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Transfer of Decedent’s Estate I. Probate & Non-Probate Property a. Probate = property passes through decedent’s will or intestacy b. Non-probate = property passing through instrument other than will i. Does not involve a court proceeding (life ins., trust) ii. Can avoid probate if estate is small II. Probate Procedure a. Appoint personal representative: executor (named by decedent), administrator (appointed by court) b. Any part can demand formal probate (SOL = 3 years) c. Interested parties may demand supervised administration Chapter 2: Intestacy: An Estate Plan by Default I. UPC §2-102: The intestate share of decedent’s surviving spouse is: a. The entire intestate estate if: i. No descendent or parent survives decedent, or ii. All D’s surviving descendents are also descendents of surviving spouse and there is no other descendent of surviving spouse who survives D b. The first $200k, plus ¾ of any balance of intestate estate, if no descendent of D survives D, but a parent of D survives D c. The first $150k, plus ½ of any balance of intestate estate, if all D’s surviving descendents are also descendents of surviving spouse and spouse has one or more surviving descendents who are not of the D. d. The first $100k, plus ½ of any balance of intestate estate, if one or more of D’s surviving descendents are not descendents of surviving spouse II. Ausness on §2-102 a. No descendents or parents = all to spouse b. All descendents are descendents of spouse = everything to spouse c. No issue, but parent(s) survives = $200k + ¾ to spouse d. All issue are descendents of spouse but spouse has other issue = $150k + ½ to spouse e. D’s issue are not issue of spouse = $100k + ½ to spouse f. Note: Spouse’s shares is always calculated first. g. UPC & KY are parantelic (go down first) h. Children of spouse, if not by D, get nothing III. §2-103 Share of Heirs Other than Surviving Spouse a. Order = D’s descendents, then parents, then descendents of D’s parents, then grandparents IV. Uniform Simultaneous Death Act (§2-701, §2-104) a. The death is deemed simultaneous unless the other survives 120 hours V. Partial Intestacy a. May exist if part of will is struck down
Share of Descendents I. 3 Basic Schemes a. English (Strict) Per Stirpes i. Each generational line is treated equally ii. Division would still be made at children, even if all dead, then grandchildren split out of that b. Modern Per Stirpes (UPC 2-106(b)) i. If no children survive D, estate is divided equally at first generation in which there is a living taker ii. Each generational line treated equally; Eliminates dead generation iii. “Equally near, equally dear.” c. Per Capita Without Representation i. Each taker receives equal share regardless of generation ii. Rarely used d. Per Capita With Representation (KY) i. Equal shares at closest generational level, then descendents of dead representative split according to that share. ii. Descendents “step into” shoes of dead taker iii. Sometimes call per stirpes – this is incorrect e. Note: Surviving Spouse’s share will be calculated before any of these systems are used. f. Problems on p.73-79 II. Negative Disinheritance a. Applies to wills, not defaults b. Must make an express statement in will to disinherit child and leave the money to someone else c. UPC: Disinherit by express statement III. Shares of Ancestors and Collaterals a. Collateral = relative who is neither ancestor nor descendent. Common ancestor. b. If no issue, parents normally take under §2-102 c. Different heirs at same number: (ex: great-grandkids and niece) i. Parentillic: To niece – go down before over ii. Civil: They split it (only the numbers matter) d. “Laughing Heirs” – UPC only goes to second line collaterals (grandparents) IV. Advancements a. CL: Any lifetime gift to child presumed to be a prepayment of child’s intestate share (advancement) b. To avoid: child must show transfer was intended as absolute gift to not be counted against child’s estate c. Hotchpot (when it’s an advancement) i. A receives $10k advancement, $50k left to A, B, C ii. $50k + $10k = $60k, then $60k / 3 kids iii. A has $10k already, so gets $10 more; B,C get $20k each iv. Participation in the hotchpot is voluntary
d. When advancements exceed estate i. If advancement = $40k, and estate = $50k ii. A stays out and keeps $40k, B,C split $50k UPC §2-109 Advancements a. Treated as advancement only if i. Declared/acknowledged in writing, or ii. In writing to be taken into account for estate b. For (a), property advanced is valued as of the time the heir came into possession of property, or at time of D’s death, whichever occurs first c. If recipient does not survive D, property is not taken into account unless in writing Half-Bloods a. UPC makes no distinction b. KY: Half-blood gets ½, whole blood gets double that. c. No distinction if there are only ½ bloods and no whole bloods Posthumous Children a. KRS §381.070 Non-marital Children a. “The child of no one” b. Uniform Parentage Act: gives limited rights for children if paternity shown
Bars to Succession I. Estate of Mahoney – Homicide a. Remanded to determine whether spouse willfully killed husband. b. Constructive Trust imposed (Vermont Statute) i. Equitable remedy imposed against one who inherits by wrongdoing ii. Used to prevent unjust enrichment, creates no fid. duty iii. Not a trust at all; beneficiary receives no use of property II. Murdering Heirs Statutes a. UPC §2-803 i. Distinction between intentional and unintentional conduct ii. Civil standard of proof; criminal conviction is determinative of intent iii. Treats slayer as if he predeceased D. (UPC & KY) b. KRS §381.208 i. Requires conviction of felony; forfeits all interest c. Constructive Trust Statutes (above) d. Note: These are used only when there’s no statute for murdering heirs III. Expectancy a. The expected inheritance of heir apparent b. Child takes this action to release expectancy back to parents c. Consideration is required d. Ex: X has children A, B. A has children C,D. X dies. A releases expectancy. All goes to B, even though A has 2 kids.
Undue Influence – often happens to old people e. Mental incapacity d. Can disclaim prior to D’s death.e. Hart a. Undue Influence (no exact legal definition) a. 4. so you can’t increase amount to your heirs. v. Delusion = false concept of reality c. To have standing to challenge a will. Strittmater: Probate set aside: it was her insane delusions about males that led her to leave estate to National Women’s Party. Mistake: Mistake is susceptible to correction if T is told the truth. 3. Legal.IV. Causes particular provision in will – or entire will – to fail for lack of testamentary capacity b.D. one must be of sound mind. Fraud or duress f. 1. Cannot disclaim property in order to avoid federal government as a creditor. But if A (promisor) dies first and has kids. a. (could differ now) e. V. I. or 9 months afterward Drye v. Influencer had opportunity to do it iv. b. Influencer had the disposition or motive to do it iii. VII. you must have a financial interest II. Insane Delusion a. Transfer of Expectancy a. not psych. Disposition is result of the influence b.. and promisee is 3rd party = not enforceable Renunciation & Disclaimer a. I. U. the renunciation should incur the same penalty that acceptance would have brought about and should render recipient liable for any payment incorrectly paid by Gov. T was susceptible to it ii. Minority – must be over 18 c. concept. amount is frozen c. Delusion is insane if rational person in T’s position could not have drawn conclusion of T. Basic Test: i. If recipient renounces an inheritance that would cause him to be financially disqualified from receiving benefits. d. Chapter 3: Wills Mental Capacity I. Can only characterize it as a K to transfer to 3rd party b. (Medicaid benefits) Troy v. 2. VI. Testimental Capacity: Overview: a. UPC §2-801 i. CL: intestate successor cannot prevent property from passing to him d. To make a will. Confidential relationship: some trust or reliance 4 .S. Other tests: i. III. A taker by either will or intestacy doesn’t want it: Decline to take property b. Various tests are used. Heirs of disclamer still receive same amount disclaimer would’ve received.
