Wills & Trusts Flashcards
1
Q
What is probate? What is not included
A
Judicial proceeding to
1) Determine decedent’s will is valid or intestate procedures apply
2) Appoint personal rep to wind up estate and distribute estate.
3) Contract distributions like 401k, IRAs, life insurance, and employment death benefits; joint bank accounts w/ ROS, J/T and T/E w/ ROS; property held in trust; property over which decedent held a power of appointment are all considered non-probate assets.
2
Q
Under what circumstances might the intestate statute come into play?
A
1) No will
2) Will fails to make a complete disposition
3) Omitted spouse or omitted child.
3
Q
How do you determine a spouse’s share in intestacy?
A
1) Spouse gets the entire estate if decedent had no kids or parents or all decedent’s kids were born from the spouse and she has no other kids. [Nuclear family]
2) Spouse gets the first 100k plus 1/2 of everything else if one or more of the decedent’s kids are not the spouse’s kids or the spouse has kids who are not the decedent’s. [Divided family]
3) Spouse takes the first 200k plus 3/4 of what remains if there are no kids, but decedent is survived by a parent.
Notes
- Stepchildren do not inherit by intestate statutes.
- *Adopted kids count as natural kids.
- **Adopted kids do not inherit from natural parents unless child is adopted by the spouse of natural parent.
- ***Child in gestation at time of death takes if it survives 120 hours.
- ***Artificial insemination baby takes if husband consented to a posthumous pregnancy and agreed to support the child.
- **Equitable adoption is enforced if there was an agreement to adopt, but it had not been performed yet.
4
Q
If property passes to a spouse through the intestate statute, what other rights might the spouse have?
A
1) Family allowance (18k, if more or longer than a year, the court must approve).
2) Exempt personal property up to 10k, or, if no spouse, decedent’s children. Includes furniture, furnishings, personal effects, and automobiles.
3) Right to occupy residence for 6 months.
5
Q
How does inheritance pass to descendants of deceased children in MA?
A
Per capita at each generation.
Careful not to give to spouses of predeceased descendants or members of a class if their parents took their share.
6
Q
Who takes if decedent is not survived by a spouse or descendants?
A
Parents Then siblings Then nephews and nieces And so on... No limit in MA.
7
Q
Does MA follow the Uniform Simultaneous Death Act?
A
Partly. If there is no sufficient evidence as to whether a party survived, the property of each passes as though each party survived the other.
However, in MA, if there is sufficient evidence that one party survived longer than the other for any length of time, then the party who survived longer is treated as a survivor. (No 120 hour rule.)
8
Q
What is the effect of a lifetime gift to an heir or will beneficiary?
A
Common law treats it presumptively as an advancement.
In MA, it is only an advancement if the donor declares it as an advancement in a contemporaneous writing or the donee acknowledges it as such in a writing.
9
Q
May a beneficiary disclaim his share?
A
Yes, but once he does, it is irrevocable.
To be valid, it must be:
1) In writing and signed; and
2) Filed with probate within 9 months after decedent’s death.
Disclaiming treats the person who disclaimed as though he or she predeceased the donor.
Notes
- Disclaimer can be partial
- Personal rep can disclaim for deceased beneficiary or heir, and a guardian can disclaim for an incapacitated beneficiary or heir if it is in the best interest of the beneficiary’s or heir’s estate.
- ** For irrevocable inter vivos trusts, the beneficiary must disclaim within 9 months of the trust being created.
- *** Disclaiming avoids taxes.
10
Q
What are the requirements to validly execute a will?
A
1) 18 years old at time of creation
2) Two Ws
3) Witnessed either T signing, T acknowledging his earlier signature, or T acknowledging the will.
Notes
- Codicils require the same thing.
- Signing anywhere on the will is fine.
- ** Witness knowing they were witnessing a will does not matter.
- *** Witnesses do not need to sign in one another’s presence or T’s presence.
- ** In MA, T does not have to be alive if the witnesses saw him sign it before he died.
11
Q
How may wills be proven valid in probate?
A
1) Court may if it appears to be validly executed and no contest.
2) Notice given to parties, unopposed, and court does so on the strength of the pleadings.
3) Self proving affidavit
a) Notary swears in parties
b) T signs a statement saying he signs of his own free will.
c) Ws sign a statements saying that they saw T sign, he was over 18, and appeared of sound mind.
d) Can be done on the will or in an attached affidavit. If done on the affidavit, must sign both the will and the affidavit.
12
Q
Can a witness be an interested party?
A
A will can be both admitted to probate and valid even if an interested party is a witness.
Even though it will always be admitted, the gift to the interested party will be void unless:
1) there were two disinterested witnesses; OR
2) the interested witness can establish that the bequest and will were not due to the fraud or undue influence of the witness.
That is, the interested witness has the burden of proof.
13
Q
Does MA recognize holographs?
A
No. Eve though about 30 states recognize holographs, in MA, if a will is handwritten or typed, it still requires the same formalities.
Exception: If the holograph was executed in a state that recognizes holographs, but the will is admitted to probate in MA, it will be recognized.
14
Q
Will MA recognize a foreign will?
A
Yes if:
1) It would be valid in MA.
2) It would be valid where executed.
3) It would be valid where T was domiciled either when will was signed or at T’s death.
15
Q
What is a conditional will? Valid?
A
E.G. If something happens to me on my trip to Everest, leave my estate to the kid who played McLovin.
Discuss:
1) Was this meant to be a conditional will?
2) Was the seemingly conditional language just a motive for making the will.
3) Did T destroy it after his trip? Why not?
16
Q
How can I revoke my will?
A
1) A properly executed subsequent testamentary instrument that either expressly revokes previous wills or does so by inconsistency.
2) A revocatory act with appropriate intent to revoke the will. Can be done by you or another at your direction and in your presence. Must be done on the will itself, not a copy.
17
Q
If your will is destroyed improperly and needs to be admitted to probate, how is that possible?
A
Proof of Lost Will Statute
Requirements:
1) Proof of due execution (Testimony or other evidence);
2) Cause of will’s non-production proved;
and
3) Proof of will’s contents with evidence that is strong, positive, and free from doubt. (Xerox or oral testimony.)
18
Q
What are some presumptions with revocation?
A
1) If will last seen in T’s possession and not found at death, presumed revoked by physical act.
2) If last seen in T’s control and found mutilated, it is presumed T did the mutilating.
3) Neither is presumed if will last seen in possession of someone adversely affected by its contents.
4) Presumptions can be rebutted with evidence.
19
Q
How may a will be revived?
A
Majority of states say no revivals.
MA does not revive a will UNLESS:
1) The will is still in existence; and
2) There is evidence that T intended that it be revived.
20
Q
What is dependent relative revocation?
A
If T revoked his will premised upon a mistake of law or fact as to the validity of another disposition (e.g. a mistaken belief that a new will was valid), then the court may disregard the revocation of the revoked will and admit it to probate.
In order to do this, the previously revoked will must better accomplish T’s failed distribution goals than an intestate distribution.
This may require the application of the proof of lost wills statute.
21
Q
Can T make changes on the face of the will after it has been executed?
A
T can cross out a provision to revoke it, but cannot write something new in because it would have to be signed and witnessed.
22
Q
What is the MA Anti-Lapse Statute?
A
In MA, if a beneficiary pre-deceases T, the anti-lapse statute will save a gift if:
1) The beneficiary was a grandparent or a descendant of a grandparent of T; and
2) The beneficiary is survived by descendants who survived T (not a spouse).
If no descendants, then the gift lapses into the residuary estate.
Anti-Lapse Statute does not apply if surviving T is an express condition of the bequest.
If a residuary estate is devised to 2+ persons and a gift to one lapses or fails for some reason, the surviving residuary beneficiaries rule states that the other beneficiaries take the residuary estate in proportion to their interests.
Same as above if a gift is made to a specific class. If a class member pre-deceases T, the remaining class members take.
However, class gift rules give way if:
1) It looks like a class but the members are specifically named; and/or
2) The class members are grandparents or descendants of a grandparent of T, in which case anti-lapse governs.
23
Q
When does a class close?
A
Rule of Convenience:
When some member is entitled to distribution, but if a member is in gestation at that time then he or she is included (Common Law Presumption that there will be no more than 280 days from conception to birth).
24
Q
Does the Anti-Lapse statute apply to non-probate transfers? NEW RULE - RIPE FOR TESTING
A
Unlike most states, in MA, the anti-lapse statute can apply to non-probate transfers and certain future interests in trust.
e.g. Life insurance policy names, brother X, and there’s no alternate beneficiary. X pre-deceases insured, but X has two kids. The policy can pass to the kids.
e.g. Trustee shall pay all trust income to my brother Barton for life, and on Barton’s death, the remainder shall pass to my sister Gladys. Gladys dies but leaves two kids.
See page 16-17 of outline.
25
What is the omitted spouse statute?
