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DESCRIPTIONWills, Trusts and Estates outlineDukeminier & Stikoff, Wills, Trusts & Estates (Ninth Edition) Professor James Puckett, Penn State Law
WILLS TRUSTS AND ESTATES
DUKEMINIER & STIKOFF WILLS, TRUSTS, & ESTATES (9TH EDITION)
Professor Puckett, Penn State Law.
intestate Governed by the default pg 63-81, 81-91
testate -- when someone dies with a
rules of intestacy, when someone dies without a will.
Primary purpose of intestacy statute if to carry out the probable intent of the typical intestate decedent default rules for property succession at death
UPC 2-101 Intestate Estate
2-102 Share of Spouse
2-103 Share of heirs other than surviving spouse
S= surviving spouse; D = surviving descendant(s) of decedent; P = surviving parent(s) of decedent;
BorS = surviving siblings of decedent, surviving descendants of decedents parents; G = surviving grandparent of decedent; GD surviving descendants of grandparents
S; no D; no P
All to s
All to S if all D are also Ds and S has no other surviving descendants
$225,000 plus half of the rest to S if D are also Ss and S has other descendants; other half to D
$1500,000 plus half of the rest to S if one or more D is not Ss; other half to D
S; no D; P
$300,000 plus of the rest to S ; other one-fourth the P
No S; D
All to D (per capita at each generation)
No S; No D; P
All to P
No s; no D; no P; BorS
All to BorS (per capita at each generation)
No s; no D; no P; NO borS; G or GD
If both paternal and maternal G or GD, one half to paternal G or GD and one half to maternal G or GD (all to G or if non, per capita at each GD generation)
If survivors on one side only, all to G or GD on that side (all to G or, if none, per capita at each GD Generation
No s; no D; no P; no BorS; no g or gd
Stepchildren or, if none then
Escheat to state; therefore, no laughing heirs
Heir apparent people that have a mere expectancy that is both contingent on their surviving A and defeasible by As contrary dispotion by will, will substitute or lifetime gift
Devisee; legatee; beneficiary a person named in a will.
Estate Plan By Default
Summary of UPC Intestacy Provisions
Basic Structure of Intestate Succession
Domestic Partners and Same Sex Marriage policies that underpin the spousal intestate share seem to also apply to long-term cohabitating partners.
The Problem of simultaneous death A person succeeds to the property of a decedent ONLY if the person survives the decedent for an instant time.
Arises in wills, trusts and other modes of nonprobate transfer in which the governing instrument does not avoid the problem by requiring a beneficiary to survive the donor by a stated period of time.
Uniform Simultaneous Death Act provided that if there is no sufficient evidence of the order of deaths each was deemed to have predeceased the other, so neither inherited from the other.
Issue of what is sufficient evidence, remedy = UPC 2-104 and 2-702
2-104 and 2-702 provides that an heir, devisee or life insurance beneficiary who fails to survive by 120 hours (5 days) is deemed to have predeceased the decedent. under the amended UPC claimant must establish survivorship by 120 hours by clear and convincing evidence.
Janus v. Tarasewicz
Facts: Husband and wife died after taking cyanide laced Tylenol (on accident) . Wife was on life support for two days while hubby died upon arrival at the hospital. Issue of who died first
Holding: Court found sufficient evidence that she outlived her husband and appellate affirmed.
If a child dies before decedent and the child leaves descendants, all state provide that the childs descendants shall represent the dead child and divide the childs share among themselves.
Fundamental issue is whether the division into shares should begin at the generational level immediately below the decent or at the closest generational level with a descendant of the decedent alive.
English Per Stirpes / strict per stirpes
Followed by 1/3 of states.
Treats each line of descent equally
The property is divided into as many shares as there are living children of the designated person and deceased children who have descendants living.
Children of each of the deceased descendant represent their deceased parent and are moved into their parents position beginning at the first generation below the designated person.
Assures vertical equality at the expense of horizontal equality.
Modern Per Stirpes /per capita with representation
Less than states follow
Look first to see whether any children survived decedent
Yes distribution is identical to English Per stirpes
No estate is divided equally (per capita) at the first generation in which there are living takers
Per Capita at Each Generation ( 1990 UPC)
Initial division of shares is made at the closest generation in which one or more descendants are alive (as under modern per stirpes) HOWEVER the shares of the deceased persons on that level are treated as one pot and are dropped down and divided EQUALLY among the representatives in the next generation.
Representations in Wills and trusts
Which one rules depends on the state
Ancestors, Collaterals and Others
Parents no descendants? Goes to parents.
Other ancestors and collaterals no parents OR descendants? Goes to more remote ancestors or collateral kindred. All persons who are related by blood to the decedent but who are not descendants or ancestors are called collateral kindred.
TWO BASIC SCHEMES
Parentelic system intestate estate passes to grandparents and their descendants and if none to great-grandparents and their descendants and if none to great great grandparents and so on down the line (parentila) descended from an ancestor until an heir is found
Degree of relationship system intestate passes to the closest of kin, counting degrees of kinship. (Table of consanguinity)
Laughing Heirs distant relatives
Stepchildren and In laws 1/3 of states and the UPC recognize stepchildren as potential heirs.
Half Bloods majority of states and the UPC relatives of a half blood is treated the same as a relative of a whole blood
Escheat if intestate decedent leaves NO survivors entitled to take under the intestacy statute her probate property escheats to the state under UPC 2-105.
Disinheritance by negative Will
UPC 2-101(b) authorizes a negative will by way of an express disinheritance provision. The barred heir is treated as if he disclaimed his intestate share which means he is treated as having predeceased the decedent.
Bars to inheritance: Advancements 126-129; Slayer Rule 132-139; Disclaimer 140-145
Advancement and Hotchpotch
If a child wishes to share in the intestate distribution of a deceased parents estate, the child must permit the administrator to include in the determination of the distributive shares the value of any property that the decedent, while living gave the child by way of an advancement
Advancement at common law any lifetime gift by the decedent to a child was presumed to be an advancement; prepayment of the childs intestate share.
To avoid application of the doctrine, the child had the burden of est. that the transfer was intended as an absolute gift that was not to be counted against the childs share of the estate.
When a parent makes an advancement to a child and the child PREDECEASES the parent, the amount of the advancement is deducted from the shares of the childs descendants if other children of the parent survive.
Hotchpot if a gift is treated as an advancement it is account for in distributing the decedents estate by bringing into hotchpot
O dies with no spouse but children A, B and C with an estate worth 50k.
A received advancement of 10k (to calculate shares for A, B and C you ADD the 10k gift to the 50k estate.)
10k advancement + 50k estate = 60k hotchpot
60k divided by 3 descendants = 20k/each
A only gets 10k because she already received 10k
*** IF A was given 40k gift she would just be left out of the hotchpot because we know O would want A to have at least 40k ***
It is not uncommon in wills and trusts to find a provision instructing that certain lifetime gifts or distributions under the instrument are to be taken into account when calculating later shares
Advancements in modern law Many states have reversed the common law a lifetime gift is presumed NOT to be an advancement unless it is shown to have been intended as such
Uniform Probate Code 1990 2-109
Inter vivos gifts do not constitute an advancement unless a writing indicates that the donor intended the gift to constitute an advancement
Writing requirement (a) if the donor creates the writing, the writing must be made contemporaneously with the inter vivos gift (b) if the donee creates the writing, the writing may be made at any time
Donee predeceases unlike commo law approach if the donee predeceases the donor the inter vivos gift to the donee qualifies as an advancement. The advancement does not count against the share of the donors estate going to the donees issues unless the writing expressly provides so
Guardianship and Conservatorship of Minors 129
Guardian of the person
Guardian has responsibility for the minor childs custody and care.
If both parents die while the child is a minor the court will appoint a guardian of the person usually from among the nearest relatives.
A guardianship of the person terminates when the minor reaches the age of majority, dies or is adopted.
Covered in UPC 5-201 to 5-210
NO AUTHORITY to deal with the childs property
Property management options
(1) Guardianship of the property
Has the duty to preserve the specific property left to the minor and deliver it at the age of 18, unless the court approves a sale, lease or mortgage. The guardian can only use income from the property to support the ward.
Only one trip to the court house annually fro accounting; more flexible and expires when the minor reaches the age of majority
Conservator is given title as trustee to the protected persons property along with investment powers similar to those of a trustee.
Custodian is a person who is given property to hold for the benefit of a minor under the uniform transfers to minors act.
