wills and trusts

Question 1

Intestate succession

Answer 1

Property that does not pass by will upon a decedent’s death will be distributed according to the state’s applicable intestacy statutes

Question 2

D only survived by spouse, no kids

Answer 2

• In most states, if D is survived only by a spouse and no descendants, surviving spouse inherits the entire estate
• In some states, however, a certain portion of the estate will be given to the decedent’s parents’ and their issue

Question 3

Non UPC rule if D is survived by spouse and kids

Answer 3

In most states, if the decedent is survived by a spouse and descendants, the surviving spouse will inherit a portion of the estate, and the surviving descendants will inherit the rest.

Question 4

UPC approach if D has spouse and kids

Answer 4

Under the UPC, the surviving spouse will inherit the entire estate if all of the descendants are descendants of the surviving spouse

Question 5

What if decedent is not survived by a spouse, but has kids

Answer 5

In most states, if decedent is not survived by a spouse, the decedent’s surviving descendants will inherit estate equally

Question 6

What if D has no spouse, no kids

parentelic approach

Answer 6

• If decedent is not survived by spouse or kids, but their parents are alive, parens will inherit the estate equally
• if there are no surviving parents, the descendants of the decedent’s parents will inherit

Question 7

Strict per stirpes

Answer 7

• Under strict per stirpes, estate is divided by number of members in first generation of kids who are either alive or survived by descendants
• each living member takes share, and deceased member’s share drops to next generation

Question 8

Modern per stirpes

Answer 8

• modern per stirpes works same as strict per stirpes, except estate is divided equally at first living generation with a living taker, not the first generation after decedent

Question 9

Per capita at each generation

Answer 9

• UPC approach
• estate divided at closest generation to decedent with a living taker (like modern per stirpes approach)
• shares of deceased descendants at each level are pooled together and drop down to next level

Question 10

CL rule on advancements

Answer 10

at common law, gifts to heirs during T’s life were considered advancements and were automatically deducted from their share of the estate

Question 11

Modern approach to advancements

Answer 11

today, gifts to heirs during Ts life are not advancements on intestate share unless
- the D declared his intent to make the gift an advancement in a contemporaneous writing; or
- heir acknolwedged it to be an advancement in writing

Question 12

USDA standard

Answer 12

To prove you survived someone else, you must demonstrate that by clear and convincing evidence of survival by 120 hours

Question 13

Formalities for an attested will

Answer 13

• intent
• writing
• signature
• witnesses

Question 14

Intent requirement for attested will

Answer 14

T must intend the instrument to function as their will

Question 15

Witness requirement for wills

Answer 15

will must be signed in the joint presence of, and attested to by, at least two witnesses

Question 16

Requirements for holographic will

Answer 16

• in handwriting
• intent to be a will
• signature

Question 17

Handwriting requirement for holographic wills

Answer 17

• in most states, the entire will must be in T’s handwriting and signed
• some states also require holographic wills to be dated
• under the UPC however, only material provisions must be in handwriting (beneficiary + gift)

Question 18

Intent requirement for holographic will

Answer 18

• it must be clear in the document that it was intended as T’s will
• UPC: words of intent need not be in handwriting and can be shown by extrinsic evidence

Question 19

Codicil

Answer 19

A codicil is a testamentary addition to a will, executed with the same formalities as a will

Question 20

Effect of executing a codicil

Answer 20

A valid codicil republishes the will as of the date of the codicil

Question 21

holographic codicils

Answer 21

A holographic codicil is valid, as is an attested codicil to a holographic will

Question 22

Substantial compliance doctrine

Answer 22

Under the minority/UPC approach, a document that substantially complies with formality requirements will be recognized as valid, if shown by clear and convincing evidence that T intended it to serve as his will

Question 23

Will substitute definition

Answer 23

An inter vivos transfer of property will avoid probate and is therefore a will substitute

Question 24

Time limit to contest will

Answer 24

A will contest must be filed within 6 months after a will is admitted to probate

Question 25

Who does NOT have standing to contest a will

Answer 25

creditors, spouses of beneficiaries under prior wills, pretermitted heirs

Question 26

no contest clauses

Answer 26

No contest clauses are enforceable unless the claimant has probable cause to contest the will (majority/UPC rule)

Question 27

Grounds for contesting will

Answer 27

• lacking capacity
• insane delusion
• undue influence
• fraud

Question 28

how to show T lacked capcaity to execute will

Answer 28

Claimant must show, at the time T made the will, T lacked the ability to know:
- the nature of the act (why)
- the nature/character of their property (what)
- natural objects of his bounty (who)
- plan of attempted disposition (how)

who what why how when

Question 29

Insane delusion

Answer 29

T is operating under an insane delusion, which is a belief not based in fact or reason

Question 30

test for insane delusion

Answer 30

A rational person in T’s situation would not have reached the same conclusion

Question 31

fraud in inducement for wills

Answer 31

Fraud in inducement occurs when a person misrepresents a fact related to the instrument (usually regarding property or beneficiaries)

Question 32

Fraud in execution for will

Answer 32

Fraud in the execution occurs when a person misrepresents the contents or nature of the instrument executed by T

Question 33

Revoking wills, generally,

Answer 33

Generally, a will may be revoked in whole or in part.

