The Five Main Topics of the Course:
1. Intestate Succession How do we distribute someone’s estate if he or she dies without a will?
2. Testate Succession How do we create or revoke a will? How do we distribute the estate when you have a will?
3. Trusts
4. State Tax (Covered in 1- 1.5 hrs.)
5. Elder Law Medicaid Planning – When your client has one foot in the grave and you as an attorney figure out what you can do for them as an estate planner.
The Big Picture Look:
Trying to figure out how do we distribute someone’s property interests after he or she is dead.
Eyerman v. Mercantile Trust Co. (1975)
CASE SUMMARY
PROCEDURAL POSTURE: Plaintiff neighbors filed an action to enjoin the demolition by defendant executor of a house, and alleged issues of private nuisance, enforcement of restrictive covenants, and public policy. The Circuit Court of the City of
OVERVIEW: The owner of the home died and directed her executor to raze the home, sell the lot, and transfer the proceeds to the residuary of the estate. The neighbors asserted that razing the home would adversely affect their property rights, violate the terms of the subdivision trust indenture, produce an actionable private nuisance, and was contrary to public policy. The court reversed the denial of the injunction. The neighbors pleaded and proved facts sufficient to show a personal, legally protectible interest. The purposes of the testatrix's trust would not be defeated by injunction because the proceeds from the sale of the property would pass into the residual estate and thence to the trust estate as intended, and only the capricious destructive condition would be enjoined. The value of the property was significantly higher with the house intact. The neighbors, the community as a whole, and the beneficiaries of testatrix's estate would be severely injured should the provisions of the will be followed. No benefits were present to balance against the injury.
HOLDING: The court held that to allow the condition in the will would be in violation of the public policy of
OUTCOME: The court reversed the denial of the injunction and remanded.
RULE OF LAW: (1) The taking of property by inheritance or will is not an absolute or natural right (not a fundamental right under the Constitution) but one created by the laws of the sovereign power; and (2) An unexplained destruction of estate property violates public policy.
HORVATH: Your ability to write a will is not constitutional guarantee. Your ability to write a will is granted to you by state statute. What the state giveth, the state can taketh away and it can be tempered by public policy concerns. The neighbors had standing to challenge the carrying out of the directive in the will because the devise in the will affected their property values. Also, the court will not allow a devise in a will that violates public policy or that causes more harm than good.
Definition of Public Policy: That which conflicts with the morals of the time and contravenes any established interest of society.
Terms
Intestate: Of or relating to a person who has died without a valid will.
Testate: Having left a valid will at death.
Heir: A person who, under the laws of intestacy, is entitled to receive an intestate decedent’s property. Not all heirs are necessarily Devisees.
Presumptive Heir: A person who would inherit from another if the latter died intestate at that moment. Note: may lose right if someone with a closer relationship or superior claim comes into the picture by birth, marriage, etc.
Heir Apparent: One who certainly will inherit when and if another dies intestate, needing only to survive the intestate.
Devise: When used as a noun, a testamentary disposition of real or personal property.
Devisee: A person designated in a will (under testate succession) to receive a devise. You cannot have a Devisee in an intestate estate. Not all Devisees are necessarily heirs – you can have heirs not included in the will and can Devisees not related to you by blood, i.e., by way of gift.
Decedent: The dead person.
Descendent: Generally, the dead person’s children, grandchildren, great grandchildren – those that descend from the dead person.
Testator: One who makes a will.
Will: An instrument or declaration by which one directs the disposition of one’s property after death. Also called a testament (old days testaments for personal and wills for real). Don’t have to say “Will and Testament”, but many still do.
Codicil: Amendment to an existing will.
Issue: A person’s descendants or lineal descendants, i.e. children, grandchildren, and so forth (Don’t use Issue, use Descendant)
Consanguinity: Relationship by blood.
Affinity: Relationship by marriage.
Per Stirpes: A scheme of representation whereby descendants of a deceased taker of a share of an estate receive their ancestor’s share.
Per Capita: A scheme of distribution of an estate whereby all individuals of the relevant status take equal shares.
Policy Issues
- The courts will attempt to honor the wishes of the decedent as to how he or she wants the estate distributed.
- The decedent is no longer with us; therefore, we may need extrinsic evidence to determine his or her wishes.
- Without any evidence (the will), we are going to look to the statutes because the law will make presumptions when there isn’t a will, the will is silent, or the will is vague. The statute is the default. The rules are codified because it is such an old area of the law.
Operations of Law: Property Not Controlled by a Will
- Joint Tenancy
- Tenancy in Common
- Controlled by Contract:
- Life Insurance Policies A contract between the insurance company and the decedent
- IRA’s
- 401(k)
- Annuities
- Anything that has a beneficiary designation and a contract associated with it.
Probate Assets: Property Controlled by a Will
In order to figure out what assets are probate assets, use the definition below:
Probate Assets: Those assets held in the decedent’s name alone that required the decedent’s signature to transfer. Exception: Personal property does not require your signature to transfer; therefore, it is a probate asset.
Probate Assets go one of three ways:
1. Testate
2. Intestate
Either you have a will or you don’t. Non-Probate Assets pass by Operation of Law or by Contract
3. Trust Assets Specifically put into a trust by a Grantor (someone who creates a trust)
The First Step in analyzing any probate problem is you have to categorize the assets. If you don’t, you are not going to know what document controls the distribution of assets. You are not going to know what rules control the distribution of the assets.
In Re Van Wormer’s Estate (Supreme Court of MI) (1931)
PROCEDURAL POSTURE: Appellant guardian sought review of an order of the circuit court (
OVERVIEW: The deceased and the guardian were divorced and had two children. The guardian had custody of the children. Before his death, the deceased issued stock in the executor's name. The executor sold the stock at a profit. The guardian alleged that the money the deceased invested in the stock and the profit should have been accounted for as a part of the deceased's estate. The trial court found that the stock passed from the deceased to the executor as a gift causa mortis.
HOLDING: The court held that the gift the deceased made to the executor in contemplation of his death would not be set aside. At the time of the gift the deceased was suffering from a mental breakdown that continued to the time of his death. The mental illness that resulted in suicide fastened itself upon the deceased before the date of the gift, and he was convinced at that time that he could not continue on indefinitely in his depressed mental state. The deceased's act of causing the certificate of stock to be issued in the executor's name and depositing it in a bank constituted delivery sufficient for a gift causa mortis.
OUTCOME: The court affirmed the order upholding the probate court's allowance of the executor's final account of the deceased's estate.
HORVATH: The problem at issue is the stock.
Definition (from case) of gifts a causa mortis: The claimed gift a causa mortis cannot be sustained unless it appears from the record that at the time of the transaction the donor believed he was suffering from an affliction from which he might not recover and from which in fact he did not. “It is not essential to a gift a causa mortis that the donor be in extremis and that death is certain, but it is sufficient if he is apprehensive of death from present malady or imminent peril.”
Gift a causa mortis Elements: (DEMA)
1. Donative intent,
2. Effective delivery (including constructive delivery)
3. Made in contemplation of death; and
4. Acceptance (presumed).
Exam Goal: Discuss all the possible arguments – is the gift revoked or revocable? Be ready to say if this, then that; however, we can go the other way also.
Will Substitutes
Contractual and by Operation of Law items that are effective in distributing property after death but you do not have to use your will to do it. It is also referred to as “poor-man’s” estate planning.
Joint tenancies – Property passes to surviving joint owners
Tenancy by the Entireties – Property held as husband and wife.
Life Insurance – A contractual agreement wherein the beneficiary receives payment upon the death of the owner.
Paid on Death (POD/TOD) Accounts – Can be used with investments and bank accounts.
Qualified Monies (IRAs, 401(k)s…) – Should always have a beneficiary designated.
Annuities – Operate like life insurance but may have income tax consequences.
Life Insurance
It is possible that life insurance, while traditionally a non-probate asset, could be come a probate asset. Here is how:
There are three players:
1. The Owner of the life insurance policy
2. The Insured
3. The Beneficiary
- A person can be the both the Owner and the Insured. Upon death, the policy pays out to the Beneficiary.
- A person can own a life insurance policy on someone else and be the beneficiary.
- Cannot have Insured and Beneficiary.
Two ways that Life Insurance can become a Probate Asset:
1. Owner and Insured is same person (husband) and the wife is the beneficiary. The wife dies before husband but husband does not put a new beneficiary on the policy. When the husband dies, there is no qualified beneficiary to take. What the insurance companies do under contract is pay the insurance policy to the owner’s estate and the owner’s estate has to make a claim. The value of the insurance policy ends up under probate and is controlled by the will.
2. Mom owns life insurance policy on child. The Owner (mom) dies before child. The policy will not pay out because child (the Insured) is still living. The ownership of the policy transfers to the estate. It becomes an asset that requires a signature but the Owner is deceased; therefore, it must be run through the probate process.
Probate Process
Decedent passes away
Testate
– Will is submitted to probate
Intestate/Partial Intestate
– Petition/Application – apply for letters of authority
Personal representative (P.R.) is appointed
– By will
– Priority established by statute
Administration (formal or informal)
– Collect assets
– Notice to creditors
– Pay estate taxes, if applicable
– Inventory and accounting
– Partial and final distributions
Priority of Claims
Estates and Protected Individuals Code (EPIC)
Sec. 3805: Creditors’ Claims
(1) If the applicable estate property is insufficient to pay all claims and allowances in full, the personal representative shall make payment in the following order of priority:
(a) Costs and expenses of administration (Attorneys).
(b) Reasonable funeral and burial expenses.
(c) Homestead allowance (later in course but generally spouse and kids in home).
(d) Family allowance (later in course).
(e) Exempt property (later in course).
(f) Debts and taxes with priority under federal law.
(g) Reasonable and necessary medical and hospital expenses of the decedent's last illness, including a compensation of persons attending the decedent.
(h) Debts and taxes with priority under other laws of this state.
(i) All other claims (credit cards).
Sec. 3805 applies whether you die testate or intestate. You must always pay your creditors or claims. Attorneys get paid first – no one would take the work if they didn’t get paid – same reasoning for (b). This section also technically applies when the estate is insolvent.
Know the order!
The Residuary Devisee (everybody in an intestate estate or the person who gets everything that’s left over in a testate estate) might argue about the reasonableness of the costs of the funeral and the last illness because the more money we pay out to creditors the less money the residuary devisee gets.
The creditors down the list may also argue the reasonableness of the funeral costs.
(2) A preference shall not be given in the payment of a claim over another claim of the same class, and a claim due and payable is not entitled to a preference over a claim not due.
