Wills & Trusts

Question 1

Testator’s Property

Answer 1

Under the EPTL, the testator’s personal and real property consists of the following:

1. Intestate property (where the will lacks a residuary clause or the will does not apply to that property),
2. Will - bequests or legacies (personal property) and devises (real property),
3. Insurance,
4. Testamentary substitutes, AND
5. Exempt property.

Question 2

Exempt Property

Answer 2

Exempt property passes immediately upon death by operation of law to the surviving spouse and children under the age of 21. It does not count as part of the estate for purposes of computing the right of election or intestacy. (see list in WCR)

Question 3

Will

Answer 3

Under the EPTL, a will is an oral declaration or written instrument made to take effect upon death, by which a person disposes of property or directs how it should not be disposed of, disposes of his body or any part thereof, appoints a fiduciary or makes other provision for the administration of his estate and which is revocable during his lifetime.

Question 4

Codicil

Answer 4

Under EPTL, a codicil is a supplement to a will, either adding to, taking from or altering its provisions or confirming it in whole or in part by republication, but not totally revoking such will. Under the EPTL, to be effective, a codicil must be executed with the formalities of a will.

Question 5

Execution of a Will (“IS IN THE PUB”)

Answer 5

Under the EPTL, except insofar as non-cupative and holographic wills are authorized under a properly executed will is:

1. IN Writing,
2. SIGNED by the testator at the end,
3. IN the presence of two witnesses or else he acknowledges his signature to them,
4. THE two witnesses attest the testator’s signature and sign their names 30 days of each other, AND
5. The testator PUBlishes the fact that the document is a will. (Testator declares that this is his will.)

Question 6

Revocation of a Will

Answer 6

Under the EPTL, a will can be revoked in the following ways:

1. By a subsequent will that revokes all prior wills,
2. By a second will that is so inconsistent with the first will that the two cannot stand together, or
3. By the unwitnessed physical act of destroying the entire will by tearing, burning, etc.

NOTE: A codicil cannot entirely revoke a will.
NOTE: The revival doctrine is NOT followed in NY.

Question 7

Can a codicil entirely revoke a will?

Answer 7

No.

Question 8

Revocation of a Will by Divorce or Annulment

Answer 8

Under the EPTL, a divorce or the annulment of a marriage revokes any revocable provision of the decedent’s will in favor of the former spouse.

Question 9

Interested Witness

Answer 9

Under the EPTL, an interested witness is a witness who is also a beneficiary under the will. An interested witness is competent to witness execution of the will. A bequest to an interested witness, however, is void unless:

1. There are at least two non-interested witnesses, OR
2. The witness would also be an intestate distributee. In that case, the witness takes the lesser of:

a. the bequest under the will, OR
b. His intestate share.

Question 10

Elective Share

Answer 10

Under the EPTL, the elective share of the surviving spouse is the GREATER of $50,000 or one-third of the net estate, whether or not there are issue.

Question 11

Issue

Answer 11

All persons in the line of decent of the testator.

Question 12

Net Estate

Answer 12

Under the EPTL, the net estate is composed of the estate assets:

1. Minus debts, administrative expenses, and reasonable funeral expenses, and
2. All testamentary substitutes.

Estate taxes are disregarded in computing the net estate, but note that the surviving spouse must contribute to all such taxes.

Question 13

Testamentary Substitutes

Answer 13

Under NY law, testamentary substitutes include:

1. Totten trusts,
2. Lifetime transfers with strings attached,
3. Employee pensions,
4. Gifts in excess of $13,000 made within 1 year of death,
5. Government Bonds, paid-on-death bank accounts (POD’s), and Powers of Appointment (presently exercisable general powers), and
6. Survivorship estates.

Question 14

Totten Trusts

Answer 14

Under NY law, a Totten Trust is a bank account in the depositor’s name in trust for another person who has the right of survivorship.

