TRUSTS & ESTATES NOTES SUMMARY
I. Introduction
A. The “Right” to Inheritance
1. Hodel v. Irving, 481 US. 704 (1987) p.2-13
Decedents have the right to control disposition of their property at death, and the original provision of the “escheat’ provision of the Indian Consolidation Act of 1983 effected an unconstitutional “taking” of their property w/o just compensation.
2. NO RIGHT TO RECEIVE. Restrictions upon marriage, to a particular class or faith, as a condition of inheritance are constitutional, valid & enforceable. Shapira v. Union Nat’l Bank, 39 Ohio Misc. 28 (1974) pp.24-34. The court distinguished:
partial restraint on marriage -- whom beneficiary could marry [permissable] versus covenant restraining religious practice [impermissible]
testamentary gift conditioned upon the religious faith of beneficiary [impermissible] versus those conditioned upon marriage to persons of particular religious faith [impermissible]
test. gift conditioned on beneficiary getting divorced [impermissible] versus those conditioned on benef. marrrying “qualified woman.” The possibility that he’d marry her just to get the money, then divorce is was deemed too remote.
the contingent gift to Israel in lieu of benef. goes to the conviction underlying T’s intent – not to punish the son but to perpetuate religion & ethnicity.
T’ors may disinherit their č; thus a T may restrict inheritance unless contrary to public policy & void (like ban on marriage).
An alternative interpretation might be that if the gift reflects the bigoted mores of the greater society, it is constitutional; if not, it is not. I wonder what court would uphold, “To my son, if he established a commitment to another man as his life partner” – esp. if that son were straight?
B. The Probate Process
1. Who benefits? Why?
Intestacy
/Will
1. Administrator – must post bond; chosen by a statutory process (usually relation determines); / 1. Executor – if you appoint one, you waive the bond requirement.2. File notice of proceeding w/this particular administrator / 2. File original will
3. Letter of administration issued – authorizes administrator to act on estate’s behalf. / 3. Letter testamentary issued – authorizes executor to act on behalf of estate.
2. Duties of Representative
1.Collect Assets – meaning, inventory & collect them.
2.Manage assets.
3.Receive & pay creditors’ claims.
4.Distribute the rest.
3. Why avoid probate?
1. Money. (a) Atty’s fees – sometimes executor can get atty’s fees as well as
(b) executor’s commission.
(c) filing fees;
2. Time
3. Uncertainty – judicial oversight can mean high risk; inexperienced, dumb judges – some of whom are not even lawyers.
How to avoid probate:
1. Trusts – revocable, irrevocable, many other types
2. Life insurance
3. Retirement accounts & other pension on death k’s.
4. Joint tenancy – upon death, decedent’s share goes to survivor.
5. When the estate is small, probate may not be necessary.
Universal succession – surviving spouse or child, assets and debts.
Is a will needed even where probate is avoidable? There is always the chance that after setting up these instruments for improper accounting for everything owned.
4. Probate Process: Formal & Informal
a. OPENING
Informal Opening / Formal OpeningMust be filed w/in 3 yrs. of death. UPC 3-108 / Must be filed w/in three years of death. UPC 3-108
1. No notice; representative just petitions for appointment. Petition contains pertinent information about decedent & names & address of spouse, č or other heirs and if a will is involved, the devisees. / 1. Notice to interested parties. Interested party may demand formal probate. May be used to (a) block an informal proceeding;
(b) probate a will; or
(c) to secure a declaratory judgment.
2. File original will, if there is one. / 2.
3. Executor swears that will was validly executed; no proof by witnesses required as long as (a) attestation clause showing req’s of execution met & (b) required signatures
4. Within 30 days after appointment, the personal representative must mail notice to every interested person, incl. heirs apparently disinherited by will.
b. SUPERVISING REPRESENTATIVE’S ACTIONS
Court supervises. It approves:
inventory & appraisal
payment of debts
family allowance
granting options on real estate
sale of real estate
borrowing of funds & mortgaging of property
leasing of property
proration of federal estate tax
commissions
attorney’s fees
preliminary & final distributions
discharge of personal representataive
UPC authorizes unsupervised administration unless any interested party demands supervised.
The representative thus has the broad powers of a trustee. Files a sworn statement that he has published notice to creditors, etc.
c. CLOSING THE ESTATE
Rep. is expected to complete administration & distribute as promptly as possible.