Custodian has right to manage the property and to reinvest it however the custodian is a fiduciary and is subject to the :standard care that would be observed by a prudent personal dealing with property of another
Available only to persons who create them during life inter vivos trust OR who die testate and create one by will a testamentary trust
Most flexible. Can tailor trust specifically to circumstances and desires. A trust can postpone possession.
Bars to Succession
Rule that prohibits a slayer from inheriting from his victim
The Slayer Rule
In re Estate of Mahoney
Facts: Mahoney died intestate of gunshot wounds, wife convicted of manslaughter. Survived by wife, father and mother, father was administrator.
Issue: Can a widow convicted on manslaughter in connection with the death of her husband inherit from his estate
Holding: probate court cannot impost a constructive trust this needs to be done by the Court of chancery. Reverse and remanded to the court of chancery.
Courts in states without slayer statutes have 3 options
1. Legal title passed to the slayer may be retained in spite of the crime (no inheritance = additional punishment and you dont want to punish someone twice for the same crime)
2. Legal title will not pass no one should profit from wrongdoing
3. Legal title passes, but equity holds him as a constructive trustee for the next heirs
Mercy Killing in In Re Estate of Schunk W provided H with the loaded shotgun that H used to kill himself. The court held that Ws assisting H to commit suicide was not an unlawful and intentional killing within the meaning of the Wisconsin slayer statute.
Disclaimer is a refusal to take the property
From common law to statutory law
At common law if an heir renounces, the law treated it as if the title had passed to the heir, to the next intestate success. Almost all states have chosen to treat it as if the disclaimer died before the distribution
Avoiding Taxes Most state disclaimer statutes require that a disclaimer be made within 9 months of the creation of the interest being disclaimed UPC 2-1101 to 2-1117
Avoiding Creditors most disclaimer statutes provide that a disclaimer relates back for all purposes to the date of the decedents death UPC 2-1106. In an intestate estate the disclaimer takes effect as of the time of the intestates death UPC 2-1106(b)(1)
SCOTUS held that you cannot disclaim in order to avoid creditors. You still inherited the property (or you wouldnt have been able to pass it off) so you are subject to liens
Will formalities and strict compliance 147-165; Purging Statutes 167 SKIM model execution 167-171
Willis: Formalities and Forms
Execution of Wills
Worst evidence problem in discerning the authenticity, the voluntariness and the meaning of a will.
Wills act deals with Attested Wills, holographic wills and notarized wills
3 Core Formalities
The Functions of Formalities
Evidentiary function supply satisfactory evidence to the court
Ritual function (cautionary function) a ceremony supposedly impresses upon the transferor the significance of the event
Protective function purpose of safeguarding the testator
Channeling function standardization of form simplifies administration
Substantial Compliance with the Wills Act want people to conform with wills act so they dont have to sit around wondering if something was meant to be a will or not.
Strict Compliance Rule
Under traditional law for a will to be admitted to probate it must be in strict compliance with the formal requirements of the applicable Wills Act.
Must be in writing, signed by the testator, and then attested by two witnesses
Guards against a spurious funding of authenticity a false positive
Est. a conclusive presumption of invalidity for an imperfectly execute instrument the strict compliance rule denies probate even if the defect is innocuous and there is overwhelming evidence of authenticity false negative
In re Groffman
Facts: Groffman died 3 yrs after executing a will in the home of his friends the blocks. The will had been prepared by a lawyer who gave it to Groffman to execute on his own. Under the will the daughter/step daughter would take home. Widow contested the will. Litigation focused on whether the witnesses were present together when he signed. The two witnesses were not present at the same time when signing will (one was in living room one was in dining room)
Holding: Witnesses must be present at the same time for a will be to considered valid
Stevens v. i've briefed 15 cases to orph
Facts: Miller when to Bank to execute his will. Bank employee/public notary, saw him execute the will. She then took the will to be signed by 2 other bank employees who didnt see him execute the will. Challenge was brought by nieces.
Statute: the signature shall be made or the will acknowledged by him in the presence of at least two competent witnesses present at the same time, and such witnesses shall subscribe the will in the presence of the testator and of each other but no form of attestation shall be necessary
Holding: Will was not properly executed. This is an example of strict compliance
The Meaning of Presence
Line of sight the testator does not actually have to see the witness sign but must be able to see them were the testator to look. (exception is made for a blind testator)
Conscious Presence the witness is in the presence of the testator if the testator, through sight, hearing or general consciousness of events, comprends that the witness is in the act of signing
Test of mental comprehension
Uniform Probate Code dispenses altogether with the requirements that the witnesses sign in the testators presence. 2-502(1) page 149
Witnesses most jx rq the testator sign or acknowledge in the presence of at least two witnesses who are present at the same time. The witness must sign the will and in some jx the witnesses must know that what they are signing is the testator will
UPC does not require the witnesses to sign the will in either the testators presence or the presence of each other UPC 2-502(a)(2) Many traditional wills act statutes require the witness to sign the will in each others present
The Signature Requirement
All states including the UPC requires the testator to sign the will
Purpose of signature rq is to provide evidence of finality, distinguishing a will from mere drafts or notes and to provide evidence of genuineness.
Signature by Mark, with Assistance, or by Another
Full signature is preferable, a mark, cross, abbreviation or nickname can be sufficient.
Order of signing IN GENERAL the testator must sign or acknowledge the will before the witnesses attest. HOWEVER if they all sign as part of a single or continuous transaction, the exact order of signing is not critical.
Subscription and Addition After Signature some states have adopted the English wills act rq that a will be signed at the foot or end thereof this is called subscription
Delayed Attestation under UPC 2-502(a)(3)(A) witnesses must sign within a reasonable time which would extend until after the testators death.
The meaning of writing and video or electronic Wills a will need not be on paper, all that is required is a reasonably permanent record of the markings that make up the will
Video Wills A dvd/video tape does not comply with the requirement that the will be a signed writing In Re Estate of Reed.
Electronic Wills An electronic will probably does not satisfy the writing (or signature) requirements of an ordinary Wills act, but such a will might be allowed under the substantial compliance doctrine or the harmless error rule.
Purging statute Allows a will attested by an interested witness to be admitted to probate but it voided any bequest to the interest witness. W will attested by an interested witness would be valid but the witness would not take his devise
Interested Witness under the UPC 167 not many states follow, do not require that any of the witnesses be disinterested UPC 2-505(b) provides that a will is valid even if witnessed by an interested person and without purging the interested witness of his devise.
Relief from Strict Compliance 179-197
Substantial Compliance Doctrine
Key question is whether the manner in which an instrument was executed satisfied the purposes of the Wills Act formalities. IF SO instrument should be deemed in substantial compliance with the Wills Act and admitted to probate.
Harmless Error Rule
The court may excuse noncompliance if there is a clear and convincing evidence that the decedent intended the document to be his will
Uniform Probate Code 2-503
In re Estate of Hall
Facts: Joint will to represent the desires of couple. Signed and notarized but there were not attesting witnesses. It follows UPC code section 2.3 that allows for harmless error if they can show that, by clear and convincing evidence the document is intended to be the will. Pretty clear what the donor intent was, court used harmless error to solve the defect in attestation.
Clear and convincing evidence
Writing, signature and attestation
In re Probate of Will and Codicil of Macool
Facts: Prior to husbands death, wife executed will and codicil but later there were notes in addition. She went to see her lawyer, who dictated her will entirely in her notes. Dictation was typed and the word DRAFT: placed on the document. There was evidence that the wife sat through the dictation, went to lunch, was supposed to sign it later that day. She died without signing
Issue: Can you use harmless error?
Holding: Must show by clear and convincing evidence this was the donors intent the process here is NOT cured Harmless error = high level of proof potentially more than just intent, must have shown they reviewed the document in question.
Probating an Unsigned Instrument harmless error rule may be invoked to probate an unsigned instrument other than in a switched wills case BUT the court requires that the proponent to prove by clear and convincing evidence that the decedent in fact reviewed the instrument and thereafter assented to it.
Validates a will that has been acknowledge by the testator before a notary public or other individual authorized by law to take acknowledgements)
Provides a will is valid if it is signed by two witnesses or if it is notarized.
Holographic Wills 197-215
Holographic Wills written by the testators hand and signed by the testator. Need not be attested by witnesses.
PROS & CONS: They are indispensible for testators who are either unwilling or unable to commission a traditional will. The authors of holographic wills are not foolish or unreliable. Some argue they breed litigation and are inartful.
