Wills and Trusts

Question 1

Abatement

Answer 1

Abatement is the process of reducing gifts when the assets of the estate are insufficient to pay all debts and gifts. The court will abate the gifts in the following order: property not disposed of by will (intestate property), residuary gifts, general gifts (non-relatives, then relatives), and specific gifts (non-relatives before relatives).

Question 2

Acts of Independent Significance

Answer 2

A will may dispose of property by reference to acts and events that have independent legal significance apart from their effect in the will.

Note - this comes up when there’s an issue of introducing extrinsic evidence to interpret the will (i.e., “to my employees at the time of my death; extrinsic evidence can show who the employees were at the time of death)

Question 3

Ademption

Answer 3

Ademption applies where a specific gift devised has changed form from that identified in the will or no longer exists. Traditionally, the beneficiary of the gift takes nothing. However, modernly and in California, courts will examine the testator’s intent at the time he disposed of the specific gift. If there is evidence the testator intended for the beneficiary to receive the gift, the court may treat it as a general gift or trace the gift to its new form.

Example - you were supposed to get a condo that was sold, you can ask the court to trace the funds to the bank account they were placed in

Question 4

Advancement

Answer 4

If a person dies intestate, property that the testator gave to their heir during lifetime is treated as an advancement against that heir’s share of the intestate estate if the decedent declared and the heir acknowledged such in a writing.

Question 5

Ambiguities in the Will

Answer 5

A court will only look to the four corners of the will to interpret the terms; no extrinsic evidence is admissible. However, extrinsic evidence may be introduced if a patent or latent ambiguity can be shown.

Example - testator leaves property in his will to “his stepson.” A court will admit extrinsic evidence to determine who his stepson is.

Question 6

Capacity

Answer 6

A testator must be at least 18 years old and have mental capacity such that he understands the nature of the testamentary act, nature and situation of his property, and remembers and understands the relations with family members affected by the will.

Question 7

Charitable Trust

Answer 7

A charitable trust is one that has a stated charitable purpose and exists for the benefit of society at large. An ascertainable beneficiary is not required for a valid charitable trust.

Question 8

Codicil

Answer 8

A codicil is an instrument made after a will has been executed that modifies, amends, or revokes the will. A codicil must satisfy the same formalities as a will or holographic will. Execution of a codicil republishes the will, meaning courts will consider the original will to have been executed on the same date as the codicil.

Question 9

Confidential Relationship (Wills)

Answer 9

A presumption of undue influence arises when the principal beneficiary of the will has a confidential relationship with the testator, the principal beneficiary participated in the drafting of the will, and the gift to the beneficiary was unnatural.

Question 10

Choice of Law

Answer 10

A written will is validly executed if its execution complies with the law of the state where the testator is domiciled at the time of execution of the will or domiciled at death. If the will was not validly executed in another state, but the decedent is domiciled in California and dies in California, the will is valid as long as it complies with California requirements.

Question 11

Curing Invalid Will - Codicil

Answer 11

A valid codicil executed after the original will cures any problems that existed at the execution of the will, including interested witnesses.

Question 12

Cy Pres

Answer 12

When a charitable objective becomes impossible or impracticable to fulfill, the court may apply the doctrine of cy pres depending on whether the charitable intent was specific or general. The doctrine of cy pres substitutes another similar charitable object that is as close to the settlor’s intent as possible. If the doctrine will not fulfill the settlor’s intent (i.e., specific intent), the court will apply a resulting trust.

Question 13

Deed (Will Substitute)

Answer 13

A deed of property can serve as a will substitute for transferring property upon the death of the landowner. If a grantor delivers a deed to a third party with instructions to give the deed to a person upon the grantor’s death, the deed will serve as a will substitute and effect transfer of the property.

Question 14

Demonstrative Gift

Answer 14

A demonstrative gift is a general gift that specifies the property or a particular fund from which the gift should be made.

