INTRODUCTION TO ESTATE PLANNING
I. The Power to Transmit Property at Death: Its Justification and Limitations:
A. The Right to Inherit and the Right to Convey:
1. It was once widely held that the right to pass property at death was neither a natural right nor was it constitutionally protected. That all changed with the Court’s decision in Hodel v. Irving.
a. Hodel Court’s opinion appears to rest on belief that right to transmit property at death is separate, identifiable stick in bundle of rights, and, if this right is taken away, compensation must be paid.
b. There’s a difference between right to receive and right to transmit.
2. An Introduction to the Problem of the Dead Hand:
a. Property owners have nearly unrestricted right to dispose of their property as they please.
b. Unless disallowed by law, donor’s intention determines meaning and effect of donative document.
i. REST III §10.1 à The controlling consideration in determining the meaning of a donative document is the donor’s intention. The donor’s intention is given effect to the maximum extent allowed by law
c. A provision requiring Son to marry Jewish girl within 7 years was not unconstitutional or against public policy (as a ‘dead hand’), he did not have the absolute right to inherit from his father, it could be restrained. [Shapira v. Union National Bank] i. A restraint to induce a person to marry within a religious faith is valid only if, under the circumstances, the restraint doesn’t unreasonably limit the transferee’s opportunity to marry.
d. Will or trust provision is ordinarily invalid if it’s intended or tends to encourage disruption of a family relationship:
i. Provisions encouraging separation or divorce have usually been held invalid, unless T’s dominant motive is to provide support in the event of separation or divorce.
e. Other Provisions: Generally the destruction of property is not a valid condition (i.e. take my $ only after destroying my papers)
i. If something is of value a testator can not have it destroyed after his death, even if they could have destroyed it when they were alive. This has included papers, unfinished novels, property.
II. Transfer of the Decedent’s Estate:
A. Probate and Nonprobate Property: All decedent’s assets at death can be divided into probate and nonprobate property.
1. Probate Property: property that passes under decedent’s will or by intestacy; distribution of probate assets under will or to intestate successors may require court proceeding involving probate of will or finding of intestacy followed by appointment of personal representative to settle probate estate.
a. Descent – you take by statute without there being a will (Heir)
b. Devise – means by will (Devisee)
i. Most things can be either, depending
rules as your will
c. Conflict of Laws – the law where real estate is at is what applies, the law where the decedent is domiciled applies to all other property
d. You cannot use negative bequests, i.e. “I want my property to pass through intestacy, but nothing to my son Joe.”
e. No living person has an heir; heirs are those who take your property by intestacy after you die.
3. Partial Intestacy – If a will is so poorly drafted that it disposes of only part of the probate estate
B. Share of Surviving Spouse:
1. Studies support the conclusion that the spouse’s share given by most traditional intestacy statute’s is too small
a. Most people think everything should go to the spouse when there are no children from a previous marriage
2. Under current law, the spouse usually receives at least a ½ share of the estate
3. Under current UPC provisions, if all the decedent’s descendants are also descendants of the surviving spouse (and the surviving spouse has not descendants), the spouse takes the ENTIRE ESTATE
a. Supported by studies that show that that is the normal practice in wills of estates with minor children