Wills and Trusts Flashcards
intestate
Dies without a will
codicil
supplement that amends or revokes a will in whole or in part
Intestate succession
An estate plan developed by state legislature for distributing property when decedent dies intestate (w/o a will)
to take from a decedent, an individual must _____ the decedent
Survive. if they die at same time, must prove by clear and convincing evidence the heir survived him by 120 hours
To calculate spouse’s share if decedent is just survived by spouse, no parents and no descendants
Spouse gets 100%
Calculate spouse’s share if the dead guy is just survived by spouse and their kids together
spouse gets 100%!!
Calculate spouse’s share if dead guy is survived by spouse, they have NO kids together but spouse has other kids
spouse get $150,000 plus half of what’s left
kids born after dad dies
if kid is conceived before but born with 280 days of husband’s death there is a rebuttable presumption that the kid is the husband’s and kid will inherit from husband as if the kid was born before hubs died
How does Per Capita with Representation work to determine intestate share (when dying without a will)
Divide property equally at first generation where there is a member who is ALIVE. Then shares drop down to remaining kids, descendants.
How does Per Capita at each Generation work? (UPC method) to determine who gets what when dying without a will
- divide property into equal shares at first generation where there is a surviving member
- then do not pass deceased member’s share down to offspring but instead pool what remains
- divide what remains among surviving members at next generation.
formal execution requirements for a will
- signed writing
- witnesses
- intent
UPC does not allow oral wills or audio/video recordings
What is required when signing a will
intent and desire to sign. Formal signature is NOT required.
18 yrs old and of sound mind
who must attest the will
Most states require at least 2 witnesses
-testator must sign or acknowledge will in presence of witnesses
witnesses must sign in presence of testator
what are interested witnesses
What is the common law, modern, and UPC approach to interested witnesses
people that have a direct financial interest in the will
At common law- interested witness can not be a competent witness to a will and if they are, the will is not valid
Modern approach- states invalidate only the portion of the will that provided gift to the interested witness beyond what they would have received in intestacy
UPC- eliminated interested witness doctrine
What is the PRESENCE requirement of witnesses to a will
Majority view vs UPC view
Majority view- will must be signed in joint presence of and attested to by 2 witnesses
UPC view- witnesses do not have to be present at same time and T does not have to sign in their presence as long as he acknowledges his signature to them before they sign and they sign within reasonable time
What are the requirements for testator competencey
Competency is measured at the time of signing
Testator meets capacity if he knows:
1) nature and extent of his property
2) the persons who are the natural objects of his bounty
3) nature of the instrument he is signing
4) the disposition being made in the will
Does subsequent incompetence invalidate a will
No
What is required under common law/ majority rule about formalities for wills. How is it different for UPC
Strict compliance - i.e if you forget to sign name as witness, will is invalid
But under UPC- just need “substantial compliance and clearnand convincing evidence the testator intended the document to serve as his will
What is required in Modern View (UPC and minority rule) for compliance with formalities in will creation
Substantial compliance Doctrine-
If a formality isn’t met, a court will admit a will to probate if there is clear and convincing evidence that the decedent INTENDED the document to serve as his will
What is a holographic will
an informal handwritten will. Does not need to be witnessed. Just signed
UPC requires material provisions be in the testator’s writing.
INTENT IS KEY- UPC authorizes looking to extrinsic evidence to establish intent
what does a codicil do
supplements a will. Does not replace underlying will, just amends or supplements it.
Formal codicils must be signed, witnessed
Holographic codicils must be in writing
When can wills be altered or revoked
at any time up until the testator’s death. Can be revoked in full or in part
ways to revoke a will
- creating a new will
- physical act- burning, ripping up, LOST
- operation of law- i.e divorce revokes all will provisions favoring ex spouse
is tearing up a will over the phone with lawyer ok?
No, needs to be conscious presence
Does UPC recognize revival of revoked will?
NO. Need to re-execute a revoked will otherwise if you die before it is re-executed, then estate goes thru rules of intestate succession
What is Dependent Relative Revocation?
= a safety valve for testators who revoke a will on the basis of mistake. Can be a mistake of fact or law
DRR invalidates the mistake and revives the earlier will
“But for the mistake, the testator would not have revoked the will”
if the will refers to another document- i.e sketchbook in desk drawer- can that document be incorporated into the will
Yes- incorporation by reference- a will can incorporate an extrinsic document that is not testimentary in nature if the document is in existence at time of execution, testator INTENDS for it to be incorporated and document is described in will with sufficient certainty to permit its identification
What is the common law view on lapse
a gift in a will would lapse- fail- if the intended beneficiary dies before the testator
what is an anti- lapse statute
Prevents CERTAIN gifts from lapsing (failing) - ie. just gifts to relatives of testator.
