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Today’s class

Today’s class. Rights of descendants intentionally omitted from a will Protection of descendants unintentionally omitted from a will Further introduction to trusts. Rights of descendants intentionally omitted from a will.

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Today’s class

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  1. Today’s class • Rights of descendants intentionally omitted from a will • Protection of descendants unintentionally omitted from a will • Further introduction to trusts

  2. Rights of descendants intentionally omitted from a will • While spouses are protected when intentionally omitted from a will through the elective share, children are not (except in Louisiana) • That said, testators invite challenges to their estate plan when they omit children, and juries and judges tend to be sympathetic to the children (p. 520).

  3. Protection of descendants inadvertently omitted from the will • While testators are permitted to deny their children a bequest, the law also protects their children from being left out of the will unintentionally • Usually, the statutes apply to children born or adopted after execution of the will • Sometimes, though, they also apply to children alive when the will is executed • When is an omission considered intentional and when is it considered unintentional?

  4. Gray v. Gray Gray v. Gray947 So. 2d 1045 (Ala. 2006), p.528 Mary Rose John Monica Robert Jack 1981 1984 1989 2004 John executes a will devising his entire estate to his wife Mary. Jack is born. John and Mary divorce. As part of settlement, John creates a trust for Jack. John dies.

  5. What was the effect of John’s will after he died? • The divorce revoked the provision in the will in favor of Mary, so John’s estate would either pass through intestacy or go to a contingent beneficiary • If it passed through intestacy, what would happen? • The three children would share • Since Jack would have no reason to sue if the estate passed through intestacy, there must be a contingent beneficiary • It was John’s brother (footnote 28) • Jack takes only if he was unintentionally omitted from the will

  6. Was the omission of Jack unintentional under Alabama law? • No. Under provision (a) (2), Jack’s omission is considered intentional • What’s wrong with viewing Jack’s situation as an (a) (2) situation? • The provision contemplates a situation in which the other parent of the omitted child will provide for the child with the bequest from the decedent • In this case, the other parent will not receive a bequest because of the divorce—the statutory provision assumes that the other parent actually takes under the will • This point is made explicitly in the 1990 UPC, page 531, under (a)(1)

  7. Would Jack take under the 1990 UPC? • No. Under provision (a)(2), Jack’s omission is considered intentional because John had living children when he wrote his will. • What would have been a better way for the court to reach the result it reached and which was probably the correct result? • Use provision (a)(3) of the Alabama pretermitted child statute (note 1, page 532). John did provide for Jack with the trust. Why didn’t the court go this route? • Because it requires an assessment of intent and that becomes more complicated. Was the trust actually intended as a “transfer in lieu of a testamentary provision?”

  8. Note 3, p. 532 • Under the second example, C receives $5,000, two-thirds from A and two-thirds from B—(2(ii) and 2(iv), pages 531-532) • C gets an intestate share under the 1969 UPC unless the second or third provision is satisfied

  9. Introduction to Trusts • Inter vivos revocable trusts to avoid delays, costs and publicity of probate • Testamentary marital trusts to save on estate taxes and protect children from prior marriage • Trusts for disabled children • Trusts for minors • Discretionary trusts to reduce taxes on family wealth, shield beneficiaries from creditors, allow for accommodation to future circumstances

  10. Statistics and sources of law • $760 billion held in ~1.25 million private and charitable trust accounts (2006) • More than 2 billion tax returns reporting (2007): • $142.5 billion in gross income • $3.7 billion in fiduciary fees • $1.6 billion in attorneys fees • Restatements of Trusts • First (1935) • Second (1959) • Third (2003, 2007, in prog) • Leading Multivolume Treatises • Scott; Bogert • Uniform Laws • Uniform Trust Code (2000)

  11. WA ME MT ND VT MN OR NH MA ID WI NY SD RI WY MI CT PA NJ IA NE NV OH DE IN IL UT MD CO WV VA KS MO CA KY NC TN AZ OK AR SC NM GA AL MS TX LA FL AK HI Uniform Trust Code adoptions (2009)

  12. The settlor, trustee, and beneficiaries, p. 547 Settlor Trustee Trust Property Promise to manage property in best interests of Beneficiaries Right to sue Donative or Commercial Transfer Distributions Beneficiaries

  13. Third-party rights Creditors of the Trust Claims re: trust property Trustee as trustee Payments from trust property Claims re: personal property Creditors of the Individual individual Payments from personal property

  14. Pretermitted child(1969 UPC) • a) If a testator fails to provide in his will for any of his children born or adopted after the execution of his will, the omitted child receives a share in the estate equal in value to that which he would have received if the testator had died intestate unless: • It appears from the will that the omission was intentional; • When the will was executed the testator had one or more children and devised substantially all his estate to the other parent of the omitted child; or • The testator provided for the child by transfer outside the will and the intent that the transfer be in lieu of a testamentary provision be reasonably proven. . . . • Ala. Code in Gray (pages 528-529) • Ind. Code § 29-1-3-8 (a) follows 1969 UPC through (a)(2)

  15. Pretermitted child(1990 UPC, § 2-302(a)(1)) Except as provided in subsection (b), if a testator fails to provide in his [or her] will for any of his [or her] children born or adopted after the execution of the will, the omitted after-born or after-adopted child receives a share in the estate as follows: 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.

  16. Pretermitted child(1990 UPC, § 2-302(a)(2)) Except as provided in subsection (b), if a testator fails to provide in his [or her] will for any of his [or her] children born or adopted after the execution of the will, the omitted after-born or after-adopted child receives a share in the estate as follows: If the testator had one or more children living when he [or she] executed the will, and the will [made a bequest] to one or more of the then-living children, an omitted after-born or after-adopted child is entitled to share in the testator’s estate as follows:

  17. Pretermitted child(1969 UPC) • a) If a testator fails to provide in his will for any of his children born or adopted after the execution of his will, the omitted child receives a share in the estate equal in value to that which he would have received if the testator had died intestate unless: • It appears from the will that the omission was intentional; • When the will was executed the testator had one or more children and devised substantially all his estate to the other parent of the omitted child; or • The testator provided for the child by transfer outside the will and the intent that the transfer be in lieu of a testamentary provision be reasonably proven. . . . • Ala. Code in Gray (pages 528-529) • Ind. Code § 29-1-3-8 (a) follows 1969 UPC through (a)(2)

  18. Pretermitted child(1969 UPC) • a) If a testator fails to provide in his will for any of his children born or adopted after the execution of his will, the omitted child receives a share in the estate equal in value to that which he would have received if the testator had died intestate unless: • It appears from the will that the omission was intentional; • When the will was executed the testator had one or more children and devised substantially all his estate to the other parent of the omitted child; or • The testator provided for the child by transfer outside the will and the intent that the transfer be in lieu of a testamentary provision be reasonably proven. . . . • Ala. Code in Gray (pages 528-529) • Ind. Code § 29-1-3-8 (a) follows 1969 UPC through (a)(2)

  19. Will of Calvin Coolidge “The White House” Washington Will of Calvin Coolidge of Northampton, Hampshire County, Massachusetts Not unmindful of my son John, I give all my estate both real and personal to my wife Grace Coolidge, in fee simple – Home at Washington, District of Columbia this twentieth day December, A.D. nineteen hundred and twenty six. /s/ Calvin Coolidge____ Signed by me on the date above in the presence of the testator and of each other as witnesses to said will and the signature thereof. /s/ Everett Sanders___ /s/ Edward T. Clark___ /s/ Erwin C. Geiser___

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