Discerning testamentary Intent
In re Kimmels Estate
Facts: A letter was mailed by decedent to two of his children George and Irvin who were named beneficiaries. Addressed to their resident and he died on the afternoon of the same day.
Issue: Is the paper testamentary in character? Is the signature in compliance with the Wills Act? (used the word father instead of name)
Holding: The words of if enny thing happens support testamentary intent. This is not an ordinary will BUT his intent to execute is apparent.
The pros and cons of holographic wills
Preprinted will forms
If signing a preprinted will form and you complete it by hand and then sign it but it does not have it attested by two witnesses, if strict compliance with the wills act is required the form is not entitled to probate as a formal will
However, it might be entitled to probate as a holographic will if enough of its text was handwritten by the decedent
In re Estate of Gonzalez
Facts: Gonzalez visited his bro Joe and Joes wife. Gonzalez was planning to fly to FL and he wanted to prepare his will before leaving. He showed Elizabeth and Joseph two copies of a preprinted will form. On the first copy, he handwrote it. She testified that he had already filled out the form before she saw it and didnt see him sign it Gonzalez gave a copy of the blank form to Joe/Elizabeth and it was signed but not filled out. Three of his children tried to probate the will; other children filed a summary judgment motion.
Holding: Valid holographic will. Printed portions of a will can be incorporated into a holographic will where the court needs testamentary intent, considering all of the evidence in the case. UPC allows for them.
Incorporation by reference and surplusage
Harmless error and preprinted Forms
Signature and Handwriting
Signature almost all states allow the signatures to be at the end, at the beginning, or anywhere else. If it is not signed at the end, there may be doubt if the signature was intended. Implies that you read the whole will.
The extent of the testators handwriting
First generation: Entirely written , signed and dated
Second generation (1969 UPC) material provisions
3rd generation (1990 UPC) material portions and extrinsic evidence
Signature and Handwriting
A holographic will must be
Written by the testators hand and
Signed by the testator
In almost all states permitting holographs, the will may be signed at the end, at the beginning or anywhere else on the face of document
But, if not signed at the end, there may be doubt about whether the decedent intended his name to be a signature.
Williams v. Towle The testator did not sign his name at the end, but he did write his name in block letters on the top of the first page The court admitted the will to probate.
In re Estate of Kuralt
Facts: Charles Kuralt (tv actor) had 20 yr relationship with Shannon. Both wanted to keep it a secret. In 1989 he executed holographic will that gave all of his interest in a particular property to Shannon. Then in 1994, he executed a formal will that didnt mention any of the property he owned. He intended to transfer a 90 acre parcel to Shannon in 1997 but became sick. Upon going into the hospital, he wrote her a letter about his intent along with $17k. She sought to probate the letter as a holographic codicil estate objected, trial court found in her favor
Holding: This is a valid holographic codicil. There was extrinsic evidence of his intent and he even used the word inherit for the specific bequest
Death and taxes
Testamentary intent or intended disposition
Revocation of Wills 215-229; 239-241; Revival of Wills 229-234, 238-239
Revocation of Wills
An important corollary to the principle of freedom of disposition is that a person remains free to rework her estate plan until the moment of death. A will is ambulatory subject to modification or revocation by the testator at any time prior to death.
Revocation by Writing or by Physical Act
All states permit revocation of a will:
1. By a subsequent writing executed with Wills act formalities AND
2. By a physical act such as destroying, obliterating, or burning the will.
An oral declaration that the will is revoked, without more, is not enough to revoke the will.
If a duly executed will is NOT revoked with accordance with applicable statute, the will must be admitted to probate UPC 2-507
Express and Implied Revocatory Writing
Writing executed with Wills Act formalities may revoke an earlier will in WHOLE or PART by express revocation
Most wills open with an express revocation clause
John Doe, a resident of ______,______ make this my will and revoke all prior wills and codicils
May revoke in whole or part by inconsistency (implied revocation)
Issue arises when a testator executes a subsequent will that does not include an express revocation clause. Question is whether the testator intended the subsequent will to replace a prior will in whole or in part, or if instead he intended the subsequent will to supplement the prior will.
To treat a subsequent will that does not expressly revoke a prior will BUT makes a complete disposition of the testators estate, as presumptively revoking the prior will by inconsistency 2-507(c)
IF the subsequent will DOES NOT make a complete disposition of the testators estate it is viewed as a codicil
Codicil a testamentary instrument (i.e. will) that supplements rather than replaces an earlier will; the later codicil supersedes the earlier will to the extent of inconsistency between them
Formalities, writing and physical acts
Thompson v. Royall
Facts: Mrs. Kroll properly executed her will, then wanted to destroy and revoke the will. One of her attorneys recommended keeping a copy of her old will just in case she wanted to make a new one. She signed on the old will that it was null and void and was only being kept for memorandum on the back of the cover sheet of the will. The will was then entered into probate.
Issue: Did she properly revoke her will?
Holding: If written words are used for the purpose of revoking a will, they cannot merely be on a blank part of the paper. The writing must mutilate, erase, deface or come into contact with the written part of the will
UPC 2-507(a)(2) changes this allows for revocation by a physical act of cancellation whether or not the cancellation touches any words.
Intent to Revoke
Cancellation and Harmless Error in a revocatory Writing
In Re Estate of Stoker
Facts: Stoker drafted a will, and he intended for his then gf Gularte to be the executer of the will. He died in 2008 and Gularte tried to introduce the will into probate. Stokers daughter objected more recent will/they broke up. Daughter brought in the will and a witness saying it was the one Stoker wanted. Holographic will , written by the witness but Stoker peed on a copy of the old will an burned it
Holding: A will may be revoked where the testator executes a subsequent inconsistent will or where he or she burns or destroys the will.
Harmless error and revocation by writing
Revocation by physical act
Revocation by physical act on a copy
Presumption of Physical Act Revocation
Harrison v. Bird
Facts: Daisy Speer executed a will and named Katherine Harrison the beneficiary. The original was retained by Speers atty and Harrison had a duplicate. Mrs. Speer later called her atty and said she wanted to revoke her will and atty/secretary tore up the will. The atty then mailed the pieces and a note to Speer to verify it was destroyed and told her she was without a will. She died and Harrison tried to probate the duplicate. Circuit court 1) the will wasnt lawfully revoked wasnt done in her presence 2) no ratification of the destruction of her will 3) couldnt find the destroyed pieces of her will so presumption that she revoked it herself
Holding: Court held that speer destroyed her will/revoked it. The burden is on Harrison to present evidence to rebut that.
Notes: Court relied instead on the PRESUMPTION of revocation that arises when a will last known to be in the testators possession cannot be found (or is found in mutilated condition) the law presumes that the will cannot be found because the testator destroyed or mutilated it with the intent to revoke it.
Lost wills and the Presumption of Revocation assumption of revocation if the will in the testators possession cannot be found OR found mutilated. Burden of proof on the proponent of the will newer court requires a preponderance of the evidence
1. If you use Will B to revoke Will A, then destroy Will B, Will A will not be reinstated
2. Partial revocation UPC 2-507 authorized partial revocation by a physical act
3. Dependent Relative Revocation if a testator undertakes to revoke his will upon a mistaken assumption of law or fact, under the doctrine of dependent relative revocation (DRR) the revocation is ineffective if the testator would not have revoked the will but for the mistaken belief.
A partial or complete revocation is ineffective if made:
1. In connection with an attempted to achieve a dispositive objective that fails under law
2. If a testator undertakes to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective if the testator wouldnt have revoked the will but for the mistaken belief. The basis for disregarding the revocation is the testators mistaken belief.
(a) the former will is revived when the new will from which the former will was revoked is found to be invalid
(b) the presumption established in subsection (a) is allowing the revocation to remain in effect would be more consistent with the testators probable intention.
Partial Revocation by Physical Act most states authorize partial revocation by physical act.
Dependent Relative Revocation
LaCroix v. Senecal
Facts: Testator a will, then wrote a codicil. Original language: bequeath to my nephew Nelson Lamoth; new language added Marcisse Lamoth aka Nelson Lamoth. The codicil was signed by her husband, a named beneficiary.
Holding: The codicil was just an unnecessary correction and failed under applicable law. The codicil should NOT be treated as making the original will revoked or ineffective.
Notes: If a testator cancels or destroys a will with the intention of making a new one and the new will is not made or fails it will be presumed the testator preferred the old will to intestacy and the old will be admitted to probate in the absence of evidence overcoming this presumption Revocation is not effective where the intentions to revoke are conditional and the conditions are not fulfilled.
