Trusts & Estates Essentials Power Point Slides Class #5

1. Trusts & Estates EssentialsPower Point Slides Class #5 1-31-19 Yad Drawkcab Lanoitan

2. UNIT ONE: BASELINES Closing Up CHAPTER 1: OVERVIEW 1.4.6 – 1.4.7

3. Section 1.4: Preliminary Topics on Death & Dying1.4.6 Disclaimers • Disclaimer allows a person to refuse an inheritance. • Disclaimant is treated as having predeceased the decedent. UPC § 2-1106(b)(3). • Relation-Back Doctrine: • disclaimer “relates back” to immediately before the decedent’s death • Thus, disclaimant never legally gained possession of disclaimed property • Disclaimed interest passes to the next eligible taker under the decedent’s will or intestacy statute. • Why disclaim? • Transfer tax avoidance • Asset protection against creditors

4. Section 1.4: Preliminary Topics on Death & Dying1.4.6 Disclaimers • Once an individual makes a valid disclaimer, the disclaimer becomes irrevocable. • When is a disclaimer barred? • UPC 2-1113 • (a) by a written waiver of the right to disclaim. • (b) If … before the disclaimer becomes effective: • (1) the disclaimant accepts the interest sought to be disclaimed [or] • (2) the disclaimant voluntarily assigns, conveys, encumbers, pledges, or transfers the interest sought to be disclaimed or contracts to do so.[ This covers renting the lot out as in Q after the case]

5. Section 1.4: Preliminary Topics on Death & Dying1.4.6 Disclaimers • When is a disclaimer barred? • UPC 2-1113 • Other Legal Limits •  Many states: Must disclaim within 9 months of receiving the property • Limits to prevent use of disclaimer to avoid debts or to qualify for benefits. E.g., • You lose Medicaid eligibility if you disclaim • Disclaimers lose out to federal tax liens

6. 1.4.6 DisclaimersIn Re Estate of Gardner • Marlene Richardson inherited a life estate in real property in trust from decedent Scott Gardner’s estate. • Trust required Richardson to make reasonable contributions for maintenance of property. • Property encumbered by mortgage of $205,330. • Richardson sought to disclaim retroactively 20 months after Gardner’s death to avoid contributing to mortgage. • NOTE: Arizona statutes here based on UPC

7. 1.4.6 DisclaimersIn Re Estate of Gardner • Evidence that she had “accepted” the property and so was barred from disclaiming it: • R physically occupied the property in the same manner she had prior to Decedent's death. • R arranged to pay the utilities and taxes on the Property • R made repeated affirmative statements asserting her present right to “enjoy the benefits of ownership during [her] lifetime” and to exclude the remaindermen. • Attempt to disclaim more than nine months after court had ordered her to pay the mortgage on the property. • QUESTIONS?

8. Section 1.4: Preliminary Topics on Death & Dying1.4.7 Professional Responsibility (NOTIO) This is not a professional responsibility course and I won’t test on this material. As a matter of professional training, I’ll go through it quickly. Two areas of concern for T&E: • Malpractice: In most states, estate planning attorneys owe a duty of professional care to the client and the client’s intended beneficiaries. • Ethical rules on client confidentiality and conflicts of interest • Problems often arise in the context of joint representations, such as married couples, but joint clients are not always on the same page. • When do diverging interests of joint clients preclude joint representation?

9. 1.4.7 Professional ResponsibilityProblem 1.5 See A. v. B., 726 A.2d 924 (N.J. 1999) • Paul and Tawny are married, but Paul secretly fathered a child with Janet. Paul and Tawny retain estate planning counsel to draft reciprocal wills. Same law firm retained by Janet in paternity and family support claim against Paul. Casebook authors say: (1) Law firm should withdraw from representing Janet in the paternity action (law firm in case did so). This is a concurrent conflict of interest, to which Janet never agreed.

