Wills, Estates & Trusts
I. Week 1 Terminology
A. Intestate:Of or relating to a person who has died without a valid will
B. Testate: Having left a valid will at death
C. Heir: A person who, under the laws of intestacy, is entitled to receive an estate of decedent’s property
D. Devise: When used as a noun, a testamentary disposition of real or personal property
E. Devisee: A person designated in a will to receive a devise
F. Decedent: Dead guy
G. Descendant: Generally, dead guy’s children, grandchildren, etc.
H. Testator: One who makes a will
I. Will: An instrument or declaration by which one directs the disposition of one’s property after death
J. Codicil: Amendment to an existing will
K. 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
1. Donative intent
2. Effective delivery (including constructive delivery)
3. Made in contemplation of death
4. Acceptance (presumed)
II. Policy Issues
A. Courts will attempt to honor the wishes of the decedent
B. The decedent is no longer with us, therefore, we may need extrinsic evidence to determine his or her wishes
C. Without any evidence, the law will make presumptions
III. When Deciding What Goes into Decedent’s Probate Estate
A. First thing to look at – What assets does the decedent have dominion and control over?
B. Second thing to look at – Which assets are probate assets (tenants in common) and which ones are non-probate assets (tenants by the entirety, JT w/rights of survivorship)? The will only controls probate assets.
C. Probate Asset: Any asset in the decedent’s name alone which requires the decedent’s signature to transfer (caveat = personal property)
IV. Answers to Week 1 Problems
A. Problem #1: ROBERT does here, but it also depends on when the will was executed; this isn’t automatically revoked upon recovery (b/c only some jurisdictions say this). If will was executed before heart attack, then Robert is going to get to keep the watch. If will was executed after heart attack, then this would be in Bart’s favor and would be a valid revocation by David.
B. Problem #2
1. Part (a) = Non-probate asset
2. Part (b) = Non-probate asset
3. Part (c) = $300,000 would go into the probate asset b/c tenants in common have an undivided interest
4. Part (d) = Probate asset
5. Part (e) = Probate asset
6. Part (f) = Non-probate asset
7. Part (g) = Probate asset
8. Part (h) = Probate asset
9. Value of Edward’s probatable assets: [300,000+50,000+40,000+1,000+2,000,000]=2,400,000
C. Problem #3: The Condo would now become an asset of the probate estate because the other joint tenants have predeceased Edward—it’s in Edwards name alone and needs a signature in order to transfer
D. Problem #4: T’s NDE = [Gross Probate Estate] – [3805 Priority Claims] = [696,000] – [10,000+45,000+10,000+10,000+10,000] = 611,000
E. Problem #5
1. Part (a) = All $700,000; total intestacy
2. Part (b) = $105,000 wasn’t effective passed by will (other $60,000 was a general devise)
3. Part (c) = $20,000 general devise; residuary devise $420,000; $400,000 gets distributed here via intestacy
V. Will Substitutes & Probate Process
A. Will Substitutes
1. Life Insurance: Contractual agreement wherein the beneficiary receives payment from the insurer upon the death of the insured
2. Joint Tenancies: Property passes to surviving joint owners
3. Tenancies by the Entirety:Property held as husband and wife
4. Trust: One person (trustee) holds property for the benefit of another person (beneficiary) with specific duties attaching to the manner in which the trustee deals with the property
5. Paid on Death Accounts (POD/TOD): Can be used with investments and bank accounts
6. Qualified Monies (IRAs, 401(k)s, etc..): Should always have a beneficiary designated
7. Annuities: Operate like life insurance but may have income tax consequences
B. Probate Process
1. Decedent passes away
2. Testate – will is submitted to probate
3. Intestate or partial intestate – petition/application—apply for letters of authority
4. Personal Rep. is appointed – by will; priority established by statute
5. Administration (formal/informal)
a. Collect assets
b. Notice to creditors
c. Pay estate taxes, if applicable
d. Inventory and accounting
e. Partial and final distributions
C. EPIC 3805—Priority of Claims
1. Section 1: If the applicable estate property is insufficient to pay all claims and allowances in full, the personal rep shall make payment in the following order of priority—
a. (a)—Costs and expenses of administration