Pro Rata Example: Determine the total amount owed to each creditor –
$1000 total debt but only $100 left in the estate to pay creditors:
$500 owed to Visa – 50% of the debt
$200 owed to MC – 20% of the debt
$300 owed to Discover – 30% of the debt
Visa gets $50
MC gets $20
Discover gets $30
(3) If there are insufficient assets to pay all claims in full or to satisfy homestead allowance, family allowance, and exempt property, the personal representative shall certify the amount and nature of the deficiency to the trustee of a trust described in section 7501(1) for payment by the trustee in accordance with section 7502. If the personal representative is aware of other non-probate transfers that may be liable for claims and allowances, then, unless the will provides otherwise, the personal representative shall proceed to collect the deficiency in a manner reasonable under the circumstances so that each non-probate transfer, including those made under a trust described in section 7501(1), bears a proportionate share or equitable share of the total burden.
In other words, you can’t avoid paying your creditors by putting all of your money in trusts. It is the responsibility of the PR to go to the trust and ask for a payoff.
Intestacy, Wills, and Donative Transfers
Sec. 2101 – Intestate Succession
When does intestacy apply?
(1) Any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent's heirs as prescribed in this act, except as modified by a decedent’s will.
Horvath: If your will does not cover everything then it goes by intestate succession
Negative Will
(2) A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent that passes by intestate succession. If that individual or a member of that class survives the decedent, the share of the decedent's intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed his or her intestate share.
A Negative Will doesn’t actually give anything away. It states that I am going to die intestate, but when I do my son doesn’t get to take. It limits the ability to take by intestate succession. Not all states allow a negative will. It is not a negative bequest (leaving someone out of your will). A negative will doesn’t give anything away – when I die intestate, you are cut out.
Exam: If I tell you in a fact pattern that someone has a valid will, don’t argue with me, don’t go through the elements of a valid will. If I say it’s a distributable estate, then you know that all the creditors have been paid. I’m not giving points for arguing.
More Definitions
Who are one’s “descendants” (“issue”)?
Who is a “child”?
– Under what circumstances is an adopted child a “child” within the meaning of EPIC? See EPIC § 2114(2).
– Is an illegitimate child a “child” under EPIC?
– Is a stepchild a “child” under EPIC?
Sec. 1103(l): “Descendant” means, in relation to an individual, all of his or her descendants of all generations, with the relationship of parent and child at each generation being determined by the definitions of child and parent contained in this act.
Sec. 1103(f): A child does not include an individual who is only a stepchild, a foster child, or a grandchild or more remote descendant.
Sec. 1106(i): A parent does not include an individual who is only a stepparent, foster parent, or grandparent.
Sec. 2114(1)(a): A child born or conceived during a marriage, both spouses are presumed to be the natural parents of the child for purposes of intestate succession. If a man and a woman participated in a marriage ceremony in apparent compliance with the law before the birth of the child, even though the attempted marriage may be void, the child is presumed to be their child for purposes of intestate succession.
Horvath: A child born in wedlock is presumed to be the child of the father. You have to overcome the presumption to say that he is not.
(2) As soon as a child is adopted, he or she becomes the child of the parent under the Code.
Sec. 1107(j): “Survive” means that an individual neither predeceases an event, including the death of another individual, nor is considered to predecease an event under section 2104 or 2702.
Sec. 2104: An individual who fails to survive the decedent by 120 hours is considered to have predeceased the decedent for purposes of homestead allowance, exempt property and intestate succession, and the decedent’s heirs are determined accordingly.
Share of Heirs other than Surviving Spouse
Any part of the intestate estate that does not pass to the decedent's surviving spouse under section 2102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the following individuals who survive the decedent:
– (a) The decedent's descendants by representation.
– (b) If there is no surviving descendant, the decedent's parents equally if both survive or to the surviving parent.
– (c) If there is no surviving descendant or parent, the descendants of the decedent's parents or of either of them by representation.
– (d) If there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by 1 or more grandparents or descendants of grandparents, 1/2 of the estate passes to the decedent's paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent's paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other 1/2 passes to the decedent's maternal relatives in the same manner. If there is no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side, the entire estate passes to the decedent's relatives on the other side in the same manner as the 1/2.
What if there are no eligible takers in (a) through (d) above?
Who is a Surviving Spouse?
Spouse is defined by state marriage laws, not EPIC.
Effect of divorce, annulment and separation
– EPIC 2801(1) An individual who is divorced from the decedent or whose marriage to the decedent has been annulled is not a surviving spouse unless, by virtue of a subsequent marriage, he or she is married to the decedent at the time of death. A decree of separation that does not terminate the status of husband and wife is not a divorce for purposes of this section.
EPIC 2801(2). For purposes of parts 1 to 4 of this article and of section 3203, a surviving spouse does not include any of the following:
– (a) An individual who obtains or consents to a final decree or judgment of divorce from the decedent or an annulment of their marriage, which decree or judgment is not recognized as valid in this state, unless they subsequently participate in a marriage ceremony purporting to marry each to the other or live together as husband and wife.
– (b) An individual who, following an invalid decree or judgment of divorce or annulment obtained by the decedent, participates in a marriage ceremony with a third individual.
– (c) An individual who was a party to a valid proceeding concluded by an order purporting to terminate all marital property rights.
– (d) An individual who, at the time of the decedent's death, is living in a bigamous relationship with another individual.
– (e) An individual who did any of the following for 1 year or more before the death of the deceased person:
(i) Was willfully absent from the decedent spouse.
(ii) Deserted the decedent spouse.
(iii) Willfully neglected or refused to provide support for the decedent spouse if required to do so by law.
Quick Review
Some statutes will say descendant and some will say child. All children are descendants but not all descendants are children.
Memorize Priority of Claims
Survival Requirement (120 hour Rule)
Surviving Spouse
Public policy wants to protect surviving spouse of the decedent.
Sec. 2103
Any part of the intestate estate that does not pass to the decedent’s surviving spouse or the entire estate if there is no surviving spouse passes in the following order to the following individuals who survive the decedent:
(a) The descendants of the decedent, i.e. children, grandchildren, great-grandchildren, etc;
(b) Surviving parents;
(c) Descendants of the decedent’s parents, i.e. siblings, nieces and nephews, etc.
(d) If there is no surviving descendant, parent, or descendant of a parent, then ½ to maternal grandparents and ½ to the paternal grandparents. If no surviving grandparents, then to the decedent’s relatives on either side in the same manner as ½. If there are no relatives then the estate escheats to the state.
RULE: Don’t go up if you can go down. It’s only when you can’t go up, then you go down. Don’t go to your parents if there are descendants (not necessarily children).
Who is a surviving spouse?
–Spouse is defined by state marriage laws, not EPIC.
–Effect of divorce, annulment and separation
Sec. 2801(1) An individual who is divorced from the decedent or whose marriage to the decedent has been annulled is not a surviving spouse unless, by virtue of a subsequent marriage, he or she is married to the decedent at the time of death. A decree of separation that does not terminate the status of husband and wife is not a divorce for purposes of this section.
Sec 2801(2) For purposes of parts 1 to 4 of this article and of section 3203, a surviving spouse does not include any of the following:
An individual who obtains or consents to a final decree or judgment of divorce from the decedent or an annulment of their marriage, which decree or judgment is not recognized as valid in this state, unless they subsequently participate in a marriage ceremony purporting to marry each to the other or live together as husband and wife.
(b) An individual who, following an invalid decree or judgment of divorce or annulment obtained by the decedent, participates in a marriage ceremony with a third individual.
(c) An individual who was a party to a valid proceeding concluded by an order purporting to terminate all marital property rights.
(d) An individual who, at the time of the decedent's death, is living in a bigamous relationship with another individual.
(e) An individual who did any of the following for 1 year or more before the death of the deceased person:
(i) Was willfully absent from the decedent spouse.
(ii) Deserted the decedent spouse.
(iii) Willfully neglected or refused to provide support for the decedent spouse if required to do so by law.
Sec. 2102 – The INTESTATE share of a decedent’s surviving spouse is one of the following:
(a) Entire Estate (b) 150 + ½ (c) 150 + ¾ (d) 150 + ½
------------- --------- -------- ---------
D – Surviving Spouse D – SS Parent D – SS - - - - - - - -
| | | |
Descendants D – SS Desc. Desc.
(e) 150 + ½ (f) 100 + ½
---------------- ---------------
D – SS - - - - - - - - - - D – SS
| |
Desc. Desc.
RULE: As long as the surviving spouse and the decedent have mutual descendants it is $150,000 + ½ (See b, d, e above). If the decedent does not have any descendants but decedent has a parent surviving, it is $150,000 + ¾. If the decedent has surviving descendants that are not related to the surviving spouse, it is $100,000 + ½.
· Look at it from the decedent’s perspective
· We only care about relationships of the decedent
· Look to the Surviving Spouse first
· Step children in intestate succession are no relation to decedent
Representation
Sec. 2103(a): The decedent’s descendants [take] by representation.
This is where the grandchildren step into the shoes of the deceased children and they represent their predeceased ancestor in taking in the estate. If and only if their ancestor has pre-deceased will someone of a more remote generation, i.e. a grandchild, take in the place of a child.
• The right of a person to take the share of an estate that a predeceased ancestor would have taken (to “represent” the ancestor).
• If you are a single or widowed parent with three children living, how would you typically want your estate divided?
• What if one of your children predeceased you leaving two living children (i.e., your grandchildren). How would you typically want to the estate divided? Would you want the share that would have gone to your child go to your grandchildren instead?
Step 1: Identify the decedent’s children (do not forget about adopted and after-born).
Step 2: Determine if any predeceased child left a descendant who survived the decedent.
Step 3: Ascertain state’s method of handling multi-generation succession (i.e., what does “representation” mean in your jurisdiction)?
–Strict or “pure” per stirpes
–Per capita with representation
–Per capita at each generation
Representation Generally
· The right of a person to take the share of an estate that a predeceased ancestor would have taken (to “represent” the ancestor).
· Younger generation descendants divide the share the older generation descendant would have received had the older generation survived the decedent.
Four Different Methods of Division of Property (responsible for per stirpes and EPIC)
1. Per Stirpes. Must know “pure” per stirpes. “I want my descendants to take per stirpes) Replaced by per capita.
2. EPIC
3. Pure per capita (does not exist in any state).
4. Per capita with representation (also called modern per stirpes).
Per Stirpes
· “By the roots” or “stocks”
· Divide estate into shares – one share for each surviving child and for each deceased child who left descendants surviving the decedent.
· Each surviving child receives one share and the share of each deceased child passes to the child’s descendants.
· Always divide into shares at child generation, even if no children survive decedent.
