LexisNexis Capsule SummaryTrusts and Estates.docx

1、LexisNexis Capsule Summary Trusts and EstatesNote: Numbers in brackets refer to the printed pages of Understanding Trusts and Estates by Roger W. Andersen where the topic is discussed.LexisNexis Capsule SummaryTrusts and EstatesChapter 1LAWYERS, ESTATES, AND TRUSTS 1 Serving the Living 1-2 Trusts an

2、d Estates is the study of ways to help living people solve family problems. Recognizing that lawyer conduct affects the living, some courts have broken down traditional defenses and held lawyers responsible to will beneficiaries who were not their clients. A. Traditional Defenses 1. Privity Traditio

3、nally, will beneficiaries who lost their share because of the lawyers negligence were out of luck. Because the lawyer had rendered service to the now-dead client rather than to the will beneficiaries the beneficiaries had no “privity” with the lawyer and could not recover. 2. Statute of Limitations

4、Traditional rules said the statute of limitations for any negligence began to run when the will was drafted, often many years before the error was discovered after the client died. The delay barred many claims. B. A Trend Starting with Lucas v. Hamm, 364 P.2d 685 (Cal. 1961), courts have been abolis

5、hing the privity defense and reading the statute of limitations as beginning to run at the testators death. The trend is not universal. See, e.g., Miller v. Mooney, 725 N.E.2d 545 (Mass. 2000) (rejecting tort liability, but leaving open the question of third party beneficiary liability). 2 An Overvi

6、ew of Intergenerational Wealth Transfer 2-11A. Probate 1. The Process Probate systems collect the assets of decedents, satisfy creditors, resolve conflicts among beneficiaries, and distribute what is left to the appropriate persons or institutions.a. Subject to Probate. Property that the decedent he

7、ld alone or as a tenant in common is subject to the system. Joint tenancy (or tenancy by the entirety) property, life insurance proceeds on the decedents life, and property in lifetime trusts are all outside of probate. Depending upon local rules, the decedents half of community property may or may

8、not pass through probate. b. Personal RepresentativeWhen a person dies and a decision is made to probate his estate, someoneusually a family memberwill petition a court in the decedents state of domicile to appoint a “personal representative” to handle the work. Executors (if there is a will) and ad

9、ministrators (if there is no will) are the most common types of personal representatives. c. Small EstatesMany states allow small estates to pass without court administration, or with minimal court involvement. See, UPC 3-1201 to 3-1204. d. Supervised EstatesThough local practice will vary, administ

10、ration of a court-supervised estate generally looks like this: Upon appointment of the personal representative, the court issues appropriately titled “letters” to evidence the individuals authority. The personal representative then contacts banks, stock transfer agents, and the like, to collect the

11、decedents assets. An inventory is filed and creditors are notified. If known or reasonably ascertainable creditors are given actual notice, their claims may be cut off if the creditors dont file promptly. See Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478 (1988). Next, estate adm

12、inistration enters a holding period. Appraisals are made; tax forms are filed; sometimes property is sold to pay creditors or because no one wants it. There may be a will contest or litigation about the wills meaning. When all questions are resolved, the personal representative closes the estate by

13、distributing the remaining property to those entitled to it. 2. Is Probate Necessary? Probate is not always necessary. All, or virtually all, of the property may pass free of probate. There may be no creditors, or they may have been found and paid. Everyone may agree on whos to get the property. B.

14、Lifetime Transfers 1. Trusts Harvard Professor Austin W. Scott said, “the purposes for which trusts can be created are as unlimited as the imagination of lawyers.” 1 Austin W. Scott & William F. Fratcher, The Law of Trusts 4 (4th ed. 1987-1991). a. Basic Requirements: Intention Property Trustee Bene

15、ficiary b. Living v. TestamentaryA trust created during the life of the settlor is called a “living” (or “lifetime” or “inter vivos”) trust. A trust is created by will is called a “testamentary” trust. Questions involving living trusts can be resolved in courts of general jurisdiction, but there is

16、no ongoing judicial supervision. Testamentary trusts are typically subject to the continuing jurisdiction and supervision of the probate court. 2. Other Lifetime Transfers Surviving joint tenants own the entire property when one joint tenant dies. Because the survivor no longer shares ownership with

