Will Substitutes Flashcards
Inter vivos gift
Gratuitous transfers made during life that cannot be revoked
Inter vivos gift requirements
Intent, delivery, acceptance
Gifts causa mortis
Gifts made in the anticipation of death, extra requirement: PERIL OF DEATH
Revocable (automatic if they survive, can be volitional before death too)
Tenancy by the entirety
Marriage, time, title, interest, possession
Joint tenancy
Time, title, interest, possession
Tenancy in common
Possession alone
Right of Survivorship
T/E + J/T
when one party dies, their interest vanishes while the other party’s interest swells
T/E: divorce/death
J/T: severed into T/C
Problem with concurrent interest
Partitions by sale
Pay on death contracts
“When I die, pay X”
Title changes at death
Revocable and amendable
Problem with POD contracts (common law)
Testamentary in nature, not valid unless executed under conditions set out by the Wills Act (which they typically were not)
POD contracts (UPC 6-101)
Are valid even though they are testamentary in nature and not executed in compliance with the Wills Act
First exception to the Wills Act
Life insurance
Can life insurance beneficiary designations be changed by divorce?
Yes - automatically under some statutes
UPC 2-804 - Yes, automatic
Hillman v. Marietta
Under federal employee life insurance, federal law preempts state law and a former spouse wins if that
is who was designated.
UPC does not like this case
Can life insurance beneficiaries be changed by a will?
Yes in some states
Cook v. Equitable Life Assurance Society
Terms of the life insurance policy controlled over a holographic will
Costs of the Cook rule?
Cannot control all of your clients assets in a will, complicating estate planning
Rule leads to injustice when D thought things were changed
Benefits of Cook Rule
Immediate payment of the proceeds
Less litigation
POD mutual funds account
Work a lot like a will
Stake chooses market-index funds with no load and low fees
POD brokerage accounts
Also work a lot like a will
Owner can control the investments within the range of publicly traded securities, mutual funds, and ETFs
NO PROPERTY INVOLVED
POD bank/brokerage accounts disputes
1) True J/T (some of the asset could be a lifetime gift, and some at death by will subs.)
2) POD account
3) Convenience or agency account
4) T/C
Medical savings account
tax benefits, make payable to spouse to keep the tax advantage
IRAs
contain POD clauses
defined contribution of a personal pension
Do wills change a POD designation in an IRA?
Some states: yes
Terms of the IRA: often NO
Egelhoff v. Egelhoff
ERISA has no provisions for IRAs designation after divorce, and the state law cannot overtake it
Majority in Egelhoff benefit:
Pension law uniform across state lines
Reduces cost of plan administration
Speeds up payments
Dissent in Egelhoff approach benefit:
Intent is met
Divorce agreement is followed
WA law followed
UPC followed
Courts would not have to create a new rule to deal with areas of law not covered by ERISA
Benefits defined pensions v. defined contribution accounts
Employee worries less about investing
To get some secure benefits, a DB costs less with more benefits
