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Trusts & Estates Outline

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Trusts & Estates Outline Trusts & Estates Outline Transfer of Decedent’s Estate I. Probate & Non-Probate Property a. Probate = property passes through decedent’s will or intestacy b. Non-probate = property passing through instrument other than will i. Does not involve a court proceeding (life ins., trust) ii. Can avoid probate if estate is small II. Probate Procedure a. Appoint personal representative: executor (named by decedent), administrator (appointed by court) b. Any part can demand formal probate (SOL = 3 years) c. Interested parties may demand supervised administration Chapter 2: Intestacy: An Estate Plan by Default I. UPC §2-102: The intestate share of decedent’s surviving spouse is: a. The entire intestate estate if: i. No descendent or parent survives decedent, or ii. All D’s surviving descendents are also descendents of surviving spouse and there is no other descendent of surviving spouse who survives D b. The first $200k, plus ¾ of any balance of intestate estate, if no descendent of D survives D, but a parent of D survives D c. The first $150k, plus ½ of any balance of intestate estate, if all D’s surviving descendents are also descendents of surviving spouse and spouse has one or more surviving descendents who are not of the D. d. The first $100k, plus ½ of any balance of intestate estate, if one or more of D’s surviving descendents are not descendents of surviving spouse II. Ausness on §2-102 a. No descendents or parents = all to spouse b. All descendents are descendents of spouse = everything to spouse c. No issue, but parent(s) survives = $200k + ¾ to spouse d. All issue are descendents of spouse but spouse has other issue = $150k + ½ to spouse e. D’s issue are not issue of spouse = $100k + ½ to spouse f. Note: Spouse’s shares is always calculated first. g. UPC & KY are parantelic (go down first) h. Children of spouse, if not by D, get nothing III. §2-103 Share of Heirs Other than Surviving Spouse a. Order = D’s descendents, then parents, then descendents of D’s parents, then grandparents IV. Uniform Simultaneous Death Act (§2-701, §2-104) a. The death is deemed simultaneous unless the other survives 120 hours V. Partial Intestacy a. May exist if part of will is struck down 1 Share of Descendents I. 3 Basic Schemes a. English (Strict) Per Stirpes i. Each generational line is treated equally ii. Division would still be made at children, even if all dead, then grandchildren split out of that b. Modern Per Stirpes (UPC 2-106(b)) i. If no children survive D, estate is divided equally at first generation in which there is a living taker ii. Each generational line treated equally; Eliminates dead generation iii. “Equally near, equally dear.” c. Per Capita Without Representation i. Each taker receives equal share regardless of generation ii. Rarely used d. Per Capita With Representation (KY) i. Equal shares at closest generational level, then descendents of dead representative split according to that share. ii. Descendents “step into” shoes of dead taker iii. Sometimes call per stirpes – this is incorrect e. Note: Surviving Spouse’s share will be calculated before any of these systems are used. f. Problems on p.73-79 II. Negative Disinheritance a. Applies to wills, not defaults b. Must make an express statement in will to disinherit child and leave the money to someone else c. UPC: Disinherit by express statement III. Shares of Ancestors and Collaterals a. Collateral = relative who is neither ancestor nor descendent. Common ancestor. b. If no issue, parents normally take under §2-102 c. Different heirs at same number: (ex: great-grandkids and niece) i. Parentillic: To niece – go down before over ii. Civil: They split it (only the numbers matter) d. “Laughing Heirs” – UPC only goes to second line collaterals (grandparents) IV. Advancements a. CL: Any lifetime gift to child presumed to be a prepayment of child’s intestate share (advancement) b. To avoid: child must show transfer was intended as absolute gift to not be counted against child’s estate c. Hotchpot (when it’s an advancement) i. A receives $10k advancement, $50k left to A, B, C ii. $50k + $10k = $60k, then $60k / 3 kids iii. A has $10k already, so gets $10 more; B,C get $20k each iv. Participation in the hotchpot is voluntary 2 d. When advancements exceed estate i. If advancement = $40k, and estate = $50k ii. A stays out and keeps $40k, B,C split $50k V. UPC §2-109 Advancements a. Treated as advancement only if i. Declared/acknowledged in writing, or ii. In writing to be taken into account for estate b. For (a), property advanced is valued as of the time the heir came into possession of property, or at time of D’s death, whichever occurs first