Wills Flashcards
Powers of Appointment
What is the power of appointment & who are the characters?
An authority created in, or reserved by a person, enabling that person to designate, within limits prescribed the creator of the power, the persons who shall take the property and the manner in which they take it. (i.e. permits the income beneficiary to designate the remaindermen)
Donor – creator of POA
Donee – person who is given POA to use
Takers in default – persons who take property subject to the power, if the donee fails to correctly exercise the power
Powers of Appointment
How is a testamentary POA adequately exercised?
A general Will provision (“all the rest, residue…”) exercises all POA held by the donee testator (both general & specific), unless the instrument creating the POA called for its exercise by specific reference in donee’s will.
Ex - “to such of her descendants as Dana appoints by a Will that specifically refers to this power”
Specific reference requires POA to be specifically mentioned - cannot just say “all property over which I have a POA” – takers in default would get property
Will Contests
No-Contest Clauses
(In Terrorem Clauses)
No-contest clauses are given full effect even if there was probable cause to challenge the will.
Exceptions – can contest on grounds that:
Will was revoked by a later will (must have PC – can’t just make that up, need some proof).
NOT for claims that revoked by physical act or was a forgery.
Contest filed on behalf of a minor or incapacitated beneficiary
Construction proceeding to determine will’s terms
Objection to jurisdiction of the court.
Powers of Appointment
Classification of POAs. Which are subject to creditors or elective share?
General POA - donee can appoint the property to themselves, his estate, or his creditors Special (Limited) POA - Donee cannot appoint to themselves, his estate, or his creditors – usually just to limited class named by Donor (“to any one of her descendants”) Presently Exercisable POA - Donee can appoint during donee’s lifetime – in a trust instrument but can also exercise in Will (“during her lifetime”)
This is even if the trust gives instructions on how to distribute the principal on donee’s death if donee does not exercise POA.
Testamentary POA - Donee can appoint only by Will after Donor’s death (“on her death”)
Subject to elective share and/or creditors:
General Presently Exercisable POA - YES
General Testamentary POA – NO (Except for creditors – if donor was also donee & exercises it in favor of his estate)
Special POA – NO
Will Contests
Testamentary Capacity. Lucid interval. Insane delusion.
TESTAMENTARY CAPACITY:
Understand the nature of the act (i.e., he was writing a Will);
Know the nature and approximate value of his property;
Know the “natural objects of his bounty,” and
Understand the disposition he was making
Lucid Interval - Capacity to make a will requires less capacity than required for any other legal instrument so the surrogate court could find that the testator executed the will during a lucid interval.
Insane delusion - T is of sound mind but has persistent belief in supposed facts, which have no real existence & which are against all evidence & probability & produce the exercise of the testamentary act.
Will Contests
Undue Influence
Undue influence - existence of a testamentary capacity subjected to & controlled by a dominant influence of power.
Burden of proof on the will contestant to prove:
Existence & exertion of an influence;
Effect of such influence was to over-power the mind and the will of the testator; and
Produced a will or gift in a will that would not have been executed but for the influence.
Not enough proof:
Mere opportunity to exert influence
Susceptibility to influence (illness, age)
Unequal dispositions among children.
Elective Share Statute
When is surviving spouse disqualified from taking elective share?
Cannot take elective share, intestacy, exempt personal property set-aside, or bring wrongful death action (DISMAL):
Divorce - a final decree of divorce/annulment.
Invalid divorce procured by surviving spouse
Separation decree (NOT agmt) rendered against surviving spouse.
Separation agmt- only bars SS from electing if there is a specific provision waiving rights of election
Marriage was void - as incestuous or bigamous.
AL - Abandonment & lack of support by surviving spouse.
é Remember – separation decree still allows SS to take under the Will
Will Contests
Gifts to Attorneys. Will names Attny as executor.
Where a will makes a gift to one in a confidential relationship (e.g., A-C; child w/ durable POA) AND that person was active in preparing the will, there is an inference of undue influence which, if not rebutted, satisfies the contestant’s burden of proof.
