Succession Flashcards
Priority of claims to inheritable assets after a person dies (6)
- Government allocates to private parties (close family member)
- Government allocates unsecured creditors
- Government allocates to government via tax
- Government allocates to surviving spouses
- Government to decedents
- Government allocation by default rules
Homestead Allowance
UPC 2-402: $22,500 (varies by state)
To spouse, if none, minor and dependent kids
Before creditors
Family Allowance
UPC 2-404: $27,000 (personal rep can choose to pay)
Exempt Property
UPC 2-403: household furniture, cars, appliances, and personal effects up to value of $15,000
Do former spouses get these exemptions? (Homestead, family, exempt property)
No
Do domestic partners apply to the exemptions? (homestead, family allowance, exempt)
Common Law: NO
UPC: advises states to include domestic partners
Waiver of Homestead/Family Allowance + Exempt Property
PERMITTED - UPC 2-213
Federal Law Legacy Tax
Dates back to the 1797 legacy tax
Unified + Gift tax: 40% of the amount above the federal exemption ($12,060,000), plus $16,000 per person per year
Spouses can use some of the exclusion (doubling it) if they file a return to make the exclusion “PORTABLE”
Failure to file the “portable” exclusion by the surviving spouse [federal]
Surviving Spouse Estate Tax Trap
Estate tax (state)(MA, VE, NY, MS, RI, CN, MR. DC. IL, MN, WA, OR, HI)
Depends on the net value of the decedent’s gifts before death and assets remaining at death (varying marginal rates)
Like the federal
Inheritance tax (state) (PA, NJ, MR, KE, IA, NE)
Government’s portion depends on the amount of each recipient’s gifts and inheritances
What state has both an estate + inheritance tax?
Maryland
Spousal elective share
allows the spouse to take assets ahead of those allocations made by the decedent
Highest priority of deciding who gets claims to what assets?
State enforces the decedent’s choice via will or substitute
Who should decide who should get sentimental personalty?
Decedent, NOT the state
Who should choose where tangible property should go?
Decedent
Who should choose between farms and businesses?
Decedents to preserve
1) subjective value
2) efficiency - will know who will manage the business/farm
What kills the middle class farms?
Estate tax - barely enough to survive
Why is allowing the decedent’s intent necessary?
- promotes justice to get service from kids
- avoid unjust enrichment
- reduce injustice
- advance justice by increasing distributive justice
- achieve fairness of rewards
- benefits families
- consideration of the capital formation
- consider public goods
- consider democracy
- consider happiness of those who think they will have less than $3,000,000
Easiest way to split control to the government
tax the estate
Parks v. Fink
Uses the modern rule that a lawyer might have a duty to an intended beneficiary
Does the lawyer owe a duty to an intended beneficiary?
Common Law: NO.
Modern Trend: depends - exceptions
Modern Trend of Beneficiary Duty
Lawyer owes a duty in some cases, but not if:
- there was a failure for the client to execute the will
- if the will was never executed
- if inappropriate to a 6-factor balancing test
Six-factor balancing test (when the intended beneficiary does not have a right to the lawyer)
- Extent to which the transaction was intended to benefit the nonclient plaintiff
- Forseeability of harm to the plaintiff
- Degree of certainty that the plaintiff suffered injury
- The closeness of the connection between the D’s conduct and the injury
- Preventing future harm
- Extent to which the profession would be unduly burdened
