Trusts & Wills Professor Gingis Spring 2011 University of South Dakota School of Law Dukenminier & Johanson, 6th Ed. Chapter 1. Introduction to Estate Planning Section A. The Power to Transmit Property at Death, Justification & Limitation 1. Jefferson’s Works – 2. Blackstone, Commentaries – 3. Hodel v. Irving – (1987) Indian land was being divided under an allotment policy and fractional ownership developed. People were owning 1/100th of a parcel of land and rental income bookkeeping was expensive. So congress said anyone who’d inherit less than 2% or income and less than $100 a year lost his inheritance and it escheated to the tribe.
Irving sued because it was taking his property right to give it to his descendants. HELD: While congress could theoretically abolish inheritance, there is policy in favor of allowing inheritance, and a general right to transmit property or not with what is your own. Here rights to property disposal at death would be totally eliminated even if you could make a complex trust do the same thing. 4. Notes: a. Investment backed expectation affected? Did the Indians expect anything? b. Benefits & burdens analasys? Is it worthwhile to take these rights? c. Gingiss – Trusts need not be complicated for only a few pieces of property. d.
Court here holds the right to bequeath as a separate and distinct right, taxable. 5. Halbach – Inheritance is the least objectionable means to deal with property at death. Tax levels are going up to over 3 million by 2010, infinite by 2011…back to 1 million by 2012 (because congress didn’t have the votes for permanence) Marital Deduction – (Not on the exam) you can leave your spouse unlimited amounts tax free, until that spouse dies. Folks like to create 2 trusts, one for the maximum tax free amount, and one for the Marital Deduction that will only be taxed later. . Bentham – 6. Oliver – 7. Ascher – We no longer expect inheritances during our productive lives. 8. Note: Inheritance in the Soviet Union 9. Blum & Kalven, Progressive Taxation – 10. Langbien – 11. Shapria v. Union National Bank – Will said son only got money if they married good jewish girls, otherwise the money goes to Israel. Sons argued that this was contrary to p. policy and unconstitutional under the 14th amendment (Shelly v. Kramer racial covenant, states cannot limit marital freedom), so neither should private action. Son lost.
Held: The provision is constitutional, does not overly limit property, and since the decedent’s intent was to benefit judaism, not force his son to act in a certain way, and thus not contrary to p. p. (This is a lot like those federal funding blackmail things. ) There is no constitutional right to receive property. Section B. Transfer of the Decedent’s Estate 1. Probate & Non Probate Property Probate – Property that passes by will or intestate succession, Performs 3 functions a. Provides evidence of transfer of title b.
Protects creditors by requiring payment of debt c. Distributes the decedent’s property to those intended after debts paid. Non Probate – Other stuff, like Joint tenancy, life insurance, contracts payable at death, interests in trust… 1. Administration of Probate Estates a. History & Terms – When probate is required, a personal representative is appointed to inventory & collect assets, manage them during administration, see to debts & creditors of the estate, and distribute the remaining assets to those entitled. If a will is written, the representative may be chosen.
Representative must give bond unless the will waives it. Devise – leaving real property to devisees Bequeath – leaving personal property to legatees For intestate succession – Real property descends to heirs, while personal property is distributed to next of kin. Statute of Distribution – governing law of intestacy, a single law usually. b. Summary of Probate Procedure: 1. Opening Probate – First the will should be probated, or “Letters of administration” sought. States have procedures for the issuance of these. Barring objection, this can all be done outside a formal forum, Ex Parte.
Most states require notice to interested parties before probate. At the hearing the will must be proved by affidavit of the witnesses, or testimony. Time for Contest – Time alloted to contest the results of probate, depends upon statute for the jurisdiction. Barring Creditors of the decedent – Creditor claims not filed within a statutory period after probate are barred. (often 2-6 months) or sometimes whether or not probate is commenced, claims not filed within a longer period (1-5 years) are barred. . Supervising the Representative’s Actions In many states the actions of the Rep are supervised by the courts. This can get expensive. The Uniform Probate Code permits unsupervised administration if nobody demands supervision. 3. Closing the Estate Rep must complete the estate’s business ASAP. Creditors must be paid, assets distributed, and the process completed. Rep may be liable if this is not done. Judicial approval is required to relieve Rep of liability unless statute or time limits protect him. C. Is Probate Necessary? Death can be expensive.
In most states the Rep’s fee is set as a % of the estate, in statute. A lawyer who serves can charge both as attorney and as executor, double fees, if the estate acknowleges him, otherwise he gets ? the usual Rep fee. In a few jurisdictions, the lawyer cannot get his attorney fees in addition to the Rep fees. Probate can be avoided – Owner / Soon to be dead guy transfers all of his property into joint tenancy or irrevocable trust. It can be hard to do this if you have a lot of stuff all over the world, so a back up will is still a good plan in case anything was overlooked.
Avoiding Probate with a Will or Intestate – States permit transfer of small property without probate, but the value limit varies. Bank accounts, car titles, etc can be transfered with a simple form. d. Universal Succession Europe & Louisiana – No administration, heirs or devisees simply step into the decedent’s shoes at the time of death. No lawyer is required, nor need the court get involved. D. Estate Planning Problems 1. Professional Responsibility (Privity & Malpractice) Simpson v. Calivas – Attorney who drafted dad’s will (Calivas) was sued for failing to make sure his client’s intentions were met.
There was a life estate to be reserved in the house & homestead, but these were not properly defined. Probate gave the land & house all to the stepmother. (Atty notes indicated it was to be only the house, they knew this. ) So the son who thought he should inherit the land of the homestead, just not the house sued after buying out his stepmother. Lower court held that D owed no duty to the intended beneficiaries. NHSC overturned. Attorney held liable. Most states allow will drafters to be held liable under a tort or contract theory, or both (as in NH. A few still hold that when the one party is dead, nobody else can sue, due to lack of privity. Most courts reject the notion that “inferior” probate court rulings are determinative of the testator’s intent when a subsequent malpractice suit arises against the drafter. Attorney’s have a duty (California) to refer a client to a specialist, or consult a specialist, should the drafting be beyond their skill. A lawyer is not to draft a document for a person who is not his client without consulting that person. Hotz v. Minyard – Minyard had 2 kids, Tommy & Judy.
He wrote a will giving one of his car lots to each, and splitting the rest of his property between them. Everybody was present at the law office for this will signing & got a copy. Later that day he snuck a new will to the lawyer, giving the real estate under Tommy’s lot to tommy. Judy came to the Dobson office to discuss the will later still, and they showed her the old one (at Minyard’s insistence that she not know of the newer. ) Then Minyard had a stroke, and while Judy cared for him, Tommy ran things at both lots, and into the ground. Life went sour, he fired Judy, she threatened to sue.