2. Duties to the Client pp.59-70
A lawyer’s duty is to beneficiaries, not just to the Testator. Forseeability of harm puts duty to beneficiaries. Simpson v. Calivas (NH 1994) p.59.
C. Who May Inherit – State Definitions of Family
1. Who qualifies as Surviving Spouse
a. Peffley-Warner v. Bowen, Washington 1989 (handout)
“Meretricious” relationship – unmarried couple who represented to others that they were married for 20 years – did not establish status of woman partner as a spouse under Washington intestate devolution.
Social Security benefits are assigned to widows who qualify by:
1. Valid marriage test.
2. Intestacy devolution test – if probate laws would assign the partner the same status as wife for assigning intestate share.
3. Legal impediment test – if partner entered into relationship believing in good faith that marriage ceremony effected a valid marriage.
The question became whether under the intestacy devolution test the woman partner would have inherited. The court held she would not:
The court ruled that plaintiff’s reliance on a case involving an unmarried couple, where the woman partner was found entitled to property not titled in her name. Lindsey. The court distinguished that case’s holding, saying it involved an “equitable division of property” following breakup, with the aim of preventing unjust enrichment.
Here, the case did not involve, as did Lindsey, jointly constructed/purchased property.
b. In the Matter of the Estate of Marshall Gardner (handout): marriage between plaintiff’s father and a post-op male (J’Noel) –to-female transexual was void.
(i) Determination of sex: beyond chromosomes
J’Noel had a birth cert. showing “female” at birth, validly altered under Wisconsin law.
The Kansas supreme court held that the legislative intent – as understood by the plain language, the leg. history, and the language of Title VII – indicates only “traditional” sexual definitions of male and female. Therefore, J’Noel’s marriage to the Testator was void, and J’Noel’s share should go to the T’s son.
This case contraindicated the T’s apparent wishes in favor of “traditional” bigoted values. There was ample opportunity to find that, because the State of Kansas had seen fit to approve the marriage – and that the T had relied upon this approval in not making “safer” arrangements per his intent (the estoppel argument), that J’Noel should get a spousal share.
2. Who Qualifies as a Descendant
a. STATUS CATEGORIES OF CHILDREN
Two primary categories:
Natural aka genetic
A marriage b/w parents is the stand-in for legal process to prove parentage.
This is because of the legal presumption that the child is presumed to be of the husband and wife.
Possible problems:
* posthumous birth – after father died; it is presumed that if child is born within 280 days of father’s death it is presumed to be his child. The presumption stops at 300 days. However, a parent may attempt to rebut (as one parent did at 320 days).
* artificial insemination (Woodward) – after father’s death, the
In Massachussets the Woodward court held that the child was
a. Marital or nonmarital. In this case, the marriage had ended by death, so the child was a nonmarital child.
The court distinguished these nonmarital children from traditional nonmarital children thus:
i.whether it was his sperm that impregnated her.
ii. husband’s knowledge & consent: they looked at whether he consented to his sperm being used and to supporting the child.
Generally, the act of intercourse is considered consent to create and support a child.
The court took it upon itself to comment upon the types of evidence that could be heard.
If this had been not in Mass. but in Louisiana, how would it have differed?
(see Woodward) Note this is an issue of a state’s intestacy statute
The successor has to exist at the time of the decedent’s death.
How does this relate to Hodel?
the statute governs; left the term posthumous children undefined
p.4: “the devolution of real & personal property in intestacy is neither a natural nor a constitutional right. It is a privilege conferred by statute.”
How does this relate to Schapira? An heir has NO RIGHT TO RECEIVE
Is this broader, on p.4 – no right to transmit? it’s w/in Mass’s prerogative to abolish intestacy altogether.
In general, if a child is born outside of marriage, in order to be given the status of child there needs to be a formal adjudication of paternity in some states.
The UPC, which has adopted uniform heritage act, it can occur more functionally.
Surrogacy –
In some states, A surrogate mother, even who has no genetic relationship to child in womb, is the mother -- and her husband the father – unless the father
waives paternity
Intent: California holds that the intent of parties necessary
Mass. doesn’t allow surrogacy – esp. for money
Artificial insemination Hecht v. Superior Court (Cal. App. 1993) It is not the role of the judiciary to inhibit the use of reproductive technology when the Leg. has not seen fit to do so; any such effort would raise serious questions in light of the fundamental nature of the rights of procreation & privacy.
b. Adoption
Dual inheritance (from both natural and adoptive kin) is not permitted in some states, such as Maryland.