If T marries after he executes his will, Spouse takes intestate share of what is left after the property left to his children before the marriage is paid. UNLESS
1) It appears from the will (no extrinsice evidence) that the will was in contemplation of marriage;
2) The will states that it is to stand notwithstanding subsequent marriage; or
3) Provisions were made for the spouse in transfers outside the will, and it is shown that the transfer were intended to be in lieu of the testamentary gifts by amount or other evidence.
Don't forget about her statutory rights.
26
What effect does divorce have on a will?
In MA, final decree of divorce or annulment revokes all gifts and fiduciary appointments in favor or former spouse and relatives of the former spouse who are not relatives of the testator. Estate is distributed and fiduciaries are named as though former spouse and her relatives pre-deceased the testator.
Divorce rule also applies to revocable distributions such as revocable trusts, life insurance policies, IRAs, joint bank accounts, but not to ERISA retirement plans.
The provisions are revived if they remarry.
Applies only for divorce, NOT SEPARATION.
J/T and T/E property converted to T in C.
27
What is the omitted child statute? COMMONLY TESTED BUT DID NOT TEST ON IT LAST YEAR. RED FLAG
Only applies to children born or adopted after the will's execution.
1) If T did not have other kids,
Omitted child takes intestate share, unless the will devised substantially all of the estate to the other parent of the omitted child.
2) If T had other kids, and those kids were in the will,
Omitted child takes what the other kids took, and the other kids shares abate proportionately.
NOTE***
The omitted child statute does not apply if:
1) It appears from the will (no extrinsice evidence) that the omission was intentional;
2) Provision was made for the child by transfers outside the will and it is shown that those transfers were intended in lieu of testamentary gifts by T's declarations, by the amount of the transfer, or by other evidence.
28
What happens when there are too many claims to satisfy both the testamentary gifts and the claims?
Testamentary gifts abate in the following order
1. Intestate property
2. Residuary gift
3. General Legacies
4. Demonstrative Legacies
5. Specific Bequests
29
What is unique about demonstrative legacies?
It is an amount of money from a specific source. If the source is no longer sufficient to pay that gift, then the portion from the specific source is treated as a specific bequest and the difference is a general legacy.
30
What happens if T gifts BA or some other specific piece of property to a donee, but T no longer owned that property at death?
The gift is subject to ademption.
Note***Ademption only applies to specific bequests.
There are statutory exceptions to the ademption problem.
1) Specific beneficiary takes any of the remaining specifically devised property and
(a) any unpaid balance of the purchase price (together with any security interest) by reason sale of the property to the extent paid after T's death.
(b) any amount of condemnation award for taking, to the extent unpaid at T's death.
(c) Any amount of fire or casualty insurance proceeds unpaid at T's death.
2) Will executed before T became incapacitated and guardian or conservator, or by an agent acting under durable power of attorney, or if condemnation award or insurance proceeds are paid to the guardian because of fire or casualty, specific devisee has a right to a general legacy in the amount equal to the sale price, award, or proceeds.
31
What specific rules apply to bequests of stock?
A specific bequest of stock includes additional stock of that entity or another entity produced by a stock split or stock dividend, and also stock resulting from a reorganization, merger, etc., after will was executed BUT NOT stock acquired by exercise of a stock option.
32
If T gives you BA, do you take subject to the mortgage?
At common law no.
In MA, yes because the exoneration of liens doctrine has been abolished by statute. That is, unless, the will provides for exoneration.
A general provision in the will to pay debts does not count.
33
Can T incorporate a list in his will?
Yes, an extrinsic document may be incorporated by reference if:
1) Writing is in existence when the will was executed.
2) Will manifests an intent to incorporate the writing.
3) Will describes the writing sufficiently to permit identification.
Exception: Will may refer to a written state or list that disposes of tangible personal property only (no money, stocks, bonds, etc.) not specifically disposed of in the will. Must be in T's handwriting and signed by T at the end. Must describe property with reasonable certainty. This list may be made before or after will.
34
If T does something that substantially changes a gift, does the gift fail?
e.g. "Gary Busey takes my car." I currently drive an '93 Ford Tempo. At death, I drove Audi A8.
or
"Ralph Macchio takes everything in my living room." Currently, the most valuable thing in my living room is my TV. At death, my living room has the crystal egg from Risky Business.
No. The change is an act of independent significance, not made with the purpose of making the testamentary gifts more substantial.
35
What if I left my old chest to Brett Michaels, but there is a deed to a house in it? Does Brett take the deed?
No, he only takes tangible personal property within the chest.
36
What types of ambiguity might we encounter in a will? What are the remedies?
1) No ambiguity on face, but extrinsic evidence suggests there might be. E.g. 200 shares when there are 300.
Apply the plain meaning. No extrinsic evidence admitted.
2) Latent ambiguity. E.g. "Gift to my good friend Jed Mosley." I have a friend named Ted Mosbey, and I have a friend named Jen Rosely. Here, extrinsic evidence is allowed to find out who I was talking about. If can't be figured out, then the gift fails.
3) Patent ambiguity. E.g. "$25,000 ($25) to Carl Weathers." Here, it's complicated because old MA common law says that extrinsic evidence is not allowed, but the modern trend says otherwise.
4) Blanks. E.g. "$25,000 to my friend ___________."
Gift fails. Courts will not fill in the blanks.
37
What if I was good friends with Patrick Swayze when he died. My parents, thinking the Swayz left me a goddamn fortune, cut me out of their will. As it turns out, that bastard Swayze didn't leave me shit! Then, on top of it all, my parents die before they realize that Swayze left me out in the cold. What can I do?
Nothing absent evidence of fraud.
38
What if I was good friends with Patrick Swayze when he died. My brother told my parents that Swayze left me a goddamn fortune, but, in fact that bastard Swayze didn't leave me shit! Thinking that he did leave me $$$, my folks cut me out of their will. They never realize that Swayze left me out in the cold, and that my bro lied to them. What can I do?
That is fraud in the inducement and the court will create a constructive trust in my favor.
39
What are contracts related to wills? Permissible?
A contract to make a will or not to revoke a will is permissible and can be established by:
1) provisions in the will stating the material provisions of the k; OR
2) Express reference in the will to the K and extrinsic evidence prove the terms; OR
3) A writing signed by T evidencing the contract.
Usually these arise out of services like when I took care of Harry Carey before he died. He told me that I would be put in his will as payment. That son of a bitch did nothing though. Since, none of the three above apply, I'm SOL.
May be able to recover under unjust enrichment though for my reasonable services. (Must expect payment to recover under this theory.)
40
Can you disinherit someone in your will?
Yes, words of disinheritance are given full effect. Remember though, if Goldie Hawn cuts out Kate Hudson for making "How to Lose a Guy in Ten Days" her kids can still take.
41
To whom is an estate attorney liable for negligence?
In a testamentary trust where the trustee hires the lawyer, only the trustee can sue him because the attorney's duty is to the trustee who hired him. See Spinner v. Nutt. No duty to beneficiaries because that would conflict with duty to trustee.
If the attorney prepares a will, the minority rule says that beneficiaries may not sue because there is no privity of K.
The majority rule says that beneficiaries may sue the drafter if he was negligent.
MA has not decided, but Spinner v. Nutt indicated that MA is going to join the majority because there are no conflicting duties in preparing a will like with the trust situation.
Bottom line, mention both sides.
42
A decedent dies without a will and is survived by his spouse, his brother, his predeceased sister's only daughter, and his mother. In most states, to whom will the decedent’s estate be distributed?
A His brother.
B His spouse and his mother.
C His spouse, his mother, and his brother.
D His spouse, his mother, his brother, and his niece.
B His spouse and his mother.
43
A decedent dies intestate, survived by a spouse with whom he had two children, and two children from a previous marriage. What is the surviving spouse's share of the estate?
A The entire estate.
B One-half of the estate.
C The first $200,000 plus three-fourths of the balance of the estate.
D The first $100,000 plus one-half the balance of the estate.
D The first $100,000 plus one-half the balance of the estate.
44
How are the intestate shares of descendants distributed?
A Equally.
B Strict per stirpes.
C Per capita at each generation.
D Per capita with representation.
C Per capita at each generation.
45
An adopted child has which of the following rights under intestate succession laws?
A The same rights as a natural child of the adopting parents.
B The right to inherit from both his adopting and natural parents.
C The right to inherit from and through his natural parents.
D The right to inherit from his adopting parents but not their kin.
A The same rights as a natural child of the adopting parents.
46
The decedent and her only child were involved in a plane crash. Neither was alive when the emergency team reached them.The child, who died without a will, is survived by a spouse. The decedent is survived by only a brother. The decedent left a sizeable intestate estate and a life insurance policy naming the child as the sole beneficiary. Who will share in the decedent’s estate, and who will take the insurance proceeds?
A The decedent’s brother will take the estate, but the child’s spouse will take the insurance proceeds.
B The child’s spouse will take the estate and the insurance proceeds.
C The decedent’s brother will take the estate and the insurance proceeds.
D The child’s spouse will take the estate, but the decedent’s brother will take the insurance proceeds.
C The decedent’s brother will take the estate and the insurance proceeds.
