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Wills and Trusts

Terms in this set (85)

Formalities for a Will (admissible to probate under Statute of Wills)
Testator must be 18 or over
Will must be written
With testamentary intent
Signed
Two attesting witnesses who witness the signing or testator's acknowledgement of previous signature
Effect of Will's failure to comply with Formalities
Invalid

UPC - court may validate if proponent establishes the testator's intent by clear and convincing evidence
Tests for attesting witnesses view of sigining
Line of Sight Test - could see testator sign if they were to look.

Conscious Presence - conscious of the testator's actions
Probate jurisdiction over property in other states
Ancillary administration takes place in every other state where property is owned

Common law applies the will requirements of the forum state

Uniform Probate Code requires either law of the place, law of domicile at death, or law of domicile at execution
Test for interested witnesses
Majority rule is that the beneficiary loses unless there were two other disinterested attesting witnesses or witness-beneficiary would be an heir if there were no will (in that case only gets lesser of amount given or intestate share.

UPC rule ignores interested witnesses unless there was undue influence.
Self Proving Will
If T and witnesses sign self-proving affidavit that recites all formalities before notary give conclusive presumption of validity.
Revocation
Express must be in writing (always include I expressly revoke all earlier wills).

Physical Act

Inconsistency

Divorce
Physical Act Revocation
intent to revoke
physical act to the original (burned, tore, cancelled, or destroyed)
Presumption
will in T's possession found in mutilated condition after T's death results in a presumption of intent to revoke

will last seen in T's possession and control not found after death results in a presumption that it cannot be found because of intent to revoke

(other party must show access)
Revocation by Proxy
Done at T's direction and in T's presence
Lost Will Statute
Proponent must prove content of lost will by clear and convincing evidence (copy)
If atty fails to properly execute or revoke a will
Atty can be sued for negligence
Revocation by Inconsistency
Latter document controls if they cannot be reconciled (revocation revokes all amendments, residuary clause revokes earlier will in entirety)
Effect of Divorce
Revokes all provisions in favor of ex spouse (as if ex spouse were dead)

Remarriage revives these provisions
Amendment of a will by crossing out and adding text to the margin
The revocation is valid under physical act, but the addition is ineffective unless the will is re executed or republished by codicil
Dependent relevant revocation
DRR allows us to disregard a revocation that is based on, induced by, premised on a mistake of law or fact if the court is satisfied that but for the mistake T would not have made the revocation.
Rivival
If a will revoking a prior will is destroyed, it has no effect at common law. At UPC it is revived if the earlier will still exists, if T intended to revive it, and will 2 was revoked by physical act (otherwise argue dependent relevant revocation)
Incorporation by Reference (if memo didn't meet formalities required for a will)
Memorandum must be in existence at time of will's execution, must manifest intent to incorporate, must describe the writing sufficiently to permit its identification

Exception: tangible personal property
Doctrine of Independent Significance
Act having an independent lifetime motive may impact on the will as well.
When beneficiary dies before (or within 120 hrs of testator)
The gift lapses (fails and falls to residue)
If a class, the surviving members take unless the anti lapse statute applies
Anti Lapse Statute
Dead beneficiary is a close relation (but not spouse)
Gift goes to their issue (bypasses relation's will)
Specific Legacy
gift of identifiable piece of personal property
Demonstrative Legacy
a specified pecuniary amount that also specifies the source of the fund
General Legacy
default; specified pecuniary amount
Residuary Bequest
designates the person that should receive the remainder
Intestate Property
If there is a partial intestacy
Ranking of Bequests in the case of an Insolvent Estate (sold last)
Specific
Demonstrative
General
Residuary
Intestate
If specifically devised property is sold by conservator (appointed due to testator's incompetence), or if condemnation award or insurance proceeds relating to the property are paid to the conservator, the specific devisee has a right to
a general legacy equal to the net sale price, condemnation award, or insurance proceeds unless testator's disability has been adjudicated to have ceased and testator survives the adjudication by one year.
A specific devisee has the right to the remaining specifically devised property and
Any balance of purchase price owing from purchaser when contract is still executory at T's death. (At common law, equitable conversion would apply, and T would no longer
own real property, but merely a claim to the remaining purchase price.)

Any amount of condemnation award for taking of the property, to the extent unpaid at T's death.

