Wills, Trusts & Estates Guide

Wills, Trusts, & Estates Spivak F11
I. INTRODUCTION TO FAMILY PROPERTY LAW a. Non-probate instruments include (4): i. revocable trust; ii. life-insurance contract iii. pension-account contract; iv. joint bank or stock account.(imperfect because cant be revoked) b. Trusts i. Testamentary trusts trusts created by will ii. Lifetime trusts, inter-vivos trusts, or nontestamentary trusts trusts that can be created by nonprobate instruments iii. Trust is a fiduciary relationship with respect to the property, in which title and beneficial ownership are separate iv. Trustee holds title to and manages the trust property for the benefit of another person or persons, who are called the beneficiary or beneficiaries v. A lifetime trust can be irrevocable or revocable vi. If it remains revocable until the settlors death, it operates as a will substitute and serves the function of avoiding probate c. John H. Langbein, The Nonprobate Revolution and the Future of the Law of Succession i. Pure Will Substitutes 1. Include: Life insurance, pension accounts, joint accounts, and revocable trusts 2. Each of the above mechanisms reserves to the owner complete lifetime dominion, including the power to name and to change beneficiaries until death. ii. Imperfect Will Substitutes 1. Include: Joint tenancies 2. More closely resemble completed lifetime transfers iii. Revocable trust i.e. Totten trust simply a deposit account in which the beneficiary designation is thinly camouflaged under language of trust 1. The depositor names himself trustee for the beneficiary, but retains lifetime dominion and the power to revoke 2. Either by declaration of trust or by transfer to a third-party trustee, the appropriate trust terms can replicate the incidents of a will iv. Difference between wills and will substitutes
Joel Tague
Page 1

1. Most will substitutes are asset specific: bank balance, mutual fund shares, etc. 2. Property that passes through a will substitute avoids probate 3. The formal requirements of the Will Act do not govern will substitutes and are not complied with v. Functions of probate 1. Making property owned at death marketable again (title-clearing) 2. Paying off the decedents debts (creditor protection) 3. Implementing the decedents donative intent respecting the property that remains once the claims of creditors have been discharged (distribution) vi. Creditors are protected even without probate 1. Survivors pay off decedents debts voluntarily and rapidly 2. So-called credit life insurance typically discharges an insureds account balance at death 3. Secured creditors have security interest in collateral d. The right of publicity i. Majority of jurisdictions recognize the right of publicity to be descendible, all limit the duration of the right. ii. Jurisdictions vary a great deal in the length of time that they recognize post-mortem publicity rights. iii. It is also possible for heirs to register a persons name or likeness as a trademark after the persons death. e. Questions & answers (pg. 1-20) i. If G dies first, survived by A, then: 1. Probate: car & savings account, mutual fund 2. Non-probate: checking account, certificate of deposit, bond, life insurance, pension plan ii. If A dies first, survived by G, then everything will pass through probate f. Donative freedom i. Cultural tradition to donate ones wealth to his children 1. However, risks creating a class system 2. Estate taxes are at the heart of this issue ii. Constitution protection of donative freedoms arent absolute 1. Transfer taxes are allowed Joel Tague Page 2

g. Case Law > i. Hodel v. Irving: If an Indian had interest in land that was less than 2% then the land would escheat to the tribe. The law said that you could not devise the land through a will. There was a lot of tiny interests in the land. 1. Issue: Whether the original provision of the escheat provision of the Indian Land Consolidation Act is a taking without just compensation? 2. Holding: The court held that this was a taking. 3. Rules: Complete abrogation of right to pass property is unconstitutional. ii. Shapira v. Union National Bank > Mr. Shapira died, left a will. In it was a provision that allotted his 21 yr. old son a share of the estate ONLY IF he was married to a Jewish girl, or if w/i 7 yrs. of his death he got married to a Jewish girl. P, if the Son, and he is contesting this provision as (i) unconstitutional, (ii) contrary to public policy, and (iii) unreasonable. 1. Issues: a. Is provision constitutional? b. Would enforcement of provision be contrary to public policy? c. Is provision is unenforceable b/c of unreasonableness? 2. Holdings: a. Provision is constitutional. The right to marry is constitutionally protected from restrictive state action. However, here, no fundamental rights are being violated; the Court is not seeking to enforce any restriction on the sons right to marry, the Court is just seeking to enforce the testators restriction upon his sons inheritance. b. No violation of public policy. Restriction is a partial restraint and reasonable. If it were a total restraint then it would be against public policy. Ct. is not being asked to hold P in contempt of court. c. Provision is reasonable. No evidence that finding a Jewish woman would be particular troublesome (Ct. cites a case where only 5-6 Jewish people in town, etc.). & 7 yrs. is plenty of time. 3. Rules: The Ct. applies the following rules: a. The right to receive property by will is a creature of the law and is not a natural right or one guaranteed or protected by State or Federal constitution. Joel Tague Page 3

b. Under State law a testator may legally entirely disinherit his children. c. Clauses imposing reasonable restrictions are valid & not contrary to public policy. d. A gift conditioned upon B marrying a particular religion is reasonable. 4. Reasoning: There is a difference between conditions of the Bs faith and conditions upon marriage to persons of a particular faith. A condition that pays out only if you remain in a particular religion would be invalid. A condition restraining marriage does not restrict religion of the B. In considering the reasonableness of the provision the father and the Ct. should consider the Sons decision to marry should as proper motive. 7 years is reasonable. h. Terminology i. Intestate a person dying without a valid will ii. Testate a person who dies with a valid will iii. Testatrix (woman) / testator (man) a person dying with a valid will iv. Partially intestate (not partially testate) when a decedents will doesnt dispose of all of his or her property v. Descent inheritance of land vi. Inheritance reserved for intestate succession of land vii. Heirs those who took land by intestacy viii. Distribution succession of personal property ix. statutes of descent and distribution - Statutes on intestate succession x. Distributees / next of kin those who took personal property by intestacy xi. Devise a disposition of land by will xii. Devisee to whom the land was given xiii. Legacy / bequest a disposition of personal property xiv. Legatee recipient of a disposition of personal property xv. UPC 1-201 definition of devise a testamentary disposition of real or personal property (modern usage) xvi. Personal representative if the will names an executor who is willing and able to serve xvii. Administrator if decedent dies intestate or without naming an executor, court appointed xviii. Decedents probate estate consists of property owned by the decedent at death & property acquired by decedents estate at or after decedents death Joel Tague Page 4

II. INTESTATE SUCCESSION a. Policy reasons for intestate succession i. To protect the financially dependent family ii. To avoid complicated property titles and excessive subdivision of property iii. To promote and encourage the nuclear family iv. To encourage the accumulation of property by individuals v. To distribute in way that family believes is fair and maintains harmony among family members b. Requirement of survival i. Only persons who survive the decedent are entitled to receive the decedents property (either by testate or intestate succession) ii. Survival by only an instant is sufficient iii. Uniform Simultaneous Death Act where the title depends upon priority of death and there is no sufficient evidence that the persons have died otherwise than simultaneously, the property of each person shall be disposed of as if he had survived iv. UPC any individual who fails to survive the decedent by 120 hours is to have predeceased the decedent v. UPC 2-104 embraces the 120-hour rule but goes further by requiring that survival by 120 hours be established by clear and convincing evidence (revised USDA also embraces this) c. Notes and problems (pg. 28) i. Simultaneous deaths If A and B both die simultaneously and are survived by their respective parents, pursuant to the USDA, As parents would inherit As estate and Bs parents would inherit Bs estate ii. Near simultaneous deaths If B outlives A, but by less than five hours, then: 1. Original USDA Bs parents would inherit the entire estate 2. UPC 2-104 Because B did not survive A by 120 hours, As parents would inherit As estate and Bs parents would inherit Bs estate iii. Definition of death (40 states follow the uniform determination of death act): one who has (1) irreversible cessation of circulatory or respiratory functions, or irreversible cessation of all functions of brain d. Relatives in gestation at the decedents death i. Generally persons who are born after the decedents death are NOT eligible to receive the decedents property Joel Tague Page 5

ii. However a child in gestation at the decedents death is eligible if born alive and viable (UPC 2-104(a)(2)) 1. Child must survive birth by at least 120 hours (UPC 2-108) e. General patterns of intestate succession i. Spouse 1. State laws a. If decedent leaves no parent or descendant, then entire intestate estate goes to spouse b. If decedent leaves no parent and descendant are issue of both D and S, then entire intestate estate goes to spouse c. If decedent leaves descendants, then the spouse may have to share estate with descendants even if descendants are adults and/or have much less financial need than spouse 2. UPC 2-102 spouse gets: a. 2-102(1) The ENTIRE estate IF: i. no parent or descendants OR ii. descendants are also issue of spouse b. 2-102(2) The 1st $300,000 + of remainder IF: i. A parent of decedent survived decedent; AND ii. Decedent has no surviving descendants. c. 2-102(3) The 1st $225,000 plus of balance IF: i. Deads surviving descendants are also descendants of surviving spouse; AND ii. Spouse has one or more surviving descendants that is not a descendant of decedent d. 2-102(4) The 1st $150,000 plus of balance IF: i. Decedent has 1 or more surviving descendants who are NOT spouses issue. 3. Questions & answers (pg. 30) a. D married S and together have 3 kids. Who are heirs? i. None, because no death b. Same problem but D dies leaving S,A,B,C has will leaving property to children in equal shares. Under UPC, who is Ds heirs i. S under 2-201(1) unless D has children other than A,B,C. in which case she would share. Joel Tague Page 6

c. Same problem, but Ds net probate estate was valued at $100k and D also had $1 mil. life insurance with S named as beneficiary i. In every case S gets everything because only $100k is the estate. d. (a) S gets everything ; (b) S gets $150k + of remainder or $250K total. Remainder is split Ds children??; (c) S gets $225 + of remainder or $287.5k ii. Descendants 1. Descendants share a. If no surviving spouse, then all states gives the entire estate to decedents descendants i.e. to the decedents children or descendants of deceased children. b. Above inherit to the exclusion of parents, grandparents, brothers, and sisters. 2. Representation among descendants a. Descendants or issue includes not only children, but also grandchildren, great-grandchildren, etc. b. Representation ONLY comes into play if at least one child predeceases the decedent. c. Per capita distribution if all of the intestates children are alive, each child receives an equal share d. Representation with Strict per-stirpes system i. Divide the estate into primary shares 1. the (# of living children PLUS the # of deceased children who themselves have descendants ii. One share goes to each living member of the children generation, if any. iii. Divide and subdivide each primary share allocated to the living descendants of a deceased child. e. Representation with Modified Per Stirpes (Per-Capitawith-Representation System) i. With the exception of step 1, this system is identical to the strict per-stirpes system. ii. Divide the estate into primary shares at the generation nearest to the decedent that contains at least one living member. Joel Tague Page 7

iii. Thus, if all of the decedents children are dead, but at least one grandchild is alive, the primary shares are determined at the grandchildren generation rather than at the children generation. iv. In a strict sense, then, the grandchildren take in their own right, per capita, and not as representatives of the decedents decease children. f. Representation with Former Uniform Probate Code System do we need to know this? (pgs. 34) i. Divide at level of first living taker ii. Any takers an the level below the level of first living takers split the un-taken from the level of first living takers g. Representation with Current Uniform Probate Code Per Capita at Each Generation UPC 2-106 i. Divide the estate into primary shares at the nearest generation to the decedent that contains at least one living member. The number of primary shares is the number of living persons in that generation plus the number of deceased persons in that generation who have living descendants. ii. Allocate one primary share to each living member of the primary-share generation. iii. Combine the remaining primary shares, if any, into, into a single share and assume that the descendants already allocated a share (and their descendants) had predeceased the decedent. Then distribute that single share among the decedents descendants in accordance with step one. h. Questions and answers (pg. 36) i. Under Strict Per Stirpes 1. G=25%; I,J,K= split 25%; O,P,Q= split 25%; T= 12.5%; U,V= each 6.23%;R=25% ii. Under Modified Stirpes 1. G,I,J,K,R = each get 1/7TH ; O,P,Q= split 1/7TH ; T,U,V = split 1/7TH iii. Under Former UPC 1. G,I,J,K= each get 1/7th ; O,P,Q,R= split 4/6th of 3/7th ; TUV= split 2/6th of 3/7th ? iv. Under Current UPC Joel Tague Page 8

1. G,I,J,K = each get 1/7th; T,U,V,O,P,Q,R= share equally in the remaining 3/7ths iii. Guardianships / Conservatorships for Minors 1. Conservator guardian of property appointed by state to receive and manage intestate assets passing to the minor or incapacitated heir 2. UPC 502 the appointment is made by probate of the parents will and acceptance by the designated person. Court confirmation is unnecessary. iv. Ancestors and Collaterals 1. Parents and their descendants a. UPC 2-102 If no surviving descendant but spouse, then parents will take of estate after $300,000 is allocated to the spouse. b. UPC 2-103 If no surviving descendant or spouse, then parents will take entire estate to the exclusion of decedents siblings. c. UPC 2-114 - no parent may inherit from a child if their paretnal rights could have been terminated from neglect, etc. d. Descendants of parents i. If neither of the decedents parents survives, the descendants of the decedents parents inherit by representation. ii. UPC 2-106 applies the per-capita-at-each generation system e. Relatives of half blood UPC 2-107 states that relatives of half blood are treated the same as relatives of whole blood f. Relatives by marriage nearly all jurisdictions exclude them under intestacy statutes g. Questions and answers i. 300+ of 200 or 450 to S and 50 to mother ii. None if it is found their parental rights could have been terminated iii. Split between b and c iv. B gets ; FGJ split of or 3/8; LMNOP split of or 3/8 Joel Tague Page 9

2. More remote ancestors and collaterals a. Parentelic System i. A parentela consists of an ancestor and that ancestors surviving descendants. ii. The parentelic system of inheritance is based on a preference for persons who are in the nearest parentela to the decedent. iii. Thus, the parentelic system provides that the first parentela (the decedents own surviving descendants) inherits first; if that parentela contains no surviving members, the second parentela (the decedents parents and their descendants) inherit next, and so on. iv. Under the UPC, the parentelic system is carried out through the third parentela (grandparents and their descendants). v. Table of Consanguinity on pg. 42 vi. UPC 2-103(4) estate is first divided into parental and maternal halves 1. Only if there is at least one grandparent or descendant of grandparent in each half. 2. If both of the grandparents on one side predeceased the decedent, that half is a separate parentela for purposes of representation among the descendants of the predeceased grandparents. b. The Civil-Law Method (non-UPC) i. When statute says to nearest kindred or next of kin. ii. Applied the civil-law method of computing degrees, which consists of counting generations under the following formula: counter the number of generations (1) up from the intestate to the intestates ancestor who is also an ancestor of the collateral relative and (2) down from that common ancestor to the collateral relative. iii. The total of these two figures constitutes the degree of kinship for each collateral relative. iv. Table on pg. 42
Joel Tague
Page 10

c. Modern Civil-Law Method when there are two or more collateral relatives in equal degree who claim through different common ancestors, those claiming through the ancestor nearest to the decedent take to the exclusion of the others. d. Question & answer (pg. 43) i. (a) ABC each get 1/3; (b)DEF each get 1/3; (c) RS share equally both 5s ii. (b)(i) parents get everything; (b)(ii) S2 and S3 split everything, (b)(iii) N2 receives everything; (b)(iv) U1 and A split everything f. Rearranging Intestate Succession i. Case law: 1. DePaoli v. C.I.R. 62 F.3d 1259 (1995) a. Facts: i. DePaoli's father died leaving everything to him and nothing to his mom. ii. DePaoli argued that his father meant to change the will so as to leave $600k (max. not taxable) to DePaoli and the rest to mom iii. DePaoli disclaimed all but $600K and remainder was transferred to mother who would be exempt as the decedents wife. iv. The Tax Commissioner found that DePaoli was liable for taxes on the amount over $600K. Further, the money goes to DePaolis kids if he disclaims, not his mom - Mom was liable for the gift tax associated with remainder. DePaoli appealed. b. Issues: (1) Whether disclaimer of a will allows one to avoid the taxes. (2) Whether illegitimate kids are issue for the purpose of inheritance of disclaimed benefit from a will. c. Rule: money that has been disclaimed passes as if the person making the disclaimer had died before the decedent. Money that is refused becomes subject to intestate rules. i. DePaoli had children, (the normal next step for intestate succession), but they were illegitimate. ii. To count as an heir, the parent of an illegitimate child must, "recognize the child in writing as an heir. Joel Tague Page 11

iii. Although DePaoli had claimed the kids as tax exemption, court said that wasnt sufficient to establish as heirs. iv. Without a spouse or heirs, DePaolis disclaimed money goes to his Mother. v. The money going to the surviving spouse is assumed to be coming directly from the decedent, and therefore qualifies for the marriage deduction. ii. Agreement among the heirs UPC 3-912 contains a provision authorizing private agreements among successors iii. State disclaimer statutes and Federal disclaimer statutes have formalized the common law allowing one to refuse property (pg. 50-51). iv. Creditors rights v. Questions and answers (pg. 52) 1. (a) XYZ each get 1/3 of the total estate; (b) XY each get , Z gets
2. (a) B takes , XY each take ; (b) same ?????????????????????????? vi. Formality vs. Discretion in Intestate Succession 1. Courts cannot consider surviving spouses needs or contribution to decedents wealth for intestate purposes. g. Altering intestate succession by means other than testamentary disposition i. Advancements and related doctrines 1. Advancement gift made during life to a family member that has the effect of reducing the share of the probate estate that the donee receives by intestate succession upon the donors death intestate a. Courts interpret the advancement statutes as authorizing an inquiry to determine if the decedents specific intent was to make an advancement rather than an absolute gift. b. UPC 2-109(a)(ii) Advancements usually restricted to gifts accompanied by a writing expressing the decedents intent to make an advancement. 2. Releases (between prospective decedent and prospective recipient) agreement that potential intestate taker has made with potential decedent saying I received xyz during lifetime and I release all claims 3. Assignment between prospective heir and 3rd party 4. Questions and Answers (pg. 55) Joel Tague Page 12

a. No advancement because no writing expressing decedents desire to make an advancement, estate split equally between 2 sisters b. D and X will split estate equally because the advancement doesnt count against heirs share if person with advancement pre-deceases decedent c. D gets $200K, E gets $300K d. Probably not. An assignment requires the heir to receive fair consideration. A bowl of soup is probably not fair. ii. Negative wills stated intention to disinherit somebody 1. Case Law Waring v. Loring a. Deceased left will stating that wife was given property in lieu of dower and her statutory rights to my estate. He gave the rest to daughter including a life interest in a trust, the remainder of which was to go to daughters issue. Daughter had no issue. b. Executor of daughters estate said it should all go to daughters estate and none to mother (wife) because of negative provision in will. c. Court said the statutory rights mentioned in will dont apply to widows share of an intestacy arising from a failed disposition. (would be decided differently under UPC) 2. Under the common law, an attempt to disinherit has no effect on person to inherit intestate portion of the estate 3. UPC 2-101(b) disagreed with the common law because it defeats a testators intent for no sufficient reason (still approves use of negative wills) III. THE CHANGING AMERICAN FAMILY a. Who is a Surviving Spouse i. Formal Marriage 1. UPC 2-802 If the decedents marriage is dissolved by divorce or annulment, the decedents former spouse loses the status of surviving spouse. 2. UPC 2-802 If the decedents marriage is void because it was bigamous, incestuous, or preceded by an invalid divorce decree, the decedents would-be spouse does not have the status of surviving spouse. 3. UPC 2-802 Not a spouse criteria: a. Marriage ended by a valid divorce or annulment Joel Tague Page 13