Tommy offered her a nice job again, and fired her again, and she sued. At issue is the suit against Dobson, the lawyer for breach of fiduciary duty. The court held that There was a factual issue as to Dobson’s duty to Judy (for treating the old will as valid) and Dobson’s firm (for being Dobson’s firm)… The lower court’s dismissal was overturned and the case sent to a jury. All these problems with liability have pushed forward reforms in property law, excusing small will errors, producing the wait-and-see doctrine… Chapter 2: An Estate Plan By Default (Intestacy & Spousal Share) A. The Basic Scheme 1.
Introduction The goal here is to guess what the person wanted when they didn’t tell us. Most people die without a will. The state isn’t trying to impose its own will. (Though you cannot disinherit your spouse, condition bequests on divorce…) UPC 2-101 – Any part of an estate not disposed of by will passes by intestacy statute. You can have intestacy even when you have a will, where stuff isn’t covered correctly. UPC 2-102 – Share of Spouse: entire estate if no descendant or parent survives, or all of the decedent’s descendants are of the surviving spouse and that spouse has no descendants of a prior relationship.
In SD – Parents are irrelevant if there is any spouse or kids. As are any of the spouse’s kids from a prior relationship. Only the decedent’s children from other relations matter. Barring these, the spouse takes the entire estate, otherwise the spouse gets the first $100,000 and ? the balance. The other ? goes to ALL of the DECEDENT’S descendants. 29A-2-102 2-103 – Heirs other than the spouse: 2-105 – No taker The state will take if you have no living heirs beyond your grandparents or descendants in SD (and descendants of grandparents…) Some states go to great grandparents, California will go as far as the records will allow. . Share of Surviving Spouse (And how long does she have to survive? ) Elective Share – Amount you are required by law to leave for your spouse. Under these, what you leave in the will is subordinate. In many states, the spouse takes ? or 1/3 in non UPC States. Outside SD, in UPC states the spouse takes it all if there are no descendants or parents, or if there are descendants but all from this relationship, (spouse also takes all). In SD, if there are no descendants, spouse takes all, if there are descendants and all are from this relationship, spouse also takes all.
Otherwise spouse gets first $100,000 plus ? excess (because the surviving spouse might not care for the stepkid). Avoid “If we die in a common disaster” – this can be ambiguous all the time…prefer “If we die under circumstances where the order of our death cannot be established by proof…” Then you name the person to be deemed the survivor. Janus v. Taraseqicz – Decedent & wife died within 2 days of each other after eating cyanide laced Tylenol capsules. He wanted his property, and life insurance, to go to his wife, or otherwise to his mother if they died at the same time. Decedent collapsed first, then the wife. UPC requires survival by 120 hours or one is deemed predeceased. ) Insurance says to wife if she survives me, default to do this is the UPC limit of 120 hours. So Decedent’s mom got screwed out of the insurance policy. Gingis Hypo – H & W both have wills that say “All to my spouse, but if spouse dies first, $100 to my nephew and the rest to my kids. ” If the both die at once, and are deemed to predecease each other, the nephew would get $100 twice, one under each will. Careful language can avoid this. What if they’re in an accident and die at ALMOST the same time.. Its generally best to draft wills that make no distinction re who ied first. 3. Share of Descendants In every state, descendants take to the exclusion of others. There are 3 systems: 1. Classical, English Per Stirpes (Divide at the first generation) 2. American, Modern (Divide at the first generation where someone is alive) 3. Per Capita at each Generation (Any one at any generation who’s entitled to take anything, always gets the same as anyone else at that generation. SO at each generation, the remaining estate to be divided goes back into the pile and is redivided at the next generation. ) UPC Uses this. See P. 86 Diagram
C’s kids take 1/6 while B & D take 1/3. If C had no kids, B & D take ? each. The whole idea is that where a decedent’s heir is not living, that heir’s descendants take in his stead. In per stirpital distribution, spouses of heirs are not relevant. When an heir is living, their children are irrelevant. (DUH) P 87 Diagram (2 kids dead, 3 grandkids) English System (and SD) – Divide at the kids generation, even if they’re all dead. Then grandkids divide parent’s share. SO D gets ? , E & F get ?. American System (and Cal) – If all children are dead, divide that the first generation where SOMEONE is alive. So D,E,F each get 1/3.
Per Capita System – Same as American system. P 88 Diagram English & SD System – D gets ? , F gets ? , H & G get 1/8. American / Modern System – D & F take 1/3, G & H take 1/6 Per Capita (Same as American) 4. Shares of Ancestors & Collaterals If A dies w/o spouse or descendants, it goes to the descendants of A’s parents. Things go from the parents the same as A. In some states only the parents take, in other siblings also take. If there are no parents, go to descendants of parents same as the whole, descendants of only one parent are treated as full bloods. If no descendants of parents, go grandparents, ? o each side. This can vary, in California they take as individuals (3 left, 1/3 each…) P 91 Daigram English System -B gets ? , F gets ? , G gets 1/12, O gets 1/12, L-N get 1/36, J gets 1/8, P takes 1/8. American – Same result as English (because someone in gen 1 is alive. ) Per Capita – B gets ? ; F, G, J get 1/8; L-P get 3/40ths Negative Inheritance – Where a will is written giving all to A, and explicitly disinheriting B, where A & B are heirs, and A dies without heirs. The will is meaningless, so common law activates intestacy statute and gives everything to B, even though the decedent hated him.
UPC changes this, ordering B treated as predeceased. (So you go to other, more distant heirs of the decedent, even heirs of the negated person, or 3rd cousins…) Half Bloods – People who share one parent. (there are no ? daughters) In SD and most states, these folks take as whole bloods, treat them like normal siblings. In Virginia, they are ? a person for inheritance purposes. In Mississippi, ? bloods count for nothing unless there are no other heirs. B. Transfers to Children 1. The meaning of Children (p97) a. Posthumus children – A child was at common law presumed an heir if born to the decedent’s wife within 280 days of his death.
As a PP matter, children born a decade after dad is dead due to artificial means, the states should probably forbid inheritance. b. Adopted Children – generally given all the rights of blood children upon adoption, this tends to also remove rights of inheritance from blood parents. Hall v. Vallandingham – Blood nephews of the wealthy, intestate, otherwise heirless William Vallandingham were adopted by the new spouse of their mother, Jim Killgore. They desired to receive what would have been their inheritance from the deceased blood uncle, but the court held that since they were adopted, such was no longer an option by statute.
