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Decedents Outline 1

Decedents Outline 1 - DECEDENTS ESTATES AND TRUSTS Stephen...

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DECEDENTS’ ESTATES AND TRUSTS © Stephen Hunt, Jr. I.Introduction *Must know a case if it is Supreme Court Precedent Rules: Stage 1: Historical Rule Stage 2: Uniform Probate Code (original 1940 version) Stage 3: UPC (most current) 3 main areas of the course : 1. Intestacy; 2. Wills and 3. Trusts Keep in mind that everyone wants to reduce transaction costs , preferably without a lawyer or probate proceedings. Estate planning will be important because of baby boomers and their large amts of money. Wealth transmission is a lot different that a quarter of a century ago ; people will live a lot longer, parents will die later, and grandchildren will be involved. Divorce and high rate or remarriage will also affect estate planning. A.Probate v. Non-Probate Transfers Probate = a cumbersome, slow process that should be avoided if possible. It will sometimes be used to pass on property legally. Because people hate probate, there are several ways to avoid it : Joint forms of ownership, trusts, survivorship bank accts, and gifts while still living. There are state taxes on gifts, but we will cover federal law , such as the gift tax exemption, spousal exemption. To probate a will is to file the will with a probate court and have the will administered. Once a will is probated, it is a recorded document that is available to the public. Probate: What Is It, and Who Needs It? Essentially, a course in estates and trusts is a course in the wealth transmission process. Because most people want to enjoy their possessions while living, death is the focal point for most gratuitous transfers of wealth . If person of moderate means dies without a will, relatives may just divide up property and may not have to have any formal legal action. They could even agree to divide it up like the will (if there was a will) without legal action. Most estates are distributed informally. BUT, may have some asset that needs to be transferred through the legal process (like a title). These will need to go through the probate process . A personal representative will be appointed (also called administrator) if no will or the executor named in a will will collect all of Jane’s assets and pay any outstanding bills. Many testators want to avoid probate because of delay and expense. Litigation will often arise between beneficiaries of the estate and people who claim ownership of assets that they want to be left out of the estate. *chart on p. 9 supp. Gifts Gruen v. Gruen : Son and step mother are arguing over the ownership of a painting that the son says the father gave him on his birthday but in which the father retained a life estate. Issue is whether a valid inter vivos gift of a chattel may be made when the owner (donor) has reserved a life estate in the chattel and the donee has never had physical possession of the chattel before the donor’s death? YES. Valid gift. Rule: Elements of a valid inter vivos gift are Donative Intent, Delivery (actual or constructive) and Acceptance. An inter vivios gift 1
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requires that the donor intend to make an irrevocable present transfer of ownership.
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