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Trusts & Estates I (JURI 4280) Professor Lisa Milot Fall 2019

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Introduction OCGA § 53-1-5 UPC 2-1106 (3)(B) (Disclaim Procedures) (TOD=when we’re certain who it belongs to) If an instrument creating a future interest contains no provision providing for how such an interest is to be disclaimed before its passing, then if the disclaimant is not an individual the disclaimed interest passes as if it did not exist, or if the disclaimant is an individual the disclaimed interest passes as if the disclaimant had died immediately before the T.o.D., unless the disclaimant’s descendants would share the interest by law or the instrument (only to S’s children, not split with siblings), the disclaimed interest passes only to the descendants who survive the time of distribution, or if the interest would have passed to the disclaimant’s estate the interest passes by representation to the descendant’s surviving T.o.D, where no descendant’s survive the T.o.D. it shall pass to the state or any other persons as it would under intestacy laws of their domicile, unless the decedent’s surviving spouse has remarried, in which case the decedent shall be considered unmarried at death. (Disclaimer can’t be used increase your kids shares and decrease your siblings shares) Role of the Lawyer and the Lawyer-Client Relationship Probate and Non-Probate Transfers Intestacy: Introduction and Surviving Spouse Shares OCGA § 53-2-1(c)(1) UPC 1-109 (Cost of Living Adjustment- That calendar year’s Consumer Price Index**) b. If CPI of preceding year < or > ref. base index, then adjust by $ amt x CPI/index rounded down if decrease or up if increase to nearest $100 UPC 2-102* (Share of Spouse) All if no descendant or parent survives decedent OR all descendants are also the spouse’s children and there is no other descendant (Half-children?) of the surviving spouse who survives decedent. Firs 300k+3/4 if no descendant of the decedent survives but a parent does First 225k+1/2 if all dec. surviving des. are also des. of the surviving spouse AND the surviving spouse has one or more half-children + des. (SPOUSE) First 150k + 1/2 if one or more of the dec.’s surviving des. are not des. of the surviving spouse(DEC.) (This is in addition to, not including, probate exemptions in Pt. 4 which can total up to 64.5k) UPC 2-103 Heirs Other Than Spouse (Whatever Not Already Given Through 102) (1) To the dec. des. by rep. (2) If no des.  dec. parents equally IF both survive OR to the surviving if one survives (3) If neither 1 or 2 des. of dec. parents or either by rep. (4) If neither 1,2, or 3 for grandparents if both survive (A) Half split equally between each of the dec.’s paternal grandparents if both survive; all to one if one survives; or to their descendant’s by representation (B) Half split equally between each of the dec.’s maternal grandparents if both survive,; all to one if one survives; or to their descendants if bot are deceased, taking by representation. (5) If neither 1,2, or 3, but only one of either 4(A) or 4(B) All to that side (6) If there is no taker under any of these subsections but the dec. has one deceased spouse who has one or more des. who survive the dec.  the estate or part thereof passes to those des. by rep.

1-22

22-38 39-56 57-72

OR more than one deceased spouse who has one or more des. who survive the dec. an equal share of the estate or part thereof shall pass to each set of des.’s by rep. Wyoming Share of the Spouse Unless there’s a prenup, undisposed property shall descend and be disposed of, if dec. intestate, to his family subject to the following If any issue and spouse, ½ to spouse and residue to issue, all if only spouse 5.

Intestacy: Lineal Descendants, Ancestors & Collaterals OCGA § 53-2-1(b)(1) & (c) and § 53-2-50 UPC 2-104 (120 Hours Requirement) FOR- int.; homestead allowance, and exempt property (1) Individuals born before a decedent’s death who fail to survive dec. by 5 days are deemed to have predeceased the dec. Presumption against survival must be disproven by clear and convincing evidence. (2) Individuals unborn at dec.’s death must survive 120 hours after birth, proven by C&CE (Inapplicable if the estate would otherwise pass to the state) UPC 2-105 (Escheating) If there is no taker under article 2, the interest escheats to the state UPC 2-106 (Representation aka Per Capita) (All equal to those equal) (70% then 20% stirpes) (a)(1-2) deceased means actually predeceased or as deemed by UPC 2-104, survival includes contrary (b) (DEC. DES. !!!) this means the estate is divided into as many equal shares as there are (i) surviving des. in the generation nearest to the dec. which contains one or more surviving des. (ii) deceased des. in the same generation who left surviving des. (2-104), if any. !!!Each surviving des. in the nearest gen. is allotted 1 share, the remaining shares, if any, are combined and then divided in the same manner among the surviving des.’s of the deceased des. as if the surviving des.’s who were allocated a share and their surviving des.’s had predeceased the dec. (c) (Des. of Parents or Grandparents) As above, nearest generation to dec. parent(s) or either OR paternal grandparent(s) or either, OR maternal grandparent(s) or either, the estate is then divided into as many equal shares as there are (i) surviving des. in the generation nearest the dec. parents or either, OR the deceased granparents or either that contain one or more living des. AND (ii) deceased des. in the same generation who left surviving des., if any. Each surviving des. in the nearest gen. is allocated one share, the remaining shares, if any, of the deceased descandants are then divided amongst their surviving children of the deceased descendants as if the surviving descendants who were allocated a share and their surviving descendants had predeceased the dec. (PER STIRPES HATES MORE BABIES) UPC 2-114 (Parent barred from taking under certain circumstances 1. Parental rights were terminated and never reestablished 2. Child died before 18 and parental rights COULD have been terminated established by C&CE (abuse, neglect, inaction, etc)

