Estates

Augmenting estates

• Augment estate (bring in everything from list and add it all together) • Find marital portion of augmented estates (need separate chart, calibrates length of marriage) o Spouse gets 1/2 of marital portion • Take amount from 2(a) and deduct amounts spouse was given in will, as well as marital portion of their own wealth (percentage) • Add up other beneficiaries' property • Divide this amount pro rata to meet underage of spouse

Testamentary capacity

♣ 18 + ♣ mental acuity - Test (low standard), must know: • Nature and extent of property • Natural object of bounty (who takes) • Disposition being made by will • Relate TWO factors to THIRD o Who takes what under will - Tested at time of will execution

Codicils

♣ A codicil is a document that's added to an existing, signed will, to change it or add new provisions to it. Under this doctrine, a will is treated as re-executed as of the date of the codicil. The doctrine is not automatic, but only when updating the will carries out the testator's intent.

Breach of spousal obligations

♣ A few jurisdictions have enacted statutes that adultery and abandonment preclude a spouse from taking the estate of another. ♣ Not in IL or UPC

Disclaimers

♣ A party must actively disclaim a testamentary gift if he or she wishes not to accept it. The disclaiming party is treated as if they pre-deceased the decedent and property is distributed to the next eligible taker. ♣ Requirements: - Must be in writing and signed by disclaimant - After death ♣ Treated as though disclaimant pre-deceased, so they cannot dictate where it goes ♣ Why? Creditors usually cannot step in after property is disclaimed OR someone wants property to pass to their children

Pour-over wills

♣ A pour-over will is a testamentary device wherein the writer of a will creates a trust, and puts in the will that the property in his or her estate at the time of his or her death shall be distributed to the Trustee of the trust. - IL trust must be in existence at time will is made even if it wasn't funded or subject to amendments - UPC can give a valid will gift to a trust that exists by the time decedent dies

Constructive trust

♣ A remedy for void wills. Constructive trust is not a trust of any kind: mechanics are to have constructive trustee turn over property from one person to proper person

Self-settled trust

♣ A self-settled trust is a type of irrevocable trust in which the grantor is also the primary beneficiary. - Spendthrift clauses ineffective ♣ Primarily effects creditor's rights (settlor can have no discretion): - Self-settled and mandatory: creditors can only get at what is mandatory per trust - Self-settled and discretionary: creditors can get at anything the trustee COULD give beneficiary • Trustee basically gets everything if they want • Discretion kills self-settled trusts

Spendthrift trusts

♣ A spendthrift trust is a trust that is created for the benefit of a person that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit of the beneficiary. ♣ Spendthrift trusts restrict the beneficiary's ability to transfer voluntarily, so cannot transfer to creditors (but once property is paid to beneficiary, creditors can reach) ♣ TO be effective: (1) prohibit beneficiary from transferring interest (2) prohibit creditors from reaching interest) ♣ Limits - Court makes another exception for people who can reach spendthrift trust assets, allow tort creditors to reach spendthrift, ... if the non-trust assets of the defendant are insufficient and if the tort is gross negligence or intentional torts. (Sligh) - Special creditors: • Wife or child for support or alimony • Necessary services rendered • Services to furnish or preserve beneficiary's trust interest • US/state debts ♣ Spendthrift clauses are not effective in self-settled trusts

Spouse statutory forced share

♣ A spouse can renounce will to get a forced share of the estate without contesting the will through probate. A spouse will be entitled to 1/3 of the property if there are descendants of the decedent, or ½ if there are no descendants. However, if a spouse successfully contests a will in probate court, he or she might be entitled to more of the estate, even 100%. ♣ IL A spouse can force their share of only probate assets. However, non-probate assets can get pulled into court if the court determines the decedent used non-probate transfers intending to deprive the surviving spouse, if it was an illusory transfer, the transfer consisted of fraud on marital rights, or the decedent retained control until death. ♣ UPC Under the "augmented estate" theory, the probate estate is "augmented" with certain non-probate transfers. The court considers length of marriage under this method to calculate marital portion. - Based on: • Decedent retained a possession or enjoyment of the property or its income • Retained power to revoke the transfer • Held property jointly w/ a right of survivorship • Made gifts of more than $3k to a beneficiary during either of the two years before death - Then augment estate

Testamentary trusts

♣ A trust created in a will.

Creating trust by declaration of trust

♣ A trust may be created by a declaration that the owner of property is holding in trust for another person.

Creating trust by transfer into trust

♣ A trust may be created by a transfer of property by the owner to another as trustee for the settlor and/or a third party. If the transfer is made during the settlor's lifetime, the trust is an "inter vivos" or "living" trust. A living trust can be either revocable (changeable in whole or in part) or irrevocable. If the trust is created at the testator's death, it is a testamentary trust.