c. If recipient does not survive D, property is not taken into account unless in writing VI. Half-Bloods a. UPC makes no distinction b. KY: Half-blood gets ½, whole blood gets double that. c. No distinction if there are only ½ bloods and no whole bloods VII. Posthumous Children a. KRS §381.070 VIII. Non-marital Children a. “The child of no one” b. Uniform Parentage Act: gives limited rights for children if paternity shown Bars to Succession I. Estate of Mahoney – Homicide a. Remanded to determine whether spouse willfully killed husband. b. Constructive Trust imposed (Vermont Statute) i. Equitable remedy imposed against one who inherits by wrongdoing ii. Used to prevent unjust enrichment, creates no fid. duty iii. Not a trust at all; beneficiary receives no use of property II. Murdering Heirs Statutes a. UPC §2-803 i. Distinction between intentional and unintentional conduct ii. Civil standard of proof; criminal conviction is determinative of intent iii. Treats slayer as if he predeceased D. (UPC & KY) b. KRS §381.208 i. Requires conviction of felony; forfeits all interest c. Constructive Trust Statutes (above) d. Note: These are used only when there’s no statute for murdering heirs III. Expectancy a. The expected inheritance of heir apparent b. Child takes this action to release expectancy back to parents c. Consideration is required d. Ex: X has children A, B. A has children C,D. X dies. A releases expectancy. All goes to B, even though A has 2 kids. 3 IV. Transfer of Expectancy a. Can only characterize it as a K to transfer to 3rd party b. But if A (promisor) dies first and has kids, and promisee is 3rd party = not enforceable V. Renunciation & Disclaimer a. A taker by either will or intestacy doesn’t want it: Decline to take property b. Heirs of disclamer still receive same amount disclaimer would’ve received, so you can’t increase amount to your heirs. I.e., amount is frozen c. CL: intestate successor cannot prevent property from passing to him d. UPC §2-801 i. Can disclaim prior to D’s death, or 9 months afterward VI. Drye v. U.S. a. Cannot disclaim property in order to avoid federal government as a creditor. (Medicaid benefits) VII. Troy v. Hart a. If recipient renounces an inheritance that would cause him to be financially disqualified from receiving benefits, the renunciation should incur the same penalty that acceptance would have brought about and should render recipient liable for any payment incorrectly paid by Gov. Chapter 3: Wills Mental Capacity I. Testimental Capacity: Overview: a. To make a will, one must be of sound mind. b. Minority – must be over 18 c. Mental incapacity d. Undue Influence – often happens to old people e. Fraud or duress f. To have standing to challenge a will, you must have a financial interest II. Insane Delusion a. Causes particular provision in will – or entire will – to fail for lack of testamentary capacity b. Legal, not psych, concept. Delusion = false concept of reality c. Delusion is insane if rational person in T’s position could not have drawn conclusion of T. d. Strittmater: Probate set aside: it was her insane delusions about males that led her to leave estate to National Women’s Party. (could differ now) e. I.D. v. Mistake: Mistake is susceptible to correction if T is told the truth. III. Undue Influence (no exact legal definition) a. Basic Test: i. 1. T was susceptible to it ii. 2. Influencer had the disposition or motive to do it iii. 3. Influencer had opportunity to do it iv. 4. Disposition is result of the influence b. Various tests are used. Other tests: i. Confidential relationship: some trust or reliance 4 ii. Rest. §8 TEST: Suspicious Circumstances 1. Whether T received independent advice 2. Extent of weakened condition 3. T’s attitude toward others changed 4. Discrepancy between new and older will 5. Reasonable person would view as unjust, unfair c. Burden of persuasion i. Will proponent must show will is valid (easy) ii. Contestant must show substantial evidence of undue influence d. Lakatosh TEST: i. 1. There was a confidential relationship (*in every test) ii. 2. ∆ received bulk of estate iii. 3. D’s intellect was weakened. e. Lipper TEST i. 1) Confidential relationship, 2) Motive, 3) Opportunity, 4)Causation IV. UI & Attorneys a. PR: L shouldn’t let T give him anything, unless related V. Moses (not assigned) a. Test: 1) Confidential relationship + 2) Suspicious Circumstances VI. No Contest Clause a. Beneficiary who contests will shall take nothing, or token amount, in lieu of provision made for them in will b. Majority: Enforce unless there is good cause for the contest. (UI) c. Minority: Strict enforcement Fraud I. Overview a. T deceived by misrepresentation and does that which she would not have done but for the misrepresentation b.
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