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WILLS TRUSTS & ESTATES-Intestacy

When someone dies without a will rules of intestacy apply governed by the default pg 63-81, 81-91

 Primary purpose of intestacy statute if to carry out the probable intent of the typical intestate
decedent – default rules for property succession at death

UPC § 2-101 Intestate Estate

§2-102 Share of Spouse
§2-103 Share of heirs other than surviving spouse

S= surviving spouse;
D = surviving descendant(s) of decedent;
P = surviving parent(s) of decedent;
BorS = surviving siblings of decedent, surviving descendant’s of decedent’s parents;
G = surviving grandparent of decedent;
GD surviving descendants of grandparents

Facts UPC Authority Disposition

S; no D; no P 2-102(1)(A) All to s
S; D 2-102(1)(B) All to S if all D are also D’s and S has no other
surviving descendants
2-102(3) $225,000 plus half of the rest to S if D are also
S’s and S has other descendants; other half to D
2-102(4) $1500,000 plus half of the rest to S if one or
more D is not S’s; other half to D
S; no D; P 2-102(2) $300,000 plus ¾ of the rest to S ; other one-
fourth the P
No S; D 2-103(a)(1) All to D (per capita at each generation)
No S; No D; P 2-103(a)(2) All to P
No s; no D; no P; 2-103(a)(3) All to BorS (per capita at each generation)
BorS
No s; no D; no P; NO 2-103(a)(4) If both paternal and maternal G or GD, one half
borS; G or GD to paternal G or GD and one half to maternal G
or GD (all to G or if non, per capita at each GD
generation)
2-103(a)(5) If survivors on one side only, all to G or GD on
that side (all to G or, if none, per capita at each
GD Generation
No s; no D; no P; no 2-103(b) Stepchildren or, if none then
BorS; no g or gd 2-105 Escheat to state; therefore, no “laughing heirs”

Heir apparent  people that have a mere expectancy that is both contingent on their
surviving A and defeasible by A’s contrary dispotion by will, will substitute or lifetime gift

Devisee; legatee; beneficiary a person named in a will.

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Estate Plan By Default--Summary of UPC Intestacy Provisions - Intestate Succession Structure

Domestic Partners and Same Sex Marriage  policies that underpin the spousal intestate share seem to
also apply to long-term cohabitating partners.

The Problem of simultaneous death  A person succeeds to the property of a decedent ONLY if the
person survives the decedent for an instant time.

 Arises in wills, trusts & other modes of nonprobate transfer in which governing instrument does not
avoid the problem by requiring a beneficiary to survive the donor by stated period of time.

 Uniform Simultaneous Death Act  provided that if there is no sufficient evidence of the order of
deaths each was deemed to have predeceased the other, so neither inherited from the other.
o Issue of what is “sufficient evidence”, remedy = UPC 2-104 and 2-702
 §2-104 and §2-702 – provides that an heir, devisee or life insurance beneficiary who fails to survive
by 120 hours (5 days) is deemed to have predeceased the decedent. – under the amended UPC
claimant must establish survivorship by 120 hours by clear and convincing evidence.

Descendants
Representation

 If a child dies before decedent and the child leaves descendants, all state provide that the child’s
descendants shall represent the dead child and divide the child’s share among themselves.
 Fundamental issue is whether the division into shares should begin at generational level
immediately below decent or closest generational level with a descendant of the decedent alive.

English Per Stirpes / strict per stirpes

 Followed by 1/3 of states.
 Treats each line of descent equally
o The property is divided into as many shares as there are living children of the designated
person and deceased children who have descendants living.
o Children of each of deceased descendant represent their deceased parent and are moved
into their parent’s position beginning at the 1st generation below the designated person.
o Assures vertical equality at the expense of horizontal equality.

Modern Per Stirpes /per capita with representation

 Less than ½ states follow
 Look first to see whether any children survived decedent
o Yes  distribution is identical to English Per stirpes
o No  estate is divided equally (per capita) at the first generation in which there are living
takers

Per Capita at Each Generation ( 1990 UPC)

 Initial division of shares is made at the closest generation in which one or more descendants are
alive (as under modern per stirpes) HOWEVER the shares of the deceased persons on that level
are treated as one pot and are dropped down and divided EQUALLY among the representatives in
the next generation.
Representations in Wills and trusts
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Which one rules depends on the state

Ancestors, Collaterals and Others

Parents  no descendants? Goes to parents.

Other ancestors and collaterals  no parents OR descendants? Goes to more remote ancestors or
collateral kindred. All persons who are related by blood to the decedent but who are not descendants or
ancestors are called collateral kindred.
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2 BASIC SCHEMES
 Parentelic system intestate estate passes to grandparents and their descendants and if none to
great-grandparents and their descendants and if none to great great grandparents and so on down
the line (parentila) descended from an ancestor until an heir is found

 Degree of relationship system intestate passes to the closest of kin, counting degrees of kinship.
(Table of consanguinity)

Laughing Heirs  distant relatives

Stepchildren and In laws  1/3 of states and the UPC recognize stepchildren as potential heirs.

Half Bloods  majority of states and the UPC relatives of a half blood is treated the same as a relative of a
whole blood

Escheat  if intestate decedent leaves NO survivors entitled to take under the intestacy statute her
probate property escheats to the state under UPC 2-105.

Disinheritance by negative Will

 UPC 2-101(b) authorizes a negative will by way of an express disinheritance provision. The barred
heir is treated as if he disclaimed his intestate share which means he is treated as having
predeceased the decedent.

Bars to inheritance: Advancements 126-129; Slayer Rule 132-139; Disclaimer 140-145

Advancement and Hotchpotch

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“If a child wishes to share in the intestate distribution of a deceased parent’s estate, the child must permit
the administrator to include in the determination of the distributive shares the value of any property that
the decedent, while living gave the child by way of an advancement”

 Advancement at common law any lifetime gift by the decedent to a child was presumed to be an
advancement; prepayment of the child’s intestate share.

o To avoid application of the doctrine, the child had the burden of est. that the transfer was
intended as an absolute gift that was not to be counted against the child’s share of the
estate.

o When a parent makes an advancement to a child and the child PREDECEASES the parent,
the amount of the advancement is deducted from the shares of the child’s descendants if
other children of the parent survive.

 Hotchpot if a gift is treated as an advancement it is account for in distributing the decedent’s

estate by bringing into hotchpot

o O dies with no spouse but children A, B and C with an estate worth 50k.
 A received advancement of 10k (to calculate shares for A, B and C you ADD the 10k
gift to the 50k estate.)
 10k advancement + 50k estate = 60k hotchpot
 60k divided by 3 descendants = 20k/each
 A only gets 10k because she already received 10k
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A was given 40k gift she would just be left out of hotchpot because O want A to have 40k+
 It is not uncommon in wills and trusts to find a provision instructing that certain lifetime gifts or
distributions under the instrument are to be taken into account when calculating later shares

Advancements in modern law  Many states have reversed the common law – a lifetime gift is presumed
NOT to be an advancement unless it is shown to have been intended as such

Uniform Probate Code 1990 2-109

 Inter vivos gifts do not constitute an advancement unless a writing indicates that the donor
intended the gift to constitute an advancement

oWriting requirement – (a) if the donor creates the writing, the writing must be made
contemporaneously with the inter vivos gift (b) if the donee creates the writing, the writing may
be made at any time

oDonee predeceases unlike commo law approach if the donee predeceases the donor the inter
vivos gift to the donee qualifies as an advancement. The advancement does not count against the
share of the donor’s estate going to the donee’s issues unless the writing expressly provides so

Guardianship and Conservatorship of Minors 129

Guardian of the person

 Guardian has responsibility for the minor child’s custody and care.

o If both parents die while the child is a minor the court will appoint a guardian of the person
usually from among the nearest relatives.
o A guardianship of the person terminates when the minor reaches the age of majority, dies
or is adopted.
o Covered in UPC §§5-201 to 5-210
o NO AUTHORITY to deal with the child’s property

Property management options

(1) Guardianship of the property

o Has the duty to preserve the specific property left to the minor and deliver it at the age of
18, unless the court approves a sale, lease or mortgage. The guardian can only use income
from the property to support the ward.
o
(2) Conservatorship
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o Only one trip to the court house annually fro accounting; more flexible and expires when
the minor reaches the age of majority
o Conservator is given “title as trustee” to the protected person’s property along with
investment powers similar to those of a trustee.
o
(3) Custodianship

o Custodian is a person who is given property to hold for the benefit of a minor under the
uniform transfers to minors act.
o Custodian has right to manage the property and to reinvest it however the custodian is a
fiduciary and is subject to the :standard care that would be observed by a prudent personal
dealing with property of another”
o
(4) Trusteeship

o Available only to persons who create them during life inter vivos trust OR who die testate
and create one by will a testamentary trust
o Most flexible. Can tailor trust specifically to circumstances and desires. A trust can
postpone possession.

Bars to Succession

o Rule that prohibits a slayer from inheriting from his victim

o Voluntary disclaimer

The Slayer Rule

In re Estate of Mahoney
 Issue: Can a widow convicted on manslaughter in connection with the death of her husband
inherit from his estate
 Holding: probate court cannot impost a constructive trust this needs to be done by the Court of
chancery. Reverse and remanded to the court of chancery.