Question 34

revocation of codicils and wills

Answer 34

• revocation of a will revokes its codicils
• revocation of a codicil does not revoke underlying will

Question 35

Revocation by subsequent instrument

Answer 35

A will can expressly revoke a prior will or impliedly revoke it by inconsistent terms

Question 36

What happens when there are multiple wills

Answer 36

• the last will controls
• the wills should be read together to the extent possible, but last controls to the extent it is inconsistent with the prior will

Question 37

How to distinguish codicil from new will

Answer 37

To distinguish a codicil from a will, look for a residuary clause. A will typically has one, but a mere codicil does not

Question 38

Revocation by physical act

Answer 38

A will may be revoked when T commits a physical act with the intent to revoke, or directs a third party to do so in their direction and in their presence

Question 39

Lost wills

Answer 39

JDXs are split as to whether a will not found at T’s death creates a presumption that it was revoked
- burden is on proponent to establish existence of will by clear and convincing evidence
- duplicate originals can be used as evidence, but duplicate copies cannot

Question 40

Destruction of a copy of a will

Answer 40

revocation of a duplicate revokes all copies, but destruction of an unexecuted copy does not serve as revocation of all cpoies

Question 41

Governing law

Answer 41

• law in JDX of decedent’s domicile at death governs disposition of personal property
• law in JDX of real property governs disposition of that property
• BUT decedent may also select which state law governs terms of will

Question 42

Line of signt

Answer 42

Under the traditional view, a witness signs the will in the testator’s presence if they are within the testator;s line of sight

Question 43

Conscious presence test

Answer 43

Under the modern view, a witness signs the will in the testator’s presence if they sign the will within the testator’s range of senses

Question 44

Common law disinsterested witness rule

Answer 44

Under CL, the signing of the will MUST be witnnessed by two disinterested witnesses (people who do NOT receive any benefits under the will)

Question 45

Modern approach to interested witnesses

Answer 45

Virtually every state has abolished the common law interested witness rule, and allow interested witnesses to validly witness the signing of a will.

Question 46

minority modern approach to interested witnesses

Answer 46

• in a minority of states, the interested witnes forfeits his interitance unless two additional disinterested witnesses serve as valid witnesses
• Some states only allow interested witnesses to inherit their intestate share of the estate

Question 47

Personal signature requirement for holographic wills

Answer 47

in states that recognize holographic wills, they are only valid if the testator signs it personally (no proxy signatures)

Question 48

Integration of documents in a will

Answer 48

Integration of documents arises when pages or portions of a will become separated. A document will be integrated into a will if
- the testator intended the document to be part of the will: AND
- the document was physically present at the time the will was executed

Question 49

Incorporation by reference

Answer 49

Incorporation by reference deals with the incorporation of extrinsic doucments into the will (rather than pages or portions of the original will)

Question 50

When will a doc be incorporated by reference

Answer 50

In most states,a document or writing may be incorporated by reference when
- T intended to incorporate the document into the will
- the document was in existence at the time the will was executed; AND
- the document is sufficiently described in the will

Question 51

Facts of independent significance

Answer 51

A court may give effect to events that would change the disposition of a T’s estate after the T has executed their will IF those events have significance apart from a change in the testator’s testamentary scheme

Question 52

Devises through unattested memorandum

Answer 52

Devises to persons named in an unattested memorandum, not incorporated by reference, are invalid on the basis that the memo has NO independent significance apart from the will

if it meets incorporation by reference, however, it’s OK

Question 53

What can a codicil do

Answer 53

A codicil can explain, modify, amend, or revoke provisions of an existing will

Question 54

Republishing will

Answer 54

At the time a person executes a codicil, the original will is treated as republished and is deemed to have been executed on the date the codicil is executed

Question 55

Codicil curing defects in will

Answer 55

Republication can cure defects in a will that might affect the validity of specific devises (e.g., republication by codicil that is properly witnessed can save a devise to an interested witness)

Question 56

Can a codicil republish an invalid will

Answer 56

Most courts hold that a codicil cannot republish an invalid will as a whole

Question 57

Holographic codicil curing holographic will

Answer 57

In states that recognize holographic wills, a holographic codicil can validate a will that was not originally valid because it failed to meet statutory requirements

Question 58

Revocation by subsequent written instrument

Answer 58

A will can be revoked by
- a subsequent written instrument executed for the sole purpose of revoking prior will; or
- subsequent will/codicil that contains a revocation clause or provisions inconsistent with the prior will (only revokes to extent there is conflict)

Question 59

Revocation by physical act

Answer 59

A will is revoked if the T or anothe person at his direction and in his presence burns, tears, destroys, or obliterates the will with intent to revoke it

