wills and trusts - roddod

Wills & Trusts Outline Rodriguez-Dod [Spring 2000] K. McMahan

INTRODUCTION

1. Key Terms §731.201A. Will (35) - A written document properly signed that disposes of a person’s property at

deathB. Beneficiary (2) – one who receives something from a will

1. AKA - deviseeC. Codicil: A supplement which adds to, subtracts from, or modifies a will

1. note: you don’t have to change the entire will.D. Devise (8) – gift (of real estate)or property that is distributed in a will

1. Historically it included legacy ($) and bequest; NOW all one inclusive termE. Devisee (9) – means a person designated in a will to receive a devise.

1. In the case of a devise to an existing trust or trustee, or to a trustee of a trust described by the will, the trust or trustee is the devisee. a. Beneficiaries of the trust are not devisees.

F. Heirs (18) – persons who receive something from an intestate estateG. Beneficiary – a person who receives through testate or intestate meansH. Intestate - Died without a valid will or any will at all;

1. Individual may die partially intestate if their will is incomplete in some way.2. Circumstances where one dies testate but some of his assets are intestate

a. example: Properly prepared will that states that deceased gives his home to his brother. However at the time of his death, decedent owns a car, bank account, etc.

3. When you die intestate, you go through the administration of the estate, but attorneys use this interchangeably with the term probate.

I. Testate: Died with a valid will1. Testator is the deceased male writer of the will 2. Testatrix is the deceased female writer of a will (but we don’t really use this term

anymore)J. Personal Representative (25) – In Florida, a person or individual or corporation in

charge who is appointed to taking care of your estate.1. Testator nominates person and the Court approves.

K. Probate of Will (27) – all steps necessary to validate a will with the court and asking the court to recognize it and accept it as the person’s last will

L. Property (28) – means both real and personal property or any interest in ownership of itM. Trust (33) - A fiduciary relationship with respect to property, in which title and beneficial

ownership are separate1. Trustee Holds title to and manages the trust property for the benefit of another

person or persons, who are called the beneficiary or beneficiaries.2. Gifts left in Wills:

A. Devise : A gift in a will that deals with Real Estate (real property);B. Devisee : The one who received this land;C. Legacy : A gift of money;D. Bequest : A gift of some tangible object.

1. example: car, jewelry, artwork, stocks.E. Today there really isn’t a distinction of the above, they are all interchanged with Devise.

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3. Receivers of gifts:A. Beneficiary : receives the estate via the will.

1. Also called a legatee, or devisee.B. Heir : receives by statute or law the intestate estate.C. Note: you can be both an heir AND a beneficiary (think partially intestate).

4. “Per Capita” literally means “Per Person” or “Per Head”A. “I leave 10,000 Per Capita to Fred”B. Requires the element of survivorship. Means that Fred has to survive the testator in

order to receive the gift and not have it lapse.5. “Per Stirpes” literally means “By the Roots”

A. The person will get the gift but, if they don’t survive the testator, the lineal descendants of that person receive the gift evenly.

B. In Florida this is known as “Per Stirpes Distribution by Representation” and to make the distribution at the level of people who were supposed to get the money. This is the minority rule.

C. Florida follows the Per Stirpes Distribution method 1. Example #1 A gift from A to B of $10,000 Per Stirpes.

a. facts: B has 2 kids (Marvy and Renee); and B dies before A.b. answer: each child gets $5,000

2. Example #2 Ann had an estate worth $200,000.a. facts: She has 2 brothers at the time she wrote the will (Ron and Marco). Ron

has 2 daughters (Elena and Lynn); Marco has one son (Larry).b. Assuming her brothers survive her – both Ron and Marco get the money at her

death per stripes. ($100,000 each)c. Non Assume Both Ron and Marco are dead, but their children are alive.d. Florida says to distribute at the level of who was supposed to get the money

therefore, Elena and Lynn would receive 50,000 each (1/2 of their father Ron’s share) and Larry would receive 100,000 (his father’s share).

e. The majority of states say that the 200,000 should be distributed evenly among Lynn, Elena and Larry.

D. This can always be overcome by putting a paragraph in the will how you want the money distributed if your beneficiaries don’t survive you.

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PROBATE PROPERTY AND PROBATE PROCEEDINGS

1. The Probate ProceedingA. This is a Court proceeding that aims at having the decedent’s will viewed as valid (along

with any and all codicils).1. If there is no will, this is referred to as an Intestate Proceeding.2. Proceeding is generally referred to as the court “blessing” the will.

B. A will has absolutely NO meaning until the court recognizes it.1. Note: Remember, there is no absolute legal right to give your “stuff” away at death.

C. Proceedings are Ex Parte – in behalf of only one partyD. Probate Proceedings occur in the county where the decedant was domiciled (living) §

733.101E. Order of Probate Proceeding:

1. example: The Smiths are a couple in their 70s with 3 children & grandchildren2. questions to ask in interview:

a. Do they want a will?b. Do they already have a will?c. What property do they have?d. Where is property located?e. Where do they live?f. Is it community property (jointly owned w/ ½ interest to each)?

3. facts: When one dies, they want $600,000 to be split b/t their three kids/grandkids and $1.4 M to surviving spouse. When the second dies, they want the $1.4 to go to the 4

4. considerations: estate taxes, whether kids are descendants of both H & W, what if any kids predecease them.

5. ORDER of Probate Proceedings:a. Step One : Determine if there was a duly executed will or not.b. Step Two : File will in probate court in county where Smith resided when he

diedc. Step Three : File a petition that Smith appointed W as a Personal

Representative (Executor or Executrix) in charge to handle the estate & ask court to recognize will as a valid will.(1) W can resign, may be someone else named in the will or someone else

can volunteer and court can approve themd. Step Four : Gather all of the Probate Property together and itemize these

assets.e. Step Five : Since estate is now open for administration, it is open for people to

file claims (creditors, illigitamate children).(1) If no claims are made, personal rep collects the decedent’s assets,

makes a list of the heirs, investigates owed debts, gathers beneficiaries, litigates on behalf of the estate, pays the taxes, finally distributes the remaining assets(a) If there is a will Distribute the remainder(b) If there is not a will Distribute according to the intestate

statutes.f. Step Six : Petition the court to allow you to close the estate

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F. §733.101 Jurisdiction/Venue:1. In FL, original jurisdiction is in the Trial Court level (Circuit Court) in the county in

the state in which the decedent had his or her “domicile”.a. Domicile is synonymous with residence.

(1) Principle Place of Abode(a) If unclear, look towards the decedent’s intent of where he wanted

to remain.i. example: Person owns condo in Ft. Lauderdale, but is then

placed in Nursing Home in Iowa but, retains title to condo. NO MATTER HOW UNREALISTIC THE INTENT – if that person intended to move back to Florida, then their venue for probate purposes is in Broward County.

2. ORDER FOR TESTa. First look towards:

(1) §733.101(1)(a) – Domicile(2) §733.101(1)(b) – If no Domicile in this State, then any county that

Decedent owned Real Property.(3) §733.101(c) – If no Domicile and no Real Property, then in any county

where a debtor of the Decedent resides.b. Note: Under §733.101(2), a husband and wife do not have to have the same

domiciles. G. Ancillary Proceeding

1. Proceedings that deal with property that is outside the jurisdiction of the Probate Court.a. Only Real Property creates this problem.

2. Such items as: Stocks, Bonds, and Bank Accounts in States where the decedent did not live are deemed to “travel” with the decedent and thus do not suffer through an Ancillary Proceeding.

H. §733.103 –Effect of Probate1. Two Basic Provisions are contained in this Section:

a. §733.103(1): Technically, a will in and of itself means nothing, it does not pass title to you upon a person’s death…the right to possess the property is postponed until it goes through administration/probate.

b. §733.103(2): Sometimes collateral attacks are allowed for extrinsic matters (not intrinsic), which allow individuals a chance to litigate and attack a will on its validity.(1) Once a will is admitted into probate, it is generally thought to be valid

and collateral attacks are not permitted(a) It will likely be admitted if it was Duly Executed –it was signed

properlyi. Due Execution exists where:

a. It was done with competence (no duress, fraud, mistake, undue influence)

b. It was not revoked at time of death of the decedent (§733.103)

(2) Collateral Attacks

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(a) Are not defined by the Statute but:i. Collateral Attacks are not allowed outside of the Probate

Proceeding.ii. An attack is Collateral if you have an adequate legal

availability to attack it in probate.(b) Example: 3rd child is left nothing in his father’s will. After Probate,

he files a claim against his two sisters for tortious interfearance of a will.i. NO GOOD. The 3rd child will be collaterally estopped from

raising this argument after the Probate Proceedings.ii. Remember

a. CAN ONLY MAKE A WILL VALID IN PROBATE;b. CAN ONLY CONTEST A WILL IN PROBATE.

2. Exceptionsa. The above example of a Collateral Attack is also an Example of Intrinsic fraud.

(1) ie: proof that decedent is coerced into signing a will, etc.b. Whenever such intrinsic fraud is raised after probate proceeding – an estoppel

claim is raised precluding the petitioner from asserting his claim.(1) EXCEPTION If the claim is Extrinsic then the petitioner is not

estopped from asserting his claim.(a) Example Wife leaves everything to her husband and the adult

children want to contest the will based on tortious interference by their mother’s husband. If the husband tells the kids not to bring the claim and he’ll share with them later, and the children actually do not go to probate court and the husband does not share – this is Extrinsic Fraud and IS allowed after the proceeding has ended.

(b) Steps:i. Look at who’s being defraudedii. If the person being defrauded is someone who could have

argued in probate (ie: named in a previous will or would be left something in intestacy by the statutes) – then it’s allowed.

iii. Ask: “But for the fraud, the individual would have questioned the will in probate.”

2. What is Probate Property? A. Definition : Probate Property includes all property, real or personal, tangible or

intangible, wherever located and solely owned by the decedent at the time of death, except for Homestead Real Property and real estate outside of Florida.

B. Examples:1. Business Interests - Partnership interest, stock in a closely held corporation or any

business entity, etc. is all probate property when solely owned by decedent.a. Personal Representative is permitted to go in and audit books to determine the

decedent’s ownership value.b. However, Pers. Rep. should immediately sell the decedent’s interest to

guarantee that the value does not decrease.2. Cash decedent had primary control over

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a. If on decedent’s person at the time of death it’s probate propertyb. Same as cash in safe, in a bank, residence, vault, etc.c. Money in a client trust account is NOT probate property

3. Claims Against Others – intangible probate assets because right exists for decedent to receive moneya. promissory notes, accounts receivable, pending lawsuits

4. Contract Rights a. Frequent Flyer miles MAY be probate property if they are transferable.

(1) example: Jack owns Blackacre under a deed that allows him to keep it as long as Jill is alive. Jack’s Personal Representative needs to determine if Jill is alive at the time of death to see if this is included in Jack’s probate property.

5. The right to use a famous decedent’s name or likeness may be considered probate property.

6. Interests in Property Own may either own real estate or own interests/rights to it.a. Such Tenancies as Tenancy in Common are part of a decedent’s probate

estate because he owns those interests solely.b. Interests that include a right of survivorship are NEVER part of a decedent’s

probate property. (see §689.15)c. House that decedent owns in Florida that he rents out is Probate Property.

(1) Because not homestead property that is solely owned (§733.608)d. Pre-paid cemetery plots are real estate (see §733.608)e. Real Property in Florida is probate, even if there was a contract to sell

Homestead Property is initially non-probate property and must be petitioned to the court to become probate property.

f. Co-Op in New York is Probate Property. (1) Not considered for Homestead because it is not Real Property but it is a

share of ownership in the co-operative that are intangible personal property wherever located.

7. Judgment Monies Awards for wrongful death become part of the decedent’s probate estate because it was his estate that brought the action.

8. Tangible Personal Property – (things you can touch)- Inherent probate value is based on its objectivity. Determination must be made as to if it was jointly or individually owned.a. Jewelry, clothing, furniture, stamps, collectible coins, art work, antiquesb. Bankbook and cash are NOT tangible because they represent something

3. What is NOT Probate Property?A. Generally – Non Probate Property falls under the category of instruments known as “Will

Substitutes.”B. These items are plentiful and include:

1. revocable trust;2. life-insurance contract;3. pension accounts;

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4. joint bank or stock account;5. rights of survivorship.

C. In these situations, a death certificate is all that is needed to transfer title.D. Will Substitutes differ from an ordinary “last will and testament” in three ways:

1. Most will substitutes are asset specific (each deals with a specific type of property);

2. Such property avoids probate;3. The formal requirements of a will (ie: attestation) do not govern will substitutes.

E. Trusts: Someone holds property for the benefit of someone else - 1. An owner of property transfers legal ownership to a trustee to hold for the benefit

of a beneficiary (considered the equitable owner)a. Trusts are NOT probate propertyb. Example Grandpa puts money in a trust estate for his granddaughter. The

maintainer of this trust is the Grandfather’s son. (1) The granddaughter is the equitable title owner of the trust and known as

the beneficiary. (2) The son is the legal owner of the trust and is known as the trustee. (3) If the son dies, this money is NOT part of his probate estate since he is

merely holding it for someone else’s benefit (granddaughter’s). However if the granddaughter dies BEFORE her father, the trust is part of the granddaughter’s probate property.

(4) Remember: Where a decedent had a fiduciary interest in an estate by holding property for someone else as a trustee, don’t included in the decedent’s probate property.

2. Florida presumes ALL trusts to be irrevocable.a. It is up to the originator to reserve the right to revoke it.

3. Types of Trusts:a. Totten Trust: bank account that decedent opens in his lifetime and names a

beneficiary, at time of death beneficiary gets it(1) Totten Trusts are fully revocable during decedent’s lifetime but, become

irrevocable at death.(2) This is a smooth way to get $$ outside of probate(3) Example: JOHN DOE ITF JANE SMITH John Doe can freely spend his

money and at his death, “ITF” which means “In Trust For” simply informs the bank to pay Jane Smith whatever is left in the account.(a) NOTE: If Jane Smith dies before John Doe – This DOES become

probate property.b. Intervivos Trust: Trust created during the decedent’s life

(1) Does this mean the beneficiary gets it during the life of the c. Testimentary Trust: Trust created in the decedent’s will.d. Grantor Trust: Recognized under Florida law and the IRS.

(1) Grantor of the trust fund makes himself the trustee and names a beneficiary. In this respect, his wishes never go through probate (ie: he maintains and distributes the $$ to beneficiary as HE sees fit until his death).

e. Equitable Trust: Made by an operation of law.

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(1) These are split into two categories Resulting Trusts and Constructive Trusts (there MUST be a confidential relationship present for this one).

F. Rights of Survivorship1. Property will avoid probate on decedent’s death where it’s held as:

a. Joint Tenants with Rights of Survivorship; or b. Tenants by the Entirety with Rights of Survivorship.

2. §689.15 –In Florida if two people, who are not married, have their names on a deed and, absent an express statement that they are to have rights of survivorship, the court will hold that the individuals hold as Tenants in Common.a. If a married couple wants to hold their property as Tenants in Common, they

will HAVE to have an express provision stating such.b. SO ABSENT AN EXPRESS Right OF Survivorship, FLORIDA ASSUMES

THAT MARRIED COUPLES ALWAYS HAVE Right OF Survivorship (1) Example David and his son John own a house as Tenants in

Common. Despite dual ownership with both names on the deed, John lives somewhere else. David, in his late years, meets Alice and marries her and transfers his ½ interest in the house into “David and Alice as Tenants by the Entirety with R of S”. David soon dies.

(2) David’s joint ½ interest automatically shifts to solely Alice’s after his death. However, Alice and John own the house now as Tenants in Common.

G. Community Property1. Definition : All property and assets acquired by a husband and wife during the

course of their marriage, while they lived in a community property state, is considered to belong to both spouses equally with a ½ interest to each spouse.a. EXCEPTION : other than property acquired by devise, gift or inheritance.

2. Florida is NOT a community property state. The following are:a. Louisiana, Texas, New Mexico, Arizona, California, Washington, Idaho, and

Nevada.b. If clients had acquired property living in a community property state, the laws of

that jurisdiction may effect your Florida clients.c. example: J marries S in NY (non-community property state). They

subsequently move to California (community property state) and they buy a home in CA for $100,000 and acquire $200,000 in stock in J’s name. (So $1.2M worth of property was acquired in community property state).(1) They sell the CA home for $1M and put the $1M in J’s bank account

then move to Florida. J dies and is survived by S and 4 children. J’s will cuts S out and says 4 kids get equal shares.

(2) Seems that S gets nothing BUT since they acquired $1.2M (house & stocks) in a community property state, S gets ½ of that pursuant to the laws of that jurisdiction. Also, those $1.2M assets DO NOT go through probate.

(3) The other ½ is left to probate and will be distributed pursuant to the will with ¼ interest to each kid.

(4) If will would have said to S and 4 kids, S would still receive ½ of $1.2M and the other ½ would get divided 5 ways.

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(5) NOTE: you have the option to alter your interest when you move from a community property state.

H. Life Insurance – generally NOT a probate asset1. Look at 3 people

a. The insured;b. The owner of the insurance; andc. The beneficiary.

2. Generally, the owner of the insurance is also the insured and logically is not the beneficiary as well.a. Example #1: If the decedent’s company took out a life insurance contract on

him (as they do with executives) typically the named beneficiary is the company, this is NOT probate property.

b. Example #2: If the decedent owned property and named his estate as the beneficiary, this MAY be probate property.

c. Example #3: If the decedent is the insured and dies before at least one beneficiary, this is NOT probate property.

d. Example #4: If the decedent dies after the beneficiary, and there is no default/successor beneficiary – this SHALL be probate property.

e. Example #5: Look who killed the decedent; If the beneficiary is proven to have in some way caused the death of the insured, then he CANNOT receive the money.(1) Even if criminal court does not find beneficiary guilty, the probate court

or a civil court can make its own determination as to if beneficiary killed the decedent.

Probate Assets ( Generally)

1) All assets solely owned by the decedent2) Excludes Homestead3) Escludes Non-Fla. Interests in Non-Fla real estate4) Excludes Tenancy with right of Survivorship and Tenancy By Entirety5) Excludes Life Insurance with a beneficiary6) Excludes property owned by decedent as a trustee.

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TAX CONSEQUENCES OF DEVISING PROPERTY

1. THIS IS NOT FROM ROD-DOD’S CLASS, THIS IS INTERESTING INFO I WANTED TO REMEMBER

2. Amounts excludable during ones lifetime :A. Each individual has the right to gift up to $10,000.00 every calendar year to any and as

many people as they want to without having to pay any gift taxes (by themselves or the grantees).

1. If a husband and wife then up to $20,000.00 may be gifted tax-free every calendar year.a. Remember: It goes by individual and not by husband AND wife.

3. Amounts excludable by devise : (as of 1999)A. $650,000.00 may be devised tax-free by each and every individual during one’s lifetime.

1. This amount may be in any combination of assets. (ie: homes, cars, accounts, etc.)

2. NOTE: This amount can not be gifted to as many people as the decedent choosesa. he is ONLY allowed $650,000.00 tax-free ONCE!

3. Husband and wife may gift 1.3 million tax free.B. This limit is constantly changing due to inflationary rates.

1. NOTE: In the year 2006 – you may devise up to $1,000,000.00 tax-free!C. The Unified Gift Tax Law states that this amount may be accelerated, and part or all may

be gifted by the individual now.D. NOTE: This is in addition to the 10K/yr + 10K/yr to as many people/yr as you want.

4. Amounts excludable to your spouse :A. You may gift as much assets as you want to your spouse free of estate or gift tax when

you die.

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DYING INTESTATE

1. Intestate: When a decedent dies without a will or without a valid will, then the estate is in intestacy. A partially invalid will fails to give away all probate property and thus it is in partial intestacy.A. Only probate property passes through intestacyB. ORDER ON TEST:

1. First, under §732.101(2) must show that the decedent is in fact dead.a. Under §731.103(3), a person is presumed dead only after you have diligently

searched.(1) Simply being missing may cause a problem!

2. Second, must be of a class that falls under the intestacy scheme.a. Under §731.101(1), an heir is entitled to inherit if a person did not dispose of

property in a will.b. Must show you qualify as an “heir”

3. Then see Who Gets What infraC. §732.101(1)

1. Any part of the estate of a decedent not effectively disposed of by will passes to the decedent’s heirs. a. The Court will only distribute probate property.

2. §731.201(18) defines “Heirs” or “heirs at law” as those persons (residents, non-residents, or aliens), including the surviving spouse, who are entitled under the statutes of intestate succession to the property of the decedent.a. Who survives the decedent determines who inherits.b. This group includes blood relatives and the decedent’s surviving spouse.c. Relatives by means of marriage (in-laws) are excluded and are not heirs.d. Note: If a will is rendered partially invalid, the same person may be considered

a devisee AND an heir.(1) example: Sam has $100K in bank, $5K car, $80K home = $185 probate

property(a) He wills $20K cash plus $5K car to church(b) He wills $50K to nephew Jerome BUT J dies before Sam(c) His estate is in partial intestacy…$25k properly goes to church;

Under 101(2), J cannot inherit because he didn’t survive the decedent; thus $160k goes through intestacy because he didn’t account for survivorship. i. (S should have included a residuary clause in his will to

cover what he forgot to devise).D. §732.101(2)

1. Heirs have no claims to the decedent’s property until the decedent has died.a. An heir MUST survive the decedent in order to be considered an heir and

inherit.2. The Intestate Proceeding

A. Who survived the decedent?1. Surviving Spouse has the best chance of becoming an heir.2. Lineal Heirs have the next best chance, first by far group a. then b.

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a. Lineal Descendents : Individuals related to the decedent by blood but born AFTER the decedent (e.g. decedent’s children, grandchildren).

b. Lineal Ascendents : Individuals related to the decedent by blood but born BEFORE the decedent (e.g. decedent’s parents, grandparents).

3. If there are no lineal ascendents or decendents, then the Court looks towards collateral individuals.a. Collateral Heirs : Individuals who share a common relative with you, such as

parents and grandparents.(1) Such heirs would include brothers, uncles, and cousins.

B. ORDER ON TEST – WHO GETS WHAT1. Is there a surviving spouse?

a. Does a legally valid marriage exist at time of death?b. Which assets apply under §732.102 to satisfy share of spouse?c. Is surviving spouse estopped from inheriting?

2. Are there other heirs - which assets apply under §732.103 to satisfy remaining share of heirs? a. Lineal descendants under 732.103(1)?

(1) Goes to nearest generation level that is living, or where dead, that have lineal decendants

(2) Adopted under 732.108(1)?(3) Illigitamate (born out of wedlock) under 732.108(2)?(4) Afterborn heirs under 732.106?(5) Half-Blood under 732.105?

b. Parents under 732.103(2)?c. Siblings and descendants of siblings under 731.103(3)?d. ½ each to paternal and maternal kindred under 732.103(4)?

(1) Grandma/Grandpa under 732.103(4)(a)?(2) Uncles/Aunts and descendents of under 732.103(4)(b)?(3) Does one side get all under 732.103(4)(c)?

e. Last deceased spouse’s family under 732.103(5)?3. Since absolutely no one exists, how much escheats to the state under 732.107?4. How are the gifts distributed per stirpes under 732.104?

3. §732.102 –Share of SpouseA. Spouse must prove that at the time of death, they were legally married to the decedent.

1. Marriages entered into for ANY reason are upheld in the eyes of the intestate statutes.a. Evidence that married as a result of undue influence is irrelevant, marriage is

still valid; It is voidable but not void.(1) A valid marriage may be repudiated (set aside) and the spouse is not

considered a “surviving spouse” when:(a) Married and left spouse within a year(b) Left spouse and married another bigamously(c) She comes back after he dies and wants $$ (kids fought it and

proved she repudiated thus she got nothing)2. If divorce has not been finalized (filing or contemplation of divorce), can’t block a

spouse from asserting spousal inheritance rights in intestate.a. Separation is not a divorce thus you’re still married.

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b. Absent a final decree of dissolution of marriage from a judge, the Court will consider a spouse a spouse. Once a decree is entered, the ex-spouse is barred from receiving from the husband in intestacy.

B. §732.102(1)(a) – NO LINEAL DESCENDANTS1. If no surviving lineal descendants exist, surviving spouse gets everything AT TIME

OF DEATH.C. §732.102(1)(b) – LINEAL DESCENDANTS OF BOTH –note that the law hase changed

from 20k to 60k.1. If surviving spouse and lineal descendents that are both his as well as those of the

surviving spouse = the spouse receives the first $60,000 of the estate VALUED AT TIME OF DEATH plus half of what is left. The lineal descendents (most likely children of both), all equally share the remaining half.a. NOTE: If the first $60,000 exhausts the estate – then the kids will get nothing.

(1) example: On day decedent dies, all he has is 100 shares of stock worth $40K(a) If on the day it was to be distributed, the 100 shares were worth

$40Ki. The surviving spouse gets first $60K (so 50 shares) and ½

of remainder (so 25 more shares worth $10K) = $30K total(b) If on the day it was to be distributed, the 100 shares were worth

$5Ki. The surviving spouse gets first $60K (since at the time of

death the estate was valued at $40K that meant only 50 shares). However, the current value of those 50 shares is only $2500 but that’s life.

ii. Additionally, she also receives ½ the remaining estate (since at the time of death the remaining estate was valued at $20K which was 25 shares), surviving spouse gets now only 25 shares worth only $1250 (since now ½ the remaining estate, or 50 shares, is only worth $2500).

iii. Thus, surviving spouse gets a total of $3750 = ($2500 + $1250) and the lineal descendants get nothing.

b. example: Joe & Susan have $120K, no will, and one child Karen(1) Surviving spouse gets first $60 plus ½ the remaining $100K = ($20 +

$50) = $70K(2) Karen gets $50K (if more kids, same but kids share determined under

§732.103)D. §732.102(1)(c) – ONLY LINEAL DESCENDANTS OF DECEDENT

1. If the decedent is survived by a spouse and lineal descendents – one or more of whom are not lineal descendents of the surviving spouse = the spouse receives half of the probate estate AT TIME OF DEATH and the decedent’s remaining lineal descendents split equally the rest.a. example: Joe & Susan have $120K, no will, and one child Karen; and Joe

had Stan from a previous marriage to Amy. (1) Joe dies:

(a) Susan (surviving spouse) gets first $20 plus ½ the remaining $100K = ($20 + $50) = $70K

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(b) Karen & Stan (surviving lineal descendants) split remaining $50K according to §732.103 since both are whole-blood descendants.

(c) Amy (ex-spouse) doesn’t get a thing(2) Susan dies:

(a) Joe (surviving spouse) gets first $20 plus ½ the remaining $100K = ($20 + $50) = $70K

(b) Karen (surviving lineal descendant) & Stan split remaining $50K according to §732.105 since Stan is a half-blood.

