Wills and Trusts Flashcards
Intestate Succession
o Survived by spouse with no descendants – surviving spouse inherits entire estate
o Survived by spouse and descendants – surviving spouse inherits 1/2 or 1/3 of decedent’s estate, with remainder to surviving descendants
—UPC – if decedent’s descendants are also surviving spouse’s descendants, entire estate goes to surviving spouse
o Not survived by spouse – decedent’s surviving descendants inherit entire estate
o Not survived by spouse or descendants – decedent’s surviving parents inherit entire estate
Per capita with rep (modern per stirpes)
Divided into equal shares at first generation with living takers. Each living person takes a share and each share of a deceased person at that level passes to her descendants
- Majority of states
Per capita at each generation
Divided at first generation with living takers, but shares of deceased are combined and divided equally among takers at the next level
- UPC and growing number of states
Surviving descendants - Simultaneous death
One cannot take as an heir or beneficiary unless she survives decedent.
—Uniform Simultaneous Death Act – property passes as though the beneficiary/heir died before the decedent unless there is sufficient evidence decedent died first
—120-hour rule – beneficiary/heir is only treated as having survived decedent if there is clear evidence that she survived by 120 hours or more
Disclaimers
For fed. tax purposes, disclaimer must be in writing, irrevocable, and filed within nine months of decedent’s death. The interest then passes as if the disclaiming party predeceased decedent
Advancements
Inter vivos gift with the intent that it be applied against inheritance/wills
o At CL, gifts were automatically deducted from beneficiary/heir’s remaining interest.
o Now, gifts are only advancements if decedent declared an intent to make the gift an advancement in writing, OR the beneficiary/heir acknowledged the gift to be an advancement in writing
Wills
Operative upon death. A will must be at least:
(1) In writing
(2) Signed by testator – any mark intended to be a signature suffices. Presence and direction needed for proxy
(3) Signed by at least two competent W – must see testator sign the will + sign as witnesses in testator’s presence in a reasonable time
—-Licensed notary satisfies this requirement in many states
(4) Testator has capacity (18+ and mental capacity) and testamentary intent
Interested Witness to a Will
—-CL - Where a W stands to benefit under the will, the will is valid but gift to W is void unless there were two other disinterested Ws or the interested W would take if there was no will
—-UPC – presence of interested W does not invalidate a will or any part of it
Testator capacity
Testator has capacity (18+ and mental capacity) and testamentary intent
- Mental capacity – testator must understand the nature of his act, his property, the persons, and the disposition > Rebuttable presumption exists that testator had mental capacity
- Testamentary intent – testator must have present intent for the instrument to operate as his will
Attestation clause
Clause between testator and witness signatures in a will, which sets forth that all elements were satisfied > prima facie evidence of the facts recited
Holographic will
Handwritten, unwitnessed will. Replaces/revokes any prior valid will. Are required to:
o Be in testator’s writing
o Be signed
o Reflect testator’s intent to make a will
Codicil
An amendment, modification, or alteration to a previously executed will
o To be valid, a codicil must be executed with the same formalities required for the will itself
Construction of Wills
Ambiguity – extrinsic evidence is admissible to resolve ambiguity. Can be patent or hidden (cannot be carried out without further clarification)
Integration – occurs if:
o Physical presence — at the time of the will’s execution; and
o Intent of inclusion
– Can be established by W testimony and other extrinsic evidence
o Requirements are presumed where there is a physical connection/internal coherence
Acts of independent significance – > valid as long as the act or event has some independent significance (ex: identifying beneficiaries or property)
Incorporation by reference – where:
o Intent to incorporate
o Authenticated document — the will sufficiently describes doc so that it can be authenticated; and
o In existence upon will execution (BUT tangible personal property exception)
Mistake – permits the use of extrinsic evidence. C&C std to prove the testator’s intent.