Question 15

Dependent Relative Revocation

Answer 15

Courts will apply the doctrine of dependent relative revocation (DDR) to revive a valid will if the testator revoked the first will on a mistaken belief that their second will would have been valid. It must be shown that the testator would not have revoked the first will but for this mistaken belief.

Question 16

Discretionary Trust

Answer 16

A discretionary trust gives the trustee discretion to distribute or withhold payments, principal, or income to the beneficiary.

Question 17

Duties of the Trustee

Answer 17

A trustee has a duty to account and inform, not delegate his trustee duties, be impartial, use due care, which includes the duty to make informed decisions and diversity assets, segregate trust funds, be loyal, prudently invest, defend the trust, and enforce claims of trust property.

Mnemonic AND I DID SLIDE (account/ not delegate/ impartial/ due care/ informed decisions/ diversify/ segregate/ loyalty/ invest /defend/ enforce)

Question 18

Duty to be Impartial

Answer 18

A beneficiary must be impartial toward each beneficiary.

Question 19

Duty Not To Delegate

Answer 19

A trustee must not delegate his duties to others. Modernly, a trustee may delegate if he exercises due care in selecting and overseeing the agents.

Question 20

Duty of Due Care

Answer 20

A trustee must use due care and act as a reasonably prudent person when dealing with trust affairs. This includes the duty to make informed decisions about and diversify investments.

Question 21

Duty of Loyalty

Answer 21

A trustee must remain loyal to the beneficiaries, refrain from self-dealing in the trust assets and avoid conflicts of interest.

Question 22

Duty to Defend

Answer 22

A trustee must defend actions that may result in a loss to the trust.

Question 23

Duty to Diversify Investments

Answer 23

A trustee is required to minimize risk to the trust by adequately diversifying assets.

Question 24

Duty to Enforce

Answer 24

A trustee must enforce claims that are part of the trust property.

Question 25

Duty to Account and Inform

Answer 25

A trustee must regularly report to the beneficiaries with a statement of income and expenses of the trust, even if not requested. Additionally, beneficiaries are entitled to an accounting upon request.

Question 26

Duty to Make Informed Decisions

Answer 26

A trustee must perform responsibilities with due diligence required to invest trust assets after properly investigating and developing knowledge of the investment landscape.

Question 27

Duty to Prudently Invest

Answer 27

A trustee must prudently invest the trust property to make it productive for the beneficiaries. Common law utilizes a variety of statutory lists of investments, whereas the Uniform Prudent Investor Act (UPIA), adopted in a majority of jurisdictions, provides that a prudent investor’s performance is measured in the context of the entire trust portfolio.

Note - this could come up if the trustree makes one really bad investment and ends up losing the money

Question 28

Duty to Segregate

Answer 28

A trustee must not commingle the trust funds with his own.

Question 29

Exceptions to Spendthrift Trusts

Answer 29

While spendthrift clauses are generally valid, an exception usually applies to i) children and spouses entitled to support, ii) those providing basic necessities to the beneficiary, and iii) holders of federal or state tax liens.

Question 30

Exoneration

Answer 30

Exoneration applies when a gift of property is subject to an encumbrance and the will requires the encumbrance be paid off such that the devisee takes the property free and clear. The order of abatement applies to exoneration, but specific gifts cannot abated for the purpose of exoneration.

Question 31

Private Trust

Answer 31

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. Formation of a valid trust requires a settlor, his intent to create a trust, identifiable property (res), a valid purpose, and an ascertainable beneficiary.

Question 32

General Gift

Answer 32

A general gift is a gift from the general assets of the estate that does not include specific property.

Question 33

Holographic Will

Answer 33

A will that does not comply with will formalities can still qualify as a valid holographic will if the signature and material provisions are in the testator’s handwriting, provided the testator intended to make a will.

Question 34

Incorporation by Reference

Answer 34

Any separate document may be incorporated into a will by reference if the document is in existence at the date of the will, there was an intent to incorporate the document, and it is sufficiently described and identifiable in the will.