Discretionary trusts

♣ A trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by the settlor. ♣ Vs. mandatory: will stipulate exactly how much to give beneficiaries ♣ Effect on beneficiary's interest - Trustee can regulate what is necessary for beneficiary, can have general regulation provisions ♣ Effect on creditors - If the trustee exercises his discretion to pay, then the beneficiary's creditors have the same rights as the beneficiary. If the discretion to pay is not exercised, then the beneficiary's interest cannot be reached by creditors.

Modes of revocation

♣ A will may be revoked wholly or partially in three ways; by subsequent writings, by physical destruction, or by operation of law. - Later instrument: A testator can expressly revoke a will by a subsequent writing, a later will, or a codicil. You need an instrument that is executed with the same formalities as the will in the first place • Express • Implied- inconsistencies, etc. - Physical act: A will may be revoked by burning, canceling, tearing, obliterating, or destroying a material portion of the will with the intent to revoke it. Both the act and a simultaneous intent to revoke must be proven to yield a valid revocation. • IL Assumes revoked by physical act is cannot find will after death • Does not permit partial revocation by physical act - Operation of law: Testator himself does not start process of changing will, but something happens in law, like testator gets marries, divorced, or has children. • IL divorce can revoke will, but it will be a partial revocation (it revokes any provision in the will granting to the spouse and designations of the formal spouse of the estate as executory.) o Treats like ex- spouse pre-deceased • UPC the current UPC revokes both will provisions from the spouse, and all the other designations to the spouse (inter-vivos spouse trustee designations, beneficiary designations, that are will substitutes).

Facts of independent significance

♣ A will may provide for the designation of a beneficiary or the amount of a disposition by reference to some unattested act or even occurring before or after the execution of the will or before or after the testator's death, if the act or event has some significance apart from the will.

Abatement

♣ Abatement of debts is a common- law doctrine of wills that holds that when the equitable assets of a deceased person are not sufficient to satisfy fully all the creditors, their debts must abate proportionately, and they must accept a dividend. ♣ Payment of claims ♣ Allocation of expenses non -probate v. probate

Creditors' claims in probate

♣ Administrative expenses ♣ Last medical and funeral expenses ♣ Family allowance ♣ Tax claims ♣ Secured claims ♣ Judgments against decedents ♣ Other claims

Wills

♣ All wills required testamentary intent, meaning knowledge it is will, intent that property be distributed at death and revocability; proper legal capacity, meaning over eighteen and a sound mind; and, a lack of contravening factors, including undue influence, fraud, duress, and mistake. Additionally, (insert rule for each type of will).

Wealth transfer tax basics

♣ Although taxes should not be the main determination when advising estate planning clients, however, wishes for disposition should be done with least tax consequences and proposed to client. ♣ state tax consequences on gifts, inheritance ♣ federal tax consequences on estate, gift, GST ♣ rates from 18-40% ♣ Unified credit = $5.45 m

Adopted children

♣ An adopted child is treated as a biological child for purposes of inheritance from adoptive parents. Adoption usually curtails all inheritance rights between the natural parent and the child. But, there are exceptions. ♣ IL - In adult adoptions, an adopted child is considered a descendant of parents, but not their kin. - If adopted by grandparents, adoptive children can take as child or grandchild, whichever portion is bigger. - Adoptive parents and their kin can take from adopted child and natural parents CANNOT, unless natural parents gave property (can revert) - Can take from natural parents if: • In- family adoption: adopted by a descendant or spouse of a descendant of a great-grandparent • Dead parent adoption: parent dies and surviving parent remarries and that spouse adopts ♣ UPC - Cannot take from natural parents unless: • Adopted by genetic parent's spouse OR • Child is adopted by relative of genetic parent OR • Adopted after death of both parents - Adoptive parents are only ones who can take from child EVEN if one of the parents is the natural parent

Formal requirements attested will

♣ An attested will requires a writing that the testator signs with present testamentary intent in the joint presence of two witnesses, that both witnesses understand the significance of the testator's act, and that the will has no legal effect until after the testator's death. - Can be signed by another at direction - Initials or signature - When witnesses sign, testator is present

Laughing heirs

♣ An heir who is legally entitled to inherit the property of a person who has died, even though that heir is only distantly related to the deceased, and therefore has no personal connection or reason to feel bereaved over the death.

UPC intestate succession

♣ Ask is there a spouse? ♣ Are there parents? ♣ Are there descendants? - Are they also descendants of the surviving spouse? ♣ UPC is more favorable to a surviving spouse as well as to the state. A surviving spouse will take the entire estate if there are no parents, descendants or if the descendants are also the spouse's descendants. The UPC will not look for distant relatives, and the estate will escheat if the decedent has no grandparents or descendants of grandparents. - Exception = stepchildren (even of multiple spouses)

Assignments

♣ Assigning your portion of will to someone else while the decedent is still alive ♣ Cannot gratuitously assign expectancy to someone else, but if they are backed by consideration, they will be enforced

Half bloods

♣ At common law, relatives who shared only one common parent were not entitled to inherit from or through on another. The UPC and the majority of jurisdictions have abolished the distinction between whole and half -blooded relatives.

