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WILLS & TRUSTS Flashcards

1
Q

INTESTATE SUCCESSION: DEF

A

The statutory method of distributing assets not disposed of by will

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2
Q

INTESTATE SHARE OF SURVIVING SPOUSE: WITH LIVING DESCENDANTS

A

MOST STATES: 1/2 or 1/3 of estate

UPC: if living descendants are also descendants of living spouse - spouse takes the entire estate

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3
Q

INTESTATE SHARE OF SURVIVING SPOUSE - NO DESCENDANTS SURVIVING

A

MOST STATES: Spouse takes entire estate

UPC: Spouse takes entire estate if decedent has no living descendants OR parents

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4
Q

INTESTATE SHARE OF CHILDREN + OTHER DESCENDANTS: PER CAPITA BY REPRESENTATION

A

1) Property is divided into shares at the first generation with surviving takers
2) Each person at that generation takes a share and the share of any deceased taker passes to their issue by representation

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5
Q

INTESTATE SHARE OF CHILDREN + OTHER DESCENDANTS: PER STIRPES

A

1) One share passes to each child
2) If that child is dead, it passes to their descendants by representation

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6
Q

INTESTATE SHARE OF CHILDREN + OTHER DESCENDANTS: PER CAPITA AT EACH GENERATION

A

1) Property is divided into shares at the first generation with surviving takers
2) BUT the shares of the deceased persons in the first generation are combined and then distributed equally to the takers at the next generation

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7
Q

INTESTACY: ONLY PARENTS SURVIVE

A

One half of estate to each parent

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8
Q

INTESTACY: ONLY PARENTS AND SIBLINGS SURVIVE

A

SOME STATES: Entirety to parents
OTHER STATES: 1/2 to parents and 1/2 to siblings

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9
Q

SPECIAL INTESTACY CASES: ADOPTED CHILDREN

A

Adopted children are treated as natural kids. They can inherit through the adoptive parents and the adoptive parents can inherit through them

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10
Q

SPECIAL INTESTACY CASES: ADOPTION AND INHERITANCE OF NATURAL PARENTS

A

All inheritance rights of natural parents are cut off UNLESS the adoption is by a spouse of a natural parent in which adoptive child can still take from one natural parent

UPC - Allows for inheritance from BOTH natural parents

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11
Q

SPECIAL INTESTACY CASES: NONMARITAL CHILDREN

A

1) Can always inherit from the mother
2) Can inherit from the father IF:
- Marriage to mother after birth
- Paternity suit proves parentage
- After death of father he is proved the father in probate case

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12
Q

INTESTACY PROBLEMS: SIMULTANEOUS DEATH - USDA V. 120 HOUR RULE

A

USDA: when there is no sufficient evidence as to survival, the property of each heir is disposed of as if he survived

120 hour rule: one half of the states say that if an heir survives at least 120 hours after the decedent who died intestate, they take as an heir.

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13
Q

INTESTACY PROBLEMS: DISCLAIMERS

A

Heirs and beneficiaries may disclaim their right to inherit by: 1) writing, 2) irrevocable, 3) filed within 9 months of decedent’s death

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14
Q

INTESTACY PROBLEMS: SLAYER STATUTES

A

In most states, when one causes the death of a decedent intentionally or feloniously, they forfeit any and all interests in the estate

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15
Q

INTESTACY PROBLEMS: ADVANCEMENTS

A

An advancement is a lifetime gift made to an heir with the intent that it be applied against the heir’s share of the estate.

UPC Requirements: contemporaneous writing of intent by donor or writing of acknowledgement by donee

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16
Q

WILL EXECUTION REQUIREMENTS: TESTAMENTARY INTENT

A

1) A present intent established by the contents of the document itself

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17
Q

WILL EXECUTION REQUIREMENTS: CAPACITY

A

1) At least 18 yrs old and of sound mind
2) Understand the act
3) Understand the effect of the act
4) Understand the nature and extent of property
5) understand the natural objects of her bounty
6) Ability to do all of these at the same time

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18
Q

WILL EXECUTION: VALIDITY REQUIREMENTS

A

1) in writing
2) signed by T or someone at T’s direction in their presence
3) Two competent witnesses
- some states PURGE share to interested witness
- Some states say it doesn’t matter
4) T signs or acknowledge’s previous signing of will in W’s presence
5) W’s sign in T’s presence (conscious presence test)
6) OR NOTARY instead of Ws

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19
Q

HOLOGRAPHIC WILLS

A

Most states say that wills entirely in the Ts handwriting are valid, although the UPC only requires the material portions to be in Ts handwriting

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20
Q

WILL SUBSTITUTES: CODICILS

A

A codicil is a later testamentary instrument that amends, alters or modifies a prior executed will. A will is treated as executed on the date of the last valid codicil.

