Introduction to Estate Planning
Power to transmit property at death
· Old View: Right of succession to property by will or intestacy of a deceased is of statutory creation and the state may take that right away Day [3]
· New View: The government cannot completely eliminate the right to transfer property at death Hodel v Irving [3]
o Basic Rule: The right to dispose of property through intestacy or will is a fundamental property right and cannot be abolished. However, some changes/adjustments to the law can be made (in Hodel the legislation just went too far)
§ De minimus adjustments are ok
Issue of the Dead Hand [20]
· General Rule: All kinds of restrictions are allowed in a will unless the condition violates public policy or a constitutionally protected fundamental right. Donor intent governs except in extremely limited cases. The ct cannot question the fairness or wisdom. The cts main purpose is to facilitate.
· To invalidate provision (exceptions to the general rule to strike a provision) = Look for unreasonable conditions, such as:
o Absolute or Unreasonable (i.e. total) restraints on marriage (or promote divorce/separation) violate the fundamental right to marry and are not valid
§ Partial restraints on marriage are allowed (if reasonable)
§ Time: Marry within a certain time is ok
§ Religious restraints on marriage are ok (this is arguably not restricting marriage rather encouraging a certain religion) Shapira (ok to require marriage into a religious family as long as the condition is not too unreasonable)
o Religion Requirement violate public policy and religious freedom (ie “you have to remain catholic”)
o Destruction of property – cts will refuse to allow destruction bc this encourages economic waste (burning a house will not be upheld)
§ Exception: de minimus destruction (i.e. burn a diary probably ok)
o Some state laws may control (may or may not be able to completely disinherit children / spouse)
o Racial limitations (ie cannot marry an African American is not allowed)
o Creditor’s Rights: May not be able to give away something that a creditor has a right in
o Illegal Activity: Cannot encourage illegal activity
Transfer of the Decedent’s Estate
Probate v Nonprobate
· Probate: Passes either under a will or intestacy, but in either case under supervision of the court. Includes all property that is not nonprobate
o Goal: Preserve testator intent, protect creditors, evidence transfer of title
o Examples: Stock account (unless titled with right of survivorship) “JTWROS”, will
o Issues
§ Place of filing: Place of Domicile at time of death for personal property and ancillary jurisdiction in any States where real property is located
§ Statute of limitations to contest a will: 3 years
§ Personal representative may need to post a bond to the ct.
· Nonprobate: Everything that does not pass under a will or by intestacy
o Examples:
§ Trusts
· Pros: You can also have a will to cover what is not under the trust – benefit from both
· Cons: The trust is only useful for the items remembered to be put in the trust
§ Right of survivorship assets – automatic passing on death (joint tenancy), i.e. checking accts
· Certain items of personal property cannot be titled with joint tenancy with right to survivorship (i.e. for de minimus items, possession alone is evidence of title – ie clothing, etc.)
· In general we do not worry about personal property
o Exception for some personal property: We do worry about items that are more expensive to track the ownership chain (for example historical art)
§ Assets payable upon death – Aka Contracts payable upon death (like life insurance, 401k unless no beneficiary designated)
§ Life Estates and remainders
o Other options to avoid probate
§ Small estate exemption: state law rule which allows bypassing probate if the estate is worth less than a certain amount of money
§ Transfer car title by affidavit that you are the heir and the death certificate
o Nonprobate assets cannot be disposed of by will: Ie cannot change the terms of a life insurance contract with language in a will
Professional Responsibility
· Theories of Atty Liability:
· Tort / Negligence Theory = negligence plus atty owed duty to P
o Majority / modern trend: Atty has a duty to exercise due care to intended beneficiaries
o Minority Common law: protects attys, no duty to intended beneficiaries (only to testator client)
· Contract Theory = must show privity of contract (lack of privity is the main argument made by attys)
o Majority / modern trend: 3d party beneficiary to the K can sue the atty Simpson (ct allowed beneficiary to sue atty for malpractice)
o Minority Common law: protect
Common law marriage: live together long enough to be considered a married couple
§ Rule: if the state recognized CL marriage then it is indistinguishable. Risk: if anyone wants to challenge the distribution of the estate, CL marriage is easy to challenge (i.e. decedents children by a prior marriage). Ie get an affidavit to evidence that the decedent was the spouse
o Same sex couples: marriage where allowed by state law
§ A domestic partnership statute may allow intestacy in a minority of states.
§ Much safer route: do a will for a same sex couple bc intestacy for same sex couples is a fuzzy area
o Bigamous marriage (multiple wives/husbands): Effect on intestacy: the spouse who is knowingly entering into a bigamous relationship will be excluded from intestacy (ie the 2d marriage is not valid)
o Married but separated are still spouses until divorce entered – some states may recognize spousal abandonment
· Survival Requirement: Spouse must survive the decedent
o Main problem: proving when someone survives another when TOD is difficult to determine
o Actual Survival Common law:
§ Must prove by preponderance of the evidence (i.e sufficient evidence) that spouse survived a second later otherwise the beneficiary is treated as if predeceasing the testator Janus (ct found W survived H so estate first went to W then W’s heirs)
o Actual AND Legal Survival Modern approach / UPC / Revised Uniform simultaneous death act (USDA:
§ The UPC requires the taker to prove by clear and convincing evidence that they survived 120 hrs (5 days) past 1st decedent UPC 2-104 (actual survival alone is not enough)
· Calculating Spousal Share
o UPC 2-102 (favors surviving spouse):
§ Surviving spouse takes 100% if:
· No surviving issue or parent of the decedent OR
· Surviving spouse is also parent of surviving issue and no other surviving issue UPC 2-102
§ Spouse gets