There are three questions you must ask:
1. Where do I start dividing (which generation do I start dividing in?)
2. How do I divide? (The same for every model) MEMORIZE THIS: One share to each surviving member and one share to each predeceased member who left surviving descendants.
3. What do I do with predeceased members’ shares? Under Per Stirpes
Per Stirpes
Q: Where do I start dividing?
A: Always with the children (the first generation)
Q: How do I divide?
A: I give one share to each surviving member and one share to each predeceased member who left surviving descendants (this is the same answer for every model)
Q: What do I do with predeceased members’ shares?
A: Straight down the line. The more siblings you have, the less money you get.
Pure Per Capita
Take the number of people who are qualified to take and divide the estate equally regardless from whom they descended or how many siblings they have.
Per Capita with Representation (Old Code). It exists in some jurisdictions.
Answer to question 1: Same as Per Stirpes
Answer to question 3: Same as EPIC
· Original UPC (1969) method (still used in many states)
· Like pure stirpes, except the nearest generation with descendants who survive the decedent is used as the “root” of the distribution (instead of using the decedent’s children as the “root”).
· 1 share for each surviving descendant of the “root” generation and 1 share for each predeceased descendant in “root” generation who, in turn, left at least one surviving descendant.
· Sometimes called “modern per stirpes” or “per capita with per stripes representation.”
Per Capita at Each Generation
· UPC (1990)
· Like per capita with representation, (i.e., nearest generation with descendants who survive the decedent is used as the “root” of the distribution), except all takers of an estate in a generation are treated equally, regardless from whom they are descended of how many siblings they have.
· Break into primary shares at nearest generation with at least one surviving descendant (1 share for each surviving descendant and 1 share for each predeceased descendant who, in turn, left at least one surviving descendant).
· After “root” generation, recombine unused primary shares and divide the such primary shares per capita in the next generation (repeat again if necessary).
EPIC Sec. 2106
· If, under section 2103(a), a decedent's intestate estate or a part of the estate passes by representation to the decedent's descendants, the estate or part of the estate is divided into as many equal shares as the total of the surviving descendants in the generation nearest to the decedent that contains 1 or more surviving descendants and the deceased descendants in the same generation who left surviving descendants, if any. Each surviving descendant in the nearest generation is allocated 1 share. The remaining shares, if any, are combined and then divided in the same manner among the surviving descendants of the deceased descendants as if the surviving descendants who were allocated a share and their surviving descendants had predeceased the decedent.
· What method does EPIC use, per stirpes, per capita with representation or per capita at each generation?
Q: Where do I start dividing?
A: The first generation where you find a survivor
Q: How do I divide?
A: I give one share to each surviving member and one share to each predeceased member who left surviving descendants.
Q: What do I do with the predeceased members’ shares (undistributed shares)?
A: The remaining shares are recombined and then divided in the same manner among the surviving descendents of the decedent’s descendants (next set of takers), i.e., grandkids. EPIC tries to treat all of the grandkids the same
Exam: I will not tell you that someone has predeceased – he or she simply won’t be listed as surviving. If someone is not in the list of survivors, they are predeceased.
Summary
· What is the “root” generation?
–Per stripes – always the next generation, even if no surviving members.
–Per capita with representation and per capita at each generation – first generation with at least one surviving member.
· How many shares?
–1 share for each surviving member of root generation + 1 share for each predeceased member leaving at least one surviving descendant.
· What happens to shares allocated to members of root generation who did not survive the decedent?
–Per stirpes and per capita with representation – share passes down directly to descendants of person represented.
–Per capita at each generation – combine the unused shares and divide equally among members of next generation.
Intestate Advancement
EPIC Sec. 2109
Advancement: An inter vivos gift, made by the decedent, to an heir in intestate succession. However, there is a string attached – the advancement comes out of the inheritance. (Testate succession uses the term satisfaction.)
Sec. 2109(1) If an individual dies intestate as to all or a portion of his or her estate, property the decedent gave during the decedent’s lifetime to an individual who, at the decedent’s death, is an heir is treated as an advancement against the heir’s intestate share only under either of the following circumstances:
(a) The decedent declared in a contemporaneous (at the same time) writing OR the heir acknowledged in writing that the gift is advancement. (Subsection (a) uses the word “advancement” where subsection (b) uses “gift”).
(b) The decedent’s contemporaneous writing OR the heir’s written acknowledgement otherwise indicates that the gift is to be taken into account in computing the division and distribution of the decedent’s intestate estate. (This subsection uses the word “gift” instead of advancement – in case the decedent used layman’s terms)
Note: The heir can acknowledge at a later time (not contemporaneous) that the advancement or gift is to be treated as an advancement and therefore come out of the inheritance.
Advancement will occur only under the following circumstances:
· Contemporaneous writing stating it is an advancement
· Contemporaneous stating that the gift is to be used in computing the distribution of decedent’s estate
· Valued as of the time it came into the heir’s possession
· If the heir fails to survive decedent, the property is not used in computing the estate unless decedent said to.
Problem 3 – Advancements
· Decedent intestate leaving a net estate of $200,000. He was survived only by his three children, Allen, Brian and Carol. During his lifetime, he gave Allen a check for $40,000.
· Will the court consider this an advancement? What facts are required for the court to do so?
· If the court considers the $40,000 to be an advancement, how will the estate be distributed?
Hotchpot Method
Step 1: Add the advancement back to the distributable estate (the net estate is now $240,000).
Step 2: Divide as you normally would.
Step 3: Subtract the advancement from the advancee’s share.
Step 4: To check yourself, add that which you are giving away and make sure its your original distributable estate.
Coomes v. Finegan (1943)
A suit to enjoin the sale of real estate at sheriff's sale under an execution issued on a judgment against an heir of an intestate who died seized of the land, although the heir had filed a renunciation of all interest in the estate. From a decree dissolving a temporary injunction and denying a permanent injunction, the plaintiff, as grantee of all the other heirs, has appealed. Decree is affirmed.--Affirmed.
DISPOSITION: Affirmed.
PROCEDURAL POSTURE: Plaintiff heir challenged a judgment from the Carroll District Court (
OVERVIEW: The heir attempted to stop the sale of real estate at sheriff's sale under an execution issued on a judgment against the heir, of an intestate who died seized of the land, although the heir had filed a renunciation of all interest in the estate. The trial court dissolved the temporary injunction and denied a permanent injunction. The individual who had obtained the judgment, contended that the heir's renunciation of her inheritance was made without consideration with intent to defraud, and in no way affected his superior right of his judgment lien.
ISSUE: The issue was whether a child, who took an interest in real estate from an intestate parent, could, by renunciation of that interest, defeat the lien of a prior judgment.
HOLDING: The court affirmed and held that while the title of a devisee vests immediately on the death of the testator it is only a tentative vesting, until there is some definite act of acceptance. Nevertheless, renunciation did not defeat the fact that the lien and the title vested in the judgment holder at the time of the testator's death by operation of law, requiring no assent or acceptance by the heir. Renunciation was not effective to destroy the lien of the judgment.
OUTCOME: The court affirmed the judgment from the trial court, which had dissolved a temporary injunction and denied the heir's petition to preclude the sheriff from selling property, pursuant to the individual's judgment lien.
RULE: You can disclaim an interest; however, in an intestate estate the disclaimer might not defeat the claim of a creditor.
HORVATH: Mom died intestate. One of her daughters had a secured judgment against her. The daughter executes a disclaimer stating that she does not want her interest. You can always disclaim your interest – you are not forced into accepting money and therefore can always execute a disclaimer. She was trying disclaim her share to prevent the judgment creditor from attaching her share of the family farm, preventing the family from selling the farm without satisfying the judgment.
The question becomes, can she disclaim her interest in order to defeat her creditor in the face of the claim? The court said no because in an intestate estate your interest vests immediately upon the decedent’s death. That interest is sufficient enough for a judgment creditor to attach. You cannot disclaim prior to the death of the decedent because you have nothing to disclaim – you do not have an interest.
Disclaimer (continued)
Sec. 2901
· An heir, devisee or beneficiary may refuse his or her inheritance or devise by delivering a valid disclaimer to the PR of an estate or Trustee of a trust.
· May include real property, personal property, a right to control property or a power of appointment.
· You can also disclaim a “governing instrument” such as a deed, assignment, bill of sale, will, trust, beneficiary designation, contract, i.e. life insurance policy.
Then only the disclaimed interest passes by
The disclaimer can only affect the amount you’re disclaiming
Sec. 2903
To be valid it:
· Must be in writing and signed
· Declare the disclaimer
· Describe the interest
· Signed by the disclaimant; and
· Delivered to the Personal Representative or trustee.
Sec. 2907
…However if by law, or under the will or testamentary trust, the descendants of the disclaimant would take the disclaimant’s share by representation if the disclaimant predeceased the decedent, then [only] the disclaimed interest passes by representation to the descendants of the disclaimant who survive the decedent.
Problem 1
· Sara died intestate, with a distributable estate of $200,000. Her son, Tom, predeceased her. Her daughter, Brenda, executed a valid disclaimer. Sara's survivors are Tom's daughter, Nancy; Brenda; and Brenda's children, John, Ted, Edie, and Martha.
· How will Sara's estate be distributed?
· What happens if Brenda disclaims her interest? Brenda is not treated as having predeceased Sara as to the total distribution; otherwise Brenda’s children would get an unfair share over Tom’s children. Her ½ will pass to her children who will divide it equally and Tom’s whole amount ($100,000) passes to his descendant, Nancy. The amount disclaimed can only affect the amount you are disclaiming. It cannot affect the rest of the distribution of the estate.
Additional Rules
· IRS: The disclaimer must happen within 9 months of the date of death
· Cannot have taken beneficial property interest prior to disclaiming
· It’s not an all or nothing proposition – you can disclaim 50%, 25%, etc.
Slayer’s Statute
Slayer’s Statute: A statute that prevents a person who has killed another from inheriting or otherwise benefiting from the latter’s estate.
In re Estate of Howard Mahoney (1966)
DISPOSITION: Decree reversed and cause remanded, with directions that the proceedings herein be stayed for sixty days to give the Administrator of the Estate of Howard Mahoney an opportunity to apply to the Franklin County Court of Chancery for relief. If application is so made, proceedings herein shall be stayed pending the final determination thereof. If application is not so made, the Probate Court for the District of Franklin shall assign to Charlotte Mahoney, surviving wife, the right and interest in and to the estate of her deceased husband which the Vermont Statutes confer.
PROCEDURAL POSTURE: Appellant wife sought review of the decision from the Probate Court for the District of Franklin (
ISSUE: Whether a widow convicted of manslaughter in connection with the death of her husband may inherit from his estate.
