Part 1: general trusts & estates policies
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Waiver of Elective Share Rights Good Practice: Each party should have a full schedule of assets attached to the agreement so that it is clear that full disclosure is made Only allowed under the PRE if you can competently represent both parties Maybe malpractice if you write a will and each wants to disinherit the other spouse but you don’t make either sign a waiver of that right – duty to inform Form: A written contract signed by the surviving spouse (before or after marriage ok) UPC §2-213: Waiver of Right to Elect: Applies to right to election of homestead allowance, exempt property and family allowance (either in whole or in part) Unenforceable If: (1) waiver executed involuntarily, unconscionable when executed, or did not have or could not reasonably have had an adequate knowledge of the property or financial obligations of the decedent (Geddings v. Geddings) Community Property States: Assume that both H&W share in ½ of assets – all accumulated by either spouse during marriage – assumed to be based on the joint efforts of husband and wife Marriage as a partnership – recognize one spouse’s efforts while the other is raising the kids Each spouse only has testamentary capacity over his or her half of the community property Policy: Community property cuts down on risk-taking or overall economic productivity because both spouses have to work, and then pay people for their services rendered Or both contributed to marriage, should have equitable division of tangible assets Usually “estate” is all your separate property, and ½ of the community property that you can do whatever you want with Separate property (got before marriage and gifts/inheritances during marriage) Community property (all earnings and property acquired during marriage by either spouse (besides gifts and inheritances) Community property states have no elective share statutes How does a spouse transfer property from personal to community property? Looking for evidence of “transmutation” where property moved from separate community property (presumption that it stays separate) Joint Title Gift Presumption: Property was titled in both the names of H&W Need a separate writing saying that you intend to transmute it from separate property to community property (ex: a “transmutation agreement” or if deed had said “as community property and not as separate”), problem with “comingling” where you can’t trace the original account balances At Death: If first spouse dies and doesn’t have a will, all their separate property and their “half” of the community property goes intestate. The surviving spouse gets their ½ immediately The other ½ goes into the deceased spouse’s estate where it will be distributed according to his/her wishes Estate of Borghi: W owned house, married, paid off then re-titled it in both names, died Issue: Is real property acquired by one spouse prior to the marriage later community property once they are married? Did the inclusion of the other spouse on the deed change it from separate property to community property? Holding: No. Character of property is determined at the date of acquisition (designated when you get it), then have to overcome this presumptive designation to change it There must be sufficient evidence of intent to overcome the presumption that the separate property becomes community property –change in legal title is not controlling evidence to overcome presumption Dissent: Reasonable for any non-lawyer to think that holding property in both people’s names makes it community – she did this change, so her intent is clear Issues for Migrating Couples: Marry in one state and then moves to another kind of state Separate Community: Quasi-Community Property: Surviving Spouse has to show what part of deceased spouse’s estate would have been community property if it had been earned/acquired in a community property state throughout their marriage Property acquired in separate property state remains separate after moving, but presumption that property is considered community property under transmutation Community Separate: Historically, surviving spouse got to between elective and community property, but then statute passed (UDOCPRADA, 15 states), to correct the problem of spouses moving to separate property jurisdictions and taking ½ community property share, and then electing to get another portion of the remaining assets If your spouse is going to die, want it to be community separate Says the surviving spouse does NOT get the elective share of the community property in the estate Someone Was Left Out (1) Inadvertent Disinheritance of Spouse – Omitted Spouse Arises When: The will is made then the marriage must occur AFTER the marriage Policy: Legislators assume that testators who fail to change their pre-marital wills do so inadvertently – marriage automatically revokes a pre-marital will Good Practice: Sign a codicil, restate the terms of the existing will, so republishes and brings it forward in time - the will would incorporate by reference the prior amendment of the trust (happened before codicil), or wait until after you get married to execute will Minority: If a person marries after making a will and the spouse survives Testator, the will is revoked as to SS, UNLESS provision has been made for spouse by marriage K, or is provided for in the will, or is mentioned in the will in such a way as to show an intention not to make such provision; and no evidence to rebut the presumption of revocation. (Prestie v. Prestie) Prestie v. Prestie: H&W married, moved to Vegas, divorced, H gave W life estate in condo, but will an trust gave nothing to W, son got everything Holding: An amendment to an inter vivos trust cannot be used as evidence to rebut the presumption that a will is revoked as to an unintentionally omitted surviving spouse when the two are married – looked ONLY at the will, where wife was not provided for Majority UPC Approach: §2-301: Entitlement of Spouse- Pre-Marital Will If a SS married T after T executed his/her will, SS is entitled to receive as an intestate share, no less than the value of the share of