Wills and Estates Outline

WILLS & ESTATES OUTLINE
Prof. Steven Goode – Summer 2010

I. Introductory Material
A. Theoretical Issues
1. Is the right to pass property at death a good thing?
a) Halbach argues that it is because it makes the donor happy, reinforces family ties, and (most importantly) provides an incentive to work and earn beyond what just one person can consume
b) Bentham argues it is because it encourages the young to care for the old
c) Ascher argues that it is not; that if the government took all property at death, it could wipe out the deficit (but he would provide for exceptions, notably surviving spouses and minor children
d) Blum argues that inheritances don’t make much of a difference in inequality among economic classes; rather, it is day-to-day income and cultural experience that causes the wealth gap
e) Langbein says inheritances today aren’t as important as they were in the day of the family farm; more important today are things like educational expenses for children and other inter vivos transfers; thus, parents today save less and consume more
2. Does the ability to pass property at death encourage saving by the testator, or discourage work by the donees?
3. Today, the law is in flux because:
a) Types of property are changing – unlike the past, when land was the most important family asset, today personal property accounts for most wealth
b) Marriage is changing (½ end in divorce; 83% and 78% of women remarry)
c) The family is changing (kids born out of wedlock, people live together instead of marrying, same-sex marriages are under consideration)
d) The financial relationship between spouses has changed
e) People are living longer
f) Today there are many will substitutes – ways to dispose of property without a will
(1) Thus, there is a “dual system,” but there is a movement to integrate the two (e.g., the Uniform Probate Code [UPC])
B. What limitations on bequests are permissible?
1. There is very little a testator can’t do – the general attitude is it’s the testator’s property and he can do what he wishes
a) The basis behind this rationale is that the testator could place conditions on devises while alive, so why not at death? However, this ignores the fact that you can change your mind while alive
2. Thus, in Shapira, a bequest requiring a son to marry a Jewish girl by a certain age is perfectly acceptable as a condition on the will
a) Contrast with wills that are a total restraint on marriage – a will with a marriage requirement is only valid if it does not “unreasonably limit the ability to marry, where reasonableness is equal to “likelihood of occurrence”
b) Thus, the marriage requirement in Shapira is OK (there were lots of Jewish girls around) while one placed on a woman in the Circle of Friends religious order isn’t
c) Restraints on remarriage are virtually always permissible
3. State action can sometimes limit what a testator can do, but the cases are all over the board on what state action means
a) For example, Shelley v. Kraemer said a racially restrictive covenant was void because it required state action (e.g., the court) to enforce it
b) Similarly, in Evans land devised for a white-only park is invalid because park maintenance was a government function (e.g., state action); also, Penn dealt with an endowment for a white orphanage/college – court says board was an “agent of the state” and thus there was state action
c) Generally, though, we allow testators to do with their wills what we wouldn’t let the government do.
C. Malpractice
1. The key to success in estate planning is to avoid the pitfalls (and there are many!) A wills practice is probably the easiest type to practice in and get sued for malpractice
2. Privity
a) This is the key to determining if a will beneficiary can sue
(1) Most states have removed the privity barrier for beneficiaries to sue (e.g., Lucas v. Hamm in California and Ogle v. Fuiten in Illinois)
(a) Problems with this approach: are damages just equal to the bequest, or can consequential damages be had? Also, potential conflict if lawyer has to worry about beneficiaries suing
(2) 5 states have not removed this barrier (including New York and Texas)
(a) In these states, only the client (e.g., the decedent) can sue – thus, a wills practice is much safer in Texas
3. The law of wills is becoming less rigid, largely because malpractice has become such a problem
D. Basic Estate Planning
1. Probate and Nonprobate Property
a) Probate property is anything passed via a will or intestacy
b) Nonprobate property is anything passed by an instrument that isn’t a will which became effective upon death. Ex.:
(1) Joint Tenancies
(2) Life Insurance
(3) Contracts with “payable on death” provisions (e.g., IRA’s)
(4) Property passing via power of appointment
c) Thus, it is important to know not just what property is held, but how that property is held
2. Estate Administration (Duties of executor/administrator)
a) Inventory and collect decedent’s estate
b) Manage assets during administration
c) Receive and pay claims of creditors and tax collectors
(1) Some states assume that if you pass burdened property, that the estate pays any liens and the property passes unburdened (but other states don’t)
(2) If the statute of limitations has run on the debt on a piece of property, the executor may not pay the debt
(3) Although many wills contain “just debts” clauses, they aren’t necessary since state law requires such debts to be paid (but the clause is useful if it directs how those debts should be paid)
d) Distribute remaining assets to those so entitled
3. T