south carolina trust & estates outlin

8/18/2019 South Carolina Trust & Estates Outlin

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Functions of Probate

• The three core functions of probate:

1) Provide evidence of transfer of title to the new owners;2) Protect creditors by providing a procedure for payment

of debts; and

3) Distribute the decedent’s property to those intended afterthe decedent’s creditors are paid.

Probate and Nonprobate Property

Probate Property

Property that passes through probate under the

decedent’s will or by intestacy. Nonprobate Property

Property that passes outside of probate through a

nonprobate mode of transfer. Joint tenancy (real and personal)

Life insurance

ontracts with payable!on!death (P"D) provisions #nter vivos trust

Formal v. Informal Probate

Formal Probate

$he court supervises the actions of the personal

representative in administering the estate througha potentially costly and time consuming process.

Informal Probate

$he personal representative may administer the

estate without court supervision unless an interested party as%s for court

review.Problem 1

$ dies owning &lac%acre. $ has one intestate heir ' but $ devises (has a valid will

leaving) $’s entire estate including &lac%acre to . $wo years later D dies devising*hiteacre to $ if living and if not to $’s estate. *ho get’s *hiteacre+

!" #alpractice "ase

,ydde v. -orris /0 1.2. 3d 456 (1 3778).

"hapter 2

INT$!T%"&: %N $!T%T$ P'%N (& $F%*'T

The (asic !cheme

Intestacy as efault +ules Testacy

Decedent leaves a will that provides for the disposition

of her property at death.

Intestacy

Decedent leaves no will. $he probate estate passes by

intestacy. Partial Intestacy

Decedent leaves a will that disposes of only part of the

probate estate; the part of the estate not disposed of by

the will passes by intestacy.



,anus v. Tarase-ic493 :.2.3d 469 (#ll. pp. 6890)!imultaneous eath

<niform 1imultaneous Death ct (6847 rev. 6805) (in 1 for testacy only)=

#f >there is no sufficient evidence? of survivorship the beneficiary is deemed to have

predeceased the donor. 1P @3!3!674 (for intestacy)=

laimant must establish survivorship by 637 hours (0 days) by clear and convincing

evidence.!outh "arolina Intestacy !tatute

!"P" !ec. /202011 to 1 1P (3!3!674) reAuires any ta%er to survive decedent by 637hours unless escheat would result)

1. !urvivin4 spouse ta5es:

a) ll if no surviving issue of the decedent.(b) B if surviving issue.

2. 6eirs other than survivin4 spouse ta5e remainder. #f no surviving spouse that

share is added to this level. ta%er at one level preempts any ta%er at subseAuentlevels. *here representation is provided for division is made at the first level atwhich there are survivors.

6. Level (a) #ssue of decedent eAually if same degree; uneAual degree ta%e by representation.

3. Level (b) Parents ta%e eAually or the survivor 6. Level (c) #ssue of parents by representation. hildren and issue of whole

blood siblings and half!blood siblings3. Level (d) Crandparents

6E3 to maternal side or the survivor 6E3 to paternal side or the survivor

5. Level (e) #ssue of grandparents by representation 6E3 to maternal side6E3 to paternal side

(one side ta%es all if no ta%ers on other side).4. Levels (f) F (g) Creat!grandparents or issue in similar manner as levels

(d) F (e).0. Level (h) 1tepchildren and issue by representation.. Level (i) 1tate through escheat.



!.". Intestacy 210302)P+$0!"P" 7/202011 to 1)

1. !hares of escendants 1)

183 18/ 18/ 183

"ompetin4 !ystems of +epresentation

2nglish Per 1tirpes

Gertical eAuality each line of descent treated eAually

-odern Per 1tirpes

2ach line of descent treated eAually beginning at first generation with a living

ta%er !hares of escendants 2)

182 $n4lish per stirpes 189 189

183 #odern per stirpes 183 183



!hares of escendants 9)

6E3 2nglish per stirpes 6E9 6E9 6E4

6E5 -odern per stirpes 6E 6E 6E5

!hares of escendants )

6E3 6E9 6E9 6E4 2nglish per stirpes6E5 6E 6E 6E5 -odern per stirpes



!hares of %ncestors and "ollaterals

6E4 6E4 6E63 6E5 6E5 6E5 6E63 6E9 6E92nglish F -odern Per 1tirpes 6E9



(. Transfers To "hildren

Hall v. Vallandingham, 540 A.2d 1162, (Md. Ct. Special App. 19!

Mina"# v. Citi$en% &idelit# 'an, 419 S.).2d *40 (+#. 196!

)ood-a"d v. Comm" o/ Soc. Sec., 60 ..2d 25 (Ma%%. 2002! n "e Ma"tin '., 41 .3.S.2d 20 (.3. S"". Ct. 200!

%dvancements: 6otchpot $;ample

Testator <=)

au4hter % <1=) au4hter ( <) au4hter " <)

>uardianship of #inors

Cuardianship of the property

"rigin in feudal practice in which a guardian too% possession of the ward’s lands; still

subHect to eItensive Hudicial supervision. onservatorship

guardian of property with investment powers similar to those of trustees more

fleIible than guardianship. ustodianship

person who is given property to hold for the benefit of a minor under the <$- or

<C-.

$rusts leIible and highly customiKable property management arrangement.

". (ars to !uccession

#n re 2state of -ahoney 337 .3d 4/0 (Gt. 68)



isclaimer and +epresentation

Pate v. ordDrye v. <nited 1tates 039 <.1. 48 (6888)

isclaimers 0 Ta; +e?uirements and !")

I+" sec. 21@ re?uires a ?ualified disclaimer be:

in writing;

>signed either by the disclaimant or by the disclaimant’s legal representative; >irrevocable and unAualified (no acceptance of benefits);?

the disclaimed interest must pass to someone other than the disclaimant unless the

disclaimant is the transferor’s spouse; within 8 months of the transferor’s death or if later 8 months after the disclaimant

reaches the age of 36.1ims v. all 083 123d 560 (3775)



"hapter 3

AI''!: "%P%"IT& %N "BNT$!T!

%. #ental "apacity

Testator Cmust be capable of 5no-in4 and understandin4 in a 4eneral -ayD:E

M6N the nature and eItent of his or her property

M3N the natural obHects of his or her bounty andM5N the disposition that he or she is ma%ing of that property%nd must also be capable of:

M4N relating these elements to one another and forming an orderly desire regarding thedisposition of the property.?

The test of -hether a testator had the capacity to ma5e a -ill is -hether he 5ne-:

(6) his estate

(3) the obHects of his affections and

(5) to whom he wished to give his property.

>M$Nhe legal test for determining whether or not a person has sufficient mental

capacity to dispose of his property by will does not include the proviso that he must

have a reasonable basis on which to found his li%e or disli%e of the natural obHects ofhis bounty.?

>urther the capacity to %now or understand rather than the actual %nowledge or

understanding is sufficient.?In re $state of Aashburn 87 .3d 6734 (:.. 688/) (slide 6)

Ailson v. 'ane= /19 !.$.2d @@ >a. 2)

"apacity Thresholds 0 !"

O > person may eIecute a valid will even if he or she is not competent to transactordinary everyday affairs.? . . . >bility to transact important business or even ordinary business is not the legal standard of testamentary capacity.?

O airston v. -c-illan(urden of Proof

6airston v. #c#illanO > M$Nhe party alleging incompetence bears the burden of proving incapacity at the timeof the transaction by a preponderance of the evidence.’ ?

O >n action to contest a will is an action at law and in such cases reviewing courts willnot disturb the probate courtQs findings of fact unless a review of the record discloses noevidence to support them.?



Insane elusion

Provin4 Insane elusion

In re !trittmater= 3 %.2d 2 N.,. "t. $rrors %ppeals 19G)

(reeden v. !tone= 2 P.2d 11/G "olo. 2)

1/ 6olo4raphic Aill 11 6olo4raphic "odicil

(. *ndue Influence

C% donative transfer is procured by undue influence if the -ron4doer e;erted suchinfluence over the donor that itD:E

overcame the donorHs free -ill and

caused the donor to ma5e a donative transfer that the donor -ould not

other-ise have made.J

Presumptions (urden !hiftin4

onfidential ,elationship R 1uspicious ircumstances S Presumption of <ndue #nfluence(&urden 1hifting) Types of "onfidential +elationships:

iduciary

,eliant

Dominant!subservient



$;amples of !uspicious "ircumstances:

1ecrecy or haste

,easonable person would regard it as unnatural unHust or unfair

Donor’s attitude toward others changed by reason of his relationship with the

alleged wrongdoer

>#f evidence of such a MfiduciaryN relationship is presented the proponents of the willmust offer rebuttal evidence. . . )e empha%i$e that althogh the p"oponent% o/ the -ill

m%t p"e%ent evidence in "ettal, the# do not have to a//i"mativel# di%p"ove the e7i%tence

o/ nde in/lence. n%tead, the conte%tant% o/ the -ill %till "etain the ltimate "den o/ p"oo/ to invalidate the -ill.8

airston v. -c-illan

In re Aill of #oses= 33/ 1o. 3d 938 (-iss.688)

'ipper v. Aeslo-

58 1.*.3d 89 ($eI. iv. pp. 685)Aill "ontest Plannin4

"ontest >rounds

o -ost common grounds for a will contest are lac% of capacity and undue influence.o "ften alleged together; testator’s mental status overlaps with the susceptibility

element of undue influence. Aarnin4 !i4ns

o :ew testamentary scheme ma%es a radical departure.

o -ultiple or blended families.

o #mposes conditions that are li%ely to anger the beneficiary.

o -a%es a disposition to a person unpopular with the testator’s family.

Precautionary #easures

+ecord (uildin4

,ecorded Gideo Discussion

Professional 2Iamination of apacity

Disinterested *itnesses

#nter Givos $rust

#aintain !ecrecy

#nter Givos $rust

#nter Givos Cifts

!ooth Feelin4s

amily -eeting

Letter or Gideo 2Iplanation

lso Letter to lawyer why and Letter from lawyer of Problems

:o contest clause> 1hould any beneficiary of this *ill or of the trust agreement ... contest the validity ofthis *ill or any provision thereof or attempt to prevent any provision from being carriedout in accordance with its terms in legal proceedings or otherwise then any interest provided for such beneficiary and his or her descendents is revo%ed and such beneficiaryshall be deemed to have predeceased me for all purposes under this *ill. ’ ? ,ussell v.*achovia 55 1.2.3d /33 (1 377).

(e?uests to %ttorneys

*ndue Influence

-any courts hold that a presumption of undue influence arises when an attorney!drafterreceives a legacy eIcept when related to the testator.

*nethical "onduct



-odel ,ule of Professional onduct 6.9(c) reads= A la-#e" %hall not %olicit an# %%tantial gi/t /"om a client, inclding a te%tamenta"# gi/t,

o" p"epa"e on ehal/ o/ a client an in%t"ment giving the la-#e" o" a pe"%on "elated to thela-#e" an# %%tantial gi/t nle%% the la-#e" o" othe" "ecipient i% "elated to the client.

