Wills & Trusts Outline
Guzman Fall 2011
Background
Vocabulary
Definition
Testate
Intestate
Person who dies
Testator or decedent
Intestate or decedent
Property
Testate estate
Intestate Estate
Taker of property
Generically beneficiary; more specifically, devisee if taking real property or legatee if taking personal property
Generically heir; more specifically distributee or “next of kin” for personal property
Method of distributing assets
Probate
Administration
Officer of the court
Executor
Administrator
Gift vs. Will
· Common denominator
· Voluntary
· No consideration
· Elements of a gift
· Intent (present, donative)
§ This is the most critical and often the most difficult to determine
· Delivery
§ Some jurisdictions treat this as consumed in the intent element
§ Either way, it helps to prove donative intent, particularly in the actual delivery context
§ Recall the “wrench of delivery”
§ Types: actual, constructive, symbolic
· Acceptance
§ Possession is a very strong indicator
§ Acceptance is presumed if the gifted property is “valuable”
· Not an ir-rebuttable presumption
· Miscellaneous gift stuff
· A gift is complete when all three elements are complete
§ Does not necessary have to be in the logical order of the elements above
· Title/ownership/rights transfer immediately upon completion of the gift
§ Cannot be revoked once completed
· Technically, a gift can never be revoked (before or after) because revocation implies there's actually been something completed and once a gift has been completed it cannot be taken back
· Elements of a Will
· Intent
§ Testamentary intent – present intent to make a transfer at death
· This would be donative intent and we would want to make the transfer in a Will
§ Related to donative intent
· Formalities
§ These form the evidentiary corollary of delivery to indicate that there is in fact testamentary intent
§ Usually this is a signed and witnessed writing
· Death of donor
· Miscellaneous Will stuff
· A Will is not complete/executed (that is, transfer doesn't take place) until Death.
· Remember, you only have a mere expectancy if you are told you are going to get something in someone's Will – even if the Will is valid.
§ You have nothing until death
· Difference
· Delivery => present transfer
Unit 1 – Intestacy
In general, intestacy schemes/statutes are written in order to give effect to what the legislature thinks most people would want to happen to their property if they had prepared a will.
· We don’t care at all about what the individual decedent wanted; we are concerned with how a “normal” person would want their property to be disposed of.
· This is a completely impossible task for the legislature. Also, the legislature tends to target the demographic that is most likely to die intestate, so if you don’t fit that demographic then the intestacy scheme may not work very well for you.
o i.e. young, poor, unmarried, uneducated, childless, and/or healthy people are more likely to not have wills
o Over half of the population still dies intestate.
It is important to think of intestacy schemes as the default rule or presumption. Normally, people can opt out of the intestacy scheme by simply writing a will (or doing something else that alters the scheme or disposes of property at death). However, there are two classes of individuals who are categorically not allowed to opt out of intestacy; although, the specific definitions of these two classes varies by jurisdiction.
1) Minors
· Oklahoma and many states requires 18
· Others, it's 14
· Some states allow under 18 if married
2) Incompetent/Incapacitated
· This is a very low bar, but people who lack testamentary capacity cannot opt out of the intestacy scheme
A. Scheme
Rule #1: In order to take in intestacy, the person in question must have survived the decedent.
· We don’t care whether they survive the probate of the decedent’s estate, but they do have to survive the decedent.
· There are usually minimum requirements for how long someone must outlive the decedent in order for them to be considered a survivor—see Part C: Status, infra.
· Rationale: We want property to be used for the benefit of the living
Rule #2: Except for the decedent’s spouse, heirs are usually always related by blood or adoption, never by marriage
· The exception to this is steps in some jurisdictions (but adoption usually required)
· Rationale: Blood is thicker than water
Rule #3: If there is a surviving spouse, the spouse always takes under intestacy (barring a valid pre-nup).
· Rationale: We presume that the decedent wants to take care of his or her spouse
Rule #4: If the decedent doesn’t leave a surviving spouse but does leave descendents will take to the exclusion of everyone else
· We look down before every considering going up or to the side. If there are descendants, then collaterals will NOT take.