A valid codicil can incorporate by reference a prior invalidly executed will

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21
Q

WILL SUBSTITUTES: INCORPORATION BY REFERENCE

A

To incorporate an extrinsic document it must:
1) Exist at the time the will was executed
2) Will must sufficiently describe the writing to permit ID
3) Will must manifest intent to incorporate the writing

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22
Q

WILL REVOCATION: BY OPERATION OF LAW (In General

A

1) Many states allow for total or partial revocation of wills in the event of subsequent marriage, divorce, or birth or adoption of children

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23
Q

WILL REVOCATION: SUBSEQUENT MARRIAGE

A

1) Usually has no effect on old will because new spouse is covered under elective share statute
2) Some states: no revocation occurs if 1) will provides for new spouse, 2) spouse’s omission was intentional or 3) will was made in contemplation of marriage

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24
Q

WILL REVOCATION: DIVORCE

A

Revokes anything former spouse and spouse’s family members would have taken unless those people were also T’s family.

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25
WILL REVOCATION: BY WRITTEN INSTRUMENT
1) Must be executed with formalities 2) 2nd written testamentary document is read together will first will if possible and revokes inconsistent provisions of the first
26
WILL REVOCATION BY PHYSICAL ACTS
1) burning, tearing, obliterating, or cancelling a material portion of the will 2) intent to revoke at the time of the physical act 3) Presumed revoked if not found after death
27
WILL REVOCATION: REVIVAL
If a will that wholly revoked another is then revoked , the previous will REMAINS REVOKED unless it is evident that T intended to revive it
28
WILL REVOCATION: DEPENDENT RELATIVE REVOCATION
A court may disregard a revocation if it was based on a mistake of law/fact and would not have occurred but for the mistaken belief that another disposition of property was valid
29
CLASSIFICATION OF GIFTS: DEVISE
Gift of real property
30
CLASSIFICATION OF GIFTS: SPECIFIC BEQUEST
Personal property distinguishable from the rest of Ts estate
31
CLASSIFICATION OF GIFTS: GENERAL BEQUEST
Personal property not distinguishable from the rest of Ts estate
32
CLASSIFICATION OF GIFTS: DEMONSTRATIVE LEGACY
gift of specific sum of money payable out of a designated source
33
CLASSIFICATION OF GIFTS: GENERAL LEGACY
gift of money not identified to be payable from a specific source
34
CLASSIFICATION OF GIFTS: RESIDUARY
Gift of remainder of the estate after all debts and other gifts are paid
35
ADEMPTION
When property bequeathed is no longer in Ts estate, the bequest is adeemed (it fails)
36
EXONERATION OF LIENS
Some states: liens are paid off from estate funds first UPC: no exoneration of liens on property unless will says so
37
ABATEMENT
Is the process of reducing gifts when estate funds are insufficient to satisfy gifts. The order is as follows: 1) intestate property 2) residuary 3) general gifts 4) demonstrative gifts 5) specific gifts
38
SPOUSE: ELECTIVE SHARE
This gifts the surviving spouse the right to a portion of the estate regardless of what the will says. The percentage varies amongst states
39
COMMUNITY PROPERTY STATES: NO ELECTIVE SHARE
The surviving spouse takes 1/2 of the community property while the decedent can only give away personal property and their 1/2 of the community property.
40
WILL CONTESTS: INSANE DELUSION
1) Persistent belief of state of facts against all evidence. 2) Must have connection btw insane delusion and property disposition
41
WILL CONTESTS: UNDUE INFLUENCE
1) Influence existed and was exerted 2) Influence overpowered T’s mind and free will 3) Caused T to execute a will with different terms EVIDENCE: * Unnatural disposition * Opportunity * Confidential/fiduciary relationship * Ability of T to resist * Beneficiary involvement in drafting will
42
WILL CONTESTS: FRAUD
1) False rep made to T 2) Knowledge of falsity by person making statement 3) T reasonably believed statement 4) Caused T to execute will they would not otherwise have made
43
WILL CONSTRUCTION: PLAIN MEANING RULE
