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Any bequest that precludes someone from ever getting married as it violates public policy. 1. Is a bequest severly violative of public policy? ii. Any bequest that requires a divorce as is against public policy; iii. If the bequest promotes criminal activity. 1. i.e. money contingent on abortion in 1880’s; iv. Also, you cannot force people to waste their property; 1. Therefore, cannot bequest property and then, through the bequest, make the property useless with restrictions; b. Shapira v. Union National Bank (1974): A will left money to kids as long as they married Jewish women with Jewish parents; if they were not married within 7 years after the death of the testator, then the money would go to the State of Israel; converts don’t count; i. ISSUE 1: Is this a violation of the fundamental right to marriage? No. 1. There is a constitutional right to marry. a. This will provision impinges the right to marry but not like Loving v. VA which would have put people in jail for marrying people of a different race. b. Instead, this was just about money. c. Here, the real issue is not whether there is a right to marry, but whether the testator is allowed to have placed this restriction; i. The right to receive under a will is not a natural right (like marriage would be) and is not protected by the US Constitution. 2. Maddox v. Maddox a. Requirement placed to inherit that daughter needed to marry a Quaker; b. In this case, the court rules that it was unfair restriction to attempt to find a Quaker given the times and where she lived;
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3. Here, the court is unwilling to follow Maddox because there are plenty of chances to meet Jews – GET ON A PLANE! 4. The will is upheld on this issue. ii. ISSUE 2: Does this marriage requirement violate public policy? No. 1. The question to ask is whether this is a general or partial restraint? a. Partial restraints only impose reasonable restrictions and are valid as not violating public policy; 2. General Rule: the great weight of authority is that gifts conditioned upon the beneficiary’s marrying with a particular religious class or faith are reasonable and not against public policy; a. Furthermore, the will gave a 7 year grace period and this makes the marriage clause even more reasonable because it allows for reflections and fulfillment of the condition without oppression; b. Finally, giving to Israel if the son doesn’t marry shows the depth of the testator’s intent; i. Wants to help protect Jewish traditions. c. It is the duty of the Court to honor the testator’s intent. c. Evans v. Newton: i. Bequest the estate to be used as a park for Whites only; ii. The SC said this is not an acceptable bequest; iii. Especially here where done by a public official. d. Evans v. Addney: i. From the previous decision, do the heirs have the right to get the property back when the SC rules that the park must be integrated? Yes. e. TERMS: i. Testator – a person who has written a will; ii. A person who dies with a duly executed will dies – testate; iii. A person who dies with no will dies – intestate; iv. Devisee (legatee) – person who gets the testator’s property; v. Devise/Legacy/Bequest – the clause directing the disposition of property; f. 3 Common Incentives Used in Trusts Created by the Testator: i. Conditions that encourage the beneficiaries to pursue an education; (Estates and Trusts – Spring ’11) 2
ii. Conditions that provide what might be termed as moral incentives – 1. Incentives that reflect the settlor’s moral or religious outlook or promote a particular way of living; iii. Conditions designed to encourage the beneficiaries to have a productive career 1. Can’t get the bequest unless you have a job making X dollars per year; 2. May be problematic if the beneficiary wants to be a school teacher or work for a charity g. Under English CL, real property passed by “descent” to the property owner’s heir. i. The Statute of Wills directed where property went; ii. No state has abolished inheritance; 1. Hodel v. Irving – there is right to property – a total abrogation of these rights cannot be upheld. h. Slayer Statutes – i. Ford v. Ford (1986): P murdered her Mother and then sought the property left to her under her Mother’s will; Maryland, the place of the murder/will, has no “Slayer Statute” to deal with this situation; BUT, there is a Slayer Rule one cannot profit by his/her own wrong, and on a broad ground of public policy of the CL which was perhaps not supported by a majority of courts, but the BASIC RULE decided was that a murderer, or his heirs or representatives through him, ordinarily may not profit by taking any portion of the estate of the one murdered; it was determined in criminal court that P committed the crime by reason of insanity; 1. ISSUE: Does the Slayer Rule apply when the murdered committed the act while insane? No. 2. RULE: a. For the Slayer Rule to apply, the murder must be both felonious and intentional. b. The trier of fact must decide on a preponderance of the evidence whether the manner of the decedent’s death was homicide, whether the homicide was a murder or manslaughter, and whether the claimant was the criminal agent – i. If a manslaughter, need to determine if it was voluntary or not; c. Moreover, there must be intent –
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a person with a mental disorder or who is mentally retarded and falls under the cognitive and volatile components of the criminal responsibility statutes does not act with unfettered will. Use the preponderance standard in the civil trial and found liable.” a. iii. iv. i. Educator ii. For some States. Most States have their own Slayer Statutes. iv. need to perform a civil trial under the preponderance (lesser) standard. Maybe the family wants to keep the money. v. States that felonious and intentional killings means that you lose the benefits of the estate. Nicole Brown Simpson – “I leave all my property to OJ. Litigator 2. 2. Acquitted at criminal trial. Estate Planning: (Estates and Trusts – Spring ’11) 4 . Therefore. even if there is a criminal trial and guilt. Why have this approach? a. EXAMPLE: 1. if no criminal conviction. 1. The Slayer Rule is not applicable when the killer was not criminally responsible at the time he committed the homicide. then through the preponderance of the evidence standard. Minority: no Slayer Statutes at all. b. Policymaker 3. Roles of the Estate Planner: 1. Result: P can take under the will! ii. ii. Can prove felonious and intentional if there is a criminal conviction or. Must pass the criminal insanity test. UPC 2-803 1. iii. 1. Planner 4.i. Role of the Attorney – i. but wants a criminal conviction of the person who committed the crime.
e. services. the mother. The fabled “I love you. both dealerships are owned by their father (Big Daddy). and T went to D to prepare the father’s will. Should talk about confidentially policies before talking about estate planning with the married couple. iii. Write a letter from the very beginning as well indicating prices. i. ii. Married Couples – a. with the exception of a husband and wife that have a mutual trust and sign simultaneously!). D never indicated that that will had been revoked. What should D have done in this situation? (Estates and Trusts – Spring ’11) 5 . ii. later J talked to D about her father’s will and D showed her the first (not the secret) will. you love me” Will. but T weeded J out of the dealership and J sued – D talked to J individually to settle. Grauer contends these never fail to be a bad idea. initially. Can work for same-gender and unmarried couples as well. i. a. Minyard (1991): T and J are brother and sister. the will left T a dealership and everything else was divided. b. 2. father. Tell the husband in the situation that he needs new representation. father ended up getting a second (secret) will indicating that T would everything outright (sorry. and the disclosure policy (the policy may be complete disclosure or complete confidence of information – just make it clear to the clients from the beginning!). represent the family. J came away with the impression she would be taking something. Typically represent more than 1 individual – i. Probably better to set up a trust to make sure your intent is actually effectuated. J!). 1. There may be unusual conflict though – especially for same-sex where there may be standing issues. There is the assumption that the spouse will use the money fairly and the give the proceeds to their kids. prepared taxes for the father and for J (for the last 20 years). father became incapacitated and J took over the dealership. D. Hotz v. 3.1. (important side note – a beneficiary was present! Don’t sign a will when a beneficiary is present at the signing. iii. iii. T was the head of one auto dealership and J was the head of another. an attorney. not J’s attorneys – BAD IDEA! J’s attorneys should have acted on this. May have conflict of interest working with married couples – like where the husband sneaked back into the office and wanted a secret will drawn up.
but if it comes up. 2. you can have a secret will. ISSUE: Did D violate his fiduciary duty to J by misrepresenting her father’s will? Maybe. Whether an attorney who drafts a will or estate plans will be liable for malpractice because they did not get what they thought they were going to get – the attorney messed up. Lucas v. “Don’t tell J anything about the will. Drop J as a client. Hamm (CA) (Estates and Trusts – Spring ’11) 6 . 4. ii. non-valid will to J. HERE – Remand and go to trial because the Lower Court issued a Summary Judgment for D. Elliott (1996): 1. in equity and good conscience. The only persons who can sue the attorney are those who hired the attorney for the contract. Attorney – client privilege is a fiduciary one.”? a. Barcelo v. D should have thought about the consequences BEFORE he drafted the secret will! d. It’s a factual question as to whether there was a breach of duty when D showed the old. D will probably be liable because of the Attorney – Client relationship and the duty that stems from it. b. A fiduciary duty exists when one has a special confidence in another so that the latter. 3. is bound to act in good faith. 3. RULE: a. a. What should D do if the father said. Tell father – “I won’t say anything. Remember.” c. I will say that she should talk to you and ask to see the current will. i. Many jurisdictions allow the beneficiaries who are not in privity of contract to sue for malpractice: i. 2.a. NO SECRETS! iv. 5. Situations occur where a will is drafted for someone and the person does not receive something that they intend to receive – a. Should have said that he could not talk to J – she needed her own attorney and he could only talk to her attorney. D could have established ground rules with the family in order to avoid the situation – for example. 6.
1. If a person has no will. but not beneficiaries. Gruen v. Gifts – 1. The administrator or executor of the will may sue. The probate process varies significantly across States. A Personal Representative gathers all of the assets at death. v. ii. Don’t need privity to sue. If you transfer property to a trust but retain a Life Interest/Estate in the property. a. then the act is complete. Gruen (1986): Issue over a painting. An issue occurs when there are ambiguities with the testator’s actions. iv. Probate and Non-Probate Transfers i. If there is a will. To make a valid inter vivos gift. the SC ruled that privity of contract is needed to sue for malpractice of will (the concurrences challenge this point). therefore. either actual or constructive to the donee. 2. the property will be taxed at death. b. and acceptance by the donee. iii. no will was created. there was no actual delivery. the closest relative will be the Personal Representative. 2. 3. delivery of the gift. the father sent a letter followed by 2 additional letters telling the son that he would get the painting. there will be a named Representative or Executor. Where there is a conflict between a husband and wife. 4. Beneficiaries did not get what they intended because of perpetuities problems. ISSUE: Was an inter vivos gift given? Yes. j. the painting was worth millions. it would be better for the attorney to no longer represent both or have one spouse be represented by another attorney. the father retained a life interest in the painting.1. RULE: i. but the standard of care to the community does not include understanding RAP. If a gift is given before death through a transfer. a. ii. INTENT – (Estates and Trusts – Spring ’11) 7 . In Ohio. v. the letters sent did not meet testamentary formalities. there must exist the intent on the part of the donor to make a present transfer.
This is a case-by-case analysis. Don’t use Gifts Causa Mortis as an estate planning tool – (Estates and Trusts – Spring ’11) 8 . 2. rather than paying estate tax when the painting is worth more. The letters should have said something like. he could have disclaimed it. “Let’s commit tax fraud!” 1. This is assumed by law. 2. but asked the father to hold onto the painting for him while he was at school. 4. 2. shown by P’s statements and P’s retaining of the letters. v. TRANSFER – 1.1. Here. the letters acted as constructive delivery. iii. vi. a. It would have been better for the son to have established a lease agreement with his dad. 2. The transfer must sufficiently divest the donor of domination and control over the property. D argued that the life interest showed lack of intent. Here. “Here’s the gift!” and the son acknowledged receipt of the gift. 3. iv. Problem with Dad’s first letter – it basically said. but as long as the evidence established an intent to make a present and irrevocable transfer of title. Must intend to make an irrevocable present transfer or ownership. Here. there is a present transfer or some interest and the gift is effective immediately. He probably realized that the painting was increasing in value. vii. Why did the father do this as opposed to creating a will? 1. 3. this was indicated with the letters. There must be delivery of the gift. ACCEPTANCE – 1. Remember. 2. Probably decided to give the gift of the painting now and pay the gift tax liability when the painting is worth less. if the son did not want the property.
a. ii. How do we treat joint bank accounts? a. 1. i. i. 2 people have agreed that signor #1 is the Depositor and wanted to avoid probate but the agreement says that signor #2 could take the money out until death. b. General Rule: the money in the bank account really belongs to the person who deposited it there. there is no gift to you unless/until/to the extent you withdrew the funds and I did not demand it back. These are revocable if given near death and then recovery occurs. From a gift standpoint: if I bought land and shared it with you. The signature card should indicate this. c. i. d. c.a. If I put $1 million in the joint bank account. Joint Interests with a Right to Survivorship – 1. Courts generally enforce survivorship provisions in joint accounts assuming that the depositor did not revoke the survivorship provision in life and that the decedent’s estate does not introduce clear evidence that the now-deceased depositor established the joint account only for convenience. Ohio – bars extrinsic evidence to show convenience – why? Because anyone who wanted multiple parties needed them to sign the signature card and shows clear intent by the testator. it would be a gift of ½ of the property. It will go to the named survivor. You can still go after the person who just took out the money you put in. Why the accounts are viewed this way? – because they are created for 1 of 3 reasons: a. This property will stay outside of the probated estate. 2. These are payable on death accounts (POD). One person did not want the other person to get the property when they died (they (Estates and Trusts – Spring ’11) 9 . Want to put the money in the account and give the other person the right to withdraw the money immediately. b. vi.
G never used the account personally. c. but that person wanted the other person to have access to the funds to. RULE: i. Take by terms of the joint tenancy not by a separate will or intestacy 5. RATIONALE: i. The burden must be established by clear and convincing evidence that a gift was not intended. b. then F began to take care of W. it’s a non-probate transfer a. put the money in appropriate accounts or to pay bills. presumably speaks the full truth. No doubt here that W tried to take G off the account and put F’s name on the account. G’s name was never taken off the account. 3. 2. G and W had a joint bank account. 3. Evidence of lack of donative intent must relate back to the time of creation of the joint tenancy. Franklin v. (Estates and Trusts – Spring ’11) 10 . W sent a letter to the bank asking for G to be taken off the account and F to be put on the account. G was W’s sister. Lifetime gifts are not nearly as important in wealth transmission processes as other forms of non-probate transfers 4. TC ruled that G was the sole owner of the funds at W’s death. G never used the account. Can consider events occurring after creation of the joint account in determining whether the donor actually intended to transfer his interest in the account at his death to the surviving joint tenant. for example. 1. 2. When a joint tenant or tenant by the entirety dies. The instrument. Also. meaning the signature card. 1. a. The attempt to change the account showed that W believed that he solely had possession of the account. joint tenants with right to survivorship.wanted it to go to probate). Anna National Bank (1986): W died. ISSUE: Was W’s intent for G to have the money in the account formed only for G to pay W’s bills and thus the money should go to F instead of G? Yes. signatures showed up on the card.
Following the testator’s intent. Introduction i. iv.000 in stocks and bonds. the money goes back to the estate – doesn’t go to G. Education. a. the probate system is still used! II. To avoid this. iii. Where its impossible to discern where property was intended to go.ii. The overall US approach is to follow the bright-line/sledgehammer approaches. a. set up the trust and tell the bank that you’d like it to distribute and require the bank to consult with you before it distributes. Intestate Succession a. 3. ii. allows for wealth to transfer because of the extended and enriched educational opportunities. The will does not dispose of the (Estates and Trusts – Spring ’11) 11 .” Decedent dies with $20. In light of all of this. Example 1: Decedent writes a will which provides “I leave all of my real property to my brother Joe. When do we use intestate statutes: 1. the standard to override the signature card is that there needs to be clear and convincing evidence to go behind the terms of the agreement . When there is no will. by paying for college and expensive private schools. full of delays. iii. Fear that the probate system is costly. Non-Probate Revolution – i. When a will does not explain where all of one’s property should go. k. Each intestate statute is the legislature’s best guess as to how people would want their property passed to future generations. For example. 2. ii. if you set up a gift and hold a life estate in the gift or if you sent up an irrevocable trust with you having the life estate – it will be included in your estate tax. Tax consequences usually play little in avoiding probate because tax rules permeate many of the non-probate methods of estate planning. iii. 1. Can avoid probate through trusts and arguably through the education of children 1. and inadequate – also it is public. So.
New-Biology Approach – anyone in utero at the time you die counts as a descendant. Grauer would have the will say: “to be distributed to the heirs and heirs shall be determined as if she had survived me and died that moment after I did. a. The only people able to contest are people who would be financially better off if the will was thrown out – a. grandkids. Hence. iv. nieces and nephews. but rather to her heirs. vii. 2. stocks and bonds will be distributed by intestate succession. i. the property should pass not to the beneficiaries of Alice’s will.” Decedent has explicitly provided that if Alice does not survive decedent. the $50. virtually all intestate succession statutes preclude collateral from inheriting. because they are not real property. but before inheritance escheats to the state. only blood relatives will inherit. etc. 1. So this could be people who may take in intestacy or from an old/previous will. Take to the exclusion of collaterals. As long as the descendant has children. “I leave $50. b. Example 2: Decedent writes a will which provides. or great-grandkids.stocks and bonds.000 will be distributed by intestate succession. if she survives me. Hence. vi. Collaterals – include siblings. step children may be able to recover. REMEMBER.000 to my sister Alice. v. We don’t know about frozen eggs/sperm…yet… (Estates and Trusts – Spring ’11) 12 . and cousins – pretty much any other relative not a direct lineal descendant. Descendants – 1. If she does not survive me. if Alice does not survive. Who Can Challenge the Will? 1. I direct that the property be distributed to her heirs (and not to her estate).
if the estate is worth $600. If leaving kindred and no issue.000. i. the spouse gets $400. i.viii.000 and half of everything else. The surviving spouse is entitled to: a. it’s funny. may the spouse choose to do so? 1. ii. If the estate is small and the spouse wants to keep the money. (Estates and Trusts – Spring ’11) 13 . Example Mass. In that case. Need to set up a guardianship for the kids. So. c. the spouse gets everything up to $200.000 and the kindred gets the other half. the surviving spouse gets ½ and the kids get ½. Laughing Heirs – those so far removed that if they take anything at all. b. Statute – 1. only the issue would have a cause of action. They probably wouldn’t sue as long as they don’t hate you when they get older. If there is issue.
§ 2-103 a. How to deal with blended families a. Descendants by representation. Authorizes a negative will.iii. So if all the kids come from the traditional relationship then everything goes to the surviving spouse 2. parent. ix. UPC Example – 1. d. 5. then to parents iii. §2-105 (Estates and Trusts – Spring ’11) 14 . The order of taking per intestate statute: i. The UPC says a decedent may limit the right of an individual if the individual survives the decedent. Outside the UPC. to the descendant of the deceased parent of either of them by representation (so this would be brother or sisters) iv. If there are no descendants. but the decedent’s parents survive. the spouse shares with the parents a. etc. If no surviving descendant. b. OH approach is different because the spouse takes all here 3. this does not exist. § 2-101(b) a. Majority of states have the ½ to remaining spouse and ½ to kids provision. The negative will disinherits someone without saying who gets the property. This is illustrative of many jurisdictions. If no surviving descendant or parent. If no surviving descendants. ii. b. c. § 2-102: Intestate share of spouse is the entire estate if all the decedent’s surviving descendants are descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent a. The spouse gets the first 150k and splits half of the rest if the spouse had descendants who are not from the decedent 4. then half goes to grandparents (half to paternal side and half to maternal side) 6.
ISSUE 3: Did the DC err when it appointed (ex) wife the personal representative? No. For the mother to be a personal representative. and sister. husband was committed to going to trial for the divorce. b. ISSUE 1: Do the appellants. have standing to appeal? The mother has standing to appeal to be the personal representative and that’s it. mother’s. husband’s other family members sue saying wife is not surviving spouse.a. The sister’s. under intestacy. So. b. 3. This limits the extent of the statute. husband dies and the (ex)wife became the personal representative of the husband’s estate. a. MT was a UPC state so all the money should go to the (ex)wife. i. decedent must like a spouse or heir who can serve. Why did the mother want to be the personal representative – representative receives some payment from the estate to perform the duties and she was ticked at the (ex) wife. An oral statement by the judge that they were divorced did not create a formal divorce. 2. wife created settlement in an attempt to avoid litigation. b. the decedent’s mother. a. for them to recover any of the estate because decedent had descendants. a. the MT statute provided that competent successors may alter their interest by agreement under the rules of intestacy (this is CL almost everywhere)—this does not sound like following the decedent’s intent though 1. ISSUE 2: Did the DC err when it granted SJ in (ex) wife’s favor? No. i. (Estates and Trusts – Spring ’11) 15 . Share of the Surviving Spouse i. but settlement had 1/3 to wife and 2/3 to kids in trust. So there may be an issue as to whether (ex) wife is a spouse and this mother has standing. the estate escheats to the state b. For there to be a formal divorce. brother. and brother’s situation doesn’t change because there was no opportunity. need a written order from the divorce court. a party lacks standing where there is no personal stake in the validity of the claim or agreement. If there is no taker under the statute. Estate of Goick (1996): divorce proceeding was not finalized. there was a settlement between the (ex)wife and the kids as to the distribution of the estate.