The legislature giveth, & the legislature taketh away; State law removed rights to previous parents’ estates. UPC 2-113 – Someone related to decedent by more than one way (married his cousin) is only entitled to the stronger single claim. UPC 2-114 – A person is a child of his parent, regardless of the parent’s marital status, adopted children are children of their new parents but may still inherit from biological relatives, and only when the natural parent in question openly accepted the child as such. (Not all states accept this, or the Hall decision)
See SD Statute on TWEN… Distinguish between new family adoptions and family realignment adoptions. There is complete severance where the child is given up at birth to unknown parents… It does not always work both directions, such that a natural ancestor may not inherit from a descendant who was adopted by others, but they might from him. Technology – Surrogate parent rules are unsettled in the US, In the UK parentage is that of the surrogate, regardless of who’s egg & sperm were used. For lesbians partners, parental rights seem to go to the egg donor, for switched at birth babies, legal inheritance descends from the biological parents only.
Adult adoption – Generally as easy as child adoption, except in one case where a homo adopted his lover, the court held the two relationships were incompatible. You can’t use adult adoption to bind someone else’s estate. O’Neal v. Wilkes – (p 108) O’Neal was a girl who bounced from home to home for years, before winding up in the care of her natural father’s sister’s friends from Georgia. She stayed with them as daughter and was recognized as such. When her would be father died, the estate denied her inheritance.
The court held that as there was not valid adoption contract, she would unfortunately be denied inheritance. Equitable adoption ain’t good enough. 1. Adoption K must be made between competent parties, parents 2. K theory is applied to protect the child (who got screwed in this case. ) 3. Legal custodianship is granted by the court 4. Ratification of an adoption K by folks w/o legal authority is void. c. Non Marital Children Under the common law, bastards were the child of nobody and could not inherit.
The property if intestates would go to the local lord. In the US, inheritance through the mother was possible early on, through the father only if he acknowledged the child and adopted it. This has changed in recent years. This was justified to discourage illicit sex & the difficulty of proving paternity. Sometimes its easier to inherit from a father who disputes paternity than one who openly admits it (but doesn’t get a court order). If you have children out of wedlock, get a will. Uniform Parentage Act not accepted in SD – Parent & Child relation extends to all parents & children regardless of marital status.
In Most states, SD included, if the parents get married after birth, the child is considered legitimate. (In SD, the baby born to a married woman is presumed to be legitimate even if the father is not the husband. ) 2. Advancements (p128) – This is where someone gave you part of yer inheritance while you’re alive. “Dad, can I have $10,000 (part of my inheritance) now? ” Sure…. Then dad dies…how is this to be treated? 1. Advancement – Child’s inheritance is cut as if he got it already. For purposes of calculating the size of the estate, this chunk is included in the total estate before division between heirs.
Then subtract it again from the share of the person who got advanced. 2. Not Advancement – Its a gift, Child gets his share of all that remains. 3. Loan – You got more than your share or otherwise owe it back… Advancements don’t generally include interest, as a matter of administrative convenience. If the advanced person goes over his share, if its a loan one can sue him to recover it, if it was not… he keeps the extra. (A loan would be an asset of the estate. ) If the advanced person predeceases the testator, and has heirs, you don’t treat it as an advancement. His kids inherit as if the advancement was a gift. Unless the advancement provides such. ) If it was a loan, sue the estate of the deceased advanced person. UPC 2-109: Advancements must be noted in contemporaneous writing by the decedent or the recipient & heir (at any time) who got stuff early. This reverses the common law. Watch out for states that don’t have the UPC. 3. Managing a Minor’s Property Guardian – Person who has the responsibility to see to a minor’s custody & care. Courts will appoint a guardian if none is listed in the parents’ will. Further, such a will is handy to determine what is done with the child’s newly inherited property.
Guardian of the Person – Person who cares for the child itself. Natural parents always win over wills (my ex wife…) unless they are unfit. If one is not named, the court will appoint one from among the relatives. Guardian of the Estate (Conservator) – 3 options: 1. Do nothing, probate court appoints a person, person must file annual reports. Often distrusted historically. 2. Transfer to a minor under the Uniform Transfers to Minors Act. This operates like a trust. Court supervision is not required (No reports) and gives a person investment & spending powers.
Its a good system for small estates. Minor MUST receive the property at a stated age. 18 to 21 maximum depending on state. SD the max is 21, 18 if UTMA is not mentioned. The minor is the taxpayer under this system & must file accordingly. 3. A trust – the superior means if you have doubts at all. Its good for large amounts of money, but must be created specifically with a will. The trust can last beyond 21 (In SD it can go forever. ) It can be for more than one child, allowing the trustee to support minor children until everyone is grown up & has college paid for. Then it can devolve to the kids.
Article 5 of UPC, in SD its different, they kept the old SD system when UPC was adopted. Will Problem, P 136 What if your single trust for your kids would get unbalancing since they’re 30 years apart? Set up two trusts? It’s probably a good idea to keep as a single trust to maintain the size of the estate until division (funding the needs of the kids under 18 on interest. ) Other kids can be allowed advances out of the trust. Section C. Bars to Succession 1. Homicide In Re. Estate of Mahoney – Widow killed her husband, it was voluntary manslaughter, not murder as was the usual case, and she wanted her share of the estate.
The probate court gave it to his parents. The court stated that of the 3 takes on this situation, the constructive trust solution was best as Vermont had no law prohibiting inheritance after murder. They ordered the probate court to stay action for 60 days and allow the administrator time to visit the court of chancery seeking a declaration of a constructive trust under the widow. If he didn’t, she would inherit as normal. 1. Slayer retains his title to inheritance, statutes alone control. 2. Legal title does not pass to the slayer, because nobody should profit from his own crimes. 3.
Title passes in constructive trust to the slayer, only to be passed on to other heirs. The court notes that involuntary manslaughter would not be subject to these rules. The probate court here did not have the jurisdiction, a chancery court would need to be enlisted to create the trust. In SD, all the courts are part of the same system. Bird v. Plunkett – Guy kills his wife, shot her in the side. He is convicted of manslaughter, but seeks to inherit under his wife’s will leaving everything to him. The court examines statute 7062 which states that no person be denied inheritance unless guilty of murder in the 1st or 2nd.
