Wills & Trusts Flashcards
Wills Checklist/ Roadmap
- Validity – Execution and Capacity
- Revocation
- Components of a Will
- Construction and Interpretation
- Intestate Succession
- Rights of Surviving Spouse and Children
- Bars to Succession
Valid Will– Execution Requirements
An attested will must:
- be in writing (no oral wills)
- signed by the Testator (or another person in T’s presence & at his direction)
- signing/ acknowledgement of T’s signature must be done in presence of 2 witnesses, both present at the same time
- witnesses must sign the will during testators life and
- witnesses must understand that the instrument they sign is T’s will
Witnesses Signatures
For testators dying on or after January 1, 2009, if the will doesn’t meet the witnessing requirement (both witnesses see T’s signing or acknowledgement @ the same time) it can still be admitted to probate if proponent establishes by clear and convincing evidence that T intended the doc to constitute his will @ time of signing
Interested Witness
witness is interested if they receive something under the will more than they would receive in intestacy
If a witness is interested there is a presumption of undue influence & If the IW does not overcome this presumption, they only get intestate share and rest goes to the residue.
Holographic Instruments
a holographic instrument is an entirely or partially handwritten instrument
Valid if signature & all material provisions are in the T’s handwriting. No need for witness.
material provisons– name of executors & trustees, ID of bequests, declaration that instrument is a will, & signature
Capacity Issues
negate testamentary capacity & invalidate gift/ disposition
4 Capacity Issues:
- undue influence (common law presumption of UI, standard UI, & statutory UI)
- insane delusion
- fraud
- mistake
Common Law Presumption of Undue Influence
presumption arises if beneficiary:
- is in a confidential relationship with the T;
- participates in some way in procuring the gift; AND
- the gift is an unnatural bequest that favors the beneficiary
If presumption is not overcome, the gift fails
Statutory Undue Influence
arises when beneficiary is:
- attorney
- caregiver
- person who drafts instruments OR
- person in fiduciary relationship & transcribes the instrument
There is a presumption that gift procured through undue influence UNLESS beneficiary is blood relative
if presumption not overcome, gift fails
Standard Undue Influence
In absence of common law presumption, challenger must show:
- there was influence exerted on T
- the effect of influence was to overpower free will & mind of T
- product of the influence was a will which would otherwise have not been executed but for the influence
FACTORS: T was vulnerable, B’s relationship gave them opportunity, B used tactics designed to exert UI, gift to B was inequitable
Insane Delusion
T had an insane delusion & but for the insane delusion the specific bequest would not have been made
Fraud
(in the execution & inducement)
fraud in the execution: where a T is misled into executing the instrument by false representations concerning the character or content of an instrument (led to believe its something other than a will)
fraud in the inducement: where a T is misled into executing the instrument by false representations concerning outside facts that influence his motivation
Mistake
(in the execution & inducment)
mistake in the execution: mistake as to the character of the doc. Can’t be probated
mistake in the inducement: based on mistaken belief of untrue facts. no relief unless fact of the mistake & disposition testator would have otherwise made is on the face of the instrument
Revocation
occurs by:
- subsequent will
- physical act (i.e., tearing, blotting, burning)
- by operation of law (e.g., divorce)
Revival
when will #2 revokes will #1 & then will 2 is revoked by physical act, will 1 will only be revived IF:
from the circumstances of the revocation OR from T’s contemporaneous/ subsequent declarations, its evident that T intended will #1 to be revived by revoking will 2
Dependent Relative Revocation
cancels a revocation that was based on mistaken assumption of law or fact that new disposition, made concurrently is valid.
Ct will give effect to revoked portion if its consistent w/ T’s testamentary intent (would the T rather the gift lapse or cancel revocation)
Codicil
amends a prior will & requires same formalities as a will.
