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MEE Topics > Wills and Trusts > Flashcards

Wills and Trusts Flashcards

1
Q

intestate

A

Dies without a will

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2
Q

codicil

A

supplement that amends or revokes a will in whole or in part

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3
Q

Intestate succession

A

An estate plan developed by state legislature for distributing property when decedent dies intestate (w/o a will)

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4
Q

to take from a decedent, an individual must _____ the decedent

A

Survive. if simultaneous death, must prove by clear and convincing evidence the heir survived him by 120 hours

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5
Q

To calculate spouse’s share if decedent is just survived by spouse, no parents and no descendants

A

Spouse gets 100%

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6
Q

Calculate spouse’s share if the dead guy is just survived by spouse and their kids together

A

spouse gets 100%!!

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7
Q

Calculate spouse’s share if dead guy is survived by spouse, they have NO kids together but spouse has other kids

A

spouse get $150,000 plus half of what’s left

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8
Q

Per Capita (Majority)

A

Divide property equally at first generation where there is a member who is ALIVE. Then shares drop down to remaining kids, descendants.

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9
Q

UPC Per Capita (Minority)

A
  1. divide property into equal shares at first generation where there is a surviving member
  2. then do not pass deceased member’s share down to offspring but instead pool what remains
  3. divide what remains among surviving members at next generation.
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10
Q

formal execution requirements for a will

A
  1. Writing
    2.Signed
  2. Witnessed

UPC does not allow oral wills or audio/video recordings

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11
Q

What is required when signing a will

A

Legal Capacity
Testamentary Capacity
Testamentary Intent
Formalities

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12
Q

who must attest the will

A

Most states require at least 2 witnesses
-testator must sign or acknowledge will in presence of witnesses
witnesses must sign in presence of testator

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13
Q

what are interested witnesses

What is the common law, modern, and UPC approach to interested witnesses

A

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

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14
Q

What is the PRESENCE requirement of witnesses to a will
Majority view vs UPC view

A

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

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15
Q

What are the requirements for testator competencey

A

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

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16
Q

Does subsequent incompetence invalidate a will

A

No

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17
Q

What is required under common law/ majority rule about formalities for wills. How is it different for UPC

A

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

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18
Q

What is required in Modern View (UPC and minority rule) for compliance with formalities in will creation

A

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

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19
Q

What is a holographic will

A

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

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20
Q

what does a codicil do

A

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

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21
Q

When can wills be altered or revoked

A

at any time up until the testator’s death. Can be revoked in full or in part

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22
Q

ways to revoke a will

A
  1. creating a new will
  2. physical act- burning, ripping up, LOST
  3. operation of law- i.e divorce revokes all will provisions favoring ex spouse
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23
Q

is tearing up a will over the phone with lawyer ok?

A

No, needs to be conscious presence

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24
Q

Does UPC recognize revival of revoked will?

A

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

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25
Q

What is Dependent Relative Revocation?

A

= 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”

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26
Q

if the will refers to another document- i.e sketchbook in desk drawer- can that document be incorporated into the will

A

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

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27
Q

What is the common law view on lapse

A

a gift in a will would lapse- fail- if the intended beneficiary dies before the testator

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28
Q

what is an anti- lapse statute

A

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
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29
Q

What is abatement

A

if the estate does not have sufficient funds to pay debts or make gifts, the gifts will be reduced (abated) in a specific order.

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30
Q

What happens when property in a will no longer exists at the time of the T’s death (ademption)

A

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.

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31
Q

How do you prove undue influence over a testator

A

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.

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32
Q

what is the slayer statute

A

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

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33
Q

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

A

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.

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34
Q

Define Trust, how trusts are created - start of trust essay.

A

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

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35
Q

Is a trust presumed revocable or irrevocable

A

In most jurisdictions, a trust is presumed REVOCABLE unless it expressly states it is irrevocable.

Traditionally, a trust was presumed irrevocable.

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36
Q

Elements to create a valid private trust

A
  1. Capacity
  2. INTENT to transfer ownership of property
  3. To trustee for benefit of one or more ascertainable beneficiaries (can be unborn kids)
  4. for a valid purpose

Consideration is NOT required.

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37
Q

What is the duty of prudence for a trust and what duties does it include

A
  • 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

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38
Q

What is the Trustee’s Duty of Loyalty and how is it violated

A

= 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

39
Q

if there is evidence of self dealing by the trustee is there a breach of the duty of loyalty

A

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

40
Q

What is the remedy for a breach of the duty of loyalty thru self dealing

A

Beneficiaries can set aside the transaction or ratify the transaction and recover the profits from it.

41
Q

Do anti lapse statutes apply to trusts?