P argues that this law does not eliminate the common law power to further limit anyone who killed a person from inheriting that way. D argues that the law is what it says, and only murder precludes inheritance. The court goes with the D. UPC allows proof that murder took place in probate, even if a criminal conviction was not obtained, and thus inheritance would not pass. 2. Disclaimer – When an heir refuses to accept title to all or a part of inherited property. (Because the land is full of cyanide and cleanup costs more than it’s worth. You don’t want it. In feudal times this was not an option, because someone had to maintain feudal obligations. Common law treats title as having passed (when intestate) to that heir, and then to the next successor. (A gift usually goes back to the donor. ) 2-801 Authorizes disclaimer, you cannot make it so that someone cannot disclaim a part of their inheritance. Requirements under state law & federal gift tax for valid disclaimer are different, particularly for future interests: I leave property to A for life & A’s heirs per stirpes. State Law: For 9 months from A’s death, his heirs can disclaim, else they get it.
Federal Law: Estate Tax / Gift Tax – 9 months from creation of the interest, that is the time I die & leave property to A, even for A’s descendants. (Disclaimer after 9 months is treated as a gift to the next heir and is taxed. ) Why is this federal law silly? To A for life, then to A’s widow, then to A’s descendants who reach 21. What if A is single until more than 9 months after the interest is created. Then his new wife wants to disclaim, she can’t… its too late. You can draft a will to adjust automatically to changes in the tax code. I leave the largest tax free amount in a trust for my kids…” 2 reasons for disclaimer when the land isn’t laced with cyanide: 1. Tax reasons, disclaim $1 million to your kids, so they don’t get taxed on it twice. 2. Creditors, you a zillion in debt, dad dies leaving you 1 million, you’d rather have your kids get it than creditors. USSC said that in the case of back taxes, you cannot disclaim inheritance to avoid government liens against your collective assets. Standard creditors are foiled. If you accept the benefits of the inheritance can bar you from disclaiming. Moving into the house you disclaimed. ) Or an agreement not to disclaim, like getting a loan based on coming inheritance. When decedent dies testate, and the devisee refuses to accept, the law usually acts as if the devisee had predeceased the decedent. This saves on taxes and makes things run fairly. Also, you can’t disclaim under strange inheritance systems to get your kids an unfair share of an inheritance. Troy v. Hart – Old man with 2 sisters is in the Stella Maris old folks home. He’s on medicade, and has given power of attorney to Troy. Later, his sister Alta Mae died leaving $300,000 intestate.
This would go between Old man & his two sisters. One of his sister’s lawyers got Letich, the old man, to disclaim his inheritance by sneaking into the home one afternoon. Troy argued that this was invalid, and that such money couldn’t be disclaime1d due to medicare obligations requiring payment if one’s status changes. The court held that while such payment was required, the disclaimer was valid because Letich was not incompetent. Medicade would have a lien against the sister’s who inherited after the disclaimer (under a constructive trust. ) If Letich had died before the disclaimer, can his estate disclaim and avoid his debts?
If the personal rep in the will is expressly given the power, or in some states with leave of court. Medicare – government insurance program for folks over 65, it does not cover nursing homes. Medicade – welfare for poor folks needing medical care. It does cover nursing homes. It is a crime for lawyers to advise illegal action to get under this. Assets given away within the last 36 months, 60 if in trust, are added to wealth level calculation. If you inherit property, you are obligated to take it (as was Mr. Letich. ) Chapter 3.
Wills: Capacity & Contests “Testamentary Capacity” 1. Why Require Capacity? In almost all states, any person must be 18 and competent in order to make a valid will. In Re Strittmater – (1947)Woman in her 40’s went uber feminist, often in her writings insulting her loving parents. She especially developed a hatred for men. She joined the National Women’s Party, and left everything to them. The court held that she was probably insane and not capable of making a valid will. Her other relations will take. 2. Test of Mental Capacity: Does the Testator know… 1. The nature & extent of his property? 1. he persons who are natural objects of the testator’s bounty (often mistakenly assumed as a synonym for heirs by the court. ) 2. the disposition he is making 3. how these elements relate so as to form an orderly plan for the disposition of his property . The testator need not have average mental capacity, may be eccentric, and even if declared incompetent may at times still draft a will. The test for competency to will is less than that to make a contract or gift, but greater than that for marriage. To draft a will for an incompetent is a breach of ethics. The lawyer may however rely on his own judgment of the matter.
Estate of Hastings – SC of SD… Delusional (developmentaly disabled) guy dies in 1982. He had executed 3 wills naming his sister as main beneficiary in each. She petitioned to have the 81 will admitted to probate, other relatives argued that he was of unsound mind. He could operate farm machinery, simple stuff…he could not demonstrate understanding of his own will. Court held the will invalid. You do not need to be insane to lack testamentary capacity. Estate of Hastings – SC of SD… Delusional guy dies in 1982. He had executed 3 wills naming his sister as main beneficiary in each.
She petitioned to have the 81 will admitted to probate, other relatives argued that he was of unsound mind. Doctor A. H. Marshall – Uber christian fellow who’s politics were quite nuts. He knew the nature & extent of his property. He knew who the natural objects of his bounty were. He knew the disposition of the will, and how they all fit together. (Was he incapable of logical thinking? ) An insane person may have the capacity to draft a will. Other things that can affect the will: Alcohol, Old age, dimentia, organic condition/ brain tumor… Terms of the will are theoretically irrelevant unless there is something inherently insane in them. . Insane Delusion (p165) In re Honigman – Guy was obsessed with suspicion that his wife was cheating on him. A few months before he died, he changed his will to give her only a life estate in the statutory minimum, the rest to his grand-nieces & brothers & sisters. His wife had a lot of money on her own. The jury found that he was suffering from insane delusion. The court held that it was not totally unreasonable, she had money, and thus he may have had another reason for leaving her out of the will. The will was upheld. Where there was some basis, though not necessarily a good one, a will may be upheld.
Bonjean – Gal disinherits her brothers & sisters, leaving things to her dead relatives husband & wife. She goes into treatment for depression etc…after attempting suicide several times. Alleged insane delusion is that the siblings were out to get her… Court holds that no, it is not insane to resent someone who has you institutionalized. Mere misapprehension of fact is not enough to invalidate a will by delusion. Ante-Mortem Probate: Probate an estate before the testator dies…. 3 states allow it. Do you want to stare down mom and say, “You’re not of sound mind…” Most lawyers think this is a silly idea and nobody does it.
Virtual Representation – Someone who stands in the same interest of another (for minors etc…) B. Undue Influence – In the eyes of the law: coercion. (Of course you pre-suppose mental capacity if you argue this. Gingiss’s Elements: 1. Susceptible to undue influence or domination by another? 2. Person allegedly influencing had opportunity to exercise it. 3. Disposition for personal benefit? 4. Provisions of will are unnatural and the result of such influence? Never draft a will where you get anything, except maybe for family, and then never take more than you’d get by intestate succession.
