WILLS, TRUSTS, & ESTATES
THE POWER TO TRANSMIT PROPERTY AT DEATH – JUSTIFICATIONS AND LIMITATIONS
The Right to Inherit and the Right to Convey
Inheritance existed before wills and testaments.
Testament = written or oral instructions properly witnessed and authenticated, according to the pleasure of deceased
Until 1980’s, it was generally the view that the right to transmit or inherit property at death was neither a natural right nor was it constitutionally protected (it was only a civil right).
Hodel v. Irving
Land act gave Indians’ land and allotment policies led to the land being divided up into hundreds of parcels.Land Consolidation Act attempted to fix the problem:
Escheat provision provided that if land represented 2% or less of tract’s acreage and earned less than $100 to its owner, it cannot be inherited and escheats to the tribe.No provision for payment.
The right to pass on property to one’s heirs is a valuable right – a total abrogation of these rights cannot be upheld.(Right to will).
A complete consolidation of both descent and devise of a particular class of property may be a taking.Even the US concedes that total abrogation of right to pass property is unprecedented and likely unconstitutional.
It would be better for the US to fix fractionation by regulating descent and devise, without completely eliminating right to descent.
The ability to effectively control disposition on death through complicated inter vivos transactions is not an adequate substitute for the property taken
Opinion rests on the assumption that the right to transmit property at death is a separate, identifiable stick in the bundle of rights, and if taken away, must be compensated for it.
Shaw Family Archives v. CMG Worldwide (Marilyn Monroe case)
Monroe’s estate (Plaintiffs) argues that it is the successor-in-interest to the postmortem right of publicity devised through the residuary clause of Monroe’s will & that the commercial use of Monroe’s picture, etc. without consent violates its rights under Indiana’s Right of Publicity Act.
Statute creates a descendible and freely transferrable right of publicity that survives for 100 years after personality’s death.
Descendible postmortem publicity rights were not recognized in NY, CA, or IN, at time of Monroe’s death in 1962.
P argues that will should be construed as devising such rights later conferred – court DISAGREES.Neither state in which Monroe lived permitted a testator to dispose by will of property she does not own at death.
Testamentary disposition is controlled by law in state you live in at death.
NY and California laws – will/disposition at death passes property owned at death
UPC 2-602 – a will may pass “property acquired by the estate after testator’s death” – court says no, CA and NY had not adopted this.Even if they had adopted it now, testamentary disposition is controlled by the law in effect as of the date of death.
Today, in CA, new law says publicity rights are devisable at death, even by residuary clauses made before 1984.
T dies owning Blackacre.T has one intestate heir, X, but T devises his entire estate including Blackacre to Y.Two years later, D dies devising Whiteacre to T if living, and if not, to T’s estate.Who gets Whiteacre?
Law in effect when I died is what I own.
2-602 says a will may pass property acquired by estate after testator’s death. Comment says the section was revised to assure that a residuary clause passes property acquired by estate after his death. Comment is not law.
SC 62-2-602 says a will is construed to pass all property testator owns at death including property acquired after execution of will.
Does this include property acquired after death – controlled by will?Probably NO.
If we had 2-602 in SC, Y would get it.
Or, if D had died first and T had gotten property, would have def. gone to Y.
Rule of construction:The law prefers not to create an intestacy.
The Policy of Passing Wealth at Death
Inheritance remains one of the purest forms of “getting something for nothing”
Arguments in support of inheritance:
Least objectionable way of dealing with prop. on owner’s death = simple.
Donors want it – natural & proper as expression & reinforcement of family ties (important to healthy society and a good life)
Comfort during life to know that loved ones will be provided for, etc.
Incentive for society and economy – productive/save money.Might bring forth creativity, hard work, initiative, individual responsibility, even after they’re taken for themselves.
What harm is there if individuals pursue immortality and psychological satisfactions through socially approved channels?
Vital to economy’s capital base and to level of employment & productivity.
Arguments against inheritance:
Perpetuates wide disparities in distribution of wealth
Concentrates inherited economic power in hands of a few and denies equality of opportunity to poor
US hasn’t used transfer of wealth to raise much revenue; proposition that property rights should end at death; all property owned at death could be sold and proceeds paid to US (with some exceptions)
Distribution of wealth – discourage the inheritance of large fortunes
Large fortunes should dissolved into small fortunes upon death; no individual could inherit more than $1 million…
Inequalities may result not only from inherited wealth, but also from uneven investment in human capital of children across families.
Intergenerational wealth transmissions no longer occur primarily upon death of parents, but rather, when children are growing up.
Education more important than property; children of propertied parents much less likely to expect an inheritance; today’s children don’t always depend on wealth transfer at death
Government limits ability to give property away – federal estate and gift tax.
Tax on giving property away in lifetime and at death – applies to pretty much everything you own.
In 2001, Congress b
Duties to Intended Beneficiaries:
Simpson v. Calivas (NH 1994)
– May intended beneficiary sue the drafting attorney for malpractice?
Claimed D failed to draft a will that incorporated actual intent of P’s father. Did the term “homestead” refer to all of decedent’s real property or only to the house?
Complained that attorney was not specific enough in portraying client’s intentions in will.
Probate court awarded all real property + house to stepmother but attorney notes said that only house goes to her and land went to son.Lower court dismissed claim against lawyer and did not admit notes.Lower court said drafting attorney owes no duty to intended beneficiary.
: Reversed – attorney who drafts testator’s will owes a duty of reasonable care to intended beneficiaries.
Issue of Privity:
Usually need privity, but exception where risk to person not in privity is apparent – there is foreseeable harm to the intended beneficiary – there is no other remedy for them.
Novel issue in SC – some states have ruled that privity is a defense, SC has not expressly ruled that privity is not a defense.
Third-Party beneficiary right to sue
Intended beneficiary states a cause of action simply by pleading sufficient facts to establish that attorney has negligently failed to effectuate testator’s intent as expressed to the attorney.
A third-party beneficiary status necessary exists where the K gives promisor reason to know that a benefit to 3rd party is contemplated…
Ex – where a client has identified to attorney to whom he wishes his estate to pass
Probate court must determine testator’s intent – may consider extrinsic evidence when terms of will are ambiguous.
Collateral Estoppel issue:
Only applicable if finding in the 1st court is essential to judgment of court – finding of actual intent is not necessary to that judgment so this cannot be the basis for CE – basically, probate court can screw up and that’s ok – can still sue for malpractice.
Before the will is actually signed, duty is solely to the testator.After that, loyalty splits.
SC case – Rydde v. Morris – sick client contacted lawyer, lawyer sent out questionnaire – some docs signed but no will.There was no duty.
Probate court jurisdiction – most courts today reject the claim that a probate court’s conclusions about testator’s intent in a construction suit are determinative in a malpractice suit.