Fiduciary %ppointments

$he comment to ,ule 6.9 advises= n otaining the client% in/o"med con%ent to the con/lict, the la-#e" %hold advi%e the

client conce"ning the nat"e and e7tent o/ the la-#e"% /inancial inte"e%t in the

appointment, a% -ell a% the availailit# o/ alte"native candidate% /o" the po%ition.

". Fraud

Forms of Fraud

Fraud

$estator is deceived by a deliberate misrepresentation and as a result does that

which he would not have done. Fraud in the Inducement

misrepresentation causes the testator to eIecute or revo%e a will to refrain from

eIecuting or revo%ing a will or to include particular provisions in thewrongdoer’s favor.

Fraud in the $;ecution

person intentionally misrepresents the character or contents of the instrument

signed by the testator which does not in fact carry out the testator’s intent.. uress

'atham v. Father ivine 90 :.2.3d 69 (:.. 6848)$. Tortious Interference -ith an $;pectancy

1chilling v. errera803 1o. 3d 6356 (la. pp. 377/) !" and Tortious Interference -ith an Inheritance

ou4lass v. (oyce= 92 !$ 2d G1 !" 21)

*hile finding the facts did not give rise to a $#*# action the court noted=*e have adopted the closely analogous tort of intentional interference with prospective contractual relations . . . intentional interference with inheritanceclosely analogous to intentional interference with economic relations).-ost Hurisdictions adopting the tort of intentional interference with inheritancehave reAuired the plaintiff to prove the following elements= (6) the eIistence of an eIpectancy(3) an intentional interference with that eIpectancy through tortious conduct(5) a reasonable certainty that the eIpectancy would have been realiKed but for theinterference and(4) damages



"hapter 9

AI''!: FB+#%'ITI$! %N FB+#!

%. $;ecution of Aills

1. Attested Wills

Functions of Formalities

>Does this remar% indicate /inalit# o/ intention to t"an%/e" +? +itual Function

$he performance of some ceremonial for the purpose of impressing the transferor

with the significance of his statements. $videntiary Function

1upply satisfactory evidence to the court.

Protective Function

Prophylactic purpose of safeguarding the testator.

"hannelin4 Function

1tandardiKation of form simplifies administration.

*P" 7202a)

1= rev. 2@)2Icept as otherwise providedT a will must be=

(6) in writing;(3) signed by the testator or in the testator’s name by someother individual in the testator’s conscious presence and bythe testator’s direction; and(5) either=() signed by at least two individuals each of whom signedwithin a reasonable time after the individual witnessedeither the signing of the will as described in paragraph(3) or the testator’s ac%nowledgment of that signature or

ac%nowledgment of the will; or (&) ac%nowledged by the testator before a notary public orother individual authoriKed by law to ta%eac%nowledgments.

!"P" !ec. 202

2Icept as otherwise providedT a will must be=(6) in writing;(3) signed by the testator or in the testator’s name by someother individual in the testator’s conscious presence and bythe testator’s direction; and() signed by at least two individuals each of whom signed

within a reasonable time after the individual witnessedeither the signing of the will as described in paragraph(3) or the testator’s ac%nowledgment of that signature orac%nowledgment of the will; or

(&) ac%nowledged by the testator before a notary public orother individual authoriKed by law to ta%eac%nowledgments.

!ection /2020

written will is valid if eIecuted in compliance with @ 3!3!073 either at the time of

eIecution or at the date of the testatorQs death or if its eIecution complies with the law atthe time of eIecution of (6) the place where the will is eIecuted or (3) the place where

the testator is domiciled at the time of eIecution or at the time of death.

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In re >roffman (688) 3 ll 2.,. 679 (igh t. of Justice 2ng.) (6)!tevens v. "asdorph 079 1.2.3d 67 (*. Ga. 6889) (6)

CPresenceJ in Aill $;ecution

C!i4natureJ in Aill $;ecution

Purpose= $o provide evidence of finality and distinguishes a will from mere draft or notes.*hat forms of >signature? serve this purpose+

Taylor v. 6olt 654 1.*.5d57($enn. pp. 3775)1teve Codfrey’s *ill

$state of #orea=

/9 N.&.!.2d 122 N.&. !urr. "t. 1/)

7 /20203. %ttestation and self0provin4.

(a) ny will may be simultaneously eIecuted attested and made self!proved.# UUUUUUUUUU the testator sign my name to this instrument this UUU day of UUUUUUUUUU 68UUU

and being first duly sworn do hereby declare to the undersigned authority that # sign and eIecute



this instrument as my last will and that # sign it willingly (or willingly direct another to sign forme) that # eIecute it as my free and voluntary act for the purposes therein eIpressed and that #am eighteen years of age or older of sound mind and under no constraint or undue influence. *e UUUUUUUUUU and UUUUUUUUUU the witnesses sign our names to this instrument and at least

one of us being first duly sworn does hereby declare generally and to the undersignedauthority that the testator signs and eIecutes this instrument as his last will and that he signs itwillingly (or willingly directs another to sign for him) and that each of us in the presence andhearing of the testator hereby signs this will as witness to the testatorQs signing and that to the best of our %nowledge the testator is eighteen years of age or older of sound mind and under noconstraint or undue influence.

(b) n attested will may at any time subseAuent to its eIecution be made self!proved=$he 1tate of UUUUUUUUUU ounty of UUUUUUUUUU *e UUUUUUUUUU and UUUUUUUUUU the testatorand at least one of the witnesses respectively whose names are signed to the attached orforegoing instrument being first duly sworn do hereby declare to the undersigned authority thatthe testator signed and eIecuted the instrument as his last will and that he had signed willingly

(or willingly directed another to sign for him) and that he eIecuted it as his free and voluntaryact for the purposes therein eIpressed and that each of the witnesses in the presence and hearingof the testator signed the will as witness and to the best of his %nowledge the testator was at thattime eighteen years of age or older of sound mind and under no constraint or undue influence.$;ecution of Aills

2. Curing Defects

!ubstantial "ompliance and 6armless $rror

In re Aill of +anney= @ %.2d 133 N.,. 11)

:o attestation clause but two!step affidavit witnesses did not sign the will

affidavit language refers to attestation that :2G2, happened



(. The +evocation of Aills

*P" 720G= ,evocation of *ills(a) will or any part thereof is revo%ed=(6) by eIecuting a subseAuent will that revo%es the previous will or part eIpressly or byinconsistency; or (3) by performing a revocatory act on the will if the testator performed the act with the intent

and for the purpose of revo%ing the will or part or if another individual performed the act in thetestator’s conscious presence and by the testator’s direction.!outh "arolina version of 2): by being burned torn canceled obliterated or destroyed withthe intent and for the purpose of revo%ing it by the testator or by another person in his presenceand by his direction.

Problem:

+evocation by Inconsistency

6arrison v. (ird= 36 1o. 3d 8/3 (la. 6885)Thompson v. +oyall6/0 1.2. /49 (Ga. 6854)'a"roi; v. !enecal=88 .3d 660 (onn. 6805)

$state of %lburn=669 :.*.3d 868 (*is. 685) (slide 6)

. 2



Is the #il-au5ee Aill revivedL

If not= can the Kan5a5ee -ill be admitted to probate or did Bttilie %lburn die

intestateL

In Lyles 0 testatorHs -ill 4ave 9 acres of her farm to A and 1 acres to B= T Hs

heir. Then later struc5 out A and -rote C19J over the C1J acres 4iven to

B. B is the intestate heir of T = % -as not= Pa4e 2@= prob 3

A ar4ued that his 4ift -as revo5ed only on the condition that the C19J 4ift to

B -as valid.

The court refused to apply ++ to AHs 4ift= because B -as the testatorHs heir

and -ould receive the 19 acres by intestacy.

Ailban5s I and II

M@2 -ill presumed revo5e M@ revivedL

Bld +ule

Ne- +ule

!" sec /2020@

a) The revocation by acts under 7 /2020/2) of a -ill made subse?uent to a

former -ill= -here the subse?uent -ill -ould have revo5ed the former -ill if

the subse?uent -ill had remained effective at the death of the testator= shall

not revive or ma5e effective any former -ill unless it appears by clear=

co4ent= and convincin4 evidence that the testator intended to revive or ma5e

effective the former -ill.

b) The revocation by a third -ill under 7 /2020/1) of a -ill made

subse?uent to a former -ill= -here the subse?uent -ill -ould have revo5ed

the former -ill if the subse?uent -ill had remained effective at the death of

the testator= shall not revive or ma5e effective any former -ill e;cept to the

e;tent it appears from the terms of the third -ill that the testator intended

the former -ill to ta5e effect.

+evocation by Bperation of 'a-

+evocation by ivorce !" 20G)

pplies in all but a handful of states where revocation occurs only if the divorce

is accompanied by a property settlement.+evocation by #arria4e !" 2031)

+evocation by (irth of "hildren !" 2032)

:o ,evocation by "ther hanges of ircumstances

!" !ec /2020G

#f after eIecuting a will the testator is divorced or his marriage annulled or his spouse is a party to a valid proceeding concluded by an order purporting to terminate all marital property rights or confirming eAuitable distribution between spouses the divorce orannulment or order revo%es any disposition or appointment of property including beneficial interests made by the will to the spouse any provision conferring a general orspecial power of appointment on the spouse and any nomination of the spouse aseIecutor trustee conservator or guardian unless the will eIpressly provides otherwise.

Property prevented from passing to a spouse because of revocation by divorce or

annulment or order passes as if the spouse failed to survive the decedent and other provisions conferring some power or office on the spouse are interpreted as if the spousefailed to survive the decedent.

!" !ec /202031

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a) #f a testator fails to provide by will for his surviving spouse who married the testator

after the eIecution of the will the omitted spouse upon compliance with the provisionsof subsection (c) shall receive the same share of the estate he would have received if thedecedent left no will unless=

1) it appears from the will that the omission was intentional; or

2) the testator provided for the spouse by transfer outside the will and the intentthat the transfer be in lieu of a testamentary provision is shown by statements ofthe testator or from the amount of the transfer or other evidence.

(. +i4hts of escendants Bmitted from the Aill

>ray v. >ray= 84/ 1o. 3d 6740 (la. 377)!" !ection /202032

a) #f a testator fails to provide in his will for any of his children born or adopted after

the eIecution of his will the omitted child upon compliance with subsection

d)= receives a share in the estate eAual in value to that which he would have received if

the testator had died intestate unless= 1) it appears from the will that the omission was intentional; or

2) when the will was eIecuted the testator had one or more children and devisedsubstantially all his estate to his spouse; or

3) the testator provided for the child by transfer outside the will and the intent

that the transfer be in lieu of a testamentary provision is shown by statements ofthe testator or from the amount of the transfer or other evidence.

!" Bmitted "hild Problem

and * marry and sign ># love you? wills. $hereafter a child is born. * dies without

ma%ing a new will (assume and child survive *). ow is *’s estate divided+". "omponents of a Aill

1. Integration of Wills

2. Republication by Codicil

3. Incorporation by Reference. Acts of Independent !ignificance

*P" 7201: Incorporation by +eference !" sec. /2020 the same.)

ny writing in eIistence when a will iseIecuted may be incorporated byreference if the language of the willmanifests this intent and describes thewriting sufficiently to permit itsidentification.

