978-0134004006 Chapter 52 Lecture Note

Unlock access to all the studying documents.

View Full Document

430

“When you have told someone you have left him a legacy, the only decent

thing to do is to die at once.” Samuel Butler

I. Teacher to Teacher Dialogue

The origins of the laws of wills and trusts go back to the canon laws of the medieval church.

The church had much control, not only over the spiritual life of its members, but also over the

more temporal affairs such as the disposition of worldly goods. The early church-based patterns

of disposition of property based on family relationships are still reflected in more modern day

elements are taxes, control, and present needs. The federal wealth transfer tax structure is

extensive and very complicated. The three main components of that tax structure are the gift,

estate, and generation skipping taxes. In addition, states have also developed their own property

transfer tax structures based on inheritance taxes, estate pickup taxes, or some combination

The control element also goes to the issue of how much the owner is actually willing to give

up before he or she departs this life. Simple human nature is such that it can be most difficult to

dilemma.

WILLS, TRUSTS, AND ESTATES

Wills, Trusts, and Estates

purported intent. There is a rhyme and reason to it all in spite of the sometimes-arbitrary nature of

such proceedings.

If a person has not written a will, or the will is not admitted to probate, he or she is deemed to

have died intestate. Every state has stepped into this void and written a will by way of an intestate

estate will be charged with three major duties:

1. To garner the assets of the estate.

2. To net out those assets by paying all proper claims, taxes, and costs of administration.

3. To distribute the net proceeds of the estate per the will or the intestate statute.

II. Chapter Objectives

1. List and describe the requirements for making a valid will.

2. Describe the different types of testamentary gifts.

III. Key Question Checklist

 What are the possible transfer options for property available before and after death?

 Will any property pass outside of the probate proceeding?

VI. Text Materials

Introduction to Wills, Trusts, and Estates

Wills transfer property upon a death. If one dies intestate, your property is distributed according

to state statute. Trusts are used to transfer property that will be held and managed for a

Chapter 52

Will

Wills are made out by a testator or testatrix to transfer property after their death to a beneficiary.

Requirements for Making a Will – Each state has a Statute of Wills that establishes the

Attestation by Witnesses – Only mentally competent witnesses can attest a formal will. Most

Codicil – Wills can only be amended by adding a codicil which must be executed with the same

Revoking a Will – A will is revoked when the testator burns, tears, obliterates, or, in any way,

Joint and Mutual Wills – A joint will is a single instrument that is executed by two or more

Special Types of Wills – A holographic will is entirely hand written and signed by the testator.

Simultaneous Deaths – The Uniform Simultaneous Death Act provides that each deceased

Probate – The process of settling an estate is probate, and is governed by state statute, and

usually administered through a probate court. A personal representative is appointed to handle the

Testamentary Gifts

A gift of real estate left by will is called a devise; personal property willed is called a bequest or a

legacy. Specific gifts are specially identified pieces of property. General gifts are not identified as

to the specific property from which it will be made, so it comes from the general estate. The

Lineal Descendants – Property may be left to the lineal descendants.

Per Stirpes Distribution – Per stirpes distributes based on the representation of the parents, so

Wills, Trusts, and Estates

Ademption – If a specific gift is left to a beneficiary, but the property is no longer part of the

estate, the beneficiary gets nothing. This is an ademption.

Abatement – When a testator’s estate is not large enough to cover all the bequests, abatement

Intestate Succession

If a person dies without a will, or if the will is invalid, his property is distributed pursuant to the

state’s intestacy statute to his heirs. Usually it is distributed first to the spouse, children, lineal

state.

Irrevocable Trust

A trust is a legal arrangement in which a settler, trustor, or transferor delivers and transfers

to the beneficiary.

Beneficiaries – Income beneficiaries receive the trust income; remainder beneficiaries receive the

alive.

Testamentary Trust – These trusts are created by will and executed after death.

Special Types of Trusts

Resulting Trust – This trust is implied by the conduct of the parties.

Charitable Trusts – A charitable trust is created to benefit some segment of society or society in

general.

can revoke it at any time.

Totten Trust – A Totten trust is created when a person deposits money in a bank account in his

or her own name and holds it as a trustee for the benefit of another person.

Chapter 52

Living Trust

Benefits of a Living Trust – A living trust lets you avoid probate because the assets are owned

by the trust.

Funding and Operation of a Living Trust – The grantor transfers title to the trust to fund it. It

Beneficiaries – The trust names an income beneficiary (usually the grantor) and a remainder

beneficiary.

Undue Influence

Critical Legal Thinking – I think many cases of undue influence occur. I think proving undue

influence is very difficult.

