Trusts & Estates Flashcards
(37 cards)
What are the two requirements that every testator must have before making a will?
- Testamentary capacity: must be 18 years of age, of sound mind, and able to understand the nature & Extent of property
- Testamentary intent
What are the five requirements for a valid will?
1) will must be in writing
2) signed by T
3) signed or acknowledged in the joint presence of 2+ witnesses
4) signed by 2+ witnesses during T’s lifetime
5) witnesses understand the instrument
Note: a will not meeting the reqs. still valid if T intended the document to be their will.
What is a holographic will and what are the requirements?
A holographic will is a will in T’s handwriting. No witnesses are needed. It only requires:
- to be signed by T (anywhere)
- with material provisions in T’s handwriting.
What is a codicil?
A codicil is an alteration to a will. The original will is treated as republished and takes the date of the codicil.
When can there be incorporation by reference? (3 requirements)
T can incorporate by reference a separate document into a will when 1) the document is in existence; 2) will shows intent to incorporate; and 3) the writing is described
How may a will be revoked?
A will may be revoked in whole or in part by:
- a subsequent instrument such as a new will or codicil that expressly or impliedly revokes the first will
- Physical act: physical destruction, burning, tearing, etc. WITH INTENT to revoke either copy or original.
Note: T may direct another person to destroy the will in their presence; if only part of the will is destroyed extrinsic evidence is admissible to prove if entire will is revoked or part.
What is dependent relative revocation
T didn’t really revoke the will. T cancels the revocation based on mistake of law or fact and but for this mistake, T would not have revoked. The revocation is set aside and remains in force.
What is abatement?
Abatement is when the estate is insufficient to pay all debts and claims and gifts are abated to satisfy the debt in the following order: 1) intestate property; 2) residuary devises; 3) general devises; 4) demonstrative devises; 5) specific devises
What is ademption by extinction
Specific devise fails (is adeemed) when T no longer owns the gift at death. Look to T’s INTENT. May occur intentionally (sale, gift) or unintentionally (fire, theft) - beneficiary takes nothing. OR T may have collected balance to intend to give to beneficiary.
What is lapse and how can it be prevented?
Lapse is when a beneficiary predeceases T, the gift lapses (into residuary of estate).
Can be prevented by anti-lapse statute which provides a substitute beneficiary. Unless intended by will, the gift will pass to the issue of the intended beneficiary who is kindred
What is the simultaneous death act?
If it cannot be established by clear and convincing evidence that one survived the other by 120 hours (five days), the property is administered as if the intended beneficiary predeceased T
What is a disclaimer and how is it made?
Beneficiary irrevocably refuses a gift. Disclaimer must be made in writing (identify T, gift being disclaimed) and signed by the beneficiary. Treated as predeceased.
A pretermitted child receives intestate share unless, what? (3 scenarios)
- Will shows omission was intentional
- T provided substitute will outside of transfer
- T had other children and left estate to parent of omitted child
Note: only children born AFTER the will was created are protected by the pretermitted statute
What is a no-contest clause?
A clause to discourage potential will contestants causing beneficiary to forfeit their right to take. Will be enforced, unless beneficiary with probable cause brings contest on grounds of fraud, forgery, revocation etc.
What is an advancement and how is it applied?
inter vivos property that is given to heirs during decedent’s lifetime and is treated as an advancement against an heir’s share of the intestate estate only if 1) decedent declares in a contemporaneous writing that the gift is, an advancement, or 2) heir acknowledges it in writing
What is a living will?
Document specifying life-sustaining and pain-alleviating measures one does or does not want in the case they are indefinitely incapacitated.
What is a durable healthcare power of attorney?
Document that appoints an individual as an agent to make healthcare decisions on behalf of the principal. It becomes effective ONLY IF principal is incapacitated. Extends to all healthcare questions, unless stated otherwise.
What is family consent?
If a person becomes terminally ill or otherwise indefinitely incapacitated and there is no living will or power of attorney, close relatives, usually in order by statute, may act as surrogate decision-makers.
What are the five requirements for a valid trust?
- Intent: Settlor manifests present intent to create a trust by words or conduct.
- settlor capacity: Must be of majority age and have mental capacity (presumed unless contrary evidence)
- Identifiable trust property (res) in existence
- Ascertainable and definite beneficiary
- valid trust purpose
What is the duty of good faith under trusts?
A trustee must administer the trust in good faith in accordance with the trust purpose and terms, in the interest of the trust beneficiaries. If a trustee acts in bad faith or dishonesty, the court may interfere with actions.
What is the duty of loyalty under trusts?
There must be a duty of loyalty to beneficiaries in all matters relating to the trust . Trustee must put interest of the beneficiaries first and must avoid self-dealing and conflicts of interest.
- cannot loan or sale trust property to yourself
- seeing terms such as “closely held”, “arms length”, “illiquid” “market risk” this is a RED FLAG that the trustee breached their duty of loyalty.
A trustee can attempt to explain that a prudent/loyal investor would have made the transaction, however, trusted can proceed to sue if they wish.
What are the two types of express trusts?
- Private express trusts: comprise most of the trusts established by individuals
- Charitable trusts
What are the two types of implied trusts?
- resulting trusts: places property in the hands of rightful owners when circumstances require it, even though there has not been any wrongdoing on anyone’s part
- constructive trusts: deprives a wrongdoer from retaining improperly obtained property (usually erected to remedy fraud or unjust enrichment)
What is the duty of care under trusts?
Must exercise care, skill, and caution that would be exercised by a reasonably prudent person. Mistakes in judgment do not expose one to liability.
- must keep records and proper accounting
- must diversify their accounting and be a prudent investor (cannot put all money into one place)