b. Survivor obtained or consented to a final decree or judgment of divorce or annulment, even though later the decree proves to be invalid c. In which the survivor, following an invalid decree obtained by the decedent, participated in a marriage ceremony with a third individual d. Survivor was a party to a valid proceeding purporting to terminate all martial property rights e. UPC 2-803 homicide of decedent forfeits all intestate and testate rights ii. Divorce, separation, Misconduct 1. Case Law Holmes v Fentress a. Husband and wife think they divorce, but they really dont. After H dies, it is determined that W is still his lawful spouse even though they thought they were divorced for 40 yrs and both had remarried. Court gives estate to his wife b. Hs executor argues W was not credible as to whether she was the wife court said she is no more credible than H was c. Executor also said W waived her rights. Court said waiver is relinquishment of a known right. Because W didnt know she had the right, she couldnt waive it. iii. Putative spouses One who, in good faith, believes she is married to the H, but is actually not legally married. 1. Courts use this to recognize a claim for an intestacy share by an unmarried cohabitator or under an omitted spouse statute 2. UPC is silent regarding putative spouses jurisdictions are free to adopt this doctrine iv. Common-law spouse 1. Defined as parties presently agree to enter into the relationship of husband and wife; requires cohabitation, or actually and openly living together as husband and wife; parties hold themselves out as husband and wife, and acquire a reputation as a married couple 2. Few states recognize a common-law marriage v. Unmarried spouses 1. Inheritance based on contract? a. Case law; Estate of Quarg
Joel Tague
Page 14

i. H and W have kids, separate but never divorce. H moves in with another woman, has a kid and lives together for 40 years then dies intestate. ii. Old W wants half the estate (amount allowed when a non-issue child exists) iii. Court says Old Wife is only wife and would normally get her share of the estate iv. However, court also says there may be an implied contract between H and new W to take care of her for life. (following Roccomonte). Remanded for plenary hearing to see if contract exists b. Some jurisdictions have taken the position that only an express contract concerning the property division upon dissolution of a domestic partnership is enforceable. They do not recognize an implied contract. 2. Inheritance based on status a. Same-sex partners only i. Although some states recognize same-sex partners, the courts have not invoked inheritance laws when domestic partnerships end in death. b. Opposite-sex partners only i. Some state courts have held that a cohabitation relationship involving two persons of the opposite sex can have the same force and effect as a legal marriage. ii. State legislation for opposite-sex couples, the doctrine of common-law marriage can sometimes turn domestic partners into spouses, thereby conferring the benefits of marriage. b. Who is a descendant? i. Intestate succession 1. Adopted children / stepchildren / foster children a. UPC 2-114(b) treats adopted persons as children of their adoptive parents for all inheritance purposes (takes care of the step-parent adoption adopted child can inherit from all three) An adopted individual is the child of his or her adopting parent or parents and not of his or her natural parents, but adoption of a child by the spouse of either natural parent has no effect on (i) the relationship between the child and Joel Tague Page 15

that natural parent or (ii) the right of the child or a descendant of the child to inherit from or through the other natural parent. b. Above abrogates the stranger-to-the-adoption rule and allow a child not only to inherit from but also through the adoptive parent and allow adoptive family members to inherit from or though the adoptive child c. Case law - Estates of Donnelly i. Child was adopted by stepdad when dad died. Natural grandparents died intestate. ISSUE: whether an adopted child who is no longer an heir of father is also cut off as an heir from paternal grandparents. HOLDING: yes. REASON: Court considers two WA statutes together (1) the adopted child cannot take from his natural parent because he is no longer an heir; and, (2) the adopted child enjoys complete inheritance rights from the adoptive parent, as if he were the natural child of the adoptive parent 1. These two together indicate legislative intent to give child clean start. Also reinforced by fact that adoption records are secret and there is no way to verify who is an adopted heir after adoption. d. Since 2008, UPC has generally adopted the approach in Donnelly, placing adopted persons exclusively in their adopted families for inheritance. i. An exception to this rule exists if the adoptive parent is a relative of the natural parent e. Before 2008, adopted kids could still inherit from natural grandparents. f. One way street (UPC 2-114(b)) only adopted parents can inherit from adopted child, not adoptive parents relatives g. Question & answer (pg. 79) i. Restatement is consistent with the pre-2008 UPC; the restatement is inconsistent with the 2008 UPC amendment. ii. X and y are both heirs either way when you consider 2-113 and 2-119(c) but y can only inherit a single share Joel Tague Page 16

1. UPC 2-113 if youre related to decedent through 2 lines, you can only inherit a single share 2. 2-119(c) child may still inherit through natural parent if he was adopted by a relative of natural parent h. Stepchildren and foster children i. Absent adoption, stepchildren and foster children are usually not entitled to inherit from their stepparents or the stepparents relatives. ii. Question & answer (pg. 80) 1. If C dies intestate, pursuant to UPC 2-102, B takes $225K + of remaining estate. V takes remainder; If C dies intestate and adopts X & Y, B takes the entire estate. 2. If X dies intestate, then Y, V, and Z all take equally. UPC makes no distinction amongst half-blood relatives. i. Equitable adoption of foster children i. Foster children not formally adopted by their foster parents, especially those who express desire, but fail to complete paperwork ii. Some of the states accept the equitable adoption doctrine in which foster children obtain inheritance rights 2. Children of parents not married to each other a. Inheritance rights of non-marital children b. UPC 2-117 individual inherit from and through their biological parents regardless of their parents marital status. i. Supreme Court cases 1. Trimble v. Gordon held state statue allowing illegitimate child to inherit from mother but not father unconstitutional b/c of due process 2. Lalli v. Lalli upheld statute that imposed a flat barrier on inheritance unless the mother sued the father within a 3 year period to show / prove child was his c. If your parents had you as a child but never acknowledged you nor lived with you, you can inherit from them b/c you Joel Tague Page 17

are the child of your natural parents; they, however cannot inherit from you (UPC 2-114(c)) d. Problems (pg. 84) i. X could share in the estate of A if A were her mother. Under the common law, X could share in the estate regardless of whether A were mom or dad ii. Under 2-114 (c) a parent cannot inherit from a child if then failed to treat the child as their own c. Children conceived by assisted reproductive technologies i. Non-Surrogacy (rules for parent/child relationship) 1. UPC 2-120(c) Parent/child relationship exists between child and birth mother 2. UPC 2-120(b)A parent/child relationship does not exist between the child and a 3rd party donor 3. UPC 2-120(d)(e)(f) A parent/child relationship exists between the child and a. The a husband of the birth mother whose sperm is sued for reproduction, or b. An individual who is identified on the childs birth certificate as the childs other parent, or c. An individual who consented to assist reproduction by the birth mother with the intent to be treated as the childs other parent. ii. Problems (pg. 86 1st set) 1. Father and mothers child 2. Still, father and mothers child (if both on birth certificate) 3. Both women, not the sperm donor iii. Surrogacy 1. No parent child relationship exists between child and surrogate unless a. The surrogate is designated as a parent in a court order, or b. The surrogate is the genetic mother and no other parent child relationship is established under the UPC 2. A parent child relationship exists between the child and intended parents (those who entered contract with surrogate) who either functioned as a parent within childs first 2 years or died during pregnancy Joel Tague Page 18

3. The parent child relationship does not depend on the validity or enforceability of the surrogacy contract UPC 2-121(a)(1) iv. Problems (pg. 86 2nd set) 1. Child has a parent relationship mother, father, not surrogate 2. Father and mother, not surrogate 3. Both mothers, not the surrogate 4. Doesnt matter that surrogacy is void v. Posthumous reproduction 1. UPC provides that posthumously conceived child is treated as a child, if either a. In utero 36 month after parents death, or b. Born 45 months after parents death vi. Problem (pg. 87) 1. Both mother and father (within the 36-45 month deadline) d. Rules of construction for class gifts i. Adopted children / stepchildren / foster children 1. UPC 2-705(b) courts usually treat an adopted child as a member of the class if the donor of the class gift adopted the child 2. Some courts adopted a Stranger-to-the-Adoption doctrine that assumes an adopted child (except for donors adopted children) are not included with heirs 3. UPC 2-705(f) abrogates (eliminates) the stranger-to-the-adoption rule; under the UPC, the doctrine is abrogated if (1) the adoption took place while the child was a minor, OR (2) the adoptive parent was the childs stepparent of roster parent, OR (3) the adoptive parent functioned as a parent of the child before the child reached the age of majority 4. Case law - Ohio Citizens Bank v. Mills a. Great grandfather creates a will with trust that is to go to his living grandchildren and great grandchildren. One of the grandsons had adopted his first wifes children. The grandson also had a child with a subsequent wife. b. Issue: Whether great grandfather intended trust to go to adopted great grandchildren c. Trial ct said yes. Appellate court said no. Supreme ct reversed and said yes - applies the stranger-to-the-adoption rule and excludes adopted grandchildren i. Even though a new statute placed adopted children on same footing as natural children that only applies to trusts made after the statute was passed Joel Tague Page 19

ii. Court says look to law at time trust was established which was stranger to adoption rule iii. No explicit statement that adopted kids were included in trust no explicit instruction in statute saying it is retroactive iv. Going forward, new statute will apply (adopted are like natural unless explicitly excluded) Adoption of adults 1. Courts differ on whether adult adoption is allowed 2. UPC? Adoption of spouse or domestic partner 1. UAA 5-101(a)(1) prohibits the adoption of your spouse Problem (pg. 96) 1. Children and wife would probably all inheritit was the donees intent; probably the same result if it were partner or lover instead of wife 2. C2. C1 if mom was named as an adoptive parent Stepchildren and foster children usually courts do not construe class gifts to include stepchildren. Problem (pg. 97) 1. Only C1 (assuming mom was also an adoptive parent) Children of parents not married to each other 1. Case Law Will of Hoffman a. Mary left of trust for each of 2 cousins. When cousin died, that half went to issue of the cousin. Sole surviving child of one cousin had only illegitimate kids b. Issue: whether the term issue extends only to lawful (i.e. of marriage) children. c. Holding court of appeals reversed, finding the old common law as outdated i. Statues show concern for illegitimate kids ii. Societys attitude toward illegitimate kids is changing iii. Impossible to know testators intention iv. Therefore issue no longer means legitimate 2. For purposes of a 3rd party trust / gift, they are considered the children of that parent, see generally UPC 2-705(a) 3. Usually, non-marital children are presumptively included under class-gift terminology Problems (pg. 101) 1. Both C1 and C2 are children of S. no difference, still both are children of S. Children by assisted reproduction 1. Case law In re Martin B
ii.
iii. iv.
v. vi. vii.
viii.
ix.
Joel Tague
Page 20

a. Grandpa left trust to his issue. One son predeceased his dad, but saved sperm for his wife to use as she saw fit. She then used it to get preg and had two kids (one was 43 mos after husband died, other was 2 yrs later) b. Issue: whether these 2 kids are decendants and heirs to partake of grandpas trust c. Holding: yes they are d. Reasoning:: i. NY statute allows posthumous children to be treated like other children post conceived seems the same and are certainly posthumous ii. Right to have children (even biotechnically) must be respected iii. Restatement if individual considers kid to be his own, society should do same iv. A sympathetic reading of instruments suggest grantor intended all of his bloodline to get their share x. Problems (pg. 103) 1. UPC would recognize the first child but not the second child (in utero 36 months after, or born 45 months after, dads death 2. Only C1 and C2 because distribution cannot consider future possible births
Joel Tague
Page 21

IV. EXECUTION OF WILLS a. i. Probate procedure 1. Determination of whether deceased left valid will made in proceeding in which the instrument is OFFERED for probate by the PROPONENT 2. If found to be valid, it is OFFERED INTO PROBATE as decedents last will 3. Typically, courts of general jurisdiction exercise probate jurisdiction 4. Court will appoint executor (in will) or administrator (no one named as executor in the will) ii. Formalities of Execution: traditionally, wills are required to be: (1) in writing; (2) signed by the testator; and (3) attested by credible witnesses iii. UPC requirement in 2-502 1. In writing; 2. Signed by the testator or in the testators name by some other individual in the testators conscious presence and by the testators direction; and 3. Signed by at least two individuals, each of whom signed with a reasonable time after he or she witnessed either the signing of the will as described in ii or the testators acknowledgement of that signature or acknowledgement of the will. a. UPC 2-502(a)(3)(B) allows notarization instead of witnesses b. UPC 2-503 Harmless error rule will that was not executed in conformity with 2-502 is valid if the proponent can establish by clear and convincing evidence that the decedent intended the proffered document to constitute the decedents will iv. Military wills 1. Exempt from any requirement (form or etc.) under the laws of that state and has legal effect 2. What does a military testamentary instrument mean? It has to be executed by the testator in the presence of a military legal assistant counsel and 2 disinterested witnesses 3. Its probably more technical / tougher than state testacy laws i. Joel Tague Attested (or notarized) wills Page 22

1. UPC 2-506 recognizes a will executed outside the estate in accordance with either the law of the place of execution or of the testators domicile. 2. Attestation clause although not required by statute, lawyers frequently incorporate them to raise a rebuttable presumption that the events recited therein actually occurred 3. Lawyer liability for invalid execution a lawyer who supervises the execution of a will may be liable to the intended devisees if the lawyer causes the will to be invalidly executed i. The writing requirement 1. All statutes + UPC require in writing, even scratched in paint on the fender of a car, so long as markings can be detected. 2. Video or audio recording not recognized as writing and hence not valid (see UPC 2-502 comment) 3. Digital will i.e. on a diskette not usually recognized but maybe harmless error exception can come into play here ii. The signature requirement 1. Estate of McKellar court finds will invalid because it signature was in opening paragraph but not the end (also she signed before witnesses arrived) 2. Restatement approach the end of document satisfies the signature requirement; at any other place, it raises an inference they signed the document 3. The sign-first requirement a. Most courts assume the testator must sign the will before the witnesses sign. b. Some courts say it doesnt matter the order of the signature so long as it is part of a single transaction. 4. Crossed wills a. Estate of Pavlinko husband and wife signed each others will by accident and court found the will to be invalid b. Harmless error rule could be applied here to find a valid will 5. Problem (pg. 120). c. Under strict compliance void will no signature d. Under substantial compliance probably valid e. Under 2-503 valid if proponent shows it was decedents intent 6. Unsigned will Allen v. Dalk court holds that when only the duplicate will is signed and not the original will, it is found invalid
Joel Tague
Page 23

7. Digitized scan of handwritten signature Taylor v. Holt - court finds valid where testator uses a digitized handwritten signature made before witnesses. It was his mark or symbol executed by any methodology shows his intent. iii. Attestation requirement 1. Case Law Estate of Peters a. Conrad had a will devising everything to his deceased wifes son he had no heirs. b. Problem: will was written, signed and notarized, but the witnesses (who watched notary sign, forgot to sign). 18 mos after Conrad signs (and after conrads death), the witnesses sign. State challenges (because it stands to get the estate). State law requires 2 signatures. Lower court finds will valid, appellate reversed finding invalid c. Issues: (1) Is one signing witness enough; Can signature be later? d. Reasoning: there has been a streamlining of requirements for wills, fewer requirements, but not less, possible more adherence to remaining requirements. Also a will may be signed within a reasonable time of executing. This case not reasonable because (1) after his death, and (2) 18 months after witnessing. Also, no case for substantial compliance as this particular state has rejected that rule. 2. Signature requirement requires two witnesses and the witnesses to sign the will 3. Reasonable time: 2-502 gives std for reasonable time, but not absolute due to 2-503 harmless-error rule 4. Presence requirement non-UPC states commonly require that the witnesses sign the will in the presence of the testator 5. Case Law - Stevens v. Casdorph 1998, West Virginia a. Man signed the will at a bank in front of a notary and then the notary took the will to two other bank employees to each sign the will as witnesses. They did not actually see the will signed. Niece challenged the will. West VA law requires Testator and witnesses to sign in each others presence, or at least acknowledge it. None of those took place, therefore the trial court should not have found for the Casdorphs (that the will was legitimate). Reversed 6. Line-of-vision test a. Prevailing interpretation of the presence requirement: witness must sign within the testators line of vision.
Joel Tague
Page 24

b. The test requires at minimum that the testator, without changing his position, might have seen the will being attested; it is not necessary that he actually saw it. 7. Conscious-presence test a. Some courts and restatement 3d only require that the signer can sense the presence of the other person. 8. UPC only requires presence when the person who signs the testators name in the testators conscious presence. a. The UPC does not require the witness to sign in the presence of the testator or in the presence of each other. b. It requires the witness to witness the testators act of signing the will or witness the testators act of acknowledging either the signature or the will. c. Presumably, the witnessing requirement means that they must observe the act. d. The UPCs abrogation of the requirement that the witnesses sign in the testators presence raises a question about whether there is any time limit on when the witness must sign the will after they have witnessed the testators signature or acknowledgement of the signature of the will. 9. Competency of attesting witnesses a. Most non-UPC states require witnesses to be credible or competent b. Competency is determined when the will is executed. c. Mental incompetency, extreme intoxication, or the influence of drugs remains a grounds of disqualification as a witness d. Minors can be valid witnesses 10. Interested witnesses a. Common law says that they are disqualified and if you dont have the minimum number of witnesses without him / her, will is invalid. b. Most non-UPC states have purging statutes, the will is valid, but the interested witness will only get the share they would have under intestacy. c. This is also applied to the spouse of witness. d. UPC 2-205 states that interested witnesses are NOT DISQUALIFIED as attesting witnesses and they do not forfeit any portion of their devisees. iv. Notarization as an Alternative to Attestation Joel Tague Page 25

1. Case Law Estate of Hall a. H and W created a draft of a joint will to replace an existing will. The attorney recommended they sign and notarize the draft so that it would be binding until the attorney could send a cleaned up version for the parties to sign. The draft was signed by H and W, but was not signed by witnesses, but was instead notarized by the attorney. After H died, W submits draft will (never replaced with a cleaned up version. Daughters (from Hs first marriage contest because no witnesses) Judge permitted the will and daughter appealed. Montana law allows an exception for the two witnesses as harmless error if there is clear and convincing evidence that the document was meant to be a will. Court found that H and W did intend this to be a will. v. Self-proved wills see UPC 2-504(a)-(b) 1. A self-proved will is a will for which the testator and the witness have executed an affidavit before a notary public or similar officer detailing the procedures followed in the execution of the testators will. 2. The UPC conclusively presumes that all the signature requirements have been satisfied and creates a rebuttable presumption that all other requirements have been satisfied. 3. A self-proved will also serves to eliminate the need for having the witnesses testify upon the filing of the will to prove its authenticity. vi. Statutory wills (not very important) created by bar associates i.e. California b. Wills neither Attested or Notarized i. Nuncupative wills (oral wills) 1. Allows property to pass under oral wills for soldiers in active military service and marines or sailors at sea 2. Some states allow for persons in their last illness a. The testator must be: 1. dying and know it; 2. express orally the intent to make an oral will; and 3. call upon competent witnesses (at least two) to witness that the spoken words are the testators last will. ii. Holographic wills Joel Tague Page 26

