T&E (Pratt) - outline PDF

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T&E

Johnson

INTRODUCTION: 

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Testate = with a will o To be valid, needs to be signed and witnessed o A will can be revoked by the testator at any point as long as she has capacity Intestate = without a will o Need to go through default list

Probate Property  

Non-Probate Property (outside the will)

In Decedent's name

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Through probate by will or

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Joint property (automatically to survivor)

intestacy 

Life insurance (a contract)

Designated survivors

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Retirement benefits (a contract)

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Property in living trusts (1) avoid probate (2) manage assets

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P.O.D. accounts = payable on death

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Designated survivors

Probate is not always necessary:  Lifetime Transfers (aka – will substitutes) o Trusts - must have property and be held by a trustee for the benefit of someone else  Inter vivos (during lifetime) v. testamentary (trust by will)  Revocable (majority) v. irrevocable (tax reasons) o Joint Tenancy  EX) life insurance (a contract) o Guardianships  Guardian of the person  Guardian of the property  Guardian ad litem Duties Lawyers Owe Clients (and others) Fabian v. Lindsay - Legal malpractice and breach of contract by a third beneficiary  The attorney has a duty to carry out the client's intent = breach of attorney's duty to the client o Recognize tort and contract causes of action by a third party beneficiary Schneider v. Finmann - Can an attorney be held liable for damages resulting from negligent representation in estate tax planning that caused enhanced estate tax liability? YES  A third party beneficiary can only sue on: fraud, malice, or other special circumstances

INTESTACY: 1. Is the will valid 2. Is ALL property properly distributed?  Residuary clause i. Sweeps up rest of property ii. Includes if a beneficiary dies 3. Intestacy rules are irrelevant  = a back-up 1

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Survivorship:  UPC = survived another by 120 hours o Adopted by NYS  Death in the absence of body: o UPC: presumed dead after 5 years o NYS: presumed dead after 3 years Protective Provisions: EXEMPT PROPERTY  Family members have a right to estate assets “off the top,” before creditors’ claims and before distribution according to the intestate statute (or will if there is one).  Homestead and exempt property: UPC provides the surviving spouse or children a monetary homestead allow and of 15K and exempt property allowance of 10k. o EPTL 5-3.1: Exemption for benefit of family o Applies if a decedent leaves a surviving spouse or descendants under 21 yrs of age. These assets are NOT part of the estate – they automatically become the survivor’s assets. Up to $56k in property can transfer. o Exemptions: cash or personal property up to 15k; one car or the cash equivalent up to 15k; farm machinery up to 15k; little stuff (pictures, bibles, utensils) up to 1k; household items, furniture and electronic devices up to 10k o Subtract BEFORE distributing assets! o *If estate assets are insufficient to pay funeral bill, the 15k must be used towards this.  Support: the monetary support to surviving spouse and /or issue to help them live while the estate administration is open. Structure of Intestate Schemes:  Blood relatives are favored (includes adoption and spouse)  Stop when you find survivors  A predeceased MAY be held as a placeholder UPC §2-102: Share of Spouse; 4 situations i. the entire estate (to spouse) if: 1. No descendant or parent of the decedent survives the decedent or 2. All of the decedents surviving the decedent are also descendants of the surviving spouse AND there is NO other descendant of the surviving spouse who survives the decedent (Note the NY is different) ii. The first 200k + ½ of the interest estate IF no descendant or the decedent surviving the decedent, but a parent surviving the decedent (no issue, but surviving parents) 1. Parent gets remained ½ (1/8 if 1 parents) iii. The first 150k +1/2 of the interstate estate IF one or more decedents surviving descendants are also descendants of the surviving spouse AND the surviving spouse HAS descendants that are NOT also the defendants (surviving spouse has other kids with decedent AND from a different relationships) 1. Other 12 goes to descendants iv. The first 100k + ½ of the intestate estate IF one or more of the decedent’s surviving descendants are NOT descendants of the surviving spouse (decedent has other kids from different relationship) 1. Purpose of this subdivision is to make sure the surviving spouse takes care of the children AND decedents children from prior spouse are also taken care of. UPC: Section 2-103. Share of Heirs Other Than Surviving Spouse.  USE IF NO SURVIVING SPOUSE (a) Any part of the intestate estate not passing to a decedent’s surviving spouse under Section 2-102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the individuals who survive the decedent: 2

