Wills, Trusts, & Estates
Medlin 2014
Professor Alan Medlin
1-Intestacy
2-Creating Wills
3-Construing Wills
4-Creating Trusts
5-Construing Trusts
6-Power of Appointment
I. Background and Policy
A. Sources of Law
1. Foundational & related law
(i) Property law – statutory & common law
(ii) Contract law – statutory & common law
(iii) IRC – Estate & gift taxation provisions
2. Current/applicable law in SC
(i) 1969 Uniform Probate Code (UPC)
(ii) SC common law
B. Power to Transmit Property at Death – Policy Analysis
1. Arguments in support
(i) Encourage familial responsibility: allow decedent’s to take care of loved ones upon death => policy interest in preventing care of presumptive heirs from falling to state
(ii) Incentive to be productive: allow to accumulate additional wealth to provide stability and support to loved ones after death and thus be more productive during lifetime
(iii) Incentive trusts: allow decedent’s to condition support of loved ones after death (dead hand concept) and thus encourage certain desirable behaviors by heirs – three generally accepted categories of incentives:
(a) Pursuit of education
(b) Moral incentives
(c) Encourage productive career
2. Arguments against
(i) Dead hand control & inflexibility: decedent’s bequests & directions can’t be modified regardless of subsequent changes in circumstances – consequence and loss falls to heirs not decedent
(ii) Prevention of waste
(iii) Distribution of wealth
3. Policy Considerationsà there is a difference btwn positive and negative restrictions:
(i) Constitutional concerns such as due process and equal protection; if state action eliminates the right to devise and descent of a certain class of property, it is an unconstitutional taking (Hodel).
(ii) Prevent the destruction of property.
(iii) Can’t completely prohibit marriage by unreasonably preventing marriage, and you can’t foster family discord, such as divorce or the breaking up of a family. (Again, no room for negotiation or understanding.)
(iv) Restrictions on marriage based solely on race classifications violate the Equal Protection Clause
(v) You can require a change in behavior (go to college, get clean/sober, etc.).
(vi) Protecting the testator’s intent; sometimes you can use the dead hand argument that he would change his mind if he was alive today
(vii) Elective share (requirement that one-third of probate estate goes to spouse regardless of what you want)— policy behind the elective share:
(a) “Ward of the State”
(1) family is better able/more responsible to take care of family members than government
(2) economic partnership: both spouses contribute to the wealth creation (whether by working or staying at home); so both entitled to a share of the wealth that they helped create
(3) surviving spouse needs supportà don’t want spouse who stayed at home caretaking her whole life to be destitute
(4) paternalistic view
(b) Reasons against the elective share:
(1) It is my personal property
· Interference with right to use and enjoy
· Who are we as the state to make a better judgment about what people ought to do with their property than the people themselves
(2) Discourage savings, productivity, etc.
(viii) Estate Taxes (also called the death tax)
(a) What if estate taxes were set at 90%?
(1) Encourage waste today so that the government doesn’t get it at death
(2) Discourage savings and earnings
(3) Private property and productivity dampened
(ix) Policy of letting deceased devise generally:
(a) Custom
(b) Allow man to conform to his natural desires to propagate his kind after he is gone (Locke)
(c) Encourage production today
(d) Incentive for the young to care for the old
4. Cases:
(i) Hodel v. Irving:
(a) Facts:
(1) Congress passed the Land Consolidation Act that would escheat all land shares that constituted less than 2% of the total tract of Native American Plots of land to the tribe
(2) Several petitioners sued arguing that it was a taking
(3) The court held that it was a taking
· The right to pass on valuable property to one’s heirs is itself a valuable right
· The law is not all bad—it is aimed at fixing a real problem
o Property was divided between hundreds of owners, making it virtually impossible to know who owned what
o The administrative tasks were extremely burdensome
· However, the law limits one’s property right to exclude completely—necessitating a taking
· Gov’t can regulate, BUT cannot abolish the right to pass the property on
(ii) Shaw Family Archives v. CMG Worldwide
(a) Background:
(1) Defendants claimed to own the writes to produce and sell a Marilyn Monroe t-shirt
(2) Plaintiffs, residuary takers under Monroe’s will, claimed that a part of the residuary was Monroe’s Publicity rights (the clause said that the plaintiffs were entitled to “anything else which she shall be in any way entitled”)
(b) Testamentary disposition is controlled by the law in effect as of the date of death
(c) On Monroe’s death, there was no statute providing for publicity rights, therefore, she cannot have intended to have passed such a property right in her will
(1) Any publicity rights she owned were extinguished at death
C. Professional Responsibility/Ethics—MALPRACTICE
1. DUTYàSampson v. Calivas
(i) Background:
(a) Father wanted to leave his property to his son.
