Wills and Trusts Flashcards
requirements for a trust
- intent to create a trust
- trust property
- trust purpose
- ascertainable beneficiary
inter vivos trust
trust created while the settlor is living, designating the settlor or someone else as trustee
pour-over will
trust created while living to which the trust property is devised upon death; doesn’t have to meet formalities of a will
testamentary trust
trust created upon the death of the settlor; must comply with wills formalities
charitable trust
trust created for the benefit of the community at large or a segment of the community; not void for lack of ascertainable beneficiary; not subject to RAP
charitable purposes
- relief of poverty
- education
- religion
- NOT funding a political party
cy pres doctrine
if a charitable trust fails for impossibility, impracticality, or illegality, court can modify trust to substitute an alternative charitable purpose if still in keeping with / derived from the original purpose
income
money generated by trust property
principal
money generated by conveyance of trust property
income or principal: sale proceeds
principal
income or principal: cash dividends
income
income or principal: rents
income
income or principal: interest
income
income or principal: stock dividends
principal
general rule as to creditors’ right to access trust principal
creditors may access beneficiary’s interest if trust property has been distributed to beneficiary
support trust
an asset protection trust that allows distribution as necessary to provide for the beneficiary’s support, such as education and health
creditors’ right to access support trust
no access unless creditor is the one providing a necessary
spendthrift trust
trust in which the beneficiary is restricted from alienating her interest in the trust
creditors’ right to access spendthrift trust
no access; limited exceptions for:
- creditor providing necessaries
- child support obligations
- tax liens
discretionary trust
trust in which the trustee may distribute trust income and principal at his sole discretion; reviewed for abuse of discretion
creditors’ right to access discretionary trust
creditor can access once the trustee has made a distribution
trustee’s powers
those powers granted expressly in the trust and those necessary to carry out trust’s terms
trustee’s fiduciary duties
duty of loyalty
duty of care
trustee’s duty of loyalty
administer the trust in good faith and act reasonably
breaches of duty of loyalty
conflict of interest = presumed breach; rebutted by showing fair terms or that an independent party would’ve done it too
self-dealing = irrebuttable presumption of breach, no further inquiry
self-dealing
acting for personal gain in the position of the trustee, such as
- buying or selling trust assets
- borrowing from or making loans to trust
- engaging in transactions with friends or relatives
remedy for breach of duty of loyalty
beneficiary can rescind the transaction or ratify transaction and receive profits from it
duty of prudence
to act as a reasonably prudent investor in similar circumstances with reasonable care, caution, and skill; includes:
- duty to diversity
- duty to be impartial in distributions
- duty to make productive
- duty to disclose information to beneficiaries and account for actions taken
revocability of trust
presumed to be revocable
modification/termination of trust by beneficiaries
consent of all beneficiaries: modify if in keeping with or necessary for material purpose of trust
consent of all beneficiaries and settlor: modify regardless
disclaimer of trust interest
in writing within nine months of interest vesting
modification/termination of trust by court
if unanticipated changes frustrate purpose of the trust
intestate succession
plan for splitting up an estate developed by the legislature when there is no will; decedent’s intent is irrelevant
simultaneous death
to take by intestate succession, must survive the decedent; if simultaneous, must have clear and convincing evidence of survival by 120 hours
spouse’s intestate share when: just spouse
spouse takes entire
spouse’s intestate share when: spouse + shared descendants
spouse takes entire
spouse’s intestate share when: spouse + decedent’s parents
spouse takes 75% and $300,000
spouse’s intestate share when: spouse + shared descendants + spouse has other kids
spouse takes 50% and $225,000
spouse’s intestate share when: spouse + decedent has other kids
spouse takes 50% and $150,000
will formalities
- writing
- signed by testator
- testamentary intent
- two witnesses
- capacity
purge theory
the presence of interested witnesses invalidates the will as to its portions that provide in excess of their intestate share; do not share if two other disinterested witness
UPC has abolished
presence of witnesses
majority rule: each sign in each other’s presence
UPC: witnesses sign in reasonable time after
traditional presence
line of sight
modern presence
conscious presence—awareness of act being performed, even if not presently perceiving it
capacity / sound mind
ability to know
- nature of the act
- nature and character of property
- natural objects of the bounty
- plan of disposition
substantial compliance
defect doesn’t invalidate will if clear and convincing evidence of intent to act as will; UPC/modern rule
holographic will
informal, entirely handwritten will signed by testator without witnesses
nuncupative will
oral will; invalid in most jurisdictions
codicil
supplement to a will; requires same formalities as will itself
three ways to revoke a will
- subsequent instrument
- act of destruction
- operation of law (e.g., divorce)
lost will
a missing will at the time of testator’s death creates rebuttable presumption that the testator destroyed and revoked the will
dependent relative revocation
equitable doctrine that invalidates a mistaken revocation and revives earlier revoked will
conditional will
will that takes effect dependent upon the happening of a certain condition; if ambiguous, courts will construe language as not a condition
incorporation by reference
can incorporate separate document by reference if
- document existed at time of reference
- document is clearly identified in will with sufficient certainty
- testator intended to incorporate the document
lapse
a testamentary gift fails because the beneficiary predeceases testator
anti-lapse statute
allows a lapsed gift to pass to beneficiary’s issue; usually only if beneficiary is a blood relative
abatement
if estate cannot afford all of its gifts, gifts are abated in the following order
- intestate property (not addressed in will)
- residuary
- general gifts
- specific gifts
resulting trust
trust created by a court when settlor’s trust fails that requires holder to distribute trust property to the settlor/settlor’s estate
elective share
surviving spouse can choose to take a certain share instead of taking under the will
- common law: 1/3 of all decedent’s property
- community property state: 1/2 of marital property (property before marriage)
- UPC: 50% of augmented estate (property before and during marriage)
omitted spouse doctrine
omitted spouse entitled to intestate share unless
- valid prenup
- spouse received property outside will in lieu of devise
- spouse specifically excluded
doctrine of advancements
applies in intestate succession; a gift during life may be viewed as an advancement of the child’s share if:
- common law: any lifetime gift
- UPC/modern: contemporaneous writing declares it an advancement or otherwise indicates it’s meant to be taken into account upon death
Hotchpot analysis
- add value of advancement back into estate
- divide estate among children
- subtract value of advancement from child’s share
omitted child
omitted if had child after will and didn’t amend
does not apply if
- had child at time of will and left all/substantially all of the will to the spouse
- omission was intentional
- child received property outside will in lieu of devise
remedy for omitted child
no other children: take intestate share
other children: equal share from portion devised to other children
disclaimer
- signed writing
- filed with court or communicated to administrator/executor of estate
- identifies decedent, property disclaimed, extend of disclaimer
- within nine months of death
insane delusion
false belief adhered to despite reason and evidence to the contrary that is but-for cause of disposition
undue influence
- susceptibility
- motive
- opportunity
- causation
presumption based on confidential relationship
administrator
appointed by court to administer the estate
executor
named in the will to administer the estate
power of appointment
permits donee to dispose of property; can be general or specific (limited)
power of attorney
empowers donee to make decisions during periods principal is unable to; can be general or specific;
healthcare advance directive
living will, healthcare power of attorney, or both; must be a signed writing witnessed by two people
living will
describes the desired medical care and requires agent to enforce these wishes
healthcare power of attorney
permits donee to make medical decisions on principal’s behalf when principal is incapacitated
