Final Flashcards
3 cases regarding the freedom of disposition exception
- Shapira v Union Nat’l Bank – marrying a Jewish girl by time your 28 or, if not, to the state of Israel does not contravene public policy because it is observing a religious purpose (hence Israel)
- But see Maddox v Maddox – marry into this religion that only has 5 or 6 members when she gets to marrying age, unreasonable restraint on the family
- Dominant Purpose Partial or Total Restraint on Marriage / Encouragement of Divorce – if limits marriage, is a restraint. But see not a dominant purpose if trust/will is meant to support until the marriage
Is freedom of disposition constitutional?
iv. This is not constitutionally protected according to the Fifth Amendment takings clause – See Irving Trust v Day (1942); But see Hodel v Irving – total taking of at death transfer was unconstitutional under the Fifth Amendment. Thus some dead hand transfer is constitutionally protected
What happens to posthumously acquired property
i. Property not owned upon death cannot be devised
ii. Thus property acquired by me posthumously by “If Tyler dies then to Tyler’s estate” clauses cannot be passed through my already executed will if I have died when land is bequeathed. It is passed to whoever is my intestate heir at law.
4 examples of non probate property
a. Nonprobate Property
i. Inter vivos Trust – Passes through terms of trust, not probate
ii. Pay-on-death/Transfer-on-death Contracts
iii. Life insurance
iv. Joint tenancy
3 examples of probate property
b. Probate Property
i. Testamentary Trusts
ii. Will
iii. Intestacy
Formal vs Informal Probate
i. Formal Probate UPC § 3-401
1. Representative petitions court
2. Judicial determination occurs after notice given to parties
3. Proceedings become judgements if not appealed
ii. Informal Probate UPC § 3-301
1. Representative petitions court
2. Will validity and intestacy not at issue unless objection occurs
Are negative wills in the UPC
Yes
i. 101(a) Any part of a non-devised estate passes through intestacy
ii. 101(b) Allows for negative wills
How do CL, most wills OR the UPC treat simultaneous death
i. At CL needed to be a millisecond by the preponderance of the evidence
ii. Under the UPC § 2-104, must survive for 120 hours by clear and convincing evidence
iii. In wills, commonly there is boiler plate language of multiples of days
Define per stirpes (1/3 states)
split at first generation and then distribute down at necessary – note this is regardless of whether first generation is alive or not – creates vertical equality
Define modified per stirpes
split at the nth generation, where n = the generation where at least one descendent is alive – then distribute down as in per stirpes
Define per capita at each generation
split at the nth generation, where n = the generation where at least one descendent is alive – then recombine shares and distribute equally along n+1th generation, continue process
When do ancestors potentially get anything via intestacy? And how much would the spouse take?
If there are no surviving issue and just parents – parents take. If spouse plus parents? 1/2 states say spouse only, other authority says spouse/parents split.
What are the options if there are no parents AND no issue
Parentelic (go up then down) OR Degree-of-relationship system (table of consanguinity)
How are step-children treated?
The key question is whether a parent-child relationship exists
How could adoption change taking under UPC
Under UPC a parent-child still exists even if there is adoption but in Hall v Vallidingham adoption severs the original parent’s ties
How is double-taking treated if you, say, married your cousin
Under UPC you can get the larger share, some states (Mississippi LOL allow you to take both sides)
How do you prove a gift was an advancement under CL and UPC
Under CL any gift during life was presumed an advancement, under UPC this is reversed. Under UPC you can rebut presumption with a contemporaneous writing by either child OR parent
Example hotchpot question
Estate = 20,000
A –> B - $5000 during life
B C and D survive A
now do if A–> $20,000
Should get $6,666 apiece – 25,000 is total – all get 8,300 - A gets 3300
A gets nothing and B and C get $10,000 apiece – note NO CLAWBACKS
Four types of children supervision systems
a. Guardianship (of property) – slow and expensive, a lot of court actions
b. Conservatorship – like a trust, more flexible – one annual trip to courthouse – gets $ at 18
c. Custodianship – similar to conservatorship – gets $ at 18
d. Trusteeship – even more flexible
Bars to taking
Disclaimer, slayer rule (in the UPC)
When can/cant you disclaim?
