Trusts and Wills Flashcards
'’Heir’’ vs. ‘‘beneficiary’’
Heir is one who takes by intestate succession;
Beneficiary is one named in a will or trust
What are:
- '’Issue’’ and ‘‘descendants’’
- '’Gift’s’’ ‘‘devises’’ and ‘‘bequests’’
- “Estate”
- '’Issue’’ and ‘‘descendants’’- often used interchangeably to describe heirs or descendants of decedent
- ’’ Gift s,’’ ‘‘devises,’’ and ‘‘bequests’’- used interchangeably to refer to property disposed of via a will
- “Estate” – roughly refers to property descendent owned upon death
What are the rules that govern how a state is distributed upon the intestacy death of a decedent?
- Survived by spouse with no descendants: Spouse inherits entire state
- Survived by spouse and descendants: Surviving spouse takes 1/2 or 1/3 and everything else to descendants. (UPC: if descendants are also the spouses’, the spouse take everything)
- Not survived by spouse: decedent’s surviving descendants inherit entire estate
- Not survived by spouse or descendants: decedent’s surviving parents inherit entire estate
What happens if the decedent dies and have a spouse only
Surviving spouse inherits entire estate
- Some states provide a certain portion to decedent’s parents and parent’s issue (i.e., decedent’s siblings)
What happens if the decedent dies and have spouse and descendants
Survived by spouse and descendants - surviving spouse inherits one-half or one-third of decedent’s estate, with remainder to surviving descendants (e.g., children)
- Uniform Probate Code (‘‘UPC’’) - if decedent’s descendants are also surviving spouse’s descendants, entire estate goes to surviving spouse
What happens if the decedent dies and have no spouse, but have descendants
Not survived by spouse - decedent’s surviving descendants inherit entire estate
What happens if the decedent dies and no spouse and no descendants
Not survived by spouse or descendants - decedent’s surviving parents inherit entire estate
- If no surviving parents - descendants of decedent’s parents (e.g., decedent’s siblings) inherit
>> I.e., decedent’s estate would go to siblings, then nieces and nephews, and continue down family line until there is a taker
What are the two ways that a distribution is made to descendants
- Per capita with representation (modern per stirpes): Estate is divided into equal shares at the first generation at which there are living takers.
- Per capita at each generation: Divided at first generation with living takers, but shares of deceased are combined and divided equally among takers at the next level
How per capita (modern per stirpes) works
Majority of states
- Divided at first generation with living takers- estate divided into equal shares at the first generation at which there are living takers
>> Each living person takes a share and each share of a deceased person at that level passes to her descendants
- E.g., X dies intestate and has three children: A, B, & C but only A is alive upon X’s death (i.e., B & C predecease X); A has one child, J; B is survived by one child, K; C is survived by three children, L, M, & N
>> X’s estate is divided into 1/3 shares:
A takes 1/3,
B’s 1/3 goes to K;
L, M, & N split C’s 1/3 share (i.e., L, M, & N each get 1/9)
How per capita at each generation works
UPC and growing number of states
- Divided at first generation with living takers, but shares of deceased are combined and divided equally among takers at the next level
- Avoids situations where takers are penalized for having a bigger family
- E.g., same scenario as above- A still takes 1/3, but the remaining 2/3 is divided equally among B & C’s surviving children, K, L, M, & N
- Result is that K, L, M, & N each get 1/6
- E.g., same scenario as above- A still takes 1/3, but the remaining 2/3 is divided equally among B & C’s surviving children, K, L, M, & N
How adopted children inherit?
Adopted children - treated the same as a natural child for purposes of intestate succession
- Cuts off adoptee’s inheritance rights from his natural parents (you cannot adopt for both of them)
-
Exception- adoption by spouse of a natural parent (unless who adopt you is your stepfather)
- >> Does not cut off adoptee’s inheritance rights with respect to the natural parent whose spouse adopted the child
How step-children & foster children adopt?
Stepchildren & foster children - generally have no inheritance rights
- Exception - adoption by estoppel
>> A stepchild or foster child can inherit from or through a step/foster parent as though they were legally adopted where step/foster parent gains custody under an agreement with natural parents to adopt the child
How Non-marital children inherit?
Non-marital children – all states permit inheritance from the mother
- Inheritance from father is permitted if paternity is established
How posthumous children inherit?
Posthumous children - a child in gestation at the time of decedent’s death inherits as if they were born during decedent’s lifetime
How do you deal with the situation where the beneficiary dies at the same time as the decedent?
- Uniform Simultaneous Death Act (USDA) - in doubt, property passes as though the beneficiary/ heir died before the decedent unless there is sufficient evidence decedent died first (then no doubt)
- 120-hour rule - beneficiary/heir is only treated as having survived decedent if there is clear evidence that she survived by 120 hours or more (i.e., five days)
What is the USDA rule?
