Wills & Trusts Flashcards
Nonprobate property
Property that does not pass through probate and is not governed by will or intestacy.
(1) Inter vivos gift - property person has already given away. Includes gifts to living trust.
(2) Remainder interests + executory interests. Remainder beneficiary receives upon life estate holder’s death.
(3) Co-ownership of property:
-Tenancy in common –> decedent’s share passes through estate.
-Joint tenancy –> decedent’s share passes to surviving joint tenant.
(4) Pay/transfer-on-death
Intestate succession
Intestacy occurs when person dies without a will (total intestacy) or had a will but the will did not dispose of all property (partial intestacy).
Heirs: persons who take by intestacy.
Applicable law:
-Marital rights –> law of domicile when property acquired (inception of title rule).
-Succession rights –> if personal property, law of domicile at death. If real property, law of suits (location of land).
Spouse’s intestate share varies by state:
-May be percentage like 1/3 or 1/2 of estate
-Share may vary depending on number of children or length of marriage
After spouse, the property goes to descendants, i.e. persons related to decedent in descending lineal line such as children and grandchildren.
-If all children survive, they receive equal shares (per capita share).
-Three methods of computing the shares in cases where some of the descendants are deceased, property is split across generations, etc.:
-(1) Per stirpes distribution (minority): divide into shares at first generation below decedent. Create one share for each surviving child (if child is predeceased, they don’t get a share) and one share for each predeceased child who left living descendants. Give each surviving child one share. Give share created for predeceased child to child’s descendants (split it b/w the child’s descendants).
(2) Per capita with representation distribution: divide estate at first generation WITH SURVIVING MEMBERS (at least 1). Each living person at that level takes a share. Share of deceased person at that level passes to issue.
(3) Per capita at each generational level distribution (adopted by Uniform Probate Code): divide estate into shares at first generation with survivors. Pool shares of lower generation so that each person of that generation receives equal share. I.e. everyone in same generation gets equal share.
If no descendants (post-spouse distribution), property will generally pass to ancestors and collaterals.
-Ancestors: persons related in ascending lineal line such as parents and grandparents.
-Collaterals: persons related but not in a lineal line such as siblings, aunts, and uncles.
-Estate passes in following order: parents –> sibling (varies by state; e.g. if one parents and at least one sibling survive, some states give entire estate to parent; other states give one-half to parent and one-half to siblings) –> grandparents and their descendants (aunts, uncles, cousins).
Adopted people:
-Adopted child inherits from adoptive parents.
-Whether adopted child inherits from biological parents varies by state.
-Adoptive parents inherit from adopted child; biological parents do not (in any state).
Adoption by estoppel may permit child to inherit, but generally, stepchildren have no inheritance rights.
-In most states, age when person was adopted does not matter.
Nonmarital children:
-Always inherit from mother.
-Inherit from father if state requirements met (such as determination of paternity via DNA testing).
Half blooded siblings: siblings with one common parent.
-Most states do not distinguish b/w half bloods and whole bloods.
Posthumous child: child born after death of a parent (e.g. father died before child was born).
-Strict approach: baby must be in utero at the time of death and then born alive, and then are an heir.
-Lax approach: child born within 18 months/2 years/etc . of the death, can still claim to be an heir.
Advancement
Lifetime gift intended by donor as prepayment of intestate share. E.g. Parent has two children. Gives Child 1 and advancement of $10k. Parent dies with a $20k estate. Distribution: Child 1 gets $5k from the estate and Child 2 receives $15k. You take the estate and pretend the advancement is still in it. Evens out the net shares.
Survival
How long must an heir outlive the intestate to be able to claim a share?
-Some states: heir can survive for any amount of time.
-UPC: heir must survive by 120 hours.
-No survival: heir treated as predeceased.
Requirements of disclaimer
-In writing
-Signed by person disclaiming (i.e. heir refusing to accept their share)
-Acknowledged in front of notary
-Timely filed
-Modern view: can disclaim at any time as long as no acceptance or use of benefits from gift.
Effect of disclaimer: treat person who disclaimed as dying first.
If heir or beneficiary kills decedent
-Slayer statute precludes killer from inheriting or being beneficiary
-Court can impose constructive trust
Courts do a balancing if death is by something lesser, e.g. negligence.
Execution of wills
Since wills are a privilege, you must generally comply with all requirements to pass on property through a will.
Applicable law:
-Real property –> law of situs
-Personal property –> law of domicile at death
-Savings statute –> will valid if it complies with local law, law where it was executed, or law of decedent’s domicile at death or will execution.
Requirements of will validity:
-Legal capacity: in most states, person must be at least 18 years old.
