CHAPTER 1 INTRODUCTION TO ESTATE PLANNING
A. The Power to Transmit Property at Death: Its Justification and Limitations
1. The Right to Inherit and the Right to Convey
a. By testament is by written or oral instructions property witnessed and authenticated, according to the pleasure of the deceased, which we, therefore, emphatically style his will.
b. Rights to succession to deceased’s property are statutory creation
c. Hodel v. Irving
1. Indian property was divided so many times, the administrative costs outweighed the value of the land. So, some state passed a law consolidating it, but people said it was a constitutional taking
2. May need to reorganize fractionation by regulation of the descent and devise, but is not appropriate to take the extraordinary step of abolishing both descent and devise of these property interests even when passing the property to the heir might result in consolidation of property.
3. It goes too far under Mahon and it’s a taking
2. The Policy of Passing Wealth at Death
a. In a capitalistic economy we want people to be motivated to earn money and work—savings, rewards, and incentives to the donor.
b. Six options for property at death: (1) destroy it; (2) bury it with the deceased; (3) up for grabs, first come first take; (4) confiscate it for the government; (5) forced heirship; and (6) where the decedent wants it/use a will.
c. De Tocquevill: dangerous for wealth to remain in the same hands
d. Ascher’s six justifications: (1) spousal inheritance, (2) dependent lineal descendants, (3) large trusts for disabled lineal descendants, (4) unlimited for lineal ascendants, (5) charity up to 20%, and (6) $250,00 exempt for anything.
3. An Introduction to the Problem of the Dead Hand
a. Effect of a donative document: the donor’s intention not only determines the meaning but also the effect of donative document
b. Shapira v. Union National Bank
1. Father conditioned son’s inheritance on marriage to Jewish girl.
2. Right to receive property by will is creature of law, and not a natural right or one guaranteed or protected by state or US constitution
3. A partial restraint of marriage which imposes only reasonable restrictions is valid, and not contrary to public policy. The condition was not a covenant to restrain the freedom of religious practice.
B. Transfer of the Decedent’s Estate
1. Probate and Nonprobate Property
a. Probate property: property that passes under the decedent’s will or by intestacy
b. Examples of nonprobate property: joint tenancy property ,both real and personal; life insurance; contracts with payable-on-death provisions; interests in trust
1. Still included in the estate tax package
2. Administration of Probate Estates
a. History and Terminology
1. If a Personal Representative is not appointed the preference is: surviving spouse, children, parents, siblings, creditors
2. A person dying testate devises real property to divisees and bequeaths personal property to legatees. When person who dies intestate, the real property descends to heirs; personal property is distributed to next-of-kin.
3. Duties of the PR:
a. inventory and collect the assets of the decedent;
b. manage the assets during administration;
c. receive & pay claims of creditors and tax collectors;
d. clear any titles to cars, real estate, or other assets; &
e. to distribute the remaining assets to those entitled
b. A Summary of Probate Procedure
1. Probate performs 3 functions: (1) provides evidence of transfer of title to new owners by a probated will or decree of intestate succession; (2) it protects creditors by requiring payment of debts; and (3) it distributes the decedent’s property to those intended after the creditors are paid
c. Is Probate Necessary?
1. Probate can be expensive. Probate can be avoided by inter vivos transfers and by placing property into joint tenancy. However, this is not suitable for all property
d. Universal Succession
1. UPC §3-312 to 3-322 authorizes universal succession as an alternative to probate administration. Similar system in LA
3. Probate Process in Nebraska
a. Jurisdiction §24-517(1) exclusive original jurisdiction of all matters relating to decedents’ estates, including the probate of wills and the construction thereof …
b. Venue §30-2410 (a) venue is informal or formal testacy is (1) where decedent had his domicile at death; or (2) if decedent not domiciled in this state, in any county where property is located
1. Domicile means where they were living w/ intent to remain
c. Informal Probate
1. Admit will to probate, if one exists, court then determines that will is valid and constitutes last will and testament
2. Appoint PR to the estate
3. 30-2412 priority to appoint as PR: person nominated in will, surviving spouse who is devisee, other devisees, surviving spouse, other heirs, after 45 days any creditor
4. 30-2414 application for informal probate/appointment directed to registrar (court) and verified by applicant
a. Talks about what application must contain (venue, jurisdiction, original will attached, applicant belief that this is last will of decedent)