OVERVIEW: The wife was convicted of manslaughter for shooting her husband. The husband died intestate and the probate court determined that it would be unjust to allow her to profit from her husbands death and decreed the residue of his estate to his parents rather than to her as required by Vt. Stat. Ann. ch. 14, § 551(2). The wife challenged the decision and the court reversed. There was no statutory basis for depriving the wife of her rights under Ch. 14, § 551(2) and the probate court lacked the equitable power to stray from the statutory mandate. The court recognized that the wife should not be permitted to profit from her husband's death if she intentionally killed him and granted the estate administrator 60 days in which to apply to the court of chancery, which had the equitable power to impose a constructive trust on the wife in favor of the parents. Because the manslaughter conviction did not delineate between voluntary or involuntary manslaughter the intentional killing of the husband would have to be proved in the chancery court before a constructive trust could be imposed. If the chancery court's jurisdiction was not invoked within 60 days the wife inherited the property.
OUTCOME: The court reversed the judgment granting the husband's estate to his parents rather than his wife and gave the estate administrator 60 days to apply to the chancery court for the imposition of an equitable trust on the wife.
Definition of Constructive Trust per Cardozo: The Nature of the Judicial Process: Consistency was preserved, logic received its tribute, by holding that the legal title passed, but it was subject to a constructive trust. A constructive trust is nothing but “the formula through which the conscience of equity finds expression.”
HORVATH: In order to be considered a slayer and therefore destroy your right to inherit from the person you have slayed, you must have intentionally slayed them. At the very least it has to be voluntary manslaughter.
Under Coombs, in an intestate estate, you vest immediately upon the death of the decedent. Prior to her conviction, she received property as a surviving spouse. The court struggles with the issue of how who owns the property and how can we distribute it. Equity states that wife has an interest in the property but she cannot benefit from her wrongdoing (unjust enrichment).
A trust is created where one person has legal title and beneficial or equitable title belongs to another person, thus creating a split in the title. As a court remedy, the court formed a constructive trust. A constructive trust is a legal remedy to transfer property from a wrongdoer to a person who should rightfully have it. In
Slayer will be declared constructive trustee of property acquired from decedent for benefit of decedent's heirs where killing is either murder or voluntary manslaughter but not when killing is involuntary manslaughter. A person may lose their freedom but not property.
Sec. 2803 (Slayer Statute)
An heir who is convicted of intentionally and feloniously killing the decedent may not inherit from the decedent.
It revokes the following:
· Disposition in a Will or Trust
· Grant of a power of appointment
· Nomination of the killer as Personal Rep. or Trustee
· Joint Tenants with Rights of Survivorship becomes a Tenants In Common so ½ passes to the decedent’s estate
A disclaimer is treated differently than predeceasing. In an intestate estate, disclaimer has a completely different effect in terms of distribution.
Problem 2
Kim died intestate. At the time of her death she owned the following:
· $30,000 certificate of deposit, titled to her and her son, Edward, as joint tenants with rights of survivorship.
· $30,000 certificate of deposit, titled to her and her daughter, Rose, as joint tenants with rights of survivorship.
· Bank account, titled to her, with a balance of $100,000.
· Personal property worth $5,000.
· Assume that Kim's estate had no priority expenses. In 1993, a court determined that Edward killed Kim feloniously and intentionally. Kim's survivors are Edward; Edward's two children, Andrea and Christine; Rose; Rose's two daughters Sue and Leah; and Kim's ex-husband Norm.
· How will Kim's estate be distributed? Explain.
Assignment of Expectancy Interest
Expectancy: a mere hope or possibility of receiving a benefit from the death of another.
If presumptive heir fails to outlive the source, the assignment is worth nothing. Furthermore, the presumptive heirs are not bound by the assignment and make take through the assignor by representation.
Again, the right to take by intestate is a mere expectancy. If the source changes his will or disinherits the assignor, the assignee is out of luck.
Son of Bill Gates Example: I will assign my expectancy to you if you give me the yacht today so that when my dad dies, you will get 30% of my gazillion dollars. Generally assignments are not enforceable against the estate so the yacht owner will have to take Bill Gates’ son to court. Bill Gates could write son out of will or son could predecease his dad.
Scott v. First Nat’l Bank of
PROCEDURAL POSTURE: Appellee administrator, by way of interpleader, brought a proceeding concerning the administration of appellant litigant's father's estate after the administrator had filed an inventory showing a personal estate of about $ 490,000. The
OVERVIEW: The litigant left his first wife and daughter to be with another woman. The litigant and the wife entered into a separation agreement whereby the wife was to have custody of the daughter. The litigant signed over the couple's house to the wife and she assumed the mortgage. In a separate instrument, the litigant assigned under seal to his daughter one-half of his expectancy in his father's estate for consideration of one dollar and other valuable consideration received from the wife on behalf of the daughter. The wife sued for divorce in 1948 and the decree did not mention the assignment. Since 1936, the litigant's father had been mentally incompetent. The litigant argued the assignment lacked the necessary consideration.
HOLDING: On review, the court held that where the wife assumed the burden of care and education for the daughter and assumed liability for the unpaid bills, loans, and mortgage, the wife's actions constituted adequate consideration for the assignment of the one-half expectancy from the litigant's father's estate. The court held the bargain was at arm's length and the litigant had an opportunity to seek independent advice.
OUTCOME: The court affirmed the judgment finding the assignment to the daughter valid.
HORVATH: At the time of the contract, Grace gave the burden of care and assumed liability in consideration of the contract. Wilmer gave basically nothing. The court found what it wanted to find. Generally speaking assignments are not enforceable; however, there are circumstances where the court will find consideration and make the contract enforceable.
Family Protection
EPIC 3805(1): If the applicable estate property is insufficient to pay all claims and allowances in full, the personal representative shall make payment in the following order of priority [out of the gross estate]:
· Costs and expenses of administration
· Reasonable funeral and burial expenses
·
· Family allowance
· Exempt property
Protections apply to testate and intestate estates. Note that the homestead allowance, family allowance, and exempt property have priority over most creditors of the decedent.
Policy: to make sure creditors are not paid first and to allow the family to take from the gross estate as opposed to taking from the distributable estate. Several statutes provide protection for a surviving spouse. EPIC sections 2402 and 2403 provide for two allowances, the Homestead Allowance and the Reasonable Family Allowance. Section 2404 allows the family to claim $10,000 worth of exempt property. These are available whether the decedent died intestate or testate, and as we learned in week 1, they are paid as priorities before the estate is distributed
Sec. 2402
· EPIC 2402. A decedent's surviving spouse is entitled to a homestead allowance of $15,000.00, adjusted for inflation.
· If there is no surviving spouse, each minor child and each dependent child of the decedent is entitled to a homestead allowance equal to $15,000.00, adjusted for inflation, divided by the number of the decedent's minor and dependent children.
· The homestead allowance is exempt from and has priority over all claims against the estate, except administration costs and reasonable funeral and burial expenses.
· A homestead allowance is in addition to any share passing to the surviving spouse or minor or dependent child by the will of the decedent, unless otherwise provided, by intestate succession, or by elective share.
Family Allowance – $18,000
Sec. 2403 – Available to the surviving spouse and surviving minor and independent children for living expenses.
(1) For their maintenance during the period of administration, a reasonable family allowance ($18,000) is payable to the decedent's surviving spouse and minor children whom the decedent was obligated to support, and children of the decedent or another who were in fact being supported by the decedent, which allowance shall not continue for longer than 1 year if the estate is inadequate to discharge allowed claims. The family allowance may be paid in a lump sum or in periodic installments. The family allowance is payable to the surviving spouse, if living, for the use of the surviving spouse and minor and dependent children; otherwise to the children or persons having their care and custody. If a minor child or dependent child is not living with the surviving spouse, the allowance may be paid partially to the child or to a fiduciary or other person having the child's care and custody, and partially to the spouse, as their needs may appear.
(2) The family allowance is exempt from and has priority over all claims except administration costs and expenses, reasonable funeral and burial expenses, and the homestead allowance. The family allowance is not chargeable against a benefit or share passing to the surviving spouse or children by the will of the decedent, unless otherwise provided, by intestate succession, or by way of elective share. The death of an individual entitled to family allowance terminates the right to allowances not yet paid.
Under EPIC 2405, personal representative may determine up to maximum of $18,000/year (adjusted for inflation) on his or her own authority.
Exempt Property – $10,000
Sec. 2404 – Available to surviving spouse and children (not just minor children but adult children as well – different from above) for personal effects such as family heirlooms.
(1) The decedent's surviving spouse is also entitled to household furniture, automobiles, furnishings, appliances, and personal effects from the estate up to a value not to exceed $10,000.00 more than the amount of any security interests to which the property is subject. If there is no surviving spouse, the decedent's children are entitled jointly to the same value.
(2) If encumbered assets are selected and the value in excess of security interests, plus that of other exempt property, is less than $10,000.00, or if there is not $10,000.00 worth of exempt property in the estate, the spouse or children are entitled to other assets of the estate, if any, to the extent necessary to make up the $10,000.00 value. Rights to exempt property and assets needed to make up a deficiency of exempt property have priority over all claims against the estate, except that the right to assets to make up a deficiency of exempt property abates as necessary to permit payment of all of the following in the following order:
a) Administration costs and expenses.
b) Reasonable funeral and burial expenses.
c) Homestead allowance.
d) Family allowance.
(3) The rights under this section are in addition to a benefit or share passing to the surviving spouse or children by the decedent's will, unless otherwise provided, by intestate succession, or by elective share. The $10,000.00 amount expressed in this section shall be adjusted [for inflation].
Exam: The Exemptions/Allowances total $15,000, $18,000, and $10,000 – $43,000. If I say on an exam “distributable estate” do NOT take these out of the distributable estate, they come from the gross estate. These amounts do not effect what the surviving spouse is allowed to take under a distributable estate ($150,000 + ½) – you get this in addition to these allowances.
Elective Share/Forced Share of Surviving Spouse
Definition: An opportunity for a surviving spouse to take something from a testate estate that he or she wouldn’t normally get.
· A share of an estate (also called a forced share) set aside by law for a surviving spouse, regardless of the provisions of the decedent spouse’s will.
· It is an elective share, because the surviving spouse is generally required to choose between her statutory share and any favorable provision in the will.
· Not applicable in community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI)
· Taken from the distributable estate
Problem
We know that the intestate statutes dictate what a surviving spouse can take. However, EPIC 2202 (1) provides the WIDOW (that's a gender-specific term meaning a FEMALE surviving spouse) with a right to elect something instead of her intestate share. This section of EPIC only applies in intestate estates.
