How is the property to be distributed?

Question 1

Is there nonprobate property?

Answer 1

The decedent’s nonprobate property goes to the transferees identified in the written instrument properly creating the nonprobate arrangement (I.e., joint tenancy, life insurance/POD, legal life estates & remainders, and inter vivos trusts.

Question 2

Is there probate property?

Answer 2

If the property in question does not qualify as nonprobate property, the property automatically falls to probate–the default system (i.e., will or intestacy–the default).

Question 3

Order of Payment of Claims

Answer 3

Payment of debts, funeral expenses, taxes expenses of administration and family advances must all be provided for before the estate can be distributed. THEN specific gifts (“my” ABC stock), general gifts (just ABC stock), demonstrative (1st specific, then general), and then residuary (what’s left).

Question 4

Community Property -

“Exchange Rule”

Answer 4

Earnings during marriage are classified as community property. Under the “exchange rule” any property purchased with those earnings remains the community property of the marriage. When a spouse uses their earnings during marriage to purchase stock in their own name, absent an express written transmutation of the non-purchasing spouse or an intent to make a gift to the acquiring spouse, the stock remains the community property of the marriage.

Question 5

Third Party Transfer of Community Property

Answer 5

If the acquiring spouse dies before the non-acquiring spouse then the acquiring spouse may will away their one half interest in the CP.

Question 6

Lapse Gift &

Anti-Lapse Statutes

Answer 6

A lapsed gift is one that was valid when the will was executed, but which fails due to the subsequent death of the beneficiary during T’s lifetime.
At CL the gift would lapse and pass to the residuary clause.
CA Anti-lapse statutes will prevent testamentary gifts from lapsing if the predeceased BENE was kin to T (or T’s spouse) and dies w/ LINEAL descendants capable of taking the gift by substitution.

Question 7

Class Gift

Answer 7

A “class” is an indeterminate group of people which becomes “determined” once T dies and there is at least one surviving member of the class. The anti-lapse statute applies to class gifts (as to pre-deceased class members).

Question 8

Residue

Answer 8

The residue of an estate consists of any property owned by the decedent that has not been validly conveyed under the decedent’s testamentary documents (be aware of classification of gifts).

Question 9

Ademption by Extinction

Answer 9

Assumption that a specific gift is to be considered adeemed when it is not part of T’s estate at time of death (CL). CA = T’s intent … watch for stock “change in form” re: mergers, splits, dividends & reorganizations.

Question 10

Specific Gift

Answer 10

A specific gift is a gift of specifically identifiable property (“my” 100 shares of ABC stock).

Question 11

General Gift

Answer 11

A general gift is out of the general estate (100 shares of ABC stock)

Question 12

Demonstrative Gift

Answer 12

A general legacy paid first from specific property and then, if insufficient, out of the general estate.

Question 13

Ademption by Satisfaction

Answer 13

Specific, general, or demonstrative gifts may be satisfied in whole or part if T gives gift to bene, after /s/ will w/ intent to satisfy gift. CA requires /s/ writing by T in will or at time of gift or anytime by bene … can be ademption by satisfaction & extincsion

Question 14

Abatement

Answer 14

May reduce gifts to benes because estate is insufficient to pay all … Order is intestate property, residue, general bequests, demonstrative bequests, specific bequests