Limitations on DDR Courts have held that DRR applies ONLY:
1. if there is an alternative plan of disposition that fails OR
2. if the mistake is recited in the terms of the revoking instrument or possible is established by clear and convincing evidence.
Revival of Revoked Wills
In re Estate of Alburn
Facts: Ottilie Alburn died; her sister Adele filed a petition for appointment as administrator of the estate which alleged that she died intestate. Viola Henkey a grand niece, filed a petition for the probate of a will which Alburn executed in Milwaukee, in which she was named a legatee and executrix. Lulu Alburn and Doris filed another petition of a will from Kankakee. The county court held a hearing on the petitions Kankakee Will had been destroyed under the belief that the Milwaukee will could be revived. Court probated the Kankakee Will Adele appealed. The wills named different beneficiaries.
Issue: Did the deceased revoke the Kankakee will under the mistaken belief that she was reinstating the Milwaukee will by clear preponderance of the evidence?
Holding: The testator desired her first will to stand even though she revoked it making another will. No evidence that she wanted to die intestate. You can use DRR to try to argue either way, depending on your state. Many states would reject reviving the Kankakee.
UPC 2-508(a) if a subsequent will wholly revoked the previous will is itself revoked by a physical act, the presumption is that the previous will remained revoked
UPC 2-509(b) if a subsequent will partly revoked the previous will is revoked, the presumption is that the previous will is revived.
UPC 2-509(c) if Will 2 is revoked by will 3, Will 3 does not revive will 1 unless the text of Will 3 indicates the result was intended.
Revocation by Operation of Law
Divorce In most states, statutes provide that a divorce revokes provisions for the divorced spouse. In the remaining states, revocation occurs only if the divorce is accompanied by a property settlement
Marriage in most states, a premarital will remains valid in spite of marriage. A surviving pretermitted spouse is entitled to an intestate share of the estate, unless the omission was intentional
Birth of children almost all states have pretermitted children statutes which give a child born after the execution of a will a share in the parents estate.
Components of a Will 241-256
Components of a will
Doctrine of Integration all papers that are present at the time of execution and are intended to be part of the will are treated as such. Pages should be stapled/fastened or show a connection of language
In re Estate of Rigsby
Facts: Appeal of Betty Dorsey, sister of decedent JEassline from an order admitting a holographic will to probate. The document had two pages of the will. The error on appeal is a failure of the trial court to allow the second page to be admitted as the page was not fastened. Both pages are handwritten and initialed/dated on top. Only the first page is signed on the bottom and has confirmed language for a list of items on the second page. The first page makes no mention of page 2 and page 2 conflicts with page 1 about jewelry
Holding: The trial court did not err that page 1 was the entire holographic will did not clearly appear that page 2 was intended to be included with the first.
Republication by Codicil
Publication of a will occurs when a testator conveys to the witnesses, by words or by action that a document is the testators will.
Republication by Codicil a validly executed will is treated as re-executed (republished) as of the date of the codicil.
A will is treated as if it were executed when its most recent codicil was executed whether or not the codicil expressly republishes the prior will unless the effect of so treating it would be inconsistent with the testators intent.
Incorporation by Reference allows for a writing that was in existence but not present at the time of execution that was not itself execute with testamentary formalities to be absorbed into the testators wills.
Clark v. Greenhalge
Issue: Did a probate judge correctly conclude that a specific bequest of personal property contained in a notebook were incorporated by reference into the will?
Holding: Yes. A notebook that gives guidance in distributing the testators estate may be incorporated by reference to a will that includes language on how to distribute. Doesnt matter that in the will it was called a memorandum but not on the notebook.
Johnson v. Johnson T a lawyer prepared 3 typewritten paragraphs stating that the document was Ts will and making various bequests. Typewritten text was not signed by T or witness and it appears to cut off mid-sentence. Beneath the typewritten text at the bottom of the page T wrote the following by hand To my brother James I give 10 dollars only. This will shall be complete unless hereafter altered, changed or rewritten T signed and dated the document below the handwritten portion. The court held that the valid holographic codicil incorporated the prior will by reference and republished and validated the prior will as of the state of the codicil thus giving effect to the intention of the testator.
Berry v. Trible after lawyer sent T draft will, T made handwritten changes to it signing on the bottom of each page. One of the pages T wrote I give and bequeath all with an arrow pointing to an intended beneficiary. Court held that the document could not be probated as a holograph because the handwriting and typewritten text were interwoven both physically and in sequence of thought
Incorporation Not Recognized in NY, CT or LA
Subsequent Writings and Tangible Personal Property 2-513 , allows a testator to dispose of tangible personal property by a separate writing, even if prepared after the execution of the testators will provided that the will make reference to the separate writing.
the UPC allows the testator to reserve the power to make and then continue revising a list of bequests of tangible property with out additional testamentary formalities.
Acts of independent significance sometimes permits extrinsic evidence to identify the beneficiaries or property passing under a will.
If the beneficiary or property designations are identified by reference to acts or events that have a lifetime motive and significance apart from their effect on the will and the gift will be upheld under the doctrine of acts of independent significance.
Uniform Probate Code
Capacity to make a Will 265-274; Insane Delusion 274-283
Wills: Capacity and Contests
3-5% of wills are contested on the grounds of capacity and undue influence
Mental Capacity: Testator must be capable of knowing and understanding in a general way
1. The nature and extent of his property
2. The natural objects of his bounty
3. The disposition they are making of that property
4. Relating these elements to one another.
5. Will represent her wishes.
** Capability not knowledge **
Fraud occurs where someone intentionally misrepresents something to the testator, with the intent of influencing the testators testamentary scheme, and the misrepresentation causes the testator to dispose of his or her property in a way that he or she would not have otherwise.
Fraud in inducement occurs when a person misrepresents a fact to the testator for the purpose of inducing the testator to execute a will within certain provisions OR for the purpose of inducing the testator to revoke a will.
KEY is that the misrepresentation does NOT go to the terms of the will per se but rather concerns a fact that is important to the testator and may induce the testator to dispose of his or her property differently in light of the misrepresentation
Fraud in the execution occurs when a person misrepresents the NATURE of the document the testator signing. When either a person tricks another into signing a document that purports to be the signers will but the signer does nto realize it or when the testator realizes he or she is signing his or her will
Standing general rule is that a party will have standing to contest the validity of a will or provision in a will only if that party will financially benefit if his or her challenge is successful.
IN re Wrights Estate
Facts: Lorenzo Wright died at 29. The decedent left an estate consisting of two parcels of land in Venice and an estate in salt lake city his formal home, and some property to people but mostly to a friend named Charlotte. The notary, realtor and two subscribing witnesses testified that they believed he wasnt of sound mind. Didnt have extremely persuasive reasons
Holding: There is no evidence that testator suffered from settled insanity, hallucinations or delusions. Testamentary capacity cannot be destroyed by showing a few isolated acts. The opinions were trivial
Notes: Capacity to create a will requires less capacity than contract law.
Wilson v. Lane
Facts: Greegs property was divided equally to 17 beneficiaries, 16 of them relatives. Katherine lane was not blood relative but cared for Greeg before her death. Attorney testified that Greeg was mentally competent when choosing the benefiaries The caveators challenged her capacity by saying she was eccentric, aged. All that is required to sustain the will is proof that she was capable of forming a certain rational desire in regards to her assets. A medical expert concluded she was in a stage of dementia but this doesnt mean she cant form a will. She had a guardian for her finances, but only for the concerns of her living alone from an agency.
Holding: No testimony, expert or otherwise was offered to establish that she suffered from a form of dementia sufficient to make her unable to form a will
Insane Delusion must show 1) testator labored under an insane delusion and 2) that the will or some part of it was a product of the insane delusion moment of lucidity
In re Strittmaters Estate
Facts: An appeal admitting to probate the will of Louisa S. Appellants challenge on her insanity. Medical witness was her physician her entire life. In her opinion she suffered from paranoia and had a split personality. Her disease had been well-developed by the time she wrote her will. She left her whole estate to the womens party
Holding: It was the product of her paranoid condition, especially her insane delusions about the male, that led her to give her estate to the womens party. The probate should be set aside.