If there was a proper divorce settlement. ii. the heir can be dedesignated. Domestic Partnerships as an Alternative to Marriage 1.b. In Ohio. Most jurisdictions do not allow taking for the domestic partner unless the jurisdiction allows same-sex marriages. So why is the (ex) wife still a spouse when there was an oral agreement? i. some partners will adopt the other partner. In Ohio. (Estates and Trusts – Spring ’11) 16 . a. Ohio has a designated share statute – a. To circumvent this. a. a. 2. Result. they need to worry about other family members who do not approve of the relationship and who may contest the will in court. there would be a property settlement agreement which includes provisions for dealing with estate planning. 5. a. c. no one can contest. after one year has passed. if you designate someone as your heir. Maybe the decedent really didn’t want to go through with it at that point. the agreement is acceptable and the (ex) wife is the personal representative because did not go through. Another problem with the adoption approach occurs if the couple splits – it is difficult to de-adopt someone. But does this circumvent public policy? b. iii. Can go to the probate court and file a petition that designates someone as an heir. This is because same-sex partners cannot be heirs. Is this now incest between you and your “child”? 4. 3. No proper documentation. ii. If the partner is adopted and can take in the estate.
c. M will receive the money. then divide by 3 because there are now only 3 lines. M will never take under any method because E is still alive and it is supposed that when E dies. The Share of Lineal Descendants i. B. 3 Systems of Taking: 1. C. ii. and D all hypothetically survive X because they are from the younger generation. (Estates and Trusts – Spring ’11) 17 . Example 1: 1. b. there are 4 lines: A. C. i. c. H. Result: divide into ¼ for each line and then distribute equally between the members of the line (remaining descendants). But if B. In other words: A. e. and hang onto their share of the money to give to their heirs. Here. and P were all dead. Start the division of money with any line that still has at least one living member in class d. and D each with living members in it. B. Property is distributed as if the death order occurred as it was expected to occur. Strict “Per Stirpes” Distribution/Traditional Representation Approach a.
Modern “Per Stirpes” Distribution/Old UPC Approach – a. if N and O were dead and there were N1. and U should all be treated the same and P doesn’t receive dramatically as much money. i. and P are all dead. O. Remember. Therefore. each of these would receive a 1/24 share which is 1/3 of 1/8. So. B. Some people are upset because descendants get different levels of distribution. This system does not treat everyone the same. N. for example. So. ii. O would receive 1/16 and N1 and N2 would receive 1/32 shares. i. 2. especially when a grandchild could get less than a great-grandchild i. 1. the line we consider here is the grandchildren line because there is at least 1 grandchild of X alive. If N was dead and survived by N1 and N2 and O was alive. H. Start the division in the first line in which someone is alive. then there would only be 7. because there are 8. There are 8 grandchildren that are either alive or have living descendants. ii. N2. 3.f. i. If. each of this line receives 1/8 c. b. and O1. Per Capita Per Generation/New UPC Approach – (Estates and Trusts – Spring ’11) 18 . Q. Then create as many lines as people are alive and people who are dead with survivors.
adoption is a creature of statute.a. ii. Therefore. iv. the grandchild generation) i. This is the great-grandchildren line 2. 2. iii. Estate of Donnelly (1972): John Sr. will of John Sr. left all to Lilly who was dead. iii. most jurisdictions have taken the position that once adopted. John died and Faith married Richard who adopted Jean L. ISSUE: Should Jean L be allowed to inherit? No. John Jr. take 3/8 x 1/5 = 3/40 d. 1. Divide the shares into 1/8 (5 living + 3 with descendants). the plain language of the jurisdiction’s adoption statute would not allow Jean L. People thought that each person in each generation should be treated the same.. married Faith and they begot Jean L. To figure out the amount. to recover anything in intestacy 1. you are cut off from the biological family and you can only inherit from the adoptive family. 2. b. Therefore. you could take under your biological and adoptive parents. Adoption i. But. married Lilly begot Kathleen and John Jr. this placed everything into intestacy. ii. RATIONALE: (Estates and Trusts – Spring ’11) 19 . Start with the generation that has at least 1 person alive (here. Look to the next line with living descendants – 1. CL did not recognize adoption. 3. Look to see the # alive compared to the # passed away with living descendants.. There are 5 alive and must equally share the remaining 3/8. At first. there are 5 alive and 3 with living descendants..
why was he adopted so late? Because E had passed away at this point and S wanted to make sure part of the estate would go to W. why not just write a will? Because M could contest the will and then W would get nothing. the children of W are included as well. i. the child’s rights to inherit are preserved. Therefore. c. ISSUE: Are the natural children of an adult adoptee. Exception: if a parent of a child dies without the relationship being previously terminated and the living parent remarries and the child is adopted by the new spouse. M argues that while W could collect.a. W is not inheriting her. RULE: a. 1. Estate of Brittin (1996): S married E. descendants of the adopting parent for the purposes of inheritance? Yes. 3. i. S and E begat M. but rather W’s children. a. W would be able to take under the statute because he was legally adopted. W died before S. The strict language of the statute clearly cut off inheritance by Jean even though she still had the same mother. E had a child with W (previous marriage) and the child was 3 at the time of the marriage to S. b. Jean L would have been protected both by the UPC and Ohio. i. iv. Adoption of the child by the spouse of either natural parent has no effect on the relationship between the child and the natural parent or the right of the child or descendant of the child to inherit from or through the other natural parent. Result: W’s children may inherit by the terms of the statute. UPC §2-114(b) 1. the adoptee must reside in the home at any time for more than 2 years continuously preceding the commencement of an adoption proceeding or in the alternative that such persons are related to him within a degree set forth as a related child. since W is a child for purposes of inheritance. IL statute says that for adult adoptions. Broad statute 2. (Estates and Trusts – Spring ’11) 20 . v. S adopts W when W is 46 and W already had his own 5 children. S died and W’s kids want to claim part of the estate. But. 2. Ohio has a limitation on the statute – adopted person is a stranger for all other purposes including inheritance.
P. Both the UPC and Ohio take the position that although an adoptee is an heir. vii. b. because X was not the one to do the adopting. X’s son. so all the money would go to X’s grandchildren – 1. but no children. is in a same-sex relationship and adopts his partner. Could only inherit from the adoptive parent. Estate of Villwock (1987): R left his entire estate to J and then to D. P can collect under the trust.) 2. Then. not to D).e. Z. Simultaneous Deaths i. adoptive grandparents. not from others (i. Suppose X leaves a generation skipping trust. Can Z inherit under the terms of the trust? a. Example: Decedent dies intestate survived by her husband and her sister. after the husband’s death. D argues that J died first and therefore everything should be hers based on what doctors said/death certificates. 2. Other Jurisdictions – Watson Family: a. accident occurs with both dying simultaneously and M argues that R’s property should go to her. O went to ME to get the adoption annulled – the court ruled that residency was necessary for annulment of the adoption and O was not a residency. ii. decedent’s husband will succeed the entire estate. W’s trust was in CT. 3.vi. W creates a trust skipping generation. CT does not have similar provisions as Ohio or the UPC – therefore. do not leave property to an adult adoptee (over the age of 18) unless the bequest specifically mentions that person. Under the UPC and most state statutes. the husband’s brother will take his entire estate. (Estates and Trusts – Spring ’11) 21 . O adopts her same-sex partner. one year later they split and settle. Y. b. etc. CL: Stranger to the Adoption Rule – 1. survived by his brother. No. This has been thrown out by the UPC – you can inherit from and through your adopting parent e. J left everything to R and then to other relatives (but. Decedent’s sister will take nothing. How will the decedent’s estate be distributed? 1. The husband dies 2 weeks after the decedent. but they do not disrupt the adoption.
4. What if one was hurt much worse than the other in the 1 st accident which contributed to his death in the 2 nd? 1. The Doctrine of Disclaimer holds that property that is disclaimed will pass as if the person disclaiming died before the transfer occurred . an heir was not entitled to “renounce” or “disclaim” property inherited by intestate succession. and both are going to the hospital when the EMS gets in a car accident? Is this a common disaster? i. D is unable to recover because it was determined that R died first. the property passes through J’s will. 1. Survivorship Clauses (use these instead of Common Disaster Clauses) – 1. Don’t make it too long. b. 1. UPC has a 120 hour survivorship requirement = 5 days. iii. They state that if the beneficiary and the testator die as the result of a common disaster. 2. At CL. 2. Grauer doesn’t like to use these because if both are in a car accident. ii. 3. 5. ISSUE: Should D be able to recover the entire estate when the deaths occurred “simultaneously”? No. it might lead to beneficiaries living in a bubble. the death certificates were overturned because there was enough evidence to show (from the EMS reports) that R died before J. a. (Estates and Trusts – Spring ’11) 22 . Just leads to a lot of factual issues upon death. Needs to occur within 9 months after the date of death unless the party interested in disclaiming was under the age of 21 – then have 9 months after hitting age 21. The presumption was that a gift was accepted because there is no good reason not to accept the gift. for example. f. Title vested in the heir automatically at the decedent’s death. Therefore. This clause would say something like “X must survive me by Y period of time” – traditionally 30 days. Ohio has a 120 hour requirement for intestacy. iv. then property passes as if they died simultaneously. Don’t want property to go through an estate when the beneficiary died very quickly. Here. RATIONALE: a. Disclaimer (Renunciation) – i.1. Common Disaster Clauses (STAY AWAY FROM THESE) 1.
Under CL. but if J dies before the mother. no disclaimer can occur. that judgment is a lien on the property and personalty you own). You cannot disclaim an interest before the death of the party giving you that interest. 2.75 million. the lien will be placed on it and he will lose it to the guardian. 2. 1. 2. b. a. But some courts state that where there is a disclaimer and there are creditors. then goes to Capital Law. EXAMPLES: 1. if J inherits his mother’s property. the court probably would not accept the disclaimer on equity principals. you could only disclaim through a will – i. ISSUE: Is an anticipatory disclaimer of an expectancy interest in an estate valid and effective? No. then goes to kids.” iv. Cannot disclaim in favor of someone else – can’t say.iii. ( if someone has a judgment against you. c. If J would wait to disclaim at death. If an estate beneficiary expects a disclaimer. you could not renounce it. RULE: a. in this case. Some courts allow for the “Relation Back” Theory to permit disclaiming beneficiaries to avoid creditor claims. spousal abuse occurred when he married the guardian. J is convicted. judgment for the guardian for $2. the beneficiary’s interest is treated as if the beneficiary never received the interest – therefore it is outside the creditor’s interests. vi. “Leave $50. 3. then Capital Law” – wife disclaims. “To wife. Estate of Baird: J brutally assaulted the guardian of his mom (who also happened to be his wife). “I disclaim for X or in favor of X.000 to the student who gets the top grade” – can’t disclaim because we don’t know who the person with the top grade is at this time. The disclaimer before death is not a disclaimer of an interest – J had no interest in the property until the death would occur – therefore no disclaimer. Ohio states that a disclaimer to avoid an existing claim or a future claim one can anticipate is a fraudulent disclaimer. intestacy was seen as an operation of the law and therefore. J’s kids would get the property without the lien. v. “To wife. (Estates and Trusts – Spring ’11) 23 . 1. d. then kids” – wife disclaims. You could disclaim from wills because these were seen as gifts.
viii. At CL there was a rebuttable presumption that there would be advancement for large transactions like this – (Estates and Trusts – Spring ’11) 24 . 2.000 at the time of the parents’ death? a. Disclaimer has a powerful effect in cases where great amounts of money are involved.000 more on L than D to pay for schooling over 4 years. Many people feel that parents do their best while alive and no one is keeping track of how much is spent on the kids during the parents’ lives. The court said that the expectancy interest of disclaimer is enforceable where valuable consideration is given – here. b. EXAMPLE: 1. a.000 per year. Should D get an extra $160. Suppose that the grandmother and D both have loads of money and there are grandchildren with little money – the D might disclaim the inheritance and allow it to pass to the grandchildren for tax purposes. Cannot “disclaim” property and then use the “disclaimer” in an attempt to receive some benefit from the beneficiary who is now receiving that property – this is not a disclaimer because they are still receiving the benefits of the property.vii. L goes to school and will spend $50. 2. Can you assign an expectancy interest? 1. x. 1. The parents then need to spend $160. there was an agreement in the will that if a divorce occurred. taking less child support. So. W would disclaim any inheritance and W would take less child support.000 per year. ix. D goes to school and will spend $10. Scott: P married W. Where there is a beneficiary who would receive under intestacy and who passes away. 3. a. you can lock up an expectancy interest in some sort of future property when there is adequate/sufficient consideration given for that expectancy interest.000 was an advancement. there would have been a presumption that the $160. ii. g. Advancements – i. his executor may choose to disclaim the previous interest if beneficial within the 90 day period of disclaimer. Under the CL.
000+$90.000 b. Such transfers may be: a. OR b. Need to actually acknowledge the advancement in order to count. Take $90.000 and A gets $40. i. c. iii. A gift. 2.000 to A.000-$30.000? a. The decedent declared in a contemporaneous writing or the heir acknowledged in writing that the gift was an advancement.000=$10. 2.667K c. The writing indicates the gift should be taken into account for intestate succession. What if there is a will that says each child should receive the same? 1.000 and there are 3 heirs.000. This leads to litigation amongst heirs as to whether or not there were advancements. estate is left with $90. Advance $30. 1.000 = $120.000. iv. III.000=$140.000/3= $46. A loan. This is called Satisfaction not advancement. EXAMPLES: 1. 120/3 = $40. Treat large transactions like the example as a loan where the SoL on the collection of the loan have not expired and then the personal representative can decide to go after the person with the “loan”. UPC/OH require a writing that there has been an advancement – no presumption that an advancement occurred. but it works the exact same way. a. Take $50. Protection of the Family – (Estates and Trusts – Spring ’11) 25 . Property given during the lifetime of an individual is treated as an advancement only if: a. An advancement. 2. $140.667-50K) – A is not required to repay the estate the difference v. so 2 heirs get $40.000 each.667K and A gets nothing ($46. b.1.000+$30. 2 take $46. What if A is advanced $50.
If you comingle assets. iii. RATIONALE: a. b. a. Burkin: decedent had an inter vivos trust (revocable) and retained the right to use the property for life. ii. This had all the requirements for a trust. ISSUE 1: Is this a valid trust or is this just a will asking for the property to go to C and therefore allowing the wife to take her elective share? It is a valid trust. Where does this theory come from? 1. 2. Hard to determine what is community property and what is personal property. New Rule: Allow assets to be included from the trust in elective share when the decedent who created the trust had actual control over those assets and could use those assets for his/her own benefit (this can be shown if the trustee had the power of appointment or revocation of the trust). Elective share statutes allowed a surviving spouse to elect to take a fractional share of the decedent’s probate estate. Traditional Elective Share Statutes i. Introduction to Elective Shares i. Therefore.a. c. Problem with Community Share Property as opposed to Elective Shares: 1. the benefit was to go to C. ii. the property in the trust is not included as assets susceptible to elective share statutes. Sullivan v. 3. 3. 2. decedent was the trustee and the beneficiary. b. they can be transmuted into community property. MA law stated that where property was put in a revocable trust like this. the wife gets nothing because all the property was placed in the trust. (Estates and Trusts – Spring ’11) 26 . decedent and wife had split many years ago and the trust was just as old. How could you disinherit the spouse? – Set up a joint tenancy with rights of survivorship with someone else OR set up a trust where you have a life estate in the property and the trust is revocable and the wife is not a beneficiary. 1. ISSUE 2: Should this always be the MA approach? No. Most Eastern states use elective shares. CL notion of dowry and curtesy.
In this case. Compton: a. you can disinherit through the use of a non-probate account. a. This means if a conveyance was made simply to defraud (or an intent to defeat a surviving spouse’s election power) the conveyance will not be upheld. Under the traditional approach (and OH). (Estates and Trusts – Spring ’11) 27 . Some states take the Fraudulent Intent Approach – 1. not inter vivos gifts. Warren v. Net probate estate. the property is in a pot. The court was unwilling to use this new rule in this case because it would have changed estate planning and frustrated the testator/decedent in this case – beware future cases and trusts! iv. Modern Elective Share Statutes i. the spouse can get part of the property as well. b. c. But then the OH SC reversed. Shorter marriages are subject to smaller percentages depending on the length of the marriage. 2. c. UPC takes the approach that if the marriage lasted at least 15 years. b.b. iii. there was a decision like Sullivan that provided you could elect against the inter vivos trust. If less than ½ of the property is available in the pot when one spouse dies. 1. NY and UPC have a bright-line test – 1. 2. ii. 2. What is included in the estate? a. fraud was found. 3. 4. the surviving spouse has a right to elect against the remaining ½ that may be given to other parties. it is clear from this type of statute that the parties are at the mercy of a judge’s decision on whether fraudulent intent existed. In Ohio. Don’t care about the intent of the settlor of the trust because he/she retained all control of the property. The UPC “augmented estate”. aka a trust. If you designate someone to have the property. But. Can now only get to the probate estate.
Under Traditional Approach . Surviving spouse’s own property. 1. iv. UPC – augmented estate is $6 million – New UPC: if marriage lasted at least 15 years. iv. Proceeds of insurance if it was owned immediately before death/power of appointment (new UPC only). by the decedent immediately before death that passed outside probate. f. Property held in PODs or TODs (Payable on Death and Transferable on Death). not after divorce.b. Old UPC: elective share is $2 million (1/3 of the augmented estate). d. This transfer after death must be for more than $10. Lifetime transfers to surviving spouse. the spouse can elect against it. Transfers of property during marriage – g. elective share is only available at death. even if the spouse is not a beneficiary for that policy. remainder to X. living trust (income to self. c. ii. Property owned. i. (Estates and Trusts – Spring ’11) 28 .$1 million (1/3 of the $3 million – the trust is protected). i. iii. the amount would be $3 million. So if you own the policy. e. EXAMPLES: 1. not to surviving spouse) has $3 million – a. Property decedent had where there was a presently exercisable general power of appointment. Under CL – can elect for $1 million b. Property that passed during marriage and during 2 years after decedent’s death. 5. c. Remember. including: i. Any fraction interest in joint tenancy or survivorship. As long as there is an interest in property or enjoyment of property.000 to count as part of election or estate assets. Lifetime transfers to 3rd parties where decedent retained an interest in the property. Probate has $3 million. or owned in substance.
ISSUE: Can a prenup be thrown out if it lacked proper disclosure? Yes. OLD UPC—augmented estate is now 9m. spouse has $5 million already. The reason for the prenup is as much for divorce as it is for estate planning purposes – can be used to protect children from a prior marriage. living trust $3 million. Traditional – 1/3 of $3 million (probate) means spouse gets $1 million plus transfer so she really gets $4 million.5m. Geddings: parties were married in 1979. 2. New UPC – were married for example: 15 years. Ohio only has prenup agreements – no post-nup agreements. transfer to spouse at death is $3 million. “Waiver of Right to Elect and of Other Rights”. 1. c. W signed a document presented to her by her husband entitled. the document said that both had wills. ½ of $11 million = $5. surviving spouse has $5 million. and both wanted the bulk of their estates to go to their kids from previous marriages and each disclaimed interest in the other spouse’s estate except as provided by will. iv. This has a negative connotation in society and may not look so hot.5 million-5 million=. i. the surviving spouse will probably not be able to use elective shares. b. since the spouse has $5 million in property already. There is an affirmative duty imposed upon each party to disclose his or her financial status and this transcends what is normally required for a commercial transaction .$11 million total – gets 1/3 of it. especially in your first marriage. a. a. RULE: a. Probate $3 million. Probate is $3 million. d. total property is $11 million. living trust is $3 million. iii. she gets 3m from election.5 million. Waiver of Elective Share Rights – aka Prenups! i. ii. c. Old UPC . take $5.5 million for the spouse for elective share.2. 3. b. (Estates and Trusts – Spring ’11) 29 . This means if you marry someone that has a lot of property and you die with substantially less in your name. Traditional – 1/3 of $3 million or $1 million. NEW UPC—if marriage lasted 15 years. spouse gets 4. W contends that she did not receive full disclosure of the document because she did not adequately know or understand H’s financial situation. Geddings v.
vi. and it is not unconscionable. ii. 2. there was a lack of disclosure. b. and Family Allowance – i. Each party has a duty to consider and evaluate the information received before signing the agreement. but if an attorney represents both parties in regards to the prenup. If couple comes to you saying that they want a prenup. If you waive your right to disclosure. Grauer says to attach a schedule to the prenup so each party can see the assets and liabilities listed and attached the agreement that will be subject to the agreement. Homestead Allowance.i. Requires fair disclosure of the material financial information. Basically. Here. c. Homestead Allowance: 1.000 – Ohio has no such allowance. The idea is to protect the homestead from creditors – don’t want the remaining family left out on the street. it is awkward to ask my future spouse how much they are worth and it may ruin our relationship” type of statute. remember: a. An offer on the table may not be so good and the party that may not want the prenup may be at a disadvantage without representation and knowing his/her rights. RATIONALE: a. e. So the parties must disclose information at the time the agreement was made about each party’s assets. v. The standard is unconscionability – in regards to disclosure. 2. If you are doing the prenup. Exempt Property. 2. this is a “gee. so the prenup is invalid. UPC §2-213 Waiver of Right to Elect of Other Rights 1. UPC gives the family $15. d. Is separate representation required for a prenup agreement? 1. a. You may not need your own representation. 3. The one that doesn’t want it probably doesn’t understand what he/she is giving up. (Estates and Trusts – Spring ’11) 30 . this is a big problem because there is no commonality of interest. disclosure is not required. One probably wants the prenup more b. tell the parties straight up that you cannot represent both of them. 3.
