Will substitutes

Question 1

Will substitutes

Answer 1

1. will substitutes:
   i. life insurance
   ii. joint tenancies or tenancies by the entirety
   iii. inter vivos trusts, bank account trusts
   iv. deeds, contracts
   v. inter vivos gifts
   vi. gifts causa mortis
2. benefits: avoid taxes and probate expenses
3. will substitutes and nonprobate assets are not affected by the will, so will pass to the beneficiary despite any contrary provisions

Question 2

Joint interests

Answer 2

1. surviving joint tenant takes the whole property without probate
2. community property with right of survivorship is treated as a joint tenancy in that
   i. can be severed in the same manner before either owner’s death
   ii. passes directly to survivor outside of probate upon death
   iii. but taxed differently (double stepped up basis)

Question 3

life insurance

Answer 3

1. terms of life insurance control

2. life insurance is not a probate asset

Question 4

deeds

Answer 4

1. a deed deposited in escrow, with delivery conditioned upon grantor’s death, is a valid non-testamentary transfer
2. a deed that is by its terms effective only upon grantor’s death that has actually been delivered to the grantee can be construed as a non-testamentary present transfer of a future interest, subject to a life estate in the grantor
3. revocable transfer on death deeds are recognized in CA:
   i. deed by which an individual may transfer real property to a beneficiary on the individual’s death
   ii. deed must be recorded within 60 days of date of its execution, but need not be delivered to beneficiary
   iii. does not affect or create ownership rights in beneficiary during transferor’s lifetime

Question 5

inter vivos revocable trusts

Answer 5

1. an inter vivos revocable trust revocable by settlor (donor) is valid in CA
   i. valid even if settlor is the sole trustee and sole beneficiary during settlor’s lifetime, as long as trust provides for successor beneficiaries after death

Question 6

government bonds

Answer 6

1. a payable on death designation on a US bond is valid

Question 7

Bank Arrangements

Answer 7

3. payable on death designations on a bank account
   i. POD accounts are valid will substitutes in California by statute (often invalid elsewhere)
   ii. only distinguishable from a Totten trust in that depositor did not say they held the proceeds in trust
4. savings account trusts (Totten trusts) are valid even though trustee (depositor) can withdraw all proceeds for their own use
   i. trust is revoked to the extent of withdrawals made by depositor before their death
   ii. revocation can also be by depositor’s will
   iii. depositor’s creditors can reach the funds during depositor’s life
5. joint or survivor accounts: survivor has an absolute right to all the money
   i. extrinsic evidence admissible to show that the account was merely for convenience and decedent did not intend joint survivor to take all the money
6. multiple party accounts are non-testamentary
   i. multi-party accounts in credit unions, industrial loan companies
   ii. the rights of the beneficiary, survivor, POD payee are not denied because will formalities not followed

Question 8

Contracts

Answer 8

1. pension plan designations: designation of a beneficiary under a pension plan is valid
2. installment sale contracts: designation of a contingent beneficiary under an installment sale contract is sometimes invalid
3. securities registered in beneficiary form:
   i. securities can be registered POD or TOD (transfer on death), such that security is transferred (non-testamentary) to beneficiary upon death of owner
4. other contracts: risk of being struck down as improper will if it violates the Statute of Wills

Question 9

Gift Causa Mortis: Gifts in View of Impending Death

Answer 9

1. important
2. requirements
   i. gifts of personal property
   ii. made in contemplation, fear, or peril of impending death
   iii. with intent to revoke if escape (by donor) from the peril
   iv. actual, constructive (keys), or symbolic (ownership document) delivery
   a. constructive if donor has done everything possible to allow access to the gift
3. last illness presumption: a gift made during last illness of giver is presumed to be a gift causa mortis if illness would naturally give the giver the expectation of speedy death
4. mere abstract fear of death from a future cause is not enough
   i. fear of flying, death in war are not enough, but being pinned down by sniper fire or plane catching fire is enough
5. recovery: if and only if the donor recovers, the gift is revoked by operation of law
   i. gift is not revoked if donor dies, even of a different cause of death
6. gifts causa mortis are revocable by any affirmative act manifesting intent to revoke, or if donee fails to survive donor
7. creditor claims: such a gift is subject to the claims of creditors of donor’s estate