Breeden v. Stone
Facts: Contested probate of a handwritten will. Mr. Breeden died in his home from a self inflicted gunshot wound two days after being involved in a hit and run which killed the other driver. Upon entering the home, the police found a handwritten note which left everything to Sydney stone who attempted to probate it. Breedens sister alleged a lack of capacity. The probate court entered the will the court found cocaine and alcohol in his system, but the petitioners didnt prove by a preponderance of the evidence that because of the use that he was not sound mind when executing the will. Hanks test: one may have insane delusions for some matters, but may still be able to transact business. Such insanity does not make one incompetent to contract unless the subject of the contract is connected to the insane delusion
Holding: The probate court correctly applied the tests he was of sound mind when he executed the holographic will. Affirmed.
Capacity Burden of Proof
Due execution creates presumption of capacity
Burden of persuasion on contestant
Accordingly, the will is admitted unless
Fact finder concludes that incapacity has been proved by a preponderance of the evidence.
Due execution creates presumption of capacity
Burden of production on the contestant
Accordingly, if and only if contestant comes forward with evidence supporting a finding of incapacity
Then the will is not admitted unless the fact finder concludes that capacity has been proved by a preponderance of the evidence.
Undue influence 283-305
Undue Influence protects against a wrongdoer taking unfair advantage of a susceptible donor. Must show:
1. the donor was susceptible to undue influence
2. the alleged wrongdoer had the opportunity to exert undue influence
3. the alleged wrongdoer had a disposition to exert undue influence
4. there was a result appearing to be the effect of the undue influence
a. clear and convincing evidence .
susceptibility to undue influence
opportunity to exert undue influence
disposition to exert undue influence
result appears to be the effect of undue influence.
Estate of Lakatosh
Facts: Roger Jacobs took advantage of the confidential relationship with Rose L to siphon money. Spry, Guardian of her estate, filed for an accounting of a constructive trust on Roger and then sought to revoke her last will on the grounds of undue influence. Bench trial ordered that a constructive trust for $128k be imposed on roger and her will be revoked. He appeals. Rose came to depend on roger; gave him power of attorney, executed a new will and gave him all but $1k. Atty Jacobs said she was not competent at the time to understand her actions/estate. Rogers converted the money for his own benefit and for his friend.
Issue: Was there a confidential relationship? Did this result in receiving a bulk of the state? Was there a weakened intellect at the time the will was executed?
Holding: Trial court affirmed Roger failed to carry his burden of proving the absence of undue influences.
Presumption and burden shifting in undue influence cases
In Lakatosh Roger had burden of proving that roses will was voluntarily made because he had been in a confidential relationship with her and the suspicious circumstances were present.
(1) Must have a confidential relationship- fiduciary, reliant, or dominant-subservient
(2) Suspicious Circumstances- may be satisfied by showing that the influencer procured the will
(3) If a presumption of undue influence is triggered, burden shifts to the proponent to rebut the evidence.
Confidential relationship- some situations involving a trusting relationship the law requires a person to be other regarding because of the potential abuse of trust
Suspicious circumstances In addition to a confidential relationships a contestant must usually show the existence of suspicious circumstances.
Presumption and burden shifting
In re estate of Reid
Facts: Thomas Pluskat filed to set aside the attested will of Mary Lea Reid, the adoption of Michael Cupit by Reid and the warranty deed executed conveying her home and land to Cupit. Cupit a 24 year old male made an uninvited visit to her home (for an interest in hold homes and his family had connections to the fact) He attended law school and had a mother/son relationship with her. Evidence said it was intimate. Cupit met with Atty Boutwell about becoming adopted so he was her sole heir. Boutwell said it wasnt necessary then cupit asked him to prepare a deed to convey her property to him. Cupit visited the farm and prepared a will. The atty took every precaution to ensure she was competent.
Holding: Chancellor found there was undue influence attested will was the same as the holographic/conflict of interest at the firm. Cupit alienated Reids family and friends. Decision affirmed. Cupit argued Pluskat had no standing and was barred by SOL this is correct but court said the case was just so unusual.
Lipper v. Weslow
Facts: Contest of the will of Mrs. Sophie Block on the ground of undue influence. Ps are 3 grandchildren; Ds are here two surviving children (Frank son, also her lawyer). The will did not leave anything to her grandchildren. Trial court set aside the will. Ds appeal contending there is no evidence to support that the will was procured by undue influence. She explains why the grandchildren werent left money. However there was also evidence that Frank had issues with the deceased son whose grandchildren were contesting the room. He lived next door to her, potentially the will wasnt read and the explanation part of why no inheritance to them was conflicted by evidence. Evidence was that she was of strong mind.
Holding: No evidence of undue influence. She was a sound mind Frank had the opportunity to prevent her from receiving means of contract but no evidence that he did (Will admitted she did receive some of the flowers).
Strategies if Contest is anticipated Record building (record discussions, exam of capacity); maintain secrecy (inter vivos trust, gifts); sooth feelings (family meeting, letters, etc.)
Bequests to lawyers and fiduciary appointments
Undue influence many courts presume undue influence when an attorney receives a gift
Unethical conduct a lawyer cannot solicit a gift from a client, unless related to the client
Fiduciary appointments and conflicts of interest the lawyer should advice the client concerning the nature of the lawyers interest in the appointment and the availability of other counsel of the position.
Mistakes and Ambiguities 327-337; 343-351
Mistaken or Ambiguous Language in Wills
Plain meaning/no extrinsic evidence rule extrinsic evidence may be admitted to resolve certain ambiguities but the plain meaning of the words of will cannot be disturbed by evidence that the testator intended for another meaning.
(1) UPC 2-502- Will must be in writing; signed by testator; witnessed by two disinterested parties or notarized. Holographic will is valid if signature and material portion of document is in testator's handwriting. Extrinsic evidence allowed.
No reformation rulecourts may not reform a will to correct a mistaken term to reflect what the testator intended the will to say.
Anmheiter v. Arnheiterreformation not allowed; no extrinsic evidence allowed.
In re estate of Gibbs reformation not allowed, but can ignore certain details. In this case, they picked the wrong persons address from the phone book
Mahoney v. Grainger
Facts: Sullivan executed a will and instructed her attorney to leave all of her property to her 25 cousins equally. Her prior will left only two of the cousins. The will was executed and the trial judge ruled that the term heirs at law only applied to her maternal aunt and not to her 25 cousins. Certain cousins appealed this.
Issue: Can extrinsic evidence that a testator intended to dispose a property to beneficiaries not named in the will be admitted when a beneficiary can be ascertained from the face of the will?
Holding: NO. Heirs of law living refers to her aunt. The only heir at law Extrinsic evidence would only be admissible to determine the meaning of the testamentary language that is not clear in its application to the facts.
In re estate of Cole
Facts: The will of Ruth Cole states a bequest for Vining in the sum of two hundred thousand dollars ($25,000). Appellant disputes the trial courts determination to consider testimony of the wills scrivener. The scrivener said he used his computer to copy and paste then changed the name to veta vining. And the number to 25K, the amount chosen, but failed to change the words. Appellant offered no contradictory evidence. Trial court found the testimony was reliable
Holding: Affirmed. Courts allow patent evidence from the face of the will. Latent ambiguity the terms are applied to the facts are modernly allowed.
Patent Ambiguity evidence from the face of the will. In re Cole it is the inconsistency between two hundred thousand dollars and $25,000.
Under traditional law, extrinsic evidence is not admissible to clarify a patent ambiguity -- The court is confined to the four corners of the will even if as a result the ambiguous devise fails and the property passes by intestacy.
Latent Ambiguity manifests itself only when the terms of the will are applied to the facts.
Takes one of two forms
A description for two or more persons or things fit exactly (equivocation)
A description for which no person or thing fits exactly but two or more persons or things fit partially. (no exact fit)
Openly Reforming Wills for Mistake
Erickson v. Erikson:
Held that extrinsic evidence of mistake by scrivener is admissible and if proved by clear and convincing evidence, the court may reform the will (if an atty did this intentionally, relief would be achieved from constructive trust)
In re Estate of Herceg
Facts: The will of Eugenia had no named beneficiary. Colomba Pastorino, executrix, had petitioned for the construction of the will to be the same as the decedents prior will which gave Sergio Pastorino (per sitrpes) then Colomba if he had not been living. If the will was filed intestate, a niece and nephew would get the estate. Gorman, the atty, filed an affidavit that some lines had been deleted. The difficulty in this case is that the prior holding found that where a named beneficiary had been deleted, it cannot be supplied by construction/reformation of the will. Clear and convincing evidence standard. Look to evidence if there is a mistake and then look for any probable intent to see if will meet the standard of proof.
Holding: The testator intended the residuary beneficiary to be Colomba, and her name should be inserted in the will. This was a small bequest which helped.
