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Trusts and Estates
Wayne State University Law School
Cancelosi, Susan Evans

Introduction to Estate Planning
–          How property passes between the living and the dead
o    Intestate, by will, or by will substitutes (trusts, etc…)
–          Massive wealth transmission is starting to begin (baby boomers are passing)
–          Wealth concentration is occurring in the US at an increasing rate (the rich get richer and the poor poorer)
–          You must have more than $2 million before the estate tax takes effect ($3.5 in 2009)
–          P.13 Totfield…what is the most important for democratcy is not that there are not great fortunes but that they do not change hands
–          The right to pass property at death is not treated as a natural law in the US, it is a law created in statutes
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 Irving Trust v. 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)
§ TC had held that the P had no vested interest in the property of the decedents prior to their deaths and the congress had plenary authority to abolish the power of testemantary dispostity of Indian property and alter the rules of intestate succession (relying on Irving Trust). The COA reversed citing that the decedents had a right, derived from the original Sioux allotment state, to control disposition of their property at death (focued on the right to transmit, rather than the right to receive)
§ Descend vs Devise
§ Descend = passing property by intestancy – no written document (heir)
§ Devise = passing property by a will (devisee)
§ De minimus adjustments are “ok”
§ Property is a bundle of sticks issue…
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 (or reasonableness). The cts main purpose is to facilitate (rather than regulate).
·    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 upon death – 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
o    What about property without tangible waste? An unfinished work of art, diary, notes, etc…
Transfer of the Decedent’s Estate
–          When someone dies…figure out where the will is, search for assets and itemize them (money, property, stocks, real estate, etc), call a local attorney in the community that has jurisdiction (call bar association), can also call the county probate clerk for more information regarding the specific situation.
–          Independent vs dependent administration – independent is once you’ve been assigned by the administrator you don’t need to come back to court unless someone is challenging it; Dependent administrators must continually check in with the court.
–          Probate is completely separate from federal estate tax issues…they are entirely different
o    Probate court fees, administrator, appraiser, and lawyer fees are the only (typically) in probate…much highter fees are possible if you die intestate because of research needed to find heirs and the such.
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

ian to protect the interests of the children and prevent an issue of conflict of interest
o    Real property not passing under joint tenancy must (normally) be passed through probate
o    Regardless of probate/nonprobate…you always want to create a will (it is a good catch all for your interests, both present and future, a good safety net for anything that you were unable to foresee)
 
NOTES
–          Personal representative finds and determines the extent of assets
o    Charged with repaying creditors
o    Asked to provide a bond…will can waive necessity of bond
–          An estate cannot close with some sort of accounting back to the Probate court (all creditors taken care of, titles cleared, etc…)
o    Court must accept the final accounting and discharge the representative (up until that point they are not off the hook)
–          A probate court can interpret and enter wills but for malpractice claims it must be heard by courts of general jurisdiction
Professional Responsibility
·    Theories of Attorney Liability: (Simpson v. Calivas)
·    Tort / Negligence Theory = negligence plus attorney owed duty to P (duty requires some sort of relationship which creates such a duty)
o    Majority / modern trend: Attorney has a duty to exercise due care to intended beneficiaries
o    Minority Common law: protects attorneys, 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 attorneys) (privity requires close/direct relationship)
o    Majority / modern trend: Third party beneficiary to the K can sue the attorney Simpson (ct allowed beneficiary to sue attorney for malpractice)…exception to the privity rule.
o    Minority Common law: protects attorneys, no privity with 3d party beneficiaries
·    Attorney could be sued for both: There is a clear duty to both the client and the beneficiaries