A conditional will can be written stating that the will will take effect upon the marriage. (Estates and Trusts – Spring ’11) 31 . What happens when a person gets married. the family allowance allows the court to order the personal representative to distribute money to the family for living expenses when the estate is in administration and this money need not be given back. The family allowance: 1.ii. If there is no $10. then the personal representative is personally liable. 2. furnishing. This protects against runaway brides. Ohio – the old will is still in effect. 1. This means that each spouse has a guaranteed ½ interest but no right to the other ½ interest. The surviving spouse is entitlted to $10. iv. Exempt Property: 1. need to pay off all creditors and then make the distributions to the beneficiaries. Usually in the SW US states. If the spouse passed on. appliances. but you can elect against the will. v.000 in things like furniture. b. f. the right passes to the children. Many people who are not married have wills. iii. a. 2. iii. The Community Property System – i. and personal effects in addition to the homestead allowance. ii. But.000 in these forms of assets. Some jurisdiction – the will was revoked. Normally. 1. 1. If this is done in the opposite order. the spouse may receive the remainder in any other form of asset. 3. Helpful for the insolvent estate. cars. a. This system assumes that property acquired during the marriage is the product of joint efforts of the husband and wife. and dies leaving nothing to the spouse. doesn’t change the will. Better idea is to advise a client to put some money is the spouse’s name so that there is money to pay the mortgage or at least have money in a joint account. Each has ½ a share in the property. 4.
Those which protect all children who have been unintentionally disinherited. If you move from a community property state to an elective share state. the surviving spouse can elect against all of the community property and everything in the estate.iv. Protection of Children: Pretermitted Child Statutes – i. g. v. unless the omission is intentional. the daughter is able to recover ¼ of the estate based on intestacy rules. the will did not explicitly state that the daughter was to take. 3. Only Louisiana has a statute protecting against intentional child disinheritance. Most states protect kids against unintentional disinheritance. ii. 2. 2 categories of pretermitted child statutes: 1. extrinsic evidence will not be admissible. Estate of Glomset: Wills of husband and wife were reciprocal unless their deaths were the result of a common disaster which would cause the property to go to the son. then such child must have the same share in the estate as if the decedent died intestate. OK statute says that if a will omits a child. the surviving spouse is dependent upon whatever the decedent chooses to give them. ISSUE: May extrinsic evidence be admitted in order to prove the intent of the testator? No. vi. 2. you start off with no property in the community share and therefore all property is separate. All property accumulated during the marriage is owned 50-50. The son gets nothing because he was provided for under the will (if there was a common disaster) and therefore is unable to recover anything under the statute. RULE: a. If one spouse earned a lot before marriage and has clearly separated accounts. Look to the four corners of the will – where it is clear that there are no uncertainties. the will did not provide for situations in which the wife died first and then the husband died later. vii. RATIONALE: a. (Estates and Trusts – Spring ’11) 32 . Those which protect only children born after the execution of the testator’s will. b. If you move from an elective share to a community property state. iii. Here. 1. iv.
b. Permit the excluded child to inherit “unless it appears that such omission was intentional”. E. a. If a testator fails to provide in his will for any child born or adopted after the execution of the will. so some portion thereof. the omitted after-born or after-adopted child receives a share. Where a will states: “do not intend to provide for any other relatives or persons whether claiming to be an heir of mine or not. 3. Glomset. B – 40. W – 200 and after executed child – how much to that child? i. Extrinsic evidence is not admissible. EXAMPLE: a. If pre-execution children are living when the will is executed. Look to the state of domicile to determine the rules of validity for a will. Every not named child/issue receives an intestate share of the estate. (Estates and Trusts – Spring ’11) 33 .g. vii. Massachusetts-Type Statutes: 1. then the child gets the intestate share value. Except for Glomset (Oklahoma). 2. Wills a. 3. If will. or basically the same types of interests the other kids received. a. Execution of the Will: i.v. 2. the child receives a reduced amount – limited to devises made to testator’s then living children under the will. Will Formalities – 1. UPC §2-302 1. no one (including future children) will be able to collect under the will – tough noogies! IV. If there are no other living children. Intent is irrelevant. vi. a. A – 20. 2. Permit all children “not named or referenced to” in the will to take a share of the deceased parent’s estate. extrinsic evidence is admissible. Shares with A and B. Missouri-Type Statutes: 1.” after naming people who would receive under the will.
b. you were safe. These are unattested wills. Proxy signatures allowed when done at the testator’s request and in the testator’s presence. i. ii. c. you were not a credible witness if you were a beneficiary under the will. Ohio requires 2 witnesses while Vermont requires 3 witnesses. Signature can show up anywhere on the will. if 2 witnesses were required and 1 was a beneficiary. Signed by the testator or in the testator’s name by some other individual in the testator’s conscious presence and by the testator’s direction. UPC requisites for the will: a. the will was thrown out.” 3.a. each of whom signed within a reasonable time after he/she witnesses either the signing of the will as described above or the testator’s acknowledgement of that signature or acknowledgement of the will. and i. iii. iv. Ohio does not allow holographic wills. Some states said that if the will had a small gratuity paid to those signing the will. Under CL. Texas Probate Court Rules – typical: a. Signed by at least 2 individuals. Allow holographic wills – i. A will that is in the handwriting of the testator (Texas requires that the will be entirely in their handwriting). a. In writing. c. b. When are witnesses credible? 1. So. For example. b. c. If there were 3 witnesses and 1 was a beneficiary and the state required only 2 witnesses. 2. Requires 2 or more witnesses who sign in your presence. ii. A will should clearly state: “I am leaving my property to ___. the (Estates and Trusts – Spring ’11) 34 . Can have a proxy sign the will for you but you must direct them to do it and it must be done in your presence.
(Estates and Trusts – Spring ’11) 35 . a. b. So are other attorneys at the law office. West: this is a contested will. etc. ISSUE: Is the will valid when the witnesses did not sign in the presence of the testator? No. the matter lies on the fact that the witnesses signed the will while NOT in the presence of the testator. if I have 1 sign as a witness and the will leaves that child ½ of the full estate. 4. 1. not the full 1/2. we are only talking about beneficiaries. the amount is limited to what may be received under intestacy. Therefore. outside the senses of the testator. a. b. and signed the will there. law clerks. the child can actually only get 1/3. The Modern Approach – a beneficiary may be a witness but is limited to a share that cannot exceed what that person would receive under intestacy. the will was signed by the testator in the presence of the witnesses (law clerks. it is not through the will. 2. RULE: i. paralegals. a. and therefore needed to be thrown out. etc. While the executor does receive money. it probably wouldn’t have be enough. If that beneficiary/witness would receive more under the will. Therefore. NOT the executor. The witnesses’ signatures must have occurred within the actual physical presence of the testator. 4. it is through performing the function of the executor. Morris v.will had beneficiaries as witnesses. at the law office). the clerks then took the will back to their desks. even if the witnesses walked to their offices and were loud about signing it. b. Under both CL and the Modern Approach. this happened for both the will and the codicil. EXAMPLE: if I have 3 children and each is entitled to 1/3 of the estate in intestacy. the executor can be a witness without penalty. 3. Attorney who drafts the will is a good witness to have – a.
” iv. 2. it goes to probate for intestacy. This was because the court reasoned that the conscious presence requirement was designed to protect against fraud. Provides a secondary place for the testator to sign. “Please sign here and witnesses please sign here. the best way to have it thrown out is if the formalities are not completed. Why have such a formalistic ceremony? 1. Not required. iii. Attorney follows a ceremony when the will is being signed: 1. ii.” v. Pages need not be stapled. 3. “Were you present when the will was signed?” you can respond by saying. Have the notary initial each page to make sure everything is there. “If I supervise the execution of a will. So. b. 1. If the will is contested. (Estates and Trusts – Spring ’11) 36 . _____. the testator was loud about the signing and testator’s family was conscious that the will was being signed at the time – therefore. “Conscious presence” includes senses other than sight and admitted into probate a will even though the witness signed outside the testator’s eyesight. Asks testator: “Is this you will?” a. “Would you let _____. If you are the attorney and if you are asked. In re Demaris’ Estate: a. In this case. i. Since the will is invalid. b. 2. under this rule. 5. but do it anyway. The will must be PUBLISHED – so print the document. and _____ be your witnesses?” b. I follow a script and never vary from the script.2. RATIONALE: i. The Execution Ceremony – i. Create a rebuttable presumption that the execution requirements were followed. the will was valid. c. 4. testator must see the witness and the will being singed unless the witness was blind (special rules for this). Usually boilerplate in nature. Attestation Clauses – 1.
most attorneys don’t include these with wills. c. testators did (Estates and Trusts – Spring ’11) 37 . There is no good answer as to where the will should be stored. Salvage Doctrines: Substantial Compliance and the UPC’s Dispensing Power i. If you give the client. there was an original will and then the couple signed a joint will – the original was the Husband’s from a prior marriage. b. 3. i. Safe Guarding the Will 1. This is useful because when a will goes to probate. Don’t execute 2 duplicate originals because this leads to a host problems. no self-proving affidavit in the will. For a long time in many jurisdictions. sworn statement stating that the signatures on the will are the testator’s and witnesses’ signatures and everything that should be included in the will was actually included. and could lose the original or make changes to it. The Self-Proving Affidavit will get a will into probate without having to bring the witnesses into court. This resolved the problem of people forgetting what happened at a will signing 20 years earlier or if a witness cannot be found. because Ohio has no requirement for affidavits for the will to be probated. Estate of Hall: Couple has a joint will. given them the original signed document. Get this affidavit at the time the will is signed and attach it to the will. 2. The problem with this approach is that people are dumb. This clause allows a will to be probated even where witnesses have no clear memory of signing the will as long as the witnesses can ID their signatures and the genuineness of the testator’s signature is verified.5. the new joint will had no witnesses. Should be included in every will! vi. Husband and Wife sign the will together. the attorney said the will would be effective as soon as it was notarized. the attorney signed it. Self-Proving Affidavit – 1. In Ohio. vii. 6. (lawyer is an idiot for having a joint will). there was/is a requirement when a will was submitted for probate that there had to be a notarized. a. Law firm holds a copy ii. the original will was torn up. A good idea is for the lawyer to keep the will. a. you’ll need to find witnesses who signed the will so they can lay a foundation for the will by testifying that the signatures are theirs. b. c. a.
Codicil – 1. i. 3. RESULT: Probate the joint will. 3. As a result of Morris. many jurisdictions passed statutes saying that formal requirements need not be followed 100% in cases displaying clear and convincing evidence that the will was intended to be dispensed by the testator. remember the attorney wants the new will to be probated because if not. the will now speaks as of the date of the codicil – that means everything is updated/reaffirmed up to this new date. If you execute a codicil to the will. and 3. but the proponent must prove: 1. Grauer is not convinced there is clear and convinced there is clear and convincing evidence. The decedent both signed and intended the document to be the will. when the Husband died.sign it. 2. ISSUE: Is the joint will admittable to probate? Yes. The document may still be treated as if had been executed under the certain required circumstances if the proponent of the document established by clear and convincing evidence that the decedent intended the document to be the decedent’s will. But maybe the court has more facts indicated here. This is an amendment to a will. 2 or more witnesses saw the decedent sign the document. In Ohio. he faces malpractice. probate court can accept a will that fails on formalities. 2. UPC §2-503 iii. In this case. Doctrine of Replication of Codicil – a. d. Must be established/created with testamentary formalities. ii. 1. 2. the wife had a clear interest in the new will. the wife argued that his intent was to form a new will. b. The decedent prepared the document. 1. also. EXAMPLES: (Estates and Trusts – Spring ’11) 38 . RULE: a. ii. What Constitutes a Will? i.
RULE: i. Doctrine of Integration: 1. to be incorporated by reference. RATIONALE: i. but if you sign a codicil in 1990. b. full assurance is given that the identity of the extrinsic paper has been correctly ascertained. ii. The first document had his actual signature on it. Integration and Incorporation by Reference – 1. we don’t care if the pages are scattered all over the place. and in 1989 you move to a new residence. ii. the will is valid – nothing needs to be stapled to be integrated. the property clause will be updated because the will is not enforced as of the 1990 date. c. must be in existence at the time when the document incorporating them occurred. the old will may not be upheld due to confusion over which property you were referring to. If a will was created in 1988 states: Leave X my home. Here. The paper. b. ii. even if in regards to a different matter. Estate of Norton (1991): a. 3. As long as you can figure out a coherent whole.i. If the will would fail for lack of # of witnesses. a properly executed codicil will correct the deficiencies. And the will existed prior to the existence of the codicil. element 1 is met – 1. There must be reference to the document in terms so clear and distinct that from a perusal of the second will OR with the aid of parol or other proper testimony. Element 2 fails – (Estates and Trusts – Spring ’11) 39 . Elements: a. 2. ISSUE: Were the first 6 pages incorporated by reference into the codicil? No. As long as all the pages were present when the will was executed. 2.
will was written. Just saying “last will and testament” is not enough. and she writes it up. therefore the Doctrine of Incorporation by Reference CANNOT APPLY (fails element #1). 3. 1980. will says that the property will go as designated by memo left by decedent and known by G. The court ruled that you don’t know if all the pages were there when the will was witnessed.1. B takes the will of 14 pages with him to Moscow and before he left. 2. No reference in the codicil of the prior will document. ii. codicil to 1977 will. memo written with no reference to a painting. b. republishing the will through a codicil means (Estates and Trusts – Spring ’11) 40 . The Beale Example: a. In re Bennet a.000 to be distributed in accordance with a letter to be included with the will”. 2. c. B died. the court used the doctrine of integration and integrated the new documents with changes mostly grammatical and the child was going to get disinherited anyway from the original will. The letter was indicated to NOT have been written prior to the will. at which point he tells the secretary what he wants in his will. Even though it only changes small amounts of information. Will read: “I leave the sum of $50. decedent died. 1979. he had the will “witnessed” by people at a party. 4. found a will and letter saying give all the money to William Jennings Bryan. Clark v. 1977. c. writes in notebook that the paintings were to go to Clark. BUT. in 1972. RULE: i. ISSUE: May the memo of the 1979 notebook be included by reference to the will as a result of the 1980 codicil? Yes. b. B had his secretary go to the bar. Greenhalge: the decedent wrote a will in 1977. Assumed that the typed document was his will because the changed were made after he signed the will. 1976. b. a. Secretary receives 2 pages postmarked the same day with a desire to have the documents amended – one child of B would be disinherited. i. change to the memo. d.
that you change the wills publication date to the date of the execution of the codicil; 1. Therefore, treat the will, through the codicil, as being published in 1980 not 1977; 2. Court also states that notebook is a memo; a. The D here, as the executor, had already distributed property that was included in the notebook – “ya big hypocrite!” – “the court said, ‘give me a break’” c. RESULT: G gets the painting through reference; 5. UPC §2-510/513 a. Models CL that the referenced document must exist prior to the new referencing document and there must be an explicit reference to the document; iii. Facts of Independent Significance 1. The Doctrine of Independent Significance is necessary for flexibility wills; a. If you leave a will that says “I leave the home that I own at this date of the will to X” and then I sell home and buy a new one – the will would not take into account the new property; b. Better to say: “I leave the home I own at the time of my death to X.” 2. UPC §2-512 a. A will may dispose of property by reference to act and events that have significance apart from their effect upon the disposition made by the will whether they occur before or after the execution of the will or before or after the testator’s death. The execution or revocation of another individual’s will is such an event. 3. The Doctrine of Independent Significance is relevant in one of two kinds of cases: a. When the testator’s will makes reference to facts of events of independence significance to determine the beneficiaries of the will (as when testator’s will makes a devise to his older surviving sister); b. When testator’s will makes reference to facts or events of independent significance to determine the property that an
(Estates and Trusts – Spring ’11) 41
ascertained beneficiary will receive (I leave any car I own at my death to my brother); 4. EXAMPLE: a. Will leaves “all of the stocks and bonds found in my safe deposit box to the persons designated on the envelope in which those stocks and bonds are found”; i. Like the Bryan situation and the testator still has control over where the assets will go, therefore invalid and not protected by this Doctrine; b. Set up trust and says money goes a certain way like giving money to Capital as long as Capital has a legal clinic; Capital would get no money if there is no legal clinic; i. This is acceptable; 5. Pinion: a trust was set up in which $1 million was transferred with income for life, and a remainder in X (1934); a. In 1935, a will is created which says that the residue of the estate should go to the Bank with it as a trustee to hold and administer through the terms of the trust; i. Why do this? Because the trust doesn’t do through probate and therefore, there is more privacy; b. In 1955, testator wrote an amendment to the trust and leaves the amendment at the bank; c. Later in 1955, the testator executed a codicil to incorporate the amended trust; d. Later still in 1955, the bank signed the amendment to trust – i. Argument that cannot incorporate the amended trust by reference because the bank failed to sign until after the execution of the codicil ii. MA SC rules people do these types of trusts all the time, so validate the action 1. Every state now has pour-over wills a. Will says “I leave residue of estate to 5/3 bank during the lifetime of spouse, pay income to spouyse and principal needed for standing of living, ect; at death, income contines to children until youngest kid reaches 35, then principal to kids”
(Estates and Trusts – Spring ’11) 42
i. The wife can write that if husband does not survive me, I leave my estate to trust of husband’s will—valid 6. In re Tipler’s Will: the first will states – “Everything goes to my husband if he survives me”; 2 days later, he she executed a codicil that said – “If my husband predeceases me, then my estate is distributed according to my husband’s will”; at this time, the husband had no will; a. ISSUE: Should the decedent’s will be upheld to distribute the property according to the husband’s will where husband predeceased the decedent and the husband had no will when the codicil was created? ((y)) b. RATIONALE: Since the husband’s will had the intention to distribute his estate not how to distribute the wife’s estate there was non-testamentary significance behind the event and therefore the doctrine of independent significance can be used c. RULE: i. The Doctrine of Independent Significance is an escape mechanism from the strict requirements of incorporation by reference; ii. Look at intent – here, the testator wants to disinherit her family and therefore uphold her intentions; iii. What about the fact that the codicil was scribbled on the back of the envelope? 1. The court was willing to accept the codicil because it was in handwriting and showed a clear intent that she didn’t care who got her property as long as it went to whoever the husband wanted the property to go to; d. RESULT: Therefore, uphold the codicil; e. Construction Problems Created by the Time Gap between Will Execution and Death i. These problems occur when a contingency is not take care of in a will; ii. For example: if will says “property to spouse if the spouse survives me”; 1. What happens if the spouse predeceases you? The law must come up with the answer! iii. Abatement 1. General Bequests – a. May be satisfied out of the general assets instead of a particular piece of property; (Estates and Trusts – Spring ’11) 43
500 and the remaining will abate with general legacies and will be able to recover the difference if there is money left over in the estate.500. “I leave my home to D provided that should my house by equal to or more than the value of my estate. Specific – a. Here. then General Bequests. the D takes the property outright and the S gets the monetary bequest from the estate up to the value of the property. This means that Specific Bequests have Top Priority. Specific General Residue Outside of the Will (Specific Bequests get to take first!) 5. “I leave my entire estate to my 2 children equally. If the estate does not have enough money in it to cover the value of the property. How could the will have been drafter to make it equal? i. ISSUE: Does D receive the property and then S gets money up to the value of the property first? Yes. i. then the beneficiary only gets $2. EXAMPLE: (Estates and Trusts – Spring ’11) 44 . b. 3. and then Residue. RESULT: D gets the house because it is a specific bequest. then the beneficiary gets the $1. The D does not need to sell the property in order to equal out the bequests. if the library is sold at $2. the S gets all of the money in the estate and is out of luck. Order of Abatement a. If will says. “Sell my library to give the beneficiary $2. ii. i.000”.” c. residue split between S and D.500.b. a. 2. These include monetary bequest. 1. EXAMPLE: 1. In re Estate of Potter: the will says that decedent leaves her beach house to D and an equivalent amount to S. if the library is sold at $1. i. 4.000. not enough money to equal the value of the property. A gift by will of property that is particularly designated to be satisfied by the receipt of a particular piece of property to the beneficiary.” ii.
1. Some wills state that debts must be paid first – DON’T DO THIS! i.000 in cash. D.000 from the sale of the car but only got $10.000 to F and I direct that my car be used to satisfy the bequest. C. “I devise $30. ii. Jurisdictions believe this is redundant because the executor already has an obligation to pay the debts of the estate. a car worth $10. The total in this case is $110.E get 15 and F gets an additional $10. F gets $10. look at the amount of cash in the estate – here. “I devise the residue of estate to Penn University.000.D. the estate consists of a boat worth. How to determine cash amounts: i. and E) plus “leftover” bequests from unfulfilled specific bequests (here. ii.000. University gets nothing d.” b. Then. At death.000 from the car’s sale.a. ii.” iv.” iii.000 = ½ so each will receive ½ of the bequests they are due.000. and E. “I devise $30. iii. F gets $10. D.D. Distributed: i. $10. and E get $15.000 ($30. B gets the boat outright.” ii. 1. Exoneration – a. This clause could cause problems because this is a bequest to creditors – so if a creditor failed to bring a (Estates and Trusts – Spring ’11) 45 . $20.000.000 iv. and $55.000 6. “I devise my boat to B. Terms of Will: i. $55.000 because F was to get $30. $90. iii. c. Take the total amount given by will – here.000/$110. Therefore C. $55.000 to each of C.000).000 v.000 to each C.