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(1) to the decedent’s descendants by representation; (2) if there is no surviving descendant, to the decedent’s parents equally if both survive, or to the surviving parent if only one survives; (3) if there is no surviving descendant or parent, to the descendants of the decedent’s parents or either of them by representation; (4) if there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived on both the paternal and maternal sides by one or more grandparents or descendants of grandparents: (A) half to the decedent’s paternal grandparents equally if both survive, to the surviving paternal grandparent if only one survives, or to the descendants of the decedent’s paternal grandparents or either of them if both are deceased, the descendants taking by representation; and (B) half to the decedent’s maternal grandparents equally if both survive, to the surviving maternal grandparent if only one survives, or to the descendants of the decedent’s maternal grandparents or either of them if both are deceased, the descendants taking by representation; (5) if there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by one or more grandparents or descendants of grandparents on the paternal but not the maternal side, or on the maternal but not the paternal side, to the decedent’s relatives on the side with one or more surviving members in the manner described in paragraph (4). (b) If there is no taker under subsection (a), but the decedent has: (1) one deceased spouse who has one or more descendants who survive the decedent, the estate or part thereof passes to that spouse’s descendants by representation; or (2) more than one deceased spouse who has one or more descendants who survive the decedent, an equal share of the estate or part thereof passes to each set of descendants by representation. EPTL § 4-1.1 Descent and distribution of a decedent’s estate  The property of a decedent not disposed of by will shall be distributed as provided in this section. In computing said distribution, debts, administration expenses and reasonable funeral expenses shall be deducted but all estate taxes shall be disregarded, except that nothing contained herein relieves a distributee from contributing to all such taxes the amounts apportioned against him or her under 2-1.8. Distribution shall then be as follows: (a) If a decedent is survived by: (1) A spouse and issue, fifty thousand dollars and one-half of the residue to the spouse, and the balance thereof to the issue by representation. (2) A spouse and no issue, the whole to the spouse. (3) Issue and no spouse, the whole to the issue, by representation. (4) One or both parents, and no spouse and no issue, the whole to the surviving parent or parents. (5) Issue of parents, and no spouse, issue or parent, the whole to the issue of the parents, by representation. (6) One or more grandparents or the issue of grandparents (as hereinafter defined), and no spouse, issue, parent or issue of parents, one-half to the surviving paternal grandparent or grandparents, or if neither of them survives the decedent, to their issue, by representation, and the other one-half to the surviving maternal grandparent or grandparents, or if neither of them survives the decedent, to their issue, by representation; provided that if the decedent was not survived by a grandparent or grandparents on one side or by the issue of such grandparents, the whole to the surviving grandparent or grandparents on the other side, or if neither of them survives the decedent, to their issue, by representation, in the same manner as the one-half. For the purposes of this subparagraph, issue of grandparents shall not include issue more remote than grandchildren of such grandparents.  Only go down to first cousins (7) Great-grandchildren of grandparents, and no spouse, issue, parent, issue of parents, grandparent, children of grandparents or grandchildren of grandparents, one-half to the great-grandchildren of the 3

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Johnson paternal grandparents, per capita, and the other one-half to the great-grandchildren of the maternal grandparents, per capita; provided that if the decedent was not survived by great-grandchildren of grandparents on one side, the whole to the great-grandchildren of grandparents on the other side, in the same manner as the one-half.  Can go down to children of first cousin and that is it (b) For all purposes of this section, decedent’s relatives of the half-blood shall be treated as if they were relatives of the whole blood. (c) Distributees of the decedent, conceived before his or her death but born alive thereafter, take as if they were born in his or her lifetime. o Alive at the time of death or the child is on gestation (d) The right of an adopted child to take a distributive share and the right of succession to the estate of an adopted child continue as provided in the domestic relations law. (e) A distributive share passing to a surviving spouse under this section is in lieu of any right of dower to which such spouse may be entitled.