1. What choice does the widow have under 2202(1)(a)?
2. What choice does the widow have under 2202(1)(b)? What is dower?
When would the widow elect dower?
What choice does a surviving widower have if his wife died intestate?
Dower: A life estate in 1/3 of the husband’s real property – NOT a 1/3 life estate.
Exam: If the answer is dower, say “undetermined amount in dower” because we cannot calculate it. Dower works well if your husband was Donald Trump with his many properties.
Sec. 2202
(1) The surviving widow of a decedent who was domiciled in this state and who dies intestate may file with the court an election in writing that she elects to take 1 of the following:
1. Her intestate share under Section 2102; or
2. Her dower right. . . . [NOTE THAT EXCERPTS FROM
MCL 558.1. The widow of every deceased person, shall be entitled to dower, or the use during her natural life, of 1/3 part of all the lands whereof her husband was seized of an estate of inheritance, at any time during the marriage, unless she is lawfully barred thereof.
This gives a surviving widow a life estate in 1/3 of all the real property of which her deceased husband was seized (essentially that he owned with a right of possession) and which could pass by inheritance to the couple’s children.
MCL 558.12. When a widow is entitled to dower in the lands of which her husband died seized, she may continue to occupy the same with the children or other heirs of the deceased, or may receive 1/3 part of the rents, issues and profits thereof, so long as the heirs or others interested do not object, without having the dower assigned.
In
If the wife predeceases her husband, her dower interest is extinguished.
Surviving widower only has the choice of taking his intestate share. The state has a legitimate stake in protecting women
Sec. 2202(2) – Testate
Options under a testate estate:
1. Abide by the terms of the will;
2. Take the elected or forced share (see calculation)
3. If a woman, can take dower.
Elected Share Calculation
That the spouse will take ½ of the sum or share that would have passed to the spouse had the testator died intestate, reduced by ½ of the value of all property derived by the spouse from the decedent by any means other than testate or intestate succession upon the decedent’s death.
How much of the distributable estate can the surviving spouse she take?
Step 1: Determine how much would have taken had decedent died intestate (use $150,000 + ½ etc.)
Step 2: Subtract out the money received in non-probate transfers (joint owner on property, etc.)
Problem II (cont.)
B. EPIC 2202(2) provides ANYONE who is a surviving spouse of a decedent who dies TESTATE domiciled in
1. What choice does a surviving spouse have under 2202(2)(a)?
2. What choice does a surviving spouse have under 2202(2)(b)? Sometimes, we call this the “forced share,” because the statute forces the estate to pay something to the spouse.
· What is the formula used to determine what the surviving spouse will get under this election?
· NOTE: The formula which a surviving spouse can elect is applied to the total distributable assets.
Answer:
EPIC 2202(2) The surviving spouse of a decedent who was domiciled in this state and who dies testate may file with the court an election in writing that the spouse elects 1 of the following:
(a) That the spouse will abide by the terms of the will.
(b) That the spouse will take 1/2 of the sum or share that would have passed to the spouse had the testator died intestate, reduced by 1/2 of the value of all property derived by the spouse from the decedent by any means other than testate or intestate succession upon the decedent's death.
Derived from spouse includes large gifts made within 2 years of death, joint tenancy, life insurance. EPIC 2202(7).
(c) If a widow, that she will take her dower right under sections 1 to 29 of 1846 RS 66, MCL 558.1 to 558.29.
Elective Share
½ of what he would have received had she died intestate, reduced by ½ of what he did receive non-probate.
½ of $500,000 ($250,000) reduced by ½ of $200,000 ($100,000)
250,000
- 100,000
150,000
Charles can take $150,000. The other $350,000 goes to wherever the will says it goes.
*Under this election, he would be better off not taking his elective share and going with the terms of the will, i.e., the insurance policy?
Testate Succession Review
Options:
First: Abide by the terms of the will;
Second: Elective or Forced share – ½ of what spouse would have received had decedent
died intestate ($150 + ½ calculation), reduced by ½ of what the spouse did in fact
receive through non-probate transfers (joint property, life insurance, IRA, 401(k),
etc.). If that number is less than $0, then it’s just $0. If it’s more than $0, that is
the amount of money a surviving spouse can take from the distributable estate of
the decedent’s testate estate.
Third: Widows have a third option of dower.
Exam: If I give you a Distributable Estate, start with your calculations of either abiding by the terms of the will or elective share or if a widow then dower.
Protection of After-Married Spouses
Example: You executed a will while you are single, in which you named the
This is a mistake. The decedent forgot to amend his or her will to include the spouse and decedent married after the will was executed.
Omitted Spouse (All omitted spouses are surviving spouses but not a surviving spouses are omitted spouses)
EPIC 2301(1): Except as provided (STOP!) in subsection (2) (see below). if a testator's surviving spouse marries the testator after the testator executes his or her will, the surviving spouse is entitled to receive, as an intestate share, not less than the value of the share of the estate the surviving spouse would have received if the testator had died intestate as to that portion of the testator's estate, if any, that is not any of the following:
(a) Property devised to a child of the testator who was born before the testator married the surviving spouse and who is not the surviving spouse's child.
(b) Property devised to a descendant of a child described in subdivision (a)
(c) Property that passes under section 2603 [substitute gifts] or 2604 [failed residuary gift] to a child described in subdivision (a) or to a descendant of such a child.
(2) Subsection (1) does not apply if any of the following are true:
(a) From the will or other evidence, it appears that the will was made in contemplation of the testator's marriage to the surviving spouse.
(b) The will expresses the intention that it is to be effective notwithstanding a subsequent marriage.
(c) The testator provided for the spouse by transfer outside the will, and the intent that the transfer be a substitute for a testamentary provision is shown by the testator's statements OR is reasonably inferred from the amount of the transfer or other evidence.
(3) In satisfying the share provided by this section, devises made by the will to the testator's surviving spouse, if any, are applied first, and other devises, other than a devise to a child of the testator who was born before the testator married the surviving spouse and who is not the surviving spouse's child or a devise or substitute gift under section 2603 or 2604 to a descendant of such a child, abate as provided in section 3902.
Exam: Calculations in an essay = points. If you write in your essay, “she received this outside her will, therefore she is not an omitted spouse” and don’t go through the calculation, you lose points. Your job is to argue your client’s case – “if we can prove this, this is what is going to happen. If we can’t, this is what is going to happen.” Be prepared for both.
How do we calculate what omitted spouse receives?
Whether it comes from the elective share, omitted spouse share, or intestate share, it all comes from the distributable estate.
Subtract out property devised to the descendants of the testator who are not descendants of the surviving spouse (non-mutual descendants)
Distributable Estate
- Gifts to non-mutual descendants
= Adjusted Distributable Estate
Articulated Formula: The omitted spouse is entitled to her intestate share subject to the gifts to the descendants of a prior relationship or non-mutual descendants.
Options:
Surviving Spouse 1. Abide by terms of the will
2. Forced Share
3. Widower: Dower
Omitted 4. Omitted Spouse Share
Spouse
Omitted Spouse vs. Elective Share
· Elective share (§ 2202)
· Abide by will; or
· Take ½ of the amount that would have passed to surviving spouse had testator died intestate, reduced by ½ of the value of all property derived by spouse from the decedent outside probate; or
· If a widow, take dower.
· Omitted spouse (§ 2301)
· Take amount spouse would have received if the testator had died intestate as to that portion of the testator’s estate, if any, that is not any of the following:
· Devise to child of prior marriage/relationship
· Devise to descendant of such child
· Are these provisions mutually exclusive or may an omitted spouse choose to utilize § 2202 or § 2301 depending on which section would provide the greater amount?
· When would § 2202 provide a greater amount than § 2301?
Estate of Sprenkle-Hill
· Wendy married Henry in 2000. Prior to their marriage in 1999, Wendy executed a will whereby she left her entire estate to her two sons from a previous marriage. Wendy passed away in 2001. Wendy’s 1999 will was admitted to probate. The will was not made in contemplation of marriage and did not specifically state that it would be effective notwithstanding subsequent marriage. Wendy made no provisions (e.g., will substitutes, etc.) for Henry outside probate. Wendy’s distributable estate is $500,000.
· Is Henry an omitted spouse under § 2301? If so, what amount is entitled to under that section?
· May Henry elect to take his elective share under § 2202? If so, what is the amount of his elective share?
· §§ 2202 and 2301 are not mutually exclusive.
· Surviving spouse who satisfies the conditions of § 2301 may nonetheless take an elective share under § 2202 if that provision yields a larger amount. The amount to which the surviving spouse was entitled under § 2301 will then be considered part of the elective share.
· Conversely, if the share available to a surviving spouse under § 2301 is greater than the elective share under § 2202, the surviving spouse may receive the full amount to which he or she is entitled under § 2301 by electing to abide by the terms of the will pursuant to § 2202(2)(a).
Problem 3
· A. Daniel married Jenny in 1974. The valid will which he executed in 1972 left his entire estate to his mother, Rita. The will did not mention Jenny, nor did it contemplate Daniel’s future marriage. Daniel died in 1998. During his lifetime, he never transferred any property to Jenny. The 1972 will was the only will Daniel ever executed. Jenny and Rita survive him.
· 1. Is Jenny eligible for protection under 2301?
· 2. To what is an eligible surviving spouse entitled?
· 3. Is there any part of the estate which may not be used to compute the share of the eligible surviving spouse?
· 4. Are there any situations in which this protection may not be available to an eligible surviving spouse?
· 5. Is Jenny entitled to anything else from Daniel’s estate?
Ask:
1. Abide by terms of will;
2. Forced or elected share; or
3. If a woman, dower
To qualify for Omitted Spouse:
4. Was she married after the will was executed?
5. Was the will made in contemplation of the marriage?
6. Did the will say it was notwithstanding a subsequent marriage?
7. Was there a gift outside the will that was intended to be a substitute?
If yes, she is an admitted spouse and entitled to her option.
Exam: This analysis on an exam is worth 7-8 points and it took 1 minute to write. Spit it back at me.
Problem 3 (continued)
· Following the death of his wife, Cindy, Thomas executed a will in 1980 that left $50,000 to Randy, who is Cindy and Thomas' son. The will devised the rest of his property to Thomas' mother, Meg, and did not mention anything about the possibility of Thomas marrying. Thomas met and married Carol in 1991. He died in 1999, never having executed another will. He never made any transfers of property to Carol that he intended to be a substitute for a testamentary provision. Thomas' distributable assets totaled $300,000. If Thomas had died intestate, Carol’s share of the estate as surviving spouse would have been $200,000 ($100,000 + ½) Carol, Meg, and Randy survive Thomas.
· Is Carol eligible for the protection available under EPIC 2301?
· Assuming Carol is eligible, what is she entitled to?
