Wills and Trusts

Question 1

Pour-over from will to trust

Answer 1

California has adopted the Uniform Testamentary Additions to Trusts Act, under which a testator can make gifts by will to a trust, provided that the trust instrument was executed before or concurrently with the will and is adequately identified in the will.

Question 2

Incorporation by reference

Answer 2

Incorporation by reference requires that a written document instrument to be in existence at the time the will is executed. It must be clearly identified in the will, and there must be proof that the proffered document is the one described in the will. If these requirements are met, the court will infer intent to incorporate.

Question 3

Omitted Child

Answer 3

California has a statute that protects children from being unintentionally omitted from their parent’s will. In California, if a decedent fails to provide for a child born or adopted after the execution of the decedent’s testamentary instruments, the child receives his intestate share of the decedent’s property. This rule includes children who were alive when the testamentary instruments were executed but the testator either believed that the child was dead or was unaware of his birth. The child’s share includes the decedent’s probate estate, plus all property held in a revocable trust that becomes irrevocable on death. An intentionally omitted child will not inherit under the will.

Question 4

Intestacy Shares

Answer 4

Any part of a decedent’s estate that is not properly disposed of by will passes to the decedent’s intestate heirs as prescribe by statute. If there is a surviving spouse…
If there is no surviving spouse, the entire estate passes to the decedent’s surviving issue. Descendants of a living descendant are excluded. If the eligible surviving issue are all of the same generation, they take equally.

Question 5

Duties owed by trustee

Answer 5

With a revocable trust, a trustee’s duties are owed exclusively to the settlor. A trustee of an irrevocable trust owes her duties exclusively to the beneficiaries. Trustees have a duty of are, duty to separate and earmark trust property, a duty to preserve the trust and make it productive, a duty to invest, a duty to diversify, a duty of loyalty and duty to account.

Question 6

Trustee’s liability to beneficiaries

Answer 6

If a trust commits a breach of trust, the beneficiaries may sue the trustee for the amount necessary to restore the trust property and distribution to what they would have been without the breach. This includes any losses resulting from the breach and for any profit that would have accrued but for the breach. This is a surcharge and the trustee is personally liable.

Question 7

Duty to administer trust

Answer 7

The trustee has a duty to administer the trust in good faith and in a prudent manner, in accordance with the terms and purposes of the instrument.

Question 8

Duty of care - Prudence

Answer 8

A trustee must exercise the degree of care, skill, and caution that a reasonably prudent person would in managing her own property. Care relate to diligence, skill to capabilities, and caution to conservatism in administering the trust.

Question 9

Duty of loyalty and impartiality

Answer 9

A trustee owes a duty of undivided loyalty to the trust and its beneficiaries and may not deal with the trust in a person capacity. This includes using or borrowing trust funds. A trustee has a duty to administer the trust solely in the beneficiaries interest, and if there is more than one beneficiary, the trustee must act impartially. A trustee cannot favor one beneficiary over another.

Question 10

Trustee’s defenses to breach of duty

Answer 10

Equity will not enforce a trust if the beneficiaries expressly or impliedly consented to the breach. Also, the beneficiaries must sue within a reasonable time or they will be barred by laches.

Question 11

Revocation

Answer 11

A testator can revoke a will by subsequent instrument, a physical act, or by operation of law.
A testator can revoke a will by physical act by burning, tearing, canceling, destroying, or obliterating it, with the intent to revoke. The destruction must occur though some material part of the will. A statement alone is not enough to revoke a will, it must be coupled with a concurrent act of revocation.

Question 12

Revival

Answer 12

Generally, revival of a revoked will concerns a will that was revoked by a subsequent instrument, which itself is revoked by physical act or subsequent instrument, so long as there was intent to revive by the testator. A will may also be revived by reexecution or republication. A will may be reexecuted by the testator acknowledging her signature or the will and having witnesses attest to it. A will still in physical existence by be revived through publication of a codicil.

In California, the revival of a revoked instrument depends on the tesator’s intent. If the revoking instrument is itself revoked by physical act, extrinsic evidence is admissible to prove the testator’s intent to revive the will.

Question 13

Codicil

Answer 13

A codicil is a testamentary instrument intended to modify, amend, or revoke an existing will.

Question 14

Holographic instruments

Answer 14

California recognizes holographic wills and codicils. To be valid, the signature and material provisions of a holographic will must be in the testator’s handwriting.

Question 15

Integration

Answer 15

A will can be written on more than one piece of paper. A will consists of all papers that were actually present at the time of execution and that the testator intended to constitute her will. All of the sheets of an integrated will are probated as parts of the testator’s will. The requisite intent and presence of the papers at execution are presumed when there is a physical connection of the papers. Extrinsic evidence is admissible to show which papers were intended to be integrated.

