Will Substitutes

Question 1

What is the test for distinguishing a (revocable inter vivos) trust from a will?

Answer 1

Whether the transfer creates some present fide even if it is a future interest subject to divestment)

Question 2

How does a settlor make a pour-over gift from a will to a revocable trust?

Answer 2

A settlor can make gifts by will to a trust established during their lifetime. It may remain unfunded during the settlor’s lifetime but must be clearly identified from language in the will

Question 3

What are will substitutes?

Answer 3

Will substitutes are functionally indistinguishable from a will because the death beneficiary receives assets at the death of the donor and will substitutes convey no lifetime benefits (personal enjoyment) to the death beneficiary during the lifetime of the donor. However, they differ in one way: in a will substitute, the title of the asset transfers to the death beneficiary during the lifetime of the donor, whereas in a will there is no asset title transfer before death of the donor. Because the title is transferred before death, will substitutes avoid probate court.

Question 4

Are revocable trusts valid as will substitutes?

Answer 4

Yes, a revocable trust set up to hold the res in further trust for heirs on the death of the settlor are valid even though the settlor retains the right to revoke, alter, or amend the trust, keeps an income or other interest, retains power of appointment over the trust corpus or names themselves trustee

Question 5

What is a Totten trust?

Answer 5

A bank account depositor declares themself the trustee of the account for a person who is to receive the money at the time of death, but retaining full control over the account in their lifetime. (This is not technically an actual trust nor is it a will.)

Question 6

How is a Totten trust revocable?

Answer 6

By (1) withdrawal of funds, (2) any lifetime act manifesting the intent to revoke, (3) a specific contradictory provision in the will

Question 7

What is a gift causa mortis?

Answer 7

A gift in view of impending death (the donor must be suffering realistic fear of death)

Question 8

What are the delivery and acceptance requirements for gifts causa mortis?

Answer 8

The same as inter vivos gifts – may be accomplished by actual or constructive but not symbolic delivery

Question 9

How can gifts causa mortis revoked?

Answer 9

(1) Affirmative act indicating an intent to revest ownership in the donor
(2) By operation of law if the donor recovers from the condition causing fear of impending death
(3) By operation of law if the donee predeceases

Question 10

Can the donor’s estate creditors reach a gift causa mortis?

Answer 10

Yes