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

Wills, Trusts, and Estates
Hilary Term 2010

INTESTACY

I. Overview – Property Rights

Eyerman v. Mercantile Trust (Kingsbury Place Case)

Louise died and according to her will, wanted her house to be demolished and property to be sold. Her neighbors sued to have injunction from the demolition of the property. Neighbors generally don’t have any interest in your property – only Heirs and Devisees have interest in property.
Neighbors fall into neither category, but the court allows them to have standing because the destruction of the house would affect their property value, ie against public policy.
The law of wills and a person’s right to their property is NOT absolute! Your ability to dispose of property by will is given to you by statute, given by the STATE. It is NOT a constitutional right. “What the state giveth, the state can taketh away” – not an absolute right

Public Policy Issues
· The court will try to honor the decedent’s wishes
· Since s/he is dead, extrinsic evidence is used to determine their wishes
· If there is no extrinsic evidence, the court will make presumptions using the statute

Basic Terms
· Heir: a person who will inherit another’s real property by intestate succession
· Devisee: a person who inherits another’s real property by will
· Devise: when used as a noun, a testamentary disposition of real or personal property
· Decedent: dead guy
· Descendent: generally, the decedent’s children, grandchildren and forward down through generations. Also called “issue”
· Ancestor: parents, grandparents, and so forth up through prior generations
· Consanguinity: relationship by blood. Affinity is relationship by marriage
· Testator: one who makes a will
· Will: an instrument or declaration where one directs the disposition of the property after death. It is also called a testament
· Codicil: An amendment to a will
· Intestate: of or relating to a person who has died without a valid will
· Testate: a person who has died that left a valid will at death
· Descendants: people in a parent-child relationship
· A “child” is not a stepchild, foster child, or a grandchild, or a remote descendant.
· An illegitimate child: A child born out of wedlock will be presumed to be the child of the man/father. A child born within a marriage is presumed to be the father’s child
· Adopted child: also considered a “child,” can’t inherit from his/her natural parents, an adopted child is the child of the adoptive parents. ******* [listen to podcast] · Stepchildren are not “children”
· “Parent” is not a stepparent, foster parent, or grandparent – first generation of parents
· Half-blood; half-siblings: they inherit the same as full siblings
Probate Process
· Decedent passes away
· Testate
Will is submitted to probate
· Intestate/Partial intestate
Petition/Application – apply for letters of authority
· Personal representative (PR) is appointed by court – his name appears on letters of authority. PR’s signature now replaces decedent’s signature to
i. Collects assets
ii. Notice to Creditors
iii. Pays estate taxes
iv. Inventory and accounting
v. Partial and final distributions

What goes into the Estate

Three Categories of Assets

i. Probate: those assets held in the decedent’s name alone that require the decedent’s signature to transfer.
1. It travels by one of two ways:
a. Testacy or
b. Intestacy
2. Personal property is an exception because it doesn’t require the decedent’s signature to transfer. *Unlike trusts, probate requires the estate to pay set fees to the county/state
3. Will controls probate assets!
ii. Non-Probate: those assets that are not held in decedent’s assets alone does not require the decedent’s signature to transfer. Opposite of probate assets and travel by operation of law or contract. Doesn’t matter what will says about non-probate property, it is governed by law or contract only!
1. Assets not held in decedents name = joint tenancy w/ survivorship
a. Via operation of law
b. Tenants in common is NOT joint tenancy à goes to probate ct, but only the portion the tenant owned
2. …That does not require the decedent’s signature to transfer
a. Life insurance: designated beneficiary gets $ via operation of contract
b. Life Insurance as a Probate Asset
i. Normally, when owner/insured dies, policy pays out to a named beneficiary it is non-probate asset, but there are 2 exceptions:
1. When owner/beneficiary dies before the insured = probate asset
2. If beneficiary dies before owner/insured and then owner/insured dies (owner hasn’t switched beneficiary yet), no one to pay so owner’s estate makes claim and benefit is paid to estate = probate asset
iii. Trust Assets: Terms of the trust control distribution of property

