Estate Administrative Issues Flashcards
What is a pwr of appointment?
POWER OF APPOINTMENT = An authority created in, or reserved by a person, enabling that person to designate, within limits prescribed the creator of the power, the persons who shall take the property and the manner in which they take it
It allows someone to look at the facts in existance in the FUTURE for distribution of property
Characters:
Donor – creator of POAppt
Donee – person who is given POAppt to use
Takers in default – persons who take property, if the donee fails to correctly exercise the power
What are the 4 classifications of pwr of appointment?
Dimension 1: General vs. Special
1) General PoAppt = DONEE can appoint the property to themselves, his estate, or his creditors (as if he owned the property himself)
2) Special (Limited) PoAppt = DONEE cannot appoint to themselves, BUT RATHERjust to limited class named by DONOR(e.g. “to any one of her descendants”) Dimension 2: Presently Exercisable vs. Testamentary
**3) Presently Exercisable PoAppt = DONEE can appoint during HER lifetime (via lifetime trust)
NOTE:
DONEE can exercise the pwr via a Will UNLESS the DONOR’s Will expressly forbids it
If DONEE does not exercise the pwr of appt and there is NO default taker→ on her death the trustee will distribute the principal of the trust property to the DONOR’S residuary beneficiary (OR DONOR’S intestate estate)
4) Testamentary PoAppt = DONEE can appoint only by Will after DONOR’S death
NOTE: in ANY pwr of appt question, FIRST classify the pwr
What types ofpwr of appts are considered testamentary substitutes (T-Subs)?
Count as T-Sub:
General Presently Exercisable PoAppt - DONEE can appt property to herself
———- Are NOT T-Subs:
General Testamentary PoAppt - DONEE can’t get to the res (trust property) in her lifetime
Special PoAppt - DONEE can NEVER get to it
What types ofpwr of appts are subject to creditors’ reach?
Creditors’ can get to:
1) General Presently Exercisable PoAppt - DONEE can reach the assets as if she owned them, so the creditors can as well
———– Creditors’ CANNOT get to:
1)General Testamentary PoAppt - DONEE can’t get to the assets in her lifetime
EXCEPTION: Creditors CAN attack IF
(i) a person is BOTH DONOR and DONEE of the pwr; OR
(ii) DONEE can exercises in favor of her estate
2) Special PoAppt - DONEE can NEVER get to the assets, so neither can the creditors
How do you determine if a pwr of appt violates the Rule Against Perpetuities (RAP) or the Suspension Rule?
FRAMEWORK
FIRST: Identify the type of power
1) General PRESENTLY EXERCISABLE pwr of appt VS. 2) Special pwr of appt OR General TESTAMENTARY pwr of apt
SECOND: Is the power valid under RAP?
NOT AN ISSUE IF GRANT IS TO A LIVING PERSON
1) General PRESENTLY EXERCISABLE pwr of appt: to be valid, the pwr must be certain to be ACQUIRED w/in LIB + 21 yr
2) Special pwr of appt OR General TESTAMENTARY pwr of apt: to be vald, the pwr must be certain to be EXERCISED w/in LIB + 21 yrs
THIRD: Are the interests CREATED by the pwr VALID? 1) General PRESENTLY EXERCISABLE pwr of appt: to be valid, the pwr must be certain to be ACQUIRED w/in LIB + 21 yr
IFF there is a future interest created (i.e. a Will), we measure from TIME OF CREATION of future interest (no Relation Back Doctrine)
We do NOT apply the Second Look Doctrine here
If invalid b/c of RAP or Suspension Rule, apply NY reform statute (i.e. reduce age contingency to 21 yrs)
2) Special pwr of appt OR General TESTAMENTARY pwr of apt: Relation Back Doctrine: We “FILL IN THE BLANKS” (i.e. look at from time of DONOR and read AS IF all part of his Will) to see if the interest created will vest w/in LIB + 21yr
If violates RAP, we can apply “Second Look Doctrine” to see if the interest will vest looking from the death of the measuring life REMEMBER: if it’s a “class gift” it must be “good as to ALL”
If STILL invalid b/c of RAP or Suspension Rule, apply NY reform statute (i.e. reduce age contingency to 21 yrs)
DEALING WITH AMBIGUITY
Can extrinsic evidence be used to clarify a prvn in a Will?
Absent ambiguity, it is CONCLUSIVELY presumed that the testators have READ the Will and INTENDED its consequences→ the plain meaning of the Will won’t be overturned by extrinsic evidence IF it’s “AMBIGUOUS”…
1) If it is a “latent ambiguity” (i.e. not evident by looking at the will)→then extrinsic evidence IS admissible to clarify/find the meaning of the testator’s words Can use:
(i) “facts & statements” evidence abt the family relationships;
(ii) evidence abt the testator’s declaration of intent to 3d parties; OR
(iii) evidence of testator’s stmt to an atty who prepared the Will
2) If it is a “patent ambiguity” (i.e. an obvious error like missing a few zeros in $ amt)
Can use:
(i) “facts & statements” evidence; OR
(ii) evidence of testator’s stmt to an atty who prepared the Will
BUT NOTevidence abt the testator’s declaration of intent to 3d parties
CONDITIONAL WILL
What is a conditional will?