the estate he/she would have received if: Testator had died intestate as to that portion of the estate, if any, that is neither: (1) devised to a child of the testator born before marriage (from another marriage) nor, (2) devised to a descendant of such child UNLESS: It appears from the will or other evidence that the will was made in contemplation of the testator’s marriage to surviving spouse OR the will expresses the intention that it is to be effective notwithstanding any subsequent marriage OR (3) Testator provided for the spouse by transfer outside the will IF all of the decedent’s estate is going to his children – Surviving Spouse SHOULD take the ELECTIVE share instead of the omitted spouse share So Prestie decided under UPC: surviving spouse would get ½ of probated state (NV intestacy), and still gest life estate in the condo from the trust (2) Intentionally Disinherited Children Intentional Disinheritance: Theoretically, parents have the full right to give nothing to kids Louisiana protects children against intentional disinheritance (if under 24 or invalids) If desired, use language of affirmative disinheritance with specific reference to the child Discretionary Approach: Court decides, but might lead to too much litigation, and interferes with testamentary freedom (but litigation rare in Australia where used) Policy: Most of the developed world recognizes testamentary freedom, but other countries balance that right against morality and justice to the dependent family members UK Jurisdictions: More contact between children - parents (kids know they will get money regardless of parents intentions, so more conversations about finances) Family maintenance statutes (in other countries) would permit judge to make awards to omitted spouse or children based on the circumstances for their family maintenance (3) Omitted Children: (1) Will Written Before their Birth When any testator omits to provide in his will for any of his children, unless it appears that such omission was intentional, such child must have the same share in the estate as if he had died intestate (Estate of Glomset) UPC §2-302(a): If a testator fails to provide for any of their children born or adopted after the will, the omitted after-born/adopted child receives a share in the estate as follows: (1) No kids when will written: Kid gets intestate share, unless SS takes under will (2) Testator had 1+ kids alive when will executed who took under it: After-born can: (i) Get a portion of the estate that the then-living children were given (ii) Receive what child would have received if testator gave all kids equal shares
What kind? The interest given to after-born kid must be of the same character, equitable or legal/present or future, as that devised to the then-living children under the will Omitted child cannot take more than the devises made to the testator’s then-living children. (Divide (total $ devised to then-living children) / (# of children)) Whose share is it taken from? Devises to the testator’s children who were then living when the will was executed abate ratably to provide for the omitted child’s portion What exceptions? Neither (a)(1) or (a)(2) applies if the omission was intentional or, the testator provided for omitted after-born by a transfer outside of the will (in lieu of will) as shown by the testator’s statements or the amount of transfer or other evidence If testator fails to provide because they believed the child to be dead, child is entitled to share in the estate as if the child were an omitted after-born child (2) pretermitted child A person who would likely stand to inherit under a will, except that the testator did not know of the party at the time the will was written C/L: Presumed that omission was intentional Modern Statutes: Presumed that omission of child was unintentional So pretermitted kids inherit as if they were an after-born child after a will, unless you think they’re an intentionally disinherited (then just follow will) Missouri-type: Extrinsic evidence not generally available to show testator’s intent Estate of Glomset: Joint wills, if both died, went to son, no mention of daughter Holding: No extrinsic evidence allowed. No ambiguity, and clear that he didn’t mention daughter, and no reason not to – she’s a pretermitted heir. Dissent: Statute is meant to protect from unintentional– this is intentional Massachusetts-type: Extrinsic evidence generally admissible to prove intent Excluded child entitled to inherit unless such omission appears intentional Whose share is it taken from? Devises to testator’s then-living children when will was executed abate ratably to provide for the omitted child’s portion Overcoming Pretermitted Child Statutes Padilla: “I declare that I have no children whom I have omitted to name or provide for herein” (insufficient) Hilton: Leaving a nominal gift to “any person who seeks to share in my estate as a pretermitted child” (insufficient) NO: SOMEONE DIED WITHOUT A WILL DISTRIBUTION OF ESTATES UNDER INTESTACY LAW Intestate: Property of a person who dies without a valid will are to be distributed in accordance with the intestate succession statutes in effect in the jurisdiction Policy: Give property to those who deserve it Look at efficiency- Who will put property to the best use for economy? Look at intent- look at decedent’s actual relationship to beneficiaries and who they would on average probably give to (most common) How would people determine likely preferences? How would courts enforce? WHEN ARE INTESTACY STATUTES APPLICABLE? (1) Someone with no will (2) Someone with a will that was invalid (3) Property owned by decedent that was not included in the will (4) To interpret a provision in will leaving to “my heirs” but not specified (5) To determine who has standing to contest a will WHO GETS THE PROPERTY UNDER INTESTACY LAWS? The UPC’s general policy is encourage family harmony, and to not differentiate between traditional and non-traditional marriages with respect to adoption, and divorce Preserve debtor’s basic human dignity, to relieve taxpayers of obligation to provide for insolvent debtors, to promote efficiency – personal property likely to be worth