WILLS AND TRUSTS - AUGUST NOTES August 16, 1999 Exam - Saturday December 4, 1999; closed book, closed

code

two parts:

1. true false and multiple choice (50-100 questions), gives an even coverage to course materials. Every class will contain 2-3 questions on exam; 2. essay questions Exam will be heavily based on stuff that is done in class; very strong connection to stuff in exam and class materials Pay close attention to the problems in the book; Can miss class up to 8 times $81 per class is what we are paying. Overall history of the general history of wills and trusts California law will be used as a model; exam will be based on California law This is a frequently tested area on the state bar essay portion. Based on fact that we will all be dead - metabolically challenged I. Development of how property was handled upon death 1. first person who picked up property of deceased owned the property 2. buried person with belongings A. was an inefficient use of resources 1. Society developed rules to indicate where property went a. b. c. d. e. f. intestate descent or distribution imposed by the government appropriate to allow a person to decide where property went upon death person could indicate where property could go upon death - the WILL wills are of a relatively recent origin a privilege under common law; not guaranteed under laws; can be taken away at any time but very unlikely; must comply exactly with the code to make the will valid since it is a privilege; some states have a substantial

compliance rule (if will is mainly in compliance then it is okay) - mostly though it has to be exactly correct 1. Non-probate transfers a. survivorship rights (pensions plans, life insurance policies); governed by contract b. can be wealthy but have small probate estate c. because survivorship rights (trusts) or contract I. Modern law A. mostly state law; therefore different in each state. 49 states use common law system except for Louisiana which uses civil law (developed off of Roman system). B. Results are very state orientated. We will cover generic approach and California; we will not study the UPC much; Uniform Probate Code (UPC) I. Intestate Succession - happens if you have no will A. section 6400; 1. can be intestate as to the person (no will at all) 2. intestate as to property (does not dispose of all your property); most wills have a residual clause to prevent this (all rest of property goes to ___ ) 3. property in probate passes to heirs as prescribed by state law a. all creditors get paid first b. taxes, loans, credit cards, funeral expenses, etc. c. remaining property will pass to heirs 1. no evidence of what person intended can be introduced to decide who gets what A. History of intestate succession 1. Common law a. real property - king or queen was in charge of the laws governing this; many levels of ownership and people owed duties based on real property b. personal property - there was not much of this in the early days so the crown did not care much about this; let the church handle personal property; (goblets that the poor

people used were made out of lead which made them dumb) 1. California no longer makes the distinction between real and personal property although a few do A. Terms 1. descent - succession of real property (by crown) 2. distribution - succession of personal property (by church) a. most states (including CA) call the above terms intestate distribution 1. heir - person who takes under descent and distribution a. do NOT call a person who takes under a will a heir b. can have heirs apparent while alive c. Historical Note: common law real property went to heirs, personal property went to next of kin 1. Ancestors - people that came before you (parents, grandparents) 2. descendants - people below you (children, grandchildren); also called "issue" 3. collateral relatives - people related to you but not in direct line up or down; related to you because you share a common ancestor (cousins, brothers, sisters, nieces, nephews) 4. relationships by concinnity - blood relationships (common law did not think relationships by marriage did not matter) 5. relationships by affinity - by marriage usually A. Relevancy 1. most people don't have a will; 75% of people don't have a will 2. will can be used for other things than disposing property (guardian for child, method of burial, survival action (in case you die in an accident, medical malpractice, and want to leave the right to sue to someone) cannot leave the wrongful death action to the estate) 3. most people think the government will take care of it 4. some people just don't care 5. takes money, time, effort; wills are complex 6. admission of mortality 7. have to divulge things you might not want to tell people (attorneys need to know everything); people don't like to reveal personal information 8.

Chart: -------------------------------------------August 18, 1999 Register for West Education Network Intestate succession - Basic distribution scheme 1. surviving spouse a. history i. common law 1. real property - spouse was not an heir; could not take by intestacy because spouse was not a blood relative of decedent
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heir had to be a blood relative but there is protection for surviving spouse a. dowry - right of surviving wife; entitled to a life estate of one third of husband's real property; not required that the husband own real property at time of death b. courtesy - a widower (husband) was entitled to life estate in all of wife's estate; a woman would own real property in a situation in which there were no male heirs so did not happen very often; there had to have been children in the marriage for there to be a courtesy right. No requirement that children still be alive

1. personal property - husband took all personal property as soon as marriage occurred; if husband died first, the wife could inherit some of the property

i.