Rule on simultaneous death
Uniform Simultaneous Death Act (USDA) - property passes as though the beneficiary/ heir died before the decedent unless there is sufficient evidence decedent died first
- Applies to distributions of property by any means, including will, joint tenancy, intestate succession, etc.
What is the 120-hour rule?
120-hour rule - beneficiary/heir is only treated as having survived decedent if there is clear evidence that she survived by 120 hours or more (i.e., five days)
What is the slayer rule?
Decedent death caused by beneficiary/heir (Slayer Rule) - one who wrongly brings about the death of a decedent forfeits an interest in decedent’s estate
- In such a case, property passes as though the killer predeceased the victim
What is a disclaimer?
When you “reject” an interest that otherwise would pass to them from a decedent or decedent’s estate.
- Effect- interest passes as if the disclaiming party predeceased decedent
Disclaimer requirements?
-
Requirements-
- For fed. tax purposes, disclaimer must be:
- in writing,
- irrevocable,
- and filed within nine months of decedent’s death
- For fed. tax purposes, disclaimer must be:
- States may impose additional requirements, although most are satisfied by compliance with fed. requirements
What is an advancement?
Gifts made during testator or decedent’s life with the intent that the gift be applied against any share the heir or beneficiary inherits from decedent/testator’s estate.
Modern statutes required intent, common law presumes gifts.
Common law and modern differences on advancements
- Common law - gifts were automatically deducted from beneficiary/heir’s remaining interest
- Modern requirement- in most states, gifts to beneficiary/heir during testator/ decedent’s life are advancements only if either:
- Decedent declared her intent to make the gift an advancement in contemporaneous writing, or
- Beneficiary/heir acknowledged the gift to be an advancement in writing
This rule apply to both intestacy and wills
What is a will?
A will is an instrument that directs the disposition of a person’s property when they die (i.e., will directs the disposition of testator’s property)
- No legal effect before testator’s death - operative upon death
- May be revoked or amended until testator’s death; named beneficiaries have only an expectancy interest (i.e., no property rights)
What are the requirements of a will?
State law defines the requirements, in general, most states require at least:
- Document in writing
- Signed by testator (any mark intended to be a signature suffices)
- Signed by two witness
Requirements also includes the capacity and intent to make the document his will.
Does a will need to be signed by the testator?
Yes, any mark intended to be a signature suffices
>> If testator is incapable of signing, must be signed by another in her presence and by her direction (firma a ruego)
Does a will need witnesses?
Yes, they sign the will as well.
They are witness and they must see testator sign the will and must sign as witnesses in testator’s presence in a reasonable time.
’‘Testator’s presence’’ = line or range of senses, although many states require witnesses be in testator’s line of sight
- Licensed notary satisfies this requirement in many states
- You could prove this using an attestation clause
What is an attestation clause?
Clause included immediately between testator and witness signatures in a will, which sets forth the require elements and that they were satisfied (witness saw T sign, and T saw W sign as W)
- Constitutes prima facie evidence of the facts recited in the clause (i.e., that execution requirements have been satisfied)
Who can make a will?
Someone with intent and capacity.
The person executing the will must be 18 or older and have mental capacity.
The requirements are required at the moment of the execution
When do you have mental capacity to execute a will?
Mental capacity- testator, at the time of will execution, must understand:
- Act- nature of his act (i.e., that he is executing a will);
- Property - nature and extent of his property; and
- People- persons who are the natural objects of his bounty
Grandpa needs to understand what is he doing, using what to whom
Rebuttable presumption exists that testator had mental capacity (you need to prove incapacity, not the other way around)
Physical ailments, drug addiction do not raise a presumption of incapacity
When you have testamentary intent?
When you as testator intend that the instrument operates as your will
- Usually established by provisions in the will (e.g., ‘‘I, Testator X, hereby declare that this is my last will’’)
- Present intent required- testator must have present testamentary intent (i.e., intent to make a will in the future is insufficient)
- Extrinsic evidence is allowed to prove requisite intent or lack thereof
Can you use extrinsic evidence to show lack of intent of making an instrument a will?
Yes,
- Extrinsic evidence is allowed to prove requisite intent or lack thereof
Who can be a Witness of a will?
Someone competent (not necessary over 18) that is not barren because of interest.
When a witness to a will is deemed as competent?
When they are able to understand and appreciate the nature of what is happening
Witness doesn’t need to be 18, they just need to have mental capacity
Witness in court standard: if little Timmy can be a W in court he can be W to a will
When a Witness is barred of being a Witness because of his interests?
