Trusts and Estates Flashcards
Default rules (intestacy laws)
Govern the distribution of assets when there is no valid will.
surviving spouse (intestacy laws)
Entitlement to a significant portion, or all, of the estate.
Children and issue (intestacy laws)
Share the remainder of the estate.
Parents and Collaterals
Entitled if there are no surviving spouse or descendants.
Per Stirpes vs. Per Capita Distribution
Methods of dividing an estate among descendants.
Simultaneous death
Uniform Simultaneous Death Act: If two people die simultaneously, each is treated as having predeceased the other for inheritance purposes.
Advancements
Lifetime Gifts: Considered advancements against an heir’s share of the estate if intended as such.
Formal requirements of wills
- Writing: Generally required.
- Testamentary Intent: Clear intent to create a will.
- Capacity: Legal and mental capacity to make a will.
- Witnesses: Usually requires two disinterested witnesses.
holographic will
handwritten and signed by the testator
Nuncupative will
oral wills made before witnesses
typically only for personal property and in limited circumstances
Revocation (how to do it)
Physical act (e.g., tearing, burning), subsequent will or codicil, or operation of law (e.g., divorce).
revival (revocation)
can be reviewd if re-executed or republished by codicil
incorporation by reference
documents not present at the time of will execution can be included if certain conditions are met
acts of independent significance
acts or events that affect the distribution of property and are significantly for reasons other than their effect on the will
Lack of capacity
grounds for contest
testator did not have the requisite mental capacity
undue influence
grounds for contest
coercion that overpowered the testators free will
fraud
grounds for contest
misrepresentation intended to deceive the testator
mistake
grounds for contest
error in the wills creation
no contest clauses (enforceability)
clauses intended to dissuade will contests enforceability varies by jurisdiction
Creating trusts
- Intent: Clear intention to create a trust.
- Res: Trust property.
- Trustee: Person holding and managing the trust property.
- Beneficiary: Person benefiting from the trust.
- Purpose: Legal purpose for the trust.
express trust
created intentionally by the settlor
- private trust – For the benefit of specific individuals
- charitable trust – For charitable purposes
implied trust
created by law
- Resulting Trusts: Arise from the conduct of the parties.
- Constructive Trusts: Imposed to prevent unjust enrichment.
Revocable trusts
can be altered or revoked by the settlor
irrevocable trusts
cannot be altered or revoked once created
Duties of the trustee
- Duty of Loyalty: Act in the best interest of the beneficiaries.
- Duty of Prudence: Manage the trust property with care.
- Duty to Inform and Account: Provide information to beneficiaries and account for trust management.
Modification (trusts)
Can be modified by settlor (if revocable), by beneficiaries (if all consent), or by court (under certain conditions).
Termination (trusts)
Can be terminated by the terms of the trust, by revocation (if revocable), by consent of all beneficiaries, or by court order.
reversion (trusts)
type of future interest
Interest retained by the grantor.
possibility of reverter (trusts)
type of future interest
Follows a fee simple determinable.
right of reentry (trusts)
Type of future interest
Follows a fee simple subject to condition subsequent.
remainders (trusts)
type of future interest
Interest in a 3rd party that follows a life estate
vested remainder (trusts)
type of future interest
certain to become possessory
contingent remainder (trusts)
type of future interest
Depends on a condition precedent
rules against perpetuities
no interest is good unless it must vest no later thna 21 years after the death of a measuring life
The rule against perpetuities is a legal rule that says when someone sets up a trust or gives away property in their will, the people who get that property must be able to own it within a certain amount of time. This rule helps make sure that property doesn’t stay tied up for too long and can be used by future generations. It’s like making sure everyone gets their turn to play with a toy without having to wait too long
Powers of appointment
authority granted to a person to designate the recipients of certain property
general power of appointment
donee can appoint to anyone including themselves
special power of appointment
donee can appoint only to a specified group
exercising powers of appointment
must complu with any formal requirements in the creating instrument
failure to exercise typically returns to the donors estate or follows an alternate distribution plan
What is a personal representative’s Role
Executor (if named in will) or administrator (if appointed by court) manages the estate.
what duties does a personal representative have?
Collect assets, pay debts, distribute property
Probate process
- Initiation: Filing of the will and petition for probate.
- Notice: Notice to heirs, beneficiaries, and creditors.
Inventory and Appraisal: Listing and valuation of estate assets. - Distribution: Payment of debts and distribution of remaining assets according to the will or intestacy laws.
Joint tenancy (non probate transfer)
right of survivorship
Beneficiary designations (non probate transfer)
things like
- life insurance
- retirement accounts
trusts (non probate transfers)
property held in trust passes according to the trusts terms