more to debtor than to anyone else – stays with person who values them most Intestacy laws reflect the probable intent of the decedent. US laws are in contrast to China and British Commonwealth countries, where probate courts are given more discretion to give property to relative who are needy or deserving and had a special relationship with the decedent Waiver of Right to Elect - applies to Homestead/Family and Exempt Property UPC §2-213(a): Right of election may be waived, wholly or partially before or after marriage, by a written contract signed by surviving spouse. (b): Waiver is unenforceable if surviving spouse proves that: (1) waiver executed involuntarily, unconscionable when executed, or did not have or could not reasonably have had an adequate knowledge of the property or financial obligations of the decedent Homestead Allowance Exception UPC §2-402: Homestead allowance is exempt from and has priority over all other claims against the estate – like creditors – and is in addition to any share passing to the surviving spouse or minor or dependents by the decedent’s will (unless provided by intestate succession or by elective share) UPC homestead allowance doesn't protect the physical house for the family; just gives the family cash that can be used in any way they want Includes: Clothing, some exceptions for family homestead If Surviving Spouse: Entitled to a homestead allowance of $22,500 If no Surviving Spouse: Each minor child and each dependent child of decedent is entitled to the same homestead allowance ($22,500) divided by number of children Applies to: Surviving spouse and minor children remain entitled Family Allowance Exception UPC §2-404: Surviving spouse and minor children whom decedent was supporting are entitled to a reasonable allowance in money out of the estate for maintenance during period of administration In addition to: Homestead, exempted property, and anything passing to kid or spouse in the will Duration: Not longer than one year Payout: Paid as a lump sum or in installments, paid to surviving spouse if living, or to children or persons in their custody Maximum amount is $27k (personal rep’s can make family payments up to $27k without being asked, but above that is at probate court’s discretion) Exempt Property UPC §2-403: Protects up to $15k of “personal property” (some states include cars) from the claims of creditors – family can put it to more use than stranger In addition to: Homestead, exempted property, and anything passing to kid or spouse in the will Includes: Household furniture, cars, appliances, personal effects Amount: Spouse or children are entitled to other assets needed to make up the $15,000 value. If there is no surviving spouse, decedent’s children are entitled jointly to the same value. Rights to make up a deficiency of exempt property has priority over all claims against the estate – but abates as necessary for homestead and family allowance Creditors Surviving Spouse Take to the Exclusion of Descendants Difference between real property (rules of descent) and personal property (rules of distribution) Surviving spouse wasn’t an “heir,” but has a lifetime interest in decedent’s real property WHO IS A SPOUSE? Common Law Marriage: C/L marriage used to be common, deemed married if you were living together for a certain number of years, but it was complicated so not all states use it Same-Sex Partner: Many states ALLOW same-sex partners to acquire intestate succession rights by registering as domestic partners or entering into a “civil union” Transgender Partner: KS found marriage between a transgender individual was void under KS law, so spouse NOT ALLOWED to entitled to inherit under intestate succession
Descendants Take to the Exclusion of Parents or Collaterals A decedent’s direct lineal descendants take to the exclusion of collateral relatives So long as decedent has children, grandchildren, or great grandchildren, virtually all intestate succession statutes preclude D’s siblings or any more distant relatives from inheriting Any living descendant of decedent cuts off rights of the descendant’s own children to inherit WHO IS A DESCENDANT? Most courts have to interpret intestacy statutes not adopted to deal with these unique problems Half Blood: Normally treat half-bloods and whole-bloods the same under the UPC UPC §2-107: Kindred of Half Blood: Relatives of the half blood inherit the same share they would inherit if they were of whole blood Adopted Kid: Creature of statue because not recognized by common law UPC §2-118: Adoptee and Adoptive Parent: A parent-child relationship exists between an adoptee and the adoptee’s adoptive parent, but once adopted, there is no parent-child relationship between adopted kid and their genetic grandparents, unless: (In these cases have two sets of parents for inheritance purposes only) (1) Stepchild is Adopted by Stepparent (UPC encourages step-parent adoption) (2) Kid is Adopted by Relative of Genetic Parent (3) Kid is Adopted After Death of Both Genetic Parents (4) Kid is Product of Assisted Reproduction, or Gestational Child Later Adopted Non-UPC: Estates of Donnelly: Opposite result than UPC – cut off for good The legislature intended to remove an adopted child from his natural bloodline for purposes of intestate succession, so the statute says adopted child is not to be considered an heir of his natural parents (cuts off inheritance from natural grandparents too) (even though she was adopted by her step-parent Kid Out of Wedlock: SCOTUS almost said that illegitimacy is a suspect classification UPC §2-117: No Distinction Based on Marital Status: A parent-child relationship exists between a child and child’s genetic parents regardless of parents’ marital status Have to go through adjudication to establish parent/child relationship (DNA) Trimble Gordon: Allowed inheritance from intestate father was court ordered to support Lalli v. Lalli: Permitted a non-marital child to inherit from father only where there had been a declaration of paternity before father’s death Foster Kids: Only if parents placing kid in foster home contracted for foster family to adopt Look at direct expression of the decedent’s