Deceased Beneficiaries 351-352, 357-361, 367-373; Changed Property 373-374, 379-384
Death of Beneficiary Before Death of Testator if the testators actual intent is not evidence, the court will apply rules of construction that are meant to implement the probable intent of the typical testator.
Lapsed and void Devises
Lapsed if a devisee does not survive the testator, the devise fails
- Nearly all states have enacted antilapse statutes that under certain circumstances substitute another beneficiary for the predeceased devisee.
Specific and General Devise if a specific or general devise lapses, the devise falls into the residue.
T's will gives her watch (specific) to A, $10k (general), and then the rest to C (residuary). A and B predecease T. The watch and money then go to C.
Residuary Devise If a residuary devise lapses, the heirs of the testator take by intestacy. If only a share of the residue lapses, such as when one of two residuary devisees predeceases the testator., at common law then the lapsed share passes by intestacy to the testators heirs rather than the remaining residuary devisees [no residue of a residue]
Ex. After making several specific and general devises to various persons, T devises the residue of her estate one-half to B and one half to C. B predeceases T. Bs on-half share goes to Ts heirs by intestacy not to C.
Class Gift If a devisee is to a class of persons, and one member of the class predeceases the testator, the surviving members of the class divide the gift
Ex. T devises $10,000 to the children of A (a class gift). One child of A, B, predeceases T. At ts death, T is survived by another of another child of A, C. Because this is a class gift, C takes the entire $10,000.
Void Devise If a devisee is already dead at the time the will is executed or the vise is a dog or cat or some other ineligible taker, the devise is void, the same rules apply to the lapse devise also apply to a void devise
Antilapse Statutes they do not prevents a lapse, RATHER they substitute other beneficiaries, usually the dead beneficiarys descendants, if certain requirements are met. A typical antilapse statute provides that if a predeceased devisee is related to the testator, and is survived by descendants who survive testator, those descendants are substitute for the predeceased devisee
1. Theory of presumed intent: must bear the particular relationship specified in the statute
2. UPC 2-605: If a devisee who is a grandparent or a lineal decedent of grandparent of the testator is dead at the time of execution of the will, then the issue of the deceased devisee takes in place of the deceased.
a. 1990 UPC adds a devise to a stepchild
Presumed Intent the theory behind antilapse statutes is that for certain predeceasing devisees, the testators would prefer a substitute gift to the devisees descendants rather than for the gift to pass in accordance with the common law of lapse.
Scope an antilapse statute applies to a lapsed devise only if the devisee bears the particular relationship to the testator specified in the statute.
T devises home to niece, B and residue to A. B predeceases T, leaving a child, C, who survives T. What happens to As Share?
Anti Lapse as Default Rules
DEFAULT RULES because antilapse statutes are designed to implement presumed intent, they are default rules that yield to an expression of the testators actual intent that is contrary to the statute.
Ex. T devises her entire estate one-half to my son A and one half to my daughter B, but if A or B or both do not survive me then I give such predeceasing childs share to my friend F. If b predeceases T, leaving a child, C. At Ts death Ts estate will pass one half to A and one half to F. The antilapse statute does not apply to bs share, because T has provided expressly for the possibility of B predeceasing T.
Words of Survivorship
words of survivorship, such as in a devise to an individual if he survives me or in a devise to my surviving children are not, in the absence of additional evidence, a sufficient indication of an intent contrary to the application of this section
ex. T devises Blackacre to my son Sidney, if he survives me. And vests the residue of his estate to his wife , Wilma. Sidney dies in his fathers lifetime, leaving a daughter, Debby. T is survived by Wilma and Debby. Who takes Blackacre, Wilma or Debby? The issue is whether the words if he survives me impose a condition of survivorship.
The majority of cases have held that an express requirement of survivorship, such as if he survives me precludes the antilapse statute.
UPC 2-603(b)(3) the term if he survives me is not enough to impose a condition of survivorship and the antilapse statute applies nonetheless substituting Debby for her father.
Class Gifts under lapse rules, a class gift is treated different from a gift to individuals. If a class member predeceases the testators, the surviving members of the class divide the total gift including the deceased members share UNLESS an antilapse statute applies.
What is a class?
A class gift arises if the testator was group minded.
Testator is group minded if he uses a class labels in describing the beneficiaries such as to As children or to my nephews and nieces
A gift names to beneficiaries who form a natural class may be deemed a class gift if the court decides that the testator would have wanted the survivors to divides the share of predeceasing beneficiary rather than for it to lapse.
Restatement of Property Wills and Other donative Transfers 13.2
Dawson v. Yucus
Facts: Stewart devised her interest in her late husbands farm house to two nephews- Gene Burtle and Stewart Wilson. Burtle Died before Stewart (woman) Can Wilson get the rest as a class gift as each was supposed to get ? Trial Court ruled that it was NOT a class gift and entered extrinsic evidence to show that Stewart wanted the property to go to her husbands side of the family.
Issue: Was this a class gift, or should the residues take the remaining ?
Holding: Affirmed Trial court the will did not create a class gift. The gift in the clause to Burtle lapsed and therefore passed into the residue of her estate. There was no language of the will that indicates she intended to create a class gift.
Application of Antilapse Statutes to Class Gifts
Almost all states apply their antilapse statutes to a single generation class gift UPC 2-605
Ex. Children, siblings
Ex. T, a widow, dies leaving a will devising Blackacre to my sisters and devising her residuary estate to her stepson, S. When T executed the will, T had two sisters living A and B. One sister died before will was executed leaving a child F who survived T. A died during Ts lifetime leaving two children, D and E. T is survived by B, D, E, F and S. Who takes Blackacre?
Assuming antilapse statute applies to devise to sisters in most states B takes 1/3 share, D and E SPLIT 1/3 share and F takes 1/3 share.
In minority of states, F does not share because C was dead when the will was executed and black acre goes to B and split between D and E.
If antilapse statute DID NOT apply to class gifts B, as the sole surviving member of the class would take Blackacre
Changes in Property after Execution of Will
Ademption by Extinction
A will includes a specific devise of an item of property but the testator sells or gives the item away before death. What happens to the devise?
A specific devise of REAL or PERSONAL property is subject to ademption by extinction
The devise fails.
Ademption only applies to specific devises (to take away) you no longer get it.
Ex. Gifts of my property at 123 main street my car my three carat diamond ring given to me by my aunt jane
DOES NOT APPLY to general, demonstrative or residuary devises
General testator intends to confer a general benefit and not give a particular asset
Ex. A devise of $100,000 to A. If there is not $100,000 in case in the testators estate at death, the legacy is not adeemed; other property must be sold to satisfy As general legacy.
Demonstrative hybrid, a general devise yet payable from a specific source
Ex. Testators will gives B the sum of $100,000 to be paid from the proceeds of sale of my Apple stock If testator dies without $100,000 in apple stock the devise is not adeemed and other property must be sold in order to raise the full $100,000
Residuary Devise conveys portion of testators estate not otherwise effectively devised by other parts of the will
Ex. A devise to A of all the rest, residue, and remainder of my property and estate
Identity theory (traditional rule) if a specifically devised item is not in the testators estate, the gift is extinguished.
Intent theory ( UPC) newer theory, if the specifically devised item is not in testators estate, the beneficiary may nonetheless be entitled to the replacement or cash value of the original item, if the beneficiary can show that this is what the testator would have wanted.
Uniform Probate Code 2-606
Satisfaction of general pecuniary bequests
Satisfaction sometimes known was ademption by satisfaction may be applicable if a testator makes an inter vivos transfer to a devisee after executing the will.
If the testator is a parent of the beneficiary (or stands in loco parentis) and sometime after executing the will transfers to the beneficiary property of a similar nature to the devised by the will, there is a rebuttable presumption that the gift is in satisfaction of the devise made by the will.
Exoneration of liens
If a will makes a specific disposition of property that is subject to a mortgage to secure a note on which the testator is personally liable, it is presumed that the testator wanted the debt to be paid out of the residuary estate
UPC 20697 a specific devise passes subject to any mortgage existing at date of death, without right of exoneration regardless of general directive in will to pay debts.