EPTL §2-1.1 - Heirs at Law and Next of Kin Defined  Whenever used in a statute or instrument, unless a contrary intention is expressed therein, the term “heirs”, “heirs at law”, “next of kin” or any term of like import means the distributees, as defined in 1-2.5. EPTL §2-1.6 - Disposition of Property Where a Person Dies Within One Hundred Twenty Hours of Another Person or Any Other Event (a) Except as provided in paragraph (b) of this section: (1) Where, under articles 4 and 5 of this chapter, the title to property or the devolution of property depends upon an individual’s survivorship of the death of another individual, an individual who is not established by clear and convincing evidence to have survived the other individual by one hundred twenty hours is deemed to have predeceased the other individual. (2) For purposes of a provision of a governing instrument that relates to an individual surviving an event, including the death of another individual, an individual who is not established by clear and convincing evidence to have survived the event by one hundred twenty hours is deemed to have predeceased the event. (3) Where a disposition of property under a governing instrument (i) depends upon the time of death of two or more beneficiaries designated to take alternatively by reason of surviving an event, including the death of another individual, and (ii) it is not established by clear and convincing evidence that such beneficiaries have survived the event by one hundred twenty hours, the property thus disposed of shall be divided into as many equal portions as there are alternative beneficiaries and such portions shall be distributed respectively to those who would have taken the whole property in the event that the designated beneficiary through whom they take had survived. (4) Where it is not established by clear and convincing evidence that one of two co-owners with right of survivorship survived the other co-owner by one hundred twenty hours, one-half of the property passes as if one had survived by one hundred twenty hours and one-half as if the other had survived by one hundred twenty hours. Where there are more than two co-owners and it is not established by clear and convincing evidence that at least one of them survived the others by one hundred twenty hours, the property passes in the proportion that one bears to the whole number of co-owners. (b) The survival requirements of paragraph (a) of this section shall not apply if: (1) The governing instrument contains language dealing explicitly with simultaneous deaths or deaths in a common disaster and that language is operable under the facts of the case. (2) The governing instrument expressly indicates that an individual is not required to survive an event, including the death of another individual, by any specified period or expressly requires the 4

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Johnson individual to survive the event for a specified period. However, survival of the event or the specified period must be established by clear and convincing evidence. (3) The imposition of a one hundred twenty-hour requirement of survival would cause a nonvested property interest or a power of appointment to be invalid under section 9-1.1 of this chapter. However, survival must be established by clear and convincing evidence. (4) The application of a one hundred twenty-hour requirement of survival to multiple governing instruments would result in an unintended failure or duplication of a disposition. However, survival must be established by clear and convincing evidence. (5) Its application would result in a taking of the intestate estate by the state. (6) The surviving spouse exercised the right of election under section 5-1.1-A of this chapter, but died less than one hundred twenty hours after the death of the deceased spouse. (c) For purposes of this section, “governing instrument” means a deed, will, trust, insurance or annuity policy, bank account in trust form, security registration in beneficiary form (TOD), pension, profit-sharing, retirement, or similar benefit plan, instrument creating or exercising a power of appointment or a power of attorney, or a dispositive, appointive, or nominative instrument of any similar type.