- need familiar relationship
- and must be survived by issue
if that is the case, and intended recipient is dead, then gift goes to their issue
What is abatement
if the estate does not have sufficient funds to pay debts or make gifts, the gifts will be reduced (abated) in a specific order.
What happens when property in a will no longer exists at the time of the T’s death (ademption)
IF specifically devised property is not in the estate when T dies, the gift fails but under many statutes, if the T replaced the property then the beneficiary would receive that instead.
How do you prove undue influence over a testator
If the wrongdoer exerted such influence that it overcomes the testator’s free will and causes the testator to make a gift he otherwise would not have made. SODA
S- testator was susceptibel to undue influence
O- Influencer had opportunity
D- Influencer had a disposition to exert undue influence
A- will appears to be a product of undue influence (giving 50% or more to influencer)
Most courts only invalidate portions that are infected with undue influence.
what is the slayer statute
A person who intentionally kills dead guy or who is convicted of abuse or neglect of dead guy, forfeits all benefits with respect to dead guy’s estate including intestate share, elective share etc.
Voluntary manslaughter counts. Accidental/involuntary manslaughter does not bar a gift.
Killing must be felonious and intentional
If the dead guy died w/o a will but gave the child a gift during their lifetime, should the gift be deducted from what the kid would inherit under laws of intestate succession
Cl- lifetime transfer is subtracted from child’s intestate share
Majority rule- lifetime transfer consider a gift, ignored when computing intestate share unless there is evidence to show decedent intended otherwise.
Define Trust, how trusts are created - start of trust essay.
A trust is a fiduciary relationship where a trustee manages/protects/invests certain property and iany income derived from it for the benefit of one or more beneficiaries.
To create a trust, the grantor must have INTENT to creat the trust. A trust is valid as long as it has a trustee, an ascertainable beneficiary and assets
Is a trust presumed revocable or irrevocable
In most jurisdictions, a trust is presumed REVOCABLE unless it expressly states it is irrevocable.
Traditionally, a trust was presumed irrevocable.
Elements to create a valid private trust
- Capacity
- INTENT to transfer ownership of property
- To trustee for benefit of one or more ascertainable beneficiaries (can be unborn kids)
- for a valid purpose
Consideration is NOT required.
What is the duty of prudence for a trust and what duties does it include
- duty to act as RPP and treat trust property as if it were your own
Includes:
Prudent investor Rule- reasonable caution, care, skill when investing
Duty to diversify
Duty to make property productive- maximize income from investments
Duty to be impartial- to interests of all beneficiearies
What is the Trustee’s Duty of Loyalty and how is it violated
= duty to administer trust in good faith and to act reasonably when investing, act in best interest of beneficiaries.
Violated thru self dealing- buying/selling trust assets or borrowing from trust
if there is evidence of self dealing by the trustee is there a breach of the duty of loyalty
Yes, b/c self dealing is a per se breach of the duty of loyalty- no further inquiry into the trustee’s reasonableness or good faith is required
What is the remedy for a breach of the duty of loyalty thru self dealing
Beneficiaries can set aside the transaction or ratify the transaction and recover the profits from it.
Do anti lapse statutes apply to trusts?
No. So if a gift to an issue fails b/c person is dead usually their kids or descendants will not take under the trust. If anti lapse applies, then their issue can take under trust
What happens when future interest holder disclaims their interest? two scenarios
1. if holder of future interest disclaims interest
2. if income beneficiary disclaims interest
- if holder of future interest from trust disclaims interest, then trust principal reverts back to testator’s estate or if anti lapse rules apply, it goes to their issue.
- If income beneficiary disclaims interest trust is automatically distributable to remainder beneficiary.
what is a vested remainder
remainder is vested if holder is ascertainable and there are no contingent conditions prior to receipt
Parties to a trust
Settlor= creator, Beneficiary= must be definite and ascertainable- gets benefits of trust
Trustee- manages the trust.
Same person can’t be trustee and sole beneficiary
When can the settlor (creator) end the trust
-if settlor is still alive
-after settlor has died
Settlor can terminate the trust if all beneficiaries are in existence and all agree to the termination
After the settlor dies, it can be terminated if ALL beneficiaries in existence agree AND there is no material purpose of the trust yet to be performed
Types of trusts
Discretionary trust, support trust, spendthrift trust, charitable trust, mandatory trust
What is a discretionary trust
Trustee is given complete discretion regarding whether or not to give payments of income/principal to beneficiary.
If discretion to pay is NOT exercised, creditors can’t come after beneficiary
Beneficiary lacks standing to challenge actions of trustee for discretionary trust
What is mandatory trust
trustee has no discretion.