Wyoming Distribution Strict Per stirpes Pennsylvania Succession Modern Per stirpes 6. Defining the Modern Family OCGA § 53-2-1(b)(2), § 19-8-19, and § 19-8-21 UPC 2-107 (Half-bloods) Half bloods are treated as whole bloods

72-84

95-108

UPC 2-113 (Preventing Double Inheritance) Let’s say you marry your dad’s second wife and adopt one of the children of their marriage, the adopted child could technically receive two shares of the inheritance but cannot under this rule. UPC 2-118 (Adoptee’s) Adoptees are treated as the whole blood, as well as those in the process of being adopted if the adoption is still granted, same with stepparents if the deceased step parent’s spouse survives five days UPC 2-119 (As the above pertains to genetic parents) (a) Except as otherwise provided, an adopted child and their genetic parents do not have a parent-child rel. (b) Adoptions by a stepparent and by one genetic parent are allowable along with a third relationship with the other parent (Get adopted by the 20 year old your dad had a mid-life crisis with, assume the older man your mom married will leave everything to her) (c) 3 relationships may exist if a relative of your genetic parents adopts you, or that genetic relatives spouse (excludes double inheritance) (d) Children adopted after the death of their children may retain a third parent relationship (Count Olaf rule) UPC 2-120 (In Vitro) In the case of divorce or in a lack of consent a parent-child relationship does not exist between the child and the parent An in vitro child will have a p-c relationship with his birth mother, the father if his sperm was used and no exception met Birth certificates may presumptively create a p-c relationship If no record signed before two, you must function as a parent before 18 to create a p-c relationship UPC 2-121 (Child Born To Gestational Carrier) Court order must establish validation for a gestational carrier agreement and the genetic mother is the last resort if no other c-p rel. exists, intended parents must function as parents for at least 2 years 138-154 7. Simultaneous Death, Disclaimers, and Advancements OCGA § 53-10-2 and § 53-10-5 UPC 2-109 (Advancements) (Can be with non probate property such as in irrevocable inter vivos trust or as the beneficiary of a life insurance policy) Upon the conferment of a gift to a would-be heir, if a decedent or that heir had contemporaneously prepared a writing indicating that the gift is to be taken into account in computing the division and distribution of the decedent’s intestate estate. Property is then valued as of the first of either the time the heir came into possession or enjoyment of the property or at the dec. death. The advancer’s interest is not taken into account if he/she predeceases the dec. and his/her share would be passed to their issue, unless otherwise indicated in writing by dec. Hotchpot Method of Accounting 1. Add value of advancements to the value of G’s probate estate, dubbed the hotchpot estate 2. Predecease anyone who’s advancement exceeds the share they would have otherwise received 3. Subtract the value of any advancements not exceeding an heir’s share from what they would have otherwise received.