A

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

42
Q

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

A
  1. 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.
  2. If income beneficiary disclaims interest trust is automatically distributable to remainder beneficiary.
43
Q

what is a vested remainder

A

remainder is vested if holder is ascertainable and there are no contingent conditions prior to receipt

44
Q

Parties to a trust

A

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

45
Q

When can the settlor (creator) end the trust
-if settlor is still alive
-after settlor has died

A

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

46
Q

Types of trusts

A

Discretionary trust, support trust, spendthrift trust, charitable trust, mandatory trust

47
Q

What is a discretionary trust

A

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

48
Q

What is mandatory trust

A

trustee has no discretion.
Trust covers when trust property is to be distributed

49
Q

What is a support trust

A

Trustee must pay what is necessary for beneficiary’s support

50
Q

what is a spendthrift trust

A

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

51
Q

What is a charitable trust

A

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

52
Q

How can a charitable trust be modified if that charity no longer exists

A

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

53
Q

Can a trust be created for any purpose

A

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

54
Q

For trust beneficiaries, what is the requirement

A

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

55
Q

Do trusts need to be in writing

A

NO, can be oral , in writing or intent manifested by conduct

56
Q

Parties to a trust- types of beneficiaries

A

Income beneficiaries- get income from trust like rent from RE owned
Remainder beneficiaries- get trust principal upon termination of trust

57
Q

Are trust provisions that say you can’t get married and get the trust usually upheld

A

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

58
Q

Duty of loyalty trustee rules for essay

A

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.

59
Q

Essay rules regarding the prudent investor act

A

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.

60
Q

What happens if trust goes to “all my children” but one of the kids is dead already.

A

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.

61
Q

When is a disclaimer of an interest from a trust effective

A

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

62
Q

Can settlor make directives to trustee as to how the trust is invested

A

Yes but it doesn’t absolve trustee of liability to beneficiaries. Still have duty to diversify, invest wisely, etc..

63
Q

How long does a durable health care power of attorney last and what does it allow for.

A

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

64
Q

Are people acting under a durable power of attorney barred from civil liability

A

Typical health-care durable powers statutes provide that agents acting in “good faith” are immune from civil suit (such as a wrongful death action).

65
Q

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

A

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

66
Q

two duties required by trustee

A

Duty of loyalty & duty of care.

67
Q

what is a support trust

A

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.

68
Q

how and when can a court modify a trust and does the court need consent of beneficiaries

A

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

69
Q

IS a provision in a trust preventing transfer of interest until a set age permissible

A

Yes

70
Q

How can a trust terminate on its own

A

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

71
Q

Omission of a child in the will

A

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.

72
Q

in what types of trusts can creditors NOT reach the assets of the trust

A
  • 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.

73
Q

stock split- common law vs upc

A

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.

74
Q

Bequeathing a specific home in a will that you sold at time of your death

A

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

75
Q

in a will, can a person change the recipient of their life insurance policy?

A

No- it has to be changed with life insurance co.

76
Q

in Trusts, special duty of trustee within duty of care

A

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.

77
Q

if a trust is REVOCABLE, then the Settlor can do what

A

change the express terms during their lifetime, ie. direct the trustee to do something different with principal income

78
Q

for a discretionary trust, when is there a violation/abuse of discretion

A

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

79
Q

if the income of the trust is distributed to the beneficiary, can the creditors get at it

A

Yes. If it is not distributed, creditors can not get at it.

80
Q

3 limited situations where creditors can reach trust money if there is a spendthrift provision

A
  1. child support
  2. tax debt
  3. for debts for necessities
81
Q

a gift in a trust to “remaining/surviving children” remains open until when?

A

at least one kid is entitled to possession or settlor dies

82
Q

if the beneficiary of a trust is dead, does anti lapse apply so the beneficiary’s kids can get the money

A

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

83
Q

issue vs heirs

A

Issue= ALL genetic descendants

Heirs= broader- includes spouses, cousins, aunts, uncles

84
Q

if an anti lapse provision in testator’s will conflicts with anti lapse state statute, which to use?

A

the one in the will

85
Q

remember for anti lapse for a will- the beneficiary has to be …

A

close blood relative to testator and had issue who survived

86
Q

special power of appointment for a will

A

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.

87
Q

omitted spouse in a will

A

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

88
Q

Charitable trust

A

no named beneficiaries, has to be for charitable purpose, avoids rule against perpetuities

89
Q

Honorary trust

A

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

90
Q

what in a trust allows the settlor to specify certain people with the power to make distributions

A

a special power of appointment

91
Q

how to start a trust essay

A

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

92
Q

what would make a testator’s handwritten additions to a will legit

A

If they are signed and witnessed

93
Q
A

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