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Chapter 17 Transferring Real Estate after Death: Wills, Estates, and Probate.

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Presentation on theme: "Chapter 17 Transferring Real Estate after Death: Wills, Estates, and Probate."— Presentation transcript:

1 Chapter 17 Transferring Real Estate after Death: Wills, Estates, and Probate

2 Uniform Probate Code State Law Driven. Laws of Wills, Estates and Probate – Heavily State Law Driven Uniform Probate Code. One-Third of States Have Adopted Uniform Probate Code. MN is one of them. Will v. Intestate. 2

3 Dying Intestate: General Rules of Distribution 1. Surviving spouse 2. Children (should go to future generations if possible – not to past or older generations) 3. Parents 4. Siblings (brothers and sisters) 5. Grandparents 6. Aunts and uncles 7. And so on... Until “laughing heirs” 8. Escheat General Rules

4 Dying Intestate: MN Law for Spouses Surviving spouse. The intestate share of a decedent's surviving spouse is: (1) the entire intestate estate if: (i) no descendant of the decedent survives the decedent; or (ii) all of the decedent's surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent; (2) If other descendants of surviving spouse or decedent - the first $150,000, plus one-half of any balance of the intestate estate, if all of the decedent's surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent, or if one or more of the decedent's surviving descendants are not descendants of the surviving spouse.

5 Dying Intestate: MN Law for Heirs Other than the Surviving Spouse Any part of the intestate estate not passing to the decedent's surviving spouse, or the entire intestate estate if there is no surviving spouse, passes in the following order to the individuals designated below who survive the decedent: (1) Descendants. to the decedent's descendants by representation; (2) Parents. if there is no surviving descendant, to the decedent's parents equally if both survive, or to the surviving parent; (3) Parent’s Descendants. if there is no surviving descendant or parent, to the descendants of the decedent's parents or either of them by representation; (4) Grandparents. 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, half of the estate passes to the decedent's paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent's paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other half passes to the decedent's maternal relatives in the same manner; but if there is no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side, the entire estate passes to the decedent's relatives on the other side in the same manner as the half; (5) Other Family. if there is no surviving descendant, parent, descendant of a parent, grandparent, or descendant of a grandparent, to the next of kin in equal degree, except that when there are two or more collateral kindred in equal degree claiming through different ancestors, those who claim through the nearest ancestor shall take to the exclusion of those claiming through an ancestor more remote. Order of Payment

6 Dying Intestate: MN Law if No Family The State takes it.

7 Dying Intestate: MN Simultaneous Death Act REQUIREMENT THAT HEIR SURVIVE DECEDENT FOR 120 HOURS. An individual who fails to survive the decedent by 120 hours is deemed to have predeceased the decedent for purposes of homestead, exempt property, and intestate succession, and the decedent's heirs are determined accordingly. If it is not established that an individual who would otherwise be an heir survived the decedent by 120 hours, it is deemed that the individual failed to survive for the required period. This section is not to be applied if its application would result in a taking of intestate estate by the state under section 524.2-105.524.2-105

8 Example, Ron passes away with no spouse or children – how are the assets of the estate distributed? Parents Ron Ron’s brother Ron’s sister

9 Consider 17.1- How to Distribute Ralph’s $800,000 Estate Steven Alice Ralph and Cora Ralph Marries Again and Dies After Two More Children Alan Erica Ralph and Susan Children

10 Per Capita Distribution Child One 1/4 Child One 1/4 Child Three 1/4 Child Three 1/4 Decedent Grandchild A 1/4 Grandchild A 1/4 Grandchild B 1/4 Grandchild B 1/4 Child Two

11 Per Stirpes Distribution Child One 1/3 Child One 1/3 Child Three 1/3 Child Three 1/3 Decedent Grandchild A ½ of 1/3 (or 1/6) Grandchild A ½ of 1/3 (or 1/6) Grandchild B ½ of 1/3 (or 1/6) Grandchild B ½ of 1/3 (or 1/6) Child Two

12 UPC Combo Distribution Old - Same as Per Stirpes New – Per Capita at Each Generation Child One 1/2 Child One 1/2 Child Three Decedent Grandchild A ½ of 1/2 (or 1/4) Grandchild A ½ of 1/2 (or 1/4) Grandchild B ½ of 1/2 (or 1/4) Grandchild B ½ of 1/2 (or 1/4) Child Two

13 Probate: Distribution Shares 1 / 4 for B,C,D; 1 / 8 for F,G Per stirpes: equal down lines A A B B C C D D F F G G E E 1 / 5 for B,C,D,F,G A A B B C C D D F F G G E E Per capita: equal among heirs

