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Trusts and Estates
University of Toledo School of Law
Baker, Chad Richard

Trust & Estates Outline-Spring 2012-Baker

I. Introduction

A. Whose Money Is It? Competing Policy Concerns

1. Why Permit Gratuitous Wealth Transmission?

a. Pro-Transfer

1. Nature right and incentive to industry

a. Inheritance is a natural right-you’ve earned it

b. If you are concerned about inheritance, then you are concerned about having enough money to live and you can’t determine exactly how much money you need, so you’re not going to save up and give away tons of it and promote waste or inequality- you’re going to continue using it normally

c. If you take someone’s property away, there is a disincentive to work and save, and no incentive to use money wisely

2. Lack of control

a. It’s hard to enforce restrictions on transfers

3. Conspicuous consumption

a. Keeping up with the joneses: buying everything you can get your hands on

b. If you take everything away from people when they die, you might cause them to buy things they don’t want or need while they’re alive or things that they don’t value too much

4. Family contribution and reward

5. Cynical View

b. Con-Transfer (allowing estate to the state)

1. Promotes equality: stops the head start that wealthy kids get

2. Promotes productivity: because they’re not inheriting money

3. Reduces taxes elsewhere

2. Why and How do We Limit the Power to Transmit Wealth?

a. Conditions/Limitations Analysis

1. Is the condition unreasonable?

a. Was the intent of the decedent clear and does the condition relate to his intent?

b. Does the condition violate public policy?

c. Is the condition so restrictive that it can’t be satisfied?

2. Estate of Feinberg

a. Will left his assets in two trusts to his wife; on her death went to descendants that married into the Jewish faith

1. Wife had limited power of appointment-power that someone is given to change the direction or disposition of assets

a. Wife exercised the power: at her death not deemed deceased (married Jewish) would receive $250,000.

2. Only one kid got the money, the parents got the rest of the money. Child challenged it and her father defended it

3. Challenged based on public policy

a. Messed with the right to marry who you want

b. Ransdall: different bundle of rights for marriage (OK)

c. Winterland: same as Ransdall but Ct. said not ok

4. Illinois supreme court doesn’t agree with policy challenge

a. Not interfering but rewarding for certain decision

b. Not tearing apart marriage

5. Wife cut off descendent pool that could have kept going on and on

6. No const. right to do what you want with your money: but through CL right to distribute property at death, through positive legal rights

b. Slayer Statutes

1. Purpose of slayer laws: it is against public policy to allow a killer to inherit

a. Punish bad character: not a strong argument

b. Deterrence: not all homicides are voluntary, so not all can be deterred

c. Intent: strongest argument

1. Honor the intent of the deceased not to have person who killed them inherit

a. If someone knew that person would kill t

he survivors

2. Tenancies by the entirety

a. A joint tenancy between husband and wife

3. Contract assets: assets titled to a trustee, TOD/POS account, IRA, 401K, ERISA

4. Lifetime gifts

c. Gifts:

1. Inter Vivos: a gift made during the donor’s lifetime and delivered with the intention of irrevocably surrendering control over the property. If the intention is to make a testamentary disposition effective only after death, then the gift is invalid unless made by will

a. Elements:

1. Intent: to make a present transfer-even if it is the present gift of a future interest

2. Delivery: sufficient to divest the donor of dominion and control over the property

3. Actual: the act of giving real and immediate possession to the donee

4. Constructive: an act that amounts to the transfer of title by operation of law when actual transfer is impractical or impossible

b. Gruen v. Gruen

1. Dad wrote a letter giving a painting to his son, but reserved a life estate in it, and never actually delivered the paintings to him

2. He then learned from his lawyers that this wasn’t the way to go, so rewrote the letter giving him the painting as a gift and expressing his hope that the son would let him keep it until father’s death, which the son did