-Testamentary capacity: “sound mind” requirement. Testator must understand what they’re doing; must understand effect of what testator is doing; understand nature and extent of property (doesn’t have to be perfectly precise); recognize natural objects (family members) of testator’s bounty; ability to do the above at the same time. Adjudication of incompetence –> rebuttable presumption of lack of capacity.
-Testamentary intent: testator intended instrument to be will.
-Formalities:
-(i) attested will: in writing; signed by testator or proxy (most states don’t mandate location of the sig); doesn’t have to be dated; attestation - two witnesses (states vary whether interested witness loses gift); usually must witness in testator’s conscious presence. Attestation clause recites elements of execution and is prima facie evidence of proper execution.
-(ii) holographic will: written in testator’s handwriting; must be signed and dated by testator; no witness requirement in some states; how much must be in testator’s handwriting varies by state - majority rule: virtually everything; minority rule: only material provisions.
-(iii) noncupative/oral will: abolished in most states.
Classification of gifts
Devise: gift of real property.
Bequest: gift of personal property. Specific bequest: property distinguishable from rest of testator’s estate.
Specific bequest of general nature is not distinguishable from rest of estate, e.g. “I leave my computer at the time of death.”
Legacy: gift of personal property not sufficiently described to be specific (usually money).
Demonstrative legacy: gift of specific sum of money payable out of designed fund. E.g. “I leave $10k to the beneficiary from my account at Bank X.”
Residuary gift: gift of remainder of estate after all debts and other gifts are paid.
Changes in beneficiaries and property after will execution
Ademption: gift fails because property is no longer in testator’s estate (e.g. already given away, stolen, destroyed). Beneficiary can’t collected ademed gift.
-Exceptions: replacement property (e.g. testator replaces gifted item w/ similar item, beneficiary may get new item); balance of purchase price (after testator sells intended gift); condemnation or insurance proceeds; proceeds from sale by guardian.
Ademption by satisfaction: beneficiary receives gifted property before testator’s death. Most states require a writing + express intent to “down pay” the gift at the time of the inter vivos gift.
Beneficiary receives increased number of shares from stock splits or stock dividends. But wouldn’t get new securities/shares.
Debt owed on a gift (lien on a car, mortgage on a house)? Some states - liens exonerated (paid off with estate funds); UPC and other states - no exoneration unless will provides for it.
Abatement: when there isn’t enough money to pay everyone. Process of reducing gifts when estate property is inadequate to satisfy gifts and debts. Abatement order:
-Property passing by intestacy
-Residual gifts
-General gifts
-Demonstrative gifts
-Specific gifts
Lapse
Gift fails because beneficiary fails to survive testator or is legally treated as not surviving testator.
How to distribute lapsed property:
-Will’s terms (e.g. “…if he survives me”)
-Anti-lapse statute may apply: prevent lapse by substituting descendants of predeceased beneficiary for predeceased beneficiary; relationship needed b/w testator and predeceased beneficiary varies by state.
-Residuary clause/lapse in residuary gift: (i) common law rule - deceased beneficiary’s share passes by intestacy; modern rule - surviving residuary beneficiaries divide the deceased beneficiary’s share.
-Intestacy
Will interpretation and construction
These issues are raised by personal rep of the estate + heirs who would benefit from a different interpretation.
Basic rules of construction:
-Will –> intent not to die intestate.
-Conflicting provisions –> use one closer to testator’s death.
-Construe will as a whole.
-Give ordinary words their ordinary meaning.
-Give technical words their technical meaning.
-Give effect to all language in will.
Ambiguities:
-Patent ambiguity: ambiguity is obvious. Court looks at extrinsic evidence.
-Latent ambiguity: language is clear on its face but cannot be carried out with further clarification. E.g. “I leave my house to my cousin Frank” but it turns out the decedent has two cousins named Frank. Court looks at extrinsic evidence.
-No apparent ambiguity: language is clear on its face and can be carried out, but someone thinks testator made a mistake. Traditional/plain meaning rule - cannot disturb plain meaning of will. Modern rule - extrinsic evidence permitted to alter plain meaning of the will.
Incorporation by reference [of an external doc]. Requirements:
-Intent to incorporate writing
-Writing must be in existence when will is executed
-Writing must be clearly identified in will
-No witnesses to that external doc required
Tangible personal property doc: testator’s will may refer to written list to dispose of tangible personal property, even if list was not in existence at time of will execution.
Fact of independence significance: something that has a legal reason for existing other than the disposition of property at death. E.g. “I leave the contents of my safe deposit box” - testator can change contents of the box after execution of the will, so heir will receive the contents at the time of death.
Conditional will: will that is to operate if certain events occurs or does not occur. Courts construe will as general, not conditional, if possible.