(c) Amy (ex-spouse) doesn’t get a thingE. Estoppel of Spousal Rights

1. Actions of spouse must be so egregious that a spouse waives their rights under §732.102.a. example: Spouse married MANY individuals is estopped from getting any of

their deceased spouse’s money.F. Cases:

1. Marvin v. Marvin (page 87), Jones v. Daly (page 98)2. Whorton v. Dillingham (page 101): Decedent dies leaving no spouse only a gay

lover. The lover knows that they can’t assert §732.102 rights in intestate, nor are they a blood relative of the decedent so they try to sue the decedent’s estate arguing a breach of contract.a. Argument: Petitioner will argue that in exchange for aiding, helping, cooking,

etc. for the decedent, they were going to be left something.b. Holding: Court says that the if the consideration for these services was in

sexual favors then it is an unenforceable contract however, if you could separate a sexual relationship from those other duties and still find substantial consideration to form a valid contract then – you may sue the estate.

4. §732.103 – Share of Other HeirsA. Absent a surviving spouse or the portion of the estate left after §732.102 will go to:

1. §732.103(1) Decedents lineal descendents (children, grandchildren) equally;a. Surviving spouse of a child who predeceases surviving spouse has no rights to

inherit.2. §732.103(2) Absent lineal descendents, to the decedent’s mother and father

equally (or their survivor);a. “or their survivor” means if only one parent, they get entire estate.b. You cannot inherit from your in-laws, your in-laws may not inherit from you

3. §732.103(3) If none of the above, then to the decedent’s brothers and sisters and the descendents of their deceased brothers and sisters (neices and nephews);

4. §732.103(4) If none of the above, then divide the decedent’s estate in half and distribute one half to the decedent’s paternal descendents and the other half to his maternal descendants in the following manner:a. To their grandmother or grandfather equally (or to their survivor);b. If no grandmother or grandfather then to aunts and uncles and descendents of

deceased aunts and uncles (cousins);c. If there are no grands or aunts and uncles on one side (maternal or paternal),

then the estate will go to the side that has relatives that fit the above scheme.5. §732.103(5) If none of the above, it will be divided as to the last deceased

spouse’s kindred, as if the spouse had survived the decedent and died intestate.

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5. §732.107 – Escheat (State’s Share)A. If absolutely no one – then the estate escheats (reversion of intestate estate w/o heirs) to

the state.1. This money will go to the state school fund.2. Court allows 10 years after a Personal Representative has been named for

someone to come forward and claim the money.6. §732.104 – Distribution of Money (what shares do they get?)

A. Two Methods1. Per Capita – means per head

a. You must survive to get the giftb. Majority of states (but not FL) have per capita with per stirpes representation

(1) Look at who is alive AND anyone dead w/ people living underneath them and divide by that many people

2. Per Stirpes – Florida Statutesa. You do not have to survive to get the gift (survivorship not required).b. Descendants of a deceased take by representation the share that the

deceased person would have taken had he survived to be an heirc. In FLORIDA, (§732.104) - distribution of estate proceeds are done in a per

stirpes fashion to lineal descendents or collateral descendents.(1) Look at living people OR dead w/ people living beneath them

(a) Divide at the nearest generation leveli. example: A (deceased) has two brothers, B & C whom are

nearest to A, not alive but have people under them. a. [B] has 3 kids b1, b2, b3b. Also [b1] is dead but had 2 kids b1-1, b1-2c. [C] has 1 kid c1 d. [B] gets ½ but since he’s dead

b1 gets 1/6, b2 gets 1/6, b3 gets 1/6 b1-1 gets 1/12, b1-2 gets 1/12

e. [C] gets ½ but since he’s dead c1 gets ½

ii. example: Assume decedent dies without a will. The Court determines that the only people able to become heirs of his estate are his three siblings (A, B and C). Decedent had an estate of $90,000.00.a. [A], B and C would each receive $30,000.00;b. Assume that [A] is dead but has two children a1, a2.

Pursuant to §732.103(3) as well as §732.104, each of those children would receive $15,000.00 B and C would each get $30,000.00.

7. Rights of Other IndividualsA. §732.106 Afterbornes: are Heirs of the decedent that are conceived before his or her

death but born thereafter.1. Under §732.106 these heirs inherit intestate property as if they were born during

the decedent’s lifetime and

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a. However this exception ONLY applies to children of the decedent.(1) example: H impregnated W before he died. W gave birth to [H]’s son S

sometime after his father and grandpa died. (a) S may inherit from both father and grandfather(b) W would not inherit from grandfather because she is not blood

relative, she is just a daughter in-law(c) Any other kids W had with other men cannot inherit from father or

grandpa because exception only applies to decedent’s afterborn heirs.

B. §732.105 Half-Bloods: are individuals that share one common parent but not both.1. Generally, this is applied to determine how much a half –brother will inherit from

step-brother that died (could be that there are other step-children still living)2. Under §732.105, heirs that are half bloods get ½ the gift that whole bloods get.

a. Formula to find out each share for a half-blood or whole-blood: (1) Add each H and W shared by each child(2) Add the total number of Ws and Hs(3) Divide how many parents each child shared with the kid that died by this

total (4) Finally, divide that number by amount dead kid left

(a) Example Alice and Bob marry, and have a three kids, C, D and E. Bob soon dies, and Alice remarries to Fred. Alice and Fred have a kid, T. All parents die, then C dies. C has $50K. Does T have a right to inherit from C? Yes, he has the same mother, he’s a half blood.

(5) How much does each child get?(a) D has one W and one H = 2(b) E has one W and one H = 2(c) T has only one W = 1

(6) The sum of Ws and Hs is (2+2+1)= 5(7) Divide 5 by # each kid has, then take that share from dead kids estate

(a) D 2/5 of 50K = 20K(b) E 2/5 of 50K = 20K(c) T 1/5 of 50K = 10K

C. §732.108(1) - Adopted Persons1. For the purpose of intestate, adopted children are treated as lineal descendents of

the adopting parent and is one of the natural kindred of the all member’s of the adopting parent’s family.

2. This child is NOT a lineal descendent of his or her natural parents, nor is he or she one of the kindred of the natural born family, or any prior adopted family. He’s cut off to all but his adoptive family.

3. EXCEPT THAT three ways exist where an adopted child CAN still inherit from their natural parents:a. §732.108(1)(a) – PARENT REMARRIES

(1) Adoption of a child by the spouse of a natural parent has no effect on the relationship between the child and the natural parent or the natural parent’s family.

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(a) example: Assume Sam has two natural parents, Mom and Dad. However, Sam’s parents divorce and dad runs off when Sam is three. Soon after Sam’s Mom marries again, and that person wishes to adopt Sam.i. Sam may still inherit from his mother and mother can still

inherit from Sam.b. §732.108(1)(b) – WIDOW REMARRIES

(1) Adoption of a child by a natural parent’s spouse who married the natural parent after the death of the other natural parent has no effect on the relationship between the child and the deceased natural parent’s family.(a) example: Assume Sam has two natural parents, Mom and Dad.

Unfortunately, Sam’s father dies and the surviving spouse remarries and that new parent adopts Sam. Sam’s natural dad’s mother dies.i. Sam may inherit from his natural father’s family even

though he has been adopted, because the family didn’t give up their rights when father accidentally died.

(2) Basically, §732.108(1)(a) does not require death of a parent; whereas §732.108(1)(b) does require death – However, the same results ensue.[????WHAT SAME RESULTS????]

c. §732.108(1)(c) – CLOSE RELATIVE ADOPTS(1) adoption of a child by a close relative has no effect on the relationship

between the child and the families of the deceased natural parents.(a) example: Assume Sam has two natural parents, Mom and Dad.

Unfortunately both die. Soon after Sam is adopted by a “close relative”.i. Sam may inherit from his natural parents as though he

wasn’t adopted…additionally, Sam may inherit from his adoptive parents as well.

(2) §63.172(2) defines close relatives as sisters, brothers, aunts, uncles, etc.

4. Public Policy Courts want to encourage adoption, and give children a “fresh start.”

5. Examples:a. facts: A & B were married, they divorced, they had two children that B now has

custody of. The both remarry and have one child each.(1) A – B x and y(2) A – D v(3) B – C z

b. hypos:(1) C dies intestate, x and y are only step-kids and they were never adopted

so they don’t inherit from C. B gets first $20K plus ½ of remainder, z gets other ½

(2) A, B, C, D and x die. Y is a whole blood. v and z are half-bloods. They will all inherit they are all blood related to x.

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(3) C dies intestate, C had adopted x and y. B gets first $20K, plus ½ of the remainder. x, y, z are all now lineal descendants of B and C. The remainder is distributed to them equally.

6. Virtual/Equitable Adoption: This occurs when individual promised to adopt a child, but never get a chance to before they died but was cared for as a “mother” would. a. Here, a child will receive from the court the RIGHTS of an adopted child to

inherit from equitably adoptive parents SHALL NOT make you adopted.(1) Since this is not a real adoption, it does not take away rights to inherit

from natural family.(2) Equitably adoptive child CANNOT inherit from adoptive parents’

ascendants or descendants, only from that mother and father.b. In order to assert this you need:

(1) A promise to adopt (oral or written);(2) Part Performance (treated kid as a natural child); and(3) Foster Parents to die intestate.

c. remember – Virtual Adoption ONLY EXISTS in INTESTATE situations.d. example: Gina and Fran are two best-friends. Gina is a widow with two small

children. Fran is married to Jack. Gina has Fran and Jack promise to take care of Gina’s two small children should anything happen to her. Gina even takes out a $1,000,000.00 life insurance policy on her life naming Fran and Jack as the beneficiaries. This money is designed to provide for Gina’s two small kids. Gina also puts her home in both her name as well as Fran and Jack’s. Unfortunately Gina dies. The two small kids go to Fran and Jack. The two do all that they were supposed to but, never adopt the children. The kids grow up and are adults and Fran and Jack die intestate.(1) result: Under statutory scheme, children could not inherit from Fran &

Jack but under the common law claim of virtual adoption, they would be treated as though they were adopted allowed to inherit

(2) procedure: The two kids will have to sue Fran and Jack’s estate for specific performance or breach of contract of the contract between their natural mother and Fran and Jack in that the kids were never adopted. Here, they are only asking for the rights of adopted children.

(3) Courts have stated that adult individuals that grew up like this, but have become estranged from “Fran and Jack” may STILL go through a Virtual Adoption proceeding to get money through intestate.(a) However, one Florida case even says that Virtually Adopted

children’s rights extend to Homestead.D. §732.108(2) - Born Out of Wedlock.

1. General Rule Regarding Illegitimate Children : As long as paternity is established and there is no other provision stating otherwise, illegitimate children MAY claim from their natural parents.

2. Florida says that if parents are married at time of birth you are considered legitimate.a. Person is natural child of a man the mother is married to at the time of

conception; look at the statute at the time mother dies

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b. Example Ann and John are not married and conceive a baby. Soon after, John leaves and Ann marries Ted. They are married for one week before Ann and John’s baby is born.(1) This baby IS legitimate – it doesn’t matter if the baby’s mother marries

someone other than the natural father as long as there is a marriage at time of birth.

3. IMPORTANT NOTE As soon as a child is adopted (ie: by mother’s new husband), §732.108(2) has NO RELEVANCE, and we are only concerned with §732.108(1)a. §732.108(2) ONLY pertains when child remains illegitimate.b. Parent or child may establish illegitimacy; distant relatives precluded from

doing soc. Prior adjudications of a child’s legitimacy do not pertain here and each case is

reviewed de novo.(1) Florida Statutes 95.11(3) creates a four year statute of limitations to

assert legitimacy in an intestate proceeding.4. Under §732.108(2), children born OUT of wedlock:

a. Are lineal descendents of their mother (since you know who that is)b. As for the father, may become lineal descendants of their father only IF:

(1) §732.108(2)(a) – NATURAL PARENTS MARRY(a) If natural parents at any time get married, the child then becomes

legitimate and a lineal descendant of the father.i. Divorce or annulments in these situations do not have a

retroactive effect.a. Florida does not recognize common law marriages for

this purpose.(2) §732.108(2)(b) –FATHER’S PATERNITY PROVEN IN COURT

(a) If child proved in court paternity of the father, either before or after the father’s death, the child is considered a lineal desendant of the father.i. If child attempts this after the father’s death, the burden of

proof is clear and convincing evidence, which is VERY difficult to prove.

ii. If child attempts this while father is alive, the burden of proof is by preponderance of the evidence.

(3) §732.108(2)(c) – FATHER’S PATERNITY IN WRITING(a) If the father acknowledges paternity in a sufficient writing, then

the child is considered a lineal descendant.i. The Courts on a case-by-case basis determine the

sufficiency of the writing.a. example: If individual sets up a trust fund and writes,

“the beneficiary shall be my son James Smith”, this is sufficient for the Courts to establish paternity.

8. §732.601 - Simultaneous Death Act–

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A. Occurs when there is insufficient evidence that the persons involved have died any other way but simultaneously. This is an important concept because determining who dies first can drastically alter who is distributed what through intestacy.

B. ORDER ON TEST:1. First, §732.601(5) states that the provisions contained in §732.601 ONLY pertain

when persons’ assets go through intestate proceedings.2. Second, under §732.601(3) whatever was owned joint must be divided and kept

separately.a. Look at each decedent (husband and wife) and assume the one predeseaced

the other 3. If you can’t determine which heir dies first, §732.601(2) requires assets be divided

equally among heirs as if each beneficiary had survived the other. a. Look at each decedent (husband and wife) and assume the one predeseaced

the other 4. If the insured and the beneficiary of a life insurance policy die simultaneously,

§732.601(4) assumes the insured survived the beneficiary (pretends beneficiary dies first)

C. Determining who died when:1. Time of death on a Death Certificate is not always correct and is only prima facie

evidence as to the order of death. Look further.2. You must introduce sufficient evidence to show that one died before the other.

a. Proof here is through preponderance of the evidence.3. Courts will look towards circumstantial evidence in an attempt to ascertain which

individual survived the other. a. Examples: Order of bodies found in a burning house closest to the door might

mean that they were the last to die; temperature of bodies; murder/suicide (he killed everyone first before himself); position of bodies, etc.

4. Florida states that survival by one second is enough to have out-lived someone, then you do not have a simultaneous death.

D. How to distribute the property:1. §732.601(1) – Probate Property should be disbursed as if each spouse survived

the other, except as provided otherwise.a. Example: William and Sara are married. Together they have a child, Eric.

Sara also has a child from a previous marriage named Frank. William has a bank account solely in his name in the amount of $100,000.00. Sara has a bank account solely in her name in the amount of $120,000. Assume that William and Sara die simultaneously.(1) For purposes of William’s estate, according to §732.601(1), FL Sim

Death Act requires that you treat his assets as if he survived Sara, meaning that his wife was dead before he died. In this case, William only has one lineal descendent, Eric, so Eric gets all $100,000.00

(2) Now, for purposes of Sara’s estate, under FL Sim Death Act, we pretend he died before his wife. When she outlives her husband she has two lineal descendents, Eric and Frank. Each will get $60,000.00.

(3) In conclusion: Eric gets $160,000.00 and Frank gets $60,000.002. §732.601(2) – Right of Survivorship assets should be divided into as many equal

parts as there are successive beneficiaries, and those parts shall be distributed as if each beneficiary had survived the other.

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a. Example: William and Sara also owned a home as joint tenants with rights of survivorship. They died simultaneously and without a will. The home was valued at $200,000.00(1) William: according to §732.601(2) we must divide the property into as

many equal parts as there were beneficiaries. There were two beneficiaries – William & Sara, so we divide the home in half (ie: $100,000.00 to William and $100,000.00 to Sara). Next we treat each share as if they survived the other beneficiary. So the same result occurs as it did above – Eric gets all $100,000.00.

(2) Sara: same treatment as above, her share goes to her two lineal descendents, Eric and Frank taking $50,000.00 each.

b. Note If there are three names and they each have rights of survivorship, and only two die simultaneously, then the third beneficiary takes EVERYTHING because the property doesn’t enter probate property.

3. §732.601(3) – Property owned jointly should be distributed one half as if one had survived, and one half as if the other had survived. If there are more than two joint tenants then, the property should be distributed in the proportion that each one bears to the whole number of joint tenants.a. Example: William and Sara own a condo on the water. The condo is appraised

at 1,000,000.00. They own the condo as joint tenants and die simultaneously.(1) Once again split it in half and distribute according to the intestate

statutes.4. §732.601(4) – Life Insurance. When the insured and the beneficiary in a policy of

life or accident insurance have died simultaneously, then the proceeds of the policy shall be distributed as if the insured had survived the beneficiary.a. Basically – the proceeds become probate property in the insured individual’s

estate.

LOSS OF RIGHTS TO AN INTESTATE SHARE9. §732.801 – “disclaiming” one’s interest (in either intestate or probate proceeding)

A. “Disclaim” Voluntary relinquishment of a beneficiary’s rights. B. You will be treated as if you predeceased that person.C. Such rights may be waived either before or after the decedent dies.D. You may disclaim all of your interest or part of their interest.

1. ie: “I disclaim all but 100,000” or “I disclaim 50%”, etc.E. How to distribute “disclaimed” wealth :

1. §732.801(3)(a) states that absent another provision in the decedent’s will for how to distribute wealth such there be a disclaimer, the property left to the disclaiming beneficiary should be treated as if the disclaimer died before the decedent and therefore has their disclaimed property pass through them per stirpes to their descendents – However, this depends on the wording of the disclaimer.a. Most disclaimers are used for tax purposes (ie: someone has enough wealth,

so they pass the money on to their children).b. However, can’t disclaim wealth to cheat creditors. (ie: someone who’s insolvent

can not disclaim)F. Requirements to Disclaim :

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1. §732.801(4)(a) – Disclaimer must be done in writing, describe the interest in the property disclaimed, and be signed, witnessed, notarized, and acknowledge in the manner provided for the conveyance of real property.a. Signed by person disclaiming, 2 witnesses (with legibly typed names) that have

either seen the person disclaiming sign their name OR they attest that it is that person’s signature.

2. §732.801(4)(b) – Disclaimer is irrevocable when recorded with the clerk of the county in which the estate is being administered. If no proceeding has begun yet, it is irrevocable if recorded by the clerk of any county in which a proceeding could be administered.a. Remember – ONCE FILED IT IS IRREVOCABLE!

3. §732.801(4)(c) – Disclaiming person must deliver or mail a copy of the disclaiming instrument to the personal representative, or any other person having legal title to, or possession of the property in which the disclaimed interest exists.

4. §732.801(5) – Disclaimer may be filed at any time after the creation of the interest however, it must be filed:a. Within 9 months of the decedent’s death; orb. If the disclaimer is not yet ascertained as a beneficiary OR the disclaimant’s

interest has not become fixed both in quantity and quality at the death of the decedent, then the disclaimer must be filed within 6 months of the event that would cause him or her to be fully apprised of their interest in both quality and quantity.

G. Persons Disclaiming on another’s behalf: 1. §732.801(9) – Disclaimer may be made for a minor, incompetent, incapacitated

person, or deceased beneficiary by the guardian or personal representative (ie: Power of Attorney) of such person. However, such disclaimer can be only be made if:a. Such Disclaimer is in the best interest of the disclaiming party, ANDb. Such Disclaimer is in the best interest of the party to take the disclaiming

parties interest.2. Example: Mary is 80 and suffers from dementia. Her estate is worth over 1 million

dollars, so her power of attorney knows that she does not need any more money so files disclaimer on her behalf.

3. Example: Bill is 99 and has an estate worth over 1 million as well. He also recognizes that he does not need the money and decides to disclaim as well.

H. Example of Disclaimer1. Frank is a widow and has three adult children: Albert, Barbara and Chris. Frank

has an estate worth $900,000.00. Assume that Chris has enough of his own personal wealth and instead wishes for his children to be taken care of, so he disclaims his interest prior to his father’s death.a. Normally, Albert, Barbara and Chris each would have received $300,000.00

from Frank. Now Chris’ interest is passed per stirpes to his two children, George and Gina as if he predeceased Frank, in the amount of $150,000.00 each. (note that these two children must be blood grandchildren of Frank’s, or related by adoption, etc.)

10.§732.802 – Killer (Slayer) Statutes:A. A surviving person who unlawfully and intentionally kills or participates in procuring the

death of the decedent is not entitled to any benefits under the will or under the Florida

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Probate Code, and the estate of the decedent passes as if the killer had predeceased the decedent.

1. Note: Conduct must be both intentional and unlawful – this is a conjunctive test so, argue both.

2. A final judgement of conviction of murder in any degree is enough to satisfy this provision. However, absent such decree, evidence presented that shows murder by a preponderance is acceptable, and will be viewed de novo.

3. Also note that a judgment of “not guilty” DOES NOT satisfy this statute, and a separate trial may be held in the proceeding.

B. Note: This statute applies to both probate and intestate proceedings.C. Example: Blackare, a 10 ace plot of land was purchased by Dave and Wally for 2 million

dollars. Each investor put in 1 million dollars. Both Dave and Wally own this land as Joint Tenants with Rights of Survivorship. Wally then intentionally and unlawfully caused the death of Dave.

1. Some say that Wally should get nothing but, Florida Statute says:a. “Make the wrongdoer forfeit his right of survivorship.” Basically, severe the r of

s relationship and make the relationship one of Tenants in Common.2. Now, Wally only looses the right to take over the entire acreage but, maintains his

50% share.11.Heir’s Liability –

A. An heir’s debt to a decedent may effect the intestate share to which the heir was entitledB. §732.109 allows the personal representative to hold back that sum to repay the debtC. Exceptions:

1. Debts are personal to you – a. Example: if you owe a debt to your father, never pay it off and die before your

father, you child inherits full share; your debt is not deducted from your child’s share

2. Title doesn’t pass to you until it is transferred to youa. A creditor does not have greater rights than you do, they cannot collect on

debts owed to them directly from the personal representative, they must wait until your inheritance is distributed to you(1) Sometimes creditors can get an injunction so you cannot defraud them

by transferring it to someone else once you get it

12.REMEMBER: If no one stands to inherit because there is no will and no known living heirs, or beneficiaries have lost their right, §732.107 says that the estate shall escheat to the state (state gets it)

13.Recap:A. Ways to loose rights in intestacy :

1. Divorce;2. Intentionally cause the death of another;3. Disclaimer;4. Adoption;5. Illegitimacy, etc.

B. Probate Proceedings :1. If, during the administration of an Intestate Proceeding, a valid will is found, then

the estate goes to probate and out of Intestate.

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a. This MUST happen while Probate Proceeding is open and ongoing.b. Under §733.208(5) if probate has been closed after distribution, nothing you

can do; no remedies are available to you. (1) even if another will is found after Probate has been closed, the

finalization of the previous administration stands.

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WILLS

1. Effectuating a Will – Note: the following pertains ONLY to Florida law---Colorado is not included.A. §731.201(35) – A will is “an instrument, including a codicil, executed by a person in the

manner prescribed by this code, which disposes of the person’s property on or after his or her death and includes an instrument which merely appoints a personal representative or revokes or revises another will.”

Testamentary in CharacterRevoked or Amended during the Testator’s LifetimeNo Legal Effect until the Testator dies

B. Rod-Dod’s Definition- A revocable instrument that is testamentary (effective at testator’s death).

1. A document operating during lifetime is not a will2. Writing doesn’t actually have to leave something. It can appoint a personal

representative and your property would be distributed through intestacy.C. §732.501 – Who may make a will

1. Any person 18 years or older, AND of sound mind may make a will.D. Testamentary Intent

1. Testator must have Present Testamentary Intent when they executed the will.a. Means testator intends it to be a will;b. Lack of Testamentary Intent could invalidate a particular gift but, maybe not the

entire will.(1) Example: Husband had a girlfriend and wanted to get her to sleep with

him, so he had his attorney draft up a will (which the attorney knew the husband did not intend to be valid) which left the girlfriend everything. He untimely died after that, and the girlfriend tried to enforce the will. However, the wife brought in the attorney to show the court a lack of intent, and the wife won.

2. The Court will look at the “four-corners” of the will to make their determination.a. EXCEPTION: If an ambiguity exists as to the testator’s intent, Courts will allow

extrinsic evidence.(1) example: Person signs will on death-bed and knows that they aren’t

getting better, when they sign a will, it can be inferred that they mean for this to operate as a will.

E. In FL, execution must be in strict compliance1. Under §732.502(1), execution of a will must be in writing and contain:

a. Testator’s signature:(1) Must appear at the end of the instrument; or

(a) By the term “end of the will”, it is meant – the end of the substantive part of the will (after all is disposed) and not necessarily the physical end of the will.

(b) Florida states that even scribble or a mark is sufficient to constitute a signature – it doesn’t have to be a legal signature.

(2) Testator’s name may be signed by someone who (a) has the testator’s direction to do so, and

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(b) does so in the presence of the testator.i. Presence requirement

a. Minority requires testator to actually be “in the line of vision”

b. Majority (FL) broadly applies Conscious Presence Test – testator must know what other is doing, but don’t have to see him doing it

(c) Testator may acknowledge to the witnesses that he signed the willi. May have acknowledgement by silence

a. If will is already signed by testator, and he asks witnesses, “will you sign my will?” that is enough

b. Two Witnesses must be in the presence of testator that can attest to(1) The testator’s signing, or (2) acknowledge

(a) That he previously signed the will; or(b) That another person has signed testator’s name to it

(3) POLICY for having two witnesses is that it protects against fraud or coersion….unlikely that two people would hold a gun to your head and threaten you to sign.

c. Witnesses’ signatures:(1) Attesting witnesses must sign the will in testator’s presence; and (2) in the presence of each other

(a) example: A testator can either sign in front of the witnesses or sign at home and acknowledge to the witnesses himself that he either signed the will himself or that he authorized someone to do it for him. Line of vision test v. conscious presence test are the two major tests. In Florida, use line of vision, since case law does not specify.

(b) NOTE: Timing - In FL for will to be properly executed, strict compliance requires witnesses to sign in presence of the testator.i. Rule: A witness may sign a will within a reasonable length

of time after the Testator signs the will.ii. The In Re Estate of Peters Court did not specify what was

a reasonable amount of time however, a witness signing after a testator has died is unreasonable.

(c) Witnesses may sign anywhere2. REMEMBER: There are 3 presence requirements for the signing of the will:

a. The testator must sign it in the presence of the witnessesb. The witnesses must sign it in the presence of the testator.c. The witnesses must sign it the presence of each other.

3. NOTE: A will does not need to be notarized4. §732.504 Who may be a Witness ( also called Subscribing Witnesses )

a. Any competent person(1) Incompetent when either:

(a) incapable of expressing themselves in a manner in which they would be understood

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(b) incapable of understandingb. Anybody not precluded by lawc. Even interested parties may be a witnessRule 90.601 states that every person may be a witnessRule 90.603 states that a person who is incapable to express himself in a way that is understood can be a witness.

