Wills & CP

Question 1

When is a will validly executed under California law

Answer 1

CIF

A will is validly executed according to California law if: 1) the testator has testamentary capacity, 2) the testator has present testamentary intent and 3) the will complies with applicable formalities.

Question 2

when does a testator have testamentary capacity under California law?

Answer 2

The testator has testamentary capacity if (1) the testator was at least 18 years or older,
2) understands the nature and situation of her property,
3) the testator understands their relationships and those whose interests are affected by the will, and
4) the testator understands the significance of the testamentary act.

Question 3

when does a testator have present testamentary intent?

Answer 3

If the testator intends to presently make a disposition of his property that will be effective upon his death.

Question 4

Formal requirements for an attested will

Answer 4

1) a signed writing
2) in the simultaneous presence of two disinterested witnesses who understand the testamentary nature of the act, and
3) the witnesses sign the document within the testator’s lifetime.

Question 5

Formal requirements of a holographic will

Answer 5

1) in writing, 2) with material terms handwritten by the testator (e.g. gifts and recipients), 3) is signed by the testator, and 4) expressly states the present testamentary intent of the testator.

Question 6

Omitted spouse definition and rule

Answer 6

An omitted spouse is the spouse who married the testator after the execution of the last testamentary instrument by the testator and the spouse is not mentioned or provided for in those testamentary instruments.

An omitted spouse receives other half of CP and QCP (total 100% CP) + up to ½ share of SP, unless 1) will shows
omission was intentional, 2) the spouse is provided for outside of the testamentary instruments, or 3) voluntary and knowing waiver by the spouse.

Question 7

pretermitted child definition and rule

Answer 7

A pretermitted child is one who was born after the execution of the last testamentary instrument and is not mentioned or provided for in the testamentary instrument.

A child born before the execution of the last testamentary instrument may still qualify as a pretermitted child if the testator did not know about the child’s existence.

receives intestate share, unless 1) the will shows omission was intentional, 2) T provided substitute transfer (T provided for the omitted child outside the will when T leaves substantially all
estate to SS who is child’s parent) outside will, or 3) T had other children and left estate to parent of omitted child

Question 8

Abatement

Answer 8

Abatement (estate insufficient to pay all debts and claims): Gifts are reduced (abated) pro rata under a will to satisfy
the debts and claims of an estate in the following order by default—intestate property, residuary devises, general
devises [non-relatives, then relatives], demonstrative devises, specific devises [non-relatives, then relatives]

Question 9

Community property general presumptions

Answer 9

California is a community property (CP) state.

Property acquired during the marriage is presumptively CP. Property acquired before the marriage, by gift, will, or inheritance (WIG), or after termination of marriage, or income acquired from
such property is presumptively separate property (SP).

If the couple resided in another state for part of their marriage, Quasi-CP (QCP) is property acquired by either spouse that would have been CP had the spouse been domiciled in California at the time of acquisition. This is treated as SP but as CP upon divorce or death

QMP is property acquired during a void or voidable marriage that would have been CP had the marriage been valid. This is treated as CP

With these principles in mind, each item of property will be examined.

Question 10

valid premarital agreement

Answer 10

must comply with SOF

voluntary and not unconscionable.

unconscionable = terms are unfair, or if a spouse did not know the extent of the other spouse’s property before signing the agreement.

voluntary (party against whom enforcement is sought) = (1) independent legal counsel (can waive in writing); (2) 7 days to consider the agreement; (3) was
fully advised in writing of all the rights and obligations that attach to PMA

Question 11

Disposition at divorce of CP and the four exceptions

Answer 11

At divorce CP is divided “in kind”; each spouse is entitled to receive one-half interest in CP asset
EXCEPTIONS: MELT

misappropriation by spouse, educ. debts & tort liab. assigned to spouse, liabilities > assets

Question 12

disposition of CP at death

Answer 12

At death
1. decedent may dispose of his half CP + all SP by will
2. SS of intestate decedent is entitled to all CP + at least one-third of SP, depending on # of children and parents

Question 13

transmutation definition and exceptions

Answer 13

Agreeing during marriage to change the character of a particular asset

Before 1985: can be oral or signaled through conduct

After 1985: Need signed writing by adversely affected spouse, expressly declare a change in the ownership

UNLESS…
Gift of Insubstantial value

Question 14

CP characterization for Tort recoveries

Answer 14

If tort happen during marriage, then recovery is CP

If tort happened before or after marriage, then recovery is SP (and community is entitled to reimbursement if medical bills were paid out of community funds

BUT on divorce, remaining recovery goes to the injured spouse

Question 15

Debts incurred during marriage

Answer 15

CP and debtor’s SP liable for debts incurred during marriage. If for necessaries, then non debtor’s SP is liable too. First from CP, then debtor’s SP, then non debtor’s SP if necessary

Question 16

Moore formula; when does it apply and what is it

Answer 16

SP down payment; premarital loan on home purchase shortly before the marriage (8 months in Moore); loan paid with CP

Owner’s SP = down payment + loan amount - CP loan payments.