o Construe will as a whole o Give ordinary words their ordinary meaning o Technical words get technical meaning
44
WILL CONSTRUCTION: PATENT AMBIGUITY
Ambiguity in will ON ITS FACE - Extrinsic evidence can be applied
45
WILL CONSTRUCTION: LATENT AMBIGUITY
Intent is clear from the will but creates an ambiguity as applied - EE is allowed
46
TRUST: DEFINITION
A fiduciary relationship in which a trustee holds legal title to specific property for the benefit of the beneficiary
47
TRUSTEE: DEFINITION
1) Has legal title in the trust 2) Owes fiduciary duties of reasonable care, utmost degree of loyalty and is PERSONALLY LIABLE for lapses in these duties
48
BENEFICIARY: DEFINITION
Has equitable title in the trust, and is the person(s) benefiting from the trust property
49
SETTLOR/DONOR: DEFINITION
Creates the trust
50
WHAT ARE THE 3 TYPS OF TRUST THAT CAN BE CREATED?
1) Express Trust 2) Constructive Trust 3) Resulting Trust
51
ELEMENTS OF EXPRESS TRUSTS
1) Settlor capacity 2) present intent to create the trust 3) competent trustee with duties 4) a definite beneficiary 5) Trustee and beneficiary not the same person 6) Specific trust property 7) Valid trust purpose
52
PRECATORY EXPRESSIONS IN TRUST
Merely expressing a hope, wish, suggestion as to how to use the trust property = NO TRUST
53
PRECATORY EXPRESSIONS: OVERCOMING INVALIDITY
1) Directions are definite and precise 2) addressed to executor or administrator 3) failure of trust results in unnatural dispositions of property OR 4) Extrinsic evidence shows settlor was supporting beneficiary before execution
54
TRUSTEE: ACCEPTANCE
1) Trustee substantially complies with the acceptance requirements said in the trust OR 2) accepts delivery, exercises powers, or indicates acceptance
55
TRUSTEE: REMOVAL
Court may remove trustee if detrimental to trust administration by considering: 1) serious breach of the trust 2) lack of cooperation btw multiple trustees 3) unfitness, unwillingness, persistent failure OR 4) Substantial change in circumstances so that removal benefits ALL beneficiaries
56
ASCERTAINABLE BENEFICIARIES
A beneficiary is NECESSARY TO THE VALIDITY OF A TRUST except for charitable trusts
57
QUALIFIED BENEFICIARIES
Is one who, on the date qualification is determined is: 1) a current beneficiary OR 2) a first line remainderman
58
TRUST ACCEPTANCE BY BENEFICIARY
A trust cannot be forced on a beneficiary BUT it is normally PRESUMED
59
BENEFICIARY: TRUST DISCLAIMER
A beneficiary may disclaim any interest in the trust if they have not yet accepted any of its benefits
60
ANTI-LAPSE STATUTE: TRUSTS
MOST states only allow this for wills but some have applied it to trusts and allow heirs of the beneficiary to receive their interest in the trusts
61
TRUSTS: EFFECT OF DIVORCE
When a final divorce judgement is entered, it revokes all trust benefits to the ex-spouse and all fiduciary appointments in their favor
62
TRUSTS: CLASS GIFTS
beneficiaries may be unascertainable when trust created but must be ascertainable when property distributed
63
TRUST PROPERTY REQUIREMENTS
1) The property must be in legal existence - so settlor CANNOT transfer property they do not own 2) Must be separately identifiable from other property
64
TRUST PURPOSE
1) Cannot be for ILLEGAL purposes 2) OR against public policy
65
TRUST CREATION: 3 WAYS
1) Inter vivos trust (living trust) by declaration of trust 2) Inter vivos trust by transfer of property during settlor's lifetime 3) Testamentary trust (created by will)
66
INTER VIVOS TRUST: DECLARATION OF TRUST
1) Declare settlor as trustee OR 2) Declare trustee to whom settlor must deliver the trust property to
67
INTER VIVOS TRUST: CONVEYANCE OF PROPERTY
1) Trustee takes legal title upon delivery of deed, title document or physical property
68
TRUST REQUIREMENTS: WRITING OR ORAL
GENERALLY - a trust can be created orally as long as the terms are demonstrated by CLEAR AND CONVINCING EVIDENCE
69
TRUST WRITING REQUIREMENT: STATUTE OF FRAUDS
If the subject of the trust is LAND, it must satisfy the statute of frauds and be in writing
70
TESTAMENTARY TRUST REQUIREMENTS
Trust intent and essential terms are ascertained from either: 1) terms of the will 2) an existing writing incorporated by reference into the will 3) OR exercise of PoA created by the will
71
SECRET TRUST
