Wills, Trusts and Estate Wills, Trusts and Estate PlanningPlanning

Intestate Intestate SuccessionSuccession

Unit 3Unit 3

Testate vs. Intestate Testate vs. Intestate SuccessionSuccession

SituationSituation Parties Who Receive Deceased’s Parties Who Receive Deceased’s PropertyProperty

Deceased dies with a valid Deceased dies with a valid willwill

Beneficiaries named in the will.Beneficiaries named in the will.

Deceased dies without a Deceased dies without a valid willvalid will

Heirs set forth in the applicable intestacy Heirs set forth in the applicable intestacy statute.statute.If there are no heirs, the deceased’s property If there are no heirs, the deceased’s property escheatsescheats (goes) to the state. (goes) to the state.

Historical Development of Historical Development of State Succession StatutesState Succession Statutes

Male heirs inherited real property to Male heirs inherited real property to the exclusion of female heirs unless the exclusion of female heirs unless no male heir existed.no male heir existed.

If there were two or more males who If there were two or more males who were equally related, the older male were equally related, the older male would inherit all the land.would inherit all the land.

If there were no male heirs and If there were no male heirs and several female heirs, the females several female heirs, the females shared equally. shared equally.

Protection of the “Surviving” Protection of the “Surviving” SpouseSpouse

The surviving spouse was not considered The surviving spouse was not considered an heir. But common law gave each an heir. But common law gave each spouse a marital estate in the lands of the spouse a marital estate in the lands of the other spouse.other spouse.

Widows – Dower Rights – life estate in 1/3 Widows – Dower Rights – life estate in 1/3 of the property owned by husband during of the property owned by husband during marriage, even if property wasn’t owned marriage, even if property wasn’t owned by the husband at the time of his death.by the husband at the time of his death.

Widowers – Curtesy Rights – life estate in Widowers – Curtesy Rights – life estate in all the wife’s property, if a child was born all the wife’s property, if a child was born to the marriage.to the marriage.

Protection of Protection of SurvivingSurviving Spouse – Spouse – Under Modern LawUnder Modern Law

Dower and Curtesy have been mostly Dower and Curtesy have been mostly eliminated but the majority of states make eliminated but the majority of states make the surviving spouse an heir under their the surviving spouse an heir under their descent and distribution schemes.descent and distribution schemes.

States have also enacted specific marital States have also enacted specific marital property laws.property laws.

Homestead and personal property Homestead and personal property exemptions are also available in most exemptions are also available in most states.states.

Marital Property StatutesMarital Property Statutes

Separate Property – even if deceased left a Separate Property – even if deceased left a will, a surviving spouse can elect to take will, a surviving spouse can elect to take against the will. The surviving spouse can against the will. The surviving spouse can obtain a share of the estate even if obtain a share of the estate even if nothing is left to them under the will.nothing is left to them under the will.

Community Property States – the surviving Community Property States – the surviving spouse is protected against disinheritance spouse is protected against disinheritance because the surviving spouse already because the surviving spouse already owns an undivided ½ interest in the owns an undivided ½ interest in the marital property.marital property.

The Homestead ExemptionThe Homestead Exemption

The surviving spouse may be able to The surviving spouse may be able to occupy the homestead free from the occupy the homestead free from the possessory claims of the true title claims of the true title holders as well as retain it exempt holders as well as retain it exempt from the claims of the deceased from the claims of the deceased spouse’s creditors.spouse’s creditors.

Homestead exemptions vary greatly Homestead exemptions vary greatly from state to state.from state to state.

Personal Property ExemptionsPersonal Property Exemptions

The surviving spouse and minor The surviving spouse and minor children are frequently granted the children are frequently granted the right to retain certain personal right to retain certain personal property free from the claims of property free from the claims of creditors.creditors.

In some instances, their claim will be In some instances, their claim will be superior to the claims of will superior to the claims of will beneficiaries to whom the items were beneficiaries to whom the items were left.left.

The Basic Idea of The Basic Idea of Intestate DistributionIntestate Distribution

After the decedent’s property is used After the decedent’s property is used to pay debts, taxes, funeral to pay debts, taxes, funeral expenses, and administration expenses, and administration expenses, the remainder, if any, is expenses, the remainder, if any, is distributed to the decedent’s heirs.distributed to the decedent’s heirs.