Question 16

Undue influence

Answer 16

A will is invalid if it is obtained through undue influence, which is mental of physical coercion that deprives the testator of her free will and substitutes her desires for those of another. Contestants have the burden of proof to show that influence was exerted on the testator, that the effect of the influence was to overpower the mind and free will of the testator, that the product of the influence was a will that would not have been executed. Undue influence is usually proved by circumstantial evidence and factors include opportunity to exert influence, the susceptibility of the testator, whether the beneficiary was active in procuring the will, and whether the provisions seem natural.

Question 17

Presumption of influence

Answer 17

A presumption of undue influence shifts the burden of proof to the proponent of the will and arises where there is a confidential relationship between the testator and the beneficiary, the beneficiary participated in procuring, drafting, or executing the will, and the will provisions are unnatural and favor the alleged influencer.
In California, there is a statutory presumption of undue influence if there is a provision in favor of the following people: the person who drafted the instrument, a person in a fiduciary relationship with the testator and transcribed the instrument, a testators care custodian.

Question 18

Creation of a trust

Answer 18

A trust is a fiduciary relationship with respect to property whereby one person, the trustee, holds legal title for the benefit of another, the beneficiary. Creation of a valid express trust requires: property, a trustee with duties, a definite beneficiary, a manifestation of intent to create a trust by a settlor with capacity, and a valid trust purpose.

Question 19

Trust revocation

Answer 19

In California, a trust is presumed revocable unless the trust instrument expressly provides that it is irrevocable. Where there is power to revoke, that power generally lies with the settlor, although all beneficiaries may consent to terminate a trust if no material purpose will be impaired. Generally, a trustee may not unilaterally terminate a trust.

Question 20

Lapse and anti-lapse

Answer 20

When a beneficiary dies or ceases to exist after the testator executes his will but before the testator dies, the gift lapses. Generally the lapsed gift falls into the residuary estate or, if non, passes by intestacy. Nearly all states have enacted anti-lapse statutes which provide a substitute beneficiary. The California anti-lapse statute applies only if the predeceasing beneficiary was a blood relative of the testator or of the testator’s spouse or domestic partner. If the statue applies, the issue of the predeceasing beneficiary take the beneficiary’s gift per capita with representation.

Question 21

Specific and general legacy and ademption

Answer 21

A specific legacy or devise is a gift of a particular item of property distinct from all other objects in the testator’s estate. A general legacy is a gift of general economic benefit, payable out of the general assets of the estate. Usually, a specific bequest is adeemed if the specific property is not part of the testator’s estate at his death. Where a specific gift is adeemed, it fails, and the beneficiary does not inherit under the will. Courts will look at the specificity of the language in the bequest to determine if the legacy is general or specific, and will look to the intent of the testator to see if they intended to devise to be adeemed. Courts will generally try and avoid ademption.

Question 22

Residuary

Answer 22

A residuary gift is what remains of the testator’s property after paying debts, expenses, and taxes, and satisfying the specific, general, and demonstrative gifts.

Question 23

Duty to separate and earmark trust property

Answer 23

Trust assets must be kept physically separate from the trustee’s personal assets. In addition, trust property must be titled in the trustee as trustee.

Question 24

Duty to preserve trust property and make it productive

Answer 24

This is the duty to preserve and protect the trust property. From this duty, there is implied the duty to make the property productive, which includes the duty to invest. The trustee must invest within a reasonable time and continually review those investments. If the trustee fails to invest, they are chargeable with the amount of income that would normally accrue from appropriate investments.

Question 25

Duty to invest

Answer 25

Most states have enacted the Uniform Prudent Investor Act. This requires a trustee to invest and manage the trust as a prudent investor would, taking into account the purposes, terms, distribution requirements, and other circumstances of the trust. Any type of investment is permitted and prudence is evaluated as to the overall investment strategy rather than as to each investment. Along with the duty to invest is the duty to diversify.

Question 26

Will formalities

Answer 26

A valid will requires the signature of the testator, plus the signature of two witnesses who were present at the same time to witness or acknowledge the testators execution of the will.

Question 27

Holographic will formalities

Answer 27

A holographic will requires that the signature and all material provisions be in the testator’s handwriting.

Question 28

Dependent relative revocation

Answer 28

DRR cancels a revocation based on a mistaken assumption of law or fact and applies where the testator revokes his will on the mistaken belief that another disposition would be effective, and but for the mistake, T would not have revoked his will.

Question 29

Resignation of trustee

Answer 29

A trust must have a trustee, but a trust will never fail just because a trustee refuses to serve. When this happens, courts will appoint a new trustee and until that happens, title is in the trustor’s estate or with the court.

Question 30

Trust termination by beneficaries

Answer 30

Beneficiaries are usually allowed to terminate a trust only if all the beneficiaries consent and the termination will not impair a material purpose of the trust.

Question 31

Defenses for breach of duty

Answer 31

Equity will not enforce a trust if the beneficiaries expressly or impliedly consented to the breach. Also, beneficiaries must sue within a reasonable time or they will be barred by laches.

Question 32

Testamentary intent

Answer 32

For an alleged will to be valid, a testator must have had the intention to make the particular instrument his or her will. This issue will arise when someone else is influencing the testator’s intent to create a testamentary instrument.