 Notes:
 Courts in states without slayer statutes have 3 options
 1. Legal title passed to the slayer may be retained in spite of the crime (no
inheritance = additional punishment and you don’t want to punish someone twice
for the same crime)
 2. Legal title will not pass – no one should profit from wrongdoing
 3. Legal title passes, but equity holds him as a constructive trustee for the next heirs

Constructive trust:
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Mercy Killing in In Re Estate of Schunk W provided H with the loaded shotgun that H used to kill
himself. The court held that W’s assisting H to commit suicide was not an unlawful and intentional killing
within the meaning of the Wisconsin slayer statute.

Disclaimer
o Disclaimer – is a refusal to take the property

From common law to statutory law

 At common law if an heir renounces, the law treated it as if the title had passed to the heir, to the
next intestate success. Almost all states have chosen to treat it as if the disclaimer died before the
distribution

Avoiding Taxes Most state disclaimer statutes require that a disclaimer be made within 9 months of the
creation of the interest being disclaimed UPC §§2-1101 to 2-1117

Avoiding Creditors most disclaimer statutes provide that a disclaimer relates back for all purposes to
the date of the decedents death UPC 2-1106. In an intestate estate the disclaimer takes effect as of the
time of the intestates death UPC 2-1106(b)(1)

 SCOTUS held that you cannot disclaim in order to avoid creditors. You still inherited the property
(or you wouldn’t have been able to pass it off) so you are subject to liens

Willis: Formalities and Forms

Execution of Wills
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 Worst evidence problem in discerning the authenticity, the voluntariness and the meaning of a will.
 Wills act deals with Attested Wills, holographic wills and notarized wills

Attested Wills

 3 Core Formalities

o writing
o signatures
o attestation

 The Functions of Formalities

o Evidentiary function  supply satisfactory evidence to the court

o Ritual function (cautionary function)  a ceremony supposedly impresses upon the
transferor the significance of the event
o Protective function  purpose of safeguarding the testator
o Channeling function  standardization of form simplifies administration

UPC §2-502

Substantial Compliance with the Wills Act  want people to conform with wills act so they don’t have to
sit around wondering if something was meant to be a will or not.

Strict Compliance Rule

o Under traditional law for a will to be admitted to probate it must be in strict compliance with the
formal requirements of the applicable Wills Act.
o Must be in writing, signed by the testator, and then attested by two witnesses

o Guards against a spurious funding of authenticity – a false positive

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o Est. a conclusive presumption of invalidity for an imperfectly execute instrument the strict
compliance rule denies probate even if the defect is innocuous and there is overwhelming
evidence of authenticity – false negative

The Meaning of “Presence”

Line of sight the testator does not actually have to see the witness sign but must be able to see them
were the testator to look. (exception is made for a blind testator)

Conscious Presence  the witness is in the presence of the testator if the testator, through sight, hearing
or general consciousness of events, comprends that the witness is in the act of signing
o Test of mental comprehension

Uniform Probate Code dispenses altogether with the requirements that the witnesses sign in the
testator’s presence. §2-502(1) page 149

Witnesses  most jx rq the testator sign or acknowledge in the presence of at least two witnesses who
are present at the same time. The witness must sign the will and in some jx the witnesses must know that
what they are signing is the testator will
 UPC does not require the witnesses to sign the will in either the testator’s presence or the
presence of each other UPC 2-502(a)(2) Many traditional wills act statutes require the witness to
sign the will in each other’s present
The “Signature” Requirement
o All states including the UPC requires the testator to sign the will
o Purpose of signature rq is to provide evidence of finality, distinguishing a will from mere drafts or
notes and to provide evidence of genuineness.

Signature by Mark, with Assistance, or by Another

o Full signature is preferable, a mark, cross, abbreviation or nickname can be sufficient.

Order of signing  IN GENERAL the testator must sign or acknowledge the will before the witnesses
attest. HOWEVER if they all sign “as part of a single or continuous transaction, the exact order of signing
is not critical.

Subscription and Addition After Signature  some states have adopted the English wills act rq that a
will be signed at the foot or end thereof – this is called subscription

Delayed Attestation  under UPC §2-502(a)(3)(A) witnesses must sign “within a reasonable time”
which would extend until after the testators death.

The meaning of “writing” and video or electronic Wills  a will need not be on paper, all that is
required is a reasonably permanent record of the markings that make up the will
Video Wills  A dvd/video tape does not comply with the requirement that the will be a signed writing
In Re Estate of Reed.

Electronic Wills  An electronic will probably does not satisfy the writing (or signature) requirements of
an ordinary Wills act, but such a will might be allowed under the substantial compliance doctrine or the
harmless error rule.
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Purging statute Allows a will attested by an interested witness to be admitted to probate but it voided
any bequest to the interest witness. W will attested by an interested witness would be valid but the
witness would not take his devise

Interested Witness under the UPC 167  not many states follow, do not require that any of the
witnesses be disinterested UPC §2-505(b) provides that a will is valid even if witnessed by an interested
person and without purging the interested witness of his devise.

Relief from Strict Compliance

Substantial Compliance Doctrine
o Key question is whether the manner in which an instrument was executed satisfied the purposes
of the Wills Act formalities. IF SO  instrument should be deemed in substantial compliance with
the Wills Act and admitted to probate.

Harmless Error Rule

o The court may excuse noncompliance if there is a clear and convincing evidence that the decedent
intended the document to be his will

Uniform Probate Code §2-503

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In re Estate of Hall
 UPC code section 2.3 allows for harmless error if can show that, by clear & convincing evidence document
is intended will. clear donor intent. court used harmless error solve defect in attestation.
 Clear and convincing evidence
 Writing, signature and attestation

In re Probate of Will and Codicil of Macool

 Issue: Can you use harmless error?
 Holding: Must show by clear and convincing evidence donor’s intent – process NOT cured Harmless error
= high level of proof potentially more tha intent, must have shown they reviewed document in question.
 Probating an Unsigned Instrument  harmless error rule may be invoked to probate an unsigned
instrument other than in a switched wills case BUT court requires proponent to prove by clear &
convincing evidence that the decedent in fact reviewed the instrument & thereafter assented to it.
 Casual Writings

Notarized Wills
o UPC §2-502(a)(3)
o Validates a will that has been “acknowledge by the testator before a notary public or other
individual authorized by law to take acknowledgements)
o Provides a will is valid if it is signed by two witnesses or if it is notarized.

Holographic Wills 197-215

Holographic Wills written by the testator’s hand and signed by the testator. Need not be attested by
witnesses.

o PROS & CONS: They are indispensible for testators who are either unwilling or unable to
commission a traditional will. The authors of holographic wills are not foolish or unreliable. Some
argue they breed litigation and are inartful.

Discerning testamentary Intent

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In re Kimmel’s Estate
 Holding: The words of “if enny thing happens” support testamentary intent. This is not an
ordinary will BUT his intent to execute is apparent.
 Notes:
 Testamentary intent?
 The pros and cons of holographic wills
 Conditional Wills

Preprinted will forms

o If signing a preprinted will form and you complete it by hand and then sign it but it does not have
it attested by two witnesses, if strict compliance with the wills act is required the form is not
entitled to probate as a formal will
o might be entitled to probate as holographic will if enough text handwritten by decedent

In re Estate of Gonzalez
 1st copy, he handwrote it. She testified he filled out the form before she saw it & didn’t seesign it Gonzalez
gave copy of blank form to Joe/Elizabeth signed, not filled out. His 3 children tried probate will; other
children filed summary judgment motion.
 Holding: Valid holographic will. Printed portions of will can be incorporated into a holographic will where
the court needs testamentary intent, considering all of the evidence in the case.
 UPC allows for them.
 Incorporation by reference and surplusage
 Harmless error and preprinted Forms

Signature & Handwriting

Signature  almost all states allow the signatures to be at the end, at the beginning, or anywhere else. If it
is not signed at the end, there may be doubt if signature was intended. Implies read the whole will.

The extent of the testator’s handwriting :

- First generation: “Entirely written , signed and dated”

- Second generation (1969 UPC) “material provisions
- 3rd generation (1990 UPC) “material portions” and extrinsic evidence

Signature & Handwriting

 A holographic will must be:

o Written by the testator’s hand and

o Signed by the testator

 Signature:

o Most states permitting holographs, can sign at end/beginning/anywhere on face of document

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o If not signed at end, doubt about whether decedent intended his name be a signature.

Williams v. Towle  The testator did not sign his name at the end, but he did write his name in block
letters on the top of the first page The court admitted the will to probate.

Extrinsic Evidence

In re Estate of Kuralt
 Facts: He intended to transfer a 90 acre parcel to Shannon in 1997 but became sick. Upon going
into the hospital, he wrote her a letter about his intent along with $17k. She sought to probate the
letter as a holographic codicil – estate objected, trial court found in her favor
 Holding: This is a valid holographic codicil. There was extrinsic evidence of his intent and he even
used the word “inherit” for the specific bequest
 Notes:
 Death and taxes
 Testamentary intent or intended disposition

Revocation of Wills & Revival of Wills

Revocation of Wills

o An important corollary to the principle of freedom of disposition is that a person remains free to
rework her estate plan until the moment of death. A will is ambulatory subject to modification or
revocation by the testator at any time prior to death.