When U. Whether T received independent advice 2. Extent of weakened condition 3. Reasonable person would view as unjust. causing T to execute will to include provisions in wrongdoer’s favor. 2) Motive. 3)Causation (succeeds in doing so) Overview a.IV. 1. in lieu of provision made for them in will b. Usually must have intent and purpose of misleading c. Duress I. D’s intellect was weakened. (UI) c. ∆ received bulk of estate iii. ii. Minority: Strict enforcement Overview a. PR: L shouldn’t let T give him anything. unless related Moses (not assigned) a. There was a confidential relationship (*in every test) ii. Test: 1) Confidential relationship + 2) Suspicious Circumstances No Contest Clause a. Lipper TEST i. One misrepresents the character or contents of instrument signed by T. unfair c. I. or refrain from executing/revoking will. Beneficiary who contests will shall take nothing. Discrepancy between new and older will 5. or token amount. 5 . Lakatosh TEST: i. T’s attitude toward others changed 4. becomes overly coercive Fraud I. 3) Opportunity. Rest. II. Majority: Enforce unless there is good cause for the contest. V. Burden of persuasion i. which does not carry out T’s intent g. 1) Confidential relationship. Remedy: Usually constructive trust Fraud in the Inducement e. Contestant must show substantial evidence of undue influence d. 4)Causation UI & Attorneys a.I. One misrepresents facts. 2. Test: 1) Intent to deceive T. Will proponent must show will is valid (easy) ii. §8 TEST: Suspicious Circumstances 1. e. Remaining portion of will stands unless fraud is entire will d. 2) For purpose of influencing T’s disposition. 3. T deceived by misrepresentation and does that which she would not have done but for the misrepresentation b. VI. Fraud in the Execution f.
Ex: if you would get certain amount under intestacy. IV. b. Indirect Interested Ws a. this is ok. b. W gets what this will says VI. W requirement to sign in presence of T satisfied only if T is capable of seeing W sign. b. Extra Benefit Rule (only some states) a. Groffman: No probate. Have more than 1 W so that if 1 is interested. Differing Will Requirements a. b. Wrongdoer performs or threatens to perform wrongful act that coerced T to make donative transfer she otherwise would not have made. Stephens v. Gift: Interested W statutes are concerned only with gifts. Basic will formalities: 1) Writing. KY: If you’re interested W. Intent may be established by extrinsic evidence d. 2) Signed by T. Creditors can be Ws because T is paying a debt. KRS: Two “credible” (disinterested) witnesses required c. Direct v. UPC: Does not state that Ws must be credible or disinterested V. Ws later disclaimer of interest did not render her “disinterested” at time of signing. c. KY: “Interested” extends to close relatives of W VII. Presence (Imp!) I. This is ok. look for undue influence. T did not properly execute will when Ws signed outside presence of T III. Overview a. Statutes vary on whether W must view T signing will c. Father Divine a. Purging Statute a. but not any “extra benefit” provided for in will c. If nursing home. Remedy: Invalidated Latham v. Constructive Trust used whenever necessary to satisfy demands of justice when someone is prevented from making a will. must be 2 or more Ws at same time. you’ll still have enough for a valid will. If W would’ve gotten more before the will. at which W is pastor. Casdorph a. (English Wills Act) b. Line of Sight Test a. Ex: T leaves money to church. Supernumerary Statutes a. Compensation v. not giving a gift. T planned on redoing her will. Estate of Parsons a. c. 3) Attestation by Ws b. you will still receive this.II. VIII. If 1% goes to executor. 6 . Chapter 4: Wills: Formalities & Forms I. KRS: “Credible Ws” only – Ws inherit nothing from will II. CA later adopted UPC (with no interested W provision) and dumped this. cult killed her in surgery. b. Will invalid. only the “extra benefit” is invalidated.
d. Deposit with Clerk i. comprehends that W is in act of signing UPC a. W is in presence of T if T. Anything you intend to be your signature is ok. Real Property a. L shouldn’t keep will – looks like solicitation V. Held: Will is invalid because exceptions cannot be made to Wills Act.II. Mistake in Execution a. the addition is invalid and will is ok c. Determine whether it’s added before or after signature b. Ignore material below signature. Conscious Presence Test a. b. III. UPC: Signed will + affidavit signed by T. Claim whole will is invalid. Self-Proved Will i. Allows will to be valid now if it was valid originally c. through sight. The law of the state where property is located determines validity of disposition of real property. Ausness recommends this b. f. Comity Statutes a. When you execute valid will where you’re domiciled then you move to state where will would not be validly executed. 15 of outline IV. and notary ii. Pavlinko’s Estate: Husband and wife mistakenly signed each other’s will i. In re Snide: Same as Pavlinko. Dispenses altogether with requirement that W sign in T’s presence Signing a. Executing a Will I. Normally doesn’t apply to holographic wills e. sound. If before. Additions to Will Before/After Subscription: a. or general consciousness of events. etc) after adding it. follow all procedures (Ws. Held: Will properly admitted to probate. IV. If you’re too ill. dispositive provisions in both wills are identical. The law of D’s domicile at death determines validity of will II. then may either i. If you’re illiterate. Safeguarding a Will a. W. but wills were identical i. To be valid in all states: p. b. you may direct someone else to sign for you. or ii. b. If after. KY: Ws must be in presence of T. Ws not required to be present when will is probated iii. were he to look. T must be able to see W sign. III. b. To add to existing wills. Personal Property a. an X will suffice. 7 . V.
III. d. Gives court the power to dispense with formalities if there is clear and convincing evidence that D intended document to be his will b. Ranney i. b. iii. and he had directed that his prior will be destroyed. Dispensing Power a. Technique of will construction and interpretation c. Integration a. gift goes to 3rd person because survivorship clause (to spouse if alive) isn’t met V. A: If T videotapes his will. Change language so will reflects actual intent of parties b. Statute providing for probate of a document that was not properly executed if court is satisfied that there can be no reasonable doubt that deceased intended the document to constitute his will. Remanded to determine whether execution of will substantially complies with statutory requirements. Self-Proving Affidavits: sworn statements by eyewitnesses that will has been duly executed. If there is clear and convincing evidence that purposes of formalities were served despite a defective execution. Harmless Error c. Testamentary scheme – reflected in both wills – when 1st spouse dies. IV. Ausness: Joint wills are bad idea. When 2nd spouse dies. Allows extrinsic evidence to show intent VI. Reformation a. Husband and wife executed joint wills.C. Attestation Clauses: provide prima facie evidence that T voluntarily signed will in presence of witnesses d. S. Dependent Relative Revocation (explained later) 8 . but at whether T intended the document or writing to constitute his will. will admitted to probate c. Overview a. remaining property goes to surviving spouse b. Estate of Hall i. When T almost complied wholly b. Reciprocal Wills (these are common) a.Curative Doctrines I. May have to integrate another document to get the will (may be more than one) b. UPC §2-503: Court is to look not for whether purposes of formalities were served [like substantial compliance]. notarized but no W. Substantial Compliance – a. ii. will not help because T hasn’t complied at all. c. Will probated: evidence that he intended this to be his will. VII. Accidentally signed attestation clause instead of something else. Try to figure out what is the will and what is not. II. ii.