Someone is interested when stands to benefit under the will. Under some rules having a Will with an interested witness that can be an issue:
- Common Law: entire Will could not be probated (mostly abolished)
-
Majority rule: will is valid but gift to witness beneficiary is void
-
Exceptions- interested witness can still be a beneficiary where either:
- There were two other witnesses who were disinterested (i.e., three total witnesses, two of whom were disinterested), or
- Interested witness would take if there was no will (i.e., interested witness would have taken as a descendant through intestate succession)
-
Exceptions- interested witness can still be a beneficiary where either:
- UPC- presence of interested witness does not invaIid ate a will or any part of it
What is a codicil?
An amendment, modification, or alteration to a previously executed will
When a codicil is validly executed, the original will is treated as republished and deemed to have been executed on the date the codicil was executed
What are the requirements of a codicil?
- Same formalities as a Will required - to be valid, a codicil must be executed with the same formalities required for the will itself (i.e., in writing, signed by testator, with sufficient witnesses)
What is a holographic will?
Handwritten, unwitnessed will. Not recognized in all states
If requirements are correct, it replaces and revokes any prior valid will
What are the requirements of a holographic will?
To be valid, a holographic will must:
- Be in testator’s writing -some states require the entire will to be in testator’s handwriting, while others allow typewritten text if the typed portion is not material
- Be signed- testator’s signature must be somewhere on the will
- Reflect testator’s intent to make a will - document must, as a whole, reflect that it is testator’s intent to make a will
>> E.g., a letter signed by testator requesting changes to his will is not a will because it contemplates a future writing, i.e., that a writing constituting the will would be made
Are oral wills accepted?
not permitted in most states
Who a court would conclude that an external document is integrated into a will?
By doing this test:
- Physical presence - the document was physically present at the time of the will’s execution; and
- Intent of inclusion - testator intended the document to be part of the will
How do you prove that a document was integrated to a will?
Evidence - witness testimony and other extrinsic evidence may be used to establish that the requirements have been satisfied
Presumption - requirements are presumed where there is a physical connection of pages (e.g., staple or paperclip) or when there is some internal coherence (i.e., pages comprise a complete, orderly disposition when combined)
What is an act of independent significance?
Common-Law rule that allows a testator to effectively change the disposition of his property without changing a will, if acts or events changing the disposition have some significance beyond avoiding the requirements of the will
The Will make reference to this act, and then after the will is executed, the T makes acts or events that define the disposition of property.
Example: The T on his will makes the identification of a beneficiary or amount of a gift in a will may be determined by some future act or event
Requirements for an act of independent significance?
Act or event by T needs to have some independent significance during testator’s lifetime other than providing a gift in her will
X’s will leaves: ‘‘$100 for each person employed as my gardener upon my death’’
Two years after executing the will, X fires one gardener and hires three others, who remain employed until she dies.
Valid for the three gardeners to recieve?
Valid b/c it is presumed that X would not hire and fire gardeners to change who is a beneficiary under her will, i.e., the employment decisions have independent significance.
Therefore since the acts are independent, they don’t need to go and change the will for the new gardeners to recieve
X leaves ‘‘all automobiles I own at the time of my death to A’’ and owns three cars at the time of execution.
Thereafter she sells one and buys two others before she dies, leaving A with a valid bequest of the four automobiles X owns upon her death.
Valid?
Valid b/c it is presumed that X did not buy and sell the cards for the sole purpose of changing A’s gift
What happens if the will reference other documents?
They will be considered incorporated into the will, if they comply with the requirements
Documents extrinsic to the will (i.e., not part of the will) may be incorporated by reference into the will in most states
What are the requirements for a document to be considered incorporated into a will?
Requirements - the document will be incorporated by reference where:
- Intent to incorporate - the will manifests testator’s intent to incorporate the document;
- Authenticated document - the will sufficiently describes the document such that it can be authenticated (description must allow reasonable identification and must correspond to Will’s description);
- In existence upon will execution - the document must be in existence at the time the will is executed (tangible property exception)
What is the exception to the existence requirement of an extrinsic document to be considered part of the will?
General Rule: A document must exist before the will to be incorporated to it.
Tangible Property Exception: in most states, a will may incorporate by reference a document (i.e., statement or list) that disposes of testator’s tangible personal property
The document disposing the property can be prepared before or after execution of the will and can be changed before testator’s death, but it most:
- Be signed by testator; and
- Describe items and to whom they are devised with reasonable certainty
How do you revoke a will?
When a person capable of executing one (intent and capacity), revokes one before his death.