Trust covers when trust property is to be distributed
What is a support trust
Trustee must pay what is necessary for beneficiary’s support
what is a spendthrift trust
expressly restricts beneficiary’s power to voluntarily or involuntarily transfer his equitable interest
Creditors can’t reach trust interest unless for child support, basic necessity providers or tax lien holders
What is a charitable trust
Trust created for charitable purpose - i.e poverty, education, religion, health. Must not identify individuals by name.
Charitable trusts are NOT subject to rule against perpetuities
How can a charitable trust be modified if that charity no longer exists
Thru the doctrine of Cy Pres- which allows the court to shift the trust to a similar charity AS LONG AS THE SETTLOR had GENERAL not specific charitable intent. So settlor couldn’t have specified the $ to just one particular college, but if he wanted it to benefit college ed in general, can shift it to diff college if original one no longer exists
Can a trust be created for any purpose
Yes, as long as not illegal or contrary to public policy.
Trusts that provide for single person only as long as they don’t get married may be upheld if intent was to provide support before marriage. Restriction on surviving spouse remarrying is likely to be upheld
For trust beneficiaries, what is the requirement
They must be identifiable. Can look to outside writings to identify them.
Exeception: “my friends” or “coworkers” or “unborn kids” or “my brothers” or “my grandkids” or for charities. i.e indefinite class is ok unless the trustee must distribute equally to all members- that is invalid
Do trusts need to be in writing
NO, can be oral , in writing or intent manifested by conduct
Parties to a trust- types of beneficiaries
Income beneficiaries- get income from trust like rent from RE owned
Remainder beneficiaries- get trust principal upon termination of trust
Are trust provisions that say you can’t get married and get the trust usually upheld
No, usually contrary to public policy. Could be upheld if the motive was to provide support for beneficiary while B is single. But generally restrain on marriage is not permissible
Duty of loyalty trustee rules for essay
A trustee is bound by a range of fiduciary duties including the duty of loyalty. When a trustee personally engages in transaction involving the trust property, a conflict of interest arises between the trustee’s duties to the beneficiary and her own personal interest. A trustee buying or selling trust assets is considered self-dealing. When self-dealing is established, no further inquiry into the T’s good faith or reasonableness is required b/c self-dealing is a per se breach of the duty of loyalty. When this duty is breached, any B has standing a/ trustee if his interests are violated. He can set aside the transaction or ratify and recover profits from it.
Essay rules regarding the prudent investor act
The Uniform Prudent Investor Act requires the trustee to act as a prudent investor would when investing his own property. The trustee must exercise reasonable care, caution and skill and make informed decisions about the investment scheme or delegate such decision making to an investor. IN assessing whether a trustee has breached this duty, factors considered include:
1. distribution requirement of the trust
2. general economic conditions
3. role the investment plays in relationship to the trust’s overall portfolio
4. the trust’s need for liquidity or income
The trustee must diversify the investments to spread risk of loss but investing in one mutual fund may be sufficient if the fund is diversified.
What happens if trust goes to “all my children” but one of the kids is dead already.
In states that have adopted the UPC, a dead child’s descendants can take their share by representation. If there are no descendants, the share of dead person is divided among rest of recipients.
When is a disclaimer of an interest from a trust effective
If it is in writing and made within 9 months of dead person dying. Then that person who disclaimed the interest is considered to have predeceased the dead guy and their share goes to other siblings
Can settlor make directives to trustee as to how the trust is invested
Yes but it doesn’t absolve trustee of liability to beneficiaries. Still have duty to diversify, invest wisely, etc..
How long does a durable health care power of attorney last and what does it allow for.
An agent acting under a durable health-care power of attorney (POA) is authorized to make health-care decisions on behalf of the principal whenever the principal lacks the capacity to make a decision herself. A duly appointed agent may make decisions on behalf of the principal without the concurrence of the principal’s relatives. A durable power is not dependent upon a particular diagnosis and remains in effect until and unless rescinded by the principal
Are people acting under a durable power of attorney barred from civil liability
Typical health-care durable powers statutes provide that agents acting in “good faith” are immune from civil suit (such as a wrongful death action).
Does a death resulting from a Do Not Resuscitate order quality for the Slayer statute and prevent someone to take from the dead person’s will
most durable powers statutes specify that a death resulting from the withholding of treatment at the agent’s directive is not to be treated as a homicide or an intentional taking of the patient’s life
two duties required by trustee
Duty of loyalty & duty of care.
what is a support trust
If a trustee is to make payments to the beneficiaries of the trust as is necessary for their support, then a support trust exists. In this context, “necessary” is not limited to bare essentials, but rather includes maintaining the standard of living to which the beneficiary is accustomed, as well as support for the beneficiary’s spouse and children.