14 In the Matter of the Estate of Morris P. Van Der Veen (#3) 935 P2d 1042 (Kan 1997) Son killed parents. Son named as beneficiary of parents – “unto to our children, Laura Ann Van Der Veen and Kent Phillip Van Der Veen, equally and per stirpes”. Son had a child (not known by the parents). Who gets the money? What rationale does the court use to reach this decision? 14

15 Example from Book 15 C B A W X YZ Per Capita. A, B, Y, & Z = 1/4 Per Stripes A, B = 1/3 Y, Z = 1/6 UPC - same as per stirpes Example 1Example 2Example 3 Per Capita. X, Y, & Z = 1/3 Per Stripes X = 1/2, Y, Z = 1/4 UPC - X, Y, Z = 1/3 (because the same generation) C B A W X YZ C B A W X YZ Per Capita. X, C = 1/2 Per Stripes X, C = 1/2 New UPC? Per Captia per Generation. C = ½ - each of X, Y, Z get 1/3 of a ½ (or 1/6) Or, C= ½ and X = 1/2

16 Consider 17.2 – Distribution Hypothetical 16 H DCBA W H dies in 2001 leaves everything to W W passes away two months ago intestate A died in 1993 but had three children ZWX R TS Per Capita Per Stripes By Right of Representation UPC – Old same as Per Stripes UPC – New – some twists

17 Dougherty v. Rubenstein (#X) 914 A2d 184 (Md App 2007) Father and Son Rocky Relationship. A father and son did not get along very well until they reconciled when the son was 24. For the next seven years, the son and father saw each other often and talked daily. Father Leaves Estate to Son. During that time the father wrote a will leaving everything to his son. Father’s Heath Deteriorates. The father’s health deteriorated and he was admitted to the hospital – basically for alcoholism. The doctor’s recommended he be transferred to an intermediate care facility. The doctors also stated the father was suffering from dementia. Father Hated Care Facility. The father hated the care facility and blamed his son for putting him there (wrongly blamed his son). Father excluded son from will based on a false belief that son had forced father into an old-folks home and stolen his money. The father also wrongly blamed the son of stealing his money. Father Creates a New Will. Leaving the son out. Father Dies – Son Contests the Will. “Insane Delusion Rule” – competent overall but not over one person. Case of Devil Daughter. Start here thursday

18 Wills I. Creation A. Writing B. Signature C. Witnesses D. Notarized II. Terminology A. Testate / Intestate B. Testamentary / Inter vivos

19 Requirements for a Valid Will Writing Testamentary capacity Signature Witnesses Acknowledgment (for self-proving will)

20 Holographic will Consider 17.4, p. 487: holographic will question: “I would like Deborah to have my home and property to maintain and keep with the hope that she may find the comfort and independence that has been denied me. She has been my love and faithful consort and has given me untold support and happiness. Words fail me.”

21 Revocation of a Will By new will By physical destruction By operation of law

22 Components of Testamentary Capacity Age capacity Mental capacity – Ability to understand nature and value of property – Ability to understand relationships and objects of their affection – Issues of undue influence

23 Grounds for Challenging a Will Testamentary capacity Undue influence Failure to follow requirements Tortuous interference with expectation of inheritance (Anna Nicole Smith case)

24 Undue Influence Testator must be established as a person who could be subject to undue influence (sick, confused, etc.). A party must be shown to have had the opportunity to exercise undue influence. A party must have been disposed to exercise undue influence. There must be a will that reflects the results of the undue influence.

25 25 Consider 17.6, p. 490. Hospital Bed Changes to a Will Blakes dying of cancer asked a friend to make a will for him The friend relied what he had been told to Blakes’ attorney. The attorney drafted a will but did not visit Blakes. Blakes was presented the will but said he felt too tired to finish it. He was encouraged to continue and did so. The will gave his practice to his partner and left nothing for his wife and was contested. Consider 17.7, p. 492. Money left to church with church witnessed by members of the church. Do witnesses have to be disinterested parties? Is being a member of a church that will receive the money make them “interested” parties? Consider 17.5, p. 496. Contested Will – Testator Could Not Read. Can a will be contested because the testator could not read and signed with an X? Questions: Testator cannot move arm – can wife move his arm to sign an “X”? Consider Hypotheticals - Capacity

26 Slusarenko v. Slusarenko (#x) 147 P3d 920 (Or App 2006) Father Married Woman 26 Years His Junior. Father Named Wife as Sole Heir. Children Contest Will Using Undue Influence. Factors of Undue Influence – Participation of the beneficiary in the making of the will – Lack of independent and disinterested advice – Secrecy and haste – Unexplained change in the testator’s attitude toward others – Change in the estate plan – An unnatural or unfair disposition of property – The testators susceptibility to undue influence. 26