Addition to previous will changing some. 2. V. is insufficient. printed portions in the will. Does not mean will is to be probated only if condition occurs.” look at what is in T’s handwriting to see whether there’s enough for holographic will VI. Cases a. 1. whether or not witnessed. or b. Kimmel’s Estate a. Mulkins i. testamentary intent to execute will is apparent. Revocation of Wills Revocation by Writing or Physical Act I. When revocation of will is based on a misunderstanding as to the legal effect or factual questions. Holographic Wills I. b. Eliminate pre-printed language as “mere surplasage. Subsequent writing executed with testamentary formalities. d. of the provisions of previous will. If a duly executed will is not revoked in a manner permitted by statute. Material portions = parts that dispose of property and reflect testamentary intent.a. d. UPC §2-502(b) a. KY does not require Ws if will is entirely in T’s handwriting II. Use of term “inherit” in letter shows testamentary intent b. Signed “father” at end and said “If anything happens to me. the revocation is conditional upon those facts being correct. Can’t use printed part to provide essential language to will being testamentary III. c. Oral declaration that will is revoked. Overview a. burning will. b. entire will must be handwritten and signed by T. IV. “If I don’t return…” b. etc. Condition is a statement of inducement for execution of will.” b. including. Physical act such as destroying. without more. c. 9 . for holographic wills. To be valid. if the signature and material portions of document are in T’s handwriting. c. the will is admitted to probate. Probated. A will that is not executed is valid as a holographic will. Kuralt i. Conditional Wills a. §2-502(c): Intent that the document constitutes T’s will can be established by extrinsic evidence. Codicil a. All states permit revocation of will by a. but not all.
return to original will without codicil. and because it was not physically defaced in any way. does not replace it. judge wrote “void” on back of it. Dependent Relative Revocation and Revival I. VIII. b. L rips into 4 pieces and sends to her. b. it is not presumed to revoke the prior will but is viewed as a codicil. Cases a. Construed as partial revocation that revokes clause 1. Thompson v. 2. Lost Wills a. ii. If you do. The attempted revocation is ineffectual because T intended to revoke will by subsequent writings not executed . Canceling a. By performing a revocatory act on the will. No revocatory intent IV. Supplements will. Royall i. Bird i. If T had written the revocation. rebuttable presumption that T destroyed will. if performed act with intent and for purpose of revoking will or part or if another person performed act with T’s conscious presence and at his direction. DRR Elements a. If no one can find will. iv. Valid will b. Not a good idea b. c. b. but will is not found. b. Codicil a. but no revocatory act. ii. Presumption of Revocation a. iii. T intended to revoke will. and this was holographic will. Harrison v. Courts vary on strength of this presumption VII. Purported Revocation i. Can still be probated if accidentally lost or unintentionally destroyed b. By physical act. write “Copy” on it. presumption is that T intentionally revoked it by act. 3. or ii. Mistake of law or fact 10 . 1. III. Intent. UPC §2-507 Revocation by Writing or Act a. If evidence shows T had possession of will before death. or ii. revocation would probably be ok. VI. By subsequent testamentary instrument c. If subsequent will does not make a complete disposition of T’s estate. V. T wants to revoke. By executing subsequent will that revokes previous will or part expressly or by inconsistency. Duplicate wills a.II. A will or any part thereof is revoked i. Cancel through clause 1 and not the others. If a codicil is revoked.
T executed will M. Requirements: a. Revocation (by any method) of covering will d. d. §2-804 Revocation upon Divorce: Revokes any revocable (i) disposition of property made by divorced individual to his former spouse in governing instrument and any disposition created by law/instrument to relative of divorced one’s former spouse. Where the mistake is recited in the terms of the revoking instrument or. Minority (KY) i. Note: If you tear will #1 up. 3. b. there is no revival. another will) c.II. and tore up K will mistakenly believing it would revive M. IV. transforming interests of former spouses into equal tenancies in common. Codicil was void because of interested W. Revocation by subsequent testamentary instrument (usu. III. c. Will must be re-executed or republished by codicil. or ii. When there is an alternative plan of disposition that fails. Valid Will b. 2. T left will and codicil clarifying a name. old will will be probated. Revival I. No intestacy. is established by clear and convincing evidence LaCrox a. then #2 is revoked in any way. and 2) Severs the interests of former spouses in property held by them at time of divorce/annulment as JT. Estate of Alburn a. 1. CL: Automatic revival b. K will probated under doctrine of relevant revocation because it was revoked by mistaken understanding that M would then be valid. Which frustrates T’s alternative plan of distribution Overview a. Revival Approaches a. Revival occurs only when will #1 is replaced by will #2. Components of a Will I. 4. 2. iii. then will K. V. 1. Majority (old UPC): i. Integration of Wills 11 . A likes this. If T mistakenly believes new will is valid and destroys old will. Held: T’s intention to revoke will was conditioned upon execution of codicil that had same disposition as estate. DRR Applies ONLY: i. b. Will revived if T so intends ii. possibly. b.
Letter’s date differed than will’s description. UPC §2-510: Any writing in existence when a will is executed may be incorporated by reference if language of will manifests this intent and describes the writing sufficiently to permit its identification. Republication by Codicil a. Grayson i. If beneficiary/property designations are identified by acts/events that have a lifetime motive and significance apart from effect on will. whether they occur before or after execution of will or T’s death. as beneficiary. All papers present at time of execution. Power of Appointment: 2 types I. are integrated into the will. b. Preventable by fastening all pages together. b. T’s will left $ to be paid as directed in letter. Held: This was the letter. ii. UPC §2-512: Events of Independent Significance i. Notebook incorporated by reference into T’s will. 2) Will manifests an intent to incorporate. Ex: Will #2 revokes #1. Incorporation by Reference a. iii. Letter was dated prior to codicil. gift upheld b. c. despite discrepancy in date. T adds codicil to #1. c. which republished her will. b. (Ex’s on page 44 notes. Non-testamentary things are incorporated into will. Acts of Independent Significance a. which republished will. The execution or revocation of another’s will is such an event. Difference between Republication and Inc. iii. Greenhalge i. To apply: 1) Incorporated document in existence. Clark v. Simon v. including himself. General Power a. Works like a re-execution of the will. Gives holder of power (donee) power to choose anyone. b. Notebook existed when she executed her codicil. Will #1 is republished and #2 is squeezed out. by Reference: Republication applies only to a prior validly executed will. imp) 12 . e. IV. III. c.II. intended to be part of the will. a. and 3) Will sufficiently describes writing to be Inc. it can occur before or after execution of will or T’s death. whereas incorporation by reference can apply to incorporate into a will language/instruments that have never been validly executed. Will may dispose of property by reference to acts/events that have significance apart from their effect on the dispositions made by will. T stated in will she had designated items in notebook memo. ii. so was in existence at time will executed. Differs from incorporation because here. d.
