Wills & Trusts

Question 1

Will Formation Process - Generally

Answer 1

1. The beginning of a will identifies the testator—the person making the will—and indicates they are competent to make a will.
2. The dispositive provisions then set out how the property is to be distributed. The provisions include specific gifts to specific people, and then the rest is distributed through the residue or residuary.
3. There may also be an appointment of an executor and successors, to be responsible for the legal distribution of the estate after testator’s death by offering the will for probate and obtaining court approval for all acts.
4. The testator signs and dates the will, and then there is an attestation clause signed by the witnesses, attesting to the testator’s competence to make a will.

Question 2

Wills - Exam Approach

Answer 2

Use a mental checklist to treat wills chronologically:

1. Execution and capacity;
2. Revocation;
3. Components;
4. Interpretation;
5. Intestate succession;
6. Rights of surviving spouse and children; and
7. Bars to succession.

If the exam states that the testator executed a valid will, there is no need to discuss either execution of the will or capacity of the testator, since both of those issues go to the issue of validity.

If the essay gives no details about the will execution, but is largely about formation of, and acts of a trustee under, a testamentary trust, such as occurred on the take-home essay, just focus on the trust.

Question 3

Wills - Execution, Generally

Answer 3

The requirements of a statutory will are precise, and variance will ordinarily invalidate the will.

The main issues involve the validity of the testator’s signature, the order and validity of the witness’ signatures, and interested witnesses.

Question 4

Wills - Testator’s Signature

Answer 4

A will may be signed by the testator or by someone at his direction.

Even if the testator signs, but only with an “X,” it is sufficient execution.

Question 5

Wills - Witnesses’ Signatures

Answer 5

The witnesses, being present at the same time, must witness either the testator’s signature, or the testator’s acknowledgment. An acknowledgment is the testator saying to the witnesses, “This is my will,” or something similar.

If the witnesses are not present at the same time, the will has not been properly executed and normally is invalid.

Question 6

Wills - Interested Witnesses

Answer 6

If a witness is interested—they receive something under the will more than they would receive in intestacy—then there will be a presumption of undue influence.

If the proponent of the will does not overcome the presumption, the witness’ disposition lapses.

Appointment of the witness as a trustee or executor does not make the witness an interested witness.

Question 7

Wills - Holographic Wills

Answer 7

A holographic will is one in which the material provisions are handwritten by the testator.

For a holographic will to be valid the signature and all material provisions must all be in the testator’s handwriting, but there is no requirement for witnesses.

A holographic will can incorporate printed boilerplate, but the material provisions must all still be in the testator’s handwriting.

Question 8

Wills - Witnesses’ Signatures, Exception

Answer 8

If a will is not executed in strict compliance with the witnessing requirement, it may still be admitted to probate if the proponent establishes by clear and convincing evidence that at the time the testator signed the will, the testator intended the instrument to constitute his will.

Analyze whether the formalities of execution have been met. If they have not been met, discuss the rule of clear and convincing evidence and apply it to the facts before deciding whether to validate or invalidate the will.

Question 9

Capacity - Generally

Answer 9

There are four primary issues in testamentary capacity:

1. Undue influence;
2. Insane delusion;
3. Fraud; and
4. Mistake.

Question 10

Undue Influence - Generally

Answer 10

There are three types of undue influence analysis:

1. A presumption of undue influence;
2. Standard undue influence; and
3. Statutory undue influence

Question 11

Undue Influence - Presumption of Undue Influence

Answer 11

A presumption of undue influence arises when:

1. A beneficiary is in a confidential relationship to a testator;
2. The beneficiary participates in some way in “procuring” a gift; and
3. The gift is an “unnatural” bequest that favors the beneficiary.

If the presumption is not rebutted, it invalidates the gift.

An unnatural bequest is one to someone other than the natural objects of the testator’s bounty.

Question 12

Undue Influence - Statutory Undue Influence

Answer 12

Statutory undue influence arises when the beneficiary:

1. Is an attorney or caregiver; or
2. Is the person who drafts the instrument; or
3. Is in a fiduciary relationship with the testator and transcribes the instrument.

If the presumption is not rebutted, it invalidates the gift.