modern law 1. most states don't have dowry or courtesy, including CA in section 6412; most jurisdictions are like CA 2. surviving spouse is made an heir so surviving spouse can now take by intestacy 3. protections that surviving spouse receives:
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most states have modern statutes that prevent surviving spouse from being totally cut out of a will homestead right - right to occupy home for a particular period of time right to certain personal property family allowance: amount of money that will be used to pay spouse and minor children

a. marital law i. ii. common law is used in most states (based on law in England) - there is no marital property; you earned it, it is yours; marriage is treated as roommates community property marital property system (CA and other states in the Southwest; 29% of population) - based on civil law of continent of Europe and Mexico; marriage is viewed as a partnership - when property is acquired through marriage it is split fifty/fifty;

a. particulars of CA law i. whenever property is being distributed of a spouse in CA you need to determine what type of property it is: 1. community property (28 CPC, 760 Family Code) - property acquired during marriage while domiciled in CA or another community property jurisdiction
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example: paycheck in CA (6401a, 100) surviving spouse keeps half of property and inherits deceased spouses property - therefore keeps all property (surviving spouse owns all community property)

1. quasi community property (66) - property acquired during marriage that would have been community had they been domiciled in CA; applies to personal property where ever located, as well as real property located in CA;
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applies only to quasi community property cannot be real property located outside of CA CA courts only have jurisdiction over real property in its boundaries. Have to apply law of state of real property Personal property is law of "domicile at death" Same rules as community property for distribution (surviving spouse (101, 6401b) retains half and inherits all surviving house owns all property) right of restoration of quasi-community property (102) - surviving spouse can force a person to return property for surviving spouse if it was fraudulently transferred before the spouse died. Similar to fraudulent conveyance (fraudulent conveyance - one made to avoid creditors; give property to friends and then ask for property back after you file for bankruptcy) FOUR REQUIREMENTS for restoration of quasi-community property: a. deceased spouse must be domiciled in CA at time of death b. deceased spouse did not receive consideration for substantial value for transfer c. surviving spouse did not consent or join in writing d. deceased spouse still had some benefit of property (strings were still attached)

1. separate property - (770 Family Code) property you own before marriage; property you acquired during marriage by a

gratuitous transfer (inter vivos gift, being an heir, being a will beneficiary); includes profits and incomes from separate property even if earned during marriage (stocks you bring into marriage)
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surviving either gets all, half, or one-third depending on depending (6401c) on family situation: a. surviving spouse gets all separate - if no surviving issue (descendants and issue are synonyms), no surviving parent, and no surviving descendants of parents (brothers, sisters, nieces, nephews) b. surviving spouse gets one half of separate - either deceased spouse only had one surviving spouse or children of deceased child, or the deceased spouse did not have any descendents but did have at least one parent surviving or a niece of nephew; half of all of decedents separate property c. surviving spouse gets one third of the separate property - where there are two or more bloodlines of descendants surviving (would have had to have had at least two children at some point in time)

140 through 147 - requirements that give spouse right to waive right to inherit NEED TO KNOW - it is possible for a surviving spouse to waive all inheritance

1. descendants A. if no surviving spouse, the descendants take everything

B. if there is a surviving spouse, the descendants take everything the surviving spouse does not take (either half or two thirds of the separate property depending on the family situation) i. ii. if all children are alive they take per capita (the same, equal share) if one or more of the children have died and are survived by descedants of their own, things are different; three methods by which this is handled: 1. per stirpes (by the roots or by right of representation) - always divide into shares based on the number of living children and deceased children; does not matter that no one in that generation actually survived; divide at the first generation; create a share with every living descendent and every deceased descendant WITH surviving descendants EXAMPLES IN BOOK: a. 2-1 page 22 in book - half goes to D, quarter to A, quarter to A and B b. 2-2 page 22 - half to C one quarter to A and B most states have rejected this per stirpes view; most people want to treat equally related people the same; see 246 - it is possible to request per stirpes 1. per capita with representation (CA view 6402a, 240) - divide into shares at first generation with a surviving member; want equally related people to be treated equally a. 2-3 page 23 - D gets half, A gets quarter, B gets quarter - because we divide at first generation; just by coincidence that it came out the same as per stirpes b. 2-4 page 25 - all get one third because second generation is the first generation with surviving members