47
The entirety of a testator’s will provides, “I do not want my daughter to take any of my estate.” If the testator is survived by only the daughter and a son, how will the testator’s estate be distributed?
A All to the son.
B One half to the son and one half to the daughter.
C All to the daughter.
D All to the state.
A All to the son.
48
Assuming the requisite intent, the testator has validly signed the will in each of the following circumstances EXCEPT:
A The testator places his initial in the margin.
B The testator's lawyer reads the will to the testator over the phone and then signs for the testator at the testator's request.
C The testator places his fingerprint on the will.
D The testator forgets to sign the signature line at the end of the will but signs the integrated self-proving affidavit.
B The testator's lawyer reads the will to the testator over the phone and then signs for the testator at the testator's request. This is assuming the self-proving affidavit is part of the will.
49
A testator signs his will in front of two witnesses. Immediately after the witnesses sign, the testator remembers that he wanted to include a legacy of $5,000 to a friend. After explaining this to the witnesses and while still in their presence, the testator handwrites the legacy directly under his signature. The witnesses witness but do not sign the legacy. The effect of the additional legacy is:
A Both the will and the legacy are void.
B The will is valid, but the legacy is void.
C Both the will and the legacy are valid.
D The legacy is a valid holograph, but the will is void because it is not subscribed.
B The will is valid, but the legacy is void.
50
If an attesting witness is also a beneficiary under a will:
A The will can be probated, and the gift is valid.
B The will is valid but the devise to the subscribing witness is void.
C The will has not been properly executed and cannot be probated.
D The gift is valid if the attesting witness would have been an intestate heir.
B The will is valid but the devise to the subscribing witness is void.
51
Which of the following wills is valid?
A A handwritten will signed by the testator and attested to by two witnesses.
B A handwritten, unattested will signed by the testator.
C A typewritten will signed by the testator and attested to by at least one witness.
D A typewritten, unattested will signed by the testator.
A A handwritten will signed by the testator and attested to by two witnesses.
52
Republication by codicil has what effect on an earlier will?
A It revokes the will.
B It redates the will as of the date of the codicil.
C It dates the codicil as of the date of the will.
D It has no effect.
B It redates the will as of the date of the codicil.
53
The order of priority for naming a personal representative begins as follows:
A Executor, surviving spouse who is a devisee, other devisees.
B Surviving spouse who is a devisee, other devisees, other heirs.
C Public administrator, executor, surviving spouse who is a devisee.
D Executor, public administrator, surviving spouse who is a devisee.
A Executor, surviving spouse who is a devisee, other devisees.
The order of priority for naming a personal representative is as follows: executor, surviving spouse who is a devisee, other devisees, surviving spouse, other heirs, public administrator.
54
A no-contest clause will have the following effect:
A A beneficiary contesting the will forfeits his interests.
B A beneficiary contesting the will forfeits his interests, unless there is probable cause.
C A beneficiary bringing suit to construe a will’s provision forfeits his interest.
D A beneficiary contesting the will forfeits his interests, unless he is claiming fraud or undue influence.
A A beneficiary contesting the will forfeits his interests.
55
Which of the following are two elements that must be proven to establish undue influence?
A The testator was threatened and the resulting disposition would not have been executed but for the influence exerted.
B The testator’s mind and free will were overpowered, and the resulting disposition would not have been made but for the influence exerted.
C The testator was defrauded, and the resulting disposition is one that he may not have made but for the fraud.
D The testator was threatened, and his mind and free will were overpowered.
B The testator’s mind and free will were overpowered, and the resulting disposition would not have been made but for the influence exerted.
To establish undue influence, there are three requirements: (i) that influence was exerted over the testator, (ii) the effect of the influence was to overpower the testator’s mind and free will, and (iii) the product of the influence was a disposition that would not have been made but for the influence. Merely threatening a testator does not constitute undue influence; his free will must be destroyed. The resulting disposition must reflect the desire of the influencing party, not the testator, and so would not have been made but for the influence.
56
At the time the testator executes his will, the testator and his spouse have one child, a son. The will leaves all of the testator's property to his spouse. Subsequently, the testator and his spouse adopt a daughter. If the testator dies without having revised his will and survived by his spouse, son, and daughter, how should the estate be distributed?
A One-third each to the spouse, the son, and the daughter.
B One-half each to the spouse and the daughter.
C All to the spouse.
D All to the daughter.
C All to the spouse.
57
When a specifically-bequeathed item is not in a testator's estate at his death, the court will consider which of the following in determining whether the bequest is adeemed?
A The testator’s expressions of intent.
B Whether the testator used proceeds from the item to purchase replacement property.
C Whether the property was disposed of by a conservator.
D Whether proceeds from the sale of the item were kept in a separate account.
C Whether the property was disposed of by a conservator.
There is an exception to the ademption rule if the specifically devised property is sold by a conservator. In that case, the devisee is entitled to a general pecuniary legacy equal to the amount of the proceeds. Ademption is decided based on the objective test of whether the item is a part of the testator’s estate at death. If it is not, and no statutory exception applies, the bequest is adeemed. The testator’s intent is irrelevant.
58
All of the following statements about a spouse's elective share are true EXCEPT:
A Assets placed in a revocable trust during marriage are subject to the surviving spouse’s elective share.
B The amount of the surviving spouse’s elective share depends on which other relatives also survived the decedent.
C If the decedent was survived by issue or kindred, the share passing outright to the spouse is satisfied first out of personal property.
D The elective share applies to the augmented estate, which includes nonprobate transfers if the decedent retained economic control and benefits.
D The elective share applies to the augmented estate, which includes nonprobate transfers if the decedent retained economic control and benefits.
59
If a testator makes a specific bequest of stock, the devisee is entitled to additional securities, including ____________________, but not ____________________.
A Shares produced by a dividend; shares produced by a split.
B Shares produced by a dividend; cash dividends.
C Securities acquired by exercising a purchase option; shares produced by a split.
D Shares produced by a split; securities acquired by exercising a purchase option.
D Shares produced by a split; securities acquired by exercising a purchase option.
60
To execute a valid will, the testator must sign the will in the presence of two attesting witnesses who must:
A Sign in the presence of each other.
B Sign after the testator declares the instrument is her will.
C Sign after seeing the testator sign or acknowledge her signature or the will.
D Sign in the presence of the testator.
C Sign after seeing the testator sign or acknowledge her signature or the will.
There is no requirement that the testator publish the will (i.e., the witnesses do not need to know that the document they are witnessing is a will), that she request the witnesses to sign, or that the witnesses sign in the presence of the testator or of each other.
61
Which of the following is the best example of the class gift rule?
A When a will makes a gift to “the children of my friend X,” only those children of X who survive the testator will share the gift.
B When a will makes a gift to “each of my three friends, A, B, and C,” only those friends who survive the testator will share the gift.
C When a will makes a gift to “the children of my friend X,” the share of any of X’s children who predecease the testator will pass to their descendants.
D When a will makes a gift to “each of my three friends, A, B, and C,” the share of any of the three friends who predecease the testator will pass to their descendants.
A When a will makes a gift to “the children of my friend X,” only those children of X who survive the testator will share the gift.
62
A testator’s will bequeaths property “to my son if he survives me.” The son predeceases the testator and is survived by a wife and a daughter. The son's will bequeaths all of his property to a charity. Who takes the testator's property?
A The son's wife.
B The son's daughter.
C The charity designated by the son.
D The testator’s residuary beneficiaries.
D The testator’s residuary beneficiaries.
Anti-Lapse does not apply because there was express language in the will that Son had to survive (an express condition of survivorship).
63
A contract to NOT revoke a will means that:
A The contract is revocable without notice to the other party, and there is no remedy if one party dies in breach.
B The contract is not revocable, and there is a remedy if one party dies in breach.
C The contract is revocable, and there is a remedy if one party dies in breach.
D The contract is revocable with notice to the other party, but there is no remedy if one party dies in breach.
D The contract is revocable with notice to the other party, but there is no remedy if one party dies in breach.
A contract not to revoke a will is revocable during both parties’ lifetimes, provided notice is given to the other party. If a contract is revoked without notice and the revoking party dies in breach, there is no remedy, since there has been no damage, and the other party is free to revoke her contract.
64
Which of the following will result in revocation of a will by physical act?
A The testator accidentally tears up her will thinking it was another document, but later is glad she tore it up.
B The testator tells another person to burn the will she left it at his house because she wants to make a new one.
C The testator tells her friend she regrets leaving everything to her cousin in her will; the friend burns the testator's will.
D The testator is dying and asks her brother to tear up the will she hands him; he does so in front of her.
D The testator is dying and asks her brother to tear up the will she hands him; he does so in front of her.
The act and intent must be concurrent, and the act may be performed by a third party, but only at the testator’s direction and in her presence. Accidental destruction does not satisfy the present intent requirement.
65
If a person marries after executing a will and the spouse survives the testator, the spouse takes an intestate share of the testator’s estate unless:
A Extrinsic evidence shows the will was made in contemplation of the marriage.
B The testator provided for the surviving spouse by transfer outside of the will.
