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Wills, Trusts, and Estates
WMU-Cooley Law School
Carey, James L.

WILLS, ESTATES & TRUSTS
Prof J. Carey—MICHAELMAS 2012
 
PROBATE
PERSONAL REPRESENTATIVE
ESTATE- Gross Estates: Value of asset at the time of death
DISTRIBUTABLE ESTATE- Value of asset after payment of death; Make payment to the beneficiaries from this
TESTATE (Testacy)- Dying with a valid will
TESTATOR (Testatrix)- Person making the will
WILL- An instrument or declaration by which one directs the disposition of one’s property after death
DEVISE- When used as a noun a testamentary disposition of personal property
DEVISEE- A person designated in a will to receive a devise
INTESTATE (Intestacy)- Person who dies without a valid will
DECEDENT- The dead guy
HEIR- Any person who, under the laws of intestacy is entitled to receive an intestate decedent’s property  
 
I. PROPERTY RIGHTS- Eyerman v. Mercantile Trust
            Rule: There are limits on how you can dispose of your property after you die. If it is against public policy, the court may not honor your wishes. A person’s right to his property isn’t absolute—the state giveth, thus the state can taketh away. It cannot do more harm than good.
II. POLICY ISSUES
            (1) Courts will attempt to honor the wishes of the decedent;
            (2) However, the expert on decedent’s intent (decedent) is dead and unavailable to inform the court;
            (3) Therefore, the court will use reliable evidence to determine intent (the most reliable evidence is a validly executed will)
            (4) Without any evidence, the court will make presumptions (the court will look to the statutes)
GIFT CAUSA MORTIS
Elements:
            (1) Made in contemplation in death (person giving fit must reasonably believe that he or she is about to die
            (2) Donative Intent (person giving gift must have the intent to give it to the person)
            (3) Effective Delivery (person can expressly or constructively give the gift
            (4) Acceptance (presumed)
            (5) The gift is revocable until the death of the donor AND is automatically revoked upon the giver’s recovery from which he was afraid he would die (i.e., believing you are dying of a heart attack—you give your daughter your diamond ring…but you don’t die—the gift is automatically revoked, she doesn’t get the diamond ring)
            b. In Re Van Wormer’s Estate:
                        -Made in contemplation in death—Van Wormer was suffering from depression so he gave his brother stock stating that he would die in the near future. He leaves for FL and end up committing suicide
                        -Donative Intent and Effective Delivery—He gave his brother the stock
                        -Acceptance—Brother took the stock
                        -Wife argues that this was a gift causa mortis and since he didn’t die when he gave his brother the stock, then it was revoked. However, the CT said that his depression was the cause of his committing suicide so this is a valid gift causa mortis
Gift Causa Mortis– PROBLEM: David suffered a heart attack at a family gathering. As the ambulance crew was taking him out of his home, David took off his Rolex watch and handed it to Robert, saying “Robert, take my watch. You can keep it.” Robert said, “O.K” and took the watch. David survived the heart attack, but died two years later in an automobile accident. His valid will left the watch to Bart. Who has superior claim to the watch, Robert or Bart, and why? – At the time of the heart attack, David made a gift causa mortis to Robert. He believed that he was dying, he took off his watch and gave it to Robert, showing he meant for Robert to have it and Robert took it so acceptance is also satisfied. However, gift causa mortis’ are revocable once the giver of the gift survives. Since David survived his heart attack, the gift of the watch was revoked and Bart has the superior claim to the watch
WHAT GOES INTO THE ESTATE
I. PROBATE- Property held in the decedent’s name alone that requires the decedent’s signature to transfer. These assets can go through either Testate or Intestate Succession
            a. Probate Process:
                        i. Person dies
                        ii Testate: will is submitted to probate
                        iii. Intestate/Partial Intestate: Petition/Application—applies for letters of authority. The letter for authority basically says that the personal representative’s signature is just as good as the decedent’s signature
                        iv. Personal Representative (PR) is appointed: (1) by Will; (2) Priority established by statute
                        v. Administrative (formal or informal)
II. NON-PROBATE (WILL SUBSTITUTES)- Assets that travel by operation of law or contract
            a. Examples:
                        i. Life Insurance Policies: Contractual agreement wherein the beneficiary receives payment upon the death of the owner (note that while not common, it is possible for life insurance to become a probate asset in 2 ways; (1) where there is no beneficiary listed or the beneficiary is deceased as well, OR (2) if the owner of the insurance dies, but the insured is still living so the asset of owning the insurance will pass in the deceased’s (past-owner) estate
                        (1) Owner
                        (2) Insured
                        (3) Beneficiary
                        (4) Note: You can hold more than 1 role; however you can never be the insured and the beneficiary (because you are dead)
                        ii. Joint and Survivorship Account: Where 2 or more depositors may exercise some degrees of control over the funds during their joint lifetimes and upon the death of the first, the survivor becomes the sole owner of the funds
                        (1) Joint Tenancies: Property that passes to the surviving joint owner
                        (2) Tenancy by the Entireties: Property held as husband and wife
                        iii. Paid On Death (POD) Accounts: Can be used with investments and bank accounts
                        iv. Qualified Monies (IRAs, 401Ks): should always have a beneficiary designated
                        v. Annuities: Operate like life insurance but may have income tax consequences
                        vi. Inter Vivos Gift: When someone has a specific intent to give a gift, and does so, to someone who accepts said gift. This is not revocable
III. TRUST- Owned by both the trustee and grantor and passed by the terms of the trust
                        i. Totten Trust: (also called a savings account trust, a tentative trust, or a poor man’s will) Here the trust may be revoked or the beneficiary changed by the depositor’s (this cannot be done in joint accounts)
What goes into the estate—Problem: Edward and Pat Smith were married for 47 years when he died. They had 2 children, Orin and Demona. When Edward died, he owned the following:
            (1) A home, in which he and Patricia resided. The deed that conveyed the house stated “to Edward Smith and Pat Smith, as tenants by the entirites.” The hous which was fully paid for was valued at $400K—Non-Probate
            (2) A condo in Petoskey, MI. Deed conveyed the condo to “Edward Smith, Demona Smith, and Orin Smith, as joint tenants with rights of survivorship.” The Condo, which was fully paid for, was valued at $400K—Non-Probate
            (3) A family farm, valued at $600K. The deed that conveyed the farm stated, “to Edward Smith and Danielle Crane as equal tenants in common.” Danielle was Edward’s cousin. The farm was fully part paid for. ½ Probate and ½ Non-Probate
            (4) A savings account in Edward’s name totaling $50K—Non-Probate
            (5) A 2005 Lexus RX 330 titled in Edwards name, totaling $40L –Probate
            (6) A paid up life insurance policy with Patricia a beneficiary—Non-Probate
            (7) An investment portfolio valued at $2mil, titled in Edwards name—Probate
            (8) Personal property valued at $10K—Probate
Edward was survived by: Patricia, Orin, Demona, Orin’s Son Ted, Danielle and Danielle’s sons Rick and Ron. What assets will pass into Edwards Estate?—Remember these are those probate assets that don’t pass by contract or as a matter of law
                        a. Lexus- $40K
                        b. Savings account- $50K
                        c. (1/2) Family Farm- $300K
                        d. Investment Portfolio- $2 mill
                        e. Personal Property- $10K
                                    $2,400,000
What assets p