b. (b)—Reasonable funeral & burial expenses
c. (c)—Homestead allowance
d. (d)—Family allowance
e. (e)—Exempt property
f. (f)—Debts & taxes with priority under federal law
g. (g)—Reasonable & necessary medical and hospital expenses of the decedent’s last illness, including a compensation of persons attending the decedent
h. (h)—Debts & taxes with priority under other laws of this state
i. (i)—All other claims
2. Section 2: Preference shall not be given in the payment of a claim over another claim of the same class, and a claim due and payable is not entitled to a preference over a claim not due
3. Section 3: If insufficient assets to pay all claims in full OR to satisfy homestead allowance, family allowance and exempt property, the PR shall certify the amount and nature of the deficiency to the trustee of a trust described in 7501(1) for payment by the trustee in accordance with 7502. If the PR is aware of other non-probate transfers that may be liable for claims and allowances, then, unless the will provides otherwise, the PR shall proceed to collect the deficiency in a manner reasonable under the circumstances so that each non-probate transfer, including those made under a trust described in 7501(1), bears an equitable or proportionate share of the total burden.
D. Net Distributable Estate (or Insolvent Estate if Negative) = Gross Probate Estate – 3805 Priority Claims
E. EPIC 2101—Intestate Succession
1. Section 1: Any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent’s heirs as prescribed in this act, except as modified by decedent’s will
2. Section 2 [Negative Will]: A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent that passes by intestate succession. If that individual or a member of that class survives the decedent, the share of the decedent’s intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed his or her intestate share.
3. Negative Will: Person who is in a will is “disinherited” by the testator and is treated like he predeceased the decedent (so he doesn’t get anything)
F. Four Principles Underlying Issues Relating to Estate Distribution
1. Courts want to give deference to decedent’s intent regarding distribution of his/her property at death
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 (the most reliable being a validly executed will) to determine intent AND
4. When there is no “reliable” evidence, the court (and statutes) will make presumptions (rebuttable)
5. BUT DECEDENT’S INTENT WILL BE LIMITED BY LAW & PUBLIC POLICY NEVERTHELESS!!!!!!!
VI. Week 2 Terminology
A. Descendant/Issue—[EPIC 1103(l)]:In relation to an individual, all of his or her descendants of all generations
B. Child—[EPIC 1103(f)]:Includes, but is not limited to, an individual entitled to take as a child by intestate succession from the parent whose relationship is involved. Child DOES NOT INCLUDE an individual who is only a stepchild, foster child, or grandchild or more remote descendant.
C. Adopted Child—[EPIC 2114(2)] 1. Adopted child = natural child according to the intestate succession statute
2. Adopted child is the child of his/her adoptive parents and NOT of his/her natural parents
D. Illegitimate Child—[EPIC 2114(1)(c)]:A child not conceived or born during a marriage is an individual born in wedlock if the child’s parents marry AFTER the conception or birth of the child (illegitimate child is still considered a “child” here!!!!!)
E. Parent—[EPIC 1106(i)]:Includes, but is not limited to, an individual entitled to take, or who would be entitled to take, as a parent under this act by intestate succession from a child who dies w/o a will and whose relationship is in question. Parent DOES NOT INCLUDE an individual who is only a stepparent, foster parent, or grandparent.
F. Surviving Descendant—[EPIC 2106(3)(b)]:A descendant who neither predeceased the decedent nor is considered to have predeceased the decedent under 2104.
G. EPIC 2104—The 120 Hour Rule:An individual who fails to survive the decedent by 120 hours is considered to have predeceased the decedent for purposes of homestead allowance, exempt property and intestate succession, and the decedent’s heirs are determined accordingly; have to prove by clear & convincing evidence that heir survived decedent by 120 hours!!!
H. EPIC 2108—Individual in Gestation:An individual in gestation at a particular time is treated as living at that time if the individual lives 120 hours or more after birth.