F. §732.502(4) – Codicil (amendment to the will) must be executed in the same manner as a will.

G. NOTE: Nothing in Florida Statutes precludes people from witnessing a will that they signed on the testator’s behalf (see §732.504(2))

1. However, this really isn’t smart – especially if such a person is a beneficiary of the will.

2. Even convicted felons could witness a will.2. Additional Safeguards

A. Publication of a Will1. Is a requirement that the testator must inform (or have someone else inform) the

witnesses that they’re about to sign a will.2. Really means reading a will to a witness so they know their signing the testator’s

will.3. Florida does not require this .

a. In FL, witness only needs to know the person is freely, voluntarily signing the will and is of sound mind.

B. Attestation Clause1. They’re located immediately below the testator’s signature, and really mean that

the procedure of executing the will is strictly being adhered to (see page 176).2. Although no state requires the use of an attestation clause as a prerequisite to

validity, lawyers routinely use them because they raise a rebuttable presumption that the events recited therein actually occurred.

3. Benefits of an Attestation Clause:a. May be used to refresh a witness’ recollection at a later time;

(1) Used so that even if a witness can no longer remember witnessing the will, the clause stands for that they wouldn’t have committed fraud.

b. Prima facie evidence that the will was duly executed, but only prima facie effective so may be rebutted.(1) This clause doesn’t replace testimony witnesses must give BUT:

(a) Courts hold that absent contrary testimony, if a witness is now no longer available, you may be able to get the will to probate anyway.

(2) Clause can be used to impeach a witness that claims that no one else was present at the signing of the will.(a) Court sometimes holds the weight of this clause over the weight

of a witness’ testimony.C. §732.503 Self-Proving affidavit

1. NOTE: This suggested language is not required in FL (but it may for Colorado??)2. Testator and both witnesses must go before a notary public and once again attest

to the fact that all requirements were conformed to (i.e. sound mind, in each others presence) in the execution of the will.

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3. Preventative purpose is so when testator dies, you don’t need to track down all of the witnesses, that’s why to be held effective, it must be notarized. (may be signed anywhere)a. NOTE: If a notary is a witness to the will, they can’t notarize the will

themselves because you cannot notarize yourself.4. May be signed after death

3. OTHER TYPES OF WILLSA. Holographic Wills: A will written solely in the testator’s own handwriting and signed by

the testator.1. This type of will needs no form requirements (i.e. need NOT be witnessed.)2. Holographic wills are NOT permitted in Florida – even if it was recognized as valid

in other jurisdictions.a. However, Florida does state that:

(1) If a testator has a holographic will from another state, and moves to Florida, FL will enforce that will if:(a) signs a codicil conforming to the laws of the State of Florida, and (b) it expressly states that they like their will from the other state.

i. However, Florida will not even allow a testator to amend a previously valid will with a holographic or noncupative document.

(2) Even though it’s invalid as a holographic will, if it adheres to ALL of the formalities of a Florida will (by meeting testator & witness signature requirements), then it will NOT be considered holographic and may go through probate as a valid will.(a) In Re Estate of McKellar

i. Decedent hand wrote will & signed it in the beginningii. Witnesses didn’t see the signature at the endiii. Ct held will invalid as a holographic will

(b) In Re: Estate of Black i. Testator used three copies of a pre-printed formed will in

which to draft her own will. She wrote the substantive portions of the will in her handwriting.

ii. In determining whether this constituted a holographic will or not, Court held that it was holographic in order to further the policy that Courts prefer testatcy over intestacy and that the testator’s only mistake of using some of the wording of the pre-printed form did not rise to the level of invalidating the entire well-planned will.

iii. Note: Florida would not have upheld this will as valid.B. Noncupative Wills: 732.502 (2) Is an orally made will.

1. Florida does NOT recognize such wills, though enforceable in other statesa. POLICY: There is too much room for fraud and deception.

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4. §732.502(2) Non-Residence WillsA. Any will or codicil, other than a holographic or noncupative will, executed by a

nonresident of Florida is valid as a will in Florida provided that this same will:1. was valid under the laws of the state or country where the testator was at the time

of execution.2. REMEMBER A holographic will that also conforms with ALL Florida

requirements of a will, in Florida’s eyes is not considered a holographic will and therefore could be enforced from another state or country.

B. NOTE: §732.502(2) only refers to procedural matters and not substantive matters.1. Example In New York you can leave your home to someone else even if you are

married and have minor children. If you move to Florida, that part would not be enforced because in Florida you have to leave your house to spouse and children.

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REVOCATION OR AMENDMENT OF WILLS/CODICILS

1. General Rule:A. All wills and codicils are revocable and amendable provided that at the time testator goes

to change a will:1. Testator is alive, AND2. Testator is competent.

2. BURDEN OF PROOFA. When a will is offered for probate, the burden is shifted to the proponent to show that the

will was revoked3. PRESUMPTION

A. When there is a defaced or mutilated will, the presumption is that the testator’s intent was to revoke or amend the will.

4. Three principle ways to amend or revoke a will: A. Expressly or impliedly (by writing),B. Physically destroy it (by act),C. Effect of subsequent marriage, birth or dissolution of marriage.

5. §732.505 – Revocation by WritingA. A will or codicil is revoked as a whole or in part by:

1. §732.505(1) Subsequent inconsistent will or codicil. a. The revocation extends only so far as the inconsistency.

(1) example: Testator has will which sets up a trust for A&B. The testator later signs a codicil setting up a trust for A&B&C.(a) Court now says that there was no new provision that got rid of the

trust to A&B, so the Court enforced a trust to A&B&C.2. §732.505(2) Subsequent written will, codicil or other writing declaring the

revocation.a. Note: The subsequent writing must be executed with the same formalities as

are required when drafting a new will. b. There must be substantial markings on will to show that you mean to revoke it,

so long as it was done with same formalities.(1) Kronauge v Stoecklein

(a) She wrote “the will is void” on the margin(b) Ct said if you want to revoke the entire will then you have to

deface the text of the will, she did not mark up the actual writing so ct held will validi. This is an unsuccessful attempt to revoke a will by writing.

The cross-outs made would not affect the original writing of the will, and the will will be viewed as if her “void” cross outs aren’t there.

B. Revocation by Writing may also revoke wills implicitly 1. This is an effect of the inconsistency made by a codicil with the original

a. example: Testator writes a codicil adding another beneficiary. The implication by adding another beneficiary is that he wishes to lessen the amounts to the other beneficiaries.

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C. NOTE: Remember intent of testator to revoke entire will is by act, but in part could be as follows:

1. Spoliation Is a tort that makes it unlawful to write on someone else’s will.6. §732.506 – Revocation by Act

A. A will or codicil is revoked in its entirety: (Florida holds the Minority View)1. when the testator or some other person in the testator’s presence and at the

testator’s direction by burning, tearing, canceling, defacing, obliterating, or destroying it with the intent, and for the purpose, of revocation.a. Note: As long as other party has permission to destroy will, the testator doesn’t

have to watch them do it. Being in the same room is sufficient enough to make this effective.

2. This requires intent and capacity on part of testator.a. When there is whole or even partial destruction of a will and it was always in

testator’s hands, there is a presumption that the testator intended it to be revoked

B. REMEMBER: Revocation by Act can only accomplish a complete revocation.7. §732.507 – Effect of subsequent marriage, birth, or dissolution of marriage.

A. This may revoke part or all of a will by operation of law.B. §732.507(2) Any provisions of a will executed by a married person, which provision

effects the spouse of that person, shall become void upon the divorce of that person or upon the dissolution or annulment of the marriage.

1. The other parts of the will not be revoked and remain in full force and effect.a. NOTE: Gifts to ex-spouses relatives aren’t effected by divorce.b. NOTE: Subsequent marriages to the same spouse you previously divorced

does NOT reinstate the previous will.8. §732.508 – Revival by Revocation

A. Where the testator leaves two documents purporting to be his will, the most recent one would be held to be his will.

1. However, you must check the 2nd document to see if it’s a superseding will or just a codicil.

B. Florida is an anti-revival state – you cannot revive a willC. §732.508(1) Once a former will is revoked by the testator, it cannot be revived.

1. this is true even if the former will is in existence at the date of the revocation of the subsequent will.

2. example: Once you have revoked a will by act of destruction, and realize that you made a mistake, you may not tape it back together again. You must either:a. Draft a new will, OR;b. Write codicil that you liked your old will (republish it)

(1) §732.5105 – Republication of Wills By Codicil(a) execution of a codicil referring to a previous will has the effect of

republishing or reconfirming the revoked will except as modified by the amendments made in the codicil (if any)i. EXCEPTION: unless there is a provision in the codicil

saying that it revokes the will §732.511 Republication of Wills by Reexecution

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If a will has been revoked or if it is invalid, it may e republished and made valid by its rexecution or the execution of a codicil republishing it with the formalities required by law for the execution of wills.

D. §732.508(2) Revocation of a codicil to a will only revokes the codicils, not the underlying will

1. It is presumed that in revoking the codicil, the testator intended to reinstate the provisions of the will or codicil that were changed or revoked by that codicil as if the revoked codicil had never been executeda. NOTE: however if you tear up a valid will but, not the codicils, the revoking of

the will automatically revokes all of the codicils.9. Application

A. No matter which one of the above is used, the Testator’s Intent must always be focused on.

B. Capacity is also relevant:1. Look at the four requirements of Testamentary Capacity, only this time, the

testator must know that he is changing his will.2. Look towards the four-corners of the document to determine capacity and intent, if

ambiguous then look towards extrinsic evidence.a. Example: Even when physical destruction of a will occurs, the Courts need

substantial proof of intent not to destroy will because evidence of someone tearing up a will is pretty conclusive that they didn’t want that will.(1) When there is partial destruction of a will and it was always in testator’s

hands, there is a presumption that the testator intended it to be revokedC. When a will is known to be in the testator’s possession and control, and then it can not be

found after death it is presumed to be revoked (this presumption can be rebutted).1. If the original is gone, even if attorney has a copy, the will is considered gone.2. This applies to codicils too.

a. However, in order to overcome this presumption states that you must:(1) Prove the will existed; AND(2) Prove what it said, or who was the executor.

(a) This is a high standard because you must find witnesses to the will.

10.§733.207 – Establishment and Probate of Lost or Destroyed Will A. If you can’t find a copy of the will, two disinterested (not having a money interest in the

will) witnesses are needed to testify. 1. This necessarily doesn’t mean the two witnesses that signed the will

B. If you can find a copy, then only one disinterested witness must testify. 1. a photocopy, carbon copy is sufficient but, not a rough draft.2. When a will is missing but a codicil is found along with a photocopy of the will, the

Court will overcome the presumption and hold the will valid.11.Doctrine of Dependant Relative Revocation [DRR]: (where does this go in)

Where a testator makes a new will revoking a valid prior will and the new will is found to be invalid, the prior will may be reestablished on the ground that the revocation of the prior will was dependent on the validity of the new will and the testator would have preferred the earlier will to intestacy.

A. This is not a rule of law, it is an equitable remedy. It is a presumption concerning the intent of the testator

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B. It is a rebuttable presumptionC. May be applied to 1st or 2nd willD. In Florida, you cannot revive a will that has been fully revoked. If a will is only

conditionally revoked, you can use DRR in Florida to get the will probated. However, it is not considered fully revoked in that case, or you could not bring it back; it is only a conditional revocation.s

E. This is generally applied when second wills are made by mistake: 1. A 1st will is executed then lost2. A 2nd will was executed then after the 1st was found, destroyed or revoked the 2nd

a. Could alos come up where revokes 1st when there is a mistaken belief that his property will be distributed in another way(1) This is a but for his mistake argument

3. In effect, now the testator died intestate4. In order to revoke a will, there must be a joint venture of action and intent5. The beneficiaries or attorney can try to revive the 1st or 2nd under DRR saying he

didn’t intent to revoke the will since he would not have wanted to die intestate.a. Where a testator makes a new will revoking prior will, and the new will is found

invalid, the prior will may be reestablished on the ground that revocation was dependant (or relative) upon the validity of the new will and the testator would have preferred the old will to intestacy.

b. If a will was destroyed, §733.207 permits extrinsic evidence to determine what was intended.

6. If they succeed, DRR will only bring back a revived will in its entiretyF. How DRR works:

1. The last will executed prior to testator’s revoked will is reviveda. Only where the threshold is established that:

(1) Testator did not intend to die intestate(a) If testimony/evidence exists that testator wanted to die with a will

(2) Testator would prefer prior will than die intestateG. How to apply DRR:

1. Show testator only revoked the prior will under the supposition that the new will is valida. To revoke a will, there must be a joint intention and action to revoke

(1) Must have had full intent to revoke 1st will(2) Intention must not be conditional

2. Show that the two wills were not materially differentH. REMEMBER: Under §732.509 revocation of a will revokes all codicils, but the reverse is

not true under §732.508(2)12.§732.512 Incorporation Of A Writing By Reference

A. §732.512(1) 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

1. document must already be in existence at time will is executed2. must identify the document sufficiently so testator realizes you are incorporating it

into the willa. What may sufficiently identify it is: (description of the document, the doc’s

date)3. Must show testator intended to incorporate it

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B. §732.512(2) ( Acts of Independent Legal Significance ) A will may dispose of property by reference to acts and events which have significance apart for their effect upon the dispositions made by the will

1. It doesn’t matter whether these acts occur before or after:a. the execution of the will, orb. the testator’s death

2. Must be acts of independent legal significancea. An example of such an act or event is the execution or revocation of a will or

trust by another personb. Example: Who ever I marry will receive trust of $10,000

13.§732.515 Separate writing identifying devises of tangible property A. Allows tangible personal property(not cash or business property) to be disposed of

through a separate writing1. writing doesn’t have to be in existence before will is executed

B. Writing must: 1. be signed by testator2. sufficiently describe tangible property3. sufficiently describe who gets it (specify)

C. Does not include money, property used in trade or business, or stocks14.Codicils

A. Codicils are a partial revocation by writing, and must be carefully drafted or else confusion will arise.

B. Example: 1. Will Says: Article 6, ¶ B says, “I leave $1,000.00 to my brother Bob.”2. Codicil Says: “Testator hereby revokes Article 6, ¶ B and in its place inserts the

following ‘I leave $1,000.00 to my niece Nancy.’”3. The above is an example of a correctly drafted codicil.

C. Example:1. Will Says: Article 6, ¶ B says “I leave $1,000.00 to my brother Bob.”2. Codicil Says: “On my death, I leave $500.00 to my brother Bob and $1,500 to my

niece Nancy.”3. The above is an example of an incorrect way to draft a will because Courts don’t

know if this is “in addition to” or “in place of” the previous provision in the will.D. Generally, gifts in Codicils are presumed to be “in addition to” the will and not in conflict

with wills.

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PRETERMITTED SPOUSE

1. A spouse is pretermitted when the decedent failed to execute a new will after marrying, thus leaving the surviving spouse without mention in the decedent’s will. A. Under §732.301, a pretermitted spouse has the same rights they would have received

had the decedent died intestate.1. surviving spouse receives her intestacy share first, and then the remainder of

decedent’s will is enforced.a. example: Sean executes a will. Soon thereafter Sean marries Catherine, and

never gets around to change his will. Sean dies and his will doesn’t provide for his wife. Catherine is considered a pretermitted spouse under §732.301.

2. Public Policy: Court feels that spouse, had they had the chance, would have provided for their spouse.

B. Burden of proof is on surviving spouse to:1. Prove that they were pretermitted (married after execution of will)2. Prove that they were married at the time of death(i.e. valid marriage); AND

a. Note: marriage can be for 1 minute or 15 years – it doesn’t matter.C. Three Exceptions to the general rule of §732.301

1. §732.301(1) Waiver of Rights:a. Existence of a prenuptial or anti-nuptual agreement, will prevent pretermitted

spouse from exercising her rights to pretermitted share(1) This can be signed either before or after the marriage, and simply may

state, “I wave all rights” to be sufficient. It is not necessary that you use the word pretermitted.

2. §732.301(2) The Spouse is provided for in the will:a. If a person is “provided for” in will then they are not considered a pretermitted

spouse in Floridab. To determine what it means to be “provided” for:

(1) Look to whether testator left to that person in contemplation of marriage as a spouse.(a) To determine “in contemplation of marriage” court looks at

extrinsic evidence i. Evidence they are only an acquaintance, friend, or

business associate is disproving contemplation of marriage.

ii. Example: Jack was friends with Jill, he made a will providing for his friend Jill, and later in life ended up marrying Jill. Before he died, he never changed his will to reflect his new wife. Courts look towards extrinsic evidence to see if the two were contemplating marriage at the time the will was drafted.

c. In Re Estate of Spencer (1) Left her as a beneficiary under a retirement plan as her married name,

but they were not married yet.(2) In Hawaii, marriage revokes a will in Hawaii if no provision has been

made stating otherwise.

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(3) Ct looked to whether the will provided for the new wife as a spouse? Looked at four corners of the document.

(4) At the time he drafted the will, was he contemplating marriage? They said no, so only treated her as a friend even though they were engaged to be married. [DOES IT MATTER IF THEY WERE ENGAGED TO BE MARRIED AT TIME OF WILL] In Florida, because he did not provide for her as spouse, the exception wouldn’t apply. Thus, she would have been found to be pretermitted.

d. Basically, if you show that the gift in the will, at the time the will is drafted, was provided for this person as a spouse, in contemplation of marriage. Then this person would thus not be considered a pretermitted spouse and would not have right to distribution had the decedent died intestate.

3. §732.301(3) Will discloses an intention not to provided for spouse:a. Presumption is that if you write nothing in your will about your wife, that you

just forgot.b. All will has to say is the fact that you know that you have a wife, but that you

make no provision in your will for her.D. Computation of Pretermitted Spouse share:

1. example: Testator had two children by a previous marriage and spouse was not provided for in the will. Testator had an estate of $100,000.00, a remainder of a car loan for $12,000.00 and funeral bills of $8,000.00.

(1) ??? HOW DO WE TREAT THIS ???2. §732.302 Pretermittive Children

A. When a child is born/adopted after execution of a will and the will was never changed in include the child, and the child did not receive his share, then the child is considered pretermitive.

B. A pretermitive child shall receive a share of the estate equal in value to that he would have received if the testator died intestate (unless you meet an exception)

1. Two exceptions to the general rule a. If it appears from the will that the child was omitted intentionally; OR

(1) If any intentional reference to include the child was made after the will was executed, then the child receives nothing

b. The testator had one or more kids when the will was executed and devised substantially all the estate to the other parent of the pretermitted child

C. Parent has the right to disinherit a child but must do so consciously

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RIGHT TO ELECTIVE SHARE

1. The difference between an Elective Share and a Pretermitted Spouse is the fact that a Pretermitted Spouse was not provided for at all – and was not referred to in the will in the capacity of a spouse. To claim an elective share you simply have to be a spouse that doesn’t like what you were left. A. A spouse of decedent that is not happy with what the decedent left her in the will:

1. Has a right to elective share (which replaces dower and courtesy)2. Elective share applies equally to husbands and wives3. No longer common law, it is statute based

2. Rights of Surviving SpouseA. Rights to gifts under the will B. Rights to Homestead (statutory or constitutional)C. Rights to Exempt property (statutory or constitutional)D. Family allowanceE. If pretermitted spouse, right to share

3. “Elective share” – an amount that becomes payable to a surviving spouse in cash or in kind (non-cash assets) under certain circumstances (Applies in Testate Estates)

1. It is computed as a percentage of the Fair Market Value of Probate assets that are subject to administrationa. But only gets the assets after deduction of valid claims against the estate,

mortgages, liens, or security interests on those assets4. §732.201 – Right to Elective Share of Spouse

A. The surviving spouse of a decedent shall have the right to demand a share of the estate of the deceased spouse, only if the decedent was a Florida domiciliary

1. The decedent must be domiciled in Florida but, the spouse can live somewhere else.

B. Decedent must have died intestate1. Elective share only applies in testate estates [DOES ELECTIVE SHARE APPLY

IN TESTATE OR INTESTATE ESTATES???]C. Generally, the elective share of a spouse has priority over any other gift in the will.

5. ProcedureA. Courts will use the Elective share statutes that were in effect at the time of the

testator’s death, and not the statute in effect when the petition was filed.

6. §732.205 Elective Share Restricted to FL Resident Decedent A. GET THE INFO FROM THE HANDOUT

7. §732.2025 Definitions - lists the definitions used in this section8. §732.2105 Effect of Election on Other Interests (formerly §732.211)

A. 732.2105(1) The right to petition for elective share shall be” in addition to” other rights of a surviving spouse (formerly §732.208)

B. 732.2105(2) Decedent will be treated as though he was predeceased by surviving spouse

1. Has the effect of saying that:a. Spouse gets paid first; andb. when other beneficiaries are paid, they will be paid according to the will

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9. §732.2125 Right of Election; by whom exercisable [STANDING] (Formerly §732.210) A. SEE HANDOUT FOR ADDITIONAL INFOB. Purpose: to preserve a surviving spouse’s well being, not to make them rich.C. Who has standing to bring the elective share request?

1. Surviving spouse may bring election ;a. The Court however has discretion to block the elective share of a surviving

spouse.(1) Example: Court may consider if this was a fourth marriage and was for

only one week.(2) Example: Wrongful conduct may also block the share.

2. Personal representative may bring election a. If it is an incompetant surviving spouse, this individuals actions must be

approved by the Courts as being in the “best interest” of the surviving spouse. (1) In determining “best interest” the court will look at:

(a) Whether an incompetent surviving spouse has independent wealth in which to live on;

(b) Whether when that person was competent they knew what the the deceased spouse’s will said and they accepted it

(2) Court will not enforce the elective share petition of the personal representative where these are found.

(3) Clarkson v 1 st National Bank (a) Court looked to see if it was in the best interest of the

incompetant surviving spouse to get an elective share. She was left ¼ of his estate. She was left power of appointment but she became incompetant. Ct didn’t want to look only at the money. Ct tries to step into the surviving spouses shoes and decide, if they were competent would they have taken the elective share for their well being.

3. Holder of a Durable Power of Attorney may bring election .a. Holder may elect to take the elective share on behalf of a surviving spouse

against the will of a surviving spouse.b. Refer to “Documents Relating to Wills” infra for more on Durable Power of

Attorney10.§732.2135 Time of Election (formerly §732.212)

A. Petition for Elective Share must be made within 4 months from the date of the first publication of notice of administration.

1. Publication in newspaper that you will be probating a will satisfies notice of administration.

B. EXCEPTIONS:1. Some Other Proceeding: If there is some other proceeding going on in regards to

the Testator’s will, then the surviving spouse may get an extension to file of 40 days after the finalization of the previous proceedings.a. The above litigation can not start after the 4 month period is over in order for

you to claim extension.(1) This extension applies even if the surviving spouse is part of the

litigation.2. Fraud: If the surviving spouse was somehow defrauded into not filing for the

elective share, the proceeding may be opened up again.

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3. Surviving Spouse Dies Before Filing: Elective Share request can not be made if the surviving spouse dies prior to filing the petition.a. If the election is made timely but, the surviving spouse dies prior to getting the

money, the Court will award the money to the surviving spouse’s estate.11.§732.2035 Property Entering into Computation of Elective Share (formerly §732.206)

A. §732.2035(1) Does not include things that pass outside of probate; Only includes probate assets

B. §732.2035(2) Does include “decedent’s ownership interest” in accounts registered as “Pay on Death” or “Transfer on Death” or “In trust for”

1. “decedent’s ownership interest” means that portion of the accounts which the decedent had immediately before death, the right to revoke (i.e. revocable trusts)

C. Does include homestead, family allowance, property in joint tenancy, joint accounts, etc.1. DOES THIS INCLUDE real property not located in Florida.

D. Sullivan v Burkin 1. Wanted to cut out his separated wife or child. She is not a pretermitted spouse

because they were married at the time of execution. She wants her elective share.

2. Problem is that most of his assets are in a trust, and generally trusts pass outside of probate.

3. Ct held this trust was illusory but still valid; it is a revocable trust disguised as an irrevocable trust. Since revocable trusts will be considered part of the probate estate, they included it.

E. Traub v Klatkiss 1. Surviving spouse was separated from deceased husband. Most of his assets

have been transferred so that she couldn’t get anything. She said it was fraudulent. Ct didn’t agree. The legislature didn’t intend to include non-probate assets in the computation of the elective share. This was not an illusory transfer as she claimed. Thus, she can’t receive anything under elective share, even though the motivation was fraudulent. You only get an elective share on probate assets. Old statute allowed election only on probabtable assets. New statute differs in that it allows election even on some non-probatable assets which are listed. [IS THIS A TRUE STATEMENT??] IS THIS STATEMENT INTENDED TO INCLUDE REVOCABLE TRUSTS DISGUISED AS IRREVOCABLE]

F. Seifert v Burkin 1. Trusts he created for his two daughters were held as illusory because he never

really gave them away and they could not do anything with them without his permission.

12.§732.2065 Amount of Elective Share (formerly §732.207)A. 30% of the Fair Market Value of the Testator’s assets

1. Such valuation shall be made on the date of death (FMV).2. 30% comes from §732.2075 (see infra):

13.§732.2075 HOW to pay the Elective Share (formerly §732.209)A. Absent a provision in the Testator’s will on how to handle an anticipated elective share

judgment, the elective share shall be paid through the Court’s discretion as follows:1. §732.2075(1) look at instructions in the will, they are controlling2. Then go down list under §732.2075(1)(a-f)

a. §732.2075(1)(a) take proceeds from life insurance policy of decedent not owned by surviving spouse

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b. §732.2075(1)(b) take proceeds from retirement plan of decedent c. §732.2075(1)(c) take ½ of decedent’s real propertyd. §732.2075(1)(d) take property held in special needs trust for surviving spouse e. §732.2075(1)(e) take assets that he was going to give to the surviving spouse

in the will;f. §732.2075(1)(f) take assets that would have gone to the surviving spouse in

the will but which he disclaimed (this doesn’t include revocable trusts)3. §732.2075(3) Permits payment to be in cash or in kind property. (formerly

§732.214)a. Assets in kind shall be distributed at fair market value on the date of

distribution. (example: stocks) However, other assets are valued at the time of death.