- Texas allows dual inheritance.
- UPC allows inheritance from natural and adoptive kin if the child is adopted by a step-parent.
(i). Legal Adoption – pretty simple; family court decrees adoption;
Who is denied access to that legal process?
1. Same-sex adults – some states prohibit; Len & Gene. In NY the court held that sexual relationships ;
* to foreclose other claims on a will;
Delaware permits it.
(ii). Equitable Adoption – where a child has been led to believe that he or she isa legally adopted member of their family (p.113, dissent of Sears, quoting Crawford v. Wilson, (Ga. 1913):.
[w]here one takes an infant into his home upon a promise to adopt such as his own child, and the child performs all the duties growing out of the substituted relationship of parent and child, rendering years of service, companionship, and obedience to the foster parent, upon the faith that such foster parent stands in loco parentis, and that upon his death the child will sustain the legal relationship to his estate of a natural child, there is equitable reason that the child may appeal to a court of equity to consummate, so far as it m ay be possible, the foster parent’ omission of duty in the matter of formal adoption.
c. Nonmarital children
1. Uniform Parentage Act: adopted in 1/3 states (1973). The parent & child relationship extends to every parent and č, regardless of marital status of parents. If a father & č relationship is presumed to exist, an action to determine its existence may be brought at any time. If a č has no presumed father, an action to establish a parent-č R must be brought within three years after the č reaches majority.
When parents do not marry or attempt to marry, a parent-č R is presumed where:
a.while the č is a minor, the father receives the č into his home and openly holds out the č as his natural č, or
b.the father acknowledges his paternity in a writing filed w/an appropriate court or administrative agency.
II. THE DEFAULT: INTESTATE SUCCESSION
UPC 2-102 [p.73] SHARE OF SPOUSE
(1) Entire Estate if:
i or ii: if no descendent or parent of decedent (D) survives D; or
if all the D’s surviving descendents are also desc’s of surviving spouse
(2) 1st $200k + ¾ balance of estate if parent of D survives D
(3) 1st $150k + ½ balance of estate if all of D’s descendents are also Spouse’s descendants AND SP has descendants NOT OF D.
(4) 1st $100k + ½ of balance of estate if one or more of D’s surviving desc’s are NOT descendants of SPOUSE.
SHARE OF HEIRS OTHER THAN SURVIVING SPOUSE § 2-103 (p.73)
Any part not going to D’s SPOUSE, or entire estate if no spouse, thus:
(1) to D’s desc’s by representation
(2) If no desc’s, to parents equally (or all to one)
(3) if no desc or parent, to desc’s of desc’s parents or either of them by representation
(4) if no surviving descendant, parent, or descendant of a parent, but Grandparents or desc’s of grandparents
half of estate to dec’s paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the desc’s of the paternal and maternal grandparents, by representation; each half.
If no taker, then all goes to the state.
Do Estate Planning Problem. p.49.
B. Share of Surviving Spouse p.74-86
1. Simultaneous death.
Where simultaneous death occurs, the diagnosis of death must be made in accordance w/the usual and customary standards of medical practice. Janus v. Tarasewicz, Ill App. (1985)
UPCUniform Simultaneous Death Act An heir or devisee or life insurance beneficiary who fails to survive by 120 hours (5 days) is deemed to have predeceased the decedent.
C. Share of Descendants
1. Generally:
per stirpes
per capita w/representation
per capita at each generation
2. Advancements:
any distributions of estate given to č while decedent living must be deducted from č’s share of deceased parent’s estate, unless č establishes that gift was absolute gift.
The gift is put into hotchpot, then divided by the # of č. The donee gets her share, minus the gift already received. E.g.,
Mary got $10k advancement. Julie and Tim are co-heirs of $50k estate. The $10k advancement gets added to the $50k estate, for a $60k hotchpot. The $60 is divided by 3, so each heir considered to get $20k. Mary already got her $10k, so she’ll get just $10k, while J & T each get $20k now.