intent to adopt and acting consistent with that intent by establishing a close familial relationship Clear and convincing evidence that the parent considered the child to be their child (CA rule), as shown by: conducting themselves as parent/child, providing financial support, long-term relationship, child takes parents name, intent of parties, etc. Adoption by Estoppel: Look at reasonable detrimental reliance which arises when a child lives with adult and adult conducts themselves so that kid relies on them as parents Kids from In Vitro: Look at intent to become parent to decide if relationship forms The functioning of genetic parents being considered the same as legal parents is the foundation of the modern inheritance system. However, this is complicated when… Uniform Probate Code: Looks at an intent-based approach to defining parent-child relationships (looking at actions and intentions instead of legal relationships) UPC §2-210: Assume that sperm donor has no intent unless proven otherwise Unless intent to act as parent, donor has right to anonymity (not parent) UPC §2-212: Woman carrying a kid under a gestational agreement without intent to function as the resulting child is the “gestational carrier” not the parent BUT assume that the woman who becomes pregnant with aid of reproductive technology intends to be the child’s mother People Who Can be Involved: Hopeful mother, hopeful father, biological mother, biological father, gestational carrier (surrogate) Social Security Benefits: Under federal law, benefits are available to deceased’s minor children if the child would have been an intestate heir under applicable state law Woodward: Banked sperm before undergoing chemo treatments, but then he died, she use the sperm and had twins, claimed survivors social security benefits Holding: If deceased had an intent for sperm to be used, they can inherit Kids Born After Parent’s Death: C/L: If child is born within 10 months of death, presumed the dead husband is the father Length of Keeping Estate Open: How long, and how much should be reserved? UPC (not adopted anywhere) requires that child be in utero within 36 months of death of the parent (CA says 2 years), potion of estate has to be set aside Rule: No clear way to reserve part of the estate for the potential beneficiary, maybe just keep the whole estate open for that length of time that other beneficiaries might come up WHAT IS THE JURISDICTION’S RULE FOR DISTRIBUTION? Good Practice: Have a provision in the will that names and describes the rule that you want to apply (administer my estate under the per stirpes rule, meaning that x”) Per Stirpes/Strict Per Stirpes Distribution: Gives descendants the same shares they would have received IF: (1) Order of deaths had been “normal,” (2) assuming that X’s kids wouldn’t first consume all inheritance, and (3) assuming that kids would be who parents would leave estate to Step 1: Divide into shares at first generation descending from the decedent (even if all/no dead) Unless an entire chain is completely dead, then divide into that chain Step 2: Give each surviving kid one share, and give the deceased kid’s kid’s an equal percentage their parent’s would have received had they been alive (don’t recombine for next generation) Critique: May cause equally related individuals to be treated differently, therefore, known as “strict” per stirpes (grandkids might get different amounts) Modern Per Stirpes Distribution: Most states use this (MAJORITY APPROACH!) Step 1: Find the closest generation to the descendant with someone living Closest generation is the siblings (look at the oldest and the closest to them in age) Step 2: Divide by the number in that generation (both surviving and deceased) Step 3: Then the living people in that generation take that amount, but that generation’s kids split if their parents are dead First generation gets same amount, but if share passes down, grandkids different Applies “equally near equally dear” ONCE, then reverts back to the per stirpes rule UPC’s §2-103 Per Capita at Each Generation (“Representation Provision”) Step 1: Start at the closest generation with someone living Step 2: Divide by the number of shares (including those who have already died) The remaining estate is divided into as many equal shares as there are surviving descendants in the generation nearest to D which contains one of more surviving descendants (kids), or whose descendants have surviving descendants (grandkids) Step 3: Then recombine what’s left, and divide between number alive at next generation Each surviving descendant in the closest generation gets one share, and the remaining shares, if any, are recombined and then divided in the same manner among the surviving descendants of the deceased descendants (everyone in a generation gets the same amount) Complaints: Somebody in the great grandkids gets mad that one side of the family gets to split more because the other side has more kids Parents Take to the Exclusion of Collaterals/Others (1) UPC is a type of “parentelic” system – Where they first look to descendants of deceased, then to the parents of the deceased, then to the siblings of the parents of the deceased UPC 2-103(a): Surviving spouse descendants parents Give equal shares to both surviving parents, or all to one parent if only one is living If no parents, then look to grandparents, each side getting ½ to split up, if grandparents are dead, then divide by number of other kids that grandparent had, and then passes down each side like per stirpes (dead uncle’s share goes to nieces) Once it’s on each side, use the “by representation” to decide how to allocate per side (2) Others have a “degree of relationship” system – Estate is distributed to decedent’s “next of kin” as defined by Table of Consanguinity Niece – 3, Grandparents – 2, so someone with a closer degree of relationship takes first Closest person gets all, or if multiple people as close, split evenly among them WHEN IS SOMEONE A PARENT? (1) If the Parents are Married and Kid Born during Marriage (Uniform Parentage Act: §204(a)(1)) Crusades Presumption – If a kid was born within 280/300 days of the husband leaving, presumed to be