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WILLS & TRUSTS Flashcards

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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
Q

WILL REVOCATION: BY WRITTEN INSTRUMENT

A

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

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26
Q

WILL REVOCATION BY PHYSICAL ACTS

A

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

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27
Q

WILL REVOCATION: REVIVAL

A

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

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28
Q

WILL REVOCATION: DEPENDENT RELATIVE REVOCATION

A

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

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29
Q

CLASSIFICATION OF GIFTS: DEVISE

A

Gift of real property

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30
Q

CLASSIFICATION OF GIFTS: SPECIFIC BEQUEST

A

Personal property distinguishable from the rest of Ts estate

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31
Q

CLASSIFICATION OF GIFTS: GENERAL BEQUEST

A

Personal property not distinguishable from the rest of Ts estate

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32
Q

CLASSIFICATION OF GIFTS: DEMONSTRATIVE LEGACY

A

gift of specific sum of money payable out of a designated source

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33
Q

CLASSIFICATION OF GIFTS: GENERAL LEGACY

A

gift of money not identified to be payable from a specific source

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34
Q

CLASSIFICATION OF GIFTS: RESIDUARY

A

Gift of remainder of the estate after all debts and other gifts are paid

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35
Q

ADEMPTION

A

When property bequeathed is no longer in Ts estate, the bequest is adeemed (it fails)

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36
Q

EXONERATION OF LIENS

A

Some states: liens are paid off from estate funds first
UPC: no exoneration of liens on property unless will says so

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37
Q

ABATEMENT

A

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

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38
Q

SPOUSE: ELECTIVE SHARE

A

This gifts the surviving spouse the right to a portion of the estate regardless of what the will says.

The percentage varies amongst states

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39
Q

COMMUNITY PROPERTY STATES: NO ELECTIVE SHARE

A

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
Q

WILL CONTESTS: INSANE DELUSION

A

1) Persistent belief of state of facts against all evidence.
2) Must have connection btw insane delusion and property disposition

41
Q

WILL CONTESTS: UNDUE INFLUENCE

A

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
Q

WILL CONTESTS: FRAUD

A

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
Q

WILL CONSTRUCTION: PLAIN MEANING RULE

A

o Construe will as a whole
o Give ordinary words their ordinary meaning
o Technical words get technical meaning

44
Q

WILL CONSTRUCTION: PATENT AMBIGUITY

A

Ambiguity in will ON ITS FACE - Extrinsic evidence can be applied

45
Q

WILL CONSTRUCTION: LATENT AMBIGUITY

A

Intent is clear from the will but creates an ambiguity as applied - EE is allowed

46
Q

TRUST: DEFINITION

A

A fiduciary relationship in which a trustee holds legal title to specific property for the benefit of the beneficiary

47
Q

TRUSTEE: DEFINITION

A

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
Q

BENEFICIARY: DEFINITION

A

Has equitable title in the trust, and is the person(s) benefiting from the trust property

49
Q

SETTLOR/DONOR: DEFINITION

A

Creates the trust

50
Q

WHAT ARE THE 3 TYPS OF TRUST THAT CAN BE CREATED?

A

1) Express Trust
2) Constructive Trust
3) Resulting Trust

51
Q

ELEMENTS OF EXPRESS TRUSTS

A

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
Q

PRECATORY EXPRESSIONS IN TRUST

A

Merely expressing a hope, wish, suggestion as to how to use the trust property = NO TRUST

53
Q

PRECATORY EXPRESSIONS: OVERCOMING INVALIDITY

A

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
Q

TRUSTEE: ACCEPTANCE

A

1) Trustee substantially complies with the acceptance requirements said in the trust OR
2) accepts delivery, exercises powers, or indicates acceptance

55
Q

TRUSTEE: REMOVAL

A

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
Q

ASCERTAINABLE BENEFICIARIES

A

A beneficiary is NECESSARY TO THE VALIDITY OF A TRUST except for charitable trusts

57
Q

QUALIFIED BENEFICIARIES

A

Is one who, on the date qualification is determined is:
1) a current beneficiary OR
2) a first line remainderman

58
Q

TRUST ACCEPTANCE BY BENEFICIARY

A

A trust cannot be forced on a beneficiary BUT it is normally PRESUMED

59
Q

BENEFICIARY: TRUST DISCLAIMER

A

A beneficiary may disclaim any interest in the trust if they have not yet accepted any of its benefits

60
Q

ANTI-LAPSE STATUTE: TRUSTS

A

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
Q

TRUSTS: EFFECT OF DIVORCE

A

When a final divorce judgement is entered, it revokes all trust benefits to the ex-spouse and all fiduciary appointments in their favor

62
Q

TRUSTS: CLASS GIFTS

A

beneficiaries may be unascertainable when trust created but must be ascertainable when property distributed