1. Written entirely or materially in the handwriting of the testator. 2. Some states require witnesses to prove the testators handwriting; some require that it be dated; some require that it be signed at the end. 3. Courts have validated a holographic will containing some nonholographic matter under one or two theories. a. Intent theory words or marks not indeed by the testator to be part of the will need not be in the testators handwriting. b. Surplusage theory the portions of the document in the testators handwriting are given effect as a holographic will if they make sense as a will standing alone, without regard to the portions of the document not in the testators handwriting. c. Both theories recognize that words or marks on a sheet of paper that are not in the testators handwriting do not necessarily disqualify the handwritten portion as a holographic will. 4. Estate of Black woman writes a holographic will, but uses three pages of a 1-page form to do so. Court held that the will was valid relying on the wills statute (probate code 53 a. Statues favor validity of holographic wills b. Overly technical application of statute would limit effectiveness of such wills c. Statute only requires that will be written, sated and signed in hand of testator d. Therefore, printed matter, not incorporated into the handwritten portion of the will arent part of the will e. Each page had her name handwritten i. CA doesnt require signature at end 5. First generation holographic will statutes requires a holographic will to be entirely written, signed, and dated in the testators handwriting. 6. Second generation holographic will statutes / former UPC retained the signature requirement, deleted the date requirement, and replaced entirely with material provisions 7. Third generation holographic will statutes / UPC 2-502(b)-(c) only the material portions of the document need be in the testators handwriting and portions of the document that are not in the testators handwriting, along with other extrinsic evidence, can be used to establish testamentary intent. Joel Tague Page 27
Joel Tague
Page 28

a. Grounds of contest: the contestants case i. Testamentary intent 1. UPC 2-502(c) intent that the document constitutes the testators will can be established by extrinsic evidence, including, for holographic wills, portions of the document that are not in the testators handwriting 2. Estate of Kuralt K has mistress. He executed a holographic will that indicated he left the Montana property to the mistress. 10 yrs later he executed a formal will later that swore off previous wills, giving everything to his wife but did not list the montana property. He later deeded part of the Montana property to the mistress and said he would sell the rest at a later date but died before then. Two weeks before he died he writes letter that she would inherit the Montana. After he dies mistress sought to probate the letter as a valid holographic codicil. In SJ the lower court found it invalid codicil and was appealed. The letter indication his desire to have mistress inherit + the previous gift indicate intent, but also indications this wasnt intended to be testamentary (mention of will by lawyer). Therefore, reversed and remanded to consider facts (including extrinsic evidence) as to testamentary intent. Remand found intent, thus a valid will. MT Sup ct affirms. 3. Edmundson v. Estate of Fountain court finds no holographic will b/c it lacked testamentary intent (just a list of who should receive what) language is too ambiguous. 4. Use of extrinsic evidence to show lack of testamentary intent: sham will a. Fleming v. Morrison testator executed a codicil to his will. Found to be invalid because extrinsic evidence showed he never intended it to be operative. 5. Conditional will Eaton v. Brown court found valid will which states this is my last request if I do not return from my journey. Courts prefer to resolve doubts in favor of validity. b. Testamentary capacity 1. Age requirement a. UPC 2-501 sets 18 as the minimum age. b. However, you can be a valid witness no matter your age. 2. Mental requirement a. Mental deficiency i. UPC 2-501 requires the person to be of sound mind. Joel Tague Page 29

ii. The definition of mental capacity relates to mental ability, not actual knowledge. iii. Restatement says you need: (1) to know the nature and extent of your property; (2) the natural objects of your bounty; (3) disposition of property; and (4) capable of recalling these events iv. Fletcher v. DeLoach Validity of will was challenged based on testators testamentary capacity. Lower court found lack of capacity. Ap ct affirmed finding evidence of lack of capacity: 1) she had become depressed, 2) shown to be disoriented, 3) decline in attention to appearance and cleanliness, 4) everything to one heir b. The lucid interval i. A person who is mentally incapacitated part of the time but who has lucid intervals which he or she meets the standard for mental capacity can make a valid will ii. Lucero v. Lucero court upheld will of a mental deficient who was lucid when executing her will c. Authority of a conservator to make a will for a mentally incapacitated person i. UPC 5-411 conservator or guardian to make, amend, or revoke a will for a protected person d. Insane delusion / monomania / partial insanity i. ii. Estate of Koch decedent has mental problems. At one point, family attempts to get him institutionalized; after it fails, he thinks his family was trying to just get his money. He wills it all to his brother. court held his will invalid b/c his feelings were unfounded in fact and these feelings were the reason for being excluded from his will e. Jan E. Rein, An Ounce of Prevention: Grounds for Upsetting Wills and Will Substitutes i. Non-conventional bequests are vulnerable to attack i.e. leaving to a domestic partner, one child opposed to another, not leaving to a spouse f. No-contest clauses
Joel Tague
Page 30

i. UPC 2-517, 3-905 no-contest clauses are unenforceable if probable cause exists for instituting proceedings g. Strike suits suit aimed at disqualifying a will can produce a reaction from the accused, where someone files suit against the will primarily with the hope the case will be settled outside of court h. Revocable trusts advantage as opposed to wills is that potential contestants who are not beneficiaries are not ordinarily required to receive notice of the trust at the settlors death iii. Undue influence / duress (Restatement) 1. Invalid if procured by undue influence (influence exerted over the donors free will), duress (threatened or performed a wrongful act), or fraud (knowingly or recklessly made a false representation to the donor) 2. Usually accepted that a presumption of undue influence arises if the wrongdoer is1) in a confidential relationship with the donor, and 2) there were suspicious circumstances surrounding the will. 3. Lipper v Weslow a. contest of will for undue influence. Testator left everything to two living kids and nothing to grandchildren though her dead kid (dead son was half sibling to two living kids). Trial was to the jury and set aside the will signed in 1956. Will prepared by half-brother signed by two of Mr. Bocks associates. The will was not read by the lady before signing and all evidence is circumstantial. However, there are sufficient witnesses and the writing within indicate that this was her intent. She was competent at the time she signed and could have read it in full. The Plaintiffs have to show more than the state for undue influence but that it happened. Just because the son wrote the will is not enough, nor that he could intercept cards and flowers, but both were in the will and she signed it. Lower court found the will was unduly influenced, AP court reversed b. Most states have the presumption of abuse that has to be overcame, despite a confidentiality situation. This state is different with Lipper. 4. Lawyer named as beneficiary of the will a. Statutory provisions invalidating most devises to the drafting attorney or care custodian.
Joel Tague
Page 31

b. Rules of professional responsibility generally forbid lawyers from naming themselves as beneficiaries in wills that they draft. 5. Lawyer named as fiduciary in the will little guidance in this area though courts urge strong caution 6. Testamentary appointment of lawyer a provision in a will directing that the drafting lawyer be hired to represent the personal representative is usually not binding b/c clients have a right to hire their own lawyers. 7. Expenses of defending a will Contest a. 3-720 provides that a personal representative who defends or prosecutes any proceeding is good faith (successful or not) is able to recover reasonable attorney fees from estate 8. Devises to spouses and domestic partners a. courts recognize spouses exert influence over one another regarding their estate planning but consider the spouse to be a natural object and therefore refuse to find undue influence when the spouse is the primary or sole beneficiary of the decedents will (not always the case with domestic partners) iv. Fraud / forgery 1. Fraud in the execution when a testator is defrauded about the nature or contents of the document he or she is signing 2. Fraud in the inducement when a testator is intentionally misled into forming a testamentary intention that he or she would not otherwise have formed a. Constructive trust and other remedies 3. Latham v. Father Divine a. first cousins alleged duress when their cousin gave her whole estate to Father Divine. Cousins argued that Ms. Lyon was going to revoke the will and leave them an inheritance. The cousins also argued that doctors employed by the Defendant killed Ms. Lyon. The court has the power to cause the money probated to be taken as constructive trusts for the plaintiffs if the facts are true. When a person has a will and is kept from revoking a will and executing a new one, the court can find that the property is held in constructive trust for the intended parties.
Joel Tague
Page 32

v. Constructive Trust and other Remedies 1. Constructive trust as a remedy for wrongful conduct a. If a wrongful act prevents a testator from making a will, courts have used constructive trusts to those who suffered the loss b. Pope v. Garrett by physical force decedent was interrupted from signing the will and court held plaintiff was entitled to a constructive trust in her favor 2. Tortious interference with an inheritance a. A person who by undue influence, duress, fraud, or other tortious conduct causes a decedent to divert property from one who would otherwise have received it through gift, devise, or intestate succession may be liable for damages in tort for wrongful interference with inheritance or gift. b. Courts have allowed these actions to be brought before the death of the testator. c. Can bring after testators death only if the claim could not have been asserted as part of the proceedings to admit a will to probate. d. Consequential, punitive damages, and attorneys fees are available. 3. Living probate statute permitting the testator to validate their wills while alive (unsuccessful attempted and in few states) 4. Settlement of will contests / alternative dispute resolution a. will contests frequently end by settlement, not trial. c. Unattested documents and events incorporation by reference, independent significance, and related doctrines i. Integration (Restatement) 1. Wills frequently are composed of multiple pages. No state requires that each sheet of paper of a multiple page will to be executed separately. 2. Writings contained on separate pieces of paper can be effective as parts of a single document. 3. Simon v. Grayson 8. Valid will indicated more instructions to executor could be found in a letter to be dated as of March. Will had a codicil from November, but didnt change terms discussed in letter. Issues: whether the codicil eliminates the letter. Whether the letter is valid with a wrong date. Ct held that a codicil republishes a will. Joel Tague Page 33

Further, the date on the will was not important as all other factors indicate it was the testators intent to integrate. Integrated letter not impacted by codicil. Courts strongly support the view that any evidence will suffice so long as the court is satisfied that at the time of execution the separate papers were present and regard by the testator as parts of the will. court upheld letter b/c even though it was not in existence at the time of the will, it was in existence a the execution of the codicil ii. Incorporation by reference UCC 2-510 1. UCC a writing in existence when a will is executed may be incorporated by reference if the language of the will manifests this intent and describes the writing sufficiently to permit its identification 2. Doctrine is rejected by some states 3. Incorporation into holographic wills courts differ as to whether one can incorporate into a holographic will, especially when the incorporation is not handwritten by the testator iii. Republication by Codicil 1. A will is treated as if it were executed when its most recent codicil was executed, whether or not the codicil expressly republishes the prior will, unless the effect of so treating it would be inconsistent with the testators intent (what does this mean?) iv. Acts having independent significance 1. Restatement the meaning of a dispositive or other provision in a will may be supplied or affected by an external circumstance referred to in a will, unless the external circumstances has no significance apart from its effect upon the will 2. UPC 2-512 a will may dispose of property by reference to acts and events that have significance apart from their effect upon the dispositions made by the will, whether they occur before or after the execution of the will or before or after the testators death. The execution or revocation of another individuals will is such an event. 3. The will of another person is not a testamentary act of the decedent and therefore has independent significance. Thus, a will directing that property be distributed in accordance with the will of another is effect even if the will of the other person was executed later. 4. Examples you can leave bequest to the partners at your law firm at the time of your death; if x leaves y the contents of a safe deposit box, y is entitled to what is in there when x dies even though the contents may change from execution to death Joel Tague Page 34

v. Reference of unattested writing 1. UCC 2-513 permits a testator to dispose of tangible personal property without having to meet the requirements of the doctrines of incorporation by reference or acts having independent significance. To be admissible, the writing must be signed by the testator and describe the items and the devisees with reasonable certainty. It can be executed before or after the will was written and modified at any time. 2. Questions (pg. 189) a. Under the former UPC, B will get the desk b/c it is in Gs handwriting b. Under the current UPC, A will get the desk b/c if it is not signed c. If it is not signed, UPC 2-503 may be able to validate it if there is clear and convincing evidence d. Joint representation of husband and wife 1. Lawyers frequently represent both spouses when estate planning, but this representation carries the risk that neither spouse will receive the representation a single individual will. 2. Lawyer must withdraw from representation of both when a conflict of interest arises. (fiduciary duties to both) e. Contracts to a devise V. REVOCATION OF WILLS a. Revocation by Subsequent Will i. Restatement a testator may revoke his or her will in whole or in part by subsequent will or by revocatory act. ii. UPC 2-507 A will is revoked when a subsequent will is made that revokes previous wills or is inconsistent with previous wills 1. Gilbert v. Gilbert courts holds that two holographic writings comprise a second will that distributes only the money Frank kept in this employers safe. It was not inconsistent for him to distribute, by a second will, a portion of his estate that would have passed under the residuary clause of the first will. 2. Revocation by inconsistency / implied revocation when a testator, without the aid of an attorney, executes a will that does not include an express revocation clause. 3. When a testator dies with two or more wills, and the latest one does not expressly revoke the previous ones, litigation arises as to Joel Tague Page 35

whether the testator intended the subsequent will to replace the previous wills in while or in part or merely to supplement them. 4. Problems (pg. 204) a. Under UPC the 2nd will revoked the 1st because it is inconsistent with first 2-507(a)(1) and (b) b.
Joel Tague
Page 36

b. Revocation by unattested Revocatory Act i. UPC 2-507(a)(2) By performing a revocatory act on the will, if the testator performed the act with the intent and for the purpose of revoking the will (acts include burning, tearing, canceling, obliterating, or destroying the will or any part of it - whether or not damage touched any of the words of the will. ii. Kronauge v. Stoecklein woman wrote a valid will. Later tried to revoke it by writing in the margin (handwritten) that it was void. Court held that because the cancellation writing didnt touch the words of the will, the will was not cancelled iii. Touching of the will 1. no touching of the words is required for revocation by burning or tearing 2. Most authority is consistent with the proposition that words of cancellation in the margin or on the back of the will fail to revoke a will by cancellation. 3. Kroll v. Nehmer court held that words of cancellation that touched the notarial seal of the self-proving affidavit attached to the will qualified as a sufficient act revoking the will. 4. UPC 2-507(a)(2) eliminates the distinction between revocation by cancellation and revocation by burning or tearing. Regardless of the type of revocatory act, a touching of the words on the will is not required. (supported by Restatement) iv. Revocatory act performed by another 1. UPC 2-507: Revocation can be done by testator, or another person a. The act of revocation by another person, must be performed within the testators conscious presence and by the testators direction. v. Ineffective attempt to revoke 1. If a testator intends to revoke a will by act to the document and the will is not destroyed by the physical act because another person fraudulently intervened to prevent the destruction, the will remains effective. 2. Without the physical act, an intent to revoke is insufficient to revoke a will 3. The courts, however, will provide a remedy for any wrongful interference with an attempt to revoke and will accomplish a testators intent through the constructive trust remedy. Joel Tague Page 37

4. Traditionally, constructive trust remedy used only when a 3rd party wrongfully interfers with an attempt to execute or revoke a will. 5. Estate of Tolin Testator created valid will, then a valid codicil. Later decides to revoke codicil by destroying it. Actually only destroys a photo copy. Circuit court says it is revoked, district court says it isnt because only a copy was destroyed, not a codicil. Appellate court affirms district court (no revocation). However, appellate allows a constructive trust because constructive trust is proper when a mistake in the transaction is because of fraud or breach, but it is also proper when one party has benefited by the mistake of another at the expense of a third party vi. Presumption of intent to revoke 1. If a will contestant proves that the testator had custody of the will, a will that is found physically mutilated is presumed to be revoked. 2. Estate of May testator told nieces husband he had a will on 2 occasions (once 3 days before death). Only will that was found was torn in half. Presumption was that a destroyed will in testator presence means it is destroyed. However, here the contestants rebutted that presumption by testators statements of a having a will. Therefore lower court was in error to find the will revoked. The presumption of revocation must be tempered when the act could have easily occurred accidentally Such acts must be shown to have done by the testator with intent to revoke. vii. Lost or destroyed wills 1. If the will remained in the decedents possession after execution, many courts presume that a lost will was destroyed with intent to revoke. 2. Standard to overcome that presumption is only preponderance of evidence though. viii. Wills executed in duplicate 1. Definition: Formal procedures for executing a will were performed on two copies of the same will. 2. The effect of duplicate execution is that the testator has two identical wills. 3. If a will is executed in duplicate, an act of revocation on one will also revokes the other duplicate. 4. If both copies were retained by the testator, but only one can be found, courts presume the will was revoked. ix. Proof of lost or destroyed wills 1. To probate a lost will, contestant must: Joel Tague Page 38

a. Rebut the presumption of revocation, AND b. Prove contents of will by clear and convincing evidence x. Restrictive lost will statutes 1. few states place further conditions on the probate of a lost or destroyed will. xi. Fraud 1. If a person obtains access to a testators will and wrongfully destroys it, the will is not revoked. (no testator intent) xii. Safeguarding of clients wills 1. UPC 2-516 after the death of a testator and on request of an interested person, a person having custody of a will of the testator shall deliver it with reasonable promptness to a person able to secure its probate and if none is known, to an appropriate court. A person who willfully fails to deliver a will is liable to any person aggrieved for damages that may be sustained by the failure. A person who willfully refuses or fails to deliver a will after being ordered by the court in a proceeding brought for the purpose of compelling delivery is subject to penalty for contempt of court. 2. UPC 2-515 testator or testators agent can deposit a will with a court for safekeeping at cost xiii. Is there a duty to probate a will? 1. Although any interested person can petition for probate of a will, the personal representative normally files the petition. If not, one of the devisees named in the will can usually be counted on to file a petition. UPC 3-912 2. If, however, the affected parties wish to suppress the will and divide up the decedents assets in a different way, they normally can do so. 3. Such an agreement does not need the consent of the executor. Successors have the power to direct the executor not to probate the will and, if they do so, the executor loses standing to proceed. (see UPC 3-720 comment) xiv. Partial revocation by revocatory act (e.g. scratch out part of will off) 1. A partial revocation by act has a double effect: deprives one of property and gives it to another. 2. Unless authorized by statute, courts do not recognize a partial revocation by act. Joel Tague Page 39

3. There can however be partial revocation by subsequent will (if you cant tell what was removed e.g. cut out) xv. Effect on a codicil of a revocation of the will 1. The revocation of a will by act does not revoke a codicil to the will. 2. If the codicil depends on the revoked will for its meaning, however, the codicil may have no effect as a matter of construction. c. Revocation by changes in circumstances marriage, divorce, remarriage i. Restatement the dissolution of the testators marriage is a change in circumstance that presumptively revokes any provision in the testators will in favor of his or her former spouse. Neither marriage nor marriage followed by birth of issue is a change in circumstance that revokes a will or any part of a will. ii. Automatic revocation of premarital wills 1. At common law, a premarital will of a woman was revoked upon marriage and a premarital will of a man was revoked upon marriage and birth of issue 2. The fact that the spouse or the spouse and the couples issue predeceased the testator was accorded no legal significance. 3. Few states still have marriage-revocation statutes. 4. Estate of Spencer guy creates will devising everything to his girlfriend. Marries girlfriend a couple months later. Dies a month later. Statute said marriage revokes previous will. Court held that even though it was same person, will was revoked because no provision was made for a potential marriage. Estate distributed though intestacy she still gets that share, but kids get the rest. 5. Erickson v. Erickson guy wrote will 2 days before marriage, court did not find contingency of marriage clause in will so held the will would be revoked by marriage. However, if clear and convincing evidence could prove it was a scrivener error that caused no mention of upcoming marriage, not revoked. Remanded on that basis iii. Revocation upon divorce UPC 2-804(b)(1)-(2) divorce or annulment alone revokes any testamentary provision favoring the former spouse iv. Problems (pg. 225) A would die intestate under 2-804 b 1,2 d. Reinstating a revoked will i. Restatement revival of revoked wills 1. A will that was revoked by a later will is revived if the testator: Joel Tague Page 40

a. Re-executed the previously revoked will; b. executed a codicil that revives revoked will c. revoked the revoking will by act intending to revive the previously revoked will; or d. revoked the revoking will by another later, 2. A will that was revoked by act is revived if the testator: a. reexecuted the will; b. executed a codicil indicating an intent to revive the previously revoked will; or c. performed an act on the will that clearly and convincingly demonstrates an intent to reverse the revocation 3. A testamentary provision that was revoked by dissolution of the testators marriage is revived if: a. the testator remarried the former souse, reexecuted the will, or executed a codicil indicating an intent to revive the previously revoked provision; or b. the dissolution of marriage is nullified ii. Situation: will one is expressly revoked by will 2, then testators draws an X through will 2. 1. The ecclesiastical rule whether the previous will would be revived depended on the testators intent 2. Common law rule regardless of intention, the original will is automatically revived 3. American rules on revival in the absence of a statute preference for the ecclesiastical rule 4. Statutory rules on revival a. Anti-revival rule: will would be revived only if testator either re-executed that will or executed a codicil showing an intention to revive the will iii. Estate of Boysen guy wrote a valid will. Later lost by court house. Created new will (was actually different than 1st). then the 1st was found, the guy ripped up the new will, but kept it as an indication of his desires should the 1st be lost again. Court followed UPC 2-509(a) which indicates that a will revoked by a second will remains unless it is evident from the circumstances of the revocation of the 2nd or from declarations that testator intended 1st will to take effect. Circumstances indicated testator wanted 1st will to take effect iv. Revocation of a codicil same rules as revocation by will Joel Tague Page 41
Joel Tague
Page 42

