Trusts and Estates

3 February

• Wrap-up on Problem 11:
  Remember, there was this prior spouse who had a claim of $10K. What is the status of that claim? A claim that somebody has is different from something that's secured by property in the estate (e.g., the mortgage).

  This is an unsecured debt, not attached to anything. So if the former spouse doesn't know about this, what do we do? We balance between the estate executor having to track down creditors and creditors having to come forward. The creditor is an interested party. In Dane County, when you file for probate, there's a little letter box where you drop your notice to creditors, and the newspaper people come and take it and put into their legal notices (this is like $50 or something).

  All of this went fine until Pope (see ch 1): a person died owing some money, and the creditor didn't get any special notice, although general public notice was given. For most legal matters, just a notice in the newspaper isn't enough to put parties on notice. The creditor claims this is a violation of due process, SCOTUS says yes: you're entitled to more proper service of notice (just having notice isn't enough: the creditor was the hospital where the person had died, so they absolutely had actual notice of the death, and they new they had a claim).

  So we get § 859.48: the estate doesn't have to give actual notice, but if they fail to give notice to a creditor who could have been found by reasonable notice, that creditor gets some special treatment with respect to deadlines. Note that this might not be enough either-- it hasn't been tested in federal court. But so far so good.

  And one reason (law in action footnote) that there's not a lot of creditor rights caselaw is that there's not a lot of litigation here: either people are getting paid, or the amounts are too minor to justify litigation. Also, exploit: you can stiff creditors this way by making lame notice-giving efforts and sitting on the asset until a year passes.

  Anyway, do we take out of the marital or individual estate? Hard to know-- it depends whom you want to favor. It seems like it should come out of the individual side, as a logical rule, so go with that.

• So, remember the workflow:
  1. Who owns what?
  2. Non-probate transfers
  3. Probate - will
  4. Probate - intestacy
  Now we are on wills. The law of wills is very old: at least 300 years, but maybe much more. And probate has been the standard way to transfer property at death. It's a very highly developed area of law. It's fairly picky at times, but remember that it comes from a time when people couldn't read and write, so a lot of rigid rules evolved. Also, note that wills create a ready-made forum for disputes: a civil court proceeding, with all interested parties notified and given a copy of the will so everyone can see what everyone else gets. So there can be lots of objecting.

  Anyway, don't underestimate the difference between a proceeding like this, and one where someone has to find out that they have been wronged, and then initiate the dispute. No wonder non-probate transfers are so attractive: there's less probability of disputes.

• There's just one statute on capacity (§ 853.01), and the rest is caselaw. Normally the age-18 requirement isn't too big a deal (most people don't die that young, and those who do don't have that many assets). But there are exceptions: rock stars and heirs who hate one parent, underage fathers who die, and so on.
• The capacity to make a will is the lowest threshold of capacity: at the moment you sign the will, you need to understand what you're doing.
• The elements of capacity are straightforward:
  • Must know what their property is
  • Must know who the natural objects of the bounty are (note that this is very subject to social context)
  • Must understand the estate plan (this is honored in the breach: hardly anyone can explain all the details of the language in a will)
  • Must understand the relationship between the property, the plan, and the family (i.e., must know that normally your estate would go to your spouse, but this will donates it all for the law school)
  So the idea is that the plan must be rational. Of course, that's kind of a moving target. There's generally a presumption that wills are valid, and the burden is on someone else to challenge it (this isn't universally true, but generally). So mounting a challenge implies a bit of a burden. And the standard of proof (in WI and in many other jurisdictions) for contesting capacity: clear and convincing evidence. Few wills get challenged, and most challenges fail. Overwhelmingly, for this reason, the decisionmaker here is not the court: there's no point in going to court. It's a lawyer or a relative saying "don't do this."
• In WI, there's no right to a jury trial for a will contest, incidentally.
• Problem 1: The principles are sort of used and sort of not. Maybe they're implicit (in the analysis of Strittmater, e.g.), but maybe not. The main principle here is this is a law-in-action one: what do you think of the disposition? If we think Honigman should have given his property to his wife, then maybe he has an insane delusion. So what is the difference between Wright and the others? Well, the specificity of the ostensible delusion (man-bashing, wife-affairs), but also the fact that the delusion was a strong influence on the will. So the principle is the connection between the irrationality and the estateplan. Wright is just as crazy as the others, but his brand of crazy isn't an essential part of the estate plan.

  So it's not as simple as just a judge picking the result they want and then working backwards, but that can happen, so we need to be aware of it.

