South Carolina - Wills and Trusts Flashcards
INTESTACY > Disclaimers
Requirements
Timing
Effect
REQUIREMENTS: Disclaimer must
- be in writing
- be signed
- describe the property disclaimed
- describe the extent disclaimed, and
- be delivered to PR or court
TIMING: must be delivered w/in later of 9 months of ø’s death, date interest vested, or disclaimant’s 21st birthday
EFFECT: treats disclaimant as predeceasing decedent
*DOES NOT treat disclaimant as having predeceased the decedent for purposes of determining the generational level at which a distribution is made.
WILLS > Requirements of a Will
- Testator must be 18 years old, married, or emancipated
- Will must be in writing
- Will must be signed by T (or by another in T’s presence and at T’s direction) (can be signed anywhere on document); and
- Two Witnesses must witness T signing will (or T’s acknowledgement of a prior signature or of the will itself)
WILLS > What jurisdiction’s law must the will comply with in order to be admissible to probate in SC
- SC
- state where will was executed
- T’s domicile at time of will’s execution
- T’s domicile at death
WILLS > Pretermitted Children
Entitled to Intestate share, unless
1. appears from will that omission is intentional
- T left substantially all of the estate to the surviving spouse; or
- T provided for child by transfer outside of the will w/ intent that it be in lieu of the testamentary devise
WILLS > How to get a lost/destroyed will admitted to probate
First, must overcome rebuttable presumption that will was revoked by physical act
Second, it may be admitted to probate if the following can be proven:
- valid execution;
- the cause of the nonproduction; and
- the contents of the will
WILLS > Revival
Revival after Total Revocation
Revival after Partial Revocation
Will-2 Revoked by Written Instrument (not physical act)
REVIVAL AFTER TOTAL REVOCATION: If a subsequent will that WHOLLY revoked a previous will is itself revoked by a revocatory act, the prior/first will is revived if it appears by Clear and Convincing evidence that Testator intended to revive. (favors not reviving first will)
REVIVAL AFTER PARTIAL REVOCATION: If a subsequent will that partly revoked a previous will is revoked, the revoked part of the previous will is automatically revived, UNLESS there is clear and convincing evidence that Testator did not intend to revive the portion revoked (favors reviving first will)
WILL-2 REVIVED BY WRITTEN INSTRUMENT
If Will-2 revoked by written instrument (not physical act), intent to revive Will-1 must be in the terms of the revoking instrument
WILLS > Dependent Relative Revocation
T’s revocation will fail and the prior disposition will remain in force, when
- T revokes all/part of a will under mistaken belief that another disposition of his property would be effective, and
- but for that mistaken belief, T would not have made the revocation
* Only use DRR if result would come closer to what T tried to do [[I.e., if attempted gift was larger. Mention on exam if attempted gift is smaller. Do not mention if gift is totally gone]]
WILLS >
When does SC Anti-Lapse Statute Apply
When there’s a lapse
Must be a gift to T’s grandparent or a lineal descendant of a grandparent who left issue that survives T.
*doesn’t apply to class gifts (i.e., only surviving class members take)
INTESTACY > Paternity by Adjudication
Timing
Standard of Proof
Before ø’s death, or LATER of
6 months after appointment of PR, or
8 months after Decedent’s death
STANDARD OF PROOF
clear and convincing
ELECTIVE SHARE >
Timing
Later of 6 months following probate of will, or 8 months after ø’s death
ELECTIVE SHARE >
Waiver
- in writing, and
2. any time after spouse receives a written disclosure of the T’s property and financial obligations
WILL CONTEST >
Prerequisites to mounting a will contest
- Grounds (defective execution; revocation; lack of testamentary capacity; lack of testamentary intent; undue influence; fraud; and mistake)
- Standing: any person whose share of the estate would increase were teh will contest successful
WILL CONTEST >
Lack of Testamentary Capacity
Effect of an adjudication of incompetency
T must be 18, married, or emancipated
- Did T know the nature and character of his property;
- did T know the natural objects of his bounty; and
- did T understand the disposition he wished to make
EFFECT OF ADJUDICATION OF INCOMPETENCY
presumption of incapacity, but not conclusive
WILL CONTEST >
Undue Influence
Presumption
Clear and Convincing evidence of
- existence and exertion of the influence
- effect of which was to overpower the mind and will of the testator; and
- the result if a will (in whole/part) that would not have been executed but for the influence
PRESUMPTION:
Person with confidential or fiduciary relationship to testator draws or procures the execution of the will
WILL CONTEST >
Fraud
Testator was WILLFULLY DECEIVED as to the
- Character/content of the instrument,
- extrinsic facts that would induce the will or a particular disposition, or
- facts material to a disposition
WILL CONTEST >
Mistake
MISTAKE IN EXECUTION: parol evidence admissible to show T didn’t know instrument was a will
MISTAKE IN INDUCEMENT: No relief, unless (1) mistake is on the face of the will, or (2) mistake involves omission of a child mistakenly believed to be dead.
