Trusts & Estates Flashcards
Probate property
passes through probate under decedent’s will or by intestacy
nonprobate property
- passes outside probate by way of will substitute
- Death results in prop transfer (e.g., life ins., joint tenancy, some trusts)
- different rules/statutes govern types of non-probate transfers. Federal (ERISA), state (prop rules), etc
executor vs. administrator
If decedent dies testate & in her will names person who is to execute, such person usually called executor.
If will doesn’t name executor, or executor is unable, or decedent dies intestate, court will name administrator, usually selected from a statutory list of persons (spouse, children, parents, siblings, creditors).
primogeniture
real prop descended to eldest son, personal prop equally among children
3 core functions of probate
- provides evidence of transfer of title to the new owners, making prop marketable again
- protects creditors because procedure for payment of decedent’s debts
- distributes the decedent’s prop
What law applies to disposition of prop?
- Generally, the law of the state where the decedent domiciled governs disposition of personal prop, & law of state where decedent’s real prop is located governs disposition of real prop.
- Will should first be probated in jd where decedent domiciled (primary or domiciliary jd).
- If probate includes real prop in another jd, ancillary probate in that jd required (lawyers often recommend inter vivos trust to avoid this)
nonclaim statute
requires creditors of estate to file claims w/in a specified period, otherwise they are barred
Freedom of disposition
- Distinctive feature of American inheritance law.
- Originated in English common law, but now stronger than in Britain.
- Most of law of succession is concerned with enabling posthumous enforcement of the actual intent of the deceased or, failing this, the probable intent.
- Few constraints on deceased’s disposition of his wealth
Dead Hand Control
- dead hand that can rule from beyond the grave. Decedent can put conditions on the individual rec’ing the wealth, ongoing life choices, including those of a very personal nature. Compelling living beneficiary to act in certain ways to receive it.
- cons – dead person can’t know what conditions are – things come up like a sick child. Dead hobbling the living is irrational. Living being controlled by imagination of the dead as to what the circs will be after they are dead.
- Testator may legally disinherit kids, so ok for T to restrict a child’s inheritance (to condition it on marrying Jewish girl)
- A testator may not attach a condition to a gift that is in violation of public policy (reas restrictions on marriage ok)
- can’t avoid condition by saying you will act improperly (can’t say it encourages me to marry then divorce)
- If will has condition that Daniel get divorced, that would be agst public policy.
Keswich Home (T put in will that he would give home $$ if it was only used for white patients)
- Unconstitutional for Keswick to comply w/condition. Definitely agst public policy. Also can be seen as impossible to be fulfilled.
- Final appeal: Keswick won. Illegal racially discriminatory condition. Impossible condition b/c to fulfill it would ultimately result in loss of Keswick home b/c of illegal behavior.
Conditions in will that are against public policy
- conditions that promote family disharmony
- conditions that encourage crime or tort
- conditions that require destruction of property because they amt to waste
- unconstitutional / illegal
- divorce as condition
Can you cut minor kids out of will?
- Yes, in most states
- Anne surgeon, married to Bob, 3 kids. Bob becomes homemaker. Anne divorces Bob to marry David. Bob becomes primary custodial parent. She cuts children out of her will. Her omission of minor children is not a violation of s’n laws of most US jds. Even if kids will be indigent, on state support
Intestacy Statutes (definition and goal)
- default rules supplied by the state
- Statutes of descent and distribution
- Descent – who it goes to
- Distribution – in what shares
- Goal: to determine the probable intent of the decedent in distributing his prop. – based on empirical evidence, but doesn’t fit everyone. E.g., Whether adopted child of same sex couple will be seen as child of both.
Heirs apparent
- if person is still alive. B/c he can make a will up until he dies, so can change. Or there could be changes in family structure – another kid born, heir could predecease. Just a “mere expectancy”
Structure of Intestacy statutes
- exclusionary or sharing
- intestate heirs will be in classes by priority
- can have either exclusion (higher excludes lower class) or sharing
- UPC 2-102 – surviving spouse in intestacy gets all unless there are stepchildren of surviving spouse or a parent of the decedent.