Insane delusions

♣ Belief with no basis in fact ♣ Effect the disposition ♣ *use causation analysis b/c delusion must effect outcome of the will ♣ Honigman's will.

Ways to limit liability under duties

♣ Beneficiary consent ♣ Advice of counsel ♣ Exculpatory clause in instrument ♣ Court approval

Joint tenancy

♣ Both real and personal property that is held under a joint tenancy will pass outside of probate. The decedent's interest vanishes at death and the survivor has the whole property. - Presumption against joint tenancy, requires showing: • Proper language • Deed - 4 unities: • time: interest must be acquired by both tenants at the same time • title: interest must arise from the same instrument • interest: must have the same interest • possession: both tenants must have right to possess the whole property - Can use straw person to get 4 unitites - Gives other tenant lifetime rights (might not be good will substitute cannot revoke)

Issues in non-probate transfers

♣ Can give other person lifetime rights ♣ Can be used for a matter of convenience, but in reality they take everything

Step-children

♣ Can take under UPC as exception before escheating to state

Extrinsic evidence in interpretation

♣ Can use to: - Find facts of independent significance - Documents incorporated by reference - Provide context (background, habits, relationships) - Resolve ambiguities - Explain personal usage - Misdescriptions ♣ Cannot use to: - Unsettle plain meaning - Create ambiguity

IL Lawyer Ethic Rules

♣ Can't represent clients with adverse interests, unless: - Lawyer reasonably believe they can provide competent representation - Representation not prohibited by law - Representation does not involve a claim by one client against another in a proceeding - Each client gives informed consent ♣ Cannot represent someone giving them a gift unless related to person

Releases

♣ Cannot gratuitously release back to the donor, but if you are given consideration for that release, then it is enforceable.

Pretermitted heir statutes

♣ Child born after will was executed can try to qualify under their state's pretermitted heir statute, if you are successful you can get your intestacy share. ♣ Doesn't apply to: - Children born before will was made - Appears omission was intentional (explicit provision in will) - Testator provided for children outside will - Testator left substantially all will to pretermitted child's other parent

Public policy on wealth transfer tax

♣ Currently, large estates and gifts are taxed under the theory that such large transfers of wealth can afford to be taxed. However, there is a debate and push towards eliminating or reducing wealth transfer taxation.

Ademption by extinction

♣ Doctrine applies only to specific bequests, If the specific bequest is missing or destroyed, the beneficiary takes nothing. This rule does not apply when testator was incompetent, unless the will was executed prior to incompetency. ♣ UPC Fully rejects traditional approach to ademption. The UPC permits a beneficiary of a specific intent gift to inherit the property acquired by the testator as replacement property or the outstanding balance.

Domiciliary v. ancillary probate and admin

♣ Domiciliary: The county in which the decedent was domiciled at the time of his death has jurisdiction over the decedent's personal property and over any real property within that jurisdiction. ♣ Ancillary: Other jurisdiction where decedent's real estate, tangible personal property or intangible personal property is located.

Fiduciary duties

♣ Duties that apply to those people managing estates and assets, including executors, administrators, and trustees.

Remedies for disinherited children

♣ Easy to disinherit children ♣ Can only contest will ♣ Unless pretermitted heir

Escheat

♣ Escheat is a common-law doctrine that transfers the property of a person who dies without heirs to the state.

Anti-lapse statute

♣ Every state has an anti-lapse statute, but the terms vary. Generally, the change the rule about lapses in the residuary and provide substitute takers for lapsed gifts, they also change the rules on class gifts. They can always be overcome with testator's intent, whether it be by language or provisions providing for alternative substitution. ♣ IL only covers descendants - If one residuary taker is dead, give to others - If there is a class gift, use normal common law rules except if one of the class members is pre-deceased is one of the protected people, substitute their descendants

Types of trusts

♣ Express, spendthrift, discretionary, self-settled, charity

Protected exempt property

♣ Family is entitled to claim certain tangible personal property, even when the decedent has attempted to devise that property in his will. Some states have statutory list or a monetary limit. ♣ IL apparel, school books, bibles, and family pictures up to $4k ♣ UPC protects auto, furnishings, personal effects, furniture up to $15k

Gifts inter-vivos

♣ For a gift to be valid, it must include intent, delivery, and acceptance by donee. Intent is valid as long as the donor has mental capacity and no contravening factors exist. Delivery will be valid through symbolic, constructive or actual delivery; and acceptance is presumed if it benefits the donee. - A donor can retain a life estate in a gift and constructive delivery will be acceptable in such a situation as it would be nonsensical to deliver the gift to the donee and then immediately take it back for the remainder of the donor's lifetime

Fraud

♣ Fraud, like undue influence and duress, must have been present when the will was executed. The burden of proving fraud is on the contestant. - False statement - The person knew it was a false statement - Intent to rely on that statement - Reliance in fact ♣ Remedy: will void will unless it is VERY EASY to determine which provisions were unduly influenced

Situations of intestate succession

♣ Full: when individual dies without a will ♣ Partial: there is a will, but not everything is covered, if a will fails to dispose of all the property, analyze the property not included in the will using the rules of intestacy.