EPTL §2-1.7 - Presumption of Death From Absence; Effect of Exposure to Specific Peril (a) A person who is absent for a continuous period of three years, during which, after diligent search, he or she has not been seen or heard of or from, and whose absence is not satisfactorily explained shall be presumed, in any action or proceeding involving any property of such person, contractual or property rights contingent upon his or her death or the administration of his or her estate, to have died three years after the date such unexplained absence commenced, or on such earlier date as clear and convincing evidence establishes is the most probable date of death. (b) The fact that such person was exposed to a specific peril of death may be a sufficient basis for determining at any time after such exposure that he or she died less than three years after the date his or her absence commenced. (c) The three-year period provided herein shall not apply in any case in which a different period has been prescribed by statute. Problem 1:  If a person dies intestate, joint property is not included o EX) personal stocks of the decedent would be subject to intestacy rules Problem 2:  Spouse and child survive decedent o UPC: all $90,000 to the wife o EPTL: $50,000 + half of what's left to the wife and the rest to the child  Only the decedent's brother and first cousin survive him o UPC & EPTL: everything would go to the brother Spouses and Partners:  Some states recognize CL marriage o No formal ceremonies  Obergefell v. Hodges - couple of same sex can't be deprived of their right to marry  EPTL §5-1.2 - Disqualification as Surviving Spouse a. A husband or wife is a surviving spouse within the meaning, and for the purposes of 4-1.1, 5-1.1, 5-1.1-A, 5-1.3, 5-3.1 and 5-4.4, unless it is established satisfactorily to the court having jurisdiction of the action or proceeding that: 1. A final decree or judgment of divorce, of annulment or declaring the nullity of a marriage or dissolving such marriage on the ground of absence, recognized as valid under the law of this state, was in effect when the deceased spouse died.

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2. The marriage was void as incestuous under section five of the domestic relations law, bigamous under section six thereof, or a prohibited remarriage under section eight thereof. 3. The spouse had procured outside of this state a final decree or judgment of divorce from the deceased spouse, of annulment or declaring the nullity of the marriage with the deceased spouse or dissolving such marriage on the ground of absence, not recognized as valid under the law of this state. 4. A final decree or judgment of separation, recognized as valid under the law of this state, was rendered against the spouse, and such decree or judgment was in effect when the deceased spouse died. 5. The spouse abandoned the deceased spouse, and such abandonment continued until the time of death. 6. A spouse who, having the duty to support the other spouse, failed or refused to provide for such spouse though he or she had the means or ability to do so, unless such marital duty was resumed and continued until the death of the spouse having the need of support. Descendants: (or issue) 1. Non-marital children  Ability to inherit from father? o Need to establish paternity → look at states statutes  EPTL §4.1.2: 1. Court makes an order of filiation 2. The father signs a document acknowledging paternity 3. DNA test proving paternity 2. Adopted Persons  Adopted kids can inherit from adoptive parents  SOME states sever inheritance from genetic parents  Equitable adoption = court recognizes adoption even without formal papers o NOT in NYS 3. Children and Assisted Reproduction  Finley v. Commissioner, Social Security Admin. o Trying to get health insurance for baby with Mr. Finley's earnings record o Q: Can a child who was an embryo via IVF during marriage and implanted in mother's womb after father died, inherit from the father? NOPE 1. → could be included in a will but the father died intestate 2. When is conception? a. Lacks a clear definition 3. The court encouraged the legislature to review the statute because it was written when IVF was not available o EPTL §4-1.1(b) - For all purposes of this section, decedent’s relatives of the half-blood shall be treated as if they were relatives of the whole blood. o EPTL §4-1.4 - Disqualification of Parent to Take Intestate Share o UPC: 2-120(k) 1. [When Posthumously Conceived Child Treated as in Gestation.] If, under this section, an individual is a parent of a child of assisted reproduction who is conceived after the individual’s death, the child is treated as in gestation at the individual’s death for purposes of Section 2-104(a)(2) if the child is:  in utero not later than 36 months after the individual’s death; or  born not later than 45 months after the individual’s death. 4. Half Bloods 6

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Ex) half brother or sister o Share a parent by blood  Most states allow them to inherit equally o Ex) a step-child would not inherit from non-blood step-father 5. Step Children  If last resort, possible virtual adoption to allow inheritance so it doesn't go to the state o NOT in NYS Allocating Shares: Descedents & Collaterals:  If parent is alive, the child does not inherit → the search stops 1. "per capita" - counts people o Strict Per Stirpes  Depends on how many kids the parents have  The share of the prior holder is divided by number of kids o Per Stirpes: Per Capita with Representation  Skip older, "empty" generations and divide the estate into shares at the first generation leaving survivors 2. "representation" - focuses on generation and people...