"lar5 v. >reenhal4e= 093 :.2.3d 848 (-ass. 6886)!" sec. /202012

O will may refer to a written statement or list to dispose of items of tangible personal property not otherwise specifically disposed of by the will other than money evidencesof indebtedness documents of title . . . securities . . . and property used in trade or business.

O $o be admissible under this section as evidence of the intended disposition the writingmust either be in the handwriting of the testator or be signed by him and must describethe items and the devisees with reasonable certainty. $he writing may be referred to asone to be in eIistence at the time of the testatorQs death; it may be prepared before or after the eIecution of the will; it may be altered by the testator after its preparation; and it may be a writing which has no significance apart from its effect upon the dispositions made bythe will.

,ohnson v. ,ohnson= 3/8 P.3d 839 ("%la. 6804)



*P" 72012: %cts of Independent !i4nificance

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 beforeor after the eIecution of the will or before or after the testator’s death. $he eIecution orrevocation of another individual’s will is such an event

. "ontracts +elatin4 to Aills*P" 72019: "ontracts "oncernin4 !uccession

contract to ma%e a will or devise or not to revo%e a willor devise or to die intestate . . . may be established only by

(i) provisions of a will stating material provisions of the contract(ii) an eIpress reference in a will to a contract and eItrinsic evidence proving the terms of the contract or(iii) a writing signed by the decedent evidencing the contract and eItrinsic evidence proving the terms of the contract. $he eIecution of a Hoint will or mutual wills does notcreate a presumption of a contract not to revo%e the will or wills.1 section 3!3!/76 difference in green.

Oia v. Putnam= // !o. 2d 9/ Fla. 1)



"hapter /: NBNP+B(%T$ T+%N!F$+! %N P'%NNIN> FB+ IN"%P%"IT&

Aill !ubstitutes

Aill !ubstitutes: 1) tend to be asset0specific 2) avoid probate and 3) are not subect to the

Aills %ct.

(. Aill !ubstitutes and the Aills %ct

1. Re"ocable Trusts

#Deferred$(. Aill !ubstitutes and the Aills %ct 2. %ayable on Deat& Contracts and 't&er (onprobate Transfers

In re $state of %t5inson= 6/0 :.2.3d 049 ("hio Prob. 686)$state of 6illo-it359 :.2.3d /35 (:.. 689)>#n the event of the death of any partner his share will be transferred to his wife with notermination of the partnership.?*P" 7/011: Nonprobate Transfers on eath

provision for a nonprobate transfer on death in an insurance policy contract of employment bond mortgage promissory note certificated or uncertificated security account agreementcustodial agreement deposit agreement compensation plan pension plan individual retirement

plan employee benefit plan trust conveyance deed of gift marital property agreement or otherwritten instrument of a similar nature is nontestamentary.*niform +8$ TB pendin4 in !": /20/031)

#t is a non!testamentary transfer

"nly available for individual transferors

&ut transferee can be an individual or other estate planning entities (for eIample a trust)

(1 will not limit) ,evocable by law even if deed says otherwise

&ut might be subHect to contract not to revo%e

apacity is the same as for ma%ing a will

an be revo%ed by= recorded $"D deed recorded >instrument of revocation? recorded

deed eIpressly revo%ing $"D deed an’t be revo%ed by *ill

&eneficiary’s creditors can’t reach during transferor’s lifetime

&eneficiary must survive the transferor to ta%e

reditors of transferor estate can reach similar to other non!probate transfers (1 rule+)

". Aill !ubstitutes and the !ubsidiary 'a- of Aills

Types of 'ife Insurance: 'ifeHs >reat 'ottery

*hole Life <niversal LifeV

Gariable LifeV

<niversal LifeV

Level $erm



nnual ,enewal $erm

Lots of hybrids

V investmentEsavings element

"oo5 v. $?uitable 'ife %ssurance !ocHy 439 :.2.3d 667 (#nd. pp. 6896) (slide 6)!" 'a- /2020G : ivorce is deemed pre0decease

O pplies only to *illsO :ew <niform ct (3!974) broader but unanswered is= ,etroactive+O Wualified ,etirement Designation of &eneficiary Pre!empted by 2,#1 and state law

can’t change ( gelho// ). (Plan dministrators protected)

Pension and +etirement %ccounts

Oarela v. (ernachea 86/ 1o. 3d 380 (la. pp. 3770)

!"P" #ulti0Party %ccountsO /20/012 Protects financial #nstitutionsO s does /20/01@ to /0113

'ifetime o-nership /013):

Joint ccounts ! depositor(s) to eItent of contributionV

P"D original payee(s)V

$rust ccounts belong to the $rustee unless trust is irrevocableV

o V<nless clear and convincing evidence otherwise

+i4hts of !urvivorship /019)

O Jt cc’t ! to survivor(s)V (can change by *ill with clear F convincing evidence)O P"D ! to original payee(s) surviving or if none to the P"D payeeV

O $rust cc’t survivor trustee(s) and if none to beneficiaryVO Vunless pre!death written evidence different (acc’t agreement etc)O P"D and $rust cc’t ! can’t change by *ill

+i4hts of "reditors /01G) #ulti0party %ccounts

O reditors of the estate of a deceased account holder through the 2state can reach account proceeds in the hands of survivor(s)=

O if necessary to pay debts andO the decedent had a beneficial entitlement before death

O $wo year 1EL to assert liabilityTransferor on eath TB)

O 1 sec. 50!!67 et seA. provides for registration of securities in $ransfer on Death ($"D)

form



O reditors of a decedent owner can reach by 50!!87 as otherwise allowed by state lawwhatever that may beX

. Pour0Bver Aills and +evocable Trusts in #odern $state Plannin4 eferred)

,oint Tenancies in +8$ Imperfect Aill !ubstitute)

reation of Jt $enancy in ,E2 gives the donee a present interest in the ,E2 that cannot be

revo%ed Jt. $ can be severed during lifetime

reditors of all tenants can reach

1 3!974 severs a Jt $en unless eIpressly J$*,"1; and if J$*,"1 loss of

testamentary power of disposalF. Plannin4 for Incapacity

In re $state of Kurrelmeyer= 980 .3d 37/ (Gt. 377)/2001 !" urable Po-er of %ttorney

O Document must use the >magic? words to be durable i.e. survive the incompetence ofthe principal

O 2Iecuted and attested li%e a *ill and recorded li%e a deed

O an be general or limited in scopeO 5rd party reliance if contains >magic? wordsO "ther Pwrs of tty valid until actual notice of disability (3!3!073)

!" PB% >ift "ases

O Fender v. Fender 538 123d 457 (6890)O >ordan v. (usbee UU 123d UUU (ug 56 3766)O 2state’s sued to recover property >gifted? by attorney!in!fact during the decedent’s

lifetime.%dvance irectives

#nstructional Directives

1pecifies treatment in end!of!life situation or in the event of incompetence.

ProIy Directives Designates an agent to ma%e health care decisions for the patient.

ybrid or ombined Directives

#ncorporates both of the first two approaches that is directs treatment preferences

and designates an agent to ma%e substituted decisions.(ush v. !chiavo 990 1o. 3d 536 (la. 3774)!" 6ealth "are 'a-s

O Death with Dignity ct (44!//!67 et seA.) also called Living *illsO ealth are Power of ttorney (3!0!074)O dult ealth are onsent ct (44!!67)O Do :ot ,esuscitate "rder ct (44!/9!67)

O <niform Determination of Death ct (44!45!407) (Page 97 of the $eIt)O <. natomical Cifts ct (44!45!577 et seA)

eath -ith i4nity %ct 990GG01= et se?.)

O Deals with terminal illness and persistant legislative stateO an direct treatment or direct withhold treatmentO Designate an agent to revo%e or to enforceO !hour waiting periodO 1tatutory form (44!//!07)

'ivin4 Aill "ontinued

O 1ignedwitnessed by 3 and notaried (one of the witnesses may be the notary)



O #f in a hospital or a nursing home someone from "ffice of "msbudsman (Cov’s office)must be one of the witnesses6ealth "are Po-er of %ttorney /2009)

O Designate gent to ma%e health care decision any time the principal is not competentO hoices= "rgan Donor Life!1ustaining Procedures $ube eeding

O Living *ill trumps when applicableO 1igned and 3 witness (a number of individuals are disAualified)O 1tatutory form

!" %dult 6ealth "are "onsent

O a guardian appointed by the court if the decision is within the scope of theguardianship;

O an attorney!in!fact appointed by the patient in a durable power of attorney if the decisionis within the scope of his authority;

O a person given priority to ma%e health care decisions for the patient by another statutory provision;

O a spouse of the patient unless the spouse and the patient are separated and written etc

O a parent or adult child of the patient;O an adult sibling grandparent or adult grandchild of the patient;O any other relative by blood or marriage who reasonably is believed by the health careO professional to have a close personal relationship with the patient;O person given authority to ma%e health care decisions for the patient by another

statutory provision.O #f persons of eAual priority disagree . . . may petition the probate court for an order

determining what care is to be provided or for appointment of a temporary or permanentguardian.



"hapter G:+i4hts of the !urvivin4 !pouse

#arital Property !ystems

"ommunity Property !tates

+i4hts of !urvivin4 !pouse to !upport

o-er +i4hts AifeHs ri4ht to 183 of 6usbandHs +8$ for 'ife)

Declared unconstitutional in 'oan v )at%on 56 123d 476 (1 6894) on eAual

protection basis Prospective in effect from 0E33E6894

1tatute repealed (36!0!67)

$;empt Property 0 !"P" /202091

1urviving 1pouse entitled to Y0% of personal and household goods and effects minor or

dependent children are so entitled if no surviving spouse #f not enough property the ma%e up with other assets

$his is before creditors are paid (eIcept admin costs and funeral eIpenses)

$here is an 637 hr survivorship rule

#f estate is sufficient specifically devised property is not subHect to eIempt property

claim (3!3!473)



ou aren’t li%ely to see in practice. ou won’t represent estates that small.

!" $lective !hare 0 !ections /202021 to 02G

/202021

(a) >#f a married person domiciled in this 1tate dies the surviving spouse has a right of

election to ta%e an elective share of one!third of the decedentQs probate estate. . .?

