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Select Topics Part 2 > Wills and Trusts > Flashcards

Wills and Trusts Flashcards

1
Q

Wills Checklist

A
  1. Validity - Execution and Capacity
  2. Revocation
  3. Components of a will
  4. Construction and interpretation
  5. Intestate succession
  6. Rights of Surviving spouse and children
  7. Bars to succession
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2
Q

Testator

A

Person making the will

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3
Q

Dispositive Provisions

A

Set out how the property is to be distributed.

Includes special gifts to specific people.

Rest is distributed through residue or residuary clause

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4
Q

Executor

A

Responsible for the legal distribution of the estate after testator’s death by offering the will for probate and obtaining court approval for all acts

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5
Q

Probate

A

process of confirming the validity of a will and accounting for all the assets

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6
Q

Attestation Clause

A

Clause signed by the witnesses attesting to testator’s competence to make the will

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7
Q

Will Execution Issues

A
  1. Validity of testator’s signature
  2. Order and validity of the witness’ signatures
  3. Effect of interested witnesses
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8
Q

Witnesses’ Signatures

A

Witnesses, being present at the same time, must witness either the testator’s signature, or the testator’s acknowledgement.

After Jan. 01, 2009, if formalities of execution have not been met, will may be admitted to probate if the proponent establishes by clear and convincing evidence that at the time the testator signed the will, the testator intended the instrument to constitute his will

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9
Q

Interested Witnesses

A

Witnesses who receive something under the will more than they would receive in intestacy.

Creates a presumption of undue influence.

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10
Q

Holographic Will

A

Requires that the testator’s signature on all material provisions be in the testator’s handwriting.

No requirement of witnesses.

Can incorporate printed boilerplate but material provisions must be in testator’s handwriting.

Undated holographic will will be deemed invalid if there is another dated will

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11
Q

Holographic Will - Material Provisions

A
  1. Declaration as will
  2. Dispositive Clauses
  3. Naming of Executors, etc.
  4. Attestation Clause
  5. Signatures
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12
Q

Issues relating to Capacity

A
  1. Undue Influence
  2. Insane Delusion
  3. Fraud
  4. Mistake
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13
Q

Undue Influence Analyses

A
  1. Common Law Presumption of Undue Influence
  2. Statutory Undue Influence
  3. Standard Undue Influence
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14
Q

Common Law Presumption of Undue Influence

A

Presumption of undue influence that invalidates a gift if:

  1. Beneficiary is in a confidential relationship to a testator
  2. participates in some way in procuring a gift and
  3. gift is an unnatural bequest that favors the beneficiary
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15
Q

Statutory Undue Influence

A

When beneficiary is:

1) An attorney or caregiver, or is the person who drafts the instrument, or
2) is in a fiduciary relationship with the testator and transcribes the instrument,

it is presumed to be procured through undue influence

Blood relatives within the fourth degree is not presumed to be undue influence

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16
Q

Standard Undue Influence

A
  1. There was influence exerted on the testator
  2. Effect of the influence was to overpower the free will and mind of testator; and
  3. The product of the influence was a will which would not otherwise have been executed but for the influence

FACTORS:

1) testator vulnerability
2) beneficiary’s relationship to the testator gave beneficiary the opportunity to exercise undue influence
3) beneficiary had disposition to influence the testator and utilized actions and tactics designed to exert influence, and
4) gift to beneficiary was inequitable

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17
Q

Insane Delusion

A

But for insane delusion, the specific bequest would not have been made

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18
Q

Fraud

A

Fraud in the execution - Testator is misled into executing the instrument by false representations concerning the character or content of an instrument (rare)

Fraud in the inducement - false representations of the facts that influence testator’s motivation

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19
Q

Mistake

A

Mistake in the character of the document.

Mistake in the inducement - based on a mistaken belief in untrue facts. No relief unless both the mistake and disposition appear on the face of the instrument

Clear and convincing extrinsic evidence admissible to establish mistake and actual intent to reform will even if no mistake on the face of the will.

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20
Q

Which Will Do We Use?