17、 the one who has died, the decedent effectively has transferred wealth at death without the need of probate Funds paid by a third party (like a life insurance company) at the death of someone are often treated as contract rights of the beneficiary, rather than property of the one who died. “Payable-

18、on-death” and “transfer-on-death” bank and brokerage accounts reach the same result. C. The Uniform Codes and the Restatements The Uniform Probate Code (UPC) and the Uniform Trust Code (UTC) offer statutory language and commentary to state legislatures considering reform (and indirectly influence co

19、urt decisions). The Restatements of Property and of Trusts provide guidance to courts (and indirectly influence legislatures). Chapter 2INTESTACY 3 Overview 13-14 Intestate statutes identify who takes a decedents probate property: if there is no valid will (total intestacy) or to the extent that the

20、 will does not dispose of all of the property (partial intestacy). Often these statutes also serve as models for other laws that mandate shares for disinherited spouses or forgotten children. Intestate schemes also provide document drafters with a large variety of choices to present to their clients

21、 who want wills or trusts. 4 Spouses 15-18 A. Who Is a Spouse? Whether an individual can inherit as a “spouse” is usually a question of each states domestic relations law. Most states require a valid marriage between people of different genders. Someone who has cohabited under a good faith, but mist

22、aken, belief that he or she was married may be able to claim an intestate share as a putative spouse. See Restatement (Third) of Property 2.2 comment. e. Vermont recognizes parties to a civil union as spouses. See 15 Vt. Stat. Ann. 1204(b). B. The Spouses ShareThe size of a surviving spouses share v

23、aries, depending upon both state law and who else survives. If the decedent left no children, the spouse might get everything, or might share with the decedents parents. If the decedent left children, the spouse will often share with them, taking half if there is one child, and one-third if there is

24、 more than one child. Some states give the spouse a lump-sum amount and then divide the balance between the spouse and the children. In other states, the spouse gets everything, and the children have to rely upon their surviving parent to serve as a conduit, leaving them anything that is left over a

25、t her death. 1. The Conduit TheoryThe conduit theory may work well in the traditional situation of spouses who marry, raise children, and die without having divorced or remarried. When the surviving spouse is not the parent of some or all of the decedents children, however, the survivor may be less

26、likely to favor those children and, thus, be less reliable as a conduit.The UPC distinguishes between single-marriage and multiple-marriage situations. If the surviving children are all children of the decedent and surviving spouse, the surviving spouse gets everything. UPC 2-102(1)(ii). If the surv

27、iving spouse is the parent of the decedents children, but also has other children, the survivor takes $150,000, plus one-half of the balance. UPC 2-102(3). If the decedent left children who are not children of the surviving spouse, the survivor takes only $100,000, plus one-half of the balance. UPC

28、2-102(4). 5 Other Family Members 18-30 A. Qualifying to Take 1. Nonmarital Children At common law, nonmarital children could not inherit from anyone. Now they can always inherit from their mothers. Jurisdictions define differently the situations in which nonmarital children can inherit from their fa

29、thers (and vice versa). The Equal Protection clause of the 14th Amendment protects nonmarital children to some extent. Trimble v. Gordon, 430 U.S. 762 (1977), invalidated an Illinois statute that allowed nonmarital children to inherit from their fathers only if their parents eventually married and t

30、he fathers acknowledged the children. In Lalli v. Lalli, 439 U.S. 259 (1978), the Supreme Court upheld a New York statute that allowed a nonmarital child to inherit from her father only if the man had been found to be the father in a paternity action brought both within two years of the childs birth

31、 and while the man was alive. These sorts of requirements seem harder to justify in an age of DNA analysis. 2. Adopted Children a. Identifying the Question Questions can arise about whether the adopted person (the adoptee) can inherit from the adoptees genetic parent or through the adoptees genetic

32、parent (for example, from a grandparent). Similarly, there may be questions about whether the adoptee can inherit from the adoptees adoptive parent or through the adoptees adoptive parent. The same sorts of questions can arise in the other direction, if the adoptee dies first (for example, whether the adoptees genetic grandparent can inherit from the adoptee). b. I