Trust and Estates
Professor Loebl
Summer 2010
Trusts and Estates
-know the minority rules, the majority rules, the UPC rules
5/24/2010
Assignment 1: Problem of the Dead Hand (27-47), 71-80, 87-97
-issue: how long should we let the “dead hand” control?
I. Restatement (Third) of Property: Wills and Other Donative Transfers
A. Section 10.1: Donor’s Intention determines the meaning of a donative document and is
Given effect to the maximum extent allowed by law
1. property owners have the nearly unrestricted right to dispose of their property
As they please
2. American law does not grant courts any general authority to question the
Wisdom, fairness, or reasonableness of the donor’s decisions about how to
Allocate his property
a. main purpose of the law is to facilitate and not regulate
i. establishing rules under which sufficiently reliable determinations can be made regarding the content of the donor’s
intention
ii. American law is supposed to step in when and only to the extent
that the donor attempts to make a disposition or achieve a purpose
that is prohibited or restricted by an overriding rule of law
b. does this always happen? No- the court and society sometimes can get
their opinion or view in even though it is supposed to be relying on the
intent of the decedent
3. Shapira v. Union National Bank: Decedent leaves the remainder of this estate in three shares to his sons with provisions that his sons, including the plaintiff Daniel, marries a Jewish girl with two Jewish parents. He brings claims alleging a constitutionality issue and a public policy issue. There is a 7-year time limit. If he
Does not marry someone in this category, there is a gift-over (goes to a second party if the action of the first party is not met). In this case, it goes to the state of Israel. In this case, the decedent took into account what happens with the gift- over.
a. Constitutionality issue: he claims it violates the 14th Am. right to marry
i. P alleges the state action necessary for the 14th Am. Case is the court upholding this will- it comes from the courts enforcement of the restriction his right to marry
ii. Shelley v. Kraemer case not applicable here- the court is being ask to enforce the testator’s restriction up on his son’s inheritance and not his right to marry- inheritance is not a natural right
iii. not interfering with the right to marry- Daniel can marry anyone he wants to and if he chooses to marry a Jewish girl with Jewish parents, he gets 1/3 of his father’s estate but if he chooses not to, then he doesn’t get the inheritance with is not a violation of the 14th Am.
iv. look at Decedent Shapira’s constitutional rights too- it is his property and he can dispose of it as he pleases- right that you have when you own property- you can sell it or when you die, you can will it- you can’t deprive people of that right and laws that do that are unconstitutional
v. there is not a constitutional right to inheritance- especially one that violates other constitutional provisions and rights
-should there be a right for this for children from being disinherited like they do for spouses? This is an issue
b. Public Policy issue: the fall-back provision
i. partial restraint on marriage in this case and violated his free choice of religious practice (coercing him to be Jewish P argues)
ii. P argues that the restriction is coercive of his religious practice
-the court says this not true- you are not forced to practice the religion by marrying a Jewish woman (he doesn’t have to be jewish- just has to marry a jewish woman)
iii. partial restraints on marriage: valid as long as reasonable restrictions- generally are upheld by the courts
-in order to be upheld, it cannot be unreasonable
-reasonable restraint: a restraint unreasonably limits the transferee’s opportunity to marry if a marriage permitted by the restraint is not likely to occur. (Note 3 page 34)
-factual question; look at all circumstances
iv. Cites to the Maddox v. Maddox case: but this is different- the court says that in 1854, there were only 5 eligible people for the P to marry and in this case, it is not the same situation with transportation and there are more people to choose from so the P in this case doesn’t have the same unreasonable restriction and he is not even limited to those people in his area
c. Conclusion: Daniel does not get the inheritance but we do not know where Daniel’s third went- the lawyer would not tell them
d. Not all courts apply the reasonable test- some do not take that into consideration (like Illinois in note 4 page 34)
4. Invalid Restrictions
a. a will or trust provision is ordinarily invalid if it is intended or tends to encourage disruption of a family relationship unless the issue is support (note 5 on 35)
b. provisions encouraging separation or divorce are usually invalid unless
the dominant motive of the testator is to provide support in the event of separation or divorce (note 5 on 35)
c. Restatement (Third) of Trusts Section 29(c) (2003): invalidates trusts that are contrary to public policy
5. Incentive Trusts
a. what happened in the Shapira case
b. focuses on ensuring that the beneficiary does not adopt a slothful or wasteful existence as on religion or marriage
B. Transfer of the Decedent’s Estate (page 38)
1. Probate and Nonprobate Property
a. Probate: property that passes through probate under the decedent’s will
or intestacy (most pass OUTSIDE of probate)
i. administered by the court (can be expensive)
-court costs, lawyers get fees, personal reps get fees
-becomes a matter of public record and now what it is the will, can be made public and people generally do not want this to be made public
-can take a very long time to administer the estate
-functions of probate:
(1) provide good title
(2) protection of creditors
(3) distributes the decedent’s property to those intended as the decedent wants it
-under all intestate succession statutes, parents of the decedent are not heirs if the decedent leaves a child
– a decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession
-while your parents are alive, you cannot be an heir- you are an heirs apparent and you have an expectancy to inherent but you do not have a vested property interest until you are an heir
B. 2-102: Share of Spouse (page 73 [statute] and 75)
1. can get the entire estate or just parts according to the UPC
a. goes along with the policy that most people would want the entire estate to go to their surviving spouse especially if all of the descendants were of both the decedent and the surviving spouse
2. entire estate: no descendants or parents survives the decedent OR
All of the decedent’s surviving descendents are also descendents of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent
3. different formulas for figuring out what the surviving spouse gets in (2)-(4)
a. (2) $300,000 plus ¾ of the balance if there is no descendant but there is a parent
b. (3) $225,000 but ½ of the balance if all of the surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent
c. (4) $150,000 plus ½ of the balance if one or more of the decedent’s surviving descendants are not descendants of the surviving spouse
C. 2-103 Share of Heirs Other than Surviving Spouse: Order
a. surviving spouse but if there isn’t one- then to the decedent’s descendants by representations
b. if no descendants by rep, then to parents then to descendants of the decedent’s parents then to grandparents or grandparents’ descendents and if there is no one left to go to after this, then to relatives
c. if no one, then look to 2-105 and the intestate estate passes to the state
Example: P dies. P had three children: A, B, and C. A has two children: D and E. B has one child: F. C has three children: G, H, and I.
-A and B die before P.
-A’s children D and E are alive when P dies.
-B’s child F is alive with P dies.
-C is still alive and so are C’s children G, H, and I when P dies.
-A and B’s children will represent them and the amount that their dead parents were supposed to get and C does not need representation can C can take the share outright.
-D and E will take for A
-F will take for B
d. decedent’s descendants by representation: by representation can mean three things because the jurisdictions follow different rules
i. English per stirpes: “by right of representation” latin
-one third of the states follow this
– sometimes called strict per stirpes
