Will rules of construction Flashcards
Specific gift:
Real or personal property.
Testator’s intent is to devise a specific item that can only be satisfied by the PR delivering that specific item.
Examples:
O devises BA to A
O devises his 2014 mazda 3 to B.
If only owns 1000 shares of a stock and O devises 1000 shares to B, then specific or “my 1000 shares.”
General gifts:
Usually personal, but can be real property.
Testator’s intent is for the executor to satisfy this intent out of the general assets of the estate (those not used to pay debts and not used to satisfy specific gifts.)
Most common is pecuniary gift (cash)
Marital gift (in QTIP) is a general gift because $ amount determined by the formula to reduce the tax base to the excludable exemption amount.
We authorize the executor to fund this amount in “cash or in kind” so that he doesn’t have to sell assets to fund. Value of those items is as of date of distribution.
Residuary gift:
What is left over after satisfying debts, specific, and general gifts. Goes to the residuary beneficiaries.
Most of the time the residuary is the largest, so primary beneficiary.
120 hour rule:
120 hour rule applies to wills, but the will can change the term because testator’s intent controls (most well drafted wills negate the 120 hour rule and change it to 30 or 60 days)
For tax reasons, never want to exceed 6 months.
Disclaiming:
Beneficiary under a will and heir at law can refuse to accept the disposition by disclaiming the property. If statutory disclaimer, makes it as if the disclaiming heir or devisee predeceased O!
Why disclaim?
Tax: if B wants to gift to his child, b, because he doesn’t need or want the property, it would be subject to gift tax unless he disclaims.
No need or want to have the property
Don’t usually draft around disclaiming, just reality.
Effect of subsequent divorce (after execution before death):
Most states now have statutes that state that upon divorce, all provisions of a will executed during marriage in favor of an ex-spouse are void.
Texas also voids provisions in favor of the ex-spouses relatives that aren’t related to the testator (step-kids). If they want to continue to favor, must specifically overrise.
Void provision in favor of ex-spouse doesn’t revoke the whole will unless the whole estate is left to the ex-spouse.
Treat ex-spouse as pre-deseasing!
Apportionment:
If the estate is large enough to trigger a state tax, the tax will be apportioned to be a pro rata share (except for spouses and charity). This is the default rule and can (SHOULD) be modified in the will.
Contents rule: Rule of specificity:
Rule of specificity: If gift of real property, presumption is that the gift does not include personal property.
The contents of the desk do not pass to the son. Common to specify in a will that the contents or included.
Pretermitted children:
No forced heirship, so a parent may intentially disinherit one or more of the parent’s children. So, to protect a child from an accidental or inadvertant disinheritance, state legislatures have enacted states that may provide a forced share of the parent’s estate for a pretermitted child under certain circumstances.
A child must be born or adopted after the testator executed the will to receive a forced share as a pretermitted heir.
Best way to intentionally disinherit is to expressly state in the will that the person or class is disinherited.
Ademption by satisfaction:
Ademption by satisfaction is the failure of a testamentary gift because the testator has already transferred the property ot the beneficiary between the time of will execution and time of death. (Analogous to the advancement concept in intestate succession.)
Usually only residuary or general gifts. Both real and personal property.
Burden of proof in TX is on the residuary to prove ademption by satisfaction
Ademption by extinction:
Ademption by extinction refers to the failure of a specific gift because the property is not in the testator’s estate when the testator dies. Specific gifts ONLY. Could have been sold, given away, consumed, stolen, or destroyed.
Abatement:
If we don’t have enough cash to pay all of the debts (which is typical) have to sell assets to raise the cash. The abatement process tells us the priority of what to sell to satisfy the debt.
BUT: A decedent’s intent expressed in a will controls. If large gifts (100k to grandchild) want to give the executor discretion to fund the gift in cash or in kind (so could fund with 100k worth of stock. Valued at the date of distribution)
Lapse:
Tesatamentary gifts intended for a beneficiary who died before the testator will not take effect; the gift lapses. If the gift lapses, the gift is void!
May also lapse if they disclaim or if biologically survived but legally predeasesed (didn’t meet the survival period)
Apply legal fiction that if they did not meet the survival rule, they predeceased so the gift lapsed.
Anti-lapse statutes:
Anit-lapse does not apply when there is an express condition of survivorship.
Unless the gift is a class gift, if the beneficiary is a descendant of the testator or the testator’s parents, the descendants of the beneficiary take the gift. The alternative takers are inheriting in their own right. They are taking directly from the testator NOT the dead guy.
Antilapse for residuary bens: Modern statute overrides CL and says surviving residuary ben gets it all.
Right of Exoneration:
Specifically devised or bequeathed property is often subject to encumbrances. The beneficiary takes subject to debt unless the will expresses otherwise IF the will was executed on or after September 1, 2005. If before, then the beneficiary takes free of the debt and the debt is paid out of the residuary.