Question 35

Insane Delusion

Answer 35

An insane delusion is a belief for which there is no factual or reasonable basis, but the testator believes it despite all reason and evidence to the contrary. If it is shown that the testator has an insane delusion, it must also be shown that but for this delusion, the testator would not have disposed of his property in the way he did (i.e., the delusion caused the testator to make the disposition).

Question 36

Integration

Answer 36

Papers are integrated into the will if they were present at the time of execution and the testator intended them to be part of his will.

E.g., folded together, stapled, etc.

Question 37

Intent

Answer 37

The testator must have present testamentary intent.

Question 38

Interested Witness

Answer 38

A person who takes under a will and is a witness creates a rebuttable presumption of undue influence, unless there were two other disinterested witnesses.

Question 39

Issue

Answer 39

Issue refers to the lineal descendants of the testator, including children, grandchildren, and great-grandchildren. Adopted children are treated the same as non-adopted issue.

Question 40

Lapse and Anti-Lapse

Answer 40

Under common law, if a beneficiary predeceased the testator, the gift to the beneficiary lapsed. Under modern anti-lapse statutes (applicable in California), if the beneficiary was a blood relative of the testator, the beneficiary’s surviving issue will take in their place.

Question 41

Liabilities of the Trustee

Answer 41

A trustee is personally liable for violating his fiduciary duties, torts committed by him and his agents within the scope of his trustee duties, and for contracts made within the scope of his trust supervision.

Question 42

No Contest Clause

Answer 42

A no contest clause penalizes a beneficiary if he contests the instrument and will be enforced only if it is a direct contest brought without probable cause.

Question 43

No Further Inquiry

Answer 43

When a trustee engages in self-dealing, an irrebuttable presumption is created that the trustee breached his duty of loyalty. There is no further inquiry into the trustee’s good faith or reasonableness. Even when self-dealing is authorized (by settlor, court order, or all beneficiaries), the transaction must be reasonable and fair to avoid liability for beach.

Question 44

Omitted Children (Wills)

Answer 44

Omitted children will receive an intestate share if born or adopted after the will was made unless they were intentionally omitted, provided for outside the will, or the decedent devised substantially all of the estate to the other parent of the omitted child.

Note - if you see this in an essay actually calculate the intestate share so you can accurately describe how the remaining assets are divided

Question 45

Omitted Children (Trusts)

Answer 45

A child who is omitted from a trust can force an intestate share if they were born/adopted after the trust was created, the settlor mistakenly believed the child was dead or never existed, and they were not intentionally omitted from the trust. A share will not be forced if the child was provided for outside the trust or the settlor left substantially all of their estate to the child’s other parent.

Question 46

Omitted Spouse

Answer 46

An omitted spouse will receive an intestate share if they were married when the will was executed unless they were intentionally omitted, provided for outside the will, or waived their right to a share in a valid agreement.

Question 47

Intestate Succession

Answer 47

Intestate succession applies when a decedent dies without leaving issue, or their will does not dispose of all their assets. The assets are distributed in the following order - issue, parents, issue of parents, grandparents, and so on, until the property escheats to the state.

Question 48

Per Capita Distribution

Answer 48

If the surviving issue are all of equal kinship, the property passes per capita.

Note - this method CANNOT be used if the surviving issue are NOT all of equal kinship

Question 49

Per Capita with Representation

Answer 49

If the surviving issue are of unequal kinship, per capita with representation is used. The issue of any predeceased children stand in the place of the deceased child.

Steps
1. Divide the estate equally at the first generation where someone has survived the decedent
2. If there are deceased members at that generation, their shares drop down to their surviving issue (representation)
3. If a deceased member has no surviving issue, they take no share

Example - A (the decedent) dies, and his children B C and D are dead. B’s child E is dead, but is survived by J. C’s child F is alive. D’s child G is dead, survived by two children (K and L). D’s child H is alive. D’s child I is dead and has no issue.

Because there are two living grandchildren of A (F and H and two children represented by issue (E and C), there are four shares to split. Since I has no issue, he takes no share.