4. §732.2075(4) To the extent that these are inadequate to satisfy the Court’s ruling, use the order found in the Rules of Abatement under §733.805 a. First take property not disposed of by the willb. If not enough or all is disposed, look for residuary clause

(1) Take property devised to the residuary devisee or devisees;c. Then take from general devises: Property not specifically or demonstratively

devised;d. Then take property specifically or demonstratively devised

B. From the above number, you must deduct:1. All valid claims against the estate that can be payable by the estate, AND

a. Note: Such as any money owed to the surviving spouse.2. All mortgages, liens, or security interests on the assets.

a. Note: Funeral Bills are deductible here.C. What isn’t deducted is:

1. Administrative Costs (ie: those costs incurred in administering the will), including taxes.

14.Notes 15.§732.2085(3) allows someone the option to get creative in order to not loose a gift from a

testator in order to satisfy an elective share.A. Example: Ed receives an apartment building from his dead uncle Ted. Ted’s wife

however, was awarded an elective share and due to circumstances Ed was supposed to give up his apartment building to her. Pursuant to this section, Ed may have the apartment building appraised and pay Ted’s wife that amount of money thereby keeping his building.

16.§732.215 If additional taxes are owed because of a surviving spouse deciding to elect their share – the spouse must pay that bill!

17.Example of a difficulty in paying the Elective ShareA. Blockage Discount : Occurs when there has been a reduction in the price of stock which

occurs because stock that is to be sold is sold in larger than normal quantities.1. Example: Grandfather dies. Grandfather is the majority shareholder of GM. His

wife gets an elective share, and now his stock must al be sold. Selling ALL that stock at once floods the market and drastically devalues the price of the stock.

2. REMEMBER: case about the oil paintings ($200,000 vs. $15,000,000)18.Elective Share recap:

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A. ELECTIVE SHARES SAY THAT THEY DON’T WANT WHAT WAS LEFT TO THEM IN THE WILL – THEY WANT 30%. HOWEVER, THOSE WHO ELECT THIS, DON’T GET THEIR SHARE IN ADDITION TO WHAT WAS LEFT TO THEM IN THE WILL BUT, THEY DO GET THEIR ELECTIVE SHARE IN ADDITION TO THE RIGHTS OF A SURVIVING SPOUSE UNDER FLORIDA LAW.

19.§732.702 Waiver of Spouse’s Rights to ElectA. A surviving spouse is entitled to waive rights to such things as elective shares,

homestead, etc.1. This can be done either before your spouse dies (ie: prenuptual agreement) or

after the spouse has died (ie: by failing to claim a right or by filing a disclaimer pursuant to §732.801)

B. Ways to waive:1. If its not timely, you waive your right under §732.2135 (6 mos)2. Waiver must be made knowingly and intentionally;

a. Nuptial Agreement – look to see what the spouse waived, you must make a determination if she waived rights to elective share

b. Written Settlement Agreement – Their willing to take so much in exchange for their rights to election

3. The Slayer Statute – If you somehow cause the death of your spouse, you are not permitted to elect your share

4. May be estopped from claiming an elective share;a. Example: Two individuals are married, they never consummate their marriage

and also enter into many bigamous marriages throughout their time together. Such a person would be estopped from claiming an elective share.

C. There are however some exceptions for self-defense, etc.

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Comparison of old to new statutes in elective share:

Old Statute New Statute

Right to Elective Share 732.01 & 732.05 732.201 (no big change)

In addition to other rights 732.208 732.2105 (1) (no change)

After election, treated as predeceased

732.211 732.2105 (2) (no change)

Standing - Who may exercise the right to an elective share

732.210 - 2 people have a right - either 1) spouse or 2) guardian of the spouse Case law allows power of attorney also.Standard: Best Interest

732.2125 - Specifically now allows 3 people to have a right - either 1) spouse 2) guardian of the spouse & 3) Power of attorneyStandard: Best interest determining the spouse’s probable lifetime needs

Time of Election 732.212 - Must bring within 4 months of the first publication of administration.

732.2135 - Extends time amount to 6 months. You can petition the court for an extension. But then if you withdraw you will receive certain charges

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Assets 732.206 - Only probate assets subject to administration to go into computation of elective share

732.2035 - No longer limited to just those things through probate subject to administration. Also included: Joint bank accounts or trusts; tenancy of the entireties. Still goes automatically to survivor, but they go into amount computed for elective share. Revocable trusts and certain rights to income, other transfers the decedent made where other persons were to distribute to the decedent, net value of life insurance policies, benefits paid to another person on decedents retirement plan. These are allowed in computation under new statute. Listed in 732.2045 - Can’t have overlapping.

Amount of the Share 732.207 - Spouse gets 30%

732.2065 - still 30%; but becomes more because there are so many more assets allowed in the computation

Payment - From what assets are they payable??

732.209 - 1) Look to will for direction 2) then take assets to surviving spouse 3) Go to abatement to take assets.

732.2075 - Same - But, on top it gives you a list of what else you pay from; above list. 732.2085 - Liability of direst recipients and beneficiaries. Who and in what percentage. 732.2095 - Valuation of the assets from which they are being paid. As of what time period do you value those assets.

Spouse can be paid in Cash or in Kind

732.214 - Permits you to pay in cash or property.

732.2075(3) - Also permits you to pay in cash or property.

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Spouse gets paid 1st 732.211 732.2105(2) -

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PROTECTIONS GIVEN TO SPOUSE AND FAMILY

1. §732.402 - Exempt PropertyA. Designed to primarily protect those estates that are of little value because, without these

exemptions, the estate would be worthless.B. Applies whether testate or intestate.C. Protections provided by both statute and constitution. D. §732.402(1) Basically, the surviving spouse or the children of the decedent shall have a

share in the estate designated as “exempt property”E. §732.402(2) Such property consists of:

1. Household furniture, furnishings, and appliances in the decedent’s usual place of abode up to a net value of $10,000 as of the date of death;a. Note: In addition, the Florida Constitution exempts $1,000 as well – so in

actuality – you can exempt $11,000.2. All automobiles held in the decedent’s name and regularly used by the decedent

or members of the decedent’s family as their personal automobiles, etc.a. Example: If you know you are about to die, go out and buy a Rolls Royce and

put it in your name, this way your creditors cannot touch it, and your family can keep the value.

F. §732.402(4) states that these exemptions are in addition to what was left in a will, or inherited through intestate, etc.

G. §732.402(5) states that property demonstratively devised by the decedent’s will to any devisee shall not be included in exempt property.

1. means creditors won’t get it if willed awayH. Creditors that COULD seize these assets:

1. The Federal Government could if the decedent owes back taxes.a. The Federal Government isn’t bound by the Florida Constitution.

(1) However, it is unlikely that the Government would come in and take these things.

2. Creditors with security interests in such property.a. Example: Assume Dead Dan bought a refrigerator on time, and at the time of

his death he had not yet finished paying off the item. At this time, Sears could come in and take the refrigerator.(1) It is likely that these creditors come in to take these items.

b. NOTE: Funeral bills are technically not creditors claims since their expense was incurred after death.

I. Waiver1. Failure to Act : Since, you must petition the Court with what is exempted property

pursuant to §732.402(6) within 4 months after the date of first publication or 40 days after the date of the last proceeding involving this will, failure to do so could result in a waiver of this right.a. Example: Failure to tally up the $11,000 worth of household goods would result

in a waiver.(1) Petitioner must describe the asset and estimate it’s value.

2. Decedent waiving rights for you : The decedent may do this in two ways:a. By leaving all tangible personal property in his home to his brother.

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(1) Since his brother is not allowed such an exception under the statute, the decedent has in actuality waived the rights for his spouse and children.

b. By mortgaging all of his property.(1) Nothing could be exempted since it is subject to creditor’s security.

(a) Example: The bank, Cadillac, Sears, etc.

2. §732.403 - Family AllowanceA. When the decedent’s surviving spouse and his lineal heirs needs money as soon as

possible and can not wait until after the probate proceeding, the Court may grant them an allowance.

B. Occurs in either Testate or Intestate estates regardless what the will states.C. Requirements :

1. The decedent had to be domiciled in Florida;2. The decedent was either obligated to or was supporting his surviving spouse or

any lineal heirs.a. This may also include lineal decendents or ascendents (ie: what if the

decedent was supporting his parents!)b. Note: Being a personal representative does not block the person from getting

an allowance.D. Procedure :

1. Individual must file a petition with the Court however, there is really no set time limit in which to file.a. However, this provision is designed to help emergencies therefore, filing

usually happens within 1 month of the death of decedent.(1) Example: Widow waited 6 months to file this petition and the Court

rejected it. Evidence of procrastination shows that person maybe doesn’t really need the money.

2. The maximum a Court will award is $6,000 after it determines whether or not the petitioner needs the money at all.

3. The Court will also determine how the money will be paid.a. Example: lump sums or installments.b. Note: The family allowance has priority over claims of creditors;c. Note: Whomever the allowance is being paid to – should that person die, the

payments will cease.E. Waiver :

1. Failure to file;2. If you die the benefits stop; it is to momentarily benefit you3. Nuptual agreements;4. Settlement agreements, etc.

3. §733.806 - AdvancementA. An advancement is a gift made by decedent during life to a family member that B. When a decedent dies Intestate but during the decedent’s life he made a transfer to

someone (usually parent to child or presumptive heir) with out consideration (like a gift), we treat this property as an inheritance (and not a gift or a loan)

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1. the reason this even matters is because what was transferred was actually part of what the heir/child would have gotten during intestate, public policy requires everything to be fair by equalizing everyone’s sharea. so rather than give them more shit than they are entitled to through the

intestacy statutes, they get less as decedents estate is distributed. (but technically they get the same).

C. To be an advancement: (2 ways: 1,2,AND 3 OR 4)1. must show intent AND

a. it was intended to be deducted from heirs share of the estate when decedent died(1) example: Son tells father that he wants to go to law school, so his

father gives him several thousand dollars. Policy states that it was the father’s intention that this money that he gave him during his lifetime was actually an advancement to what the father intended the son to receive on death.

(2) This differentiates an advancement from a gift or a loan(3) Not all gifts constitute an advancement.

(a) Example: Birthday/Graduation gifts aren’t advancements because not intended to be deducted

2. must be a contemporaneous writing by the decedent AND3. must be signed at time of transfer OR

a. Either Decedent or Heir can sign. b. An heir can even sign after the decedent’s death.

4. If person receiving the money acknowledges in a contemporaneous writing that its an early distribution of inheritance, this is all the court needs to consider it an advancement

D. REMEMBER – this concept of Advancement has no application when the testator dies TESTATE.

E. Procedure:1. Step One: Court must determine whether or not there was an advancement.2. Step Two: If the Court finds there was an advancement, they must next determine

how much it was for.3. Step Three: Court uses the theory of “HOTCHPOT”

a. Hotchpot Court will bring back, into the estate (numerically, not physically) the advancement in order to determine how much each other heir should get.

b. Example: Assume father advanced to daughter $60,000 during his lifetime. At death, he dies intestate, and the Court “brings back” the $60,000 advancement into his intestate estate.(1) At intestate his estate is worth $190,000. We bring “back” the $60,000,

and now the intestate estate is worth $250,000. (2) Next we see that testator had no surviving spouse and five children. SO

we divide the estate (pursuant to Florida Law – per stirpes) among the five children – giving each child $50,000 each.

(3) However, the daughter already got $60,000 – so unless she gives 10,000 back to the estate – the Court can only divide $190,000 by four children.

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4. Step Four: That daughter should give back the 10,000 to the estate. However, if she does not, the only remedy available is that she will be deprived from anything future assets out of this estate. (Big Deal)

5. NOTE: if daughter dies before she receives advancement (though all 1,2,and 3 are met), children are not effected and each will receive share as if no advancement

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HOMESTEAD

1. Purpose of the Homestead probate exemption is to promote stability. It prevents creditors from forcing the sale of decedent’s family homes.A. Not concerned with what can happen during decedent’s lifetime

2. Homestead property is not probate propertyA. Doesn’t pass under the will, passes as if its not part of the will goes to the person entitled

under the Constitution and statutes.B. Statutes do not state what Homestead is, neither does the Florida Constitution, but it

does give an outline in Article X, Section 4 (a-c)of the Florida Constitution.3. ORDER ON TEST:

A. In order to be exempt from a forced sale under §4 of the constitutionB. 1st - must show under §4(a)

1. that it’s real property, ANDa. exemption applies to:

(1) land - ie: to dirt(a) you can be homestead exempt for an empty piece of land

(2) any improvement on the land- ie: a house, garage or improvements (a) as long as those improvements, etc. are used by owner and his

family. (b) A trailer or mobile home on property would be part of homestead.(c) Rental property is not homestead.

2. that it’s owned by a natural person (not corporations)C. 2nd – Must be within size limits of §4(a)(1)

1. If located outside a municipality, 160 acres of contiguous land is homesteada. If land subsequently becomes part of a municipality the 160 acres may not be

reduced as Homestead without the owner’s consent.b. Example: Contiguous means in succession.

(1) There are three parcels of land numbered one through three next to each other. Harriet Homeowner owns parcels 1 and 3. She may not claim parcels 1 and 3 as Homestead together because they aren’t contiguous.

2. If located within a municipality, ½ acre is homestead but exemption limited to owner or owners family

D. 4th – must be decedents primary residence1. principal place of residence or intent to remain there qualifies

a. decedent resided there at time of deathb. If decedednt wasn’t residing there but family wasc. If owned 2 homes, look at: drivers licence, where he votes, where he files

income taxes E. 5th – must determine if after the decedent’s death, the exemption inures to anyone(if

anyone can benefit from it) or if the home is subject to the claims of decedent’s creditors1. Under §4(b), these exemptions shall inure to the surviving spouse or heirs

(§732.103 discusses heirs) of the ownera. This § allows the exemption to continue even though it’s no longer decedent’s

homestead (because he’s dead)

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2. §4(c) restricts lifetime alienation (what you can do with it while your still alive) and limits the devisesa. §732.4015 statutorily reiterates limits on devises as provided by the

constitution(1) General Rule If the decedent dies with a spouse and no children , he

or she may not devise Homestead property to anyone else but the spouse. (statute says “may”?)

(2) General Rule If the decedent dies with a spouse and lineal descendents then the surviving spouse has a Life Estate and the children have a vested remainder.

(3) General Rule If the decedent dies with only minor children he similarly may not devise Homestead property to anyone else.

(4) General Rule If the decedent dies without a spouse and adult children he has no restriction on who to devise Homestead property to.(a) Example Assuming that the decedent has no surviving spouse

and only adult children, he can preserve Homestead by leaving it to a grandchild because that grandchild is a lineal descendent of his. However, since under these facts the decedent could leave it to anyone – if he chooses not to give it to a lineal descendent but to his friend Fred, he has destroyed Homestead.

(5) General Rule If the decedent dies with no children or spouse, he or she has no restriction on who to leave Homestead property to.

3. If the devise under the constitution was ineffective (maybe because died intestate), then homestead shall descend under §732.401(1) in the same manner as other intestate property UNLESS decedent is survived by a spouse and lineal descendants, the S gets a life estate and LDs get a vested remainder

F. EXCEPTIONS1. Homestead shall be subject to forced sale to pay taxes (federal, state, local) §4(a)2. Homestead exempt from all other creditors except:

a. Obligations contracted to purchase, repair, or improve the homestead (i.e. mortgage)

b. Obligations purchased to develop the homestead (roofers, contractors)c. If someone’s lien attaches before Homestead, then that creditor can come after

your home.(1) example: Assume you charge a vacation on Visa and default on

payments. Soon after, you get Homestead exception. Because the lien from the Visa charge occurred before the Homestead, Visa can come after your home for payment.

3. If decedent properly alienated property during his lifetimea. §4(c) says proper alienation by mortgage, sale or gift, if married by deed, and

abandonmentb. If improper, survivors can try to get it back

4. One may not avoid the restrictions imposed on Homestead by transferring Homestead property to a trust - §732.4015(2)

4. Examples of Homestead:A. Commercial Property is not Homestead;

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1. If part of property is occasionally used for business or office purposes the Court will not deny Homestead.a. Office room or rented room in house.

2. Must be permanent residence of the decedent:a. regular home;b. condominium;c. townhouse; butd. not a co-op because it isn’t real property.

3. Any vested estate may qualify for Homestead (ie: A Life Estate can qualify as Homestead)

4. Even property that was Homestead and was transferred in a trust, it still qualifies as Homestead.a. Courts look at the intent of the person – ie: If they rent their house while they

are gone for a year, as long as their intent is to return that is okay.b. Even if person goes to jail for 10 years and if your intent is to go back to that

house you have not abandoned Homestead.5. Remember – Decedent must own the real estate to qualify for a homestead

exemption.a. If the required period of adverse possession has been satisfied then the person

can acquire this property and use it for Homestead.(1) Standard to prove adverse possession is by clear and convincing

evidence.b. §732.401(2) property held as Tenants by the Entirety is not considered

Homestead. (1) Property owned with Rights of Survivorship is not considered

Homestead because it is not subject to probate.5. Waivers and Termination of Homestead - Abandonment

A. Abandonment constitutes a waiver of Homestead and can be defined as: vacated or waived intending never to return.

1. Death does not equal an abandonment.B. Being ousted from a home is not the voluntary relinquishment of a right and therefore not

an abandonment.1. note: If the decedent was ousted from a house pursuant to divorce, and not

because of his own making, it is not an abandonment of Homestead.C. Eminent Domain taking: no voluntary relinquishment, it was taken away from you

involuntarily. D. If the decedent requests in is will that his home be sold then this is a waiver of

Homestead…..can he do this ?1. Example Assume that on January 30, 1999 you contracted to sell your home to

Fred but, prior to the closing you die. However, the sale of a home abandons Homestead. However, if the proceeds of the sale are reinvested into another home within a reasonable period of time then, the new home retains Homestead status.

2. Courts look at the intent and say that the decedent intended to sell the home.6. What can you do with Homestead:

A. Rule: A married person who is the owner of Homestead property, even if he is the sole owner, he must have the spouse sign the deed to sell the property.

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1. The wife must sign the deed.a. example #1 Dave and Wendy are married. However Dave owns Homestead

property with Bob as Tenants in Common. Dave then decides to convey his interest to Charlie, and transfers the deed without Wendy signing it.(1) The transfer from Dave to Charlie was invalid because Dave’s spouse

did not sign the deed to a transfer of Homestead property.b. EXCEPTION: If Dave decided to transfer the property to his spouse Wendy, he

does not need her signature.(1) If no spouse but minor children – the children might need a guardian to

sign.c. example #2 Decedent owned 360 acres of land outside of the municipality

and his principal residence was located on this property. He later took 200 acres and sold it to someone else without having his wife sign the deed.(1) Homestead said that even if the land is solely owned (and even

purchased prior to marriage), the decedent must have his wife sign the deed if the land sold was Homestead.

(2) Remember: The fact that a home is Homestead exempt is not conclusive proof that the property is probate property and subject to Homestead restrictions.

d. example #3 Commercial property is not Homestead. For your property to be Homestead it has to be your principal place of residence. Assume Farmer Ted owned 100 acres outside the city. Ted rented 99.75% of the land to Farmer Fred and made profits off this. Ted had his home on the remaining quarter acre. For Homestead purposes, only the quarter acre that his home sat on would be considered Homestead since the other land was used commercially.

e. example #4 Assume the same facts as above. We need to look at all the facts and circumstances in order to ascertain which parts of the property are probate property. Items such as pools, garages are all part of Homestead and should thus be included in the acreage when determining Homestead.

f. example #5 Son took property as a beneficiary instead of an heir because it was testate. Credit card company says because he is a beneficiary they can collect. Ct will say no because he’s still a person who otherwise would have been an heir.

In class example:1. Can Saks force a sale of H's home during his lifetime to collect his debt?

a. H is a widower, no children, and is the sole owner of the home.Answer: No, it is his homestead

2. Can H alienate his house, given same facts as above? Yes, he is a single man.a. What if H remarries? No, then he must have his wife's permission to alienate

the homestead.3. What happens to the house if H dies intestate, given the same facts as #1? It will

descend in the same manner as other intestate property.a. What if H is married? It goes to his wife (F.S. 732.102)b. What if H is married with one adult child? Same as #4(a).c. If his wife is deceased, and he has one minor child? Goes to his child (F.S.

732.401, 732.103).

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4. Can H freely devise his home? It can be devised to spouse, provided there are no minor children. a. Assume H has one minor child, plus a spouse? No, the spouse take a life estate in the homestead, with a vested remainder to the lineal descendants in being at the time of the decedent's death.c. Assume H is married and has one adult child? Same as #4(a).d. Assume wife is deceased, and on minor child? Cannot devise home, via

Florida Constitution and F.S. 732.4015.e. Assume wife is deceased, and he is survived by one adult child? He can freely

devise in that instance.

A tenancy by the entirety is not homestead for the purposes of descent. However, it is still homestead exempt from the claims of creditors.

A spouse is not liable for the debts of his/her spouse.

More In-class examples (from questions above):1. Wife has a child, and marries Husband #2, who is divorced with a minor child.

a. Can W freely devise the homestead? No, because she has a minor child. b. What happens if she dies intestate? Life estate to spouse and vested

remainder to her lineal descendant. 2. Same facts as above, except W & H2 own homestead with TBE, then W dies.

a. H2 would then own the homestead, due to the TBE.b. When H2 passes intestate, his minor child would get the homestead, as

opposed to hers.

WILL CONTESTS

1. Will Contests take two forms:A. If not yet probated

1. may object to the petition for administrationB. If already admitted to probate

1. may petition to revoke the will2. may make a qualified renunciation

a. if you lose, you still remain a beneficiary2. §733.212 – Notice of Administration; Filing Objections and Contest Claims

A. §733.212(1) permits all interested persons to challenge the validity of a will 1. §731.201(21) defines “interested person” as anyone who may reasonably be

expected to be affected by the outcome of the proceedinga. TEST: You are considered to be affected by the outcome if you stand to gain

pecuniary or other interest by contesting the willb. The language of §731.201(21) deems a personal representative as an

interested party in any proceeding affecting the estate or the rights of a beneficiary in the estate

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(1) HOWEVER, A personal representative is not granted automatic standing to contest(a) They must resign if they wish to contest the will

c. Term does NOT include an heir at law or devisee who has received his distribution.

3. §733.107 - Burden of Proof in Contests A. In all proceedings contesting the validity of a will:

1. Burden shall be upon the proponent of the will to establish prima facie its formal execution and attestation (witnessing the signing).

2. Thereafter, the contestant shall have the burden of establishing the grounds.4. Grounds For Will Contest in Florida: See below

A. FraudB. MistakeC. Undue InfluenceD. Lack of Testamentary Capacity

5. Presumption/ Standing to ContestA. Court begins analysis of a will with the presumption that: If an adult signs a will, they have

the requisite capacity.1. That presumption may be rebutted by anyone who;

a. raises such issue of lack of capacity, AND b. has standing to do so.

2. Such a person also has the burden of proof that the testator LACKED capacity.B. Court will look at evidence from before, after and during the signing of the will, giving no

more weight to one factor over the other.1. Courts also will decipher between an insane delusion and a mistake of belief.

a. Example: Mother takes daughter out of will because she thinks that she is stealing her jewelry. This may be wrong but, this doesn’t mean that the mother is dillusional.

b. Example: If a Father (in his older years) writes daughter out of will because he says that this is not his daughter, this is dillusional because he has no basis for saying this.

2. Mistaken beliefs don’t effect testamentary capacityC. Standing consists of

1. You would be an heir in intestate (ie: you would benefit financially) OR2. The decedent had a prior valid will in which you were a beneficiary.

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GROUNDS TO CONTEST A WILL

6. §732.5165 – Effect of Fraud, Duress, Mistake and Undue InfluenceA. states that a will is invalid if it procured by fraud, undue influence, duress, mistake or

fraud. B. If only part of the will is procured by such, then only that part is invalid.

FRAUD

1. If a testator was fraudulently induced to execute or transfer a will, the will (or the fraudulently induced portion) is not eligible for probate. A. Fraud occurs when a person intentionally misrepresents material facts to a testator

intending for testator to rely, to his detriment on these misrepresentations.2. 2 TYPES of FRAUD

A. fraud in the inducementInfluenced or induced a person to execute a will

B. fraud in the executionTricking a person into signing a will stating that it is another document

3. BURDEN OF PROOFA. The party contesting that is asserting fraud has the burden of proof.B. Difficult burden.C. Example Husband dies and is survived by his wife and a brother. Husband transferred

the rights of his restaurant while he was alive to his brother. Widow now is attempting to assert a claim of a fraudulent transfer because she claims that her husband was unable to get a liquor license so he transferred his ownership to his brother.

1. This is not fraud. The husband did not transfer his ownership based on any fraudulent method by the brother. There are no facts to show that the husband did anything other than what he wanted. Therefore, no fraud.

4. NOTE: This is the least used avenue to contest the will because it is the hardest to prove.5. Steps to take legal practice

A. STEP ONEAttorney should look towards transfers of property:1. What assets belong to the probate estate?

a. Did the decedent make any transfers? (1) Was there a wrongful transfer of property?

(a) If a pre-death transfer was done improperly with fraud (or by some other means from below) to an item out of the probate estate you need to have the transfer set aside from the rest.

B. STEP TWO Look at will and codicil:1. Look towards the will and codicil to see if they were made under the influence of

one of above four grounds for contest.2. Document could be declared entirely invalid or maybe only sometimes portions of

it invalid.a. If someone could establish that the codicil was fraudulent then only that would

be thrown out.(1) Example Assume that an elderly man relies on a housekeeper and

she fraudulently gets him to leave her $10,000 in his will – only that gift

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will be held to be invalid but, the rest of the will can be distributed accordingly.

MISTAKE

1. If a testator mistakenly executed (signed)a will thinking it was something else then the is not eligible for probate.

2. Mistake means: a mistake in the execution of a document.A. Example: A busy law firm attaches two different people’s wills together and has the

testator sign the document. This is a mistake in execution.B. NOTE: MISTAKE MUST BE IN EXECUTION - NOT IN BELIEF

1. However, if the mistake in belief is so strange or so bizarre you might be able to contest the will not because of mistake of belief but because of lack of testamentary capacity.

2. Mistake in drafting or scrivner is not a mistake 3. Example 1: Mistake in belief on the part of the testator that someone is going to kill

him and that’s why he’s executing a will, is not a mistake that will invalidate a willa. note: Little green men are going to kill him is not enough to warrant a lack of

testamentary capacity though.4. Example 2: Mother writes son out of will because he never calls her. In actuality

he is really in a coma but since the mother made a mistake of fact and not in execution, this provision of writing him out will be sufficient.

C. If the whole will is a mistake, the whole thing will be invalid; if only part is a mistake, only that part will be held invalid

1. If only part of the will or codicil is the result of a mistake than that troublesome clause won’t be enforced but the rest will.a. A draftsman’s error generally will not render a will invalid.

2. Example: Testator wanted everything put in trust and give interest to A. At A’s death he wished to give the corpus of the trust to his nieces and nephews. However, he decided to amend this and give the interest to someone else but keep the nieces and nephew’s corpus. The attorney made a mistake and deleted the trust entirely. The nieces and nephews contested the will at the testator’s death based on mistake.a. Court held the codicil deleting the trust was invalid because of the attorney’s

error and left the original will intact.b. Make sure that your client reads what he is signing prior to signing it to make

sure it comports with his intent.