Joint and Mutual Will: Joint will in which respective Ts make similar or reciprocal provisions. c. b. no signature or date. H dies. One may enter into K to make a will or to not revoke a will b. 1. A disagrees with outcome because will was not validly executed. Express reference in will to a K and extrinsic evidence proving terms of K iii. Pretermitted Spouse Statute: (FL) Surviving spouse shall receive share at/equal to what he/she would receive under intestacy. Die intestate c. H. 3. Will Contracts a. Requirements for K to make a will i.II. validated. iii. Writing signed by T evidencing K (independent of will) iv. The handwritten portion was a valid holographic codicil that republished and validated the prior will. III. Held: Children. d. Contracts to make a will i. Putnam a. but easier to prove if it is V. d. (Ex: charitable trust only) Johnson a. UPC §3-514 Contracts Concerning Succession a. Contracts not to make a will i. A mutual will with an underlying K. no Ws. c. T left typed will. b. Can only choose among a limited class. Codicil incorporated prior will by reference and republished. children want creditor status before W2. Admitted to probate. Via v. Special Power a. but spouse takes first 13 . Contracts Relating to Wills I. Usually applies to i. Remedies: 1) Receive its value or 2) Specific performance II. Children will get out of residuary estate. Provisions of will stating material provisions of K ii. Statute of Frauds applies b. Note a. ii. 1. should not be given creditor status when interests contravene spouse interests under PSS. Consideration required ii. H remarries after W death. as 3rd party beneficiaries. IV. Mutual wills: Separate wills of two or more persons that contain similar or reciprocal provisions. Probated at each death. T later added codicil in his own handwriting on bottom of page. III. Note: Doesn’t require K to be in writing. Contract not to revoke existing will i. Joint Will: one instrument executed by two persons as will of both. 2. Overview a. Breach of K if they do. W executed mutual wills to give children estate after deaths.
Traditional Approach: No relief c.e. Note: Ks do not apply to property surviving spouse acquires after death of spouse. Sometimes use Dependent Relative Revocation III. Erickson: If scrivenor’s error has misled T into executing will on belief that will be valid notwithstanding T’s subsequent marriage. but plain meaning of words not disturbed c. Fits nothing IV. L makes mistake by writing/leaving out the wrong thing b. Equivocation: Fits two or more people or things ii. It is only where testamentary language is unclear in its application to facts that evidence may be introduced as circumstances under which T used language to help its meaning. Where description of thing/person consists of several particulars and all of them do not fit any one person/thing. 14 . Anheiter (wrong house #) a. T makes/revokes will because of some mistake b. house #s will normally be taken out if inconsistent Openly Reforming Wills for Mistake I. Courts are reluctant to allow extrinsic evidence to reform will c. Misdescription IV. JDs: Bar admission of evidence to vary terms of will. b. Courts usually won’t help you with this II. b. No Reformation Rule: Reformation would correct a mistaken term in will to reflect T’s intention. Grainger a. Modern Approach: Reform will so it reflects T’s intent d. Scrivenor’s Errors a. less essential particulars may be rejected provided the remainder of description clearly fits. i. JDs vary. Where no doubt exists as to the property or identity. Latent ambiguity: ambiguity manifests itself when will terms are applied. b. Chapter 6: Will Construction Mistaken or Ambiguous Language in Wills I. III. Mistake in Execution a. Personal usage exception: If extrinsic evidence shows that T always referred to one by a nickname. evidence is admissible to show T meant someone other than person with that legal name. Mahoney v. extrinsic evidence of that error is admissible to show intent of T. no extrinsic evidence is allowed. Gibbs: Middle initials. Mistake in the Inducement a. c. Plain Meaning Rule: extrinsic evidence admitted to resolve some ambiguities. Patent ambiguity: ambiguity appears on face of will. Note a. II. Overview a. b.
Note: This applies only when will does not specify what should happen next. A donative document. If class member predeceases T. c. and ii. If devisee who is grandparent/lineal descendent of grandparent of T is dead at time of execution of will. Through intestate succession. b. Rest. f. d. say. they take equally. Overview a. Lapse = If devisee does not survive T. may be reformed to conform text to donor’s intention if. UPC §2-605 (Old UPC) Antilapse. precluding application of antilapse statute. iii. Anti-Lapse Statutes a. the issue of deceased devisee who survives at least 120 hours takes in place of deceased devisee. Some states have anti-lapse statutes. To avoid anti-lapse statute. Be sure to determine whether will language indicates T had a “contrary intention” to the application of antilapse statute. ii. II. §12. Estate of Russell a.” or state that antilapse should not apply. or is treated as if he predeceased T.” b. III. e. “To A if he survives me. fails to survive T. If unequal degree. Deceased Devisee. If all of same degree of kinship to devisee. Allen v. Does not prevent a lapse. TEST for whether it’s a class = Whether T is “group-minded” 15 . to share and share alike. Donor’s intention is known Death of Beneficiary Before Death of Testator I. surviving class members divide total gift b. Will contained words of survivorship. by clear and convincing evidence i. Class Gifts I. Intended gift to dog is invalid b/c he can’t be beneficiary.V. “To living brothers and sisters. then those of more remote degree take by representation. gift lapses b. Class Gifts i. v.1 a. Mistake of fact or law affected specified terms. One who would have been a devisee under a class gift if he had survived T is treated as devisee under this § whether his death occurred before or after execution of will iv. Note: UPC Applies only to devisees to grandparent or lineal descendent of grandparent. merely substitutes other beneficiaries (usu. issue) for dead beneficiary if certain requirements are met. which substitute another beneficiary for predeceased devisee in certain circumstances. Left ½ estate to dog. Talley a. though unambiguous. the heir was entitled to receive the ½ interest intended for dog.
i. car) b. Membership of class is typically not static. Changes in Property after Execution of Will I. §13. 1. II. disposition creates a class gift. Residuary i. Specific i. T left ½ gift to one nephew 1. the disposition does not create a class gift. money d. (house. and ii. The presumption is rebutted if language or circumstances indicate that the transferor intended the beneficiaries to take as a group. c.1: Class Gift Defined a. Upon distribution. §13. unless language or circumstances indicate that transferor intended beneficiaries to take as individuals Rest. Sullivan a. Bequest of certain amount of money to come from a specific source. If the terms of disposition identify beneficiaries 1) by group label and 2)Either by name or by number of beneficiaries who then fit the group label. Some identifiable type of property. Ademption by Extinction 16 . b. General i.2: Class Gifts Distinguished from Individuals a. without any reference to group label. If individual names: court admits extrinsic evidence to determine if T would want survivors to divide property Rest. Taking as a group mean: i. property is divided among then-entitled class members on fractional basis b. T intended class gift because property is to be shared equally. b. If terms of disposition identify beneficiaries only by a group label. 1 died. III. but subject to fluctuation by increase/decrease until time when class member is entitled to distribution. Court admitted extrinsic evidence to prove class gift to because T didn’t want to pass by intestacy. Class gift is a disposition to beneficiaries who are described by a group label and are intended to take as a group.II. VI. usu. IV. If T uses class label in describing beneficiaries ii. Demonstrative i. Everything that has not been disposed of under the categories. and ½ to other (left one out). Something fungible. the disposition is presumed not to create a class gift. but is to the beneficiaries taking as individuals. Hybrid. but is to the beneficiaries taking as individuals. If terms of disposition identify beneficiaries only by name. Held: T’s will did not create class gift and 1’s gift will pass to 1’s heirs. Yucus a. No language to indicate T wanted class gift. V. Dawson v. In re Moss (A likes) a. Types of Devises a.