To the extent that the rest of will is not changed, it is deemed to speak as of the date of the codicil, so unaltered portions are republished by the codicil
Integration
will consists of all papers or writings actually present at the time of execution & that the T intended to physically constitute her will
(presence/intent presumed when papers are physically connected, e.g. stapled)
Incorporation by Reference
requires that the
- incorporated writing be in existence as of the date of execution of the will
- will shows testator’s intent to incorporate the writing &
- incorp writing sufficiently described in the will
Acts of Independent Significance
permits a court to resolve ambiguities in a will by referring to certain docs OR acts effectuated during the T’s lifetime which were created/done for primarily non-testamentary motives
“to Church I am member of at time of death” – ambiguity as to what church that was so need to reference stuff outside of will to figure that out
Interpretation – Ambiguity in Will
whether latent (not on face of will) or patently (on face of will), extrinsic evidence will be admissible to explain the ambiguity
Specific Legacy
a gift of a particular item of property distinct from all other objects in the T’s estat
if specific legacy, look for issues of:
- accretion,
- ademption,
- lapse &
- anti-lapse
Accretion
when a specific gift increases in # or amount, the majority & CA rule is that the increase in gift goes to the beneficiary
Ademption
when the specific gift ID’d in the will is no longer there when T dies, beneficiary is no longer entitled to the specific gift upon T’s death
- ademption by extinction: T no longer owns the specific gift
- ademption by satisfaction: T gives B substitute gift during T’s lifetime
CA: Ct will admit extrinsic evidence to determine if T intended to adeem the gift
Simultaneous Death
If T & beneficiary die simultaneously, or if it cant be determined who died first (bc of 5 day rule), B of any legacy is deemed to predecease the T
5 day rule/ 120 hr rule: a B who doesn’t survive the T by 5 days/120 hrs
Lapse
occurs if B predeceases T, the gift will fail & fall to the residue in the absence of an applicable anti-lapse statute. If the gift is the residue, then the gift will pass to intestacy
CA Anti-lapse Statute
where the predeceased B is kindred of the testator/trustor OR kindred of the testator/ trustors surviving, ex, or deceased spouse/domestic partner AND the predeceased B left issue surviving them, then the gift in that case goes to the surviving issue of predeceased B
General Legacy
a gift of general economic benefit (such as cash) payable out of the general assets of the estate
Stock Gifts
can be either specific or general depending on language & circumstances BUT usually general legacy UNLESS:
- will refers to “my shares of a particular corps stock” OR
- stock is in a small, closely held corp not traded on a stock exchange
Will Admitted to Probate in CA if:
the will complies w/ the formalities of execution of 1) CA law, 2) law of place where the will was executed; or 3) law of place of T’s domicile @ the time the will was executed
Intestate Succession
Surviving spouse gets the decedent’s share of the CP, & all of the SP if the decedent leaves no issues, parent, sibling, or issue of deceased sibling.
Surviving spouse gets
- 1/3 split of SP, if there are 2 or more children (including issue of deceased children)
- 1/2 split of SP, if there is 1 child or 1 issue of deceased child or no children but a parent or issue of a parent
If no surviving spouse, entire estate passes to decedent’s surviving issue. CA per capita formula– each live taker @ each generation is treated equally
Pretermitted Spouse
A spouse may dispose of their half of the CP by will to whomever they wish, BUT a spouse omitted from a premarital will receives their intestate share of testator’s estate UNLESS
- the omission was intentional as shown in the will
- spouse is provided for in transfers outside the will (such as a prenup), or
- spouse made a valid agreement waiving her interest in decedent’s estate
Pretermitted Child
A child omitted from a pre-birth will (born after the will) receive their intestate share UNLESS:
- ommission was intentional as shown in will
- child is provided for in transfers outside the will OR
- testator had other children & left their estate to parent of ommitted child
adopted children can inherit from both adoptive & natural parent if: adopt parent married to natural parent or adopted after 1 natural parent dies
Adopted Children
Bars to Succession
B is barred from receiving their share if they:
- feloniously/ intentionally kill decedent
- commit elder abuse of decedent OR
- unsuccessfully bring will contest if there’s a no contest clause in the will
Trusts Checklist
- formation & validity
- fiduciary duties of trustees
- remedies for breach of fiduciary duty
Valid Trust
Elements of valid trust:
- a settlor or trustor who creates the trust
- a trustee, whose duty is to manage the trust
- intent to create a trust
- trust property
- delivery of the trust property to the trustee
- beneficiaries
- valid trust purpose (estate planning)
Grounds for invalidating trust: undue influence, insane delusion, fraud & mistake
Secret Trust
if a will makes a gift that to a named beneficiary but the gift was made in reliance on the beneficiary’s oral or written promise to hold it in trust for another, THEN, to prevent unjust enrichment, courts will allow intended trust beneficiary to present extrinsic evidence of the agreement.
