Trusts and Estates Overview

Introduction to Trusts and Estates

  • Overview of law and practice governing trusts and estates (T&E)
  • Focus on testamentary freedom and the legal system

Property Distribution Systems

  • Property distribution at death: intention of the donor
    • Types of distributions:
    • Probate: through legal regime/court
    • Incapacity: with or without a plan
    • Intestacy: without a plan
    • Testacy: with a will
    • Testamentary trusts: created via will
    • Nonprobate transfers/will substitutes:
      • Joint accounts, life insurance, nontestamentary trusts

Estate Planning

  • Estate plans address incapacity and death
  • Recommended for:
    • Individuals with children, significant property, or specific wishes
  • Integrated estate plans mix probate/nonprobate systems:
    • Living wills, directives, POAs (powers of attorney)

History of Estate Law

  • Intestacy: previous 'next of kin' rules evolved
  • Wills: Statute of Wills as legal formalities established
  • Four functions of formalities:
    1. Evidentiary
    2. Channeling
    3. Cautionary
    4. Protective
  • Modern trend: loosening of formalities

Legal System Governing T&E

  • Intestate succession and wills law are statutory
    • Variations between state laws and common law
    • Federal law relevance: nonprobate assets/taxes

Testamentary Freedom

  • Guiding principle in U.S. T&E law:
    • Effectuating transferor’s intent
    • Intestacy is the default 'will'
    • Default rules are changeable by the decedent (D)
    • Incentives for property creators: productivity, care, and support

Limitations on Testamentary Freedom

  • Rule Against Perpetuities: gifts must vest within lives in being plus 21 years
  • Concerns over intergenerational property control
  • Nature of spousal/creditor rights

Case Analysis: Feinberg Case (Ill. 2009)

  • Facially discriminatory provisions regarding marriage and religion
    • The issue of public policy violation
    • Court analysis on enforceability of will provisions

Enhanced Understanding of Legal Contexts

  • Testamentary freedom has strong public policy implications
  • Legal scrutiny for provisions against public interests/employment norms

Understanding the Spence Case (Ont. App. 2016)

  • Omission of a daughter from will based on past communication
    • Uncontested evidence sufficed for original will insight
    • Considerations on public policy and undue influence in will provisions

Intestacy Rules and Family Dynamics

  • Intestacy affects the estate on D's death:
    • Default statutory rules for family inheritance
  • Family hierarchy based on relationship and presumed testator intent

Inheritance and Distribution Hierarchies

  • Legal definitions of family impact inheritance shares:
    • Surviving spouse (SS)
    • Children
    • Parents

Key Understanding of Wills

  • Basic definitions and components of Wills (W)
    • W = Last Will & Testament
    • Legal formalities for valid execution: capacity, intent, witnesses

Trust Elements and Operations

  • Terminology: Settlor, Trustee, Beneficiaries
  • Requirements for creating a trust: valid purpose, competent parties, identifiable beneficiaries

Charitable Trust Fundamentals

  • Definition and structuring of charitable trusts
  • Flexibility in modifying and enforcing charitable trust intents

Ethical Obligations of T&E Lawyers

  • Rules of professional conduct regarding estate planning and administration
  • Importance of communication, client capacity, and conflict avoidance

Administration of Estates

  • Steps required for managing an estate through probate
    • Duties of the personal representative (PR)
    • Addressing debts and creditor claims effectively

Key Takeaways and Next Steps

  • Understanding estate plans, trust laws, probate processes, and ethical practices critical for successful navigation of T&E law.