C All of the property was devised to the surviving spouse's child.
D The will is silent as to whether it remains effective upon a subsequent marriage.
B The testator provided for the surviving spouse by transfer outside of the will.
The spouse is not entitled to an intestate share if: (i) it appears from the will (extrinsic evidence is not admissible) that the will was made in contemplation of the marriage, (ii) the will expresses the intention that it be effective notwithstanding a subsequent marriage, or (iii) the testator provided for the spouse by transfer outside the will and the intent that the transfer be a substitute for a testamentary provision is shown by the testator’s statements or is reasonably inferred from the amount of the transfer or other evidence. Normally, if a person marries after executing a will and the spouse survives the testator, the spouse takes an intestate share of the testator’s estate other than property devised to a child who was born before the marriage and who is not the surviving spouse’s child.
66
Which of the following statements correctly describes the omitted child statute?
A If a testator fails to provide for a living child because she mistakenly believed the child to be dead, the child does not share in the estate.
B If the will made no gifts to the testator’s children who were alive when the will was executed, the omitted children take nothing.
C An omitted child is entitled to an intestate share regardless of whether the testator had children when the will was executed.
D The omitted child statute applies to children born or adopted before or after the will was executed and the child was unintentionally omitted.
B If the will made no gifts to the testator’s children who were alive when the will was executed, the omitted children take nothing.
If the will made no gifts to the testator’s children who were alive when the will was executed, the omitted children take nothing. The Massachusetts omitted child statute applies only to children born or adopted after the will is executed. If the testator had no living children when he executed the will, the omitted child takes an amount equal to an intestate share. The child takes a share unless the will devised all or substantially all of the estate to the other parent of the omitted child and the other parent survived to take under the will. If the testator had one or more children living when he executed the will, and the will devised property to one or more of them, the omitted child’s share is limited to the gifts to the other children. If the will made no gifts to the testator’s living children, the omitted child takes the same share as the other children, nothing. If a testator fails to provide in her will for a living child solely because she mistakenly believed the child to be dead, the child shares in the estate as though he were an omitted afterborn or afteradopted child.
67
The anti-lapse statute will apply to save a gift for which of the following predeceasing will beneficiaries?
A
The testator’s uncle, who is survived by a spouse.
B
The testator’s adopted son, who is survived by a spouse.
C
The testator’s spouse, who is survived by three children.
D
The testator's cousin, who is survived by one child.
D
The testator's cousin, who is survived by one child.
Anti-lapse applies to a predeceasing beneficiary who is a descendant of the testator, a grandparent of the testator, or a descendant of the testator’s grandparent (e.g., a cousin or uncle). However, the statute will not apply unless the predeceasing beneficiary left descendants who survived the testator. Only descendants are substituted for the beneficiary, not spouses..
68
Which of the following statements concerning the effect of a testator's divorce or annulment is true?
A
Divorce or annulment revokes appointments of the spouse as executor or trustee.
B
Divorce or annulment revokes all will provisions in favor of the former spouse, but does not affect life insurance policies or irrevocable trusts.
C
Divorce or annulment converts tenancy in common property to joint tenancy property.
D
Divorce or annulment does not revoke provisions in favor of the former spouse’s relatives.
A
| Divorce or annulment revokes appointments of the spouse as executor or trustee.
69
If one of two joint tenants kills the other, how is title to the property held?
A The killer owns the entire property.
B The killer and the victim’s estate each own one-half of the property as tenants in common.
C The state and the victim’s estate each own one-half of the property as tenants in common.
D The victim’s estate owns the entire property.
B The killer and the victim’s estate each own one-half of the property as tenants in common.
70
Under which of the following doctrines must the will proponent show that an extrinsic document offered for probate was present at the will’s execution?
A Integration.
B Republication by codicil.
C Incorporation by reference.
D Acts of independent significance.
A Integration.
Under the doctrine of integration, the will proponent must show that an extrinsic document offered for probate was present at the will’s execution and intended by the testator to be a part of the will. The requirements of presence and intent are presumed when there is a physical connection of the pages (e.g., staple), when there is an internal coherence by provisions running from one page to the next, or when the pages, read together, set out an orderly dispositional plan. These requirements also can be established by the testimony of witnesses or other extrinsic evidence.
Under the doctrine of incorporation by reference, an extrinsic document not present at the time the will was executed may be probated as part of the will if it was in existence when the will was executed, the will sufficiently describes the document, and the will manifests an intent to incorporate the document.
71
Each of the following statements describes a requirement for incorporation by reference EXCEPT:
A The document must have been in existence at the time the will was executed.
B The document must dispose only of items of tangible personal property.
C The will must sufficiently describe the document to permit its identification.
D The will must manifest an intent to incorporate the document.
B The document must dispose only of items of tangible personal property.
72
Is a will providing that the testator’s property is to be distributed in accordance with the subsequently executed will of another person valid?
A Yes, under the doctrine of incorporation by reference.
B Yes, under the doctrine of acts of independent significance.
C No, because the making of a will is a testamentary act.
D No, because a pour-over gift may only be made by an existing will.
B Yes, under the doctrine of acts of independent significance.
A will providing that the testator’s property is to be distributed in accordance with the subsequently executed will of another person is valid under the doctrine of acts of independent significance. The doctrine provides that a will may dispose of property by reference to future unattested acts and events that have significance apart from their effect on the dispositions made by the will. The doctrine has been used with regard to acts of the testator as well as to acts of third persons. If a testator directs that his property be distributed in accordance with the will of another person whose will has already been executed, and the other requirements of incorporation are met, (i.e., the testator’s will sufficiently describes the other person’s will to permit its identification and manifests an intent to incorporate), the other person’s will can be incorporated into the testator’s will by reference. However, if the testator’s will provides that his property should be disposed of as provided in the future will of another person, it is generally held that the doctrine of acts of independent significance applies, and the gift is valid. Although the other person’s making of a will is a testamentary act, it has significance independent from disposing of the original testator’s property, i.e., it directs the disposition of the other person’s estate. A pour-over gift is a gift from a will to an inter vivos trust. The Uniform Testamentary Additions to Trusts Act provides that such a gift is valid, notwithstanding the fact that the testator has reserved the power to amend or revoke the trust or has actually amended the trust after executing his will, and further notwithstanding the fact that the trust instrument or any amendment was not executed in accordance with the Statute of Wills.
73
Which of the following assets may be disposed of by will?
A Life insurance proceeds.
B Property held in joint tenancy.
C Property held as tenants in common.
D Property held as tenants by the entireties.
C Property held as tenants in common.
74
The testator's son is married with one child. If the testator bequeaths property to his son’s wife, and the son and the wife subsequently divorce, who takes that property on the testator’s death?
A The son.
B The son's former wife.
C The son's child.
D The residuary beneficiaries.
B The son's former wife.
The only divorce relevant to a testator's will is the testator's.
75
If the testator executes a will and subsequently executes a second will that does not expressly revoke the first will, which will controls?
A The first will controls and impliedly revokes the second will in its entirety.
B The first will controls and impliedly revokes the second will to the extent of any inconsistent provisions.
C The second will controls and impliedly revokes the first will in its entirety.
D The second will controls and impliedly revokes the first will to the extent of any inconsistent provisions.
D The second will controls and impliedly revokes the first will to the extent of any inconsistent provisions.
76
Assuming the requisite intent, in which of the following cases has the will been revoked by physical act?
A The will is found in a sealed envelope marked “VOID” on the outside.
B The will is found with the testator’s signature crossed out.
C A codicil to the will is found burned in its entirety.
D An unexecuted copy of the will is found torn to pieces.
B The will is found with the testator’s signature crossed out.
Assuming the requisite intent, a will found with the testator’s signature crossed out has been revoked by physical act. A will may be revoked by physical act by burning, tearing, cutting, obliterating, or canceling a material portion of the will with the intent to revoke. Words of cancellation must touch the words of the will; thus, writing the word “VOID” on the outside of the envelope containing the will is ineffective to revoke the will. Although burning an entire will is a sufficient act of revocation, a physical act of revocation performed on a codicil revokes only the codicil, not the prior will. Likewise, although tearing a will to pieces is a sufficient act of revocation, the destruction of an unexecuted copy of a will does not revoke the will, even if accompanied by the requisite intent. But where a will has been executed in duplicate (i.e., both copies are signed), an act of revocation performed on either copy revokes the will.
77
Which of the following statements is true regarding a contract to make a will?
A It must be executed with the requisite testamentary formalities.
B The promisee must have provided sufficient consideration.
C If breached during the testator’s lifetime, the court will impose a constructive trust.
D It can be used to contest the probate of a will that is inconsistent with the terms of the contract.
B The promisee must have provided sufficient consideration.
78
If a testator bequeaths a bracelet to her daughter and subsequently sells the bracelet and uses the proceeds to buy a necklace, what does the daughter take at the testator’s death?
A Nothing.
B An amount equal to the value of the bracelet at the will’s execution.
C An amount equal to the value of the bracelet at the testator’s death.
D The necklace.