(b) Father’s will provided that all property was to go to his son except a life estate in the “homestead” which was to go to the son’s stepmother (with the son holding the remainder)
(c) In probate, the stepmother convinced the probate court that the term “homestead” basically included all of the father’s property & not just the house
(d) The son brought a malpractice suit against the father’s attorney, but the case was dismissed at the trial level because the court held that the drafting attorney owes no duty to an intended beneficiary
(e) The lawyer argued
(1) There was no duty to an intended beneficiary
(2) Probate court determination of the testator’s intent controlled and any action to construe it was collaterally estopped
(ii) On appeal, the court holds that a drafting attorney owes a DUTY to the intended BENEFICIARIES
(a) Exception to privity requirement for K’s
(1) Intended beneficiaries may enforce terms of a K as a TP beneficiary
(b) The drafting attorney’s duty to the son was reasonably FORESEEABLE
(1) It is foreseeable that the attorney knew that if he screwed up, the beneficiary son would be damaged – duty to prevent that
(c) Court rejects an interpretation that would only hold the attorney liable where the testator’s intent, as expressed in the will, was frustrated by th
, life insurance, retirement plan, annuity
2. §2-803 (b) joint tenancyàsevers JT and no right of survivorship
3. §2-803 (e) Prevents killer from serving as fiduciary
4. §2-803(f) Felonious and intentional killing (burden of proof required in these situations)
(i) A final criminal judgment of felonious and intentional killing is sufficient
(a) conviction for murder or involuntary manslaughter
(1) if the verdict is guilty of voluntary murder any criminal court conviction is binding on the civil probate administration
(b) If there is any other result (acquittal, guilty plea, etc.), the result is not conclusively binding on the civil/probate side
(ii) In the absence of a CONVICTION, the court may determine by a preponderance of the evidence whether the killing was felonious and intentional for the purposes of this section
5. § 2-803(h) Killer is deemed to have predeceased the victim if killer dies within 120 hours after feloniously and intentionally killing the decedent (use clear and convincing evidence standard)
(a) Passed to deal with the murder suicide – though statute does say “suicide”
(b) Eliminates rights (if any) of killer’s estate to take from decedent’s estate AND preserves rights (if any) of decedent’s estate to take from killer’s estate
B. DISCLAIMER
(i) Three Exam Basics up front
(1) A disclaimer is the refusal to take a gift that can be in whole or in part
(2)The effect of a disclaimer is that the disclaimant is treated as predeceasing the transferor so they are never in possession of the property
(3) You can’t manipulate, for intestacy purposes, where to divide the estate by disclaiming
1. What is a disclaimer?
(i) A DISCLAIMER is a refusal to accept a gift (a donative transfer)
(ii) You can disclaim in whole or in part –and- in life or at death
(iii) SC’s statutory disclosure right is located at SCPC §2-801
(iv) Partial disclaimers are valid
(v) Unlike a release, a disclaimer cannot be given for any consideration
2. When can you disclaim?
(i) Can disclaim at life or at death and in whole or in part (includes disclaiming power of appt)
(a) Disclaimer must be made w/in reasonable time after disclaimant gains actual knowledge of interest
(1) reasonable time if made w/in 9 months after date of effectiveness of transfer
3. Disclaimer must be:
(i) in writing;
(ii) declared as a disclaimer;
(iii) say what interest/power is disclaimed; and
(iv) be delivered to the transferor of the interest
(a) Made by personal delivery,
(b) first‑class mail (delivered on postmark date), or
(c) any other method that results in its receipt.
4. Effect of a disclaimer – disclaimant is treated as having predeceased the testator