Question 13

Undue Influence - Standard Undue Influence

Answer 13

In the absence of the common law presumption, the challenger must show that:

1. There was influence exerted on the testator;
2. The effect of the influence was to overpower the free will and mind of testator; and
3. The product of the influence was a will which would not other have been executed but for the influence.

A number of factors may be considered, including: (a) the testator was vulnerable to undue influence; (b) the beneficiary’s relationship to the testator gave the beneficiary the opportunity to exercise undue influence; (c) the beneficiary had the disposition to influence the testator, and utilized actions and tactics designed to exert influence; and (d) the gift to the beneficiary was inequitable.

Question 14

Insane Delusion - Generally

Answer 14

The issue is whether the insane delusions actually caused the bequest.

The test is whether, “but for” the insane delusion, the bequest would not have been met.

Question 15

Fraud - Generally

Answer 15

Fraud in the inducement occurs where a testator is misled into executing the instrument or a particular gift by false representations concerning facts that influence his motivation.

If the court determines that someone fraudulently represented the facts to the testator, any gift caused by the fraud will be denied probate.

Fraud in the execution occurs where a testator is misled into executing the instrument by false representations concerning the character or content of an instrument. (rare)

Question 16

Mistake - Generally

Answer 16

Where there is a mistake in the inducement, based on a mistaken belief in untrue facts, there is no relief unless the fact of the mistake, and the disposition the testator would have made but for the mistake appear on the face of the instrument.

Where there is a mistake in the execution, as to the character of the document, it cannot be probated, since there is no intent to make a will. (rare)

Question 17

Revocation - Generally

Answer 17

There are three methods of revocation of an instrument or a gift in the instrument:

1. By subsequent will;
2. By physical act (cancellation, tearing, blotting out, etc.); or
3. By operation of law (divorce or termination of a domestic partnership).

While a strike-out of a bequest is an effective revocation by cancellation, adding in a new bequest is not effective because it would not comply with the required execution formalities.

Question 18

Revival - Generally

Answer 18

Revival only applies when a second will revokes the first will, and then the second will itself is revoked by physical act.

If this occurs, the first will is only revived if (1) from the circumstances of the revocation or (2) from the testator’s contemporaneous or subsequent declarations, it is evident that testator intended the first will to be revived by revoking the second will.

Extrinsic evidence is allowed to show such intent. If the second will is revoked by a subsequent instrument, extrinsic evidence to prove the intent to revive is not allowed. In that case, revival of the first will would only be permitted if the subsequent instrument actually republishes part or all of the first will or otherwise explicitly states that the first will is revived.

Question 19

Dependent Relative Revocation (DRR) - Generally

Answer 19

A testator who revokes a will or portion of a will under a mistaken belief of law or fact, and who would not have revoked the will but for such belief, has not effectively revoked his will.

The doctrine of DRR allows the original will or portion of the will to be revived.

A court will give effect to the revoked portion if it is consistent with what the court determines was the testator’s intent.

If the revocation is by physical act, the mistake may be shown by extrinsic evidence, but if the revocation is by subsequent instrument, the mistake must appear on the face of the will.

Question 20

Components of a Will - Generally

Answer 20

Where there are other documents in addition to the will, one must determine whether they are part of the will.

There are four possible theories for what these papers might be:

1. A codicil;
2. An integration;
3. An incorporation by reference; and
4. Acts of independent significance.

Question 21

Codicil - Generally

Answer 21

A codicil is a supplement to a will that alters, amends, or modifies the will, rather than replacing it.

A codicil must be executed with the same formalities as a will.

A validly executed codicil republishes the will as of the date of the codicil, unless the will contains a clause to the contrary.

Question 22

Integration - Generally

Answer 22

The will consists of all papers or writings actually present at the time of execution and that the testator intended to physically constitute her will.

Intent and presence are presumed when the papers are physically connected or there is an internal sense of connections shown by the provisions running from one page to the next.

Question 23

Incorporation by Reference - Generally

Answer 23

Incorporation by reference requires that:

1. The incorporated writing be in existence as of the date of execution of the will;
2. The will shows the testator’s intent to incorporate the writing; and
3. The writing be sufficiently described in the will.