Swenson Elements 1. Participation by the beneficiary in procurement of the will 2. Independent advice (not the usual lawyer) 3. Secrecy & haste 4. Change in attitude 5. Change in disposition of property 6. Unnatural or unjust gift 7. Susceptibility Lipper v. Weslow – Grandma had 3 kids. One died with 2 kids, grandchildren. Grandma left everything to the 2 surviving kids. The grandchildren claim undue influence. The will declared that her 2 grandkids and their mother, the daughter in law, were total pains in the backside, unfriendly most of the time, and not to get a dime.
Court held that there was evidence that this was the testatrix’s will, any claims to cards & letters be damned. Is justification of a will, within the will, a good idea? Undue influence generally requires 3 prerequisites: 1. The person exerting influence had a confidential relationship 2. That person received the bulk of the testator’s property 3. If the testator was of weakened intellect, the BOP shifts to the accused to disprove influence. No Contest Clauses / Interrorem Clause – “Should anyone contest my will, if they loose they get NOTHING. ” Most courts will enforce hese clauses, but if there is nothing left to a person, they can challenge all they want with nothing to loose. Bequests to an attorney not related to the testator, who drafts the will, are presumed to be undue influence, requiring clear & convincing evidence to the contrary. Fred Borche a SD case – Made a will and his friends said it wouldn’t stand in court, so his friend helped him get a good will ready. They’d been friends for years. He didn’t sit in on the meeting with the attorney. Borche gave the attorney some lists of what to do, drafted by his friend. The court covers the 4 Gingiss issues, and finds undue influence.
What if the attorney who didn’t draft the will? … In Re: Will of Moses – Gal had 3 husbands, after that she became lover to an attorney named Holland. In a will about which Holland was not informed, she left almost everything to him. So of course her sister attacked the will on grounds of undue influence, even though it was drafted by another lawyer. The lower court found against Holland, The Court reversed. It reasoned that the evidence clearly demonstrated a relationship, that Ms. Moses had the advice of counsel, and that sexual morality of their relations was not an issue, the will was invalid for basic undue influence.
Gingiss finds this decision WEAK. Attorney who drafted the will didn’t ask about Moses’s family. When probate is opened, those in a will must be notified, and also those who would take if the will was invalid. In Re; Kaufmann’s Will – Gay dude with a large inheritance and stock in the family jewelry store chain moves from Washington to NY. He falls in with Walter, a non-practicing attorney and turns over most of his worldly affairs to him so that he may paint. They travel together, have wild gay sex according to the jury, and when Kaufmann leaves a big chunk of his family change to his partner the family is aghast.
The court holds that undue influence was applied in the wills Kaufmann made. Haynes v. FNSB of NJ – Old woman moves in with her daughter(1 0f 2), and using her living younger daughter’s attorney to redraft her will leaving more to the living side. The court found a presumption of undue influence because of the close relationship between them. The children of the deceased daughter were upset because they were mostly disinherited. BOP on the P, must demonstrate a confidential relationship by a beneficiary to raise a presumption of undue influence, rebuttable with clear & convincing evidence.
In most states, a no-contest clause is not enforceable if the challenge is brought in good faith & with probable cause… mostly. If representing a married couple, let them know up front you will keep no secrets from the two by either party. Seward Johnson’s Estate Story- Poor polish girl becomes 5th wife to the Johnson & Johnson Heir, winning $340 million over his kids. Document mental capacity & intentions if a will contest is possible. Gingiss on How to avoid gettin’ screwed like Ninia: Ninia had a conflict of interest in that as trustee & counsel she stood to get a lot out of the will execution.
During her Cross Examination: When drafting a trust, ask the property owner first. C. Fraud Most of the time its about forgery… Blind man is given the wrong will to sign – Fraud Testator is told that their favorite heir apparent has died, so they leave everything to the messenger. – Fraud Estate of Carson – Husband & wife are supposedly happily married, except that he never got a divorce from the last wife. She dies, leaving all to her “husband” which she doesn’t actually have. Court says it’s not a slam dunk fraud… she may have wanted to have him have the money anyway after 20 years of happy cohabitation.
Latham v. Father Divine – Father is a charismatic minister, with a considerable following of blacks and whites. He was left something in the will of a white follower. Will has never been executed, the battle is between prospective heirs. Concept of constructive trust extended here… Chapter 4 Wills: Formalities & Forms A. Execution of Wills Gingiss On This: Over time there have developed a lot of formalities for wills, the slightest deviation from which can void the document, even if it’s clear that the will bears the testator’s intent.
In SD: Will must be in writing, signed by the testator or in his name by another in the testator’s presence & direction, and signed in the conscious presence of the testator by 2 or more witnesses who witnessed either the signing of the will or the acknowledgment of the testator that this is his will. (Testator already signed. ) Holographic Will: About ? the states honor these. No witnesses required. Traditionally they had to be entirely in the testator’s writing (voiding will forms) but now need only be the substantive parts in handwriting, (so will forms are ok).
Why So Strict Our Requirements? A. Ritual function to preclude casual utterances or drafts. B. Evidentiary function, testator is dead, witnesses memories fade… C. Protective function, it is supposed to avoid undue influence. D. Safe Harbor function, gives the testator confidence. 1. Attested Wills In Re Groffman – Groffman was friends with both Mr. Block and Mr. Leigh, and frequented the Leigh house on Tuesdays. He had a will drafted by a fellow who was recommended to him, and one evening in early september 1964 asked the two men to witness it.
There was no space on the table in the living room so each in turn, but not at the same time, went into another room with him and presumably signed off on what Groffman said was his signature. The will’s execution was contested by his widow. The court held that though the will was probably quite accurate, statute required both witnesses to be present at the same time. Thus the will could not be executed. (UPC would have no problem with this, its a fairly minor point. ) Some states require actual SIGHT of the testator, hard for blind folks and generally excused. Most states require only conscious presence & direction by the testator.