Question 60

Revoking will by words of cancellation

Answer 60

• under CL, words of cancellation are valid only if they come in physical contact with the words of the will
• under UPC, words of cancellation need not touch any words of will, but must be somewhere on the will to validly revoke it

Question 61

Revocation through marking it up partially

Answer 61

In most states, when marks of cancellation (crossing out a word) are found on a will known to last have been in the testator’s possession, a presumption arises that marks were made by T with intent to revoke.

it sure as shit doesnt say shiv

Question 62

overcoming presumption of partial revocation through marking

Answer 62

The burden to overcome this presumption is on the party claiming that the devise has not been revoked
- if devise is revoked, it passes as part of residuary estate.
- Some states do not permit partial revocations at all

Question 63

Revocation by divorce

Answer 63

• in some circumstances, dispositions under will are revoked by operation of law
• at CL divorce did not revoke T’s devise to former spouse
• TODAY, however, divorce revokes provisions in will to former spouse UNLESS the will or court expressly provides otherwise. Devise may be revived if the spouses remarry

Question 64

What if provision in favor of former spouse is revoked by operation of law

Answer 64

If provision in favor of former spouse is revoked by operation of law, the devise passes as if the former spouse predeceased the testator

Question 65

Dependent relative revocation

Answer 65

Under DRR, a valid revocation of a will may be ignored if the will was revoked under T’s mistaken belief of law or fact that the T could revive an earlier will, or modify his disposition of property by codicil or new will

Question 66

When does DRR apply

Answer 66

DRR only applies when the court can determine that the T would have preferred the disposition in the revoked will over the disposition resulting from a finding that they died intestate

Question 67

Revival of a will at CL

Answer 67

Under CL, the revocation of a subsequent will automatically revives the prior will (no intent requirement)

Question 68

Revival at modern law

Answer 68

Under the modern view, most states permit revival of a revoked will if
- it is evident T intended revoked will to take effect as executed; or
- T republishes the revoked will with a subsequent will or codicil that complies with formalities for execution

Question 69

Lapse

Answer 69

If a beneficiary named in a will predeceases the testator, absent an alternate disposition of the devise specified by T, the devise lapses into the residue unless a jurisdiction’s anti lapse statute preserves the devise

Question 70

Anti lapse statutes

Answer 70

Generally, under an antilapse statute, devises will vest in the descendants of the predeceased beneficiary if they
- are a blood relative of T; and
- have descendants who survive T

Question 71

Residue of residue at CL

Answer 71

Under CL, an invalidated residuary devise passed to T’s heirs through intestate succession

Question 72

Residue of residue modern approach

Answer 72

Under the modern approach, if the residue is devised to two or more persons, an invalidated residuary devise will pass to the other residuary beneficiaries rather than the T’s heirs

Question 73

Ademption

Answer 73

Under the doctrine of ademption, if the subject matter of a specific devise is not in the estate at the time of T’s death, the devise adeems or fails

Question 74

Intent for ademption at CL

Answer 74

At CL, testator’s intent for ademption was irrelevant

Question 75

intent and ademption modern view

Answer 75

In most JDXs today, a specific devise will adeem ONLY IF the T indended for the devise to fail. If they did not intend for it to fail, beneficiary is entitled to
- any prop in T’s estate which T acquired as a replacement for the specific devise, or
- a monetary devise equal to the value of the specific devise

Question 76

Generic descriptions of property in will

Answer 76

Any property described in generic terms is interpreted under the circumstances at the time of T’s death, rather than when the will is executed

Question 77

Slayer statutes

Answer 77

A person who feloniously and intentionally kills the decedent is barred from claiming a share of their estate as either an heir or beneficiary under the D’s will.

• generally, the estate is distributed as if killer predeceased the decedent

Question 78

Disclaiming interest

Answer 78

A beneficiary under a will can disclaim or renounce their interest under a T’s will causing the disclaimed property to pass as if they predeceased the T

Question 79

Requirements forr a valid disclaimer

Answer 79

A valid disclaimer must
- be in writing
- describe interest being disclaimed sufficiently; AND
- be delibered or filed

Question 80

Timing of disclaimers at CL

Answer 80

Under CL, a disclaimer must be made within a reasonable amount of time

Question 81

Modern timing for disclaimers

Answer 81

Some states require a disclaimer to be made within 9 months after T’s death

Question 82

Timing of disclaimers under UPC

Answer 82

Under the UPC, a disclaimer may be made at any time

Question 83

Specific devise

Answer 83

A devise is specific if the subject matter of the devise is specific real or personal property

Question 84

General devise

Answer 84

A devise is general if it can be satisfied with any of the estate’s assets

Question 85

Demonstrative devises

Answer 85

A devise is demonstrative if the T makes a general devise AND specifies a specific source that the general devise it should come from

Question 86

Abatement

Answer 86

If there are more claims against the estate from creditors than assets to cover devises made under the will, the devises abate.