Revocation by Writing or by Physical Act

o All states permit revocation of a will:

o 1. By a subsequent writing executed with Wills act formalities AND

o 2. By a physical act such as destroying, obliterating, or burning the will.

o An oral declaration that the will is revoked, without more, is not enough to revoke the will.
o If a duly executed will is NOT revoked with accordance with applicable statute, the will must be
admitted to probate UPC §2-507

Express and Implied Revocatory Writing

o Express revocation
o Writing executed with Wills Act formalities may revoke an earlier will in WHOLE or PART
by express revocation
o Most wills open with an express revocation clause
 “John Doe, resident of ______,_____make this my will & revoke all prior wills & codicils”
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o Implied revocation
o May revoke in whole or part by inconsistency (implied revocation)
o Issue arises when a testator executes a subsequent will that does not include an express
revocation clause. Question is whether the testator intended the subsequent will to replace a prior
will in whole or in part, or if instead he intended the subsequent will to supplement the prior will.

o Modern View
o UPC
o To treat a subsequent will that does not expressly revoke a prior will BUT makes a complete
disposition of testator’s estate, presumptively revoking prior will by inconsistency §2-507(c)

 IF subsequent will DOES NOT make complete disposition of testator’s estate=viewed as codicil

 Codicil testamentary instrument (i.e. will) that supplements rather than replaces earlier will; later
codicil supersedes the earlier will to extent of inconsistency between them

Formalities, writing and physical acts

Thompson v. Royall
 Facts: She signed on the old will that it was “null & void” and was only being kept for memorandum on the
back of the cover sheet of the will. The will was then entered into probate.
 Holding: If written words are used for revoking will, cannot be on blank part of paper. Writing must
mutilate or erase/deface/come into contact with the written part of will
 UPC allows revocation by physical act of cancellation whether cancellation touches any words.
 Notes:
 Intent to Revoke
 Malpractice
 Cancellation and Harmless Error in a revocatory Writing

In Re Estate of Stoker
 Facts: Stoker drafted will, intended gf Gularte to be executer of will. died08. Gularte tried to introduce will
into probate. Stoker’s daughter objected more recent will/they broke up. Daughter brought will & witness
said 1 Stoker wanted. Holographic will written by t witness but Stoker peed on copy of old will an burned it
 Holding may be revoked-testator executes subsequent inconsistent will/ burns/destroys the will.
 Notes:
 Harmless error and revocation by writing
 Revocation by physical act
 Revocation by physical act on a copy
Presumption of Physical Act Revocation
Harrison v. Bird
 Facts: Circuit court 1) the will wasn’t lawfully revoked – wasn’t done in her presence 2) no ratification of
the destruction of her will 3) couldn’t find the destroyed pieces of her will so presumption that she revoked
it herself
 Holding: Court held that speer destroyed her will/revoked it. The burden is on Harrison to present
evidence to rebut that.
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 Notes: Court relied on PRESUMPTION of revocation that arises when a will last known to be in the
testator’s possession cannot be found (or found mutilated ) – the law presumes that the will cannot be found
because the testator destroyed or mutilated it with the intent to revoke it.

Lost wills and the Presumption of Revocation  assumption of revocation if the will in the testator’s
possession cannot be found OR found mutilated. Burden of proof on the proponent of the will – newer
court requires a preponderance of the evidence

1. If you use Will B to revoke Will A, then destroy Will B, Will A will not be reinstated

2. Partial revocation UPC §2-507 authorized partial revocation by a physical act

3. Dependent Relative Revocation  if a testator undertakes to revoke his will upon a mistaken
assumption of law or fact, under the doctrine of dependent relative revocation (DRR) the
revocation is ineffective if the testator would not have revoked the will but for the mistaken belief.

A partial or complete revocation is ineffective if made:

o 1. In connection with attempted to achieve a dispositive objective that fails under law

o 2. If testator undertakes to revoke will upon mistaken law/fact assumption revocation

is ineffective if testator wouldn’t have revoked will but for mistaken belief. The basis for
disregarding revocation is testator’s mistaken belief.

 (a) former will revived when the new will from which the former will was
revoked is found to be invalid

 (b) presumption established in subsection (a) is allowing revocation to remain

in effect would be more consistent with the testator’s probable intention.

Partial Revocation by Physical Act  most states authorize partial revocation by physical act.
Dependent Relative Revocation

LaCroix v. Senecal
 Facts: Testator a will, then wrote a codicil. Original language: “bequeath to my nephew Nelson Lamoth”; new
language added Marcisse Lamoth aka Nelson Lamoth. Codicil signed by husband, a named beneficiary.
 Holding: Codicil=unnecessary correction & failed applicable law doesn’t make original will revoked/ineffective .
 Notes: Testator cancels/destroys will, intent make new-not made/fails= presumed testator preferred old
will to intestacy & be admitted to probate-absence evidence overcoming presumption Revocation not
effective where intentions to revoke are conditional & conditions not fulfilled.
Limitations on DDR  Courts have held that DRR applies ONLY:

1. if there is an alternative plan of disposition that fails OR

2. if the mistake is recited in the terms of the revoking instrument or possible is established by clear
and convincing evidence.
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Revival of Revoked Wills

In re Estate of Alburn
 Issue: Did the deceased revoke the Kankakee will under the mistaken belief that she was reinstating the Milwaukee
will by clear preponderance of the evidence?
 Holding: The testator desired her first will to stand even though she revoked it making another will. No evidence that
she wanted to die intestate. You can use DRR to try to argue either way, depending on your state. Many states would
reject reviving the Kankakee.
 Notes:
 UPC: Subsequent will wholly revoked previous will=by physical act, presumption previous will remained revoked
 UPC:Subsequent will partly revoked (previous will revoked) presumption that previous will revived.
 UPC Will2 revoked by 3, 3 not revive 1 unless text on Will3 indicates result was intended.

Revocation by Operation of Law

Divorce  In most states, statutes provide that a divorce revokes provisions for the divorced spouse. In
the remaining states, revocation occurs only if the divorce is accompanied by a property settlement
UPC 2-804

Marriage  in most states, a premarital will remains valid in spite of marriage. A surviving pretermitted
spouse is entitled to an intestate share of the estate, unless the omission was intentional

Birth of children almost all states have pretermitted children statutes which give a child born after the
execution of a will a share in the parent’s estate.

Components of a Will 241-256

Components of a will

Doctrine of Integration  all papers that are present at the time of execution and are intended to be part
of the will are treated as such. Pages should be stapled/fastened or show a connection of language

In re Estate of Rigsby
 Facts: sister of decedent-order admitting holographic will to probate. Document had 2 pgs of will. Error on
appeal=failure of trial court allow 2nd pg be admitted as not fastened. Both handwritten & initialed/date on
top. Only 1st pg signed bottom & confirmed language-list items 2nd pg. 1st pg makes no mention of 2nd &
pg2 conflicts with pg1 about jewelry
 Holding: TC-entire holographic will integrated– appear that pg2 intended to be included with 1 st..

Republication by Codicil

Publication of a will occurs when a testator conveys to the witnesses, by words or by action that a
document is the testator’s will.
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Republication by Codicil  a validly executed will is treated as re-executed (republished) as of the date
of the codicil.

o A will is treated as if it were executed when its most recent codicil was executed whether or not
the codicil expressly republishes the prior will unless the effect of so treating it would be
inconsistent with the testator’s intent.

Incorporation by Reference allows for writing that in existence but not present at time of execution
that was not itself execute with testamentary formalities to be absorbed into testator’s wills. UPC 2-510

Clark v. Greenhalge
 Issue: Did a probate judge correctly conclude that a specific bequest of personal property
contained in a notebook were incorporated by reference into the will?
 Holding: Yes. A notebook that gives guidance in distributing the testator’s estate may be
incorporated by reference to a will that includes language on how to distribute. Doesn’t matter
that in the will it was called a “memorandum” but not on the notebook.
 Notes:
 Johnson v. Johnson  T a lawyer prepared 3 typewritten paragraphs stating that the document was T’s will and
making various bequests. Typewritten text was not signed by T or witness and it appears to cut off mid-sentence.
Beneath the typewritten text at the bottom of the page T wrote the following by hand “To my brother James I give 10
dollars only. This will shall be complete unless hereafter altered, changed or rewritten” T signed and dated the
document below the handwritten portion. The court held that the valid holographic codicil incorporated the prior
will by reference and republished and validated the prior will as of the state of the codicil thus giving effect to the
intention of the testator.
 Berry v. Trible  after lawyer sent T draft will, T made handwritten changes to it signing on the bottom of each
page. One of the pages T wrote “ I give and bequeath all” with an arrow pointing to an intended beneficiary. Court
held that the document could not be probated as a holograph because the handwriting and typewritten text were
interwoven “both physically and in sequence of thought”
 Incorporation Not Recognized in NY, CT or LA

Subsequent Writings and Tangible Personal Property  2-513 , allows a testator to dispose of
tangible personal property by a separate writing, even if prepared after the execution of the testator’s will
provided that the will make reference to the separate writing.

- the UPC allows the testator to reserve the power to make and then continue revising a list of
bequests of tangible property with out additional testamentary formalities.

Acts of independent significance  sometimes permits extrinsic evidence to identify the beneficiaries
or property passing under a will.

- If the beneficiary or property designations are identified by reference to acts or events that have a
lifetime motive and significance apart from their effect on the will and the gift will be upheld
under the doctrine of acts of independent significance.
-
Uniform Probate Code

Capacity & Contests-3-5% of wills contested on grounds of capacity & undue influence
Mental Capacity: Testator must be capable of knowing and understanding in a general way
19

1. The nature and extent of his property

2. The natural objects of his bounty
3. The disposition they are making of that property
4. Relating these elements to one another.
5. Will represent her wishes.
** Capability not knowledge **

Fraud  occurs where someone intentionally misrepresents something to the testator, with the intent of
influencing the testator’s testamentary scheme, and the misrepresentation causes the testator to dispose
of his or her property in a way that he or she would not have otherwise.