If she abides by the will she will get $0. Dower is $0 because we cannot figure it out. It’s going to be a toss-up from Elective Share or Omitted Spouse’s Share.
Elective Share Omitted Spouse Share
½ of Intestate – ½ non-probate 300,000
- 50,000 (Randy)
½ of 200,000 – ½ x 0 250,000
-100,000
$100,000 – $0 150,000
/2
$100,000 $75,000 $175,000
Hypothetical
A. The deceased, David, dies in 2004, leaving a will he executed in 1994. At the time of his death, his gross estate consists of the following assets: a home valued at $300,000, bank accounts containing $100,000, and household goods and personal effects with a fair market valued at David’s death of $35,000. Assume all assets are owned in his name solely. David is survived by his wife of five years, Wilma; his adult child from his prior marriage, Chris; and his mother, Mary. David died with a valid will, which leaves the house to Chris and the remainder to Mary. Wilma is not mentioned in the will. Assume no transfers to Wilma have been made during David’s life, that no administrative expenses, burial expenses or taxes are due, and that family support will run $10,000.
1. Wilma is your client. Advise her as to her options.
2. In dollars, how much will Wilma take with each option?
Gross Estate = $435,000
Distributable Estate = $400,000
David
Wilma
Chris
Mary
Always start with the surviving spouse. Even though she’s not mentioned in the will, she can still take.
1. Abide by the will = $0
2. Dower = $0
3. Elective Share = ½ of $250,000 is $125,000
4. Omitted Spouse = -$300,000 (house to Chris), $100,000 left
Tell her to take the Elective Share – $125,000.
Hypothetical continued
B. Same facts as above, with the following changes. Assume the house is owned by Wilma and David as tenants in the entireties. In this case, David’s will leaves $100,000 to Chris, and the residuary to Mary.
1. How do your answers to part A change?
Tenants in the entireties (they own jointly) means that it’s a non-probate transfer so it’s not part of the probatable estate. We have to go back and adjust the gross estate.
Had she died intestate she would get the first $100,000 (there is no + ½)
Hypothetical continued
C. Same facts and questions as B above, but instead of $100,000, David leaves Chris $50,000.
D. Same facts and questions as A above, however, Wilma abandoned David in 2002. They have not divorced; however, they have not lived together since 2002.
She gets nothing. An abandoned spouse is not an omitted spouse.
Antenuptual Agreements
Rinvelt v. Rinvelt (1991)
PROCEDURAL POSTURE: Defendant husband appealed a judgment of divorce entered by the
OVERVIEW: Prior to getting married, a couple entered into an antenuptial agreement, which was drafted by the husband's attorney. Plaintiff wife filed for divorce, and the trial court entered a judgment of divorce, strictly enforcing the antenuptial agreement. The husband appealed, and the court affirmed. The court found that in cases involving the property rights of one spouse upon the death of the other, antenuptial agreements were enforceable. The court applied that rational and held that antenuptial agreements governing the division of property in the event of divorce were enforceable in
OUTCOME: The court affirmed the judgment of divorce, which enforced the antenuptial agreement that had been entered into by the husband and wife.
HORVATH: One of the issues was that antenuptial agreements may promote divorce because of the ease of which property will be divided. Secondly, one who enters into an antenuptial agreement waives certain property rights, and how can you waive property rights before you know what the property is? According to Rinvelt, in order to have a valid antenuptial agreement you must have full or fair disclosure.
Can you waive your rights as a surviving spouse? Yes, Sec. 2205
Rights may be waived, wholly or partially, before or after marriage, by a written contract, agreement, or waiver signed by the party waiving after fair disclosure.
Disclosure: You disclose by attaching a list of all assets, property, etc. If you don’t list everything it might get thrown out.
If you waive “all” rights, you are waiving everything – elective share, dower, gross estate, distributable estate, homestead allowance, etc.
It is also irrevocable.
Postnuptial agreements are not solely for the tabloids. They are also for people with established families and they are remarried. It is to prevent another party from thinking they are going to make a claim to property.
Problem 4
E. Problem: In 1997, Lana, age 65, and Felix, age 68, married. It was the second marriage for both, each having children from the prior marriage. In 1998, a year after they married, they decided to plan their estates. Each executed a document entitled "Post-Nuptial Agreement." Paragraph 14 of the agreement states, "By this document, I waive all rights in the estate of my spouse, [name]."
In 1999, Felix executed a will, intentionally omitting Lana from any portion of his estate. Felix died in January, 2000. As Lana was sorting through his papers, she discovered a package containing 1,000 shares of Apple Computer stock, issued in 1981. The shares are now worth over $750,000. Lana had never known that Felix owned this stock.
Lana seeks your advice about the effect of the Post-Nuptial agreement on her rights to anything from Felix's estate.
What is your advice?
If he knew about the stock and didn’t disclose it, it violates the fair disclosure element.
Lana’s argument: Check to see when the stock was purchased. Ask to see the agreement. Did he keep track of the stocks, i.e. trades or listing stocks/dividends on income tax returns?
Where were the stock certificates located? Underneath the mattress? How did Felix handle is finances?
If you can overcome the burden of proof, then Lana may have rights to the $750,000 because it was not listed in the postnuptial agreement.
If Lana has enough money to live on and wishes to preserve her relationship with her stepchildren, she may want to not fight for the money and let it pass to Felix’s children. Is it worth losing the relationships or was Felix hiding something? Explain the options. If you want to go into court and fight it, I’m your weapon.
Omitted Child
Sec. 2302
This is where a child is born or adopted after the will is executed or there is an illegitimate child. 2302 does not use the word descendant. Grandchildren come after the will all the time. This only applies to children and not stepchildren.
After-born (or adopted) children
EPIC 2302(1). Except as provided in subsection (2), if a testator fails to provide in his or her will for a child of the testator born or adopted after the execution of the will, the omitted after-born or after-adopted child receives a share in the estate as provided in 1 of the following:
(a) If the testator had no child living when he or she executed the will, an omitted after-born or after-adopted child receives a share in the estate equal in value to that which the child would have received had the testator died intestate, unless the will devised all or substantially all of the estate to the other parent of the omitted child and that other parent survives the testator and is entitled to take under the will.
Elements:
1. Must be born after the will is executed;
2. Omission cannot be intentional
3. Cannot be provided for outside the will with a substitute devise
If you meet all three elements you are qualified as an omitted child.
How much do you get?
If there were no other children alive at the time the testator executed the will, how much is that child entitled to? The child is entitled to his or her intestate share unless the testator left all or substantially all of the estate to the omitted child’s surviving parent. Reasoning: eventually you will inherit from the other parent so we are not going to give it to you now.
Substantially All: no one knows, it doesn’t say. Only if the court finds that it is substantially all, the child will not qualify.
If there are children alive at the time the will was executed and they receive something in the will, the omitted child is entitled to an equal share to the total devises to children.
Example:
How will an omitted child’s estate be distributed?
Abate Ratably – you lose at a certain rate (see example below).
$400,000 total devised to the children.
D
A B C [D]
$100,000 $200,000 $100,000
($25,000) ($50,000) ($25,000) $100,000
A: To figure out A’s share take A’s $100,000 and divide it by the total, in this case $400,000: ¼ or 25% or $25,000. He must contribute $25,000 to D the omitted child.
B: $200,000 is 50% of total or $50,000 he must contribute to D
C: $100,000 is 25% of total or $25,000 he must contribute to D
D: D gets $100,000.
This reflects the intent of the testator and preserves to the maximum extent possible the ratio of the other children.
If there is more than one omitted child divide the total number of children by the amount. Example: Divide A’s share $100,000 by 5, B’s share $200,000 by 5, etc. Keep the ratios the same.
Sec. 2302 will not apply if:
The omission appears intentional; or
Testator provided for omitted child outside the will by a substitute provision shown by testator’s statements or can be reasonably inferred from the amount of transfer or other evidence.
Testate Estate
When you write a will, your client is the testator. When your client dies, the estate is your client. Your job is to advise the personal representative so as to carry out the wishes of the testator.
Professional Liability Issues
How can a third party, who is not your client, sue you?
Ginther v. Zimmerman (1992)
OUTCOME: The court affirmed order which granted summary disposition to defendants (the attorneys) in a lawsuit which contended that defendants were guilty of malpractice.
HORVATH: To form a life estate you transfer the property to someone else while you are still living. When you die it becomes a probate asset. The plaintiffs are claiming that they were not in the will because the intent of the testator was frustrated. There was no mistake in the will – it was exactly how the testator wanted it to be. The testator believed that the house was already given to them through a life estate but it was actually still in decedent’s name. The mistake was in the deed. The court said that in this context you can’t sue someone over a deed. The attorneys should have admitted their mistake.
Pour Over Will/Trust “Funding”
A pour-over will is a safety net.
In order to avoid probate we create an artificial estate or trust. We create a clone of the testator and they become the trustee of their own estate. We take their assets in their name alone and we transfer them into their name as trustee. They go inside the “box” for the benefit of the beneficiaries.
Example: Wills are cars. A pour over will is a Cadillac. It is a car but it has different bells and whistles. It still has to meet all the requirements of a properly executed will but the difference is the only devisee is the trust or in particular, the trustee. All property is then distributed according to the plan in the trust. It is also called a revocable living trust.
Bullis v. Downes (2000) P 38
PROCEDURAL POSTURE: Plaintiff appealed from an order in the Ionia Circuit Court (
OVERVIEW: Defendant attorney provided estate planning services to decedent. Plaintiff and her two brothers were the adult children of decedent. Defendant drafted a will and a revocable trust pursuant to decedent's instructions. However, because decedent was unhappy with the appearance of her signatures on those documents, defendant prepared another will and trust agreement. On the same day, defendant also had decedent execute two deeds, transferring to the trust decedent's home, and her cottage. Plaintiff sued defendant claiming that as a result of defendant's negligent handling of decedent's will and trust, she lost property that she expected under the instruments. Defendant brought a motion for summary disposition under Mich. R. Civ. P. 2.116(C)(8). Defendant's motion was granted and plaintiff appealed. On appeal, the court reversed, holding that the trial court erred in granting defendant's motion, and that plaintiff had pleaded a legally sufficient claim of legal malpractice.
OUTCOME: Because the trial court erred in granting defendant's motion, and that plaintiff had pleaded a legally sufficient claim of legal malpractice, the court reversed the decision to grant defendant's motion for summary disposition.
HORVATH: The will discussed the pour-over provision that everything goes into the trust. The error once again happened in the deed (titling), there was nothing wrong with the will or trust. The court said they get to look at the whole thing in the entire estate plan. If there is an error in the estate plan, then the third parties can sue for malpractice. In Ginther, the court said there was nothing wrong with the intent in the will, the deed was screwed up.