Question 87

Priority of abatement

Answer 87

Creditors of the estate always have priority to assets over beneficiaries. Absent a provision in the will, property abates on a pro-rata basis in the following order
- intestate property
- residuary devises
- general devises
- specific devises

Question 88

Exoneration at CL

Answer 88

At CL, a specific devise of encumbered real property was entitled to have the mortgage on the property paid from the estate as a debt from the decedent

Question 89

Exoneration modern approach

Answer 89

Today, a beneficiary of real property assumes the morgage, regardless of a general directive in the will to pay debts

Question 90

CL approach to stock dividends

Answer 90

At CL (and some states today), a stock dividend constitutes property interest that is separate from shares of stock received through a specific devise
- under this rule, beneficiary of the underlying shares of stock does NOT receive additional shares that were obtained through stock dividend

Question 91

Stock dividend definition

Answer 91

Shareholders may participate in dividend reinvestment programs that automatically reinvest quarterly dividends into buying more shares of a corp’s stock

Question 92

Majority view to stock dividends

Answer 92

Under the majority view, beneficiaries are entitled to additional shares owned by the testator that were acquired as a result of stock splits or dividends

Question 93

Class gifts

Answer 93

A T may devise property to a class of individuals

Question 94

What if a class member predeceases T

Answer 94

If a member of a class predeceases T, their share is split evenly among the remaining members. It does NOT lapse into the residue

Question 95

Devise to class member who predeceases T but qualifies under anti lapse statute

Answer 95

A devise to a class member who qualifies under anti lapse statute would pass to descendants, not the rest of the class

Question 96

Devises to children

Answer 96

T may devise property to their “children”, “heirs”, “issue
- under these circumstances, courtw ill look to intestacy statutes to determine how it should be split

Question 97

Disinheritance

Answer 97

A child that is intentionally ommitted from a will is not entitled to a share of the estate

Question 98

Majority approach to disinherited kids and disinheritance clause

Answer 98

In most states, a general disinheritance clause is not sufficient to show intent to omit child from the will

Question 99

Pretermitted children

Answer 99

A pretermitted child is one who is unintentionally omitted from a will. This occurs usually when they are born or adopted after execution of the will, or are thought to be dead but are really alive

Question 100

What are pretermitted children entitled to from estate

Answer 100

A pretermitted child is entitled to the share they’d have gotten had T died inttestate so long as they did NOT intend to omit the child from their will

Question 101

Children as a class

Answer 101

• At CL, only biological, full blood kids are included in this class
• In most JDXs today, adopted kids, half blood, and kids born out of wedlock are also included

Question 102

Conditions prohibiting marriage

Answer 102

conditions that prohibit marriage are void as against public policy

Question 103

What does “surviving” mean

Answer 103

• in most states, “surviving” means beneficiary has to survive date of distribution of estate
• in some states, it just means outliving the testator

Question 104

Writing requirement for will contracts

Answer 104

in most states, contracts to make a will must be in writing
- even if a JDX doesnt specify this matter in their probate code, they usually reach this conclusion by applying the SOF

Question 105

Damages when a party breaches a will K

Answer 105

if a party breaches a valid K to make a will, the court will usually probate the new will and impose a constructive trust in favor of the original intended beneficiary under the contractual agreement

Question 106

Valid will K

Answer 106

valid K (mutual assent+consideration+no defenses) to make a will generally is enforceable and typically takes certain forms
- K to make joint/mutual will
- K to make a certain devise by will
- K not to revoke will or certain provision
- K to refrain from executing a will

Question 107

mutual will

Answer 107

a mutual will is a separate will of at least two people that contain similar or reciprocal provisions

Question 108

joint wills

Answer 108

a joint will is a single document executed by at least two people which contain similar or reciprocal provisions

Question 109

Lack of capacity

Answer 109

A will is invalid if T lacked mental capacity when will was executed. To prevail in will contest on these grounds, contestant must prove T did NOT know or understand
- nature and extent of his property
- persons who are the natural objects of his bounty; or
- disposition he was making of property

Question 110

presumption for capacity

Answer 110

generally, there is a rebuttable presumption in favor of T having mental capacity

Question 111

Undue influence

Answer 111

A will is invalid if T executed it while under undue influence. Undue influence occurs when a person exerts such control and influence over T as to overcome their free will

Question 112

What contestant must show in will contest on undue influence

Answer 112

To prevail in a will contest for undue influence, contestant must prove that
- T was susceptible to undue influence
- wrongdoer had opportuntiy to exert undue influence
- wrongdoer actively participated in drafting the will; AND
- will evidences a result that appears to be effect of undue influence

Question 113

Presumption of undue influence

Answer 113

Generally, there is a rebuttable presumption of undue influence if a confidentail relationship existed between the alleged wrongdoer and T such that circumstanes surrounding the drafting of the will are suspicious (close relative, attorney, caretaker involved in drafting T’s will and gets something from it)

