TRUSTS AND ESTATES OUTLINE
CHAPTER ONE: INTRODUCTION TO FAMILY PROPERTY LAW
Societal changes over the last several decades have led to changes in Family Property Law:
Children of Assisted Reproduction
Non-marital and Adopted children are generally treated the same as marital children
Main Underlying Theory of Family Property: Freedom of Disposition, which includes:
The right to give property away during life and pass it on at death
The right to choose who gets it
The right to choose in what form they get it
The right to give another person the right to make those choices after death
Limitations/Restrictions on the Freedom of Disposition
Not constitutionally protected right
Federal transfer tax laws
The elective share
Rule Against Perpetuities
Tax Implications: Federal Tax System has 3 Federal Transfer Taxes:
Federal Estate Tax: taxes people’s estates, and is based on substance over form (no distinction between probate/non-probate)
Federal Gift Tax
Federal Generation Skipping Transfer Tax
State Probate Tax Laws are based on Form over Substance, and make major distinctions between probate/non-probate transfers.
Probate Transfers: consists of property owned by the decedent at death (titled in the decedent’s name), which passes under a will or under the rules of intestacy, through probate.
Probate Property: if the decedent has a valid will, the will controls the probate property. However, if the decedent does not have a will or the will is invalid, then the probate property passes through the laws of intestacy, which are statutory.
Non-Probate Transfers: property that is subject to a will-substittue. An arrangement respecting property or contract rights that is established during the donor’s lifetime under which (1)the right to possession or enjoyment of the property or contract right shifts outside of probate to the donee at the donor’s death; and (2)substantial lifetime rights of dominion, control, possession, or enjoyment are retained by the donor.
Intervivos Trusts (revocable intervivos trusts or lifetime trusts): the donor establishes the trust during his/her lifetime and the terms state that the donor retains the right to income during life and retains the right to revoke
Joint Accounts: bank accounts with right of survivorship
Joint Tenancy with right of survivorship
TOD or POD: transfer on death or pay on death
Some other miscellaneous non-probate instruments
Intestate: person dying without a valid will
Testate: a person has died with a valid will, and is therefore a testator
Partially Intestate: a will does not dispose of all the property
Descent: inheritance of land in English Law of Intestacy.
Heirs: those who took land in English Law of Intestacy
Distribution: succession to personal property in English Law of Intestacy
Distributees or Next of Kin: those who took personal property by Intestacy
Devise: a disposition of land b
eath Act: if there is no sufficient evidence that the persons have died otherwise than simultaneously (eg. car accident), the property shall pass as if he had survived.
UPC 2-104: an individual who fails to survive the decedent by 120 hours is deemed to have predeceased the decedent for purposes of intestate succession. The survival must be established by clear and convincing evidence.
UPC 2-702: similar requirement for wills and other instruments
Death: an individual who has sustained either (1)irreversible cessation of circulatory and respiratory functions; or (2)irreversible cessation of all functions of the entire brain, including the brain stem. Determinations of death are made in accordance with accepted medical standards
Children born after Death: children born after the decedent’s death are generally not eligible to receive decedent’s property.
Children in Gestation: common law treats children in gestation at the decedent’s death as if they were alive if they are subsequently born alive. UPC: requires child to be born and survive birth by at least 120 hours.
Note: important to note that UPC treats a non-surviving as if they predeceased the decedent. Especially important in simultaneous death cases.