- UPC 2-102(2) – the first 300,000, plus ¾ of remaining estate if no descendents of decedent, but decedent has parent. [This excludes what is further down]
Simultaneous Deaths of Intestate & Heir
- Look at evidence of longer survival
- For someone to be an heir, person leaving prop has to have already died – old rule was heir has to be alive for “instant in time” in advance of other party. Now, look at evidence of longer survival.
- Janus v. Tarasewicz - Both spouses died from cyanide-laced Tylenol. Who died first? Wife on life support, hubby pronounced dead before her. Ins. policy for $100K taken out by hubby, wife as beneficiary & his mom as contingent beneficiary if wife didn’t survive him.
- Evid. that Teresa survived Stanley – Teresa regained some brain waves, technically not dead. Stanley had no signs of life at all. Teresa pronounced dead 2 days after Stanley.
- Stanley’s mom wants son’s Ins. money. But, Teresa’s father gets it b/c she survived Stanley.
- What is the justification for doing this? Just a question of who lives an instant in time longer.
- Uniform Simultaneous Death Act was supposed to fix this problem. Need “sufficient evidence” of order of death. If no sufficient evid each was seen to predecease the other, neither inherits other’s estate. What is “sufficient”?
- USDA doesn’t provide what we are looking for assuming your policy is to do the wishes of decedent.
- 120-Hour Survivorship Rule. New rule. Req’t that claimant must establish survivorship for 120 hrs by clear and convincing evidence.
Consanguinuity
- Descendants
- Encompasses more than one generation
- But, not all members of the class termed descendants are treated the same. There is a preference for closely related descendants
- Ancestors
- Collateral Kindred
Descendant’s Priority in Intestacy
- take by Representation (child’s descendents represent the dead child & divide the child share among themselves)
- 3 Methods of Division: English per stirpes; modern per stirpes; per capita at each generation (UPC 1990).
- Remember - Under all these methods, should a line become extinguished, their share goes to the general share
English per stirpes
- Begin at the first level of descendants, even if no one at that level survives the decedent
- ALL of it is divided at this level
- So, if A had B &C, who both predeceased. B had D, C had E & F. Estate spit in two at B&C level, so D gets 1/2 and E&F get 1/4 each.
- Vertical equality – each line of descent receives an equal share
- Values – who will carry on the family name, descent.
Modern per stirpes
- Begin at the first generational level where there is a living person
- Most popular among those surveyed
- So, if A had B &C, who both predeceased. B had D, C had E & F., division of estate takes place with the grand-children
- The entire estate is divided up – D, E, and F each receive 1/3 of the estate
- Value here – all the grandchildren are equally closely related to the decedent.
Per Capita at Each Generation (UPC 1990)
- Least Popular of the systems despite equality-oriented policy goals
- Initial division of decedent’s estate occurs at first generation where there is a descendant alive
- But, shared of dead persons on this level are treated as one pot and dropped down, divided equally among representatives at next generation
- So, if a had B, C, D - D is only one surviving. D gets 1/3. Remaining 2/3 drops to next gen, where it is divided equally.
- “Equally near, equally dear”
Ancestors and Collaterals (distribution to)
- If intestate decedent is survived by a descendent, the D’s ancestors & collaterals don’t take.
- in 1/2 states, spouse gets her share, then D’s parents get rest. In other 1/2, spouse takes to exclusion of parents.
- if no spouse or parent, decedent’s heirs will be more remote ancestors or collateral kindred
- if decedent has no spouse, parent, or descendant, it passes to brothers/sisters and their descendants. Descendents of dead siblings take by representation (nieces/nephews), then one of the 3 systems.