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UNDUE INFLUENCE

1. If a testator was unduly influenced, the will (or unduly influenced portion) is invalid and not eligible for probate. Most common claim.

2. To assert a claim, the allegations must be sufficiently specific that free will of testator was destroyed such as with:A. Over persuasionB. ForceC. CoercionD. Duress

3. Decided on a case by case basisA. Acts occurring in the past are admissibleB. Remoteness goes to the weight, rather than to admissibility

4. 2 options for someone contesting A. meet the burden by giving direct evidence, or

1. example: Video showing he was forced to sign at gun point.B. raising a presumption of undue influence

5. Presumption is established if : [must prove all three]1. NOTE: These three elements are all for indirect evidence however, with direct

evidence the following is not needed.

B. Show a confidential relationship between the decedent and the wrongdoer existed 1. confidential relationship means trust

a. This relationship may arise between any two people where the basis is founded on a trust (i.e. neighbors)

2. Showing who the decedent relied upon, who brought them to the doctor, picked up medicine, went grocery shopping is sufficient to establish a confidential relationship.a. Note: Simply showing that you spent time with the decedent (ie: went there for

dinner and got advise about your love life) does not show some sort of reliance or dependency by the deceased (they could have that relationship with anyone) that there was a confidential relationship.

b. Example: A confidential relationship doesn’t only have to be with your family. Could be your realtor that you’ve known for over 18 years and that realtor also picked up mail, etc.

3. Family relationship does not mean confidential relationship. A presumption does not arise in a spousal relationship.a. Example: A couple is married and a wife hounds her husband to change his

will every month. Florida law says that you can not prove undue influence in a marriage – you must have direct evidence (ie: knife or smoking gun).

C. Show an active procurement of a will (or a provision of the will) by the wrongdoer1. Courts will look at all relevant facts in order to determine active procurement, and

it goes on a case-by-case basis.2. Active Procurement means a lot of pressure

a. Active procurement occurs where actions of wrongdoer prevented decedent from exercising his or her own free will.

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b. In determining whether active procurement existed, the Court will consider the criteria given in Carpenter:(1) NOTE: Don’t have to meet all of these & this list is not exhaustive.(2) Presence of the beneficiary at the execution of the will;(3) Presence of the beneficiary on those occasions when the testator

expressed a desire to make a will;(4) Recommendation by the beneficiary of an attorney to draw the will;(5) Did beneficiary have knowledge of the contents of the will prior to

execution;(6) Did beneficiary give instructions on preparation of the will to the attorney

drawing the will;(7) Did beneficiary secure (find) witnesses to the will;(8) Safekeeping of the will by the beneficiary subsequent to execution.(9) Mere kindness (raking leaves or calling attorney for a neighbor) does not

equal active procurement, you need something more.D. Wrongdoer must receive substantial benefit under will or codicil being objected to.

1. May indirectly receive a benefita. Doesn’t require that wrongdoer is a beneficiary under the will, just that for some

reason he benefited from the will(1) Example: attorney drafting the will

b. Courts look at what gifts you would have gotten in a previous will or intestacy and compare it to what you would have gotten had there been no will.

c. When the attorney is accused:(1) If a lawyer is accused of undue influence you can still represent

decedent’s estate although it wouldn’t be a good idea.(a) Florida Bar Rule 5-102 says that ethically you should cease

handling the estate. (2) Should an attorney get accused and he is receiving a substantial

amount of money he can rebut it by showing that he prepared many other wills and never received any gifts. (a) Showing that attorney received a fee for his services is not

enough to show that he benefited by the will. (3) If you are related to the testator and you are the attorney you can still be

accused of undue influence.D. After the rebuttable presumption is raised .

1. If you can show the above elements (ie: confidential, procurement, etc.) then you raise the rebuttable presumption that there was undue influence.

2. This proponent now has the burden to rebut the presumption by: a. Giving reasonable explanation to refute allegation by explaining the reason

why they are accused of the wrongdoing (explain their true motives);(1) All relevant factors will be considered in deciding this.

b. After proponent gives reasonable explanation burden shifts back to the claimants claiming undue influence.

c. Judge in his deliberations may consider the following:(1) At the time of signing the will:

(a) Age of decedent;(b) Frailties (ex: were they on medication, hospitalized, doctor’s

visits);

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(c) What was person’s mental state;(2) Who had contact with decedent; How often did he or she see her; Who

else was present when they were there; (3) Did this person keep the testator away from anyone else (i.e. relatives,

other beneficiaries)(4) Any peculiar disposition in the will (ex: money left to an organization that

person had no contact with);(5) When was will written in relation to the death (ex: If written 14 years ago

obviously, the person liked it); (6) Who had possession of the will;(7) Is the beneficiary a natural recipient of the decedent’s bounty;(8) Education of decedent and there business ability and how they manage

their money; (9) Talk to people who knew decedent (ex: doctors, rabbi, pharmacist,

neighbor, attorney who drafted will-how often did he meet with the decedent);

d. As an attorney for the decedent, a safeguard would be: (1) Have the testator tell as many people as he can that he disinherited his

family; (2) Make note for file.

E. If undue influence is successfully reached, then that portion or portions of the will that were procured will be thrown out.

1. If not successful, the will goes through probate.F. Estate of Carpenter (leading case in FL for undue influence)

1. Carpenter had 4 kids and died leaving everything to her daughter, Mary. 2. Presumption of undue influence by indirect evidence was successfully raised by

will contestants (the 3 sons) because they showed the following:a. Confidential Relationship existed between mother/daughter

(1) Took care of sick mother(2) Took her to hospital(3) Drove her from city to city(4) Trusted Mary to do her errands

b. Active in procuring the will(1) Mary called her own attorney to do the will(2) She was present when will was assigned(3) Knew will existed(4) Directed attorney in structuring the will(5) Her attorney secured the witnesses

c. Substantial benefited(1) Mary was the only beneficiary

3. Thus, the burden shifted to the proponent (Mary). Now, Mary had burden of coming forward with a reasonable explanation for her active role in testatrix’ affairs and specifically in preparation of willa. She doesn’t have to prove that no undue influence existed, she just has to

show the reasons for having acted in that particular mannerb. If she fails to rebut the presumption, the ct presumes undue influence.

(1) In this case, proponent successfully rebutted the presumption of undue influence by showing (among other things):

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(a) She was just doing what her mom asked her to do(b) She was the only one there to do so

LACK OF TESTAMENTARY CAPACITY

5. Testamentary Capacity is not defined in the Statutes, only by Case Law.6. Lack of testamentary capacity voids the will in total, not just partial invalidity. 7. §732.501- states any person 18 or more years old of sound mind may make a will

A. Testator must have testamentary capacity at time will is executed1. Ct determines solely at the time they actually execute the will

C. No requirement that testator be competent at the time the witness signs the will.8. To establish testamentary capacity

A. Testator should understand:a. Nature and extent of his propertyb. Natural objects of the testator’s bounty

(1) Who are the people that would normally be getting the estatec. the practical affects of the disposition of the will as it has been executed

B. Attorney should:1. Have testator bring letter from a doctor for the file that says that the testator is

mentally competent. (Preferably a young doctor so that he is around during probate)

2. Have a list of a bunch of questions for testator to answer in front of witnesses:a. Who’s the president; Who’s vice-president; Did you go on a cruise; Did you

speak to your grandchildren recently…etc. (shows that testator knew what was going on).

9. Presumption of Testamentary Capacity ExistsA. A testator is initially presumed to have testamentary capacity when they sign a will

1. if someone wants to contest the capacity, they have the burden to prove a lack there of by preponderance of the evidence

10.Circumstantial EvidenceA. Along with looking at testamentary capacity on day the will was executed, you may admit

evidence to show how the testator acted before and after executing the will.1. Ct will consider:

a. Old ageb. Whether decedent’s disposition was consistent

(1) peculiar appearances or behaviorc. Whether decedent was on drugs/medication

(1) even abuse of controlled substances do not by themselves show lack of testamentary capacity (a) However, if testator was a known alcoholic, the attorney should

establish that they signed the will at a sane, lucid or un-high moment.

B. Fletcher v DeLoach 1. Testator’s estate was going to be distributed equally.2. Her eldest son died and she became depressed, then later she executed a second

will that pissed off the other kids.

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3. Ct looked at circumstantial evidence (from before and after) and determined she lacked testamentary capacity when she executed the second will.

11. Insane Delusion A. A will made by someone who is insane is valid if made during a lucid periodB. Insane Delusion, “Spontaneous conception and acceptance of fact that has no real

existence except in imagination.”C. example: An 85 year old who persistently believes that Santa Clause is real might have a

problem here.12.§744.331(6) Procedures in Determining Incapacity

A. The court may make findings of fact on the basis of clear and convincing evidence that a person is incapacitated with respect to exercising a particular right or all rights.

1. NOTE: the ct will provide a written order that says:a. the nature and the scope of their incapacities b. the exact areas where a person lacks capacity to make informed decisionsc. the specific legal disabilities to which the person is subjectd. the specific rights that the person is incapable of exersiciing

2. Ct may expressly incapacitate someone from exercising certain rights but if they don’t incapacitate them from “executing a will”

B. If a court declares decedent incompetent before executing his will then they are presumed to lack competency in signing the will

C. From the time they are determined incompetent, the presumption will continue until the disability is removed

13.MALICIOUS INTERFERENCE WITH INHERITANCEA. A tortuous action (civil action) for malicious interference with inheritance:

1. alleges that absent a 3rd party’s actions, the beneficiary would have received a greater portion of the decedent’s estate.

2. is brought after probate and is brought against the wrongdoera. must exhaust your remedies in probate court before raising this tort claim

(1) Note: THIS IS ONLY ALLOWED FOR A LOSER IN PROBATE COURT.

B. To prevail, a must establish with reasonable certainty that absent the 3rd party’s actions:

a. would have received a portion or a greater portion under decedent’s will; andb. intentionally intentionally engaged in wrongful conduct; andc. ’s ill motivated actions influenced the decedent; and d. ’s ill motivated actions were the proximate cause of receiving a lessor or no

share of the estate.(1) Decedent had at one time a fixed intent of giving you a gift and BUT

FOR the actions of the wrongdoer you would have received it (2) must prove testamentary intent.

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ADEMPTION

1. Ademption: Revocation or taking away of a legacy by an act of the testator.

A. It occurs when a testator, while living, gives the bequest to the legatee or substitutes another bequest for that mentioned in the will.

B. It also can occur when the testator does something to make it impossible for his or her will to be carried out.

1. Ex: If testator disposed of property before he or she died.C. This ONLY applies to testate estates with a specific devise

1. Only Specific devises (gifts) can adeem (fail). 2. BUT if the testator no longer owns that devise when he dies, you get nothing3. A devise can adeem (fail) in whole or in part

D. Types of devises where this applies 1. Specific Devise (devise = gift) Gift of an item that can be identified and that

property may only be used to satisfy that gift. a. includes identifiable tangible property and easily identifiable intangible propertyb. What something is worth has nothing to do with a specific gift.c. If the devise does not say "MY", then it is not a specific devise. The devise

would be general, and the personal rep would be responsible for going out and getting the beneficiary that specific gift. Always, always, look for the word "MY"!!!

d. Examples of specific devises(1) cash is not a specific gift but, a coin collection is.(2) real estate, but if property is no longer there, you don’t get the specific

gift(3) If 100 shares of Mobil stock are left – this is not specific unless you have

exact stock certificate numbers.(4) Specific bank account is ok because its easily identifiable (value of acct

is irrelevant)(5) Picasso in my living room – easily identified tangible(6) Installment contracts: Picasso to son, but sold it under an installment K

(term K to pay $ for Picasso)- son gets $ over term but not what has already been paid

(7) promissory note to devise future term paymentse. Example of specific assets being sold:

(1) Will says, “Have my personal representative sell the DeGa painting and gift the proceeds to my son.” If during the father’s life he forgets that he made this devise, then sells the painting and puts the money into his checking account which is left to his daughter then, the gift has adeemed (been taken away).

2. Demonstrative Devise (Gift) Fungible item that comes from a source. You devise a gift and specify the source you want the gift to come from. If the item is no longer there, the beneficiary is still entitled to the devise. In this instance, it becomes a general devise. You are saying there is a particular place from which you want the devise to come, but if the source is no longer there, the devise does not adeem. It becomes a general devise.

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a. Money left in bank account #1234 b. Corn from a specific silo.c. General Gifts A general devise comes from the general estate. Money itself

is a general devise. A general devise comes from the general estate. Money itself is a general devise. (1) Example: Demonstrative gift can become a general gift in the following

manner: If a gift is left as ‘$1,000 to son from Nations Bank Account’ however, when father dies only $850 is left in his account. The $850 is a demonstrative that has adeemed in part. If, at the end of the administration of the will, there is money left over, the $150 can become a general gift.

E. Adeemption may occur in whole or in part 1. If partial, you get what is remaining

a. ex: Steuben crystal set that now only has two pieces but originally had ten – this gift has only adeemed in part, you get the 2 pieces.

F. Order on Test 1. Step One Decedent must have died Testate;2. Step Two Apply objective test:

a. Determine if you have any specific devises given by testator, and (1) Was it gift of stock? See §732.605 infra.

b. whether they where part of decedent’s estate at death.3. Step Three Look at intent of the testator: Did the testator intend for you to get

something?a. Generally, intent of decedent is irrelevant if there is no gift left at time of death.b. HOWEVER, Florida takes minority approach and allows intent; allows the use

of extrinsic evidence of testator’s intent to show that a gift has NOT adeemed. (ex: ask if decedent had a pattern of devising things, etc.)(1) Example: Decedent provides in will that the proceeds of a (3rd party’s)

promissory note will go to a certain beneficiary. But payor pays off testator before he died and during that time decedent never changed will. After receiving the proceeds the decedent puts every cent of that money into a separate bank account and doesn’t touch that account. When he dies, because of ademption, you would get nothing BUT in Florida . if beneficiary comes up with enough evidence about testator’s intent, he may be able to assert that his gift did not adeem and get some of the money in the bank account.

4. Step Four Was it satisfied? See §732.609 infra.2. §732.609 Ademption by Satisfaction

A. Property that a testator gave to a person in the testator’s lifetime is treated as a satisfaction of a devise to that person, only if:

1. If the will specifies that a gift could be an ademption; or2. The testator acknowledges the intent to give a gift as an ademption in another

writing; or3. The beneficiary acknowledges in writing that he accepts the gift as satisfaction of

ademption.B. Generally, dispositions of property in a testators will are unaffected if given away during

the lifetime.

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1. Meaning, your gift is erased because I delivered or satisfied it during my lifetime. This is generally applicable to Inter-Vivos transfers made AFTER the will is signed.a. Example: Will gives away 100 shares of stock; he gives car to Alice while alive.

Just C. Only occurs to specific bequestsD. Court will value the gift at the earlier of:

1. The date of decedent’s death, OR2. The date gift was received.

3. REMEMBER: Go to §733.805 to determine the order of what assets get sold first to satisfy devises (or debts, taxes, etc)

4. Examples of random issues:1. Example #1 Critical to examine the wording of the transfer:

a. “All my interest in IBM stock and into” assume he sold the stock and got a bond from IBM or got a note and mortgage from IBM.

b. Since this is still 1) an interest in IBM; and 2) is easily traceable, the beneficiary of the IBM stock can easily get the mortgage and the note or the bond.

2. Example #2 Decedent specifically identifies stock or proceeds to a school in his will. This stock company merged with another and therefore it wasn’t ABC stock company anymore. The Court said the wording included this new stock and that the old stock was traceable.

5. §732.605 Ademption of Gifts of Stocks A. Generally, problems arise when a testator only gives portions of his stock to a devisee.

1. Any involvement that you have in a new stock, this statute makes it so that you don’t have to change your will. This statute deals with whether the change (of stock value, shares, etc) was of a voluntary act of the testator, other wise the court knows to distribute that stock to your beneficiary.

B. §732.605(1) this section applies only when testator intended a specific devise of stock (not their value). (requires a specific devise in order for it to kick in)

C. §732,605(2) ademption does apply to thisD. [WHICH IS IT??] some Massachusets court determined that stock splits do not effect the

value of the share of stocks, and that absent another provision in the will, the beneficiary would get the stock plus any additions to stocks via stock splits. [OR IS IT:]

E. Watson v. Santalucia 1. In the absence of anything manifesting a contrary intent, a legatee of stock is

entitled to any additional shares received by a testator as the result of a stock split occurring in the interval between the execution of a will and the testator’s death.[WHICH DO WE APPLY, UNDER THIS ONE, WHAT HAPPENS FOR SPLITS THAT OCCUR IMMEDIATELY AFTER DEATH? WOULD THIS BE A GOOD TIME TO REFERENCE 733.805?a. These splits must be after the signing of a will, and before the death of

decedent.F. 2000 Shares of the stock; 100 shares are to go to three people; stock splits 4-1. Now the

people get 400 shares.6. “On my death Blackacre to A”7. If during the life of decedent, he gives Blackacre to B. This gift has adeemed f or A.8. “On my death Blackacre to A”

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9. If during the life of decedent, he contacts to sell Blackacre to A. On decedent’s death when he finds out that he is left Blackacre, he can not get his money back.

10.Accretion:11.Accretion is appreciation in value or increases in wealth. 12.§732.606 Non Ademption

A. This is an exception to the General Rule, it says certain things will not adeemB. 732.606(2) states that the following will go to the specific devisee rather than adeeming:

1. 732.606(2)(a) – balance of purchase price of any property sales still owed to decedent at death goes to specific devisee (gets money left over from sale)

2. 732.606(2)(b) – If property is condemned, you shall receive the unpaid amount.a. If everything was paid before death, specific devisee gets nothing here

3. 732.606(2)(c) – insurance proceeds paid after death will go to specific deviseea. If everything was paid before death, specific devisee gets nothing here.

Actually, if the testator restored the house from the insurance proceeds, you get the restored house. If they took the proceeds and moved somewhere else, you get nothing. If the insurance proceeds have not come, and the testator passes away, you get the proceeds from insurance when they do come in, after the death of the testator.

C. 732.606(1) 1. NOTE: This § may be used by a specific devisee only if the testator has not been

competent for at least one year prior to death. [do I have this right??]2. If specifically devised property is:

a. sold by a guardian of the property for the care and maintenance of the ward; or

b. if a condemnation award or insurance proceeds are paid to a guardian of the property as a result of condemnation, fire, or casulaty,

3. the specific devisee has the right to a general pecuniary devise (the net sale proceeds) of the property specifically devised. a. MEANING: you can only take what’s left but if after all proceeds are done you

can go back and claim rest if money is there. Example: Testator specifically devises property in a will to A. But later decedent becomes incompetent and guardian sells property to care of the incompetent decedent. In this scenario, A would get the proceeds of what’s left when decedent dies. You are still entitled to the full amount of what the guardian netted in the sale. Whether there is enough money in the estate to satisfy that entitlement is another question, but you are still entitled to that full amount.

4. Exception to the Exceptiona. If decedent is no longer incompetent (regains legal capacity) and remains

competent for at least one year prior to death, then §732.606 no longer applies, and the specific devisee would not get the proceeds. Instead, stuff will adeem.

13.§733.803 - ExonerationA. Under the Common Law Doctrine, if testator’s will did not say otherwise, a specific

devisee could get property free and clear a lien. 1. Meaning: that a person who is to receive a specific gift is entitled to get that gift

free of any liens or encumberences, this gives the specific devisee the right to

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compel the personal representative to use other parts of the estate to pay any liens or encumbrances off.

B. In Florida, unless will says otherwise, the devisee takes the property subject to the mortgage or liens on property

1. Meaning: in order for devisee to take property free and clear, testator must show that he intended it free and clear by stating in the will “A gets property free and clear of all liens.”

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LAPSED LEGACY

1. Lapse - The termination of a right or privilege to the devisee when a devise(gift) lapses (fails for some reason).A. Lapses applies to the person who gets it (the devisee himself). You look at people!!B. Ademption applies to the property (the gift itself).C. example: Testator’s will specifically devises property to A if A survives; But A has

predeceased the testator so the devise cannot take place. Thus, when a will fails, or a gift fails, lapses applies.

2. Only takes place in testate estates. A. NOTE: If all the gifts fail, will then goes through intestacy

3. At Common Law, a testamentary gift to a person who was dead at the time will was executed or who failed to survive the testator lapses (unless the will says otherwise).A. There are statutes to prevent this from happening:

1. §732.6032. §732.604

4. Where a legacy (or distribution by will) has claimed to lapse, ct must decide:A. Did the devise actually fail in regards to the person getting it?

1. Failure is judged as of the time the testator dies.B. If there was a failure, what is the gift?C. Then look to see if failed gift was disposed of in another manner by provisions in the will?D. If no alternate plan in the will, then the gift fails and it lapses…UNLESS an anti-lapse

statute applies that will save it?E. If an anti-lapse statute doesn’t apply, then it lapses and courts will determine appropriate

distribution of the failed gift. [DOES 733.805 APPLY HERE?]5. Why gifts fail:

A. A condition in the will is not met 1. Generally, events that occur after decedent’s death do not effect the decedent’s

will.a. Absent a clear and specific intent in the will, events that occur after the

testator’s death, will not affect the validity of the testamentary disposition of the will.

2. In most cases, survivorship is required but a decedent may elongate this period by a month, a week, a year – whatever he wants. It’s simply a condition.a. example: When survival is a condition (“if you survive me”), or a condition

precedent (“only if you graduate from law school”).b. example: Decedent has long-lost cousin, Fred, and leaves him $25,000 but

only if Fred claims it within 8 months. If he doesn’t claim it, the gift lapses.(1) In general the person merely has to survive to get the gift.

B. Devisee predeceases testator 1. Example: Decedent leaves $1,000 to associate Robert if he survives the decedent.

Rob later dies.a. Since Rob died the gift lapses and it goes back into the pot. The anti-lapse

statute does not protect him since he is not a lineal descendent of the decedent’s grandparents.

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2. Example: Decedent leaves Ann a Nations Bank CD worth $10,000 only if she survives him, if not, to Barry per stirpes.a. If Ann dies before, then Barry gets the CD.

C. Someone is treated as having predeceased the testator (i.e. killer statute, divorce, etc.)1. §732.507(2) says divorced spouse is treated as predeceased testator

a. Example: Decedent leaves the entire estate to spouse, if she doesn’t survive me then to the ASPCA. Then him and his wife divorce and he dies.(1) The divorce causes us by operation of law to treat her as dying before

him, so the ASPCA will get it.b. Example: Decedent leaves all to wife, if she doesn’t survive then to her

children. They divorce and he dies.(1) By operation of law the sons get it because the ex-wife is considered as

pre-deceasing the husband and since there was an alternate gift, sons get the money.

c. Example: Decedent leaves all estate to spouse. There is no alternate disposition or residuary clause. The couple divorces and then remarry each other. The husband then dies, and they have no children.(1) By operation of law, she is treated as pre-deceasing him [WHY?? THEY

REMARIED] and since there is no alternate disposition, then the estate passes through intestacy. In intestacy the husband is considered as having a wife and since no children, she gets it all.

6. Other ways a gift may fail:A. When they are too vague.

1. example: “I leave $20,000 to my favorite charity” – this is too vague and will fail.B. When they would be legally incapable to deliver.

1. example: “I leave 3 lbs. of cocaine in my dresser to my grandson”2. example: “I leave my house to my friend Fred to be used as a Bowling Alley”…

however town ordinance doesn’t allow bowling alleys.C. When a gift is practically difficult to deliver.

1. example: Large piano organ to china.2. NOTE: Gifts that are merely factually difficult to deliver will be enforced.

a. example: Money left to stepchildren that testator hasn’t seen in years and Personal Representative can not find them. Court says that the Personal Representative should keep trying.

If you cannot find the beneficiary, the gift does not lapse. The gift is held for a period of 10 years, and if the beneficiary has not claimed it at that point, it escheats to the state.

7. §732.603 – Antilapse; Deceased Devisee; Class Gifts A. §732.603 only applies to lineal descendents of the grandparents of the testator and not

ascendants.1. This statute protects parents and grandparents of testator.

B. §732.603(2) LAPSES deals with devisees other than grandparents and their lineal decendants

1. If a devisee named in a will predeceases a testator, or2. predeceased execution of testator’s will, or 3. is required to be treated as a predeceasing the testator, AND 4. that person is not the testator’s grandparent or lineal decendant of grandparent,5. Then that gift fails, it lapses!

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a. REMEMBER: testator can say survirorship is not necessary or tetstator can set forth alternative beneficiary so gift does not fail

C. §732.603(1) ANTI-LAPSES deals with devisees that are grandparents or grandparents lineal decendents

1. Where a gift would otherwise lapse because:a. Beneficiary is dead at time of execution, orb. Beneficiary predeceases the testator, orc. Beneficiary is treated as predeceased,

2. AND, is a grandparent or lineal descendent of grandparent of the testator3. THEN, the gift is saved; it will not lapse

a. If no lineal decendants, it lapses unless something is stated otherwise.b. example: Decedent made a gift to his grandparent, who later predeceases

decedent.(1) The Court will assume that the decedent wanted the legacy saved and

the gift will not lapse.c. This only applies where there is NO contrary intention in the will.

(1) REMEMBER: Testator may specifically write in the will that this provision doesn’t apply or “if grandfather survives me”. Ct will then assume he didn’t want his legacy saved and gift will lapse

4. EXAMPLE: Assume Testator creates a trust in a will for spouse. The provision was that if the spouse remarries or dies, the remaining money should go to the testator’s brother.a. The testator dies after both her husband and brother but, survived by her

brother’s son.b. The nephew is a lineal descendent of the testator’s grandparent. Thus, gift to

brother is protected by the anti-lapse statute (732.603(1)). 5. Adoption

a. Legally adopted children are treated as lineal descendants of adopted parents and are treated as a natural child under §732.108.

b. Step children and foster children are not protected under §732.603.c. NOTE: the exceptions to where an adopted can claim from natural father also

apply here8. Estate of Griffen

A. None of the people named were alive when the testratrix diedB. If all gifts fail, will goes through intestacy

1. example: Could B’s adopted daughter inherit through intestacy?a. No, because mother is not a lineal descendant of testatrix. (Granddaughter is

only a stepgrandhild.)C. Decedants said she intended to give it to her heirsD. Ct said language in will was ambiguous

1. “and her heirs”…describes gift as being fee simple.2. “and her heirs”…will be given their legal meaning absent any other direction in the

will.E. Ct held absent a clear and specific intent in the will, events that occur after the testator’s

death, will not affect the validity of the testamentary disposition of the will.To prevent a gift from lapsing, be very explicit. Do not depend on the words "to his heirs and assigns forever." Show a clear intention in the will.