(b) or non!domiciliaries law of domicile determines spousal rightsAho is a !urvivin4 !pouse

3!3!376(c)= Z1urviving spouse> . . . is as defined in @ 3!3!973.

irst must be married to the decedent. 2ither by ceremony or by common!law

-ust survive

-ust not be divorced (see 3!973(b)

Aho is not:

/2020@2a): > person who is divorced from the decedent or whose marriage to the

decedent has been annulled is not a surviving spouse unless by virtue of a subseAuentmarriage he is married to the decedent at the time of death. decree of separate maintenance which does not terminate the status of husband and

wife is not a divorce for purposes of this section.% survivin4 spouse does not include 20@2b)):

(6) a person who obtains or consents to a final decree or Hudgment of divorce from the

decedent or an annulment of their marriage which decree or Hudgment is not recogniKedas valid in this 1tate unless . . . they subseAuently participate in a marriage ceremony purporting to marry each to the other or subseAuently live together as husband and wife;

(3) a person who following a decree or Hudgment of divorce or annulment obtained by

the decedent participates in a marriage ceremony with a third person; or (5) a person who was a party to a valid proceeding concluded by an order purporting to

terminate all marital property rights or confirming eAuitable distribution between

spouses. (4) a person claiming to be a common law spouse who has not been established to be a

common law spouse by an adHudication commenced before the death of the decedent orwithin the later of eight months after the death of the decedent or siI months after theinitial appointment of a personal representative; if the action is commenced after thedeath of the decedent proof must be by clear and convincing evidence.

Problem:

died survived by his >wife? *. 1he had been married 9 times before and at least 3

were alive and not divorced from * when and * married. #s * ’s surviving spouse+

:o see Lovett v. Lovett 484 123d 935 (1 pp. 688/)

Probate $state /202022

>. . . probate estate means the decedentQs property passing under the decedentQs will plus

the decedentQs property passing by intestacy reduced by funeral and administrationeIpenses and enforceable claims.?

Sei/e"t

3!/!476(c) (formerly 3!3!663)

:"ehe"

Aaivin4 the $lective !hare 0 !"P" /202029a)

$he rights of a surviving spouse to an elective share homestead allowance and eIempt

property or any of them may be waived wholly or partially before or after marriage by

a written contract agreement or waiver voluntarily signed by the waiving party after fair

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and reasonable disclosures to the waiving party of the other partyQs property and financialobligations have been given in writing.

Aaivers Q /202029b)

<nless it provides to the contrary a waiver of all rights in the property or estate of a

present or prospective spouse or a complete property settlement entered into after or in

anticipation of separation or divorce is a waiver of all rights to elective share homesteadallowance and eIempt property by each spouse in the property of the other . . .

. . . and a disclaimer by each of all benefits which would otherwise pass to him from the

other by intestate succession or by virtue of the provisions of a will eIecuted before thewaiver or property settlement.

Ahat is Fair isclosure

>the document ac%nowledged that . . . each disclaimed interest in the spouseQs estate

eIcept as provided in the will . . . of the other spouse; and each had made a full fair andcomplete disclosure to each other of all presently!owned assets.?

1ame as antenuptial agreement

Fair disclosure means accordin4 to "t %pp)

>before signing an antenuptial agreement each party must disclose to the other the factsthat eIist at the time of the agreement and which in the absence of the antenuptialagreement affect or determine the prospective intestate share of a surviving spouse in thedisclosing partyQs estate or which otherwise affect or determine distribution of property atthe disclosing partyQs death.?

-rs. C established she had no real or general %nowledge of the total eItent of her

husbandQs assets. . . . she had no %nowledge of the value of husbandQs estate. $he attorney preparing the waiver document testified he did not discuss assets with -rs. C when itwas eIecuted.

;edding% v. ;edding% 47 123d 5/ (6880)

/202023

$he right of election of the surviving spouse may be eIercised only during his lifetime byhim or by his duly appointed attorney in fact. #n the case of a protected person the rightof election may be eIercised only by order of the court in which protective proceedingsas to his property are pending.

Proceedin4 for $lective !hare 0 !"P" /20202

ile claim within 9 months of death or months of probate of *ill whichever is later

!pouse ies Ahile Pendin4

Callagher v. 2vert 0// 123d 36/ (1 pp 3773)

Bffset: /20202/

surviving spouse is entitled to benefits provided under or outside of the decedentQs will

by any homestead allowance MeIempt propertyN whether or not he elects to ta%e anelective share but . . . Moffset the elective shareN

Bffset /20202G

#n the proceeding for an elective share all property including beneficial interest which

passes or has passed to the surviving spouse under the decedentQs will or by intestacy

by a homestead allowance and

by 1ection 3!3!476 or

which would have passed to the spouse but was renounced or

which is contained in a trust created by the decedentQs will or

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a trust as described in 1ection 3!/!476(c) in which the spouse has a beneficial

interestis applied first to satisfy the elective share and to reduce contributions due from otherrecipients of transfers included in the probate estate.

beneficial interest that passes or has passed to a surviving spouse under the decedentQs

will includes an interest as a beneficiary in a trust created by the decedentQs will or

an interest as a beneficiary in property passing under the decedentQs will to an

inter vivos trust created by the decedent. or purposes of this subsection the value of the electing spouseQs beneficial interest in

property which Aualifies or would have Aualified for the federal estate taI maritaldeduction pursuant to 1ection 370 of the #nternal ,evenue ode as amended and ineffect on December 56 3778 must be computed at the full value of the Aualifying property.

Wualifying for these purposes must be determined without regard to whether an election

has been made to treat the property as Aualified terminable interest property.

Problem *ill gives house to and residue to D. ouseSY/0%; $otal probate estateSY877%

2lective 1hare S 6E5 I Y877% S Y577%

Y577%!Y/0% S Y330%

1ame but Y677% Ht account with

1ame but Y677% Ht account with D

:ot subHect to elective share. Smith v. McCall 4// 123d 4/0 (1

pp. 688) ow about P"D’s and $rust ccounts+

Y577%!Y/0% S Y330%

1ame but Y6m life ins to

1ame but Y6m life ins to D

Life #ns+ ,etirement &enefits Y due+

Does 3!!376 eIempt+

Federal $state Ta; #arital eduction Q I+" sec. 2/

(6) the decedent must be a <.1. citiKen or resident;

(3) there must be a surviving spouse i.e. the spouse must survive the decedent;

(5) the spouse must be a <.1. citiKen; (370(d) and 370 provide an eIception)

(4) property or an interest in property must pass to the surviving spouse from the

decedent; (0) the property or interest in property transferred to the spouse must be included in the

decedentQs gross estate; and () the surviving spouse must receive a >deductible? interest (non!deductible non!

terminal interest).

Terminal Interest $;ception

(b)(0) surviving spouse is given an eIclusive life income interest and a CP" over the

trust assets. (b)(9) marital trust followed by charitable interests.

(b)(/) Aualified terminal interest property (W$#P).

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so!called >estate trust.?

Rualified Terminal Interest Property Trust RTIP Trust)

the surviving spouse has the absolute right for life to income from the property payable at

least annually; no one has an eIercisable right during the surviving spouseQs life to appoint any interest

to anyone other than the surviving spouse; and the P, elects to treat the interest as W$#P property. ($he election is automatic if the

estate taI return is completed properly and the deduction claimed.) 1 elective share offset statute does not reAuire the devise to be claimed as a federal

estate taI deduction. #t is only necessary that it could Aualify. -a%ing an election on a return is not needed to satisfy the 1P offset rule.

$his is particularly important as the minimum filing reAuirements for a federal estate taI

return is Y0m in 3766!63 but will be Y6m in 3765. Problem

’s *ill devised to his wife my home . . . for the term of her natural life a life estate

provided however that she

(6) continues to occupy the home; (3) that this provision is null and void should she remarry;

(5) that this provision is null and void should we divorce or be separated at the

time of my death; and (4) provided that she and she alone occupies the home.



"hapter = "BN!T+*"TIBN BF AI''!

%. #ista5en or %mbi4uous 'an4ua4e in Aills

$he decedent died in 6884 leaving an estate of approIimately Y377777 to

>my brothers and sisters living at the time of my death.?

Table of "onsan4uinity

In 192= the decedentHs sister 4ave birth= out of -edloc5= to a son she named +udy.

The family too5 a solemn vo- to tell the community +udy -as the decedentHs brother. Theya4reed the siblin4s -ould spea5 of +udy only as their brother and the parents -ould call

him their son.

They -ere so dedicated to this vo- that +udy did not find out the real truth until he -as 9G

years old.

Ahen the father died= in the Petition For 'etters Bf %dministration for his fatherSs -ill=

Paul= another son= listed +udy as a son. Thereafter= the fatherHs estate -as evenly

distributed amon4 the livin4 siblin4s= includin4 +udy.

The decedent had e;ecuted a -ill in 1G/= five years after her fatherSs death. !he had

named Paul her personal representative. 6o-ever= in dividin4 the decedentHs estate= Paul

e;cluded +udy this time= claimin4 he -as not a brother.

Fenel v. Floyd The decedent devised to her four dau4hters:

C Mall of the lots that I o-n on !uber !treet= "olumbia= !outh "arolina= e;cept those

hereinabove devised= under Item OI= share and share ali5e....H

In Item I of the Aill= #rs. #arshall left the residue of her estate to her dau4hter=

#aude Floyd.J

(ob ,ones *. v .!trandell

CI 4ive and be?ueath all of my personal and household effects of every 5ind=

includin4= but not limited to . . . and other insurance on or in connection -ith the use

of this property to (ob ,ones *niversity= >reenville= !outh "arolinaD=E to be used in

a scholarship fund for needy students= . . . . I hereby declare that I have considered

my children= and have decided to dispose of my estate as stated herein due tonumerous circumstances.J

!" "ases Q $;trinsic $vidence

$state of Fabian= 3@3 !$2d 9G9 !" %pp 21)

Fenel v Floyd= 39G !$2d 1 !" %pp 1@/)

(ob ,ones * v. !tandell= 93 !$2d 21 !" %pp 21)

#ahoney v. >rain4er=1@/ N.$. @/ #ass. 133)

%rnheiter v. %rnheiter= 630 .3d 864 (:.J. 1uper. 680)



$state of >ibbs= 111 N.A.2d 913 Ais. 1/1)

$ric5son v. $ric5son= G1/ %.2d 2 1@)

"orrectin4 #ista5es in Aills

*P" 720@ 2@):

+eformation to "orrect #ista5es

>$he court may reform the terms of a governing instrument even if unambiguous to conformthe terms to the transferor’s intention if it is proved by clear and convincing evidence that thetransferor’s intent and the terms of the governing instrument were affected by a mista%e of factor law whether in eIpression or inducement.?Flemin4 v. #orrison= G2 N.$. 9 #ass. 19)

(. eath of (eneficiary (efore eath of Testator

$state of +ussell= 999 P.2d 33 "al. 1/@) slide 1)

!" %ntilapse 20/3

O #f a devisee who is a great!grandparent or a lineal descendant of a great!grandparent ofthe testator is dead at the time of eIecution of the will fails to survive the testator or istreated as if he predeceased the testator the issue of the deceased devisee who survive the

testator ta%e in place of the deceased devisee and if they are all of the same degree of



%inship to the devisee they ta%e eAually but if of uneAual degree then those of moreremote degree ta%e by representation. . . .

O . . . "ne who would have been a devisee under a class gift if he had survived the testatoris treated as a devisee for purposes of this section whether his death occurred before orafter the eIecution of the will.