Revocation
- by written instrument, as long as there is:
o Intent — present intent to revoke; and
o Formalities — made with the same formalities required for will execution - by physical act
- by partial marking - marks of cancellation on the will
o Where such marks are found on a will known to have last been in testator’s possession, a presumption is created that the marks were made by testator with the requisite intent to revoke
Revocation by operation of law
Marriage following execution of a will (omitted spouse) – no effect in most states, but under the UPC the omitted spouse will take a share of decedent’s estate equivalent to what their intestate share would be
- Not applicable if will makes clear that the omission was intentional
Divorce following execution of a will — revokes all bequests made in favor of the former spouse, unless will expressly provides otherwise.
Pretermitted children — where testator’s will does not provide for children born or adopted after the will was executed, most states give the pretermitted child a share of testator’s estate equal to what they would have received through intestate succession
Revival
Where a will is revoked and the revoking instrument is subsequently revoked, the original will is presumptively revived
o Will is not revived if testator’s statements or other evidence make clear she did not intend to revive the prior will
Dependent Relative Revocation (DRR)
Revives the revoked will if doing so would come closer to giving effect to what testator tried, but failed, to do than would intestate succession. Applies where:
o Revocation was premised on some mistake of law or fact;
o Revocation would not have occurred absent testator’s mistaken belief that some other plan for disposition of property was valid; and
o The originally revoked will is closer to testator’s preference than would be intestate succession
Ademption
A gift of specific property in a will fails if it is no longer in testator’s estate at death
o Applies to specific devises only. Exceptions: replacement, balance of purchase, proceeds
o Where a general or demonstrative gift fails, estate generally must sell off other prop to satisfy the gift
o A minority of states apply the intent theory of ademption, under which an adeemed bequest is saved if evidence establishes that ademption would be inconsistent with testator’s intent
Abatement
Where an estate’s value is insufficient to pay its obligations and provide for disposition of property under a will, it must reduce (abate) gifts to pay the obligations and satisfy some bequests/devises
o Estate must always pay off obligations before distributing assets
o Most states abate estate property in the following order: (1) Property not disposed of by will, (2) residuary estate, (3) general devises – abate pro rata, and (4) specific devises and bequests
Anti-lapse statutes
A gift provided in a will lapses where the beneficiary predeceases testator, but the lapsed gift will be saved and vests in the predeceased beneficiary’s descendants if predeceased beneficiary was (1) A relative of testator (usually descendants only); and (2) had descendants
Ks Involving Wills
Valid Ks to make, not make, or revoke a will are enforceable
- Additional requirements — UPC and some states also require either:
o Provisions in the will state the material provisions of the K,
o Express reference in the will to the K and extrinsic evidence proving the K terms, or
o Writing signed by decedent/testator evidencing the K
- Remedy for breach — constructive trust in favor of the intended beneficiary under the K
- Joint wills are likely to be K for wills, but mutual wills are not
Will contest - No-contest clauses
States vary on how strictly they apply no-contest clauses
o Majority – no forfeiture of interest if beneficiary challenges in good faith and on the basis of PC
o Minority – no-contest clauses given full effect regardless of challenging
Wills contest - undue influence
A will is invalid if executed while testator was subject to undue influence that effectively overrode testator’s free will. Will contestant has burden of proof and must show:
o Influence was exerted on testator;
o Testator’s mind and free will were overpowered; and
o Testator’s will would not have been executed absent undue influence
Presumption of undue influence arises if:
(1) A confidential relationship (e.g., attorney-client) existed between testator and beneficiary, who exerted influence; and
(2) Beneficiary participated to a significant degree in executing, drafting, or procuring testator’s will
- Fraud – where a will or some of its provisions are the result of fraud, the will or the provision is invalid. Must be shown that:
o Testator has been intentionally deceived as to:
Character or content of the will or its provisions, and/or
Facts extrinsic to the will that would induce the will or a particular provision or disposition
o Testator acted in reliance on the misrepresentation
Will contest - mistake
Mistake as to nature of instrument – extrinsic evidence req to show that testator was mistaken as to the nature of the instrument he signed > nullifies the testamentary intent req
mistake in the inducement - no relief
Mistaken omission – no relief
Reformation for a mistake – UPC allows a court to reform terms of a will to conform to testator’s intent > must be shown by C&C evidence that a mistake of law or fact affected the will and testator’s intent
Power of Appointment
Authority granted to a person (donee) enabling donee to designate a new owner of property and how they take it. Power of appointment can be general or special
- General – donee can exercise her power in favor of anyone, including herself, her estate, her creditors, etc.