Arises if an estate lacks sufficient assets to pay the decedents debts as well as all the devises
UPC 3-902 if the testamentary plan would be defeated by the usual order of abatement, the shares of the distributes abate as may be necessary to give effect of the intent
Trusts385-400 Creation 400-417
Trusts: Characteristics and Creation
Basic Structure A transfers property to B for the benefit of C (and possibly others) --- one party (settlor) transfers property to a second party (trustee) who holds and manages the property for the benefit of one or more third parties (beneficiaries)
BASIC TRUST RULES
1. Same party can wear all 3 hats The same person can be settlor, trustee and beneficiary at the same time as long as there is ANOTHER trustee or ANOTERH Beneficiary
a. MERGER if the same party is both trustee and beneficiary and there is NOOTHER trustee or beneficiary the legal title and the equitable title are said to merge and the trust is terminated (bifurcation of the legal and equitable titles is essential to a trust)
i. Bifurcation creates a difuciary duty between the trustee and the beneficiaries. If the same person is both trustee and beneficiary, one cannot hold oneself to a fiduciary duty so the trust merges and terminates.
2. A trust will not fial for want of a trustee if the trustee decliens to serve, dies or is unable to continue OR if the settlor forgot to name a trustee, a court will appoint a successor trustee [once trustee accepts, the trustee can leave the position ONLY with court approval or the consent of all the beneficiaries]
a. Where will creates a trust but fails to appoint a trustee the general rule is to appoint the executor as trustee.
b. EXCEPTION if the court concludes that the powers given to the trustee were personal, to be exercised by only THAT trustee the court will decline to appoint a successor trustee and the trust will fail.
3. A trust is not created Until it is ffunded.
4. Co trustees must agree on action
a. Uniform trust code rejects the common law rule and prmits action based on the vote of a majority of the co trustes.
A trust is a legal arrangement created by a settlor in which a trustee holds property as a fiduciary for one or more beneficiaries .
Trustee takes legal title to the trust property, which allows the trustee to deal with third parties as owner of the property.
Beneficiaries have equitable title to the trust property, which allows them to hold the trustee accountable for breach of the trustees fiduciary duties.
Typically entitled to periodic distributions from the trust income and sometimes from the trust principal as well.
Types of Trust
Testamentary created by a will and arising in probate
Inter vivos created during the settlors lifetime by declaration of trust or by deed of trust often as a will substitute to avoid probate.
Resulting trust arises any time a trust fails in who or in part, the courts use it to require the party holding the property to return the property to the settlor or the settlors estate if the settlor is dead.
Constructive Trust used to prevent unjust enrichment
Vocabulary, Typology and Illustrative Uses
A person who creates a trusts is the settlor, grantor, or trustor.
Inter vivos created during the settlors life
Testamentary created by will
Declaration of trust or deed of trust
Type of Transfer
Revocable or irrevocable
Ex. O declares herself trustee of certain property for the benefit of O for life and then on Os death, to pay the principal to Os descendants. O retains he power to revoke the trust. Unless O revokes the trust, on Os death her descendants will be entitled to the remainder of the trust property independent of any probate administration of Os estate.
Trust for incompetent persons.
Ex. Os son A is mentally or physically impaired and is unable to manage property. O transfers property to X in trust to support A for life, remainder to As descendants, and if A dies without descendants, to Os daughter B.
Ex. T transfers property to X in trust. The trust instrument gives X discretion to pay any amount of income or principal to a or for As benefit. Or, x might be given discretion to pay trust income to any one or more of a class of persons, such as A and her descendants and to distribute the trust property to As descendants at As death.
Ex. H devises property to X in trust to pay the income to W for her life and then on her death to pay the principal to Hs children.
THIRD PARTY RIGHTS
Bifurcation of Ownership
The trustee holds legal title to the trust property but the beneficiaries have beneficial ownership. The law requires the trustee to subordinate the interest to those of the beneficiaries (duty of loyalty). Duty of prudence trustee must hold an objective standard of care and must administer the trust suited to its purpose.
Two categories of issues arise from splitting of legal and equitable ownership
Asset partitioning the effect on the rights of third parties with respect to the trust property and the property of the trustee personally
Fiduciary administration the powers and duties of the trustee and the corresponding rights of the beneficiaries with respect to the trust property and against the trustee (fiduciary administration)
Four Functions of Trusteeship
Custodial involves taking custody of the trust property and properly safeguarding it.
Administrative includes accounting and recordkeeping as well as making tax and other required filings
Investment involves reviewing the trust assets and making and implementing an investment program for those assets as part of an overall strategy reasonably suited to the purpose of the trust and the needs of the beneficiaries
Distribution involves making disbursements of income or principal to the beneficiaries in accordance with the terms of the trust.
Trust v. Legal Life Estate
LEGAL LIFE ESTATE
EQUITABLE LIFE ESTATE trust
Legal life tenant has no power to sell a fee simple unless such a power is granted in the instrument creating the life estate
All difficulties of legal life estate are resolved or mitigated by using a trust.
MODIFICATION & TERMINATION
Trust naturally end when all the trust principal is disburded pursuant to the terms of the trust. Under special circustances however the terms of the trust may be modified or the trust may be terminated prematurely
At common law, courts order the terms of a trust to be modified if
1. All the beneficiaries consent
2. An unforeseen change in circumstances materially frustrates the settlors intent. The trust is modified to promote the settlors presumed intent under the circumstnaces
** as general rule it is against public policy to use a trust to try to cheild ones assets from ones creditor.
** traditional rule is that a will cannot revoke an intervivos trust unless the trust expressly authorizes it.
Creation of a Trust
Creation of a trust requires:
2. Ascertainable beneficiaries who can enforce the trust
3. Specific property, the res, to be held in trust
** If testamentary OR to hold land** 4. A writing may be required to satisfy the Wills act or the Statute of Frauds
Intent to Create a Trust
No particular form of words is necessary to manifest an intent to create a trust.
Do not even have to include trust or trustee is required.
Settlor need only manifest an intent to create a transfer of property to X for the use and benefit of A is typically held to create a trust.
Testamentary trust is created by will. In a well drafted will the testators intent to create a trust is stated clearly
Ex. All the residue of my estate, wherever situated, including lapsed devises, but excluding any property over which I may have power of appointment, I get to XYZ TRUST COMPANY, of Chicago, IL, as trustee to be held in trust and disposed of as follows.
If intent is not stated clearly, it must be inferred.
Deed of Trust
Unlike a testamentary trust or an inter vivos trust of land, there are no particular formalities required to create an inter vivos trust of personal property.
Testamentary trust must satisfy the wills act because it is made by a will
Inter vivos trust of land must satisfy statute of frauds
Inter vivos trust of personal property no specific formalities required.
Jimenez v. Lee
Facts: Brought by P against her father to compel him to account for assets which she alleges were held in a trust. Two gifts: Grandmother purchased a $1K bond for education; second gift from one of Ds clients for $500. D cashed the bond and invested the proceeds in a stock of a bank, entitled ownership as Jason Lee, custodian for BEsty Lee. Did the same for the 2nd gift. Grial court found it was not a trust he was just the custodian under the uniform gift to minors act. P claims that because it was for education, created a trust. Ds attempt to broaden his power by investing violated his duty to administer the trust
Holding: A trust exists here father was subject to liability. If he wrongly disposed of the property, she could recover. If he sold trust property and acquired other property with the proceeds, she could enforce the trust through the new property.
Declaration of Trust
Under a declaration of trust, the settlor simply declares himself to be trustee of certain property. The settlor may also be a beneficiary of the trust.
Ex. O makes a written declaration of trust declaring herself trustee of $100,000 held at First National Bank, to pay the income to herself for life and then on her death the funds are to pass to A. Even though O is the settlor, sole trustee and the sole income beneficiary, this is a valid trust.
To have a valid trust, the trustee must owe fiduciary duties to someone other than herself. If o were the sole trustee and also the sole beneficiary, the equitable and legal titles would merge leaving O with absolute legal title, as under UTC 402(a)(5)
Declaration of trust v. Outright gift
Outright gift requires the donor to deliver the property to the donee
Delivery can be constructive or symbolic rather than physical, but delivery of some kind is required.
Intention alone is not enough to perfect the gift.
If donor manifests an intention to make a gift but fails to complete delivery, the question may arise whether the manifestation can be recharacterized as a declaration of trust.
Hebrew University Assn v. Nye
Facts: The P obtained a judgment that it is the rightful owner of Abraham Yahudas Library, a distinguished Hebrew scholar. The library contained rare books. The controversy is between two Hebreew charitable institutions. Prof. Yahuda and his wife indicated they wanted a scholarship research center in memorial to then. Ethel met with P; P threw a lunch in her honor and here she described the property and announced it as a gift to P. Ethel also approved a newspaper release. She had prepared to ship the library but it was not shipped before her death. The complaint alleged that P was the owner and entitled to possession. The facts show Ehtel intended to make the gift inter vivos, it just hadnt been delivered.