WILL CONTEST > Reformation available when
Clear and Convincing Evidence of BOTH: (1) ACCOMPLISHMENT of T’s intent was affected by mistake of law or fact; and (2) TERMS of the will were affected by a mistake of law or fact.
TRUSTS > Elements
Creator … delivers … legal title of trust assets (res) … to trustee … for the benefit of the beneficiaries … with intent to create a trust … for a valid purpose
*does not apply to self declaration of trusts or testamentary trusts
TRUSTS >
If the Statute of Frauds is violated (wrt a valid express trust), when may a constructive trust be imposed due to an issue with the trustee?
FRAUD IN INDUCEMENT: if trustee (at any time) orally promises to serve as trustee, and at that time, he has no intention to perform his promise.
CONFIDENTIAL RELATIONSHIP: Grantee/Trustee served in a confidential relationship to Grantor/Settlor
TRUSTS > SECRET TRUSTS
What is a Secret Trust
Extrinsic Evidence permitted
Rule
Testamentary gift that is absolute on its face, but was in fact made in reliance on the devisee’s promise to hold the property in trust for another.
Extrinsic evidence is permitted
If intended trust beneficiary can present CLEAR AND CONVINCING evidence of the devisee’s promise (to hold property in trust), a CONSTRUCTIVE TRUST will be imposed
TRUSTS > SECRET TRUSTS
What is a Semi-Secret Trust?
Rule
Testamentary gift that is made in trust (with a named trustee), but fails to name the beneficiaries.
Extrinsic evidence is NOT permitted
Named trustee holds the property on a resulting trust for the testator’s heirs
TRUSTS > CHARITABLE TRUSTS
Special Rules for Charitable Trusts
- Not subject to the Rule Against Perpetuities or the Rule Against Accumulations (can accumulate income perpetually)
- Must be for a CHARITABLE PURPOSE
-must have a mechanism to ensure it’s being used for a charitable purpose
((e.g., religion, medicine, science, governmental, research, education)) - Must be in favor of a REASONABLY LARGE NUMBER of UNIDENTIFIABLE beneficiaries, and
- Can be modified by EQUITABLE DEVIATION (also applies to private trusts)
- used when specific charitable purpose becomes unlawful, impracticable, wasteful, or impossible
TRUSTS > Creditors
Efficacy of Spendthrift Trusts against Creditors
THIRD PARTY BENEFICIARIES:
- Enforceable if it restricts the alienability AND assignments of a third-party beneficiary.
- Child Support
TRUSTS FOR BENEFIT OF SETTLOR:
-invalid to protect against creditors
-invalid to protect against child support
((-invalid against claims of government))
TRUSTS > Creditors
Effect of Discretionary Trusts on Beneficiary’s Creditors
Creditors cannot compel payment from the trustee (even in absence of spendthrift clause)
If served with process, trustee must satisfy creditor’s claim before exercising power in favor of beneficiary
Court can also order trustee to satisfy SMS, spousal support, child support
TRUSTS > Creditors
Effect of revocability on creditor’s claims
if trust is for benefit of S, and it’s irrevocable, S’s creditors CANNOT reach it
(exception: if trust create with intent of defrauding known creditors)
TRUSTS > TRUSTEE’S DUTIES
Trustee’s Duties
- Duty of Loyalty (no self-dealing)
- Duty to Invest Prudently
- Duty to preserve and protect trust property
- Duty of Impartiality
- Duty to Account and Inform
TRUSTS > TRUSTEE’S DUTIES
Duty of Loyalty
Duty against Self Dealing (BBBCS)
- Trustee cannot BUY/SELL assets to itself
- Trustee cannot BUY/SELL assets from one trust to another trust
- Trustee cannot BORROW trust funds (no matter what)
- CORPORATE trustee cannot purchase its own stock as a trust investment (can retain if in original res)
- SELF-DEALING: Trustee cannot engage in any transaction in which she seeks to secure a PERSONAL GAIN.