Fraud in inducement occurs when person misrepresents fact to testator, purpose of inducing testator
to execute will within certain provisions OR purpose of inducing testator to revoke will.
 KEY: misrepresentation does NOT go to will terms, concerns fact important to testator & induce testator
dispose property differently light of misrepresentation

Fraud in executionp misrepresents NATURE of document=testator signing. When tricked another into
signing document=purports signer’s will = signer does not realize thinks Testator signing own will

Standing  general rule-Party will have standing to contest validity/provision in will, only if that party
will financially benefit if his or her challenge is successful.

IN re Wright’s Estate
 Holding: There is no evidence that testator suffered from settled insanity, hallucinations or delusions.
Testamentary capacity cannot be destroyed by showing a few isolated acts. The opinions were trivial
20

 Notes: Capacity to create a will requires less capacity than contract law.

Wilson v. Lane
 Holding: No testimony, expert or otherwise was offered to establish that she suffered from a form of
dementia sufficient to make her unable to form a will

Insane Delusion  must show

1) testator labored under an insane delusion &
2) will or part of it was a product of the insane delusion “moment of lucidity”

Capacity Burden of Proof

 Majority Rule
o Due execution creates presumption of capacity
o Burden of persuasion on contestant
 Accordingly, the will is admitted unless
 Fact finder concludes: incapacity has been proved by preponderance of the evidence.

 Minority Rule
o Due execution creates presumption of capacity
o Burden of production on the contestant
 Only if contestant comes forward with evidence supporting finding of incapacity
 Not admitted unless concludes capacity proved by a preponderance of evidence.

Undue influence 283-305

Undue Influenceprotects against wrongdoer taking unfair advantage of susceptible donor. Must show:

1. the donor was susceptible to undue influence

2. the alleged wrongdoer had the opportunity to exert undue influence
3. the alleged wrongdoer had a disposition to exert undue influence
4. there was a result appearing to be the effect of the undue influence
a. clear & convincing evidence .

Circumstantial Evidence
- susceptibility to undue influence
- opportunity to exert undue influence
- disposition to exert undue influence
- result appears to be the effect of undue influence.

Estate of Lakatosh
 Issue: Was there a confidential relationship? Did this result in receiving a bulk of the state? Was there a
weakened intellect at the time the will was executed?
 Holding: affirmed – Roger failed to carry burden of proving absence of undue influences.

Presumption & burden shifting in undue influence cases

 21

- In Lakatosh Roger had burden of proving that rose’s will was voluntarily made because he had been
in a confidential relationship with her and the suspicious circumstances were present.
-
(1) Must have a confidential relationship- fiduciary, reliant, or dominant-subservient
(2) Suspicious Circumstances- may be satisfied by showing that the influencer procured the will
(3) If presumption of undue influence triggered, burden shifts to proponent to rebut \evidence.
-
Confidential relationship-  some situations involving a trusting relationship the law requires a person
to be other regarding because of the potential abuse of trust

Suspicious circumstances  In addition to a confidential relationships a contestant must usually show

the existence of suspicious circumstances.

Presumption & burden shifting

In re estate of Reid
 Holding: Chancellor found there was undue influence – attested will was the same as the holographic/conflict of
interest at the firm. Cupit alienated Reid’s family and friends. Decision affirmed. Cupit argued Pluskat had no
standing and was barred by SOL this is correct but court said the case was just so unusual.

Lipper v. Weslow
 Holding: No evidence of undue influence. Was sound mind. Frank=opportunity to prevent receiving means of
contract no evidence that done(Will admitted she receive some flowers).

Strategies if Contest is anticipated  Record building (record discussions, exam of capacity); maintain
secrecy (inter vivos trust, gifts); sooth feelings (family meeting, letters)

- Bequests to lawyers & fiduciary appointments

o Undue influence – many courts presume undue influence when attorney receives gift

o Unethical conduct –Lawyer cannot solicit gift from client, unless related to client

o Fiduciary appointments & conflicts of interest lawyer should advice client nature of
lawyer’s interest in appointment & availability of other counsel

Wills: Construction - Mistakes and Ambiguities

Mistaken or Ambiguous Language in Wills

 Plain meaning/no extrinsic evidence rule – extrinsic evidence may be admitted to resolve
certain ambiguities but the plain meaning of the words of will cannot be disturbed by evidence
that the testator intended for another meaning.

(1) UPC 2-502- Will must be in writing; signed by testator; witnessed by two disinterested parties or
notarized. Holographic will is valid if signature and material portion of document is in testator's
handwriting. Extrinsic evidence allowed.

 No reformation rule=courts=no reform will to correct mistaken term reflect testator intended
 22

o Anmheiter v. Arnheiter—reformation not allowed; no extrinsic evidence

o Estate of Gibbs-reformation not allowed, ignore certain details=phone book picked wrong P address

Mahoney v. Grainger
 Facts: Sullivan executed a will and instructed her attorney to leave all of her property to her 25 cousins equally.
Her prior will left only two of the cousins. The will was executed and the trial judge ruled that the term “heirs at
law” only applied to her maternal aunt and not to her 25 cousins. Certain cousins appealed this.
 Issue: Can extrinsic evidence that a testator intended to dispose a property to beneficiaries not named in the
will be admitted when a beneficiary can be ascertained from the face of the will?
 Holding: NO. “Heirs of law living” refers to her aunt. The only heir at law” Extrinsic evidence would only be
admissible to determine the meaning of the testamentary language that is not clear in its application to the facts.

In re estate of Cole
 Holding: Affirmed. Courts allow patent evidence – from the face of the will. Latent ambiguity – the terms are
applied to the facts are modernly allowed.

 Patent Ambiguity  evidence from the face of the will.

 In re Cole inconsistency between “200k dollars & $25,000.

 Traditional law: extrinsic evidence not admissible to clarify patent ambiguity

 Court confined wills 4 corners=ambiguous devise fails & property passes by intestacy.

o Latent Ambiguity  manifests itself only when the terms of the will are applied to the facts.
 Takes 1 of 2 forms:
1. A description for 2 or more persons or things fit exactly(equivocation)
2. Description-no person/thing fits exactly. 2+persons/things fit partially=no exact fit
o Personal usage 

Openly Reforming Wills for Mistake

Erickson v. Erikson:
 Held that extrinsic evidence of mistake by scrivener is admissible and if proved by clear and convincing evidence, the
court may reform the will (if an atty did this intentionally, relief would be achieved from constructive trust)

In re Estate of Herceg
 Holding: testator intended residuary beneficiary: Colomba, & name be inserted in will-small bequest helped.

Deceased Beneficiaries & Changed Property

Death of Beneficiary Before Death of Testator testator’s actual intent not evidence, court apply rules of
construction to implement probable intent of testator.

Lapsed & void Devises

Lapsed if a devisee does not survive the testator, the devise fails

- States enacted antilapse statutes-certain circumstances substitute beneficiary for predeceased devisee.

 Specific & General Devise – if specific or general devise lapses=devise falls into the residue.
o T's will gives watch to A, $10k &rest to C (residuary). A&B predecease T. watch & money then go to C.
23

Residuary Devise  If a residuary devise lapses, the heirs of the testator take by intestacy. If only a share
of the residue lapses, such as when one of two residuary devisees predeceases the testator., at common
law then the lapsed share passes by intestacy to the testator’s heirs rather than the remaining residuary
devisees [no residue of a residue]

 Ex. After making several specific and general devises to various persons, T devises the residue of her estate one-half to
B and one half to C. B predeceases T. B’s on-half share goes to T’s heirs by intestacy not to C.

Class Gift  If a devisee is to a class of persons, and one member of the class predeceases the testator,
the surviving members of the class divide the gift

 Ex. T devises $10,000 to the children of A (a class gift). One child of A, B, predeceases T. At t’s death, T is survived by
another of another child of A, C. Because this is a class gift, C takes the entire $10,000.

Void Devise  If a devisee is already dead at the time the will is executed or the vise is a dog or cat or
some other ineligible taker, the devise is void, the same rules apply to the lapse devise also apply to a
void devise

Antilapse Statutes  they do not prevents a lapse, RATHER they substitute other beneficiaries, usually
the dead beneficiary’s descendants, if certain requirements are met. A typical antilapse statute provides
that if a predeceased devisee is related to the testator, and is survived by descendants who survive
testator, those descendants are substitute for the predeceased devisee

1. Theory of presumed intent: must bear the particular relationship specified in the statute

2. UPC 2-605: If a devisee who is a grandparent or a lineal decedent of grandparent of the

testator is dead at the time of execution of the will, then the issue of the deceased devisee takes
in place of the deceased.

a. 1990 UPC adds a devise to a stepchild

Presumed Intent  the theory behind antilapse statutes is that for certain predeceasing devisees, the
testators would prefer a substitute gift to the devisee’s descendants rather than for the gift to pass in
accordance with the common law of lapse.

Scope – an antilapse statute applies to a lapsed devise only if the devisee bears the particular relationship
to the testator specified in the statute.

T devises home to niece, B and residue to A. B predeceases T, leaving a child, C, who survives T. What happens to A’s Share?

Anti Lapse as Default Rules

DEFAULT RULES because antilapse statutes are designed to implement presumed intent, they are
default rules that yield to an expression of the testator’s actual intent that is contrary to the statute.