CAN disclaim: to avoid creditors
CANT disclaim: the gov’t = taxes/medicaid OR “strategically” - your issue can’t take more when you disclaim
What does a will require
A writing
Two attesting witnesses
Signature
How are the words after the signature on a will treated
As if they do not count - check with TB
What is strict compliance
A writing, two attesting witnesses in the presence of the testator AND each other (1/2 the states)
What is UPC 2-502
A writing, signed in the presence or acknowledged in presence of two witnesses, signed by two attesting witnesses “w/in reasonable time” - not contemporaneous - (slim majority of states)
ALSO there is a notary that would be accepted too but NOT ADOPTED by majority of states
Four formalities
Channeling fxn
Evidentiary fxn
Cautionary/rituallary fxn
Protective fxn
Cases about strict compliance
Groffman case/Casdorph case (bank teller)
What after the softening doctrines invented by courts
line-of-sight and conscience presence test
How does UPC v CL treat interested witnesses
Under CL - interested witnesses get nothing, now many states allow them to get as much as they would in intestacy (still harsh) - the reduced purging statutes,
LAST - under UPC there are no interested witnesses
What does the harmless error rule apply to?
Wills, revocations, codicils, revivals
What is the harmless error rule?
Can cure defects iin wills revocations codicils and revivals if decendent intended the document to be his/her will by clear and convincing evidence
Case where harmless error was used
In re Horton - crazy mom drove son who had a conservator to suicide - court allowed HER
You have a switched wills problem, what is the analysis?
Strict compliance - no accepted like in Pavlinkos estate
Substantial compliance rule - older rule that required C&C evidence that the wills act formalities were followed
Harmless error rule
How should you discuss “intent” on the test?
The three intents - the intent to
(1) create a scheme to dispose of your property
(2) to comply with the wills act formalities
(3) to “make a will”
Was the will a draft?
Like in Macool case - maybe? Would vitiate the intent. Fact specific inquiry.
Holographic will requirements
ii. At early common law holographic wills were required to be entirely in testators handwriting with signature and date
iii. § 2-502(b) requires no witnesses and only “material portions”
1. He defines “material portions” as who gets what
2. Remember the standard is preponderance of evidence when you are outside of § 2-503
Types of revocation
Express, implied, phyiscal act
Revocation by physical act at CL vs UPC
At CL must be on original and must touch the original (i.e. Thompson case) VS UPC must be on the original but is more flexible - note how HER would apply
What if you can’t find a will that was known to be in testators possession
Rebuttable presumption of revocation by physical act (the evidenciary standard varies here)
What is partial revocation by physical act?
Majority of states allow, but some states say NOPE
Will = A B C and crossed out -D- get everything, result?
Can you see who D was supposed to be?
If yes :
Majority states - sure
Minority states - nope
If no: Majority of states - sure but a subset says passes by intestacy
Minority of states - still no
Dependent relative revocation - what are the steps of analysis
Was there a valid revocation
Was it based on a condition (of law or fact)
Did the condition not occur? If so, can ignore the revocation if it is more consistent with the intent of testator
How do you revive a will
In majority - just need to show the intent to revive (in will or otherwise) via situation or contemporaneous statements
Minority says you need to reexecute first will ONLY
NOTE - can republish by codicil - will #4 references will #1, can incorporate by reference
What can be integrated into the final writing
Incorporation by reference (UPC 2-510)
1. There is an intent to incorporate
2. The document is described adequately to identify
3. Exists at the time of publication
AND
e. Acts of Independent Significance
AND MAYBE - minority rule:
can bequest personal property by a handwritten list that is made after the will I executed. BUT it cannot run contrary to rule. Minority jrx. Usually a $$$ limit.
How do you assess capacity (via Restatement)?
1) The nature and extent of his property;
2) the persons who are the natural objects of his bounty and
3) the testamentary provisions he is making, and he must moreover, be capable of
4) appreciating these factors in relation to each other, and
5) forming an orderly desire as to the disposition of his property
What if I have crazy thoughts, does that vitiate intent?
Only to the extent the the thoughts can be seen to influence the distribution of your estate.