Any amount of fire or casualty insurance proceeds unpaid at death.

Any real or tangible personal property acquired as a replacement for other similar property.

Property acquired as a result of a foreclosure of a security interest on specifically devised note.
Ademption
The extinction or withdrawal of an inheritance because decedent did not own the property at the time of death.
Latent Ambiguity
Will is not ambiguous on its face, but cannot be applied in the real world.

Extrinsic evidence is admissible otherwise the gift fails.
Mistake
Common law - you cannot alter the plain meaning of a will by extrinsic evidence.

MPC - if a mistake is proven by clear and convincing evidence, the court can reform even unambiguous terms to match T's intent.
Intestacy Default Rules
If survived by spouse and issue - spouse gets entire state unless one of the spouse's issue is not also the issue of decedent (fixed amount plus fraction of excess).

Shares based on relation (per capita or by representation)
Per Capita divison
Equal shares (or equal shares then equal shares again for each line)
UPC division for predeceased hiers
For those that die before taking, a pot is created and divided equally among descendants
Strict per stirpes
Empty lines are ignored.
Adoption by Estoppel
Permits a child to inherit from or through a stepparent or foster parent when legal custody of a child is gained under an (unfulfilled) agreement to adopt the child.
Effect of Simultaneous Death
Act as though the testator survived and beneficiary predeceased (does not apply to joint tenants).
UPC Rule on Advancements
Gift must be declared or acknowledged as an advancement in writing
Rights of surviving spouse
Homestead
Exempt Property
Family Allowance
Elective Estate
Elective Estate
Spouses may elect against the will of their deceased spouse. Generally 1/3 of the estate of the deceased spouse (including revocable trusts and large deathbed gifts); Right of election can be waived
Pretermitted Child
Child born or adopted after will executed (or believed dead)

Entitled to claim an intestate share unless the omission was intentional, T provided another transfer in lieu of inclusion in the will, or left substantially all to the child's parent
Republication by Codicil
Will "speaks" (is deemed to have been executed) on date of last codicil thereto
Homicide limitations on sharing in the estate
a person who feloniously and intentionally kills the decedent is not entitled to any benefit from decedent's estate by will, by intestacy (including family allowance, exempt property and homestead), under life insurance contract or otherwise. (May create a lapse)

Criminal acquittal is insufficient; this is a civil matter.
Methods of creating a lapse
Predeceased beneficiary
Homicide
Renunciation
Living Will
statement of an adult individual's desires with respect to life-sustaining procedures, artificial nutrition or hydration, and pain alleviating treatment when the individual becomes terminally ill or is in a persistent vegetative state
Durable Healthcare Power
used by one person (the "principal") to appoint an agent to
make healthcare decisions for the principal such as giving consent to medical treatment, accessing principal's medical records, and admitting or discharging principal from a healthcare facility. The instrument does not become operative until the principal loses capacity
Administration of Estate Analysis
Will must be admitted to probate to be effective

Personal representative appointed (according to priority, surviving spouse then to beneficiaries)

Personal representative must post a bond and has power to sell property

Inventory

Publication to creditors
Standing to Challenge Will
any person that would take more if there were no will
Ways to Challenge Will
Lack of testamentary capacity
Undue Influence
Test for Lack of Testamentary Capacity
T did not understand:

nature of the act
nature and character of property
natural objects of bounty
nature of the disposition
(insane delusion)
Test for Undue Influence
Existence and exertion of the influence
Effect of overpowering the mind
Result is a will that would not have been executed but for the influence
Requirements for a Valid Trust
Settlor delivers legal title to assets with the intent to create a trust for a valid purpose

Certain and identifiable trust property

Beneficiaries (someone to enforce the trust)
Effect of language of hope, wish, or desire
Prefatory language of suggested use.