:ote= no 637!hour survivorship as in <P%ntilapse: "ase 9

< devises entire estate= one!half to Daughter ' one!half to 1on A. ' dies before < leaving achild C . < dies. *hat happens to '’s share+"ommon 'a-: '’s share lapses and passes by intestacy. A and C share '’s lapsed share so A gets [ of the estate C gets \ of the estate.Aithout the Cno0residue0of the0residueJ rule: '’s share as a residuary devise to A and ' goesto A so A gets the entire estate.Aith an applicable antilapse statute: C ta%es '’s share so A gets B of the estate C gets B ofthe estate.

%ntilapse: "ase

< devises home to niece A and residue to '. A dies before < leaving a child C .T dies. Ahat happens to AHs shareL

*P": s a descendant of < ’s grandparents A falls within the reAuired relationship of the

antilapse rule. $herefore C ta%es the home.!ome antilapse statutes: #f the statute only applies to < ’s descendants then the antilapse statuteis not applicable the devise lapses and the house falls into the residue to go to '.

%ntilapse: "ase /

< devises entire estate= one!half to ' one!half to A >but if A or ' or both do not survive me then# give such predeceasing child’s share to my friend &.? ' dies before < leaving a child C .< dies. *hat happens to '’s share+%ntilapse statute states a default rule: &ecause < has provided eIpressly for the possibility of ' predeceasing < the antilapse statute does not apply. & receives one!half of the estate.



!"P" /2020/1

$he intention of a testator as eIpressed in his will controls the legal effect of his

dispositions. $he rules of construction eIpressed in the succeeding sections of this partapply unless a contrary intention is indicated by the will.

%ntilapse: "ase G

< devises entire estate= >to my living brothers and sisters A ' C : and to share and shareali%e.? A ' and C die before < leaving descendants. < dies. *hat happens to A ' and C ’s

shares+Issue: Do the terms >living? and >share and share ali%e? eIpress a condition of survival precluding application of the antilapse statute+ Allen ". Talley 1G): $erms indicate reAuirement of survival antilapse statute does notapply : and ta%e the entire estate.

%ntilapse: "ase @

< devises entire estate= >to my brothers and sisters A ' C : and to share and share ali%e.? A ' and C die before < leaving descendants. < dies. *hat happens to A ' and C ’s shares+

Issue: Does the term >share and share ali%e? by itself eIpress a condition of survival precluding application of an antilapse statute+ )state of *uru+o"ic& 22): >1hare and share ali%e? does not eIpress contraryintention antilapse statute applies. : and and descendants of A ' and C each ta%e 6E0of the estate.

%ntilapse: "ase

< devises &lac%acre >to my son 1idney if he survives me? residue to his wife *ilma.1idney dies before < leaving a child C . < dies. *ho ta%es &lac%acre+



Issue: Do the words >if he survives me? evidence an intention that 1idney’s descendants shouldnot be substituted for 1idney+#aority +ule: n eIpress reAuirement of survivorship such as >if he survives me? evidencesan intention that 1idney’s descendants should not be substituted for 1idney. *ilma ta%es&lac%acre.

*P" 720/3b)3): $he term >if he survives me? is not a sufficient eIpression of contrary intent.ntilapse statute applies. Debby ta%es &lac%acre.

+uotolo v. Tieten= 987 .3d 6 (onn. pp. 377) aff’d 86 .3d (onn. 377/)ifference of: CandJ Q CorJ

O $o and ’s heirs and assignsO *ords of purchase! to ! and words of limitation :D heirs and assignsO $o & or &’s heirs and assignsO *ords of purchase to ! and then maybe survivorship+O P"+ later

6o- to %void !urvivorship *ncertainty

O 1 has no direct authority on survivorship language6. Provide alternative gift if devisee does not survive3. Provide in *ill that antilapse statute does ", does not apply5. Provide that issue of devisee ta%e his or her parents share per stirpes. 1ee samplecodicil for issue of deceased child

"lass >iftsO *hat is a lass gift+ p. 5/0 and :a-%on

O -y will says= # give Y677% to my favorite *$2 class of the last 37 years+O -ichael dies at hristmasO # die :ew ear’s 2veO # die neIt July+O *hat if gift is to my former students who made an in *$2+

%ntilapse and "lass >ifts: "ase 1

Types of evises

1pecific= &lac%acre; my ring

Ceneral= Y67777

Demonstrative= Y67% from the proceeds from sale of ' asset

,esidue= remainder of estate not specifically devised



Brder of %batement

!"P" /20302

<nless *ill provides otherwise ! proportionally among=

#ntestate Property

,esidue Devises

Ceneral Devises 1pecific Devises

(Demonstrative Devises are 1pecific to the eItent of the fund and Ceneral otherwise)

"ase 13

$ eIecutes a will in which she devises Y577777 to charity ' Y677777 to charity C and

the residue of her estate to her son A. t the time of the will’s eIecution $ has Y977777 in assets.

< then becomes ill and undergoes an eIperimental treatment costing Y077777.

$he treatment fails= $ dies.

<% estate is valued at Y577777.

<nder traditional abatement rules A ta%es nothing ' ta%es Y330777 and C ta%es

Y/0777. ow to draft to avoid abatement+

Drafting 1olution

Draft as percentages or maI or min amounts

or eIample= harity & 47] not to eIceed Y' harity 67]

not to eIceed Y' residue to son "r give son a preresiduary min gift= for eIample son gets Y' and

residue is divided among & and eAually or uneAually.%demption Q !pecific evise

!"P" /2020//a)

O Devisee is entitled to=O *hat’s leftO <npaid purchase priceO <npaid ondemnation wardO <npaid fire and casualty insurance proceedsO oreclosure property rec’d from sale of devised property

$;ample

O $ devises coin collection to &.O 1ubseAuently $ sells B of the collection to . pays Y67% in cash and owes $ Y60% for

the coins when $ dies.O $ put the Y67% paid for the coins in a >special? ban% account that $ sets aside for >hobby

mad money.?O *hat does & get+O *hat result if the coins were sold by $’s conservator+O *hat result if sold by $’s attorney in fact+

!ale by "onservator

!"P" /2020//b)

O onversion by conservator (but maybe not P") does not adeemO #ncludes sales condemnation fire or casualtyO :ot apply if disability ceases for more than one year

In re $state of %nton= /56 :.*.3d 68 (#owa 377/)%ccretion Q !pecific !ecurities

!"P" 20/ te;t p. 3)1



O 1o much as is part of estate at deathO Plus stoc% splits etc by companyO 1ecurities as a result of merger consolidation reorganiKation by companyO ,einvestment shares of a mutual fundO "therwise additional securities are not part of devise

$;ampleO $ owns 677 sEs of '^ stoc% and devises 677 sEs of '^ to &. $he residue to O &efore $ dies '^ pays a 67] stoc% dividend (67sEs for $); and thereafter splits 3 for 6=

i.e. $ now owns 337 sEs of '^O $hen $ buys another 677 sEs of '^ and then '^ splits 3 for 6 again ($ owns 47 sEs

of '^O ow many shares is & entitled to receive+O *ho gets the eItra '^ stoc%+

U 1P 3!3!73 provides that after acAuired property passes according tothe decedent’s *ill.

%demption by) !atisfaction

O "ase 12:< s will devises Y47777 to her son S and her residuary estate to her daughter :. fter eIecuting the will < gives Y57777. $ dies with an estate valued at Y677% O ow much does 1 receive+

!"P" /2020/1

O Property which a testator gave in his lifetime to a person is treated as a satisfaction of adevise to that person in whole or in part only if the will provides for deduction of thelifetime gift or the testator declares in a contemporaneous writing that the gift is to bededucted from the devise or is in satisfaction of the devise or the devisee ac%nowledgesin writing that the gift is in satisfaction.

Problem

O $’s *ill devises Y57% to and the residue to &. During $’s lifetime $ gives 077 sEs ofpple stoc% at at time when pple is selling for Y47 per share. $ intends for the gift tosatisfy (at least in part) the devise. *hen $ dies pple is selling for Y477 per share.

O $o what amount if any is entitled to under $’s *ill+O or purpose of partial satisfaction property given during lifetime is valued as of the time

the devisee came into possession or enHoyment of the property or as of the time of deathof the testator whichever occurs first.

!imilar Terms -ith ifferent %pplication

O %dvancement Q 201 for intestacy onlyO %demption Q 20// applies to specific devises (eI= # give my bicycle to )O !atisfaction Q 20/1 applies to general devises (eI= # give Y30% to )

$;oneration8Non0$;oneration $;ample

O $ owns &lac%acre that is subHect to a Y677% -ortgage and $ has Y377777 of cashO *ill directs that all Hust debts of the decedent be paidO *ill devises &lac%acre to O Y377777 ,esidue devised to &

O #n 1 how much does & inherit+O Y377777

O #f *ill eIonerates from ta%ing &lac%acre subHect to the mortgage how muchdoes & inherit+

O Y677777Non0$;oneration

!"P"/2020/G



O specific devise passes subHect to any mortgage pledge security interest or other lieneIisting at the date of death without right of eIoneration regardless of a generaldirective in the will to pay debts.

O <nless *ill provides otherwise (3!76)

Bther +ules of "onstructionO 6. ardinal ,ule of onstruction= determine testator intentO 3. #f possible determine intent from 4 corners of document (no eItrinsic evidence)O 5. *ill should be read in light of surrounding circumstances (abian)O 4. #f possible give effect to all parts of the *illO 0. *ords have ordinary meaning (&J<)O . ll provisions should be read as consistent if possible if not more specific

controlling over more general saying things differently in different places impliesdifferent meaning (see neIt slide)

O /. *ill spea%s as of time of deathO 9. Presumption against #ntestacy

O 8. Devise of land is fee simple (3!3!66) even without words of limitation (1lide 55)"onstrue %ll Parts "onsistently

O !helvin v. "olony 'utheran "hurch= 99 123d /4(6800)U Aal5er v. %lverson= 9 12 8 (6867)U #cRua4e v. "alhoun= 695 12 64 (685)



"hapter @ 0 T+*!T!: INT+B*"TIBN %N "+$%TIBN

!tatistics and !ources of 'a-

*niform Trust "ode %doptions 2)

Types of Trusts

2Ipress $rusts

Private $rusts

haritable $rusts or

#mplied

,esulting $rusts (teIt pp. 0/6!/3)

onstructive $rusts (eAuitable remedy ! teIt p. 364 ather Devine)

Key $lements of a Trust:

Division of Legal and 2Auitable title

1ettlor

$rustee

&eneficiary $ransfer of Property



The !ettlor= Trustee= and (eneficiaries

Parties to a Trust: The !ettlor

1ettlor also called Crantor and sometimes $rustor

,eAuires #ntent to create a $rust

,eAuires Legal apacity to create a $rust

or revocable trust same as *ill (/!76)

or irrevocable trust understand nature of trust and probable conseAuences

-accauley et al. v. *achovia &an% 08 123d 5/6 (1 pp. 3773)Parties to a Trust0 The Trustee #ust %ccept the ,ob