Non-probate assets, such as life Non-probate assets, such as life insurance proceeds and survivorship insurance proceeds and survivorship bank accounts, are not affected.bank accounts, are not affected.

Intestate Succession LawsIntestate Succession Laws

Determined by state law called the Determined by state law called the intestate succession statute or intestate succession statute or statues of descent and distribution.statues of descent and distribution.

Intestacy statutes vary substantially Intestacy statutes vary substantially from state to state.from state to state.

More Than One StateMore Than One State

Deceased lived in Nebraska where she Deceased lived in Nebraska where she owns a home, had a driver’s license, and owns a home, had a driver’s license, and paid income tax. She owned a cottage in paid income tax. She owned a cottage in Wisconsin and a condo in Florida.Wisconsin and a condo in Florida.

If she dies intestate, Nebraska’s statutes If she dies intestate, Nebraska’s statutes will determine how and by whom her will determine how and by whom her house and personal property are inherited. house and personal property are inherited. Wisconsin’s statues will decide who Wisconsin’s statues will decide who receives the house, and Florida’s law, the receives the house, and Florida’s law, the condo.condo.

Intestate Succession LawsIntestate Succession Laws Surviving spouse.Surviving spouse. Lineal descendants – blood relatives Lineal descendants – blood relatives

such as children, grandchildren and such as children, grandchildren and great-grandchildren.great-grandchildren.

Lineal ascendants – blood relatives Lineal ascendants – blood relatives such as parents, grandparents and such as parents, grandparents and great-grandparents.great-grandparents.

Collateral Heirs – uncles, aunts, Collateral Heirs – uncles, aunts, brothers, sisters, nephews, nieces, and brothers, sisters, nephews, nieces, and so on.so on.

Additional ConsiderationsAdditional Considerations Adopted children – according to most Adopted children – according to most

state statutes are considered blood state statutes are considered blood relatives of the adopted family.relatives of the adopted family.

Persons related by marriage – not Persons related by marriage – not considered as part of intestate considered as part of intestate succession.succession.

Half-blood relatives – only considered Half-blood relatives – only considered part of intestate succession if related part of intestate succession if related through the blood relative.through the blood relative.

Review particulars in your state statutes.Review particulars in your state statutes.

Surviving Spouse - FloridaSurviving Spouse - Florida

If there are no children - the entire If there are no children - the entire estate. estate.

If the surviving children are of the If the surviving children are of the deceased and the surviving spouse - deceased and the surviving spouse - $60,000 of the estate + one-half of the $60,000 of the estate + one-half of the balance of the intestate estate. balance of the intestate estate.

If the surviving children are of the If the surviving children are of the deceased but are separate from the deceased but are separate from the spouse - one-half of the intestate estate.spouse - one-half of the intestate estate.

The Basic Distribution Scheme The Basic Distribution Scheme ((when all Decedent’s children are alive)when all Decedent’s children are alive)

Each child receives Each child receives an equal share.an equal share.

This is called This is called per per capitacapita distribution. distribution.

Per capita – equally Per capita – equally to each person.to each person.

Intestate

Son 11/3

Son 21/3

Daughter1/3

Multi-Generation SuccessionMulti-Generation Succession(when there are Predeceased Children)(when there are Predeceased Children)

If some of the If some of the intestate’s children intestate’s children died before the died before the intestate after having intestate after having children who outlive children who outlive the intestate, there are the intestate, there are at least 3 methods at least 3 methods states use when states use when dividing property dividing property among descendants among descendants when different when different generations are generations are involved.involved.

Per StirpesPer Stirpes (by Right (by Right of Representation)of Representation)

Per Capita with Per Capita with RepresentationRepresentation

Per Capita at Each Per Capita at Each GenerationGeneration

Determining the Distribution Scheme in the Determining the Distribution Scheme in the Case of Multi-generation SuccessionCase of Multi-generation Succession

Identify the Intestate’s Children Identify the Intestate’s Children Determine if Any Predeceased Child Left a Determine if Any Predeceased Child Left a

Descendant who Outlived the Intestate.Descendant who Outlived the Intestate. Ascertain the Governing State’s Method of Ascertain the Governing State’s Method of

Handling Multi-Generation Succession. Handling Multi-Generation Succession. per stirpesper stirpes per capita with representationper capita with representation per capita at each generationper capita at each generation

Per Stirpes (by Right of Per Stirpes (by Right of Representation)Representation)

The intestate’s children are the root The intestate’s children are the root of the distribution process.of the distribution process.