Must prove gift made willingly & freely. If close friend or relative then usually rat’l basis for gift.
Putnam Scrutiny – automatic inquiry by Ct. if gift to drafting attny
Will names drafting attny executor –must give written disclosure to the client saying, (1) anyone can be executor, (2) executor receives statutory commissions, & (3) attny also gets legal fees for representing the estate.
Client must sign Acknowledgement of Disclosure in presence of at least 1 witness other than the attorney/executor.
Effect of failure to comply with the statute - lawyer’s commissions as executor will be reduced by 50%.
Elective Share Statute
When must spouse elect? Who can elect? Can elective share be waived?
Must be filed w/in 6 mos. after Letters are issued by Surrogate Ct.
No estate administration – w/in 2 years of D’s death
Only SS can elect (not her issue) BUT guardian of incapacitated spouse may elect on their behalf w/ Ct. approval.
Waiver – w/ or w/o consideration, before/after marriage, to 1 particular will or T-Sub or to all à must be in writing, signed & acknowledged.
General waiver (ex - premarital agmt) of all rights - waives right to elective share or intestate share but NOT to specific gifts made in Will - must be explicit waiver of such bequests.
Elective Share Statute
What is the effect on the elective share if the decedent is not a NY domiciliary? The effect on property located outside NY?
Decedent not domiciled in NY at death – rt. of election is NOT available to SS unless D expressly states in his Will that the disposition of his RP in NY is to be governed by NY law.
Ex – H, domiciliary of Fla., dies leaving W. Owned property in NY. W cannot claim an elective share w/ respect to NY real estate.
If D is NY domiciliary – property located outside NY still counts toward value calculation of SS’s elective share – even though the Ct. cannot adjudicate ownership of the property (need “ancillary administration” b/c of the “situs rule.”)
Elective Share Statute
Elective Share Trusts
Decedents dying before Sept. 1, 1994, - right to elective share could be eliminated through use of an elective share trust that gave SS a life estate (an income interest for life), as long as at least $50k was given outright to the spouse.
If the sum of (i) outright dispositions of at least $50k plus (ii) the principal of the trust, was at least the 1/3 elective share amount, the surviving spouse could not elect against the Will.
For estates of decedents DYING on or after Sept. 1, 1994 a life estate will not satisfy the elective share entitled.
NOT controlled by date of will execution
Caveat - only kill trust if spouse’s elective share is not being satisfied
Trust is administered as if SS predeceased D & the remainder is accelerated to the beneficiary.
Elective Share Statute
Exempt personal property set-aside.
Items that come off the top before property passes through Will, intestacy or elective share – i.e. not counted toward estate.
Car - $15k
Furniture, appliances, computers - $10k
$15k cash
Animals, farm machinery - $15k
Books, pics, videos - $1k
Maximum allowed = $56k
Elective Share Statute
Consideration Furnished Rule
Surviving spouse has the burden of proof as to the decedant’s contributions to the assets, acquisitions (RP) or the deposits in a joint bank account/tenancy held by the deceased spouse & third party – only “consideration furnished” goes into elective share pot.
DOES NOT APPLY to survivorship estates tra spouses – ½ is automatically a T-sub
Survivorship estates/bank accts. w/ deceased spouse & 3rd party created before marriage - consideration furnished test applies BUT irrevocable dispositions before marriage are not T-subs so only ½ of property’s value is a testamentary substitute – so if showed provided all the consideration only would get ½ considered, but if showed provided 1/3 consideration, that’s all that applies.
T-Subs & Intestacy
H left $100k in bank acct in his name for cousin (Totten). $140 in joint acct w/ friend created after marriage (contributed it all). Tenancy in Entirety worth $120k & intestate property in his name worth $90k. What does wife take under intestacy & under elective share?