"ne or more individuals or corporations

an be 1ettlor beneficiary or 5rd party

ailure to name a $rustee not fatal

EL= must have some active duties or trust will fail and beneficiaries have legal title as

well as eAuitable ownership. #n 1 no merger unless same Crantor $rustee and sole benef. (/!473(d))

Trustee: Fiduciary uties Loyalty administer in best interest of beneficiaries ; good faith (/!973); avoid conflicts

Prudence

Duty of impartiality (/!975)

Prudent dministration (/!974)

2Iamples= :ot commingle trust assets (with trustee’s personal assets); duty to

inform and account dministration paperwor% filings (taI returns etc) accountings (/!976)

#nvestment ! management

Distribution periodic and final

Penalty for breach loss of compensation or personal liability or removal

2Iercise 1pecial 1%ills (/!97)

"orp Professonal) v. Individual trustee te;t p. 1)

ost (reasonable compensation /!/79 or by agreement); Professionals have fee schedule

(p 006) 2Iperience

:eed for 1uccessors

Primary duties=

Distribution

dmin

#nvestment

o!$rustees



$rust Protector (dvisor) (/!979(b)!(c))

Private $rust o.

amily "ffice

Third0Party +i4hts

Parties to a Trust: (enefi0 ciaries Q $?uitable B-ner

Present or current beneficiaries sometimes called life beneficiaries uture beneficiaries sometimes call successor beneficiaries

inal beneficiaries! sometimes called remaindermen or remainder beneficiaries

&eneficiaries must be=

definite (/!473(b)) or

haritable (/!470) or

animals (/!479)

or certain special non!charitable trusts (/!478) but is subHect to ,P or must be

for the benefit of a cemetery etc 2Iample $rustee can give money to anyone regardless of need

'ife $state istin4uished

*ith a Life 2state there is no division of legal and eAuitable title Life 2state has legal title for life

#ssues for LE2 include waste maintenance payment of taIes

(. "reation of a Trust

Intent to "reate

-ust not be precatory # wish hope

:ot an eAuitable charge (security interest not a trust)

:ot an agent security deposit 5rd party contract

Delivery of trust property or symbolic delivery

,imene v. 'ee04/ P.3d 63 ("re. 68/)

The 6ebre- *niversity %ssc. v. Nye 68 .3d 46 (onn. 686)

#ethods to "reate0 !"T" /20G091

O reated by=$ransfer to a 5rd PartyV (Deed of $rust) delivery of property or title; or by devise in a *ill

(does not have to be in writing) or *ritten Declaration of $rust no deed reAuired but usually done

2Iercise of Power of ppt (P") in favor of a $rustee



Voral trust reAuires clear and convincing evidence to establish

Necessity of Trust Property

O 1ettlorO $rustee

O &eneficiaryO $ransfer of Property(rainard v. "ommissioner86 .3d 997 (/th ir. 685/)!peelman v. Pascal 6/9 :.2.3d /35 (:.. 686)

Aill !ubstitutes

+evocable Trusts

!"T" 7 /20G0/1. "apacity of !ettlor of +evocable Trust.

O $he capacity reAuired to create amend revo%e or add property to a revocable trust or todirect the actions of the trustee of a revocable trust is the same as that reAuired to ma%e awill.

!"T"7 /20G0/2. +evocation or amendment of +ev Trust.O (a) <nless the terms of a trust eIpressly provide that the trust is irrevocable the settlormay revo%e or amend the trust. $his subsection does not apply to a trust created under aninstrument eIecuted before the effective date of this article.

+evo5in4 "ommunity Property Trusts /20G0/2)

O (b) #f a revocable trust is created or funded by more than one settlor=O (6) to the eItent the trust consists of community property the trust may be

revo%ed by either spouse acting alone but may be amended only by Hoint action of both spouses; and . .

O (5) the trustee shall promptly notify the other settlors of the revocation oramendment.

+evo5in4 ,oint Trusts 0 0/20G0/2b)

O (b) #f a revocable trust is created or funded by more than one settlor= . . .O (3) to the eItent the trust consists of property other than community property each

settlor may revo%e or amend the trust with regard to the portion of the trust property attributable to that settlorQs contribution; and . . .

O (5) the trustee shall promptly notify the other settlors of the revocation oramendment.

/20G0/2e)

O (e) settlorQs powers with respect to revocation amendment or distribution of trust property may be eIercised by an agent under a power of attorney only to the eItenteIpressly authoriKed by the terms of the trust or the power of attorney provided theeIercise of the power does not alter the designation of beneficiaries to receive the property on the settlorQs death under the settlorQs eIisting estate plan.

!ample raftin4 to %mend a +ev. Trust

O $he 1ettlor may by signed instruments delivered to the $rustee during the 1ettlorQs lifeamend=

O $his $rust greement in any respect; orO ,evo%e this $rust in its entirety or any provision.

7 /20G0/3. !ettlorSs po-ers.

O *hile a trust is revocable rights of the beneficiaries are subHect to the control of and theduties of the trustee are owed eIclusively to the settlor.

!"T" 7 /20G0/9. 'imitation on action contestin4 validity of revocable trust distribution

of trust property.



O (a) $ime to ontest=O 6 yr after 1ettlor’s death orO 637 days after notice of trust and the time limit to contestO whichever is sooner

O (b) <pon the death of the settlor of a trust that was revocable at the settlorQs death the

trustee may proceed to distribute the trust property in accordance with the terms of thetrust. $he trustee is not subHect to liability for doing so unless=O (6) the trustee %nows of a pending Hudicial proceeding contesting the validity of

the trust; or O (3) a potential contestant has notified the trustee of a possible Hudicial proceeding

to contest the trust and a Hudicial proceeding is commenced within one hundredtwenty days after the contestant sent the notification.

O (c) beneficiary of a trust that is determined to have been invalid is liable to return anydistribution received.

7 /20G0/. $ffect of penalty clause for contest.

O provision in a revocable trust purporting to penaliKe any interested person for

contesting the validity of the trust or instituting other proceedings relating to the trust isunenforceable if probable cause eIists for instituting proceedings.O In re $state and Trust of Pilafas= 95 P.3d 437 (riK. pp. 6883)

O Wuestions presented=O #s the will revo%ed+O #s the trust revo%ed+

. Pour0Bver Aills and +evocable Trusts in #odern $state Plannin4

+easons for creatin4 +evocable Trusts:

O void the so!called >probate process? and costs (#n 1 fees are \ of 6] (@ 9!36!//7))O Creater confidentiality than owning assets directly and at death disposing of them by will

(i.e. publicity)O Provide an arrangement for property management (especially during a time of legal

incapacity of the grantor) andO void ncillary ProbateO voiding delays in starting and completing the administration process to transfer

ownership of property after a grantor’s death.O $he obHectives of the revocable trust are achieved only to the eItent that the trust is

funded.O ,ev trusts do not save estate taIes that can’t be saved with a properly drafted will.O <sually the settlor has a will that >pours over? to the revocable trust all of the decedent’s

property still individually owned at death.



Pour0Bver Aills= +evocable Trusts= and Nonprobate Transfers

7 /20201. %dditions to trusts.

O (a) % devise . . . may be made by a will to the trustee of a trust established or to beestablished by the testator or by the testator and some other person or by some other person if the trust is identified in the testatorSs -ill and its terms are set forth in a

-ritten instrument (other than a will) e;ecuted before or concurrently

O $he devise is not invalid because the trust is amendable or revocable or

because the trust was amended after the eIecution of the will or after the death ofthe testator . . . and shall be administered and disposed of in accordance -ith

the provisions of the instrument . . .= includin4 any amendments thereto made

before the death of the testator . . .O revocation or termination of the trust before the death of the testator causes the

devise to lapse.O (b) eath benefits of any 5ind including . . . life insurance policies and payments

under . . . a pension stoc%!bonus or profit!sharing plan or under a retirement annuitycontract may be paid to the trustee of a trust . . . in eIistence at the death of theinsured employee or annuitant MorN

O (c) eath benefits of any 5ind . . . may be paid . . . to a trustee named= or to be

named= in a -ill . . . . !uch payments shall be deemed to pass directly to the trustee of the testamentary trust and shall not be deemed to have passed to or be receivable bythe eIecutor of the estate of the insured employee or annuitant.

!ample Pour0Bver raftin4

O ># give and devise all the rest residue and remainder of my property of every %ind anddescription (including lapsed legacies and devises) wherever situate and whetheracAuired before or after the eIecution of this *ill to the $rustee of that certain $rustgreement between myself as 1ettlor and myself as $rustee eIecuted on the same day but before # eIecuted this *ill. . . .

O . . . $he $rustee shall add this property to the corpus of the $rust and shall administer anddistribute the property in accordance with the provisions of that $rust greement

including any amendments made by me before my death.?



"lymer v. #ayo 4/5 :.2. 3d 6794 (-ass. 6890)

7 /20G0/G. ivorce or annulment as revo5in4 revocable trust.

O #f . . . the settlor is divorced or his marriage annulled or his spouse is a party to a valid proceeding concluded by an order purporting to terminate all marital property rights orconfirming eAuitable distribution between the spouses the divorce or annulment or orderrevo%es any disposition or appointment of property including . . . any nomination of thespouse as trustee unless the trust eIpressly provides otherwise.

O Property prevented from passing to a spouse because of revocation by divorce orannulment or order passes as if the spouse failed to survive the settlor and other provisions conferring some power or office on this spouse are interpreted as if the spousefailed to survive the settlor. #f provisions are revo%ed solely by this section they arerevived by the settlorQs remarriage to the former spouse.

O . . . divorce or annulment or order means any divorce or annulment or order which would

eIclude the spouse as a surviving spouse within the meaning of subsections (a) and (b) of 1ection 3!3!973. . . .O M$his is similar to 1P @ 3!3!07/.N

Bral Trusts

$state of Fournier= 873 .3d 903 (-e. 377) (6)Blliffe v. Aells= 657 -ass. 336 (6996)

Bral Trusts in !"

O 3!/!47/ says oral trusts "_ eIcept for otherwise provided by statute=O 3!/!476 says no oral declarations of trust (settlor is trustee)O 1tatute of rauds reAuires writing to prove ,E2 trust (1ettlemeyer v. -cluney)O 1o only oral trust possible in 1 is transfer to trustee (settlor is not trustee) involving

personal propertyO 3!/!476 (b) is from old statute and says real estate constructive and resulting trusts can

be oral and that continues under 1$!ettlemeyer v. #c"luney 08 123d 064

O &etween 6893 and 6886 1ettlemeyer purchased 4 properties. 2ach time he had the titleissued in his daughter’s name.

O 1ubseAuently 1ettlemeyer filed a lawsuit alleging the properties were held in aneIpress constructive or resulting trust with -cluney as the trustee and 1ettlemeyer asthe beneficiary.

O 1ettlemeyer testified he voluntarily placed title of the properties in daughterQs name andadmitted daughter had not induced him to have the properties conveyed to her.

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O e admitted that there was never an agreement that she would reconvey the property bac%. >#t wasnQt brought up. # trusted her to thin% she would deed it bac% to me.?