Question 24

Acts of Independent Significance - Generally

Answer 24

This doctrine permits a court to resolve ambiguities in a will by referring to certain documents or acts effectuated during the testator’s lifetime for primarily nontestamentary motives.

The act or event must have a sufficient significance apart from its impact on the will (“All my paintings to the employee in my employ at the time of my death”).

Question 25

Interpretations of Wills - Extrinsic Evidence

Answer 25

Extrinsic evidence is admissible to explain a latent or patent ambiguity in a will.

It is not admissible to show that a will provision has a meaning to which it is not reasonably susceptible.

Question 26

Interpretations of Wills - Specific vs. General Legacies

Answer 26

A specific legacy is a gift of a particular item of property distinct from all other objects in the testator’s estate. The issue is whether the testator intended the donee to have that thing only, or something similar.

A general legacy is a gift of general economic benefit, payable out of the general assets of the estate.

If a gift is a specific legacy, consider increase or accretion, ademption, and lapse and anti-lapse.

Question 27

Interpretations of Wills - Increase or Accretion

Answer 27

When a specific gift increases in number or amount, the increase in a specific gift goes to the beneficiary.

Question 28

Interpretations of Wills - Ademption

Answer 28

Ademption by extinction occurs if the subject matter of a specific bequest is missing or destroyed.

Ademption by satisfaction occurs when the testator gives the beneficiary a substitute gift during the testator’s lifetime.

In either case, the beneficiary is not entitled to the specific gift upon the testator’s death. In California, the court will admit extrinsic evidence to determine if the testator intended to adeem the gift.

Question 29

Interpretations of Wills - Lapse and Anti-Lapse

Answer 29

If the beneficiary predeceases the testator or trustor, the gift lapses and falls to the residue in the absence of an applicable anti-lapse statute.

California’s Anti-Lapse statute provides that if the gift was made to kindred of the testator, or of his current or former spouse or domestic partner who predeceased the testator but left issue who survived the testator, the issue take the gift.

Question 30

Simultaneous Death - Generally

Answer 30

If the testator and beneficiary die simultaneously, or it cannot be determined which one died first, the beneficiary is deemed to predecease the testator.

Question 31

Intestate Succession - Generally

Answer 31

If the instrument or the residue, fails for any reason, the result may then be intestacy.

In case of intestacy, the surviving spouse, if any, gets the decedent’s share of the community property, and all of the separate property if the decedent leaves no issue, parent, sibling, or issue of a deceased sibling.

Question 32

Intestate Succession - Survival of Beneficiary

Answer 32

For the purposes of intestate succession, a beneficiary who does not survive the decedent by 120 hours is deemed to have predeceased the decedent, unless the result is escheat to the state.

Question 33

Intestate Succession - Unequal Degrees of Kinship

Answer 33

If the issue are of unequal degrees of kinship to the decedent, the estate is divided into shares based on the nearest generation in which there are living descendants of the testator:

1. one share for every living member of that generation, and
2. one share for each deceased member of the generation, with their share being taken by their issue by right of representation.

E.g., if T is survived by two living children, and two grandchildren through a deceased child, each living child receives 1/3, and the two grandchildren each receive 1/6.

Question 34

Intestate Succession - Equal Degrees of Kinship

Answer 34

The portion passing to each issue depends on how many issue there are in particular degrees.

If the issue are all of equal degree of kinship to the decedent, then they take equally.

E.g., if T is survived by three children, they each take 1/3.

Question 35

Intestate Succession - Separate Property, After Distribution to Spouse

Answer 35

The rest of the decedent’s separate property is distributed as follows:

i) To the decedent’s surviving issue;
ii) If none, then to decedent’s surviving parent or parents;
iii) If none, then to the surviving issue of decedent’s parents;
iv) If none, then to decedent’s surviving grandparent or grandparents;
v) If none, then to the issue of the grandparents;
vi) If none, then to the issue of any predeceased spouse or domestic partner;
vii) If none, then to the decedent’s next of kin;
viii) If none, then to the parents of a predeceased spouse or domestic partner or their issue; and
ix) If none, then the estate will escheat to the state of California.