This Anti-Apportionment clause may indicate that the taxes are paid by the residue of the estate – be careful because this may eat up the entire residue! 1. even if there is a provision on the payment of debts – need to have a very specific clause that says the mortgage would be paid. Unless the will provides otherwise. This specific devisee is entitled to nothing if the specifically devised property is not in the testator’s estate at testator’s death. iii. each devises is responsible for his pro-rata share of the taxes. need to really know how many assets there are in probate and how much it is going to cost. Another problem: even if planned. ii. BUT. If doing this. The personal representative will reduce the amount received based on tax liability. 1. iv. Modern Approach/UPC/OH: the mortgage will not be paid. ii. 2 Doctrines of Ademption: a. 2. now with the clause. you will not be paid by the estate. the devisee was entitled to have the mortgage paid off by the executor out of the assets of the residue. Anti-Apportionment Statute – i. Exoneration of Mortgage – i. ii. McGee v.claim in the first place as would be normally required for the executor to pay (so there are normal time periods all creditors of the estate are required to come forward and get paid) – if you fail to do so. creditors can still come forward later and expect to be paid. Only applies to specific bequests. McGee: issue over the purchase of flower bonds (low interest rate bonds issued by federal government but (Estates and Trusts – Spring ’11) 46 . c. iii. Ademption 1. b. Need to calculate and think about it. assets’ values can change. Ademption by Extinction – i. CL: if you devise property to someone when encumbered by a mortgage.
Should have. Here. there is nothing for the children and the bequest is adeemed by extinction. If any balance of the purchase price is still owing from a sale. the decedent had a durable POA for financial matters when he was incapacitated. RATIONALE: a. was it found in the estate at the time of death? If yes. b. Remember: 1. the money goes to the friend. is the devise in the estate? 3.000 was to go to a friend and any stocks and other monies were to go to his grandchildren. when looking at intent. flower bonds were purchases by his son. Therefore. iv. get property. out of luck. Is the gift a Specific Bequest? i. not the decedent (the purchase occurred before the decedent passed).could be used to pay off estate taxes). the decedent’s will stated first that $20. they get the bequest. written the will so that it was in a % not a specific amount given to the friend – in that way. the son withdrew approximately $50.000 worth of flower bonds 1. If yes. If yes. i. v. Old UPC/CL – 1. no monies for the Specific Bequest to the children. If yes. Is there a Specific Bequest? 2. and therefore. 2. RULE/TEST: a. if no. the children would still be able to get something. the monies are out of the accounts and therefore. (Estates and Trusts – Spring ’11) 47 . ISSUE: Were the bequests of any monies to the decedent’s grandchildren adempted by extinction? Yes. 3.000 and bought $30. the beneficiary is entitled to it at the testator’s death.
So. Securities tent to be in the residue of the estate. if a bequeathed a Honda Accord. b. 3. 4. then there is the issue of what is replacement property unless Ademption was clearly intended by the decedent. 2.000 installment payments. Get all the old UPC provisions. So. look to the intent. If I sold property that was bequeathed to you for $300. you are entitled to the remaining $600. Amount of a Condemnations Awards – a. (Estates and Trusts – Spring ’11) 48 . Amount of Unpaid Insurance from Fire or Casualty vi.a. 2. the devisee gets the remaining amount due.000 that is to be paid in the 2 remaining $300.000 for 3 years. New UPC 1. If you are bequeathed a home that the city has condemned and is willing to pay for. But. vii. PLUS. the beneficiary gets the Toyota. the beneficiary gets the value of the devised property unless Ademption was clearly intended by the decedent. but it was traded in to get a Toyota Camry and then the testator died. Problem – trying to effectuate the testator’s intent. and I die after 1 year. a. get real/tangible personal property owned at death that the testator acquired as a replacement for the specific personal property a. 5. 3. the Old UPC had a clear bright-line test where the New UPC is more subjective. Securities – 1. Look at intent. Usually. but hasn’t actually paid for yet. the value of the specifically devised property to the extent that the devised property is not clearly replaced and then give the value of the devise.
the testator has given property to the same beneficiary. a. 2. b. If Specific Bequest. Securities of another organization as acquired through merger. and the specific property is given. CL Doctrine – a. then the devisee gets: a. Any good will should indicate what would happen if the beneficiary dies before the testator. Courts used to say that dividends never went with the bequests. etc.2. should the bequest be satisfied? 1. then the gift fails. 3. then the bequest will be put into the residue. b. Situation where a will devises property to a particular beneficiary and during the testator’s lifetime. 2. Counterpart of probate advancements. If the beneficiary dies before the testator. but the splits did. consolidation. Then the remaining/surviving devisee is the only one to take. UPC says if you bequest stock and the number of shares changes. 3. What happened if the security splits and instead of having 4 securities. If General Bequest. Lapse occurs when one of the beneficiaries changes. ii. now you have 8? a. Ademption by Satisfaction – i. b. by the action of the company. but the other devisee dies? a. the transfer is not satisfied by Ademption unless the testator states in the will or another writing that the gift is supposed to satisfy the will v. If it is a pre-residuary bequest. then the beneficiary is entitled to nothing at death because the specific property has been transferred. Securities of the same organization acquired by reason of the actions initiated by the organization. Lapse 1. (Estates and Trusts – Spring ’11) 49 . What if the residue goes to more than 1 person.
B and C share the $90. The Anti-Lapse Statutes apply unless there is a contrary intent. So. and C with the residue going to my spouse. Suppose A dies and leaves 1 child.b. the class gift doesn’t lapse unless EVERYONE in the class predeceased you. But. A’s child would still get $30. named in the will. 1. Under CL. A’s $30. a. the niece. 4. 5.000 to my children A. What if bequest said: “$90. B. a.000. the money would go DIRECTLY to my issue. iii. the spouse. therefore. The Anti-Lapse Statute – 1.000 would go to the residue – thus. RATIONALE: i. b. The bequest then goes directly to the issue NOT to the estate of the initial devisee.” i. every jurisdiction said – “What if the person that predeceased had issue?” i. b. Most Anti-Lapse Statutes still apply to class gifts. all lines of relatives got something and the predeceased’s issue were left something as well. Therefore. Here.000. Under an Anti-Lapse. Bequest: “I leave $90. Estate of Rehwinkel: will left residue to estate to those listed and living at the time of the decedent’s death. Under CL.000 to me and I have children and there is no clause indicating would happen to the bequest if I predeceased my Uncle. passed away first and nieces son claimed under anti-lapse statute. i. ii.000 to be shared by children”. ISSUE: Does the Anti-Lapse statute apply? No. money goes to A’s child. c. if Uncle bequests $10. RULE: i. EXAMPLE: a. Applies when a bequest is made to a blood relative and the blood relative dies before the testator and leaves issue. b. (Estates and Trusts – Spring ’11) 50 . ii.
10. Testator’s Circumstances and Behavior (Estates and Trusts – Spring ’11) 51 . the intent of the testator overrides the Anti-Lapse Statute. M1 and M2. This is to preserve the intent of the decedent because the decedent clearly wanted the property to go to either M or R. 9. c. Construction Problems i. 8. the will says the residue goes to M and R – if one predeceases me. Since R is dead and would be the alternative devisee. The decedent could have said: “if they predecease me. New UPC – if the will only has words of survivorship. 6. The New UPC requires something more. Because the decedent used the language. B’s 2 nieces were to get $1. a. Need even more explicit language in the will to override the Anti-Lapse.New UPC doesn’t like this result! a. “living at the time of” decedent’s death. The court ruled that words of survivorship are effective only if there are survivors. f. Old UPC – if you leave something to someone who predeceases you. a. the Anti-Lapse statute is effective. 7. the gift is superseded by the alternate devise only if the expressly designated devise is entitled to take under the will.” 2. Since there are no survivors in this case. b. then the rest to the other. 1. Therefore. b.000 each. Estate of Ulrikson: B has an estate and 2 children – M and R. the AntiLapse applies. Majority Rule – words of survivorship override Anti-Lapse statutes. M has a children. ISSUE: Should the Anti-Lapse statute apply? Yes. precluded and the Anti-Lapse statue does not apply. i. then to their issue. both predecease B. such as those in Ulrikson. If the will creates alternative devices. a. RESULT: M1 and M2 get the residue.ii. it lapses to their issue. the Anti-Lapse statute still applies.
Usually 2 kinds of latent ambiguities: i. 2.1. Estate of Gibbs: a will left money to R who can’t remember anything about the testator other than he might have given her a ride in his taxis that one time. No person or thing exactly matches the description. 2 Kinds: 1. Since there is no ambiguity. b. did not receive notice that he was to take. don’t use extrinsic evidence. Latent – a. the court says that there is NO ambiguity in this case. other people at the shop were included in the will. This is latent ambiguity. the court strikes the middle initial and street address because there was an obvious mistake so then RS is able to take under the will. 2 or more persons fit the will’s description. That is because by striking this information. ii. there is NOW ambiguity! b. 1. RS and R have the same name. RULE: i. a. b. a. RS who works at the testator’s shop. 2. Patent – a. There needs to be ambiguity before extrinsic evidence can be introduced to explain the meaning of the will. R is thrilled because he’s winning big!. ISSUE: Should the will be amended to provide for RS? Yes. Obvious from the face of the will that someone is wrong with the will. attorney had written the wrong address for the right name. b. Here. c. (Estates and Trusts – Spring ’11) 52 . Then allow extrinsic evidence in order to give the money to RS. BUT. RATIONALE: i. Usually the court’s don’t allow extrinsic evidence here.
DC: testator leave residue of estate to those named in Article 8. the residence sat primarily on one parcel and there was a garden. c.. the testamentary formalities would be circumvented.whomp… 3. the decedent did not divide up the property. And. attorney comes to court with notes saying that testator wanted the money to go to Knupp. bring in evidence to show how the “residence” was used – did the use include both parcels? a. ii. Correcting Mistakes (Estates and Trusts – Spring ’11) 53 . the property was clearly used together as one residence. Upchurch: a will left a residence to a beneficiary. Statements by testators are admissible if they show something about the testator’s state of mind. 1. b.2. this sort of evidence would defeat the purpose of the testamentary functions of a will. 2. ISSUE: Should the extrinsic evidence from the attorney be allowed in as evidence? No. a. This is because. Britt v. b. RULE: i. There is a concern of fraud. the attorney wanted to introduce evidence about the intent of the testator when devising the property. the residence consisted of 2 parcels that were divided for tax purposes. The court would not allow evidence from an attorney if that evidence was something that the attorney remembered the decedent saying about his intentions for the will. 1. Knupp v. instead. RESULT: the “residence” included both parcels. RULE: i. RESULT: Knupp cannot recover and probably sues the attormey…whomp. in this case. Here. ii. a. on the other parcel. this is clearly a patent ambiguity. etc. ISSUE: Should both parcels be included in the residence bequest? Yes. You cannot use extrinsic evidence to add to the will. c. 1. if allowed to add to the will. article 8 fails to name anyone. So.
the child is entitled to share in the estate if it is an after-born child i. Under CL. The attorney testified that D would not have been included even if he were alive. ii. b. Other testamentary instrument. Operation of Law – i. g. a. Wills that state the testator doesn’t want a person to receive anything. Revocation – i. How can you revoke: 1.e. iii. Subsequent instrument – writing “VOID” is not enough unless it is the original. 2. RATIONALE: i. divorce. G would not get something even if it was a mistake. ISSUE: Should G be included in the will? No. 1.1. If the decedent made the mistake that she believed her son was dead. UPC – need to revoke through subsequent will revoke the previous will. a. decedent may have thought that G was missing or dead because he was gone for a long period of time a. he should have had a better relationship with his mom. 2. RESULT: the son is out of luck. c. (Estates and Trusts – Spring ’11) 54 . if the attorney is holding the original will – none of the following actions performed by the testator will actually revoke the will. Gifford v. If at the time of death you fail to provide for a child. 3. After-born means being born after creation of the will. ii. Dyer: several small bequests of small sums of money and leaves residue to brother-in-law and nephews. Negative will – only in UPC. Will b. that mistake must indicate what they son would get if he were alive. G is not mentions in the will and is decedent’s only kid. UPC – Pre-determinative Heir Statute – covers those after-born or adopted children. a. Physical act – only if original is in your possession. iii. Remember.
then there is presumed revocation. uphold the will – send it through probate. daughter was unable to find the will. 2. is suspicious that the daughter was involved in some foul play involving the will. The proponent of the will can establish that the will was executed with testamentary formalities at the time of the execution. RULE: a. how do you know the content? 1. c. Stronger presumption if the testator was the ONLY ONE with access to the will. In OH – when a will is lost or destroyed before or after death. 2. Duplicate Copies 1. RATIONALE: a. i. First Interstate Bank of OR v. No person opposing the admission establishes with a preponderance of the evidence that the will was revoked iii. Revocation by Physical Act – i. probate shall admit the will if: 1. 1. decedent had the intent to keep the money in his bloodline. there is a weaker presumption because the daughter had access to the will and the will left her less money than if the estate went through intestacy. b. Under UPC you can revoke a clause of the will. Here. statements of the attorneys. The court does not take the position that testator tore up an d destroyed the will – it seems the court. In a case where the presumption is overcome (and you admit the will). based on the presumption. Can do a physical act to revoke – a. ii. The act can be done by a proxy who was in the presence of the testator. Henson-Hammer: testator’s original will was not found among his personal possession when he died. General Presumption: if the will was in the testator’s personal possession . DON’T DO THIS (Estates and Trusts – Spring ’11) 55 . 3. Therefore.2. h. attorney’s copy iv. he told his daughter where the will was supposedly located. and the will cannot be found upon death. b. Use a photo copy. ISSUE: Was the will revoked because it could not be found? No.
3. the 1 st will said it was bequeathing all “effects” to L. the first clause should indicate that you revoke any previous wills. 2. “effects” cover personal property and NOT real property. Because of this definition. NY Cardozo opinion: a. we treat the destruction of one as the destruction of both. the issue concerned the meaning of “effects” and if it was included in the 2nd will. The court does not favor Revocation by Implication. 1. he wrote a new will to give everything to his siblings? (Estates and Trusts – Spring ’11) 56 . she asked the attorney to destroy the will. RULE: a. revocation would have occurred as long as he was in the physical presence of the testator. If he had ripped the will up in time. but the will did not say that it was revoking the previous will. the 2nd will said that it was bequeathing property to brothers and sisters. Revocation by Subsequent Written Instrument – i. no revocation occurred.2. ii. Woman had a will that was witnessed. Generally. b. a. vi. Can You Cancel a Will at Home? 1. If one of them is in the testator’s possession and the other is not. ii. Partial Revocation: 1. both wills could operate simultaneously. one will said it was bequeathing property to L.” and the will was not actually destroyed before her death. So the intent to destroy counts for both v. ISSUE: Was there a revocation of the first will because “effects” covers real property and would have been revoked because real property was covered in the second will? No. iii. Wolfe’s Will: there 2 wills. please destroy. i. Whenever you draft a will. but she died before the will was destroyed. Most states allow partial revocation by physical act. i. Could we admit a statement from a brother that said before the testator died. c. RESULT: L gets personal property and the siblings get real property. Because the letter did not say: “I have revoked the will.
Revocation by Codicil – 1. Property that was supposed to go to an ex-spouse was distributed as if the ex-spouse died first. iv. ERISA – employment retirement act. Not used often anymore because of computers and the ease of changing documents. Someone writes a will in 1999. Under a qualified plan. k. the divorce revoked anything in the will that would do to exspouse unless there was an exception in the will. i. 2. New UPC: 1. SC ruled that UPC is trumped by ERISA unless the wife consents to have the right taken away—ERISA protects spouse. wills. CL courts and Ecclesiastical courts took a different approach. 3. Old UPC: 1. Unless express terms.1. Limits on the UPC – a. 2. j. although the courts split on it. and the marriage was annulled. cut out ex-spouse. You could argue that the 1st will was written under duress.e. ii. ii. 3. 2. (Estates and Trusts – Spring ’11) 57 . Not admissible because this is a statement of the testator’s intent – circumvents the testamentary requirements of the will. Should the 1999 will be used? a. you must get retirement benefits as a joint and survivor annuity with spouse unless spouse waives the right. 2. to trusts. CL – a. a second will in 2005 revoking the 1999 will. Revocation by Operation of Law i. Revival and Dependent Relative Revocation – i. If a couple divorced AFTER the will was created. Generally no. Situations like divorce. and 2007 will destroying the 2005 will and now there is no will to enforce! 1. Applies to any governing instrument – i. Separation is not a divorce! iii. designation of beneficiaries under insurance.
Many jurisdictions follow the traditional EC Approach. iii. ii.000. a.” 3. 4. New UPC – 1. “I leave F $10. Really.000” and writes in “$15. EC said that the 1999 will is dead and cannot be re-established unless reexecuted. You could use the Doctrine of Dependent Revocation and therefore preserve the gift of at least $10. If a subsequent will.000. The beneficiary cannot get $15. Problem – 1. §2-509 b. but the testator crossed out “$10. Can revoke a will be expressly revoking. residue to X. This results in immediate revocation. that wholly revoked a previous will. Revival can occur if the testator declare that he wanted the 1st will to take effect. the previous will (1 st will) is fully revoked unless it is revived.000 UNLESS there is proper testamentary formality.i.000 since increasing the amount made clear the testator intended to keep the gift in the will. this is a revocation of the bequest. is revoked by a revocative act.000 and inserted $1? (Estates and Trusts – Spring ’11) 58 . This being that there was revocation so long as the gift was increased to $15. ii. The “Mild Ecclesiastical” Approach – a. CL said go back to the 1999 will. CL said that the will was never revoked because wills don’t “speak” until death occurs. EC took the “Economic Efficiency” Approach – 1. a. i. i. 2. iii. Look to testator’s intent. iii.” 2. What if the testator crossed out the $10. ii. Properly executed will.000 to F. b. Can revoke by an instrument executed with testamentary formalities.
First United Methodist Church of Albany : 1963 will was signed with testamentary formalities and folded together with scratch paper that looked like writings and notes for a new will. if its contents can be ascertained in any legal way iii. The Doctrine of Presumed Intention – Conditional Revocation – i.a. EXAMPLE: if you have a contract with a spouse that they will leave all their property to you on the condition that you leave your property to their sister. though cancelled. RATIONALE: a. should be given effect. or made one that failed to take effect. if the will is totally destroyed by fire) the fact that the testator intended to make a new will or made one which cannot take effect counts for nothing 4.g. 1. (Estates and Trusts – Spring ’11) 59 . Probate the 2nd will to brother and then the sister will have to sue the estate on a breach of contract claim. the 1963 will had clauses crossed out in pencil 1. l.000 because it is clear that the testator wanted to disinherit F. probably no revocation of the 1st will because the 2nd will (through testator’s notes) had not taken effect. 2. ISSUE: Did the testator revoke the old will through the pencil marks and notes attached? No. if you leave all of you property to a brother? 1. The mere fact that the testator intended to make a new will. Based on the circumstances. prevent a cancellation or obliteration of a will from operating as a revocation. the notes were not signed with testamentary formalities. 3. So this Doctrine doesn’t always work. But if the old will is once revoked (e. RULE: a. iv. will not alone. If it is clear that the cancellation and the making of the new will were parts of one scheme. ii. and the revocation of the old will was so related to the making of the new as to be dependent on it. Can’t get the $1 or $10. the old will. Limits on the Power to Revoke: Joint Wills and Will Contracts – i. Carter v. RESULT: Here. in every case. it looks like the testator was planning on writing a new will not just a plan to revoke the current will.
but the evil stepmother’s will actually got rid of her late husband’s children and their issue. 2. 1. RULE: a. SHOULD SET UP A TRUST! b. he created a contract with his wife that everything should go to his children. the original “I love you” wills) were valid. What about augmented estate? Only affects trusts that the current spouse sets up. use trusts! iii. the estate was to be split into 7ths (one for each child). i. wills were “I love you” wills. Limit the amount of principal given to the spouse – yet again. RESULT: a. Garrett v. Shrimp v. Is there a breach of contract action? Yes. How could the wills have been drafted to avoid litigation? a. 4. then a gold-digger would have gotten nothing! V. a. i. Put the monies into a trust – don’t use contracts! b. Huff: husband leaves his estate to his wife.e. Reid: Ps were the children of husband and Ds were the children of wife. The court creates a constructive trust to give the husband’s children their shares. RATIONALE: a. there was no explicit written contract but there was implicit agreement. 2. gold-digger wants an elective share. ISSUE: Could the wife revoke her will? Yes. 3. the wife remarried a gold-digger and complies with the will/contract. but that doesn’t protect against breach of contract claims. ISSUE: May the gold-digger get his elective share against the wife’s will to the children? Yes. if H had set up a trust for W and the kids. The court decided that the old will (i. Therefore. i. Contesting the Will (Estates and Trusts – Spring ’11) 60 .ii. This situation would have been easier to deal with if the agreement had been in writing. i. Wills are freely revocable. 1. The gold-digger is not prevented from using his collective share rights. after the death of the surviving spouse.