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9. Ademption vs Exoneration A. Difference between the two is that with

1. Ademption – you ask “is property still there,” and a. example: “My house to friend” – if you sell house and rent apartment It

adeems2. Exoneration – you ask “is person still there”

a. example: “My house to friend” – where friend is dead or is treated as dead, §732.603(2) governs because no matter what situation occurred, the friend is not a grandparent or lineal descendant of grandparent.

10.ResiduaryA. When a Non-Residuary gift of a will lapses, and §732.603 is inapplicable, then if no

alternate disposition, this money becomes part of the rest and goes to whoever gets the residue (or the residuary of probate property). If no clause of who gets this “remainder” in will, then the Court says to check the intestacy.

1. NOTE: You can specifically disinherit someone and they could get your money through intestacy in the above example. a. Mere words like “I hate my family and they get nothing” will not change the fact

of the above example. If you don’t dispose of your wealth properly by including a residuary clause, heirs will get it.

B. §732.604 Failure of Testamentary Provision1. Once monies become part of the residuary:

a. When part of the residuary clause fails (assuming these people aren’t beneficiaries pursuant to 732.603), and the residue is devised to two or more persons and the share of one of the residuary devisees fails for any reason, his or her share passes to the other residuary devisee, or to the other residuary devisees in proportion to their interests in the residue.

2. If only one residuary beneficiary and the gift fails then the residuary goes to intestacy.a. Meaning, if entire estate residue is devised to one person, then it goes to

intestacy. (1) Policy Done because Courts don’t want legacy’s to lapse and they

want devises to vest.(2) COURTS FAVOR TESTACY OVER INTESTACY

3. Under §732.611, must distribute per stirpes (unless the will states otherwise).11.Class Gifts (Lapses and Anti-Lapses)

A. Gifts made in a will to a group of people in a certain category or who bear a specific relationship to the decedent, rather by each individual’s name.

1. Example: $100,00 to each of my grandchildren; $1,000 to each member of the sales staff at Gucci Bal Harbor. (Rosa’s will)

B. If a will includes a class gift, and one or more but not all, members of the class predecease or are treated as predeceased, then:

1. At common law, whatever predeceased person’s gift was then gets distributed to the remaining members

2. FL applies statute §732.604 (2)(lapse or anti-lapse apply) and the gift will not lapse and the surviving members all share the money, but if they all die, the gift lapsesa. If applied to one member of the class, then that member’s share is saved

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(1) Example: Four people in a class: A,B,C,D; When A dies…lapse statute applies so rest of class gets it;

(2) When D dies (where D is grandparent or LD of grandparent), anti-lapse statute applies and D’s descendants get it, (a) unless all the members in the class are dead, where then it

lapsesC. Three Questions to ask in a Class Gift:

1. Whether a testator’s disposition is a class gift which a specific person was a member of the class.

2. If person who was member of class fails to survive testator, does the gift fail of lapse or is it saved by the antilapse statute.

3. Was it the proper disposition of this asset. (ex: intestacy, residuary, other members, etc.)a. Should I give it to the remaining class members.b. Presumption is that if when persons to receive gift are named – even if the

class is mentioned – presumption is that it is not a class gift.(1) ex: $10,000 to my children Alice and Bob.

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ABATEMENT AND CONTRIBUTION

1. ABATEMENT

A. Is when you reduce a devise because insufficient assets in the testator’s estate to satisfy debt, costs of administration, and paying off the beneficiaries/devises of the will.

1. Generally, this is a result when people die with less $ than they had when they wrote will.

B. Only applies in Testate estates.C. Example:

1. Testator leaves $100,000 to A; $50,000 to B; and $200,000 to C. He only has $75,000 at death – Abatement and Contribution addresses this problem.a. Decedent may put in will what assets are to be used to pay debts, bills, etc

before the Personal Representative decreases anyone else’s gifts.2. If not mentioned – see §733.805

D. §733.805 Order in which assets are appropriated (statute is used if testator is silent on this)

1. §733.805(1) A testator is free to determine what order probate property is to be useda. example: 100K to A; 200K to B, rest to C; he dies with 325K and 15K in debts.

(1) Will can say “but any debt owed should be paid out of gift to B, before gifts to A and C”

(2) Thus, B will only get 185Kb. If in the previous example, he doesn’t say it and you don’t have enough money

to pay off debt, Always look first to see if the testator directs you where to take from in order to pay off debts of the estate.

c. §733.805(1) tells you in what order property will be reduced.NOTE: statute reduces the 1st, and if that value isn’t enough, proceed down the list reducing the legacies that are given until value is sufficient to pay debts.

(1) property not disposed of by the will ; (a) example: could be effect of not including residuary clause, so this

property will go through intestacy(2) property devised in the residuary clause (3) property not specifically or demonstratively devised

(a) General Devisee (generally devised property) (b) ex: $20,000 to A or $50,000 to B.

(4) property specifically or demonstratively devised (a) ex: The necklace, the condo, etc.

(5) Note Can’t touch things that are not probate property(a) ex: Life Insurance, Joint Accounts, etc.

2. REMEMBERa. Specific Devises : Can only be satisfied by the delivery of a specific item.

(1) Gifts by will of property that is particularly designated; the only way to satisfy that gift is by giving that particular piece of property(a) example: my 10 shares in IBM stock, my oak rocking chair, etc.

(2) Specific is the most protected type of gift;

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b. Demonstrative Devise : Gift of money, stock, or any fungible item payable out of a specific source or fund.

(a) example: I give 10 shares to Sam to be paid out of the sale proceeds of my IBM stock

(2) Demonstrative is the second most protected type of gift.(3) It is an unconditional gift, that does not adeem like a specific devise

does.(4) §733.805(2) A demonstrative gift will be classified as a general devise if

the funds/property from which the payments are to be paid are unavailable/insufficient to satisfy the gift, but only to the extent of the insufficiency

c. General Devise : Any gift made to person that can be satisfied from anywhere or any portion of testator’s estate.(1) example: money is the most common

d. Residuary Devise : It’s a type of general devise; An “everything else” devise(1) A residuary devisee generally has to wait until everything else is done

(all debts are paid, all other devises are distributed)Be careful not to exclude your family unintentionally by leaving everything to them in the residuary clause. Any money owed by the estate will come from the residuary, which could end up leaving family nothing. Specific and demonstrative devises have greater protection under the statute.

3. §733.805(2) Certain devises are preferred over other devises in the same class.a. Devises supported by valuable consideration are entitled to preferenceb. Devises given to the surviving spouse are entitled to preference

(1) example: 200K to wife, 200K to daughter, rest to son; When he died he was worth 305K and had 100K in debts(a) Under §733.805, 100K is taken out of daughter’s legacy first,

205K is left(b) Wife gets the 200K and daughter gets 5K, nothing is left so son

gets A prenuptial agreement destroys the spouse's right to preferential treatment, and both the spouse and child in the same category would split the difference after taxes.

2. §733.805(2) CONTRIBUTIONA. The remaining devisees may be called upon to reduce their share to aid the injured

devisee pro rata of their share1. example: gross estate is worth 100K; 60K in savings in bank A, 30K in a cd in

bank B, 10K in checking in bank C; a. Will says bank A to Sam; B to Joe; 2/3 residue to Sam and 1/3 residue to Joe b. Owe 20K in debtsc. Residue is insufficient to pay, so get other 10K from:

(1) savings since it is more liquid, but Joe will then have to contribute his pro rata (proportionate) share back to Sam

(2) Ultimately, Sam takes 2/3 of debt ($6.6K)and Joe contributes 1/3 of his share ($3.3K) to satisfy debt.

(3) Thus, Sam ends up with 53.4K; Joe ends up with 26.7K

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SIMULTANEOUS DEATH AND SURVIVORSHIP

1. Requirement of Survivorship:2. Court focuses on:3. At what time did the gift become the property of this person.4. Example: Gift vests at decedent’s death but, right to possess is postponed.5. “Income to A for life, remainder to B”

(a) If B dies before A, his heirs get the money6. “Income to A for life, remainder to B if he survives A.”

(a) If B dies before A, his heirs won’t get the money.7. Look to the wording of the will.8. Courts favor conditions subsequent rather than a condition precedent.9. Law favors early vesting of survivors.10.Words in will are given their ordinary and plain meaning absent an ambiguity.

(a) Judges are allowed to interpret and construe wills. However, Judges are not supposed to listen to extrinsic evidence when first reading the will – not until he reaches an ambiguity may he look beyond the four corners of the document.

11.Courts can not re-write wills.12.Boone County National Bank 13.Family tried to assert that there was an ambiguity in the document. Court found no such

ambiguity. In situations like this Court may generally not look past the four corners of the document and may not correct a draftsman’s error. There are two exceptions:

14.Draftman’s error must appear clearly on the face of the document.15.ex: “the” is spelt as “eht”16.Draftman’s error must be made to reflect what the will should have been the correct outcome

had the error not been made.17.ex: Decedent always refers to kids in will as Frank, Fred and Ginny…but one time he

referred to them as Frank, Fred, and Jeanne.18.Court can change this.19.Court relied on the Statute of Wills in concluding here:20.stated that because there are such stringent rules in having someone sign a will – this must

be the decedent’s intent.21.When there is confusion as to a will22.Look at laws of construction.23.Go by the plain meaning of the document, look for ambiguity, etc.24.Court favors early vesting of devises.25. If still lost with ambiguity, then Court might have to look beyond the four corners.

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KILLER FORFEITURE STATUTE

1. §732.8022. We don’t let wrongdoers benefit from their acts.3. Person who intentionally and unlawfully kills or participates in procuring the death of the

testator is precluded from taking from the estate.4. We treat the wrongdoer as failing the survive the testator.5. Killing in self-defense does not bar you here but, assisting a suicide does because you are

aiding in the death.6. §732.802(3)7. Deals with situations where a named beneficiary in insurance policy or other contractual

relationships is not entitled to the proceeds and is treated as predeceasing the testator.8. Example9. Frank has a will which states “Blackacre to my son Sam and the rest, residue, etc to my

friend Charlene.” Frank was killed by his son Sam. Frank is survived by Sam, Sam’s son (and Frank’s grandson) Gordon as well as Charlene.

10.Because Sam killed Frank he is treated as predeceasing his father because of the killer forfeiture statute. However the gift of Blackacre is preserved by the Anti-lapse statute to go to Gordon. Here the Courts do want to procure the sins of the father on his son.

11.Charlene takes what’s left (about $1,000,000)

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DOCUMENTS RELATED TO WILLS

1. §709.08 Durable Power of AttorneyA. Power of Attorney written document which gives authority to someone else to act on my

behalf.1. Regular (limited) Power of Attorney can not be used after authority is deemed

incompetent.2. Durable Power of Attorney will survive the person’s incompetence.

B. Requirements :1. Must be in writing (can not be oral);2. Must be signed by person giving the power, and must conform to the following:

a. 2 witness’ signatures with their signed and printed names.b. These witnesses must see the power sign it.

3. Have it notarized but it is not a requirement.4. MUST contain the following magic words: “This durable power of attorney is not

effected by subsequent incapacity of the principal except as provided in Statute 709.08 Fl. Statutes” or similar words that show this document lasts through incapacity.

C. Timing: In Florida D Pof A goes into effect the day that it is signed.1. No “sprining power” in FL

a. Can not be a “springing” document (ie: only effective at a later date)2. But FL has, §709.11 – Deployment Contingent Power of Attorney

a. Applies to all people going to warb. Signed in advance, and says powers go into effect if troops are sent overseas.

D. Who May be a D P of A :1. Must be 18 years old;2. Must be of sound mind;3. Can even nominate a financial institution as defined in Chapter 655 with trust

powers, having a place of business in this state and authorized to conduct trust business in this state.

4. Can even name a not-for-profit organization, organized for charitable or religious purposes in this state, and is qualified as a court appointed guardian prior to January 1, 1996, and which is a tax exempt organization under 26 USC §501(c)(3).

5. May name more than one D Pof A.a. However if two people are chosen as D Pof A, then unanymous decisions must

be made;b. If more than two people are chosen, then only a majority rules to make

decisions.(1) Individual not agreeing may dissent, and they will subsequently not be

held liable.E. Generally, a D Pof A can not be delegable.

1. Example: Father can not transfer to son, etc.F. Limited Life:

1. The D Pof A ends on certain factors:a. Death;

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b. When principal while alive and competent revokes it;2. Still enforced if person is deemed incompetent

a. As long as no one goes to the Court and says that the Power of Attorney isn’t doing his job or that they feel the incompetent guy is getting mistreated – the Durable Power of Attorney lasts.

G. Reliance on D P of A by third parties1. A third party may rely on a D Pof A that is properly prepared until:

a. Notice is sent that person can not act as D Pof A;(1) Must be in writing and served on the person or entity to be bound by

such notice.(2) Must also be sent certified or in some manner which the person has to

sign for it.b. Policy holder himself calls and says that Power Holder can’t act.c. 3rd party receives notice that proceedings (guardianship) have begun to declare

principal incompetent.d. If a bank is defrauded but were unaware that you could not act anymore, then

they are not liable.e. Unless D Pof A says otherwise, you are giving them the power to act over

everything.(1) EXCEPTION: Homestead will not be included unless says so in D Pof A.

H. Fiduciary Duties of Power Holder 1. Fiduciary duties are owed by the power holder ( who has power of attorney)2. Power Holders who act in good faith on the part of the principal aren’t liable, even

if they lose money but, if they act in bad faith, they are.I. Rights of Power Holder

1. Holder of D Pof A have extensive rights in regards to property.2. What CAN’T you authorize someone to do:

a. Vote in public election;b. Exercise powers or authorities granted to the principal as trustee or as court

appointed fiduciary. c. Perform duties under a contract that requires the exercise of personal services

of the principal.d. Create, amend, sign, revoke a codicil or will for you.e. Can’t do what D Pof A says not to;f. If document is silent about the creation or transferring of trust funds then the

holder has no right to touch these;g. D Pof A must specify BOTH financial and medical matters…..If document is

silent, only financial matters will be interpreted.

2. Health Care Advance Directives A. §765.101(1) - Advance Directive

1. means a witnessed, written document, or oral statement…a. In which instructions are given by a principal or b. in which the principal’s desires are expressed concerning any aspect of the

principal’s health care, and includes, but is not limited to: (1) a living will, or (2) the designation of a health care surrogate, or

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(3) orders not to resuscitate issued pursuant to §401.45.B. §765.304 - Living Will

1. §765.101(10) – defines “Living Will” as a document where a person indicates when they are to die if their condition is such that they cannot be brought back to normal existence and they could only be kept alive by artificial support systems.a. Has nothing to do with distribution of property, it governs when a decedent dies

2. A written statement that a person signs (says), and is only applicable if:3. They are terminally ill;

a. Basically says doctors must say that you can not be cured by medical science.b. §765.101(17) – defines terminal condition

(1) A condition caused by injury, disease, or illness from which there is no reasonable probability of recovery and which, without treatment, can be expected to cause death; or

(2) A persistent vegetative state characterized by permanent and irreversible condition of unconsciousness in which there is:(a) The absence of voluntary action or cognitive behavior of any kind;(b) An inability to communicate or interact purposefully with the

environment.4. Florida states that this can only be done in writing.

a. FL statutes provide forms for a living will5. Valid from date you sign it.6. Under §765.304(1), you must use one doctor to allow life not to be sustained7. Purpose: save pain of family and allow death with dignity, also prevents assets

from being depleted.8. §765.302 outlines the procedure for making a living will, includes notice to doctor

C. §765.202 Designation of Health Care Surrogate 1. Written document designating a surrogate to make health care decisions for a

principala. §765.101(16) – defines “surrogate” as any competent adult expressly

designated by a principal to make health care decisions on behalf of the principal on behalf of the principal’s incapacity.

2. §765.202(1) must be signed in presence of two witnesses, or principal may direct another person to sign their name

3. §765.202(2) person designated as surrogate may not be a witness; and at least one person who acts as a witness shall be neither the principle’s spouse nor blood relative

4. §765.202(3) Allows designation of an alternate surrogate. a. Need to determine ahead of time if surrogate will be able to go through with it.

But just in case, designate an alternate.5. §765.202(7) this establishes a rebuttable presumption of clear and convincing

evidence that the principal intended to designate a surrogateD. §765.104 - Revocations

1. An Advance Directive (living will) or Designation of a surrogate may be revoked at any time by a competent principal:a. signed, dated writing;b. physical cancellation or destruction;c. oral expression of intent to revoke;d. sign a new one.

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2. Note: Same as in wills, a divorce will nullify the naming of a spouse as a health care provider.

3. Note: 2 witnesses needed for these.a. Surrogate should not be one of the witnesses.

4. Note: Must be competent but, just like wills, the presumption is with competence.E. §765.101 Definitions

1. §765.101(9) - Life Prolonging Procedure - a. Any medical procedure, treatment, or intervention which:

(1) Utilizes mechanical or other artificial means to sustain, restore, or supplant a spontaneous vital function;

(2) When applied to a patient in a terminal condition, serves only to prolong the process of dying.

b. Though it’s broadly defined, it does not include administration of pain medicine.2. §765.101(14) - The Principal

a. the person who is giving the power to the agent. (1) This person holds a “health care proxy”.

3. §765.101(15) – Proxy a. A competent adult who has not been expressly designated to make health-care

decisions for a particular incapacitated individual, but who, nevertheless, is authorized pursuant to §765.401 to make health care decisions for such individual.(1) §765.401authorizes the following:

(a) the judicial appointed guardian of the patient;(b) the patient’s spouse;(c) an adult child of the patient;(d) a parent of the patient;(e) the adult sibling of the patient;(f) an adult relative of the patient;

(g) a close friend.F. §765.102 Legislative Findings and Intent -

1. Public Policy of these provisions:a. You have fundamental right under the Constitution to make own decisions to

choose or refuse medical treatment.b. Florida recognizes physical as well as mental incapacities.

G. §732.910 Legislative Declaration 1. States legislative purpose is to promote public interest to encourage and aid

medical research advancements. a. Also, regulates the gift of a body or parts of a body, to be made after death of a

donor.

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TRUSTS

1. Why People Set Up Trusts:

Because they want someone else to manage their assets.

To avoid probate.Probate is a transfer of property by will to another (beneficiary), at death of the property

owner A. Will Substitutes (Also called Non-Probate Property)are used to avoid probate:

1. Life Insurance policies (Contract payment with a named beneficiary)2. Property held by Tenancy by the Entirety(right of survivorship)3. Proprty held by Joint Tenancy with Right of Survivorship4. Pension Plans(contract payment)5. Homestead Property 6. Inter-Vivos Trusts

NOTE: validity of will substitutes(Non-Probate Property) FORM over substance

B. Probate Property :1) Stocks2) Annuities3) Personal Property

To obtain protection against the creditors of the beneficiaries.Must have a SpendThrift Clause in the trust to protect from the creditors of the Beneficiary from reaching into the trust to pay debt.

Tax ImplicationsFederal Taxes

1) Gift Tax: Tax on property given by the owner to another2) Estate tax: Tax on estate property owned at death3) Income tax: Tax on income earned each year

Revocable Trusts:Substance governs over form. If the assets are revocable, then it is assumed that the property is still owned by the settlor and he is responsible for taxes related to the property

Vehicles for Charitable Goals

2. Types of Trusts

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Express Trusts

Private Express TrustsElements:

1) Res2) Trust Intent3) Trustee4) Beneficiary

Charitable Trusts

Resulting TrustsTwo ways to have a resulting trust

1) The trust does not completely dispose of the trust propertySettlor retains a reversionary interest in the trust property

2)

Constructive TrustsA remedy for someone’s wrong doing.Elements Needed to have a Constructive Trust imposed:

Breach of a promise between the transferor and the transferee leading to unjust enrichment of the transfereeA confidential relationshipFraudUndue InfluenceTranferor was in contemplation of death

The only duty of a trustee in a constructive trust is to transfer the asset to the intended beneficiary when asked for.

Honorary Trusts

A. Totten Trust: “The Grandma Trusts”1. written as Jane Doe ITF John Smith.

a. ITF means “payable on death to”2. Beneficiaries receive money per capita and not per stirpes.3. This type of trust is fully revocable.

B. Revocable Inter Vivos (created during lifetime) Trust;1. AKA Living trust or Grantor trust

C. Testamentary Trust;1. Takes effect when the trustee dies2. Created in the will

a. In the will, you name the trustee and the beneficiaries and describe the trust. 3. Testamentary Trusts are ALWAYS Irrevocable

3. General Provisions

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A. Under a typical trust, the settlor (owner of property) transfers assets to himself or a 3rd party. That person becomes a trustee.

1. A trust is not a will and therefore does not conform to the rules of a will.a. Example: Divorce doesn’t sever rights to trustee, unless stated in trust (form)

2. Done pursuant to a writing. Usually in written form.3. A settlor may name themselves as the beneficiary in a trust AS LONG AS there is

a B. Generally, a trust is not revocable and is etched in stone.

1. Unless, the grantor includes a provision in the trust reserving the right to revoke or amend it.a. Settlor usually retains authority to revoke or amend it and a right to income

from trust during his lifetime.(1) Example: “while I’m alive, I can get income from the asset in the trust.

When I die, the trust income and assets will be distributed to beneficiaries.”

(2) Example: “This Trust can only be altered on the top of the Empire State Building”(a) then that provision will be honored.

2. Absent evidence that grantor revoked trust in writing, it remained enforceable.C. Jurisdiction –trusts that can be revoked during lifetime are legally recognized in all statesD. Why you want a trust

1. you don’t have to wait for probate to get family allowance2. When you put property into a Trust, must have their documents changed.

a. Example: Must move assets from deed of house held as “BILL SMITH” to “BILL SMITH AS TRUSTEE FOR THE TOM JONES REVOCABLE TRUST”(1) Unless you do this, simply having the trust document will do you no

good.(2) problems occur when you execute a non-funded trust

3. Trusts aren’t only used as estate planning devices. A trust is basically when a trustee manages property for others known as beneficiaries (proper property management).a. Trustee is the legal owner but the Beneficiary has equitable ownership (the

right to use and benefit).4. Two ways to create a trust:

A. Deed of trust 1. To a third person2. May be real or personal property3. AKA - trust agreement4. Under this the settlor is a trustee

B. Declaration of trust 1. Only for personal property (cannot be for real property)2. declare yourself the trustee of your property3. Doesn’t have to be in writing if the beneficiary will get it before grantor's death. If

the beneficiary will not get it until the grantor's death, it is considered testamentary in character, therefore it must be in writing. The best practice is to always put it in writing.

4. Pre-select the person who will manage your assets if you become incompetant

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a. Since people are living longer, take care of what is going to happen after you become incompetant

C. Pour Over Trust1. example: Testamentary Pour Over into an inter vivos trust2. How they work: you need a will, in addition you have an inter vivos trust, the

residue of the will goes into the trusta. Typically, the will only governs small amounts of money because the bulk of

the money was put in the trust.3. Document merely:

a. names a PR;b. states to have property go through probate but pour them over into the trust.

(1) Insurance Co. that pays medical bills to person individually would be considered probate property.

c. REMEMBER: The trust must conform to all the formalities of a will.4. Any assets included in your will that you want to pour over into an inter vivos trust must go through probate, so those assets will not be available right away. Be sure your clients know that those assets will not be available for 6-12 months, most likely.

5. Four Requirements to Create a Valid Trust (not in statutes)A. Must have a settlor.

1. Also known as the grantor.2. person who creates the trust with the intent to create a trust.3. Administrative (give powers and duties to trustee) and dispositive (who

beneficiaries are and what they get) provisions.4. Generally a written instrument.5. Settlor can be the trustee and a beneficiary of own trust.

B. Must have a trustee.1. Person who has legal title and manages the money.

C. Must have at least one beneficiary.1. This person has equitable ownership (benefits from trust).

D. Must have “Corpus” or “Res”.1. This is something of value in the trust (assets/property)2. the actual assets/property in the trust

In Florida, 732.513(d) says that just because you did not put any res in the trust does not make the trust invalid. 6. Requirements in detail

A. Trust must contain two general terms:1. Dispositive Terms: Outlines assets, who is to get assets and when;

(1) Res – something of value in trust2. Administrative Terms: Outline the powers and the duties of the trustee. Indicate

how the trust is to be managed, spent, etc.a. Names three parties:

(1) Settlor – person that creates the trust with the intent to do so;(2) Trustee – person who now has legal ownership to trust and manages it.(3) Beneficiary – person(s) who benefits from trust, has equitable

ownership;7. SETTLOR

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A. Person who creates trust through will or other device with intent to create itB. Intent Requirement

1. Must show that the settlor had the intent to develop the relationships in the trusta. Need element of intent because trusts may not be created by accident – they

must be created intentionally.b. Example: “I want you, trustee, to hold this item for the benefit of B, beneficiary”

2. Language must show settlor’s clear manifestation of intent to create a trust.a. Best Evidence to show clear manifestation of intent:

(1) He put this property into a trust, AND(2) that he actually delivered the property to the trust (via trustee)

(a) Problems arise when the settlor fails to complete the transfer because then the corpus is dry

3. Need present intent to create a trust – future intent is not sufficient.a. Cannot be a promise to create a trust in the future, but right now!!b. Farmers Loan v Winthrop : Woman put 5K in a valid trust granting herself a life

estate, naming bank as trustee. She knew she would be getting money from her husband’s estate later which would go in her trust. She wrote a deed of trust (giving to a 3rd party). She gave 2 powers of attorney in her trust. One authorized Farmer to collect and receive any and all cash, shares of stock, and any property to which she might be entitled to form her husband. (1) most of the money went in her trust, but when she died, 1.4M hadn’t

been placed into trust yet. Her estate wanted the money to go into the estate, not her trust. The beneficiaries for each were different.

(2) Trust didn’t say Farmer must transfer the money into trust, it just gave them permission to do it in the future. Thus, $ went to estate.

(3) She should have stated that she currently intends that particular transfer to go to the trust.

4. Invalid if Precatory Language is used to create : language used by the settlor that implies a moral obligation but is not binding upon the trustee.a. TEST to determine if Precatory Language formed trust Ct looks at:

(1) Relationship b/t settlor and beneficiary(2) Relationship b/t settlor and trustee(3) All estate planning information surrounding the possible trust

b. Examples of non-binding precatory language: “I hope” or “I wish”(1) Instead use direct words like “shall” or “must” or “I intend”

c. Colton v Colton : Husband asked wife to give his mother and sister, and hopes that she will use her best judgment in deciding what to give them. He gives everything to wife and leaves decisions to her. He dies. Wife hates mother and sister-in-law and refuses to give them anything. (1) Widow argues that she was not directed to give them anything because

a trust was never created. Wife claims it was merely precatory language, trial court agreed.

