Wills and Trusts
CHAPTER 1: INTRODUCTION TO WILLS, TRUSTS, AND ESTATES
I. THE POWER TO TRANSFER PROPETY AT DEATH
a. Right vs. Privilege
i. Governmental Power to Regulate: Irving Trust Co. v. Day, “Nothing in the Federal Constitution forbids the legislature of a state to limit, condition, or even abolish the power of testamentary disposition over property within its jurisdiction
ii. Government cannot abrogate completely: Hodel v. Irving, barring inheritance of Indian land allotments and providing for “escheat” to the tribe is considered a taking under the Takings Clause of the 5th amendment.
II. “DEAD HAND” CONTROL
a. Definition: Decedent conditions a gift to a beneficiary upon a beneficiary behaving in a certain way. (exercising control over beneficiary after death)
b. Valid unless:
i. Condition constitutes a complete restraint on marriage (partial restraint probably okay), requires a beneficiary to practice a certain religion, encourages divorce or family strife, or directs the destruction of property
c. Remedy: If condition violates public policy then:
i. Gift-over clause: a clause in the instrument that provides where the gift is to go if the condition or restriction is not satisfied
ii. No gift-over clause: permit beneficiary, who is subject to the condition, to take the property free and clear of any conditions
III. WHO TAKES DECEDENT’S PROPERTY
a. Probate Property:
i. Passes pursuant to the terms of the decedent’s will, otherwise through intestacy
b. Non-Probate Property:
i. Passes pursuant to the terms of the non-probate instrument
ii. Limited to:
1. Property held in JT
2. Life insurance contracts (modern trend expands this exception to include all contracts with payable-on-death clauses)
3. Legal life estates and remainders
4. Inter vivos trusts
IV. THE PROBATE PROCESS: AN OVERVIEW
a. Default:
i. Probate is the default. The decedent must take affirmative steps (execute a valid will or create a valid non-probate instrument) to avoid having the property pass through probate.
ed if all the decedent’s property is non-titled personal property. But if takers opt not to open probate, those who take the decedent’s property may take subject to creditors’ claims.
V. ESTATE PLANNING
a. Key Objectives: In advising a party about his or her estate plan, the key objectives that an estate planning attorney should keep in mind are (1) honoring the party’s intent (2) avoiding estate taxes, and (3) avoiding probate
b. Professional Responsibility:
i. Under the common law approach, the attorney owes no duty of care to and is not in privity of contract with, intended beneficiaries. Accordingly, intended beneficiaries have no standing to sue for malpractice.
ii. Under the modern trend, an attorney owes a duty of care to intended beneficiaries, and intended beneficiaries are third party beneficiaries with respect to the contract between the attorney and testator. Intended beneficiaries have standing to sue for malpractice.
