5- Intestacy Part 3 - Review & Practice Problems

Summary

This video script from Wilson Trusts Chapter 2 delves into the intricacies of intestacy laws, explaining how estates are distributed when a will is either partially or completely absent. It highlights the default rules favoring spouses and children, then parents, and finally collaterals and remote kin, with the state as the last resort. The script also covers how surviving spouses and children's shares are determined, introducing three distribution methods: English per stirpes, per capita with representation (modern per stirpes), and per capita at each generation. Through various examples, it illustrates the application of these methods, showing how shares are allocated among surviving family members, including those who pre-deceased the decedent.

Takeaways

• 📜 Intestacy refers to the legal situation where a person dies without a will or with a will that does not dispose of all their property, leading to the distribution of the estate according to default rules.
• 👫 Intestacy laws favor the surviving spouse first, followed by the decedent's issue (children), then parents, collateral relatives, and finally remote kin or the state if no relatives are found.
• 💰 When a surviving spouse and issue are present, the share of the estate that the spouse receives depends on various factors and is outlined by the UPC 2-102, which specifies the percentage of the share.
• 👨‍👩‍👧‍👦 In the case of Howard's estate example, Wendy, the surviving spouse, would receive a specific share plus half of the remaining assets, while the rest would be divided equally between their children Anne and Billy, excluding Zayne as he is not Howard's issue.
• 🏡 The distribution of shares in the estate becomes more complex when a child pre-deceases the decedent, with three methods available to divide the shares: per stirpes, per capita with representation, and per capita at each generation.
• 🌿 The English per stirpes method divides the estate at the first generation of the decedent's issue, regardless of whether the issue are living, and then drops the share to the pre-deceased child's survivors.
• 👪 Per capita with representation (modern per stirpes) divides the estate at the first generation where there is a living taker, ensuring that each surviving line receives an equal share.
• 👥 Per capita at each generation also divides at the first generation with a live taker but pools the shares before dropping them down to the next generation, maintaining equality among the same generation.
• 🔢 The distribution of shares can vary significantly depending on which method is applied, as illustrated through several examples in the script, each yielding different results for the same family structure.
• 📚 The script provides detailed examples and calculations for each method of distribution, which can be found in the textbook on the specified pages, offering a comprehensive understanding of intestacy laws and their application.

Q & A

What is the definition of intestacy?

Intestacy refers to the situation where a decedent leaves no will or a will that does not dispose of all of their property. In such cases, the probate estate passes through intestacy, which means it follows the default rules set by the state.

How does the distribution of property work when a decedent leaves a will that only partially disposes of their estate?

When a decedent leaves a will that only partially disposes of their estate, the portion of the estate not disposed of by the will passes by intestacy, following the default rules for distribution.

What are the general rules for intestacy in all states?

In all states, intestacy rules generally favor the spouse first, then any issue (children) of the decedent. If there are no issue, it goes to the parents. If the parents have predeceased the decedent, it goes to collateral relatives, and finally to remote kin. If there are no remote kin, the property passes to the state.

How is the share of a surviving spouse determined when there are also surviving issue?

The share of a surviving spouse when there are also surviving issue is determined by specific rules outlined in the Uniform Probate Code (UPC). The exact share depends on various factors, including the number of surviving issue and whether the spouse is also an issue of the decedent.

What is the process for determining the share of a surviving spouse in the estate of Howard, who was married to Wendy and had two children Anne and Billy?

According to UPC 2-102, if Howard's estate is worth 1 million, Wendy's share would be $225,000 plus half of the remaining assets. After subtracting $225,000 from the total, the remaining $775,000 is divided by two, giving Wendy an additional $387,500, for a total share of $612,500. The other $387,500 is divided equally between Anne and Billy.

What happens if a child pre-deceases the decedent and there are multiple methods for dividing the shares?

When a child pre-deceases the decedent, there are three options for dividing the shares: per stirpes (English per stirpes), per capita with representation (modern per stirpes), and per capita at each generation. Each method has different rules for how the estate is divided among the surviving relatives.

Can you explain the English per stirpes method for dividing an estate?

The English per stirpes method involves dividing the estate at the first generation where there are issues, regardless of whether they are living. If a child pre-deceases the decedent, their share is dropped down to their surviving issue. This method preserves the share for the deceased child's line.

How does the per capita with representation method differ from the English per stirpes method?

The per capita with representation method divides the estate at the first generation where there is a living taker. If all issue in a generation have pre-deceased the decedent, the division is postponed until a living generation is reached. This method allows for a more even distribution among the living relatives.

What is the per capita at each generation method, and how is it applied?

The per capita at each generation method divides the estate at each generation where there is a living taker. If there are no living takers at a generation level, the shares are pooled and then divided among the next living generation. This method ensures that the estate is divided equally among all living relatives at each level.

Can you provide an example of how the shares would be distributed using the per capita at each generation method if A has three children B, C, and D, and B and C have pre-deceased A with B having one child E and C having two children F and G?

Using the per capita at each generation method, the estate would be divided into thirds since there are three potential takers at the first living generation (D, E, and F). E would receive one-third, and F and G would split the other third, each receiving one-sixth. D would keep their one-third.