e. Dependent Relative Revocation (Ineffective Revocation) i. Restatement dependent relative revocation doctrine 1. If the testator purports to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective if the testator would not have revoked his will had he known the truth. 2. A person lacks true revocatory intent if the revocation is based on a mistaken belief. ii. Callahans Estate a. Facts b. Husband and wife created many similar wills over years. c. Will in 44 giving greater benefit to Albert who stopped drinking d. After Albert starts drinking, husband and wife destroy 44 wills to revive the previous will (40) e. Atty said cant do that, he made new will that looks like 40 f. H signed new will then died 3 days later (didnt get to wifes new will until she was in the hospital. g. W entered hospital a couple weeks after his death, signed two wills while there and died 5 mos later h. W was deemed incompetent when she entered the hospital i. Rule j. a revocation by a 2nd is only effective if the 2nd will is found to be valid. k. In this jurisdiction, if a revoking will fails to become effective, the prior will stands. l. Holding m. With the grief of her Hs death and funeral arrangements, W did not have much time in which to make another will iii. Giving effect to the testators intention in other dependent relative revocation cases 1. Rule is ordinarily applied in cases where a testator having executed one will thereafter revokes it by the execution of a later will which, for some reason fails to become effectual. 2. In such cases revocation of the earlier instrument is treated as relative and dependent upon the efficiency of the later disposition, which was intended to be substituted. 3. Revocation of a later will for the purpose of reviving a former one is only one of several factual patterns that lend themselves to a dependent-relative-revocation analysis 4. Another typical situation in which courts have applied dependent relative revocation is one in which a testator revokes a will by revocatory act in connection with an ineffective attempt to execute a replacement will. 5. Estate of Patten Joel Tague Page 43

a. Mom made will in 68 but original could not later be found b. Mom made another in 70 with some changes, but it wasnt properly executed (Witnesses didnt see her sign) c. After mom died, 70 will was deemed ineffectual d. A copy of 68 will was offered into probate e. Issue: whether ineffectual revocation by creation of the 70 will revived the 68 will. f. Holding: no, The doctrine can only apply where its clear that testators intended the revoked will to be replaced by new will. Intent for destroying 68 will isnt known . 6. For the doctrine to apply, the new will must also not have change the testamentary purpose of the old will and essentially repeated the same dispositive plans such that it is clear that the first will is revoked only because the second duplicated its purpose. iv. Uncompleted Plan 1. If the testator never had a plan to make a replacement will, the doctrine of ineffective revocation is inapplicable. 2. Similarly, if the testator intended to make a replacement will but never took steps to complete the plan, the doctrine cannot be applied. The revocation stands v. Unattested handwritten alternation of a will 1. Testators sometimes attempt to alter their wills by marking them up by crossing out attested language and inserting unattested substitute language a. In the absence of a harmless error rule, the inserted unattested language cannot be given effect. b. Question then becomes, does marked out language act as partial revocation or ineffective revocation 2. Schneider v. Harrington a. Woman makes handwritten changes to will that gave 1/3 to 3 different people. Stuck line through last person and changed other 2 to . b. Issue: whether dependent relative revocation can apply to a clause of a will c. Yes, the court found intent to replace the struck through portion with new percentages is clear. However, because the new portion of the will (new percentages) didnt satisfy the states attestation requirement, the new will was void. Therefore, the prior will stood (1/3 to each) 3. UPC 2-503 harmless error rule may allow the words to be given effect 4. Courts have held that a decedent can validly alter a holographic will by making handwritten changes thereon without signing the will again or signing or initialing the alteration. 5. Problem
Joel Tague
Page 44

a. Under both UPC and R3d, The written revisions will not be part of the valid will b/c they are unattested to and on the doctrine of dependent relative revocation the original will is valid b. c. vi. Revocation based on mistake of fact 1. Because it was based upon a mistake of fact, the original devise giving the devisee $10,000 can be effective. 2. Probably nothing can be done and the court will enforce the codicil. vii. Express revocation by subsequent instrument 1. Dependent relative revocation can be applied if a will was expressly revoked in connection with an attempt to achieve a dispositive objective that fails under law. viii. Partial application of Dependent Relative Revocation 1. f. Contracts not to Revoke a Will i. Mutual and Joint wills 1. Mutual wills separate wills executed by t people usually containing reciprocal provisions 2. Joint will single instrument executed by two people and is intended to be the will of each 3. Joint and mutual wills are joint wills that contain reciprocal provisions ii. Junot v Estate of Gilliam 1. Facts 2. H and W created wills at same time that were reciprocal, leaving everything to the other if they dont each die within 90 days. 3. If they did, each split their estates between his 2 and her 3 kids. 4. H dies. W then changes her will to include only her 3 kids. 5. W dies. 6. Hs kids challenge will claiming the 2 reciprocal wills were contracts which W broke when she changed hers. 7. Issue: whether reciprocal wills corm a contract 8. Holding - No 9. Court said Std or proof was clear and convincing evidence a. No such evidence here b. Wills did exactly what parties intended c. New statute specifies 4 requirements for a K to be recognized (statute wasnt limited in retroactivity)- only K if: i. Provisions of will stating material provisions of K ii. Express reference in will to K and extrinsic evidence proving same, or Joel Tague Page 45

iii. Writing signed by decedent evidencing K iv. Note - Joint will is not a contract d. Rules: i. Clear and convincing evidence needed to prove existence of a contract not to revoke ii. No presumption of a contract merely from execution of joint or mutual wills iii. Shimp v Huff 1. H and W made a joint will in 74 in which they each devised the entire estate to the other. W died, but H didnt offer will for probate (everything was in his name). However, the court did allow H to create new will. H married a new wife. H then died. W2 wanted here statutory share (1/3) of Hs estate. 2. Lower court held that the 74 will was a binding contract and Hs estate all went to W1 (or her heirs?) 3. Appellate court looked at many different ways different courts have handled this issue but chose to handle it based on public policy of protecting a surviving spouses rights to share in husbands estate. Therefore, W2 receives her share.
Joel Tague
Page 46

VI. Post-execution events affecting wills a. Changes in the clients estate 1. Classification of devises a. Specific devise testamentary disposition of a specifically identified asset i. Example: My 100 shares of Microsoft stock b. General devise testamentary disposition, usually of a specified amount of money or quantity of property, that is payable from the general assets of the estate c. Demonstrative devise testamentary disposition, usually of a specified amount of money of quantity of property, that is primarily payable from a designated source, but is secondarily payable from the general assets if designated source is insufficient d. Residuary devise testamentary disposition of property of the testators net probate estate not disposed by a specific, general, or demonstrative devise e. Two stage analysis (1) classify the devise as specific, general, demonstrative, or residuary; and (2) apply the doctrine based on the classification of the devise (classification of the devise governs the legal outcome) i. Ademption of specific devises by extinction 1. Specific devises are normally used to pass on to particular relatives or friends property the testator holds dear 2. Often the devised property is sold, destroyed, stolen ect., becoming extinct adeem 3. Under the doctrine of ademption by extinction, a specific devise is adeemed ineffective if the testator no longer owns the specifically devised property at death. 2. Identity theory the court does not inquire into the reason why the specifically devised property is not found in the estate. 3. Estate of Hume a. Hume created will giving his niece his home and the residuary to a university b. House was ultimately sold in foreclosure, with $55K in surplus proceeds. c. Hume dies
Joel Tague
Page 47

d. Will is probate such that $55K is given to niece. Based on Humes intent and fact that he didnt voluntarily sell house. Ct of appeals affirms e. Fed court reverses. Says rule of ademption by extinction prevails without regard for intent of testator. f. Use simple 2-part test 1) was the gift a specific legacy, 2) whether it is found in the estate. In this case it wasnt g. Also held that you cant substitute when a material change occurred in the subject matter house money 4. Identity theory v. intent theory a. Identity theory ademption depends solely upon whether the subject matter of a specific devise exists as part of the testators estate at death; testators intent is irrelevant b. Intent theory ademption depends upon the testators subjective intent, determined on a case by case basis c. Restatement also adopts the intent theory placing the burden of proof on the devisee to show that failure of the devise would be inconsistent with the testators intent. d. UPC 2-606(a)(6) also adopts the intent theory, placing on the devisee the burden of showing by clear and convincing evidence that ademption would be inconsistent with the testators manifested plan of distribution or that at the time the will was made, the date of disposition, or otherwise, the testator did not intend that the devise adeem. 5. Dispositions by guardians or conservators a. One type of situation in which the courts have been reluctant wholly to disregard the testators intention arises where a guardian or conservator, acting on behalf of an incapacitated testator, sold or otherwise disposed of an item of specifically devised property. b. Specific devisee becomes entitled to receive any remaining money or other property. c. UPC 2-606(b) adopts above view and lists in detail what devisees rights are. d. UPC 5-418 directs the conservator to take into account the protected persons estate plan when making investment and expenditure decisions and authorizing the conservator to examine the will. 6. Dispositions by attorneys-in-fact acting under durable powers of attorney Joel Tague Page 48

a. UPC 2-606(b) explicitly extends the guardianship exception to sales by an agent on behalf of an incapacitated testator under a durable power. b. To ease the administrative burden of post-death inquiry into the mental state of the testator, 2-606(e) establishes a rebuttable presumption that a sale or other disposition by an agent is on behalf of a testator who is incapacitated. 7. Problems (pg. 266) a. Under common law identity theory gets nothing, identity is changed. Under previous UPC he gets surplus unless it is proven testator WANTED property to adeem. Under current UPC gets any surplus value if he proves that the testator DIDNT WANT property to adeem b. 1 value of ford, 2 honda, 3 value of ford, 4 value of ford. ii. Accessions and accretions a. What rights does a devisee have to assets that were produced by a devised asset after execution of the will? b. In most situations, the choice is between awarding the product of the devisee of the underlying asset or awarding it to the residuary devisees. c. Accession questions involve: corporate stock, mortgages, promissory notes, oil and gas leases, and cultivated farm land. d. In general, courts have held that specific devises transfer that specific asset together with accessions and accretions occurring after the testators death. e. Specific devises do not bear interest, strictly speaking. If the specifically devised asset has not actually produced any income or interest, the devisee is not entitled to any interest. By contrast, general devises do bear interest, beginning ordinarily one year after the testators death. f. Specific devises of debts or obligations usually carry with them interest accrued but unpaid at the testators death. Thus specific devises of mortgages or debts pass any accrued but uncollected interest to the devises. 1. Post execution, pre death accessions and accretions a. Well settled that collected interest on a specifically devised bond does not pass to the specific devisee even if the interest remained part of the testators estate (harder in corporate restructuring of stock context) Joel Tague Page 49

2. Stock splits a. The traditional approach to resolving questions of stock accessions resulting from stock splits has been to pin the result on whether the devise is classified as specific or general. b. If the device is classified as specific, devise gets the increased number of shares resulting from split c. If the devise is classified as general, the devisee doesnt get the extra shares from split. d. Former UPC 2-607 agreed with above view, but what about current UPC? e. Watson v. Santalucia i. Testator left a valid will, giving 3 different people 100 shares of stock each. Remainder of his estate was to be equally distributed through 9 heirs. After will but before death, stock had a 4 for 1 split. Plaintiffs argue that they are entitled to 400 shares each as a result of the split. Other 9 heirs say No. ii. The court held that the traditional specific/general distinction want applicable to stock splits. Further, stock splits are just an administrative function not affecting shareholders claim on the company. Therefore, unless anything manifests a counter intent, legatee gets increased shares from splits that occur between the execution of a will and the death of the testator. c. UPC 2-605 / Restatement adopts the approach used in Watson. d. Stock dividends i. UPC 2-605(a)(1) treats stock dividends the same as stock splits, giving the benefit to the stock devisee ii. The majority of jurisdictions appear to treat stock dividends the same as cash dividends, denying the benefit of the stock dividend accession to the stock devisee. iii. Abatement 1. Suppose a will leaves to A my desk, $10,000 to B, $5,000 to C, and the residue to D.
Joel Tague
Page 50

a. If testator dies owning desk & $20,000 all of the provisions of the will can be satisfied. b. But if the net assets are worth $10,000, a questions arises as to how to distribute the decedents estate. In the absence of a will provision providing for order of abatement, the common law rule states that the residuary devisee will take nothing and there will be a pro rata reduction of the general devises to B and C. c. A will get the desk unless its sale is necessary to pay debts or expenses of administration. d. If the will also contained a demonstrative devise, this would be treated as specific for purposes of abatement. 2. UPC 3-902 Lists order in which assets are appropriated in abatement 3. Land a. At common law, title to personal property passed on the testators death to the personal representative but title to land went directly to the devisee. i. Unless the will provided otherwise, land could not be reached to satisfy the decedents debts, unless the creditor had a claim secured by a lien on the land. ii. Some states, all of the personal property abates before any land; other states, personal property devised in the residuary abates before land devised in the residuary ans specifically devised personal property abates before specifically devised land. b. The UPC -201(10),(39), 3-902 eliminates any distinction between real and personal property. 4. Devisees some states give priority to specific devises to certain relatives over specific devises to others 5. Estate taxes a. Under the federal estate tax, the taxable estate may include nonprobate property like life insurance, gratuitously donated property reserving a life estate, etc. b. Burden of the residue rule previously, the tax burden on all property was paid out of the residue of the estate. c. More recently, courts have held that taxes should be born by both probated assets and non-probate assets . Joel Tague Page 51

d. UPC 3-9A-101-115 apportions the burden among all recipients of the property, whether probate or nonprobate, included in the taxable estate. e. Problems (pg. 273) i. A= Broach, B= 8000, C= 4000, D= 0 ii. Same as above. iv. Ademption by satisfaction 1. Restatement a. an inter vivos gift by a testator to a devisee or to a member of the devisees family adeems the devise by satisfaction, in whole or in part, if the testator indicated in a contemporaneous writing, or if the devisee acknowledged in writing, that the gift was so to operate. Property a testator gave in his or her lifetime to a person is treated as a satisfaction of a devise in whole or in part, only if (i) the will provides for the deduction of the gift; (ii) the testator declared in a contemporaneous writing tha the gift is in satisfaction of the devise or that its value is to be deducted from the value of the devise, or (iii) the devisee acknowledged in writing that the gift is in satisfaction of the devise or that its value is to be deducted from the value of the devise.
2. UPC 2-609 a.
b. For purposes of partial satisfaction, property given during lifetime is valued as of the time the devisee came into possession or enjoyment of the property or at the testators death, whichever occurs first. c. If the devisee fails to survive the testator, the gift is treated as a full or partial satisfaction of the devise, as appropriate, unless the testators contemporaneous writing provides otherwise. i. This doctrine is analogous to the doctrine of advancements that applies to lifetime gifts made by decedents who die intestate. ii. It is as if part of the decedents estate had been distributed pursuant to the terms of the will in advance of the testators death. 3. Writing a. The writing requirement may be satisfied by a provision in the will expressly providing for lifetime advances Joel Tague Page 52

b. A satisfaction can also by proven by a writing in which the devisee acknowledges that the gift is in whole or partial satisfaction of a devise. 4. Specific devise a. A lifetime gift can satisfy a specific devise. If the testator makes a doctrine lifetime gift of the devised property, the of ademption applies and no writing is necessary. b. If the testator makes a lifetime gift of different property, the application of the satisfaction doctrine under the UPC depends upon whether the gift was accompanied by a writing. 5. Land a. 6. Partial satisfaction a. UPC 2-609 (b) for purposes of partial satisfaction, property given during lifetime is valued as of the time the devisee came into possession or enjoyment of the property or at the testators death, which occurs first. b. Problems i. XXXXXXXXXXXXXXXXXXX ii. XXXXXXXXXXXXXXXXXXX
b. Post-execution deaths lapse & antilapse i. What happens to a devise if the devisee predeceases the testator? Because a will transfers property when the testator dies, not when the will was executed, and because property can only be transferred to a living person. All devises, then, are automatically and by law conditioned on the survival of the testator. ii. UCC 2-702 extends the 120 hour requirement of survival to all governing instruments. iii. Devolution of a lapsed device 1. Lapse of a nonresiduary device if lapse occurs in a dispositive provision other than the residuary clause, the rule is that lapsed devices of personal property pass to the decedents residuary devisees. 2. Lapse in the residuary one residuary device when the residuary device predeceases the testator, the residue becomes intestate property. 3. More than one residuary devisee a. No-residue-of-a-residue rule if the residuary clause is in favor of more than one person, and if that clause does not create a class gift, the conventional view is that the death of Joel Tague Page 53

one or more, but not all, causes the share intended for the deceased devisee(s) to pass by intestacy. b. UPC 2-604(b) / Restatement lapsed share passes to the other residuary devisees iv. Class gifts 1. A class gift is a gift of property to a group of persons identified by a group label such as children, issue, brothers, etc. 2. Restatement definition of class gift 1. It is a disposition to beneficiaries who are described by a group label and are intended to take as a group 2. Taking as a group means that: (1) the membership of the class is not static, but subject to fluctuation by increase or decrease until the time when a class member is entitled to distribution; and (2) upon distribution, the property is divided among the then-entitled class members on a fractional basis ii. The distinguishing feature of a class gift is the ability of the group to fluctuate in number. Fluctuations in number can come through an increase in the number of takers (caused by birth or adoption) and/or through decrease in the number of takers (caused by deaths). iii. Increase in class membership The ability of the takers to increase in number is unique to class gifts. iv. Decrease in class membership 1. The rule of lapse that devisees must survive the testator to take applies to class gifts as well as individual gifts. 2. A class gift imports a built-in gift over to other takers. 3. Once the testator has died, the ability to decrease comes to an end. v. The predominant view is contrary to above, i.e. if it says to S in fee simple forever, and S dies, Ss heirs will not inherit vi. UPC 2-601, 603, 604, 702 look and type these!! vii. Per stirpes as creating an alternative devise does not work in substitution for including language of and heirs
Joel Tague
Page 54

v. Antilapse statutes leave the law imposed condition of survival intact, but modify the devolution of lapsed devices by providing a statutory substitute gift. The gift is usually to the devisees descendants who survive the testator. a. Application to class gifts UPC & states explicitly stay they apply. b. Rule of construction antilapse statutes establish a rule of construction, not a mandatory rule. They apply in the absence of a contrary intention on the part of the testator. (UPC 2-601). c. Protected categories 1. Only apply to certain categories of predeceased devisees relatives or specified relatives of the testator. 2. Very few statutes apply to any devisee who predeceases the testator leaving descendants who survive the testator. 3. UPC 2-603(b) applies to devisees who are grandparents or descendants of grandparents of the testator; it also extends protection to the testators stepchildren. It does NOT apply to devises to the testators spouse. 4. Antilapse statutes typically exclude spouses of predeceased descendants as statutorilysubstituted takes. 5. Problem (pg. 280) a. XXXXXXXXXXXXXXX d. Routolo v Tiejen i. Facts: Swanson executed a will. A clause said Hazel gets of the residuary if she survives me. Hazel died 17 days before Swanson. Lower courts held that th if she survives me satisfied the statutory condition a provisioin for what to do with the bequest. ii. Issue: is if she survives me a provision for a contingency should the beneficiary die iii. No antilapse statutes are to prevent disinheritance and should be read broadly in favor of operation iv. Reasoning:
Joel Tague
Page 55

e. Survival language that a bare expressly stated requirement of survival defeats the antilapse statute f. UPC 2-603(b)(3) survival language, in the absence of additional evidence, does not indicate a contrary intent g. UPC 2-603 also establishes more elaborate rules for determining when the statutes substitute gift takes effect i. First priority goes to the primary devisee. ii. Second priority goes to the secondary devisee. iii. Third priority goes to the descendants of either devisee if both predecease the testator but only one leaves descendants who survive the testator. iv. Fourth priority goes to the descendants of the primary devisee if both predecease the testator and both leave descendants who survive the testator, except that if the secondary devisee is a descendant of the primary devisee, the priority goes to the descendants of the secondary devisee. v. * Look at pg. 6-28 for example vi. Question & answer 1. (a) Nick will take the $120,000 in a UPC and antilapse statute jurisdiction (b) Probably to the X charity because of explicit language of lapsed devises.
2. (a) Alex and Bettys descendants will take equally. (b) Alex (maybe Betty) will probably only take because of explicit language. (c) Alex will probably only take because of explicit language. 3. 4. VII. (a) Alexs descendants. (b) Bettys descendants. Look at UPC 2-603. (?) come back to this
REVOCABLE TRUSTS AND OTHER WILL SUBSTITUTES i. The ideal will substitute allows the donor to retain lifetime enjoyment and control over the asset, while purporting to transfer to another person a property interest in or a contract right to future possession of that asset. ii. Life insurance, pension accounts, joint accounts, and revocable trusts fit this mold and are widely used.
Joel Tague
Page 56

iii. Joint tenancies also count as will substitutes because they provide for a right of survivorship. iv. Above function to pass property at death without being subject to the statutory formalities required for executing a will. a. Validity of will substitutes form over substance 1. UPC 6-101 A provision for a non-probate transfer on death in an insurance policy, contract of employment, bond, mortgage, promissory note, certificated or un-certificated security, account agreement, custodial agreement, deposit agreement, compensation plan, pension plan, individual retirement plan, employee benefit plan, conveyance, deed of gift, marital property agreement, or other written instrument of a similar nature is non-testamentary. 2. Restatement a will substitute is an arrangement respecting property or contract rights that is established during the donors life under which (1) the right to possession or enjoyment of the property to a contractual payment shifts outside of probate to the donee at the donors death; and (2) substantial lifetime rights of dominion, control, possession, or enjoyment are retained by the donor. To be valid, a will substitute need not be executed in compliance with the statutory formalities required for a will. i. Revocable trusts the present-transfer test a. Property law recognizes the validity of a revocable intervivos trust, even one in which the person creating the trust (the settler) retains the right to income for life. b. It does so on the basis of the so-called present-transfer test: i. upon creation of the trust, the settler transfers an equitable remainder interest in the trust corpus to the remainder beneficiary. ii. The transfer is treated as inter vivos, not testamentary. c. Mathias v Fantine i. Mathias made himself a trustee of his estate for his benefit for his lifetime and thereafter for the benefit of others. Issue is whether a trust was actually created. Court found three requirements for the formation of a trust 1) a declaration of a trust, 2) an intention to create a trust, and 3) an actual conveyance of transfer of property. In this case there was no actual transfer that took place. Joel Tague Page 57