Question 114

Family consent laws

Answer 114

Family consent laws permit close relatives (typically in a statutory order) to act as a surrogate decisionmaker for an incapacitated patient if there is no authorized agent acting under durable power of attorney

Question 115

Priority of relatives in most family consent laws

Answer 115

Typically, the surrogate decisionmaking order is as follows:
- spouse (unless separated)
- adult child
- parent
- adult sibling

NOTE: if there are multiple members of the same class, a majority of those must agree on which health care decisions should be made

Question 116

Living will

Answer 116

A living will is a document in which one specifies which life prolonging measures one does, and does not, want to be taken if they become incapacitated

Question 117

durable power of attorney

Answer 117

a durable power of attorney is a document that enables an individual to designate an agent on his behalf in the event that they become incapacitated

Question 118

immunity for power of attorney

Answer 118

Generally, the agent under a durable power of attorney is immunized from civil liability for health care decisions made in good faith

Question 119

Execution requirements for power of attorney AND living will

Answer 119

Generally, both the living will and power of attorney must be signed, in writing, and witnessed by at least two persons or notarized

Question 120

Personal representative

Answer 120

A personal representative handles all matters associated with probate
- if decedent does not name a personal rep, the court will appoint one

Question 121

Life insurance

Answer 121

Life insurance is a K made between a policyholder and an insurance company
- usually, life insurance Ks prohibit the change of a beneficiary under the policy by execution of a will
- most courts uphold such limitations that are set out in the insurance K
- some courts permit a policyholder to change beneficiary by will if insurance co does not object

Question 122

Totten trusts

Answer 122

A totten trust is created when a person opens a bank account for themself as trustee for another. Trustee is sole owner of account through his life, absent clear and convincing evidence of diff intent
- at trustee’s death, funds go to beneficiary free and clear of the trust

Question 123

revocability of totten trusts

Answer 123

Totten trusts are revocable by will and during trustee’s lifetime if
- trustee withdraws all funds from account; OR
- trustee delivers a signed revocation to bank naming a new beneficiary

Question 124

joint T bank accounts

Answer 124

Generally, a surviving joint T is entitled to money in a joint bank account when the other joint T dies, UNLESS the account was set up merely for their convenience

Question 125

Creditors to joint T bank account

Answer 125

• Under CL, deceased JT creditors have no claim to $ in bank account
• Under UPC, if decedent’s estate is insufficient to pay creditors, creditors claims to fund in JT bank account are superior to surviving JT

Question 126

Inter vivos gifts

Answer 126

An inter vivos gift is a gift between living perons. It is a valid transfer of property when:
- donor intends to make a gift
- donor delivers gift (actual or constructive)
- donee accepts the gift (presumed if it is something of value)

Question 127

Who has standing to contest a will

Answer 127

Generally, only those with a pecuniary interest in a will have standing to contest it. This includes any person who
- is a beneficiary under the will
- should be a beneficiary under the will; or
- would benefit if D died intestate

Question 128

majority view on no contest clauses

Answer 128

Under majority view, no contest clauses are unenforceable if probable cause exists to challenge the will action (contestant has good faith and reasonable belief in challenging it)

Question 129

Minority approach to no contest clauses

Answer 129

• minority wholly enforce these clauses
• other strictly prohibit them as a matter of public policy

Question 130

purpose of no contest clauses

Answer 130

the purpose of a no contest clause is to discourage potential will contestants by forcing them to choose either
- the gift bestowed to them in the will or
- nothing if their contest fails

Question 131

reformation for mistake

Answer 131

most courts will permit modification of a will to conform to T’s intent if there is clear and convincing evidence of a mistake

Question 132

Invalidity by fraud

Answer 132

A will is invalid if the will reflects the T’s belief in false information arising from another person’s fraudulent misrepresentation

Question 133

requirements to prevail in contest on fraud

Answer 133

To prevail in a contest for fraud, the contestant must prove
- misrepresentation of a material fact was made to T
- misrepresentation was made to induce reliance by T; AND
- T relied on misrepresentation in disposing of property in will

Question 134

What happens if a will is ambiguous

Answer 134

If a will is ambiguous, courts allow extrinsic evidence to resolve the ambiguity (i.e., the facts and circumstasnces around will may be considered to resolve ambiguity)

Question 135

Trust definition

Answer 135

A trust is a fiduciary relationship between the trustee and trust beneficiaries. When a trust is created, property is divided between legal and equitable title

Question 136

legal title

Answer 136

The trustee holds legal title to the property and becomes the owner of record for it

Question 137

Equitable title

Answer 137

The beneficiary holds equitable title and is entitled to the financial benefits of the property

Question 138

Settlor

Answer 138

The settlor is the person who creates the trust

Question 139

Express trust

Answer 139

An express trust is created when a person has the intent to create a trust and complies with the requisite formalities to create it

