Week 12 Flashcards
What is it called when there is no contingent beneficiary in a trust?
No trust, called merger
What happens if a trust doesn’t name a contingent trustee?
Court will appoint a trustee
Who does the trustee have a fiduciary duty to while the trust is still revocable?
the settlor
Who does the trustee have a duty to once the trust becomes irrevocable?
the beneficiaries
What is Farkas v. Williams about?
Facts?
Issue?
Holding?
Rationale?
Is this still the law? More?
trusts
The deceased, Albert B. Farkas, created purchased stock and held it in the form of a trust for a beneficiary, who was entitled to the stock in the event of Farkas’s death. He executed trust declarations at the time of the purchase of each stock. After Farkas died, the circuit court held that the declarations were invalid testamentary dispositions.
Whether a contingent beneficiary can sue the trustee why the settlor is still alive?
Yes, contingent beneficiary can
legal fiction
No; contingent beneficiaries have no standing until the settlor dies
What is Linthicum v. Rudi about?
Facts?
Issue?
Holding?
Rationale?
Relation to Farkas v. Williams?
What should Ernette and Myrna have done instead of challenging the trust?
trusts
In 2002, the settlor executed a will and a revocable inter vivos trust. The settlor named herself trustee. The settlor named her brother and sister-in-law the primary beneficiaries of the trust upon her death. She also named the brother and sister-in-law successor trustees upon her death or incapacity. In 2004, the settlor executed a new will and a restatement/amendment to the trust. The amended trust replaced the brother and sister-in-law as successor trustees with a nephew. The brother and sister-in-law filed a complaint alleging that the amended trust was a product of incapacity and/or undue influence. The trial court granted the nephew’s motion to dismiss the complaint.
Does beneficiary have standing to sue settlor while trust is revocable?
No
Settlor would just revoke and revise; would be inefficient
Adverse ruling
Ask the state, as guardian, to change the trust under undue influence
What about will statutes applying to trusts? (4)
Examples of the second? (3)
stuff about creation and revocation of wills do not apply to trusts
rules of construction and substantive restrictions on testation do apply to trusts
(omitted spouses; omitted children; revocation by operation of law)
What is In re Estate and Trust of Pilafas about?
Facts?
Issue? (2)
Holding? (2)
Rationale? (2)
trusts
Pilafas created a trust in which eight nonprofit organizations were to receive a portion of the trust property upon his death. The remaining portion was to go to his wife and other stated relatives. He amended the trust twice and simultaneously executed a will at the same time that he amended the second trust. The attorney did not retain the originals of Pilafas’s will but to the best of his knowledge, gave the originals of the trust agreement, the amendments and the will to Pilafas. Pilafas kept meticulous records but his will and the trust with amendments could not be found among his personal things at death. Pilafas had a room filled with important documents including photographs and old divorce papers. After Pilafas died, his son sought a determination that Pilafas revoked his trust agreement and will. The trial court held that Pilafas had revoked his will and trust. The remainder beneficiaries appealed the decision of the trial court that Pilafas revoked his inter vivos trust and will and died intestate.
Is the will revoked? Is the trust revoked?
Yes; No
Presume will has been revoked when can’t find it, not enough to claim that it looks like beneficiary may have destroyed the will; did not deliver written revocation to trustee, which was the right reserved in the trust
Suppose that Pilafas had executed a subsequent will that expressly revoked the inter vivos trust, and that this will is found among Pilafas’s papers at death. Does it revoke the trust? Has it been delivered to the trustee?
Yes, because he was the trustee (must have delivered it to himself)
Suppose that Pilafas had executed a subsequent will that expressly revoked the inter vivos trust, and that this will is found among Pilafas’s papers at death. Suppose that a bank were trustee. What result?
No revocation
Suppose Pilafas tore both his will and trust into many pieces.
What result as to the will? What result as to the trust? Why?
Will is revoked, but not the trust
trust’s revocation is by the terms of the trust, not by will statute
What happens when a trust instrument is silent about revocation?
Silent with regard to creation?
will look to will statutes
won’t look to will statutes
What is State Street Bank and Trust Co. v. Reiser about?
Facts?
Issue?
Holding?
Rationale?
trusts
Wilfred A. Dunnebrier created an intervivos trust and reserved the power to amend or revoke the trust, and the right during his lifetime to direct the disposition of principal and income. Dunnebrier subsequently applied for and received a loan from State Street Bank for $75,000. At Dunnebrier’s death, the loan had not been paid and State Street Bank sought to reach the assets of the trust.
Whether a creditor may reach the assets of a deceased settlor’s trust if he created a trust during his lifetime and reserved the right to amend and revoke, or direct payments to himself, even though the trust has living beneficiaries.
Creditor can reach them
Creditor can invade a trust set up by a debtor b/c of public policy; It violates public policy for an individual to have an estate to live on but not an estate to pay his debts with. The creditors may reach the assets of the trust to the extent that the debt is not satisfied by the estate. The creditors may not reach any amount that the settlor could not have used for his personal benefit during his lifetime.
What is Cook v. Equitable Life Assurance Soc’y about?
Facts?
Issue?
Holding?
Rationale?
trusts
Douglas Cook named the appellant, Doris Cook, the beneficiary of his life insurance policy. When he divorced, he executed a will leaving his insurance policy benefits to his new wife. However Cook failed to notify the insurance holder that he wanted to change the beneficiary of his policy.
Whether a testator may change the beneficiary of his life insurance policy through a will even though it does not comply with the prescribed method in the insurance policy.
No; cannot change
A testator must comply with the rules of the insurance policy to effect a change of beneficiary. Strict compliance with insurance policy requirements is necessary to change a beneficiary under the policy. The insurer, the insured, and beneficiary should be able to rely on the certainty that policy provisions relating to the naming and changing of beneficiaries will control.
What is a pour-over will?
Why is this useful?
Gives everything not in the trust, to the trust
so you don’t have to update the trust continuously