The writing was attempting to be testamentary, but failed intestate. d. Farkas v. Williams i. Farkas died intestate. 4 times Farkas bought stock instructing it to be issued to himself as trustee for Richard Williams. At the same time Farkas wrote a declaration of revocable trust that left him with the benefits and total control while he lived. The trust was labeled as being revocable. Issue is whether a trust was actually created. Intent was obviously there (writing). The fact that a remainder was created (if not revoked) seemed to be enough to satisfy the transfer requirement. Court found this a proper trust and reversed. e. Validity of revocable, self-declared trusts i. A self-declared trust is a revocable, inter-vivos trust in which the settler acts as trustee. ii. The settler declares himself or herself trustee for the benefit of himself or herself for life, remainder at the settlors death to the settlors chosen beneficiary. iii. Courts generally find this remainder created in this situation sufficient to show transfer and thus creates a trust f. Mental capacity required for creating a trust same as capacity for creating a will (Restatement & UTC) g. Undue influence, fraud, duress a trust is void to the extent that its creation was induced by undue influence (UTC 601) h. Rights of the grantors surviving spouse some jurisdiction, the grantors surviving spouse may claim an elective share in the assets of a revocable trust i. Rights of the grantors creditors and creditors of the grantors estate i. If a grantor transfers assets to a trust in fraud of his or her creditors, the grantors creditors can set the transfer aside to satisfy the debt, whether the debt arose before or after the transfer. ii. A transfer to a trust that is in fraud of creditors can be set aside under the fraudulent-transfer principle, whether the trust is revocable or irrevocable.
Joel Tague
Page 58

iii. More recently, the UPC, UTC, Restatement have broken from above (traditional) and allowed the grantors creditors to reach assets in a revocable trust, even though the transfer to the trust was not in fraud of creditors. j. Federal taxation of revocable trust substance over form the federal system of income, estate, and gift taxation taxes revocable trusts according to their substance, not their form. 2. Other will substitutes the present-transfer test a. Present-transfer test is widely used to validate many will substitutes, not only revocable trusts. b. Through wills in substance, transfers that can be characterized as having presently passed to a donee any interest in property, whether present or future, vested or contingent, are treated as inter vivos, not testamentary, and their validity does not depend upon compliance with the execution formalities required of wills. c. Wilhoit v Peoples Life Insurance Co. i. Wife inherited life insurance from her husbands death. She instructed insurance company to put the amount in a trust that would go to her brother upon her death. The brother died 2 years later. Wife died 19 years after that. Sons estate argues the money is like an insurance policy to be paid out when mom dies. Moms estate argues is simply an invalid testamentary disposition. ii. Court held this was not an insurance policy. This was an ineffective disposition after death because it didnt comply with the will statutes b. Life insurance as a will-substitute i. Life insurance doesnt require compliance with will statutes ii. Although paid at death, life insurance is treated as giving a current right to the beneficiary iii. Beneficiary must survive the insured iv. Non-UPC antilapse statutes do not cover lifeinsurance beneficiary designation. v. UPC 2-706 The current UPC broke new ground by adopting an antilapse statute for life insurance. Joel Tague Page 59

vi. Proceeds of life-insurance policies are wholly or partly exempt from the claims of the insureds creditors. c. Life-insurance trust i. ILITs Irrevocable Life Insurance Trusts transfer full ownership of police to trustee. 1. Avoids taxation by excluding policy payout as part of insureds estate ii. Second type is created by naming the trustee as the beneficiary of the life-insurance policy, with directions to the trustee to collect the proceeds on the insureds death and carry out the terms of the trust. 1. Revocable and hence not tax motivated. 2. Motive is the administrative convenience of having insurance proceeds added at death to an existing inter-vivos trust. d. Does the trustee have an insurable interest in the settlors life? i. Insurance law requires that the purchaser of a lifeinsurance policy have an insurable interest in the life of the insured. ii. The insured always has an interest in hisown life. iii. Inter-vivos trusts commonly authorize the trustee to purchase life insurance on the life of the settler. Such a devise has tax advantages if the insured dies within 3 years/ e. Pension Plan Accounts i. Defined Benefit Pension Plans and Defined Contribution Benefit Pension Plans allow designation of beneficiary f. Multiple party accounts i. Bank and other financial intermediary accounts frequently are registered in the names of more than one person. g. These multiple party accounts generally take one of several forms: trust (Totten trusts), joint, or payable on death (POD). Totten trust (will substitute) Joel Tague Page 60

i. Bank account in the name of 2 or more people ii. Depositor retains exclusive control until death then funds pass to beneficiary iii. Courts have held that creditors of the depositor can reach the deposit before or after the depositors death iv. If beneficiary dies before the depositor, the deposit remains the sole property of the depositor Joint accounts (will substitute) i. Like Totten trusts, they too contain a survivorship feature. ii. The balance of the account at death of a depositor shifts to the surviving co-tenant holder without going through probate. iii. Funds in a joint account are now owned in joint tenancy. The true ownership is that each account holder continues to own his or her own contribution to the balance on hand. Consequently, as between two co-account holders, a deposit into a joint bank account is revocable; no federal gift tax consequences are triggered because the tax law treats the deposit as an incomplete gift. iv. Satisfies the present-transfer test b/c co-account holder acquires a present contract right to the deposit, payable on the death of the depositor. POD Accounts (not will substitute) i. POD accounts created when a depositor registers the account in his or her name payable on death to another person. 1. Unlike joint accounts, the intention to transfer benefits is only at the depositors death. 2. POD accounts are generally held to be testamentary, invalidating the attempted transfer of ownership on the depositors death. Multiple-party accounts under UPC i. Original version presumptions before parties died that 1) a joint account was owned by the parties proportionate to each partys contribution, 2) POD Joel Tague Page 61

account was owned solely by the depositor, and 3) A trust account was owned solely by the trustee 1. UPC 6-104 presumes any account payable to 2 or more parties has survivorship (no wording needed) a. Presumption is rebuttable with C&C evidence 2. UPC 6-104 also established a presumptive death benefit for the named beneficiary of a trust account and POD account (this presumption was unqualified rather than presumptive) 3. For trust and PDO accounts, the original version negated survivorship rights among multiple surviving beneficiaries. 4. In contrast, survivorship continued for multiple joint account beneficiaries who survived the death of a third or other codepositor. 5. 6-104(e) explicitly disallows an owner from using a will to change the death benefit arising from the form of a deposit or statute 6. 6-107 beneficiary claims are subordinate to creditor claims, estate administration expenses and statutory allowances for family members ii. Current UPC Major changes include: (1) folding Totten trust accounts into the definition and coverage of POD accounts; (2) providing statutory forms for joint accounts with or without survivorship, transfer on death (TOD) accounts, and joint and single-name accounts designating an agent to act for the owner, (3) subjecting survivors benefits in accounts covered by the legislation to an order (check) of any party who dies before the check is paid; and (4) providing that, when two persons named as parties to a survivorship joint account are married to each other and the account includes one or more additional parties, only the surviving spouse may receive additional ownership of account balances following the other spouses death. iii. Joint tenancies, tenancy by the entirety Joel Tague Page 62

1. Does NOT depend on compliance with the formalities of wills. 2. Unless exempted by the marital deduction, an unequal consequences for any joint tenant whose contribution exceeds his or her ownership interest. 3. The property ownership shifts outside of probate to the surviving co-tenant 4. Joint tenancies can be severed by any joint tenant. iv. TOD registration of securities 6-301 to 310 authorize a new form of ownership of investment securities, called transfer on death registration. v. TOD Deeds (Transfer on Death deeds) 1. NOT limited to investment securities 2. A beneficiary deed can name one or more beneficiaries. 3. A person who owns real property as sole owner or as a tenant in common may designate one or more primary and one or more contingent TOD beneficiaries. 4. While the owner is alive, the beneficiaries have no interest in the property. 5. At death, the property passes outside of probate to the beneficiaries or contingent beneficiaries. 6. If none of the beneficiaries survive, the property passes through probate. b. Revoking or amending a will substitute i. Revoking or Amending a Revocable Trust 1. Estate and trust of Pilafas a. Pilafas executed a revocable inter vivos trust. He updated trust twice, the last about a month before death. He told attorney he wanted to make a third change to include all of his kids, attorney prepared changes to trust and to will and then gave originals to Pilafas. After his death the documents could not be located. Should the presumption of revocation for will also apply to trust. Court said no, 2. Revocability of Inter vivos Trust Joel Tague Page 63

a. Common law settlor had pwer to revoke only if the terms of the trust so provided b. UTC says opposite unless terms make trust irrevocable, it may be revoked 3. How to revoke a revocable trust a. If no method specified any way that provides clear and convincing evidence of settlors intent b. If method is specified do what it says! ii. Revoking or amending a revocable trust by later will 1. settler of a revocable trust can revoke the trust through an express provision in the settlors later will a. Totten trusts; multiple-party accounts; POD Accounts UPC 6-213(b) a will may NOT alter the survivorship right in any multiple-party account or POD designation b. Life insurance most courts do not allow the testator change a life insurance beneficiary by will (even in the case of divorce) c. Joint tenancies because of the right of survivorship, joint tenants who predecease their co-tenants have no power to devise their interest in joint tenancy property. 2. Super will? 3. Metropolitan life insurance v Johnson a. Johnson had a life insurance policy through his employer. He originally designated his 1st wife as beneficiary. After he divorced 1st wife, he made changes to beneficiaries, but made mistakes (chose wrong police, wrong address, said he was separated and not divorced)> Met life told 1st wife he was beneficiary, then new beneficiary said where is my money. Goes to court. Summary judgment was for new beneficiaries.. appellate court affirmed because he took positive steps to change the beneficiary and reveived no notice that he had made any errors. b. 4th circutis Phoenix test an insured substantially complies with the chage of beneficiary provisions of an ERISA life insurance police when he: 1) evidences his intent to make a change, and 2) attempts to make the change by positive action c. Will substitutes and the subsidiary law of wills
Joel Tague
Page 64

1. Should will substitutes be treated as testamentary for purposes of the subsidiary law of wills even if they are not so treated for purposes of the mandatory requirements of will execution? 2. Restatement although a will substitute need not be executed in compliance with the statutory formalities required for a will, such an arrangement is, to the extent appropriate, subject to substantive restrictions on testation and to rules of construction and other rules applicable to testamentary dispositions. i. Revocation upon divorce 1. Clymer v. Mayo a. Mayo executed a will designating her husband as beneficiary. She also did the same for her retirement plans and insurance policy. She later created a new will and new revocable trust and designated her estate was to pour over into the new trust. She moved everything around and had it prepared. She and her husband divorced and she renamed the beneficiary designation for the life insurance but nothing else. Even though the trust was unfunded, it was permitted to exist. Was James interest in the trust revoked by the divorce? If the trust was testamentary or incorporated by the reverence to her will, the interest in the trust would be revoked by the statute. It is the legislatures intent that a divorced spouse not take under a revocable trust executed with a will. The existence of the pour over will confirms this position 2. Will substitutes and conventional revocation upon divorce statutes a. Revocation upon divorce statute / former UPC 2-508 apply only to wills b. Some courts extend the application to will substitutes; others do no c. UPC 2-804 calls for the revocation, upon divorce or annulment, of any revocable disposition or appointment of property made by either divorced individual to his or her former spouse, in a deed, will , trust, beneficiary designation, power of attorney, transfer on death account, or donative instrument of any other type executed by the divorced individual before the divorce or annulment of his or her marriage to the former spouse d. UPC 2-804 also revokes benefits to former spouses relatives 3. Retroactive application Under UPC 8-101(b)(1) the provisions of the UPC apply to decedents dying after the effective Joel Tague Page 65

date of the Codes enactment by a state legislature, irrespective of when the decedents will or will substitute was executed. 4. ERISA-covered plans employment retirement income security act shall supersede any state laws as related to any employee benefit plan 5. Egelhoff v. Egelhoff a. Wash statute provides that the designation of a spouse as a beneficiary of a nonprobate asset is revoked automatically upon divorce. Does ERISA pre-empt the statute to the extend it applies to ERISA plans? Yes. Life insurance and pension plan created at employment with Boeing. The two divorced and he died a few months later. Insurance paid $46K to her. The law applies to all nonprobate assets wherever situated and expressly includes life insurance. ERISA indicates that it supersedes any and all state laws as related to employment benefit plans. Court has held such statue applies if the law has a connection with or reference to such a plan. But this is not such a situation. ERISA is a national plan with a uniform system not to be disturbed. While this may be an area traditionally left to the states, Congress has made a clear desire for preemption in the statute. 6. If an ERISA beneficiary designation can be set aside on the ground of forgery, mental incapacity, or undue influence, and if these grounds are to be imported into federal common law on the basis of generally accepted state law, why is revocation by divorce not a matter of federal common law 7. UPC 2-804 / Restatement revocable beneficiary designation of the former spouse in a will substitute is set aside by divorce 8. If spouse waives in divorce any right to plan, that waiver may be valid 9. UPC 2-804 Codified constructive trust in the event that federal courts decide ERSA preempts 2-804, subsection (h)(2) imposes an offsetting personal liability on the recipient of the proceeds in the amount of any payment received as a result of preemption. 10. Designated beneficiary means any individual designated as a beneficiary by the employee (IRS code) 11. Effect on slayer statute Most states have statutes providing that kills cannot succeed in their victims property, but what happens in ERISA context is that part of federal common law? ii. Antilapse statutes 1. 1st National Bank of Harbor v Anthony Joel Tague Page 66

a. A revocable trust does not lapse because a beneficiary predeceases the settlor. b. The settlor didnt revoke the trust indicating he didnt intend to disinherit the beneficiary 2. Estate of Button a. lapse in trust will pass to beneficiarys descendants (same as wills) (minority but growing view) b. Restatement agrees with above 3. UPC 2-603 antilapse provision only applies to wills however 2707 establishes a similar rule with respect to revocable and irrevocable trusts 4. Predeceasing beneficiaries of life insurance, retirement plan death benefits, and POD Accounts a. 2-706 applies language similar to that of 2-603 to beneficiary designations in favor of the decedents grandparents, descendants of the decedents grandparents, and the decedents step children b. Much stronger case here than revocable inter-vivos trusts b/c for these types of contractual arrangements do lose their interests by virtue of predeceasing decedent c. Some mutual funds are changing this so descendants of beneficiaries can take iii. Simultaneous or near simultaneous deaths 1. when the person whose life is insured and the beneficiary die under circumstances in which no sufficient evidence that they died otherwise than simultaneously, proceeds are distributed as if beneficiary predeceased the insured 2. Janus v. Tarasewicz a. Where an insured and a beneficiary die at similar times,
Survivorship of the beneficiary must be proven in order for the beneficiaries estate to make a claim
3. UPC 2-702 imposed a 120 hour requirement of survival upon the devisees of a decedent for purposes of a donative provision of a governing instrument (applies to wills and non-will situations) + clear and convincing proof 4. UPC 2-702 also extends the 120 hour requirement of survival to joint tenancies, tenancies by entirety, and multiple-party accounts. iv. Ademption by extinction
Joel Tague
Page 67

1. Wasserman v. Cohen devise of house was adeemed (same in trust situation as will) when decedent sold it 2. Restatement adopts the intent theory and rejects the identity theory and applies to a will substitute, such as revocable trust, that contains the equivalent of a specific devise v. Homicide as affecting succession to property the slayer rule 1. Some state statutes spouses and parents forfeit their intestate succession shares if they commit certain statutorily prohibited acts including: abandonment, nonsupport, or bigamy 2. UPC 2-803(b) an individual who feloniously or intentionally kills the decedent forfeits all benefits with regard to decedents estate, intestate share, elective share, etc. Killers share is regarded as disclaimed. 3. Neiman v Hurff 4. Severance of joint tenancies or tenancies by the entirety a. A few states adopt the rule that the killer should retain only a share in the property for life. b. Majority / UPC 2-803 (c)(2) adopt the rule that the killer should retain a share in fee. 5. Felonious and intentional killings a. States generally provide for forfeiture only if the killing is felonious and intentional. b. A person who acts in self-defense is not treated as felonious and intentional killer. c. A minority of states require the killing to constitute murder before denying the killer the right to succeed to the victims property. Other states require a person to be convicted of murder or intentional homicide. 6. Property owned by the victim a. Most, if not, all states deny the killer to receive property from the victims estate by will or by intestacy and provide that the estate or the failed interest should be distributed in accordance with the fiction that the killer predeceased the victim. b. UPC disclaimer provision 2-1106 killer is treated as having predeceased the decedent for purposes of allowing the killers interest to pass to his or her surviving descendants, if any, but not for purposes of changing the shares. 7. Will substitutes Joel Tague Page 68

a. UPC 2-803(c)(1) felonious and intentional killing of the decedent revokes any revocable disposition made by the decedent to the killer. This includes life-insurance beneficiary designations and interest in revocable trusts. 8. General principle a. UPC 2-803(f) provides that killer cannot profit from his or her wrong. 9. Property owned by the killer a. general rule that killer should not forfeit any property he or she owns
Joel Tague
Page 69
VIII.
PROTECTION OF THE FAMILY: LIMITATIONS ON THE FREEDOM OF DISPOSITION a. In American law, the decedents spouse is the only relative favored by a protection against intentional disinheritance. b. The decedents children, and maybe other descendants, are only protection against unintentional disinheritance. a. The spouses elective share i. Partnership Theory contemporary view that each spouse is entitled to of the marital property 1. Conventional elective-share (only in separate-property states) c. Surviving spouse is granted 1/3 share of the decedents estate regardless of decedents intent d. Rewards a spouse (and her children) who remarried because that spouse gets 1/3 of decedents estate even though it is unlikely that the spouse contributed that much to marital estate 2. The UPCs Elective Share e. UPC 2-202(a) Surviving spouse is entitled to 50% of the marital property portion of the augmented estate. Augmented estate is calculated as (2-203 to2-208): i. decedents net probate estate, PLUS ii. decedents nonprobate transfer to others, PLUS iii. decedents nonprobate transfers to the surviving spouse, PLUS iv. property owned by the surviving spouse and amounts that would have been included in the surviving spouses nonprobate transfers to others had the spouse been the decedent f. UPC 2-203(b) Surviving spouses entitlement of 50% is prorated based on length of marriage (after 15 years, surviving spouse receives full 50%) g. UPC 2-209 surviving spouses own assets are counted first (or a portion of them in the 15 years) in making up the spouses ultimate entitlement, so that the decedents assets are liable only if there is a deficiency. 3. Problems (pg. 357)
Joel Tague
Page 70

a. 1a = 200 of Ds estate; 1b = 0 of Ds estate b. 2a = ; 2b = 2c = ii. Protection against will substitutes (concern that elective share may be of little value if rights dont extend to will substitutes) 1. Common law-theories a. Case law i. Seifert v Southern Nation Bank of south Carolina 1. Husband remarried for 10 years, but put most of his estate in an inter vivos trust for his daughters. ISSUE: whether a spouse can effectively disinherit the other spouse by putting all of his estate in an inter vivos trust for his children. Lower ct said yes the trust isnt part of the estate. HOLDING: App ct reversed finding the husband had too much control over the trust. It was illusory. Therefore the amount in the trust should be included in the decedents estate to calculate the elective share ii. Courts adopt one of two approaches: the fraudulent-intent test or the illusory-transfer test. iii. Similarly, courts indicate that a revocable trust with a retained life estate might be illusory under the illusory-transfer doctrine. b. Computation / contribution i. For purposes of computing the amount of the elective share, the value of a will substitute that is subject to the elective share is added to the value of the decedents probate estate. ii. UPC 2-209 Beneficiaries of will substitutes are liable to contribution of a proportional part of their gifts in making up the spouses elective share c. Protection of spousal rights in pension benefits under ERISA i. With respect to marriages ending at death, REAct creates new spousal rights in the form of survivorship rights. ii. These rights only exist if the non-employee spouse survives the employee spouse. iii. Deference to state law in cases of divorce. Joel Tague Page 71

iv. Boggs v Boggs 1. Sup Ct held that ERISA preempts state property law 2. If a spouse directs his pension or death benefits to someone under ERISA, that direction cannot be challenged under state law
Joel Tague
Page 72