Question 140

Implied trust

Answer 140

An implied trust is created by conduct, regardless of whether there was intent to create a trust

Question 141

Requirements for a valid express trust

Answer 141

A valid express trust is created if five elements are met
1. The settlor has intent to create the trust
2. There is trust property (the res)
3. An ascertainable beneficiary exists
4. There is a trustee (won’t fail for lack of one, though)
5. All parties comply with requisite formalities

Question 142

Intent to create an express trust

Answer 142

• The settlor’s intent may be determined by written or spoken words or conduct
• There are NO specific words required to create a trust
• The settlor only need to intend to create the legal relationship and duties of a trust

Question 143

Precatory language

Answer 143

Precatory language merely expresses the settlor’s wishes regarding his property, not his intent

Question 144

Capacity requirement for trust

Answer 144

The settlor must have capacity in order to create a trust

same who what when where why as will contests

Question 145

Res

Answer 145

The res refers to the property that make up the trust as a whole. Just about anything that can be owned and transferred can make up the res

Question 146

Description of the res

Answer 146

The res must either be
- specifically described with certainty; or
- ascertainable with certainty from the description of it

Question 147

When does an ascertainable beneficiary exist

Answer 147

At the time of trust creation, the settlor must either
- specifically identify the beneficiary by name; OR
- sufficiently describe how the beneficiary is to be identified (“my children” is OK; “my friends” likely isn’t)

Question 148

Beneficiary’s ability to possess title

Answer 148

The beneficiary must be able to possess title to the property (e.g., an animal cannot be a beneficiary)

• note: a beneficiary need not have capacity to manage property (kids can be beneficiaries)

Question 149

Can settlors and trustees be beneficiaries?

Answer 149

Yes. A settlor and trustee can be a beneficiary. However, a sole trustee cannot be the sole beneficiary of the trust.

Question 150

Lack of trustee

Answer 150

Although a trust must have a named trustee, the trust will not fail solely for lack of one. A court may appoint a trustee if the settlor did not name one or if the trustee dies, resigns, or is removed

Question 151

Creation of trust involving RP

Answer 151

The creation of a trust involving RP must satisfy the SOF.

Question 152

Creation of a trust involving just personal prop (no RP)

Answer 152

A trust involving personal property, with no real property, need not comply with the SOF

Question 153

Formalities for testamentary trusts

Answer 153

A testamentary trust is a trust that enters into existence upon the death of a person and disposes of their property. Testamentary trusts must be executed with the same formalities of a will

Question 154

Common law/majority view on revocability

Answer 154

Under the CL and majority approach, a trust is irrevocable UNLESS the settlor expressly retains the right to revoke or amend the trust

Question 155

UTC/minority approach to revocation of trusts

Answer 155

Under the UTC, a trust is revocable unless the trust EXPRESSLY provides otherwise

Question 156

Pourover provisions

Answer 156

• a pourover provision in a will devises property to a previously existing trust under the terms of that trust
• a pourover provision is distinguishable from a testamentary trust, as a pourover provision does NOT create a trust – it just transfers property to an existing trust

Question 157

Can a pourover provision transfer assets to a testamentary trust

Answer 157

No. A pourover provision cannot devise property to a testamentary trust because that trust would not come into existence until the settlor dies.

Question 158

Charitable trust

Answer 158

A charitable trust is a trust that has the purpose of accomplishing a substantial amount of social benefit to the public at large, or to a reasonably large class

Question 159

Beneficiary of a charitable trust

Answer 159

The beneficiary of a charitable trust may be indefinite, named, or contain a class of persons described by the trust

Question 160

Application of RAP to charitable trusts

Answer 160

The rule against perpetuities does NOT apply to charitable trusts

Question 161

What if a charitable trust fails to state a specific charitable purpose or beneficiary

Answer 161

A charitable trust will NOT be invalidated for failure to state a specific charitable purpose or beneficiary
- generally, courts will select a purpose or beneficiary that is consistent with the settlor’s intent if they had a general charitable intent

Question 162

Cy pres doctrine

Answer 162

The cy pres doctrine may be applied to continue the charitable trust in a manner consistent with the settlor’s general charitable intent

Question 163

What if the settlor names a specific charitable beneficiary, but they terminate

Answer 163

If the settlor names a specific charitable beneficiary, the trust will termiante upon that charity’s termination

Question 164

Discretionary trust

Answer 164

A discretionary trust grants the trustee absolute power and discretion to make good faith determinations regarding when and how much of the trust property should be distributed to the beneficiaries of the trust.