Mistakes

♣ Generally, mistakes do not give you relief, including mistakes of fact, mistakes of law, and mistakes in execution. There are a few exceptions, - Misdescriptions - Dependent relative revocation - Extraordinary circumstances (Snide) - Remedies: • Substantial compliance (mistakes of execution) • Dispensing power (mistakes of execution) • Judicial power to reform (mistake of fact/law) o Court may reform terms of instrument to conform to testator's intent if it is clear what the intent was and it was just effected by a mistake of fact or law.

Advancements

♣ Gifts to children during the donor's lifetime that may count as their share either under intestacy or their bequest under the donor's will. If child can show the transfer was an absolute gift, the doctrine will not apply. ♣ UPC requirements - Must be in contemporaneous writing by donor or donee OR - Writing must otherwise indicate the gift was to be considered when computing and distributing estate - Not limited to descendants, but must be an heir ♣ IL requirements - Must be a descendant - Must be in writing by donor or donee ♣ Use hotchpot method • Put advancement amount back into estate • Divide estate as normal • Subtract advancement amount from donee (value at time of gift) - If amount exceeds, child does not take but doesn't need to pay back.

Formal requirement holographic will

♣ Holographic (handwritten) wills are recognized by UPC and some states. A holographic will is one that is completely handwritten and signed by the testator. Jurisdictions differ on whether it needs to be in the testator's handwriting. Some jurisdictions require a strict compliance approach where any markings not in the handwriting will invalidate the will. Others, like the UPC, merely require the material provisions be handwritten. Some states require the will be dated. - Material portions in handwriting under UPC - No date requirement - Need signature - Intent can be established by extrinsic evidence

Health care directives

♣ IL - Durable power of attorney: appoint person to handle specific health responsibilities - Living will: a written statement detailing a person's desires regarding their medical treatment in circumstances in which they are no longer able to express informed consent, especially an advance directive - Statutorily appoint surrogate to make decision (spouse - children - parents).

Post-humous children

♣ IL If a child is born alive after death, often count as taker ♣ UPC can inherit from deceased parent if the parent authorized the conception in signed writing or there is clear and convincing evidence of consent and the child is living in utero within 36 months of, or born within 45 months of the parent's death.

Breach of parental obligations

♣ IL If parent has willfully neglected or failed to perform any duty of support owed to the minor or willfully deserted minor within one year of death, shall not receive any property, benefit, or interest from estate, UNLESS - Court says you can take (will usually reduce taking substantially and subtract child support) ♣ UPC If there is clear and convincing evidence that immediately before child's death, the parental rights of the parent could have been terminated based on nonsupport, abandonment, abuse, neglect, etc. cannot take.

Interested witnesses

♣ IL Takers under will are not credible - Deny them anything under will in most states and make them credible, in IL they can take intestacy portion is less than given amount in will ♣ UPC No bearing

UPC v. IPA intestate succession

♣ IL follows the per stirpes theory of intestate succession, while the UPC abides by a per capita at each generation method. ♣ UPC is more favorable to a surviving spouse as well as to the state. A surviving spouse will take the entire estate if there are no parents, descendants or if the descendants are also the spouse's descendants. The UPC will not look for distant relatives, and the estate will escheat if the decedent has no grandparents or descendants of grandparents. ♣ In IL, a spouse must share their estate with descendants and will take 50% of the estate, while the other 50% passes to the descendants per stirpes.

Non-marital children

♣ IL makes child a full-reciprocal heir only with mother, unless - a decedent acknowledged paternity during or after death or - was adjudged to be father of child that person is heir of his father and kin ♣ IL Non-married parents can take from child if: - Acknowledged decedent as child - Had relationship with child - Supported child as own • Not in arrears of > 1 year child support ♣ UPC Marriage of parents is not relevant

Assisted reproduction

♣ IL must be in utero at decedent's death (not IVF) ♣ UPC must be in utero within 36 months of death or born within 45 months of parent's death AND clear consent authorizing conception

Terminating trust when purpose fulfilled

♣ If all purposes in trust are completed, whoever has standing may sue to terminate. Completion of purpose can stand on its own as a reason to terminate trust and you don't need ALL the beneficiaries.

Cy pres

♣ If charitable trust becomes impossible or illegal, there is a charitable purpose so must determine the general charitable purpose and suggest to court how to slightly modify dispositions in trust so it is not what original trust said but it is consistent with general purpose.

