Trusts & Estates:
Key themes
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The interests that people have in deciding what
happens to their wealth after they die (control of
the dead hand)
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Procedural rules to make sure we carry out the
decedent’s interests
The interests that people have in deciding how
to use their wealth while they are alive (limiting
the control of the dead hand)
The interests of society in protecting surviving
spouses and children and promoting fairness 1
Legal basis for Trusts &
Estates law
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Is it a natural right to determine the disposition
of one’s property?
Or is it a privilege that has been granted by the
state and that can be revoked by the state?
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Jefferson: People do not really own property. Rather
it belongs to society, and individuals only have the
right to use—and the responsibility to maintain—
property during their lifetimes (p.1)
Blackstone also saw it as a grant of the state (pp.1-2)
2
Legal basis for Trusts &
Estates law

The Supreme Court viewed the testamentary
right as a privilege at first (Irving Trust, 1942)
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“Rights of succession to property of a deceased,
whether by will or by intestacy, are of statutory
creation, and the dead hand rules succession only
by sufferance.”
“Nothing in the Federal Constitution forbids the
legislature of a state to limit, condition, or even
abolish the power of testamentary disposition over
property within its jurisdiction” (emphasis added)
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Page 3
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Legal basis for Trusts &
Estates law

In 1987, the Supreme Court changed course and
held that the Constitution is implicated when the
government totally abolishes the right to leave one’s
property to one’s chosen beneficiaries.
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The government may impose reasonable limits on what
people may write in their wills, and estate taxes are valid
However, if the government tries to take away in its
entirety the right to dispose of one’s property at death,
then we have a taking of private property without just
compensation (5th Amendment taking)

(Hodel v. Irving, page 3)
4
Did the Supreme Court
finally get it right?
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Individuals have an important interest in providing
for their children and other relatives.
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Allowing for inheritance promotes the responsibility of
people to provide for their children and other relatives,
relieving society of that obligation
Allowing for wills promotes stronger family ties, and
stronger families are good for society.

If children know that they might inherit their parents’
wealth, they’re more likely to treat them well in their old
age, as well as earlier in time.
5
Did the Supreme Court
finally get it right?

Allowing people to write wills
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Promotes hard work and productivity. Why
continue to build wealth if the government claims
it at your death?
Promotes saving over consumption.
May result in better decisions on the disposition of
the wealth—individuals may make better decisions
than government.
6
Did the Supreme Court
finally get it right?

How can the U.S. promise to be a land of
opportunity, where everyone has an equal
chance to succeed, when some people can
inherit millions of dollars and other people inherit
nothing?
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Inheritance allows people to enjoy “significant
comforts and power they have not earned” (p. 17)
Inheritance allows for the creation of an aristocratic
class in this country, something that undermines the
idea of a democracy (p. 18)
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Did the Supreme Court
finally get it right?

Can we equalize opportunities by restricting
dispositions at death (pp. 24-27)?
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People provide their children with advantages during their
lifetime that may be much more important than what they
leave in their wills. Parents vary in terms of
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Their investments in their children’s education
The richness of the home environment, including health care, food
and shelter, extra-curricular activities, summer camps, etc.
As people are living longer, inheritances may not reach children until
they already have reached their peak earning years or their
retirement (Warren Buffett’s three children are over the age of 50)
Estate taxes are important, but it is much more
important to equalize incomes than inheritances
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Probate and nonprobate
property (p. 38)
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Probate Property
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Property that passes through probate under the
decedent’s will or by intestacy.
Nonprobate Property
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Property that passes outside of probate through a
nonprobate mode of transfer (most property)
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Joint tenancy (real and personal)
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Bank accounts, mutual fund accounts, homes
Life insurance
 Contracts with payable-on-death (POD) provisions
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Retirement accounts
Property put in an inter vivos trust while the decedent was alive
10
Functions of probate
(p. 39)
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The three core functions of probate:
Provide evidence of transfer of title to the new
owners;
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Protect creditors by providing a procedure for
payment of debts; and
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Distribute the decedent’s property to those
intended after the decedent’s creditors are paid.
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Formal v. informal probate
(pp. 43-44)
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Formal Probate
The court supervises the actions of the personal
representative in administering the estate through
a potentially costly and time consuming process.
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Informal Probate
The personal representative may administer the
estate without court supervision unless an
interested party asks for court review
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Interested parties include heirs, devisees, children,
spouses, creditors, beneficiaries
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Problems, pages 47-48
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