• Most undue influence challenges deal with capacity, but not all capacity challenges implicate undue influence.
• Problem 2: there's some stuff here, but it doesn't rise to undue influence. There's influence, but it's not undue. The distributions to the children, and the fact that A sat in the meeting are suspicious. Always know who your client is, and make sure you represent that person. Note that under intestacy, B's kids would take the whole estate, so there might be a lot at stake for a challenge.
• Note in Lipper and Perssion... Holy crap this is the guy from Pines v. Perssion (property case about WI students and implied warranty of habitability). Anyway, note that in both of those cases, the will is written be a relative. Anyway, in these cases, the tough testators are presumed not to have been unduly influenced by their relatives, because they were independent hard-minded folks. There were causes for suspicion, but they didn't rise to the clear-and-convincing standard of undue influence.
• Note that in WI there's no such thing as partial capacity or partial undue influence. These are binary states: you either have them or you don't. Some states allow challenges to only part of a will, but others do not. This is a matter of WI case law, not statute: it's something you might be able to argue on the right side of facts. These cases are all very fact-driven, and you might be able to get a decision-maker to side with you if your facts are strong enough.
• Criteria for undue influence include: the person who exerts the undue influence needs to benefit from it. But really, just a nearby connection might be enough.
• Problem 3: techniques to avoid a challenge, and their drawbacks.
  • No contest clause: this is a key technique, but we'll table it until later.
  • Explanation of why some would-be beneficiaries are cut out: this shows capacity, shows that she understands what she's up to. Why is it a bad idea?
    • Well, did she actually write it? There are some things in there that sound like a lawyer wrote it ("my said son's widow," e.g.). Now maybe the lawyer just doctored up what she said, but this is risky: the documents we write as lawyers will have to be persuasive out in the world. Maybe it would be better to have something she wrote herself. Always be thinking "what can I put in this document to make it more effective," not just "how can I make this a valid will."
    • But even if it were in her own words, there might be some issues-- that would be better. But now people can contest the reasons for her decisions. Phone records, for example. Why does Sophie Block (who is buried in Beth Israel cemetary) care about how many Christmas cards she got? Maybe there's a capacity issue if she forgot all our phone calls. And so on.
    • In fact, the reasons might be so inflammatory that people challenge just in order to clear their reputations. Slamming people from the grave can have adverse effects.
    • Good practice: have the testator write down their reasons, and put it in a file. Don't put it right in the will-- just have it available if there's a challenge. You just want to have it on hand if needed. And your whole relationship with people might change by the time you die (or not), and you don't want your last statement to them (in addition to not giving them anything) to be hostile. You could really mess up a person that way; a lawyer might refuse to help a client write a will that way. Another lawyer might feel that lawyers have no business making judgments about what clients should put in their wills. But it's an interesting facet of the question: what is our role as a lawyer.
• Problem 4: the no contest clause:
  • A: It probably doesn't have any effect, because the people who are likely to challenge it are the ones cut out of the will! Doi. Even leaving a token amount that would be wiped out by the clause might not be enough motivation.
  • B: If there's probable cause to issue a challenge (i.e., if it would be reasonable to do so; what is this "probable cause" in this context, anyway?), then the clause won't be enforced, even if the challenge fails. Well, better to say: the penalty clause would only matter if the challenge fails-- if the challenge succeeds, the will is thrown out.
• Some people are thinking of putting arbitration clauses in wills. It's not obvious that this is consitutional (dictating that people can't use the courts to resolve a legal dispute). But you could always just do it, and expect that it won't be challenged.
• Problem 5:
  • Moses: the court can't figure out why a younger guy would take up with this older woman.
  • Kaufman: the lanugage of the case is oblique, but everyone knows this is a gay couple. There is other stuff in play: this is tons of family money here. And the family had given these things outright, rather than putting them in trust: that's a poor estate planning move, if you want to control the kids' behavior. Also, the kid dies in a mysterious fire where the partner could have been implicated (but never actually was).
  The kinds of dependencies that are asserted here are ones that would be totally normal in a married couple.

  We don't know what really went on in these cases, but they show how judgments about estate planning behavior are very dependent on what other people think is normal. How much do we want courts making these evaluations (i.e., about what looks right)?