Practice Note: If you are writing a trust in a pour-over will, do not give anything away in your will. You cannot have two plans of distribution; otherwise, you are going to run into a Bullis problem where the attorneys didn’t understand the implications of changing title to the asset. The will is going one way and the trust is going the other way. If you create a pour-over will and you give away anything other than the pour over provision, you are setting yourself up for malpractice.
Intent and Required Formalities for a Valid Will
In order for a valid will to be effective, it must meet certain requirements.
A codicil is an amended will. It is a term of art and must meet will all requirements
Mental Requirements
· Testamentary Intent: You intend the writing to be your will; otherwise, it’s just a letter.
· Formalities
Physical Requirements
Signature
What constitutes a “signature?”
Signature: A signature is a physical manifestation of your intent. It therefore need not say anything.
· Can someone sign for the testator as a “proxy?”
· Where must the signature be located?
Formal Wills
· Witnesses. How many?
· Can a witness be “interested” in the will?
Holographic Wills
Signed, dated, and the material provisions are in the testator’s handwriting.
Testamentary Intent – Two Concepts:
1. The written document is intended by the signer to be his or her will; and
2. The plan of distribution contained in the document is what the signer intended to have happen to his estate assets.
You must have that intent and have a plan in order to write a valid will; otherwise it’s just a letter. The intent of what the document is and not what it says. A will is not a legal document until you are dead.
Exam: it is improper to say intend to get a gift, they don’t necessarily intend.
Types of Wills Allowed in
Formal will
–May be printed or typewritten
–Two witnesses
–Signature
–Variations of formal will
· Self-proved will – EPIC 2504 (witnesses swear that they signed a will)
· Statutory will – EPIC 2519 (fill in the blank will)
· Holographic will (If you don’t have two witnesses you can date it and sign it and it’s still a valid will)
· Oral wills are not permitted in
What is a joint will? A will signed by two people. You may see this in an old will but there is no reason to do one today.
What is a living will? It is not a will at all, it is a medical directive.
General Statutory Requirements for Wills
EPIC 2501
–At least 18 years old
–Sound mind
Requirements for Formal Will (Memorize)
700.2502 Execution; witnessed wills; holographic wills.
(1) Except as provided in subsection (2) [holographic wills] and in sections 2503 [substantial compliance], 2506 [executed in compliance with local law where executed], and 2513 [disposition by list], a will is valid only if it is all of the following:
(a) In writing.
(b) Signed by the testator or in the testator's name by some other individual in the testator's conscious presence and by the testator's direction.
(c) Signed by at least 2 individuals, each of whom signed within a reasonable time after he or she witnessed either the signing of the will as described in subdivision (b) or the testator's acknowledgment of that signature or acknowledgment of the will.
It is not required that the will be dated; however, put a date on it.
Conditional Will
The will will take affect only if the event or the condition occurs. In the absence of the condition occurring, you die intestate.
In Re Bem
1. Signed at the “end” – not necessarily the bottom
2. Codicil and republication – Bem was not a technical writer
3. Conditional Will – he didn’t die in
Rules of Construction
Statutes are the default position. If statutes are silent on an issue, the court will use a rule of construction. Here, the rule of construction is to avoid intestacy as much as possible.
Exam: Don’t skip of the statute part! It may give you direction; therefore, do not rely on the rule of construction. Say, “If the court finds that it to be a conditional will, she dies intestate, Randy gets the Lexus. If the court finds however that it not to be a conditional will, the will is still valid and Sue gets the Lexus.
Substantial Compliance/Harmless Error (Know!)
EPIC 2503 Writings intended as wills.
Although a document or writing added upon a document was not executed in compliance with section 2502, the document or writing is treated as if it had been executed in compliance with that section if the proponent of the document or writing establishes by clear and convincing evidence that the decedent (testator) intended the document or writing to constitute any of the following:
(a) The decedent's will.
(b) A partial or complete revocation of the decedent's will.
(c) An addition to or an alteration of the decedent's will.
(d) A partial or complete revival of the decedent's formerly revoked will or of a formerly revoked portion of the decedent's will.
This is done by the court – not for me to decide. Do not make a judgment call. Be prepared to go either way. If the court finds that the proponent met his or her burden and the court admits the will, the testator will die testate, etc. If the court finds that the proponent did not meet his or her burden, then the testator will die intestate, etc.
Estate of Skydancer
The date of the first two pages is
Compare to:
Estate of James M. Hall
This was a harmless error. It was obvious that Hall wanted the new will to be his last will even though all the formalities were not followed.
Witnesses
EPIC 2505
1. An individual generally competent to be a witness may act as a witness to a will
2. The signing of a will by an interested witness does not invalidate the will or any provision of it.
Horvath: The best witness is someone who is competent to write his or her own will. They are capable of forming testamentary intent.
Attestation Clause
Not required, but commonly used after a testator’s signature and above witnesses’ signatures.
On the 3rd day of October, 2005, John Doe published and declared to us, the undersigned, that the foregoing instrument was his last will, and he requested us to act as witnesses to it and to his signature thereon. He then signed the will in our presence, we being present at the same time. We now, at his request, in his presence, and in the presence of each other, hereunto subscribe our names as witnesses, and each of us declares that in his or her opinion this testator is of sound mind.
In other words: this is what I saw.
Self-proving Language P 26-27 EPIC
Different from an attestation clause in that a self proving will is taken under oath with penalties of perjury.
Estate of Mary E. Gerhardt
HORVATH: Was she acting as a witness OR a notary? Ultimately we need two (2) witnesses to a will. The court found that the notary did act as a witness because she performed all acts of a witness. The court looked at the intent of…there is no notary requirement in
EPIC 2502 – Conscious Presence
(c) Signed by at least 2 individuals, each of whom signed within are reasonable time (no real definition) after he or she witnessed either the signing of the will or the testator’s acknowledgment of that signature or acknowledgment of the will.
An unreasonable amount of time would be waiting months. Waiting weeks would be pushing it.
Purging Statutes
Some states have purging statutes which state that if the devisee in a will signs as a witness, the gift to the devisee is automatically revoked.
Notary as a Witness
Purpose is to verify signature belongs to the right person.
In re Estate of Joseph Bem (2001)
HORVATH: Break the issue into: was she acting as a witness OR a notary? Ultimately we need two witnesses. The court looked at the witness’s state of mind or intent when she signed her name. If her intent was to act as a witness, then she’s a witness. If she was just a notary, we are lacking the second witness that is required.
Problem 3
See outline P 24
Video Conference Example: You can do it but tell client that he or she is on notice that it might not work because we might not have conscious presence. As soon as the client comes back from vacation, he or she must come in to sign.
· A valid codicil must be signed and dated like a validly executed will
· Cannot superimpose signatures
· A codicil must be signed every time something is added
· If you don’t meet the requirements of a will, your next step is substantial compliance
Exam: 2 points on the exam: “Show by clear and convincing evidence that the testator intended for the document to be his will.”
Misdescription and Ambiguity
Hypo: Find checkbook, 401(k) statement, blanket, golf clubs, iPod in car given to you. One argument: you knew what was in your car when you gave it to me; therefore I should get those things – it comes down to intent. In Lawson, the court disagreed.
Lawson
HORVATH: Old statement: The contents therein. New statement: Personal effects and household goods, i.e. furniture, clothing, jewelry, appliances, rugs, art, etc. It does not include cash or stocks and bonds. The theory is it is normal to have stocks and bonds in the home. A sofa is inside the home, whereas stock certificates represent something outside of the home. The taking of the representation of something is not included in the contents in the home – tangible vs. intangible.
The majority: Lawson was so specific in the other areas of the will that it simply cannot be said that it was her intent to include stocks and bonds within the contents of the home.
The dissent: Lawson was an educated woman who surely knew the contents of her home including the stock certificates and bonds in the lockbox in her file cabinet in her home.
Same rationale, two different answers. If you use the phase: “contents of the home” it will be read as personal effects and household goods – tangible items. It will not include cash
Will Challenges
1. Formation
You can challenge a will if there is:
–Improper execution and/or witnessing; and/or
–No testamentary intent – the letter is just a letter
2. Testamentary Capacity (the big one)
–Lack mental state and other factors prerequisite to a person’s ability to execute a valid will, i.e., has testamentary capacity.
–Not suffering an insane delusion
3. Undue Influence
4. Mistake
5. Fraud
6. Revocation
Contested Cases, Burden of Proof
EPIC 3407
(1) All of the following apply in a contested case:
(a) A petitioner who seeks to establish intestacy has the burden of establishing prima facie proof of death, venue, and heirship.
(b) A proponent of a will has the burden of establishing prima facie proof of due execution in all cases and, if the proponent is also a petitioner, prima facie proof of death and venue.
(c) A contestant of a will has the burden of establishing lack of testamentary intent or capacity, undue influence, fraud, duress, mistake, or revocation.
(d) A party has the ultimate burden of persuasion as to a matter with respect to which the party has the initial burden of proof.
· A death certificate is prima facie proof of death
· A death certificate proof of venue because it says where you are domiciled at the date of death
· Heirship is proven by testimony under oath (Testimony of an Interested Person)
Example: Grandpa owns home and dies. Grandma lives in the house until she dies. The kids live in the house, the grandkids live in the house, etc. Hurricane Katrina comes along and destroys the house. The grandkids seek to recover from the insurance company and the insurance company says they are not the owners of the house. The grandkids then have to probate grandpa and grandma’s estate and get the property transferred into the kids’ names.
Proponent: In testate estate you have to file the petition, file death certificate, file testimony of intersected persons, and present the will itself.
Contestant: The burden is on contestant to show there is something wrong.
Standing
Any interested party has standing to contest a will. Devisees and heirs are usually the interested parties because they have a direct, pecuniary interest in how the estate goes.
A creditor of the decedent does not have standing to contest a will. They don’t care whether you died testate or intestate – they’re going to get paid. Creditors are paid at the gross estate.
Creditors of a devisee Rule: Secured creditors (judgment creditors) do have standing to contest validity of a will. Unsecured creditors (credit cards) do not have standing.
Testamentary Capacity
Gilmer (1947)
HORVATH: This is a big case to remember. 60 to 80 years old. She saved $10,000 ($119,000 today) She was “flimflammed” $1,500 ($20,000). The court said that she was incapable of handling her own money so they set up a conservatorship. In her will she devises all of her money to Rosa Belle her sister. Another sister saw the will and told John Brown who goes to Gilmer’s house to take care of her. Gilmer never changed the will. Brown challenged the will because she had been declared mentally incompetent to handle her own affairs.