2. The UPC a. The decedents nonprobate transfers to others component of the UPCs augmented estate system i. The surviving spouses elective-share percentage is applied to the augmented estate. 1. Above serves two functions: a. further the UPCs marital-sharing
Joel Tague
Page 73

b. theory; and c. provides way to deal with fraud on the spouses share. ii. Augmented estate: 1. decedents net probate estate, PLUS 2. decedents nonprobate transfer to others, PLUS 3. decedents nonprobate transfers to the surviving spouse, PLUS 4. property owned by the surviving spouse and amounts that would have been included in the surviving spouses nonprobate transfers to others had the spouse been the decedent iii. UPC 2-205 deals with the decedents nonprobate transfers to others usually the same will substitutes included in a decedents gross estate for federal estate tax purposes iv. Former UPC loopholes which excluded life insurance purchased by decedent naming someone other than spouse as beneficiary b. Current UPC decedents nonprobate transfers to others now include property that is subject to a presently exercisable general power of appointment (including a power to revoke) held solely by the decedent c. It is immaterial whether the power was created by the decedent or another and whether the power was created during the marriage; the decedent need only have held the power immediately before his or her death or have exercise or released the power in favor of someone else other than the decedent, decedents estate, or the decedents spouse d. Matter of Scheiner treasury bills in dispute are not testamentary substitutes against which a spouse can elect i. Federal law for US securities trumps state law e. Federal preemption of state elective-share law i. Free v. Bland under Supremacy Clause of the Constitution the savings bond regulations must prevail over Texass community property law (son could not inherit mothers share) ii. Yiatchos v. Yiatchos unless wife had consented to the POD registration, she was entitled to her oneJoel Tague Page 74

half community property interest in bonds (comm property state) 3. The incapacitated surviving spouse should the elective share be available to a mentally incapacitated spouse? a. Clarkson v First National Bank i. Husband left his incompetent wife a trust. Terms were that she could distribute the trust to her heirs after her death (she couldnt though, because she was incompetent) otherwise husband devised remainder to his kids from previous marriage. ISSUE: did husband leave a fee title or a beneficial interest in a trust. Court held that the wording Best Interest of surviving spouse found in many statutes has been interpreted differently. Minority of courts hold best interest = most money. Majority focuses on interest of heirs and shat the surviving spouse would do if not incompetent. This court ignores interest of heirs but considers what survivor would do and looks at a broad definition of what is in best interest of survivor 1. Minority view the best interests of the incompetent will be served by electing the method which is most valuable to the surviving spouse (election should be made which is to the best interests, advantage, welfare, or like of the incompetent person) 2. Majority view all the surrounding facts and circumstances should be taken into consideration by the court in order to make the election to take under the will or against it (emphasizes other considerations than monetary) b. UPC 2-212 (b) an election made on behalf of a surviving spouse who is an incapacitated person under 5-102(4) requires that the portion of the elective share and supplemental elective-share amounts that are payable from the decedents probate estate and non-probate transfers to others under 2-209(c) and (d) goes into a custodial trust created under the Uniform Custodial trust act. i. The purpose is to assure that the portion of the elective-share amount that represents involuntary transfers from the decedent is used to benefit the surviving spouse personally rather than the spouses Joel Tague Page 75

heirs or devisees. Upon the surviving spouses death, the remaining custodial trust property passes to the predeceased spouses residuary devisees or heirs. c. Timing of the election The right of election may be exercised only by a surviving spouse (not heirs) 2-211(a). i. But it may be exercised on the surviving spouses behalf by his or her conservator, guardian, or agent under the authority of a power of attorney. d. Incapacitated Spouses elective share and Medicaid Eligibility i. In Estate of Cross, court held it was proper to elect statutory share in order to maintain medicare eligibility (statutory share was determined to be part of survivors potential resources) 4. Premarital and marital agreements UPC 2-213 a. Rights to elective share (and other marital benefits) may be waived by pre-marital or marital agreement i. Courts will closely scrutinize such agreement to ensure they are not over-reaching b. Simeone v. Simeone court find prenuptial agreement valid and was not void on the ground that she did not consult with an attorney i. Couple was getting married and husband made wife sign pre-nup the night before the wedding. She didnt have legal counsel. Divorce wife sues claiming pre-nup invalid b/c no full disclosure of the general financial provision. ii. Court held that a prenup is a K like any other. The court is only going to look at procedural. Ct. is not going to presume that women are in a lower position. c. Restatement pgs. 10-34 10-35 discussing premarital or marital agreements d. UPAAA e. ERISA was amended in 1984 to require each employee benefit plan subject to its provisions to provide the surviving spouse with the right to an annuity. The spouse may, however, elect to waive that right. 5. Tax implication of an election Joel Tague Page 76

a. Elective-share law is attractive in that it allows the surviving spouse to take absolute ownership of all of her entitlement. Absolute ownership means that the spouse has power to give the property to his or her children during life or at death. b. To the extent that an elective share confers an absoluteownership interest on the surviving spouse, it qualifies for federal estate tax marital deduction. c. UPC 2-209(a)(1) provides that the elective share is funded first with property interests passing to the surviving spouse that may or may not be absolute ownership interests. d. QTIPs qualified terminable interest property allow the decedent spouse to create a deductible trust in which the surviving spouse receives only a lifetime income interest in the property e. Spouse who has been provided for by a QTIP trust may want to elect the statutory share if she has children by a former marriage because she can take an absoluteownership interest as opposed to a life estate f. UPC incorporates as 3-9A-101 to 3-9A-115 of the Uniform Estate Tax Apportionment which apportions the estate tax among the apportionable estate defined in 39A-102 as including the value of the gross estate as finally determined for purposes of the estate tax, reduced by the value of any interest in property that, for purposes of the tax, qualifies for a marital or charitable deduction or otherwise is deductible or is exempt g. Split between jurisdictions as whether elective share is before tax or after tax UPC (above goes with pre-tax so estate is larger ) b. Probate exemptions and allowances (UPC 2-401 to 2-405) 1. In addition to elective share, spouses have the right of homestead, the exempt property allowance, and the family allowance. 2. UPC very similar to non-UPC state statutes except for homestead allowance which provides for a lump-sum amount rather than a right to occupy the spouses dwelling house as long as the surviving spouse or mind children wish to do so. i. Effect of the probate exemptions and allowances in small estates 1. Under the UPC, probate exemptions and allowance homestead, exempt property, and family allowance can be distributed to the surviving spouse without delay, other than as may be necessary for the Joel Tague Page 77

personal representative to locate, liquidate, and distribute the necessary estate funds or assets in kind. (if estate is small enough, will can be rendered invalid) ii. Probate Exemptions and Allowances and Nonprobate Transfers (see 6102(b)) iii. Probate Exemptions and Allowances are Neither Charged Against the Elective Share Nor Against Devises Unless Decedents Will So Directs 1. UPC states that exemptions and allowances are in addition to or are charged against devises to the persons entitled to the exemptions and allowances. The UPC does not charge the exemptions and allowances against devises unless the decedents will directs otherwise. They are not charged against the elective share. iv. Homestead 2. UPC 2-402 homestead allowance shifts the exemption from a right of occupancy of realty to a money substitute. 3. With the cooperation of the personal representative, a spouses right to money from an estate can readily be converted into a title to real estate as a distribution in kind to the spouse, as a sale of land to the spouse, or as some combination of the two. c. Protection against unintentional disinheritance (UPC 2-302) a. Omitted Children (Pretermitted Heir) Statues i. Omitted children (pretermitted heir) statutes 1. Children may be intentionally disinherited in every American jurisdiction except Louisiana. a. This American system is not prevalent in civil-law nations. 2. Unintentional disinheritance nearly all states have pretermitted heir statutes that grant children a measure of protection from being unintentionally disinherited. a. Current UPC 2-302 has two major changes: i. If testator had no child alive when he created will, an omitted after-born or after-adopted have no protection from being accidentally disinherited ii. If testator had living children when he made will, omitted after-born or after-adopted children takes only a pro-rata share of the property devised to the then living children (not a full intestate share) 3. Azcunce v Estate of Azcunze a. Facts: Dad executed a will before the birth of his daughter. Dad executed two codicils to the will, one before and one after the birth of last daughter - neither mentioned his daughter. Then dad died. Daughter then petitioned for a statutory share.
Joel Tague
Page 78

b. Issue. Whether a child, who was not in existence at the time of the creation of a will, may take under a pretermitted child statute if that child was living during the creation of a codicil that republished the will c. Held: No. When a testator executes a codicil that expressly republishes the original will, the testators child who was living at the time does not come within the meaning of the pretermitted child statute. The codicil republished the first will because it adopted the express terms of the original will. The face of the will is unambiguous and parol evidence is inadmissible. The draftsman may have erred in failing to inform a testator of the need to expressly provide for a child that was excluded in his first will. However this mistake does not void the will. Because daughter was born before the 2nd codicil was executed, the Court will not allow that child to share in his parents estate because the reasons that the testator contemplated the child, but chose not to include her in his estate
Joel Tague
Page 79

b. Omitted spouse statutes v. UPC 2-301 (a) If a testators surviving spouse married the testator after the testator executed his will, the surviving spouse is entitled to receive, as an intestate share, no less than the value of the share of the estate he would have received if the testator had died intestate as to that portion of the testators estate. . . vi. The purpose is not only to reduce the frequency of elections under the elective share, but also to provide a share for the surviving spouse more related to the amount the decedent would probably have wanted to give, had he or she gotten around to revising the premarital will.
Joel Tague
Page 80

IX. TRUSTS: FORMATION AND FORMALITY a. Introduction i. Historical 1. Current American law recognizes the three exemptions from the Statute of Uses, especially the exemptions for active trusts and for trusts of personal property. b. Parties to a trust i. Three basic legal parties: 1. settler, the party who creates the trust; 2. trustee, the party who holds legal title to the trust; and 3. beneficiary, the party who benefits from the trust ii. The settler can create a trust during his or her lifetime (an inter vivos trust) or by will (a testamentary trust). iii. The settler of an inter vivos trust can name himself as trustee (a selfdeclared trust) or name a third party as a trustee. iv. The settler can also reserve for himself a beneficial interest in the trust; 1. often happens with a revocable inter vivos trust; made as a probate-avoidance device, with the settlor as beneficiary of the trust income. v. Nature of the beneficiarys interest. 1. The trust propertys legal title trustee 2. The trust propertys equitable title beneficiary (often actually divided between income beneficiaries and future corpus beneficiaries. 3. Holding legal title but not beneficial title creates a fiduciary duties. 4. The Rule against Perpetuities applies to trusts. vi. Enforcement 1. The trustees fiduciary duties are to the beneficiary, therefore, only beneficiaries have standing to enforce the trust. c. The Use of Trusts i. Estate planning 1. Reasons why settlers create trusts include: probate avoidance, property management, tax reasons, and control through successive generations. 2. Revocable inter-vivos trusts carry no tax advantages, but do avoid probate. Joel Tague Page 81

3. A self-declared, revocable inter-vivos trust allows the settlor to retain lifetime management control of the trust. 4. A standby trust with an independent trustee, is a superior alternative to a guardianship or conservatorship. 5. Whether self-declared or not, a revocable inter vivos trust acts as a will substitute. The trust may receive additional property from the settlors estate as the result of a pour-over devise. 6. Irrevocable inter vivos trusts can be structured to offer significant tax advantages, by freezing the value of the assets at the day of conveyance and by providing for the receipt of supplemental fundings that qualify for the annual gift-tax exclusion. Pour-over devises from the settlors estate can also provide additional funding of irrevocable inter-vivos trusts. 7. In case of a married testator, testamentary trusts are typically structured to qualify for the estate-tax marital deduction; the continuation after the settlors death of a revocable inter vivos trust can also serve this purpose. 8. After the surviving spouses death, marital-deduction trusts can continue for a further time, for the benefit of successive generations of descendants or down collateral lines. 9. By-pass trusts can also continue for successive generations. 10. The Rule Against Perpetuities in effect places an outer limit on the duration of such trusts. 11. Successive generation trusts can provide considerable transfer-tax savings, to the extent they come within the protection of the GST exemption from the federal generation-skipping tax. 12. Blind Trusts settlor retains no control so no conflict of interest (often used by politicians) d. Types of trusts i. Express trusts Intentionally created for the ongoing management of the trust property, whether for private or charitable beneficiaries or for a combination of the two. ii. Constructive trusts Not a trust at all, but a remedy. iii. Resulting trusts 1. When an express trusts fails or does not completely dispose of the trust property. 2. Like the constructive trust, it is not a trust at all rather a property interest analogous to the reversion retained by a grantor who conveys one or more legal interests in property for life or for years without creating a remainder thereafter Joel Tague Page 82

X. Substantive Requirements: The Three Certainties (certainty of subject, certainty of object, certainty of intent) i. Certainty of Subject a. UTC 401 - Trust law requires there be an identifiable trust property (res) 2. Brainard v. Commissioner a. ISSUE: Whether Brainard statement in 27 created a trust for profits realized in 28. FACTS: Brainard orally stated that he declared a trust of his expected stock trading profits for the benefit of his wife, mother, and two minor children. In 28 Brainard sold stocks for a profit, then transferred money to 4 beneficiaries. Tax commissioner said Brainard is responsible for taxes on all profits. Brainard said, not for the profits that were in the trust HOLDING: no trust was created until the funds were transferred to beneficiaries. The oral promise could not be enforced until the transfer was made, thereby expressing Brainards intent to establish a trust. b. Rules: i. expectancy cannot be subject of a trust ii. Can create a contract to bind oneself to a trust, but need all elements of a contract (e.g. consideration) 3. Notes a. Debt can be a trust property b. Courts are split as to whether an un-cashed check can be a trust property 4. When is an inter vivos Trust created? a. UTC 401 allows for inter vivos trust to be created by the owner of a property declaring he holds it in trust for a beneficiary ii. Certainty of Object 1. UTC 402 a trust must have a definite beneficiary (except for charities, animals). A definite beneficiary can be ascertained now or in the future. 2. Morsman v Commissioner i. Morsman (a bachelor) declared himself trustee of some securities. His descendants were named as ultimate beneficiaries. When he sold the securities for a profit, he didnt pay taxes on the full profits. IRS didnt like that. ISSUE: is a trust valid if the Joel Tague Page 83

settlor is trustee and beneficiary. HOLDING: No, for 4 reasons: 1. Cant create a trust where same person holds legal and equitable trust at the same time 2. Although an unborn child can be a beneficiary, there is no guarantee Morsman will ever have a beneficiary 3. He cannot say the beneficiary is his heir, because you have no heirs until after you die 4. Cant name a widow as a beneficiary if you arent married. b. Notes i. Folk v Hughes guy created trust for the children of his son (who didnt have child yet). When guy died, he did have a grandson. Court said trust was created. 3. Merger: beneficiary as Trustee a. A trustee may not be the sole beneficiary b. May be a beneficiary 4. Problem of Indefinite Beneficiary a. Clark v Campbell i. whether a bequest for the benefit of the testators friends is sufficient to for the trust? No. Common law required a definite person(s). A beneficiary or class of beneficiaries must be indicated. Without a beneficiary (cestui que) there are not duties to be enforced. No doubt this creates a trust, but without beneficiaries, the trustees hold for the taker under the will or next of kin. Relations is sufficient, but friends is not for a class. This trust will be disposed of as part of the residuary of the will. ii. Decedent left her personal property to her trustees to make disposal by way of memento to such of my friends as the shall select. Decedent further stted tht her trustees were familiar with her friends and her wishes. Heirs argue the trust is void for lack of definite standards or ascertainable standards to identify them. iii. Issue: Was the trust void
Joel Tague
Page 84

iv. Holding: Yes. To be valid a trust must have an identifiable beneficiary or sufficient means to identify beneficiaries. Friends is too indefinite. Because the beneficiaries are not definite, the trust fails. v. Rule: where a fiduciary is under a duty to select the beneficiaries of a trust from amongst a class, the entire membership of the class must be definite and ascertainable 5. Trusts for Pets a. Estate of Searight i. Facts: man left trust to care for dog. If dog died before the money ran out, then the money was to be given to a list of beneficiaries. Issue: Is the bequest for the care of Trixie valid in Ohio as a proper subject of an honorary trust and not in violation of the rule against perpetuities? Holding: Yes. This is not for the care of dogs, but a specific dog. This is an honorary trust. This beneficiary does not have legal standing and not capable of demanding an accounting, but Ohio law allows this sort of honorary trust. This is like for the care of tombstones or a grave. This is a worthy cause. This is not technically a trust, but permitted. As long as the trust is limited in length, it is not for perpetuities. While a trust for as long as it shall live might fail, this one was for a set amount each day and it would run out. iii. Certainty of Intent a. i. Farmers Loan & Trust v Winthrop 1. Facts Bostwick established a trust with Farmersfor her child and grandchild. Bostwicks husband died, so she transferred her part of his estate to Farmers. Bostwick gave trust company power of attorney for her allowing them to receive property from her husbands executor. Bostwick died after only a portion of husbands estate had been transferred. Farmers said thats it, transfer is complete. Heirs said no way
Joel Tague
Page 85
X.
TRUST ADMINISTRATION. a. Introduction UTC 105, 201 i. There are Mandatory rules and Default Rules in trust law 1. Only Default rules can be modified in the trust instrument 2. Mandatory rules: a. Duty to act in good faith & in accordance with interests of beneficiary (UTC 105) b. Requirement that a trust and its terms be for the benefit of the beneficiaries (UTC 105(b)(2)) b. Fiduciary Duties of Trustees (4 duties) i. The Duty to Inform and to Account 1. Trustees are to keep beneficiaries reasonably informed about the administration of the trust. 2. UTC provides that most aspects of duty to inform are waivable 3. Jacob v Davis a. Trustee has duty to keep clear and accurate accounts b. This duty may not be waived in the trust document 4. Duty to Account a. Trustees must file an accounting with the court prior to their discharge as trustee (when trust is terminated) i. Usually a detailed description of his actions during time he was trustee ii. After final accounting, fiduciary makes final distribution and is then himself discharged by court b. Nat Academy of Sciences v. Cambridge i. Guy creates trust for his wife until she dies or remarries, at which point trust goes to Cambridge. ii. Wife remarries, but bank continues to send her checks for 22yrs. iii. When wife dies, bank realizes its mistake an collects erroneous payments and then probate the amount. iv. Cambridge finds out she was remarried and sues to have the amount probated put back into trust account v. Issue: If a trustee innocently makes a false factual statement in the accounts, but has not made reasonable efforts to determine the true facts, he is liable for the jmisrepre s entation vi. Held: the court noted that the bank made the disputed payments for 22 years and during that time made no effort to ascertain if the decedent's widow had remarried. Therefore, the court held that marital status of the decedent's wife fully justified the Page 86
Joel Tague