1. A gift which is imperfect for lack of delivery will not be turned into a declaration for a trust as it was not delivered. Allow case to be remanded.
ON APPEAL: P gave memo contain a list of the contents of the library. Constructive delivery has been found to exist in some situations: delivery of key to safe deposit box, pointing out hiding places where money is hidden, informal memos.
Holding: A public announcement followed by an itemized form are sufficient to substitute for a formal instrument purporting to pass title. The P is the legal and equitable owner.
Under traditional law, a trust cannot exist without trust property (res)
Res does not have to be land or a substantial sum of money may be a penny or any other interest in any type of property.
NECESSARY a specifically identified interest in property.
Unthank v. Rippstein
Facts: CP Craft handwrote a promise to make monthly payment to the appellee, Iva Rippstein, for the next five years if he lived that long. Later, Craft added an amendment to the letter stating that he was binding his estate to the monthly payments and struck out the phrase, provided that I live that long. The appellee sought to have the letter declared as a voluntary trust.
Holding: A donor does not create a trust by promising to make monthly payments in the future. You must have an identifiable res (specific property) in a trust.
Beneficiaries 417-426 Writing 427-434
A private trust must have one or more ascertainable beneficiaries to whom the trustee owes a fiduciary duties and who can call the trustee to account. (follows more fundamental principle that a private trust must be for the benefit of the beneficiaries)
Beneficiaries DO NOT need to be ascertained when the trust is created. Only need to be ascertainable.
Clark v. Campbell
Facts: An estate of personal property was to be bequeathed to friend Common law says cannot be a valid bequest to indefinite person. The word friends unlike relations (okay to use) has no accepted statuary limitations, has no precise sense. Friendship is broad and varied. Desire of flexibility
Issue: Must this fail for the want of certainty of the beneficiaries?
Holding: Where a gift is impressed with a trust ineffectively declared an incapable of taking effect because of the indefiniteness of the class, the done will hold the property in trust for the next taker under the will or the next of kin by way of resulting trust.
UTC 402(c) a power in a trustee to select a beneficiary from an indefinite class is valid. If the power is not exercised within a reasonable time, the power fails and the property subject to the power passes to persons who would have taken the property if the power had not been conferred.
UTC 402 a trust is created only if the settlor has capacity to create a trust, indicates the intention to create a trust, the trust has definite beneficiary OR is a charitable trust, a trust for the care of an animal 407 or trust for a non charitable purpose 408
Pet and Other Non charitable purpose Trusts
Beneficiary principle is not absolute it is not applicable to a charitable trust
Trend in cases codified by the UTC has been toward allowing enforceable trusts for pen animals 408 and certain other non charitable trusts 409 which under traditional law would be invalid for want of an ascertainable beneficiary.
In re Searights Estate
Facts: George Searight died testate. The third item of his will provided $1,000 for his dog to keep and take care of it. If the $1,000 wasnt used up, he would then have the remainder distributed to 5 other people. The probate court held the third item as valid. In situations where the honorary trust is established for animals, unless the instrument created such trusts limits the duration of the trust to human lives, the court will create honorary trusts for animals with longevity. The amount of time, including interest, is over 4 years and it is clear and the testator included a time limit for the exercise of power this is less than he rule of perpetuities
Holding: The bequest for the dog does not violate the rule of perpetuities. Affirmed.
Honorary Trust the transferee is not under legal obligation to carry out the purpose. But if the transferee declines to do so, she holds the property upon a resulting trust and the property will revert to the settlor or the successors. Cannot violate RoP.
Statutory Purpose for trust for pet, animal other non-charitable purpose UTC 408
Statutory Purpose Trust
Transferee is not obligated to carry out settlors purpose
If transferee declines, she holds the property on resulting trust and property reverts to settlor or settlors successors
Used in Searights Estate
Statutory trust for pet animal or other non charitable purpose
Authorized by UTC 408-409 and UPC 2-907
Typically court may reduce if excessive and provide for enforcement by settlor or court appointee.
The law of trusts, standing alone, does not require a writing to create a valid trust.
An oral intervivos trust of personal property, whether by declaration or by transfer to another as trustee, is enforceable.
Oral Inter Vivos Trusts and Personal Property
UTC 407. Evidence of Oral Trust. A trust need not be evidenced by a trust instrument, but the creation of an oral trust and its terms may be established only be clear and convincing evidence.
In Re Estate of Fournier
Facts: Fournier asked a couple who he was friends with if they could hold some money for him. They said they would; he gave them two boxes, each with $200,000 cash. He asked them to hold the cash in secret until his death, then give it to his sister Faustina. Fournier explained to them that this sister needed it more than the other sister. He requested secrecy but he told both Faustina and her daughter that the money was being hold. The probate court found that Fournier had an intent that the money pass through his estate, even though no instructions that a trust had been created. The court ordered the money to go back as part of his estate.
Holding: Clear error. There is no evidence that this is contradictory. Fournier intended Faustina to take the money in her individual capacity. He created an oral trust. Judgment vacated.
Secret testamentary trusts and the wills act
Olliffe v. Wells
Facts: Ellen Donovan died and left her residuary estate to Rev. Wells to distribute in such manner as his discretion which had been expressed to him. Ellens heirs brought suit that the residue should go to them. Wells stated Ellen expressed to him that her estate was to be used for charity. Document shows only evidence of an outright fact
Issue: Can extrinsic evidence be admitted to show that there was the intent to create a trust?
Holding: No. the extrinsic evidence would defeat the rights of the heirs at law. D holds the property in a resulting trust for the testators heirs.
Semi-secret trust intent to create is clear, but the terms are unstated. Extrinsic evidence not needed to prevent unjust enrichment of trustee. Trust is invalid, not enforceable.
In the case of a semi-secret trust, the will makes a gift to a person in trust, but does not name the beneficiary
Secret trust devise is absolute on face (ex. Give to your sister, but then tell your sister to give to certain others) extrinsic okay to prevent unjust enrichment. Court can impose constructive trust.
In the case of a secret trust, the will makes a gift, absolute on its face, to a named beneficiary. However, in reality, the gift was made in reliance upon the beneficiarys promise to hold the gift property in trust for another.
Intent to create trust appears on face of will
Terms are unstated
Extrinsic evidence not needed to prevent unjust enrichment of trustee
Trust is invalid, not enforceable
devise is absolute on face
extrinsic evidence necessary to prevent unjust enrichment of promisor/trustee
court will impose a constructive trust on trustee/promisor
Will substitutes, intro 435-440 ; revocable trust 440-441; 449-452; 459-476
Nonprobate Transfers and Planning for Incapacity
Five Major Will Substitutes:
Revocable inter vivos trust
Various types of pay on death bank accounts
Transfer on death securities accounts
Legal questions raised by will substitutes
Should Wills Act Formalities be required for validity?
Wills Act NOT required for validity; low of wills do apply for substitutes (simul, death etc.)
Most flexible of all will substitutes, most like Will
Settlor can draft its provisions precisely to her liking.
Settlor of a revocable trust remains free to amend or revoke the trust at any time and for any reason
Deed of Trust whereby the settlor transfers to the trustee the property to be held in trust . On the settlors death, the trust property is then distributed or held in further trust in accordance with the terms of the trust.
Declaration of Trust settlor simply declares himself to be trustee of certain property for his own benefit during his life, with the remainder to pass at his death in accordance with the terms of his declaration. settlor retains power to revoke the trust and as trustee controls the management of the trust property.
Moon court held that a beneficiary of a revocable trust has no legally enforceable interest while the trust is revocable. The trustee is subject to the control of the settlor and only the settlor may enforce the trustees fiduciary duties.
If settlor is also trustee: any action by the settlor trustee that diminishes the interest of a beneficiary cannot be a breach of trust but rather is an implied revocation
JP Morgan Chase Bank v. Longmeyer court held that the trustee of a revocable trust owed an affirmative duty of disclosure to the beneficiary even while the settlor was alive.
Revoking or Amending a Revocable trust
UTC 602(a) An inter vivos trust is revocable unless declared to be irrevocable
To amend or revoke a trust, the settlor has to follow precisely the method for amendment or revocation specified in the trust instrument.
Patterson v. Patterson
Facts: Before passing away, Darlene P executed an amendment to the trust. She was removing her son, Ron, as a beneficiary . On summary judgment the court invalidated the amendment. The trustee, Randy P, appeals. Darlene said in the trust that she had intentionally not provided anything for this son since he