Exoneration

♣ If will-maker devises real property specifically devises or bequeathed but is encumbered by debt, the beneficiary is entitled to the property free of debt ♣ IL presumptions against exoneration (still subject to debt)

Tortious interference of expectancy

♣ If you can establish a tort, you open up all kinds of new remedies, i.e. damages

IL intestate succession

♣ In IL, a spouse must share their estate with descendants and will take 50% of the estate, while the other 50% passes to the descendants per stirpes. ♣ No spouse? All to descendants per stirpes ♣ No children? All to spouse ♣ No children or spouse = will got equal parts, everyone in Parentela 1 (parents [will get 2 shares if one deceased], brothers, sisters) - Then to Parentela 2 • Half to maternal/half to paternal per stirpes - Then to Parentela 3 • Half to maternal/half to paternal per stirpes - Next, nearest kin in equal degree (switched to gradual system) • Stops at nearest kin and if they are equal degree they share - Escheats to state

Trust termination

♣ In terminating a trust, you are still trying to carry out settlor's intent. So, so substitute the requirement that there be no material purpose and the trustor/settlor could not reasonably object to termination. You can terminate it by its own terms, by the will of the parties, by the agreement of all beneficiaries and settlor, by completion of purpose, and if intent is impossible or illegal to fulfill.

Income v. principal

♣ Income = need dividends and pay outs ♣ Principal = need safe investments ♣ Keep receipts because trustee needs to characterize

Streamlined administration

♣ Independent administration: person's will specify that the estate should be administered independently or when all beneficiaries give written consent to independent administration ♣ Summary administration: $100k or less ♣ Small estate affidavit: simple way for small estates (less than $100k) to get through administration, swear it is a small estate in affidavit and get people to turn over assets.

Foreign and international wills

♣ International wills and military wills ♣ If will qualifies under Uniform International Wills Act and states accept them (IL does and UPC states do) ♣ or military will (federal law says all states will recognize this will)

Ways to get around RAP

♣ Interpretive tricks ♣ Well-vetted savings clause ♣ Statutory interventions: some states done multi-reform effort - IL "tweaks worst parts of statute" • If the trust refers to a wife, assume she was alive when trust was made

Intestate succession

♣ Intestacy is the default statutory distribution scheme that applies when an individual dies without having effectively disposed of all his property through non-probate instruments or a valid will. While intestacy statutes vary from state to state, they generally favor the decedent's surviving spouse and descendants.

Dependent relative revocation

♣ It makes a revocation of a former will ineffective if the testator made the revocation through execution of a new will, and that newly executed will is determined invalid. - Example: Testator writes will under false assumption someone is dead, if the fact is incorrect, can argue revocation was no good.

Contract limitations

♣ Joint wills - signed by two testators and intended to serve as the will of each ♣ Mutual wills - two or more wills mutually binding, following first death survivor cannot change will unless agreed with deceased (notice) - Contractual if showing of consideration and do not violate public policy - Irrevocable and unamendable after death - Can revoke with notice ♣ Reciprocal will - must be read together, add to each other

Trends

♣ Judicial rules to statutes ♣ Non-probate revolution - More people are looking to dispose of their assets through non-probate transfers like trusts, joint tenancies, life insurance policies and other contractual methods.

Per stirpes

♣ Jurisdictions are split between a per stirpes, per capita, and per capita at each generation method of calculating share. IL follows the per stirpes method which provides that issue take in equal portions the share their deceased ancestor would have taken, if living. ♣ Parent dies w/ three kids (A, B, C) - Each get 1/3 - If B is dead, his kids will split his share 1/6, 1/6 (for two kids)

UPC per capita at each generation

♣ Jurisdictions are split between a per stirpes, per capita, and per capita at each generation method of calculating share. The UPC follows the per capita at each generation method. Under this method, property is divided into as many equal shares as there are members of the nearest generation of issue who survive the decedent and deceased members of that generation with issue who survive. The advantage of this method is that each live member of a given generation receives an equal portion of the estate. ♣ Parent dies w/ three kids (A, B. C) - A gets 1/3 because alive - Remaining 2/3 is compiled and split EVENLY among living grandchildren

Undue influence

♣ Mental or physical coercion, exerted by a third party on the testator with the intent to influence the testator, such that he loses control of his own judgment. ♣ Test : S (susceptibility) M (motive or predisposition) O (opportunity) C (causation) ♣ Presumptions: general of none, presumption will switch is prove there was a confidential relationship, then must prove the confidee benefited and there are suspicious circumstances ♣ Remedy: will void will unless it is VERY EASY to determine which provisions were unduly influenced

Mistakes in will terms

♣ Misdescriptions: different from ambiguities because it does not describe ANYTHING it Is just wrong ♣ Reformation: Judicial power to reform (mistake of fact/law) o Court may reform terms of instrument to conform to testator's intent if it is clear what the intent was and it was just effected by a mistake of fact or law.

Intestate succession in probate and admin

♣ Must determine testacy as one of the first steps in formal probate administration. If intestate, the court will appoint an administrator as personal representative.

Terminating trust because of illegality or impossibility

♣ Non-existent purpose or illegal purpose.

Formal requirements nuncupative will

♣ Nuncupative wills are generally valid only for the disposition of personal property in contemplation of immediate death and are invalid under UPC and most states. In jurisdictions where they are valid, they require at least two witnesses, and can devise only a limited amount of personal property, and may require the testator die within a prescribed period after making the oral will.