A Nothing.
Under the doctrine of ademption, when specifically bequeathed property is not in the testator’s estate at death (e.g., it was destroyed, sold, given away, or lost), the bequest is adeemed; i.e., it fails. Here, ademption operates because the testamentary disposition was of a specific bequest, here, the bracelet (a particular item of property), and the testator did not own a bracelet at her death. The necklace cannot be substituted.
79
To have mental capacity to make a will, a testator must understand each of the following EXCEPT:
A The nature of her property.
B The nature of her surroundings.
C The persons who are the natural objects of her bounty.
D The nature of her act.
B The nature of her surroundings.
To have mental capacity to make a will, the testator must have sufficient capacity to be able to understand: (i) the nature of her act (that she is executing a will), (ii) the nature and extent of her property, (iii) the persons who are the natural objects of her bounty, and (iv) the nature of the disposition she is making. Although it may be evidence of lack of capacity if the testator is unaware of her surroundings, there is no requirement that she understand that fact.
80
The capacity required for making a will is a ____________________ standard of capacity than that required to make a contract, and is measured at the ____________________.
A Higher; making of the will.
B Higher; time of death.
C Lower; making of the will.
D Lower; time of death.
C Lower; making of the will.
81
If a lifetime gift is deemed an advancement, which of the following statements is true?
A
The advancee’s share of the estate is considered satisfied regardless of advancement amount.
B
The advanced amount is added back to the estate to calculate shares.
C
The advancee must reimburse the estate if the advancement exceeds his intestate share.
D
An advancement is deducted first from nonprobate assets.
B
| The advanced amount is added back to the estate to calculate shares.
82
How do you calculate a spouse's elective share in MA?
If decedent is survived by any issue then spouse can elect to get the first $25,000 of personal property outright, plus a LE in 1/3 of the balance.
If decedent is survived by kindred but no issue, then the spouse receives the first $25,000 of personal property outright, plus a LE in 1/2 of the balance.
When the LE is personal property, it is held in trust.
Remember to discuss elective share in any question involving what a spouse might take from the deceased spouse, even if you are just going to dismiss it.
Also remember that revocable trusts and Totten trusts accounts are included for the purpose of calculating the elective share.
Life ins. proceeds are NOT.
83
Who, When, and Where can ask for an elective share?
A living spouse (executor cannot elect for the spouse). Divorced spouse is not eligible or if one spouse deserted the other or if the couple has been living apart for justifiable cause.
Must file election within 6 moths of the will being admitted to probate.
Decedent must be an MA domiciliary, and the elective share applies to all personal property, but only MA real property. (Situs rule.)
84
In calculating an elective share, how do gifts abate?
First, the elective share will be satisfied with gifts that the spouse would have received in the will. Then gifts abate in the normal order.
85
Who can bring a will contest?
Interested parties whose economic interest is adversely affected by the will probate. Creditors do not have standing.
86
What are the two most common ways of contesting a will?
1) Lack of Testamentary Capacity
2) Undue Influence
You'll do best by referencing both when one might apply.
87
How does one challenge for lack of testamentary capacity?
Burden of proof on contestant.
Elements. Did T, at the time the will was executed,
1) Understand that nature of the act he was doing?
2) Know the nature and approximate value of his property?
3) Know the natural objects of his bounty?
4) Understand the disposition he was making?
Old age, frailty, sickness, failing memory, incompetence, or vacillating judgement are not necessarily problems if T was lucid when he made the will.
Capacity is lower standard than for a K.
88
How does one challenge for undue influence?
Contestant has the burden to prove...
Free agency of T was destroyed and a will produced expresses not T's will, but one of the exerting influence. (i.e. mental duress.)
Elements:
1) Existence and exertion of influence
2) Effect overpowers the mind and will of T
3) Product is a will or gift that would not have been made but for the influence.
4) Mere opportunity, mere susceptibility, or mere unnatural disposition are not enough, but all of the me together probably is enough.
If there is a fiduciary relationship, and the fiduciary benefits from the will, there is a presumption of undue influence and the burden shifts to the contestant to prove that T made the bequest with full knowledge and consent, or T had independent counsel.
89
What happens if there is a no contest clause, and someone contests the will?
They better win, otherwise they lose their gift. No contest clauses are given full effect regardless of probable cause.
Common Sense Check: If you win, what happens to the no contest clause? It doesn't exist because the will is denied probate.
90
Does MA recognize a claim for tortious interference with inheritance?
No.
91
What is the SoL for filing claims after decedent's death?
```
One year.
Unless:
1) Claim was covered by insurance
2) Proceeding to foreclose on security interest (e.g. a mortgage)
3) where justice and equity so require.
```
92
What is the normal procedure for estate administration?
Unsupervised administration unless an heir, beneficiary, or creditor petitions for a supervised one
93
Can sale of estate real property be sold without court approval?
No, by either the administrator of an intestate estate or executor named in T's will unless power of sale was expressly granted in the will.
94
What is a trust?
An arrangement for making gifts of property and for the management of assets under which the trustee holds legal title to the trust assets for the benefit of the beneficiaries, who hold equitable title. Trustee has the burden of ownership (duty to manage, safeguard, invest, etc.) while beneficiaries have equitable title and benefits of ownership.
95
What are the requirements for a valid trust? MEMORIZE
1) SETTLOR WITH CAPACITY (18, good title, higher capacity than needed for a will)
2) DELIVERS (if inter vivos and trustee is someone other than S)
3) TRUST PROPERTY (specific interest conveyed to trustee, that is, not an expectancy or a promise to contribute money in the future.)
4) to a TRUSTEE WITH DUTIES (over 18 w/ capacity or a bank or a trust company. Remember though, no trust fails for lack of a trustee, as long as, the duties are there) Must inform beneficiaries within 30 days after accepting or after trust becomes irrevocable, and she must give at least an annual accounting. Irreconcilable conflicts do not end trust unless it prevents trustee from performing his duties.
5) for the benefit of (definite and ascertainable) BENEFICIARIES. (e.g. "my friends" doesn't cut it but "my family" can. If non-charitable, RAP applies. If charitable RAP does not apply, but Cy Pres does. If gift fails, the trustee holds the property in a resulting trust for the residuary estate. If it's borderline, argue both ways.
6) with INTENT to create a trust (that is, not precatory language such as "wish and desire" or "request" or "hope" or "would like"). That beings said, there is no magic language "for the use and benefit of [person]" is fine.
and
7) the trust has a LAWFUL PURPOSE. No encourage divorce or absolute restraints on marriage (some restraints are ok and "income to my wife for life or until she remarries is ok).
96
Are oral trusts enforceable?
If real property is involved, no.
If only personal property is involved, and there is clear and convincing evidence, yes.
However, a constructive trust may be imposed if Settlor orally promised a beneficiary an interest in land and the trustee knew about it, and promised to enforce, then refused to honor it (fraud in the inducement). This is imposed because grantee-trustee was in a confidential relationship with grantor-settlor. Beneficiary must be able to prove by C&C evidence.
Even if she cannot, she may still recover in Quantum Meruit if services were performed with the expecation of payment.
97
Settlor creates an IV trust for the benefit of his descendants, naming the Bank as trustee. The trust instrument is silent as to whether Settlor has retained the power to revoke or amend the trust. Can Settlor revoke or amend the trust?
KNOW THIS COLD. DON'T FORGET. IT'S A PRETTY NEW RULE THAT THEY ARE LIKELY TO TEST
If the trust was created before July 8, 2012, then he may NOT revoke.
If the trust was created on or after July 8, 2012, then he MAY revoke.
98
Can a settlor name himself as trustee?
Yes as long as he is not also the sole beneficiary.
Likewise, he cannot name someone else as trustee if that person is also the sole beneficiary.
99
What is a pour-over will? Is it valid?
It is a testamentary gift to a trust either yet to be established or previously established whether previously funded or unfunded.
Can add life insurance or employee death benefits into it as well.
100
Can T's creditors reach his revocable trust after he dies?
Yes, but only once the probate estate is exhausted. Creditors must file suit against the executor and come up empty handed.
101
What is the SoL for challenging the validity of a revocable trust?
NEW STATUTE
One year after Settlor's death OR 60 days after the trustee gives the person written notice of the trust's existence, a copy of the trust instrument, and the trustee's name and address.
102
What special rules apply to charitable trusts?
1. No RAP
2. Must be for a charitable purpose
3. Must be in favor of a reasonably large number of unidentifiable members of the public at large, and cannot benefit identifiable individuals. "My poor relatives" is not ok.
4. Cy Pres applies (always)
103
What rules apply to non-charitable trusts that violate RAP? E.g. Captain Jack Sparrow makes a trust to provide for his sea turtles or Mr. Wilson makes a trust to care for his garden.
1. Subject to RAP so it fails after 90 years whether the turtles or the garden are still alive or not.
2. Court may reduce the amount left in trust if it is ridiculous (e.g. $12 million to take care of my dog Rory).
104
What is a constructive trust? When might it apply?