Question 15

Joint Bank Account

Answer 15

Under NY law, a joint bank account is an account created with survivorship rights. That is, if one depositor dies, the survivor or survivors are the owners of the bank account.

Question 16

General Lapse Statute

Answer 16

Under the EPTL, where the beneficiary predeceases or dies simultaneously with the testator, the gift normally lapses to the residuary estate.

Question 17

Anti-Lapse Statute

Answer 17

Absent express language in the will, where the beneficiary is the sibling or issue of the testator, the gift does NOT lapse, but goes to the issue of the beneficiary by representation.

NOTE: These two statutes are married and you cannot cite one without the other.

Question 18

Gifts Causa Mortis

Answer 18

Under NY law, a gift causa mortis is a gift in contemplation of death. The donor must die of the illness expected. If the donor dies of another illness, the donee’s interest does not vest.

Question 19

Gift (AID)

Answer 19

Under NY law, a gift is an immediate irrevocable present lifetime transfer unsupported by consideration. The elements of a gift are:

1. Acceptance,
2. Intent, AND
3. Delivery.

Question 20

Intestacy Rights: Surviving Spouse and Issue

Answer 20

The surviving spouse takes $50,000 and 1/2 the residue, with the residue passing to the issue by representation.

Question 21

Intestacy Rights: Surviving Spouse and No Issue

Answer 21

The surviving spouse takes all.

Question 22

Intestacy Rights: Both parents and no spouse or issue

Answer 22

Each parent takes one-half.

Question 23

Intestacy Rights: One parent and no spouse or issue

Answer 23

The parent takes all.

Question 24

Intestacy Distribution by Representation

Answer 24

Under the EPTL, intestacy rules, when a decedent dies intestate survived by a spouse and issue, one-half of the estate passes to the issue by representation.

Question 25

By Representation

Answer 25

Under the EPTL, by representation means a disposition or distribution of property made in the following manner to persons who take as issue of a deceased ancestor.

The property so passing is divided into as many equal shares as there are:

1. surviving issue in the generation nearest to the deceased ancestor which contains one or more surviving issue, and
2. deceased issue in the same generation who left surviving issue, if any.

Each surviving member in such nearest generation is allocated on share.

The remaining shares, if any, are combined and then divided in the same manner among the surviving issue of the deceased issue as if the surviving issue who are allocated a share had predeceased the decedent, without issue.

Question 26

Rule Against Perpetuities

Answer 26

Under the Rule Against Perpetuities, no estate shall be valid unless it must vest, if at all, within a period of lives in being at the creation of the estate, plus twenty-one years.

Tip: If you know the person who gets the gift or bequest, there is no Rule Against Perpetuities issue.

Tip: The rule does not apply to non-profits, charities, or foundations.

Question 27

Modification of a Will

Answer 27

In New York, a will may only be amended by a document (usually a codicil) that complies with the formalities required in the execution of a will.

Question 28

Inheritance Rights of Adopted Children

Answer 28

Under the New York EPTL, an adopted child inherits the same as a natural child. This applies to inheritance rights not only of the adopting parent, but also the adopting parent’s family.

Question 29

Incorporation by Reference Rule and Pour-Over Exception

Answer 29

In New York, all provisions of a will must satisfy the will execution formalities (a writing, signed by the testator, in the presence of two witnesses, the witnesses sign within 30 days of each other, and the will is published).

Any writing not part of the will CANNOT be incorporated by reference by merely referring to it in a will because the writing does not independently satisfy the will execution formalities. The exception to this rule is a valid pour over devise to a trust. A testator can incorporate a trust’s provisions into a will if the trust was created contemporaneously with or prior to the will.

Question 30

Residuary Clause

Answer 30

A residuary clause is a clause in a will that gives the remainder of the estate to one or more beneficiaries. It comes after all of the other specific bequests and devises. Any specific bequest or devise in a will that fails will pass into the residuary estate, unless there is a provision to the contrary. If there is no residuary clause in a will or the residuary clause fails in whole or part, the residuary estate will be distributed by the laws of intestacy.