b. Once approved court issues order admitting will and appointing PR
d. Formal Probate
1. Need hearing in front of judge.
2. Then file petition for formal probate, get a date, and provide notice to interested parties.
3. 30-2209(21) Interested person includes heirs, devisees, children, spouses, creditors, beneficiaries, and any others having a property right in or claim against a trust estate or the estate of a decedent…
4. Must wait at least 5 days after death to file application. Creditors have 30 days. Any interested party can file the application.
e. Both formal and informal are unsupervised probates. With a supervised probate, the court watches and requires authorization and documentation. In this case, someone has contested the will or done something to create this heightened standard.
f. 30-2467 w/in 3 months of appointment, PR shall inventory & appraise probate property—don’t need nonprobate property
1. In Neb don’t usually get an appraisal, unnecessary
g. 20-2476 acceptable actions of PR (1) retain assets, (2) receive assets (3) perform contracts, (i) execute/deliver deed (4) satisfy charitable pledges, (5) divest assets, if needed, (6) acquire or dispose asset, (7) make ordinary repairs, (8) divide land, (9) enter lease—basically anything you could do with your own property
h. 30-2478 co-representatives allowed, concurrence required
i. 30-2480 PR entitled to reasonable compensation
1. PR fee is an estate tax deduction. Courts have no problem if less than 2%. Not favorable if higher than atty’s fees.
j. 30-2483 clerk shall publish notice 1/week for 3 weeks w/in 30 days of appointment of PR
k. 30-2485(a)(1) claims are barred unless filed w/in 2 mos after date of first publication of notice to creditors. Creditor who did not receive notice has 60 days after expiration
book P. 79 Table of consanguinity
g. 30-2353 Divorce, annulment, separation: “final decree of judgment or divorce” in Nebraska have a 6 month waiting period for divorce to be final, but the waiting period terminates if one dies, so the divorce becomes final at one of the spouses death
h. Janus v. Taraswicz: H & W poisoned by Tylenol, wife comatose but survives; wife’s family got the LI
i. 30-2304 Requirement that heir survive decedent for 120 hours
j. Uniform Simultaneous Death Act 30-121 et seq.
i. 30-124 if simultaneous deaths of insured and beneficiary, proceeds distributed as if insured survived beneficiary
3. Shares of Descendants
a. After spouse’s share (if any), children and issue of deceased children take remainder of property to exclusion of everyone else
b. When one of the children has died before the decedent, the children’s decedents represent the dead child and divide the child’s share among themselves.
c. Three methods of intestate succession: (see worksheet)
i. English per stirpes aka strict per stirpes: divides the property into as many shares as there are living children of the designated person and deceased children who have descendants living
ii. 1976 UPC modern per stirpes or per capita with representation: treats each line beginning at the closest living generation equally
1. 30-2306 estates is divided into as many shares as there are surviving heirs in the nearest degree and deceased persons in the same degree who left issue who survive, each surviving heir in nearest degree receiving one share and the share of each deceased person being divided among his issue in the same manner
iii. 1990 UPC per capita at each generation: treats each taker at each generation equally with the other takers at that generation
4. Shares of Ancestors and Collaterals
a. If there is no spouse or parent, the decedent’s heirs will be more remote ancestors or collateral kindred. All persons who are related by blood to the decedent but who are not descendants or ancestors are called collateral kindred.
B. Transfers to Children
1. Meaning of Children
a. Adopted Children
1. Hall v. Vallandingham
a. Husband died survived by wife and 4 kids. Wife married Jim, who adopted the 4 kids. Husband’s brother dies childless, unmarried, and intestate.
b. Held: An adopted child has no right to inherit from the estate of a natural parent who dies intestate, it follows that the same child may not inherit through the natural parent by way of representation.
2. UPC (1990) §2-114
a. (a) Whether parents were married or not is not an issue for inheritance
(b) An adopted individual is the child of his/her adopting parent or parents and not of his/her natural parents, but adoption of a child by the spouse of either natural parent has no effect on (i) the