Pros and cons of non-probate

♣ Oftentimes less expensive in the long run ♣ More efficient, immediacy of transfer ♣ Keeps affairs private ♣ Sometimes allows creditor protection ♣ Can protect against spouse ♣ More flexibility, property management function BUT ♣ Might cost more upfront ♣ Requires very careful planning, hard to account for EVERY asset ♣ Might have more tax consequences

Gifts causa mortis

♣ Only good for personal property while donor is facing impending peril. Test is to determine whether their intention is to give it to you where they live or die, if they want it back after "peril." The intent of the donor, must be permanent. Gift requirements, like delivery and acceptance, are still required.

Latent and patent issues

♣ Patent: on the face of the will - "to my niece Fred" ♣ Latent: can use extrinsic evidence to - Establish ambiguity - Resolve ambiguity - Examples: • Blackacre to LU o Bring extrinsic evidence to show testator was alum of LUC law

Precatory language

♣ Precatory language in a will or trust usually includes such terms as the testator's "request," "hope," or "desire" that property be given to a certain person or be disposed of in a particular manner. Whether such language can be viewed as mandatory, thus creating an enforceable will or trust, or whether it merely expresses the testator's wish to have something done has been a difficult issue for the courts. If a testator gives specific duties or ways to enforce the "wish" it may be upheld as a trust.

Proving testamentary capacity

♣ Presumptions - IL presumption of lack of capacity if under guardianship ♣ Types of evidence: symptoms, condition, instances (within 2 years or before) ♣ Witnesses: lay or expert - doctors, attorneys, friends, neighbors, psychologists, etc. ♣ Jury trial in IL to determine capacity ♣ Burden of proof on will contestant to prove lack of capacity

History of estate law

♣ Probate courts derive historically from the ecclesiastical courts of England, now their jurisdiction is different and more broad, and our county courts have jurisdiction in matters of probate which are formerly exercised by courts of chancery and common law.

Void will

♣ Probate will keep out the will document, but that is all. Contestants cannot dictate where property goes, it will pass through intestacy.

Probate

♣ Probate: - Provides evidence of transfers of title - Protects creditor's by requiring payment of debts - Directs distribution of the decedent's property after creditors are paid

Gifts to minors

♣ Problems @ common law because under contract law, although minors can own things, they can void the contract until they reach majority. - Can put in trust if substantial enough or in a custodial UTMA account

Duty of loyalty

♣ Prohibition on self-dealing. If a trustee or other manager of an estate is on either side of a transaction, the presumption is created that they breached the duty of loyalty. No further inquiry need be made; it is assumed the transaction can be unwound and the violator will be liable for any damaged.

Duty of care and skill

♣ Prudent investor: must incest as a prudent man would make - Portfolio theory: judge on all the investments as a whole, not individually ♣ Diversification - Trustee must adequately diversify trust investments to spread the risk of loss

Real v. personal property

♣ Real property has more requirements than a gift of personal property. A writing must be delivered under the Statute of Frauds and include a description of the property, signature of the grantor, name of both parties, and words of conveyance. Further, it is ideal if the deed is recorded, but at least needs to be delivered. When the deed is recorded, there is a presumption of delivery and acceptance and you cannot lose out to a bona fide purchase. - No SOF? • Detrimental reliance • Estoppel - Third party agent, must be agent of donee to presume good delivery

Charitable trusts

♣ Requirements: - Charitable intent • charitable relief of poverty, advancement of knowledge or education, advancement of religion, promotion of health, government or municipal purposes, other purposes beneficial to community - Indefinite beneficiaries ♣ Duration - They can exist forever and CY PRES can come in if something goes wrong ♣ States attorney usually enforce unless professorship

Interpreting wills

♣ Seek testator's intent, begin with basic language and plain meaning rule (interpret as reasonably objective person would), there is a presumption against intestacy.

Consent of parties to terminate trusts

♣ Settlor acting alone can bring end, if revocable. ♣ Settlor and beneficiaries can agree to terminate, but there might be a problem if contingent beneficiary is not determined yet ♣ All beneficiaries agree to terminate if there is no material yet to be served - Spendthrift clauses are evidence there is a purpose to be served

Changes in property

♣ Specific: gift of identifiable piece of property (piano) ♣ General: not identifiable ($10,000), payable from any asset ♣ Demonstrative: features of general devise like cash or proceeds but tells you from which account it should come from (half proceeds from Google stock) ♣ Residuary: leftover (rest, residue, and remainder)

Sources of law

♣ States have broad authority to regulate the process of a decedent's disposition of assets. There are few aspects of estate law that falls under federal law, including federal estate and gift taxes, as well as military wills. ♣ Laws regulating the disposition of assets after death are derived from both common law and statutory provisions. ♣ Many states have adopted the Uniform Law Commission's uniform acts, including the UPC, UPIA, USRAP, and the UTC.

