trusts: subsidary law of wills; creditor's rights ; revocation upon divorce Flashcards
what does the subsidary law of wills deal with
Which rules in the law of wills apply to will substitutes?
A Lot of times they are an issue of policy – should it apply
Should it apply to the specific non probate will sub SPECFICALLLY, not generally as a whole
what does the rst subsidary law of wills say
Although a will substitute need not be executed in compliance with the statutory formalities required for a will, such an arrangement is, to the extent appropriate, subject to substantive restrictions on testation and to rules of construction and other rules applicable to testamentary dispositions
what are creditor’s rights issues raised in the non probate context
in probate, creditors get paid before beneficiaries – should creditors rights extend to non probate will subs
state street bank
Testator executes a will and also creates a revocable trust
Places his assets of business in revocable trust
He later applies for a loan and uses his business to show he’s good for it
He dies, and the bank realizes most of his wealth is held outside of probate
He wasn’t trying to defraud the bank
Important to note because the trustee owned it, but he thought of it as his own
Where a settlor of a trust retains the power to amend and revoke the trust or power to control the principal and income during his lifetime, may his creditors reach the assets of the trust after his death to the extent that the assets of his estate are insufficient to pay his debts?
The court held that creditors may reach the assets of a settlor’s revocable trust after the settlor’s death to the extent that the settlor, during his lifetime, had access to those assets for his own benefit.
what is the policy consideration the court made in deciding to apply will law to non probate transfers (ie to that particluar non probate transfer)
Policy consideration – could the creditors access the funds if he was alive? Yes, they have a remedy – while a trust is REVOCABLE, creditors of the SETTLOR have recourse against those assets
You can’t chill assets in a revocable trust because as settlor you have control over the funds
So what’s the justification of changing the policy when the trust becomes irreovable only upon settlor’s death
Court reasons there is none
when can creditors go after assests in non probate
after probate has been extinguished
clymer
In 1973, Clara Mayo executed a revocable trust and a new will directing most of her estate to pour over into the trust, designating her then-husband James as a life beneficiary. After their divorce in 1978, Clara did not change the trust beneficiary, and upon her death, the case was appealed to the Supreme Judicial Court of Massachusetts to determine if the Massachusetts statute revoking bequests to former spouses applied to the trust.
The trust is where she specifies who the beneficiaries are
She dies and ex agues the trust should be be kept separate
Argues he gets it all (save the life insurance that she altered to go to Marinanaa)
As a result of divorce, was his interest in trust revoked?
Ie does revocation upon divorce in wills law apply to revocable wills?
From a policy standpoint, should revocation upon divorce apply
Looking at this particular case, court cant see why the same rule should not apply
Unless a contrary intent is expressed, Massachusetts statute, G.L. c. 191, § 9, under which bequests in a will to a former spouse are automatically revoked applies to a revocable trust that is funded entirely at the settlor’s death through a pour over will.
what is an alternative argument to be made in clymer – the pour over will case
She made a change via life insurance after the divorce so by not doing the same via the trust, she wanted him to still have it
what is a pour over will
A pour-over will is a type of last will and testament that directs any remaining assets to a living trust after the testator’s death
what is a unified estate plan (ie like the clymer case)
Trust can dictate where all property is to go by making the trustee the beneficiary of everything, including the will
Keeps everything in one place