What is the undue influence analysis?
i. First – state that wills are presumed to be valid
ii. Second – under Restatement test, establish that. . .
1. A confidential relationship exists between wrongdoer and testator
a. A fiduciary relationship (i.e power of attorney)
b. Reliant relationship (special trust or confidence)
c. A dominant-subserviant relationship (broadest)
2. There are suspicious circumstances present
a. Ex. Weakened intellect, no independent legal advice, unnatural or unfair disposition, bulk of estate given to one person
iii. Third – If 1 + 2 exists, then burden shifts to other party
iv. Factors the court considers
1. Donor susceptible
2. Wrongdoer had opportunity
3. Wrongdoer had the disposition
4. Result that seems to be a result of undue influence
The drafting lawyer got the estate, now what?
This creates a presumption that there was undue influence
What are forms of extrinsic evidence that are allowed, even in plain meaning jrx’s?
a. Absence of testamentary intent
b. Circumstances of will, bkrd information, family structure
c. Acts of independent significance
d. Resolving latent ambiguities
How do you address a problem asking you to change the meaning of words found in a will?
1 - analyze under plain meaning rule - cannot modify terms of will (Mahoney case - heirs at law = aunt not cousins sorry bro)
2 - softening doctrines -
i- patent/latent ambiguity (latent allowed, some jrx allow patent ambiguity evidence (money/$ discrepencies) to be allowed
ii. Falsa demonstratio non nocet - 1. Take the mistake out of the language, is the intent still clear on the face of the document?
iii. iii. Ad hoc relief for ambiguous beneficiary
In re Gibbs – addresses, initials are ambiguous
In re Arnheiter – mistaken property number
3 - c. Openly reforming (UPC § 2-805)
i. Even unambiguous mistakes may be reformed if:
1. clear and convincing evidence shows the transferor’s intent and
2. mistake must be mistake of fact or law (what else is there)
ii. Ex) In re Estate of Duke – testator described 2/3 of situations, but forgot that his wife may predecease him
What happens when a beneficiary is void of dies
Lapse statutes apply -
1. Under CL a specific or general bequest fails when the devisee dies and the property falls into the residuary
2. At CL no residual or a residual – if residual bequest fails then it passes by intestacy, not to residual beneficiary (which may be the same person, but not always)
a. Ex) $10,000 o B and C who are the children of A, B dies, B’s share to residual
ii. Class gifts – at common law a class gifts do not fall into residue but are given out to class
a. Ex) $10,000 to children of A (who and B and C), B dies, C gets it all
When do we apply anti-lapse statutes
under UPC 2-605 (should be called “alternative gift under limited circumstances)
i. Lapsed gifts to a beneficiary can go to their decendents IF beneficiary is:
1. A “lineal decendnet of a grandparent”
2. Unless language to contrary
3. By representation
Note: ‘language to the contrary’ - does it include “if they survive me language?” in UPC no - in many jrx - yes
Analysis for anti-lapse statutes
- Ask first – what is the relationship of beneficiary
- Ask second – do they have decendents who can take?
Ademption under the UPC
1 - you cant give away but you don’t own
2 - but was this the “fault” of the testator - can recover the value from the residual if there was a “clear contrary intent”
What is an advancement if it is via will?
“satisfaction” - used same hotchpot concept
Omitted spouse - how to analyze
Discuss community property vs separate property state
Spousal elective share:
>15 years - Augmented estate
* 100 - Marital portion
* 50% =SES:
2-301:
intestate share of bequeaths outside of prechildren
Exceptions - intent otherwise, transfers outside
Omitted children - how to analyze
Only child? gets intestate share
Multiple children with $ from will? $ the get/# of kids method - abatement of the other children
Exceptions - intent otherwise, transfers outside
Elements of a trust
Cast of characters - B, S, and T
Identifiable property (res)
Intent
Compare trust with a gift
both require intent, gifts require delivery and acceptance. Can turn down trust as you can a gift (no acceptance).