c. If specifically devised property is sold/mortgaged by conservator or by agent acting within authority…or if condemnation award. Applies only when there is a change to specific devise after will executed and before death d. If not covered under 1-5. a pecuniary devise equal to value as of its date of disposition of other specifically devised property disposed of T’s life as long as intent ii. Any balance of purchase price 2. Any proceeds unpaid at death on fire/casualty insurance 4. Stock Splits and Problem of Increase a. To be effective. Focus is on actual existence/nonexistence of property. Held: Specific devise was adeemed by act of T. V. 3. UPC §2-606 (Intent-based approach) i. (Same rule for wills & trust) c. When T makes transfer to devisee (while living) after executing will. Ademption by Satisfaction b. T left building to A. Two Theories i. amount of unpaid loan. 2. Satisfaction of General Pecuniary Bequests a. a. *Real or tangible personal property owned by T at death which T acquired as a replacement for specifically devised real or tangible personal property. IV. and not on intent of T with respect to it. devisee of stock is entitled to additional shares received by T as result of stock split. b. Applies to specific devises of property only. Property acquired as a result of foreclosure 5. gift is adeemed by extinction. gift is extinguished (Traditional Rule) ii. Some states consider T’s intent. or recovery for injury to property are paid to conservator or agent…the specific devisee has right to a general pecuniary devise equal to net sale price. Absent contrary showing of intent. Identity Theory: if specifically devised item is not in T’s estate. not satisfaction c. b. Right of specific devisee under (b) is reduced by any right devisee has under (a) Waserman (Identity theory) a. condemnation award. d. Intent Theory: Beneficiary may get cash value of the item if he can show that this is what T would have wanted. Applies to general pecuniary bequests only. Rebuttable presumption that gift is in satisfaction of will gift. A specific devise has a right to the specifically devised property in T’s estate at death and 1. a specific devise must be in existence and owned by T at time of death. insurance. Any amount of condemnation award for taking property 3. e. 6. or the recovery iii. insurance proceeds. but sold property before death.III. 17 . If specific property is given to beneficiary.
4. Maintenance while will is being probated ii. Residuary devises reduced first ii. Family Allowance i. ERISA Rights of Surviving Spouse to Share of Decedent’s Property I. beneficiaries b.000 d. Community Property 1. no dower rights f. Specific and demonstrative are last and reduced pro rata Chapter 7: Restrictions on the Power of Disposition: Protection of Spouse & Kids I. UPC allows probate court to set aside reasonable allowance iii. *These are ahead of the claims of creditors. When will makes specific devise of land. These states give ½ interest to spouse II. Exception: If D mortgaged property prior to marriage. Arises only when estate has insufficient assets to pay debts and devises. Usually based on estate size and lifestyle iv. Gives surviving spouse. and then sold it. Enforceable against all property of decedent ii. The Elective Share 18 . Also includes: Social security. Some states apply this doctrine. Inchoate dower: if D owned property at any time during marriage. on which there is a mortgage b. Separate Property 1. Applies only to intestacy situations and inheritable property only ii. iii. Homestead Allowance i. Family members may set aside a some personal property ii. creditors. General devises reduced iii. Cutoff is at 1 year. Rights of Surviving Spouse a. Dower and Curtesy: i. Exoneration of Liens a. Personal Property Set-Aside i. Fixed-sum allowance ii. Two Different Marital Property Systems i. 3. devises ordinarily abate in this order: i. b.000 c. UPC recommends $10. spouse gets 1/3 iv. 1. In absence of any indication in will as to how devises should abate/be reduced. Devices to Protect Family of Decedent a. spouse had a “lesser right” (life estate) to 1/3 of it. UPC §2-408 recommends $15. VII. e.VI. Order: These allowances. so presumed that T wanted debt to be paid out of residuary estate. by statute. an elective share (aka forced share) in estate of deceased spouse 2. If spouse ever bought property during marriage. Abatement (Imp!) – Matt has fractions a. 2. i.
No consideration of motive or intent of D is needed. UPC (1990): How augmented estate is computer i. Waiver a. 50%) ii. Estate of Garbade i. Premarital agreements enforcing waiver of right to elective share are valid. $50k W’s ½ JT interest ii. reducing it to $150k. $50k H’s ½ interest in JT with W 5.$25k life insurance to W 4. H’s augmented estate consists of: 1. Cooper i. Property Subject to Elective Share a.? b. $50k H/s ½ JT share. Rights of Surviving Spouse in Community Property 19 . Premarital waiver of elective share is valid ii. a. Note: Elective share statutes ignore inter vivos trusts and focus on entire estate (includes this trust) . Example i. IV. Spouse can either take under D’s will or renounce will and take fractional share of D’s estate b. Homosexual relationship does not give rise to any spousal rights under elective share. W entitled to $25k elective share. to A 2. $75k W’s property 6. UPC §2-213 c. W has elective share of 50% of whole ($225k). she would receive no money and be deemed ineligible for benefits for failing to avail herself to potential income. $150k nonprobate transfers to other than W 3. In Wife’s best interest.. UPC: Share determined by % based on length of marriage c. i. d. $50k W’s ½ JT share. iii. H and W married 25 years. Calculate elective share % (usu. that amount is credited against her elective share. Otherwise. Determine value of augmented estate iii. Assets of inter vivos trust created during marriage to D spouse over which he alone had general power of appointment is treated as part of the D’s estate. III. Also credited are $25k life ins. $100k probate estate. W entitled to elective share of 50%. b. Trusts: i. Under §2-202. Estate of Cross – Incompetent wife. So.II. Judge elected for her to take intestate share.(Sullivan) ii. Determine elective share amount c. . The party attacking the validity of the waiver has burden of showing evidence of fraud. Since W owns $75 in own name.
unless appears that omission was intentional. Inter vivos trusts (aka living trust) a. V.” c. Deed of Trust a. Ownership of movable property is determined by law of state where couple is domiciled when property acquired. etc) Pretermitted Children I. Does not change the preexisting property rights of spouse. Transfer of both legal and equitable title b.V. “X transfers property of Y (trustee) for benefit of Z. b. Normally in writing II. Real property is subject to state where it’s located. ii.” c. Can always voluntarily change character of property (JT. 3 Groups 20 . Held: Child was not pretermitted child under statute because codicil republished will and child was alive at this time. From Separate Property State to Community Property State i. Becomes community property immediately absent agreement to contrary c. belongs to married couple jointly. Migrating Couples and Property Holdings a. Chapter 8: Trusts: Creation & Characteristics I. Prevent this by giving child $1. Testamentary Trust a. Widow’s Election i. Child born after will executed. Requires W to elect between surrendering her ½ of community property and taking under H’s will. Azcunce a. Express trusts a. b. Child receives intestate share when D fails to provide for child born or adopted after will executed. Declaration of Trust a. regardless of title. b. b. Old UPC (KY) a. but before codicil. Created either by declaration of trust or deed of trust III. Irrevocable since you’ll be dead VII. No provision for him. Created by will b. ii. From Community Property State to Separate i. b. H executes will devising all community property in trust for W income for life. II. a. Equitable title goes to beneficiary and legal title to settlor/trustee. all property that comes into marriage (except inheritance). Requires delivery of deed/property. Can be revocable (flexible) or irrevocable (tax break) c. Trust Corpus or Principal VI. After marriage. Settlor is trustee and there’s no actual transfer. Trust created during lifetime of settlor b. IV. “I hold my assets in trust for benefit of A.