Homicide

♣ States vary. However, there will be a standard set out in a statute, usually, that the individual intentionally and in bad faith caused the death of another. And if found liable under this statute, usually either a criminal or civil judgment, that will result in a prohibition on taking under a decedent's will. ♣ In these situations, treat murderer as pre-deceased ♣ IL joint tenancy exception ♣ UPC tenancy in common

Failure of formalities in will

♣ Strict compliance: Under the strict compliance rule any formal breach, no matter how innocuous, results in invalidity, hence in a conclusive presumption that the will lacked testamentary intent IL ♣ Substantial compliance: Under this doctrine, a court may deem a will that was defectively executed to be valid if the defective execution fulfills the purposes of the statutory formalities. ♣ Dispensing power: A court may reform the terms of the will (even if it is unambiguous), to conform to the testator's intent if it is proven by clear and convincing evidence that the testator's intent and the terms of the will were affected by a mistake of fact or law. This includes mistakes involving both the expression of terms and inducement to make the will or any of its provisions

Pros and cons of probate

♣ Takes a long time, eats up valuable time ♣ Can be expensive ♣ Also, public knowledge, BUT ♣ Process does work to protect estates and rightful beneficiaries ♣ Formal process can be helpful

General requirements for amendment and revocation

♣ Testator has absolute power to amend or revoke will, as wills are ambulatory and changeable. Exception: joint or mutual wills and contractual wills. ♣ Capacity ♣ Intent ♣ No fraud, duress, lack of capacity

Common law dower

♣ The common -law estate of dower entitled a widow to a life estate in 1/3 of all land owned by her deceased husband at any time during the marriage.

Ademption by satisfaction

♣ The doctrine of ademption by satisfaction provides for the situation in which a testator decides to change the timing of a gift to permit the beneficiary to enjoy the benefits of the gift before the testator's death. - Applies to: • Specific, general, personal property, real property - UPC presumes no ademption by satisfaction, absent an express writing, and it limits the sources of evidence of the testator's intent to adeem.

Generation skipping tax

♣ The generation-skipping tax will be imposed only if the transfer avoids incurring a gift or estate tax at each generation level.

Parentelic systems

♣ The parentelic system is a system used by some states to determine who is an heir of a deceased person who has died intestate. Under this system, a decedent's estate will pass to the decedent's parents and their issue, if there are none, then to the decedent's grandparents and their issue, and so on.

Revival of will

♣ The revocation of a will or codicil that had revoked another will automatically revive the original will. Many states, including IL and UPC no longer support automatic revival of the original will, and instead require proof that the testator intended to revive the original.

Rule against perpetuities

♣ The rule against perpetuities forbids future interests that could potentially vest after the established time period. The rule is often stated as follows: "No interest is good unless it must vest, if at all, not later than twenty-one years after the death of some life in being at the creation of the interest." - Might be problem with future interest and/or multi-generational gift ♣ Policy: limit dead hand control & increase marketability ♣ A measuring or validating life = use someone for proof that rule hasn't been broken ♣ Is interest subject to rule attack? contingent future interests (no life in being at present time) ♣ Does rule strike down interest? ♣ What happens next?

Family allowance

♣ The surviving spouse has a right to a family allowance during probate, the amount of which varies by jurisdiction because it takes so long to finalize. ♣ IL 9 months ♣ UPC 1 year

Duty of impartiality

♣ The trustee has a duty to balance the often-conflicting interest of present and future beneficiaries by investing property so it produces a reasonable income while preserving the principal for the remaindermen.

Duty of segregation

♣ The trustee must separate his personal property from trust assets to ensure the funds are not commingling. - Exception: trust company can commingle funds if statutory provided and the trusts have similar objectives

Incorporation by reference

♣ The will can be carried out and interpreted by documents that were in existence when the will was executed, are referred to as in existence, and are sufficiently identified in the will.

Revocation of trust

♣ They are revocable or irrevocable. You can amend it, if you can revoke it. - IL irrevocable unless stated otherwise - UPC revocable unless states otherwise

Duress

♣ Threatening or coercive behavior by one person that causes another person to do something that she would not otherwise do. It is undue influence that becomes overly coercive. A transfer that was procured by duress is invalid.

Integration

♣ Through this doctrine, a will consists of all the pages that are present at the time of execution and that are intended to form part of the will, which can be shown either by physical connection of the pages or by the ongoing nature of the language of the will.

Community property protection

♣ Title is irrelevant because you just need to know WHEN it was acquired - Community: acquired after marriage or earnings after marriage - Individual: gifts/inheritance at any time, owned before marriage, property that follows (car - motorcycle)

Requirements of trust

♣ To create a trust, the grantor must have intended creation, which is likely evidenced by words of a trust, and the trust is valid if it has a trustee with active duties, an ascertainable beneficiary, and assets. All testamentary transfers, like trusts, require testamentary capacity. ♣ Need writing for real property (SOF)

Gift tax

♣ Total gifts (- exclusions) = taxable gifts (-subtract deductions) = net taxable gain (x tax rate) = tentative gift tax (-uniformed credits) = tax payable 4/15 using form 709

Estate tax

♣ Total gross estate (- deductions) = taxable estate (x tax rate) = tentative tax liability (apply credits) = tax payable by personal rep within 9 months

Duty of non-delegation

♣ Trustee can seek counsel from attorneys and investment firms, but needs to monitor them and cannot turn over entire administration of estate.