It isn't really a trust at all, it is just the name given to an equitable remedy designed remedy wrongful conduct and unjust enrichment.
For examples, pretend one who takes under T's current will actively takes steps to interfere with T signing a new will that cuts him out. Then T dies before she can execute the new will. Can't admit the new will because it hasn't been executed, but you don't want to reward the dick who wouldn't let her sign either. Therefore, you create a constructive trust for the benefit of the person T wanted to devise her property to.
105
Part I
Danny Rayburn came into some money later in life. He decided he would leave it to his brother John because John had always looked out for him. John actually hated Danny, and when he found out that Danny was leaving him money, John killed him. Does John still take?
Part II
What if John is acquitted at trial, but found liable in a wrongful death suit?
Part I
No. Better to impose a constructive trust rather than reward the killer. The estate will proceed as though John predeceased Danny.
Therefore, John's kids can take John's share.
Part II
Even if John is found not guilty at the criminal trial, the standard of proof at the civil proceeding is enough to disinherit John.
106
Cersei and Robert own the Red Keep as tenants by the entirety. Cersei kills Robert and is convicted in the newly legalized "trial by combat". Robert's will leaves all his property to Ned Stark because all of his kids are little bastards (literally). What is the status of the Red Keep?
Cersei and Ned each own a 1/2 interest as T in C. Cersei will not be rewarded with the RoS, but she is not penalized either so she can keep her 1/2 interest.
107
What is a purchase money resulting trust?
A pays for the land, but title is in B's name (A and B are not related). A now brings suit looking to have a constructive trust imposed in his favor claiming he did not mean to make a gift to B, but he had another reason for B's name taking title.
The presumption is that A can compel reconveyance at any time unless B can show that it really was a gift or it was intended as a loan of the purchase price.
If they were relatives, then the presumption is that it was a gift to B and A has to provide evidence to the contrary.
108
Explain the impact of a spendthrift clause.
A trust beneficiary's interest is freely transferable and can be reached by the beneficiary's creditors unless the trust contains a spendthrift clause prohibiting transfer of the beneficiary's interest.
Often contain wording such as, "nor shall it be subject to the claims of the beneficiary's creditors by attachment or other legal process."
In MA, these clauses are fully enforceable subject to the following exceptions:
1) Contracts for necessaries
2) Alimony or child support obligations
3) Any interest retained by the Settlor (that is, in a revocable trust settlor is treated as the owner for creditors' rights purposes.
4) Federal tax liens.
109
If beneficiary directs the trustee to pay a creditor despite the spendthrift clause, can he bring an action against the trustee for violating his duties?
No, the beneficiary participated in the breach and is estopped from complaining.
110
What if Jeffrey Lebowski created a trust, income to himself, and the principal was payable to Brandt when Jeffrey dies. Can a creditor reach it?
Creditor can reach the income, but can only reach the principal if:
1) It made no mention of whether it was revocable, and it was made after July 8, 2012; or
2) The conveyance was made with the intent to defeat, defraud, or delay his creditors.
111
If a trust specifies that Trustee shall pay Sarah Marshall so much of the principal as is needed for her support, and then Crime Scene (Scene of the Crime) is canceled, which means she needs more $ for her support. Can she compel the trustee to pay her more?
Yes "as is needed for support" means she gets what she can prove is needed for her support. The purpose of the trust is to support Sarah not give trustee discretion. It would be an abuse of discretion not to pay out in good faith.
If trustee IS given discretion, then this changes, however.
112
Under what circumstances is self-dealing by the trustee prohibited?
Trustee cannot:
1. Buy or sell assets to himself.
2. Borrow trust funds.
3. Loan funds to the trust.
4. Profit from serving as trustee (besides his regular compensation). This basically stops him from using info he gained as trustee for his own benefit.
5. Corporate trustee cannot buy its own stock as a trust investment.
SoL runs from the time:
1) Trustee repudiates the trust OR
2) Trustee dies or resigns OR
3) Gives an accounting that discloses the facts giving rise to the claim.
Beneficiary has the option of:
1) Ratifying or
2) Bring an action for the surcharge. In a self-dealing case, the only issue is damages.
113
What if the trustee subsequently sells real property to another. Can the the beneficiaries recover the property from the buyer?
Not if the buyer is a BFP.
114
Can a trustee contract around being held liable for negligence?
An exculpatory clause is valid only for ordinary negligence, not gross negligence, bad faith, or fraud.
115
What is the Uniform Prudent Investor Act?
Under the UPIA, trustee is expected to invest for the total return. Prudence is measured by conduct in making investment decision at the time the investment is made, not by hindsight based on adjustment power in favor of income beneficiary where appropriate and can allocate capital gains and principal income to beneficiary.
Under UPIA, investment duties can be delegated to an investment advisor. Trustee must exercise reasonable care in selecting the advisor and periodically review agent's performance.
116
How is a trustee supposed to distribute money to income versus principal?
All money is allocated to income (unless categorized as capital gains for tax purposes). Anything other than money (like stock dividends) are allocated to the principal.
Receipts from mineral leases, patents, copyrights, book royalties, and other liquidating assets that produce income for a limited time; receipts from deferred compensation like pension and profit-sharing plans, 401k plans, and individual retirement accounts are subject to the 10% rules.
10% to income, 90% to principal.
117
How do trustees manage expenses?
1. Trustee gets reasonable compensation as determined by trustee.
2. Ordinary expenses charged against income (expenses that come up every year like taxes, insurance premiums, ordinary repairs, mortgage interest payment.)
3. Capital expenditures are charged against the principal (extraordinary expenses like capital improvements, environmental expenses, mortgage principal payments.)
118
Can trustee be held personally liable in tort or contract actions for his actions as trustee?
Not personally liable on torts of self, agents, unless personally at fault.
Not personally liable on contracts unless the contract imposes personal liability or trustee fails to disclose that he is acting as a trustee (therefore, he should sign his name as the trustee).
119
How can a trust be modified or terminated early?
I. Modification or termination by beneficiaries:
1) Without court approval if all beneficiaries consent and no material purpose of the trust will be adversely affected, but mere dissatisfaction with the trustee is not enough. Guardian ad litem appointed for minor beneficiary.
2) Court can approve if no material purpose test is satisfied and any non-consenting beneficiary is adequately protected.
II. Changed Circumstances:
Court may authorize termination of a trust or modification of its terms if circumstances unanticipated by the settlor threaten or adversely affect the purposes of the trust.
Think about if a house is surrounded by horrible industrial conditions where it was once a nice neighborhood. Court might allow beneficiary currently in possession to sell and move.
BUT
Pretend a trust was made intending to provide for Warren Buffet until he reaches 90, but he is clearly able to take care of himself. Doesn't matter. Allowing him to take it before 90 frustrates the material purpose.
III. Uneconomic trust.
1) Trust is less than 200k, notice given to qualified beneficiaries, trust value is insufficient to justify administration costs.
2) Trust value is over 200k, and he gives notice to qualified beneficiaries, trustee can remove himself and provide a less expensive trustee if value is insufficient to justify expenses.
Qualified means they are permissible distributees or income or principal or would be if the trust terminated today.
120
What are powers of appointment?
T's will gives the donee the power to decide who to pass the assets to after her.
Can be general "and on her death to distribute the trust principal to such persons as she appoints in her will."
Can be to herself, her creditors, or her estate.
Must be express. It doesn't just fall into her residuary estate if she forgets.
However, if she specifically distributes the gift as if it were her own, that works.
OR
Can be special "and on her death to [this class]." This prevents her from giving it to herself, her creditors, or her estate.
Can be a blanket statement normally like "including property over which I may have a power of appointment."
Unless, T's will says the power of appointment must specifically refer to T's power of appointment like "With respect to the power of appointment given to me by T's will, I hereby appoint..."
121
A trusteeship may be accepted by any of the following actions EXCEPT:
A Accepting delivery of the deed.
B Exercising powers of a trustee.
C Failing to notify settlor of rejection.
D Performing duties of a trustee.
C Failing to notify settlor of rejection.
If the trusteeship is not accepted within a reasonable time, it is presumed to be rejected. A person designated as trustee can accept the trusteeship by complying with the method of acceptance stated in the trust instrument or by accepting delivery of the trust property, exercising powers or performing duties as a trustee, or indicating acceptance. Accepting delivery of the deed is accepting delivery of trust property.
122
All of the following are duties of the trustee of a constructive or resulting trust EXCEPT:
A To account to the beneficiary for all profits taken from the property.
B To invest the trust property and make it productive.
C To preserve and protect the trust property.
D To convey legal title to the beneficiary.
B To invest the trust property and make it productive.
123
If a will bequeaths money in trust, but does not name any beneficiary of the trust, what is the likely result?
A The trustee holds the money on a resulting trust for the settlor’s heirs or residuary legatees.
B A valid testamentary trust is created provided that the intended beneficiaries can be determined by extrinsic evidence.
C The trustee takes the money in fee simple.
D A valid testamentary trust is created, and the settlor’s heirs are the beneficiaries.
A The trustee holds the money on a resulting trust for the settlor’s heirs or residuary legatees.
