Estates & Trusts
Professor De La Torre Fall 2006
I. Introduction (The Probate Process)
a. Probate Process
i. Probate process is a court determination that transfers property
1. Under the decedent’s will if valid OR
2. Intestate Succession (person died w/o a will)
ii. 3 functions:
1. Provides evidence of transfer of title to the new owners
2. Protects creditors with:
a. It assures payment of debt
b. Unless creditor fails to bring claim in a specific time, then claim is barred.
3. Distributes the decedent’ property to those intended after the creditors have been paid.
i. Probate property – property disposed of by the decedent’s will or intestate succession.
ii. Non-probate property – property disposed of by some inter vivos transaction (life insurance, joint tenancy property, contracts with payable on death provisions, interests in trust)
iii. Testator – the decedent who dies with a will
iv. Intestate – the decedent who dies without a will
v. Devise – the 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 – the recipient of the property w/o a will
c. Initiation of Probate Process
i. File a petition for probate (will) or administration (no will)
ii. Appoint a personal representative. Executor (will) or administrator (no will).
iii. Authorization is given in the form of letters of testament (will) or letters of administration (no will)
iv. Notice requirement – pursuant to a hearing where parties (potential creditors, devises and heirs) can be heard.
v. Duties of the personal representative:
1. Inventory and collect the assets of the decedent
2. Manage the assets during the administration process
3. Take care of the creditors – pay the claims
4. Distribute the remaining assets those entitled to them
d. 3 types of probate process
i. Traditional Formal Probate Process
1. An interested party (devise, creditor) initiates by filing a petition for administration (no will) or petition for probate (will). A personal representative is appointed and performs responsibilities. The court approves with hearings. PR files a petition for final settlement and the court discharges him if the duties are done.
ii. Simplified Administration
1. Streamlined process where interested person files a petition and the personal representative assumes his duties. Difference – the court does NOT oversee the process. At the end, PR files petition for final settlement and court discharges.
iii. Informal Administration
1. 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)
ii. Creditors. After notice, a creditor has certain time period to file his claim against the estate to pay the debt. (KS = 4 mos)
f. Contesting a Will
i. Generally. A will contest is an attempt to prevent a will from being admitted to probate on the basis that the will was:
1. Not properly executed
3. Superceded by another will
ii. Who can contest? Anyone one with a direct, monetary interest in the estate. (creditor, devisee, heir)
iii. When? Must be done during the administration process. Claim is barred after the final decree is issued.
iv. Competing will can be admitted after the initial will.
a. Intestacy – how property is divided when decedent dies w/o a will.
i. Local statutes govern.
b. 3 ways intestacy happens:
i. Decedent dies without a will.
ii. Partially intestate death. Will doesn’t dispose of all of decedent’s property.
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. Intestate Succession Statutes are adopted by the legislature. UPC
1. Policy – what would the decedent have wanted?
iii. Common features:
1. Provide for the surviving spouse and issue.
2. If no issue, spouse usually takes all.
3. Hypos page 73.
a. UPC § 2-102(1). Spouse gets entire estate if no parent of decedent is alive and the kids are descendants of dead and surviving spouse.
b. § 2-102(2). Spouse gets $200K plus ¾ if decedent’s parent survives but no issue.
c. § 2-102(3). Spouse gets $150K plus ½ if decedent’s kids are theirs and the surviving spouse has a kid that not the decedents.
d. § 2-102(4). Spouse gets $100K plus ½ if decedent’s kids are theirs and the decedent has kid that is not surviving spouses.
e. Kansas. If decedent has spouse and issue, they share ½ each. If surviving spouse and no issue, spouse gets entire estate. If surviving issue but no spouse, then issue gets entire estate.
d. Rights of Descendants
i. Descendants are lineal issue. (Kids, grandkids, but not siblings)
ii. Per capita. Everyone at this generational level takes equally in his or her own rights. Ignore prior generations.
iii. Per stirpes. Each person at that generational level steps into the shoes of the prior generation and takes what the prior generation would have gotten if it survived.
iv. Formula. It is applied at the generational level. The number of survivors + the number of non-survivors who leave surviving issue.
1. What generational level is it applied?
2. Which generational levels take per capita and which per stirpes?
vi. Three systems:
1. English per stirpes method (strict)
a. Applied at the child level (even if not survivor)
b. Child level takes per capita, everyone else take per stirpes
2. American per stirpes method
a. Applied at the 1st generation with a survivor
b. 1st generation take per capita, everyone else per stirpes
3. UPC § 2-106
a. Applied at 1st generation with a survivor
b. Survivors at each generational level take per capita
4. When there is a survivor at the child level, American and English are the same!
e. Ancestors and Collaterals
1. Ancestors – those who came before your direct, vertical line. (Parents, grandparents, great-grandparents)
2. Collaterals – Someone related to you by virtue of the fact that you have an ancestor in common. (Siblings, cousins)
ii. General rule – strong preference for issue. If any issue, collaterals don’t take anything
iii. Rankings – page 92.
1. The lower the number, the closest to the decedent.
2. Higher number still might be able to take by per stripes.
3. See probs and handout, pg 96 using § UPC § 2-103 (p. 74_
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 GG
ssue gives up all future claims to the estate in exchange for consideration from the parent.
1. Not an advancement b/c the issue is barred from receiving more from the estate.
2. Example. D has C1 and C2. D gives C2 money and C2 releases. C1 takes the entire estate and C2 and its issue are shut out.
ii. Intent. Release depends on the intent of the decedent shown in the document of transfer.
1. If intent is full satisfaction, it’s a release.
2. If partial satisfaction, it’s an advancement.
1. If the GC take per capita at the surviving level under the American per stirpes method, the GC is not bound by the release. Only at per stirpes level will GC “step into the shoes” of C and be barred.
i. An assignment occurs when a child standing to inherit assigns that right to another person, an outside 3rd party.
ii. Rule 1 – The assignment of a potential inheritance is void if it takes place while the parent is alive. The perspective inheritance is too potential and not a solid, tangible property interest. Thus, the law treats it as void.
iii. Rule 2 – UNLESS, the 3rd party provides consideration(proof of contract return) in exchange for the signer’s promise of his or her expectancy. Under contract law, the matter is enforced as a matter of equity as a contract.
1. It doesn’t matter if the parent objects or consents – not necessary.
iv. Rule 3 – If the assignment is made after the death of the parent, it’s a valid transfer even w/o consideration. The property interest if no longer an expectancy.
v. Assignments vs. Releases
1. If the expectancy is assigned for consideration before the death of the parent and the child predeceases the parent, the GC will take the inheritance and assignee gets nothing.
a. Rationale = contract law. C cannot contract away the rights of GC without consent.
2. How to reconcile with releases – GC would be barred.
a. Decedent was involved with the release and not with the assignment.
b. With release, the consideration comes from decedent’s estate, not outside party.
3. Risks of assignee (X).
a. If assignor predeceases the parent, the assignor is not entitled to intestate succession and neither is X.
b. Parent might disinherit the assignor by preparing a will. Then assignor and X get nothing.
IV. Bars to Succession: Homicide and Disclaimer
a. Homicide – the intestate heir survives the ancestor by killing him.
i. 3 options in dividing the estate
1. Killer gets to keep the property like intestate statute says
2. Killer gets nothing because of the equitable principle that one should not profit from the crime.
Killer gets legal title as constructive trustee(assets go to killer only for an instant, but then to other heirs. As if the killer predeceased the decedent) for the other