TRUSTS > TRUSTEE’S DUTIES
Duty to Invest Prudently
*Trustee must manage property as a PRUDENT INVESTOR would. Must adhere to a standard of REASONABLE CARE, SKILL, and CAUTION in making investment decisions
(“BC = Powdered Dope”)
- Duty to BALANCE return with potential risk
- Duty not to COMMINGLE (“duty to earmark”)
* 3. Duty to DIVERSIFY Investments - Duty to keep trust PRODUCTIVE (Portfolio view: TOTAL return of investments must be reasonable)
TRUSTS > TRUSTEE’S DUTIES
What are the Beneficiary’s remedies for trustee’s breach of trust
- RATIFY: Ratifies transactions and waives the breach
- SURCHARGE: Sue for resulting loss (breach of fiduciary duty is automatic wrong: no justification/excuse available)
- TRACE (self-dealing cases): can recover trust property for the trust
TRUSTS > TRUSTEE’S DUTIES
Trustee’s duties in delegating responsibility to agent
Notifying Beneficiaries of Delegation
Must use reasonable care, skills, and caution in
(i) SELECTION of agent
(ii) defining SCOPE and terms of the delegation, and
(iii) periodically REVIEWING actions of agent
Beneficiary’s knowledge of delegation will not absolve trustee: they must affirmatively consent.
TRUSTS > Trust Accounting
Trust divided into Income (for income beneficiaries) and trust corpus (for remaindermen at termination of trust)
RECEIPTS:
Income (ORDINARY RECEIPTS): interest, rents, cash dividends ((also, 10% of annuities or royalties received))
Corpus (EXTRAORDINARY RECEIPTS): proceeds from sale of trust assets, stock splits, and stock dividends
EXPENDITURES:
Income: ORDINARY EXPENSES incurred in production of income (and 1/2 trustee’s fee)
Corpus: EXTRAORDINARY EXPENSES (and 1/2 trustee’s fee)
TRUSTS > REVOCATION, TERMINATION, AND REFORMATION
By the Settlor
Settlor can revoke, terminate, or reform trust if
- trust instruments does not explicitly state it’s IRREVOCABLE, and
- Settlor COMPLIES with provisions in trust
TRUSTS > TERMINATION AND REFORMATION
REVOCATION by the Trustee
TERMINATION ONLY*
- Notice to all qualified (i.e., living) beneficiaries,
- Trustee determines value of trust is insufficient to justify its administration, and
- Trust worth less than $100,000
TRUSTS > TERMINATION AND REFORMATION
TERMINATION/MODIFICATION by Beneficiaries
TERMINATION/MODIFICATION
- Must be an IRREVOCABLE, NONCHARITABLE trust,
- all beneficiaries CONSENT, and
- Court concludes that continuance of trust (or adherence to its original terms) is NOT NECESSARY TO ACHIEVE ANY MATERIAL PURPOSE of the trust
TRUSTS > REVOCATION, TERMINATION, AND REFORMATION
Spendthrift Clause’s Effect on Termination by Beneficiaries
Can’t terminate if there’s a spendthrift clause, unless
- All beneficiaries consent,
- Settlor consents, and
- court approval
TRUSTS > TERMINATION AND REFORMATION
By the Court
- value of trust is does not JUSTIFY its cost of administration.
- UNANTICIPATED CIRCUMSTANCES, and modification/termination will FURTHER PURPOSE of the trust.
- Continuation of trust on existing terms would be IMPRACTICABLE, WASTEFUL, or would IMPAIR trust’s administration
OR
- MISTAKE of law or fact
TRUSTS > TRUSTS BY OPERATION OF LAW
Resulting Trust
Defenses
- FAILURE of express trust, OR
- When express trust purposes ACCOMPLISHED
-Semi-Secret Trust
TRUSTS > TRUSTS BY OPERATION OF LAW
Purchase Money Resulting Trust: Definition
Defenses
DEFINITION:
One the person who pays consideration is different than the person who takes title. Person who takes title keeps property in a purchase money resulting trust for the benefit of the payor.
DEFENSES:
Gift (presumed if family)
Loan
TRUSTS > TRUSTS BY OPERATION OF LAW
Sale/Exchange by trustee of a resulting/constructive trust to a BFP for value
Cuts off right to beneficiary’s right to transferred asset
Beneficiary gets right to the proceeds
If person is not BFP, Beneficiary can elect between proceeds or property
POWERS OF APPOINTMENT
What are Powers of Appointment
Authority granted by donor to a donee, enabling donee to designate (within terms prescribed by donor) the persons who shall take property and the manner in which they shall take
POWERS OF APPOINTMENT
Parties Involved
Types of Powers of Appointment
PARTIES
Donor
Donee
Takers in Default
TYPES OF POWERS OF APPOINTMENT
General: exercisable in favor of tghe donee himself, his creditors, or the creditors of his estate.