Telephonic presence ain’t good enough. Nor is giving it to the bank teller behind the glass at the drive up. If only part of the act of signing is witnessed, the will can be invalid (in re Cooling) Folks unable to do a decent signature can generally make an X or partial name or initial if they intend it to be the total signature. Witness cannot complete the signature without direction from the testator. No rubber stamps… An attorney will be liable for supervising a defective signing in his office. Additions to a will in many states require an additional signature at the bottom
A videotape does not qualify, even if the tape is signed & sealed. Witnesses must sign within a reasonable period after the death of the testator if they don’t sign before he dies. (In some states, it’s automatically unreasonable if the testator dies before you sign. ) Estate of Parsons – (Don’t follow this case. ) Parson’s will gave $100 to one of the witnesses to her signing, and existing law mandated that signatures of disinterested parties alone count as witnesses. She disclaimed the small bequest after Parsons died. The court held that sadly the will was still invalid.
Probate code section 51 looks solely at the time of execution and attestation of the will. Purging Statute: One that effectively prohibits folks who get something in a will from acting as valid attesting signators. This is the traditional method, now UPC allows this, but a presumption of undue influence is raised. Recommendations for Executing a Will: (Gingiss gives a super detailed list of steps when he cannot supervise the signing himself. ) This should be valid in all states: (p 242) 1. For multi-page wills, bind securely, and specify in the will the page count. 2.
Make sure the testator has read & understands it. 3. Get the Lawyer, Testator, Notary & 2-3 disinterested parties together in a room with nobody else. (Lawyer can be the notary too. ) Nobody enters or leaves till the ceremony is done. (Notary not required, but handy if you can’t find a witness later & the will is contested. ) 4. Ask the testator the following: a. Is this your will? b. Have you read it and do you understand it? c. Does it dispose of your property in accordance with your wishes? Make sure everyone can hear “yes” to each answer. Consider additional precautions at pp. 209-210 5. Do you request X and Y to witness the signing? 5. Make sure the witnesses can and do see everything & each other as the testator signs the will. 6. One witness reads aloud the attestation clause. (Gingiss thinks this is silly. ) 7. Each witness signs & print & addresses by his signature. 8. Self-proving affidavit sealed by the notary attached at the end. Gingiss keeps a “conformed” copy, thats a text copy indicating who signed and where. Also on this document is the location of the real one. In SD, a living person can file his will with the county clerk. The other option is to have the client keep it.
Safeguarding a Will – Best to let the testator keep it, don’t save it in your office. In Re Pavlinko’s Estate – Hellen & Vasil, Husband & wife signed each other’s wills by mistake, each leaving property to the other. The lawyer / drafter and his secretary who didn’t speak the language signed as witnesses. Court refused to honor the will, as it would not rewrite every instance of a the testator’s name, or “my wife” and “my husband” as it appeared. It would be a slippery slope. This wasn’t the document Vasil intended to be his will, law stated that the signature must be on the document intended as the testator’s will.
Musmano’s Dissent suggested just striking words “my brother” and make the residuary clause valid. Most states follow this case. (In re Snide – mirror image wills of husband & wife may be given effect. ) UPC 2-503 – Harmless Error: (Dispensing Power) Documents not in compliance with 2-502 may be given credit provided clear & convincing evidence establishes that the decedent intended it to be: his will, partial or complete revocation, addition or alteration, or partial or complete revival of an earlier will. (This one is not in all UPC States, it IS in SD. In re Will of Ranney – In 1982 Russel Raney drafted a will several pages long, un-numbered, with the last page being a self-proving affidavit & signature page. The pages were not attached together prior to execution and there was no attestation clause. After review at the lawyers’ office, a firm partner & 2 secretaries were drafted to witness the signing. Everyone understood that page 5 was supposed to be attestation of the will, even though the testator signed on page 4 and the attestation clause was absent.
The court held that the method does not literally satisfy the state code for executing wills, but that a will may be admitted if it substantially complies. Substantial Compliance – The cure for harsh formalism, but careful practitioners should still observe the formalities for the security they provide. Its not really common, but hasn’t been asked for a lot. Self Proving Affidavit – We really did see and sign off on the will, notarized. (The we really mean it section. ) Even though the page they signed was not attached. Sometimes now we do a single signature for both the will and the notary.
Dispensing Power – Can cure lots of errors but not the lack of a signature. (Well there was one case in Australia…) *** Wills need to be in writing, signed & signed by witnesses. *** 2. Holographic Wills See p 262 for a nice poem. Holographic Will – One written in the testator’s own hand… or at least the important parts in some states, these are legal in mostly southern & western states, like SD. Also it must be signed by the testator, often a date is required. In Re Estate of Johnson – Old Johnson got a stationary will form from an office supply shop. In it he left equal divisions of his estate to his kids & the church.
The will could not, without the printed parts, make sense as a testamentary document, and thus even though statute permitted the “material portions” only in the testator’s writing, the court held that the will was invalid. Here the court shot down holographic wills that could not be a will without the typed portions. The typed words made it despositive. UPC 2-502 allows testamentary intent to be drawn from typed portions of a will. Some other things you could do: typed portions may be used to interpret the meaning of the handwritten portions. You might also call a notary a witness.
Some states have statutory “form wills” that will always be considered valid. Kimmel’s Estate – Old Kimmel wrote his son a letter in very poor english that indicated where his accounts should go if he died. The letter rambled about family news also, but was signed by the testator. The court held that the will bore testamentary intent, and was validly signed, It was admitted. Wills based on a specific cause of death (plane crash) are often still valid if it appears the testator’s intent was testamentary, and the cause of death presumably irrelevant. B. Revocation of Wills 1.
Revocation by Writing or Physical Act (p276) All states permit revocation in one of two ways: a. By a subsequent writing executed with testamentary formalities b. by physical act such as destruction of the will. A will not properly revoked is still valid. A later will without words revoking an earlier one is treated as a codicil. At common law, revoking a codicil does not revoke a will. At common law, revoking a will revokes codicils to it. Example: Will 1 :Everything to A Will 2 :Diamond ring to B, Car to C Result: A still applies except to the ring & the car.
UPC 2-507 – A will is revoked by subsequent will that revokes it, or by an act on the original will, such as burning it. Harrison v. Bird – Gal had a will naming Harrison. Her lawyer kept the original, and Harrison had a copy. Gal asked her lawyer to revoke it, and the Lawyer tore it into 4 pieces and sent them to her. When she died, the envelope was found, but the pieces were not. The court held that while the lawyer’s acts did not lawfully revoke the will, the fact that it could not be found produced the assumption that the old Gal did in fact “revoke” it by destruction.
