Trusts & Estates Essentials Power Point Slides Class #3

Trusts & Estates EssentialsPower Point Slides Class #3 1-22-19 National Blonde BrownieDay

Vocabulary Slides: Set #1 • Decedent: Person who died (in this course, the person whose property ids being distributed). • Devise: Transfer of property at death through a will • Intestacy: Transfer at death of property not disposed of by a valid will. • Escheat: If no relative can be found that meets the legal definition of "heir“ (i.e., that is listed as a possioble recipient under the state’s intestacy statute), the property will pass to the state through the process called “escheat.” • .

Vocabulary Slides: Set #1 • Heirs: The person(s) who receive a decedent’s property under the relevant intestacy statute. • Because your likely heirs might die at any time, you cannot have actual heirs until the moment you die. • Until then, we refer to the likely recipients as”presumptive heirs” and call their interest “a mere expectancy.” • This “Expectancy” can fail if: • Decedent makes a will and does not include the heir • Decedent dies without a probate estate • Heir predeceases the decedent • Etc.

Vocabulary Slides: Set #1 • Consanguinity: Closeness/proximity of blood relatives (See chart on p.49 of textbook). • Issue: Lineal descendants (i.e., children, grandchildren, etc.). In this context, issue is a collective noun, so your two children and eight grandchildren together are your “issue” (not issues) • Collateral Heirs: A successor to property who is neither an ancestor nor directly descended from the deceased but comes from a parallel line of the deceased's family, such as a brother, sister, uncle, aunt, niece, nephew, or cousin.

UNIT ONE: BASELINES CHAPTER 1: OVERVIEW 1.2 & 1.3 Continued

Section 1.2: Testamentary Freedom1.22 Constitutional Law When States Restrict Testamentary Freedom, How Does U.S. Constitution Limit Those Restrictions? PRIMARY CASE: Hodel v. Irving (RECAP) • Difficult Takings Q (Not tested in this course) • Opinion not very clear on why different from Eisner & Day • I’m covering this and Problem 1.3 for reading and interpreting the actual and hypothetical statutes

Section 1.2: Testamentary Freedom1.22 Constitutional Law Statute at Issue in Primary Case(Hodel v. Irving): No undivided fractional interest in any tract of … restricted land within a tribe's reservation or otherwise subjected to a tribe's jurisdiction shall [pass] by intestacy or devise but shall escheat to that tribe if such interest • represents 2 per centum or less of the total acreage in such tract AND • has earned to its owner less than $100 in the preceding year before it is due to escheat.

1.2.2 Constitutional Law Last Names D-N: Problem 1.3 (W13) Statutory Differences: Possible Relevance? • Covers trusts in addition to wills/intestacy • Acreage covered: • Size: Less than 2%  Less than 1% • Yield : Less than $100 in Past Year  Less than $10 each of last 10 Years • Adds: However, this rule shall not apply if the heir or beneficiary of the decedent's fractional interest also owns a share of the same tract of land.

Section 1.3: Sources of Law, Probate Courts & Probate Administration • Mostly Self-Explanatory • Four Distinctions you Need to Know • Primary Jurisdiction (Domicile) v. Ancillary Jurisdiction (Real Property in Different Jurisdiction) • Informal v. Formal Probate • Probate Estate v. Net Probate Estate • Probate v. Non-Probate Property (More Details in Chapter 10) • Qs on Section & Distinctions?

UNIT ONE: BASELINES CHAPTER 2: INTESTACY Introduction (2.1-2.2)

Section 2.1: Introduction to Intestacy UPC § 2-101(a): 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 Code, except as modified by the decedent's will. [Means “negative” will] Fl. Stat. 732.101. Intestate estate. (1) Any part of the estate of a decedent not effectively disposed of by will passes to the decedent's heirs as prescribed in the following sections of this code. (2) The decedent's death is the event that vests the heirs' right to intestate property.

Section 2.1: Introduction to Intestacy • Covers situations where there is no will or where the will does not dispose of all of the decedent’s property (“partial intestacy”) • Every State has detailed statute governing Intestacy • Structure similar but wide variations on details • Statutes all provide sequence of IFs • Unsurprisingly, strong bias to immediate family • Most people would prefer • State interest in resources going to care for dependents

Section 2.1: Introduction to Intestacy • Most Americans die intestate. Evidence suggests this is mostly due to procrastination (often fueled, at least in part, by discomfort of considering own death) rather than because of knowing acceptance of intestacy distribution regime. • What are some of the disadvantages of dying intestate?