O 1ettlemeyer denied owneship in a divorce proceeding and in a D2 investigationO Daughter denied she and her father had an agreement in which she was to convey the

properties to him but confirmed she did not pay the purchase price or property taIes for

the properties. 1he believed the properties were gifts from 1ettlemeyer.O t oral trust not established by >clear evidenceO t he can’t regain title when he put property out of his control for fraudlent purposesO t! a presumption of a gift eIists when transfer is to a child and reAuires proof of not gift

:o ,esulting $rust arisesO 1o . . . 3!/!476(b) opens up old rules concerning constructive trusts

O 1ecret trust ! testamentary constructive trust (1tuc%ey v. $ruette 6// 12 683(6835))

O 1ecret trust inter vivos donee %eeps unless fraud or confidential relationship but then %eeps if natural obHect of bounty (_insey v. &ennett 60 12 80 (6983));ll v. Prillaman 37 123d /46 (6843))

O 1emisecret trust still fails :o 1 cases



"hapter 0 +I>6T! TB I!T+I(*TIBN! F+B# T6$ T+*!T F*N

%. +i4hts of the (eneficiary to istributions

-andatory $rusts 2lective 1hare $rust is a sample

Discretionary $rust $he eline amily $rust is a sample (1ee neIt slideX)

1pray (inc must be distributed but who gets it+)

1prin%le trusts (inc may be distributed)$;tended iscretion $;culpation and %rbitration

%rbitration Q Nationally

,achel v. ,eitI 54/ 1*5d 570 ($eI pp "ct 3766) ! t said no state arbitration

applies to contracts i.e. agreement 1choneberger v. "elKe 8 P.5d 67/9 (riK.pp. 3774) (^ Legislature changed the law)

DiaK v. &u%ey 630 al.,ptr.5d 67 (al. pp. 3766)

(. +i4hts of the (eneficiaryHs "reditors

%lienability of (eneficial Interest

<nder the EL a beneficial interest in a trust was alienable both voluntary and

involuntary (but spendthrift trust provides otherwise) $hus under EL rights of a beneficiary’s creditors is based on what right the beneficiary

may have to income or principal upon what conditions and when (1$ 3!/!076)Types of Trusts and "reditors 0!"T" Provisions

,evocable $rust (3!/!070)

-andatory $rust (3!/!076)

Pure Discretionary $rust (3!/!074) (and probably includes 1upport $rust)

1pendthrift $rust (3!/!073 !075) can apply to both -andatory and Discretionary $rust

1elf!1ettled sset Protection $rust (nEa)

!"T" 7 /20G01. +i4hts of creditor or assi4nee

a) 2Icept as provided in subsection (b) the court may authoriKe a creditor or assignee of

the beneficiary to reach the beneficiaryQs interest by attachment of present or futuredistributions to or for the benefit of the beneficiary or other means. $he court may limitthe award to such relief as is appropriate under the circumstances

(b) $his section shall not apply and a trustee shall have no liability to any creditor of a

beneficiary for any distributions made to or for the benefit of the beneficiary to the eItenta beneficiaryQs interest=

(6) is protected by a spendthrift provision or

(3) is a discretionary trust interest

!tate !treet (an5 and Trust "o. v. +eiser= 598 :.2.3d /9 (-ass. pp. 68/8)an the ban% recover against the trust assets+

"reditors and +ev Trusts 0 !"T" 7 /20G0



(a) *hether or not the terms of a trust contain a spendthrift provision the following rules

apply=(6) During the lifetime of the settlor the property of a revocable trust is subHect to claimsof the settlorQs creditors.

(3) *ith respect to an irrevocable trust a creditor or assignee of the settlor may reach the

maIimum amount that can be distributed to or for the settlorQs benefit. #f a trust has more than one settlor the amount the creditor or assignee of a

particular settlor may reach may not eIceed the settlorQs interest in the portion ofthe trust attributable to that settlorQs contribution.

(5) fter the death of a settlor . . . the property of a trust that was revocable at the

settlorQs death is subHect to claims of the settlorQs creditors costs of administration of thesettlorQs estate . . . to the eItent the settlorQs probate estate is inadeAuate to satisfy thoseclaims costs . . . unless barred by 1ection 3!5!976 et seA.

iscretionary Trusts: !"T" 7/20G09

(b) 2Icept as otherwise provided in subsection (c) a creditor of a beneficiary may not

compel a distribution from a trust in which the beneficiary has a discretionary trust

interest even if=(6) the discretion is eIpressed in the form of a standard of distribution; or (3) the trustee has abused the discretion.

!tandard of istribution Feline Family Trust)

$he $rustee may pay to or apply for the benefit of each &eneficiary such of the net

income and principal of the $rust as the $rustee in its discretion may determine primarilyfor the medical care education support and maintenance in reasonable comfort of a&eneficiary . . . .

!"T" 7/20G09 continued

(c) $o the eItent a trustee has not complied with a standard of distribution or has abused a

discretion=

(6) a distribution may be ordered by the court to satisfy a Hudgment or court orderagainst the beneficiary for support or maintenance of the beneficiaryQs child; and

(3) the court shall direct the trustee to pay to the child such amount as is eAuitable

under the circumstances but not more than the amount the trustee would have been reAuired to distribute to or for the benefit of the beneficiary had the trusteecomplied with the standard or not abused the discretion.

Problem 3 on p. /11

$rust is to pay inc or prin to in trustee’s uncontrolled discretion the remainder to &.

W #f has a Hudgment creditor can the $rustee ma%e payments directly for ’s support+

1ee 1$ /!076 and /!074

Problem on p. /13

$rust for provides for inc and prin for ’s comfortable support and maintenance in

$rustee’s discretion. is insolvent. Wuestion= can a creditor of sue $rustee and force a payment and then receive the

distribution+ 1ee 1$ /!074

$state of !tevens !" 2)

Ym testamentary trust

Discretionary inc and prin for 3 %ids

"ne benef wants distributions to pay his children’s private school tuition arguing the cost

is part of his support

t= trustees may consider >family? when considering support but still discretion

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!pendthrift Provisions 0 !"T" 7 /2002

(a) spendthrift provision is valid only if it restrains both voluntary and involuntary

transfer of a beneficiaryQs interest. (b) term of a trust providing that the interest of a beneficiary is held subHect to a

Qspendthrift trustQ or words of similar import is sufficient to restrain both voluntary and

involuntary transfer of the beneficiaryQs interest. (c) beneficiary may not transfer an interest in a trust in violation of a valid spendthrift

provision and eIcept as otherwise provided in this article a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before its receipt bythe beneficiary.

!P$NT6+IFT draftin4)

>ll payments of principal and income payable or to become payable to the beneficiary

of any trust created hereunder shall not be subHect to anticipation assignment pledgesale or transfer in any manner nor shall any beneficiary have the power to anticipate orencumber their interest nor shall their interest while in the possession of the $rustee beliable for or subHect to the debts contracts obligations liabilities or torts of any

beneficiary.?$;ceptions to !pendthrift Provision: !"T" 73

(b) 2ven if a trust contains a spendthrift provision a beneficiaryQs child who has a Hudgment or court order against the beneficiary for support or maintenance may obtainfrom a court an order attaching present or future distributions to or for the benefit of the beneficiary.(c) $he eIception in subsection (b) is unenforceable against a special needs trustsupplemental needs trust . . .

1elf!1ettled $rusts Cenerally considered an available asset i.e. trust created with

beneficiary’s assets even if trust doc created by someone else 2Iceptions=

$estamentary Discretionary $rust created by 1pouse $rust of disabled person if trust reimburses the state upon death

". #odification and Termination of Trusts

In re Trust of !tuchell976 P.3d 903 ("r. pp. 6887)an trust be modified to provide for continuation as special needs trust if necessary to preserveJohn’s public assistance+In re +iddell60/ P.5d 999 (*ash. pp. 377/)an trust be modified to provide for continuation as special needs trust for :ancy’s benefit+

!"P" Q Family !ettlement0 /2030111 and 0112

compromise of a controversy as to admission to probate . . . the construction validity

or effect of a probated will the rights or interests in the estate of the decedent of asuccessor or the administration of the estate if approved by the court after hearing is binding on all the parties . . .

. . . including those unborn unascertained or who could not be located. n approved

compromise is binding even though it may affect a trust or an inalienable interest. . . . (3!5!6673 provides the probate court procedure for approval.)

7 /20G0911. -odification or termination of noncharitable irrevocable trust by consent with courtapproval.



fter notice to the Aualified beneficiaries a trustee may combine two or more trusts into

a single trust or divide a trust into two or more separate trusts if the result does notimpair rights of any beneficiary or adversely affect achievement of the purposes of thetrust.

"hiles v. "hiles

pply 1$ to facts $rust is irrevocable because it says so

pply /!466

1pecifically loo% at /!466(d)

/!463 and /!464 no help

/!460 +

/!46

/!465 nEa

Trust ecantin4 p. /)

Power to invade principal is eIercised to distribute all trust assets to a new trust that is

typically similar but >fiIes? whatever was wrong with original trust 1 1tay $unedX

:ow available in : las%a etc.

Trust Protectors 0 !"T" /20G0@@ b)0c)

Claflin and #aterial Purpose

$raditional Cla/lin Doctrine=

#f continuance of the trust without modification or termination is necessary to

carry out a mate"ial p"po%e of the settlor the beneficiaries cannot compelmodification or termination.

2Iamples of -aterial Purpose (traditional law)=

1pendthrift trust (Cermann v. : Life o. (556 1123d 590 (1 pp. 6890))

Discretionary trust

1upport trust Postponed enHoyment

In re $state of (ro-n=039 .3d /03 (Gt. 689/)(*! <he t"%t %hall e %ed to p"ovide an edcation /o" the child"en o/ m# nephe- .

Said t"%t to contine /o" %aid p"po%e ntil accompli%hed.

At %ch time a% thi% p"po%e ha% een accompli%hed =the t"%t %hall contine> /o" the ca"e,

maintenance and -el/a"e o/ =m# nephe- and -i/e> /o" and d"ing the "emainde" o/ thei" nat"allive%.

6) as the educational purpose been satisfied+

3) #f so is there any other material purpose preventing termination+



"hapter 11 0 "6%+IT%('$ T+*!T!

%. Introduction

"haritable Trusts v. Private Trusts

(. Nature of "haritable Purposes

"haritable Purposes 0 !"T" /20G09

haritable purposes include=(a) the relief of distress or poverty;(b) the advancement of %nowledge or education;(c) the advancement of religion;(d) the promotion of health scientific literary benevolent purposes;(e) governmental or municipal purposes; and(f) other purposes that are beneficial to the community.

(b) #f the terms of a charitable trust do not indicate a particular charitable purpose or

beneficiary the court may select one or more charitable purposes or beneficiaries. $heselection must be consistent with the settlorQs intention to the eItent it can be ascertained.