Has no effect on the gift. Does not give rise to any legally enforceable duty unless the language gives rise to an inference of that intent.
Clauses against public policy
Conditions on procreation, marriage, or religious practice. (But if the will merely gives one of these as a reason, it does not invalidate the clause)
Effect of a clause invalidated for public policy
Court may (based on settlor's general intent):

hold that the interest fails
OR
hold that the interest is valid as if the condition never existed
Additional Requirement for Private Trust
Must have ascertainable beneficiaries ("friends" is not an objective label for a class, if the class closes with no members )
"Pour Over" clause
Trust is named as beneficiary of a residuary estate
When a writing is required to create a trust
Trusts containing land
Grounds to Remove Trustee
Serious Breach of Trust
Lack of Cooperation among Co-Trustees
Unfitness, unwillingness, or persistent failure
Substantial change in circumstances that makes removal in the best interest of all beneficiaries
Effect of Divorce on Trust
Revokes all beneficial gifts and fiduciary appointments
Methods of creating inter vivos trust
Declaration
Transfer
Method of creating testamentary trust
Will
Formalities for Testamentary Trust
Essential terms of trust ascertained from

Will terms
Document incorporated by reference
Exercise of a power of appointment in the will
Secret Trust
Will makes an absolute gift, but does so in reliance on a beneficiary's promise to hold the gift property in trust for another.

Court imposes a constructive trust to prevent trustee's unjust enrichment but only if the agreement is proven by clear and convincing evidence.
Semi-Secret Trust
Will makes a gift to a person in trust, but does not name the beneficiary.

This gift fails for want of a beneficiary
Requirements for a Charitable Trust
Charitable agency or large class of indefinite beneficiaries
Charitable purpose
Commonly Recognized Charitable Purposes
Religion
Medicine
Science
Government (parks)
Research
Education
Features of Charitable Trust
Cy Pres Doctrine - if it is impossible to give effect to settlor intent, the court will redirect the benefit to a purpose as near as possible to the charitable endeavor designated by the settlor

Perpetual - not subject to the rule against perpetuity (unless it can shift to a noncharitable purpose)
Honorary Trust
Not for charitable purposes and no private beneficiaries, therefore no party that can bring a claim to enforce the trust (void after 21 years)

Exceptions: care of animal alive during settlor's lifetime
Trustee Duties
Duty not to commingle
Duty not to self deal
Duty to balance return with risk
Duty to diversify
Duty to keep trust property productive
Duty of impartiality
Duty to account and inform
Self Dealing Examples
Direct purchase or sale of assets (including to another trust)
Borrowing or lending (unless to protect trust)
Use of trust assets as security for loan
Gain through trustee position
Investment in own stock
Self-employment
Beneficiary Rights against Self-Dealing Trustee
Voidable unless

Authorized by trust or Approved by court
Consent or Ratification
Predates Appointment as Trustee
Exculpatory Clause for Trustee
Void if it relieves liability for

bad faith or reckless indifference
abuse of confidential relationship
Spendthrift Trust
Beneficiary cannot transfer interest (must cover both voluntary and involuntary or it is invalid)

Creditor cannot reach beneficiary's interest until it is paid out.
Discretionary Trust
trustee has option to pay income to beneficiary or accumulate it (this can be overridden by a judgment for support of beneficiary's child, spouse, or former spouse).
Trust Termination
Expiration of Term
Purposes Accomplished
Purposes are unlawful, contrary to public policy, or impossible
Settlor Termination (unless it is irrevocable)
Consent of Settlor (agent, conservator, or guardian) and All Beneficiaries (no changing of material purpose)
By the Court (if terms are impracticable or wasteful or reformation is needed to reflect settlor's true intent)
Bona Fide Purchaser of Trust Assets
Paid value and did not have notice of trust

Inquiry notice applies
Will Substitutes
Revocable Inter Vivos Trust
Life Insurance Designation
Bank Arrangement
Revocable Inter Vivos Trust
Interest in property transfers during the settlor's life, but the interest become possessory upon the settlor's death.
Resulting Trust Types
Purchase Money
Failure of Express Trust
Incomplete Disposition
Purchase Money Resulting Trust
PRESUMED when the beneficiary furnishes the consideration for the acquisition of real or personal property but, with beneficiary's consent, title is taken in the name of Y the "trustee".
Evidence that Rebuts the Presumption of a Resulting Trust
parties are closely related: parent, grandparent, spouse (gift presumed instead)
Unlawful purpose (avoid tax, hiding property from creditors, use of trustee's credit to obtain loan)
Failure of Express Trust or Incomplete Disposition
Settlor becomes the beneficiary.
Constructive Trust
Equitable Remedy to prevent unjust enrichment (torts, breach of fiduciary duty, homicide).

Not for breach of promise unless there is fraud in the inception, a confidential relationship, a will or inheritance, promise to forego bidding at foreclosure sale.
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