10. 1.4.7 Professional ResponsibilityProblem 1.5 See A. v. B., 726 A.2d 924 (N.J. 1999) (2) Law firm likely can inform Tawny of Paul’s child with Janet. • Under Rule 1.6(b)(3), a lawyer can disclose confidential information “to prevent . . . substantial injury to the financial interests or property of another” that “has resulted from the client’s commission of a . . . fraud in furtherance of which the client has used the lawyer’s services.” • Here, Paul’s failure to disclose his child with Janet to either Tawny or to law firm was a kind of fraud that could seriously warp Tawny’s testamentary wishes by diverting her property to Paul’s non-marital child with Janet. QUESTIONS?

11. UNIT ONE: BASELINES CHAPTER 2: INTESTACY Assigned Problems 2.4-2.5 Sections 2.4-2.6

12. Intestacy: Modes of Distribution Assigned Problem 2.4 (All Three Methods) Last Names O-T

13. Problem 2.4: English/Florida Per Stirpes? “A” is the decedent.

14. Problem 2.4: Solution for English/FL Per Stirpes Below Modern Per Stirpes? “A” is the decedent.

15. Problem 2.4: Solution for Modern Per Stirpes Below Per Capita at Each Generation? “A” is the decedent.

16. Problem 2.4: Solution for Per Capita Each Generation “A” is the decedent.

17. Intestacy: Modes of Distribution Assigned Problem 2.5 (Florida (Pure Per Stirpes) & Per Capita Each Generation) Last Names A, U-Z

18. Problem 2.5: Per Capita Each Generation? Per Capita at Each Generation (UPC 1990) Two Examples “A” is the decedent.

19. Problem 2.5: Solutions for Per Capita Each Generation BelowEnglish/FL Per Stirpes? Per Capita at Each Generation (UPC 1990) Two Examples “A” is the decedent.

20. Problem 2.5: English FL Per Stirpes • First Example • D gets 1/2 • F gets 1/4 • G&H get 1/8 each • Second Example • D&E get 1/3 each • F & G get 1/6 each

21. Section 2.4: Half-Blood: Generally Primary Question: Shouldcollateral heirs related to the intestate decedent by the half-blood receive the same intestate share as those related by the whole blood? • Difficult policy Q because huge variation in the way half-siblings are raised & interact (e.g., father’s 2d family started 20 years after v. half siblings close in age raised in same household) • Important (avoid common student error): Half blood relatives must be collaterals; can’t be direct descendants or ancestors. If you have one child each with 2 diff partners, they are half siblings to each other but both are full children to you.

22. Half-Blood: Relationships

23. Section 2.4: Half-Blood: 2 Rules UPC & MAJORITY OF STATES: NO DIFFERENCE • §2-107 Kindred of Half Blood. Relatives of the half blood inherit the same share they would inherit if they were of the whole blood. • Casebook authors: The UPC rule on half-bloods is, in some ways, consistent with the principle of “Equally near, equally dear,” which is the guiding tenet of the UPC’s system of representation, per capita at each generation.

24. Section 2.4: Half-Blood: 2 Rules FLORIDA & MINORITY OF STATES: HALF SHARES • 732.105. Half blood. When property descends to the collateral kindred of the intestate and part of the collateral kindred are of the whole blood to the intestate and the other part of the half blood, those of the half blood shall inherit only half as much as those of the whole blood; but if all are of the half blood they shall have whole parts. • Florida approach consistent with use of pure per stirpes for distribution.

25. In re Estate of Thiemann, 992 S.W.2d 255 (Mo. Ct. App. 1999)Myrna is Decedent

26. Section 2.4: Half-Blood: In re Thiemann • Will & Hyatt are half-sisters of Woodside. Woodside is a full-blood aunt of the decedent. Will & Hyatt’s dad was decedent’s grandfather, but their mother was not decedent’s grandmother. Thus, they are half-blood aunts of the decedent. • Lower court held that Will and Hyatt should get same share as Woodside for two reasons (both rejected by appellate court): (1) No such thing as half-aunts, only half siblings. Appellate court disagrees as a matter of logic, Has to be true because statute in Q refers to half blood relatives but does not cover siblings.