27 In Re Melter (#s) 273 P.3d 991 (Wash App 2012) Skip 27

28 Maimonides School v. Coles (#X) 881 N.E.2d 778 (Mass. App. 2008) Will Changed In Final Weeks – Valid if Change Made While Sick? $8 Million Dollar Estate. No Spouse or Children. Will All to Charites. Will Changed in Final Weeks of Life to One Niece and Her Husband. Charities Challenged Will Brener suffered severe depression and suicide thoughts. He often complained that he did not understand all the terms of the will – Testamentary capacity – Contractual Capacity 28

29 Hypotheticals – Undue Influence 29 Consider 17.8, p. 495. Money left to waitress – sister contests. Man died at age 80 and left $500,000 to a 17 year old waitress. Waitress was kind to him and he had lunch and dinner there every day for 13 months preceding his death. He was public about leaving it to her. Sister Contests. “Mr. Cruxton’s longtime friends will all agree that this was not the same guy.” End-of-Chapter Q 1, p. 503. Changed will on death bed – valid? King was taken to a hospital with a leaking abdominal aneurysm. He was in extreme pain and suffering from shock and loss of blood. He was given considerable pain medicine. He was visited by one of his daughters and grandsons. The daughter and grandson and two witnesses changed his will to give the grandson his business and real property of the business. Helped Him Sign. He signed at 1:00 p.m. and died at 2:15 p.m. Semi-Coma. Doctor stated he was semi-coma all morning. Prior to Change Family Split. After change grandson got most of it.

30 Disinheriting a Spouse 30 Consider 17.9. Undue Influence – Spouse Disinherited Man Left Wife and Daughter. He quickly met Pauline and began living with her. While Still Married Changes Will. He changed his will to Pauline and removed his wife and daughter. Dies 10 Years Later and Will Contested. Main argument is that he wrote the will while still married and is not allowed to disinherit his spouse. Cannot Disinherit Spouse Community Property States Dower/Curtesy Homestead (home must pass to family) Minnesota Law (a) Elective share amount. The surviving spouse of a decedent who dies domiciled in this state has a right of election, under the limitations and conditions stated in this part, to take an elective-share amount equal to the value of the elective-share percentage of the augmented estate, determined by the length of time the spouse and the decedent were married to each other, in accordance with the following schedule 1-2 years married = 3% 15 years = 50% chart with all the intervening years: Gets automatic life estate in the home (full ownership if no children) Gets one car More complicated

31 Revocation of a Will Destruction Execution of a New Will By Operation of Law – Divorce – Marriage – After born or adopted children 31 Consider 17.10 p. 499. Do oral statements to revoke a will revoke it? He wrote on will “Revise whole mess.” He also said to his sister: “This will is still good and is good anywhere. Oh, nuts! I am going to make a new one. I will get it done. Don’t worry about it.” End-of-Chapter Q 2, p. 503. Tore up copy of codicil. Intended to Revoke. He tore up a copy of a codicil to a will that changed the contingent beneficiary. Talked to Neighbor an Attorney. He talked to his neighbor about how to revoke the codicil and the neighbor said to tear up the original. The testator showed the neighbor the codicil and said it was the original. They tore it up. Actual Original in Attorney’s Office. The real original was in the testator’s attorney’s office (a different attorney than the neighbor). to will intending it to revoke the codicil – original actually in attorney’s office. MN Law Homicide revokes a will (the beneficiary kills the testator) Divorce revokes a will as to the former spouse

32 Peculiar Questions on Heirs Adopted. Adopted children inherit from adoptive parents After Born Heirs. Posthumous heirs (evolving decision) Illegitimate. Illegitimate children inherit from mother and from father (if paternity established) Convicts. Convicts/felons can still inherit (unless they killed the testator/decedent) Aliens. Aliens entitled to inherit

33 Living Wills Follow statutory requirements If no living will, spouse and/or parents can provide evidence of intent Uniform Rights of the Terminally Ill Act – some states have adopted

34 Probate Gather assets of the estate Pay bills according to distribution priorities Distribute property according to will or intestate succession if there is no will Probate Titles – Administrators – Executors – Personal Representatives

35 Know your Probate Language Gifts – Real Property = Devise – recipient = devisee – Money = Legacy and the recipient = legatee – Personal Property = Bequest

36 Probate A. Parties 1. Executor - with a will 2. Administrator - without a will B. Personal representative – Uniform Probate Code C. Process 1. Collection of assets 2. Non-probatable assets a. J/T b. Insurance 3. Distribution a. Creditors b. Expenses D. Abatement - estate is not enough 1. Debts + administrative expenses - paid first 2. Take from: 1. Intestate property 2. Residue - “All the rest, residue and remainder of my property I leave to…” 3. General devises or legacies 1. “All my securities to…” 2. “All my real estate to…” 4. Specific devises or legacies 1. “My 1998 Honda Accord to…”

37 Estate Taxes Exist at the federal and state levels Certain levels are exempt Family farm exemptions Inheritance tax is levied against heirs

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