Chapter 4 Flashcards
UPC §6-101. Nonprobate Transfers on Death.
A provision for a nonprobate transfer on death in an insurance policy, contract of employment, bond, mortgage, promissory note, certificated or uncertificated security, account agreement, custodial agreement, deposit agreement, compensation plan, pension plan, individual retirement plan, employee benefit plan, trust, conveyance, deed of gift, marital property agreement, or other instrument of a similar nature is nontestamentary.
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While property subject to will substitutes normally bypasses the probate estate, there are situations that might result in the property being included in the decedent’s probate estate. The most likely culprits include (i) the naming of the estate as the beneficiary in a designation form; (ii) the severance of a joint tenancy by the inter vivos actions of one of the tenants; (iii) the murder of the owner or joint tenant by the beneficiary or other joint tenant; (iv) a divorce between the beneficiary and the owner or one joint tenant and the other tenant; or (v) the simultaneous death of the owner and designated beneficiary or joint tenant.
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UPC §6-102 states that nonprobate transferees are liable to the decedent’s creditors only (i) if the probate estate is not sufficient to pay all the claims; and (ii) if there is no exemption under state law.
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UPC §1-201. General Definitions
(18) ‘‘Governing instrument’’ means a deed, will, trust, insurance or annuity policy, account with POD designation, security registered in beneficiary form (TOD), pension, profit-sharing, retirement, or similar benefit plan, instrument creating or exercising a power of appointment or a power of attorney, or a dispositive, appointive, or nominative instrument of any similar type.
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trust is a legal relationship that separates legal ownership (the property is titled in the name of ‘‘trustee’’) from beneficial ownership (the present and future interests are held by the ‘‘beneficiaries’’)
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The transferor (the ‘‘settlor’’) transfers title to the property (known as the ‘‘res,’’ ‘‘principal,’’ or ‘‘corpus’’ when in the trust) to the trustee to hold for the benefit of the present and future beneficiaries
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As to the former, trusts are either irrevocable (cannot be revoked or modified) or revocable (can be revoked and amended). Trusts are either inter vivos (created during life) or testamentary (created in the will and funded with property of the estate).
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Single-Party AccountsIf a deposit account is owned by an individual and does not include a payable-on-death beneficiary designation (discussed below), the balance in the account passes as probate property. UPC §6-212(c).
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A multiple-party account is defined in UPC §6-201(5) as ‘‘an account payable on request to one or more of two or more parties, whether or not a right of survivorship is mentioned.
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