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Unformatted text preview: Fall 2006 Trusts & Estates Outline Professor Stikoff INTRODUCTORY MATERIAL I. OVERVIEW a. Traditional subject matter (default rules) i. Intestate Succession ii. Testate Succession iii. Trusts settelor transfers property to third party (trustee). Trustee manages property for benefit of one or more beneficiaries. b. Probate transfers vs. Non-probate transfers i. most property transfers nonprobate ii. free market competitor to court supervised probate system iii. tremendous success a stinging indictment to the probate system c. reform movements (policy issues) d. Incapacity planning e. Malpractice a mine field of ethical problems II. Intestate succession a. Default rules b. Succession problems of children c. Bars to succession (e.g., killing the testator) III. Testate Succession (wills) a. Opting out b. Interpretation i. Wait until the best witness is dead, then try to figure out what it means ii. Extrinsic evidence c. Will Contests (is this really the will?) d. Limitations i. Traditional family Should working partner with most of property in his name be able to cut the non-working partner out of the will? ii. Children and behavior marrying within the faith IV. Trusts a. Asset protection Spend-thrift trust b. Legacy Trusts putting your own money in a trust c. Charitable trusts d. Dead Hand Control Rule Against Perpetuities V. The Policy of Passing Wealth at Death and Dead Hand control a. Shapira v. Union National Bank : Dr. Shapira leaves his residuary estate to three children in equal parts. Conditional gift to David if he marries a Jewish girl with Jewish parents within 7 years of Dr.s death. If not, gift over to the State of Israel. i. s Con Law Argument Like racially restrictive covenants in Shelley , state enforcement of such provisions would be Unconst 1 Fall 2006 Trusts & Estates Outline Professor Stikoff ii. Court : this is a disincentive, but not a prohibition. Like any other condition, he can marry whomever he wants but might not get $. iii. Public Policy Argument Public policy in favor of marriage, and this condition might reduce marriage iv. RULE REASONABLE conditions will be upheld. Reasonableness will be measured: 1. Temporally 2. Geographically v. Decision: there is ample time and opportunity to marry b. Anglo-American starting point is testamentary freedom Restatement 10.1 at 20, 21 i. donors intention is given maximum possible effect by law, given certain restraints ii. Everyone agrees that there should be some restraints (e.g., mandating murder), but what should they be? c. Reason for allow disposition of property after death i. incentives for accumulation of wealth 1. People would spend too much if they couldnt leave it 2. Evasion: put wealth in diamonds, false valuations, investment in human capital (largest investment today) ii. Natural law/moral argument : owner can use it how he wants d. Dead hand Control: Restatement 10.1: controlling feature is intent of donorRestatement 10....
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