Question 165

When might a court interfere with a discretionary trust

Answer 165

A court may interfere if the trustee is making distribution determinations in bad faith

Question 166

Support trust

Answer 166

A support trust is a trust that contains a provision directing the trustee to pay the beneficiary as much of the income or principal as is necessary for the beneficiary’s education and support. Support trusts can be pure or discretionary

Question 167

Pure support trusts

Answer 167

Pure support trusts limit the trustee’s discretion. The trustee is obligated to spend only so much of the available trust property as is necessary for the education and maintenance of the beneficiary

Question 168

Spendthrift trusts

Answer 168

Spendthrift trusts contain provisions designed to protect beneficiaries from their own carelessness. Generally, they serve two main functions
- beneficiary is NOT permitted to sell or assign his beneficial interest; AND
- the beneficiary’s creditors CANNOT reach their beneficial interest

Question 169

When can creditors reach a beneficiary’s interest under a spendthrift trust

Answer 169

• Settlor is the beneficiary of the spendthrift trust (a self settled trust)
• The creditor is seeking reimbursement for necessities (food, medical care, etc)
• The creditor has an order for child support or spousal support

Question 170

Rights of creditors to a trust beneficiary

Answer 170

The creditors of a beneficiary of a trust have NO greater rights in the trust property than the rights of the beneficiary. If the trust prevents a beneficiary from receiving the trust principal, then his creditors have no right to reach the trust principal either

Question 171

When can a beneficiary’s creditor reach their interest in the trust

Answer 171

Absent a spendthrift provision, the beneficiary’s creditors are able to reach the beneficiary’s interest by attachment of the interest income to the benficiary (i.e., they can’t go after the principal, but can go after interest income if no spendthrift provision)

Question 172

Reaching beneficiary’s interest post distribution

Answer 172

Whether or not a trust contains a spendthrift provision, creditors can reach the beneficiary’s interest once it is distributed to the beneficiary. Once trust income is paid to the beneficiary, a creditor may initiate appropriate proceedings to reach that income in order to saisfy a claim

Question 173

Alienability of trust interest

Answer 173

Trust interests are alienable, devisable, and descendible unless the terms of the trust provide otherwise

Question 174

Invasion of trust principal

Answer 174

Generally, an income beneficiary is only entitled to the trust income UNLESS the trust authorizes the trustee to invade the principal

Question 175

When may a trustee invade the trust principal

Answer 175

• only one beneficiary exists
• the beneficiary would ultimately receive the trust principal (not permitted if invasion would be inconsistent with S’s express directions in creating trust)
• significant change in circumstances
• trust grants trustee the discretion to invade the principal (expressly or impliedly)

Question 176

Requesting a court to permit a deviation from administrative provisions

Answer 176

Trustees and beneficiaries can request that the court permit a deviation from administrative provisions in the trust instrument. Generally, a court will permit a deviation if the purposes of the trust:
- have been satisfied
- have become unlawful; OR
- are impossible to carry out

Question 177

Cy pres doctrine

Answer 177

If it becomes unlawful, impossible, or impracticable to carry out the purposes of a charitable trust, cy pres allows the court to modify the terms of a charitable trust “as near as possible” the original intent in order to prevent the trust from failing

Question 178

When is cy pres applicable

Answer 178

The doctrine of cy pres is applicable only if
- property is placed in a trust for a charitable purpose that has become unlawful, impossible, or impracticable to carry out; AND
- the settlor manifested a general charitable intent to devote property to charitable purposes

Question 179

Absence of a reverter clause

Answer 179

The absence of a reverter clause is evidence of the settlor’s general intent. However, if there is a reverter clause, court will likely revert trust property to parties specified in the reverter clause when it becomes unlawful, impossible, or impracticable to carry out purpose of the trust

Question 180

Modification of trust by parties

Answer 180

Generally, a trust is irrevocable and cannot be modified unless the settlor retained the right to do so in the terms of the trust instrument
- however, in a minority of JDXs, the settlor is free to modify or revoke the trust instrument WITHOUT express authorization to do so

Question 181

When may a trust be terminated

Answer 181

A trust may be terminated if
- trust revoked or expires pursuant to its terms
- material purpose is satisfied or becomes unlawful, contrary to public policy, or impossible to carry out
- settlor and beneficiaries unanimously agree to terminate
- all beneficiaries agree AND no material purpose remains
- termiantion will further purpose of trust due to unforseen circumstances
- court or trustee determines value of trust property is too low to justify cost of adminsitration

Question 182

What happens when trust is terminated

Answer 182

If a trust is validly terminated, the trust property generally vests in the beneficiaries who may distribute the property in any manner they choose.
- however, trustee may retain a reasonable amount of trust property to cover debts, expenses, and taxes

Question 183

fiduciary requirements of trustee

Answer 183

A trustee is a fiduciary. As a fiduciary, the trustee must
- manage the trust property exclusively for the benefit of ALL the trust beneficiaries; AND
- administer the trust in good faith pursuant to the terms and purposes of the trust

Question 184

Duty of care for trustees

Answer 184

The trustee possesses a duty to exercise the degree of care and skill as a person of ordinary prudence would exercise in dealing with his own property
- focus is on trustee’s conduct, not the results of such conduct

