Estates & Trusts
DeLaTorre, Fall 2007
I. The Probate Process
a. Probate Process
i. Probate process is the process by which a court makes 1of 2 determinations that transfer property:
1. Under the decedent’s will, if valid; OR
2. Decedent dies Intestate (person died w/o a will);
ii. 3 prime functions that probate serves:
1. Provides official documentation of transfer of title to the new owners (either b/c of the will or intestate succession);
a. Important w/ real property, stocks, bonds;
2. Distributes decedent’s tangible assets to those intended, after the creditors have been paid;
3. Protects creditors by assuring payment of debt,
a. (1) assuming follow right steps;
b. (2) if fails to bring claim in a specific time, then barred.
i. Probate property – assets that are disposed of by either decedent’s will or intestate succession (intestacy);
ii. Non-probate property – assets/property disposed of by an inter vivos transaction or arrangement; (not disposed of by will or intestate succession);
1. Types of ‘Will Substitute Arrangements’, or ‘Will Sub Arrangements’ or ‘Non-probate transfers’:
a. life insurance;
b. joint tenancy property,
c. contracts with payable on death provisions
i. e.g. – pension plans and bank accounts;
d. inter vivos trust arrangements; and
e. life estate with remainder interest;
iii. Testator – decedent who dies with a will;
iv. Intestate – decedent who dies without a will;
v. Devise – succession process under a will;
vi. Intestate Succession – the succession process w/o a will;
vii. Devisee – recipient of the property under a will;
viii. Heir – recipient of the property w/o a will;
c. Initiation of Probate Process
i. Typically initiated by filing a petition for probate (will) or administration (no will);
ii. Early on – a Personal Representative (PR) is appointed by probate court. Executor (if there is a will) or administrator (when there is no will); role is to act on behalf of the probate estate;
1. Letters Testamentary – Authorization given to PR when there’s a will;
2. Letters of Administration – Authorization given to PR when there’s no will;
iii. Notice Requirements – when there is a hearing where the parties (potential creditors, devises and heirs) can be heard, there is a notice requirement;
iv. Principle duties of the personal representative:
1. Inventory and collect the assets of the estate;
2. Manage the assets during the administration process;
3. Receive and pay/settle the valid claims of creditors;
4. Clear any titles to cars, real estate, or other assets;
5. Distribute the remaining assets to those entitled.
d.3 Types of Probate Process
i. (1) Traditional Formal Probate Process
1. An “interested party” (e.g. – devisee, creditor, executor, intestate heir) initiates by filing a petition for administration (no will) or petition for probate (will). PR is appointed early on and performs his/her responsibilities. Most of what PR does must be approved by probate court, typically done through hearings (notice is given). PR files a petition for ‘final settlement’ [where PR indicates how he wants to give out the assets and what work he has done] and the court discharges him if the duties are done.
ii. (2) Simplified Administration – many states have a simple process;
1. usually less court involved, fewer hearing; less expensive and easier;
2. Interested party files a petition w/court and court decides to approve ONLY if certain things are true; NOT a matter of right;
a. If there are contested matters, typically not available;
b. Estate usually has to be below a certain $$ value;
c. Estate must be solvent and not in debt;
3. Have a final judicial accounting with hearing and proper notice and final decree.
4. Key advantage is don’t have court supervision, fewer hearings, less expensive;
iii. (3) Informal Administration
1. Again purpose it to make the process easier;
2. Petition is filed stating how the assets should be distributed. The court orders how they should be distributed on the front end – only time court is involved. PR follows court orders and is discharged when done.
e. Statute of Limitations
i. Filing. All states have a statute of limitations – time limit that a petition must be filed or a claim is lost forever. (KS = 6 mos, with some exceptions);
ii. Non-Claim Statute (applies to Creditors). After notice, a creditor has certain time period to file his claim against the estate to pay the debt; failure to file to the claim will result in permanent bar on recovery; (KS = 4 mos);
f. Contesting a Will
i. Generally. A will contest is an attempt to prevent a will from being admitted to probate; do this on the following basis:
1. Not properly executed; or
2. If properly executed, it was later revoked; or
3. It was superseded by another will;
ii. Who can contest? Anyone one with a direct, monetary interest in the estate; more particularly an interest that comes from refusal to probate the will; (creditor, devisee, heir);
iii. When? Contest must be done during the administration process; Claim is barred after the final decree is issued.