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The Elective Share

UPC 2-201 Dec. nonprobate transfers to others= everything that isn’t in the augmented estate in everything except UPC 2-

155-167

205 UPC 2-202* C. Election is added to, not taken from other statutory benefits (see extras in 2-204) D. Elective share rights of spouses domiciled outside the dec. state is governed by the dec. state 9. The Elective Share (cont.) 167-186 UPC 2-202 (a)-(b)!!! a. Right to claim an elective share in this state worth up to, but not exceeding 50% b. If ($amt2-207+$amt 2-209(a)(1) +$amt payable from dec.’s net probate estate and nonprobate transfers to others Certain non-probate transfers to others >Certain non-probate transfers to the surviving spouse >The surviving spouse’s property >Certain non-probate transfers from the surviving spouse to others

10. Other Protections for a Surviving Spouse & the Protection of Children (skip “The Community Property System) (These exemptions always happen first) OCGA § 53-3-1, § 53-3-2, § 53-3-3, § 53-3-7, and § 53-4-48 UPC 2-302 (Omitted Children) With exception, failure to include subsequent children in a previous will means such children will: -Inherit an intestate share or all of an estate unless a spouse is there to take (if no other children) - or if other children is limited to the share of the estate those pre-existing children were devised Or the share he would have received had he been included equally, to as much an extent possible in the same character as the other children (money or land, etc.) surviving childrens interests abate ratably to accomadate, preserving character of the devises to the best extent possible same goes if child is mistakenly thought to be dead None of this applies if it appears the child was intentionally omitted or the child was provided for by transfer outside the will

190-211

UPC 2-402* (Homestead Allowance) 22.5k to spouse, split between kids if deceased UPC 2-403* (Exempt Property) Up to 15k in securities, furniture, cars, furnishings, appliances, and personal effects, split between kids if deceased, family entitled to make up the remainder of this 15k from other assets of the estate UPC 2-404 (Family Allowance) Children and those supported by dec. entitled to rsbl support in money out of the estate for maintenance during administration, for up to 1 year, in lump sum or periodic installment, use standard of living to take account, while there may be need to be cut backs, a period of adjustment is called for. (2250 per month for 1 year) (27k?) UPC 2-405 (lump sum/12*) (Source of allowances) As long as the estate is otherwise sufficient, family may not dip into devised assets for these allowances, or the personal rep may do so if they fail to in a reasonable time. UPC 2-603 (Antilapse, Deceased Devisee, Class Gifts) Substitute gifts created in the absence of a devisee (grandparents or their descendants) may be superceded by alt devises in the will (See book for rest if needed) 11.

Execution of Wills OCGA § 53-4-23 and § 53-4-24

Chester et al. v. Smith, 677 S.E.2d 128 (Ga. 2009) Chester signed her will in the parking lot of a bank and got two tellers inside the bank to act as witnesses. Since the testatrix could not see them from her vantage point the Supreme Court of Georgia deemed the will to have been improperly granted and entered it to probate to proceed by intestacy. Policy: Wills could still have been swapped in that very short period, these formalities are taken very seriously, and are a great way to challenge any will.

213-230

TWEN

UPC 2-502 (Execution Witness or Notarized Wills) Check 503,506,513 Wills must be: (1) in writing, (2) signed by testator or rep. at their behest (3) signed by two witnesses to testator’s signature OR testator’s acknowledgement of such a signature OR! Acknowledged by the testator before a notary public or equivalent Wills in the testator’s handwriting do not require this (Holographic wills) extrinsic evidence may be used to prove or disprove wills executed such as these UPC 2-504 (Self-Proved Wills) Affidavits by testator and witnesses made before a notary public, does not matter when, proves the will’s execution without further inquiry, they still may be contested despite the increased formalities

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Salvage Doctrines and Holographic Wills

UPC 2-503 (Harmless Error) Even if a writing does not comply with 502, if C&CE establishes that the writing was intended to establish a will, a partial or complete revocation thereof, a codicil, or a revival of the second portion of this series

231-246

247-268

13. What Constitutes the Will? OCGA § 53-4-3 UPC 2-101 (Intestate estate) Any part of the estate not passed by will passes by intestacy except as modified, disinheriting has the same effect as if the individual disclaimed the share, or, subject 2-1106, as if they had predeceased the decedent UPC 2-510 (IBR) UPC 2-511 UPC 2-512 Will may dispose of property by reference to acts and events that have significance apart from their effect on the dispositions made by the will, whether they occur before or after the execution or testator’s death (1) Execution/revocation of another individual’s will counts (2) “All employees of my favorite coffee shop” or “all stocks in my portfolio” work (3) Note that some place for safekeeping could be used solely for the ability to change what someone in the will receives  fails

UPC 2-513 Separate Writing IDing Devise of Tangible Property (1) Will may refer to written statement/list to dispose of items of tangible personal property not otherwise disposed in the will other than money (2) Writing must be signed by testator and describe the items (3) Writing may be referred to as one in existence, at the time of testator’s death; may be prepared before or after execution, may be altered after preparation; and may be a writing that has no significance apart from effect on the dispositions made by the will (4) Note – Stocks, cash, real estate, and the like must be disposed by will