· Rationale: Progeny is more important to decedent than ancestors
o This is a cultural assumption
Spouses
Recall Rule #3: If there is a surviving spouse, he or she will always take something in intestacy
Recall that property held by a couple in joint-tenancy or tenancy by the entireties automatically passes to the surviving spouse upon the death of the other. Therefore, this property is NOT included in the decedent’s estate!
We looked at two schemes for spouses: 1) 1990 UPC, and 2) Oklahoma:
Scheme – X survived by:
Rule
1 – UPC 2-102 (pg 73)
Spouse only
Spouse gets everything
Spouse + all joint issue w/ no “other”
issue of either decedent or surviving
Spouse
Spouse gets everything
Spouse + any issue of decedent only
(surviving spouse’s steps) irrespective of whether there are also jt issue or issue of surviving spouse
$150,000 + 1/2 of what's left
Spouse + any issue of surviving
spouse only (decedent’s steps) and joint issue. (Note: need joint issue to kick rule in–why?)
$225,000 + 1/2 of what's left
Spouse + issue of only surviving spouse
No rule – spouse gets everything
Spouse + parent(s)
· Note that there is no sibling included here.
$300,000 + 3/4 of what's left
2 – 84 Okla Stat 213(B)
Spouse only
Spouse gets everything
Spouse + all joint issue w/ no “other”
issue of either decedent or surviving
Spouse
1/2 of decedent's estate
Spouse + any issue of decedent only
(surviving spouse’s steps)
1/2 Joint industry property (JIP) + an “undivided equal part” in the non-JIP
Spouse + any issue of surviving
spouse only (decedent’s steps)
No special rule – ignore steps and look for another category
Spouse + parent(s)/siblings
All JIP + 1/3 non-JIP
UPC Considerations
· The surviving spouse will always get more than half!
o Under Oklahoma’s rules, the spouse will get at least half, but not guaranteed
oot is “alive” so long as someone somewhere in its lineage is living. If everyone in a lineage predeceases, then the root is “dead.”
2) Degrees
· Horizontal category denoting number of generations
· i.e. children, grandchildren, great-grandchildren, etc.
Rule #6: Issue of a more remote degree from the decedent cannot inherit if their ancestor (same root but closer degree to decedent) can.
Rule #7: Issue of a more remote degree can inherit (by representation) if their ancestor cannot, even when there are other issue of decedent in a closer degree but a different root.
· As discussed below, we have 3 schemes of representation. It is important to remember, however, that the schemes only affect the outcome when issue are taking by representation. That is, the schemes discussed below only play if an heir is taking through his or her ancestor—not if he or she is taking directly.
3 Representation Schemes
1) Pure per stirpes
· Go to the child (first) generation NO MATTER WHAT
· Count the number of live roots in that generation
· Allocate a share to each root and divide down, if necessary
– This achieves perfect vertical equality—each child’s root gets an equal share
2) Modified per stirpes
· Go to the first generation with at least one living member
– This will only differ from the pure per stirpes when there is no living member left in the first/child generation
· Count the number of live roots in that generation
· Allocate a share to each root and divide down, if necessary
3) 1990 UPC
· Go to the first generation with at least one living member
· Count the number of live roots in that generation
· Allocate a share to each living member in that generation
– If there are 5 live roots and only 2 live people in that generation, then the 2 living people would each take 1/5 and the other 3/5 would be distributed in the next step
· Combine the remainder & allocate a share of it to each qualified taker at the next generation
– A qualified taker is an heir whose ancestor did not take in the step above
· Repeat as necessary
– This last part refers to repeating the step immediately above.
– An illustrative hypo
o X has 5 children, A – E. A, B, & D predecease X. A leaves children 1 & 2; B leaves 3, D leaves 4 & 5. 2 predeceases X leaving y & z.
o There are 5 live roots at the first generation and two living members.
o C & E each take 1/5 (2/5 or 10/25 is accounted for at this generation)
o 1, 3, 4, & 5 each take 3/25 (12/25 accounted for at this generation)
o y & z each take 3/5) (3/25 accounted for at this generation)
o 10/25 + 12/25 + 3/25 = 25/25 and the entire amount is accounted for
– This hypo illustrates that the UPC approach achieves perfect horizontal equality—each eligible taker in the same degree takes the same amount
o i.e. all cousins get an equal share