You can revoke through
- 1) formal revoke;
- 2) physical act;
- 3) partial revoke;
- 4) by operation of law
What is the “normal” way to revoke a Will
Same requirements as the formation:
- You need Intent and capacity
- Formal requirements
- Written
- signed by T
- signed by witness
How do you revoke a Will by physical act
A will may be revoked in most states by burning, tearing, or otherwise destroying the will
- Present intent required - testator must intend to revoke at the time of the physical act
- Act by another (revocation by proxy)- a person other than testator may revoke the will by physical act if done at testator’s direction and in testator’s presence
MORTIMER! REVOKE MY WILL HERE AT THE FIRE
How can you revoke a Will partially?
Revocation may be accomplished by making marks of cancellation on the will (e.g., crossing out provisions) in most states
- Where such marks are found on a will known to have last been in testator’s possession, a presumption is created that the marks were made by testator with the requisite intent to revoke
What are the events that revoke a Will by operation of law?
A will and/or its provisions can be revoked by operation of law upon the happening of certain events, usually involving changes in marital status or children
- Marriage following execution of a will (omitted spouse) (ONLY SOME STATES)
- Divorce following execution of a will
- Pretermitted children, kids born or adopted after the will was executed
What happens when you marry after creating a Will?
General Rule: no effect on the existing will in most states (i.e., new spouse remains omitted)
Variation: under the UPC, where a person marries after executing a will and spouse survives testator, omitted spouse will take a share of decedent’s estate equivalent to what their intestate share would be
- Not applicable if will provides for the omitted spouse (to my girlfriend Paula), was made in contemplation of marriage, or otherwise makes clear that the omission was intentional
What happens if you divorce after creating a will?
Revokes all bequests made in favor of the former spouse, unless the will expressly provides otherwise
- Remainder of the will remains valid (???)
- Effect- will is treated as if the former spouse predeceased testator
What happens when you have kids or adopt kids after the execution of a will?
Most states give the pretermitted child a share of testator’s estate equal to what they would have received through intestate succession.
What happens if you revoke the instrument that revoked a will?
The original will is presumptively revived
- Exception- revoked will is not revived if testator’s statements or other evidence make clear she did not intend to revive the prior will
How can you revive a revoked will?
Two options:
- Revoking the revocation
- By re executing the revoked will
How do you revive of a will by executing a new instrument?
a revoked will may be reexecuted by a subsequent will or codicil if testamentary formalities are satisfied
What is Dependent Relative Revocation? (DRR)
Court doctrine under which a court disregards a revocation that was done to create an alternative disposition to the original will, but was based on a mistake of fact or law
As a consequence of the mistake, the court would try to revive the original will, or to apply the original will language, if that is close to what the testator tried to do, but failed as a consequence of the mistake, to do than would intestate succession.
What are the requirements for a court to apply the doctrine of relative revocaction (DRR)?
Requirements- court may apply DRR (ignore will revocation) where:
- Revocation was premised on some mistake of law or fact;
- Revocation would not have occurred absent testator’s mistaken belief that some other plan for disposition of property was valid; and
- The originally revoked will is closer to testator’s preference than would be intestate succession
Under the general rule, what happens if the beneficiary of a gift provided in a will predeceases the Testator?
Absent application of an anti-lapse statute, the gift will go back into the residue of testator’s estate.
If anti-lapse statute exist: a gift that would otherwise lapse vests in the predeceased beneficiary’s descendants, who becomes substitutes
To whom the anti-lapse statute apply?
Beneficiaries that:
- Are relative of testator (usually descendants only); and
- Had descendants themselves after dying
Who will be the benefited parties of the gift? some states allow only testator’s descendants, while others (and UPC) allow any of testator’s relatives
Imagine this situation:
A makes a gift to B. B is not A’s relative, is just a friend.
B dies before A
The state only stops lapses when the person is relative to the testator.
Who receives?
- Common law - lapsed gift passes to testator’s heirs via intestacy
- Modern view- residuary beneficiaries who survive testator and deceased beneficiary take the deceased beneficiary’s share (both A’s and B’s residuary beneficiaries recieve)
What happens if a will makes a gift to a class of people (my children) and a class member predeceases testator (one of the children dies)?
No anti-lapse statute applies: Surviving class members take predeceased’s gift absent an alternative provision in testator’s will.
Anti-lapse statute applies: if an anti-lapse statute applies to the predeceasing class member (e.g., predeceased was testator’s relative and has surviving descendants), gift vests in predeceased’s descendants, not the class.
What is ademption?
It is a doctrine where a gift of specific property in a will faiIs if it is no longer in testator’s estate at death.
Only applies to specific devises. it does not affect general or demonstrative devises
Exception: The state is an Intent Theory state (unintended changes in property are not adeemed)
T’s will gifts T’s diamond necklace to A, but T sells it before her death
What happens upons T’s death?