VII. Share of Heirs Other Than Surviving Spouse
A. EPIC 2103:Any part of the intestate estate that does not pass to the decedent’s surviving spouse under 2102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the following individuals who survive the decedent—
1. Decedent’s descendants by representation
2. If there is no surviving descendant, the decedent’s parents equally if both survive or to the surviving parent
3. If there is no surviving descendant or parent, the descendants of the decedent’s parents or of either of them by representation
4. If there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by one or more grandparents, ½ of the estate passes to the decedent’s paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent’s paternal grandparents or either of them if both are decease
ate in a generation are treated equally, regardless from whom they are descended or how many siblings they have
3. Break into primary shares at nearest generation with at least 1 surviving descendant (1 share for each surviving descendant and 1 share for each predeceased descendant who, in turn, left at least 1 surviving descendant)
4. After “root” generation, recombine unused primary shares and divide those primary shares per capita in the next generation (repeat again if necessary)
D. EPIC 2106(1)—EPIC’s Version of Per Capita at Each Generation:If, under 2103(a), a decedent’s intestate estate or a part of the estate passes by representation to the decedent’s descendants, the estate or part of the estate is divided into as many equal shares as the total of the surviving descendants in the generation nearest to the decedent that contains 1 or more surviving descendants and the deceased descendants in the same generation, who left surviving descendants, if any. Each surviving descendant in the nearest generation is allocated 1 share. The remaining shares, if any, are combined and then divided in the same manner among the surviving descendants of the deceased descendants as if the surviving descendants who were allocated a share and their surviving descendants had predeceased the decedent.
E. EPIC 2106(2)—If Decedent has no Surviving Descendants or Spouse: If, under 2103(c) or (d), a decedent’s intestate estate or a part of the estate passes by representation to the descendants of the decedent’s deceased parents or either of them or to the descendants of the decedent’s deceased paternal or maternal grandparents or either of them, the estate or part of the estate is divided into as many equal shares as the total of the surviving descendants in the generation nearest the deceased parents or either of them, or the deceased grandparents or either of them, that contains 1 or more surviving descendants and the deceased descendants in the same generation who left surviving descendants, if any. Each surviving descendant in the nearest generation is allocated 1 share. The remaining shares, if any, are combined and then divided in the same manner among the surviving descendants of the deceased descendants as if the surviving descendants who were allocated a share and their surviving descendants had predeceased the decedent.
X. Disclaimer, Advancements, Expectancy Interest & Slayer’s Statute [EPIC Approach] A. What is a disclaimer or renunciation?
1. Disclaimer: If you disclaim a devise given to you via will (testacy)
2. Renunciation: When you receive something as an heir and renounce it (intestacy)
B. EPIC 2803—Slayer’s Statute
1. Section 1: An individual who feloniously and intentionally kills the decedent forfeits all benefits under this article with respect to the decedent’s estate, including an intestate share, an elective share, an omitted spouse’s or child’s share, a homestead allowance, a family allowance, and exempt property. If the decedent died intestate, the decedent’s intestate estate passes as if the killer disclaimed his or her intestate share.
2. Section 2: The felonious and intentional killing of the decedent does all of the following—
a. Part (a): Revokes all of the following that are revocable:
(1) Subsection (i): Disposition or appointment of property made by the decedent to the killer in a governing instrument
b. Part (b): Severs the interests of the decedent and killer in property held by them at the time of the killing as joint tenants w/the right of survivorship, transforming the interests of the decedent and killer into tenancies in common (WAS ON EXAM BEFORE!!!!!!)
C. Advancements: A payment or gift to an heir intended to be part of any eventual intestate share of the donor’s estate that might be due the heir
1. Typical Issue = Was an advance intended or was it simply a gift during life w/o affecting intestate shares
2. EPIC 2109—Advancements
a. Section 1: If an individual dies intestate as to all or a portion of his or her estate, property the decedent gave during the decedent’s lifetime to an individual who, at the decedent’s death, is an heir is treated as an advancement against the heir’s intestate share only under either of the following circumstances (only applies to an intestate estate)