124
For purposes of establishing a charitable trust, which of the following would be considered charitable purposes?
A A trust for the benefit of the Fraternal Order of Bison social organization
B A trust to fund the education of the children of the settlor's neighbor, who cannot afford college tuition.
C A trust for the benefit of the Republican Party and its candidates
D A trust to advance the doctrine of unfettered Second Amendment gun rights
D A trust to advance the doctrine of unfettered Second Amendment gun rights
125
Which of the following descriptions represents a sufficiently definite class of beneficiaries for a settlor’s private testamentary trust?
A The person kindest to the settlor during her illness
B The settlor’s heirs
C Such persons as trustee may select
D The settlor’s friends
B The settlor’s heirs
126
In which of the following cases would a court be most likely to apply cy pres?
A Settlor created a testamentary trust for his son, but his son predeceased him leaving a surviving child.
B Settlor created a trust to provide scholarships to the Acme Secretarial School, which is no longer in business.
C Settlor created a trust to support his disabled niece, and at the niece’s death $100,000 remained in the trust
D
Settlor created a trust to benefit a fledgling political party, the Reasonable Party, which has disbanded.
B Settlor created a trust to provide scholarships to the Acme Secretarial School, which is no longer in business.
127
A settlor creates a revocable trust which provides that all income will be paid to Andy for life, and on his death, the trust corpus will be distributed to Betsy. In the absence of language in the trust instrument to the contrary, which interests may be reached by Andy’s creditors?
A Both the income and the corpus if necessary to satisfy the debt.
B No trust assets may be reached, even after they are paid to Andy.
C No trust assets, but creditors can reach the income after it has been paid to the Andy.
D The income interest of the trust.
D The income interest of the trust.
If the debtor is neither the sole beneficiary nor the settlor of a revocable trust, a creditor reaches only the interest of the debtor, not the trust property itself. Thus, Andy’s creditors can reach only his income interest in the trust. It is even possible for the creditors to sell Andy’s beneficial interest to satisfy their claims. (B) and (C) are incorrect because Andy’s creditors can reach his interest before and after the income is paid.
128
Despite spendthrift protection, trust assets may be reached by the beneficiary's creditors for all of the following debts EXCEPT:
A Spousal support.
B Child support.
C Attorney’s fees for estate planning.
D Federal income taxes.
C Attorney’s fees for estate planning.
In MA, spendthrift clauses are valid except as to:
1) Ks for necessaries
2) Alimony or child support
3) Any interest retained by the Settlor
4) Federal tax liens.
129
For purpose of terminating a trust, which of the following trust language indicates a material purpose of the settlor that will likely prevent early termination by consent of the beneficiaries?
A
"Income to Abigail until she turns 35, then the corpus is to be distributed to her."
B
“Income to Settlor for life, remainder to Abigail.”
C
"Income to Abigail for life, remainder to Ben."
D
“Income to Abigail for 10 years, remainder to the Red Cross.”
A
"Income to Abigail until she turns 35, then the corpus is to be distributed to her."
(A) indicates a settlor’s material purpose to keep the property out of Abigail’s hands until age 35. Thus, Abigail would be unable to terminate the trust.
(B) and (D) include the settlor as a beneficiary. A trust may be terminated on the consent of the settlor and all beneficiaries. If Settlor and Abigail agree to terminate, it does not frustrate a material purpose of Settlor. (C) indicates a purpose to provide for successive enjoyment by a life tenant and remainderman. However, because Abigail could terminate the trust by conveying her interest to Benjamin (or vice versa), this is usually found not to be a material purpose, and they can terminate the trust by agreement.
130
Which of the following statements represent a circumstance that would justify a court’s modification of a trust due to unanticipated circumstances?
A The trust requires the trustee to distribute profits to an experimental theatre group that has been the focus of recent community protests.
B
The trust requires the trustee to keep the trust assets invested in Acme Corp. Acme Corp. manufactures cassette tapes and its stock has been in sharp decline.
C
The trust places the settlor’s cattle farm in trust and to pay profit made on sale of beef to Daughter. Daughter has become vegan and wants the trust to invest elsewhere.
D
The trust forbids the sale of certain investments. Trustee has discovered that companies represented by these investments employ labor practices that Trustee finds repugnant. n
B
The trust requires the trustee to keep the trust assets invested in Acme Corp. Acme Corp. manufactures cassette tapes and its stock has been in sharp decline.
If the court does not permit deviation from the terms, the trust will likely lose all of its assets, thus defeating the settlor’s purpose.
131
Which of the following actions does NOT breach the trustee’s duty of loyalty?
A
Deciding to diversify the trust’s investments, Trustee purchases Acme stock from the trust at an above-market rate.
B
Trustee lends the trust money at a reasonable rate.
C
Trustee borrows trust funds, invests in a risky startup company, and restores the money to the trust along with a sizeable return.
D
Trustee, who is a lawyer, renders legal services to the trust for an additional fee.
D
Trustee, who is a lawyer, renders legal services to the trust for an additional fee.
Ordinarily, a trustee may not employ herself in service to the trust. However, most courts allow a trustee who is a lawyer to be fairly compensated for extraordinary services rendered to the trust.
132
Under the Uniform Prudent Investor Act, a trustee must invest and manage trust assets as a prudent investor would. Which of the following statements is true under the Uniform Prudent Investor Act?
A Each investment decision is viewed in isolation.
B Investment returns are measured by the production of income.
C The investment strategy must incorporate risk and return objectives suited to the particular trust.
D High risk investments are inherently imprudent.
C The investment strategy must incorporate risk and return objectives suited to the particular trust.
The UPIA requires the trustee to tailor an investment strategy that incorporates risk and return objectives suited to the particular trust. Modern investment practices reflect sensitivity to the risk/return curve. Returns correlate strongly with risk, but tolerance for risk varies greatly with the purposes of the trust and the relevant circumstances of the beneficiaries.
(A) is incorrect because the UPIA is based on the modern portfolio theory of investing. Thus, each investment decision must be evaluated, not in isolation, but in the context of the entire trust portfolio (corpus) and as part of an overall investment strategy that has risk and return objectives reasonably suited to the particular trust. (B) is incorrect because under the UPIA, investment returns are measured by the “overall return” concept rather than the production of ordinary income. (D) is incorrect because the UPIA permits a trustee to invest in any kind of property or any type of investment “consistent with the standards of this Act”; therefore, no particular type of investment is inherently imprudent. The overriding concern is the risk/return objective of the investment, rather than the classification of investments as prudent or imprudent.
133
A spendthrift trust:
A Prevents a beneficiary from transferring her interest in the trust.
B Can be drafted so as to allow the beneficiary to voluntarily transfer her interest.
C Limits the creditors’ remedies to the income interest of the trust.
D Is an effective way for a settlor to protect assets from creditors while providing herself with income.
A Prevents a beneficiary from transferring her interest in the trust.
134
Settlor creates an irrevocable trust under which Trustee is to make distributions as she sees fit to comfortably support Daughter for life. Which of the following statements is true?
A Daughter’s creditors can compel distribution..
B Daughter can compel distribution.
C Settlor’s creditors can compel distribution.
D Trustee must make any distributions first to Daughter’s creditors who have served Trustee with notice of a claim
D Trustee must make any distributions first to Daughter’s creditors who have served Trustee with notice of a claim.
Once the trustee has been served with process, she cannot exercise her power in favor of the beneficiary without first satisfying the creditor’s claim.
135
An irrevocable trust may be terminated by:
A Consent of the settlor and all existing beneficiaries.
B Consent of all existing and potential beneficiaries if no material purpose of the trust would be frustrated.
C Consent of the settlor and the trustee.
D Only by the trust terms.
B Consent of all existing and potential beneficiaries if no material purpose of the trust would be frustrated.
It may also be modified or terminated upon the consent of the settlor and all beneficiaries, including potential beneficiaries.
136
The powers of co-trustees:
A Must be exercised by majority decision.
B Must be exercised by unanimous decision.
C Must be exercised by a two-thirds vote.
D Are personal to each trustee.
A Must be exercised by majority decision.
Trustees’ powers generally attach to the office and are not personal to the trustee named, but a court may find a power to be personal to a particular trustee if the trust and circumstances indicate that the settlor so intended. The fact that the trust gives the trustee discretionary powers is insufficient to prove that the power was intended to be personal to that trustee.
137
The trustee’s exercise of discretionary powers:
A May be reviewed by the court for abuse.
B Must be reviewed by the court if it involves business judgment.
C Are immune from judicial review if they are absolute.
D Cannot be reviewed by the court.
A May be reviewed by the court for abuse.
A trustee's exercise of discretionary power is subject to judicial review for abuse of discretion even if the trust instrument grants the trustee absolute discretion. The trustee must exercise discretionary power in good faith. To the extent that the exercise of discretion involves business judgment, a court will generally refuse to interfere.
138
Under a revocable trust, a trustee’s duties are owed:
A To the settlor and beneficiaries equally.
B Exclusively to the settlor.
