Distribution

Question 1

classes of testamentary gifts

Answer 1

1. specific devise or specific legacy: a gift of a particular specified item, distinct from all other objects in testator’s estate
   i. ex. my car
2. general legacy: a gift of general economic benefit with no source for the payment specified
   i. payable out of the general assets of the estate
   ii. a specific item (ex. 100 shares of X Corp., 100 acres of farm) can be a general legacy if testator did not own the items and intended for the executor to purchase them
   iii. nothing specific about publicly traded shares in a company, unless indicating “my”
   a. ex. general legacy unless testator stated “my 200 shares of Acme stock”
   iv. ex. money
3. demonstrative legacy: a gift of general economic benefit payable to be paid from a particular source or fund
   i. treated as a specific legacy to the extent that the source of payment is available
   ii. treated as a general legacy to the extent of any shortfall in the source of payment
   iii. ex. $100 to A from the proceeds of the sale of my car
4. residuary estate: the balance of testator’s estate after payment of debts, expenses, taxes, and specific, general, and demonstrative legacies

Question 2

Lapsed gifts and anti-lapse statute

Answer 2

1. a gift lapses if the beneficiary pre-deceases the testator
   i. unless the will provides otherwise, lapsed gifts fall into the residue
   ii. lapsed gifts already in the residue go to other beneficiaries or otherwise by intestacy

Question 3

Anti-lapse statute

Answer 3

2. CA anti-lapse statute only takes effect to prevent lapse if predeceased beneficiary is:
   i. kindred of the testator, or kindred of a surviving, former, deceased spouse/partner of testator
   ii. and this predeceased beneficiary leaves issue
3. notes to applicability:
   i. kindred: adopted blood relative, stepchildren, foster children, and their issue
   ii. note: the anti-lapse statute does not apply to any predeceasing spouses, though it applies to kindred of those spouses
   iii. i.e. applies to the deceased’s children and their spouse’s children, and children of those children
4. applies both to wills and revocable trusts

Question 4

Effect - Lapse

Answer 4

5. effect: anti-lapse statute allows the issue of the predeceased to take by substitution
   i. the gift is not saved for the predeceased beneficiary’s estate
   ii. sole exception: does not apply if there is a will provision to the contrary
   a. a general disinheritance clause or clause limiting beneficiary to a nominal amount is not a contrary will provision
6. method of taking:
   i. the issue of the predeceased devisee who take under the statute take per capita
   ii. those of a more remote degree take per capital with representation

Question 5

Situations - Lapse

Answer 5

7. lapse in residuary gift: where there are multiple beneficiaries to the residuary estate, and one of them predeceases the testator:
   i. California: no residue of a residue: surviving residuary beneficiaries share pro rata, except that the anti-lapse statute still applies
   ii. common law: deceased beneficiary’s share passes by intestacy
8. class gifts: only members of the class that survive the testator can share in the gift, unless the other members meet the anti-lapse statute requirements
9. if beneficiary was already dead when the will was executed, the gift is void
   i. the rules for lapsed gifts and anti-lapse statutes apply

Question 6

Ademption by extinction

Answer 6

Ademption by extinction applies to specific legacies. not general or demonstrative gifts.

Specifically gifted items that are no longer in the probate estate – the gift ademes (beneficiary takes nothing)

Beneficiary doesnt get to trace into proceeds/ get substitute gift/ get the value of the gift

Ways to alleviate ademption:

i. partial ademption is possible (ex. if testator devises a large tract of land but gives a part of it away during life, that portion is adeemed and beneficiary takes the untransferred portion)

ii. courts will construe gift as a general or demonstrative gift if:
a. the gift was destroyed in the same incident that took decedent’s life
b. the gift merely changed form (ex. stock splits, mergers, dividends)
c. If the specifically devised property is sold by a guardian or a conservator—if so devisee is entitled to a general pecuniary legacy equal to the amount of the proceeds.
d. proceeds from a sale that are traceable
i) but intent to adeem by extinction is inferred if the proceeds from a sale are disposed of or untraceable

4. ademption by extinction requires an intent to adeem
   i. look at testator’s intent and the reason the property is no longer in the estate

ii. CA statutory modifications: no ademption in these cases (bc no intent to adeem):
a. Balance of purchase price—if testator sold it and still money owed, that money goes to beneficiary.
b. any amount of eminent domain award unpaid at death
c. property owned by testator as a result of foreclosure, or obtained in lieu of foreclosure, of the security interest for a specifically devised obligation (no possession if merely foreclosing)
d. securities in another equity that were the result of the actions by the entity whose stock was being bequeathed
e. remaining proceeds of the sale of testator’s property paid to a guardian of an incompetent testator

f. summary:
i) no possession bc testator wasn’t paid yet (property sale, eminent domain)
ii) no possession bc owned by foreclosure
iii) no possession bc activity by company whose stock was devised
iv) held by guardian

Question 7

Ademption by satisfaction

Answer 7

1. ademption by satisfaction: testator gave beneficiary inter vivos downpayment on a devise
   i. testator is merely transferring a part of what is otherwise to pass at death during life
2. ways to establish that a transfer was a satisfaction:
   i. will provides for a deduction of the inter vivos gift
   ii. testator declares in a contemporaneous writing that the gift is a satisfaction
   iii. beneficiary acknowledges the satisfaction in writing at any time
3. beneficiary must subtract the satisfaction already received inter vivos from the total gift

can be both ademption by satisfaction and by extinction, if the property given in the satisfaction is the same property that is the subject of a specific gift to the beneficiary
a. ademption by satisfaction and also by extinction, because the property no longer exists in testator’s estate

4. predeceased beneficiary:
   i. if issue takes per an anti-lapse statute, the issue of a predeceased beneficiary is treated as having received the satisfaction, unless the will states otherwise
5. if non-cash, the value of a satisfaction is whatever the will states, or FMV if not in will

Question 8

Advancement

Answer 8

1. advancement: an inter vivos downpayment made by an intestate to a heir apparent
   i. intestacy situation
2. rules are the same as ademption by satisfaction
3. established by declaration in a contemporaneous writing that the gift is an advancement, either by the intestate or the heir
4. but unlike ademption, if the heir-apparent is predeceased, their issue is not treated as having received the advancement

Question 9

Increases to property after execution

Answer 9

1. the will passes all property including after-acquired property after execution of will
2. increase before testator’s death:
   i. income on property goes to general estate, improvements on property go to devisee
   ii. stock dividends and split: go to beneficiary if the stock is owned by testator at death
   a. does not matter if shares are general or specific
3. increase after testator’s death:
   i. general beneficiaries do not receive any increase
   a. exception: general pecuniary gifts (ex. gifts of a dollar amount) begin to accrue interest if not distributed within a year
   ii. increases in specific gifts pass to specific beneficiaries (deemed to own the property from time of testator’s death)
   a. stock splits, stock dividends, rents, cash dividends, interest on indebtedness
   b. a specific bequest includes additional shares produced by splits, as well as dividends (dividends used to be excluded under common law)