63
Q

TRUST PROPERTY REQUIREMENTS

A

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
Q

TRUST PURPOSE

A

1) Cannot be for ILLEGAL purposes
2) OR against public policy

65
Q

TRUST CREATION: 3 WAYS

A

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
Q

INTER VIVOS TRUST: DECLARATION OF TRUST

A

1) Declare settlor as trustee OR
2) Declare trustee to whom settlor must deliver the trust property to

67
Q

INTER VIVOS TRUST: CONVEYANCE OF PROPERTY

A

1) Trustee takes legal title upon delivery of deed, title document or physical property

68
Q

TRUST REQUIREMENTS: WRITING OR ORAL

A

GENERALLY - a trust can be created orally as long as the terms are demonstrated by CLEAR AND CONVINCING EVIDENCE

69
Q

TRUST WRITING REQUIREMENT: STATUTE OF FRAUDS

A

If the subject of the trust is LAND, it must satisfy the statute of frauds and be in writing

70
Q

TESTAMENTARY TRUST REQUIREMENTS

A

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
Q

SECRET TRUST

A

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
Q

SEMI-SECRET TRUST

A

A will that makes a gift in trust but fails to state a beneficiary - TRUST FAILS

73
Q

CHARITABLE TRUST REQUIREMENTS

A

1) class of indefinite beneficiaries
2) for the benefit of the public

74
Q

TRANSFER OF BENEFICIARY’S INTEREST

A

Unless the trust says otherwise, the beneficiary may assign his rights in the trust freely

75
Q

SPENDTHRIFT TRUSTS: DEFINITION

A

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
Q

SPENDTHRIFT TRUSTS: CREDITOR RIGHTS

A

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
Q

DISCRETIONARY TRUSTS: DEFINITION

A

Trusts where the trustee is given discretion whether to apply or withhold (or both) payments of income or principal to the beneficiary

78
Q

DISCRETIONARY TRUSTS: CREDITOR RIGHTS

A

Creditors cannot attach UNTIL trustee decides how to distribute money

EXCEPTIONS: child/spousal support

79
Q

SUPPORT TRUSTS: DEFINITION

A

Trustee is required to pay income and/or principal as necessary for beneficiary’s health, education, support.

MANDATORY - support
DISCRETIONARY - amount

80
Q

MODIFICATION/TERMINATION OF TRUST

A

Generally terminates when
1) Express provision in trust applies
2) purpose has been accomplished
3) or purposes become unlawful

81
Q

SETTLOR RIGHTS TO TERMINATE/MODIFY TRUST

A

Settlor can revoke or amend a trust UNLESS the trust expressly states otherwise

82
Q

BENEFICIARY RIGHTS TO TERMINATE/MODIFY TRUST

A

1) Consent of settlor and ALL beneficiaries
2) ALL beneficiaries IF no MATERIAL PURPOSE would be frustrated

83
Q

COURT RIGHTS TO TERMINATE/MODIFY TRUST

A

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
Q

TRUSTEE MODIFICATION OF TRUST

A

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
Q

TRUSTEE POWERS: SOURCES

A

1) express powers of trust
2) by state statute
3) by court
4) implied powers NECESSARY and APPROPRIATE to carry out trust terms

86
Q

TRUSTEE: IMPERATIVE/MANDATORY POWER

A

REQUIRES trustee to do a certain act as stated in the trust

87
Q

TRUSTEE: DISCRETIONARY POWER

A

1) Must exercise power in good faith
2) Liable ONLY for ABUSE OF DISCRETION

88
Q

TRUSTEE DUTY: TO ADMINISTER

A

Good faith and in a prudent manner according to terms and purpose of the trust

89
Q

TRUSTEE DUTY: OF LOYALTY - NO SELF DEALING

A

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
Q

TRUSTEE: INVESTMENT STANDARD OF CARE

A

Invest in the same manner as a PRUDENT INVESTOR

91
Q

TRUSTEE: INVESTMENTS - PORTFOLIO RULE

A

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
Q

REVOCABLE INTER VIVOS TRUST

A

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
Q

EXAMPLES OF VALID INTER VIVOS TRUSTS

A

1) Life insurance
2) Gift causa mortis
3) Totten trust - depositor holds funds in account for beneficiary

94
Q

RESULTING TRUSTS

A

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
Q

RESULTING TRUST: NO PRESUMPTION EXCEPTIONS

A

1) Where parties closely related - gift
2) Unlawful purpose

96
Q

CONSTRUCTIVE TRUST

A

Can be imposed when there is wrongful conduct (fraud, UI, or breach of fiduciary duty) and with CLEAR and CONVINCINGEVIDENCE

BAR (8 decks)

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