If agreement is proved by clear & convinving evidence, ct will impose constructive trust & compel compliance w/ terms of secret trust
Semi-Secret Trust
a will that makes a gift that is explicitly in trust but fails to name either actual beneficiary or purpose of trust. (e.g., i leave $10,000 to A to manage as we discussed)
Courts will not enforce the trust even if T communicated ID of B & terms to trustee bc doesn’t meet formalities. Prop falls to residuary
Charitable Trusts
purpose of charitable trust must be one considered to benefit the public
- if the effect is charitable & benefits the public then that’s enough (even if T had ulterior motive)
- RAP doesn’t apply to charitable trust (unless interest shifting from charitable to non-charitable)
Cy Pres
where T had a charitable intent but the specified charitable use is no longer possible/ practical, court must decide whether T had a specific charitable intent OR general charitable intent
- specific if T would’ve intended the trust to fail in the absence of named charity & Prop will pass as resulting trust to settlor’s successors in title
- general if T would’ve wished the property be devoted to a similar use & court will select one that’s as near as possible to original use
Spendthrift Trust
one in which B cannot alienate his interest in the trust meaning B cannot give away his future income or capital to creditors/ anyone else & trustee can’t be compelled to pay
BUT restraints not applicable once trust income has been paid out to B or from claims of dependents, govt, or suppliers of necessities (food, medicine, shelter)
Discretionary Trusts
trustee is given discretion whether to pay or withhold payments to B
Creditors can’t reach funds until trustee exercises discretion.
If no spendthrift provision & trustee elects to make payments & has notice of an assignment/ attachment by creditors, then must pay creditors directly
Support Trusts
one where the trustee is required to pay only so much of the income or principal as is necessary for support of the B
interest is non-assignable so creditors can’t reach it
Termination of Trust
Settlor/ trustor can almost always terminate or revoke a trust if statutorily permitted. In CA, settlor/trustor power to revoke trust is presumed
Beneficiary can only revoke or modify a trust if:
all beneficiaries consent & modification/ termination will not interfere w/ a material purpose of the trust
trustee can NEVER terminate
Failure of an Express Trust
when an express trust fails bc B is dead, equity creates a resulting trust in the trustor (if trustor is dead then trustor’s estate)
Trustee’s Duty to Delegate
may delegate management function that prudent trustee would delegate & must exercise reasonable care, skill & caution 1) in selecting an agent; 2) establishing scope & terms; 3) periodically reviewing agents actions
Always liable for delegates negligence
Trustee’s Duty to Earmark
trustee must keep trust assets & property separate from trustee’s personal assets & property and must be title in the name of trustee as trustee
Duty of Care
must manage investments as prudent investor would & must exercise
1) reasonable care – make reasonable effort to research/ verify info likely to affect value of investment assets
2) skill – trustee’s capabilities
3) caution – conservativism in managing the trust
Duty of Prudence/to Diversify
trustee required to make prudent investments which requires diversification & placing trust assets into investments that will maximize the value of trust assets
Duty of Loyalty
trustee has fiduciary duty of loyalty to the beneficiaries & must act in their best interest at all times. Prevents trustee from purchasing trust property for trustee’s own account or that of related persons. Before entering self-dealing transaction must obtain court approval.
Duty to Act Impartially
trustee must act impartially toward both the income and principal beneficiaries. Can’t make an investment that increase income but damages the long term value of the trust property
Duty to Administer
must administer the trust according to its terms & by following instructions
Remedies for Breach of Duty
trustee is liable for all losses resulting from breach & will be surcharged for the loss. Trustee may also be removed as trustee