5 February

• So remember that undue influence and lack of capacity are different things, even though they often go together. This stuff is fairly intuitive.
• Not so with will execution: these rules are narrow, specific, and unfamiliar. If you haven't done the right things, you don't have a valid will. The only thing as strict as will execution is deeds. So you need to be very careful in giving any advice or supervising anyone executing a will.
• Problem 6: Why is the "m" in § 853.03(2)(1)? M is in the middle of the alphabet: that way future revisions can come in above (ag) or below (as) it.
• Note the use of the word "implicit" in this statute-- see Brooks: the witnesses signed after she died, and somehow that didn't get questioned (it was within a "reasonable" time). And what is "reasonable?" Even the UPC allows signing after death (by witnesses).
• It's possible to hear someone sign a will, but seeing used to be the standard: line of sight (that was in the 1990s).
• Don't leave giant blank spaces above your signature, lest people write extra stuff in above it.
• Varying degrees of rigidity about formalities:
  • Substantial compliance: if something substantially complies with the statute, we'll let it fly.
  • Dispensing power: if something is obviously a will, we'll dispense with the formality.
  • UPC § 2-503: very much like substantial compliance.
  In reality, though, § 2-503 is not adopted many places, and relaxing technical requirements is really a cutting-edge thing. Not many courts are willing to forgive defects.
• Problem 7: WI rules are more lenient than many states (and stricter than some). And a client might move. Real estate in another state. But § 854.05 : a conflict of law statute (most states have this) - if you follow your state's law, that's good enough. So you shouldn't necessarily rely on WI law only, it would probably still work: other states will follow WI.
• Problem 8: a holographic will is signed but not witnessed; generally has to be totally in your own handwriting (or at least the material provisions). After Howard Hughes died, many holographic wills seemed to pop up-- presumably all fraud. And this doesn't defeat undue influence: a gun could be held to your head.

  As a basic matter of law, WI doesn't like these: every will must be witnessed. But, because of § 853,05, if it's from another state (and holographic wills are allowed there), it's OK.

  Why should we like them? Because if we know the intent of the person, why bother with the technical rules. On the other hand, we don't want people just casually making wills all over the place. We want caution. We don't want accidental wills. The trade-off, of course, is that we are trading false positives for false negatives: people fail to make proper wills otherwise.

• One complaint about the rigidity of will rules: it just makes work for lawyers.
• You can handwrite all you want, of course, but just get your witnesses.
• Signing (also known as "attestation") validates the components of the will. One question: what words are encompassed by this attestation? Incorporation is about this question.
• Problem 9: § 853.32(1). The will has to manifest an intent to incorporate. So that works. We know that there was a document in existence at the time of the will, but we don't know whether this one is that same document.

  You can understand who bears a burden by the language of the statute: a will can incorporate another document if all of the following apply. This means that the proponent of the document has to show that all the conditions are met. Or, on the other hand, the statute might say that incorporated documents are valid unless a, b, c.

  So we know the status of the document is questionable, and that means probably incorporation won't work because the burden is on the proponent of the document.

  But the question is really "does Friend get the stuff?" Well, if nobody questions the incorporation, then sure.

  Who is the decisionmaker here, really? The spouse, presumably. Therefore, always ask yourself: how does the decisionmaker fel about this? Do we need to have a dispute?

  And why should we presume the document was changed? Just because we can't prove that it's not, we're not required to assume that it was.

  § 853.32(2) : if the document transfers tangible personal property, then it doesn't have to be in existence at the time of the will. This really bypasses all the fancy attestation stuff.

  This is for letters like "I want Charlie to get grandpa's gold watch." This isn't strictly legal, but people do it so much, and we're never going to stop them, so we make a statute saying it's OK.

  Note that we don't know whether this document is signed and dated (we could get by without the date, but we don't know if it's signed). But what's tangible personal property: the poster and the car for sure. The cash, though is fungible. Intangible. If the document said "the $2,500 that are stapled to this document," maybe that would be tangible, but really the whole point of money is that it's not tangible. And the certificate moreso: just holding the certificate doesn't make you the owner of the shares. He can get the certificate, but not the stock itself.

  So given that this document is kind of contaminated (i.e., it mixes tangible and intangible property), does that invalidate it entirely? The statute just says "if it lists tangible personal property," so it seems like that's not a prohibition against listing other things. But if you wanted to object to this transfer, that might be an argument you'd try to make, and maybe someone would buy it.

  Part B: would it matter in a jurisdiction that had adopted UPC § 2-503? Generally, this would be a codicil, which requires execution formalities, but under § 2-503, we'll waive those formalities if we have testamentary intent. So probably this would still work, even though it's not technically the doctrine of incorporation.