reopening of the accounts. With respect to the surcharge, the court held that the bank was liable to the beneficiary to make restitution. The court also saw no reason to disturb the probate court's award of attorney fees. ii. Duty of Loyalty UTC 703, 802, 808, 810, 1002, 1008, 1009 1. Sometimes said to be most fundamental fiduciary duty 2. Matter of Green Charitable Trust a. iii. Duty of Prudence UTC 804, 807, 809 1. Introduction a. Imposes an objective standard of care. b. Most often used/utilized in trust investment. c. UTC 804 > T shall administer trust as a prudent person/investor would, considering purposes, terms, distributional reqs., and other circumstances of the trust. In so doing, T shall exercise reasonable care, skill, and causation. 2. The Prudent Man Rule and History of Trust-Investment Law a. The Rules > i. T MUST make such investments, and only such investments, as a prudent man would make of his own property having in view of the preservation of the estate and the amount and regularity of the income to be derived. ii. Problems w/the Prudent Man Rule > Ignores the fact that in reality risk correlates w/return. In the late 1990s this rule was eventually replaced. 3. The Prudent Investor Rule and Modern Trust-Investment Law a. The Prudent Investment Rule i. Uniform Prudent Investor Act 2 Standard of Care 1. A T shall invest and manage trust assets as a prudent investor would by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable skill, care, and caution. ii. Uniform Prudent Investor Act 3 Diversification 1. A Tee shall diversify the investment of the trust unless the trustee reasonably determines that because of special circumstances, the purposes of the trust are better served without diversification. b. Risk, Return, and Diversification in Practice i. In re Estate of Janes > Janes created a testamentary trust consisting mostly of Kodak Joel Tague Page 87

stock. He named W and several charitable organizations as the Bs under the trust. The Ts, the P, Ellison Patterson and Richard Young, failed to divest the estate of the stock that had dropped in value. Rules: 1. A T must diversify assets unless the T reasonably determines that it is in the interests of the Bs not to do so, taking into account the purposes and terms and provision of the governing instrument. 2. In imposing liability upon a fiduciary on the basis of the capital lost, the court should determine the value of the stock on the date it should have been sold, and subtract from that figure the proceeds from the sale of the stock, or, if the stock is still retained by the estate, the value of the stock at the time of the accounting. The Ct. has discretion on whether interest should be awarded. Dividends and other income attributable to the retained assets should offset and interest awarded. c. Calculating Damages for Imprudent Investment > Core principle is to put the B in at least the position they would have been in had the breach not occurred.
Joel Tague
Page 88

iv. Duty of Impartiality UTC 803, UPIA 1. Trusts often have multiple beneficiaries with differing interests a. Trustee has a duty to act impartially given the differing interests 2. Dennis v Rhode Island Hospital Trust a. Brief Fact Summary. The plaintiffs, the greatgrandchildren of Alice Sullivan, are the beneficiaries of a trust created under a will. The plaintiffs allege that the trustee breached various fiduciary obligations under the trust. b. Synopsis of Rule of Law. A trustee is under a duty to the
beneficiary who is ultimately entitled to the principal not to retain property which is likely to depreciate in value, although the property yields a large income, unless he makes adequate provision for amortizing the depreciation. A trustee can be removed even if the charges of his misconduct are not made out, if there is an ill feeling that it might interfere with the administration of the trust
c. Facts. The plaintiffs are beneficiaries of a trust created under a will. The trust property consisted of buildings in a downtown location. There were two beneficiaries- one got the income, the other got the principal after a number of years. during the trustees term, the property value fell sharply. Plaintiffs contend that trustee was at fault for failing to protect their interest by selling the property before it decreased in value, or maintaining the property so its value would remain high . The trustees did not appraise the trust property nor keep proper records. It made no formal or informal accounting in 55 years. There was no evidence in the record that the trusts officers focused on the problem or consulted real estate experts about it or made any further rehabilitation efforts. The trustee did little more than routinely agree to the request of the trusts income beneficiaries that it mange the trust corpus to produce the larges possible income. The plaintiffs expert witness stated that the suburban flight that led to mid 1950s downtown decline began before 1950; its causes (increased household income; more cars; more mobility) were apparent before 1950. d. Issue. Whether the trustee acted unfairly in retaining buildings in 1950 instead of selling them? Whether the surcharge was proper. Whether the court abused its powers in removing the trustee e. Held. f. Yes. The Bank Trustee acted unfairly because he made a preference for benefiting the current beneficiaries over the Joel Tague Page 89

remainder men. The trustee made no did not attempt to modernize or renovate the buildings that were deteriorating. Instead he charged high rents and the building deteriorated over time to the disadvantage of the remainder men. The court correctly chose the date of 1950 as the date that the trustee should have sold the property because it marks a reasonable outer bound of time the trustee could allege that it was ignorant of the serious fairness problem. The trustee should have been aware of the changes of the community that would cause the property to depreciate. g. Yes: h. No. The district court did not abuse its powers in removing the trustee. It properly concluded that the course of the litigation in the case demonstrated in an ill feeling that would interfere with the administration of the trust. i. Discussion: In administering a trust, the trustee must consider the best interests of the beneficiaries and the remainder men, equally. 3. Accounting for principal and interest 4. Estate of Bixby a. FACTS: trust established giving mrs. Bixby income for life from 19000 shares of stock with the residue going to other beneficiaries. Dividends of $76000 were received by Mrs Bixby. Decendent directed all taxes to be paid out of residuary. Executor split the tax burden between the $76000 income of Mrs. Bixby and the $84000 residuary. Mrs. Bixby said all the tax should be born by the residuary as it was related to the administration expenses. The residuary beneficiaries said the tax should be totally paid for by the income of Mrs Bixby. b. ISSUE: If the trust corpus suffers in tax payment strategies must the trustee reallocate enough of the tax savings to the principal account to make whole the detriment suffered by the trust corpus? c. RULE OF LAW: If the trust corpus suffers in tax payment strategies the trustee must reallocate enough of the tax savings to the principal account to make whole the detriment suffered by the trust corpus d. HOLDING AND DECISION: Ct made an order for preliminary distribution in a decedent's estate proceeding, and appeals were taken. The District Court of Appeal, Fox, J., held that where an executor in making fiduciary tax returns elects to deduct administration expenses for federal income tax purposes rather than for federal estate tax purposes, and residuary beneficiaries would otherwise be thereby deprived of benefit of the deduction, the equitable Joel Tague Page 90

solution is to reallocate enough of the tax saving to the principal account to offset the detriment to the corpus. e. Order reversed and trial court directed to enter new order for preliminary distribution in accordance with views expressed in opinion. f. g. DISPOSITION: The court reversed the trial court's order for preliminary distribution of decedent's estate and directed the trial court to enter a new order in accordance with the court's opinion. 5. Modern portfolio theory a. Trustees should invest in ways that maximize overall return b. However, duty of impartiality seems to require trustee to consider which beneficiary would benefit 6. Unproductive Assets a. If an asset is sold, the proceeds must still be allocated between income and principal 7. Allocation rules of non-profits a. NFPs have traditionally been able to consider the total return approach considering income and appreciation of principal together in the account 8. Total Return Unitrusts a. States are beginning to pass laws allowing the total return approach to be used c. Powers, Selection, Resignation, Removal, and Compensation of Trustees 1. UTC 705, 706, 708, 815, 816 2. Trustee Powers a. Typically listed in the trust 3. Selecting trustees a. In addition to being someone the settlor knows and trusts, a trustee should be someone who knows about investing b. Choosing a family member as trustee has risks 1) dont have financial know-how, 2) may also be a beneficiary potential conflict of interest, 3) once made aware of their fiduciary duty may not want to bear the risk of being trustee 4. Removal/Resignation of Trustees a. Resignation of a Trustee see UTC 705 b. To remove a trustee need one of 4 circumstances 706 i. Trustee committed serious breach of trust ii. Lack of cooperation among trustees substantially impairs trust administration iii. Removal would serve the best interest of the beneficiaries because the trustee is cant or wont administer effectively
Joel Tague
Page 91

iv. Because of substantial change in circumstance or upon the request of all beneficiaries, court finds that removal best serves the interest of all beneficiaries and isnt inconsistent with the purpose of the trust. 5. Fiduciary compensation practices a. Fees usually established by terms of the trust b. Otherwise, established by reasonable standard d. Liability to Third Parties UTC 1010 1. Creditors claims a. 2. Fiduciary Liability under CERCLA XI. SUPPORT, DISCRETIONARY, AND SPENDTHRIFT TRUSTS a. Restraining alienability of beneficial interest / Shielding Beneficial Interests from Creditors 1. Support Trusts a. Trust containing provision directing the trustee to pay beneficiary so much of the income and principal (or both) as is necessary for the beneficiaries education and support 2. Discretionary Trust a. Trust containing provision giving trustee discretion to pay beneficiary only so much as the trustee sees fit 3. Spendthrift Trust a. Trust containing provision prohibiting the alienation of beneficiaries equitable interests (cant assign interest to another such as a creditor) ii. Restraining Alienability of beneficial interests / shielding beneficial interests from creditors 1. Support Discretionary, and Discretionary-Support Trusts UTC 503, 504, 814 a. Traditional Trust law classification drew line between Support Trusts and Discretionary Trusts i. Support Trusts: by the terms of the trust the amount to be paid to the beneficiary is limited to that (principal or income) which is necessary for his education or support 1. Support trusts were alienable (creditors could get to them) ii. Discretionary Trust: the trustee may in his discretion to make, or refuse to make, any payment to the beneficiary 1. Discretionary trusts were held to be inalienable b. New approach a single standard in which all trust are a form of discretionary trusts i. Restatement creates a Range of Trustees Discretion Joel Tague Page 92

ii. Incentive and Principle Trusts c. Alienability (creditors rights) i. Traditional approach depended on classification ii. UTC approach creditor may not compel a distribution that is subject to trustees discretion even if: 1. Discretion is expressed as a standard distribution 2. Trustee has abused discretion d. R 3d approach
e. Trustee Liability
Joel Tague
Page 93

2. Spendthrift Trusts UTC 501-503 a. Rules i. A B to a spendthrift trust cannot voluntarily alienate her interest. ii. Creditors CANNOT reach interest in trust, EVEN IF trust provides mandatory payments to the B. iii. How is it Created? 1. By imposing a disabling restraint upon Bs and their creditors. 2. E.g. T devises property to X in trust to pay the income to A for life and on As death to distribute the property to As descendants. By this trust, A is given a stream of income that A cannot transfer and her creditors cannot reach. 3. Typically, a boiler plate in all trusts. iv. Arguments Against 1. Unfair to permit one to enjoy benefits w/o permitting creditors to reach that property. v. Arguments For 1. The property in trust is not really the Bs property. 2. The B has no legal interest in the property, only an equitable interest. 3. A creditor can still reach the Bs interest once property is distributed to the B. vi. UTC 502. Spendthrift Provision. 1. (a) Spendthrifts are valid ONLY IF they restrain both voluntary and involuntary transfer. 2. (b) Words that Bs interest is held subject to a spendthrift trust or similar words, are sufficient to show both voluntary and involuntary restraint. 3. If truly a spendthrift trust, B may not transfer its interest and a creditor may not reach the interest before it is received by the B. Joel Tague Page 94

vii. UTC 503. Exceptions to Spendthrift Provision. 1. (b) Spendthrift trust provision is unenforceable against: a. (1) Ct. ordered child, spouse, or former spouse support or alimony. b. (2) Judgment creditor who has provided services to protect Bs interest in trust. c. (3) Claim of the State or U.S., to the extent a state or Federal statute allows. 2. A claimant who a spendthrift trust cannot be enforced, may obtain Ct. order to attach present or future distribution; Ct. may limit award to a reasonable award. b. Broadway national back v Adams i. Man left his brother a trust explicitly stating that he was to receive income payments from the trustee twice per year. Also stated that the payments were not to be attached by creditors. ii. Creditors challenged the will/trust. iii. Issue can an equitable life estate be attached by creditors. iv. Holding: No. Although generally, one cannot place restrictions on alienation when they transfer property that only applies if they transfer legal title. Here it is clear that the brother was not transferring legal property. Therefore creditors couldnt attach something that was not legally his. Although creditors were defrauded, creditors have responsibility for due diligence to find out about the borrowers assets. v. Intent of the settlor are respected unless unlawful c. Estate of Vaught i. Dad left will creating trust, income to his wife for life with principal to his sons. Contained provision prohibiting alienation of sons interest in principal. However, one son sold all his interest principal (about $1 million), for $177K (presumably because he was a drunk/addict) Joel Tague Page 95

ii. Issue: whether a settlor can make a principal remainder inalienable until a time the B is more able to manage the principal wisely.. iii. Yes. The intention of the settlor should be honored. This applies to his intention to make both income and principal inalienable. 3. Exception Creditors a. Hurley v Hurley i. Man was a beneficiary of income from a spendthrift trust (principal went to his 2 daughters after his death). He was behind in child support. Ex-wife tried to attach the trust. He argued it is inalienable. Ct said it could be attached for lots of reasons b. Sligh v First National Bank, Trustee i. Beneficiary of trust was found liable of an intential tort. Plaintiff won large damage settlement. Only asset of the tortfeasor was income beneficial lifetime interest in 2 spendthrift trusts. P filed suit to garnish income. Lower court said no its a spendthrift trust. ii. Issue: whether it can be attached for tort creditors iii. Holding yes. iv. Court says current rational for inalienability is based on 3 things 1. Donors right to dispose as they wish 2. Protecting spendthrift individuals from pauperism 3. Responsibility of creditors to make sure before they load v. None of these really apply to the tort creditor. vi. Therefore tort creditors can attach spendthrift trusts 4. Asset Protection Trusts a. Background i. cant create spendthrift or discretionary trust for yourself b. Offshore Asset Protection Trusts i. First appeared in islands (Bahamas, cayman, Bermuda,ect) Joel Tague Page 96

ii. Many features that immunized them from creditors 1. If in another country, us ct may lack jurisdiction c. Trust protectors i. Someone you assign to watch over the trustee 1. Gives you more control without being in control which would render the trust invalid d. Domestic Asset Protection Trusts i. Some states are passing laws allowing these protected trusts to be established in their state 1. Motivated by the money it brings in e. What asset protections are therereally i. Actually, State and Federal law allows wide latitude for asset protection planning 1. Fraudulent transfers require intent. a. Cannot intend to fraud creditor that doesnt yet exist
Joel Tague
Page 97

b. Termination (or Modification) by the Beneficiaries 1. Overview UTC 301-305, 410-411, 414 a. 2. Claflin v Claflin a. Man left his son part of a trust which was to be paid out 1/3 when he was 21, 1/3 when he was 25, remainder when he was 30. b. Son files suit after he was 21 (age of majority) to get all of it. c. Issue: whether provisions postponing distribution beyond age of 21 is void d. Holding: NO. No court has held that a trust is void after the sole beneficiary reaches 21. Court has held that that Trusts can be distributed when: i. Dry trust ii. Purpose of trust has been accomplished iii. All beneficiaries consent e. Clearly neither of these has taken place. The testators intent hasnt been accomplished. He didnt want son to have the money until he was older. f. RULE: Testator can distribute his property as he wishes, with limitations; should be followed unless against law or public policy. 3. Material purpose a. Traditional law i. Trusts that contain a Material Purpose are indestructible. Such trusts include (3): 1. Postponement of enjoyment trusts a. (like Claflin) Settlor wants beneficiary to have interest, but not until a certain age or date 2. Spendthrift trusts 3. Support and discretionary trusts a. Trusts for the support of x b. Relaxation of the Material Purpose requirement Joel Tague Page 98

i. R3d weights material purpose vs. reasons for termination ii. R3d also states that spendthrift restrictions are not alone sufficient to establish a material purpose 4. Beneficiaries Consent Termination requires consent of all Bs. a. Problems i. ii. iii. iv. v. b. UPC 2-707 effect makes it more difficult to terminate a trust c. Settlor, who is sole beneficiary could terminate trust, even though it was created as an irrevocable trust d. Some states allow court, guardian or conservator to consent for a minor e. Some states allow guardian ad litem to consent for an unborn child f. Relaxation of Unanimity Requirement i. R3d authorizes partial termination (e.g. invasion of principal for life income beneficiary) without unanimous consent of all beneficiaries c. Modification (or Termination) because of Unanticipated Circumstances 1. Overview UTC 412: Court may modify terms of trust if: a. Because of circumstances not anticipated by the settlor, modification will further the purpose of the trust. 2. Distributive Deviations a. Court may allow accelerated or increased distributions when beneficiary is in need i. Usually only allowed when there is only one beneficiary; if multiple beneficiaries, not likely b. Petition of Wolcott i. Man created trust with wife receiving a lifetime income benefit from interest with sons and heirs to receive principal after her death. Trustee was given Joel Tague Page 99

broad powers to use his discretion. Wife needed more than the income was producing. ii. Issue: whether principal of trust can be invaded to give wife with only income interest more money iii. Yes, the court looked to the intentions of the testator which were to take care of his wife. The testator did not anticipate the changes (wifes bad health, economy, inflation). Failure to give his wife money would prevent accomplishment of his primary purpose (which was to provide reasonable support for his wife) thats why he gave trustee broad powers c. A few states have statutes that allow deviation in distribution if need can be shown d. 3 supreme court cases, all rejecting modification, show the court is wary of distributive deviation 3. Administrative Deviation i. Usually involves power of trustee to sell or invest assets. ii. Usually involve a change in circumstances not anticipated by settlor, and would defeat or impair accomplishment of purpose of trust b. Matter of Pulitzer i. Pulitzer left a lifetime income trust primarily to 2 of his sons. All 3 sons were trustees. Trust was made up of two stocks Press and Pulitzer. The trust said they could sell Press Stock in the interest of the beneficiaries, but explicitly were prohibited from selling the Pulitzer Stock. All beneficiaries joined in an action to get trustees to sell Pulitzer Stock
ii. Issue: whether the trustees could sell stock when it is in the best interest of the beneficiaries, even though trust states they cant iii. Holding: YES. The intent of the trust was to provide his children and grand children (remaindermen) with income, Permanence of the trust was his intent iv. Rule: In emergencies, to protect the beneficiaries from a serious loss or total destruction of the corpus, the court can read into the trust an implied power of sale. Joel Tague Page 100

4. Trust Decanting (distributing property from one trust to another) a. 9 states (not OK, ID, TX though)allow trustee to pour property from an irrevocable trust into another trust. Rules for doing this vary by state.
Joel Tague
Page 101