Note- can have a trust that is a support and discretionary trust in one.
how and when can a court modify a trust and does the court need consent of beneficiaries
A court may modify a trust if events that were unanticipated by the settlor have occurred and the changes would further the purposes of the trust.
Change to the trust must be consistent with settlor’s intention and the court does NOT need to seek beneficiary consent to make the modification
court may modify the terms of a trust that relate to the management of trust property if continuing the trust on its existing terms would be ineffective or uneconomic.
Settler and beneficiaries must consent for changes to irrevocable trust
IS a provision in a trust preventing transfer of interest until a set age permissible
Yes
How can a trust terminate on its own
if it is time limited or if there is a loss of purpose- i.e it was set to pay for college and the kid graduated
Omission of a child in the will
If the testator dies after the child had been born, and the will was made before child was born, omission of the child will be deemed accidental.- may be able to get an intestate share under omitted child statute. Analyze whether the omission of the kid was intentional, if they are provided for some other way, note- presumption is that omission of child is accidental.
in what types of trusts can creditors NOT reach the assets of the trust
- support trust- creditor can’t reach assets AND
spendthrift trust- unless it is child support or tax creditors. And in some jurisdictions creditors who provided beneficiary with necessities such as health care can reach the trust for unpaid debt.
For spendthrift trust, beneficiary’s interest is also not reachable in bankruptcy broceedigs.
stock split- common law vs upc
Common law - beneficiary doesn’t get stock split. MPC, they get the stock split added to what ever stocks they were originally supposed to get.
Bequeathing a specific home in a will that you sold at time of your death
In common law, if the item no longer exists, named beneficiary gets NADA. POOF! b/c of ademption. But this only applies if you said in your will that A gets the home at 321 x avenue. If you just said MY HOME goes to A, then it isn’t an issue.
your new home would go to residue recipient.
In modern, UPC, they get different home u bought with the funds- replacement property
in a will, can a person change the recipient of their life insurance policy?
No- it has to be changed with life insurance co.
in Trusts, special duty of trustee within duty of care
Duty of Prudent Administration- to diversity, make wise investments of the portfolio as a whole, administer the trust as a prudent person would using reasonable care, skill and caution.
if a trust is REVOCABLE, then the Settlor can do what
change the express terms during their lifetime, ie. direct the trustee to do something different with principal income
for a discretionary trust, when is there a violation/abuse of discretion
Failure to distribute trust income based solely on personal motive/bias
Even when a trustee has complete discretion, their actions will be reviewed for abuse of discretion esp if trustee’s decision is based on personal reasons totally unrelated to Settlor’s goals
if the income of the trust is distributed to the beneficiary, can the creditors get at it
Yes. If it is not distributed, creditors can not get at it.
3 limited situations where creditors can reach trust money if there is a spendthrift provision
- child support
- tax debt
- for debts for necessities
a gift in a trust to “remaining/surviving children” remains open until when?
at least one kid is entitled to possession or settlor dies
if the beneficiary of a trust is dead, does anti lapse apply so the beneficiary’s kids can get the money
In most states, anti lapse statutes don’t apply to trusts. But under UPC, anti lapse would be applied and gift would go to descendants of beneficiary
issue vs heirs
Issue= ALL genetic descendants
Heirs= broader- includes spouses, cousins, aunts, uncles
if an anti lapse provision in testator’s will conflicts with anti lapse state statute, which to use?
the one in the will
remember for anti lapse for a will- the beneficiary has to be …
close blood relative to testator and had issue who survived
special power of appointment for a will
it allows someone the testator designates to then decide who gets what. Power of appointment allows the holder to distribute some or all of the trust property WITHOUT regard to the trust provisions.
A special power of appointment EXCLUDES the person with that power from giving themselves trust property though. If the special power of appointment limits who the person can give trust/will property to- the person must stick to those limits.
omitted spouse in a will
if they signed prenup waiving their right to receive in the will, then it is ok for them to get nothing. But if the dead guy changes his mind and gives something to spouse that signed prenup to get nothing, that spouse can then also take from the will
Charitable trust
no named beneficiaries, has to be for charitable purpose, avoids rule against perpetuities
Honorary trust
Not for a charitable purpose, no named beneficiaries needed. Two types- animal trusts and non charitable purpose trusts.
Non charitable purpose trust must comply with RAP- ie. be enforced in 21 years
what in a trust allows the settlor to specify certain people with the power to make distributions
a special power of appointment
how to start a trust essay
An express trust is created as a result of the expressed intention of the owner of the property to create a trust relationship with respect to the property. A private express trust clearly states the intention of the settlor to transfer property to a trustee for the benefit of one or more ascertainable beneficiaries
what would make a testator’s handwritten additions to a will legit
If they are signed and witnessed