would have been a valid gift. VIII. Writing is insufficient to establish a trust. D told university she intended to make gift of library to them. Intent to Create Trust a. b. trustee. not inter vivos. Held: Beneficiaries entitled to receive %s in K because assignment to Π of future interest not present at time of assignment created irrevocable transfer to Π . Violated fiduciary duty. as long as there’s another beneficiary as well. II. even in event of death. b. Delivery of the memorandum with D’s acts and declarations shows an intention to give ownership of library and is sufficient to create a gift. XI. b. Hebrew University a. Overview a. b. XII. not trust. trust would be created. court appoints one. Held: Had D delivered library. B orally declared a trust of his expected profits. If B actually had stock/profits at time of declaration. c. Holds legal title. Unless contrary intention appears in will or appointment is deemed improper or undesirable. D wrote letter to R and said he’d send her monthly payments for 5 years. P made K with beneficiary to assign shares in future royalties from play. May be settlor. but same question: Was any property capable of delivery? c. Trustee i. Father used trust money intended for children’s education for stocks. b. Note 21 . Necessity of Trust Property I. Hebrew University II a. III. Jimnez a. he’s responsible for paying for it. Nothing evidence indicates D intended to create a trust. Speelman a. Trust will not fail for want of a trustee. Unthank v. c. c. Brainard a. Did not create a valid trust for future profits. has fiduciary duties. No stock existed at time. can have more than one. because of delivery IX. Beneficiary i.a. c. Settlor b. executor will be trustee. This is a gift case. X. Sole question is whether S manifested an intention to create trust b. Father violated duty to beneficiary to administer trust solely for beneficiary’s interest. Applies only to testamentary. IV. If settlor creates trust but fails to name trustee. and beneficiary. Rippstein a. c. b. The writing was merely a promise to make a series of gifts in the future and is unenforceable.
and retained right to vote. (Secret are better than Semi) Chapter 5: Non-probate Transfers & Planning for Incapacity Revocable Trusts I. so he and W are beneficiaries. II. Held: Trust not sufficiently declared on face of will and cannot therefore be set up by extrinsic evidence to defeat rights of heirs. Enforceable. will last under 21 years b. Power of Appointment a. (Oliffe) b.000: .” II. Farkas a. since there is no beneficiary capable of enforcing the trust i. $1. Extrinsic evidence is allowed to establish that a trust exists and its terms c. Trust is too indefinite on its face to be carried out. One may assign future earnings from existing K. Campbell a. Clark v. Oral Trusts for Disposition at Death I. We know there is a trust. We don’t even know a trusts exists b. D left will devising will to A to distribute in manner D expressed during life (charity) b. F created inter vivos trust for W with stock certificates. Right to say who receives property Necessity of Trust Beneficiaries I. This is not a charitable trust because benefit is for only one dog. In re Searight’s Estate a. c. D’s will instructed “friends” to distribute his property. Inter-vivos trusts a. 22 . b. D’s will provided $ for the care of his dog.V. terminate. b. d. As settlor. b. c. Secret Trust a. Honorary Trust: Binds the conscious of the trustee. Semi-Secret Trust a. but not the terms of the trust. so functions like a will. Oliliffe v. etc. II.75/day. Not a trust because there are no identifiable beneficiaries and no sufficient criterion to govern selection of individual “friends. Not recognized in all states. F can receive dividends. Not enforced! III. Held: Trust does not violate the Rule Against Perpetuities he provided a time limit under RAP. Revocable = S may change terms of trust. Wells a. a. F can revoke/amend trust. One may assign future profits from an existing thing. Can be irrevocable or revocable b.
Life insurance usually exempt from creditors’ claims. Complete Discretion: Spray Trust 1. Trustee determines amount of money beneficiary requires to maintain current lifestyle iv. Divorced. ii. may use any means as long as intent to revoke. No presumption of revocation if trust instrument is not found. ii. Pour-Over Wills a. c. A will giving money or property to an existing trust (Black’s) b. iii. Good Faith Standard i. No discretion b. Discretionary Support Trust 1. settlor’s creditors may. W created inter vivos trust for H while married. Pilafas i. Trustee must distribute all income. b. 1. 2. Objective due care standard b. Subjective standard III. IV. W died. Held: Trust valid because beneficiary acquired immediate. Overview (most trusts are hybrid) a. V. Support Trust 1. p. Will created support trust with F to support C. interest in trust at creation. Discretionary Trust i. Where person places property in trust and reserves right to amend and revoke. following death. Right of Beneficiaries to Distributions from the Trust I. though undefined. Reasonable Judgment Standard i. Trustee Standard of Care –2 Standards a. 2. Trustee has discretion to determine who and what amount 2. c. to extent not satisfied by S’s estate. and F had fid. Reiser i. 311 [write this] Clymer a. Uniform Testamentary Additions to Trust Act (UTATA) §2-511 Testamentary Additions to Trusts a. Divorced spouse should not take under revocable trust in these circumstances because divorce implies an intent. Discretion limited by ascertainable support standard. Trustee gives beneficiary amount he deems necessary to support II. Marsman a. Note i. Trustee has discretion over payment of income and/or principal ii. 23 . Mandatory Trust i. duties. d. Rest: To revoke. VI.III. Trustee must distribute all the income. reach in satisfaction to debts owed.
Support Trusts i. Creditors cannot reach until money is actually given iii. Since beneficiary has no right to payment. V. and therefore a constructive trust imposed on amounts that should have been distributed to C. Creditors can generally reach this. b. Debtor creates trust for himself b. Assets were fraudulently transferred to the trust 3. Exculpatory Clauses a. Discretionary i. so nothing for creditors to reach. Free from general creditor’s claims because trust purpose is very specific iii. To get around this. c. ii. Since beneficiary has no power to alienate trust. Purpose is to provide support for beneficiary ii. Rights of Beneficiaries Creditors I. Third Party Trusts a. reckless indifference. ii. Mandatory Arbitration Clauses a. creditors can reach it. even if discretionary interest. Will imposed a duty of inquiry on trustee. or intentional or willful neglect.IV. Courts cannot force trustee to exercise discretion in particular way iv. Exceptions: 1. Spendthrift Trusts i. b. Trust where beneficiary is prohibited from alienating his own interest in the trust. Asset Protection Trusts e. creditor also cannot compel trustee to pay him. Create merely an expectancy. Not enforceable. Exception: Providers of “necessaries” can get money directly from the trustee. An exculpatory term drafted or caused to be drafted by trustee is invalid unless trustee proves that the term is fair under circumstances and its existence and contents were adequately communicated to settlor. child support. Maintenance. Uniform Trust Code §504 24 . Beneficiary is also the settlor. Exculpatory Clause will not be enforced if it covers bad faith. Exculpatory clause is effective. II. necessary goods/services. or 2. not a real interest. neither do creditors iv. c. Must expressly restrict power of alienation. b. redirect money to Swiss account. III. taxes d. etc. Self-Settled Rights a. iii. Note: Once money is in debtor’s hands. UPC i.