A
  1. Revocation
  2. Revival
  3. Dependent Relative Revocation
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21
Q

Revocation

A

1) by subsequent will
2) by physical act (cancellation, tearing, blotting out)
3) by operation of law (CA - divorce or termination of domestic partnership)

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22
Q

Revival

A
  1. Will 2 revokes Will 1
  2. Will 2 revoked by PHYSICAL ACT
  3. Contemporaneous or subsequent declaration by T showing intent to revive Will 1 by revoking Will 2
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23
Q

Dependent Relative Revocation (DRR)

A
  1. T revokes all or part of a will
  2. Based on mistake of law or fact.

Court will give effect to the revoked portion if it is consistent with what the court determines was testator’s intent.

If revocation is by physical act- extrinsic evidence of mistake or intent allowed

If by subsequent will, mistake must appear on face of the will.

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24
Q

What Documents are Part of a Will?

A
  1. Codicil
  2. Integration
  3. Incorporation by Reference
  4. Acts of Independent Significance
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25
Q

Codicil

A

Addition or supplement that explains, modifies or revokes a will or part of a will

Requires same formalities as a will.

Admissible to probate by itself

To the extent the will is not changed by the codicil, it is deemed to speak as of the date of the codicil, so the unaltered remainder of the will is republished by the codicil.

26
Q

Integration

A

Will consists of all papers or writings actually present at the time of execution and that the testator intended to physically constituted her will.

Intent and presence is presumed when papers are physically connected or there is an internal sense of connectedness shown by the provisions running from one page to the next.

These elements may be shown by extrinsic evidence

27
Q

Incorporation by Reference

A

Not physically part of the will. A separate document.

  1. Incorporated writing must be in existence as of the date of execution of the will
  2. will shows testator’s intent to incorporate the writing
  3. writing must be sufficiently described in the will
28
Q

Acts of Independent Significance

A

Non-testamentary acts used to resolve ambiguity on the face of the will.

Act or event must have a sufficient significance apart from its impact on the will or the estate

29
Q

Interpretation of Wills

A
  1. Extrinsic Evidence
  2. Specific v. General Legacies
  3. Increase/Accretion
  4. Ademption
  5. Lapse
30
Q

Extrinsic Evidence

A

Admissible to explain any ambiguity in a will - latent or patent

Not admissible to show a will provision has a meaning to which it is not reasonably susceptible.

  1. identify the ambiguity
  2. explain why it is ambiguous
31
Q

Specific v. General Legacies

A

Specific legacy - gift of a particular item of property distinct from all other objects in the testator’s estate

Consider: 1) increase/accretion; 2) ademption; 3) lapse and anti-lapse

General legacy - gift of general economic benefit

32
Q

Increase/Accretion

A

Specific gift increases in number or amount.

Majority rule (CA) - increase in a specific gift goes to the beneficiary

Examples: stock split; stock dividend

33
Q

Ademption

A

Occurs when specific gift identified in the will is no longer there when the testator dies.

Ademption by Extinction - occurs when specific gift is no longer owned by testator at the time of his death

Ademption by satisfaction - occurs when testator gives beneficiary a substitute fit during testator’s lifetime

Beneficiary is not entitled to the special gift at testator’s death

CA will admit extrinsic evidence to determine if testator intended to adeem the gift.

34
Q

Simultaneous Death

A

If testator and beneficiary die simultaneously, or it cannot be determined which one died first:

  1. Beneficiary is deemed to predecease testator
  2. if all beneficiaries predecease, each deemed to survive the other so estate is split among their lines
  3. if spouse die simultaneously, 1/2 to each person’s estate
  4. if Joint-Tenants die simultaneously, pro rata share to each joint tenant’s estate
35
Q

Lapse and Anti-Lapse

A

Lapse - If beneficiary predeceases the testator or trustor, the gift lapses and falls to the residue in the absence of an applicable anti-lapse statute

CA Anti-Lapse Statute:

1) Where predeceased beneficiary is kindred of the testator/trustor or of the testator’s/trustor’s surviving, ex- or deceased spouse; and
2) Predeceased beneficiary left issue surviving them, the gift in that case goes to surviving issue of the beneficiary

Surviving issue take predeceased beneficiary’s share. If more than one, divide based on per capita by right of representation.

Does not apply if will evidences contrary intention - (survive 30 days)

36
Q

Intestate Succession

A

Spouse receives community property and all separate property if decedent leaves no issue.

if there is one child, parent, sibling, or issue of deceased sibling, spouse receives 1/2 separate property

if more than one child or issue of deceased children, spouse receives 1/3 separate property.

