Wills and Trusts Flashcards
Will Validity (Essay Heading)
A will is a written instrument that dictates how a person’s estate is to be distributed upon death. It goes into effect only upon the death of the testator. For a will to be valid there must be: 1) Present testamentary intent; and (2) Capacity. In addition, the will must comply with all the requisite formalities.
Deed (Real Property Cross over)
In order for a deed to be valid there must be: (1) a writing that satisfies the statute of frauds; (2) delivery; and (3) acceptance
Holographic Will Requirements
To be valid, a holographic will must be signed by the testator, the testator must possess testamentary intent, and the material provisions of the holographic will must be in the testator’s handwriting. Material provisions of the will consist of identifying the beneficiaries and the property to be devised.
Capacity (wills)
In California Capacity refers to the testator’s age (18 or over) and mental competence (sound mind).
Capacity - Common Law:
Be 18 or older
Understand the extent of their property
Know the natural objects of his or her bounty
Know the nature of his or her act
Present Testamentary Intent
Refers to the testator’s intent to create a will at the time the instrument is drafted.
Will Formalities / Statute of Wills
The statute of wills dictates what formalities are to be followed in order for a will to be probated. THe specific formalities required depend on what type of will is being executed. There are two types of wills, Attested and Holographic.
Attested Will
A formal or attested will is a written will that, in California, must be 1) signed by the testator and 2) signed by two competent, disinterested witnesses.
Holographic Will
A holographic will is one that is handwritten and unattested. In California a holographic will is valid if the signature and material provisions of the will are in the handwriting of the testator.
Competent Witness
One that understands that the document being signed is a will
Disinterested Witnesses
Two disinterested witnesses are required in California. An interested witness is one who is a beneficiary under the will. Traditionally, if one of the two required witnesses was interested the will could not be probated. In California, the presence of an interested witness does not invalidate the will; however, it merely creates a presumption that the witness procured the devise by fraud, duress or undue influence.
Interested Witness
If the presumption of fraud, undue influence or duress is not rebutted, the witness takes his or her intestate share.
- Be creative here!! How would you make this argument if you represented the witness? Did the witness really have a significant interest in the will? How much would s/he have gotten? Bring up any extrinsic evidence.
Charitable Trusts
Trust that confers a substantial benefit onto society
Rule of perpetuities does not apply
Creation
- Intent to form a trust
- Either through a settlors death or will, or during a testator’s lifetime by declaration of trust or transfer of trust
- Presently existing property
- For legal charitable purpose
Private Express Trusts
A fiduciary relationship with respect to assets or property whereby a trustee holds legal title for the benefit of the beneficiary.
Must be:
- Res
- Beneficiary
- Trustee
- Present intent to form a trust
Cy Pres
The settlor has a general charitable intent and only the mechanism for effectuating that intent is not practicable or possible. A court will attempt to modify the mechanism in order to effectuate this settlor’s intent.
Pour-Over Will
Transfers assets to the trust to ensure that these assets will be subject to the distribution plan in the trust and will also receive the benefit of the trust’s tax reduction provisions. * only one primary beneficiary- the testator’s living trust.
Honorary Trust
A trust that has no ascertainable beneficiary and confers no substantial benefit on society
Totten Trust
The named beneficiary takes whatever is left in a tentative bank account trust at the death of the owner of the bank account.
Spendthrift Trust
When beneficiary cannot alienate their interest such that the interests are protected from creditors unless for necessaries, alimony, child support or government creditors
In short: beneficiary cannot transfer his right to future payment and creditors cannot attach beneficiary’s right to future payments.
Beneficiary cannot transfer their right to future payments of income or principal, and creditors cannot attach rights for future payments unless for necessaries, such as alimony and child support, a judgment creditor who has provided services for the protection of a beneficiary’s interest in the trust or government creditors.
Voluntary Alienation on Spendthrift:
Can the beneficiary ever voluntarily alienate or transfer his right to future payments, notwithstanding the spendthrift provisions?
Answer: No, as a general rule.
This would defeat the terms of the trust.
Þ But sometimes a court will recognize the assignment on the ground that the beneficiary merely has given the trustee a direction or order to pay the beneficiary’s agent or representative, i.e. the assignee.
→ In such case, prior to the time of payment, beneficiary would have the right to revoke the order or direction.
Involuntary Alienation on Spendthrift:
Can creditors ever attach the beneficiary’s right to future payments, notwithstanding the spendthrift provisions?
Answer: No, as a general rule.
Common Law Exceptions:
Preferred creditors can attach the beneficiary’s right to future payments, notwithstanding the spendthrift provisions.
The key is that they are not typical creditors.
Support Trust
Trustee is required to use only so much income as is necessary for the beneficiary’s health, support, and education.
Voluntary Alienation on Support Trust:
Can the beneficiary ever voluntarily alienate or transfer his right to future payments, notwithstanding the support trust provisions?
Answer: No. Why?
To allow any type of assignment would defeat the purpose of the trust and violate settlor’s intent.
Thus, beneficiary cannot transfer his right to future payments in a support trust.
Discretionary Trust
Trustee is given sole and absolute discretion in determining how much, if anything, to pay the beneficiary, if ever.