- 2 methods of identifying heir if no first line collaterals (descendents of decedent’s parents)
- Parentelic systems - Intestate estate passes to grandparents and their descendants; if none, to great-grandparents and their descendants, etc. until an heir is found
- Degree of relationship system - Intestate estate passes to the closest of kin, counting degree of kinship. Look at table of consanguinity – degree of relationship is printed. If there are multiple descendants with same degree of relation, then the state imposes a tie breaker
Laughing heirs and escheat to the state
- If decedent dies with no kin, the estate escheats to the state
- If decedent dies with only no close descendants, should distant relatives be allowed to inherit?
- Half the states, and UPC, draw line at grandparents and their descendants. Thus, excluding some relatives, such as great-aunts
- Other states are more generous, to different degrees
Adopted children (and intestacy)
- used to be “strangers to the succession” – adopted child could only inherit from adopted parents, but not adopted parents’ relatives in intestacy. Also, relatives couldn’t take from adopted child. Rationale – dynastic concern. No longer the rule.
- Modern situation with adopted kids - whether an adopted child can inherit from adoptive parents and biological parents in intestacy. (double dip)
- Different rules in diff states – some states the relationship btwn adoptive parents & their relatives &the adoptive child is exclusive. For intestate succ, kids can only take through eachother. Other states where adopted children & relatives can take through eachother, but kids can also take through bio parents.
- 2008 UPC amendments – in general, it’s an exclusive relationship, but there are exceptions created under certain circs (p. 95) – cases involving stepchild/stepparent, person adopted by relative of bio parent, person adopted after death of both bio parents. Adopted person gets rights from both sets of relatives. The set of adopted relatives do not get rights in exchange from adoptee’s new family.
Adult adoption (ant intestacy)
- Most states don’t distinguish btwn an adopted child and adult
- Homosexual couple. Gives them intestacy rights & some rights they would have if married. Puts partner first in succession. Protect will against challenge. Will preempt everyone who comes after. Only people that can challenge will are those that would take if will were denied probate. If decedents’ other family want standing to challenge will, they would have to contest adoption and overturn it.
- Some states (LA included) only allow adult adoptions when there’s a parent-child relationship, prevents same sex couples from using it.
Who can challenge a will?
Only people that can challenge will are those that would take if will were denied probate (i.e., in intestacy)
Equitable adoption
- a.k.a. informal adoption, virtual adoption
- majority of states recognize equitable adoption – differences in details – done three ways, see below: (1) K made between persons with auth to K for the disposition of the child, (2) evidence of agr on part of equitably adoptive parent and child, or (3) is there a parent-child relationship.
Posthumous children, married parents (and intestacy)
- One conceived before father died, born after father’s death.
- Common law presumption of paternity of wife’s child if kid born w/in normal gestation pd (CL = 280 days)
- Uniform Parentage Act (some states) – w/in 300 days of husband’s death. Rebuttable presumption (modern scientific tests).
Non-marital children (and intestacy)
- Original common law – filius nullius. No one’s child, no inheritance rights from anyone (including mother) unless he had children of his own.
- All states now allow inheritance from child’s mother. Rules re inheriting from father vary – different states have diff conditions on proof of paternity. Most states – non-marital child can inherit from both parents provided the bio relationship can be proven – usually a time period set for demonstrating paternity.
- Establishing biological relationship – 4 methods. Most states permit paternity to be established by various types of evid – subsequent marriage of parents, acknowledgment by father, paternity adjudication during father’s life, or C&C proof of paternity after his death (DNA evidence).
- At least one state (NY) says father can’t back out once he acknowledged paternity & subsequent DNA testing showed he wasn’t. A NOLA case has just said the same. Best interests of the child who relied on the man’s earlier acknowledgement estopped the man from later denying paternity.
Posthumously Conceived Children (and intestacy)
- Some states have reqts for timely posthumous conception or timely birth (e.g., must be in utero w/in 36 mos or born w/in 45 mos of parent’s death). Also, some states have a notice reqt to administrator of the estate
- Case: Limited circs may exist where posthumously conceived children may enjoy inheritance rights of “issue” under MA intestacy law.