If you know you are making a will. if you are normally lacking testamentary capacity. and he may even want capacity to transact many of the business affairs of life.a. 1. Lane: testator was incapacitated because she called fire dept randomly. and who you want the property to go to. iii. the object or objects of his bounty. Remember. ISSUE: Did testator lack testamentary capacity? No. if you disinherit your child. but he is really just a flasher. v. then you have capacity. 1. Testamentary Capacity – i. Standing to Contest a Will – (Estates and Trusts – Spring ’11) 61 . and how he wishes to dispose of his property. RESULT: Clearly she had capacity in this case. 3. had trouble dressing. what you own. 2. RESULT: Throw out the will because he lacked capacity. This may be risky if the lucid moment ends in the middle of the taping/formalities. RULE: a. The testator hated all men. Marshall: testator rants and raves that he is the Messiah. your will will be acceptable. 2. 1. 2. ii. testimony that she was under Alzheimer’s. Therefore. 3. Wilson v. ISSUE: Did the testator have the requisite level of capacity to execute a will? No. 16 of the 17 beneficiaries were blood relatives (not really unnatural). The Standard: The mind may be debilitated. May want to video tape the execution of the will. the memory enfeebled. he will bequeathed all property to the National Women’s party. a. he cut her from his will. has a recollection of the property he means to dispose of. the will would probably not be overturned. the character may be peculiar and eccentric. vi. The will was overturned even though she was probably closer to people of the party than her own family. still it is sufficient if he understands the nature of the business in which he is engaged and when making a will. but have lucid moments and that’s when you create your will. the understanding weak. Strittmater (something like that anyway…): 1. i. Barnes v. iv. always thought the house was flooding. 1. it is more likely you are lacking testamentary capacity. Today. his daughter wore skirts shorter than he liked and therefore. Many standards of testamentary capacity are quite low – but you need to consider what is happening in the will.
you must be either an intestate heir or someone else who would take more under a previous will. b.1. many courts (the majority) will permit them standing to contest. there was good reason to disinherit the son. You receive a birthday card from a person of the opposite sex and your spouse believe you are cheating. To have standing. ii. Insane Delusions may occur in situations where: a. Grauer believes that the father’s feelings were manifestations of his experience at the home and they were projected on his son – the disinheritance should not be upheld. no access to phone. a. Rubenstein: testator drafted a will in 1990. vii. there was no private room. b. 2. Of the estate – no standing because they get paid before the beneficiaries get paid. he went to the hospital. Dougherty v. the testator experienced a stroke and dementia and the testator was put into a kind of boarding home – when there. 2 sets of creditors: i. evidence points both ways on whether the testator suffered from dementia. Occurs when a normal person has capacity. Is There a Duty to the Client to Determine whether they Should Reasonably be able to Create a Will? (Estates and Trusts – Spring ’11) 62 . If the debts are those of judgment creditors. 2. Based on the series of events that the testator went through at the home. A man really believes that a child is not his even when DNA shows it is. Of people with standing to contest the will – 1. ii. and the son’s unwillingness to let his father out of the home. RATIONALE: i. Creditors: a. BUT suffers momentarily from an insane delusion and this delusion affects the will – these are not upheld in a will. Grauer thinks this is an insane delusion – 1. If the debts are unsecured – no standing. unsanitary environment. 2. 2. Insane Delusion Rule – 1. after the visit. viii. ISSUE: Should the disinheritance be overruled because the testator was suffering from an insane delusion? No. in 1997.
Here. D alienated herself from Betty’s hippie children. i. Betty begat 2 children and Dorcas begat 4 children. Defined as “mental. The burden can shift to disprove undue influence when: 1. Undue Influence – i. 2. If there was a strict duty. b. Haynes v. Suspicious circumstances – (Estates and Trusts – Spring ’11) 63 . ISSUE: Is there a duty of the attorney to determine whether the client has testamentary capacity? Yes. a new will was drawn up and everything would go to Dorcas except $10. attorneys wouldn’t want to do wills.1. 3. RULE: a. Mr. 2. 2. they would receive no money. There is a duty to determine capacity so long as the attorney takes reasonable steps to determine whether there is capacity. the burden of proof is on the contestant to show that the will is invalid. Dorcas first wanted D’s attorney to change the will (he refused) and then took D to his attorney. wants to leave everything to the people who are taking care of him in the hospital.” ii. the will included a Contest Clause that indicated if the boys contested the will.000 to each of Betty’s children. Betty lived with D for some time and when Betty died. and had a video tape done to explain why the client was acting as she was. b. 1. moral. If the attorney takes reasonable steps. Ordinarily. Mr. Only need to use best judgment – don’t need to bring in experts. there is no liability. First National Bank of NJ: D begat Betty and Dorcas. a. ISSUE: Has there been undue influence? Maybe. D moved in with Dorcas. There is a “confidential relationship” between the proponent of the will and the testator. there was both a mother-daughter relationship and a mother living with her daughter. a. or physical” exertion which has destroyed the “free agency of the testator” by preventing the testator “from following the dictate of his own mind and will and accepting instead the domination and influence of another. Dorcas spoke with his attorney about how to change D’s estate and will to favor them. D was worth $8 million. Superior Court: D is hospitalized and needs a will. Gonsalves v. interviewed the client. RULE: i. 1. there are other family members in the picture. attorney talked to the doctor.
if Mrs.a. If you were Dorcas’ attorney. M went to another attorney to get her will done and apparently there was no undue influence. Will of Moses: attorney hooks up with the 20+ year his senior Mrs. Instead. give advice to Dorcas about what they would want included in the will. alcoholic. 5. c. The court did not look at whether Mrs. ISSUE: Was there undue influence with the new will leaving everything to the young attorney? Yes. Here. Mrs. BUT. Dorcas’ attorney because there are no rules that say you can’t do what he did. b. Current court changed the standard of proof – i. Why include such a Interrorum Clause (will contest clause)? i. i. Change from a preponderance to clear and convincing evidence to disprove undue influence. (Estates and Trusts – Spring ’11) 64 . tell her you cannot draft the will because of the potential undue influence issue – instead. i. M. Way too low considering the amount of money at stake! ii. 2. RATIONALE: a. M could resist the attorney (or had the capacity to resist) – this would have been the majority approach. the will creating attorney never asked about the relationship with the younger attorney. LC said that the standard for disproving undue influence is by a preponderance of the evidence. they looked at whether there was improper behavior by the beneficiary. Will was originally 50-50. RESULT: Remand the case – although many courts refuse to use this higher standard of proof to discount undue influence. 3. Worried about undue influence because D already had her own attorney and the new attorney had loyalty to Dorcas. M had any issue. d. the discipline occurs with the higher standard of proof required. The court does not discipline Mr. 1.000 since each could get about $2 million if they win. i. iii. if there was a previous will. Mrs. 1. 4. Ruled that D was a tough cookie and not unduly influenced. will writing attorney just write the will as she wants it. and huge age difference. 1. Willing to lose $10. RATIONALE: a. or any other contingencies. M was in ill-health.
she transferred her assets to the brother and sister to the extent she did not transfer. 1. father disinherits C. and which cause testator to act in reliance upon such statement. 1. Remember. 1. she put (Estates and Trusts – Spring ’11) 65 . Remember.2. The will creating attorney was a quasi-partner of the younger attorney. iii. Fraud which causes testator to execute a will consists of statements which are false. c. Fraud – i. The court says that this is hyperbole and is only concerned with death time transfers – when in reality. Since the court’s only concerned was death estates. 4. which are material. courts are usually reluctant to uphold a new will when the old will kept the estate in the bloodline and the new will takes money out of the bloodline without good proof of the disinheritance. 2. Peralta v. iv. P lived with mother. father thinks C is a disappointment. Fraud may exist as a form of non-disclosure – this occurs when there is a duty to speak and there has been an omission. iv. mother had given life-time transfers that equaled out the bequests. d. Tortious Interference with Inheritance – i. which deceive testator. which are known to be false by the party who makes them. some courts look at whether the testator’s free will was broken down and some courts focus on the beneficiary’s behavior and the behavior’s effect on the testator. mother dies leaving C 12k and R $61 and diamond ring. M had given everything to her sister. R tells father that C got everything. now her family received nothing. Easier to look at the actions of the beneficiary than to determine whether the testator’s will was broken.” a. The old will of Mrs. not Probate. Remember. c. ii. Rood – “don’t worry. this is hard to prove and doesn’t come up too often with wills. Roblin Estate: 2 kids: R and C. which are made with the intention of deceiving the testator. hyperbole is not enough to induce fraud claims. Fraud occurs when mom has not been told when you said you would tell. Peralta: complaint brought to District Court. 3. b. Mother gave brother and sister inter vivos gifts. Courts are reluctant to let an attorney take when the will drafting was so closely related to the attorney’s practice – better to have the testator receive outside advice. I’ll tell mom you didn’t steal the jewelry. Looked bad for the profession.
for example. Need to balance the probability of success against the value of the bequest before determining whether to bring suit. ii.in non-probate form. Could be fraudulent action or undue influence. 3. disinherited sister brings an action to the District court because there is not thing there to probate. No-Contest Clauses 1. (Estates and Trusts – Spring ’11) 66 . 4. ISSUE: Is the District Court the appropriate court to bring the action where there is nothing to probate and there is undue influence? Yes. Preparing for the Contest: the Lawyer’s Role i. b. RESULT: Claim is acceptable. Exist to stop future litigation. In-terrorem Clauses 2. 3. 2. the action can be brought in DC. i. the disinherited would still recover through intestacy. 5. Look to see if probate court could provide an adequate remedy – if not. Expectancy Interest – 1. 1. What is necessary to bring the cause of action in the DC: i. because if you throw out the will. Claim is established by the preponderance of the evidence standard. proceedings in a civil action is appropriate. Intentional Interference by Some Other Beneficiary iii. that person will be deprived of all benefits under the will and that money should go to the residue of the estate (or maybe elsewhere). No. e. 2. could the action be brought in a DC? a. If mom rewrote her will and gave everything to the 2 siblings. States that if a beneficiary should challenge the will. 4. RULE: a. Tortious actions must occur as a result of the interference – 1. In situations in which the estate has been depleted so that there could be no remedy in probate. Reasonable certainty that the plaintiff could have received something if there had been no interference. Many courts say that this clause will not be enforced if the action brought against the will is brought in good faith and with probable cause.
Person who establishes the trust. Remember. Harder to challenge than wills because wills are challenged on competency. VI. Testamentary Trust a. Beneficiaries a. iii. and qualifications of the executor. ii. will construction (as to its language).e. Special Problems for Homosexual and Transgender Testators – i. Remember. 7. since same-sex couple cannot marry. there is no unlimited gift transfers for tax purposes so that limits this avenue of estate planning. In charge of distributing the assets of the trust and holding the assets according to the terms of the trust 3. f.6. Probably should put the money in non-testate form. 1. a. Trusts a. Terms of the trust are found in a will b. The scope of no-contest clauses is limited to the bequest itself not to other potential claims of the will. Provision in IRC that does not allow you to take a loss deduction for the sale of long-term assets to a related party. elective share. 2. you lose privacy of the trust since the will will be probated and thus accessible to the public. Trustee a. Benefits for same-sex couples: 1. Trustor/Settlor/Grantor a. 2. Introduction i. b. Take under the trust 4. For Example: put the money in an inter vivos trust with the remainder to the partner. if the beneficiary is a creditor. Could have the partner take with a life estate and the remainder then to a charitable organization so that it looks bad if other people challenge the trust/will. Terms: 1. RAP issues. Useful for protecting against unlawful lawsuits. Inter vivos revocable wills that have existed for a long time and have not been revoked indicate that a person did not lack capacity because they continuously decided not to revoke. See page 468 for some scope issues – a. i. (Estates and Trusts – Spring ’11) 67 .
Beneficiaries have standing to enforce trusts. Trusts do not necessarily fail for lack of a Trustee. a. 2. Created during your lifetime b. But a court will appoint a new trustee if there is no current trustee and no provision as to who should step into the trustee’s shoes. Inter Vivos Trust a. This power usually includes the right to buy and sell property with trust assets/money. Trustee has a duty to care for those assets. Legal v.5. Creation of Trusts i. b. b. Remember. i. Example: Shapira – Jewish girl marrying case – brother had special knowledge about what the father expected in a “Jewish girl” – if the brother stepped down as trustee. a. i. Uniform Trust Code – c. a. Trustee must act in good faith and in conformity with the trust. Must have a trustee with initially created. (Estates and Trusts – Spring ’11) 68 . b. Enacted in Ohio and Ohio also has the Ohio Trust Code b. 2000 1. Trustee has legal title. Beneficial Title – a. Trust Requisites 1. settlor CAN be the beneficiary. Trust may fail where the named trustee has special knowledge and no longer wants to be the trustee so no new trustee would be able to act with said special knowledge. 4. Pour Over Trust a. i. Inter vivos trust b. c. Terms in the will pour assets into the inter vivos trust 6. It may not be funded with a great deal at first ii. you can draft a trust and give whatever powers you want to the trustee. Remember. then the trust would fail for lack of special knowledge. Settlors do not – but if a revocable trust. Trustee has legal title over the assets of the trust. settlor can always change the terms. 3.
i. a trust cannot be passive – the trustee must have duties to perform. If M dies. Example: if you don’t want to deal with investing money. a. Moss v. So. Settlor has capacity to create trust b. 5. b.b. Could have a clause that says that the bank cannot act unless the settlor or other trustee signs off on it. Merger Doctrine – a. The trust immediately ceases and that person has the assets of the trust free of trust requirements. a trust will “merge” when one person is both the trustee and the beneficiary for the trust. Ohio requirements for a trust: a. d. b. attorney determined that the most worthy was X because X took care of decedent before decedent’s death. There must be separation of legal and equitable title so that someone exists to enforce the trust. Trust for animal 1. Trust has a definite bene or is: i. Charitable trust ii. Banks can be useful trustees – if you are willing to have the banks receive a fee for their services. Under CL and the Statute of Uses. The same person is not the sole trustee and bene (merger) 9. Active v. then W takes under the trust. 7. Trust for non-chariable purpose where trustee has discretion d. Beneficiaries have beneficial title over the assets because they are the one who will benefit from those assets in the future. Can stop merger doctrine by having a named 2 nd trustee – like a bank – or add another beneficiary to the trust. The only time there may be passivity is when the trustee holds title to property and actually holds the physical property. 6. Trustee must have duties to perform e. the article of the will said that the money should go to the (Estates and Trusts – Spring ’11) 69 . Example: The trust sets M and W as trustee and beneficiaries. b. 8. Passive Trust – a. Settlor intends to create a trust c. c. you can have the bank act as a trustee and invest for you. i. Axford: will gave the attorney the power to distribute to the most worthy of the property.
Property may only be used for this purpose to the extent the court determines that the property far exceeds the value of the treatment of the animal. b.Under the UTC. If none can be found. 14. 1. The attorney needed to use a good faith effort to pick the best “caregiver” 2. then to Y. RULE: i. Brainard v. CL – property must be in the trust for the trust to be valid. Commish: (Estates and Trusts – Spring ’11) 70 . Attorney could not go outside of the “caregiver” category c. ISSUE: was there a definite beneficiary for the creation of the trust where the money went? Yes. has no accepted statutory or other controlling limitations – it is not precise. Fails as indefinite because the word “friends” unlike relations. b. 10.Pets – a. i. you don’t need a definite beneficiary. you just need a beneficiary that is ascertainable within 21 years. The will establishes a means to determine who the beneficiary is.person who best took care of decedent and attorney was the sole judge of this a. uphold the trust because there is an ascertainable and workable standard in the will that allows for the determination of a beneficiary.Trust Property – a. A person who is the trustee must enforce the trust. i. 12.How could the trust have been written to avoid litigation? a. ii. “To the best caregiver that my attorney finds appropriate.“Friends” Trusts – a. It terminates at the end of the pet’s life. 13. may go to other beneficiaries/intestacy. Ohio departs from everywhere else because you can have a pour over trust that is created and lacks property until the will is effective.” 11. c. Look at the amount of power of discretion the attorney has. Trust may be created to provide for an animal during its life. b. RATIONALE: Here.
Really. He tried to assign profits and the court ruled that there was no property in said trust even though you do have a property interest in futures earnings of stock. ii. original husband’s estate of decedent challenged will because the trust had ambiguous language and was void and no named bene for the trust. here. this was a late life marriage where everyone hated the husband’s family and the estate already got ½ of property under VA law. If a trust states: It is my desire…it will not be enforced – always say “do it. Precatory language issues – a. a. Spicer v. will stated “to my sister to be disposed of as already agreed between us”. These are words of request of entreaty and they create doubt as to whether an absolute gift of trust is intended. Set up a trust so that profits of stock savings were for the children and wife. 3. ISSUE: Was there intent to form a trust? No. 4. ii. 2. sexual favors (Grauer probably meant gender). The estate argues that there is no property interest. Similar –if not exactly the same as – will formation.1. He assigned the right to his secretary for future profits. RULE: i. 1. Difference in the cases – tax avoidance v. Intent is evidenced by a clear intent to form a legal obligation (of the trust). 2. and Formalities – 1. 2. Speelman v. Right to Pygmalion as long as it became a play. 3.” b. Intent. Court sought to prevent tax avoidance. but the court rules that there was a future property/profit interest. 3. There was a clause naming the sister as executor. 4. Pascal: 1. b. RATIONALE: i. he was just trying to avoid paying higher taxes. Wright: holographic will named sister as executor. Trust Formation: Capacity. Precatory words are prima facie construed to create a trust when they are directed to an executor but NO trust is created by precatory (Estates and Trusts – Spring ’11) 71 . c.
v. marriage or death ending the trust. Result: Uphold the will and create a trust. ii.language directed to a legatee unless there is a particular disposition of the property. If no trust was created. Not specific. b. we know who the beneficiary is because the will trust is incredibly specific.000 to my accountant who is instructed as to my charitable wishes. iv. and that the Aunt was a direct beneficiary.” i. Examples: a. but it is going to the accountant so you need to create a trust – not family/special relationship. Important: here. NOT as the executor.e. the aunt would receive nothing. Here. Therefore. ii. b. where it would come from. no trust created and the sister is able to take without a trust. Aunt is not in good health. kids argue this is not part of the trust. the children could sell the property so no rents and dividends would accumulate and therefore. a. “I bequeath $10. RATIONALE: i. iii. ii. there were specifics on how much the Aunt was to get. they will take the property through fee simple without any trust agreement. 4. If there was a trust created. iii. ISSUE: Does this precatory language invalidate this provision of the will? No. the trustee could protect the interests of the Aunt unless one of provisions are met – i. although there was a clause making the sister an executor.” (Estates and Trusts – Spring ’11) 72 . General Rule: if you direct precatory language at a beneficiary. Levin v. Fisch: Will requested that the kid benes should give money to their Aunt every year out of the millions they would inherit they would inherit from dividends and rent the accumulated. 5. but the kids don’t want to give up the money. “I bequeath $10. Here.000 to my brother who is instructed as to my charitable wishes. will/trust indicates the kids don’t need to pay if Aunt remarries or Aunt dies but the language about payment starts “it is my desire…”. This is not a bequest/gift to the accountant – rather a trust should be formed with the charitable intentions as limitations on the trust. 6. the precatory language was included in the section indicated the sister as a legatee.
” i. c. FL and NY. Goodman v. “I bequeath $10. the property was to go to his children (but no formal trust was created) and the property was sold off by the decedent’s mother. 4. Not specific and therefore. Oral trusts may only be established with clear and convincing evidence – 1. there is a trust created. evidence showed that the grandmother knew that a trust was supposed to be formed for the children and other testimony confirmed it.000 to bother but ask for part to go to my cousin. you need to deliver the property to the trustee for it to be effectuated. there is no named beneficiary or RAP problem.” i. i. but she refused to give them. require that the will be in writing. Outright gift/bequest. (Estates and Trusts – Spring ’11) 73 . How could this be enforced? ii. If a Trust fails – a. RESULT: Remand (reverse SJ) – jury decides if there is enough information. b. While Oral Trusts are acceptable – PUT IT IN WRITING! a. 1. RULE: i. a.i. b. Delivery of Trust Assets – a. 3. For example. Trusts do not need testamentary formalities – they don’t even need to be in writing. Here. there was testimony showing that the decedent’s ex-wife though the children were to be beneficiaries.e. Trust Formalities – 1. bequest/gift in fee simple. The opinion of the testator may be that he doesn’t like charities. If transferring property to a trust. 1 child went to his grandmother and wanted his proceeds from the sale. “I bequeath $10. A few states.000 to my brother with $50 per month to cousin. d. Specific and therefore. If the settlor is the trustee. it isn’t necessary to actual title of the property. ISSUE: Was a trust for the children created even though it wasn’t actually in writing? Yes. Goodman: decedent owned a bar and died. iii. c. 2. ii.