27. Section 2.4: Half-Blood: In re Thiemann • Lower court held that Will and Hyatt should get same share as Woodside for two reasons (both rejected by appellate court): (2) Statute in Q says to use half-blood rule when gift “directed to go to ascendants and collaterals” Since no ascendants here, not triggered. • Casebook authors suggest this was rejected as a matter of precedent and policy • I think the court makes a persuasive statutory interpretation point that “directs” here means what group of people the statute tells you to look at. Here, statute directs you to look at both ascendants and collaterals, but will award property to collaterals alone in absence of ascendants.

28. Section 2.4: Half-Blood: In re Thiemann: Additional Points • Florida reaches same result on these facts as Missouri. UPC divides property evenly between the aunts. • Helpful passage from Missouri treatise: “A convenient method of determining the share of collaterals of the half blood when no ascendants are involved is to double the number of collaterals of the whole blood and add the result to the number of collaterals of the half blood.” • I will not give you a problem involving both ascendants and half-blood relatives as takers.

29. Section 2.4: Half-Blood: Problem 2.6: Last Names O-T Refer to the facts in In re Estate of Thiemann and answer the following questions: • A. Suppose that after Myrna's death, Hyatt then died intestate. Who would receive what from Hyatt's estate?

30. Section 2.4: Half-Blood: Problem 2.6: Last Names O-T Refer to the facts in In re Estate of Thiemann and answer the following questions: • A. Suppose that after Myrna's death, Hyatt then died intestate. Who would receive what from Hyatt's estate? • Will is full sibling; Woodside is half sibling. • In Missouri or Florida: Will gets 2/3 and Woodside gets 1/3. • Under UPC, equal split • B. Do you prefer the UPC’s rule or the Florida rule? Why? • Good back & forth in class re ways to address wide range of half-sibling experiences, especially creative Almeida point about half-siblings having a separate source of support from the other side of their family.

31. Section 2.5: Adoption: Generally • Adoption allows individuals to alter and establish family relationships by legal decree rather than by birth or marriage. • Adoption generally creates an ancestor-descendant relationship for inheritance purposes bet the adopting parent(s) and the adopted child • Adoption can sever adoptee’s intestate inheritance rights from and through genetic family. You are responsible for knowing statutory rules & exceptions under UPC & Fl Stat. • Many states distinguish between adoption of a minor child and an adult. This is very uncommon, but casebook addresses to help you think about relevant policies here. I will not test on adult adoption.

32. Adoption & Intestacy: UPC RulesWhere Florida is essentially the same, passage in blue • Same rule applies to child and adult adoption. • UPC § 2-116: “[I]f a parent-child relationship exists or is established under this [subpart], the parent is a parent of the child and the child is a child of the parent for the purpose of intestate succession.” FL732.108(1) • Creates inheritance rights between adoptee and adoptive family. • UPC § 2-118(a): “A parent-child relationship exists between an adoptee and the adoptee’s adoptive parent or parents.” FL732.108(1) • With exceptions severs inheritance rights between adoptee and genetic family. • UPC § 2-119(a): “Except as otherwise provided . . . , a parent-child relationship does not exist between an adoptee and the adoptee’s genetic parents.” FL732.108(1)

33. Adoption & Intestacy: UPC RulesWhere Florida is essentially the same, passage in blue • Exceptions: Adoptee retains inheritance rights from (not to) genetic family if: • Adopted by a stepparent (UPC § 2-119(b)) • FL: If other parent dead, full inheritance rights both ways 732.108(b) • Adopted by a relative of a genetic parent (UPC § 2-119(c)) • FL: If both parents dead, full inheritance rights both ways 732.108(c) • Adopted after death of both genetic parents (UPC § 2-119(d)) (FL inconsistent) • Adopted by functional parent following assisted reproduction (UPC § 2-119(e)) (FL no equivalent)

