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19 Cards in this Set

  • Front
  • Back
Heirs
• Persons who survive the decedent and are designated as intestate successors under the state's statute of decent
• While the decedent lives, there are no heirs. Heirs are determined after the death of the decedent
Issue
• The descendants of the decedent
• Not limited to children; can include nieces, nephews, etc.
Ancestors
• The predecessors of the decedent
• By statute parents usually take as heirs if the decedent leaves no issue
Collaterals
• All persons related by blood to the decedent who are neither issues nor ancestors are collateral kin
• If the decedent leaves no spouse, no children, & no parents, the property passes to decedent's siblings and their issue
• Rules governing passage to those beyond siblings are rather complicated
Devise
• The act of giving property (usually real property) by will
Bequeath
• The act of giving property (usually personal property) by will
Per Stirpes
• “By the root” or representation – each branch of the inheriting family inherits an equal share of the estate
• As opposed to equal distribution amongst survivors (per capita)
• Example: A’s will specifies that his estate is to be divided among his children per stirpes. A has three children, B, C, and D. B is already dead, but has left two children (grandchildren of A), named B1 and B2. When A's will is executed, under a per stirpes division, C and D each receive one-third of the estate, and B1 and B2 each one sixth, because their "branch" of the family has received one equal share.
Per capita
• Each of the named beneficiaries should inherit equal shares of the estate.
• As opposed each branch of family inheriting an equal share of the estate (per stirpes).
• Example: A’s will specifies that his estate is to be divided among his children per capita A has three children, B, C, and D. B is already dead, but has left two children (grandchildren of A), named B1 and B2. When A's will is executed, under a per capita distribution, each of the surviving descendants B1, B2, C, and D would have received one quarter of the estate.
Disclaim
• A disclaimer (disclaimer of interest) is a written document voluntarily signed by an heir to an estate in which the said heir does not accept (disclaims) the part of the estate of a deceased person which the heir is entitled to receive.
Inter vivos
• A transfer made while living (as opposed to distinguished from a transfer made by will).
• Example: A, B, & C have a joint tenancy with a 1/3 interest each. C gives her interest (1/3) to C1 inter vivos thus changing her portion from joint tenancy to a tenancy in common as C1 does not share the 4 unities. A & B still have a joint with relation to each other, they each share a 2/3 interest, but now have a joint tenancy in common with relation to the 1/3 that C1 is holding. C1’s interest can not be devised via will because it’s a tenancy in common, but A & B’s joint tenancy is still only transferred inter vivos.
Hypothecate (Reverse Equity Loan)
• To pledge property as security or collateral for a debt without delivery of title or possession.
• Usually used in situations of land-rich, cash-poor (elderly law).
• Example: Assuming your mother owns her land out-right you can go to the bank and arrange a loan to supplement your mother’s income by $1,000 a month. In each month that your mother lives, the mortgage increases (if she lives 6 years you’d have a $72k mortgage against the property. Once mom dies, the heirs receive the property burdened by the mortgage and they can sell the property to pay off that mortgage.
o PROS: Land remains in family, heirs get to sell later at increased value, and mom gets to keep an income stream
o CONS: Look at the property value relative to the life expectancy.
• Court proposed this solution in Baker v. Weedon.
Necessity Clause
• There must be "necessity" to order a judicial sale. Only if the income from the property is insufficient to pay taxes and maintain the property could a court order a sale.
• Example: Baker v. Weedon – property in that case generated just enough money each year to pay the taxes and maintenance (no economic waste)
• "Necessary for the best interest of all the parties" rule: Deterioration and waste of the property is not the exclusive and ultimate test to be used in determining whether a sale of land affected by a future interest is proper, but also that consideration should be given to the question of whether a sale is necessary for the best interest of all parties, that is, the life tenant and the contingent remaindermen.
Statute of Uses
• Provides that any equitable estate is converted into the corresponding legal estate
• Equitable estate is similar to a trust
o Example: "to T and his heirs, to the use of A and his heirs.” T has legal, A has equitable
o Statute of Uses would transform A's equitable fee simple into a legal fee simple thus nullifying T's estate and leaving a legal fee simple in A.
Legal Owner
• Trustee – has power to sell trust assets and reinvest the proceeds in other assets
• Subject to orders of an equity court
• Equity court enforces trustee’s duty to beneficiaries
Equitable Owner
• Beneficiaries
• Hold equitable interests (interests enforceable in equity)
• Their interests are enforced upon trustee by equity court
Marital Deduction Trust
• Permitted a decedent to deduct from his taxable estate all property passing to his spouse
• Spouse was given a general power of appointment enabling spouse to appoint anyone she chooses
• Would be taxable at spouse’s later death.
• If surviving spouse given only a life estate, property didn’t qualify for marital deduction and was taxable in decedent’s estate and not in surviving spouse’s estate
• 1981 – Congress amended estate tax law to permit marital deduction trust in which surviving spouse is given only life estate.
Chose in Action
• Personal right
• Example: right of entry – is least transferable of all future interests within grantor – so really more of a personal right.
Use
• Protected interest meaning benefit
Spendthrift Provisions
• Definition: provision in which donor directs that payments be secure against the claims of creditors so that the beneficiaries cannot use the trust income or assets to secure indebtedness
• When can such provisions be overridden?
o Cannot create a spendthrift trust for yourself.
o Corpus cannot be overridden
o Can reach your interest in a trust; when established for someone else, there are three primary claims that overcome the spendthrift provision:
 Taxes related to the trust
 Claims for child support
 Spousal support (majority of states applies this one)
• A spendthrift provision in a trust is permissible under American law but not permissible under English law