Legal v. equitable title in trusts

♣ Trustee is given legal title and beneficiaries receive equitable title.

Usage of trusts

♣ Trusts are used as a non-probate transfer to distribute assets to specified beneficiaries. They are the main way that attorneys and estate planners use to substitute for will because they provide for immediacy of transfer, privacy, creditor protection, spousal protection, and property management functions. Further, they can save money by keeping estate out of probate.

Payment of claims

♣ UPC - Funeral and burial expenses or administration - Surviving spouse or child award - Debts to US - Money to employees of decedent if not more than $800 for each claimant for services rendered within 4 months prior to death - Money and property received or held in trust by decedent - Debt to state, county, city - All other claims ♣ If estate is insufficient - claims paid pro rata - Usually personal first and then real ♣ Order to give to takers - Specific - Demonstrative - General - Residuary

Spousal taking

♣ UPC Must share with descendants and parents - $300k + 75% of remainder if no issue but a parent - $225k + 50% of remainder if there are shared descendants - $150k + 50% of remainder if there are different descendants ♣ IL Must share with descendants only, 50/50, or 100 % if no descendants

Survivorship requirements

♣ UPC an heir be proven by clear and convincing evidence to have survived the decedent by 120 hours to take under his will or by intestacy. ♣ IL need only survive one second

Simultaneous death

♣ UPC under the 120 -hour requirement, distribute each person's property as if they had survived the other person - Survivorship must be proven by the party whose claim depends on survivorship ♣ IL If there is no sufficient evidence of survivorship, distribute each person's property as if they survived the other person [aka did not have surviving spouse who took estate] (can present evidence that someone died first or second)

Gradual systems

♣ Under a gradual system, priority is given to relatives who are in the nearest degree of consanguinity. The degree of the relationship is calculated by counting the number of relatives between the living taker and the decedent using the closest common ancestor.

Lapse statute

♣ Under common law, if a beneficiary died before the testator or before a point in time by which she was required to survive the testator under the will, the gift failed and went to the residue unless the will provided for an alternate disposition - Pre-residuary gifts: gift lapses, property falls to residuary - Residuary gifts: gift lapses, property passes through intestacy - Class gifts: property passes to those who qualify (must be class gift)

Homestead laws

♣ Under homestead exemption statutes, a certain acreage or value of real property is exempt from creditor's claims, is inalienable during the life of the owners without consent, and passes upon death by statutes. The UPC recommends a lump sum payment. ♣ There is a wide range of protection, TX will protect the entire primary residence, whereas IL will only protect the homestead to a claim under $15k and UPC will only protect against claims under $22.5k.

Republication by codicil

♣ Under this doctrine, a will is treated as re-executed as of the date of the codicil. The doctrine is not automatic, but only when updating the will carries out the testator's intent.

Abuse of elderly

♣ Varies by state, but abuse of an elderly person or person with disability (including negligent caretakers) will prevent from taking under a will in IL.

Payable on death contracts

♣ When a decedent has a contract with a bank, an employer, or some other entity to distribute property upon their death to a named beneficiary, all the beneficiary need do is provide a death certificate to the custodian of the property. - Right of survivorship - Generally effective w/ contract alone - In some states, can admit extrinsic evidence to show decedent did not intend for survivor to get rights or that it was only a convenience. - Judge validity of contract on contract terms ♣ Examples: transfer on death deed, transfer on death securities regulation, UTMA

Probate and Administration

♣ When a person dies and probate is necessary, one of the first steps is the appointment of a personal representative to oversee the winding up of the decedent's affairs. A personal representative is either named in the will (an executor) or appointed by the court (an administrator). ♣ Steps - Determine testacy - Get personal representative • Application and selection • Oath and bonding - Collect assets - Creditors/claims - Distribute assets to takers

The testamentary trap

♣ Whenever there is a provision to pay someone at death it looks like a will and if someone wants to show this was not a good transaction, they will try to show it was testamentary and didn't meet requirements of laws of will. ♣ Get around it w/ court case/case law saying it is okay and valid or legislature has enacted statutes accepting POD contracts.

Public policy of inheritance and proper limits

♣ While there is a general desire to allow decedents to dispose of their property's as they wish and follow their intent, there are limits to such testation, including protecting the family, creditors, and public policy.

Common elements of will that states vary on

♣ Writing ♣ Signature ♣ Attestation ♣ Witnesses

Modes of amendment

♣ You must go through whatever requirements you had to do the first time - To make a change or amend dispositive provisions - Doesn't have to be the same though - you can go from a formal attested will to a holographic will ♣ Could have formal attested will and make amendment in form of holographic (if that form is accepted in the state)