Decedent’s Estates and Trusts Spring 2013 – Outline
a. PART I – 4 short answers (45 min)
i. Issue identification.
ii. Ex: will leaves everything to A, B not included. What fact would make it better for B? Pretermitted statute! Born after the will!
b. PART II – 21 T/F & Multiple Choice
i. Discern what is relevant in answer.
ii. Give explanations on T/F
c. Know UPC more than PA
d. Topics on exam:
i. Requirements to have a will.
ii. Beneficiaries; types of requests; will revocation (need intent).
iii. No trust administration on the exam (recorded class).
iv. Suppose decedent dies w/ will giving 100,000 CASH to bob, residuary to Charlie. At decedent’s death, he doesn’t have $100,000 — $50M in assets, but less in cash. Does cash bequest lose b/c not enough cash?
1. Doctrine of Ademption
2. Clearly ademption is better if real estate.
3. Can you have ademption for cash?
v. A LOT on bequests.
vi. KNOW intestate rules
1. UPC mostly, but a few questions about PA passing under intestacy.
2. Taking by representation.
viii. Afterborn children
ix. Inheriting from or through adopted children. Can child still inherit from natural parents (who gave up right to child)… grandparents?
xi. Trusts: elements of trusts
1. Look at those elements – must be there for it to exist.
a. Written—but no oral trust regarding land.
xii. Reading provisions in a will – what happens b/c of this?
xiii. What happens if A dies before trust is funded – who’s the beneficiary?
xiv. Whose the beneficiary when someone’s interest lapses
xv. Will contest
xvi. Who can testify that someone lacks testamentary capacity?
1. Non-medical expert?
xvii. Termination/modification of trusts
II. OVERVIEW (6M-19T/3131, 3133, overview slide)
a. Probate (Administration of Property at Death)
i. The Process
1. State law process. Virtually no federal involvement.
2. Most estates must go through probate, however assets can bypass probate by will substitutes with pre-designated beneficiaries.
a. E.g. Joint property, life insurance, retirement benefits, etc…
3. Administration of Property at Death (Probate)
a. The process of administration is operated by the living (executor with the help of an attorney).
b. Step one: Find the will.
c. Step two: Determine assets and Debts
i. Must keep track of expenses
d. Step three: Opening the Estate
i. Whether decedent passed with or without a will, personal representative must oversee identifying the assets, paying the debts, and distributing excess to survivors.
ii. The person would be called an executor if named in the decedent’s will, otherwise he will be referred to as an administrator.
4. Planning Aspects of Estate in Advance of Death
a. Choosing probate versus non-probate.
i. What are the clients’ goals?
5. Where do we Probate?
a. For real property, we probate where the property is located.
b. PA § 3131: Place of Probate
i. Will of a decedent domiciled in PA at the time of his death shall be probated only before the register of the county where the decedent had his last family or principal residence.
ii. If the decedent had no domicile in PA, his will may be probated before the register of any county where any of his property is located.
c. For out-of-state property, must follow out-of-state law.
d. Intangible personal property (investments) will be probated wherever decedent was domiciled.
e. Tangible personal property varies from state to state.
i. Some say it is probated where decedent was domiciled; others say it is to be probated where the tangibles are located.
f. In this scenario, must probate property in 3 states, so you need 3 attorneys – expensive!
6. Any limitations to Probate? Creditors?
a. Rights of creditors, children, etc…
b. Taxes and other debts (come out before assets distributed).
c. Some degree of formality – need proof of where the assets are supposed to go.
d. Policy Restrictions
i. Cannot disinherit certain people.
ii. Cannot leave asset to gang or something.
7. How does Administration work?
8. How does Administration change if Will is invalid?
a. If you don’t have a will, or it is invalid, the State designates by intestacy statute.
ii. Is Probate Necessary?
1. Probate is common, and depending on assets, may well be necessary.
2. However, if able to use lifetime dispositions/will substitutes, assets will bypass probate and vest automatically.
3. When someone dies, we need to collect the assets, take care of creditors, resolve disputes among claimants, and get clear title in the hands of the right survivors. If we need the probate system to accomplish any of these goals, we should use it. If not, we shouldn’t.
i. People need guardians when they cannot handle their own affairs.
ii. The court will appoint a guardian of the person who has the responsibility to care for a child or a guardian of the property, or a guardian ad litem (appointed to protect the children’s interests in litigation.
iii. A guardian in one state may in another be called a conservator, curator, or a committee, although the disabled person typically is referred to as the ward.
iv. Parents often use their wills to name guardians.
1. Under UPC § 5-202, guardians so named can assume office upon probate of the will without court approval.
c. The Uniform Codes and the Restatements
i. The UPC and UTC (Uniform Trust Code) offer statutory language and commentary to state legislatures considering reform.
1. As of 2006, 16 states have adopted some version of the UPC.
ii. The Restatements of Property and of Trusts provide guidance to courts (and indirectly influence legislatures).