 Ex. T devises her entire estate “one-half to my son A and one half to my daughter B, but if A or B or both do not
survive me then I give such predeceasing child’s share to my friend F.” If b predeceases T, leaving a child, C. At T’s
death T’s estate will pass one half to A and one half to F. The antilapse statute does not apply to b’s share, because T
has provided expressly for the possibility of B predeceasing T.
24

Words of Survivorship
25

 UPC §2-603(b)(3)

 “words of survivorship, such as in a devise to an individual ‘if he survives me’ or in a devise to ‘my
surviving children’ are not, in the absence of additional evidence, a sufficient indication of an
intent contrary to the application of this section’

o ex. T devises Blackacre “to my son Sidney, if he survives me.” And vests the residue of his estate to his wife ,
Wilma. Sidney dies in his father’s lifetime, leaving a daughter, Debby. T is survived by Wilma and Debby. Who
takes Blackacre, Wilma or Debby? The issue is whether the words “if he survives me” impose a condition of
survivorship.

 The majority of cases have held that an express requirement of survivorship, such as
“if he survives me” precludes the antilapse statute.

 UPC 2-603(b)(3) – the term “if he survives me” is not enough to impose a condition
of survivorship and the antilapse statute applies nonetheless substituting Debby for
her father.

Class Gifts  under lapse rules, a class gift is treated different from a gift to individuals. If a class member
predeceases the testators, the surviving members of the class divide the total gift including the deceased
member’s share UNLESS an antilapse statute applies.

What is a class?

 A class gift arises if the testator was group minded.

o Testator is “group minded” if he uses a class labels in describing the beneficiaries such as
“to A’s children” or “to my nephews and nieces”
o A gift names to beneficiaries who form a natural class may be deemed a class gift if the
court decides that the testator would have wanted the survivors to divides the share of
predeceasing beneficiary rather than for it to lapse.
o Restatement 13.1
o Restatement of Property Wills and Other donative Transfers 13.2

Dawson v. Yucus
 Issue: Was this a class gift, or should the residues take the remaining ½?
 Holding: Affirmed Trial court – the will did not create a class gift. The gift in the clause to Burtle lapsed and therefore
passed into the residue of her estate. no language of the will that indicates she intended to create a class gift.
 Notes:

Application of Antilapse Statutes to Class Gifts

 Almost all states apply their antilapse statutes to a single generation class gift UPC 2-605
o Ex. Children, siblings

 Ex. T, a widow, dies leaving a will devising Blackacre ”to my sisters” and devising her residuary estate to
her stepson, S. When T executed the will, T had two sisters living A and B. One sister died before will was
executed leaving a child F who survived T. A died during T’s lifetime leaving two children, D and E. T is
survived by B, D, E, F and S. Who takes Blackacre?
26

o Assuming antilapse statute applies to devise to sisters in most states B takes 1/3 share, D
and E SPLIT 1/3 share and F takes 1/3 share.

o In minority of states, F does not share because C was dead when the will was executed and
black acre goes ½ to B and ½ split between D and E.

o If antilapse statute DID NOT apply to class gifts B, as the sole surviving member of the class
would take Blackacre

Summary Diagram
27

Changes in Property after Execution of Will

Ademption by Extinction

 A will includes a specific devise of an item of property but the testator sells or gives the item away
before death. What happens to the devise?

o A specific devise of REAL or PERSONAL property is subject to ademption by extinction

o The devise fails.

 Ademption only applies to specific devises (“to take away”) you no longer get it.

o Ex. Gifts of “my property at 123 main street” “my car” “my three carat diamond ring given
to me by my aunt jane”
o DOES NOT APPLY to general, demonstrative or residuary devises

 General  testator intends to confer a general benefit and not give a particular asset
 Ex. A devise of $100,000 to A. If there is not $100,000 in case in the testator’s estate
at death, the legacy is not adeemed; other property must be sold to satisfy A’s
general legacy.

 Demonstrative  hybrid, a general devise yet payable from a specific source

 Ex. Testator’s will gives B “the sum of $100,000 to be paid from the proceeds of sale
of my Apple stock” – If testator dies without $100,000 in apple stock the devise is
not adeemed and other property must be sold in order to raise the full $100,000
28

 Residuary Devise conveys portion of testator’s estate not otherwise effectively devised
by other parts of the will
 Ex. A devise to A “all the rest, residue & remainder of my property & estate”

o Identity theory (traditional rule) if a specifically devised item is not in the testator’s
estate, the gift is extinguished.

o Intent theory ( UPC) newer theory, if the specifically devised item is not in testator’s
estate, the beneficiary may nonetheless be entitled to the replacement or cash value of the
original item, if the beneficiary can show that this is what the testator would have wanted.

Uniform Probate Code §2-606

Satisfaction of general pecuniary bequests

 Satisfaction sometimes known was ademption by satisfaction may be applicable if a testator

makes an inter vivos transfer to a devisee after executing the will.

o If the testator is a parent of the beneficiary (or stands in loco parentis) and sometime after
executing the will transfers to the beneficiary property of a similar nature to the devised
by the will, there is a rebuttable presumption that the gift is in satisfaction of the devise
made by the will.

Exoneration of liens
 If a will makes a specific disposition of property that is subject to a mortgage to secure a note on
which the testator is personally liable, it is presumed that the testator wanted the debt to be paid
out of the residuary estate

 UPC 20697 a specific devise passes subject to any mortgage existing at date of death, without
right of exoneration regardless of general directive in will to pay debts.

Abatement
 Arises if an estate lacks sufficient assets to pay the decedent’s debts as well as all the devises
 UPC 3-902 if the testamentary plan would be defeated by the usual order of abatement, the shares
of the distributes abate as may be necessary to give effect of the intent
29

Trusts: Characteristics and Creation

Basic Structure A transfers property to B for the benefit of C (and possibly others) --- one party (settlor)
transfers property to a second party (trustee) who holds and manages the property for the benefit of one
or more third parties (beneficiaries)

BASIC TRUST RULES

1. Same party can wear all 3 hats  The same person can be settlor, trustee and beneficiary at
the same time as long as there is ANOTHER trustee or ANOTERH Beneficiary

a. MERGER if the same party is both trustee and beneficiary and there is NOOTHER
trustee or beneficiary the legal title and the equitable title are said to merge and the
trust is terminated (bifurcation of the legal and equitable titles is essential to a trust)
i. Bifurcation creates a difuciary duty between the trustee and the
beneficiaries. If the same person is both trustee and beneficiary, one
cannot hold oneself to a fiduciary duty so the trust merges and
terminates.

2. A trust will not fial for want of a trustee – if the trustee decliens to serve, dies or is unable to
continue OR if the settlor forgot to name a trustee, a court will appoint a successor trustee
[once trustee accepts, the trustee can leave the position ONLY with court approval or the
consent of all the beneficiaries]

a. Where will creates a trust but fails to appoint a trustee the general rule is to appoint the
executor as trustee.
b. EXCEPTION – if the court concludes that the powers given to the trustee were personal,
to be exercised by only THAT trustee the court will decline to appoint a successor
trustee and the trust will fail.

3. A trust is not created Until it is ffunded.

4. Co trustees must agree on action

a. Uniform trust code rejects the common law rule and prmits action based on the vote of
a majority of the co trustes.

A trust is a legal arrangement created by a settlor in which a trustee holds property as a fiduciary for
one or more beneficiaries .

 Trustee takes legal title to the trust property, which allows the trustee to deal with third parties
as owner of the property.

 Beneficiaries have equitable title to the trust property, which allows them to hold the trustee
accountable for breach of the trustee’s fiduciary duties.
30

o Typically entitled to periodic distributions from the trust income and sometimes from the
trust principal as well.

Types of Trust

 Testamentary  created by a will and arising in probate

 Inter vivos created during the settlor’s lifetime by declaration of trust or by deed of trust often
as a will substitute to avoid probate.
 Resulting trust arises any time a trust fails in who or in part, the courts use it to require the
party holding the property to return the property to the settlor or the settlors estate if the settlor
is dead.
 Constructive Trust used to prevent unjust enrichment

Vocabulary, Typology and Illustrative Uses

 A person who creates a trusts is the settlor, grantor, or trustor.

 Inter vivos – created during the settlor’s life
 Testamentary – created by will

Inter Vivos Testamentary
Creation Declaration of trust or deed of Will
trust
Type of Transfer Nonprobate Probate
Revocability Revocable or irrevocable Irrevocable

Revocable.
 Ex. O declares herself trustee of certain property for the benefit of O for life and then on O’s death,
to pay the principal to O’s descendants. O retains he power to revoke the trust. Unless O revokes
the trust, on O’s death her descendants will be entitled to the remainder of the trust property
independent of any probate administration of O’s estate.
Trust for incompetent persons.
 Ex. O’s son A is mentally or physically impaired and is unable to manage property. O transfers
property to X in trust to support A for life, remainder to A’s descendants, and if A dies without
descendants, to O’s daughter B.
Discretionary Trusts.
 Ex. T transfers property to X in trust. The trust instrument gives X discretion to pay any amount of
income or principal to a or for A’s benefit. Or, x might be given discretion to pay trust income to
any one or more of a class of persons, such as A and her descendants and to distribute the trust
property to A’s descendants at A’s death.
Testamentary.
 Ex. H devises property to X in trust to pay the income to W for her life and then on her death to
pay the principal to H’s children.
31

THIRD PARTY RIGHTS

Bifurcation of Ownership
 The trustee holds legal title to the trust property but the beneficiaries have beneficial ownership.
The law requires the trustee to subordinate the interest to those of the beneficiaries (duty of
loyalty). Duty of prudence – trustee must hold an objective standard of care and must administer
the trust suited to its purpose.
o Two categories of issues arise from splitting of legal and equitable ownership
32

 Asset partitioning  the effect on the rights of third parties with respect to the
trust property and the property of the trustee personally
 Fiduciary administration the powers and duties of the trustee and the
corresponding rights of the beneficiaries with respect to the trust property and
against the trustee (fiduciary administration)
Four Functions of Trusteeship
 Custodial involves taking custody of the trust property and properly safeguarding it.
 Administrative includes accounting and recordkeeping as well as making tax and other
required filings
 Investment involves reviewing the trust assets and making and implementing an investment
program for those assets as part of an overall strategy reasonably suited to the purpose of the
trust and the needs of the beneficiaries
 Distribution involves making disbursements of income or principal to the beneficiaries in
accordance with the terms of the trust.