- R: Where: (1) surviving parent demonstrates genetic relationship btwn child & decedent (2) survivor must establish that decedent affirmatively consented to posthumous conception and to the support of any resulting child.
- Some statutory regimes require a writing for affirmative consent
Advancements (and intestacy)
• Transfers to decedent’s children. Gift during donor’s life that’s presumed to be prepayment of at least part of child’s intestate share. Child receiving the gift is one of the donor’s heirs.
• Inez’s Estate $450,000 + ($150,000 advance to Ann). Hotchpot = $600,000; Ann - $200,000 - $150,000 advance = $50,000; Bob - $200,000; Charlie - $200,000
• Strong presumption under common law rule & it would be up to Ann to prove gift not intended as an advancement on her share of the estate. Her share is reduced by the amt of the advancement.
• If Ann predeceases Inez, has son Don. Don doesn’t take equal share w/ B & C, advance is taken into acct.
• Law treats advance as if still part of estate, combines it all, then divides by three. Ann gets a lower share.
• “Bringing the advancement into the hotchpot” – to equalize the shares of the heirs.
• This is a gift, not conditional or irrevocable. So if Ann given more than her fair share, she doesn’t have to return portion of it. She stays out of division. Estate (w/o the advance) is split btwn the remainder.
• There have been changes in the UPC and a few states re advancements
- some say it is presumed NOT to be an advancement unless it is shown to be intended as such.
- Some states & UPC require intent to make advancement be declared in writing signed by parent or child. (Modern view advocated by UPC – decedent probably disposed of prop as he wished during his life & law should respect that. This isn’t majority rule.)
Bars to Succession
- Slayer statutes: Prohibits slayer from inheriting from victim. Apply to both probate and non-probate transfers.
- Variations on who takes estate. Main rule – killer treated as having predeceased victim. So person who would have taken after killer.
- Question of whether a crim conviction is required. In general, it isn’t.
- Constructive trust – can’t let someone profit from wrongful conduct, so slayer holds prop like trustee for benefit of victim’s heirs. Mechanism to convey prop to one who in equity would have it.
Disclaimer
- Definition: The refusal of an heir or devisee to take the prop he’s entitled to under succession law.
- Effect: In almost all states, disclaimant treated as having predeceased decedent, so prop goes to next heir.
- Why is it used? To avoid gift or estate taxes to be assessed on several generations of heirs – so skip a generation and go to next. Also to avoid creditors of heir or devisee.
Two ways wills can be invalid
• Wills can be invalid for reasons of (1) substance or (2) form.
Substantive invalidity of will (reasons and doctrines)
- Substance doesn’t fit with the purpose of a will – to do the wishes of the decedent (testator).
- Sometimes a will can be seen to be not a valid expression of his wishes
- Contest: someone w/an interest (contestant) believes doc isn’t valid expression of testator’s wishes.
- Four doctrines of substantive invalidity: testamentary incapacity, duress, undue influence, and fraud (tricked into making a disposition he otherwise would have made).
Testamentary Incapacity
- 4 capabilities req’d to make valid will
- Level of “capabilities” needed: Generally low - capability, not actual knowledge. Low standard for capacity is meant to respect T’s autonomy.
- A person who is under guardianship & has a conservator may still be able to make a valid will
- Generally seen not as high level understanding as needed for commercial K. Not as low as for capacity for M.
- Lucid interval doctrine for insane persons (can still make valid will)
- Insane delusion (meet the requirements but is nevertheless operating under insane delusion)
Capabilities to make a valid will
• 4 capabilities req’d to make valid will: T must be capable of knowing & understanding in general way:
o the nature and extent of his property
o the natural objects of the testator’s bounty (capable of knowing who would inherit w/o a will)
o the disposition that the testator is making
o relating these elements to one another & forming an orderly desire regarding the disposition of the prop
Lucid interval doctrine for insane persons
- Lucid interval doctrine – even if someone is insane, an insane person can make a valid will during a time when his mind is not being affected by insanity. A lucid interval.