3. Special Issues Related to Minors pp.132-40.
Guardian of the person – if both parents die while child is a minor, one of the best uses of a will is for appointment of č’s GOP, and to manage the č’s property.
Three alternatives for property management:
a. Guardianship or conservatorship – the most “straitjacketed” – does not have title to ward’s property, usually cannot change investments w/o court order. Must perserve the specific property left the minor, and deliver at age 18 – unless court approves sale, lease or mortgage.
Ordinarily, can nly use income from property to support the ward; cannot go into principal unless court aproves.
conservatorship – more flexible powers, makes only an annual accounting.
custodianship – person who is given property for benefit of minor under the state Uniform Transfers to Minors Act. A gift or devise is made to X “as custodian for (name) under the (state) Uniform Transfers to Minors Act.
no court order
no regard to duty or ability of custodian to support minor
no regard to any other income or property of the minor which may be applicable or available for that purpose
custodian transfers property to minor at 21, or to minor’s estate if minor is dead by 21
Oversight: custodian may manage property and reinvest it in role of fiduciary – subject to “prudent person dealing w/property of another” standard.
Trusts are preferable for large amounts.
Trust – most flexible; a trust can pospone possession until donor thinks č is competient to manage it.
E. “Half-Bloods” are considered
as whole siblings in the large majority of states & per UPC,
as ½-siblings in others, such as Virginia. So in Virginia, if there are two children, A gets 2/3, A gets 1/3 (estate divided as if three č, then one gets twice as much).
In a few states, incl. Mississippi, half-bloods only take when there are no whole-blood relatives of the same degree.
In OK, half-bloods are excluded when there are whole-blood kindred by an ancestor & the half blood is not a descendant of the ancestor.
F. Bars to Succession pp.141-57
1. Involuntary – most commonly , statutory proscription v. homicide inheritance
Manslaughter – bar to inheritance? No – in Vermont.
Where no slayer statute, there are three general holdings:
a. No consequence to killer – allow inheritance to killer
b. No title to killer – equitable principle that wrongdoer should not profit from crime
c. Constructive trust – holds killer as constructive trustee of estate on behalf of heirs or next of kin of deceased. However, Probate courts do not have powers in equity
2. Voluntary – Reasons
a. Wish to avoid estate taxes; gives as gift to č (if done within 9 months of receipt).
b. avoid getting benefits’ reduced/cut off (SSI, etc.)
c. Avoid R with decedent
d. avoid creditors
e. federal tax lien – used to be avoidable by disclaiming.
SSI & Disclaimers: Troy v. Hart, 116 Md. App. 468 (1997)
SSI recipient could disclaim but the Court held that he’d have to contact the SSA & inform them of his inheritance. The result would be a sort of constructive trust, for which the estate would have to reimburse the State. Sisters said they’d reimburse Medicaid on the “suggestion” of the court. Disclaimants descendents & longtime companion, Hernel Gruber.\ -- this likely kept estate from going to longtime companion. Hm.
III. WILLS: ATTEMPTING TO MANIFEST INTENT
A. Executing wills.
Invalidating Wills: REASONS
1. Insane delusion
2. undue influence
3. sham (not meaning it)
4. Fraud
5. Failure to meet statutory requirements
1. Testamentary Capacity.
a. Mental Capacity.
i. A will that is the product of the testator’s insanity is not valid. In re Strittmater (N.J. eq. 1947).
Subtext: a will that is the product of the testator’s political opinions, where contraindicative of a court’s, may be held invalid as the product of insanity.
The court found her writings and testimony about her behavior to be “feminism to a neurotic extreme” and a “morbid aversion to men.” The money went to her relatives instead of the National Women’s Party (NWP).
Some alternative tests: 4 prongs to consider
TESTATOR ONLY HAS TO HAVE THE ABILITY TO KNOW
1. Nature & extent of testator’s property.
2. The “natural” objects of bounty – usually biological or genetic, or status-based; perhaps raitonal basis.
3. Disposition – T knows what disposition she is making.
4. how these elements relate to form an orderly plan -- as defined by community norms & judge.
Average intelligence not necessary – just mind & memory relevant to these four. Must understand the significance of the act.
(ii) “A few isolated acts, foibles, idiosyncrasies, moral or mental irregularities or departures from teh normal can’t destroy testamentary capacity unless:
a. they bear upon the gift, AND