Codicil: amendment to existing will. It acts to republish the will except as to the parts that are inconsistent. Will and codicil treated as one document speaking from date of codicil.
-Proof of codicil = proof of will. Codicil can incorporate defective will by reference.
Pour-over provision: provision in will that leaves property to inter vivos trust.
-Trust can be created before or after testator executes will.
-Trust doesn’t have to be previously funded.
Integration: must be able to show that all pages present at time of will execution are the same as pages present at time of probate. E.g. pagination, stick pages together.
Combination wills:
-Joint will: single testamentary document containing the wills of 2 or more persons. Bad practice.
-Reciprocal wills: separate wills with parallel dispositive provisions.
-Contractual will: will executed pursuant to a contract. At common law, extrinsic evidence can establish contractual nature of will. Under modern law, writing required (actual contract). Can be revoked by agreement of parties while both alive. Revoked by one person while both alive –> other person can change will. Revoked by one person after other dies –> injured beneficiaries may sue to impose constructive trust on property they should have received.
Power of appointment: owner of property (donor) transfers to the donee the power to appoint the new owner of the property.
-General power of appt: power exercisable in favor of donee, their estate, their creditors, or creditors of estate.
-Special power of appointment: power exercisable in favor of limited class of appointees, not including donee, their estate, their creditors, or creditors of estate.
Presently exercisable power: exercisable by donee during lifetime.
Testamentary power: exercisable only by donee’s will.
Will revocation (three categories)
(1) Revocation by operation of law:
-Marriage - in most states, marriage has no effect on prior will. But in some states and UPC: spouse receives intestate share unless will provides for spouse, omission was intentional, OR testator executed will in contemplation of marriage.
-Divorce: all provisions in favor of ex-spouse are void. In some states, also void gifts to ex-relatives (e.g. step-child). Voiding occurs upon final divorce. Property that would have gone to ex-spouse passes under terms of will as if ex-spouse had died first.
-Beneficiary murders testator: won’t be able to take.
(2) Revocation by physical act [reqs]:
-Intent
-Mental capacity
-Physical act: burning; tearing; writing “void” across will; cutting it. Proxy revocation permitted if done at testator’s request AND in testator’s presence (can’t just give command to attorney over the phone).
Partial revocation by physical act: e.g. crossing out a line in the will and then writing in a change. Whether valid varies by state. But must re-execute will or have a codicil.
(3) Revocation by subsequent will or codicil:
-Will or codicil must meet formal requirements.
-Revocation can be express.
-if new will completely disposes of testator’s property –> old will completely revoked.
-If new will partially disposes of testator’s property –> old will revoked only as to inconsistent parts.
-Presumption of non-revocation if will is found in normal location and there are no suspicious circumstances.
-If will was in testator’s possession or control but can’t be produced after testator’s death –> presumption that testator revoked will.
Revival
Testator executes valid Will 1. Then executes valid Will 2. Valid will 2 replaces will 1. Then testator validly revokes will 2. Is will 1 effective/does it revive? Three approaches:
-(1) UPC/intent approach –> look at testator’s intent.
-(2) Automatic revival approach –> revoking will never took effect because it was revoked.
-(3) No revival approach –> revocation by subsequent writing takes effect immediately when signed.
Conditional revocation
Implied conditional revocation (dependent relative revocation):
-Testator executes Will 1
-Testator validly revokes Will 1
-Testator executes Will 2, but Will 2 is invalid
Does Will 1 remain? DRR: Will 1’s revocation was impliedly conditioned on validity of Will 2. If Will 2 is invalid, Will 1 remains.
The more similar the will provisions, the more likely court will apply DRR.
Protections of surviving spouse
Spouse’s elective share: surviving spouse has right to portion of estate regardless of what will says (b/c we don’t want them to get screwed over if e.g. if decedent was breadwinner).
-Amount may be percentage or vary with number of children or length of marriage.
-Some states give spouse share of augmented estate, which includes nonprobate assets.
Community property states:
-No elective share because spouse is protected by owning half of community property in the first place.
-Deceased spouse can give away only separate property and their half of community property.
Pretermitted child statutes:
-Purpose is to carry out testator’s presumed intent to provide for children.
-Typically applies to children born or adopted after will execution.
-Situations when pretermitted child does not receive forced share: entire estate left to pretermitted child’s other parent; omission was intentional; testator provided for pretermitted child (e.g. beneficiary of line insurance policy, so intentionally excluded out of will).
Other protections for minor children and surviving spouse:
-Homestead (family residence): e.g. may be protected from creditors; surviving spouse and minor children may have right to live there even though they don’t have a title interest.
-Family allowance: amount surviving spouse and minor children are supposed to receive after spouse dies.
-Exempt personal property: e.g. furniture; pets; books.