CONDITIONAL WILL = A Will that expressly provides that it will be operative ONLY IF some condition is met IF condition is not met→the Will is DENIED PROBATE
**IF YOU GET A CONDITIONAL WILL, argue both sides that it may NOT be a condition, but rather a “motive or inducement” for making a Will
CONTRACTS AND WILLS
When is a K to make or NOT revoke a Will enforceable?
A K to make a Will or NOT revoke a Will can ONLY be established by an EXPRESS STMT OF INTENT that the Wills prvns are intended to constitute a K b/t the parties
A Joint Will (i.e. a Will of 2 or more ppl in one document) is NOT contractural (i.e. non-REVOCABLE by the surviving spouse) …UNLESS expressly stated to be contractural (i.e. language NOT to revoke will not be read into a Will just b/c “we” language is being used)
If a Will IS contractural and the survivior executes another Will that has INCONSISTENT prvns→ a ct will read both together AND impose a CONSTRUCTIVE TRUST to protect adversely-effected beneficiaries from first Will
What is the mental capcity req’d to execute a Will?
Testator must have SUFFICENT capcity to…
1) Understand the nature of the act (i.e. that he’s writing a Will)
2) Know the nature & approximate value of his property
3) Know the natural “object of his bounty” (i.e. he must know who is family is); AND
4) Understand the dispositions he was making
The burden of proof is on the Will proponent
NOTE: “capacity” to make a Will is LESS DEMANDING than the capcity to make other legal instruments A testator CAN properly execute a Will during a “lucid interval”
A testator’s Will MAY be invalidated if its the product of an insane delusion (i.e. paranoia)
How can undue influence on a testator be established?
The Will CONTESTANT has the burden of proving…
1) The existence & exertion of an INFLUENCE;
2) The effect of such an influence was to OVERPOWER the will and mind of the testator; AND
3) The product is a Will or a gift in a Will that would NOT have happened “BUT FOR” the influence
INSUFFICIENT EVIDENCE =
a. the OPPORTUNITY to exert influence
b. the SUSCEPTIBILITY to influence due to AGE or ILLNESS
c. UNEQUAL distributions
SUFFICIENT (but rebuttable) EVIDENCE =
a. someone who is in a CONFIDENTIAL relationship with the testator who was ACTIVE in preparing the Will
b. gifts to the DRAFTING ATTY (established sua sponte by ct w/ “Putnam Scrutiny”)
What disclosure must an atty who is appointed executor make?
A drafiting atty who is named as EXECUTOR of the testator’s estate MUST given WRITTEN disclosure to the testator that states…
- Any person can be named as executor, NOT just an atty
- The executor receives a STATUTORY commission; AND
- That the atty will ALSO be entitled to legal fees for representing the estate
Furthermore…
1. Testator/client must SIGN the written disclosure in the presence of 2 WITNESSES
If the drafting atty FAILS to comply with the req, he receives ONLY 1/2 of the statutory commission
IN TERROREM, NO-CONTEST, OR FORFEITURE PROVISIONS
What is the rule for No Contest (“In Terrorem”) Cls?
HIGHLY TESTED MATERIAL
No contest clause = a cl that states that IF BENEFICIARY CONTESTS the Will and LOSES, they will FORFEIT their GIFT
In NY, the cl is given FULL EFFECT, EVEN IF there was GOOD FAITH and PROBABLE CAUSE to challenge the Will
EXCEPTIONS: a cl will NOT be enforced if the Will Contest is…
1) Claiming forgery
2) Claiming that the Will was EXPRESSLY revoked by a later written Will (if the challenge has probable cause); NOTE: this exception does not apply to revocation by physical act
3) Filed on behalf of an INFANT or INCOMPETENT
4) A construction proceeding to construe the TERMS of the Will; OR
NOTE: Safe Harbor Provision —
a person CONSIDERING challenging a Will w/a no-contest cl can engage in SOME discovery w/o “tripping” the cl, including discovery re:
a. Person who prepared the Will
b. The attesting witness
c. The Will proponents;
d. The nominated executors; OR
e. Deposition of a person w/ information of “potential value or relevance”
What is a pwr of atty?
A written AUTHORIZATION for an agent (an “atty-in-fact”) to act on behalf of the grantor of the pwr Can be generic or specific
Non-durable pwr of atty = revoked by operation of law by either GRANTOR’S death or incapacity (valid until notice of death is received)
Durable pwr of atty = extends BEYOND the GRANTOR’S incapacity UNLESS it has specific language that it is terminated by the grantor’s incapacity
What is a health care proxy?
A type of durable pwr of atty that appoints an agent to make HEALTH CARE DECNS on behalf of the grantor It does not become effective UNTILL the grantor becomes incapacitated AND remains effective NWS incapacity
MUST be:
(1) in writing;
(2) signed by the grantor; AND
(3) witnessed by at least 2 adults
What is a living will?
States an individual’s desires, should he become terminally ill or be in a persistent vegatative state, re: whether to administer or withold…
1) Life sustaining procedures;
2) Artificial nutrition or hydration; AND
3) Treatment to alleviate pain
NY Ct of Appeals has held that patients’ right to decline treatment is G’TEED