---------------------------------August 23, 1999 Distribution continued Modern approach 1. per capita at each generation (UPC approach AND CA APPROACH) a. divide everything at the first generation and then keep dividing the further generation's shares b. divide at first generation WITH survivors c. unmarried, no kids - separate property goes to: i. goes to parents; half to each parent, or if one parent is dead, all to surviving parent (this is CA approach); many states would give deceased parent's share to the siblings

a. married, no kids - half of separate property would go: b. if no parents: i. ii. divide equally between all living grandparents (if 3 grandparents, each takes 1/3) this is the CA approach

a. great-grandparents, and their descendents take next, but take by a different system: i. civil law system with a parentalic preference 6204(f) (page 32 in book): property goes to nearest relative by counting degrees, or person with closest common ancestor if people have same degrees NOT ON EXAM

ii.

a. If no one at all: i. ii. property goes to deceased spouse's parents this is CA, goes farther than any state to prevent escheat 6402(g)

1. per stirpes distribution a. divide the share equally at each generation Need to know all states and CA

CA prefers parents to siblings; grandparents to aunts and uncles, and cousins Look at example 2-7, page 26 -- is very good for info exam:

intestacy problems; will have basic fractions and percentages; questions will come out even if answer comes out strange, most likely you did it wrong

fractions lesson: 111 -*-=236 posthumous heir - one conceived while alive, but born after your death woman - if died during labor, woman's body was kept alive on machines until baby was born; usually with men because of biological nature of it all many states will not allow posthumous collateral to inherit but in CA they are all treated the same; in CA ALL posthumous heirs will inherit Adoption 1. not allowable at common law for adopted children to inherit 2. developed in the US - Vermont and Texas were first 3. now recognized in all states; generally treat adopted child as biological children 4. still are considerable differences in the way adoption is treated 5. How an adopted child inherits from adopted parents: 1. just like a biological child (6450(b)) 2. inherits from and through the adoptive parents 3. would inherit from grandparents and other just like biological child How an adopted child inherits from biological family: 1. states vary widely on this 2. CA view:

a. 6451 - presumption is that the adopted child does NOT inherit from or through the biological b. however there is an exception: 1. the child and biological parent live together as parent and child; as a family (no time period is specified); or 2. either adoption by stepparent OR the death of the natural parent after the death of a biological parent (check this)

---------------------------------------------------August 25, 1999 Posthumous heirs - if born alive, takes as heirs regardless of relationship to individual. Ability of adopted individual to inherit

adoptee inherits from and through the adoptive parents adoptee usually will not inherit from and through the biological parents jurisdictions differ in regard to this parent; exception to where adopted child can inherit 1. Child lived with parent, 2. Adoption was either by step parent or ___

If adopted child were to die, who would inherit from the adopted child (assuming no spouse or descendent of adopted child)? What side do we go to? A. generally adopted parents and family inherit from and through the adopted child, just as if the child were a biological child 6450(b) B. inheritance rights of biological parents 1. various views on this 2. CA: middle of the road approach a. presumption that the biological parents do not inherit from or through biological parents (6451b) b. there are exceptions: a. full blooded sibling will only inherit if the adopted child could have inherited from the biological parents (Law Review Commission comment); statute says: (b) Neither a natural parent nor a relative of a natural parent, except for a wholeblooded brother or sister of the adopted person or the issue of that brother or sister, inherits from or through the adopted person on the basis of a parent and child relationship between the

adopted person and the natural parent that satisfies the requirements of paragraphs (1) and (2) of subdivision (a), unless the adoption is by the spouse or surviving spouse of that parent. b. If the child could inherit from the biological parent, and the adoption is by the spouse or the surviving spouse then the biological parents can inherit from the child A. types of adoptions 1. statutory adoptions (formal, legal adoptions) 2. adoption by estoppel (also called "equitable adoption") a. adoption equivalent of a common law marriage b. the child lives with the people, and there was an agreement to adopt, but the parents never got around to officially adopting c. the child performed his part: living with the family; but the family never adopted d. 6455 - nothing in this chapter affects or limits the application of equitable adoption for the benefit of the child; causes the parents to be in breach of their contract - remedy is to give the child his intestate share; this is child's damages e. child does not become in a legal sense a child of the people, but shares in the estate as a child would, but is not officially an adopted child (Wilson, 168 Cal. Rptr. 533; gives a nice summary of this) f. no real term for what you call the "parents" in this situation 1. Family code 9300-9340 - adult adoptions a. this is safer than doing it in a will b. CA can only have an adoption of a younger person by an older adoption; cannot have cross adoption A. non marital children (wedlock) 1. could not inherit from anyone (up until 1977) 2. Trimble v. Gordon - USC said there cannot be differences in inheritance based on marital status; they said to treat a non-marital child differen violate 14th Amendment 3. Within on year, the USSC backpeddled, they said it is okay to discriminate in some circumstances; Lally v. Lally (1978) - okay for a state to apply more demanding inheritance standards to those born out of wedlock to those born in marriage - need to have good reason 4. Some states say they won't discriminate even though they can; other states say yes they will discriminate; restrictions, difference on how marital child will inherit versus non-marital