Owner is liable for loan

Question 17

Marsden formula

Answer 17

Home purchased long before marriage

Owner’s SP % = down payment + loan amount - CP loan payments

Divided by purchase price

use this to determine property interest

Any loan payment or pre-marital appreciation of property goes to owner spouse.

Question 18

Married Women SP Presumption

Answer 18

title in W’s name alone presumes her SP PRIOR to 1975

Question 19

spouse entitled to reimbursement for which types of SP contributions to CP home?

Answer 19

DIP

Down payments,
Improvements
Principles of loans

Question 20

fiduciary duty between spouses, and what is the remedy for breach?

Answer 20

• highest level of good faith and fair dealing
• fiduciary duty of full disclosure of material facts about CP assets and debts, and to provide equal access to information upon request
• breach of fiduciary duty can result in harmed spouse receiving more than half of CP

Question 21

two methods for tracing

Answer 21

For commingled property (presumed CP), proponent of SP has burden of proving what is SP

1. Direct tracing: Proponent of SP attempts to identify with sufficiently accurate records
2. Exhaustion method: Show that at the time the asset was purchased, the community expenses
   exceeded the community funds. Funds used to purchase with is necessarily SP
3. If tracing not done/possible: if CP substantially < SP → then SP

Question 22

Valid capacity to create a will

Answer 22

18 yo
mental capacity: Must understand NPR
Nature of the act
situation of the property
relations with family members

Cannot be insane

Question 23

Valid creation of a will requires

Answer 23

Capacity and intent

intent to create a will

Question 24

formalities of an attested will

Answer 24

WSJ SU
1) in writing,
2) signed by T (or another at T’s direction and presence),
3) signing or acknowledgment in JOINT presence of 2+ witnesses,
4) signed by 2+ witnesses during T’s lifetime (can be separate),
5) witnesses understand instrument being witnessed is T’s will

Question 25

interested witness

Answer 25

Unless 2+ other disinterested signing witnesses, presume
fraud/duress/UI.

If presumption not rebutted, gift to interested witness fails, may only take intestate share. If gift acquired through actual fraud/duress/UI, not entitled to any portion of gift

Question 26

holographic will requirements

Answer 26

Will 1) signed by T with 2) material provisions in T’s handwriting. No witnesses needed

Question 27

codicil

Answer 27

amendment to existing will made by T to change, explain, or repulblish his will. It must meet the same requirements as an attested or holographic will. A valid codicil operates as republication of the original will

Question 28

incorporating by reference

Answer 28

a document is incorporated by reference when a will refers to a document outside the will if the document is already in existence, and the will refers to and shows intent to incorporate, and the document is sufficiently described in the will

Question 29

order of distribution of estates

Answer 29

specific gifts –> general gifts (those not from a particular source –> remainder

Question 30

What is an Pretermitted child?

Answer 30

a child born after a will is executed or when T is unaware of the child’s existence.

An Pretermitted child will receive their intestate share of the estate unless the child has been otherwise provided for, or the will explicitly states it will not include future or unknown children. All other devisee’s shares abate to account for their intestate share.

Question 31

Elements of a valid trust

Answer 31

Valid trust CRIB+Purpose:

1) intent (by words or conduct),
2) settlor capacity (presumed unless contrary evidence such as UI, fraud, mistake),
3) identifiable trust property (res) in
4) ascertainable beneficiary
5) valid trust purpose

Question 32

cy pres

Answer 32

charitable trusts only: If the original charitable purpose is frustrated or can no longer be pursued, trustee
and court can modify the trust to one “as near as possible” to the settlor’s original purpose
i. Only applicable if settlor had general charitable intent, not a specific charitable inte

Question 33

Revival of a will can occur when

Answer 33

(1) express revival: T executes a valid will or codicil expressly indicating intent to revive will
(2) if Will 2 (can be codicil) revoked by physical act, Will 1 revived ONLY if circumstances indicate (T’s contemporaneous or subsequent declarations)

Question 34

What are the ways to revoke a will?

Answer 34

by subsequent will (express or implied)
by physical act

Question 35

ademption

Answer 35

Ademption by extinction: Specific devise fails (is adeemed) when T no longer owns the gift at death. only change in nature (painting –> money) counts. Minor changes do not count. Beneficiary may collect sales price for specific devise only if it was not paid at the time of T’s death.

Ademption by satisfaction: An inter vivos gift in advance will be treated as a satisfaction of a testamentary gift if 1) instrument specifies deduction of the lifetime gift from the testamentary gift, or 2) T declares in a contemporaneous
writing that transfer is to be deducted from the testamentary gift, or 3) transferee acknowledges so in writing

Question 36

How can you revoke a trust?