Section 2.1: Introduction to Intestacy • Disadvantages of dying intestate include: • Distribution may not match decedent’s individual preferences • Often property goe to minors, necessitating appointment of guardians chosen by court, not decedent • Often interests in land are fragmented, complicating management • Personal representative chosen by court, not decedent

Section 2.2: Who Gets & How Much? Generally on Disposition of Property • Takers are generally spouses and blood relatives • EXCEPT: Some states as last resort, to step-children or other relatives of deceased spouse • EXCEPT: A few states recognize certain spouse-equivalents • See Hawaii (Reciprocal Beneficiaries) • See Vermont (Parties to Civil Union) • Escheat: If no Qualified Taker Under Statute, Goes to State • We’ll look at spousal share first, then other takers

Section 2.2: Who Gets & How Much? (Spousal Share) Generally on Disposition of Property & Spouses • Spousal Share Seems Small in Some States BUT • Spouse often co-owner of key assets, so gets all of those • In Community Property States, everything earned during marriage is essentially co-owned and automatically goes to survivor • Often separate statutory provisions protecting spouse re household goods & car (especially if minor children • NOTE that UPC $150,000-300,000 start point for limited spousal inheritance will eat up many estates completely. • Loss of Spousal Status: Death, Annulment, Divorce (pending proceedings generally don’t terminate rights).

Section 2.2: Who Gets & How Much? (Spousal Share)UPC 2-102 v. Fl. Stat. 732.102 All of the decedent's surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent: UPC: Spouse = 100% FL: Spouse = 100%

Section 2.2: Who Gets & How Much? (Spousal Share)UPC 2-102 v. Fl. Stat. 732.102 • No descendant of the decedent survives the decedentAND • No parent of the decedent survives UPC: Spouse = 100% FL: Spouse = 100% • One or both parents of the decedent survive(s) UPC: Spouse = $300,000 plus 3/4 of any balance FL: Spouse = 100%

Section 2.2: Who Gets & How Much? (Spousal Share)UPC 2-102 v. Fl. Stat. 732.102 Cinderella Stories • If all of the decedent's surviving descendants are also descen-dantsof the surviving spouse & the surviving spouse has one or more surviving descendants who are not descendants of the decedent: UPC: Spouse = $225,000 plus 1/2 of any balance FL: Spouse = 50% • If one or more of the decedent's surviving descendants are not descendants of the surviving spouse: UPC: Spouse = $150,000 plus1/2 of any balance FL: Spouse = 50%

Section 2.2: Who Gets & How Much? (Spousal Share)Under Both UPC 2-102 v. Fl. Stat. 732.102: • D dies, survived by a spouse, S, and no children or parents. • D dies, survived by spouse, S, one parent, and one child from the relationship with S. • D dies, survived by spouse, S, both parents, and thirteen children from the relationship with S. • D dies, survived by a spouse, S, both parents, twenty children from the relationship with S, and twenty-five grandchildren from those twenty children. • In allof these scenarios, spouse gets entire intestate estate. (In 2, 3, and 4, all of D’s descendants are also S’s descendants).

Section 2.2: Problem 2.1 • P & W = male couple married in Canada before same-sex marriage was legal in US • No descendants but a beloved CAT • Relationship strained so living separately, tho P continues to support W financially • P’s only blood relative is estranged sister. A. What would happen to Petr's estate if he died without a will, survived by Wendell, his cat, and his sister? B. What, if any, relevance is the fact of Petr's separation from Wendell?

Section 2.2: Problem 2.1 • P & W = male couple married in Canada before same-sex marriage was legal in US • No descendants but a beloved CAT • Relationship strained so living separately, tho P continues to support W financially • P’s only blood relative is estranged sister. C. What would happen if Petr created a trust leaving his entire estate in trust for the benefit of his cat? D. What would happen to Petr's estate if he divorced Wendell and then died, survived by Wendell, his cat, and his sister?

Section 2.2: Who Gets & How Much? (Other Takers)UPC 2-103 v. Fl. Stat. 732.103 FL & UPC mostly the same except for form of representation (we’ll do next time): • Descendants. • Parents. • Descendants of Parents. • Split Equally between Paternal & Maternal Kin • Grandparents • Descendants of Grandparents (NOTE: Some states go further) • All to one side of family if none qualified on other side

Section 2.2: Who Gets & How Much? (Other Takers)UPC 2-103 v. Fl. Stat. 732.103 FL & UPC both do relatives of deceased spouses next. Differences between?

Section 2.2: Who Gets & How Much? (Other Takers)UPC 2-103 v. Fl. Stat. 732.103 FL & UPC both do relatives of deceased spouses next. • Which deceased spouse? • UPC: All (each spouse’s family gets an equal share) • FL: “Last” deceased spouse • Which relatives of deceased spouse? • UPC: Descendants only • FL: Anyone who could take under the Intestacy statute

UNIT ONE: BASELINES Return to CHAPTER 1: OVERVIEW 1.4

Section 1.4: Preliminary Topics on Death & Dying1.4.1 Determination of Death • A matter of state law. Usually statutes provide: • Physiological definition(s) of death • A mechanism for declaring that a missing person is legally dead • Sample New Jersey statutes follow; specific language won’t be tested.