5. Section 6450(a) - The relationship of parent and child exists between a person and the person's natural parents, regardless of the marital status of the natural parents. 6. CA Law: a. In CA no discrimination in regard to Mother; just need proof that the mother gave birth to the child (7610 family code). b. However Father is treated differently; there are situations in which paternity is presumed: 1. born during marriage or an attempted marriage or 300 days thereafter; or 2. the father marries mother after child is born, and the father is named as father on birth certificate, or the father pays child support; or 3. the father receives the child into his home and holds the child out as his biological child a. second way child can show natural parentage: 1. through court degree of paternity (non-marital child needs this) a. third way child can show natural parentage: 1. have a court judgment of paternity after father's death; need clear and convincing evidence that the father openly held the child out as his own 2. DNA evidence is not enough; father had to hold child out as his own 6452: the biological parents and relatives do not inherit through the non-marital child 6453. For the purpose of determining whether a person is a "natural parent" as that term is used in this chapter: (a) A natural parent and child relationship is established where that relationship is presumed and not rebutted pursuant to the Uniform Parentage Act, Part 3 (commencing with Section 7600) of Division 12 of the Family Code. (b) A natural parent and child relationship may be established pursuant to any other provisions of the Uniform Parentage Act, except that the relationship may not be established by an action under subdivision (c) of Section 7630 of the Family Code unless any of the following conditions exist:

1. artificial insemination a. mother is birthmother; b. who is the father? If the donor is also the husband, then the donor is the father, but if not, the donor is not the father; then we have the potential of a fatherless child c. the court held that the sperm donor is not a father if the semen is not provided to a licensed physician; if you do it yourself, the donor can be the father d. the woman who intended to procreate the child is the one who becomes the mother e. in re marriage of Rosheta: surrogate mother artificially inseminated with husband's sperm, but surrogate mother's own egg. Court said surrogate mother was mother because both genetic and gestational mother. How to handle stepchildren and foster children? Stepchild - child of spouse that you have not adopted and is not yours Foster child - parent is unrelated to parentlike figures, but child was put there by a government agnecy. Do stepchildren and foster children have inheritance rights? Most states say no. CA is different: Three ways that a step child might be able to inherit: 1. to be determined to be a child under 6454 (relationship started when person was a minor, and continued through joint lifetimes, and clear and convincing evidence that the step or foster parent would have adopted except for legal impediment (no consent from other biological parent is typical case); step or foster treated just like biological child 2. continued during joint lifetimes 3. equitably adopted child prepare through disclaimer (bottom of page 2 of syllabus) ---------------------------------August 30, 1999 Neelma sits next to me Inheriting from step siblings Inheriting from half-blooded people I. Half and whole blood collateral heirs A. Scottish rule - half-bloods take half as much; many states adopt this rule.

B. Some states say half-bloods do not take at all, unless there are no whole bloods to take C. Modern view: half or whole blood does not matter. I. inheriting from non-citizens A. common law - could not inherit from non-citizens (real property could not be passed to aliens) B. United States - sometimes there have been restrictions, especially during war times 1. anyone can take reguardless of citizenship 2. 6411 - No person is disqualified to take as an heir because that person or a person through whom he or she claims is or has been an alien. UNWORTHY HEIRS I. What happens to property if incarcerated A. Forfeiture 1. if you are convicted of certain crimes (drugs), the state can take you property A. civil death 1. 2. 3. 4. treated as civilly dead in situations; smaller crimes than forfeiture property would go to heirs 2600 of penal code property will not be taken

A. corruption of the blood 1. person in prison blood's is tainted, and therefore cannot inherit 2. today, 2601(a) penal code, says even though you are in prison says you can still inherit A. murder of person that you would inherit from 1. policy: do not want people to benefit from evil conduct 2. CA says 250 (Slayer Statute) - two part test to trigger statute: a. felonious killing b. intentional killing