Accordingly, F takes 1/4, H takes 1/4, J stands in the place of E and takes 1/4, and K and L stand in the place of C and split his 1/4, each getting 1/8.

Question 50

Per Stirpes

Answer 50

In a per stirpes distribution, the estate is distributed equally among beneficiaries. If a beneficiary predeceases the testator, their share passes to their surviving issue.

Question 51

Pour Over Trust

Answer 51

A pour over trust is one that is structured to receive and dispose of assets at the settlor’s death. A pour over trust is often established through the settlor’s will.

Question 52

Pour-Over Will

Answer 52

A valid will which “pours over” the estate of the decedent upon his death into a trust is a pour over will. The trust must have been in existence at the time the pour-over will was executed.

Question 53

Powers of Trustee

Answer 53

A trustee has all enumerated powers expressed in the trust itself and pursuant to the law. Trustees have the implied powers necessary and appropriate to carry out all the terms of the trust, such as to sell or lease trust property, incur reasonable expenses, borrow money, or operate a business.

Question 54

Remedies Against Trustee

Answer 54

A trustee can be removed and held liable for any loss or depreciation in value of the trust. Additionally, the trustee may be disgorged of any profit made by the trustee due to personal use of trust assets and may be liable for any lost profits due to a breach of their fiduciary duties.

Question 55

Residuary Gift

Answer 55

A residuary gift is what remains of the estate after all gifts have been satisfied and debts and taxes have been paid.

Question 56

Resulting Trust

Answer 56

A resulting trust is an implied-in-fact trust based upon the presumed intent of the parties and will transfer property back to the settlor or his estate.

Triggers
* Purpose of trust ends or is satisfied
* Trust is to take care of someone but they predecease the settlor
* Trust to help a business or a group ceases to exist
* Trust fails for invalidity

Question 57

Revival

Answer 57

When a will is revoked by a physical act or a subsequent will, and then the subsequent will is revoked as well, the first will is revived if the there is proof testator intended it to be revived. If the subsequent instrument was revoked by a physical act, extrinsic evidence is permitted to prove the testator’s intent to revive the original.

Question 58

Revocation by Operation of Law

Answer 58

Divorce or dissolution automatically revokes all will provisions in favor of the former spouse unless it can be shown the testator intended the provisions to survive divorce or dissolution. Separation does not revoke the will provisions.

Question 59

Revocation by Physical Destruction

Answer 59

A will or codicil may be partially or completely revoked by a physical act, such as burning or tearing, so long as the destruction was done with the intent to revoke. If a will was executed in duplicate, destruction of one copy with the intent to revoke will revoke all duplicates.

Question 60

Revocation by Subsequent Intrument

Answer 60

A testator can revoke a will or codicil by executing a later will or codicil that partially or completely revokes the prior instrument. Oral revocations are not valid. The revocation can be implied by inconsistent terms in the subsequent instrument. The later document controls any inconsistencies.

Question 61

Consequences of Revocing of a Codicil

Answer 61

Revocation of a codicil leaves the remaining will valid (whereas revocation of a will revokes both the will and the codicil).

Question 62

Secret Trust

Answer 62

A secret trust occurs when the settlor leaves a gift to the beneficiary on the face of his will without indicating an intent to create a trust in the will, but does so on reliance of a promise that the beneficiary will hold the property in trust for another.

Question 63

Semi-Secret Trust

Answer 63

A semi-secret trust occurs when the settlor leaves a gift in his will to a person in trust but does not identify the beneficiary. The majority of jurisdictions declare semi-secret trusts invalid and apply a resulting trust. A minority of jurisdictions allow extrinsic evidence to prove the trust.

Question 64

Simultaneous Death

Answer 64

Under common law, if both the testator and the beneficiary due simultaneously, an heir’s survival must be proved by a preponderance of the evidence.

Under the Uniform Simultaneous Death Act (USDA), when there is insufficient evidence of who died first, the property will pass as though both predeceased the other. An heir must prove by clear and convincing evidence to have survived the decedent by 120 hours.