the child of that man (kids born after the death of “father” at war (2) Assumed to be the Mom If: (Uniform Parentage Act §201): You gave birth to the child, you were judged by a court to be the mom, you adopted the kid (3) Assumed to be the Dad if: (Uniform Parentage Act §201): You were assumed to be the dad and you didn’t object, you acknowledged that it was your kid (and didn’t rescind or challenge acknowledgement), court judged you the dad, you adopted it, you consented to assisted reproduction which resulted in the birth, reside with kid for 2 years in the same household Wingate v. Estate of John Ryan: Child didn’t now who was father until 10 days before genetic dad’s death, Catholic, didn’t want to tell people he had it (DNA matched, estate didn’t contest heir) Probate Code was binding but informed by factors in Parentage Act (which gave her the right to inherit from presumed dad (Wingate) and from the genetic dad) Amended the standard of proof based on advanced DNA technology. She filed within a “reasonable time” because she filed a day after he died, even before probate proceeding Policy: Don’t want to give immunity to parents of children born out of wedlock who don’t establish parentage before they’re 23 Collaterals/Non-Relatives Take the Rest If decedent had no close living relatives, closest living relatives (even if distant) were entitled to inherit – only if decedent had no living relatives would decedent’s estate escheat or pass to the state Collateral – Brothers and sisters, nieces, cousins – anyone who isn’t a direct lineal descendant Wife’s sister’s kids are called nephews/nieces, but can’t inherit under intestate statues Brothers/sisters in law are not entitled to intestate succession Step kids aren’t included in descendants or “issue” (UPC only gives step kids inheritance rights in limited circumstances) UPC: Only way it goes to step-kids, and everyone else has to be dead Modern “Laughing Heir” Statutes: At C/L, if D had no close relatives, his closest living relatives remained entitled to take, no matter how distant in relation. If No Heir can be Found, Estate Escheats to the State When decedent dies intestate without heirs, estate typically escheats to the state, or governmental entity as designated by statute, but courts don’t like to escheat (even though don’t like “laughing heirs” who are happier with their inheritance then they are sad at death of distant relative) UPC §2-105: No Taker: If there is no taker, then the intestate estate passes to the state ISSUES IN ESTATE DISTRIBUTIONS WHAT IF YOU DON’T KNOW WHO DIED FIRST? Simultaneous Death: Applies to both intestacy and wills In order to take by intestate succession, an heir must survive the decedent. However, when a decedent and their heir die at the same time, issues arise as to who died first, and if we can’t tell, what assumptions should we make about who survived? (frustration of decedent’s intent) When is Someone Dead? Determination of Death: An individual has sustained either irreversible cessation of circulatory and respiratory functions OR irreversible cessation of all functions of the entire brain, including the brain stem Good Practice: Possible to include in your will a survivorship clause: “I leave it to my wife if she is alive 30 days after my death” so overrode the intestate survivorship provisions UPC §2-104: Requirement of Survival by 120 Hours Survivorship by 120 hours as proven by clear and convincing evidence (greater than “sufficient evidence” standard at common law (so reach the opposite result in UPC and in Villwock case) Simultaneous Death Act: Need sufficient evidence that persons died other than simultaneously, but if not, then property of each person shall be disposed of as if he or she had survived the other Used in Villwock case – sufficient evidence (just act like each survives the other) JFK, Jr. Problem: Property disposed of as if they had survived each other (John’s assets disposed of as if he survived her, so nothing he owned goes to her, and nothing she owned went to him) Estate of Villwock: Emergency room physician observed both of them, calls the time of death, but also testifies before the court about the order of death WHAT IF THE PERSON DOESN’T ACCEPT THE DISTRIBUTION? Disclaimer (for inheritance by will and intestate succession) Any devisee of an estate has a right to refuse property whether a decedent died intestate or testate Application: Treats the person who is disclaiming as if they died before the decedent Can disclaim a dollar amount or a proportional share, but you can’t take any benefit from the property you’re disclaiming, and can’t direct where the property goes if you disclaim it Procedure: Disclaimer must be in writing and filed with the personal representative within 9 months of death. Some jurisdictions also require filing with local probate court UPC: Disclaimer can be filed at any time (but IRS requires it to be disclaimed within 9 months) Benefits: (1) Avoids estate tax, but money might go to who you would give to anyway (2) Can avoid creditors claims (you have no assets but money stays in family) (3) To transfer title: Real property titles only transfer once, don’t have to wait for probate to be finished until you can give it up and retitle it in someone else’s name (if intent to sell anyway) (4) Can keep family disagreements from occurring if you’re rich but you inherit before others WHAT IF THE PERSON HAS ALREADY RECEIVED PART OF THE DISTRIBUTION? Advancements: A gift from decedent to beneficiary intended to count against recipient’s share Common Law: Large gift from parent to child raised presumption that it was an advancement So the gift counted against the child’s intestate share (not valid anymore) Today: UPC §2-109: Gift during life are not treated as advancements against the recipient’s intestate share unless there is a writing that gives evidence to treat it as an advancement Writing Requirements: Decedent must declare in writing, at time gift was made, that it was an advancement, with an acknowledgement in writing by the person who received it The acknowledgement by recipient can be made at any time “Hotchpot”: Treats advanced property as if it