ISSUE: Was the pour over trust valid? Yes. Trustees should have a clear indicator that their duties as trustee have ended. decedent died without revoking old trust. a trust is irrevocable unless clearly stated that it is revocable. Can have another trustee step in when you are unable to manage the assets – i. 2. 5. ii. 1. 3. Can have someone manage and account for your assets. Under CL. you may not need this provision – it makes sense to have a provision worded: “The settlor at any time may revoke provided that if there is a trustee other than the settlor.” iii. Clymer v. The testator retains control and power over assets with the power to revoke.e. A powerful estate planning tool. the co-trustee can manage the account. Avoid probate. a. Property goes back to the settlor and the settor’s estate – goes to next in line. c. If the trustee is NOT the settlor. Benefits: a. a. If the settlor is the only trustee. Revocable Inter Vivos Trust – 1. Mayo: decedent’s trust was initially unfunded. 2. b. inter vivos trust was created as pour over. Probably should create co-trustee where if the testator becomes incapacitated. the revocation must come from a signed written statement.b. 3. Problems may occur if the trustee is the only named trustee and he/she becomes incapacitated and the trust states only the trustee can determine whether he/she is incapacitated. incapacitated. decedent and H separate and H waived his rights to pretty much all decedent’s property. c. b. Revocation – 1. Statutes have changed this so that trusts are naturally revocable unless the terms are such that the trust is deemed irrevocable. 4. it makes sense to include a clause that indicates there must be a signed writing in order for the trustee to revoke the trust. Using Trusts as an Estate Planning Tool – i. When established. the future assets of the trust were to be funded by a life insurance policy for decedent’s then husband. it shows clear intent because the testator has not revoked it over a period of time. (Estates and Trusts – Spring ’11) 74 .
a. the trust was never revoked. the court determined that the trust was valid. H dies and NW (new wife) wants the money from the new trust. if one spouse died then the trust becomes irrevocable. Easier to plan for incapacity 4. may accumulate a large amount of fees by the trustee) a. 2. b. wife died. therefore. after wife died. RATIONALE: a. 1. i. the controlling statute states: “regardless of the existence. Depends on the age of the settlor (if young. Is it a good idea to always put money/property into a trust? 1. the couple sold the property receiving a note and deed of trust which they took as joint tenants. Here. Settlor will impose no mandatory obligation on the trustee. H and W failed to revoke the trust at any point during their lives together. Was the old trust revoked? No. H remarries and puts sale of house property into a different trust. Heaps: revocable living trust with spouses acting as co-trustees.a. Based on the state. old trust required that they revoke with a writing. or character. Building Flexibility in Estate Plans: Support and Discretionary Trust i. ISSUE: Are proceeds from the house sale still in trust as of the wife’s death? Yes. the new wife has no access to the money – the money should be distributed according to that trust agreement. Private—unless there is court proceeding (whereas wills are not private) 5. 2. Old people with a lot may want to create an inter vivos trust 3. they never wrote a letter indicating revocation. Discretionary 1. Depends on the assets and the amount 2.” of the trust funded. size. Therefore. Great for managing property d. The trustee has discretion to pay income/principal for the benefit of one or more described beneficiaries. The proceeds from the house sale should be in the old trust and therefore. (Estates and Trusts – Spring ’11) 75 . iv. before either spouse died. v. Heaps v. pour over trusts with no property in it was valid. i. the property of the spouses was put into the trust via quitclaim deed but this deed was never recorded. Also helps minimize will challenges 6.
Hybrid Discretionary and Support Trusts can (and do) exist. 2. The intent behind. Support 1. This is a trust in which the trustee is to distribute income/principal as is deemed appropriate for support. creditors have no access to this type of trust fund. 4. necessary means that other assets must be used before trust assets. a. trustee is authorized to provide “such sums necessary for the support and maintenance” of mom for as long as she lives. trustee is bene as well. Wells v. “as is necessary to support” should be read to mean something regardless of the beneficiary’s assets. trustee (S) is supposed to pay for bills of mom when she can’t pay. the only liabilities creditors can get at from the trust is for the beneficiary’s support.” “maintenance. The beneficiary has NO RIGHT to the property unless the trustee actually distributes it – therefore.” of the beneficiary’s lifestyle. 3. RULE: a. i. there is clearly a conflict of interest.3. (Estates and Trusts – Spring ’11) 76 . If a beneficiary only has a right to assets for support. iv. iii. 5. The trust could have been set up in such a way as to only give funds as a last resort and wasn’t – must be explicit if this is what you want to do. The trustee’s obligation (duty) is to ascertain what the beneficiary needs for support and then pay that amount. ii. devise to S as trustee to hold for mother for as long as she lives. b. Trustee has the power to pay income for the support of the beneficiary. i. But that does not mean that a trustee should not take into account the availability of the beneficiary to support himself. Necessary does not equal last resort. a. 1. May be: “support and education. 2. ISSUE: Does “sums necessary” mean that the trust funds should only be used to help mom as a last resort when she has no other funds available? No. Trustee has an obligation to pay the beneficiary amounts necessary for support. The trustee must use good judgment – must look at all the circumstances surrounding the distribution and must remember that there may be other beneficiaries who deserve part of the assets of the trusts for support. Sanford: provision in will that where mother is still alive.
vi. v. The attorney as trustee violated his fiduciary duties. 1. E. This court enforces the clause – (Estates and Trusts – Spring ’11) 77 . RESULT: Injunctive relief so that the mother can get some trust property. The lower court wanted to take the house back and give the house to C’s new wife – i. Can set up trusts that require certain benchmarks be met by beneficiaries before those beneficiaries can take under the trust. Marsmand v. a. vii. the standard is living is determined by the standard of living to which the beneficiary is accustomed to at the death of the settlor. c. Standard of Living – 1. The D did nothing wrong in this case (clean hands!) and D made it clear that when C died. But. RATIONALE: a. if it is necessary for support. the attorney distributed $300 as a principal support payment – remember. ISSUE: Is there a duty owed by the trustee to investigate the beneficiary’s financial records when the beneficiary is allowed to access principal for his support when he is broke? Yes. in this case based on language. when C had no money. Lower court was willing to hold the attorney liable and NOT enforce the exculpatory clause. the trustee may apply the principal of the trust for the support and maintenance for C. The trust had an exculpatory clause stating the trustee was not liable except for willful neglect and default. and based on the trustee’s sole discretion. her will established a trust stating that 1/3 of the residue and net income of the trust was to go to C and if it was deemed necessary. If this is part of a support trust. Incentive Trusts – 1. C ran out of money and the drafting attorney was the trustee. d. 4. Remember. b. i. then the trustee has a duty to give some trust property. i.000 a year before he can take. the trustee had a duty to investigate the financial situation of C. Nasca: W died and was survived by Cappy (her husband) and daughter (D).g. D cannot keep all the remainder interests in the trust because C should have been authorized to access those funds. beneficiary must have a job making $100. 2. the new wife would be ousted. C wanted to sell his house to D and hold a life estate interest in the property – the trustee could have said there was trust property available to help him out.3.
1. Distribution of Income v. Protecting Beneficiaries from Creditors: Spendthrift Trusts i. RESULT: C’s estate is entitled to assets from the trust because of the failure to receive the assets during his life. 1. Normally. the attorney as a trustee is not personally liable because the exculpatory clause is enforced. Don’t know what beneficiaries will need when the settlor creates the trust. e. States that the exculpatory clause is effective unless breaches of the trust are “committed in bad faith or intentionally or with reckless indifference to the interests of the beneficiaries”. Trustee has discretion to pay the income to one or more named beneficiaries as the needs appear. the clause is acceptable. viii. etc. Grauer indicates that there was a breach of fiduciary duty with the decedent because there was a confidential relationship with the settlor to act in good faith as trustee for the trust. dividends. 2. But the court ignores this special relationship. Income – interest. rent. ii. Support trusts provide protection against the beneficiary himself. 2. Special issue because the attorney that drafts the will/exculpatory clause is also the trustee – some sort of breach of duty. (Estates and Trusts – Spring ’11) 78 . The court stated that there was no evidence that the insertion of the clause was an abuse of the attorney’s fiduciary duty with decedent at the time of the drawing of the will – therefore. 2. and therefore give the trustee flexibility when paying out assets of the trust. Spray Trusts – 1. 1.i. if the trust was “income to A for support. a beneficiary of a trust may assign his future interest in the trust so that when the benefits of the trust are due. if a trustee sells assets of the trust at a profit. 2. 2. BUT. ii.” cannot assign interest or principal of the interest. e. the assignee gets those benefits. Principal – a. Court says that the decedent wanted the clause included. The actual property placed into the trust. the capital gain is taxed to the trust. Remember. Principal – 1. that the underlying property produces. b.
c. Unless there is a valid restraint on the alienation of the trust agreement. If you have a lien against a trust. D was unable to pay off the judgment. then you may access the trust funds again. RULE: a. i. How could a spendthrift clause exist in a trust? 1. This result occurs because there is no spendthrift clause.” ii. anticipation. if the trustee pays to or applies for the beneficiary any part of the income or principal with. 2. 2. v.iii.000 in damages. whether in trust income or trust principal. Gentry: P had a judgment against the D for charges of fraud – there was over $50. Hospital states: Pay me because the beneficiary has a right to the money because it is for his support. 1. P wanted to garnish the trust to receive payments for the judgment. then your interest in the trust terminates – thus protecting the trust assets from creditors because you no longer have access to the funds. Creditors want to get the money directly from the trustee NOT from the beneficiary at this point. D will now never receive distributions from the trustee – the trustee has discretion and therefore will chose not to distribute. i. (Estates and Trusts – Spring ’11) 79 . Wilcox v. Some trusts with Cesser Provisions indicate that if the lien is paid off. The Trustee now has a duty to make payments directly to the P. What good does this lawsuit do? i. iv. or seizure by legal process. ISSUE: May P garnish the trust so that when payments are made to D from the trust P would receive those distributions? Yes. d. Example: 1. he is liable to such a transferee or creditor. Traditional rule: the lien holder stands in the shows of the beneficiary and can get a distribution for medical care so long as there is not a spendthrift provision. Cesser Provision – 1. knowledge of the transfer or after he has been served with process in a proceeding by a creditor to reach it. Suppose there is a support trust – a. D had a Discretionary Trust without any spendthrift provision. “The interest of my trust beneficiary. R2d – i. b. shall not be capable of assignment.
Duty of creditors to look at the trust language and make sure that there is no spendthrift provisions in the trust. 2. 6. 5.ii. Scheffle v. Therefore. a. D had a spendthrift trust and P had a judgment against D – P wants to collect against the trust. Trustee is permitted to give trust assets/payments to the beneficiary without paying creditors. 1. the spendthrift provision will be overruled. c. 4. Public Policy: i. Permit the trust settlor to insulate trust assets for purposes other than support or education. it may overrule the spendthrift trust. ISSUE: Does P have a right to collect against the trust? No. Local statutes clearly state the exception of collection against spendthrift trusts DO NOT include tort claims. RULE: i. P makes a Public Policy argument that is repudiated – 1. 3. If there was a fraudulent transfer. ii. 1. a. Designed to prevent voluntary assignments and to prevent the beneficiary’s creditor from garnishing the beneficiary’s trust interest. The court indicates that if the spendthrift provision policies were judicially created (so. vi. Spendthrift Trusts – 1. EXAMPLES: (Estates and Trusts – Spring ’11) 80 . 2. not statutorily) then the policy exceptions for tortfeasors may apply – not an issue here because there is a statute in place. This prevents people from putting money in a trust for themselves and preventing creditors from reaching it. Kruger: D sexually assaulted a minor and broadcast it on the internet. If the trust is a self-settled non-special interest trust. UTC Approach: prohibits creditors from asserting that the trustees has abused its discretion in failing to make a particular distribution even though the beneficiary would be entitled to make the claim against the trustee. OH Exception: this does not apply if a claim by the state of Ohio for a visit to a state institution if no spendthrift provision. BUT that didn’t happen here. b. the spendthrift creation statutes will indicate specific exceptions of collection against spendthrift provisions.
D has the right to the income of the trust. 2.” 1. ISSUE: Should P be able to receive the alimony payments form the judgment against D when D receives income from a trust with a spendthrift provision? Yes. But remember that public policy supports the payment of alimony/child support. RULE: i.000 against B and the trust states: i. 2. P should then go after it! 7. Bacardi v.” 1. “The Trustee shall pay to B so much of the income of the trust as the Trustee deems appropriate in the Trustee’s absolute discretion. If each of these examples had a spendthrift provision.000 per month. iii. a. This is a support trust and not a support claim. P can garnish the Trust and will receive judgment amount because the income is not discretionary/for support/spendthrift. D had a trust with a spendthrift provision and P wanted to garnish the income and get the actual distributions of the trust. P cannot garnish the income. As soon as B gets the money. iii. White: P was married to D.a. ii. FYI – great many jurisdictions follow this decision. This is Discretionary – the Trustee probably will not distribute anything. Public Policy of alimony and child support is greater than the spendthrift clause – 1. “The Trustee shall pay to B the entire net income of the Trust at least annually. If B has access to income of a trust each year and P has a judgment of $8. The income CAN be garnished.” 1. ii. c. b. but then did not pay. (Estates and Trusts – Spring ’11) 81 . D agreed to pay alimony of $2. The trust could be set up so that P could receive nothing if there was a spendthrift clause and it was Discretionary. Limitations: the P can only garnish the trust if it is a LAST RESORT – D has no other assets to pay off the judgment. b. the Trustee could distribute income without any attachment. 2. “The Trustee shall pay to B so much of the income of the trust as the Trustee deems necessary for B’s education and support.
the court then placed the Ds in contempt. UTC only has this exception. Ds put their money into a Cook Island irrevocable trust. the FTC filed a complaint. 5. spouse. or former spouse OR i. a lawsuit like this. the court ordered the Ds to pay the money anyway. OH says only child and spouse (no exspouse). Cook Island Trust Act – 1. Impossibility of Performance – a defense against contempt: 1.e. Remember. Was there impossibility? a. 2. a. Affordable Media. the Ds were unable to access the funds of the trust because the trust became inaccessible when an “event of duress” occurred – e. 8. cannot shield your assets with a Spendthrift Trust – this is called a Self-Settled Trust. Services or supplies provided for necessities or for the protection of the beneficiary’s interests in the trust. RULE: i. 2.g. Remember. FTC v. Contempt of Court occurs where: 1. the money will never be released from the trust)? No. ii. Here and in a few other jurisdictions. Ds were able to pay back the trust. Support of a child. The burden then shifts to the contemnors to demonstrate why they were unable to comply. It doesn’t matter if the trust’s purpose was to defraud/evade creditors. The Cook Islands’ courts will not recognize foreign judgments that are inconsistent with the statute.1. vii. 4. you as Settlor and Beneficiary. (Estates and Trusts – Spring ’11) 82 . 3. LLC: this case concerns a telemarketing Ponzi scheme created by the Ds. Self-Settled Spendthrift Trusts are acceptable. R3d Approach to the exceptions of the Spendthrift Provisions – a. ii. b. ISSUE: Should the Ds be exempt from contempt charges because there is an impossibility of action in this case – i. b. The moving party has the burden of showing by clear and convincing evidence that the contemnors violated specific and definite orders of the court. you can indicate in the trust which law governs the trust and you should place the trust assets with a Trustee in that state.
(Estates and Trusts – Spring ’11) 83 . If money is placed in a trust to avoid being used for Medical expenses. Comins: 1. The court is unwilling to say there is impossibility of performance when the Ds were the parties that set into motion the events that caused there to be impossibility in the first place! 3. iv. In regards to Medicaid planning. The Trust was set up after a medical malpractice suit – set up by a conservator because the beneficiary is mentally handicapped. any transfers made within 5 years of the need for Medicaid will count towards the assets owned when applying for Medicaid. Ds powers were to declare new Trustees and determine IF there was an event of duress. Commissioner: 1. c. 2. Here. 2. Ds were the protectors of the trust. Sometimes given negative powers – veto powers. iii. so does Medicaid. the maximum amount they could ever make to you should count against them. make a payment to you. Provided that to the extent a Trustee could. the money goes to the un-institutionalized spouse – the court rules that since they had access to the money prior to institutionalization. the maximum amount payable by the trustee is available for Medicaid – the net income of the trust. ii.b. ii. under any circumstances. Kokoska: 1. 6. f. Planning for Incapacity and the Costs of Institutional Care i. This section really deals with the middle class that are worth only a few hundred thousand dollars. Protectors are 3rd parties with the ability to access a trust and move assets. Ds ordered the trust to close because of the adverse event. Some states allow for Self-Settled Trusts. Cohen v. if you have a right to that money. This is really the only power courts have in order to fight foreign self-settled trusts. v. Congress passed the Medicaid Qualifying Trust Statute – 1. Dealing with Medicaid 1. The Trust indicates that if the spouse becomes institutionalized. i. iii.
Under the Ohio Trust Code (and most states). There was no successful revocation because while the will was in writing. RATIONALE: a. You would qualify because the maximum amount you pay is $5. 3.000 in stock? 1. On the other hand. OH has authorized the use of a Supplemental Trust – 1. You could make the trust completely discretionary – not for support for health – and therefore. Must be set up for a person under the age of 65. This might have been different if the trust was to pay for her children. The trust must provide that upon death. the trust becomes irrevocable – remember that a will only operates upon the testator’s death. ISSUE: Was the trust revoked by the 2nd will? No.000 per income. Limited in the amount of money that can be placed in this trust. In that case. it was not delivered to the trustee. viii. The assets of this trust are shielded from Medicare/Medicaid and can be used to supplement the needs of the person receiving the aid. b. 2. RULE: (Estates and Trusts – Spring ’11) 84 .000 2. 3. First National Bank of Minneapolis : 1. At CL. The money of the trust was to pay for her care – therefore. vii. you may want to set up many different trusts so that some money is available for Medicare/Medicaid. What if you set up a trust supposing you qualified for Medicaid under the $5.2. not the principal. v. Pertains to the “in writing” and “delivery” requirements. but you have $120. if you were institutionalized. the trust assets will be paid to the state to reimburse for institutionalization up to the amount the state has already paid. i. trusts were irrevocable unless there was a provision making it irrevocable. CT General Life Insurance Co. 1. 2. 2. the money is counted by Medicaid. the trust assets would not be available. b. Trust Modification and Termination by Settlor – i. trusts are naturally revocable. a. they needed to revoke the will prior to his death – upon death. Suppose you are getting 3% yield on the stock = $4. vi. Also. ii. some states will look past Discretionary Trusts with a clear intent to deceive the government as here. iii. g.000 and only interest counts for the stock.
most trusts establish how it may be revoked – you MUST FOLLOW ITS INSTRUCTIONS! iv. Here. General Rule: where a Settlor reserves the power to revoke a trust by a transaction inter vivos. RULE: a. Link: 1. iii. American National Bank of Cheyenne v. If Settlor is the Trustee. b. Funded the revocable trust with shares of the decedent’s closely held business. Barnette: 1. 2. upon the divorce of his 1 st wife. When can the beneficiaries terminate the trust? ii. Adams v. ii. Who is Required to have Written Notification? 1. v. Trustee 2. you probably will not need to show notification. Miller : (Estates and Trusts – Spring ’11) 85 .a. 2. The court disagrees with the 2nd prong and therefore the trust continues. The purpose of the trust is defeated because the intent was an income stream to heirs and F – lump sum defeats that purpose. the court said that delivery is conclusive because he was the Trustee – oral statement may be enough – look to the circumstances. he went to get a new will. RATIONALE: a. 4. Don’t accept the position of Trustee unless a provision for written notification is provided! h. he indicated that he revoked the trust – but did not have written notice. b. The every reasonably ultimate purpose of the trust’s creation and existence has been accomplished. That all the parties in interest unify in seeking termination. Modification or Termination by Consent – i. he CANNOT revoke through a will. ISSUE: Should the agreement to end the trust be accepted by the court? No. That no fair and lawful restriction imposed by the testator will be nullified or disturbed by such a result. 3. he was the issuer of the stocks. Conditions that Lead to Early Termination – i. Grauer says that F could have assigned rights and gotten a lump sum anyway. iii. as for example by notice to the trustee. 3. Remember.
b. in the trust. Modification or Termination without the Consent of all Beneficiaries – i.1. you owe tax NOW as opposed to deferring until later. a. ii. indicated that you were setting up a revocable trust. RESULT: Revoke the trust. Just because you don’t read the language. Cover education. all material purposes must be met before the trust can be terminated early! 2. OH – Spendthrift Clause MAY be indicative of material purpose – may be the cause of many Settlors putting in the clause as a policy. The purpose of the trust has been satisfied – the purposes were: i. what your intentions are for the trust! 1. it doesn’t mean you can change the terms of the trust. i. remember. iii. You need to make sure that the settlement agreement adequately protects everyone’s interests who are beneficiaries in the trust. Pernoe: money was put into an irrevocable living trust – you don’t normally want to do this. 2. Basic Rule: (Estates and Trusts – Spring ’11) 86 . iv. RATIONALE: a. ISSUE: Can the trust be revoked through this settlement plan? Yes. the trust said the income went to the beneficiary for life and then income to D for life with the remainder to a grandson. Spendthrift clauses indicate a level of purpose. 2. with documentation to prove it. How seriously should we look at the material purpose requirement of the trust? 1. clearly indicate. a. Husband no longer wants his portion. Wait until the children were at least 35 to get the money – they were old enough now. As a Settlor who wants to protect against early termination of a trust. v. not as a purpose. The only time that you could get a revocation – an instance in which the attorney clearly. the settlor wanted to revoke because the settlor thought that the trust was revocable – that’s what the attorney said! 1. Not readily inferred when looking at a trust. 1. The only exception is where all the beneficiaries and settlors agree to early termination. Remember. ii. 2. 3. He has a right to revoke his interest. UTC Approach – up to the state to decide.
but you might worry that another beneficiary might sue as a result of their rights not being protected. even if it is an irrevocable trust. b. ii. a. the trust may be terminated. they can revoke whenever. Usually. b. 2. 3. Charitable Trusts – i. You only spend the interest. If the settlor wants to revoke the trust – a. ISSUE: Is this a charitable trust with a charitable purpose? No. If the trustee improperly ends the trust and distributes its content to the beneficiaries. RATIONALE: (Estates and Trusts – Spring ’11) 87 . You cannot revoke if you were under a mistaken belief in what the law provided. 1. the money was to be used by them for their education. i. Shenandoah Valley National Bank of Winchester v. If all beneficiaries agree and there are no material purposes left to the trust. j. Taylor : a trust was created and the beneficiaries were established to be 1 st-3rd graders. iii. the beneficiaries are estopped from suing the trustee for breach of duty. Where does RAP apply? a. The Trustee of a Discretionary Trust can terminate the trust. iv. The jurisdiction and duration are limited by RAP. the money was given directly to them just before Christmas and Easter. 1. 4.1. “Charitable Purposes” – 1. Tend to end with endowment funds. You CANNOT create a charitable trust for your estate or issue’s benefits. If the settlor is the sole beneficiary. v. It doesn’t apply if the remainder goes to a charity then to another charity. set up a tax exempt corporation. c. b. If the remainder goes to a private party and then to a charity or vice versa. If the trust is irrevocable: you can revoke it yourself as the settlor ONLY IF the person who drafts it made a MISTAKE in the drafting. the donor’s family contested the trust. charitable trusts are used for smaller gifts – if a great deal of money is involved. NOT the principal. If the trust is revocable: the settlor may revoke at his or her will if the instructions for revocation built into the trust.