Younger generation descendants Younger generation descendants divide the share their predeceased divide the share their predeceased ancestor would have taken had he ancestor would have taken had he survived the intestate.survived the intestate.

In other words, the younger In other words, the younger generation “represent” or stand in generation “represent” or stand in the shoes of the older generation.the shoes of the older generation.

Per Stirpes – Per Stirpes – Children and GrandchildrenChildren and Grandchildren

Intestate

Son One Deceased

Son TwoDeceased

Daughter1/2

Arthur 1/4

Brenda1/4

If Son One would have survived, Son One would have If Son One would have survived, Son One would have received ½ the estate.received ½ the estate.

Because he predeceased the intestate, his ½ share is Because he predeceased the intestate, his ½ share is divided equally between his children.divided equally between his children.

No share for Son Two because he had no heirs to represent No share for Son Two because he had no heirs to represent him.him.

Per Stirpes – Per Stirpes – GrandchildrenGrandchildren

Although all takers are of the same Although all takers are of the same generation, they do not receive equal shares.generation, they do not receive equal shares.

This approach stresses blood line over This approach stresses blood line over degree of relationship and may cause equally degree of relationship and may cause equally related individuals to be treated differently.related individuals to be treated differently.

Intestate

Son OneDeceased

Son TwoDeceased

DaughterDeceased

Arthur 1/4

Brenda1/4

Charles1/2

Per Capita with RepresentationPer Capita with Representation

The “root” is the generation nearest to the The “root” is the generation nearest to the decedent with those who survive the instate.decedent with those who survive the instate.

If all takers are of the same generation, they If all takers are of the same generation, they take take per capita per capita but …but …

when the takers are of different generations, when the takers are of different generations, the share of the younger generation the share of the younger generation descendants is based on the share that the descendants is based on the share that the older generation would have received had the older generation would have received had the older generation survived the intestate.older generation survived the intestate.

Per CapitaPer Capita with Representation – with Representation – Children and GrandchildrenChildren and Grandchildren

Although this is the same answer as under a per Although this is the same answer as under a per stirpes distribution, the reasoning is different.stirpes distribution, the reasoning is different.

The key issue is the level at which the shares are The key issue is the level at which the shares are divided, here it’s at the children level because it’s divided, here it’s at the children level because it’s the first level with members who survived the the first level with members who survived the intestate.intestate.

Intestate

SonDeceased

Daughter1/2

Arthur1/4

Betty1/4

Per CapitaPer Capita with Representation – with Representation – GrandchildrenGrandchildren

Because the level of grandchildren is the nearest Because the level of grandchildren is the nearest generation to the intestate with survivors, it is the generation to the intestate with survivors, it is the root generation.root generation.

This approach is regarded as being fairer to both This approach is regarded as being fairer to both the intestate and the heirs than per stirpes and is the intestate and the heirs than per stirpes and is the majority approach.the majority approach.

Intestate

SonDeceased

DaughterDeceased

Arthur1/3

Betty1/3

Charles1/3

Per CapitaPer Capita with Representation – with Representation – Children and Grandchildren from Multiple Children and Grandchildren from Multiple

Predeceased ChildrenPredeceased Children

Intestate’s property is divided into shares at the Intestate’s property is divided into shares at the first generation with survivors, that is, children.first generation with survivors, that is, children.

The initial division is into quarters - one for each of The initial division is into quarters - one for each of the surviving children and one share for each of the the surviving children and one share for each of the deceased children who left surviving descendants.deceased children who left surviving descendants.

Intestate

ArthurDeceased

BrendaDeceased

Edward1/4

Fran1/8

Charles1/4

Doris1/4

George1/8

Per Capita at Each GenerationPer Capita at Each Generation

Newest approach – contained in the Newest approach – contained in the Uniform Probate Code.Uniform Probate Code.

