a)    HELD: P’s aunt (who sent her to live w/ Cooks) did not have legal authority to contract for P’s adoption – P not legal child of Cooks.
(b)   Dissent – equity considers done that which ought to have been done
(ii)   Other states: Oral agreement to adopt child is specifically enforceable if adoptive parents raise child and promise to adopt it.  
2)      Nonmarital children
a)      All jxns permit inheritance from mother
b)      Differing laws about inheritance from father
(i)     Trimble: S. Ct. held unconstitutional, as denial of EP, statute denying nonmarital child inheritance rights from father
(a)    BUT – valid state interest in obtaining proof of paternity
(ii)   Uniform Parentage Act