ration is not a divorce). You must have a final decree of divorce in order to end your qualification
                        ii. Those who marriage has been annulled and haven’t remarried
                        iii. Those living in a bigamous relationship (meaning you are living with another who isn’t your husband/wife)
                        iv. Those who are willfully absent—you left on your own accord (> 1 year before death)
                        v. Person who deserted the decedent spouse (>1 year before death)
                        vi. Person who willfully neglected or refused to provide support for the decedent spouse if required to do so by law (>1 year before death)
            b. EPIC 2102: THE INTESTATE SHARE OF A DECEDENT’S SURVING SPOUSE IS 1 OF THE FOLLOWING:
                        i. The entire estate is no descendant or parent of the decedent survives the decedent
                        ii. The first $150K, plus ½ of any balance of the intestate estate, if all of the decedent’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse of who survives the decedent
                        iii. The first $150K, plus ¾ of any balance of the intestate estate, if no descendent of the decedent survives the decedent, but a parent of the decedent survives the decedent
                        iv. The first $150K, plus ½ of any balance of the intestate estate, if all of the decedent’s surviving descendants are also descendants of the surviving spouse and the surviving spouse has 1 or more surviving descendants who are not descendants of the decedent
                        v. The first $150K, plus ½ of any balance of the intestate estate, if 1 or more, but not all, of the decedent’s surving descendents are not descendents of the surviving
                        vi. The first $100K, plus ½ of any balance of the intestate estate, if none of the decedent’s surviving descendants are descendants of the surviving spouse (this means the decedent has children from a prior relationship)
SUMMARY OF EPIC 2102: If no descendant or parent survives, surviving spouse gets everything. If they have no mutual descendents it is $150K plus ½. If no mutual descendents, but a parent survived its $150K plus ¾ and lastly, if no mutual descendants but the decedent had other children, it is $100K plus ½ of balance
            c. EPIC 1103(f): ‘CHILD”
                        “Child” includes, but is not limited to; an individual entitled to take as a child under this act by intestate succession from the parent whose relationship is involved. Child does not include an individual who is only a stepchild, a foster child, or a grandchild or more remote descendent
            d. EPIC 2114(2) & (3): Adopted Child & Termination of Parental Rights:
                        EPIC 2114(2): An adopted individual is the child of his or her adoptive parent or parents and not of his or her natural parents, but adoption of a child by the spouse of either natural parents has no effect on either the relationship between the child and that natural parent or the right of the child or a descendent of the child to inherit from or through the other natural parent. An individual is considered to be adopted for purpose of this subsection when a court of competent jurisdiction enters an interlocutory decree of adoption that is not vacated or reversed