Notes about joint tenancy
Treated as a gift when it is bequeathed -
Notes from the Brady Bunch Hypo
1) If there is a valid will that is revoked it does not republish previous wills without intent
2) Some jurisdictions do not allow incorporation by reference
3)Treat all hypothetical wills individually
Notes about beneficiaries
Must be ascertainable - see Clark case - “my friends” are not ascertainable
Pets as beneficiaries
Pets are property and cannot take, but courts have interpreted either (a) a person named to be the beneficiary not the pet or (b) an honorary trust
Unfair life insurance question
Life insurance is paid out via the terms of the contract, not subject to wills formalities - make the argument that constructive trust can be used though
Duties of a trustee
Duty of loyalty
Duty of prudence
Duty to take proper care
Duty to inform and account
Duty of impartiality
Duty to distribute
What occurs if a trustee is self-dealing
No further inquiry rule -
1. Ex.) Farmland case trustee becomes so before planting season
2. 3 defenses:
a. Settlor authorized in the writing
b. ALL beneficiaries consented after disclosure
c. Trustee approved judicial approval
3. Exceptions
a. Mutual fund companies can self-deal and invest (assume when settlor chose a mutual fund company they knew this would happen)
b. Reasonable compensation – even if this is per se self-dealing in UTC § 802
c. Structural conflict
i. Extra scrutiny will be applied
d. Exculpatory clause
i. However, these are viewed skeptically by courts
ii. If the trustee drafted or causes to be drafted the clause, it will be presumed invalid
What duties are underneath the duty of prudence
i. Ordinary prudence as fiduciary; person of ordinary prudence
ii. Uniform Prudent Investment Act is used as the standard, not the torts prudent man standard
iii. Duty of prudent investment
iv. Duty to inquire
1. Nat’l Acad v Cambridge Trust Co
a. A trust leaving $ to wife if she remain unmarried
b. Trustee bank never inquired
c. Had to pay back the reversionary interest because did not inquire into status of wife
What if the settlor does not want the beneficiary to know, what does the trustee do?
Under UPC i. If beneficiary is > 25 years old must inform and account, otherwise may be able to keep them in the dark
What are the nuances of the duty of impartiality
i. Must be loyal to all beneficiaries – Cappy case
ii. Principle and income allocation
1. Big deal where there is a reversion interest and trustee has to balance mandatory and discretionary interests
2. Seen commonly as mineral interests
iii. Unitrust – percentage allocated
Remedies if there is a breach of a trustee
i. Compensatory damages
ii. Disgorgement of profit
iii. Compelled to restore property (if real property)
iv. If trustee improperly sold his property would have to undo
v. Constructive trust/equitable lien – passes assets to injured party
What if a settlor/trustee sells for less than the value of a property
i. This does not breach the duty of prudence
1. See Fulp v Gilliland – Sale of family farm to son for ½ fair market value was not breach of duty because “what hat was she wearing?” The settlor has revoked the value of property as much as she decided to sell below. Partial sale/partial gift
2. Takeaway – the revocability of trust by settlor trumps the duties of trustee. Trustee only has duty to trustee’s goals, when beneficiary sues they are basically suing because trustee has violated settlors wishes
How did CL vs UPC treat revocation of trust (intervivos, obviously)
a. OLD CL said always irrevocable UNLESS language to contrary
b. NOW the std is always revocable UNLESS language to contrary
What are the method of revoking a trust
i. Express terms in trust
ii. If it is unclear then:
1. Later will/codicil that references trust and expresses an intent to revoke (implied revocation)
2. Clear and convincing evidence
What are the methods of making a trust
a. Declaratory trust
i. Requires clear and convincing evidence
ii. Won’t work for land because SoF
b. Deed of trust
i. Need to comply with Wills Act
Types of distribution
Mandatory distributions
Discretionary distributions -
-support trust/HEMS trust
-spray trust
-sprinkle trust
How does alienation/creditors of discretionary trusts work under CL
Three types of trusts - “pure” discretionary trusts, support trusts, and discretionary support trusts
Discretionary trusts at CL:
i. Cannot be alienated.