1. if statute is triggered, then killer is deemed dead for purposes of inheritance a. statute is unclear as to where property goes b. do not want to kill parents so that children can inherit; do not want to encourage this; so killer's descendents are cut out as well. c. Do not know if killer is treated as merely being dead, or treated dead without any descendants this is an issue that is unresolved in CA 1. proof of felonius and intentional killing: a. get charged, and goes to jail ( 254) b. 254 tells way to prove felonious and intentional killing 1. if killer is convicted 2. if the preponderance of the evidence shows that the murder was felonious and intentional killing (OJ case, acquitted in criminal court, but convicted in civil court); person that brings this is the person that would take if the murderer does not a. types of crimes and what happens: 1. voluntary manslaughter - a felony, and intentional so people will not inherit if it is voluntary manslaughter 2. involuntary manslaughter - no intent to kill, so killer can still inherit 3. reality challenged (insane) - no intent, can inherit 4. self defense - intentional, but non-felonious; you can inherit 1. suicide - makes no difference if person committed suicide as to who takes a. at common law, the heirs could not inherit, and the property went to the state b. CA does not seem to have a statute that rebuts the common law suicide rule, but CA follows the main rule 1. 6452 - failure to acknowledge and support out of wed lock child a. a biological parent can not inherit from a wedlock child unless the parent acknowledges and cares for the parent b. modern trend - impose this requirement from ALL parents to impose this type of requirement on their children

1. commit adultery or abandon spouse a. some states: cannot inherit when spouse dies b. CA does not have this 1. 259 - abusing elder or dependant adult; enacted 1998 a. cannot inherit if convicted of a crime related to abuse b. or cannot inherit if you meet the following four elements: 1. heir abused intestate (need clear and convincing evidence of abuse (not just physical; can be financial (fiduciary) abuse)) 2. half to show heir acted in bad faith 3. reckless, oppressive, fraudulent, or malicious 4. after abuse, person did not recover I. Ancestral property A. common law: no descendants or spouse, property would go back to those you inherited it from, along bloodlines; not common at all now B. all property owned by descedent is treated as if the descedant were the original purchaser - this is how many states rebut the idea of ancestral property C. CA rule: property acquired from a predeceased spouse (when you die, where that property goes) 1. property that you acquired from predeceased spouse 2. 6402.5 3. elements: a. die with no descendants and no new spouse; otherwise this statute does not apply b. property to which it attaches - all property you acquired form the predeceased spouse (separate, community, quasi community) c. for real property, only go back 15 years; if predeceased spouse died within last 15 years (died within 15 years of your death (other spouse)) d. for personal property it is the last 5 years e. only if in total there is $10,000 or more remaining 1. separate intestate distribution scheme: a. first place it goes it to the descendants of the predeceased spouse (stepchildren)

b. if no stepchildren, then the property goes to the parents of the predeceased spouse c. if no parents, then descendants of predeceased spouse (brother-in-law, etc.) d. the next step, is to the decedent's next of kin; if non of these, then they will look to more distant relatives of predeceased spouse e. KNOW THIS STUFF II. advancement - prepayment of an inheritance while the intestate was still alive A. common law: 1. if this is intended as getting inheritance early, then advancee would have to make an accounting of the money received 2. have to account for money received before person died a. special name: called "going in to hotchpotch" 1. policy is that the intestate would have wanted to be fair to the other 2. all gifts to presumptive heirs were advancements A. modern law: 1. most states, including CA, have reversed presumption 2. presumption now: absolute gift a. everything we receive is a gift, not intended to be an advancement 1. CA requirements: a. must have a writing of this 1. contemporaneous writing by advancer (person giving the gift); do this because don't want person to change the mind 2. writing e signed by advancee which can be introduced at any time 1. an advancement is an irrevocable gift. Does not create a debt, a condition precedent to sharing in the estate 2. gift is valued at date of the gift (6409b) example of how advancements operate: I -- a -- b -- c

100k to A as an advancement. 500k left in estate when intestate died. How would we distribute the estate? 1. add 100k to 600 (this is hotchpotch) 2. A gets 100 (because he already got 100k, B and C get 200 each What if A were to die first, survived by children?

advancement is generally not taken into account (unless writing said so) (6409d) no hotchpotch would be done

What if the advancements were made to brothers and sisters?

in some states advancement theory only applies to descendants in CA it applies to all

Does it

if a person dies intestate as in all (total intestacy) or part (partial intestacy) in CA applies to all types of intestacy (all or part) (6409)

Heir - anyone who inherits through intestacy