1) Occurs when settlor and beneficiary agree than beneficiary will hold the trust property for someone else 2) The intended beneficiary can introduce EE and the court will impose a CONSTRUCTIVE TRUST if CLEAR/CONVINCING EVIDENCE provided
72
SEMI-SECRET TRUST
A will that makes a gift in trust but fails to state a beneficiary - TRUST FAILS
73
CHARITABLE TRUST REQUIREMENTS
1) class of indefinite beneficiaries 2) for the benefit of the public
74
TRANSFER OF BENEFICIARY'S INTEREST
Unless the trust says otherwise, the beneficiary may assign his rights in the trust freely
75
SPENDTHRIFT TRUSTS: DEFINITION
By statute or the trust terms, the beneficiary is unable to voluntarily or involuntarily transfer his interests in the trust UNTIL he has been PAID
76
SPENDTHRIFT TRUSTS: CREDITOR RIGHTS
Creditors CANNOT attach to the beneficiary's interests until payment has been made EXCEPT: 1) child support 2) spousal support 3) settlor is beneficiary
77
DISCRETIONARY TRUSTS: DEFINITION
Trusts where the trustee is given discretion whether to apply or withhold (or both) payments of income or principal to the beneficiary
78
DISCRETIONARY TRUSTS: CREDITOR RIGHTS
Creditors cannot attach UNTIL trustee decides how to distribute money EXCEPTIONS: child/spousal support
79
SUPPORT TRUSTS: DEFINITION
Trustee is required to pay income and/or principal as necessary for beneficiary's health, education, support. MANDATORY - support DISCRETIONARY - amount
80
MODIFICATION/TERMINATION OF TRUST
Generally terminates when 1) Express provision in trust applies 2) purpose has been accomplished 3) or purposes become unlawful
81
SETTLOR RIGHTS TO TERMINATE/MODIFY TRUST
Settlor can revoke or amend a trust UNLESS the trust expressly states otherwise
82
BENEFICIARY RIGHTS TO TERMINATE/MODIFY TRUST
1) Consent of settlor and ALL beneficiaries 2) ALL beneficiaries IF no MATERIAL PURPOSE would be frustrated
83
COURT RIGHTS TO TERMINATE/MODIFY TRUST
1) Trust purpose is accomplished, illegal, or impossible 2) Unanticipated circumstances - that threaten the trust purpose 3) REFORM - by clear and convincing evidence of settlor error in writing trust
84
TRUSTEE MODIFICATION OF TRUST
1) Can terminate UNECONOMIC TRUST - property is less than $50k and insufficient to justify cost of administration 2) COMBINE/DIVIDE TRUSTS - without consent of others as long as no purpose or rights are frustrated
85
TRUSTEE POWERS: SOURCES
1) express powers of trust 2) by state statute 3) by court 4) implied powers NECESSARY and APPROPRIATE to carry out trust terms
86
TRUSTEE: IMPERATIVE/MANDATORY POWER
REQUIRES trustee to do a certain act as stated in the trust
87
TRUSTEE: DISCRETIONARY POWER
1) Must exercise power in good faith 2) Liable ONLY for ABUSE OF DISCRETION
88
TRUSTEE DUTY: TO ADMINISTER
Good faith and in a prudent manner according to terms and purpose of the trust
89
TRUSTEE DUTY: OF LOYALTY - NO SELF DEALING
CANNOT:  personally benefit from trust  purchase property from the trust  sell own property to trust  borrow from trust  claim excessive compensation - No commingling of property
90
TRUSTEE: INVESTMENT STANDARD OF CARE
Invest in the same manner as a PRUDENT INVESTOR
91
TRUSTEE: INVESTMENTS - PORTFOLIO RULE
DEF: View investments together in context of entire portfolio and part of overall investment strategy FACTORS:  Trust purposes  Economic conditions  Tax consequences  Role of each investment in portfolio  Income and appreciation  Other beneficiary resources
92
REVOCABLE INTER VIVOS TRUST
1) interest passes to beneficiary during settlor's life and becomes possessory on settlor's death 2) can be revoked or divested during settlor's life
93
EXAMPLES OF VALID INTER VIVOS TRUSTS
1) Life insurance 2) Gift causa mortis 3) Totten trust - depositor holds funds in account for beneficiary
94
RESULTING TRUSTS
3 Types: 1) Purchase money resulting trusts 2) resulting trust arising from failure of express trust 3) resulting from incomplete disposition of trust assets
95
RESULTING TRUST: NO PRESUMPTION EXCEPTIONS
1) Where parties closely related - gift 2) Unlawful purpose
96
CONSTRUCTIVE TRUST
Can be imposed when there is wrongful conduct (fraud, UI, or breach of fiduciary duty) and with CLEAR and CONVINCING EVIDENCE

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