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Decedents' Estates and Trusts
Villanova University School of Law
Maule, James Edward

FUNDAMENTALS OF TRUSTS AND ESTATES
 
COURSE OVERVIEW
Scope
Trust, estate
Other devices
Wealth/Property transmission/transfers
Property not consumed or transferred
 
General Principles
Voluntary Dispositions
Limitations
 
Rights of Creditors, children
taxes
Some Degree of formality
 
Direction not required: intestacy
Balancing competing interests
Escheat
 
Lifetime Dispositions/Will Substitutes
Outright gifts
Retention of Control and use + designation
Bank and financial accounts
Joint Ownership’s
Life insurance
Trusts and Custodianships
 
Planning
Persons without wills
Oversight
“Not Needed”
 
Why Needed
Limits on will substitutes
Appt. of personal representative
Appt. of guardians
Tax clauses
[Health care issues – power of attorney]  
Sources of Law
State Law (Federal Law: taxes, disclaimers)
 
Similarities, differences
 
Statute of Distribution(East and Northeast States)/Statute of Wills(Western States)
 
UPC – an attempt at uniformity (nationalize)
 
Residency v. Locus of Property
 
It is important to know whose law applies, because residency and locus of Property could subject different statutes.
 
HINT: Follow the statute of the strictest state in order to minimize risk.
 
Interpretation through analogy
 
Pennsylvania, UPC, major variances.
 
Relevant Pa. Code 3131, or 3133 (Probate)
 
INTESTACY
 
Intestacy: Overview
 
Applicability (4 Times when Intestacy is used.) Intestacy is use when…
 
there is no will executed or no will in force.
the will is discarded by improper execution.
there is an incomplete will: This is partial Intestacy. Partial Intestacy is when not all probate property is disposed of in will.
 
PROBATE PROPERTY: All property in Decedent’s name, excluding non-probate property which includes Life insurance, Joint property, retirement benefits, property in living trust, POD accounts, and designated survivors.
 
a provision of the will is discarded. This is also partial intestacy.
 
Impact of Intestacy
Works like a “default” estate plan. Tells us who will take and what they will take in the absence of a will.
Presumed Intent – Intestacy statute distribute property based on the Decedent’s Presumed Intent as determined by Legislature.
 
Intestacy helps identify parties with standing to challenge wills.
Who has standing? People who stand to benefit from invalidation of the will. Discussed more in depth later.
 
Only places decedents family in the estate. This creates problems with “family” relationships not officially recognized by the state.
 
Concepts spill into probate law? Why? Probate = Proving will
 
Is Intestacy a “model” estate plan? NO
 
See Pa. Code sections ‘ 2101
 
Intestacy: Terminology
 
Terms
Heirs – those people identified by statute to take the estate to the extent that the decedent dies intestate.
Not Devisees – Devisees are under a will
Heirs DO NOT exist before death.
 
Ancestors – People from whom decedent is descended. (Parents, Grandparents, extending back to history)
 
Issue/Descendants – Those for whom you are an ancestor.(Grandchildren, Children)
 
Collaterals – Those people out of the lines of ascent and descent.(Aunts, Uncles, brothers, sisters, cousins)
 
Relatives By Affinity – Disregarded for Intestacy purposes.
 
Intestacy: Survivorship – Multiple and Close in Time Death Situations
Common Law – survivorship was a question of law determined by the courts. Person trying to show survival had the burden of proof.
 
Uniform Simultaneous Death Act – This statute takes care of the problem where there is a Common Disaster. This act treats each decedent as being the survivor.
 
UPC: 120 hour requirement
Distinguish Common disaster Clause
Prototype for Wills: variable.
 
UPC 2-104
 
Pennsylvania Code – 2104(10) – 5 day requirement.
 
Intestacy: Choice of Law
Traditional Choice of Law rules.
law of the situs of the property to questions surrounding realty
law of the decedent’s domicile to questions of personalty.
 
Some courts apply the same law to both, personalty and realty.
 
Cross-linked conflicts applications.
 
Intestacy: UPC Basic Scheme
UPC ” 2-102,103,104,105,106
 
                                      
 
Intestacy: Pa. Basic Scheme – ‘  2102, 2103, 2104
 
Intestacy: Qualifying to Take
Spouses
Definition – One who is legally married.
 
Common Law marriages – Based on behavior of the couple, rather than a formal ceremony.
 
Special Circumstances
Bigamy – Subsequent spouses have void relationships with the bigamist.
Bigamist death -only the first spouse qualifies to inherit, even if long deserted by decedent.
 