Anti-Duress Clause i. Beneficiary’s (spendthrift trust) 2 ex-wives demanded child support and alimony. and discretionary trust automatically arises. Shelly a. no one could invade trust corpus. Should not be the settlor iii. Children may reach corpus money because of “emergency provision” in trust. c. Directs trustee not to honor any order from U. Creditors of B cannot demand any part of it. Court or from settlor if he’s under U. and ii. ∆ ’s trust has spendthrift provision. Best if protector is not under U. but spouses cannot invade corpus and force it to be paid to them. Protective Trust a. spouse. or former spouse. Shelly v. b. Mechanism that allows protector to oversee and sometimes override trustee ii. b.S. b. Flight Clause 25 . creditor of beneficiary may not compel distribution that is subject to trustee’s discretion. Self-Settled Asset Protection Trusts I. II. a. Trustee is directed to pay income to B. B’s mandatory income interest ceases. Scheffel – Tort Claims a. If there had been no “emergency” provision. Π has tort claim against ∆ who abused Π ’s daughter. The spendthrift provision bars Π ’s claim against the trust. courts usually successful only if settlor has some type of control over trust. VI.IV. Pay such amount as is equitable for this.S. court order c. JD b. Court cannot order trustee to pay. Settlor must argue he has no control over trust. Overview a. since beneficiary (father) had disappeared. d.S. V. Children and ex-wives may reach trust income. (c) To extent trustee has not complied with standard of distribution or has abused a discretion i. Court will review trustee’s discretion in paying children under reasonableness standard. Trust Protector Clause i. Except as in (c). Distribution may be ordered by court to satisfy judgment to pay child. but not more than amount trustee would have been required to distribute to beneficiary had trustee complied. (Hybrid: Spendthrift + support) b. but if B’s creditors attach B’s interest.S. U. b. Foreign Asset Protection Trusts a.
Non-binding letter of intent i. B seek modification for mentally retarded B. To extent practicable. If things deteriorate politically in country in which trust is located. Non-binding. Uniform Trust Code §412 a. b.III. Trust is operating as settlers intended. and reserved right to determine whether event was duress. the modification must be made in accordance with settler’s probable intent. Where class is composed of living and potential members. Held: Modification denied – no CL or statutory exception for this situation. Court will correct lawyer’s error in drafting the instrument b. Where person charged with contempt is responsible for his inability to comply. Court may modify terms of trust if continuation of trust on its existing terms would be impracticable or wasteful or impair its administration. VI. it will further the purposes of the trust. Claffin Doctrine a. ∆ s were protectors. Settlor instructs on what to do in certain situations ii. if it would be contrary to material purpose/intent of settlor! b. Trust cannot be modified or terminated prior to fixed time even if all beneficiaries consent. Equitable Deviation a. Modification a. impossibility is not a defense to contempt proceedings. settlers refuse to comply with order to repay using trust. In re Lawrence a. Stuchel i. ii. III. Modification and Termination of Trusts I. *Settlor can give beneficiary or independent 3rd party (protector) the power to modify or terminate the trust. Virtual Representation a. authorizes trustee or protector to move situs of trust from one place to another d. Held in contempt. living and identifiable members can represent unborn/unidentifiable members. Ponzi scheme. 26 . Reformation a. b. Federal Trade v. Equitable remedy will conform to settlor’s intention at time of execution IV. i. Court may modify or terminate the trust if. but settlor can remove trustee if trustee does not carry out settlor’s intentions. Modification to achieve settlor’s probable intent in light of changed circumstances V. c. Note: Claffin does not apply if settlor is still alive (consent of all needed)! II. Affordable Media a. IV. because of circumstances not anticipated by settlor. b.
ii. Unlike private trust. 27 . Settlor has shown general charitable intent.” b. The relief of poverty b. d. Brown i. Settlor’s intention to assure a life-long income for the beneficiaries would have been defeated if termination of trust were allowed. Termination of trust denied. The advancement of religion d. court may direct trust property to another charitable purpose that approximates settlor’s intention. but needs time limit so as to not violate RAP. or illegal to do what specified. Doesn’t satisfy “beneficial to community” because doesn’t target needy children. trust because it accomplishes no educational purpose. Rule Against Unreasonable Accumulations i. 1. Exempt from Rule Against Perpetuities. Shenandoah Valley a. Can be a limited number of persons. need not have ascertainable beneficiary or specific number of years. Impossible. i. can’t accumulate money without doing anything for public. The advancement of education c. d. c. Overview a. Cy Pres a. impracticable. Governmental of municipal purposes. c. The promotion of health e. Requirements for Application i. Charitable Purposes a. If settlor’s exact charitable purpose cannot be carried out. not a charitable. Termination a.VII. c. 2. II.” b. trust is invalid because it violates RAP e. Charitable trusts must distribute the money. “As nearly as possible. Modification of Charitable Trusts: Cy Pres I. Chapter 12: Charitable Trusts I. and ii. Held: The trust is merely benevolent. c. T left $ to school children for holidays for “education. b. trustee shall distribute trust property consistent with purposes of trust. and f. Upon termination. Must be for the benefit of an indefinite number of persons. Other purposes the accomplishment of which is beneficial to the community III. If T’s intent is merely benevolent. This could have been valid private trust.
Chapter 13: Trust Administration: The Fiduciary Obligation I. Hospital not needed. but had much more money. gift may be executed cy pres through general charitable purpose The Buck Trust a. II. Note: You can waive these duties. b. Settlor left art collection with very strict rules. III. etc. i. 1. but courts are suspicious c. Management of Assets a. Court must show donor had a general charitable intent. b. TEST: Conflict of interest i. and other subsidiary rules b. prudence. Supervision of Charitable Trusts I. Misappropriation. IRS revoked estate’s charitable purpose tax exemption retroactively and they must repay government. When compliance is altogether impracticable. Only attorney general has standing to challenge the use of funds. Must act in good faith. Overview a. c. Donor’s expressed intent is entitled to protection. In Re Neher a. 2. “Advance the interests of socialism. c. Π s want to spend on other counties as well. foundation representing donor has no standing. UTC & Rest. but may for social issues. b. b. Smithers a. Herzog a. T left money for nursing scholarships for students b. Settlor left funds for one county. Cy Pres does not authorize court to vary terms of bequest merely because it will accommodate the desire of trustee. W has standing to sue because NY statute does not name attorney general as exclusive person with standing to sue. IV. Court granted Π s motion to move gallery to more practical place. Cannot leave charitable trust for specific political party. The Bishop Estate (Hawaii corruption) a. Loyalty a. Settlor intended trust to be used for town hospital. d. W of donor discovered hospital misappropriated H’s funds. Most standards have relaxed II. Trust property should be different from yours and identified. Not to compromise 28 . III. Self Dealing b. III. Price must be a fair price. and ii. they stand for.II. The Barnes Foundation a.” e. Earmark i. Fiduciary duties of trustees: loyalty. Collect and protect b.
Uniform Prudent Investor Act (p. and made investment without investigating borrowers. c. Do not delegate tasks to person with most experience. XI. unless it’s not prudent to do so. §258: Contribution or Indemnity from Co-Trustee a. VII. each entitled to contribution d. 1. Rest. c. If one is substantially more at fault than the other. b. (2) Trustee who commits breach of trust in bad faith is not entitled to contribution or indemnity from his co-trustee. unless trust instrument provides to contrary. Keep good records Rothco a. the trustees must act as a group and with unanimity. or c. if neither is more at fault than other. Breach of duty to estate because conflict of interest since trustee worked for gallery. b. 2nd mortgages are not proper trust instruments. the other is entitled to indemnity from him to extent of benefit. where two trstuees are liable to beneficiary for breach of trust. The appreciated value of the paintings at time of trial was measure of damages for unreturned paintings. non-charitable trust. If one receives a benefit from breach of trust. If there is more than one trustee of a private. Estate of Collins i. 3. b.IV. unless it’s reasonable method of settling a claim or making possible the sale of property. each is entitled to contribution from the other. Trustees are to act together. b. 29 . Except as (2). Co-trustees a. Surcharges a. IX. b. c. Trustee shall give careful attention to valuation of trust property. he’s not entitled to contribution from other but other is entitled to indemnity from him. Duty not to Delegate a. others majority. 3rd trustee breached duty to exercise ordinary prudence by failing to oversee other trustees. VIII. and for any further liability. V. Trustees can be ordered to pay this when they breach fiduciary duty. except b. Pay out of pocket. X. Distribute risk by reasonable diversification of investments. Co-trustee is liable for wrongful acts of a co-trustee. 2. to make sure margin of security is adequate d. Trustees failed to follow prudent investor standard by making improper investments. Some states require unanimity.797) e. VI. Impartiality Prudent Investor Standard: a. Duty to Account a. investing 2/3 principal in single investment.