(2) Appellate court disagreed. They looked at surrounding circumstances: He wrote it the day before he died, and probably did it very quickly. He probably intended it to be a demand, rather than a mere desire to give them assets. Widow had to hand some assets over.

C. Writing Requirement

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1. Trusts for the following property must be in writing:a. §689.01 Trust for Real Estate must be put in writing to conform with the Statute

of Fraudsb. §737.111 Testamentary Aspects of trust– (means through will) invalid unless

executed with the formality of a willc. §689.06 Naming another as a trustee

2. Trusts for the following DO NOT require a writing:a. Tangible personal property (excluding real estate)b. Intangible personal property

(1) Example: A settlor of a trust may verbally declare that he owns personal property and manifests the intent to hold it in a trust for someone else.

3. NOTE: A settlor usually does not verbally declare trust, most trusts are in writing

8. TRUSTEEA. Person who has Legal Title (Ownership) of trust assets, holds and manages the trust.

1. acting as a trustee cannot be imposed on someone (must not be forced)a. they must be willing to accept the responsibility.

2. But once they accept, in order to resign they must procedurally do so (maybe in court)

B. There is no limit as to how many trustees you can have1. trustee may be beneficiary, third party, and even the settlor

a. but he can’t be all three if he is the sole beneficiary, since he must be accountable to someone

C. If settlor forgot to name a trustee (or if trustee dies), a court will appoint one.1. The trust will not die for want of a trustee2. Adams v. Adams : Husband set up house in trust for wife naming friend as trustee.

Trustee under duty to administer assets. Couple got divorced and husband denied there was a trust and friend denied being the trustee. a. In order to create a valid trust, you must deliver the assets to the trust.

(1) Though the friend never received the deed, the deed was recorded which constitutes delivery of property to the trust.

b. The question remained if there was actually a trustee named? (1) Ct didn’t care if friend didn’t want to be trustee.(2) There were beneficiaries, there was intent, and there was a trust corpus.

Doesn’t matter if there is no trustee, the ct appointed one so it wouldn’t fail and the wife can assert her right against the trust.

D. Must do the best for all beneficiaries involved1. Trustee has to account for two types of beneficiaries:

a. Income Beneficiaries - those presently receiving the income from the assetsb. Remainder Beneficiaries - those who have a remainder interest and are not

currently receiving income, they get the assets in the futureE. Trustees cannot co-mingle trust property with their own

1. Must title assets separate from his or her personal assets.2. Required to keep accurate accounts

F. Trustees owe a fiduciary duty to the “remainder beneficiaries” as well as any “life income holders”

1. Subject to personal liability

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2. The trustee owes the duty to generate a reasonable rate of return with the trust “res”.a. Simply leaving money in account collecting 6% a year is NOT good enough.b. A Passive or Dry trust is a trust in which the trustee owes no real duty to the

beneficiaries(1) this trust will not be enforced.

3. Can not be involved in self-dealing. Self-Dealing is precluded. Self-Dealing occurs when the trustee acts in a transaction wearing “both hats.” a. Trustee is held to high standard of conduct, must handle matters solely for the

benefit of beneficiaries.G. Generally, trustee cannot delegate management powers to other people H. Trustees can be removed for improper actions.

1. Note: The Trustee’s personal debts can not be collected against the trust that he or she manages.

I. SEE DUTIES OF TRUSTEES Infra.9. BENEFICIARY

A. Person who owns Equitable Title (rights) to the property and benefits from the trustB. Types of Benificiaries :

1. Two main types:a. Income Beneficiaries (Equitable Present Interest in a Life Estate) – currently

receive a stream of income from trust assetsb. Remainder Beneficiaries (Equitable Future Interest) – currently receive nothing,

but they’ll get the remainder of the assets after they’re sold(1) Revocable Trusts: Equitable Remainder Subject to Complete

Divestment(2) Irrevocable Trusts: Equitable indefeasibly Vested Remainder

2. Successive beneficiaries – this is just a term referring to the two types and the way the trust is set up. For example, usually a trust names a few for life who receive income, maybe after that to another set for life, then another set, finally after everybody named gets theirs, you distribute the principle and break up the trust.

3. Unborn or unascertained beneficiaries a. Unborn persons MAY have a future right in a trust

(1) So long as the settlor is not the only other beneficiary; OR(2) So long as settlor is not the sole trustee(3) Example: O creates trust to benefit future kids, naming wife as trustee

OK (4) Ct will protect the interests of the unborn, because they cannot speak

for themselvesb. Unborn persons MAY NOT have a present right in a trust

(1) EXCEPTION: only if mother pregnant or if they are reasonably expected to be

(2) Morsman v. Commissioner : Morsman transferred stock to a trust in which he named himself as trustee, successor trustee, and a beneficiary. On death his wife and kids would get remainder, but had no wife or kids. He was to receive the income for life, but then sold stocks. Gains were realized that should have been reported to the IRS.

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(a) Trust will fail when the same person possess both the legal and equitable title to the trust at the same time. (and no duties to anyone else) i. Grantor may not be the trustee and beneficiary with other

people, when those other people do not exist.(b) He argued that he expected to be married and have children(c) ISSUE: Whether unborn children can be beneficiaries.(d) held only if mother pregnant or if they she is reasonably expected

to be i. Ct disagreed with him. He should have named a 3rd party

as a beneficiary to avoid problems then later amended the trust (but he really couldn’t cause he wanted to screw the IRS) The courts ruling prevents this behavior, thus he paid the taxes.

c. Unborn children can be beneficiaries, so long as the same person is not a beneficiary and a trustee.

d. You must be able to ascertain your beneficiaries.e. Unascertained beneficiaries may have present and future right in a trust

(1) So long as they are identifiable (a) Some groups are difficult to ascertain

f. Example: effect of Rule of Perpetuities on basic trust(1) Oliver is settlor and transfers $100K in securities to a trust to A for life,

then to B for life, then principle to B’s children. If none living then back to O.(a) A has an equitable Life Estate;(b) B has an equitable remainder interest in a Life Estate;(c) B’s children have an equitable contingent remainder in Fee

Simple.(d) O retains a reversion because Bob may not have any children.

C. Beneficiaries have standing to bring action for breach of trustee duties 1. Personal claims against trustee are allowed for breach of duty

a. But no greater b. NOTE: Personal creditors of the trustee cannot reach trust property to collect

from the trustee because trust assets do not belong to the trustee personally, he simply has legal title. Equitable title rests with the beneficiaries.

c. [MAY PERSONAL CREDITORS OF THE BENIFICIARIES REACH TRUST PROPERTY IF THEY GET SUED (I.E. INCOME STREAM FROM INCOME BENIFS AND ASSETS LATER FOR REMAINDER BENIFICIARIES]

2. If the trustee wrongfully disposes of property to Bona Fide Purchaser, beneficiaries may make a bona fide claim to recover property

D. Difficulty in determining Beneficiaries will make a trust fail 1. Trustee cannot be the sole beneficiary

a. If the two were the same we would have a problem with “merger”.(1) Example Trustee = Bill; Beneficiary = Bill and Jane

(a) this is fine, they just can’t be identical.2. Beneficiaries must be identifiable

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a. example: On death of grantor $1,000.00 given to niece Brenda. Grantor has two nieces named Brenda…this would fail since the proper beneficiary can not be identified.

b. Clark v. Campbell – similarly a trust that names the beneficiaries simply as “my friends” will not be enforced because there needs to be a sufficient language to dispose of assets. Court stated that the trust did not exist and will not be enforced.

10.RES or CORPUS (Something of Value in Trust)A. Something of value must be transferred into the trust:

1. Example: Even $1 is something of value that goes into the “res” of the trust.a. §732.512(d) Because pour over can make the amount greaterb. Assignment of any potential winnings (lottery) that you expect to get is not

sufficient.2. EXCEPTION – Insurance Proceeds

a. Under §733.808, you can create a valid trust with no money in it, if you can show that you will be transferring proceeds of an insurance policy into the “res” (1) NOTE: §732.513 allows you to devise the insurance proceeds that get

transferred in to this nominally funded trust. B. Must have intent to transfer the property.

1. Words used such as “beneficiary” or “trustee” are not conclusive that trust exists, must look towards actions of the settlor to “transfer” the “res”.

2. Precatory Language: Language used by the settlor that implies a moral obligation but is not binding upon the trustee.a. “I hope” or “I wish” are non-binding precatory language.

(1) Instead use direct words like “shall” or “must” (2) Example: “I leave all my jewelry to my daughter but, I hope that she

gives my diamond necklace to my granddaughter in her own will.”(a) Daughter isn’t bound to pass it down to granddaughter because

precatory language was used to obligate her to do so. 3. Colton v. Colton : The day before he died, he wrote a trust. Court upheld the

creation of a trust that was written with the words “I recommend” and “I request”. a. Court held, that viewing the case in the year in which the document was written

that such language was a “polite” way of directing someone to act. Year of case was 1888.

11.§732.513 – Devises to Trustee A. Valid devise may be made to a trustee if a trust is identified in the will and it is either:

1. in existence at the time of making the will; OR2. signed at the time of making the will

B. §732.513(2) Devise will not be invalid if:1. §732.513(2)(a) because it is amedable or revocable 2. §732.513(2)(b) because it has been amended or revoked in part after execution of

the will or codicil to it3. §732.513(2)(c) because the trust wasn’t executed under same formalities of a will4. §732.513(2)(d) because it has NO $$$, and the res has only expected insurance

proceedsa. This subsection must be read together with §733.808 which allows a settlor to

create this unfunded trust

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12.§737.111 – Execution Requirements for Express TrustsA. Some trusts required to be in writing

1. which are those trusts that have a testamentary aspecta. trusts that have effect upon your death

B. Trustee must owe equitable duties to someone more than himself (a beneficiary)C. The trust should be signed in the same manner as a will.

1. Example Must have two witnesses, sign in each others presence, etc.13.§733.808 – Death Benefits; Disposition of Proceeds

A. Death benefits of any kind, such as proceeds from:1. individual or group life insurance policy;2. pension plan, stock bonus, or profit sharing plan; 3. an annuity;4. health and accident insurance policy;

B. May be made payable to the trustee under a trust agreement or declaraion of trust in existence at time of death of the insured.

C. Benefits are disposed of by the trustee by the instructions in the trustD. You can create a valid trust with no money in it, if you can show that you will be

transferring proceeds of an insurance policy into the “res”E. NOTE: also mentions other stuff so refer to code

14.§737.108 – Revocable Trusts Prior to Dissolution of Marriage A. If spouse is beneficiary, upon divorce, the rights of the spouse are nullified, unless the

document states otherwiseB. Applies only to revocable trustsC. In Florida:

1. courts do not look at entire estate plan2. courts do not look to intent, rather to instructions in trust

a. if absent instruction that says rights survive divorce, she’s gone!D. This statute only affects spouse, does not affect familyE. [IS THIS ONLY WHEN LANGUAGE SAYS “TO MY SPOUSE?”, WHAT IF IT

SPECIFICALLY IDENTIFIES HER “TO JILL ANTON, WHO’S MAIDEN NAME WAS JILL SPILL”

15.Difference Between TRUST and WILL A. Availability of Assets, Devises

1. In a will, when testator dies, there is a time lag while waiting for probate to proceed, also it takes time to distribute the devises.a. 6-8 months for a will.

2. A revocable trust is in the trustee’s hands, when trustee dies, assets immediately become available to the beneficiariesa. 4-6 weeks for trusts;

3. Ancillary Probatea. Intervivos Revocable Trust – can also be used to avoid ancillary probate.b. Example Dane is a resident of Florida and has three properties in different

states. If rather than owning the property solely he transfers all those properties to a trust…(1) At death, he doesn’t own it but, the trust does – so no probate is

required.B. Statute of Limitations

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1. In a will, a creditor only has a certain amount of time (3 months) when they have to make their claim after they are notified, after that the SOL runs on them and they’re screwed.

2. In a trust, the SOL is not limited. The creditors may collect for a long time.C. Public Record

1. A will is public record - In FL, inventory of assets can only be viewed by interested parties

2. A revocable trust is generally not recordeda. Might have to be recorded under special circumstances (where powers are

concerned)b. NOTE: if you want secrecy, a revocable trust is the way to go

D. Costs1. A will that goes through probate may be very expensive, especially if challenged

(lawyers fees, court costs, etc.)2. A trust avoids probate so much less expensive3. You get marital deductions for a trust

E. Avoiding Contests1. A revocable trust is harder to challenge than a will

F. Flexibility and Control1. Trust is better than a will because trustee may be given greater responsibility for

upkeep of property and the property cannot be transferred.2. Revocable trusts can be created inter vivos (while your alive) or upon your death

(testamentary trust) by stipulating it in your will3. Revocable trusts are used for:

a. charitable purposes, b. to control money during your lifetime or after your death, c. tax purposes (generally used in estate planning to avoid estate taxes

4. trusts place restrictions against family members not allowed by willsa. Allows you to manage great wealth for minors

5. A revocable trust gives you more control over who can be the trusteeG. Limits Liability

1. Trustee owns legal title to the property2. Although trustee manages the trust, creditors may not reach trust assets for claims

against the trustee16.Benefits of TRUSTS over LEGAL LIFE ESTATES

A. Legal Life Estate – where you transfer legal title to that person for life1. With legal title, that person has possession and control over the property, including

management powers.(1) To A for life, and remainder to A’s kids

B. Trust Beneficiary – Equitable title where there would be a beneficiary for life(1) To X in trust for A for life, and remainder to A’s kids

C. Flexibility Disposing Property1. Legal life tenant cannot sell property freely; they would have to go to court to have

that done. If buyer is lined up, he might not want to wait.a. Trustee has power of sale, no court approval required, approval comes from

trust document2. If legal life tenant wants to remove something from property (i.e. waste) like cutting

down timber, removing oil, etc. Remainders could bring injunction to stop them.

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a. Trustee manages property for the good of the beneficiaries, outside of that, he can do or get rid of anything within that duty.

D. Tax Consequences1. Generally, purpose to set up either one, is to avoid taxes.

a. BUT, legal life tenant must include proceeds from sale as part of their estate, so the’ll have to pay taxes on it, defeating the purpose.

E. Borrowing Money1. Legal life tenant cannot mortgage property on its own. Bank is not going to lend to

a legal life tenant. They are very unsecured because there are remainders that have to agree as well. The remainders may refuse to agree and some may be unascertainable.a. Trustee has power to mortgage, no need to get anyone’s approval

F. Leasing1. Legal life tenant may only lease property for a period not longer than his death.

a. Trustee manages lease under the trust so time runs until trust is dissolved.G. Management Responsibilities

1. Legal life tenant has duty to pay taxes, keep property in repair, but only to the extent of income generated from that propertya. Trustee obligated to that and much more, including insuring building, using

proceeds of other assets (if any) for repairs, etc.b. Trustee does have to maintain certain accounting, the must do bookkeeping,

which makes it more expensive to have a trusteeH. Creditors

1. Legal life tenants’ property is within creditor’s reach to pay debts. They can put a lien, foreclose, and sell it which will result in a loss (proceeds less than its worth FMV), and remainders get much less than they should have.a. Trustee may not necessarily be forced to sell property and can’t get to trustee

interests

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17.TrustsA. Express Trusts

1. Are intentionally created by the settlor for the ongoing management of the trust property.

2. Legal ownership is had by the trustee, and equitable ownership is had by the beneficiary.a. See supra….need “res”, etc.

B. Equitable Trusts (There are two kinds)1. Generally, the court can create a resulting or constructive trust, by operation of

law, in certain situations, even when no trust existed between the parties.2. Resulting Trusts :

a. Arises by Operation of Law; in 2 scenarios(1) Where an express trust fails or makes an incomplete disposition ; OR

(a) Note: Don’t necessarily need wrongdoing to form a resulting trust.i. The same remedy works when that same attorney is killed

leaving the closing; see hypo #1 infra(2) Where one person pays for property and the title is taken in another

person’s name who is not the natural object of the bounty of the purchaser(a) “natural object of the bounty” means person most likely who

would inherit from purchaser(b) Hypo #1 O owns blackacre. A pays O 10K for blackacre. Deed

conveys blackacre to Bi. If B is not a natural object of A’s bounty (not a son or heir,

he’s just a 3rd person).ii. Presumption arises that A did not have intent to give

property to B as a gift, but instead a trust is presumed to exist. a. To rebut presumption, B must offer evidence showing

otherwise; like A owed money to B (c) Hypo #2 same facts as hypo 1

i. If B is a natural object of A’s bounty (his son or heir).ii. Presumption arises that A did intent to give to B as a gift,

not a trust. a. Burden switches to A who must prove a non-gift

through preponderance of the evidence (d) Hypo #3 If Hypo 1facts were altered to the extent that the two

people were best friends for over 20 years - then B could argue that he thought this was a gift.

b. Statute of Frauds: [ASK WHAT EFFECT DOES THE SOF HAVE ON RESULTING TRUSTS??]

3. Constructive Trusts :a. Arises by operation of law; not a written documentb. This is an equitable remedy to prevent unjust enrichment.

(1) The person found to be unjustly enriched, may be ordered under duty:(a) to hold the property as trust for the benefit of the rightful owner or (b) to deliver property back to rightful owner.

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c. Terminology used:(1) When this remedy applies, equity creates his ______ interest (i.e.

beneficiary interest) into a legal interest of a trustee.d. Four Requirements necessary to impose this:

(1) A confidential or fiduciary relationship between the parties involved exists;(a) Sometimes ct will look past this prong if it doesn’t exist

(2) One party expressly or impliedly promised to do something;(3) One party transferred assets/property to another in reliance on that

promise.(4) Transferee (title holder) would be unjustly enriched if property was

retained.e. Example: A voluptuous tight young lady (cleaning girl) befriends an older man,

and she persuaded him to sign over all his property into her name. He’s got boobies on the brain, and promises to do so. Courts here might create a constructive trust for the old guy’s benefit.

f. Statute of Frauds doesn’t apply to constructive trusts – even if real estate was the “res” (1) Person v Pagnotta (inter vivos oral trust resulting in constructive trust)

(a) Woman who was dying transferred real estate to her friend, only to be given to friend’s daughter after woman died. She got better and wanted property back.

(b) She argued trust was invalid because it violates SOF. Ct disagreed and looked to her intent, which they said was to create an irrevocable trust. They applied and satisfied the constructive trust test. Thus, they created a constructive trust where property was held for daughter.

(2) HYPO: (oral trust transferring real estate resulting in constructive trust)(a) O creates an oral trust and gives real estate to X (trustee) to hold

for A for life, then to B. O dies. Since it was not in writing, violates SOF and therefore invalid. To prevent X from being unjustly enriched by keeping property, court would likely create constructive trust imputing X with trustee duty to hold for beneficiaries. [WOULD A CONSTRUCTIVE TRUST BE CREATED IF SETTLOR JUST DIED BEFORE PROBATE PROCEEDINGS OR WOULD REAL ESTATE GO TO ESTATE BENEFICIARIES]

g. You always want trusts conveying real property in writing. If not in writing, you then have to go to court and try to get the court to impose a resulting or constructive trust.

h. NOTE: Can be imposed on the killer of the decedent, for unjustly profiting from the person’s death

C. Revocable Intervivos Trust1. Created during the lifetime of the settlor.2. Def: Settlor transfers assets to himself or another as trustee pursuant to a writing.

Settlor retains the right to amend the document and receive the income from the trust.a. Upon death, assets are given to beneficiaries or remain in trust.

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3. Note: By creating a trust such as this, you could prevent your spouse from claiming an Elective Share or being declared a pre-termitted spouse.

4. Because the trust is revocable, criticism has been made the beneficiaries have no real rights.a. Court said no. Court said that as of the creation of such a trust, the

beneficiaries did have some rights to enforce the trustee to do a good job.(1) Beneficiaries had the vested rights as of the day the trust was created.(2) The fact that the grantor had the power to amend or revoke the trust or

that should the beneficiaries die, the grantor would retain all the money does not defeat the fact that this type of trust is still….a TRUST.

18.LapsingA. The Court in Detroit Bank and Trust v. Grout held the following:B. Person named in Trust account was not a relative of the grantor. The trust also stated

that if the beneficiary wasn’t alive when the grantor died, then the proceeds would go to the heirs, assigns of that person.

1. The Beneficiary died before the grantor and the grantor’s family said that the gift lapsed because the beneficiary wasn’t a relative of the grantor.

2. As a General Rule When applied to trusts….a gift to a named beneficiary is absolute and the gift should be delivered to the beneficiaries estate if they fail to survive the grantor.a. Decedent’s intent is always paramount

In Florida, a beneficiaries interest in a trust, whether revocable or not, vests at the time of the creation of the trust. Therefore, the anti-lapse statute does not apply. In the event that the beneficiary predeceases the grantor, their heirs of the grantor will get the proceeds, unless the trust states otherwise. In other words, a beneficiary predeceasing the grantor does not make the gift lapse.

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CATEGORIES OF TRUSTS

1. Rights of trustees and beneficiaries, with respect to modification, administration, and termination, depends on how you classify the trust.

2. There are 3 categories of trustsA. Spend Thrift TrustB. Support TrustC. Discretionary Trust

3. SPEND THRIFT TRUSTA. Spend-Thrift applies to both the income and the principle.B. §_______In Florida, these trusts are valid.C. Designed to protect beneficiary from himself .

1. Under this trust, the beneficiary doesn’t have the right to spend the money, gift the money, transfer the money, or otherwise control the money of this trust until he has the money in his pocket.a. Example: Aunt Amy sets up a $1,000,000.00 trust and puts a Spend-Thrift

clause in it. If the beneficiary goes out and buys a car and tells the dealer to bill the trust, the trustee does not have to pay the bill.

2. Settlor of trust states:a. Trustee is not required to pay the bills of the beneficiary;b. Beneficiary may not go out and spend all this money.

D. Designed to protect assets against creditors . 1. creditors CAN NOT reach assets until the beneficiary has the money.2. Broadway Bank v Adams (protect beneficiary from himself and creditors)

a. Testator died and created testamentary trust for his brother, A. Trust stated that A could not assign the trust income and that it was to remain free of A’s creditors. Thus he created a spend thrift trust.

b. A’s creditor argued that disabling restraints that restrict property transfers are invalid. But this argument only works as to the person who has legal title (A has equitable title until he actually received income). Since distribution of income had not been made to A yet, creditor would have to wait until distribution was made and under court order try to freeze the funds at that time (but this is very difficult to do). If there hadn’t been a spendthrift provision, the assets would have been transferable.

3. EXCEPTIONS – creditors may get beneficiary spendthrift interest only if:a. Trust requires mandatory payment to the beneficiary to pay for stuff and also

states that beneficiary cannot assign trust assets.(1) The mandatory payment beneficiary receives to spend (on food, shelter,

life necessities, etc) is accessible to creditorsb. In majority, to satisfy alimony/child support obligations

(1) Florida is in minority(a) You cannot reach the spendthrift to satisfy these obligations(b) EXCEPTION, you can once you’ve exhausted all other options

E. Settlor cannot create a revocable spendthrift trust for his own benefit as beneficiary [CAN A SETTLOR CREATE AN IRREVOCABLE SPENDTHIFT TRUST FOR HIS OWN BENEFIT]

1. In re Shirley

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a. You cannot create a trust of your own to alienate creditors. Here all assets were put into a trust the Shirley benefited off of (BEFORE SHE WENT INTO DEBT) This trust had both Discretionary and Spend Thrift provisions. Her creditors wanted to take her spendthrift interest.

b. ISSUE: Can bankruptcy creditors take assets from spendthrift trust? (1) Yes, because it’s not fair to create this trust, where you have control, to

avoid creditors.(a) While a spend thrift generally protects a beneficiary from a

creditor this doesn’t work when assets were fraudulently left there to hide from creditors.

c. If Court determines that creditors can reach the claims –how much can they reach?(1) Court looks towards whatever the maximum amount is that a trustee

could transfer to the beneficiary and that is what would be allowed to creditors.(a) It didn’t matter what she put in (¼), the trust assigned her ½,

creditors could also get that much. 4. DISCRETIONARY TRUST

A. The powers given to the trustee may be limitless (unlimited ways that this trust may be drafted)

1. Trustee is given the right to:a. decide which group of beneficiaries receive income or principal from the trust;b. decide how much they get;c. decide if they gat any at all or if the any income gets put back into the trust

corpus.B. In order to ascertain the rights of the beneficiary, you must determine what the trust

allows the trustee to do:1. First, look to language of trust document determine what powers are assigned to

trusteea. Trustee may be given complete power or very limited powerb. If trustee has full discretion (over payment of income, percent, or both), the

beneficiary does not have the power to make trustee distribute what he has power over(1) which means creditors do not have the right to force distribution either(2) Creditors cannot have more rights than a beneficiary (have same rights)

C. Generally, you are not going to be able to assign your interest1. Its not that the assignment is void, but who will want to take the assignment when

the beneficiary doesn’t have control over the interest.5. SUPPORT TRUST

A. Grantor places assets in a trust in support for the named beneficiary.1. Support is either:

a. defined by the language in the trust, or b. is for the necessities of life (care, maintenance, education, medical, or comfort)

(1) example: “When I die, I want there to be support for my son’s education”(a) They will get money for tuition, books, room, etc.

c. Support may be for anyone.B. Similar to discretionary trust, but beneficiary is limited to a certain amount of support

1. Trustee decides how much is necessary, which is the discretionary part

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a. There is a reasonable discretion standard(1) Usually for maintaining a lifestyle, not necessarily a better lifestyle

(a) Trustee can not send you to Europe for 3 months since this is not a necessity of life unless “support” is defined to include this.

b. Trustee who spends money unreasonably, may risk getting sued later on by the beneficiary.(1) Court will look at the beneficiaries own financial profile to see if support

is really needed.C. Look to trust language to determine how much control the trustee and beneficiaries have

1. If drafting a discretionary support trust, you must state that trustee can only give out money from the trust to each beneficiary only after the trustee considers what other monies coming it to support each person. Then the support will go to each beneficiary in so far as what they need.a. This will prevent one very needy beneficiary from receiving the same as other

well off beneficiaries.D. Rights of Creditors Same rights as beneficiary

1. example: Trustee that is directed to pay for education can be sued by either the school or beneficiary because school is for the support of the beneficiary and creditors usually have the same rights as the beneficiary.