Trust v. Legal Life Estate

LEGAL LIFE ESTATE
 Legal life tenant has no power to sell a
fee simple unless such a power is granted in
the instrument creating the life estate

EQUITABLE LIFE ESTATE – trust
 All difficulties of legal life estate are
resolved or mitigated by using a trust.

MODIFICATION & TERMINATION 

 Trust naturally end when all the trust principal is disburded pursuant to the terms of the trust.
Under special circustances however the terms of the trust may be modified or the trust may be
terminated prematurely
 At common law, courts order the terms of a trust to be modified if
o 1. All the beneficiaries consent
o 2. An unforeseen change in circumstances materially frustrates the settlor’s intent. The
trust is modified to promote the settlor’s presumed intent under the circumstnaces

** as general rule it is against public policy to use a trust to try to cheild one’s assets from one’s creditor.

** traditional rule is that a will cannot revoke an intervivos trust unless the trust expressly authorizes it.
Creation of a Trust
 Creation of a trust requires:
o 1. Intent
o 2. Ascertainable beneficiaries who can enforce the trust
o 3. Specific property, the res, to be held in trust
o ** If testamentary OR to hold land** 4. A writing may be required to satisfy the Wills act or
the Statute of Frauds
Intent to Create a Trust
 No particular form of words is necessary to manifest an intent to create a trust.
 Do not even have to include trust or trustee is required.
 Settlor need only manifest an intent to create – a transfer of property to X “for the use and
benefit” of A is typically held to create a trust.
Testamentary trust  is created by will. In a well drafted will the testator’s intent to create a trust is
stated clearly
33

 Ex. All the residue of my estate, wherever situated, including lapsed devises, but excluding any
property over which I may have power of appointment, I get to XYZ TRUST COMPANY, of Chicago,
IL, as trustee to be held in trust and disposed of as follows.
 If intent is not stated clearly, it must be inferred.
Deed of Trust
 Unlike a testamentary trust or an inter vivos trust of land, there are no particular formalities
required to create an inter vivos trust of personal property.
o Testamentary trust – must satisfy the wills act because it is made by a will
o Inter vivos trust of land – must satisfy statute of frauds
o Inter vivos trust of personal property – no specific formalities required.

Jimenez v. Lee
 Facts: Brought by P against her father to compel him to account for assets which she alleges were
held in a trust. Two gifts: Grandmother purchased a $1K bond for education; second gift from one
of D’s clients for $500. D cashed the bond and invested the proceeds in a stock of a bank, entitled
ownership as “Jason Lee, custodian for BEsty Lee.” Did the same for the 2 nd gift. Grial court found it
was not a trust – he was just the custodian under the uniform gift to minors act. P claims that
because it was for education, created a trust. D’s attempt to broaden his power by investing
violated his duty to administer the trust
 Holding: A trust exists here – father was subject to liability. If he wrongly disposed of the
property, she could recover. If he sold trust property and acquired other property with the
proceeds, she could enforce the trust through the new property.

Declaration of Trust
 Under a declaration of trust, the settlor simply declares himself to be trustee of certain property.
The settlor may also be a beneficiary of the trust.
o Ex. O makes a written declaration of trust declaring herself trustee of $100,000 held at
First National Bank, to pay the income to herself for life and then on her death the funds are
to pass to A. Even though O is the settlor, sole trustee and the sole income beneficiary, this
is a valid trust.
 To have a valid trust, the trustee must owe fiduciary duties to someone other than herself. If o
were the sole trustee and also the sole beneficiary, the equitable and legal titles would merge
leaving O with absolute legal title, as under UTC 402(a)(5)
 Declaration of trust v. Outright gift
o Outright gift requires the donor to deliver the property to the donee
o Delivery can be constructive or symbolic rather than physical, but delivery of some kind is
required.
o Intention alone is not enough to perfect the gift.
o If donor manifests an intention to make a gift but fails to complete delivery, the question
may arise whether the manifestation can be recharacterized as a declaration of trust.

Hebrew University Ass’n v. Nye

 Facts: The P obtained a judgment that it is the rightful owner of Abraham Yahuda’s Library, a
distinguished Hebrew scholar. The library contained rare books. The controversy is between two
Hebreew charitable institutions. Prof. Yahuda and his wife indicated they wanted a scholarship
research center in memorial to then. Ethel met with P; P threw a lunch in her honor and here she
described the property and announced it as a gift to P. Ethel also approved a newspaper release.
She had prepared to ship the library but it was not shipped before her death. The complaint
34

alleged that P was the owner and entitled to possession. The facts show Ehtel intended to make
the gift inter vivos, it just hadn’t been delivered.
 Procedural posture:
 1. A gift which is imperfect for lack of delivery will not be turned into a declaration for a
trust as it was not delivered. Allow case to be remanded.
 ON APPEAL: P gave memo contain a list of the contents of the library. Constructive delivery
has been found to exist in some situations: delivery of key to safe deposit box, pointing out
hiding places where money is hidden, informal memos.

 Holding: A public announcement followed by an itemized form are sufficient to substitute for a
formal instrument purporting to pass title. The P is the legal and equitable owner.

Trust Property
 Under traditional law, a trust cannot exist without trust property (res)
o Res does not have to be land or a substantial sum of money – may be a penny or any other
interest in any type of property.
 NECESSARY – a specifically identified interest in property.
Unthank v. Rippstein
 Facts: CP Craft handwrote a promise to make monthly payment to the appellee, Iva Rippstein, for
the next five years if he lived that long. Later, Craft added an amendment to the letter stating that
he was binding his estate to the monthly payments and struck out the phrase, “provided that I live
that long.” The appellee sought to have the letter declared as a voluntary trust.
 Holding: A donor does not create a trust by promising to make monthly payments in the future.
You must have an identifiable res (specific property) in a trust.

Beneficiaries 417-426 Writing 427-434

Ascertainable Beneficiaries
Beneficiary Principle
 A private trust must have one or more ascertainable beneficiaries to whom the trustee owes a
fiduciary duties and who can call the trustee to account. (follows more fundamental principle that
a private trust must be for the benefit of the beneficiaries)
 Beneficiaries DO NOT need to be ascertained when the trust is created. Only need to be
ascertainable.

Clark v. Campbell
 Facts: An estate of personal property was to be bequeathed to “friend” Common law says cannot
be a valid bequest to indefinite person. The word “friends” unlike “relations” (okay to use) has no
accepted statuary limitations, has no precise sense. Friendship is broad and varied. Desire of
flexibility
 Issue: Must this fail for the want of certainty of the beneficiaries?
 Holding: Where a gift is impressed with a trust ineffectively declared an incapable of taking effect
because of the indefiniteness of the class, the done will hold the property in trust for the next taker
under the will or the next of kin by way of resulting trust.

UTC 402(c)  a power in a trustee to select a beneficiary from an indefinite class is valid. If the power is
not exercised within a reasonable time, the power fails and the property subject to the power passes to
persons who would have taken the property if the power had not been conferred.
35

UTC 402  a trust is created only if the settlor has capacity to create a trust, indicates the intention to
create a trust, the trust has definite beneficiary OR is a charitable trust, a trust for the care of an animal
407 or trust for a non charitable purpose 408

Pet and Other Non charitable purpose Trusts

 Beneficiary principle is not absolute – it is not applicable to a charitable trust
 Trend in cases codified by the UTC has been toward allowing enforceable trusts for pen animals
§408 and certain other non charitable trusts §409 which under traditional law would be invalid
for want of an ascertainable beneficiary.

In re Searight’s Estate
 Facts: George Searight died testate. The third item of his will provided $1,000 for his dog to keep
and take care of it. If the $1,000 wasn’t used up, he would then have the remainder distributed to 5
other people. The probate court held the third item as valid. In situations where the “honorary
trust” is established for animals, unless the instrument created such trusts limits the duration of
the trust to human lives, the court will create honorary trusts for animals with longevity. The
amount of time, including interest, is over 4 years and it is clear and the testator included a time
limit for the exercise of power – this is less than he rule of perpetuities
 Holding: The bequest for the dog does not violate the rule of perpetuities. Affirmed.
 Notes:
 Honorary Trust  the transferee is not under legal obligation to carry out the purpose.
But if the transferee declines to do so, she holds the property upon a resulting trust and the
property will revert to the settlor or the successors. Cannot violate RoP.
 Statutory Purpose for trust for pet, animal other non-charitable purpose UTC 408—
Honorary Trust Statutory Purpose Trust
- Transferee is not obligated to carry out - Statutory trust for pet animal or other non
settlor’s purpose charitable purpose
- If transferee declines, she holds the - Authorized by UTC §§408-409 and UPC §2-
property on resulting trust and property 907
reverts to settlor or settlor’s successors - Typically court may reduce if excessive and
- Used in Searight’s Estate provide for enforcement by settlor or court
appointee.

