Non-Probate Property / Will Substitutes

Question 1

What is non-probate property?

Answer 1

Must be removed from decedent’s estate before distributing property under will or intestacy

Includes:
1) life insurance
2) joint tenancies + tenancies by the entirety
3) inter vivos trust
4) survivorship and pay on death bank accounts
5) deeds
6) contracts
7) inter vivos gifts

Question 2

what is an inter vivos gift

Answer 2

property given before decedent’s death

Question 3

what is an inter vivos trust

Answer 3

property that decedent has already transferred into trust - will not pass through estate but instead under terms of trust

inter vivos revocable trusts are also valid

Question 4

what is a future interest

Answer 4

passes to named beneficiary (e.g., a remainder or an executory interest)

Question 5

does tenancy in common have survivorship right?

Answer 5

no - so probate is not avoided

Question 6

joint tenancy

Answer 6

survivorship rights - surviving joint tenant takes w/o going through probate

Question 7

community property with right of survivorship

Answer 7

treated like joint tenancy in that it can be severed in the same manner before either owner’s death, and passes directly to survivor outside of probate when an owner dies

treated as community property for tax purposes and receives a double stepped up basis

Question 8

saving account trusts

Answer 8

valid even though depositer (trustee) can withdraw all of proceeds for own use
- trust is revoked to extend of withdrawals made by trustee before death
- trustee creditors can reach funds during trustees life

Question 9

joint or survivor accounts

Answer 9

survivor has absolute right to all money
- EE may be admitted to show account was merely for convenience and decedent did not intend for survivor to take all the money

Question 10

payable on death designations

Answer 10

permitted by CA statute as valid will substitutes

Question 11

multiple-party accounts

Answer 11

not considered to be testamentary

Question 12

deeds deposited in escrow w/ delivery conditioned upon grantor’s death

Answer 12

may be a valid nontestamentary transfer (construed as a present transfer of future interest, subject to a life estate reserved in the grantor)

Question 13

revocable transfer on death deeds

Answer 13

• an individual may transfer real property to a beneficiary on the individual’s death
• during lifetime, deed does not affect transferor’s ownership rights and does not create any legal or equitable right in the beneficiary

Question 14

government bonds

Answer 14

payable on death designation on a US bond is valid

Question 15

contracts

Answer 15

pension plan designations of a beneficiary - valid
beneficiary of installment sale contracts - invalid
securities registered in beneficiary form - valid

Question 16

life insurance

Answer 16

terms of the policy control; policy proceeds are not a probate asset

Question 17

gifts in view of impending death (gift causa mortis)

Answer 17

made in contemplation, fear, or peril of impending death with intent that it will be revoked if the giver recovers from the illness or escapes from peril (NOT just mere abstract fear of death, has to be realistically confronted with death)

subject to same delivery and acceptance requirements of inter vivos gift:
1) actual physical delivery
2) constructive delivery (keys) or
3) symbolic delivery (written instrument)

if donor recovers, gift is revoked by operation of law

gift is revocable by donor, and also revoked by operation of law is donee fails to survive donor

this gift IS subject to claims or creditors of the donor’s estate