Question 185

Exculpatory clauses for trustees

Answer 185

• under the majority view, the settlor may limit the potential liability of a trustee by including an exculpatory clause in the trust instrument
• however, exculpatory clauses don’t excuse the trustee for acts done in bad faith

Question 186

UPIA

Answer 186

The uniform prudent investor act requires the trustee to exercise the degree of care and skill as an investor of ordinary prudence would exercise in investing his own property (e.g., diversifying investments, avoiding risky investments and speculation, etc)

Question 187

Trustee’s duty of loyalty

Answer 187

Trustee owes a duty of loyalty to beneficiaries where the trustee may NOT obtain any personal gain from administering the trust, except for fees

Question 188

Self dealing

Answer 188

• self dealing is a per se breach of the duty of loyalty
• self dealing includes any transaction involving trust property that the trustee enters into for his own gain

Question 189

Waiver of duty of loyalty

Answer 189

• the settlor may expressly waive the trustee’s duty of loyalty in the trust instrument
• however, a waiver will not excuse the trustee for acts done in bad faith

Question 190

trustee duty to act impartially

Answer 190

The trustee possesses a duty to be impartial with respect to all the beneficiaries of a trust when investing, managing, and distributing trust property (cannot favor one B over another)

Question 191

assets to be allocated to trust income

Answer 191

The following assets generally must be allocated to the trust income
- receipt of rental payments from trust property
- corporate distributions (cash dividends, ROIs)

Question 192

Assets to be allocated to trust principal

Answer 192

• funds received from the sale of trust property
• repayment of loan principal

Question 193

Power of appointment

Answer 193

A power of appointment is usually conveyed by will or trust, granting the donee the right to appoint or distribute property left by the donor
- holder of power of appointment does NOT receive full title to the donor’s property, only the power to appoint or distribute it

Question 194

General power of appointment

Answer 194

A general power of appointment is created when the donor does NOT leave any restrictions as to the appointment of the property.
- donee is free to appoint property to himself, creditors, or anyone else

Question 195

Special power of appointment

Answer 195

A special power of appointment is granted when the donor leaves restrictions as to the appointment of the property
- donee may not exercise a special power for their own benefit, typically

Question 196

Power of appointment in a residuary clause

Answer 196

A power of appointment may be exercised in a general residuary clause of a will only if
- the power of appointment is a general power; OR
- the testator’s will manifests an intention to include the property subject to a power

Question 197

Acceleration of a future interest

Answer 197

a future interest may be accelerated, allowing the future interest holder to take possession immediately if the present interest holder
- loses title to the property; OR
- disclaims the property

Question 198

RAP

Answer 198

Under the common law, a future interest MUST vest within 21 years of the death of a life in being at the time it was created. If there is ANY possibility that the future interest will not vest within this time period, the interest will be invalidated

Question 199

Wait and see and RAP

Answer 199

In many JDXs, courts will wait and see if the future interest actually does fail to vest within 21 years after the death of a life in being, rather than invalidating it for any possibility that it will fail to vest within the time period

Question 200

Modern trend for wait and see

Answer 200

Under a modern trend, some courts will reduce age contingencies exceeding 21 years to validate a conveyance that otherwise violates RAP

Question 201

fee simple

Answer 201

A fee simple is the default estate. It is created with language such as “O to A”, “O to A and his heirs”, “O to A forever”

Question 202

defeasible fee

Answer 202

A defeasible fee is a conveyance in fee simple in which the grantor places express conditions on the conveyance (“O to A on the condiiton that…”)

Question 203

Fee simple determinable

Answer 203

A FSD is a conditional conveyance in which the grantor retains a possibility of reverter. The possibility of reverter vests automatically when the condition is not met. Created with durational language such as “while”, “during”, “until”

Question 204

FSSCS

Answer 204

A FSSCS is a conditional conveyance in which the grantor retains a right of entry. The right of entry does NOT vest automatically when the condition is not met (grantor must reclaim). FSSCS is created with conditional language such as “provided that” “on the condition that”

Question 205

FSSEI

Answer 205

A FFSEI is a conditional conveyance in which a third party is granted an executory interest in the property.

Question 206

executory interest

Answer 206

An executory interest is a future interest that divests an earlier interest

Question 207

Shifting vs springing EI

Answer 207

• shifting divests a prior grantee (not grantor)
• springing divests the grantor

Question 208

Life estate

Answer 208

a life estate is a present possessory estate that is limited by a person’s life

Question 209

transferability of LE

Answer 209

A LE is transferable. The transferee’s interest in the property terminates upon the death of the measuring life

Question 210

vested remainder

Answer 210

A vested remainder is a future interest that is both
- given to an ascertained grantee
- not subject to a condition precedent

Question 211

contingent remainder

Answer 211

A contingent remainder is one which is either
- given to an unascertainable grantee; or
- subject to a condition precedent

Question 212

FI that follows life estate

Answer 212

• if land goes back to grantor, grantor has a reversion
• if it goes to a third party, they have a remainder