were in the estate when computing intestate share Amounts already received charged against the shares of the heirs who received those amounts, but if their advancement was bigger than the share they were entitled to, the advancement doctrine does not require A to give back any of advancement “Satisfaction”: Someone is given a gift under a will, but also given a gift during life, does the gift during life count against the gift given in the will? ARE THERE ASSETS THAT NEED TO GO THROUGH PROBATE? Benefits of Probate: Only 25% of estates actually go through probate (1) Proof of Ownership – Get clear chain of title to property Bank might need proof of ownership to turn over stocks/accounts (2) Protects Beneficiaries – Shorter SOL for creditors or adverse claimants against estate assets If they don’t submit proof of claim to assets, claims are forever barred (usually 90 days) Non-Claim Statutes: Promotes efficient and timely winding up of a decedent’s affairs UPC: §3-801: Rep can publish a notice 3 successive weeks in general circulation– 4 months until claims barred OR give written notice to creditor then 60 days until claims barred (3) Family Arbitration – Parties have a neutral party (judge) to oversee matters Probate Drawbacks: (1) Time Consuming – Probate usually takes about 18 months (2) Costly – Paying court expenses is costly, have to pay attorney’s fees to manage Try to avoid if: No question about who is entitled to his property, all debts paid, title to property is not a problem (no real prop, joint accounts, cash, etc.), property to agreeable, competent adults NO PROBATE NEEDED: Non-Probate Asset: Most wills, are resolved informally after death without judicial interference Good Practice: Use as many non-probate interests as you can have. Lifetime gifts are the most common non-probate transfer – no property passes thru estate because changed hands before death How to Choose Non-Probate Plan Beneficiaries: (1) Name testator’s estate as beneficiary – can administer the estate as a whole even if someone else redrafts a will later, but generates significant commissions for estate executor (2) Name individual beneficiaries (income tax advantages to designate a person) (3) Designate a trust as beneficiary of assets Small Estate Administration: File opening affidavit by personal rep, they manage estate, file another affidavit by the court (usually between $20-100k) "Hold harmless" provisions for bank --> if someone brings in a death certificate and proof of relationship, then bank can pay out what was in the account w/o oversight by any PR Car Titles: Sometimes can transfer car title from decedent to beneficiary by taking death certificate to DMV–liable to suit if wrong person to get car Trusts- Trusts don’t terminate on death of a person, continues on untouched by probate process after decedent’s death (can be testamentary in which case they begin at death) Life Insurance – Proceeds of life insurance policies pass free of income tax, creditors' claims, state death taxes, and, in some C/L jurisdictions, free of spousal elective share claims (not UPC) Term Insurance: Pure death benefit – no cash value, premiums reflect risk during that term Get more cash value for term – usually provided by your employer Whole Life Insurance: Company invests premium to generate cash for insured Guaranteed payment, so expensive - buy term and invest the difference (best option) Creditors: Creditors can’t get access to life insurance money – wanted to guarantee that no matter what your status, your family would get that amount Modern UPC §2-804 Revocation by Operation of Law (insurance companies hate) Lincoln Life and Annuity v. Casewell: Decedent drafted a will “devising and bequeathing” insurance benefit to various charities, only $25k of the $200k going to Caswell The will shows insured’s intentions, but if there is no showing of incapacity to substantially comply with the requirements of the policy, then the beneficiary status on the life insurance is binding. Ben Designation > Will Provision What if a life insurance beneficiary dies before decedent? (good to name contingent B) Look to Lapse: Normally would lose interest, but maybe anti-lapse applies Insurance policies: If policy holder has not named contingent beneficiaries, then will be paid out to the estate of decedent policy holder Social Security: Estates lawyers need to take client’s SS payouts into account (non-transferrable) Full benefits are calculated on a sliding scale; based on how much earned/paid into system Married Couple: If payout of one spouse is less than ½ of their spouse’s, they can elect to take the spousal benefit and receive 50% of the amount their spouse is receiving Married – One Deceased: SS can chose to continue receiving their own amount OR they can elect to receive 100% of the deceased spouse’s check Divorce after Married >10 years – ex-spouse allowed to make the spousal share claims Pension Plans: If you contribute money into the pension plan, that’s yours to take away (whether invested or not), but can’t take out employer’s contribution until you’re vested (3-7 years maybe!) UPC – A will cannot override the POD (payable on death) designation Araiza v. Younkin: Beneficiary designation controls unless there is clear and convincing evidence of intent to the contrary – provision in the will was clear, so the will controls Defined Benefit Plans: A promise of a particular amount of payment on a regular basis after retirement – KNOW what you will receive weekly after you retire But when you die, that’s it – no more to give so sucks if you die quickly Defined Contribution Plans: Don’t know how much money you get at the end, but know how much money exists right now that will build for your retirement If employee dies before retirement, beneficiary POD designation controls (not the will) - so don’t necessarily pass through probate estate Upon Retirement: If employee retires, can take pool of money in a lump sum, or annuity Lump Sum: Becomes part of probate estate (plus income tax penalty Annuity: Get paid every x weeks for life – but once you die that’s it (no probate) Married Couple: One spouse has pension plan but one doesn’t - when