Gift to A is adeemed (i.e., it faiIs) b/ c the gift was a specific item of irreplaceable property
What are demonstrative and general devises?
- General devise= gift of a dollar amount payable from estate’s assets (To my son 10K)
- Demonstrative devise = gift of a general amount that identifies some asset as a source of the payment (To my son 10k from the sale of my stock in apple)
These devises are not affected by ademption (failure of gifts)
T’s will gifts T’s “10k of the sale of the stock I own in apple” to A. The stock is worth only 9K
What happens upon T’s death?
Estate generally must sell off other property to satisfy the gift
What happens when a general or demonstrative gift fails?
- Where a general or demonstrative gift fails (e.g., stock is not worth as much as provided in a demonstrative legacy), estate generally must sell off other property to satisfy the gift
What is the intent theory of ademption?
in intent theory states, adeemed gifts may be saved
- A minority of states apply the intent theory of ademption, under which an adeemed bequest is saved if evidence establishes that ademption would be inconsistent with testator’s intent
- Effect- beneficiary gets monetary value of the specific bequest or gets property that was acquired as a replacement for the adeemed gift
If T bequeaths “100 shares of Tigertail Corp.” to A and T owns no shares at death, the court will hold this to be a general devise, if Tigertail has widely held stock, and A will get the value of 100 shares of Tigertail at T’s death. If however, testator said “my 100 shares of Tigertail” the court will likely hold it to be a specific devise and adeemed
What is abatement?
Where an estate’s value is insufficient to pay its obligations and provide for disposition of property under a will, it must reduce (abate) gifts in order to pay the obligations and satisfy some bequests and devises
What is paid first on a estate, obligations or distributions?
Estate must always pay off obligations before distributing assets (i.e., satisfy debts, expenses, taxes, etc.)
- Abatement occurs when, after doing so, the estate lacks sufficient funds to carry out disposition of property under terms of the will
If you have to abate on your estate, in what order do you do it?
- On the order made on the will
- Under the order provided in the statutory provision
What is the statutory order of abatement?
Absent provisions in the will, most state statutes provide for an order of abatement setting a priority as to which categories of property in the estate will be sold off first
Order- most states abate estate property in the following order:
- Property not disposed of by will (i.e., passing by intestacy)
- Residuary estate ( i.e., the portion that would remain after all specific gifts and bequests have been made)
- General devises - abate pro rata
- Specific devises and bequests
What is a residuary state?
The portion of an estate that is not specific (what remains after all specific gitfs and bequest are made)
can you do a contract to make or revoke a will
Yes, and they are enforceable
- Governed by K law and Ks regarding wills are not considered wills
- K requirements must be satisfied (e.g., mutual assent, consideration)
Formal requirements of a Will’s Contract
Writing required - most states require Ks involving wills to be in writing
- Additional requirements- UPC and some states also require either:
- Provisions in the will state the material provisions of the K,
- Express reference in the will to the K and extrinsic evidence proving the K terms, or
- Writing signed by decedent/testator evidencing the K
What happens if you breach a contract to create a will? What is the remedy?
Remedy for breach - constructive trust
- Upon breach of a K to make a will (e.g., testator fails to provide for party to the K in their will), court usually probates the will and imposes a constructive trust in favor of the intended beneficiary under the K
What is a joint will?
Will of two or more people executed in a single document
- Admissible to probate upon death of either testator
- May be interpreted as a K for a will, particularly if executed pursuant to a promise between each party not to revoke
What happens if one of the T revokes a joint Will?
If one testator revokes the joint will, it remains valid as the other’s will
What is a mutual will?
Separate wills of two or more people containing reciprocal or substantially similar provisions
- Usually not interpreted as a K to make a will
What reasons can be used to contest a will?
A will may be contested for any number of reasons challenging its validity
Common grounds for contesting a will:
- Lack of capacity or testamentary intent
- Defective execution (i.e., failure to comply with required formalities)
- Undue influence, fraud, or mistake
- Will has been revoked
Who can contest a Will? (Standing to contest a Will)
Generally only those with a pecuniary interest have standing to contest
- Includes beneficiaries, someone who should be a beneficiary, or someone who would benefit if decedent has died intestate
What happens if you include a no-contest clause in a will?
The beneficiary loses their interest under the will if they contest it
- Majority view: no forfeiture of interest if beneficiary challenges in good faith and on the basis of probable cause
- Minority: no-contest clauses given full effect regardless of challenging beneficiary’s cause or intent
This rule applies only to someone fighting the will, not Does not suits challenging executor appointment, jurisdiction, or asking the court to interpret the will
What happens if there is undue influence on executing the will?