$100k (Totten) + $140k (joint acct.) + $60k (1/2 of property w/ W) + $90k (intestacy property) = $390k à x 1/3 = $130k for elective share
Under intestacy, wife takes $60k from Tenancy by Entirety & $90k from intestacy assets à $150k. So this is $20k over the elective share so no need to elect.
If only the Totten & joint acct existed, wife would take nothing under intestacy b/c nothing in H’s name. So wife would have to elect for her $80k.
Elective Share Statute
Non-Testamentary Substitutes
Life insurance proceeds - whether payable to surviving spouse or third party.
½ of qualified pension & profit-sharing benefits
Gifts less than $12,000 even made w/in 1 yr. of death.
Premarriage irrevocable transfers – gift to a friend before marriage
Irrevocable transfers made more than one year before death – transfers in which grantor did NOT retain power to revoke, invade, consume or dispose of principal.
Transfers (irrevocable) with retained life estate made before 9/1/92 & during the marriage.
Elective Share Statute
How is the elective share satisfied from the rest of the estate?
All other beneficiaries contribute pro rata - beneficiaries under the will, of T-Subs or intestate distributees.
Take the amount that needs to be satisfied divided by the remaining assets = ratio to be multiplied times each person’s share.
Ex - W left $300k net probate estate. AT&T stock ($50k) to husband H, $50k to daughter D, $50k to sister S, & residuary estate ($150k) to friend F. No T-Subs. H files for an elective share – 1/3 of $300k = $100k. H takes the AT&T stock so the net elective share to which H is entitled is $50,000.
$50k divided by remaining assets after H takes stock ($250k) = 1/5. D - 1/5 of $50k = $10k, S - 1/5 of $50k = $10k, F - 1/5 of $150k = $30k.
Testamentary Gifts
Motive or conditions in will. Ks relating to wills. Disinheritance.
Condition or motive – if condition, probate denied if not met but if motive for making will probate – argue both
Ks Relating to Wills - est. only by an express stmt in the will that its provisions are intended to constitute a contract between the parties – if survivor breaches, probate Will #2 & then impose a constructive trust in favor of original intended beneficiaries
“Negative Bequest” Rule - words of disinheritance in a will are given full effect, even in partial intestacy – it’s as if PD testator – BUT if anti-lapse applies, kids take
Elective Share Statute
Testamentary Substitutes
Totten Trust - “A, Trustee for B” Bank accounts.
Survivorship estates created on/after 9/1/66
Lifetime transfers with strings attached - transfers with a retained power to revoke, invade, consume or dispose of principal or name new beneficiaries
Irrevocable transfers with retained life estate made on/after 9/1/92
Employee pensions, etc. IF employee designated the beneficiary on/after 9/1/92 - only 1/2
Gifts made w/in 1 yr. of death in excess of $12,000 gift tax annual exclusions.
“Gifts Causa Mortis” - even within the $12,000 exclusion are testamentary substitutes – automatically revoked if donor survives expected peril.
US government bonds & other P.O.D. (“pay on death”) arrangements
Powers of Appointment– property over which decedent held a presently exercisable general power of appointment (but NOT property over which he held a general testamentary power).
Testamentary Gifts
Mistake or ambiguity in Will.
Plain Meaning Rule - if no ambiguity in language, extrinsic evidence NOT admissible to overturn the plain meaning of the will. Latent Ambiguity(misdescription) – EE admissible to cure but if EE does not cure gift fails – can use (1) Facts & Circumstances evidence - evidence about T & family, (2) Testator’s declaration of intent, or (3) stmt to attny who prepared will Patent Ambiguity - mistake on the Face of the Will - EE admissible to cure but T’s declarations of intent to a 3rd party NOT ADMISSIBLE – won’t allow evidence that contradicts what the will said.
Ex – “I give the sum of twenty-five dollars ($25,000) to my brother Bill.”
Elective Share Statute
Elective Share
Elective share = the greater of $50,000 or 1/3 of the net estate
Augmented estate - property owned at death + T-subs
Applies to the net estate after payment of debts & expenses itself but before pmt of taxes.