*A piece of property can only be in one category at any given time – the time we care about is the date of decedent’s death. How the property is owned as of date of decedents death is what determines how we are going to transfer the property

Gifts Causa Mortis: gift given in contemplation of death, revocable if person survives from that which he thought he would die from

Elements:

i. Donative Intent
ii. Effective Delivery
iii. Made in contemplation of death
iv. Acceptance (presumed)
v. Automatically revoked if you survive or if you die from some other reason than what the person contemplated

Van Wormer Case: VW was suffering from depression when he gave his bro $3200 of stock with belief that he would die in the near future. A few months later VW committed suicide. Bro claims it was gift causa mortis, Wife claims gift is revocable bc he didn’t die from depression. The court disagreed bc he committed suicide as a result of his depression, which makes it a valid gift causa mortis. Gift went to bro and does not go back to VW’s estate.
Problem 1: 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 and handed it to Rob, saying “Robert, take my watch. You can keep it.” Rob took the watch. David survived the heart attack, but died two years later in a car accident. His valid will left the watch to Bart. Who has superior claim to the watch, Rob or Bart? Because David did not die from the heart attack, Bart has a superior claim to the watch. (Rob could argue that D did not attempt to get the watch back from R for 2 years. However, law will still honor D’s wishes – it does not punish someone who procrastinates)

Problem 2: Ed and Pat Smith were married for 47 years when Ed died. They had two kids, Orin and Demona. When Ed died, he owned the following:

i. A home, where he and Pat lived. The deed that conveyed the house stated “to Ed and Pat, as tenants by the entireties.” The house was fully paid for and valued at $650

a pro rata basis
Pro rata:
i. Add up all assets in the same category
ii. Determine what percentage each creditor represents of the total (divide each claim by total amount = percentage)
iii. Give that creditor that percentage of what you actually have to give
Example:
Visa = 10,000
MC = 5,000
Discover 5,000
à Only $1000 left after we paid every other claim. All in same category: 10+5+5=20; then 10/20 and 5/20
Visa = 50% = 500
MC = 25% = 250
Discover = 25% = 250
(3) If a trust exists and the probate estate is not enough to pay creditors, the trust must be used to pay creditors.
Note: if you distribute money out according to priority of claims and there is not enough for the whole list, the last one to get paid takes it all

Intestacy
2101 – Intestate Succession
· When does intestacy apply?
When a decedent does not write a will OR
If the will does not cover some property
à Can die partially testate or partially intestate – ie. the will covers some property (testate) but not all of your property (goes intestate)
· Negative Will
à By your will you can expressly exclude someone from intestate succession – so property passes by intestate succession
· Problem: What will pass through intestacy for each of the following?
iv. When Peter died, his distributable assets totaled $700,000. He had never executed a will. How much is intestate? All of it bc he died intestate
v. In 1982, Rhonda executed a valid will which stated: “I leave $60K to the American Cancer Society.” This was the only devise in the will. When Rhonda died, her distributable estate was $165K. How much is intestate? $105K is intestate, $60K is testate bc its written in will
vi. In 1993, Ed executed a valid will, which contained the following devises: To my sister, Elena, I leave $20K. The remainder of my estate I leave to my partner, Raoul. When Eduardo died, his distributable estate totaled $420K. However the court declared the gift to Raul invalid as the result of a challenge of undue influence. What part is intestate? $400,000 bc the devise to Raul is invalid

Who takes? 120 hour Rule

i. In order to collect under intestacy, the decedent’s heirs must outlive the decedent by 120 hours (proven by clear and convincing evidence)
ii. If a descendent does not outlive the decedent by 120 hours then they will be considered to have predeceased the decedent
iii. A child in the womb (gestation) is considered a surviving descendant and can collect from intestacy IF the child was conceived prior to decedent’s death AND survives the decedent by 120 hours
iv. Simultaneous death: must live 120 hours longer than decedent or it will be treated like you predeceased decedent

Share of heirs other than surviving spouse