Section 1.4: Preliminary Topics on Death & Dying1.4.1 Determination of Death • Physiological definition(s) of death: • An individual who has sustained irreversible cessation of all circulatory and respiratory functions, as determined in accordance with currently accepted medical standards, shall be declared dead. N.J. Stat. 26:6A-2 • NOTE that this definition won’t cover a person whose circulatory and respiratory functions continue because of machines, thus….

Section 1.4: Preliminary Topics on Death & Dying1.4.1 Determination of Death • Physiological definition(s) of death: • An individual who has sustained irreversible cessation of all circulatory and respiratory functions, as determined in accordance with currently accepted medical standards, shall be declared dead. N.J. Stat. 26:6A-2 • NOTE that this won’t cover a person whose circulatory and respiratory functions continue because of machines, thus…. • [A]n individual whose circulatory and respiratory functions can be maintained solely by artificial means, and who has sustained irreversible cessation of all functions of the entire brain, including the brain stem, shall be declared dead [by a physician]. N.J. Stat. 26:6A-3

Section 1.4: Preliminary Topics on Death & Dying1.4.1 Determination of Death • A mechanism for declaring that a missing person is legally dead • A resident or nonresident of this State who absents himself from the place of his last known residence for a continuous period of 5 years, during which he has not been heard from, and whose absence is not satisfactorily explained after diligent search or inquiry, is presumed to be dead. His death is presumed to have occurred at the end of the period unless there is sufficient evidence for determining that death occurred earlier. N.J. Stat. 3B:27-1(a) • Under a statute like this, Natalie Holloway (whose story is described in the text) would be considered dead as of five years from the date of disappearance.

Section 1.4: Preliminary Topics on Death & Dying1.4.2 Incapacity & Planning for Death • Important to be aware of importance of this kind of planning, but you don’t need to know in detail • Vocabulary you Need to Know • Conservatorship • Durable Power of Attoprney • Inter Vivos Trust [= becomes operative while settlor alive] • Qs on Section or Vocabulary?

Section 1.4: Preliminary Topics on Death & Dying 1.4.3 Digital Assets • Complex & changing area. Right to allow access is not clearly established. (RUFADAA is a Uniform Act, not an adopted statute) • RUFADAA §4 allows online users to designate a recipient for some or all digital assets (a) Can use an online tool (which overrides a contrary direction by the user in a will, trust,…or other record.) (b) Can use a will, trust…or other record (Casebook says includes e-mail; compare with will formalities) (c) Both (a) or (b) override a contrary provision buried in a terms-of-service agreement .

Section 1.4: Preliminary Topics on Death & Dying1.4.4 Disposition of Final Remains Old Common Law: “There can be no property in a dead body. A man cannot by will dispose of his dead body. If there be no property in a dead body it is impossible that by will or any other instrument the body can be disposed of.” Williams v. Williams, 20 Ch. Div. 659 (1882) (England) Modern Law: • Generally permits enforcement of the decedent’s preferences. • ARIZ. REV. STAT. ANN. § 32-1365.01: “A legally competent adult may prepare a written statement directing the cremation or other lawful disposition of the legally competent adult's own remains . . . .The written statement may but need not be part of the legally competent adult's will.”

1.4.4 Disposition of Final RemainsCohen v. Guardianship of Cohen • In 1992, Hilliard Cohen (decedent) executed a will requesting “a traditional Jewish burial in our family plot in Mount Hebron Cemetery, Flushing, Queens, N.Y.” • Margaret, Hilliard’s surviving spouse of 40 years, testified Hilliard later changed his mind and requested cremation or burial with her in Florida. (Margaret is not Jewish, so she cannot be buried in the Cohen family plot). • Hilliard’s siblings, Ivan and Cressie, object to the Florida burial and sue to enforce the will. • Margaret agreed not to cremate Hilliard’s remains, but insisted on interment in Florida.

1.4.4 Disposition of Final RemainsCohen v. Guardianship of Cohen • General rule for interpreting wills: extrinsic evidence contradicting terms of will is not admissible absent ambiguity in will. • Following this rule, Trial Court held: “traditional Jewish burial” is ambiguous; extrinsic evidence of intent admissible. • Appellate Court says ambiguity unnecessary here. • Testamentary burial instructions are rebuttable by extrinsic evidence of contrary or changed intent. • “a testamentary disposition is not conclusive of the decedent's intent if it can be shown by clear and convincing evidence that he intended another disposition for his body”

1.4.4 Disposition of Final RemainsCohen v. Guardianship of Cohen • Appellate Court says ambiguity unnecessary here. • Testamentary burial instructions are rebuttable by extrinsic evidence of contrary or changed intent. • “a testamentary disposition is not conclusive of the decedent's intent if it can be shown by clear and convincing evidence that he intended another disposition for his body” • Does it make sense to essentially have lower standard of proof to change will in this particular way? • Is allowing decedents control of their remains a sensible rule?

Trusts & Estates Essentials Power Point Slides Class #3