XII. CHARITABLE TRUSTS a. General 1. Validity Charitable trusts are now universally held to be valid 2. Enforceability unlike other trusts, charitable trust needs no definite beneficiary a. May be enforced by an attorney, co-trustee or person with special interest in the trust (not general interest) i. Settlor may also enforce under uniform trust code 3. Charitable organization can be formed as a charitable trust (e.g. American cancer society) 4. Tax Exempt income of charitable trusts is usually exempt from federal taxes ii. Charitable Purpose UTC 405 1. Background: a. charitable trusts have been challenged on the basis that their purpose is not charitable 2. Tax Deductibility a. IRS allows limited deduction from income tax for charitable gifts b. Allows unlimited deduction from estate tax 3. Foreign beneficiaries are OK b. General gifts to Charity i. Charitable trust is created whenever testator devises his property to charity or to the poor ii. Wilson v Flowers 1. Guy leaves instructions in will that 20% of residuary is to be used for philanthropic causes 2. Lower court found clause valid stating money could only be given to charity, without violating rule against perpetuities, and charities are those defined as having such status for income and estate taxes. 3. Heirs argue will is invalid and must be distributed through intestacy as philanthropy is too broad. Argues that either void for uncertainty or a violation of rule against perpetuities. 4. Court says Benevolent, philanthropic and charitable all mean the same nowadays. Also look to testators intent saying he Joel Tague Page 102

intended to distribute through testacy and his desire for a perpetual non-charitable trust would be invalid, so he must have meant it to be charitable trust. iii. Split interest trusts 1. Have both private and charitable purposes 2. Ok to have two purposes within a single trust so long as the private portion had definite beneficiaries and the remainder does not violate rule against perpetuities. iv. Accumulation of income beyond perpetutites is allowed if reasonable (unlike private trust income accumulation) 1. Reasonableness is based on need or plan for the accumulation c. Specified Purposes i. Shenandoah Valley Natl Bank v Taylor 1. 2. Henry created a trust that gave money to a kids in grades 1,2,3 at John Kerr school in Winchester Issue, whether a valid charitable trust had been created
3. No. Henrys trust wasnt for poor or needy, nor did it otherwise benefit or advance social interest of the community to justify its continuance in perpetuity as a charitable trust 4. Rule: Charitable purposes include 10 relief of poverty, 2) advancement of education, 3)advancement of religion, 4) promotion of health, 5) government purposes, 6) other stuff beneficial to community ii. Notes 1. Duration of trusts for noncharitable purposes 2. Scholarships and awards a. Can be a valid charitable trust even though only a few people benefit (or one) b. Trusts for your own relatives are NOT charitable trust 1.Can be charitable if for needy students with a preference for your relatives 3. Other purposes a. Trust to promote success of particular political party is not charitable b. Trust is not charitable if it is for promotion of believes whose dissemination do not benefit society d. The Cy Pres Doctrine Joel Tague Page 103

i. General Principles UTC 413 1. Doctrine for charitable trusts: When the objectives of the settlor are not possible, the court modifies terms to get as close as possible to settlors original intent 2. Estate of Buck a. Buck left residue of his estate in a charitable trust to charities caring for needy in Marin county. Trust got huge. Trustee sought modification of terms to benefit 4 other counties in bay area under the Cy Pres doctrine b. Issue: whether the Cy Pres doctrine allows for modification of settlors instructions in order to more fully achieve his intent c. NO. d. Rule: Cy Pres doctrine may only be invoked where a trust has become 1) Illegal, 2) Impossible, or 3) permanently impracticable of performance 1.Inefficiency or ineffectiveness is NOT permanently impracticable 2.May not invoke to try to achieve a more desirable outcome 3.Trustee convenience is not a justification for changing instructions. 3. Notes a. Waste may be a basis for invoking Cy Pres b. Cy Pres can be invoked if the income exceeds the purpose for which it was established e. Discriminatory Trusts i. Home for Incurables v University of Maryland medical (ABSENT) ii. Estate of Wilson 1. Two different trusts were created, both of which were to benefit male students. Trust was challenged as unconstitutional based on sex discrimination. Complaints were filed by DOE as violations of 9th Amendment. During investigation, Wilson trustee said it wouldnt provide names, letting boys apply directly. Johnson trustee said it would administer aspersons, not males. 2. Lower court found Wilson case impossible and exercised Cy Pres in striking down the discriminatory clause. App ct invoked cy Pres saying it was impossible to administer. Joel Tague Page 104

3. The lower court took the opposite approach in Johnson and ordered a new trustee so the terms of trust could be followed. App ct reversed invoking Cy Pres. saying it violated 14th 4. Issue whether trust specifying males is a violation of the 14th amendment (and is therefore illegal and invalid) or violated the 9th amendment by requiring the school to assist with the execution of the terms of trust (identifying male beneficiaries) 5. Holding: No 6. Trust is valid charitiable trust. Cy Pres can be invoked if not possible to administer or against public policy or illegal. This is possible to administer. Put in new trustee if trustee wont administer. Also have boys apply directly for trust. 7. Trust is not violation of pub policy. Lots of charitable trust set up for women only. That is OK with public policy. So, sex discrimination in trusts cant be per se illegal. 8. Not violation of 14th no state action when it is a private trust. State isnt generally involved just because it lets the discrimination occur. For state state to be implicated it must encourage, promote or compel the discrimination. 9. Wilson affirmed (boys applied directly) 10. Johnson reversed app. affirmed lower (school to replace trustee with one who could follow the terms) f. Supervision of Charitable trusts i. Charitable trusts may be in need of control especially with Charitable trusts that generate large income. Becomes a perpetuity with no real oversight of trustees. Only Atty General of state oversees, but that is really just a formality. Others argue controls could be put in place if settlor wanted them 1. Bishop Estate Trust Hawaii princess left 6 billion to a single school. Lots of abuse by the 6 trustees. ii. Must have standing in order to enforce trust 1. State atty general 2. Persons with special interest (not general beneficiaries) 3. Recently, cts are finding that settlor has standing too (obviously if he is still alive) this is a departure from traditional law that says even settlor doesnt have standing to enforce. 4. Smithers v St Lukes Roosevelt Hospital Center a. Smithers, a recovered alcoholic and his wife create a charitable trust giving money to a hospital to establish a an alcoholic rehab center, giving a gift of $10M. Page 105
Joel Tague

hospital bought a building for the center. After was paid, Smithers became unsatisfied with the program and stopped payments. Stuff improved so smithers sent letter informing the center that he would pay the rest so long as specific terms were followed. Hospital acknowleged the terms and signed. b. A year after Smithers died, hospital announced it was selling the building an moving center to hospital. Wife got suspicious and got hospital records finding funds had been misappropriated. She got the AG involved. He got the $5M principal returned, and ultimately said he would stop investigation if hospital agreed to do what should. Hospital agreed. Wife still unsatisfied and filed suit to enforce more of the terms of the trust c. Issue appears: Does a settlor have standing to enforce terms of a trust her or she created? d. Held. Yes. The plaintiff is the donor of the gift and donors are in a better position than the AG to be vigilant and enforce. The plaintiff discovered the misappropriations. The plaintiff is not a beneficiary, so no risk of vexatious litigation by irresponsible parties who do not have a tangible stake in the matter. Also, the plaintiff has a right to sue because she is the administratrix of the estate of her husband and both he and the plaintiff made an agreement with the defendant that the latter use the gift in a specific manner. e. Dissent. The plaintiff does not have standing. The general rule is that when a charitable gift is made, without any provision for a reversion of the gift to the donor or his heirs, the interest of the donor and his heirs is permanently excluded. The right to seek enforcement of the terms of the gift is restricted to the Attorney General, absent a right to reverter. Standing is restricted to the Attorney General to prevent vexatious litigation by parties who do not have a tangible stake in the outcome of the litigation. The rule is designed to prevent a case-by-case inquiry. Therefore this concern applies to the current case even though the majority believes that the donors motives are altruistic. Furthermore, the plaintiff does not have standing as the administratrix because Mr. Smithers right to exercise control over the gift abated upon his death. Finally, the plaintiff does not have standing because the donor did not expressly reserve a right of reversion. 5. Hershey Trust: AG filed complaint that Hershey Trusts intention of selling Hershey food would have irreparable harm Joel Tague Page 106

to community. Court enjoined trust from selling Hershey. Further, the PA legislature changed trustee fiduciary to include consideration of impact to community in which the beneficiary resides. WOW
Joel Tague
Page 107

XIV. POWERS OF APPOINTMENT a. Introduction i. Definition: authority, acting in a non-fiduciary capacity , to designate recipients of beneficial ownership interest in, or powers of appointment over , the appointive property (ability to give something away) 1. Often apply to a remainder interest ii. Parties 1. Donor a. Person who created (or reserved) power of appointment 2. Donee a. Person given power of appointment i. Donee under no obligation to exercise+ ii. Donee cannot give it to another iii. Power dies with donee if not exercised 3. Permissible appointees a. People in whose favor the power can be exercised 4. Appointee a. Person who whom appointment is made 5. Taker of default of appointment a. Person who gets property, under gift in default clause, if power is not effectively exercised. iii. Kinds of powers of appointments 1. Presently Exercisable Powers v. Testamentary powers a. Testamentary powers are those that are found in a will b. Presently exercisable powers are those in the donees last unrevoked instrument in writing signed and delivered to the trustee i. Often used so donee doesnt have to wait for will to probate 2. General Powers v. Non General Powers a. General powers can be executed in favor of the donee, the donees estate, or the creditors of either. b. Non-general powers are those which exclude the donee, his estate, or creditors of either as possible appointees iv. Powers Collateral, In Gross, or Appendant Joel Tague Page 108

1. Collateral power donee owns no property interest in the appointive property 2. In Gross power donee has a property interest in the appointive property that cannot be affected by the exercise of power (cant divest donee) 3. Appendant power donee has property interest in the appointive property that can be affected by the exercise of power (can divest donee of interest) v. Invalid Powers 1. Powers that violate the Rule against Perpetuities 2. Powers without any ascertainable permissible appointee vi. Creation of a power of appointment 1. Done by a transfer than manifests an intent to create a power of appointment (e.g. to A for life, remainder, if A dies intestate, to B in fee implies A can give in a will)
2. No special words needed b. Who owns appointive property creditors, spouses, taxes? i. Donee Powers - UPC 2-205, 6-102 1. Gilman v Bell a. Man gave his daughter in law a life estate in real property, for the duration of his sons life. After sons death remainder passed to his sons heirs b. Man gave his son power of appointment (including power to appoint to himself) c. Creditor of son wants paid, pointing to sons ability to appoint property to himself. d. RULE: Power of appointment is not the same as an interest in property. no interest exists until it is appointed e. Son did not receive property because he didnt appoint it to himself. 2. Most states require a donee of a general power to exercise the power before the donee is the owner of appointive property (never owned if it was a non-general power) a. Some states allow even an ineffective exercise to recreate the ownership by the donee. b. exercise of an appointive power 3. Preference among creditors just because a donee exercises a general power of appointment doesnt mean creditors can get to the Joel Tague Page 109

property. If donee appoints in favor of one creditor, other creditors can only get to the property if the get the appointment avoided as a preference in bankruptcy proceedings 4. Spouses elective share UPC 2-205(1)(A) includes in the augmented estate any property over which the decedent held a general power of appointment ii. Reserved powers UPC 2-205, 6-102 1. Bank of Dallas v Republic Natl Bank of Dallas a. Donor created trust for use and benefit of her and her kids. b. Amended trust with following i. trustee shall pay all trust income to Settlor for her uncontrolled use and benefit during her lifetime. If trustee decides thats not enough for settlor and decendants, he may use the principal too. c. Issue : Can the income and/or principal of an irrevocable spendthrift trust, created by the settler for her and her childrens benefit, be reached creditors? d. Holding: Yes and No. creditors can get to interest, but not principal
e.
Rationale: TX recognizes that a spendthrift trusts created for others cant be reached by creditors. Cant do that if the settlor is beneficiary, though. Settlor was sole beneficiary of the interest, But there were other beneficiaries of the principal.
2. Spouses Elective Share UPC 2-205(2)(B) a. Augmented estate includes property subject to a power of appointment held by the decedent (alone or shared power with others) iii. Exercising powers of appointment UPC 2-608, -701, -703, -704 1. Capacity Donee needs same capacity as to transfer property 2. Compliance appointment must satisfy formal conveyance requirements (e.g. testamentary appointment must be in a valid will) 3. Intent Donee must manifest intent to exercise a power in order for power to be exercised. a. Specific exercise clause is best (e.g. I hereby exercise the power of appointment conferred upon me by my mothers will of [date] as follows: I appoint blah, blah, blah Joel Tague Page 110

b. Blanked exercise clause is ok (e.g. clause stating you are exercising any power of appointment the donee may have). 4. Schwartz v Baybank Merrimack Valley a. b. Issue: whether a power of appointment was exercised.
Joel Tague
Page 111
Wills, Trusts, & Estates Spivak F11 .
Joel Tague
Page 112
X.
WILL CONTRACTS a. Will contract a promise, supported by consideration, to leave property by will to the promisee or to third-party beneficiaries can be enforceable as a contract b. Most common types: (1) contracts not to revoke mutual or joint and mutual wills in favor of third party beneficiaries; and (2) contracts to make a will in favor of the promisee in return for services rendered to the decedent c. Contracts not to revoke i. Mutual and joint wills 1. Litigation over the existence of a contract not to revoke typically occurs in the context of mutual or joint wills executed by a married couple. 2. A joint will is a single instrument, executed by two person, that they intend to operate as the will of each. 3. A joint will must be probated twice upon the death of each testator. 4. If they contain reciprocal provisions, they are called joint and mutual. 5. They are not favored by estate planners. 6. When a couple has executed mutual wills or a joint will and the survivor subsequently changes his or her will, the existence of a common scheme expressed by mutual wills or a joint will may lead disappointed beneficiaries later to a claim that the original will was executed pursuant to a will contract. 7. Junot v. Estate of Gilliam court found no contract not to revoke
Joel Tague
Page 113

8. Majority of courts require that contracts not to revoke must be proven by clear and convincing evidence and that the existence of mutual wills does not create a presumption of contract 9. Presumption a. Courts have disagreed on whether a joint will with reciprocal provisions is sufficient evidence of a contract. b. In a few decisions, joint and mutual wills have been conclusively presumed contractual. c. That a joint will with reciprocal provisions is rebuttably presumed contractual is the rule adopted by some courts. d. A few cases have extended the inference of a contract to mutual wills that are not joint. 10. UPC 2-514 a contract to make a will or devise, or not to revoke a will or devise, or to die intestate, if executed after the effective date of this Article, may be established only by (i) provisions of a will stating material provisions of the contract, (ii) an express reference in a will to a contract and extrinsic evidence proving the terms of the contract, or (iii) a writing signed by the decedent evidencing the contract. The execution of a joint will or mutual wills does not create a presumption of a contract not to revoke the will or wills. 11. Theories supporting the contract beneficiaries A number of courts have held for the contract beneficiaries rather than for the surviving spouse in cases like Shimp. 12. Enforcement of contractual wills and remedies for breach a. Apart from competing claims of a surviving spouse, most cases brought to enforce a will contract arise because the survivor has breached the contract by making a new will revoking the contractual will. b. The logical implication is that the contractual will is entitled to probate despite the decedents later attempt to revoke it. 13. Lapse
Joel Tague
Page 114

a. Most courts have held that the contract beneficiarys rights vest upon the death of first of the contracting parties to die. b. The property covered by will contract passes through the beneficiarys estate rather than under the otherwise applicable antilapse statute. d. Quantum meruit recovery by unmarried cohabitators even without an explicit oral promise to devise all or part of the estate in return for services, a surviving cohabitator may have a claim in quantum meruit against the others estate for the value of services rendered the decedent in expectation of compensation. XI. MISTAKES IN DONATIVE DOCUMENTS a. Restatement the controlling consideration in determining the meaning of a donative document is the donors intention. The donors intention is given effect to the maximum extent allowed by law. b. Reforming donative documents (other than wills) i. If, by mistake, an instrument as written fails to express the true intention or agreement of the parties, equity will grant reformation of the instrument so as to make it correctly express the agreement actually made. ii. The rule applies to express inter vivos trusts as well as to other written instruments. iii. A trust with testamentary aspects may be reformed after the death of the settler for a unilateral drafting mistake so long as the reformation is not contrary to the interest of the settler. c. Plain-meaning rule when the meaning of words of the will is plain, no deviation can be permitted d. Extrinsic evidence rule if equity will not entertain suits to reform wills, no purpose would be served by allowing the introduction of extrinsic evidence to contract clear and unambiguous terms in a will e. Resolving ambiguities in wills and other donative documents i. Although courts will not reform wills, they will resolve ambiguities in wills in accordance with the testators intention as provided by extrinsic evidence. ii. Ambiguous descriptions of persons or property
Joel Tague
Page 115

1. Falsa demonstratio non nocet where a description of a thing or person consists of several particulars and all of them do not fit any one person or thing, less essential particulars may be rejected provided the remainder of the description clearly fits. 2. The admissibility of extrinsic evidence in cases of ambiguity but also one of the remedial techniques employed in such cases the deletion of the erroneous parts of a mistaken description, so that what is left accurately describes the testators intention. f. Patent ambiguity ambiguity that is apparent from the text of the donative document g. Latent ambiguity ambiguity that is not apparent merely from reading the text of the donative document but becomes apparent from extrinsic evidenceDirect evidence of intention contradicting the plain meaning of the text does not establish a latent ambiguity h. Many courts suggests that extrinsic evidence can be used to resolve a latent ambiguity but not a patent ambiguity. i. Equivocation Despite the traditional inadmissibility of the testators direct declarations of intent, there is one instance where it is well established that such evidence will be received, that is, where there is an equivocation. An equivocation exists when the words of the will apply equally to two persons or things. j. Potential evidentiary bars to the admissibility of the testators statements i. Hearsay rule come within the exception to the rule for declaration showing a state of mind ii. Attorney-client privilege k. Personal usage doctrine exception to the non-extrinsic evidence rule which allows it to find out when the donors personal usage differs from the ordinary meaning of a term l. Mistakes in the inducement i. Courts have given effect to a will that omitted or gave a nominal amount to a natural object of the testators bounty, even though the will itself recited a reason for the action that was in fact false. ii. Relief was denied because the will did not state what the testator would have done had he or she not been mistaken. Joel Tague Page 116

iii. Children omitted because though dead UPC 2-302(c) if a testator fails to provide for a child living at the time a testator executes a will solely because the testator mistakenly believes the child to be dead, the child receives a share of the testators estate as if the child were an omitted afterborn child iv. Relief for fraud in the inducement an appropriate remedy may include invalidating all or part of the will or imposing a constructive trust remedy to prevent unjust enrichment m. Mistaken omissions i. Restatement if the text reveals an apparent mistaken omission, extrinsic evidence may be considered to establish the content of the mistakenly omitted language ii. Inserting omitted language into wills by construction where courts have added the missing language, they have explained their decisions on the theory that they are engaged in a process called construction iii. Inserting committed language into inter-vivos trusts courts have openly reformed revocable trusts on the basis of extrinsic evidence of mistakenly omitted language, even after the settlors death n. Mistaken inclusions i. Restatement if the text reveals an apparent mistaken inclusion, extrinsic evidence may be considered to establish the content of the mistakenly inclusion language ii. If a scriveners error has misled the testator into executing a will, extrinsic evidence of that error is admissible to establish the intent of the testator that his or her will be valid. iii. English practice under some circumstances, English practices goes so far as to deny the probate of particular words. iv. Malpractice action against drafting attorney o. Reformation doctrine for wills i. Restatement a donative document, though unambiguous, may be reformed to conform the text to the donors intention if it is established by clear and convincing evidence that a mistake of fact or law affected specific terms; and what the donors intention was. Joel Tague Page 117

ii. The no-reformation-of-wills and no-extrinsic-evidence rules have not been universally acclaimed or followed. p. Reformation in specific contexts it is widely recognized that courts have general equity power to reform charitable trusts, whether created by will or otherwise. q. Reformation or modification to achieve tax objectives i. Restatement a donative document may be modified, in a manner that does not violate the donors probative intention, to achieve the donors tax objectives ii. Despite the general acceptance of the no-reformation rule for wills, state courts are inclined to reform split-interest charitable trusts, created by will or otherwise, to conform them to the federal tax requirements for an estate or gift tax charitable deduction. iii. Courts have reformed wills to achieve tax objectives either to correct drafting errors or to achieve tax savings from tax law changes that occurred between execution of a will and death. r. Attorney liability for mistake i. The intended beneficiary whose devise has been frustrated by the lawyers mistake can be remitted to his malpractice remedy against the offending draftsmen. ii. Privity problem 1. Modern trend abrogate the privity requirement and allow malpractice actions in tort, contract, or both by the intended beneficiaries in the will. 2. Number of jurisdictions still dismiss cases for lack of privity. 3. Other courts have adopted an intermediate position regarding the privity question, holding that a cause of action is lies if plaintiffs can show that they were intended 3rd party beneficiaries of the contract between the lawyer and testator. 4. Yet another group has limited malpractice claims to those beneficiaries identified in the will.
Joel Tague
Page 118

iii. Collateral estoppel courts have generally rejected the defendants argument that a malpractice action is an impermissible collateral attack upon the probate courts ruling on the validity of the testators will.
Joel Tague
Page 119

Wills, Trusts & Estates Guide

Transféré par

Informations du document

Description originale:

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Wills, Trusts & Estates Guide

Transféré par

Droits d'auteur :

Formats disponibles

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11

Wills, Trusts, & Estates Spivak F11