Question 36

Intestate Succession - Separate Property

Answer 36

The surviving spouse receives:

i) All of the decedent’s separate property if the decedent is not survived by any lineal descendants, parents, or issue of parents;
ii) One-half of the decedent’s separate property if the decedent is survived by one lineal descendant or by a parent or issue of a parent; or
iii) One-third of the decedent’s separate property if the decedent is survived by more than one lineal descendent.

Question 37

Pretermitted Spouse - Generally

Answer 37

A spouse may dispose of their half of the community property by will to whomever they wish.

A spouse omitted from a premarital will receives their intestate share of testator’s estate unless:

1. The omission was intentional as shown in the will;
2. The spouse is provided for in transfers outside the will; or
3. The spouse made a valid agreement waiving her interest in decedent’s estate.

Question 38

Pretermitted Child - Generally

Answer 38

A parent can fail or refuse to leave anything to their child or children.

A child born after the will is created receives her intestate share unless either:

1. The omission was intentional as shown in the will;
2. The child is provided for in transfers outside the will; or
3. The testator had other children and left their estate to the parent of the omitted child.

This principle applies as well if the testator fails to provide for a child solely because the testator believes the child is dead or is unaware of the birth of the child.

Question 39

Bars to Succession - Generally

Answer 39

A beneficiary is barred from receiving their share if they:

1. Feloniously and intentionally kill the decedent;
2. Commit elder abuse of the decedent; or
3. Unsuccessfully bring a will contest if there is a no contest clause in the will.

Question 40

Trusts - Formation

Answer 40

There are seven elements of a valid trust:

1. A settlor or trustor who creates the trust;
2. A trustee, whose duty is to manage the trust;
3. Intent to create a trust;
4. Trust property;
5. Delivery of the trust property to the trustee;
6. Beneficiaries; and
7. A valid trust purpose.

Absence of a trustee will not prevent validity of a trust since a court can appoint a trustee.

If the testator executes a valid will, which then contains a testamentary trust, and there are no facts that the trust contained within the valid will is also valid, you must still discuss the elements of a valid trust.

Question 41

Trusts - Secret Trusts

Answer 41

If a will makes a gift that is absolute on its face to a named beneficiary, but the gift was made in reliance on the beneficiary’s oral or written promise to in fact hold the gift property in trust for another, then to prevent unjust enrichment of the named beneficiary, courts will allow the intended trust beneficiary to present extrinsic evidence of the agreement.

If the agreement can be proved by clear and convincing evidence, the court will impose a constructive trust on the secret trustee, and compel them to comply with the terms of the secret trust.

Question 42

Trusts - Semi-Secret Trusts

Answer 42

A semi-secret trust occurs when a gift is directed in a will to be held in trust, but the testator fails to name a beneficiary or specify the terms or purpose of the trust.

In this situation, extrinsic evidence may not be presented, the gift fails, and a resulting trust is imposed on the property to be held in trust for the testator’s heirs.

Question 43

Trusts - Charitable Trusts

Answer 43

For a trust to be considered charitable, it must have a stated charitable purpose and it must exist for the benefit of the community at large or for a class of persons the membership in which varies.

The Rule against Perpetuities will only apply to invalidate a charitable gift if it involves a shifting executory interest from a charity to a non-charitable purpose, or from a non-charitable purpose to a charity. A shifting executory interest from one charity to another charity does not violate the Rule against Perpetuities.

Question 44

Charitable Trusts - Cy Pres

Answer 44

Where the settlor had a charitable intent, but the specified charitable use is no longer possible or practical (such as when the specific charity no longer exists), the court must decide whether the settlor had a specific charitable intent and thus would have intended the trust to fail in the absence of the named charity, or had a general charitable intent and would have wished the property devoted to a similar use that is as near as possible to the original use.

Where the court decides that the settler had a specific intent to benefit a particular charity, the property passes as a resulting trust to the settlor’s successors in title.

Question 45

Spendthrift Trusts - Generally

Answer 45

A spendthrift trust is one in which the beneficiary cannot alienate (transfer, hypothecate, or pledge) their interest in the trust.