Question 31

Non-Probate Assets

Answer 31

Non-probate assets are assets that pass by operation of law or through contract. Non-probate assets are not part of a testator’s probate estate and pass outside of the will. Generally, if a testator attempts to bequest a non-probate asset in his will, the bequest is ineffective. In addition, a beneficiary of a non-probate asset can only be changed by methods consistent with the terms specified by the asset.

Question 32

Inheritance Rights of Children

Answer 32

Under the NY EPTL, a child has no rights to his parent’s estate if the parents leave him out of their will. The only time a child will have rights when omitted from a will is if the child is a pretermitted child, which is a child born after the will was made.

Question 33

Effect of a Lost Will

Answer 33

If the lost will was not in the testator’s possession, but in the possession of another, the will is presumed not to have been revoked. If a will is lost, it can still be admitted to probate if it can be sufficiently proved. This requires:

(1) proof of due execution;
(2) proof it was not revoked; AND
(3) proof of the will’s contents.

Question 34

Holographic Wills

Answer 34

A cross-out with new words added is not valid because New York also does not recognize holographic wills (except in the case of mariners at sea or soldiers during war). A holographic will (or written alteration) is handwritten and signed by the testator, but not witnessed so it is therefore invalid in New York. In New York, a will may only be amended by a document (usually a codicil) that complies with the formalities required for proper execution of a will. A testator crossing out or changing portions of the will, without complying with the required formalities, have no effect and are invalid.

Question 35

Ademption

Answer 35

Under the New York EPTL, specific gifts which no longer exist at the time of the testator’s death adeem, which means the beneficiary cannot receive the value of this gift from other sources in the testator’s estate. The only exceptions to this rule are:

(1) when the property is sold under a contract and the proceeds for the property are paid after the testator’s death or
(2) when property is destroyed and insurance proceeds are paid after the death. In such a case, the beneficiary of the specific gift is entitled to the proceeds.

However, ademption only applies to specific bequests; not to general bequests (that is, bequests of a specified sum of money) or demonstrative bequests (which are bequests of money from an identified source).

Question 36

Simultaneous Death Statute

Answer 36

The New York EPTL has adopted the Revised Uniform Simultaneous Death Act (RUSDA), which provides that if there is no proof by clear and convincing evidence that one person survived the other by 120 hours (5 days), then the property is distributed as if that person predeceased the other person. Thus, presume that each person outlived the other when distributing their estate. If RUSDA applies and two deceased people owned property as joint tenants, RUSDA creates a fiction that the rights of survivorship are severed and the property passes as if the two people held the property as tenants in common.

Question 37

Testamentary Capacity

Answer 37

Under the New York Estate Powers and Trust Law (EPTL), the proponent of a will has the burden of proving that the testator possessed testamentary capacity. Whether the testator had testamentary capacity is a question of fact for the Surrogate’s Court to decide. Testamentary capacity requires the testator to

(1) know the nature of his act (that he is creating a will),
(2) know generally the nature and extent of his property,
(3) know the natural objects of his bounty (the person(s) who he is leaving the property to), AND
(4) understand how each of these components relate to each other. This is a lower standard than contractual capacity. Intoxication and insane delusions will not prevent a person per se from having testamentary capacity if the person executes the will during a coherent moment.

Question 38

Lay Witness’ Ability to Testify as to Testator’s Mental Capacity

Answer 38

A lay witness is allowed to testify as to the testator’s actions and statements during the will execution, but he or she cannot give conclusions or opinions as to the testator’s legal mental competency.

Question 39

Undue Influences

Answer 39

Undue influence is a dominating force on the testator’s mind that destroys the testator’s free will and forces him to embody the intentions of someone else in his will. To prove undue influence the will contestant has the burden of proving:

(1) the existence of undue influence in fact;
(2) that the effect of the influence was to destroy the testator’s free will; AND
(3) that but for the undue influence, the will would not have been executed as it was. There is a presumption of undue influence where a person is in a confidential relationship with the testator and that person is instrumental in procuring the will.