This is really just a benevolent trust. 4. 4. especially if there is valid claim. If no charitable purpose is indicated the court can create one. A person left a trust to Marymount to use for nursing students. Who enforces charitable trusts? The Attorney General. If the purpose of the trust no longer exists. A charitable trust may be formed to relieve poverty.i. c. the court can use Cy Pres to give it another purpose. b. This is a general intent to help nursing students – therefore. 3. in order to best effectuate the donor’s intent. vi. 6. Can a settlor enforce the trust agreement (charitable trust)? a. 2. or other benefits to the community. NOT the school. but the AG has not followed through the his enforcement duties. modify the trust to use the assets in a manner as close as possible to the intention. A nearby college could use the funds for nursing purposes. 3. for health. b. If there is a specific intent. Include in the document what will happen if the charitable trust would end. 2. c. find a new cause Cy Pres. the college closed and the estate wanted the money back. The money was not really for the children’s education because the trustee had no control over HOW the money would be spent and the money went directly to the children. Wilson: (Estates and Trusts – Spring ’11) 88 . Cranshaw: a. Charitable trusts CANNOT be established for political parties but they can be established for social movements. b. The Cy Pres Doctrine – 1. ii. If broad. UTC and OH – a. the money went to the other nursing school. the trust property will return to the estate if the charitable purpose no longer exists. The settlor may maintain an action to enforce a trust. Was the donor’s intent limited to a particular charitable purpose or did the donor have a more broad charitable purpose? a. give education. b. The Ohio UTC gets rid of the examination of the Settlor’s intent – a. 5. If the charitable trust is unlawful or impossible to achieve. They CAN have standing.
The trusts were upheld because donors can do what they want with THEIR money. or the class of people able to receive the gift.” – This is a non-general power. i. the standards for achieving the scholarship differed between schools – one school awarded it to the top 5 students and another awarded to those without the financial means to afford college. Powers of Appointment – a. ii. Presently Exercisable/Inter-Vivos = can exercise the power during one’s lifetime. A trust established a scholarship at all-boys’ high-schools. 3. The court recognized that there was discrimination BUT if it had been invalidated. It is as if the appointment power is property in your estate. iii. b. v. Taker in Default = a person who takes if the holder of the power does not exercise it. ANYONE! 1.” – This is a general appointment that is presently exercisable. iv. but she can demand as much as she wants from the principal. The claim was that there was gender discrimination – i. i. 2. it goes to the takers in default.e. whether or not you actually exercise the power. or creditors of the estate. Appointees/Objects of Power/Class of Permissible Appointees = the people to whom the donee appoints the property. Donee = a person who receives the power of appointment. a will. creditors. “Income to my wife for life with the right to demand from the principal for support. Donor = a person who creates the power of appointment. Definitions: i. This must be an ascertainable limitation 2. vii. estate.a. viii.e. VII. Testamentary = can only exercise the appointment rights through a testamentary instrument. Non-General/Special Power – Limited Power of Appointment to a Special Class – 1. then there could not have been minority trusts. EX: “among my descendents” – (Estates and Trusts – Spring ’11) 89 . General Power = property can be appointed to self. “Income to my wife for life. if you don’t exercise the power. It is NOT a general power IF there is a support element to the transfer! a. b. ii. vi.
education. RESULT: Since the wife failed to follow the prescribed instructions. ii. always ask to SEE the power of appointment in the Decedent’s will in order to ensure that you property exercise it. If a rule is made for who is to exercise the power. if exercisable in favor of self. in the will. but that’s about it. you MUST follow that method. state where (to the will and the article within the will) you were given the power and state specifically if you exercise it or not. in order to exercise it. b. For specific powers. it is an Exclusive/Exclusionary Power.a. D has a power of appointment. the appointment failed. or creditors of the estate. creditors. D has no power of appointment. Parties to a Power of Appointment – i. or maintenance. If you are able to exclude from the class. RULE: The power is Exclusionary UNLESS the trust/will says otherwise. support. ii. to designate recipients of beneficial ownership interests in the appointive property. In practice. the wife fails to make a specific reference to the LAST will of the Decedent – she got the power right. 2. b. c. the power of appointment must be evoked in the way in which the power calls for it to be. i. The power of appointment enables the donee of the power. RULE: a. Unless the power is limited by an ascertainable standard related to health. 3. the power and will of Decedent needed to be specifically referenced in her will because it is a testamentary power. 2. If F has a power. Does D have a power of appointment at all? a. b. Estate of Hamilton: the Decedent gave his wife a General Testamentary Power of Appointment – she could appoint to whomever she wanted to. 1. Just as for the revocation of wills. ISSUE: Should the power of appointment be enforced when the reference to the power is incorrect? No. b. Yes. (Estates and Trusts – Spring ’11) 90 . estate. There is a Series of Questions to Ask: 1. is it general? a. acting in a nonfiduciary capacity. Creation and Exercise – i. If D is a trustee or can direct trustee payments. If D is not a trustee and the trustee has pure discretion. 1.
If the power requires that you specifically refer to the power to exercise it. GENERAL RULE: a. c. you must do what the donor asks. Block: a. but made no reference to the power of appointment. 2. b. and 30% to a 3rd child. Non-General Power + the class of appointees/objects is sufficiently narrow to ID them – give the property equally to the objects. vi. 1. Non-General Power + difficult to ID the class/objects – return the property to the donor or estate. Bjr probably had the will drafted in Ohio where it would not have been exercised. What do you need to exercise the power? 1. i. The court here follows NY law because that is where the power was created – i. Will of Block: a mother gave money to Bjr and the right to distribute funds to A and J as he saw fit. If it is a specific power. (Estates and Trusts – Spring ’11) 91 . but for CL and OH. b. Because the donee is the agent of the donor. If there are no named takers in default: a. c. no. General Power: the property returns to the donor’s estate. This is the Minority view: Donee must show that there was a clear intent NOT to exercise the power of appointment. 1 year after the mother’s death. b. yes. 2. Look to the law of the jurisdiction in which the donor created the power to determine whether exercise occurred. This is close to the donor’s intent.iii. If you fail to indicate a specific reference as to whether or not you are exercising the power – 1. ISSUE: Has the power of appointment been properly exercised? In this case. You are required to actually mention or specifically reference the power before it will be exercised. Well drafter powers will indicate takers in default – 1. i. creditors may NOT access the assets. If it is a general power. Bjr left a will leaving 35% to twins A and J. iv. Hamilton: a. creditors may access the assets. 2. Bjr should have included a clause indicating that there was no interest in exercising the power. v.
Non-General Power: then to a class if capable of identification. 3. This occurs when they exercise the power. upon receiving their property. THEN the property goes to the donee’s estate. Exercising a Power by Creating Another Power 1. they take. d. If granting the power. The beneficiaries have the right. 2. OH – you can eliminate the perpetuities problem if trust says it doesn’t apply – remember. If there are takers in default. b. can’t write out the exercise of a nongeneral power of appointment. 2. Scope of the Power: i. You can create a trust from the power of appointment. Capture Doctrine – 1. So. vii.3. A Power of Appointment is exercised if there is a reference to it where there is no specific requirement that you refer to the grant of the power. then you can appoint another power without difficulty. a. It applies only to general powers and attempts at exercising that fail because they violate the RAP. Special powers are limited – limitation is based on what the power is. to use the property as they choose – a. But. Examples: 1. This is where there may be perpetuities problems. iv. 2. if it is a general power and it appears you were combining estate assets with your own and the exercise is invalid. Exercising a Power by Creating Another Trust – 1. you can grant it to avoid Capture. 2. General Power: then the property goes to the estate. (Estates and Trusts – Spring ’11) 92 . there CANNOT be a contract between a beneficiary and a donee to use a power as if it is testamentary. What if you don’t exercise the power? 1. If you have a general power. the property goes to…” ii. If there are no takers in default – a. “If the donee fails to exercise the power or an exercise is invalid. a. Majority Rule: a. iii. a. 2. You can create a further trust so long as the trust beneficiaries are all objects of the power or within the permissible class.
Can O dispose of the trust corpus by creating a trust for the benefit of his sister for life and giving S a general testamentary power? 1. iii. there CANNOT be an agreement to that effect. If there was no agreement. creates a trust and gives her son. The attorney should have made this clear to E and the cousin. valid? No. The court struck the entire exercise saying that it did not know what would have gone to the cousin if there was no agreement. E came to an agreement with her cousin that the cousin would get $250. ii.000 so long as the cousin would give $100. He can give the general power.000 back to E’s husband (who was not included in the bequest. 2. a power to appoint the trust property among O’s children? 1. v. a. give his wife. If you exercise a power beyond the scope of the power originally intended and blend it with your assets. Can O. Will of Carroll: a trust was created with income to W and residue to the children. a testamentary power to appoint the principal among M’s descendants – i.a. since M trusted O to make the decision. make the distribution of your assets and distribute the appointive assets to the objects and your assets make up the difference. BUT. Example: M. that is acceptable. b. 1. in order to get more money (the amount to E’s husband was limited). How do we know there was an agreement? 1. See Block – since there was a combination of assets – 3 kids and 35%. Exceeding the Power’s Scope 1. which goes against the powers of the trust. ISSUE: Is this contract. O. E and R. 30% (Estates and Trusts – Spring ’11) 93 . O could have appointed to his kids. ii. in his will. There was a letter that stated that this would occur – drafted by E’s attorney! iv. a. but the cousin WANTED to give the husband money out of the goodness of his heart. by a will. M would trust O to delegate the power so long as the power is limited to M’s delegated class. 2. RATIONALE: i. 35%. This is clearly a fraud on the power.
It is acceptable to contract to exercise general. you’re hit with a gift tax. Use the appointive assets first to fulfill the 35%’s and only the estate assets could be used for the 30% vi. do a conditional provision! a. The rationale is that it is as if you gave the power to yourself and then exercised the right to give it to another immediately afterward’ b. A contract to exercise a testamentary (or otherwise not presently exercisable powers of appointment) is NOT enforceable – it is VOID. Classification and Construction of Future Interests a. 1. e. then the creditors are out of luck. a. Classification of Future Interests (Estates and Trusts – Spring ’11) 94 . c. Can change a general power to a non-general power i. both take ½ as takers in default. If you have a general power of appointment and you exercise it. If I am NOT insolvent. 2. Right of Creditors i. VIII. which means that you are the only one I can appoint now. The IRS says that if you release a general power. Can disclaim the power of appointment – must be done within 9 months after it was granted to you. the power goes to creditor. iii. Contracts to Appoint and Release 1. 2. Example: if H has a general power and he would like 75% to go to S and the rest to go to D. So. If no exercise. b. creditors can grab the property over which you have the power. BUT if he exercises. Policy – should the donee have access to the money from a general power of appointment? Yes! ii. Can be a partial release b. Can release the power to appoint to anyone other than to you. 3.i. it is as if you exercised it and gave the money away – so. I exercise 7675%-25%. I am not exercising if insolvent. BUT exercise in accordance with a void contract is valid. Relation Back Theory 2. d. If you don’t exercise it. presently exercisable powers of appointment. CL/Majority View – 1. and it goes to the takers in default. Release of Powers of Appointment – a.
Creates a determinable interest. he can give that reversion away later. If grantor – a. Remainder: i. it would be part of the class. c. Vested Subject to Complete Divestment: (Estates and Trusts – Spring ’11) 95 . iv. then the interest goes back to you. ii. RAP applies here.i. ii. Kinds of Remainders: 1. An interest that immediately follows the prior interest you created and is created within the same document/grant. Because you are part of a class that is given the interest and the class can still increase in size. Can occur when the trust gives a life estate and then a reversion back to the estate. 2. Who Holds the Future Interest? 1. BUT J is alive and could have more children. b. “To J’s children” and J has 2 children. RAP doesn’t apply to reversion. Subject to a condition subsequent. 2. c. If it reverts back to the estate. Vested/Indefeasibly Vested: a. iii. If the grantor realizes that he created a reversion. “To J so long as he never serves booze” – if a condition occurs. b. You do not need to survive – vests at interest and not in possession. The “Garbage Can” of everything else. It is yours no matter what happens to you. v. ii. b. Reversion: i. Right of Entry/Reentry/Power of Termination: i. BUT it will come back to the estate before going away again. If a 3rd Person – a. Vested Remainders Subject to Open/Partial Divestment: a. if a new child is born. you need to open the estate and figure out where it is supposed to go. 3. Possibility of Reverter: i.
a. Safe from RAP issues; b. They vest in a particular person and are subject to a condition subsequent; i. IF the condition is given AFTER the gift; 4. Contingent Remainders: a. Requirements: i. Held by an unascertainable person; ii. If the person is ascertainable, then this is a condition precedent; iii. Example: if the gift itself contains a condition necessary in order to take, it is contingent; b. Executory Interest: i. Another Garbage Can; ii. If it isn’t a remainder, it is an executory interest; iii. Occurs in 2 Situations: 1. Where the interest diverts something that is already vested – a remainder may not cut short a vested remainder; a. “D for life, remainder to D, but if D fails to survive, then to N.” i. N’s interest is a shifting executory interest. 2. Where the remainder fails to immediately follow the present interest in time; a. “To D for life and then 1 year after death, to C.” i. C’s interest is a springing executory interest; ii. For the 1 year, the interest returns to the estate; ii. Remember – read “children” to mean children and NOT issue. b. Construction of Future Interests: Gifts to Individuals i. Lapse and Anti-Lapse – 1. In order to take under a will, you need to survive the testator, otherwise the bequest will lapse; Anti-Lapse Statutes apply if there are issue; (Estates and Trusts – Spring ’11) 96
2. One reason for lapse is that wills do not create legal interests until the testator is dead – if you don’t survive the testator, there was no legal interest in the first place, because there was no vested interest when the will was executed; ii. Future Interests – 1. Once a trust is created, a future interest is also created; 2. We do not imply a condition of survivorship beyond the creation of the interest; iii. Uchtorff v. Hanson: the will contained a great deal of language – during the life of the mother, she received income when in the event of the death of the wife after my death without renunciation of remarriage – if this occurs so long as the son survives indefeasibly vested interest in trust; if he doesn’t survive, to C and children; the son survived the father, but not the mother; the will doesn’t indicate what happens in this situation; AC ruled that it was ambiguous; 1. ISSUE: Is there an implied condition of survivorship beyond the creation of the future interest? No. 2. RATIONALE: a. Historically, there has been a preference for early vesting. i. Why? 1. If vested, you don’t need to worry about RAP problems, and under the CL, you could not transfer interests with contingent remainders; 2. Vested remainders are not capable of being destroyed; b. CL – you shouldn’t imply a requirement of survivorship; c. Why did the children have an argument here, then? i. The Iowa Statute – 1. Shift from CL; 2. Future interest are NOT contingent, so you must survive unless the will clearly states/indicates otherwise; 3. RULE: a. We follow the CL; b. Many modern statutes reverse the CL; iv. Matter of Kroos: a trust was created stating: “upon the death of W, I give all residue and remainder of my estate to my children; in the event that the children die before W, if the children have descendants, then they take;” here, a daughter, F, died without descendants and before the death of W; 1. ISSUE: Was F’s interest vested? Yes. (Estates and Trusts – Spring ’11) 97
2. RATIONALE: a. For there to be divestment, you must fail to survive AND leave issue – i. F only did one of these things and therefore, there was no divestment; ii. The interest vested because she survived the testator; b. How SHOULD the will be worded? i. What happens if she dies without descendants? ii. Don’t leave any contingencies open! v. See problems on pp. 819. c. Construction of Class Gifts i. Class Gifts occur when you want flexibility and you want to take into account that certain groups may increase in size, especially when in childbearing years! ii. Issues that need to be dealt with – 1. How long can the class increase in size? 2. When can it decrease in size? – Is there an implied condition to survive? iii. “To my grandchildren” – 1. People born into the class are not required to survive the class, unless that is what the interest requires; iv. In re Evans’ Estate: there was $50,000 in a trust; income was to accumulate until each grandchild reached the age of 21; at 21, each grandchild was to get his/her share of the income; at age 30, each grandchild was to get their share of the corpus; at the time the testator died, there were 6 more grandchildren, 3 of which were born after the death of the testator, but before the first reached age 30; more children could have been born; 1. ISSUE: When did the class close? It includes all grandchildren born before the first grandchild reached the age of 30; 2. RATIONALE: a. Once a grandchild is in the class, their interest has vested – it is not contingent on reaching age 30 (the wording of the interest); b. The class is determined until the distribution of the principal – i. If this were not the case and the first child reached 30 – it would be impossible to create equal distributions of the principal; c. Distributions of income do NOT close the class –
(Estates and Trusts – Spring ’11) 98
J died BUT had children. ii. it is deemed to be vested as opposed to IF someone reaches a particular age.i. vii. 3 Choices: i. the remainder should go to my grandchildren. Class Gifts of Income (Estates and Trusts – Spring ’11) 99 . If you have a right to income. d. the other child had H who produced great grandchildren for the testator (BUT H died before N – the last surviving child). If a will states: the principal should be divided “among my children” – 1. you have a vested interest as a rule of construction. if there are 7 grandchildren. up until the time of distribution of principal. on the death of the last surviving child. W married and they had N. viii. “Children” means children through a survivorship requirement. b. Just because there is a survivorship requirement for one person does not extend the requirement to every person in the will. J (married E). v. iii. If there is a clear intent for a class to close early. 1. that intent controls. J. here. “Children” means issue. he lost his remainder interest and his children do not take. “Children” MEANS children and there is no survivorship requirement. if another is born. J’s children are arguing that because H did not survive L or at least until distribution. c. RATIONALE: a. ISSUE: Should an implied condition of survivorship exist that would require H to survive for the interest to vest? No. Farr: a will states: to L for life and then to the children who survive L for life. ii. If one of the children in Evans died before anyone reached the age of 30. 1. Clobberie’s Case 1. For something to be paid when you reach a certain age. So. It is unclear what the intent of the language and trust is. See problems on pp. 827. Usry v. vi. This is the Majority View. a. that income and principal would be distributed to that child’s estate. then each gets 1/8 at the next distribution. Decrease in Class Membership: Survivorship i. Who gets the principal? a. 2. each gets 1/7 share of the income. and one other child. Majority view would say we should not imply a condition of survivorship. N was the last to die. iii.
c. The Rule Against Perpetuities a. RULE: i. ii. Don’t want a reversion.1. and then income to Tjr and his children for life with total distribution 21 years after the death of the last of Tsr’s grandchildren. (Estates and Trusts – Spring ’11) 100 . b. RESULT: J gets T3’s trust income. Since this is what would happen when the last died. a. So. It limits the time period that interests are allowed to be contingent. probably this is distributed to each descendent’ c. members of a class are joint tenants with rights of survivorship. Interests subject to the rule – 1. “No interest is good unless it must vest. 1. the gift of the entire class fails even for those of the class who are alive. iii. Dewire v. does not limit the duration of a trust. the will indicated that income should go to W for life. Hayeles: Tsr begat Tjr begat T3. in the absence of a contrary intent expressed IN THE WILL or controlling statute stating otherwise. there was contrary intent because the testator did not indicate what would happen when the 21 years were over. not later than 21 years after some life in being at the creation of the interest. Here. IX. this presented a RAP problem. always include people’s names! To do so helps with RAP problems. Policy Behind the Rule i. Generally. If a class could increase/decrease beyond the perpetuities period. a. 2. Under this rule. The rule. 1. if at all. Vested Remainders Subject to Open (or Subject to a Partial Defeasance). This case makes it clear that when it is possible. ISSUE: Can J recover/receive trust income? Yes. P and D all before the testator’s death and then additional children were born after the testator’s death (T3 begat J).” 1. a. but itself. T3’s income would be distributed among the remaining 5 until the last one is dead – UNLESS there is contrary intent. 2. You can ignore the 21 years section UNLESS there is a contingency or UNLESS the interest vests outside the reaching of the age of 21. b. we’ll assume that this is what happens when the first one died.