The will is deemed as invalid
A will is invalid if executed while testator was subject to undue influence that effectively overrode testator’s free will
How do you prove undue influence on the execution of a will?
Two ways: prove the undue influence, or create a presumption of it
To prove undue influence. Will contestant has burden of proof and must show:
- Influence was applied on testator (someone tried to influence);
- Testator’s mind and free will were overpowered (and overcome T free will); and
- Testator’s will would not have been executed absent undue influence (producing different effects that the one expected).
When undue influence in the execution of a will is presumed?
A presumption of undue influence arises if:
- A confidential relationship (e.g., attorney client) existed between testator and beneficiary, who exerted influence; and
- Beneficiary participated to a significant degree in executing, drafting, or procuring testator’s will
Once established, burden shifts to proponent of the will (usually beneficiary) to prove the will was not induced by undue influence.
What happens if the provisions of a will are made as to the result of fraud?
The will or the provision is invalid
What do you need to prove that fraud existed on executing a Will?
It must be shown that:
- Testator has been intentionally deceived as to:
- Character or content of the will or its provisions (“To Mom she needed for the cancer treatment”), and/or
- Facts extrinsic to the will that would induce the will or a particular provision or disposition in the will (“Mom has cancer, give her all the money”)
- Testator acted in reliance on the misrepresentation (i.e., he would not have made the gift or executed the will if he knew the facts)
What effects have a “nature of instrument” mistake on a will?
If it is show (extrinsic evidence may be permitted) that testator was mistaken as to the nature of the instrument he signed (e.g., he did not know he was signing his will)
This mistake may nullify the testamentary intent requirement, making the Will invalid
What are the effects of a mistake on a will?
If the mistake relates to the nature of the instrument: Deems the Will invalid
If the mistake relates to (1) omissions; or (2) the reason made (or did not make) a will or made a gift: No relief available
How mistakes work on Wills?
Common Law:
- Mistakes of omission or inducement (not fraudulent) have no relief, even if they don’t comply with the intent that could be shown by extrinsic evidence
- Mistakes on the nature of the instrument have relief, make the will invalid
UPC:
- A mistake can be reformed (extrinsic evidence allowed) by showing that the will do not conform to the testator’s intent
How mistakes on omission or in inducement (Common Law) are applied?
Mistakes that: (1) relates to the reason (inducement) testator made a will or made (or did not make) a gift in the will; (2) omission to include a provision that does not reflect the intent of T
THIS MISTAKES HAVE NOT RELIEF
No extrinsic evidence is allowed to show the mistake
(This of course does not apply if there was fraud or inducement)
How are mistakes in UPC treated?
UPC allows a court to reform terms of a will to conform to testator’s intent
- Requirements- must be shown by clear and convincing evidence that a mistake of law or fact affected the will and testator’s intent
Can you list the method of transfer of property outside of probate?
- A gift made intervivos
- Receiving money from a joint tenant account
- Trough a Totten trust
- by contracting life insurance
What are the requirements of an intervivos gift?
Both parties need to be alive (duh)
- intent, delivery, and acceptance
- 1) Donor intends to make gift;
- 2) Donor delivers gift (can be actual or constructive delivery); and
- 3) Done accepts
How a Joint Tenant Bank account works?
The account is in the name of two or more people with the ‘‘right of survivorship’’
A surviving joint tenant is generally entitled to money in a jointly-held account when the other joint tenant dies
What is a totten trust? (Aka payable on death account)
Is when someone opens a deposit of funds in one’s own bank account held in trust for another (e.g., A opens account for herself as trustee for B)
- Creates a valid revocable trust, even though depositor has control
- Funds pass to designated beneficiary upon trustee’s death
How do you revoke a tottem trust?
The trustee-depositor can revoke it by withdrawing funds before death or revoking the trust by will
Can you change the recipient of a life insurance in your will?
No, you cannot change the beneficiary unless the life insurance contract says otherwise
What is the power of appointment?
Is the authority granted to a person (donee) enabling donee to designate a new owner of property and how they take it
E.g., T’s will leaves ‘‘my property to C to give to anyone that C chooses’’ >> C has a power of appointment
What is the difference between a general and special power of appointment?
- General - donee can exercise her power in favor of anyone, including herself, her estate, her creditors, etc.
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Special - power is exercisable in favor of a limited class of appointees
- >> Cannot include donee, her estate, creditors, or creditors of her estate
What is the difference between a present and a testamentary power of appointment?
Present vs testamentary power – appointment power may be exercisable during donee’s life or only exercisable by donee’s will
- Presently exercisable - one exercisable by done during her life
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Testamentary power - exercisable only by the donee’s will
- >> E.g., T leaves ‘‘all to Candon C’s death to those C has appointed’ C’s exercise of her power of appointment is limited to her will
Who takes the decedent’s property upon death?
