Lifetime Gift to Beneficiaries

Question 1

satisfaction of legacies

Answer 1

satisfaction of legacies, is the Wills equivalent of Advancements in Intestacy

Question 2

NY RULE

Answer 2

NY has rejected the common law doctrine thus there is no satisfaction of legacies, by a testator’s lifetime gift to the distributee UNLESS proven by:
a. contemporaneous writing made at the time of the gift
AND
b. signed by the donor and the donee

Question 3

REFERENCE TO FACTS AND EVENTS OUTSIDE THE WILL: Incorporation by reference- extrinsic document (a document not part of the will itself)

Answer 3

the document can be incorporated by reference if:

1) the document was in existence when the Will was drafted
2) the Will shows an intent to incorporate the document, and
3) the document is clearly identified by the language in the Will.

NOT RECOGNIZED IN NY

Question 4

Acts of independent significance

Answer 4

acts performed by the testator after the Will is executed which have a purpose or motive independent of any testamentary purpose are given full effect when distributions are made

Question 5

Classification of gifts

Answer 5

Specific gifts
demonstrative gifts
general gift/legacy
residuary disposition
no residuary clause or antilapse

Question 6

specific gifts

Answer 6

e.g. “I devise Blueacre to my son, Seth”

Question 7

Demonstrative gift

Answer 7

a general amount, but the testator designates a special source from which the amount is to be paid from

Question 8

general gift/legacy

Answer 8

A gift of a general amount, “I give the sum of $5million to my daughter Diane.”

Question 9

residuary disposition

Answer 9

“I give all the rest, residue and remainder of my estate to my son, Seth”

Question 10

no residuary clause

Answer 10

where partial intestacy results and the Will has no residuary clause. “I give $5 million to my good friend, Frank”

and then Frank predeceases T. So, the will has to go into partial intestacy.

Question 11

abatement (reduction of legacies)

Answer 11

Rule: if there are more claims against the estate than there are assets to cover all gifts made under the Will, the gifts under the Will abate.

Question 12

Order of abatement

Answer 12

Absent a provision in the will, the order of abatement is:

1) intestate property + residuary property goes first
2) general legacy (abate pro-rata)
3) demonstrative legacy (abate pro-rata)
4) specific legacy; AND ONLY THEN
5) items that qualify for the estate tax marital deduction

Question 13

ademption (failure of gift, applies only to specific gifts)

Answer 13

Rule: if a testator makes a specific gift of property, and the property cannot be found or is no longer owned by the testator at the time of her death, the gift fails under the doctrine of ademption (without regard to the testator’s probable intent).

does not apply to demonstrative gifts, those become general devises, with three exceptions:

Question 14

when demonstrative gifts adeem

Answer 14

3 statutory exclusions:
the beneficiary is entitled to receive money or property when you can trace the source of the funds.
e.g.
1) insurance proceeds from lost, damaged or destroyed property
2) proceeds received under an executory contract, eg. sale of land ONLY APPLIES IF CONTRACT EXECUTED AFTER DEATH
3) proceeds received under an executory contract

Question 15

exoneration

Answer 15

the discharge of any encumberances on specifically bequeathed property using the residuary estate

Question 16

NY rule on Exoneration

Answer 16

Exoneration doesn’t happen unless the will specifically says so.

Question 17

Bequests of shares of stock and other securities

Answer 17

gifts of stock in publicly held corporations are general gifts + don’t adeem UNLESS
the testator bequeathes, “My Apple stock”, then this becomes a specific bequest

Question 18

gifts of stock in privately held corporations

Answer 18

specific gifts that adeem if they don’t exist

Question 19

gifts of shares where a stock split occurs are:

Answer 19

they are treated as a specific bequest for purposes of the split

Question 20

“I give $50,000 to be paid from the proceeds of the sale of my Google stock, to my son Spike”

Answer 20

this is a demonstrative gift. it doesn’t adeem. if the stock has ben sold and the money went somewhere else, Spike will still be paid.

Question 21

“I givee my 100 shares of IBM common stock to my daughter, Dara”

Answer 21

this is a specific gift. If the testator later sells his IBM shares, the gift ADEEMS and Dara gets nothing

Question 22

“I give 100 shares of Kodak common stock to my brother, Benjy”

Answer 22

Benjy has a general gift. So ademption does not apply. He gets the value of 100 shares of Kodak stock from other assets.