2. Contingent Remainders 3. Example: residue to grandchildren who reach age 25 1. 2. vi. iii. then to H’s youngest child for life and then at the death of H’s youngest child. Income to H for life.b. you have to assume that the person who would be born after the interest was created could then survive a nuclear holocaust that would kill everyone else. Strategy: 1. then to H’s youngest child. v. H’s child could outlive any living contingent remainder – not a life in being and therefore not valid. The youngest grandchild? a. The youngest child may not be a life in being. 2. 3. See if there is anyone not alive at the creation who could be born AFTER the creation of the interest. All lives in being at death. 2. ii. Executory Interests b. Exception: if you can break the class into separate shares. (Estates and Trusts – Spring ’11) 101 . The measuring life must be a person alive at the time the interest was created. The class ends at the death of T’s youngest child – the lives in being are all of T’s children because the interest was created at T’s death. If existing. 3. Example: 1. H’s child – vest at the husband’s death – life in being. The Rule’s Operation i. This violates RAP because more grandchildren could be born after the testator’s death and the class does not close until they all reach the age of 25. The interest you are testing must vest or fail within 21 years of the measuring life. H’s interest – vests immediately. 4. then the share who are alive are protected. Look at the interest. the principal to T’s youngest grandchild. iv. whose existence would DEFER vesting. then to T’s youngest grandchild then living. Example: residue to the children who reach age 25 1. How to choose a measuring life: 1. 1. Example: income to H for life. 2.
The widow may not be born when the testator died – this would cause a RAP problem for the children. No RAP problems because the class closes when the 1 st child reaches age 21! 2. Perpetuities problems don’t begin to run until the property has become irrevocable. If born after T’s death. b. Cook v. then remainder to H’s then living children. 1. Fertile Octogenarian – 1. 3. b. a. x. income to D’s widower for life. regardless of age. interests begin to run at their creation – can be inter vivos or testamentary. 1. Income to D for life. Income to H for life. it is a vested interest. To get around this. a. Remember. The law holds that a person can have children no matter what age – so. No RAP problems because the class is closed – no one can join the class when one reaches 25. See note 4 on pp. ix. Valid. ii. 2. Unborn Widow – 1. use the spouse’s name! Indicate that “income to widow for life so long as the widow was living at the testator’s death. Remember. Valid because there is not implied condition of survivorship. Example: residue to grandchildren and there is only one grandchild and no children. c. then income to widow for life. viii. Example: residue to grandchildren who reach the age of 21 1. Recurring Problems i. if payable at a future date. iii. Slothful Executor – 1. What if the litigation goes on for a long time and the estate is unable to be distributed? a.vii. it will vest 21 years after the child’s death who was a life in being.” iv. This may violate RAP. a person can have children until they die. Horn: 1. 889. (Estates and Trusts – Spring ’11) 102 . Example: residue to grandchildren who reach 25 years and one grandchild is already 26.
These trust interests protect the interests of the then living children and invalidate potential new children’s interest (born after the testator’s death). It is invalid for those born after the testator’s death. b. The interest then goes back to the settlor/estate and then goes through intestacy or residue based on the will. Exception: Infectious Invalidity – 1.000 to each child before or after my death – 1. Charitable Trusts i. iii. 1. then only that section/interest is invalid. BUT. (Estates and Trusts – Spring ’11) 103 . The Rule is applicable when: a. ii. To A for life. ii. Class Gifts i. A non-charitable interest follows a charitable interest that may not vest. then the trust should be divided into as many shares as A has issue (or deceased children with issue) and each line gets income from his/her share. If $30. it goes through intestacy. Separate Shares or the Subclass Rule – a. It is valid for each child who reaches 25.c. The charitable interest is followed with a non-charitable interest that may not vest – then there is a RAP violation. If sending the interest back to the estate of the settlor and sending it through intestacy would upset the entire estate plan. The duration of the charitable trust is not limited by RAP. e. ii. This is clearly invalid because A could have more children born who don’t reach the age of 25. Specific Sum Exception – a. 2. 1. the class MUST CLOSE before the perpetuities period. Consequences of Invalidity i. But if the interest states: those in office when the estate is distributed – it may violate RAP d. Exceptions: 1. then throw out everything in the will. 2. If it is already in the residue. on the death of each child of A to his living issue. if you said $10. b. Remember. If invalid. f.000 is to go to A’s children born before or after death who reach the age of 25. i.
(Estates and Trusts – Spring ’11) 104 . ii. it goes to the Girl Scouts”. on death of child to that person he appoints. 1. Could also just name the then living children and there would be no problem. Questions to Ask: 1. then to A’s children for their lives. it may cause infectious invalidity. Example: an inter vivos trust says. here. 3. If another child is born after death. Example: “the trustee is to pay income to D for D’s life. Can be exercisable outside the perpetuities period. 1. “to A for life. i. must be able to be exercised within the perpetuities period. then the power is invalid if it can be exercised beyond the perpetuities period. the children after D’s death may not have been lives in being. ii. at his death. Generally a presently exercisable power – that power is going to be valid so long as it becomes exercisable within the perpetuities period. i.i. b. BUT. But. Is the power valid? a. Powers of Appointment i.” 1. 2. this would be ok. Example: an irrevocable inter vivos trust states: “income to the settlor and at the settlor’s death. there is no problem. If a non-general (inter vivos or testamentary) OR a general testamentary power. the settlor also gives the power to the trustee to pay income as needed to children born after the settlor’s death”. ii. The powers are invalid because this is a testamentary general power and the children may not be lives in being. his is NOT a life in being – here. If the trust was revocable. an irrevocable trust’s time period being at the creation of the trust. The Trust has a non-general power because it is discretionary. Vested remainder in the Girl Scouts. otherwise. iii. 2. the income should be divided into as many shares as she has children. not the settlor’s death. the trustee may distribute each year as he deems appropriate. and at her death. g. A trustee can serve as a life in being BUT if it is a corporate trustee.
” a. d.” i. b. it can be exercised within the time period – therefore. there will be NO RAP problem. no interest under the appointment would be valid. General Testamentary Power: i. Because the donee is the agent of the donor. 3. and then on each child attaining age 21. then the remainder to the living grandchildren. The time period begins at the exercise of the power. If the trust is irrevocable. b. This is valid because T is a life in being. ii. the trust period begins with the creation of the trust. ii. Suppose: “income to T for life. If there was no Second Look Doctrine.” iii. Remember. then the period runs whenever the trust is irrevocable. Why? 1. as he appoints. remainder as T appoints by will. Example: to A for life. ii. the donee cannot make the property his own. Presently Exercisable General Powers: i. 1. This only applies to the exercise of a NON-GENERAL POWER and perhaps a general testamentary power. Treat the power as a non-general power – start running the perpetuities period at the creation of the power. T writes: “income to my children until the last child dies. 2. This is a presently exercisable and general power. The time period runs at the creation of the power. Read it as if it says: “to T for life. The Second Look Doctrine – 1. then to A’s children for their lives.” 2.iv. ii. If the trust is irrevocable. Look at the time period the power runs – i. c. This is NOT “Wait and See. if the holder of the power exercises the right and gives the property outright. Non-General Powers: i. e. it is valid. then to T’s children until the last dies. (Estates and Trusts – Spring ’11) 105 . Is the Exercise of the Power Valid? a. then the principal should go to the then living grandchildren. The time period begins when M (the original testator) created the power.
there was a right to withdraw from the corpus amount for comfort and support. Industrial National Bank of Rhode Island v. appointed: “income to granddaughter 1 and granddaughter 2 for their lives. This is a RAP violation. and then later had Z – 1. Estate and Trust Administration a. Remember. The rationale is that for a millisecond. and on the death of each. by will. the property is back in the stream of commerce. probate the estate where the testator is domiciled (Estates and Trusts – Spring ’11) 106 . v. Since “comfort” usually means non-support trust = a general power. ii. take a second look at the time of T’s exercise to see who are actually lives in being when M created the power. Here. because there was an ascertainable support standard. suppose that at M’s death. Suppose T later has Z. 4. are not lives in being. ISSUE: Is this a general testimonial power? Yes. 1. but Z died BEFORE T’s death. iv. Under the Second Look Doctrine. vii. T had children. 1. 1. each share of the income should go to their issue”. Suppose at M’s death. there are 6 issue alive (great-grandchildren) that were not alive when H died and therefore. The vested interest is fine because Z did not survive the lives in being. at W’s death. a. RATIONALE: i. iii. So. W. i. T’s children WERE lives in being and the exercise is valid. Barrett : H created a trust: “income to W for life. 1. b. A problem would arise if this was a testamentary power – the power would run at the creation of the trust power NOT at the exercise of the power by W. Should we run perpetuities at the exercise of W’s power? Yes. remainder as W appoints by will with the power to appoint to her estate”. X. No court before said that a general testamentary power ran with the exercise of the power – this is a minority approach now. Estate Administration i. vi. the attorney rolled the dice on whether this was a general or non-general power. X and Y. during W’s life.1. T has children X and Y. There is no way to know what T will do with the power.
Also back then. Courts are more likely to remove a trustee because removing an executor delays the distribution of the estate 5. Tend to get paid a % of the estate (Estates and Trusts – Spring ’11) 107 . Winds things up and transfers assets to the benes 2. D. the court is to or might take into account that a material purpose of the trust was to have this individual as trustee iv. more likely that executor may be liable than in years past 4. Hospital probably did not file because there was a provision in the OK statute that said that a decedent’s estate was required to pay for the last medical expenses no matter what 1. Might have ancillary probate—allows you to represent in that state as well as domicile state iii. Following Mullane. Inc v. ISSUE: Was the notice valid? Maybe. followed the statute and only filed notice in the newspaper a. Attorneys. If qualified benes request (unanimously) the court should remove if it serves the interests of all the benes and serves interest of the trust b. Creditor’s claims against decedent 1. Courts are not as likely to discipline executors for making mistakes with investments while the estate is in probate a. trustees. If trustee is an individual. Fiduciary Duties 1. To remove. but probate is self-executing v. Probate is self-executing and therefore no state issue and thus no Mullane c. Pope : Decedent was at the hospital for 6 months where he eventually passed away. Notice shortened to 30 days. Trustee a. Doesn’t require notice b. bene needs to have just cause (a breach a fiduciary duty probably) 6. need to send direct notice ii. On-going administrative function 3. Ohio rule a. b. if a creditor is known or reasonably knowable. So probably need to send direct notice to visa and other known debts 3. OK SC ruled that this does not relieve the hospital from filing notice ii. newspaper notice is enough c.ii. as executor. and executors get paid compensation 2. if you sent a bill to decedent (not to executor). If the creditor was unknowable. OK has a statute that required bill filing within 2 months of probate. Executor a. UTC expands the grounds for removal (OH doesn’t have this provision): a. Most states had a provision like Pope where an executor was required to place notice that there was a death a. RULE: i. Attorneys a. Tulsa Professional Collection Services. RATIONALE: i. the P missed the deadline (filed a few years later). Removal of executors/trustees 1. executor was not obligated to pay the bill 2. Today though.
the assets were not fairly divided---G got cash when trust got the note—should have split this ½ and ½ c. what is the estate's biggest assets?--lots of intellectual property (Elvis--there wasn’t a known right to publicity in a deceased person. No further inquiry rule— i. No further inquiry rule: 1. Matter of Warhol: Executor was a business partner.b. B drafted P’s will because P asking him to. J. 1st job-collect assets and protect them--if people are stealing the assets. at least. This is because a % fee does not necessarily bear an indication as to the work done for the estate iii. and work. get paid a set fee c. RATIONALE: i. this established a descendible right to publicity in name/assets). attorney cannot pay fees up front—need to wait until after completing work because otherwise there is no motivation to do a good job with the work d. to determine the value of the fees ii. the executor hired the quintessential litigator that is not a probate attorney. The problem was that the executorial fees. Don’t want to dually pay the executor v. ISSUE: May the attorney’s % fee schedule be enforced? No. not going to get paid for it from the estate iv. The home sale can be voided because the house was an asset (sold to L) and an asset of Beatrice’s trust sold without prior approval b. b. Have time sheets! b. for the executor/trustee. sold P’s home and gave the proceeds to G and a note to the trust 1. 2. Good idea. Duty of Loyalty i. Moreover. Matter of Kinzler: P begat G (married B). if family is crazy. there is no further drop if it became at much more valuable---ended up being worth 500m a. when Elvis died. the estate is divided with 1/3 going outright to G and L and the other 1/3 put into a trust for Beatrice with remainder to kids and trustees being B and L. RULE: a. B is executor of the will and hires himself as attorney—pays himself legal fees up front. NOW. Remember: have plenty of time sheets describing when you worked for the estate 3. need to litigate to protect them. Further. This applies even if the property is at public auction iii. to not do their wills (Estates and Trusts – Spring ’11) 108 . Prohibition against self-dealing ii. A beneficiary can void the deal for whatever reason if no court approval 4. Bars fiduciaries from entering transactions with the estate/trusts they have a fiduciary relationship with unless there is a prior court approval of the action 2.5% to 2%. and E). and Beatrice (who begat J. people wanted to sell Elvis--estate sued for a right t publicity in his name. likeness. Can be used. Warhol did silk screens and easily copied. L. valued the estate at about 100m. were given to the attorney which should not happen—even though doing that work. Concern/rationale—fear that the estate/trust could have gotten a better price 3. ISSUE: was there a breach of the fiduciary duty of loyalty? Yes. but it was discovered to be worth more so drop fee from 2.
1. iii. Requirement: the executor needs to act like a prudent person. c. Real value – what you sold it for = damages. ISSUE: Is there a violation of the No Further Inquiry Rule? Yes. Damages – i. The executor that signed off on everything went to his attorney who told him there was nothing to worry about. a person gets damages for selling items of an estate too cheaply. That means. damages are based on the value of the items at the time of trial f. your children get an elective share. e. It seems like the executors were “giving away” the assets. Here. Duty of Care: (Estates and Trusts – Spring ’11) 109 . the final executor had no conflict of interest but signed off on all of the transactions 1. There is a duty to retain and do what is best for the trust – act like a prudent investor. fudged his books in an attempt to make it look like the paintings were from his own collection. after R’s death. Normally. c. NOT a legal decision and therefore. but the executor did anyway. The court filed an injunction to NOT SELL the paintings. R died and left his estate to a charitable organization. get the appreciation damages when the sold paintings after the injunction not to sell. ii. one of his paintings purchased. The executor should have just gone to the probate court and told them what was happening. Matter of Estate of Rothko: court applied the No Further Inquiry Rule when there was no insider purchases. NY has a statute that says if you leave your entire estate to charity. g. BUT. the executors set up 2 sale contracts and sold about 100 paintings for $1. ii. d.iv. 1. one of the executors. Lloyd.8 million when the probably should have been sold for about $6 million – they sold the paintings to their own companies. one was a painter who wanted to sell his paintings through the corporation and recently had. there was no malpractice nor personal liability for the executor. one executor is the director of the corporation. 2. RATIONALE: a. i. This is a breach of trust case and that damages that result from it. b. It is a conflict of interest where R previously where R previously had a deal with the consignment agency that stated the consigners would only get 10% of the sale proceeds – new contract was formed giving them 50%. selling the paintings was a business.
Exercise the judgment and care under the circumstances then prevailing which prudent men exercise in the management of their own affairs. If you are the attorney. but in regard to the permanent disposition of their funds. Also remember.” i. ISSUE: Is the trustee liable for breach of the duty of care for failure to disclosing the transaction? Yes. must decide whether or not the investment advice was acceptable – she had a duty to (Estates and Trusts – Spring ’11) 110 . i. RULE: a.000 at which point the buyer agreed. d. There is a general duty to keep beneficiaries informed as to what is happening with the trust. The court indicates that MJ. The Prudent Person Standard (to determine if there is a breach of duty): i. Gardiner : Mj was the trustee of a trust. the bank/trustee did not test the market value of the property outside the bank’s in-house appraisers. e. C embezzled the money and P sued MJ as the trustee. Normally. considering the probable income as well as the probable safety of their capital. ISSUE: Is MJ liable for the lost money when she delegated her investment powers? Yes. there was a duty to disclose because the property was the only asset in the trust. The trust cannot have an exculpatory clause that says. as sole trustee. Here. you are held to that higher standard! 1. they did not put the property on the market. not in regard to speculation. the beneficiaries were not given an opportunity to place an offer.i. b. c. 1. Pacific National Bank: the 1 asset in a trust is a property in Seattle. the trustee said it would take nothing less than $200. MJ was not educated and let her son. Shriners Hospital for Crippled Children v. there is no duty to disclose the transaction UNLESS the trust requires notification or the beneficiaries’ approval. “I direct my executor/trustee shall not be liable for any loss caused by their conduct. Allard v. 2. the trust provided income to MJ and then to the grandchildren with the remainder to P. make the investment decisions. C. the trustee wanted to sell. the UTC says that if you sell services indicating a higher ability/standard than the prudent person. ii. Trustee is required to inform them if there is a non-routine transaction.000. 2. 1. make sure to put it in the trust language/contract. but there is a right of first refusal in the lessee. RATIONALE: a. MJ knew nothing of investments and sought C’s advice. the trustee went to the buyer who said it would buy for $140.
No longer are stocks considered risky investments. Establish the delegated scope of agency and powers. it uses a great deal of prudent investor language. can be a wise investment. Nothing is too risky as long as it can be balanced out. c. In re Estate of James: this decision occurred when NY was using the prudent person standard. a. c. Emphasizes that any asset. if bought at the right price. Investors should reduce risk by holding many different investments rather than by assuming that each investment is “safe. discretion. and if properly placed in a portfolio. as well as the probable safety of the capital to be invested. 2. with an understanding of diversification and risk. the trustees held onto the stock as the price of Kodak stock fell substantially. but in regard to the permanent disposition of their funds. A trustee may delegate duties that a prudent trustee could properly delegate – trustee should show reasonable skill.” d.investigate and guarantee that the results of the investment advice were good and sound. A trustee who complies with this will not be liable for the actions of the agent. Review the agent’s actions and monitor performance. Problem: the trustee is supposed to seek advice if ignorant on investing. i. Duty to Diversify: 1. b. Prudent Person Standard: i. the testator died holding 71% of his assets in Kodak stock. Modern Portfolio Approach – a. b. b. considering the probable income. iv. not in regard to speculation. iii.” 2. here. and intelligence manage their own affairs. Traditional Rule – cannot put all your eggs in one basket! a. A trustee may delegate investment and financial functions of a trust that a prudent person with comparable skills would delegate in similar situations. UTC and Uniform Prudent Investor Act – Modern Approach/Modern Portfolio Approach. BUT cannot rely on the advice?! c. Used the prudent man standard. (Estates and Trusts – Spring ’11) 111 . He is to observe how men of prudence. This is the traditional approach. too: 1. v. “All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion.
but they were unavailable because that case dealt with selfdealing and faithless transfers. Wanted to get appreciation damages (like Rothko). just because you might not want to invest in a certain area. Remember. vii. you may need to hire someone to do it! viii. d. Changing Conditions and Administrative Flexibility Deviation: (Estates and Trusts – Spring ’11) 112 . 2. If you breach a fiduciary duty with investments in 1 area. there is a duty to IMMEDIATELY diversify! i. vi. b.1. If you hate tobacco companies. c. ii. 2. Executor v. investments are difficult. Remember. it does not mean that the trust should not invest in that area. Most banks have a policy that 1 stock should only constitute 10% of a portfolio. plus interest. We are trying to protect the settlor’s interest – a. don’t want to dump all of the stock immediately. a trustee should review the trust assets and determine whether to buy or sell assets. Damages are based on the price the stock was worth when the lawsuit was brought minus the value of the stock when it was sold. we won’t let you balance it with good investments in another area. ISSUE: Was there a duty for the trustees to diversify the trust portfolio? Yes. Anti-Netting Rule: 1. Trustee: i. The court rejected this when the executor is in officer for a long period of time. ii. Remember. When the portfolio has 71% of one stock and no clause in the trust indicating that it was to remain that way. ii. Argument that executors should not have the duty to diversify. the trust should still be able to invest there if you are the trustee – your personal preferences should not come in the way of the trust. if the trust explicitly states: “Don’t trade in tobacco products!” then you are not allowed to. Damages: i. Remember. Within a reasonable time. but rather do it over time because there may be a market impact if you sell huge block of stock at once. RATIONALE: a. 1. ix.
There must be an emergency that undermines the purpose of the trust/the court needs to act in order to prevent the trust from failing for the court to change the conditions of the trust. ISSUE: Does the court have the power to change the conditions of the trusts to invest in stocks through the Doctrine of Changed Conditions? No. all the beneficiaries wanted to invest in stocks to make more money because the trust is not keeping up with inflation. The trust was still making money and was worth more than it was when it was founded and therefore. it was apparent that the settlor knew what he was doing especially since he was successful during the Great Depression).i. Stanton v. 2. 1. RULE: a. the court stated that it will preserve the settlor’s intent and not change the terms of the trust (moreover. no such emergency existed. Wells Fargo Bank and Union Trust Co. the proceeds could only be used to invest in AA bonds. the trust indicated that if the stocks currently in the trust were sold. : a trust was set up by the settlor during the Great Depression with assets well over $1 million. (Estates and Trusts – Spring ’11) 113 . 3. RATIONALE: a. Here.
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