Wills, Trusts, and Estates Outline

WILLS, TRUSTS AND ESTATES OUTLINE

INTESTATE – When you don’t have a will

HOW IS A DECEDENT’S ESTATE DISTRIBUTED
TESTATE – You have a will

WHO GETS WHAT Who receives assets of a decedent once someone dies?

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INTESTACY
TERMINOLOGY:
– Estate- Assets owned by the decedent (2 concepts: Property and Ownership)
o Intestate –A person who has died without a valid will
§ Only people involved are heirs
o Heir – a person who, under the laws of intestacy, is entitled to receive decedent’s intestate property
o Degree of Kinship- The closeness of the relationship to one’s relatives → kin.
o Decedent – dead guy
o Descendent – Generally, the dead guy’s children, grandchildren and so on; Must be lineal to the family bloodline
o Probate- Process and the Crt. which the process takes place in determining who takes under the estate
o Probate Asset/Property- Assets or share of asset owned by decedent solely; Governed by a will
o Non-Probate Asset/Property- Decedent’s assets that has a designated recipient
o Will Substitute- Some other tool giving decedent’s assets to another person w/out probate proceedings
a) JT- in most states w/rt. of survivorship
b) Insurance- K w/face value belonging to decedent to pay to beneficiary
c) Intervivos Trust- K transferring property while living
d) Intervivos Gift- Giving gift in life time
e) Payment on Death/POD- bank account that pays to named beneficiary in which the ownership is joint
f) Tenancy by Entirety/TBE- Ownership by husband and wife, has ROS
o Claim- All debts or fees an estate is subject to at the time of death

o

Interchangeably

Disclaimer- Refusal to accept the benefits under a will or intestate succession statute

o Renunciation- Refusal by an heir to accept an intestate share.
o Distributable Estate- Amt. available for distribution among the devisees after all claims have been settled
o Surviving Spouse- Spouse that has not divorced or annulled and is considered by law to still be married to the decedent at the time of death.
– Survive- has to outlive the decedent by 120 hrs.
o Constructive Trust- Equitable device used to avoid unjust enrichment of a person who receives property under circumstances that would make retention unconscionable (Fraud, duress)
– Generally Accepted Rules:
· Crt. usually give deference to the DECEDENT’S INTENT
· For public policy reasons (decedent’s intent limitations), Crts. may not enforce a will’s provision or decedent’s intent (if illegal, not for the greater good of the public)

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DONATIVE POWER

· ALWAYS KEEP IN MIND à 4 MAJOR UNDERLYING PRINCIPLES:

1. Crt. wants to honor decedent’s intentions, testamentary wishes within limits so that it does not violate public policy.
a. Eyerman (based on public policy, legal issues affect the neighborhood economically, historically)
2. We cannot go to the decedent (the expert on intent is unavailable) since (s)he’s dead and ask what (s)he intended so…
3. We determine the intent by looking to reliable evidence of the decedent’s intent (i.e. the will – requirements make it reliable) and when there is no reliable evidence (or ambiguities) then…

4. The Crt. will make certain presumptions via statutes of intestacy.

· TRANSFER OF THE PROPERTY:

1. INTERVIVOS: You can transfer property during your lifetime
§ An intervivos gift MUST meet ALL 3 Elements: Intent, Delivery, Acceptance
§ An intervivos gift is irrevocable UNLESS you do something to make it revocable

2. GIFT CAUSEA MORTIS: “in contemplation of death” Gift given by donor when the donor believes he is going to die
§ A gift causea mortis MUST meet ALL 3 Elements: Intent, Delivery, Acceptance
§ Donor MUST believe he is going to die. It doesn’t matter if the death is imminent or if he is suffering.
§ A gift causea mortis is revocable (MnR) and is automatically revocable if the donor survives. (MjR)
o It goes back to the owner if donor survives, then whoever the donor leaves the gift to after that will have the greater claim because the donor was deemed to be the owner because he didn’t die so his new intent is good.
o Delivery can be constructive

Ø EX.:
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 the superior claim to the watch, Robert or Bart?
It depends on whether the Crt. follows the majority or minority view:
o MjR: Bart will win b/c a valid will leaves him the watch since the gift is automatically revoked upon recovery, David did not die of the heart attack.
o MnR: Robert will win b/c can be revocable at the donor’s option

3. When dealing with gifts the moment of death is important. So, at the moment of death, the property a person owns must go to somebody. 1) The estate will hold it OR 2) It will pass outside of the estate to someone else. So, how will you know where the property will wind up? Probate Process

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PROBATE PROCESS
SO, HOW WILL YOU KNOW WHERE THE PROPERTY WILL WIND UP?

1st: Look at the titling of the property

ASK: IS THE PROPERTY SOLELY OWNED BY THE DECEDENT? (Probate)

§ IF YES then àit will go into the estate (becomes estate property)

§ IF TENANTS IN COMMON then à It doesn’t give anyone a right of survivorship so the decedent’s share of the property will go into the estate

ASK: IS THE PROPERTY GOING TO SOMEONE ELSE BY OPERATION OF LAW? (Non-Probate)

§ Right of Survivorship: Property owned with ROS
ü Example – A & B owned property as JTWOS so that when A dies all property goes to B by operation of law.
§ Tenants By Entirety: This is created by marriage and has a ROS
§ Insurance Policy: The benefit will go to the beneficiary (it will NOT go into the estate)
§ Pay on Death Account

Ø RECAP:What assets will pass into the estate (Probate)? What assets will pass outside the