- Special – power is exercisable in favor of a limited class of appointees that does not include done
- Present vs. testamentary power – appointment power may be exercisable during donee’s life or only exercisable by donee’s will
Living Wills and Power of Attorney
Advanced healthcare directives - Requires a writing, signed by testator or principal or another at his direction, and witnessed by two adults
Living will – document specifying life-sustaining and pain-alleviating measures one does or does not want if he is indefinitely incapacitated
Durable healthcare power of attorney – document that appoints an individual as agent to make healthcare decisions on behalf of principal if principal is incapacitated
Trusts
A trust is a fiduciary relationship in which one party (trustee) holds legal title to property for the benefit of designated beneficiaries
Express trusts
Created with property owner’s express intent. Requires:
(1) Settlor with capacity to convey
(2) clear present intent to create a trust relationship
(3) Competent trustee with duties
(4) Definite beneficiary – specifically identify the beneficiaries by name, or sufficiently describe how beneficiaries will be ascertained
(5) Present and clear disposition of settlor’s specific property in trust
(6) Valid trust purpose – can be for any purpose that is not illegal, impossible, or contrary to public policy
Charitable trust
Trust that has the purpose of benefitting an unascertained group of people or the public at large
* Indefinite beneficiaries – met if they are unnamed and changing over time
* Charitable purpose – must be considered to benefit the public – the effect controls
* Can be perpetual – RAP does not apply
* Trust’s property can be applied to different charitable purposes through Cy Pres (modifies terms to near purpose)
Private trust
Created for the benefit of certain defined and/or ascertainable persons
* May be created inter vivos or as a testamentary trust (pour over will provision)
* Inter vivos requires either the transfer of property to another as trustee, or for the property owner to declare himself trustee for another + delivery
Writing not required, but an oral trust and its terms can only be established by C&C evid.
Resulting trust
Trust implied or imposed by law, most often when an express trust fails for some reason
o Settlor usually becomes beneficiary and trustee conveys title back to settlor/settlor’s estate
Constructive trust
Not a trust, an equitable remedy used in cases to rectify unjust enrichment or wrongful conduct
Trustee Powers, Responsibilities, & Duties
Powers – trustee has powers necessary and appropriate to properly invest, manage, and distribute trust property if not contrary to trust terms
Duties
o Duty to administer – must administer trust in good faith and in a prudent manner in accordance with trust terms and beneficiary’s interest
o Duty of loyalty — no self-dealing
o Duty to preserve property and make it productive
o Duty to report, to separate trust property and keep records, to enforce claims and defend trust
Discretionary trust
Trustee has absolute power and discretion to make decisions regarding distribution of trust property to beneficiaries
o Beneficiary’s creditors cannot reach the trust b/c beneficiary cannot compel payment from the trust, BUT if creditors serve trustee with process, trustee must first satisfy creditor’s claims
Support trust
Sirects trustee to pay beneficiaries from trust as much as is necessary for beneficiary’s support
Spendthrift trust
Prohibits beneficiaries from transferring their interests in the trust, either voluntarily or involuntarily
o Beneficiary’s creditors cannot reach beneficiary’s interest in the trust, but distributions to beneficiary are reachable
Trust termination
Trusts terminate automatically at the expiration of a specified trust term or when its purposes have become accomplished, unlawful, impossible, or contrary to public policy
- Private trusts — can be revoked (and thus terminated) or modified by settlor and/or beneficiaries in most states
o beneficiaries can modify or revoke upon consent of settlor and all beneficiaries or all beneficiaries can consent to modify or revoke if doing so would not frustrate a material purpose of the trust