(c) $he settlor of a charitable trust the trustee and the ttorney Ceneral among others

may maintain a proceeding to enforce the trust.!henandoah Oalley National (an5 v. Taylor 5 1.2.3d /9 (Ga. 6806)(1! ?n the la%t %chool da# o/ each calenda" #ea" e/o"e a%te" m# <"%tee %hall divide the net

income into a% man# e@al pa"t% a% the"e a"e child"en in the /i"%t, %econd and thi"d g"ade% o/ the ohn +e"" School , and %hall pa# one o/ %ch e@al pa"t% to each child in %ch g"ade%, to e

%ed # %ch child in the /"the"ance o/ hi% o" he" otainment o/ an edcation.

6) Did the testator intend to create a charitable trust+3) #s the trust in the court’s Hudgment charitable+

Taylor under !" 'a-

O #s it a charitable trust+O ow about under 3!/!473(5)() refers over to the statutory ,PO ow about /3!/!470(a)+

approves benevolence

". #odification of "haritable Trusts: "y Pres or $?uitable eviation in !"

7 /20G0913. $?uitable deviation "y Pres).

(a) 2Icept as otherwise provided in 1ubsection (b) if a particular charitable purpose

becomes unlawful impracticable impossible to achieve or wasteful= (6) the trust does not fail in whole or in part;

(3) the trust property does not revert to the settlor or the settlorQs successors in

interest; and



(5) the court may deviate from the terms of the trust to modify or terminate the

trust by directing that the trust property be applied or distributed in whole or in part in a manner consistent with the settlorQs charitable intent.

(b) provision in the terms of a charitable trust that would result in distribution of the

trust property to a noncharitable beneficiary prevails over the power of the court under

subsection (a) to modify or terminate the trust only if when the provision ta%es effect= (6) the trust property is to revert to the settlor and the settlor is still living; or

(3) fewer than the number of years allowed under the 1outh arolina <niform

1tatutory ,ule gainst Perpetuities (1.. ode 1ection 3/!!67 et seA. ) haveelapsed since the date of the trustQs creation.

In re Neher= 69 :.2.3d 30 (:.. 6858)=M># home in Bed Hoo Village to the inco"po"ated Village o/ Bed Hoo, a% a memo"ial tothe memo"# o/ m# eloved h%and, He"e"t ehe", -ith the di"ection to %aid Village that %aid

p"ope"t# e %ed a% a ho%pital to e no-n a% He"e"t ehe" Memo"ial Ho%pital.8 6) Did testator have a general or specific charitable intent+3) #f the testator had a general charitable intent what alternative charitable purposes would

be consistent with that intent+$;pansion of "y Pres

>*asteful? as basis for cy pres=

y pres allowed if stated charitable purpose becomes >unlawful impracticable

impossible to achieve or -a%te/l.8 Presumption of general charitable intent=

Party opposing cy pres must show donor lac%ed general charitable intent.

!an Francisco "hronicle:The (uc5 Trust

6) *hich was more important 1 as trustee or the -arin ounty limit+3) *hat result if >wasteful? was a recogniKed grounds for cy pres+

Philadelphia !tory:The (arnes Foundation

Ta; +ulesO #ncome $aI Deduction ! #, @ 6/7 (F sometimes @ 4 for some gifts to trusts)O $aI 2Iemption 2ntity ! #, @ 076(c)

#,1 approval reAuired ! @ 079 (eIcept churches and less than Y0%)O 2state $aI Deduction #, @ 3700

"haritable +emainder Trusts Ta; structured by I+" 7 //9)

O ommon type charitable trustO -ust have at least one non!charitable beneficiary andO when all non!charitable interests terminate the must pay over to charity or

continue as a wholly charitable trustO an be for term of years (37 yr. maI) or for life or lives of individuals

O $wo basic types=O haritable remainder annuity trust ! ,$ ! (pays a fiIed sum at least annually)

0] minimum 07] maIO 2I= pay Y07% a year from Y6m trust

O haritable remainder unitrust ,<$ ! (pays a fiIed percentage of -G of trustassets at least annually; recalculated each year! 0] min 07] maI.

O 2I= 0] of -G annually from Y6m trustO :o invasion of principal permittedO Galue of remainder must be at least 67]O ,$ is inc taI eIempt but distributions are income to the beneficiary to the eItent that

trust has current or accumulated income

Bther Forms of "haritable >ifts

http://web2.westlaw.com/find/default.wl?rp=/find/default.wl&vc=0&ordoc=8346801&DB=1001530&DocName=SCSTS27-6-10&FindType=L&AP=&rs=WLW11.10&vr=2.0&fn=_top&mt=208&pbc=75AE72C7&sv=Split





O Pooled income funds (sponsored by the charity)! pays a variable ] each year O haritable gift annuity pays a fiIed annuity annuallyO ,emainder interest in a farm or residenceO haritable lead trust (it’s the reverse of the charitable remainder trust= charity first and

then non!charitable remainder. :ot an income taI eIempt entity. :ot affected by /!

465(b) purpose satisfied not failed.)



"hapter 12 0 PBA$+! BF %PPBINT#$NT: (*I'IN> F'$I(I'IT& INTB T+*!T!

%. Introduction

%dvanta4es of Po-ers of %ppointment

Postpone and delegate decisions about who will receive future distributions of trust

property.

ddresses problem of changes in circumstances. $aI avoidance.

an be structured to avoid taIation when eIercised.

Terminolo4y and Types of Po-ers of %ppointment

>eneral Po-ers >PB%)

ppointing to self estate creditors and creditors of estate is based on federal estate taI

law. 1ee #, @ 3746 and applicable regulations $he power to appoint to the entire world eIcept >self estate creditors ad creditors of

estate? is not CP" Power to appt to heirs and charities is not a CP" it’s a 1P"

Ta; "onsiderations for Po-ers of %ppointment

Ceneral Power

Donee is treated as owner of appointive property and taIed accordingly (income

gift and estate). 1pecial Power

Donee is not treated as owner of appointive property for taI purposes (income

gift and estate). Possible to give donee something close to functional eAuivalent of

ownership without additional taI. <sed regularly in contemporary estate planning to preserve fleIibility

without taI cost. *here ,P has been abolished can create a d#na%t# t"%t eIempt from

transfer taI in perpetuity.Ir-in *nion (an5 Trust "o. v. 'on4 563 :.2.3d 879 (#nd. pp. 68/4)an Gictoria reach the appointive property to satisfy her divorce Hudgment+". $;ercise of a Po-er of %ppointment

>eneral +e?uisites for $;ercise of a Po-er

power of appointment is eIercised to the eItent that=(6) the donee manifests an intent to eIercise the power in an otherwise effectivedocument;(3) the donee’s eIpression of an intent to appoint satisfies the formal reAuirements ofeIercise imposed by the donor and by applicable law; and

(5) the donee’s appointment constitutes a permissible eIercise of the power. T



*hether or not the donee has manifested an intent to eIercise a power of appointment is aAuestion of construction. Be%tatement (<hi"d! o/ D"ope"t#E )ill% and ?the" :onative <"an%/e"%,

@@68.6!68.3 (<.:. o. 5, 2006!

(eals v. !tate !treet (an5 Trust "o. 53 :.2.3d 98 (-ass. 68/0)+esiduary "lauses and Testamentary Po-ers

$;ercise of Po-ers of %ppointment: !"P" 7/2020/@ general residuary clause in a will or a will ma%ing general disposition of all of the testatorQs property does not eIercise a power of appointment held by the testator unless specific referenceis made to the power or there is some other indication of intention to include the property subHectto the power.'imitations on $;ercise

Ceneral power=

Donee can appoint in further trust.

1pecial power=

$raditional view Donee cannot appoint in further trust unless eIpressly

permitted.

-odern view Donee can appoint in further trust.$;clusive versus None;clusive Po-ers

2Iclusive Power

Donee can appoint all the property to one or more obHects eIcluding others.

Language such as= >to any one or more?; >to such of.?

:oneIclusive Power

Donee m%t appoint some amount to each obHect.

Language such as= >to all and every one?; >to each and every one.?

#llusory ppointment ,ule= 2ach obHect must receive a >reasonable benefit.?

Fraud on PB%

Problem on p. @23 Q !pecial po-er e;ercised in favor of permissive appointment

<25 to cousin) -ith side deal to 4ive portion of appointed property <15) to

non0permissive appointee husband)

%llocation and "apture

llocation (-arshalling)

#f appointive property and the donee’s property are disposed of in a common

disposition the property is allocated to give maIimum effect to the donee’sintended disposition.

$ypically applied when there is an ineffective appointment to a nonobHect or an

appointment violates the ,P.



apture

*hen donor ma%es an ineffective appointment and allocation cannot save it

appointive property passes through donee’s estate if the power is general. pplied when donee of a general power >manifests an intent to assume control of

appointive property for all purposes.?

'apse Problem $’s will reads=

6. eIercise P" to ;

3. rest to &.

predeceases but is say a cousin with issue so anti!lapse statute would apply to a

devise.. +elease of a Po-er of %ppointment

!eidel v. Aerner 54 :..1.3d 85 (1up. t. 68/0)#s contract to eIercise testamentary power of appointment in favor of nna and ran%enforceable+$. Failure to $;ercise a Po-er of %ppointment

'orin4 v. #arshall 494 :.2.3d 6560 (-ass. 6890)t nna’s death who ta%es the trust principal+Necessity of Trust (eneficiaries

"lar5 v. "ampbell 655 . 6 (:.. 683) the"e/o"e give and e@eath to m# t"%tee% all m# p"ope"t# em"aced -ithin the cla%%i/ication

a/o"e%aid in t"%t to mae di%po%al # the -a# o/ a memento /"om m#%el/, o/ %ch a"ticle% to %cho/ m# /"iend% a% the#, m# t"%tee%, %hall %elect.

-ust >the beAuest for the benefit of the testator’s friends’Tfail for the want of certainty

of the beneficiaries?+The Aill of #arilyn #onroe

6) Did -onroe intend to create a trust+3) #f so did -onroe designate an ascertainable beneficiary+

7 /20G092. +e?uirements for creation0 Po-ers in Trust

O (c) power in a trustee to select a beneficiary from an indefinite class is valid. #f the power is not eIercised within a reasonable time the power fails and the property subHectto the power passes to the persons who would have ta%en the property had the power not

been conferred.In re !eari4htHs $state 80 :.2.3d //8 ("hio pp. 6807)Trusts for Noncharitable Purposes



7 /20G09@. Trust for care of animal.

O (a) trust may be created to provide for the care of an animal or animals alive or ingestation during the settlorQs lifetime whether or not alive at the time the trust is created.$he trust terminates upon the death of the last surviving animal.(b) trust authoriKed by this section may be enforced by a person appointed in the termsof the trust or if no person is so appointed by a person appointed by the court. personconcerned for the welfare of the animal may reAuest the court to appoint a person toenforce the trust or to remove a person appointed.(c) Property of a trust authoriKed by this section may be applied only to its intended useeIcept to the eItent the court determines that the value of the trust property eIceeds theamount reAuired for the intended use. 2Icept as otherwise provided in the terms of thetrust property not reAuired for the intended use must be distributed to the settlor if thenliving otherwise to the settlorQs successors in interest.

OO

south carolina trust & estates outlin

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