Estate Administrative Issues Flashcards
What is a 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 existence in the FUTURE for distribution of property
Characters:
- Donor – creator of POAP - Donee – person who is given POAP to use - Takers in default – persons who take property, if the donee fails to correctly exercise the power
What are the classifications of power of appointment?
Dimension 1: General vs. Special
1) General POA = DONEE can appoint the property to themselves, his estate, or his creditors (as if he owned the property himself)
2) Special (Limited) POA = 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 POAP = DONEE can appoint during HER lifetime (via lifetime trust)
** NOTE: DONEE can exercise the power via a Will UNLESS the DONOR’s Will expressly forbids it
** If DONEE does not exercise the POAP 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 POAP = DONEE can appoint only by Will after DONOR’S death
** NOTE: in ANY POAP question, FIRST classify the POAP
What types ofPOAPs are considered testamentary substitutes (T-Subs)?
Count as T-Sub:
General Presently Exercisable POAP = DONEE can appoint property to herself
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Are NOT T-Subs:
General Testamentary POAP - DONEE can’t get to the res (trust property) in her lifetime
Special POAP - DONEE can NEVER get to it
What types ofPOAPs are subject to creditors’ reach?
Creditors can get to:
1) General Presently Exercisable POAP - DONEE can reach the assets as if she owned them, so the creditors can as well
Creditors CANNOT get to:
1)General Testamentary POAP - 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 power;
OR(ii) DONEE can exercises in favor of her estate
2) Special POP - DONEE can NEVER get to the assets, so neither can the creditors
How do you determine if a POAP violates the Rule Against Perpetuities (RAP) or the Suspension Rule?
FRAMEWORK FIRST: Identify the type of power
1) General PRESENTLY EXERCISABLE POAP VS.
2) Special POAP OR General TESTAMENTARY POAP
SECOND: Is the power valid under RAP?
NOT AN ISSUE IF GRANT IS TO A LIVING PERSON
1) General PRESENTLY EXERCISABLE POAP: to be valid, the power must be certain to be ACQUIRED within LIB + 21 yr
2) Special POAP OR General TESTAMENTARY POAP: to be valid, the power must be certain to be EXERCISED within LIB + 21 yrs
THIRD: Are the interests CREATED by the power VALID?
1) General PRESENTLY EXERCISABLE POAP: to be valid, the power must be certain to be ACQUIRED within LIB + 21 yr
* * IF 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 because of RAP or Suspension Rule, apply NY reform statute (i.e. reduce age contingency to 21 yrs)
2) Special POAP OR General TESTAMENTARY POAP:
* * 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 within 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 because of RAP or Suspension Rule, apply NY reform statute (i.e. reduce age contingency to 21 yrs)
Can extrinsic evidence be used to clarify a provision 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 about the family relationships; (ii) the testator's declaration of intent to 3rd parties; OR (iii) evidence of testator's statement to an attorney 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 statement to an atty who prepared the Will * * BUT NOTthe testator's declaration of intent to 3rd parties
What is a 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
When is a contract to make or NOT revoke a Will enforceable?
A contract to make a Will or NOT revoke a Will can ONLY be established by an EXPRESS STATEMENT OF INTENT that the Wills provisions are intended to constitute a contract between the parties
A Joint Will (i.e. a Will of 2 or more people 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 because “we” language is being used)
If a Will IS contractural and the survivior executes another Will that has INCONSISTENT provisions→ a court will read both together AND impose a CONSTRUCTIVE TRUST to protect adversely-effected beneficiaries from first Will
What is the mental capcity required 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 =
- OPPORTUNITY to exert influence - SUSCEPTIBILITY to influence due to AGE or ILLNESS - UNEQUAL distributions
SUFFICIENT (but rebuttable) EVIDENCE =
- CONFIDENTIAL relationship and ACTIVE in preparing the Will - gifts to the DRAFTING ATTORNEY (established sua sponte by court with Putnam Scrutiny)
What disclosure must an attorney who is appointed executor make?
A drafiting attorney who is named as EXECUTOR of the testator’s estate MUST given WRITTEN disclosure to the testator that states…
1) Any person can be named as executor, NOT just an attorney
2) The executor receives a STATUTORY commission; AND
3) That the attorney 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
3) If the drafting attorney FAILS to comply with the requirement, he receives ONLY 1/2 of the statutory commission
What is the rule for No Contest (“In Terrorem”) Clauses?
No contest clause = a clause that states that IF ANY one objects to the Will, they will get NOTHING
In NY, the clause is given FULL EFFECT, EVEN IF there was probable cause to challenge the Will
EXCEPTIONS: a clause will NOT be enforced if the Will Contest is…
1) Claiming forgery of that the Will was EXPRESSLY revoked by a later Will (if the challenge has probable cause);
* * NOTE: does not apply to revocation by physical act
2) Filed on behalf of an INFANT or INCOMPETENT
3) A construction proceeding to construe the TERMS of the Will; OR
4) An objection based on the court’s jurisdiction
NOTE: a person CONSIDERING challenging a Will with a no-contest clause can engage in SOME discovery without tripping the clause, including discovery re:
- Person who prepared the Will - The attesting witness - The Will proponents; - The nominated executors; OR - Deposition of a person with information of potential value or relevance
What is a power of attorney?
A written AUTHORIZATION for an agent (an attorney-in-fact) to act on behalf of the grantor of the power
** Can be generic or specific
Non-durable power of attorney = revoked by operation of law by either GRANTOR’S death or incapacity (valid until notice of death is received)
Durable power of attorney = 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 power of atty that appoints an agent to make HEALTH CARE DECISIONS on behalf of the grantor
It does not become effective UNTIL the grantor becomes incapacitated AND remains effective notwithstanding 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 Court of Appeals has held that patients’ right to decline treatment is GUARANTEED