Written instrument?
 The law of trusts, standing alone, does not require a writing to create a valid trust.
 An oral intervivos trust of personal property, whether by declaration or by transfer to another as
trustee, is enforceable.
Oral Inter Vivos Trusts and Personal Property
 UTC 407. Evidence of Oral Trust. A trust need not be evidenced by a trust instrument, but the
creation of an oral trust and its terms may be established only be clear and convincing evidence.

In Re Estate of Fournier
 Facts: Fournier asked a couple who he was friends with if they could hold some money for him.
They said they would; he gave them two boxes, each with $200,000 cash. He asked them to hold
the cash in secret until his death, then give it to his sister Faustina. Fournier explained to them that
this sister needed it more than the other sister. He requested secrecy but he told both Faustina
and her daughter that the money was being hold. The probate court found that Fournier had an
36

intent that the money pass through his estate, even though no instructions that a trust had been
created. The court ordered the money to go back as part of his estate.
 Holding: Clear error. There is no evidence that this is contradictory. Fournier intended Faustina to
take the money in her individual capacity. He created an oral trust. Judgment vacated.
 Notes:

Secret testamentary trusts and the wills act

Olliffe v. Wells
 Facts: Ellen Donovan died and left her residuary estate to Rev. Wells to distribute in such manner
as his discretion which had been expressed to him. Ellen’s heirs brought suit that the residue
should go to them. Wells stated Ellen expressed to him that her estate was to be used for charity.
Document shows only evidence of an outright fact
 Issue: Can extrinsic evidence be admitted to show that there was the intent to create a trust?
 Holding: No. the extrinsic evidence would defeat the rights of the heirs at law. D holds the
property in a resulting trust for the testator’s heirs.
 Notes:
 Semi-secret trust  intent to create is clear, but the terms are unstated. Extrinsic
evidence not needed to prevent unjust enrichment of trustee. Trust is invalid, not
enforceable.
 In the case of a semi-secret trust, the will makes a gift to a person in trust, but does
not name the beneficiary
 Secret trust  devise is absolute on face (ex. Give to your sister, but then tell your sister to
give to certain others) extrinsic okay to prevent unjust enrichment. Court can impose
constructive trust.
 In the case of a secret trust, the will makes a gift, absolute on its face, to a named
beneficiary. However, in reality, the gift was made in reliance upon the beneficiary’s
promise to hold the gift property in trust for another.
Semisecret Trusts Secret Trust
- Intent to create trust appears on face of - devise is absolute on face
will - extrinsic evidence necessary to prevent
- Terms are unstated unjust enrichment of promisor/trustee
- Extrinsic evidence not needed to prevent - court will impose a constructive trust on
unjust enrichment of trustee trustee/promisor
- Trust is invalid, not enforceable

Will substitutes, intro 435-440 ; revocable trust 440-441; 449-452; 459-476

Nonprobate Transfers and Planning for Incapacity
Five Major Will Substitutes:
 Revocable inter vivos trust
 Life insurance
 Various types of pay on death bank accounts
 Transfer on death securities accounts
 Pension accounts.
Legal questions raised by will substitutes
- Should Wills Act Formalities be required for validity?
o Wills Act NOT required for validity; low of wills do apply for substitutes (simul, death etc.)
Revocable Trusts
 Most flexible of all will substitutes, most like Will
37

 Settlor can draft its provisions precisely to her liking.

 Settlor of a revocable trust remains free to amend or revoke the trust at any time and for any
reason
 Creation
o Deed of Trust whereby the settlor transfers to the trustee the property to be held in trust .
On the settlor’s death, the trust property is then distributed or held in further trust in
accordance with the terms of the trust.
o Declaration of Trust settlor simply declares himself to be trustee of certain property for
his own benefit during his life, with the remainder to pass at his death in accordance with
the terms of his declaration. – settlor retains power to revoke the trust and as trustee
controls the management of the trust property.

Notes.
Moon  court held that a beneficiary of a revocable trust has no legally enforceable interest while the
trust is revocable. The trustee is subject to the control of the settlor and only the settlor may enforce the
trustee’s fiduciary duties.
 If settlor is also trustee:  any action by the settlor trustee that diminishes the interest of a
beneficiary cannot be a breach of trust but rather is an implied revocation
JP Morgan Chase Bank v. Longmeyer  court held that the trustee of a revocable trust owed an affirmative
duty of disclosure to the beneficiary even while the settlor was alive.

Revoking or Amending a Revocable trust

 UTC 602(a) An inter vivos trust is revocable unless declared to be irrevocable
 To amend or revoke a trust, the settlor has to follow precisely the method for amendment or
revocation specified in the trust instrument.

Patterson v. Patterson
 Facts: Before passing away, Darlene P executed an amendment to the trust. She was removing her
son, Ron, as a beneficiary . On summary judgment the court invalidated the amendment. The
trustee, Randy P, appeals. Darlene said in the trust that she had intentionally not provided
anything for this son since he was already provided for. Ron won on summary judgment because
the amendment completely divested Ron of his interest
 Holding: The terms of the trust do not provide a method for amending that makes it exclusive
uses for the word “may” Darlene’s amendment is valid—the terms of the trust do not specify an
exclusive method, so she was okay. She also did it with clear and convincing evidence in writing.

Application of Subsidiary Law of Wills

 “Although a will substitute need not be executed in compliance with the statutory formalities
required for a will, such an arrangement is, to the extent appropriate, subject to substantive
restrictions on testation and to rules of construction and other rules applicable to testamentary
dispositions.”
 Will substitutes are still subject to substantive restrictions and testation (no undue influence)

State Street Bank & Trust Co. v. Reiser

 Facts: The bank seeks to reach the assets of an inter vivos trust in order to pay a debt owned by
the estate. Holds the bank can do so. Wilfred Dunnebier created an inter vivos trust with the
power to amend/revoke. He conveyed to the trust the stock of 5 corporations. He also created a
will which left his residuary estate to the trust. 13 months later, he applied for $75k loan and 4
months after receiving it he died in an accident and didn’t have any funds to pay it.
38

 Holding: Where a person places property in trust and reserves the right to amend and revoke, the
creditors may, following the death, reach in to satisfy the debts to them, To the extent not satisfied
by the estate, those assets owned by a trust would have enabled the settlor to use the trust assets
for his own benefit. Court cites to IRS code and 2nd restatement.

Clymer v. Mayo
 Facts: Mayo, a prof, and executed a will naming her husband as the primary beneficiary. Clara
unified the disposition of all her property through her revocable trust (will, life insurance, etc.)
They divorced, and she changed the beneficiary of her insurance to Marianne LeFrance, but left
the trustees as the beneficiaries of her pension plans and James the life beneficiary of the trust.
 Issue: Was James’ interest in the trust revoked because of the divorce?
 Holding: Legislative intent – a divorced spouse should not take under a revocable trust in these
circumstances. In the absence of an expressed contrary intent the statute implies an intent on the
part of the testator to revoke will provisions favoring a former spouse (pour over trusts, but
applies with trusts too)
 Notes:
 Revocation on Divorce and Revocable Trust?
 UPC 2-804 applies to both wills and will substitutes. Revokes a disposition in favor
of a former spouse in a “governing instrument” which is defined in 1-201(18) to
mean deed, will, trust , insurance or annuity policy, account with a pay on death or
transfer on death designation, pension plan or other such nonprobate transfer.
 Ademption and Abatement  courts have applies most of the rules of construction from the
law of wills to revocable trusts.
 Capacity and Limitation Periods for Revocable trusts  capacity required to make a
donative transfer is higher in most states for a lifetime transfer than for a testamentary
transfer.

Revocable Trusts in Contemporary Practice

The pour-over will  a will that contains an express clause giving some or all of the decedent’s probate
property to the trustee of the decedent’s inter vivos trust to hold and distribute pursuant to the terms of
the trust. Typically the pour over clause is the residuary clause, but it need not be. The clause can transfer
to the trust a special gift or general gift but the norm is either the residuary clause or a general gift of
money.
 Standard Pour over will clause  “I give the rest, residue, and the remainder of my estate to the
trustee of my inter vivos trust, to hold and distribute pursuant to its terms. “
39

 O sets up a revocable trust with himself or a third party of trustee. O then executes a will devising
his probate estate to the trustee of that trust.
o Ex. Provision. I give my residuary estate to the then acting trustee under the trust
agreement executed by me on ______, ______, 20__, and known as the O 20___ Revocable Trust
of which I am now trustee and X is named as successor trustee to be added to the trust
estate and held under that trust agreement as in effect at my death
 UTC 2-511 – you are permitted to create a will and trust separately with pour over provisions
 UPC 2-804 applied to both wills substitutes. It revokes a disposition in favor of a former spouse in
an “governing instrument”

Lifetime Consequences
 Property management by fiduciary
 Planning for incapacity
 Keeping title clear
 No federal income, gift, or estate tax benefits
Probate Avoidance
 Avoid ancillary probate
 Continuity in property management
 Privacy and more difficult to contest than a will
 Not subject to ongoing court supervision
 More leeway than a will in choice of law
 Uncertainty about subsidiary law of wills
 Probate nonclaim statute may not be applicable.