C Exclusively to the beneficiaries.
D Primarily to the settlor, and secondarily to the beneficiaries.
B Exclusively to the settlor.
For an irrevocable trust, a trustees duties are owed exclusively to the trust beneficiaries.
139
Under the trustee’s duty to administer the trust, a trustee of a trust that has both life tenants and remaindermen must administer the trust:
A So as to maximize the amount of income for the income beneficiaries.
B So as to protect and grow the trust corpus.
C So as to take into account the differing interests of the beneficiaries.
D Without regard to the interests of individual beneficiaries.
C So as to take into account the differing interests of the beneficiaries.
If there is more than one beneficiary, the trustee must act impartially, taking into account any differing interests of the beneficiaries. The goals of present income and appreciation of the corpus must be balanced when there are life tenants and remainder holders.
140
Trustee placed $10,000 of his own money and $10,000 of trust money into a single investment account that required a $20,000 minimum investment. The investments were successful, and the account is now worth $40,000. Which of the following best describes how the money should be allotted?
A Trustee is entitled to $10,000, and the trust is entitled to $30,000
B Trustee is entitled to $20,000, and the trust is entitled to $20,000
C The trust is entitled to $40,000
D Trustee is entitled to $15,000, and the trust is entitled to $35,000
A Trustee is entitled to $10,000, and the trust is entitled to $30,000
141
A revocable trust provides that the settlor is to receive the trust income for life and then the corpus is to be distributed to her children. The settlor funded the trust with 1,000 shares of ABC stock, which has been steadily declining. The settlor has indicated to the trustee that she wants the trust to retain the ABC stock. If the trustee leaves all of the trust property invested in ABC:
A The trustee has breached his investment duty by failing to diversify.
B The trustee has not breached his duty by failing to diversify because he is following the settlor’s direction.
C The trustee has not breached any duty because the stock was the settlor’s original investment.
D The trustee has not breached any duty because investing in one stock is within his broad discretion.
B The trustee has not breached his duty by failing to diversify because he is following the settlor’s direction.
While a trust is revocable, the trustee owes his duties only to the settlor, and the settlor’s direction to hold the stock constitutes a special circumstance that would relieve the trustee of his duty to diversify. This is a revocable trust and the settlor wants to keep the investment in the ABC stock; thus, the trustee is relieved of his duty to diversify.
142
The trustee of a sizeable trust has limited investing experience. The trustee:
A May not delegate investment decisions because that is a discretionary function.
B May delegate investment decisions, but the trustee cannot be relieved of liability for those decisions.
C May delegate the investment decisions, but the trustee must monitor the agent’s performance.
D May not delegate the investment decisions without court permission.
C May delegate the investment decisions, but the trustee must monitor the agent’s performance.
The trustee must exercise reasonable care, skill, and caution in selecting an agent, establishing the scope of the delegation, and must periodically review the agent’s performance.
143
A trustee of an irrevocable trust is relieved of liability for breach of trust in each of the following instances EXCEPT:
A The trustee reasonably relied on the terms of the trust.
B The settlor waived the material purpose and consented to the conduct.
C The beneficiary ratified the transaction.
D The trust contains an exculpatory clause.
B The settlor waived the material purpose and consented to the conduct.
144
Which of the following is true regarding a pour-over gift from a will to an inter vivos trust?
A The trust must be established during the testator’s lifetime.
B The trust must be in existence at the will’s execution.
C The trust must be funded during the testator’s lifetime.
D The trust must be irrevocable.
A The trust must be established during the testator’s lifetime.
145
If a depositor deposits funds in an account “in trust for” a beneficiary, which of the following events does NOT revoke the trust?
A The depositor withdraws funds from the account during her lifetime.
B The depositor expressly revokes all "in trust for" accounts in a writing delivered only to her attorney.
C The depositor leaves a will bequeathing all funds held in her "in trust for" accounts to someone other than the beneficiary.
D The depositor predeceases the beneficiary.
D The depositor predeceases the beneficiary.
If a depositor deposits funds in an account “in trust for” a beneficiary, the depositor’s predeceasing the beneficiary does not revoke the trust. A Totten trust is a deposit of money in the depositor’s own bank account in trust for another person. The majority rule is that such a transfer creates a valid revocable trust, even though the depositor retains complete control over the account during her lifetime and the transfer is complete only upon her death. The trust is revoked to the extent of withdrawals made by the depositor during her lifetime. It may also be revoked by any lifetime act that manifests an intent to revoke. Thus, a writing expressly revoking all in-trust-for accounts delivered to an attorney is a valid revocation, even though the revoking instrument was not delivered to the bank. If the depositor’s will bequeaths all funds held in her "in trust for" accounts to someone other than the trust beneficiary, the trust is revoked and the funds pass to the will beneficiaries. If the trust beneficiary predeceases the depositor, the trust automatically terminates; the funds belong to the depositor absolutely and do not pass to the beneficiary’s estate. However, if the depositor predeceases the beneficiary, the funds pass to the beneficiary pursuant to the terms of the trust.
146
Sometimes one party pays the consideration for a property and title is taken in the name of another party. In which of the following situations is a court least likely to order the buyer to convey the property to the payor?
A The seller delivers the deed to the buyer, and the payor subsequently pays the seller the purchase price.
B The seller delivers the deed to the buyer in exchange for the payor’s canceling a debt owed to the payor by the seller.
C The payor, who is the buyer’s child, pays the purchase price to the seller, who transfers title to the buyer.
D The payor, who is eligible for better financing than the buyer, pays the purchase price to the seller, who transfers title to the buyer.
A The seller delivers the deed to the buyer, and the payor subsequently pays the seller the purchase price.
A court is least likely to order the buyer to convey the property to the payor where the seller delivers the deed to the buyer and the payor subsequently pays the seller the purchase price. When a buyer obtains legal title from the seller in exchange for consideration supplied by another person, courts imply a purchase money resulting trust by which the buyer is treated as a trustee whose sole duty is to convey the property to the payor beneficiary. For a resulting trust to arise, the payor must supply the consideration at or before the time the buyer takes title. A resulting trust will arise if the payor gives consideration by canceling a debt owed to him by the seller. Although a gift, not a trust, is presumed when a parent supplies the consideration and title is taken in the child’s name, the normal presumption of a trust applies where the payor is the child and the buyer is the parent. A trust usually will not be implied where the arrangement under which title is taken in the buyer’s name is for an unlawful purpose, such as where the buyer cannot obtain proper financing.
147
In which of the following situations is a court most likely to impose a constructive trust?
A
A grantor conveys real property to a grantee in reliance on his oral promise to hold it in trust for the grantor’s daughter; the grantee subsequently conveys the property to his son.
B A testator bequeaths all of her property to a beneficiary in reliance on his oral promise to bequeath it to the testator’s daughter upon his death; the testator dies and the beneficiary bequeaths all of his property to his son.
C A party obtains property from the owner by fraud and sells it to a bona fide purchaser.
D A thief steals property from the owner.
B A testator bequeaths all of her property to a beneficiary in reliance on his oral promise to bequeath it to the testator’s daughter upon his death; the testator dies and the beneficiary bequeaths all of his property to his son.
A court is most likely to impose a constructive trust where a testator bequeaths all of her property to a beneficiary in reliance on his oral promise to bequeath it to the testator’s daughter upon his death, and after the testator’s death the beneficiary bequeaths all of his property to his son. A constructive trust is a flexible equitable remedy imposed by a court to prevent unjust enrichment of one person at the expense of another as the result of wrongful conduct, such as fraud, undue influence, or breach of a fiduciary duty. The constructive trustee’s only duty is to convey the property to the person who would have owned it but for the wrongful conduct. Generally, a person’s mere breach of a promise is not a sufficient basis for implying a constructive trust. Thus, where a grantor conveys real property to a grantee in reliance on his oral promise to hold it in trust for the grantor’s daughter and the grantee subsequently conveys the property to his son, there is no constructive trust. (To hold otherwise would frustrate the purpose of the Statute of Frauds.) However, broken promises to a decedent concerning devolution of her property on death are a major exception to the rule: a constructive trust will be imposed because the promisee is dead and unable to personally seek enforcement. Although a constructive trust could be imposed where a fraudster obtains property from the owner and conveys it to a third party who is not a bona fide purchaser (the third party would be the trustee), this equitable remedy is not available when the transferee is a bona fide purchaser; the owner’s recovery is limited to the fraudster. If a thief steals property from the owner, title remains in the owner, so there is no need to imply a trust to restore title to the owner. But if the thief uses the stolen goods to buy other property, the owner can have a constructive trust imposed against the other property to prevent the thief from profiting from his wrong.
148
All of the following are duties of the trustee of a constructive or resulting trust EXCEPT:
A To account to the beneficiary for all profits taken from the property.
B To preserve and protect the trust property.
C To invest the trust property and make it productive.
D To convey legal title to the beneficiary.
C To invest the trust property and make it productive.
The trustee of a constructive or resulting trust has no duty to invest the trust property or make it productive. (That duty is reserved for trustees of express trusts.)