If a will cannot be found & was last in possession of the testator, there is a rebuttable presumption that it was revoked. If someone else had it, there is a presumption that it was not revoked and can be proved with a copy. Do not do duplicate originals!!! Have folks sign in blue ink… its less likely to get mixed up with copies. If the testator presumably revoked a will by destruction, (it can’t be found,) the other copy someone has cannot be admitted to probate. (You can’t say “Gee, if we can’t find one, we’ll just probate the other. ”)
Just because a disappointed heir may have destroyed the will does not rebut the presumption of revocation (assuming you can’t prove he did. ) Absent a statute, and absent evidence that the testator destroyed the will, a missing will may be admitted if its contents can be proved. A will may legally exist and not physically exist Gingiss recommends keeping the will in your office if you aren’t going to file it, except in Wisconsin where you’re not supposed to. Thompson v. Royall – Old Mrs. Kroll had a will and a small codicil, properly executed, each kept in possession of other folks.
Then a week before she died she called everyone together with the plan of destroying the wills and making new ones. She was talked out of destroying them, preferring instead to keep the documents as memoranda for drafting the next will. Instead, she signed a note, written by her lawyer, on the back of each instrument indicating that these were not to be her wills, but that others would be made. The court held that since there was no physical attack on the wills, and no duly witnessed signature of a revocation, the will was still valid. (Under Va. law, the “other revocatory act” must touch the words of the will and these notes didn’t. Destruction method requirements should not be taken lightly, just typing void on a will and signing the note may not be enough. Though a holographic revocation might be. UPC includes “canceling” as an act of revocation. Such words must be written on the will, not another document. Act need not touch the words of the will. Some states do not recognize partial revocation by an act… all or nothing. Partial Revocation – Client crosses out part of his will because someone forgot his birthday. UPC will allow partial revocation by act. Some states do not permit this.
Of course, if you can’t read what it said beforehand… the state often gives up. (some states invalidate the whole will. ) 2. Dependent Relative Revocation & Revival (Gingiss Likes this stuff) Relative Revocation: This is a doctrine that says – If a testator purports to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective. So if he tears up his will thinking his son died, and the son didn’t, the will is valid. Carter v. First United Methodist of Albany – (286) Old Mildred Tipton had a will from 1963. In 1978 she crossed out a few sections, and eft with it a note, unsigned or witnessed indicating that she intended to draft a new will like this. The court held that the crossing out bits was a revocation, but this was rebutted by the presence of the letter indicating that she revoked it with the understanding that a later will would be in effect. The presumption of revocation on a ‘damaged’ will can be rebutted, such as where the revocation was due to a mistake of fact. Courts have limited this doctrine to situations when there was an alternative plan for a will that failed, or when a mistake is recited in the instrument of revocation.
Just telling your lawyer the plan for your new will is not enough to invoke the Dependent Relative Revocation & Revival doctrine, better evidence of the new plan is required. Gingiss disagrees with this case. She knew her will was invalid, even if she planned to get a new one she had to know she was intestate after crossing out the bits on the 1963 will. Dependent Relative Revocation (DRR) is designed to cure a mistake not present in this case. Estate of Alburn – (292) Alburn had a will drawn in Milwaukee, and a later will done in Kankekee Illinois.
Then she destroyed the Kankekee will intending to revive the Milwaukee one by the act. This was not a valid revival of the Milwaukee will. The P argued that there was not enough evidence that this was the only reason Alburn would have destroyed the Kanekee will. Court found that from the evidence Alburn had no preference to die intestate, and that the Kanekee will was valid. 3 Takes Jurisdictions have on revocation: 1. The 2nd will does not revoke the 1st, because neither is effective until the testator dies. 2. The 2nd will revokes the 1st at the time 2nd is executed.
Then either if #2 is destroyed, 1 is revived… or 3. A revoked will cannot be revived unless properly re-executed with witnesses and other formalities. UPC 2-509: Revival of a Revoked Will – If will #2 properly revoke will #1, then will #1 is still revoked even if #2 is revoked later. #1 will be revived only if later evidence shows the testator’s intent to revive it (or by formal means. ) A will #2 that partially revokes sections of #1, that is itself revoked, will revive the sections of #1 that were revoked… absent intent to the contrary.
The revocation of prior wills & codicils in a new will is effective immediately upon execution, while the rest of the will does nothing ‘till you die. In the UK and a couple states, the revocation of a prior will is also invalid when the later will is revoked (so an earlier will can be revived this way. ) ALWAYS INCLUDE A RESIDUE CLAUSE IN A WILL. 3. Revocation by Operation of Law: Change in Family Circumstances UPC 2-804 & In most states, after a divorce sections of a will giving things to the former spouse are revoked outright. In the rest, they are revoked if there was a property settlement in the divorce. A will done after the divorce is the safest way to bypass this if you still want the ex to get something… or you can define it in the will. ) C. Components of a Will Integration, Incorporation by Reference, Act of Independent Significance, Repub. by Codicil. It is possible to leave a will such that the testator can reference outside documents, and change them later without the formalities of a will, and have them incorporated into the will. It is possible to have documents control who gets what without the formalities of a will under 2 doctrines: 1. The doctrine of Incorporation by Reference 2.
The doctrine of Acts of independent significance. But First, 2 other doctrines: 1. Integration of Wills – Generally, wills have multiple pages. A good lawyer will see that they are all firmly attached before the testator signs them, but internal continuity and such can demonstrate that the pages all belong together. (All documents in existence & present at the signing of the will that are intended to be part of the will ARE. ) 2. Republication by Codicil – Where a testator has a first will, then revokes it under a second, then makes a codicil to the first, the first is considered republished if such was the testator’s intent.
This can be a great way around interested parties that signed your will who would be purged otherwise. (republishing effectively changes the date on the will. ) And now the real stuff… 3. Incorporation By Reference (Much like 2, except the prior document is not a valid will. ) UPC 2-510 Any writing in existence when the will is drafted may be incorporated by reference to it in the will. Clark v. Greenhalge – Hellen Nesmith executed a will naming her cousin Executor, and main beneficiary of her personal property except for items designated in a memorandum known to that cousin Greenhalge.
One of the personal items was a Hinckley painting (among 49 listed). She kept also a notebook of bequests she wanted to make, it dictated that the painting should go to Ginny Clark, her nurse. She later stated often that it would give the piece one Virginia Clark. When she died, Greenhalge distributed property as per her amended wills, codicils, the memorandum, and some of the notebook. She refused to present Clark with the painting. The court held that the notebook qualified as a memorandum known to Greenhalge and was valid. Gingiss on this: Memo in 1972 & 1976, Notebook in 1979.