Answer 36

the settlor can revoke the trust if the power is reserved expressly in the trust; CA: trust is revocable unless stated otherwise

Court can modify trust to meet the settlor’s intent

the trustee has no power to terminate the trust unless the trust provides otherwise

Question 37

Duties of trustees

Answer 37

duty of care: trustee must act as a reasonable prudent person dealing with his own affairs

Duty of loyalty: no self-dealing; treat all beneficiaries equally; conflict of interest

duty to diversify: prudent investor test (under uniform prudent investor act) or statutory list (real estate, fed bonds, public stocks)

Question 38

undue influence in creation of will

Answer 38

common law: if T susceptible to influence, wrongdoer has opportunity, actively participates, unnatural result

presumption of undue influence if fiduciary relationship and they caused it to be transcribed

CA: (1) Vulnerability of T, (2) apparent authority of influencer, (3) actions of influencer, (4) equity of result

Question 39

abatement

Answer 39

gifts will be reduced to satisfy the share of an omitted child by taking pro rata from other beneficiaries

Question 40

Dependent relative revocation (DRR)

Answer 40

Dependent relative revocation (DRR: “didn’t really revoke”) cancels a revocation based on mistake of law or fact
i. If T revokes on the mistaken belief that another disposition would be effective, and but for this mistake T
would not have revoked his will, the revocation is set aside, and the original will remains in force
ii. If revoked by subsequent instrument, EE not admissible to show the mistake
iii. If subsequent instrument is defective in the first place, revocation is also ineffective—DRR inapplicable

Question 41

Lapse of gift in a will, exception

Answer 41

If a beneficiary predeceases T, the gift lapses (into residue of estate)

BUT Anti-lapse statute [CA] provides a substitute beneficiary: Unless intended by will, the gift passes to the issue of the intended beneficiary, as long as they are also kindred to T or T’s spouse

Issues take by representation (per stirpes)

Question 42

take by representation (per stirpes)

Answer 42

“through the branches” where descendants take their shares via degree of kinship. e.g. The deceased child’s two children, the widow’s grandchildren, will split the deceased child’s one-third share, each receiving a one-sixth of the widow’s estate.

Question 43

simultaneous death of beneficiary

Answer 43

If it cannot be established by C&C evidence that one survived the other (by 120 hours by default), the property is administered as if the intended beneficiary predeceased T.

Question 44

what are the three bars to distribution of decedent’s estate?

Answer 44

a) Slayer statute: A person who feloniously and intentionally kills decedent is not entitled to benefit from his estate

b. Elder abuse: A person found liable by C&C evidence of elder abuse (physical, neglect, fiduciary) is treated as if he predeceased decedent

c. No-contest clause (causing a beneficiary to forfeit right to take) will be enforced, unless beneficiary, with probable cause, brings contest on grounds of forgery, revocation, interested witness, improper execution, or fraud/UI/duress

Question 45

intestate shares

Answer 45

Surviving spouse gets ½ CP and QCP (total 100% CP) + at least 1/3 SP depending on surviving kindred or issue

i. Decedent survived by SS only → all SP to SS

ii. Decedent survived by parents or issue of parents → ½ SP to SS, remainder to parents

iii. Decedent survived by 1 child or issue of child → ½ SP to SS, remainder to issue

iv. Decedent survived by 1+ child and/or issue of child → 1/3 to SS, remainder to issue

No surviving spouse: If spouse does not survive decedent, SP passes to issue, then to parents, then to parents’ issue, then to grandparents’ or their issue, then to predeceased spouse’s issue

e. Adopted person dies intestate: Property is distributed among those who would have been kindred

f. Child born out of wedlock: A natural parent may not inherit from the child, unless the parent 1) acknowledged the
child and 2) contributed to support or care of the child

Question 46

what is a pour-over provision?

Answer 46

T may dispose of property by will to an existing inter vivos (established during
lifetime) trust. Hence, an inter vivos trust may be a “will substitute, ” provided the will is valid
1. This trust must be clearly identified in the will and executed before/concurrently with the will
2. This trust may be amended or revoked after execution of the will
3. This trust may be unfunded during T’s lifetime

Question 47

what is a testamentary trust?

Answer 47

trust created by a will

Question 48

two formulas to calculate business ownership between a couple

Answer 48

1. Pereira improvement due to management, labor, or special skills of spouse

Original SP investment + reasonable rate (10%) per year to owner spouse is SP. Rest is CP (½ to owner)

2. Van Camp improvement from unique character of business or market forces

(Reasonable FMV salary – community/family expenses paid by business) × years married = CP.

Remainder of the business = owner spouse’s SP

Question 49

Two prevailing “time rules” to apportion stock options to CP.

Answer 49

• Hug formula (generally favors CP): Number of shares * (date of hire – date of separation) / (date of hire – date of vest)
  o Percentage of married time between starting work and vesting
  o Used when options primarily intended to reward past services or attract employee to job
• Nelson formula (favors CP less): Number of shares * (date of grant – date of separation) / (date of grant – date of vest)
  o Percentage of married time between acquiring options and vesting
  o Used when options primarily intended as compensation for future performances and incentive to stay with company

Question 50

Debt liability within a marital economic community

Answer 50

All debts and liabilities of both spouses before and during the existence of the marriage are CP. All debts and liabilities by spouses after divorce or permanent separation are that spouse’s SP.

An exception exists if the debt or liability is for necessaries of life,
such as food or medical expenses.