In a probate proceeding, a personal representative is appointed to carry out administration of decedent’s estate
The name of the personal representatantive named in a Will is an executor
Any person with the capacity to contract can be a personal representative (i.e., must be mentally competent and not a minor)
WHat happens if no executor is named on the will or the decedent dies intestate?
Court appoints a personal representative (usually a surviving spouse or heir of decedent)
What are the personal representative/executor responsibilities?
generally, a representative/ executor handles all matters associated with winding up decedent’s estate
- E.g., filing paperwork, paying creditors, notifying beneficiaries and devisees, managing property distributions, etc.
Things in common between a living will and a healthcare power of attorney
Living wills and durable healthcare powers (a.k.a. ‘‘power of attorney for healthcare’’) are forms of advanced healthcare directives, which are instructions regarding an individual’s health if they become unable to make such decisions on their own
- Creation - states vary on requirements, but most are similar to those needed for will execution: writing, signed by testator or principal or another at his direction, and witnessed by two adults
- Revocation - both a living will and durable healthcare power of attorney may be revoked
What is a living will
It is an instrument (created as a will, revocable) specifying life-sustaining and pain-alleviating measures one does or does not want if he is indefinitely incapacitated
- I.e., directs what measures one wants if they become terminally ill or in a persistent vegetative state
What is a Durable healthcare power of attorney?
Document (same formal requirements as a will, revocable) that appoints an individual as agent to make healthcare decisions on behalf of principal
- Becomes effective only if principaI is incapacitated
- Extends to all healthcare questions, unless otherwise limited
Who takes healthcare decisions if no living will exists or no durable healthcare power of attorney is made?
most states have laws that come into play where a person becomes terminally ill or otherwise indefinitely incapacitated and there is no living will or one with durable healthcare power of attorney
- Close relatives, usually in an order provided by statute, may act as surrogate decision-makers
Define what is a trust, who are the parts of a trust?
A trust is a fiduciary relationship in which one party (trustee) holds legal title to property for the benefit of designated beneficiaries
Settler: person who created the trust, giving trustee legal title to hold, manage, and administer trust property for beneficiaries
Can a trust be revoked?
trusts are generally revocable under modern statutes, unless the terms expressly state the trust is irrevocable
What is an express trust?
Is a trust (a fiduciary relationship that allows one party to hold legal title to property for the benefit of designated beneficiaries) that is created with the property owner’s (settlers) express intent
There are two: Private Trust and Charitable Trust
What is a private trust? What are their types?
Is a type of express trust
Created for the benefit of certain defined and/or ascertainable persons (note - most common trust tested on essays)
May be created inter vivos (during settler’s life) or as a testamentary trust (created by will)
What is a Charitable Trust?
Is an express trust created for the benefit of an indefinite class of people or the public generally
What is a resulting trust?
A non-express trust implied or imposed by law, most often when an express trust fails for some reason (e.g., beneficiary is dead, trust is unenforceable or void, etc.)
- Settler usually becomes beneficiary and trustee conveys title back to settler or, if settler has died, settIor’s estate
What happens if a private trust fails because the beneficiary is dead?
Settler usually becomes beneficiary and trustee conveys title back to settler or, if settler has died, settIor’s estate
What is a constructive trust?
Is not really a trust. It is a remedy created by courts, as an equitable remedy to rectify unjust enrichment or wrongful conduct.
- Court imposes constructive trust on property in wrongdoer’s possession (“you hold this land in constructive trust”)
What are the elements required for a valid express trust to exist?
- Capacity to convey by the settlor (same as a Will)
- Settlor has a clear present intent to create a trust (writing not required unless SoF)
- If trustee is appointed, the trustee needs to be capable (capacity to hold property)
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Beneficiaries need to be defined (or describe how will be ascertained)
- This is not required in a charitable trust
- Trustee cannot be the solely beneficiary
- Setttler owns the property conveyed and it must be properly described
- Trust must have a legal purpose (not ilegal, impossible or countrary to public policy)
When do you require the trust to be written?
When Statute of Frauds or Statute of Wills requires it (always for real property)
General Rule: Oral trust are fine, but to prove its existence you need clear and convincing evidence
What happens if you appoint as trustee someone that has no capacity?
In such cases, a trustee will be appointed. A trust will not fail solely b/ c trustee does not exist
Can the trustee be a sole beneficiary of a trust?