Putative Spouses – a few states recognize the intestate claims of innocent later consorts.
 
Companions – Intestate law does not provide for companions.
You can write them into your will, but you must be careful because of challenges.
Separation Agreement – Jurisdictions are split over whether they disregard separation agreements when they apply intestacy provisions.
 
NY disregards Separation Agreements for Intestacy.
 
UPC gives effect.
 
Divorce – Generally, Intestacy does not preclude surviving spouse form taking under Intestacy until Divorce is final.
 
Invalid Divorce – “Mexican Divorce” – Generally, divorces which are not legally valid in the state do NOT preclude the Surviving spouse from taking under Intestacy.
 
Non-Marital Children.
UPC 2-114(a)
 
UPC 2-114(c)
 
see Pa. Code 2107
 
Adopted Persons
Definitions
Adoptee – central character
 
Natural Parents – birth parents
 
Adoptive Parents – Parents that adopt
 
Adoption as an Estate Planning Tool – Sometimes people adopt as a estate planning tool. Courts disagree whether to recognize such adoptions
 
Equitable Adoption
Adoptive parents intend to adopt, but die before the adoption is complete, courts occasionally allow the child to inherit under the “equitable adoption” theory.
 
Courts do not allow adoptive parents inherit from the unadopted child on such a theory.
 
See Pa Code ‘ 2108
 
See UPC ‘ 2-114
 
Half-Bloods
Definition – Two people are in a half blood relationship when they have one common parent.
 
UPC 2-107 and Pa ‘ 2104(3) – Allows Half-Bloods and Whole Bloods to inherit equally.
 
Minority Rule – Whole Bloods preclude Half Bloods from taking by intestacy or Half Bloods only get half of what Whole Bloods receive.
 
Step Children
Definition- One’s stepchildren are the children of one’s spouse.
 
Pa says that stepchildren do not inherit, but may deemed to have been adopted in very close circumstances. See equitable adoption.
 
Step-Children take if no-other surviving relatives of the decedent remain.
 
Posthumous Children
UPC ‘ 2-108& (Common Law Rule) – Includes as “heirs” relatives born after the decedent if they are born alive during the normal period of gestation after the decedent’s death.
 
PA ‘2104(4) – Person’s begotten befo

Wills are valid if the testator does not suffer from a mental deficiency at the time the will is executed.
 
Insane Delusion – It relates to specific beliefs “for which there is no reasonable foundation.” [Stritmater, pg. 65]  
If particular provisions of the will are the result of the delusion, they are void.
 
Undue Influence
The general and well-accepted rule in this state is the influence, to be undue, must be such as to substitute the will of the person or persons exercising the influence for that of the testator, thereby making the writing express, not the purpose and intent of the testator, but that of the person or persons exercising the undue influence.[Olsen, pg. 70]  
Factors Courts look to in determining Undue Influence.
the existence of a confidential relationship.
 
Burden of Proof is on the contestant.
 
The burden may shift if the party charged with asserting influence was in a confidential relationship with the decedent.
There is a conflict of authority here.
 
If independent advice is found, this overcomes the presumption of undue influence.
 
Classic examples of Confidential Relationship.
Attorney-Client
Accountant-Client
Priest-Penitent
Doctor-Patient
Investment advisor- Customer
Nursing Home administrator-Patient        
 
The closer the relationship between the decedent and the person being charged, the less scrutiny given with respect to undue influence.
                       
the influencing beneficiary’s participation in some part of the will’s preparation
 
the extent of secrecy and haste
 
the extent the new plan changes earlier plans (the former plan could be intestacy. Ex. You could be a nephew that would take under intestacy and your aunt then writes a will that leaves you out.)
 
the extent the beneficiary’s benefit is unwarranted or unfair in light of other possible claimants
 
the testator’s susceptibility to influence
 
the existence of independent advice.
 
Effect – Gifts are invalid
Property goes to Residuary Clause.
If none, then off to intestacy.
 
Unmarried Lovers can create the appearance of undue influence.
 
Exam Tip – For undue influence questions, rank each factor on a scale of 1-10 and back up with factual support.
           
Fraud
Two Types of Fraud
Fraud in factum – fooling the testator into signing a document purporting to be a will.
 
Fraud in the inducement – Getting the testator to execute a document by misrepresenting facts.
Lies
Exaggerations
 
Forgery – a will that is not the product of the decedent cannot be probated.
 
Fraud can also exist when the decedent executes a document without knowing that is a will, or that it contains a particular gift. Lacking testamentary intent, the document (or provision) would be denied probate.