Question 65

Specific Gift

Answer 65

A specific gift is a gift of specific, identifiable property.

Question 66

Spendthrift Trust

Answer 66

A spendthrift trust expressly restricts the beneficiary’s power to transfer his equitable interest. A beneficiary’s creditors usually cannot reach the beneficiary’s trust interest in satisfaction of their claims if the governing instrument contains a clause prohibiting attachment to that interest.

Question 67

Standard of Care (Trustee)

Answer 67

If the trustee has special skills applicable to the administration of the trust, they are held to that higher standard and expected to use those skills.

Question 68

Support Trust

Answer 68

A support trust directs the trustee to make limited distributions to pay for the beneficiary’s support, health, maintenance, or education. A support trust is usually not accessible by creditors to the extent it would interfere with the support.

Question 69

Testamentary Trust

Answer 69

A testamentary trust is one created by will containing the material provisions of the trust that arises upon the death of the settlor.

Question 70

Trust Modification

Answer 70

A settlor may modify their trust if they reserve the power to do so in the instrument. A court can also modify a trust, such as for cy pres purposes, in order to meet the settlor’s intent.

In California, a trust may be modified on petition by a trustee or court order if the trust will be substantially impaired due to unknown or unanticipated circumstances of the settlor.

Question 71

Trust Revocation

Answer 71

Trusts are generally revocable during the settlor’s lifetime if reserved in the trust (minority jrx provide unless stated otherwise), but may not be revoked upon death.

Question 72

Trust Formation

Answer 72

Formation of a valid trust requires a settlor, his intent to create a trust, identifiable property (res), a valid purpose, and an ascertainable beneficiary.

Note - a trustee is not required! The court will appoint someone if necessary

Question 73

Undue Influence (Traditional Approach)

Answer 73

Common law undue influence is found when the testator was susceptible to the influence, the beneficiaries had an opportunity to influence this disposition, the testator left an unnatural disposition of his property, and the beneficiaries were active in procuring this disposition.

Mnemonic - SODA

Question 74

Creation of a Valid Will

Answer 74

A valid attested will requires the testator to have capacity, intent, and meet all will formalities.

Creation of a Valid Will
Capacity
Intent
Will Formalities

Question 75

Will Formalities

Answer 75

To be valid, an attested will must be in writing, signed by the testator witnessed by two disinterested individuals present at the time of signature, and signed by two witnesses.

Question 76

Trust Termination by Consent

Answer 76

A trust may be terminated by consent if the settlor is deceased or has no remaining assets in the trust, and if all of the beneficiaries and trustees consent to the termination. However, even when all necessary parties consent to the termination, a trust generally will not be terminated if there is still an unfulfilled material purpose of the trust.

Question 77

Undue Influence (CA Approach)

Answer 77

Under California statutes, undue influence is defined as an excessive persuasion that cases another person to act or refrain from acting by overcoming that person’s free will that results in inequity. Courts consider the i) vulnerability of the victim, ii) the influencer’s apparent authority, iii) the actions or tactics used by the influencer, and iv) the equity of the result.

Mnemonic - VATS (vulnerability, authority, tactics, skewed result) “SODA VATS”

Question 78

California Statutory Presumption - Adult Caretakers

Answer 78

A presumption of undue influence applies to care custodians of a testator who is a dependent adult if the will was executed when services were provided or within 90 days thereafter. The presumption may be rebutted by clear and convincing evidence that the gift was not a product of fraud or undue influence.

Note: this does NOT apply to people who are related to/living with the testator

Question 79

Intestate Succession (distribution for CP/SP depending on how many surviving issue)

Answer 79

• surviving spouse takes all CP and 1/3 of spouse’s SP if decedent survived by more than one lineal descendant
• surviving spouse takes all CP and 1/2 of spouse’s SP if decedent survived by only one lineal descendant or by a parent/issue of parent
• surviving spouse takes all CP and all SP if spouse not survived by issue/parents/issue of parents

Example - $200,000 SP, surviving spouse and two children
- Spouse gets 1/3, children split remaining 2/3