No
How do you create a trust intervivos? (Living Will)
Creation requires either:
- Transfer of property- property owner transfers property to another as trustee, or
-
Declaration of trust - property owner declares himself trustee for another
- Delivery required - if property owner declares another as trustee (i.e., settler is not trustee), property must be delivered to trustee
Formalities - writing not required, but an oral trust and its terms can only be established by clear and convincing evidence
>> Land as property - writing required under Statute of Frauds
How do you create a testamentary trust?
Through your will
The terms of the trust (Intent, essential terms, and beneficaries) must be ascertainable by:
- Terms of the will itself,
- Incorporation by reference - an existing writing properly incorporated by reference into the will, or
- Power of appointment
What is a pour-over provision
Does not create a trust; transfers property to an existing trust
What powers a trustee has?
Trustee has powers necessary and appropriate to properly invest, manage, and distribute trust property if not contrary to trust terms
Trustee can only exercise powers expressly or impliedly conferred (most often conferred by trust terms)
What duties a Trustee has?
- Duty to administer -trustee must administer trust in good faith and in a prudent manner in accordance with trust terms and beneficiary’s interest
-
Duty of loyalty - no self-dealing
>> Trustee cannot enter into a transaction in which he is dealing with the trust in his individual capacity, absent court approval or a contrary trust provision - Duty to report – trustee must keep beneficiaries reasonably informed of the trust and its administration
- Duty to separate trust property and keep records - trustee must not commingle trust property with his own or another trust’s
- Duty to enforce claims and defend trust - trustee must enforce claims the trust has and defend the trust against claims
- Duty to preserve property and make it productive - trustee must preserve trust property, including the duty to make property productive (e.g., invest funds, lease or manage land, collect claims)
What is a protective trust?
A trust that restricts beneficiary’s access to trust property by terms of the trust
b/c beneficiaries have limited access to the trust property, their creditors are limited in accessing beneficiary’s trust interest
Two types: Distrationary and Support
What is a discretionary trust?
A trust where the beneficiary has no discretion on the distributions.
Trustee has absolute power and discretion to make decisions regarding distribution of trust property to beneficiaries
- Beneficiaries have no right to income until trustee exercises discretion to distribute property or income
-
Beneficiary’ s creditors - cannot reach the trust b/c beneficiary cannot compel payment from the trust
- >> But if creditors serve trustee with process, trustee must first satisfy creditor’s claims before distributing funds to beneficiary
What is a support trust?
A trust where the trustee is instructed to pay beneficiaries from trust as much as is necessary for beneficiary’s support
- Beneficiary’s creditors - have same rights as for discretionary trust
What is a spendthrift trust?
Is a trust where beneficiaries are prohibited from transferring their interests in the trust, either voluntarily or involuntarily
- Usually included to protect beneficiary from his own carelessness
- Beneficiary’s creditors - cannot reach beneficiary’s interest in the trust, but distributions to beneficiary are reachable
Who are the beneficiaries of a charitable trust?
Unascertained group of people or the public at large
Uncertainty needs to be reasonably large or indefinite (not for the benefit of identifiable individuals)
Think always of unnamed individuals that always changes or a charitable organization
How does the RAP apply to trusts?
- Private Trusts: applies, interest need to vest before RAP
- Charitable Trust: can be perpetual
Charitable trust for the general public, what is charitable purpose?
Must be considered to benefit the public. Effect of gift, not motive of settler, controls
e.g., trust to build a public swimming pool on land next to settler’s house is acceptable even if settler’s motive was to use the pool
Trust for supporting political initiatives can be charitable, including a present change in law (although cannot be a trust in favor of a political party)
The Rule Against Perpetuities (‘‘RAP’’) does not apply to charitable trusts, as compared to private trusts, where all interests must vest within the RAP period
How a trust is terminated
- By revocation of settlor or beneficiaries
- Expiration: Automatically at the expiration of a specified trust term or when its purposes have become accomplished,
- Not realizable: unlawful, impossible, or contrary to public policy
Who and how can a private trust be revoked?
- By settlor - settler can modify or revoke unless the terms expressly prohibit modification or revocation
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By beneficiaries - beneficiaries can modify or revoke upon consent of settlor and all beneficiaries
- Without settler consent - all beneficiaries can consent to modify or revoke if doing so would not frustrate a material purpose of the trust
- '’All beneficiaries’’ includes unborn or unascertained beneficiaries, which can preclude obtaining required unanimous consent
- Some states allow appointment of a representative for minor, unborn, or unascertained beneficiaries
What happens if the original purpose of a trust is accomplished, become impractical, unlawful or wasteful?
CY Pres Doctrine for charitable trusts - allows courts to modify terms of a charitable trust to as near as possible as settlor’s original intention
- Can arise where the trust’s original purpose is accomplished or becomes impractical, unlawful, or wasteful