“Mental weakness is not inconsistent with testamentary capacity. A lesser degree of mental capacity is requisite for the execution of a will than for the execution of contracts and the transaction of ordinary business. One may be capable of making a will yet incapable of disposing of his property by contract or of managing his estate.”
“The condition of being unable, by reason of weakness of mind, to manage and care for an estate, is not inconsistent with capacity to make a will.”
THE TEST OF TESTAMENTARY CAPACITY: Neither sickness nor impaired intellect is sufficient, standing alone, to render a will invalid. If at the time of its execution the testatrix was capable of recollecting her property, the natural objects of her bounty and their claims upon her (relationships), knew the business about which she was engaged (testamentary intent) and how she wished to dispose of her property, that is sufficient.”
This is a lesser degree of capacity than required to sign a valid contract.
Hargrove
HORVATH: The jury ruled that Hargrove suffered from an insane delusion regarding the paternity of his children. The appeals court is looking at whether or not there is any rational basis for Hargrove to believe that his kids are in fact his kids. If they are not, he is not suffering from an insane delusion. The dissent says that is not a question of law, rather a question of fact for the jury to decide. Horvath loves the dissent. The kids wanted intestate succession. The burden of proof is on the kids to show the insane delusion or the lack of testamentary capacity.
It is only when a delusion affects the way you write your will. If you write in your will that you are giving something to “Chuck” (the guy who lives in the fridge), then it may only destroy the gift you are leaving for him but not necessarily the whole will. The will may remain intact but the court may remove the product of the insane delusion.
WILL CHALLENGES
Undue Influence
What is undue influence? Elements:
1. Opportunity/Confidential relationship
2. Susceptibility
3. Disposition (motive)
4. Procurement (getting an attorney or scrivener to write out a will)
5. Unusual or suspicious circumstances.
You do not need to prove all five elements. What the court will do is take this factor and this factor and take a whiff. If it smells bad, the court will place a presumption of undue influence out there and the burden shifts to the proponent (influencer) to overcome the presumption of undue influence.
Swenson v. Plackett (1980)
PROCEDURAL POSTURE: In a will contest brought by respondents, daughters of the deceased, the Circuit Court, Multnomah County (Oregon), found that the decedent lacked testamentary capacity at the time of the execution of the will, that the will was the result of the undue influence of the appellant sole beneficiary under the will, and declared the will void. Appointment of the sole beneficiary as personal representative was revoked, and the sole beneficiary appealed.
OVERVIEW: Daughters of the decedent brought a will contest proceeding contending that the decedent lacked testamentary capacity and that the will was the product of undue influence exerted by the sole beneficiary under the will. The circuit court entered judgment in favor of the daughters, and the will was declared null and void. The order admitting the will to probate was set aside and the appointment of the beneficiary as personal representative of the estate was revoked. On appeal, the court affirmed finding inter alia, that the beneficiary had procured the services of an attorney who did not know the decedent, rather than those of attorneys to whom she was known. The beneficiary had urged the decedent to change her will and acted to assist her in changing her will within a week after the decedent learned from decedent that decedent was considering making her sole beneficiary. In addition, the decedent disowned her two daughters, the natural subject of her bounty, and gave her entire estate to an acquaintance of less than two months duration.
OUTCOME: Judgment of the circuit court in a will contest which found, inter alia, that the sole beneficiary under the will had exerted undue influence on the decedent, was affirmed.
HORVATH: Plackett took Swenson to an attorney who was not her attorney. The new will said everything to Plackett. Swenson had two daughters and the previous will devised everything to them. If Plackett could have proven independent advice, then some of the “smell” goes away; however, could not show any of that.
Karmey case
HORVATH: No need to show all five elements and the burden shifts.
The presumption of undue influence is brought to life when there is:
1. Existence of a confidential fiduciary relationship;
2. The fiduciary benefits from a transaction; and
3. The fiduciary had an opportunity to influence the grantor’s decision.
All three of these factors are present in a marriage; however, it does not automatically create undue influence – married couples are virtually exempt. You have to bring more evidence such as susceptibility in the individual on a case by case basis.
“Natural object of his bounty”
Mistake
See outline P 26
Mistake in the Inducement: A mistake in the inducement is a mistake of fact or law that causes you to write your will in a certain way – it’s not intended. A mistake is self-induced
Mistaken Omission: Accidentally leaving someone out.
Mistaken Inclusion: Accidentally leaving someone in.
There is only one instance where the court will correct mistake and that is under the omitted child statute.
Mistake in the Execution: There is a mistake in the will but it gets signed anyway.
In order to correct a mistake in the execution you have to argue substantial compliance or the intent of the testator.
Dalk – Substantial Compliance. See outline P 26
Pavlinko – Mistake in the Execution. See outline
HORVATH:
Summary on Mistake
· Generally, court cannot correct mistakes.
· Mistake in the inducement (not likely correctable)
· Mistake in the execution
· Substantial compliance statute could help.
· Mistakenly included provision (likely to strike out provision)
· Mistakenly omitted provision (not likely to include omission – no testamentary intent with respect to such provision).
· If mistake is a misdescription or ambiguity, extrinsic evidence may be admitted in certain situations.
Fraud
The difference between fraud and mistake is the intent
Fraud in the Inducement: Getting someone to write their will in a particular way
Fraud in the Execution: When someone lies about contents of the will. Lawyers are susceptible to this.
Fraud Definition (from Roblin)
Fraud which causes the testator to execute a will consists of:
1. Statements which are false,
2. Which are known to be false by the party who makes them,
3. Which are material,
4. Which are made with the intention of deceiving the testator,
5. Which deceive the testator, and
6. Which cause the testator to act in reliance upon such statements.
Unlike undue influence, you need to meet all elements
Roblin case
HORVATH: Testamentary Capacity: The son claimed that his father lacked testamentary capacity because he only referred to three items of property in his will even though he owned much more. The court said that you do not have to list all of your property to prove nature and extent of your property.
Undue Influence: There was opportunity and confidential relationship existed.
Susceptibility: He is in a rest home so it is arguable.
Procurement: Yes, she got the lawyer
Motive: Yes.
Fraud: What the daughter said technically was not true. She did not meet all 6 fraud elements – it wasn’t an intent to deceive, it was an exaggeration and lacked the intent to deceive.
Pope v. Garrett (1948)
PROCEDURAL POSTURE: A jury returned a verdict for plaintiff intended beneficiary. The Court of Civil Appeals for the First District,
OVERVIEW: The intended beneficiary contended that a constructive trust should be imposed on all of the decedent's property. The court found that (1) legal title to the heirs had passed by intestate succession, (2) some of the heirs had actively prevented their mother from executing a will that left all of her property to the intended beneficiary, (3) the heirs who were guilty of the wrongful acts became constructive trustees for the intended beneficiary, (4) but for the wrongful acts of some of the heirs, the innocent heirs would not have inherited interests in the property, therefore, (5) imposition of a constructive trust on the property that passed to all of the heirs was necessary in the interest of justice.
OUTCOME: The court reversed the judgment of the appellate court and affirmed that of the district court.
HORVATH: There is physical violence acted upon the testator; therefore, her intent is not being carried out because of duress. In this case it’s more of a physical fraud. A constructive trust was used to prevent the wrongdoers from profiting.
Problem See outline P 27
No contest – “In Terrorem” Clause
EPIC 2518 Penalty clause for contesting a will
· A provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.
· Testator leaves no provision for his estranged son. Testator’s will also contains a no contest clause. Do you think the no contest clause will scare son into foregoing a will contest?
· These are better left out of a will.
See outline P 28
Epic 3914
See outline P 28
Revoking a Will
Revocation: An act of rendering an otherwise valid will of no further effect. Revocation can only be accomplished by three ways:
1. Revocation by subsequent instrument
2. Revocation by physical act
3. Revocation by operation of law (change in circumstances)
· E.g., benefit to ex-spouse is revoked upon divorce. See EPIC 2807.
Revocation by Subsequent Instrument
EPIC 2507 Revocation by writing or by act.
(1) A will or a part of a will is revoked by either of the following acts:
(a) Execution of a subsequent will that revokes the previous will or a part of the will expressly or by inconsistency.
Presumptions upon Revocation
· How do we know if the subsequent will is merely a supplement to prior will (i.e., a codicil) or a complete revocation and replacement of the prior will?
· What presumptions does EPIC make in this regard?
· What type of clause do you think professionally drafted wills contain so there is no confusion about the issue of revocation?
If the second will makes a complete disposition of the testator’s estate, and it is inconsistent with the first will, and you do not have an express revocation, we will presume that you intended for the second will to completely replace the first will and therefore only read the second will. If there is not a complete disposition, we will treat it as a codicil and read them together.
6 to 7 points on an exam right there.
Revocation by Physical Act – Must have intent to revoke
EPIC 2507(1). A will or a part of a will is revoked by either of the following acts:
· (b) Performance of a revocatory act on the will, if the testator performed the act with the intent and for the purpose of revoking the will or a part of the will or if another individual performed the act in the testator's conscious presence and by the testator's direction.
· For purposes of this subdivision, “revocatory act on the will” includes burning, tearing, canceling, obliterating, or destroying the will or a part of the will. A burning, tearing, or canceling is a revocatory act on the will, whether or not the burn, tear, or cancellation touches any of the words on the will.
1. Must the testator completely destroy the will by burning, tearing, or other revocatory act?
2. What happens if the will is accidentally torn or burned?
3. May a testator partially revoke a will by physical act, such as crossing out provisions?
4. How do we know what the testator intended after he or she is dead?
5. What presumption do you think the law makes where the torn up pieces of the testator’s will is found after the testator’s death (and such torn up will was in the testator’s possession at death)?
Example: A testator found a photocopy of his will that he believed to be the original (the original will was actually in a safe deposit box). He wanted to revoke the will by tearing it up. Argue the intent.
Lost Wills
· Some states have “lost will” statutes, which sets out the conditions under which a will that cannot be found after testator’s death can nevertheless be admitted to probate.
· If a will was known to be in the testator’s possession at death but cannot be found, the presumption is that the testator destroyed it in order to revoke it.
Elements to prove will was not lost
1. Present evidence or witnesses as to what the will said;
2. Prove that the will was validly executed; and
3. Show the court why you cannot produce the will.
Goodwin case
HORVATH: A photocopy of a will cannot substitute an original will. A photocopy of a will does not satisfy the element of non-production. Here, the will was in the possession of the testator and readily accessible by him at his time of death; therefore, the presumption is that the testator destroyed his will with the intent to revoke it.
Markofske case
Cason v.
HORVATH: The court will admit a will as a lost will if there is proof of a will’s non-production.