1. Qualification: you can file a competing will after the initial will.
g.Avoiding Probate –
i. to avoid, put your assets in Non-probate form (b, ii. 1. above);
ii. Statutory exceptions (usually only for small claims)
a. Intestate Succession – process of dividing property when decedent dies w/o a will.
i. Primarily statutory; local statutes govern.
b.3 situations where intestacy happens:
i. Total intestacy – decedent dies w/o a will;
ii. Partial intestacy – dies with a will, but it doesn’t dispose of all of property; assets not disposed by will are disposed of by intestate succession;
iii. Will or trust contains language that calls for the intestate succession. “This goes to my intestate heirs.”
c. Probate estate.
i. Statute applies to decedent’s probate estate or subpart of assets not disposed of.
ii. Policy goal of statutes – to approximate what the average person would have wanted to happen to his/her assets if they had thought about it;
iii. Common features:
1. Provide, at least to some degree, for the surviving spouse;
a. Typically receives all of the intestate assets if there are no surviving issue;
b. If there are surviving issue – spouse will get a fraction and the kids get a fraction;
2. Hypos page 61
on pg. 78 – A has NO issue, which triggers collaterals;
i. English method – apply the formula at Brother’s and sisters level;
1. common ancestor is parents;
2. B = ¼; F = ¼; G = 1/12; L, M, N = 1/36; O = 1/12; J, P = 1/18;
3. B is ranked the closest, however this doesn’t mean that B gets everything;
b. Assume for problem on pg. 78, that B died before A (therefore no one alive at brother/sister level);
i. Common ancestor – decedent’s parents;
ii. Eng system – there are going to be 3 shares at the first level;
1. F = 1/3; G = 1/9; L, M, N = 1/27; J = 1/6; O = 1/9; P = 1/6;
iii. American – make the count at first level with survivors;
iv. 2-106 – make count at first level with survivors;
1. F, G, J = 1/6
2. L, M, N, O, P = 1/5 of ½;
1. English Method – make the count at the first level below the common ancestor (even if there aren’t survivors)!
2. American Method – apply the formula at the first level where there is a survivor;
a. Same as English method if we have at least one survivor at the level below the common ancestor;
3. UPC – you make the count at the first level where there is a survivor;
4. See probs and handout, using § UPC § 2-103 (p. 61)
a. If no surviving spouse, entire estate goes to
i. Descendents (kids)
iv. ½ to grandparents or GP’s decedents. Stops at GP level. No descendants of GGP.
v. Problems pg. 82 (see handout) ???????
1. D is survived by mother, his sister and two nephews (children of deceased brother); How is the estate distributed?
a. Entire estate goes to mother under 2-103(2) b/c no surviving descendants;
2. D is survived by one 1st cousin on mother’s side and by two 1st cousins on father’s side;
a. 2-103(4) –
b. two cousins on dad’s side get half as much as cousin on mom’s side;
3. D is survived by A, 1st cousin of the decedent’s mother, and by B, granddaughter of D’s 1st cousin;
a. A is excluded, and B walks away with the entire estate; 2-103(4);
b. A gets nothing b/c intestate succession is limited to descendants of grandparents;
f. Simultaneous Death Statutes
i. To take by intestate succession, you must survive the decedent.
1. If daughter doesn’t survive mom, she gets nothing; also daughter’s surviving husband gets nothing b/c he is not issue of the decedent;
a. Problem that comes up – daughter’s husband claims a share based on the daughter surviving the mother; However, we don’t know which of the two survived longer? See Uniform Simultaneous Death Act;
ii. Uniform Simultaneous Death Act (p. 67)