Lineal descendants take per capita (equally) if they are all are of equal degree of kinship to the decedent

if the issue are of unequal degrees of kinship to decedent, estate is divided into shares based on the nearest generation in which there are living descendants of the testator - one share for each living member of that generation and none share for each deceased member of the generation, with their shares being taken by their issue by right of representation

Simultaneous death if beneficiary does not survive decedent by 120 hours (5 days) unless result is escheat (goes to the state)

37
Q

Pretermitted Spouse

A

Spouse may dispose of their half of the community property by will to whomever they wish

However, spouse omitted from a premarital will receives her intestate share of testator’s estate unless

1) the omission was intentional as shown in the will,
2) the spouse is provided for in transfers outside the will; or
3) testator had other children and left their estate to the parent of the omitted child

38
Q

Pretermitted Child

A

Parent can fail or refuse to leave anything to their child or children. However, child omitted from a pre-birth will (child born after the will) receives her interstate share unless:

1) omission was intentional as shown in the will;
2) child is provided for in transfers outside the will; or
3) testator had other children and left their estate to the parent of the omitted child.

Principle applies if testator fails to provide for a child solely because testator believes child is dead or is unaware of the birth of the child

39
Q

Bars to Succession

A

Beneficiary is barred from receiving his or her share if they feloniously and intentionally kill the decedent, commit elder abuse (physical/financial) of decedent, or unsuccessfully brings a will contest if there is no contest clause in the will

40
Q

Trust Issues

A
  1. Formation and validity
  2. Fiduciary duties of trustees
  3. Remedies for breach of fiduciary duty
41
Q

Trust Formation and Validity

A
  1. settlor or trustor who creates the trust
  2. trustee whose duty is to manage the trust
  3. intent to create a trust
  4. trust property (res)
  5. delivery of trust property to trustee
  6. beneficiaries
  7. valid trust purpose (estate planning is always a valid purpose)
42
Q

Secret Trusts

A
  1. Gift is absolute on the face of the will
  2. Secret agreement to hold gift in trust for benefit of another
  3. Must be proven by CLEAR & CONVINCING evidence

Court will impose a constructive trust to prevent unjust enrichment

Statute of frauds not a bar because action is not to enforce original secret trust but to impose a constructive trust on beneficiary/secret trustee to avoid unjust enrichment

Statute of wills - requires compliance with statutory formalities of a will - not a bar because constructive trust does not operate to modify the will but operates solely on the trust property itself

43
Q

Semi-Secret Trusts

A

Gift in Will to T in trust but terms of trust are not apparent (separate agreement)

Trust FAILS - statute of frauds does not allow identification of beneficiary by parol evidence

Resulting trust to residuary/intestacy

44
Q

Charitable Trusts

A

Purpose is to benefit the public.

Controlling factor is the effect of the gift, not the motive of the donor not the motive of the donor.

RAP - no violation if shifting executory interest is held by another charity

45
Q

Cy Pres

A

As Close as Possible.

Where settlor had a charitable intent, but specified charitable gift as specified cannot be concluded (donee no longer exists),

Court must decide whether settlor had a specific charitable intent and thus:

 - would have intended the trust to fail in the absence of the named charity, or 
 - had a general charitable intent and would have wished the property devoted to a similar use that is as near as possible to the original use

Where court decides settlor had specific intent to benefit a particular charity, property passes as a resulting trust to settlor’s successors in title

46
Q

Spendthrift Trusts

A
  1. Beneficiary cannot alienate (Transfer/hypothecate/pledge) interest in trust (cannot get a loan against the trust)
  2. Assignee/creditor cannot compel trustee to pay
  3. Beneficiary cannot give away future income or capital to creditors or anyone else

Restraint on alienation does not apply once the trust income has been paid out to the beneficiary but creditor then has to catch beneficiary with assets

Exceptions - Creditors who can compel payment by trustee:

1) Claims of dependents (spousal/child support)
2) Government claims (taxes)
3) Suppliers of necessities (food/housing/medicine)

47
Q

Discretionary Trusts

A

Trustee has complete discretion whether to pay or withhold payments to beneficiaries.