ii. Creditors such as child/spouse, supplier of necessities could reach at CL
How does alienation/creditors of discretionary trusts work under the UTC
There is no difference between three types of trusts seen at common law – all treated the same. Children/spouses can compel distributions
Hamilton order
For pure or hybrid discretionary trusts - can get court order that any discretionary payments are made to creditor
Spendthrift trusts how to treat on exam
First treat as a “conditional gift” where you cannot alienate - say that in NY and DE a spendthrift trust is the default
-Under the uTC special creditors DO include children/spouses/taxes/gov’t agencies/lawyers exception BUT DONT include tort victims and support items as seen at CL BUT creditors cannot attach mandatory or discretionary distributions
Ways to modify non charitable trusts
Consent of B and S (not T)
Consent of B and T
Claflin doctrin (B’s unanimous, T isn’t)
Equitable deviation
Claflin doctrine
B’s unanimous (if B’s not unanimous see section 411), not trustee - may terminate if
(1) no material purpose of the trust remains
(2) AND “not inconsistent with the material purpose of the trust” ex. Brown case - money for life for nephew was a material purpose that was not fulfilled
Note: If court finds elements of claflin doctrine present, the res is ditributed as agree to by B’s
What is equitable deviation according to UTC
Court may modify terms of trust or terminate if
(1) circumstances not anticipated by settler
(2) the modification furthers the purpose of the trust
(3) to the extent practicable the act conforms with settlors intention
Equitable deviation at CL vs UTC
At CL the court distinguished between adminitrative and dispositive terms - where only administrative terms could be changed. UTC does away with this
PLUS
at CL equitable deviation was when there was “substantial impairment of purpose” of the trust while under UTC it is “to further the purpose” of the trust
Charitable trusts vs non-charitable trusts
Char. trusts have beneficiary, enforced by B’s, and Rule Ag Perpetuities issues
Noncharit. trusts have a charitable purpose (not necc a beneficiary), enforced by state AG (or in some jrx the settlor’s reps, and NOT subject to Rule Ag Perp
List of charitable purposes
PERHMB
Brea Runs Errands Meanwhile Harvey Poops
Beneficial to community
Religion
Education
Municipal
Health
Poverty
Questions to ask if it the charitable purpose fails
Does it violate RaP now?
Is it severable – provision giving preference to educating own heirs severed from charitable purpose?
Is there a reversionary interest?
Cy pres
Used to modify charitable trusts -
Occurs when charitable purpose is illegal, impossible or impracticable (AND UNDER UTC,) wasteful
Claflin doctrine in UTC vs restatement
Under UTC Preserves material
purpose
Weakens requirement of beneficiaries’ unanimity
Authorizes termination if interests of absent
beneficiary will be
adequately protected
Under restatement
Weakens material
purpose
Authorizes termination if reason outweighs
material purpose
Preserves requirement of
beneficiaries’ unanimity
If you see a creditor problem on exam what is the analysis?
If the beneficiary is someone other than the settlor, the creditor steps into the beneficiary’s shoes and acquires
the same rights as the beneficiary, but not more. A spendthrift clause blocks a creditor’s ability to step into the
beneficiary’s shoes—the creditor must wait until the property is distributed to the beneficiary. Not all creditors,
however, are subject to a spendthrift clause.
Support trusts are a favorite area to test because of their wrinkles. First, use of the word support does not
necessarily make a trust a support trust unless the level of distribution is limited to as much as necessary
for support. Second, a support trust inherently includes a spendthrift clause. Third, under the traditional
approach, only creditors who provide basic necessities can pierce the spendthrift clause.
Watch for issues designed to test the differences between the traditional approach and the UTC. The UTC
abolishes the distinction between support trusts and discretionary trusts and provides that no beneficiary
can force a distribution from a discretionary trust, even if the trustee’s failure to do so is an abuse of
discretion. The UTC does, however, provide exceptions for children entitled to child support payments
and ex-spouses entitled to alimony/maintenance.
If the beneficiary is the settlor, public policy does not permit one to shield one’s assets behind a trust. Not
only can creditors step into the beneficiary’s shoes, but they can also force the tmstee to exercise his or
her discretion to the full extent permitted under the terms of the trust, and spendthrift clauses that attempt
to protect the settlor-beneficiary are null and void (unless the jurisdiction recognizes asset-protection
trusts).