Special
Presently Exercisable Power: can be exercised by donee during her lifetime
Testamentary Power: can be exercised only by donee’s will
WILLS > Attorney Liability for Negligence
Attorney owes a duty to an intended beneficiary of an executed will, where Testator’s intent has been DEFEATED OR DIMINISHED by the attorney’s negligence
*always bring up on exam
WILLS > REVOCATION BY WRITTEN INSTRUMENT
Effect of Second Will that revokes first will
2D WILL HAS NO RESIDUARY CLAUSE: presumptively a codicil–implied revocation to extent of inconsistency
2D WILL HAS A RESIDUARY CLAUSE: Revokes 1st will in its ENTIRETY by inconsistency
WILLS > REVOCATION BY OPERATION OF LAW > Effect of Divorce
On Will:
If parties remarry:
on revocable beneficiary designations
WILL: FINAL divorce revokes all provisions in favor of ex-spouse (treated as predeceased)
REMARRY: comes back in under will
REVOCABLE BENEFICIARY DESIGNATIONS: all such designations are revoked as to ex-spouse (revocable trust; life insurance policy; pension plan)
WILLS > INCORPORATION BY REFERENCE
Requirements
Personal Property Exemption
- Will must MANIFEST INTENT to incorporate by reference
- Referenced document must be in EXISTENCE at time of the will’s execution; and
- Will must DESCRIBE WRITING SUFFICIENTLY to permit its identification
*personal property exception: (not money/no stocks or bonds)
WILLS > Ademption by Extinction
What can a specific devisee get if his gift is ademed
TESTATOR NOT DECLARED INCOMPETENT
Specific Devisee entitled to a GENERAL LEGACY equal to
-any purchase price owing from purchase when K is still executory at T’s death
-any condemnation award still unpaid at T’s death, and/or
-any insurance proceeds unpaid at T’s death
TESTATOR DECLARED INCOMPETENT AFTER EXECUTION OF WILL
Specific devisee entitled to THE REMAINING SPECIFICALLY DEVISED PROPERTY and a GENERAL LEGACY equal to
-net sale price
-condemnation award, and/or
-insurance proceeds
UNLESS: T’s disability adjudicated to have ceased and T survives adjudication by 1 year
WILLS > INTESTACY >
Items NOT in the probate estate
Property passing by right of SURVIVORSHIP
Property passing by CONTRACT ((life ins; employee plan death benefits))
Payable on Death (POD) Accounts
Property held in TRUST (including revocable trust)
Property over which decedent had a POWER OF APPOINTMENT
WILLS > INTESTACY
Step Parent Adoption (Mother remarries and step father adopts). What are intestacy rights?
Mother and stepfather can inherit from child
Child can inherit from mother and stepfather.
Child and biological father CANNOT inherit from each other
WILLS > INTESTACY
Intestacy Rights: Child born out of wedlock
child vs. biological father
CAnnot inherit unless father OPENLY AND NOTORIOUSLY treated child as his own
WILLS > INTESTACY > When is a gift an “advancement” or a “satisfaction
Advancement
Satisfaction
Only when
- Decedent declares it as such in a CONTEMPORANEOUS WRITING, or
- Heir acknowledges as such in a WRITING
Additional circumstance for satisfaction
- when will provides that gift was in satisfaction
WILLS > ELECTIVE SHARE
What assets are used in calculating the elective share
PROBATE ASSETS: probate assets, and
ILLUSORY REVOCABLE TRUST: A revocable trust is illusory when
- decedent is the sole trustee, or
- decedent has veto power over trustee’s decisions
WILLS > ELECTIVE SHARE
How much is the elective share
What property is used to satisfy the elective share
HOW MUCH IS ELECTIVE SHARE: 1/3 of probate estate (including illusory revocable trust)
PROPERTY USED TO SATISFY THE ELECTIVE SHARE (in order)
1st: property ALREADY PASSING to SS under the decedent’s will or illusory revocable trust
2d: Use rules of abatement to satisfy remainder
WILLS > SLAYER STATUTE
Evidentiary standard
Effect on
- will/intestate share
- nonprobate benefits
- Jointly held property with right of survivorship
Must find killing UNLAWFUL or INTENTIONAL by a POTE. Final criminal judgment is conclusive proof.
EFFECT ON:
Will/Intestate Share: as though predeceased
Non-Probate Benefits: Predeceased
Right of Survivorship: does not get benefit of ROS, but does not forfeit his own share [[i.e., tenants in common]]
DURABLE POWER OF ATTORNEY
Requirements
REQUIREMENTS:
- Will formalities
- Capacity to make a contract
- Language to act on behalf of principle
- Survivorship Language
TERMINATION
1. death or revocation of Principal