Case 52.1 Undue Influence: In re Estate of Haviland

and Mary called an attorney to have his will changed to favor her and not his children and Mary

prepared directions for the attorney to follow regarding the changes to be made. The second will

was signed. The children were disinherited. Upon his death, the will was challenged by the

children.

Issue: Was there undue influence by Mary?

was a hard case to decide.

Living Will and Health Care Directive

The Supreme Court has determined that the right to refuse medical treatment is a personal liberty

protected by the Due Process Clause.

Wills, Trusts, and Estates

artificial means.

Health Care Directive – In a separate document called a health care proxy you should indicate

the person whom you designate to be a health care agent for you in case of your incapacitation.

Critical Legal Thinking – The right to die allows people to have some level of control over their

last wishes. Very often, people are in tremendous amounts of pain. Or, they have certain

religious beliefs about dying. The right to die allows them to act upon certain wishes they may

have. Taken to the extreme, there is assisted suicide and in my view, that is taking the right to die

Critical Legal Thinking Case: Assisted Suicide

An Oregon law permits assisted suicide within a prescribed set of parameters of medical

conditions. The U.S. Attorney General issued a rule holding that the state law was in conflict

with the Controlled Substance Act, a federal statute. The conflict as to whether the state law was

V. Key Terms and Concepts

 Abatement—If the property the testator leaves is not sufficient to satisfy all the beneficiaries

abated first (i.e., paid last).

 Ademption—A principle that says if a testator leaves a specific devise of property to a

beneficiary, but the property is no longer in the estate when the testator dies, the beneficiary

receives nothing.

 Administrator or administratrix—During settlement of the estate, if no one is named or if the

end his or her own life.

 Attestation—The action of a will being witnessed by two or three objective and competent

people.

 Attestation clause—Witnesses usually sign a will following the signature of the testator.

These signatures are called the attestation clause.

society in general.

 Codicil—A separate document that must be executed to amend a will. It must be executed

with the same formalities as a will.

 Constructive trust—An equitable trust that is imposed by law to avoid fraud, unjust

enrichment, and injustice.

Chapter 52

Constitution.

 Devise—A gift of real estate by will.

 Escheat—When property or assets from a will are granted to the state because there is no next

of kin to claim such property.

 Euthanasia—When a physician administers a fatal dose of medicine to a terminally ill patient

to hasten their death.

will.

 General gift—Gift that does not identify the specific property from which the gift is to be

made.

 Grantor—A person who creates a living trust.

 Health care agent—In a living will or in a separate document, usually called a health care

 Income beneficiary of a living trust—A person who receives the income from a living trust

during his or her life. This is usually the grantor.

 Income beneficiary of a trust—A person or an entity to be paid income from a trust.

 Inter vivos trust—A trust that is created while the settlor is alive.

will.

 Intestate—The state of having died without leaving a will.

 Irrevocable trust—A trust is irrevocable unless the settlor reserves the right to revoke it. This

is referred to as an irrevocable trust.

 Joint will—A will that is executed by two or more testators.

property upon that person’s death.

 Living will—A document that stipulates one’s wish not to be kept alive by artificial means.

 Mutual wills—Occur where two or more testators execute separate wills that leave their

property to each other on the condition that the survivor leave the remaining property on his

or her death as agreed by the testators.

during settlement of the estate.

Wills, Trusts, and Estates

an estate.

 Remainder beneficiary of a living trust—A person who receives the assets of a living trust

upon the death of the grantor.

 Remainder beneficiary of a trust—A person or an entity to receive the trust corpus upon the

termination of a trust.

have been paid.

 Resulting trust—A trust that is created by the conduct of the parties.

 Revocation—Termination of a will.

 Right to die—The right to die is where a terminally ill person may make a decision to end his

or her life.

 Successor trustee—The trust should name a successor trustee to replace the grantor-trustee if

the grantor becomes incapacitated or too ill to manage the trust.

 Testamentary capacity—The testator must have been of legal age and “sound mind” when the

will was made.

dies.

 Testator or testatrix—The person who makes a will.

 Testator’s signature—Wills must be signed. Most jurisdictions require the testator’s signature

to appear at the end of the will.

 Totten trust—A Totten trust is created when a person deposits money in a bank account in his

 Trust corpus—The property held in trust.

 Trustee—Person who holds legal title to the trust corpus and manages the trust for the benefit

of the beneficiary or beneficiaries.

 Trustee of a living trust—A person named in a living will to administer the trust assets. This

is usually the grantor.

Chapter 52

 Undue influence—Occurs where one person takes advantage of another person’s mental,

he or she survived.

 Videotaped will—To prevent unwarranted will contests, a testator or testatrix can use a

videotaped will to supplement a written will.