Notebook was not in existence when she made the first will. She made codicils in 1980, republishing the will, and now the notebook WAS in existence and WAS a “memo” known to the executor. (court stretches memo definition to mean the device she was using to name this stuff. ) The court was playing fairly loose. Here: With tangible property other than money, you can have an outside document modified after the will that changes the disposal of such items. Just make sure each change is signed. UPC Only so far. Court states that where there is doubt, the will of the testator must prevail. Simon v.
Grayson – Testator said in his will that the executor would be paid as per a note dated March 25, 1932, to be found in his effects. A letter indicating executor & payment was found but dated November 25, 1933. The court held that the letter was valid despite the discrepancy of dates. A document that becomes part of the probate files is open to the public, so don’t let secret gifts get confused with will documents. Where a will says “I don’t give A an item, because I’ve already done so” and the earlier conveyance does not work out, the court may “incorporate” the earlier conveyance into the will and give it effect. like a deed. ) UPC 2-513: Separate writing identifying bequest of tangible property: To be admissible the document may not bestow money, but may be altered by the testator later, and have no other purpose than to affect the will. Johnson v. Johnson – DG Johnson typed a will, then hand wrote at the bottom “I give my brother $10. This shall be my complete will unless altered. ” The court DG was a lawyer who had done a lot of proper wills. The question for the court was, is the typed portion a document incorporated by reference (since it was attatched to what might be a valid holographic codicil? Court held that the codicil was valid & republished the former will, even if it was written on a typed document that would have been the invalid former will. A bad will can be fixed by a good codicil, even a holographic one. Gingiss Argues this: Here the court confuses incorporation by reference and republication. The dissent argues that at issue is the fact that these are on the same sheet of paper, and that we allow holographic wills to incorporate by reference non-holographic documents. It seems this is ok on the few cases we have. Gingiss says this is one document, you can’t save it by incorporation by reference.
In SD, you might try for clear & convincing evidence that this is his intent for a will. 4. Acts of Independent Significance If the beneficiary or property designations are identified by acts or events that have a lifetime motive and significance on the apart from their effect on the will, the gift will be upheld under this doctrine. Where T devises his “car” to B, and shortly before death buys a new car, the gift is still valid, even though the original “car” was a junker. Pour-Over Will – Will that lists a few bequests and leaves the rest to whatever revocable trust that you operate.
The remainder pours over to the trust. “I have a trust, I leave my assets to that trust, to be administered in accordance with that trust as last amended before my death. ” This allows changes to the trust without getting witnesses. Its a great will substitute. This is the UNIFORM TESTAMENTARY ADDITIONS TO TRUST ACT stuff. D. Contracts Relating to Wills A person may enter into a contract to make or not revoke a will. Here contract law applies over the law of wills. If the party to a contract can prove its existence, the will is probated subject to a constructive trust upon the estate or devisees of the defaulting testator. . Contracts to Make a Will (RARE) States vary on the requirements for a contract relating to a will, most required clear & convincing evidence, some require writings. Joint wills do not create a presumption of a contract not to revoke or modify. Where the will is not made per the contract, the P may generally sue for quantum meruit. The value the decedent put on the consideration rendered by the other party is generally good evidence of its value. Note the nice cartoon from PLAYBOY Magazine on p. 321. Someone did this in real life, the Duke & Dutchess of Windsor.
Notorious leeches, nazis, mafia, etc… The told their servants they’d make up for low pay with their wills. Debts like this all over… When they died the servants were neglected. (Here they may have sued in quantum meruit. ) 2. Contracts Not to Revoke a Will These commonly arise where husband & wife make a joint (Reciprocal) will & one dies. Most courts require clear & convincing evidence that the contract existed. If the will is well drafted in these situations it will include reference to the existence of such a K. (But the smart lawyer avoids joint wills at all. )
Reciprocal Wills – I leave everything to my spouse, then to our kids, adopted by both spouses as their will. There is no presumption of a K not to revoke or modify in these. It should be specifically referred to. By and large these kinds of wills are a headache, avoid them. UPC 2-514 – Contracts to make a will, not revoke, devise, etc… may be proved only by provisions in the will stating the material provisions of the K, express reference in the will to a K & extrinsic evidence of the terms, or a signed writing from the decedent evidencing the K.
Joint & Mutual wills to not bear the presumption of such a K not to revoke. Old Casebook Case: Schimpf v. Hoff. (Old, Minority Rule. ) Spousal Protection law v. K not to revoke….. Via v. Putnam – Husband & wife had wills that stated there was a K to not revoke or revise the distributions. Husband re-maried after his wife died. State law had a prescribed a share to go to the surviving spouse when he died, which contradicted the will. The court held that the statute protecting surviving spouses was controlling. The majority rule is that 3rd party beneficiaries (The kids of the first marriage) prevail over the 2nd wife. See Rubenstein v. Muller, NY Case) Minority Rule: Here the court held that the kids did not have any power over the surviving spouse to take statutory spouse’s share, on public policy grounds. (A pre marital agreement could defeat the spousal share. ) To Avoid this, specify that the survivor will not do anything to defeat the distribution agreement like make a trust of all your wealth & a new beneficiary. Some courts don’t allow this anyway. Where you had a premarital will, and can disinherit your wife, it will not be followed save if you specify in it that you intend it to continue after a marriage.
We assume you forgot to change it otherwise. Breach of K would ordinarily result in a constructive trust for the former beneficiaries, making them creditors against the estate so they get their whole share anyway. SD: Elective share is 3% of joint assets for the first 10 years, then 4% for 10-15. Chapter 5: WILL SUBSTITUTES: NONPROBATE TRANSFERS A. Contracts with Payable-on-death Provisions Wilhoit v. Peoples Life Insurance – Grandma & Grandpa Wilhoit had a life insurance plan, and when Grampa died Gramma got about $5000 which she intended to keep in trust for a brother of hers.
She set up the trust with the insurance company, and the son predeceased her. So she set up the money to go to her grandson. When she died, the insurance company refused to give the money to the heir of her brother, who would have taken if his benefactor had not predeceased Gramma. The court held that the trust was never delivered, and as such was not an effective gift. The life insurance policy ended when Granpa died, and a new K (an invalid testamentary disposition) was made leaving the $$ with Grandson. Her will also left it to the grandson, and this carried the day.
Had her will been silent, the money would have gone elsewhere as per intestate succession. The court in Wilhoit strikes down a payable on death designation in a K because it lacks the formalities of a will. This is the traditional rule, still followed in some states, that aside from life insurance, a payable on death K is not valid. A better theory would be to imply a condition of survivorship for the insurance beneficiary. If a beneficiary under a will predeceases the testator, the clause of the will leaving him stuff evaporates. Lapse) Some argue that since folks use will substitutes to avoid p