Question 40

Putnam Scrutiny for Attorney Draftsperson

Answer 40

However, there is a presumption of undue influence where a person is in a confidential relationship with the testator and that person is instrumental in procuring the will. A presumption of undue influence applies when the attorney draftsperson is also a beneficiary in the will. In such cases, the court is required to engage in Putnam Scrutiny, even sua sponte. However, the presumption of undue influence can be negated by showing that there was an independent basis for the disposition to the attorney, such as a family relationship or long friendship.

Question 41

No Contest Clauses

Answer 41

Unlike many other jurisdictions, New York gives no contest- clauses full effect. New York law enables testators to make the dispositions they desire without their intentions being questioned after death and without people challenging their mental sanity and free will. Consequently, anyone who contests the will’s validity or its provisions forfeits their rights under the will. However, there are a few exceptions. No-contest clauses DO NOT apply when:

(a) the contestant is alleging fraud or that the will was revoked by another will, and there is a good basis for the claim;
(b) the contest is on behalf of a minor or incompetent;
(c) the contestant is alleging that the court does not have jurisdiction; or
(d) the contestant is merely asking the court to interpret/construe the will’s terms. Unless one of those narrow exceptions apply, the no-contest clause will be given its full effect.

Question 42

Trust Creation Requirement

Answer 42

For a trust to be valid there needs to be a settlor who makes delivery of title of the property to a trustee who takes title in the property for the benefit of a beneficiary.

There needs to be intent on the part of the settlor to make a trust, the trust must be for a lawful purpose and it must be in a validly executed document.

In order for it to be validly executed, New York law requires the trust to be either:

(a) witnessed and signed by two witnesses OR
(b) acknowledged by a notary.

Question 43

Amending or Terminating a Trust

Answer 43

Under the New York Estates Powers and Trust Law (EPTL), all trusts are presumed to be irrevocable and unamendable. However, a few limited exceptions exist to this rule.

First, the settlor can amend or terminate a revocable trust at any time, but in order for the trust to be revocable it must state so in the trust instrument.

Second, the settlor can amend or terminate an irrevocable trust if all of the beneficiaries consent. A settlor may amend a trust only with the approval of all those with a beneficial interest in the trust. If the trust benefits a child, New York law does not allow a guardian or parent to consent to an amendment on the child’s behalf. Therefore, a settlor may only amend the trust if all the beneficiaries are adults and all consent. Under New York law, a designation in a trust to future non-living heirs or next of kin does not create a beneficial interest in the trust, and thus no consent is required from those future heirs or next of kin.

Third, the beneficiaries can terminate or modify a trust only if:

(1) all of the beneficiaries consent AND
(2) the termination or modification is not contrary to the intent of the settlor.

Fourth, a court may modify or terminate a trust if there is a change in circumstances not known or anticipated by the settlor which would frustrate the purpose of the trust.

Question 44

Amendment to a Trust after Execution of a Will with a Pour-over Provision

Answer 44

A testamentary disposition to a trust is valid, even if the trust instrument is amendable or revocable. But, that disposition shall be given effect in accordance with the terms of the trust instrument, including an amendment thereto, as they appear in writing on the date of the testator’s death.

Question 45

Purchase Money Resulting Trusts (PMRT)

Answer 45

A Purchase Money Resulting Trust (PMRT) arises when a purchaser buys property and has title put in someone else’s name with the intention that the other person will transfer the property back to the purchaser at a later date, but later on the title holder refuses to reconvey the property back to the purchaser as originally promised.

This is usually done to hide or shield the property from creditors. The majority of jurisdictions would compel the title holder to reconvey the property back to the purchaser through the use of a PMRT.

However, New York does not recognize a PMRT, unless there is clear and convincing evidence that the title holder expressly or impliedly promised to reconvey the land to the purchaser.