The beneficiary cannot give away their future income or capital to creditors or anyone else, and the assignee cannot compel the trustee to pay him.

This restraint on alienation does not apply once the trust income has been paid out to the beneficiary, nor to they bar payment to claims of dependents, the government, or suppliers of necessities.

Question 46

Discretionary Trusts - Generally

Answer 46

In a discretionary trust, the trustee is given discretion whether to pay or withhold payments to a beneficiary. Before the trustee exercises discretion, creditors cannot reach the trust.

Absent an abuse of discretion, a court will not interfere in the trustee’s exercise of discretion.

Question 47

Support Trusts - Generally

Answer 47

A support trust is one where the trustee is required to pay only so much of the income or principal as is necessary for support of the beneficiary.

A beneficiary’s interest in a support trust is non-assignable, and creditors cannot reach it.

Question 48

Termination of Trusts - Generally

Answer 48

A settlor can almost always terminate or revoke a trust if statutorily permitted. In California, the power of a settlor or trustor to revoke the trust is presumed.

Beneficiaries can only revoke or modify a trust if all beneficiaries consent, and the modification or termination will not interfere with a material purpose of the trust.

Question 49

Failure of an Express Trust - Generally

Answer 49

When a trust fails in some way or when there is an incomplete disposition of trust property, a court may create a resulting trust requiring the holder of the property to return it to the settlor or to the settlor’s estate.

Question 50

Trustee’s Duties - Delegation

Answer 50

The trustee may delegate management functions that a prudent trustee would delegate, and must exercise reasonable care, skill, and caution in selecting an agent, establishing the scope and terms of the delegation, and periodically reviewing the agent’s actions.

The trustee will be held responsible for any negligence of the agent.

Question 51

Trustee’s Duties - Duty to Earmark

Answer 51

The trustee must keep trust assets and property separate from the trustee’s personal assets and property, and the assets must be titled in the name of the trustee as trustee.

Commingling assets breaches the fiduciary duty to earmark.

Question 52

Trustee’s Duties - Duty of Care

Answer 52

The trustee must manage investments as a prudent investor would, and thus must exercise reasonable care, skill, and caution.

1. Care relates to the trustee’s diligence and efforts, and the duty to investigate.
2. Skill relates to the trustee’s capabilities.
3. Caution is the element of conservatism in managing the trust.

Question 53

Trustee’s Duties - Duty of Prudence/To Diversify

Answer 53

A trustee is required to make prudent investments.

Prudence requires diversification and placing trust assets into investments that will maximize the value of trust assets.

Question 54

Trustee’s Duties - Duty to Make Property Productive

Answer 54

Occurs where there is property that is not producing income, such as vacant land; where the trustee is not collecting assets or claims due the trust; or is not investing funds.

Question 55

Trustee’s Duties - Duty of Loyalty

Answer 55

A duty of loyalty prevents a trustee from purchasing trust property for the trustee’s own account or that of related persons.

A trustee must obtain court approval before entering into any such “self-dealing” transaction.

Question 56

Trustee’s Duties - Duty to Act Impartially

Answer 56

A trustee has a duty to act impartially toward both the income and principal beneficiaries.

A trustee cannot make only investments that increase income but damage the long-term value of the trust property.

Question 57

Trustee’s Duties - Duty to Administer

Answer 57

The trustee must administer the trust by following the instructions of the trust.

A trustee may breach this duty by resigning as trustee.

Question 58

Trustee’s Duties - Principal and Income Allocation

Answer 58

A trustee must follow the Uniform Principal and Income Act, which sets out how to allocate various distributions to either principal, for the benefit of the remainder beneficiaries, or income, for the benefit of the income beneficiaries.

This requires:

1. Money to be allocated to income unless it is a capital gain or in distribution of liquidation of an entity;
2. Insurance proceeds to be allocated to principal, except for business income loss, which is allocated to income;
3. Proceeds from patents, copyrights, oil and gas royalties and lease payments, and similar payments are allocated 10% to income and 90% to principal because they represent depreciating assets.

Violation of the principal and income allocation rules is also often a violation of the duty of impartiality, since it improperly favors one beneficiary over the other in a way not permitted by law.