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REVOCATION AND TERMINATION OF TRUSTS

1. Revocation and Amendment of TrustsA. Just as a will may be revoked or amended, so may a trust.B. In General:

1. If a trust expressly states that it is revocable, then it may be changed;a. Revocable trusts can be amended or terminated by the settlor, unless it says

otherwise.2. If a trust expressly states that it is irrevocable, OR if it is silent on this issue, it can

not be revoked. a. In Florida , irrevocable trusts cannot be altered.b. EXCEPTION: Even if a trust is irrevocable it can be terminated if all the

beneficiaries consent. (1) Problems arise because each beneficiary must consent, that means

vested and contingent beneficiaries.(a) So if one is incompetent, a minor, unborn, then it remains

irrevocable for lack of consent i. Need to appoint them guardians and then it may be

possible with judicial consent – but ct will apply material purpose test [WILL THEY STILL APPLY TEST EVEN W/ GUARDIAN CONSENT cause kids could end up suing later or are they precluded]

ii. §744.3021(1) Guardians of Minors have plenary (complete) powers and thus could consent of minor’s behalf

iii. Schmucker v Walker a. Trust was to benefit the grandchildren per stirpes.

Trustee had full discretionary powers and wanted to terminate.

b. NO, because there was an unfulfilled material purpose. The wife of the son was still living and had not

remarried (quite possible she could still have kids), thus the future beneficiary class could not be determined.

(b) For dead beneficiaries, majority holds trust cannot be terminated prior to the time in the trust doc, even if all others consent, IF the termination is contrary to a material purpose of the trust.

(2) Trustee does not have to consent because they do not have equitable interest in the trust, they are only custodians of the trust.

(3) Settlor does not have to consent because once he’s given up his rights, that it.

c. EXCEPTION to the EXCEPTION:(1) Even if all beneficiaries consent, if it has a material purpose, it cannot be

terminated(a) In reality, if the trustee, settlor, and beneficiaries agree to

terminate, no one is left to complain.C. Material Purpose Trusts

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1. Generally, trusts may not be terminated if they are deemed to have a material purpose.a. Basically, a settlor intends to give the trust a material purpose and that’s what

determines the type of trust he creates, so in essence, the material purpose test really looks at settlor’s intent.

2. 4 types of trusts deemed to have a material purpose:a. Spendthriftb. Supportc. Discretionaryd. Postponement of Enjoyment

(1) AKA: successive enjoyment trust(2) example: To A for life, remainder to B

3. Beneficiaries cannot compel termination of material trusts2. Early Termination

A. Assume trust with 3 beneficiaries (all of which are of age and are ascertained). All 3 want their money now. The settlor hears this and is furious. Should the settlor have a say in the matter?

1. Some Jurisdictions do not give him a say;2. Others look at the settlor’s intent.

a. Generally Majority states that an irrevocable trust can not be early terminated, even if all interested beneficiaries consent, if termination would be contrary to settlor’s material purpose.(1) Material Purpose: Spend Thrift, Support, Discretionary, Age

requirements.B. Example #1 Settlor transfers stock of $100,000 to trustee (the bank). Bank is

instructed to deliver income for life to A and the remainder to C per stirpes.1. A becomes dissatisfied here thinking that he can make more money invested

differently. However, C wants the full $100,000.00 when A dies.2. Bank can not early terminate this trust because C does not agree. We must look at

the rights of each party:a. Settlor lacks standing because he retained no interest;b. C has an equitable remainder so he can’t be compelled to settle for a portion of

the money.c. Trustee owes a fiduciary duty to keep the trust and it’s assets intact. So if they

early terminate without C’s consent, they have breached this duty to C.C. Example #2Assume same facts as above, only this time C agrees to take $70,000 and

A will take $30,000.1. In order to see if early termination applies, you must check everyone with standing

to object:a. Settlorretained no interest so he has NO standing;b. Ahas standing;c. Chas standing;d. “Per Stirpes”those people need to agree, since they are not present in this

fact pattern, then A & C are still not allowed to terminate.2. Note When all interested parties agree to early termination, there is no one to

sue the trustee, so there is no point to keep the trust running.a. When settlor leaves no interest – he can’t say anything.

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D. Example #3Settlor transfers property to irrevocable trust with bank as trustee to pay income to A for life, then to A’s children per stirpes.

1. At the present time, A is 45 and has two children both of which are 21.2. Since A can have more children, not all potential beneficiaries are present except

for the two 21 year olds, these unborns could possibly sue bank later on for terminating the trust early.

3. If settlor is alive and sees this going on – he could get and have a guardian appointed to represent unascertained beneficiaries.

E. Example #4 Settlor transfers funds to bank as trustee in the following manner….Income to A for life, then to B if B survives A.

1. Since there is a possibility that B may not survive A, the settlor has retained a reversionary interest in the trust.

2. The settlor must thus be consulted with any attempt to early terminate the trust.F. Example #5 Settlor transfers funds to bank as trustee….Income to A for life, principle

to B on A’s death. Settlor also creates a revocable trust.1. May A and B agree to revoke?

a. NO. The Settlor rules the trust because it is revocable.3. Partial Termination

A. Allowed in some jurisdictionsB. ORDER ON TEST – CAN TRUST BE TERMINATED

1st IS THIS A TESTAMENTARY (NEVER REVOCABLE) OR INTER VIVOS TRUST?2nd IF INTER VIVOS – IS IT REVOCABLE?3rd IDENTIFY ALL PEOPLE

a. Do they have standing?

C. Example #1 Settlor irrevocably transfers to the bank as trustee to A for life, then to B. If B doesn’t survive A then to B’s estate.

1. If both A and B agree to terminate but the settlor or the trustee is opposed to this, A and B may be able to compel the trustee to terminate if the settlor did not provide one of the four material purposes for a trust:a. postponment;b. spend-thrift;c. support;d. discretion.

D. Example #2 Settlor creates an irrevocable trust naming the bank as trustee. Bank is ordered to pay (in it’s discretion) to A for life, then to B per stirpes.

1. If A & B agree to terminate – trustee is not able to terminate trust because there was a material purpose to the trust…namely the support of A.

2. REMEMBER it may be legally wrong to terminate the trust but, if no one with standing would sue the bank for early termination, then the bank may agree to terminate.

E. Example #3 Trustee is to pay income to A for life but, if A gets to the age of 35 then give all money to A. If he dies before 35, then to his estate.

1. At 25 yrs old, assume that A assigns his rights to X (a complete stranger). Court said that X can not compel trustee to terminate because the purpose here was to A for life…not to X.

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a. Court said that you can not circumvent an issue by transferring.F. Remember:

1. Parties may even agree to amend a trust.2. Wherever a settlor leaves a right to revoke, he has a say in its amendment.

4. Administrative DeviationA. If the trust becomes SUBSTANTIALLY or SERIOUSLY threatened by some outside

source, the Court may allow an administrative change to the document to keep it going.1. An administrative provision is one that sets rules for the trustees (tells them what

to do).a. example: saying the trustee must invest in a certain asset (or refrain from doing

so)2. example: At the time it was created, the terms could have made sense, but years

later they may be harmful to the trust to make it no longer viable. The ct, after a motion, can order trustee to ignore those provisions, or amend thema. Court will not allow administrative deviation just because trustee doesn’t like

provision or because he thinks he can earn interest in another way – must be SERIOUS THREAT

B. Matter of Pulitzer 1. Court allowed an administrative change to the trust to prevent a serious

destruction of the trust. Trust originally specified that trust finds could only be invested in government bonds. The trust was written many years ago when the bonds yielded a high rate – they were extremely low now and court said it posed a serious threat to the existence of the trust.a. NOTE: Other government bonds may not have been a SERIOUS threat – If

that was the case then there will not be an administrative change allowed.C. §737.402(3) When Trustee can terminate early

1. If trust goes under $50,000, trustee has sole discretion to terminate the trusta. But if there is no threat that if it drops below $50K it will substantially impair its

purpose, then you cannot deviate from the administrative provisions (of what trustee must do)

2. REMEMBER: a trustee only has a fiduciary duty to the beneficiaries. [OR IS IT TO ALL THE PARTIES???]

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CHARITABLE TRUSTS & CY PRES DOCTRINE

1. Charitable TrustsA. Generally, encompasses all trusts where the settlor gave assets and income and

principle to a charity organization.1. special rules apply(differ from express trusts) because they’re set up for benefit of

societya. They are liberally construedb. Once a charitable trust is created, the settlor does not have an interest in the

trust, he becomes part of society, so he has no standing to the trust.B. ORDER ON TEST – IS IT A CHARITABLE TRUST or private trust?

1. To qualify as a charitable trust:a. Must have indefinite beneficiaries, OR

(1) example: “For the benefit of all the poor people of Kentucky” (2) Its not the quantity of the people, its what the money does for the

community.(a) If only helping 3 out of 300, it is still benefiting community

b. Must be in favor of a reasonably large class of beneficiaries AND(1) example: “For the benefit of a the Denver Zoo” (2) Cannot be for specific identifiable beneficiaries

(a) example: “Trust to M for life, remainder to son” (private trust)c. Must have a Charitable Purpose

(1) example: “trust for his age women who want to go to special school in NY” (a) Trust for lobbying is not a charitable purpose

C. Rule Against Perpetuities 1. RAP doesn’t apply to only charitable trusts because they have a perpetual

existencea. NOTE: applies to private trusts

2. Often, a trust may have charitable and private interests, in this case you MUST apply RAP

2. Cy Pres Doctrine A. Means “as near as possible”B. Applies when things become impossible, illegal, or impractical to perform

1. It’s applied to charitable trusts when:a. A specific charity, for which the settlor created the trust, goes out of existenceb. It’s charitable purpose changedc. It’s name changedd. Some significant characteristic changed

2. Rather than returning funds to settlor, Under the Doctrine of Cy Pres, Ct may redirect the benefits of the trust to a purpose as near as possible to the original intentiona. example: Ct can order benefit to continue for the Bronx Zoo, if the other zoo

closesC. Doctrine will generally apply unless settlor specified otherwise

1. Sometimes an alternative beneficiary is named

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D. Cy pres is necessary because the settlor had a general charitable intent - and that intent is reflected in setting up the actual trust document - the court is basically trying to fulfill that intent

1. Court will ask when determining whether to apply Cy Pres: a. Was there an alternative beneficiary? b. What was the general intent of the charitable trust? –

2. If settlor wanted trust to fail, if couldn’t go to anything except the organization named - then the trust fails. a. If person had general intentions of giving to anyone - court will not allow the

trust to fail3. HYPO: (Impractical)

a. Children’s wing for orthopedic problems - hospital gets the money, but it is not enough, and they have no other means of getting the rest of the money. You have to look to settlor’s general intent and purpose. What would the settlor have done if he knew that the wing could not be built? Maybe rather than building a new wing - they can give it to another children’s hospital for orthopedic care.

E. Estate of Buck 1. Trust principle increased incredibly. There was way to much money to use for the

purpose of the trust. They could not spend 30 million dollars. Under cy pres the beneficiary wants to give some of the money to another charity.

2. Cy Pres did not apply because it’s purpose could still be carried out. Although the trust was administratively inefficient, efficiency and effectiveness are not the doctrine’s guidelines.

3. Has to be impractical, impossible, or illegal.

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RULE AGAINST PERPETUITIES

1. NOTE: MAYBE ONE OR TWO QUESTIONS ON EXAM - MULTIPLE CHOICE2. The Rule Against Perpetuities – Doesn’t want “Dead Hand Control”. Developed to stop

people from controlling property for too long after they have died. A. You can ONLY control property:

1. During your life; or2. During the life in being’s life; or3. 21 years after the life in being’s life4. Any longer and you’ll violate RAP

B. “Life in Being” – probably the grantor/settlor that is alive, beneficiaries may be lives in being also without violating the rule

1. Usually family, could be one-intervening generation (like someone’s children)C. NOTE: A trust is not void simply because it extends beyond the perpetuities period, it just

limits the duration of the trustD. §689.225 Statutory Rule Against Perpetuities

1. Even if interest violates RAP – more than 21 years2. IN FLORIDA , as long as the interest vests within 90 years, it won’t violate RAP

E. ORDER ON TEST:1. STEP ONE: Who are the lives in being?2. STEP TWO: Ask when was the interest created?

a. Trusts At the time that the trust document is signed;b. Testamentary Trust At the time of death;c. Irrevocable Intervivos At the time its signedd. Revocable Trust At the time the trust no longer is revocable (usually when

settlor becomes incompetent or dies);3. STEP THREE: When does that interest vest?4. STEP FOUR: In whom does that vulnerable interest vest?

a. Ask: “IT IS IMPOSSIBLE FOR vulnerable interest to vest MORE THAN 21 YEARS AFTER validating life ‘S DEATH?”(1) The validating lives to be tested are:

(a) The Grantor first (only if alive);(b) Test Purchasers in order that they appear in conveyance (Can’t

test a class if it’s not closed);(c) Test interveening generations;(d) Test anyone else mentioned in the conveyance that hasn’t

already been tested.(2) If you can’t make at least one sentence true, you must strike that

conveyance.5. STEP FIVE: Is it an interest that is subject to or excluded from RAP?

a. RAP applies to 3 types of interests (3 vulnerable interests):(1) All Executory Interests – These VEST when the CONDITION IS MET.

(a) It becomes possessory at that time (because interest transfers from one to another)i. example: O to A, for use of a residence, but if ever used

for a business, then to B. From the moment it is ever used

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as a business - it goes to B - the interest transfers immediately to B.

(2) All Contingent Remainders –VESTS the moment when the CONDITION THAT MAKES IT CONTINGENT DISAPPEARS(a) no matter if it makes it possessory at that time, you may not have

actual property in hand yet, but it can still vest in youi. example: To A for life, and if B goes to law school, to B -

There is a condition precedent - graduate from law school - contingent remainder in B vests when B graduates from law school

(3) Vested Remainders Subject to Open – These VEST when it vests in some people, BUT OTHERS IN THE CLASS COULD STILL GET IT(a) Ways for the class to close:

i. Ascending generation dies; orii. A dies w/o kids and leaves gift to his children (physically

impossible for him to have more kids.iii. When time of possession has arrived and at least one

member is able to take.iv. example: Class Gifts OR To A for life, then to A’s children.

A may have more children. Class is subject to being open - she could have more children

b. If one of these interest exists then it violates RAP – and interest becomes void - it will then go to others who would get it absent that invalid provision

F. Definition : 1. No future interest is good - [look at type of interest] 2. unless it must vest in all people it could vest in, if at all - [does it vest or fail?]3. not later than 21 years after some life in being (plus any relevant gestational

period) - [perpetuities period]4. at the time of the creation of the interest - [death or creation of trust]

G. Rule against Perp. applies to Equitable and Legal Interest and to Personal and Real Property.

H. The Savings Clause1. Attorney’s use this to make sure that interest vests and does not violate the rule

against perpetuities.a. ”Any interest that violates the Rule against Perpetuities was inadvertent and if

so, cut off gift after 21 years and give to previous individual.”

The lives in being that can be used to overcome RAP (lives in beings):The grantorThe beneficiariesPerson related by blood or adoption to the transferor or beneficiaryPerson closely related to the transactionPeople in the transaction, or intervening generations.

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FIDUCIARY ADMINISTRATION

1. Fiduciary AdministrationA. §518.10 Defines “Fiduciary”

1. An executor (personal representative), administrator, trustee, guardian, or other , whether individual or corporate, who by some writing or document has the responsibility of buying, selling, investing, or managing assets of another.

B. Personal Representatives (executors) of estates1. What are their major duties?

a. To search for and gather all of the decedents probate assets(1) in gathering probate assets:

(a) gather all assets though all might not come in(b) gather future assets(c) gather assets that because of undue influence may come back

into the estateb. pay estate and income taxes of the estatec. pay liabilities (i.e. mortgage)d. duty to distribute remaining assets to beneficiaries or heirs

2. Doesn’t have much of an investment dutya. unless at time estate is open, there is property that needs maintainingb. only has duty to maintain until the time estate is filed and distributed

3. Does that person have time to serve as PR?a. if not, don’t do it.b. If not positive, leave a successor to PR

C. Trustees of Estates 1. Powers – trustee cant exercise a power if it will violate one of their trustee duties

a. Trustees cannot go beyond their powersb. What are the 4 sources that give them the power

(1) Trust document language (a) can limit or expand the powers of the other sources(b) §737.401 Powers of trustees Conferred By Trust or by Law

i. States that unless trust document says otherwise, trustee has the powers under §737.402 a. Meaning, when trust doc says nothing, then look to

737.402(2) State statutes

(a) §737.402 – FL gives an extensive grant of administrative powers (long list)i. gives power to administrate estate ii. §737.402(2)(h) gives power to sell assets for cashiii. §737.402(2)(k) gives power to enter into a lease

(b) If you want to give trustee all the powers, copy the exact language that’s given in the statutei. example: If settlor didn’t die in FL but wanted FL law to

govern:a. Must enumerate those powers and copy the language

(3) Common law (implied powers)

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(4) Court orders2. Duties – found in restatement of law and statutes

a. §737.301 general duties of trustee(1) General duty to administer the trust diligently for the benefit of the

beneficiaries(2) Also says other statutes don’t limit these duties

b. 7 specific duties(1) Duty to keep trust assets separate

(a) comes from restatement(b) Keep trust assets separate from own assets, CANNOT CO-

MINGLEi. When they comingle, remedies are:

a. if commingled property is lost or destroyed, it is presumed that property lost or destroyed belongs to the beneficiaries trustee takes the loss

b. If commingled property, where some assets rise and others decline The rise is attributed to the beneficiaries, the trustee

as an individual will take the loss(c) Can trustees commingle trust assets with other trust assets?

i. Generally you cannota. In FL there are exceptions

A trust company can commingle one trust’s assets with other trusts assets through a common trust fund, unless the trust document limits this so always look to the doc

(2) Duty to exercise reasonable care and skill (a) §737.302 Where the trustee does something not prohibited by the

trust, trustee must exercise skill and prudence as any ordinary, reasonable, careful person would you in carrying on his own personal affair. i. §737.302 BUT if trustee possesses special skill greater

than any ordinary normal person, they are held to a higher standard in using that skill, liable for loss that results in a failure to make use of that greater skill

ii. §518.112 If a corporation, professional trustee, or normal trustee that has special investment facilities to manage the trust, either expressly or impliedly, they are liable for loss that results in a failure to make use of that greater skill

(b) example: If trustee is a school teacher, she will be held to the standard of a reasonable person of ordinary produce investing their own money however, if the trustee is the Bloomigton trust co. they will be held as trust investers (higher standard)

(3) Duty to control and preserve trust property and to make it productive (a) In order for duty to be effective, trustee must have power to do

something about it

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i. §737.402 states certain enumerated powers that help trustee fulfill that dutya. §737.402(2)(i) gives power to make repairs b. §737.402(2)(r) gives power to take out insurance to

protect propertyc. §737.402(2)(r) gives power to employ lawyers,

investment advisers, etc. to advise or assist the trustee(4) Duty to deal impartially with all beneficiaries

(a) REMEMBER: §737.301, gives general duty to administer trust to all beneficiaries (2 types)i. Income beneficiaries - they get income for life

a. They want more investment risk to get greater incomeii. Remainder beneficiaries - they get principal (assets when

trust ends)a. They want long term conservative investments for

capital appreciation(b) Trustee has duty to remain impartial to both groups

i. Goes to investing for both impartially(c) Dennis v Rhode Island Hospital

i. Trust had 3 buildings built in 1800s, trust created in 1920 when buildings worth 300K

ii. Trustee was authorized by trust doc to sell buildings at any time; he sold them for 185K

iii. Remainder beneficiaries sued trustee for not fulfilling duty to deal impartially. The income beneficiaries didn’t sue because they got the income from the sale. Ct said he owes duty to both, but he milked the income by renting the buildings for years while the property value was declining, so he was fulfilling his duty by giving income beneficiaries a stream, but he didn’t preserve the property (let it turn to shit) so he failed to fulfill duty of impartiality to remainder benefs. If he sold the buildings immediately, he would have cut out the income benefs, so he must balance between both.

(5) Duty to personally participate and not delegate (a) In Florida, What functions may be delegated?

i. Ministerial functions you may delegatea. Sending and writing letters, copying etc.

ii. Administrative functions, generally, may not be delegateda. These are dispositive/distributive functions

who gets what, when do they get it, etc.b. EXCEPTION: §518.11 You may delegate, under

certain circumstances, part or all, of your investment function See below Delegating Investment Functions

(b) §518.11(1)(a) gives fiduciary a duty to invest and manage investment assets but he is subject to a rule that has 2 standards:

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i. Prudent Investor Rule (1st standard)a. Fiduciary has duty to exercise reasonable care in

making or managing investments as an ordinary careful prudent investor would make of his own property, having in view the preservation of the estate, and the amount and regularity of the income to be arrived.

b. Meaning, trustee must evaluate the propriety of each individual investment (in disposing of the estate) NOTE: Traditionally, this was the only standard

applied which by itself doesn’t allow for much flexibility.

ii. Modern Portfolio Theory (2nd standard)a. This standard requires the same exercise of

reasonable care and caution but it must also be applied in view of the investment portfolio as a whole, not just to each isolated investment.

iii. General effect of both standards: a. Trustee still has a duty of reasonable care as an

ordinary prudent investor to look at each investment individually, but he must also consider them all together

(c) Delegating investment functions: i. Primary function of Trustee: management and growth of

trust funds and assets.a. This responsibility can not be given ultimately to others

– although he can get assistance.b. Trustee can not accept this advice blindly – he has the

final decision. NOTE: If you hire a bank or a trust company to

manage a trust they can not hire people using trust funds when they are supposed to be the expert in that field.

ii. §518.11 2 says trustees may delegate part or all of the investment function, that a prudent investor of comparable skills might delegate under the circumstances to an investment managera. Under restatement 3rd, it might be a breach if trustee

fails, under some circumstances, to get advise of investment manager

iii. When a fiduciary delegates investment functions, he has a duty to exercise reasonable care in:a. Selecting an investment manager; andb. Establishing scope and specific terms of delegation;

andc. In reviewing and supervising the agent’s actions

iv. However, trustee is ultimately responsible because he was the one who hired these plumbers, etc.

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v. The expenses that trustee has to pay for these experts comes out of the trust.

(d) §518.11(1)(b) This rule is a test of conduct and not of performance.i. Meaning some losses are expected, ct won’t judge on this

measure, ct will judge on process you went through in looking at investments.a. Specifically, trustee will be judged on his reasonable

business judgment regarding the anticipated effect of each investment on the investment portfolio as a whole under the circumstances prevailing at that time.

ii. First Alabama Bank v Martin (pg 1242) a. Case dealt with class action suit where 1250 individual

trust funds had losses (some in securities, some in real estate). Expert witnesses were brought in to testify as to what investments should have been made.

b. Ct applied the combined modern standard of prudent investor rule and portfolio theory. Looked at whether all investments were considered individually and as a whole.

c. Bank had a well-balanced portfolio of blue chips that they invested everybody’s funds in, so as a whole it looked ok. But the bank did not look at each and every individual investment. Thus, they failed to meet the combined standard. If trustee does not pass both hurdles, then it is a

breach and can be surcharged (holding fiduciary personally liable for breach and charging them as individuals)

(e) §518.112 Imposes liability on a trustee for loss that results in a failure to meet the combined standard of care

(6) Duty to render accounts to the beneficiaries AND enforce claims AND defend actions AND also follow the terms of the trust(a) Duty to maintain detailed accountings

i. Must show in detail the name of assets and their value(b) §737.303(4) Gives a right to these annual accountings to:

i. §737.303(4)(b)(1) current income beneficiaries;ii. §737.303(4)(b)(1) principal beneficiaries; iii. §737.303(4)(b)(2) remainder beneficiaries that are

ascertainable (this doesn’t include those not alive yet)iv. §737.303(4)(d) A beneficiary may waive, in writing,

trustees duty to provide him with accountingsv. §737.303(4)(e) All rights provided to beneficiaries may be

asserted by a legal representative or natural guardian of the beneficiary

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(c) §737.3054(4) Duty to pay the expenses of trust administration, including enforcing claims and defending actions against the trust estate.

(d) Trustee has absolute duty to follow terms of the trust i. Terms of trust document trump what the statutes requireii. Case

a. Trust named PR as trustees of his trust. The language said they had duty to take the securities that were not legal investments for fiduciaries, and convert them into legal securities and from the income that was generated, pay some of the beneficiaries.

b. Because the securities were falling in value, the PR/trustees didn’t convert them, the beneficiaries sued.

c. At that time, trustees good faith defense was that there was a law that said they could keep the securities w/o converting them.

d. Ct went back to language of trust doc which controls, and said they had an absolute duty to do as the trust doc said.

(7) Duty of loyalty (a) §737.306(b) Makes trustees personally liable for:

i. breach of duty; OR ii. torts committed in course of administration of trusts estate

BUT only if trustee is personally at fault(b) Self Dealing is a breach of duty!

i. Generally, trustees are prohibited from self dealing because beneficiaries are intended to benefit from trust, not the trustee.

ii. Cannot use innocence/negligence as a defense for self dealinga. Good faith, Fairness is not relevant here

iii. EXCEPTION: if ALL beneficiaries consent to trustee’s self-dealing act that would generally cause a breacha. However, ct may still say it looks fishy and find a

breach(c) Self dealing which trustees are prohibited from:

i. Cannot borrow from the trustii. Cannot sell his own property to the trustiii. Cannot take out personal loan against the trustiv. Cannot offset the losses with the gains

a. No Offsetting Rule (aka Anti-netting Rule) Prohibits a trustee from offsetting his liability from

loss of an improper investment (caused by breach) from a gain from another improper investment (caused by breach).

Example: Trustee bought 2 stocks improperly. Bought stock A for 10K and sold at 6K, bought

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stock B for 10K and sold for 12K, so total liability of 2K. But you can’t offset, so liability is greater cause you’ve breached twice.

(d) No Further Inquiry Rule applies when trustee is involved in self dealing. i. Meaning, when trustee buys something or sells something

to trust estate, that is enough to impose liability, no further inquiry is required by the courts because this is a per se violationa. Since it is a per se violation, beneficiaries may

surcharge trust (charging the trustee) because strict liability will be applied

ii. Prevents fraud by keeping everything at arms-length a. Just keep in mind that some believe social investing is

actually a breach of loyalty [DON’T KNOW WHAT SOCIAL DEALING IS].

iii. National City Bank v Farmers Loan & Trust Co a. Prior to 1929, Settlor created revocable trust where she

named Farmers Loan as trustee. Assets of trust were stock of National City bank. Later, Farmers merged with National City. Trust doc said trustee may hold the stocks as long as reasonable?? Settlor even consented to having Farmers hold stocks until after they merged.

b. Ct held it was self dealing, since they were now merged, they were prohibited from holding their own stock.

c. But ct said they weren’t liable for loss of value because she still had the power to revoke.

d. NOTE: Generally, self dealing is a charge that allows for loss of value when irrevocable.

e. Here, Ct said even though the Bank acted in good faith (cause if they tried to sell their own stock the FMV of the stock would crash the market) they violated a per se no further inquiry rule.

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