Collect and Protect Trust Property b. iii. Ex: Married couple could give tax free gift of $22. Trustee has duty to disclose to beneficiary all information in his possession. Annual Exclusion i. Overview a. $11. Fletcher a. In other situations. Trust company had obligation to make an inquiry into whether beneficiary was still unmarried since it was a condition on the trust. Qualified Disclaimer i. Unified Credit i. Duties a. §2518:No taxable gift is made if it’s qualified disclaimer. Disclaimer has accepted no interest in property.800 tax credit ii. Chapter 14: Wealth Transfer Taxation: Tax Planning I. Tax imposed upon beneficiary for receiving money from dead d. Gift Tax i. *Problems on p. $1 million base credit for whole life. Disclaimer is in writing and made within 9 months after interest created or 9 months after disclaimer is 21. Inheritance Tax i. Courts normally favor beneficiaries. c. Didn’t report marriage. Not to Mingle trust funds with trustee’s own d. b.Subrules Relating to Trust Property I. Earmark Trust Property c. which is $345. Tax base is the value of property transferred c. Disclaimer results in taxable gift unless §2518 applies. 59 of my notes g. ii. Inform and account to beneficiaries II.000 is excluded per person. and 30 . Value of tax is based on value of property at the time f. III. per year ii. Must be a present interest! e. b. 2. Constructive Fraud i.000 child/year iv. trustee can be directed to disclose only particular information to beneficiaries. Tax on estate of decedent and paid by estate b. Doubled for married couples iii. When truth of the fact is objectively determinative c. Qualified Disclaimer 1. Imposes liability when one has duty to disclose information ii. Wife’s receipt of trust conditioned on unmarried. Tax on inter vivos transfers ii. National Academy (not assigned) a. Estate Tax i.
there is no tax because no gift. Note: Married couple could use $22k per year annual gift + $1 million each unified gift tax credit 31 . i. and b. etc. Trust for himself. donee before 21. The Annual Exclusion a. Gift = owner gives up complete dominion and control b. If B has the legal right to withdraw the money. b. Not available for gifts of future interests. V. No part of gift to one under 21 on date of transfer shall be considered a gift of future interest if property/income therefrom: 1. and 2. If owner retains some ownership. Will to the extent not so expended.. Overview a. (Not sure what this is) c. Holtz’s Estate a. Ex: Revocable trust II. No person other than the minor can have beneficial interest in property IV. or benefit of. e. $ for welfare. b. Regarded as full ownership 2. If dies before 21. III. Unlimited exclusion for medical and tuition expenses. it’s a present interest. they could draw this amount within 15 days each year. Placing discretionary power in the trustee to invade corpus makes the gift incomplete here. Exceptions: 1. d. §2503(b): Taxpayer permitted to exclude from taxable gifts $11. As long as the possibility that the entire corpus might be distributed during S’s lifetime and no one else would receive anything. Life estate followed by general power of appointment a. Amount did not exceed $11k and was present interest. S created trust and 7 annual exclusions of $10k each. H: No gift tax. May be expended by. §2503(c) Transfer for benefit of minor: i.3. Cristofani a. Pressent interest because they had a” right to enjoy” immediate possession of corpus c.000 person/year. c. d. b. c. payable to estate of donee or as he may appoint. Does not apply to terminable interests (ex: life estate) i. Q-Tip a. Transfer is to persons under local law and not designated by disclaimant. Federal Gift Tax I. S did not abandon complete dominion and control to make the gift. then to wife if she survived. Gifts Between Spouses a. H: Credit given. a. b. Pass to donee when 21. Spouse may take unlimited marital deductions for gift to other spouse.
III. VII. When decedent dies. b. In gross estate if decedent possessed right to receive benefits during life. Main point: It matters who owns the policy. All property owned at death that passes by will or intestacy b. §2042 Life Insurance a. §2035 Transfers Within 3 Years of Death a. §2033: Property Owned at Death a. May be marital deduction. Where one takes policy on own life and names family member as beneficiary. Gross estate includes value of property over which D held a general power of appointment: 32 . §2038 Revocable Transfers (on p. c. V. 63 bottom on my notes is good I. Any transfer or release of interest in property if would have been in §2036. **Life insurance (Ausness focuses on this!) The Gross Estate: Powers of Appointment: §2041 I. *Must be when otherwise would’ve been included in gross estate: i. you still may have pay estate tax on the value now. b. Estate of Maxwell a. Transfers made within 3 years of death included in D’s gross estate if i. Old Colony a. Not included if it’s by state (ex: SSI) IV. proceeds are taxed in insured’s estate if he holds any incidents of ownership over policy. §2042 b. and no evidence she intended to collect $ b.The Federal Estate Tax (Exam question) p. Trust taxed because settlor named himself trustee and determined the standard and amount of payment for beneficiary. Gift tax you paid on prior value will be credited. Value of gross estate includes value of all property of which decedent has at any time made a transfer. §2041 a. VI. VIII. §2039 Annuities & Employee Death Benefits a. Transfer was not a bona fide sale because decedent’s “rent” payments cancelled out mortgage interest. Would not include a life estate II. Note: Although you pay gift tax on part of it. unless bona fide sale for full consideration. d. §2038. Included in gross estate b. since it goes to spouse. by trust or otherwise b. Retained power in trust ii. §2036: Lifetime Transfers a. Gift tax paid by D or estate within 3 years of death ii. Property is taxable as part of D’s estate because not bona fide sale. §2037. IX. §2034 Dower or Curtesy a. 68 my notes) a. these payments are made to surviving spouse. Ex: Annuity or pension payments.
ii. Invasion allowed for “continued comfort. Decedent cannot appoint power to himself. i. v. Ascertainable Standard a. If you give to spouse. D owes no estate taxes. Vissering a. Marital Deduction a. iii. maintenance” etc of D. Donee given 5% or $5k (Hertz) b. Having a 2-step process does not protect D when D controls. 5 and 5 a. III. Q-Tip Trust a. Assets not includable in taxable estate c. D did not have general power of appointment because ability to invade trust was limited to ascertainable standard Kurtz a. Taxable Estate: Last Day I. Right to determine who receives it is an incident of ownership Special Power of Appointment a. 917 33 . iv. education.II. IV. support or maintenance (Vissering) 2. Charitable Trust a. If D leaves all money to spouse. II. 5% of F trust includable in estate because she could have withdrawn this. b. then remainder to charity: p. Standard that relates to health. b. Fully deductible. c. Decedent His creditors Decedent’s estate Creditors of decedent’s estate Regardless of whether decedent exercised the power Exceptions 1. so long as it meets requirements of actual charity b. Terminable interest III. only if M trust was exhausted. D could take 5% of F trust per year. vi.
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