Equality among like-related persons is Equality among like-related persons is achieved.achieved.

Basic plan begins with per capita with Basic plan begins with per capita with representation but once the division is representation but once the division is done at the first generation with survivors, done at the first generation with survivors, the deceased member’s shares are the deceased member’s shares are combined and distributed combined and distributed per capita per capita among the younger generation heirs.among the younger generation heirs.

Per Capita at Each Generation -Per Capita at Each Generation -Children and Grandchildren from Multiple Children and Grandchildren from Multiple

Predeceased ChildrenPredeceased Children

The initial division is into quarters - one share for The initial division is into quarters - one share for each of the surviving children and one for each of the each of the surviving children and one for each of the deceased children who left surviving descendants.deceased children who left surviving descendants.

The shares of the predeceased children are The shares of the predeceased children are combined, then equally divided among their children, combined, then equally divided among their children, intestate’s grandchildren.intestate’s grandchildren.

Intestate

ArthurDeceased

BrendaDeceased

Charles1/4

Doris1/4

Edward1/6

Fran1/6

George1/6

EscheatEscheat No surviving heirs.No surviving heirs. Estate passes or escheats to the Estate passes or escheats to the

state.state. Life insurance will pass to named or Life insurance will pass to named or

contingent beneficiaries.contingent beneficiaries.

SeminarSeminar QuizQuiz Discussion BoardDiscussion Board AssignmentAssignment

Tasks for this UnitTasks for this Unit

Your State’s Intestate Your State’s Intestate Succession LawsSuccession Laws

For the first Discussion Question For the first Discussion Question research your own state’s intestate research your own state’s intestate succession laws and share how your succession laws and share how your state distributes property of a person state distributes property of a person who dies intestate. who dies intestate.

Discuss any provision of the intestate Discuss any provision of the intestate succession statute that you find succession statute that you find interesting and provide the citation to interesting and provide the citation to your state’s statute.your state’s statute.

Intestate Succession ProcessIntestate Succession Process

For the second Discussion Question For the second Discussion Question go to LexisNexis and research your go to LexisNexis and research your state statutes to see how the state state statutes to see how the state treats illegitimate children in the treats illegitimate children in the intestate succession process. intestate succession process.

Report your findings and provide the Report your findings and provide the citation to your state’s statute.citation to your state’s statute.

Post your thoughts and responses to the Post your thoughts and responses to the Discussion Board as to each question.Discussion Board as to each question.

Read and comment on posts from your Read and comment on posts from your colleagues. colleagues.

Do not hesitate to pose questions to your Do not hesitate to pose questions to your colleagues.colleagues.

Discuss constructively with your Discuss constructively with your colleagues their posts and positions.colleagues their posts and positions.

Post as early in the week as possible to Post as early in the week as possible to foster interactionfoster interaction

Discussion Board InstructionsDiscussion Board Instructions

Property DistributionProperty Distribution

For this week’s writing assignment For this week’s writing assignment you will review the following article: you will review the following article: Montana State University's article, "Dying Without a Written Will in Montana: Who Receives Your Property?"

Then go to the Then go to the Illinois General Assembly website and review the laws of succession of and review the laws of succession of the State of Illinois.the State of Illinois.

Write three paragraphs based upon the following facts: The Lees, a family made up of a mother, father, and three children, live in Montana. Mr. and Mrs. Lee have one child together. In addition, Mrs. Lee has one minor child from a previous marriage, and Mr. Lee has a minor child from a previous marriage. All three children reside with the couple. Assume that one of the parents died today without a will, and his or her estate was valued at $250,000. Devote a paragraph to each of the following questions:1. Under the laws of Montana, how would the property be distributed?2. What would happen if this same family lived in Illinois? How would the property be distributed? 3. Do you prefer Illinois’ or Montana's statute? Why?Answer the questions in a brief short answer essay, being sure to fully explain your responses.

This week we addressed the Laws of This week we addressed the Laws of Intestate Succession.Intestate Succession.

Next week we will address Trusts.Next week we will address Trusts.

Next WeekNext Week