34. Adoption: UPC § 2-119(b)

35. Adoption: UPC § 2-119(c)

36. Adoption: UPC § 2-119(d)

37. Problem 2.7 Last Names A & U-Z Suppose Alana adopts her adult boyfriend Stuart and later dies intestate, survived by only Stuart and her sister, Sally. How would Alana’s estate be distributed? 100% to Stuart C. Suppose instead that, after Alana’s death, her sister Sally died intestate, survived by only Stuart (Sally’s nephew by adoption) and Sally’s first cousin Cary. How would Sally’s estate be distributed? 100% to Stuart B. Suppose that, after Alana’s death, her sister Sally died testate, survived by only Stuart (Sally’s nephew by adoption) and Sally’s first cousin Cary. Sally’s will devises everything to her nieces and nephews. How would Sally’s estate be distributed? Under UPC 2-705(f) (next slide) class gift to nephews/nieces doesn’t include nephew where relationship created by adult adoption. Florida would treat Stuart like any other nephew and he would take. See 732.608 (next slide)

38. Adoption under the UPC – Wills and Trusts Stranger to the adoption rule: An adopted adult is presumptively excluded from a class gift from a transferor who is not the adoptive parent. UPC § 2-705(f): [Transferor Not Adoptive Parent.] In construing a dispositive provision of a transferor who is not the adoptive parent, an adoptee is not considered the child of the adoptive parent unless: (1) the adoption took place before the adoptee reached [18] years of age; (2) the adoptive parent was the adoptee’s stepparent or foster parent; or (3) the adoptive parent functioned as a parent of the adoptee before the adoptee reached [18] years of age. Florida disagrees: 732.608 Construction of terms.—The laws used to determine paternity and relationships for the purposes of intestate succession apply when determining whether class gift terminology and terms of relationship include adopted persons and persons born out of wedlock.

39. Section 2.6: Advancements • An “advancement” refers to a lifetime gift from a donor to an intestate heir apparent if the donor intends the gift to constitute a part of the heir apparent’s intestate share. • If inter vivos gifts determined to be “advancements,” value deducted from intestateinheritance. Not deducted from share under will, because testator presumed to have taken gift into account. • Common law: Inter vivos gifts presumptively treated as advancements • UPC § 2-109 & Fl. Stat. § 733.806: Reverse the common law presumption under the belief that most inter vivos gifts not intended to be advancements

40. Section 2.6: Advancements • UPC §2-109 & Fl. Stat. §733.806: A gift is considered an advancement if • the decedent declared it so in a contemporaneous writing OR • the heir acknowledged in writing that it was. • UPC2-109(ii) adds the following way to show an advancement: “the decedent's contemporaneous writing or the heir's written acknowledgment otherwise indicates that the gift is to be taken into account in computing the division and distribution of the decedent's intestate estate.” • I think this primarily makes clear that the word “advancement” doesn’t have to appear • Florida might well reach the same result under the language of 733.806

41. UNIT TWO: WILLS CHAPTER 3 WILLS: PROTECTING TESTAMENTARY INTENT Sections 3.1 & 3.21

42. Chapter 3: Introduction Chapter Primarily Addresses Doctrines Designed to Protect Testamentary Intent • In Section 3.2: “Internal Factors” (Within Testator) • Testamentary Intent & Capacity • Must have at the moment the will is executed. • In Section 3.3: “External Factors” • Improper Pressure/Influence Exerted by Someone Else • Fraud, Duress, Undue Influence

43. Chapter 3: IntroductionOne significant idea to take from Section 3.1 Who has standing to contest a will? • Person needs concrete stake in outcome of litigation • Generally means person will receive more if the court invalidates all or part of will

44. Chapter 3.2.1: Testamentary Intent Animus Testandi: The requirement that a testator intend, at the time of execution, for the document signed as a will to be his or her will. • Rationale? Need to distinguish between preliminary documents (e.g., drafts, notes for a will) and the final testamentary instrument. Cf. joint party planning: early guest lists, menu, music selections. Three Dimensions (In text from Prof. Glover; helpful at a general level): • Donative testamentary intent (testator’s intent to make a gift at death) • Operative testamentary intent (testator’s intent for the purported will to make such gifts at death) • Substantive testamentary intent (the substantive meaning of the words of a will)