Wills & Trusts Flashcards
Will Execution
1) Will must be signed by T or someone at T’s discretion
2) Ws, at same time, must witness T’s signature
2a) Invalid witnessing requirement can be overcome with clear and convincing evidence that T intended this to be the Will
Holographic Will
Don’t need Ws if T’s signature and all material positions are in T’s handwriting
Undue Influence - Common Law Presumption
1) Bene is in a confidential relationship to T;
2) Bene participates in any way in procuring the gift; and
3) The gift is an unnatural bequest that favors the bene
Undue Influence - Statutory
Instrument prepared by fiduciary who takes gift
Undue Influence - Standard
1) There was influence exerted on T;
2) The effect of the influence was to overpower the free will and mind of T; and
3) The product of the influence was a will which wouldn’t otherwise have been exercised but for the influence
Insane Delusion
But for the insane delusion the bequest wouldn’t have been made
Fraud
In the Execution - must defraud T as to the nature of what T is signing
In the Inducement - false representations made to get T to give a gift in one way and not another
Mistake
In the character of the document
In the Inducement - mistake and alternative disposition must appear on the face of the instrument (but CA Sup. Ct. case)
Revocation
Can revoke in three ways:
1) By subsequent physical instrument;
2) By physical act; or
3) By operation of law
Revival of a Revoked Will
Will #2 revokes Will #1; Will #2 is revoked by physical act; and contemporaneous or subsequent declaration by T showing intent to revive Will #1
Dependent Relative Revocation
T revokes part or all of a will based on a mistake of fact or law
If revocation is by physical act, extrinsic evidence of mistake or intent is allowed
If revocation is by subsequent will, mistake must appear on the face of the will
Codicils
To the extent the will isn’t changed by the codicil, it’s deemed to speak as of the date of the codicil, so the unaltered part of the will is republished by the codicil
Integration
The will consists of all papers or writings actually present at the time of execution and that T intended to constitute in the will
Presence and intent are presumed when the papers are physically connected or the provisions run from one page to the next
Incorporation by Reference
1) The incorporated writing is in existence as of the date of execution of the will;
2) The will shows T’s intent to incorporate the writing; and
3) The writing is sufficiently described in the will
Acts of Independent Significance
Non-testamentary acts of T used to resolve ambiguity on the face of the will
Specific Legacy
Gift of a particular item of property distinct from all other object in T’s estate
General Legacy
Gift of general economic benefit
Increase/Accretion
The majority rule is that if the value of a specific gift increases, the increase goes to the bene of the gift
Ademption
Occurs when the specific gift is no longer there when T dies
Bene isn’t entitled to the specific gift upon T’s death
Ademption by Extinction
When the specific gift is no longer owned by T at the time of T’s death
Ademption by Satisfaction
When T gives the bene a substitute gift during T’s lifetime
Lapse & Anti-Lapse
If bene predeceases T, the gift lapses and falls into residue unless anti-lapse applies
Anti-lapse applies if the deceased bene 1) is kindred of T; and 2) leaves surviving issue
Simultaneous Death
Simultaneous death if bene doesn’t survive decedent by 120 hours
Bene is deemed to predecease T
If all benes predecease T, all are deemed to survive the other so estate is split among their lines
If spouse dies simultaneously, 1/2 to each person’s estate
If joint tenant dies simultaneously, pro rata share to each JT’s estate
Intestate Succession
Spouse receives community property and:
1) No kid/parent/issue - spouse gets 100% of separate property
2) One kid/parent/issue - spouse gets 1/2
3) More than one kid/parent/issue - spouse gets 1/3
Lineal descendants take per capita by right of representation
Pretermitted Spouse
Spouse married after will executed gets intestate share of separate property unless 1) omission intentional, 2) spouse provided for by other gifts/transfers outside the will, or 3) premarital agreement
Pretermitted Child
Child born after will executed/T didn’t know of child gets intestate share unless 1) omission intentional, 2) spouse provided for by other gifts/transfers outside the will, or 3) T had other kids and left their estate to the parent of the omitted child
Bars to Beneficiary’s Succession
Intentionally kills T
Elder abuse of T
Unsuccessful will contest where the will has such an in terrorem clause
Trust Formation and Validity
1) A settlor or trustor
2) Delivery of property to trustee
3) A trustee
4) Intent
5) Trust property
6) Beneficiaries
7) A valid trust purpose
Secret Trust
1) Gift is absolute on face of will;
2) Secret agreement to hold gift in trust for benefit of another; and
3) Must prove by clear and convincing evidence
Semi-Secret Trust
Gift in will to T but terms of trust aren’t apparent
This trust fails
Charitable Trust
Purpose of trust is one that benefits the public
Cy Pres
Charitable gift as specified can’t be concluded so the property either passes to settlor’s successor or to a related charity
Spendthrift Tust
Bene can’t alienate interest in trust
Assignee/creditor can’t compel trustee to pay
Creditor can go after bene after disbursement
Exceptions to When Creditors Can Compel Trustee:
Claims of dependents, gov’t claims, suppliers of necessities
Discretionary Trust
Trustee has complete discretion to pay bene or not
After trustee exercises discretion, if trustee has notice of assignment or attachment, must pay creditor unless there’s a spendthrift provision
Support Trust
Trustee is required to pay only so much as is necessary for support of bene
Must be a limited amount
Termination or Modification of Trust by Settlor/Trustor
Almost limitless ability so long as trust is revocable
Termination or Modification of Trust by Beneficiary
Allowed if all benes consent and it won’t interfere with the trust’s material purpose
Failure of an Express Trust
When an express trust fails because bene dies, equity creates a resulting trust in the settlor/settlor’s estate and the ct compels the resulting trustee to distribute the property to the settlor/settlor’s estate
Fiduciary Duty - Delegation
Trustee may delegate but is still liable for delegate’s wrongful acts
Fiduciary Duty - Duty to Earmark
Trustee can’t commingle trust property with own property
Fiduciary Duty - Duty of Care
Trustee must manage investments as a prudent investor would, and thus must exercise reasonable care, skill, and caution
- Care relates to the trustee’s diligence and efforts
- Skill relates to the trustee’s capabilities
- Caution is the element of conservatism in managing the trust
Fiduciary Duty - Duty of Prudence/To Diversify
Trustee is required to make prudent investments. Prudence requires diversification and placing trust assets into investments that will maximize the value of trust assets
Fiduciary Duty - Duty to Make Property Productive
Non-productive property, trustee fails to collect claims/assets, trustee fails to invest funds
Fiduciary Duty - Duty of Loyalty to Beneficiaries
Trustee can’t purchase trust property for trustee’s own account or that of related persons without court approval
Fiduciary Duty - Duty to Act Impartially
Must act impartially toward both the income and principal beneficiaries
Fiduciary Duty - Duty to Administer Trust According to Terms
Ok
Fiduciary Duty - Duty to Allocate Income
Cash to income unless capital gain, or distribution in liquidation of corp. or partnership
Stock, capital gains to principal
Insurance proceeds to principal unless from loss of business income
Patents, copyright, royalties and leases: 10% to income, 90% to principal
Fiduciary Duty - Duty to Allocate Expenses
Ordinary expenses – all to income
Trustee/attorney/accountant and other compensation – ½ to each
Principal on debt, estate taxes, environmental cleanup – all to principal
Remedies for Breach of Fiduciary Duty
Surcharged for losses
Can’t offset losses with gain
Trustee may be removed