- The law favors testate succession over intestacy.
- Legal presumption in favor of sanity**
- Unless the acts directly bear upon the testamentary act, the crazy episodes don’t matter. (E.g., Bequests not confusing, didn’t leave anything twice or to fictional person)
- Presumption of testamentary capacity. So, if equivocal evid, can be read two ways, there’s presumption, should be read in favor of capacity. Burden of proving lack of capacity, didn’t meet it
Insane Delusion
• Subset of testamentary incapacity
• Legal term – basis for striking down a will or part of a will. Differs from testamentary incapacity – the person meets the T.I. test, but nevertheless is crazy. So, you can meet the TI test and still not have capacity.
• Belief or conviction to which the testator adheres despite all reason and evidence to the contrary.
- Distinguishes it from mistake.
- Contestant must show that behavior meets the above definition AND that the insane delusion CAUSED the disposition (affected the disposition).
• If there’s any supporting evid for the “delusion,” then it’s not insane.
- You can be insane on some subjects, but capable of doing business re other matters.
- If the insane delusion doesn’t materially affect the will, then can still be valid.
Undue Influence (definition)
- Undue influence protects agst overreaching by a wrongdoer seeking to take unfair advantage of a donor who is susceptible on acct of age, inexperience, dependence, physical or mental weakness, or other factor.
- Undue influence - if the influence exerted over donor overcame donor’s free will & caused donor to make a donative transfer he would not otherwise have made.
- Problem – what kind of influence is undue?
- Paradigmatic case – caretaker ingratiates himself w/elderly donor, isolating donor from friends/family
- Elaborate scheme of presumptions and burden-shifting
Undue Influence (elements of garden variety)
• Confidential relationship + Suspicious circs
- confidential relationship: legally established relationship of trust where law expects parties to be “other-regarding” - obligated to take other person into consideration beyond oneself. Types: fiduciary (attorney, trustee, power of attorney), reliant (special trust, knowledge), dominant-subservient (caregiver, power differential operates btwn the two)
- PLUS suspicious circumstances (confidant received bulk of estate, decedent had weakened intellect, susceptible to undue influence, wrongdoer participated in preparation of the will)
- Then contestant entitled to PRESUMPTION of undue influence, so will proponent must then prove lack of U.I. (shifts BoP)
- How do you prove lack of u.i.? Prove that (1) you acted in good faith throughout transaction & (2) the testator acted freely, intelligently, and voluntarily
• 4 things we look for that give circumstantial evid of UI (burden on will contestant) – garden variety UI
o donor was susceptible to undue influence (elderly, dependent, weak willed)
o the alleged wrongdoer had an opportunity to exert undue influence (live together?)
o the alleged wrongdoer had a disposition to exert undue influence
o result appearing to be the effect of the undue influence
Problems with Statements of Reason in a Will
- Technique to avoid will contest; also another technique that can backfire
- clause that lists reasons for excluding people from will
- Danger of statement of reasons – can be questions re how factual, jury may see any discrepancies as being of unsound mind.
- Can also backfire b/c it’s provocative, may make someone contest will to clear their name
- Testamentary libel – a public document, so if it is libelous, it could lead to damages.
In Terrorem Clauses
– no contest clause in the will.
- If any legatee contests tesstator’s will, they forfeit all benefits under the will
- Usually enforceable unless there’s probable cause for challenging the will
- For it to work, the contestants must have been left something for them to lose.
Duress
• How is duress different from undue influence?
- Duress = wrongdoer threatened to perform or did perform a wrongful act that coerced the testator into making a donative transfer that the testator would not otherwise have made.
- A more extreme version of u.i. Not just pressure, but pressure made by coercion or violence.
• Examples: physical threats; blackmail (I’ll tell your wife about your affair if you don’t leave estate to me)
- Duress in prevention of making a will – Latham case is famous for extending the constructive trust to this - wrongdoer held estate in trust for benefit of Ps.