Before trustee exercises discretion, creditors cannot reach trust

After trustee elects to exercise discretion, if trustee has notice of assignment or attachment, trustee must pay creditor

Exception - Spendthrift provisions

48
Q

Support Trusts

A

Trustee is required to pay ONLY as much as is necessary for support of beneficiary.

Payout must be a limited amount.

“All the income for support” is NOT a supportive trust because it is not limited.

Non-assignable - trustee does not pay creditors, even with notice of assignment or attachment

49
Q

Termination of Trust

A
  1. By Settlor / Trustor - almost limitless ability to terminate so long as trust is revocable
  2. By Trustees - trustee can NEVER terminate a trust
  3. By Beneficiaries - revocable / modifiable IF:
    a) ALL beneficiaries consent AND b) will not interfere with material purpose of the trust
50
Q

Failure of Express Trust

A

1) Express trust fails (because the beneficiary is dead),
2) Equity creates a resulting trust in the settlor (or, if the settlor is dead, the settlor’s estate),
3) Court then compels the resulting trustee to distribute the property to the settlor or the settlor’s estate

51
Q

Fiduciary Duties of a Trustee

A
  1. Delegation
  2. Duty to Earmark
  3. Duty of Care
  4. Duty of Prudence/To Diversify
  5. Duty to Make Property Productive
  6. Duty of Loyalty
  7. Duty to Act Impartially
  8. Principal and Income Allocation
52
Q

Delegation

A

Trustee may delegate management functions (hire experts) that a prudent trustee would delegate and must exercise reasonable care, skill, and caution in:

  • selecting an agent,
  • establishing the scope and terms of the delegation
  • periodically reviewing agent’s actions

Trustee liable for wrongful acts of delegate

53
Q

Earmarking

A

Trustee cannot commingle - keep trust property separate from personal property

Title assets “T as trustee of the ABC Trust”

54
Q

Duty of Care

A

Trustee must manage investments as a prudent investor would, and thus must exercise reasonable care, skill, and caution

Care - trustee’s diligence and efforts (duty to investigate, to make reasonable effort to research and verify info likely to affect the value of investment assets)

Skill - trustee’s capabilities, use of capable experts

Caution - element of conservatism in managing the trust (evaluate each investment as part of an overall investment strategy that has risk and return objectives suited to the particular trust)

55
Q

Duty of Prudence/To Diversify

A

Trustee is required to make prudent investments.

Prudence requires diversification and placing trust assets into investments that will maximize the value of trust assets

56
Q

Duty to Make Property Productive

A

Trustee has a duty to make property productive and not simply exist without earning anything.

  • Non-productive property (vacant land)
  • Trustee fails to collect claims/assets
  • Trustee fails to invest funds
57
Q

Duty of Loyalty

A

Trustee has fiduciary duty to the beneficiaries.

Prevents trustee from purchasing trust property for the trustee’s own account or that of related persons.

Court must approve before trustee enters into self-dealing transactions

58
Q

Duty to Act Impartially

A

Trustee has duty to act impartially toward both income and principal beneficiaries. This means trustee CANNOT choose investments that largely favor income over the growing value of the trust corpus

59
Q

Duty to Administer

A

Duty to administer trust according to its terms by following instructions of the trust

Similar to agent’s duty of obedience

60
Q

Principal and Income Allocation

A

UPIA sets out how to allocate various distributions to either principal, for benefit of remainder beneficiaries, or income, for benefit of income beneficiaries

Cash to income UNLESS

  - capital gain
 - distribution in liquidation or corporation or partnership

Stock dividends and capital gains treated as principal

Insurance proceeds to principal UNLESS from loss of business income

Patents, copyrights, royalties and leases - 10% to income, 90% to principal

61
Q

Duty to Allocate Expenses

A
  • Ordinary expenses - all to income
  • Trustee/attorney/accountant and other compensation - 1/2 to each
  • Principal on debt, estate taxes, environmental cleanup - all to principal
62
Q

Remedies for Breach of Fiduciary Duty

A

Trustee is liable for all losses resulting from the breach and will be surcharged for the loss.

Loss from one breach cannot offset a gain from another breach - trustee will still be liable for entire amount of the loss

Trustee can also be removed as trustee

Select Topics Part 2 (7 decks)

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