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Wills, Trusts, and Estates
WMU-Cooley Law School
Horvath, Emily S.

Wills, Estates, & Trusts
Horvath
Summer 2012
 
 
Basic Wills Terminology:
1)      Intestate – Of or relating to a person who has died without a valid will
2)      Testate – Having left a valid will at death
3)      Heir – A person under the laws of intestacy, is entitled to receive an intestate decedent’s property
4)      Devise – When used as a noun, a testamentary disposition of real or personal property
5)      Devisee – A person designated in a will to receive a devise
6)      Decedent – The deceased person
7)      Descendent – The deceased person’s children (1 generation) and their children, and so forth
8)      Testator – One who makes a will
9)      Will – An instrument or declaration by which one directs the disposition of one’s property after death;  Also called a Testament
10)  Codicil – Amendment to an existing will
 
Four Principals for Wills:
1)      Courts like to give deference to a property owner’s intent; Courts want to honor the property owner’s intent because the property owner has rights (within limits)
2)      The decedent is not available to testify (dead), so there is no expert on his or her intent.
3)      Courts will consider other reliable evidence (to determine D’s intent).
4)      When there is no reliable evidence the court has to make presumptions. Lacking evidence they will make certain presumptions based on statues & common law, the basis of intestate succession
 
(1)   Eyerman et al. v. Mercantile Trust (1975):  Ms. Johnston wanted her home razed and the proceeds distributed to her family.  D is the personal rep (PR) of her estate.   P is a neighbor of Ms. Johnston.  He sues the estate to enjoin the razing of the house.    Estate General Standing Rule:  Direct pecuniary interest is required in an estate to establish standing.  P establishes standing by showing a devaluation of surrounding property ($10k each). 
 
Gift Causa Mortis:  A gift made in contemplation of death that is revocable until the death of the donor and is automatically revoked (or remains revocable in some jurisdictions) upon recovery.
Elements:
1)      Donative Intent
2)      Effective Delivery
3)      Made in Contemplation of Death
4)      Acceptance
 
(1)   In re Van Wormer’s Estate (1931):  The decedent’s brother, the PR of the estate, was given $3200 to invest by the decedent before his death.  The stocks were purchased in the PR’s name.  The ex-wife sues claiming this gift was one of causa mortis.  General Causa Mortis Gift Rule:  Gifts of causa mortis do not require that the donor be in extremis and that death is certain, but that sufficient apprehension of death from a present malady or imminent peril be present, the mindset is important.  Here,  though the decedent did waiver in his depression, he did in fact kill himself, and the court holds that the reason for giving the gift – depression – was the same
 
Gift Causa Mortis Problem:  David suffered a heart attack at a family gathering.  He took off a Rolex  watch and gave it to Robert as he went away in the ambulance saying “Robert, take my watch.  You can keep it.”  Robert said “OK.”  David survived the heart attack, but died two years later in an auto accident.  David’s will left the watch to another person, Bart.  Who has the superior claim to the watch, Robert or Bart?  Bart – per causa mortis rules, gift was revoked as soon as David recovered from the heart attack.
 
General Estate Overview
 
Estate Assets:  Ask the Question “What Goes Into the Estate?”  How are Assets Owned?
1)      Three Categories of Assets (note – an item can only be in one category at a time)
a.       Probate:  Assets held in the decedent’s name alone that require the decedent’s signature to transfer.  There are two ways to transfer these assets
                          i.      Intestate
                        ii.      Testate – will covers only probate property
b.      Non-Probate:  Those assets that do not fit the definition of probate assets (life insurance, 401k, qualified monies, joint property).  Transfer occurs:
                          i.      via Contract
                        ii.      via Operation of Law
c.       Trusts:  Artificial estates created for property transfer owned by a trustee
                          i.      via Trust Document
 