one accumulates rights, the other spouse has a 50% right in that fund (like community property) Employee covered by plan named other spouse, retires eventually, if they take a lump sum payment, need to get consent from other spouse because money is employee’s money, not split between 2 spouses anymore Divorce: Spouse not covered has a 50% right to all amounts contributed to plan during the marriage, and on all amounts earned from those contributions Can either disentangle assets then do qualified trade of assets OR have rights to 1/2 of the pool of money that was earned during the marriage and on all amounts earned from those contributions Creditors: Creditors have NO RIGHT to go after your pension plan (rare exceptions) Joint Tenancy in Land: When A and B JT is created, each owns 50% right to possession At death, remaining right passes automatically to the other without going through probate, and if two or more people share the joint tenancy, decedent’s share divided equally Creates joint tenancy with rights of survivorship (or if married, tenants in common) Beneficiary: Other co-tenant(s) who get your share when you die Creditors: While both alive, creditor of either can levy on property for a court judgment (property at risk for creditors), but right disappears on death, so creditor has no claim against decedent because their interest in property automatically converts Probate: No probate, right of surviving party to other interest at party’s death Joint Tenancy in Bank Accounts: At death, remaining right passes automatically to the other without going through probate Agency/Convenience Bank Account: Account has an owner, has an agent who can write checks/deposits for account owner (agent has no financial interest in account) Beneficiary: No beneficiary, agent has no ownership or survivorship interests Creditors: Creditors can proceed against the account to satisfy the debt against the principal during life AND after death of principal – agency relationship ends when the principal dies and account goes through probate with rest of estate Franklin v. Anna National: Sister takes care of old man, whited out name of wife, put sister on card saying “joint account,” she wants all account Holding: After his death, she had no rights in the account, her role was limited to acting on his behalf while he was alive. Person claiming ownership against instrument of joint tenancy has the burden to establish by clear and convincing evidence that a gift was not intended Good Practice: Should have named daughter as an agent - make it a single party agency account with rights passing to his estate on his death – under UPC §6-204 Sets out: (1) Parties, (2) Ownership (single or multiple parties), (3) Rights at death (POD, right of survivorship, passes to estate), (4) Agency, Power of Attorney Designations Joint Bank Accounts: If small accounts at local banks, if beneficiary presents the bank with death certificate, can get a release of the funds ($1-20k) – safe harbor provision for banks Account in which people own the property in proportion to the amounts contributed Follow all contributions to figure out who gets at termination Banks prefer this - easy that bank can honor a check signed by either party, and they don’t have to be involved in a lawsuit between parties to the account Beneficiary: At A’s death, surviving party takes over whole account Creditors: Creditors of one co-account holder can levy against whole account So leave yourself vulnerable if you contribute more Creditors of deceased owner can go after account during AND after death Gift Presumption: When you deposit funds into a joint bank or investment account, presumption that you make a gift of ½ that property to other named account holder Rebuttable presumption that if you’re married you contributed 50% (burden on co-account holder A to say that B hasn’t contributed and no intent to make a gift (then keep your money against creditors?) Issues: Was there (1) a revocation of survivorship provision during lifetime, or (2) clear evidence that deceased depositor established it only for convenience (some do or don’t allow extrinsic evidence) Payable on Death Accounts- Account owner designates a POD beneficiary (bank form), full owner during account owner’s life, can close, rename beneficiary, etc.) Same for “Transfer on Death” Security Accounts: Allows securities/mutual fund companies to have their accounts in agency, true joint tenancy, or POD form POD account can be changed or revoked w/o will formalities at any time before death Beneficiary: Has no rights during the owner’s life (just has an expectancy like any beneficiary under the will), owner’s creditors can go after account Normally the POD designation has priority over will terms, unless it’s revoked by law under the Modern UPC §2-804: Revocation of Transfers by Divorce Revokes any revocable disposition of property made to a former spouse, or nominating of a former spouse or their relatives from any representative capacities (but nullified if they remarry or if divorce is invalid) Pre-1990 UPC does NOT cancel out for divorce (insurance prefers this) Creditors: Rights to go after account during owner’s life AND after death Probate: Works just like the will, but don’t have to go through probate Gifts: If you make a disposition in a will, can revoke it, but gifts can’t be taken back Step 1: Does the donor have proper mental capacity? Capacity- Same as testamentary capacity: (1) know nature of the business they’re conducting (gifting), (2) recollect the property to dispose of (natural objects of their bounty), (3) scope of their property, and (4) put them together in a coherent plan PLUS they have to be able to understand the financial impact on themselves and those dependent upon them, of making that gift Step 2-4: Donative Intent, Delivery, Acceptance Donative Intent: Three letters show that he wanted son to have remainder interest The evidence established intent to make a present and irrevocable transfer of title or the right of ownership, there is a present transfer of some interest, and the gift is effective at that time. (Gruen v. Gruen) Delivery- Actual (handing it over), constructive (giving something that provides access to item, security code/keys to safe), or symbolic delivery (deed to something) Delivery necessary to consummate a gift must be as perfect as the nature of the property and the circumstances of the parties will reasonably permit (way to get ritual, protective, evidentiary formalities of will) Evidence he transferred remainder interest in painting on birthday – didn’t need actual, symbolic delivery through the letters is sufficient (Gruen) Acceptance- Assumed for valuable gifts, gift that’s beneficial to donee Gifts Causa Mortis: Gifts made with an implicit condition that the gift would revert to the owner if contemplated death doesn’t happen. Normally gifts are irrevocable even if made on one’s deathbed, but different if gift made in contemplation of death and then you survive PROBATE NEEDED: Probate Assets: Using a legal document to establish their title to the property Probate is a quasi in rem procedure – proceeds against the property itself “Executor” / “Executrix”: at center of probate process if there IS a will "Administrator" is a center of probate process if there is NO will UPC uses “Personal Representative” for both executor/administrator WHO IS THE PERSONAL REPRESENTATIVE (intestate) OR EXECUTOR (will)? How to Pick: Can always turn down a request to serve as personal rep/executor §3-203: “Priority Among Persons Seeking Appt as Pers. Rep. (1) Person with priority as determined by a probated will (2) Surviving spouse of D who is a devisee of D, (3) Other devisees of D, (4) Surviving spouse of D, (5) Other heirs of D, (6) After 45 days, any creditor Will: Testator of will can name person to serve as PR Someone who is careful and honest in their management, gets along with people in the family, and who is local –have to physically deal with assets Intestate: Whoever shows up likely – court will decide who is valid Their Duties: Personal rep/executor has to deal with decedent’s creditors – same power to settle claims against estate as rep has for settling claims by the estate Rep cant give estate assets to beneficiaries until all relevant limitations periods have expired (once they have, all claims retired – so can’t bring some unknown patent infringement claim 5 years later against administrator) But primary allegiances are NOT to the creditors –personal representative is liable for any claims paid to beneficiaries without satisfying debts Pre-Death Creditors: Creditor claims against estate > claims of beneficiaries Post-Death Creditors: If personal rep maintains enterprise’s going value by operating the business after death, might have to confront post-death creditors Payment: State bar usually publishes a schedule of fess to be “reasonably charged” by fiduciaries or trustees or personal representatives UPC §3-721: Proceedings for Review of Employment of Agents Reasonableness of compensation may be reviewed by the court – anyone who has received excessive compensation for services rendered may be ordered to repay the funds WHERE WILL THE PROBATE TAKE PLACE? Property in two jurisdictions, probably require separate and parallel administration proceedings Many jurisdictions only allow residents of that state to be executors functioning in that state Some jurisdictions don’t allow “foreign” executors to function in some states Probate proceeds in the county where property is located at time of death Separate probate for each real property location – domiciliary probate where you live, ancillary probate for vacation house (avoid ancillary jurisdiction by putting real estate in a trust) WHAT KIND OF PROCEEDING WILL IT BE? Step 1: Look at State Statutes – Is it Formal or Informal? (State statue, under UPC can pick) If named executor can’t proceed, others can petition to administer Court decides if it has jurisdiction and if what is presented is the last will of the decedent Court formally appoints executor and issues letters of testamentary (with a will) or letters of administration (no will) Step 2: Will (intestacy?) Offered for Probate In Solemn Form/Formal: Representative goes with the will, asks for appointment In Common Form/Informal: Personal representative asks for will to be admitted to probate, and for appointment as personal representative Step 3: Notice and Administration Formal: Actual notice given to all interested parties, potential beneficiaries before it can be admitted to the court (they can contest) Personal Rep has to serve a copy of petition on those who would benefit if the will was denied probate – heirs then have to show cause why will should not be admitted, admitted if no cause is shown or if there is a failure to appear by heirs Every substantial transaction must be approved in advance by the probate court. Court monitors activity of personal representative during the process Informal: Court is hands-off for proceeding, notice given AFTER will is “tentatively probated” Court admits the will to probate when offered – no supervision during process Executor provides notice to heirs/creditors at end, but no notice to parties before transactions Step 4: Winding up Affairs Formal: Then will is considered admitted for probate Will not admitted into probate until conclusion of proceeding Informal: Affidavit is filed with court, court closes probate Probate becomes final over time- no formal proceeding necessary if nobody objects Directory: outlines outlines -> Chabot College Fall 2010 Course Outline for Computer Application Systems 60 business software applications/general accounting outlines -> Adil Khan Contracts Midterm outline- waldron outlines -> Remedies for breach of promise (1) The Interests Protected outlines -> Basic Process for Assessing Damages: 97 Select interest that deserves vindication 97 a. Restitution 97 outlines -> Chapter Five: Written Documents 1 Unsigned Documents 1 outlines -> Cases and Materials on Contracts outlines -> College of Science and Health outlines -> Evidence outline outlines -> 2. Act, Omission, Status or Circumstances 4 Consequences and Causation 8 Introduction to Mens Rea and Intent 10 Levels of Fault 11 Download 0.55 Mb. Share with your friends:
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