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.