“What Goes Into the Estate” Problem:  Edward and Patricia Smith were married for 47 years when he died, leaving two children, Orin and Demona Smith.
a)      Home with deed that conveyed the house “to Edward and Patricia Smith as tenants by the entireties”-  Non-probate (joint)
b)      Condo in Petoskey with deed that stated “to Edward Smith, Demona Smith, and Orin Smith as joint tenants with rights of survivorship”-  Non-probate (joint)
c)      Family Farm with deed that stated “to Edward Smith and Danielle Crane as equal tenants in common.  Death splits tenancy ½ to probate, ½ to Crane
d)      Savings account in Edward’s name – Probate
e)      Edward’s Lexus –  Probate
f)       Life Insurance with Patricia as beneficiary –  Non-Probate
g)      Investment Portfolio titled in Edward’s name – Probate
h)      Personal Property –  Probate ** This is an exception, though no signature is required
 
Will Substitutes:
1)      Life Insurance – Contractual agreement wherein the beneficiary receives payment upon the death of the insured.  The owner is usually also the insured, but owner could be a third party.
a.       Owner
b.      Insured
c.       Beneficiary
2)      Joint Tenancies, Tenancy by the Entireties (Husband and Wife)
3)      Paid on Death Accounts – Can be used with investments and bank accounts
4)      Qualified Monies (IRA, 401k) – Should always have a beneficiary designated
5)      Annuities – Operate like life insurance but may have income tax consequences
 
Life Insurance Exception Examples: 
1)      Husband is owner and beneficiary, wife is insured.  If Husband dies first, the policy is probate because it requires his signature to transfer 
2)      Husband is Owner and Insured, and Wife is beneficiary, but wife dies first.  Husband never changes the beneficiary, so the payout becomes a probate asset
 
Probate Process:
1)      Decedent Passes Away
2)      Testate
a.       Will is submitte

Familial Relationship Definitions:
a.       Child:  Product of natural Parents, child conceived during marriage, adopted child
b.      Excluded from Child Definition:  Stepchildren, foster children, children of remote descent
c.       Adopted Children:  Become child of adoptive parents (can no longer inherit from natural parent, unless adopted by step-parent, in which case child does not lose natural parentage)
d.      Parent:  Someone not a step-part, grandparent, or foster parent
e.       Siblings:  Half and full blood siblings considered the same
 
EPIC 2104 – Surviving Descendent (120 Hour Rule):  In order to be a surviving descendent, you must survive the decedent by 120 hours (according to death certificate).  A person who was not born at the time of the decedent’s death can be a surviving descendent as long as that person is born within 9 months of the decedent’s death and survives 120 hours after birth.
 
Share of Heirs Other than Surviving Spouse:  Any part of the intestate estate that does not pass to the decedent’s surviving spouse under 2102 passes in the following order
1)      Decedent’s Descendents by representation – decedent’s child, grandchild, great grandchildren
2)      Decedent’s Parents equally – decedent’s parents
3)      Descendents of Parents – decedent’s siblings, nieces/nephews, great nieces/nephews
4)      ½ of Estate each to Maternal/Paternal grandparents or their descendents –aunts, uncles, cousins
5)      If no eligible takers above, estate Escheats to the State
Note:  As long as you can go DOWN descendent line, do not go UP to Ancestors for Intestacy Shares
 
EPIC 2801 – Definition of Surviving Spouse:  A surviving spouse does not include any of the following
1)      Divorce, Annulment
2)      Marriage to a 3rd party while still legally married, or engaged in bigamy
3)      Willfully absent for more than 1 year before death of decedent, deserted decedent, or willfully neglected to provide support if required by law to decedent spouse
 
EPIC 2102 – Intestate Shares to Surviving Spouse:  The intestate share of a decedent’s surviving spouse is one of the following given that the spouse outlives the decedent
1)      Entire estate to SS if decedent has no descendants or parent
2)      First $150k Plus ½ to SS if D and SS have mutual descendant (despite any other outside descendents)
3)      First $150k Plus ¾ to SS if D has no descendent, but D’s parent remains
4)      First $100k Plus ½ to SS if only D has descendent