1. Offers a recommended version of the common law.
III. INTESTACY (Default Provisions avoided by having valid will) [Chapter 2](PA § 2101) (Class 1 – 01.07.13)
i. Applicability of intestacy:
1. No will executed or no will in force.
2. Will is discarded—improper execution (e.g. lack of witnesses)
3. Incomplete/forgetting will: partial intestacy—doesn’t cover all assets.
4. Provision in will discarded: partial intestacy
ii. Howard Hughes: Intestacy on a Grand Scale
1. Multi-millionaire died intestate because his will was unsigned. Hughes’ estate passed almost arbitrarily to far-flung relations, many of whom were complete strangers to him.
iii. Impact of Intestacy
1. Provides a default estate plan.
2. Identifies parties with challenges to will.
3. Spills over into will drafting.
a. Ex: “If A survives me, give property to B, if A&B do not survive me, pass it to the next person by statute.”
i. Built in intestacy provision.
ii. Thus, intestacy is not only for people who fail to have wills.
4. Intestacy is bad pull between spouse, kids, and parents.
a. Not so bad after that.
1. Heirs: Those people identified by statute to take the estate if decedent dies intestate.
2. Ancestors: People in family tree that come before (parents, grandparents, etc.)
3. Issues/Descendants: People in the family tree that come after (children, grandchildren, etc.)
a. Issue is blood connection, but descendant includes adopted.
4. Collaterals: Those outside of ascent and descent lines (siblings, aunts, uncles, cousins, etc.)
5. Note: in-law relationship does NOT include you in family tree!
1. Intestacy gives shares to the decedent’s survivors. One question is who died first?
2. Common law: Required that person survives decedent by a mere second. But, must be able to prove survivorship.
a. Question of fact w/ burden on person trying to prove survival.
3. Uniform Simultaneous Death Act § 1: Where there is no sufficient evidence that the persons have died otherwise than simultaneously, the property of each person shall be disposed of as if he had survived.
a. Doesn’t address non-simultaneous deaths that occur at approximately the same time.
b. Adopted by many states.
4. UPC § 2-104: Must survive decedent by 120 hours.
a. Distinguish common disaster clause (e.g., if A&B die as a result of a common disaster, neither is presumed to have survived the other).
b. Wills can specify different length of s
iv. Could’ve gone either way.
c. Result: ALL of the estate goes to the child, not the “wife” (tranny)
d. Opinion: Kan Supreme Court basically punted saying this is an issue for the legislature to define what it means to be a female and therefore a wife
7. (Q 59:3) Client’s father passed away. Father and mother had bad relationship, supposedly divorced. Couldn’t find father’s will.
a. Got divorced in Mexico—is it valid?
b. If valid divorce, she won’t take under intestacy statute.
c. If invalid divorce, mom is now a beneficiary under intestacy statute.
i. Mom will argue that marriage is valid despite fact that she tried to divorce in Mexico. Must go by letter of the law!
d. In this case, invalid divorce but mom got nothing. Partially because of equity, partially because she tried to get the divorce recognized in U.S. court.
e. Probate courts are not just courts of law, but courts of equity (determining what is fair and just).
iii. Children of Unmarried Persons (60-65; 2103, 2107, 2108)
1. Children of unmarried women are slowly gaining equal treatment with marital children.
2. All jurisdictions grant by statute some inheritance rights to the non-marital child.
a. All but Louisiana specify that a non-marital child may share in the mother’s estate along with those born in marriage.
b. States vary in whether non-marital child can inherit from father:
i. PA 2107
ii. UPC 2-114
c. The right of non-marital child to inherit from the father has essentially developed into a proof of parentage question.
i. Many states allow several ways to prove parentage for inheritance purposes.
3. HYPO: M&F not married, have a child. No other children. F dies before birth without a will. M dies in childbirth without a will. M&F’s parents are alive. C (child) is cared for by m’s parents, but not adopted. C dies at 5months.
a. Who gets C’s property?
i. UPC § 2-114
1. If M&F were married, then all the grandparents would take equally… but different rules apply to children born out of wedlock.
2. We have no guarantees that F was C’s father. If they were married we could assume that. Since not married, we do not assume that.
ii. UPC § 2-114(c): Inheritance through a child by natural parent or kindred is precluded unless that parent has openly treated the child as his/hers, and has not refused to support the child.
1. M obviously brought C into the world and chose to have it.
iii. PA 2107(c): Child of Father: For purposes of descent by, from and through a person born out of wedlock, he shall be considered the child of his father when the identity of the father has been determined in any of the following ways:
1. If the parents of a child born out of wedlock shall have married each other;
2. If during the lifetime of the child, the father openly holds out the child to be his and receives the child into his home, or openly holds the child out to be his and provides support for the child which shall be determined by clear and convincing evidence.
3. If there is clear and convincing evidence that the man was the father of the child, which may include a prior court determination of paternity.
a. Heavy weight of evidence.
iv. § 2107 is more clear. § 2-114 states that an individual is the child of his or her natural parents, regardless of their marital status.
v. § 2-114 allows test under “uniform parentage act” – allows each state to put in their own test.