270-292

14. Construction Problems Created by the Time Gap OCGA § 53-4-66 and § 53-4-67 Abatement (UPC § 3-902) (1) (a) Shares abate without priority between real/personal property, subject to surviving spouse’s elective share according to the following order (2) Order of Abatement (Estate of Potter) (a) Property not disposed by the will (b) Residuary (c) General devises (d) Specific devises (i) General devise charged on specific property is a specific devise up to the value of the charged property, then becomes a general devise to the extent the specific property fails to fulfill the devise (3) Within a group (e.g., general devises), you total up what is available and each person gets their proportionate percentage (“ratably” within class) (4) (b) If will expresses an order of abatement, or there is express/implied purpose of the devise that would be defeated by the order, abate with testator intent (5) (c) If subject of a specific devise is sold/used, abatement is achieved by appropriate adjustments in other interests in remaining assets (6) IA Code § 633.436 – Devises to surviving spouse of any type abate last, problematic statute because estates may have to pay out debts from devises

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Lapse & Revocation OCGA § 53-4-42, § 53-4-50, § 53-4-64, § 53-4-65 UPC 2-507 (revocation) Subsequent wills expressly or by inconsistency Or revocatory acts (burning, tearing etc.) or by someone else with testator’s direction Without express revocation, subsequent wills wholly revoke IF Intent+ inconsistency (Complete disposition = express revocation unless rebutted by C&CE) Incomplete dispositions amount to supplements to previous wills UPC 2-508 A change of circumstances does not amount to a revocation Check 803-804 UPC 2-601

ELECTIVE SHARE

292-301 341-359

a) Policy – Partnership theory, or care and maintenance theory b) Analysis (UPC) i) Compute Augmented Estate (1) § 2-204 – Net probate estate (2) § 2-205 – Non-probate transfers to others (a) Owned by decedent passing outside probate: (A) General power of appointment, (B) Held in joint tenancy, (C) POD account, (D) Life insurance (b) Transfers decedent retains right of enjoyment created during marriage: (A) Irrevocable trust retaining income for life (value of property that generates the income  whole usually), (B) Trust property that decedent creates power over income exercisable for decedent’s benefit (value of whole property) (c) Outright transfers within 2y of death made during marriage: (A) Transfer as a result of termination of decedent’s right, interest or power over property, (B) Transfers relating to life insurance policy if proceeds would have been included otherwise, (C) All other transfers made to non-spouse over excludable amount for taxable gifts ($13k) (3) § 2-206 – Non-probate transfers to surviving spouse (§2-205(1), (2)) (4) § 2-207 – (1) Surviving spouse’s property (excluding §§ 2-204/6) (2) including transfers that would be included if surviving spouse was testator ii) Compute Marital Property Portion (§ 2-203(b)) iii) Elective Share is 50% of Marital Property portion (§ 2-202(a)) (1) § 2-202(b) not less than $75k iv) Subtract probate dispositions to spouse, § 2-206 dispositions and MP of § 2-207 property of spouse v) § 2-209 gives order of abatement – First from probate estate then trusts, then gifts (1) Abate ratably from AE amounts except § 2-205(3)(A) and (C) vi) NOTE – All life interests in trust to surviving spouse are disclaimed for ES calcs.

H/W married 20y, estate worth $150k, (will leaves $25k to W, $75k to W in trust remainder to S, $50k to S) house = $100k (joint tenancy), $100k POD to S, $50k insurance POD to W, irrevocable trust to H – $100k remainder to Cardozo (1) W has $250k (2) UPC (a) AE - $150k probate estate, $50k house (H), $50k house (W), $100k POD, $50k insurance (W), $100k trust (if during marriage), $250 (W’s) = $750k (b) MP = 100% of $750k, ES = 50% of MP = $375k (c) W has 100% of ($250k + $50k house) + ($25k, disclaims trust, $50k house, $50k insurance) = $425k  W can’t elect

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Contesting the Will

389-404 418-419 434-445

OCGA § 53-4-10 UPC 2-501 Introduction to Estate Taxes Trust Creation (read through “The Merger Doctrine”)

TWEN 481-500

a) Generally – Requirements (Trustee, Beneficiaries, Property) i) Settlor – Creator of trust ii) Trustee (appointed by court if no trustee is named!) (1) Has fiduciary duties (loyalty and care) to beneficiaries (2) Typically want a trustee appointment mechanism for appointing new trustees (3) Sole trustee cannot also be sole beneficiary  merger and trus...