Life insurance
 Shifts the economic risk of premature death to an insurance company.
 Commonly used to insure against lost income on the death of a wage-earner. Term life insurance is
the most common – covers a certain period of time. Whole life insurance combines life insurance
with a savings plan

Cook v. Equitable Life Aurance Society

 Facts: Douglas purchased a whole life insurance policy naming wife, Doris, as the beneficiary.
They later divorced. The divorce decree made no provision about the insurance policy. After the
divorce, Douglas stopped paying the premiums on this policy – policy was then changed to paid up
term policy. He then married Margaret, and had a son, Daniel. Douglas made a holographic will
which gave his insurance policy to Margaret and Daniel. The will was admitted to probate and
Doris was awarded the money. M/D argue that strict compliance with policy provisions is not
required to change a beneficiary in all cases. Doris asserts the Indiana law that attempts to change
the beneficiary life insurance by will without more, is ineffectual
 Holding: It may appear that the court should be sympathetic to M/D but doing that would cause
the danger or eroding the law. Upheld in Doris’ favor. Douglas “slumbered on his rights”

Elective Share 511-531

Limits on Freedom of Disposition: Protection of the Spouse and Children
Protection of the surviving spouse
40

 Separate Property States  Whatever a spouse earns is his or hers, so the protection against
disinheritance is elective share
o Elective Share sometimes called forced or statutory share, under elective share statutes,
a surviving spouse can elect to take under the decedent’s will OR to renounce the will and
take a fractional share of the decedent’s estate (typically 1/3 of all the decedent’s probate
property PLUST certain non probate transfers)
 TRUE OR FALSE  TRUE that the intestate share of a surviving spouse could, depending ont he
circumstances, be of a lower value than the surviving spouse’s forced share.
o Forced share = elective share.
Separate Property Community Property
- No automatic sharing of earnings; - property earned or acquired during
whatever spouse earns or acquires is his or marriage is community property
hers - No elective share, because each spouse
- Protection against disinheritance provided owns all earnings during marriage in equal,
through elective share undivided shares.

Marital Property Systems

Partnership Theory
- Elective share justified because surviving
spouse contributed to decedent’s wealth
- Surviving spouse should be entitled to one-
half of decedent’s property acquired during
marriage
Support Obligation
- Older view that marriage entails a support
obligation
- Support theory implies
o Smaller percentage applied to all the
decedent’s property
o A minimum amount
o Accounting for other resources
available for support of survivor

Same-Sex Couples  a surviving cohabitating partner is not entitled to an elective share unless married

UPC 2-12: the right of election may only be exercised by surviving spouse. If a rep claims the elective
share of an incompetent surviving spouse, the portion of the elective share which exceeds what the
survivor would’ve received is placed in a custodial trust.

Subsequently deceased surviving spouse  IN most states under UPC 2-212 the right of election may
only be exercised by the surviving spouse or a representative of the surviving spouse during the
surviving spouse’s life
 Wilson v. Wilson court held that a claim for an elective share filed by a rep on behalf of
incompetent surviving spouse was extinguished by the death for the surviving spouse.
Incompetent surviving spouse
Abandonment In a minority of state the elective share is denied to a surviving spouse who abandoned
or refused to support the deceased spouse.
Nonprobate property

Sullivan v. Burkin
 Facts: Mary Sullivan exercised her elective share. She seeks a determination that assets held in an
inter vivos trust should be considered as part of the estate. Probate judge rejected claim. The trust
established Ernest (husband) as the sole trustee—income was paid to him. On his death, the
41

successor trustee was directed to pay the income equally to the Ds (George and Harold Cronin).
The husband left in his will that he intentionally neglected to make a provision for his wife (they
had been separated for years)
 Issue: Whether an intervivos trust with a remainder interest is an invalid testamentary
disposition if the settlor retained broad power to modify or revoke the trust, receive income and
invade principal during his lifetime?
 Holding: Intervivos trust is not an invalid testamentary disposition because the settlor retains
broad power over the trust during his lifetime. A surviving spouse has no right to an intervivos
trust even if it is established to defeat the wife’s election. Trust was not testamentary in character
– inter vivos because had had the power to modify.
 Notes: “Rule we now favor would treat as part of the estate of the deceased assets of an intervivos
trust created during the marriage by the deceased spouse over which he or she alone had general
power of appointment exercisable by a deed or by will.

In re Estate of Myers
 Facts: Whether a surviving spouse’s elective share includes pay-on-death assets? The probate
court found that Karen Myers’ assets (checking account, certificate of deposit, and annuity) should
be included in elective share of her spouse
 Holding: Pay-on-death accounts/annuities are not included in elective shares. Overruled Sieh-
equated them to revocable trusts and to be included.

Trust administration: Intro/powers 579-588; Duty of loyalty 588-602

Trusts: Fiduciary Administration
The hallmark characteristic of common law trust is bifurcation
 Bifurcation a trustee holds legal title to the trust property, and the beneficiaries have equitable
or beneficial ownership
o Benefits to separation of legal and beneficial ownership  property transferred in trust
during life avoids probate at the settlor’s death. There is no need to change title by probate
administration upon the settlor’s death because the trustee holds legal title.
Three Kinds of Trusts in Practice
 Business trusts for commercial deals
o Common law or statutory trusts created for a commercial purpose such as organizing a
mutual fund or facilitating asset securitization.
o NOT donative in purpose, are integral to a commercial deal
o Involves exercise of freedom of contract NOT freedom of disposition.
 Revocable trusts for nonprobate transfers
o Most common use of revocable trust today is a will substitute for conveying property at
death outside of probate.
o Modern law, revocable trust need not have property, at least not initially, if it is to be
funded by a pour-over will.
o Trustee of a revocable trust does not owe fiduciary duties to the beneficiaries, but rather is
subject to the control of the settlor for as long as the trust remains revocable.
42

*** a revocable trust is little more than a nonprobate will that avoids the burdens of
probate in manner reminiscent of how trusts were once used to defeat
primogeniture and feudal incidents ****
 Irrevocable trusts for ongoing fiduciary administration
o Administration of property by a trustee in accordance with the settlor’s intent.
Increasingly, the trustee of such a trust is a fee- paid professional.

Trustees’ Powers
 Permitting the settlor to incorporate by reference in the trust instrument all or some enumerated
statutory powers
 2. Changing the default law to give trustees a statutory list of powers, such as under uniform
trustee’s powers act.

The Duty of Loyalty most fundamental principle of the fiduciary obligation in trust law. Trustee must
administer the trust solely in the interest of the beneficiary.

Hartman v. Hartle
 Facts: Dorothey Geick left 5 kids. Two son-in laws were executors—they sold the farm of the
estate to one of her sons ho bought the property for his sister, who is the wife of one of the
executors for $3900. She sold the property to D for $5500.
 Issue: Can trustee sell a property to his wife without permission by an order of the court
 Holding: No. A trustee cannot purchase from himself at his own sale, wife is subject to the same
rule. Property is owned by innocent purchases, cannot order a reseale. Executors will be held to
account for 1/5 of the profits made.
 Notes:

In re Gleeson’s Will
 Facts: Gleeson lease 160 acres of farm land, P, as trustee, leased a portion of the real estate of the
trust to himself as a partner of William Curtin and he received a share of the profits from the
farming operation on the real estate. Rule: Trustee cannot deal in his individual capacity with the
trust property.
 Holding: P should have decide whether he chose to continue as a tenant or act as trustee. His
election to act as trustee meant he couldn’t deal with himself.
 Notes:
 The No Further Inquiry Rule  If a trustee undertakes a transaction that involves self
dealing or a conflict between the trustee’s fiduciary capacity and personal interest good
faith and fairness are not enough to save the trustee from liability
 ONLY DEFENSE THAT A TRUSTEE MAY RAISE ARE THAT:
1. The settlor authorized the particular self-dealing or conflicted action in the
trust instrument
2. The beneficiary consented that after full disclosure
3. The trustee obtained judicial approval in advance
o *** Even if the trustee has such a defense, the beneficiary remains
entitled to judicial review of whether the trustee acted in good faith
and of the fairness of the transaction***

 Remedies for Breach Justifying

 Compensatory damages
 Beneficiary is entitled to disgorge the trustee of any profit made on the transaction.
43

In re Rothko
 Facts: Rothko left numerous paintings in his will to his children. Reis, Stamos and Levine were the
executors of his estate. Rothko’s children filed suit claiming that the executors entered into
improper business transactions to sell the paintings
 Issue: Whether executors fail to act unfairly in the transactions they entered into on behalf of the
estate? Whether an executor who acting prudently on the advice of counsel may be livable for the
coexcutors breach od trust ? Whether an executor who is liable for making an improper transfer
where he had duty to retain property but chose to sell the property is liable for appreciation
damages?
 Holding: Yes. The executors not only held an interest that conflicted with the interests of the
estate, but they acted unfairly because their interests conflicted with the interests of the estate.
Executors may be held to the same standard as trustees. Trustees may have an interest in a
transaction with the estate but they must not engage in the transaction unless they can show that
they will not be improperly influenced by those interest when dealing with the estate.

Duty of prudence 602-614; 643-646; Custodial/administrative functions 646-649; Trustee

Selection/Division 649-657
The Duty of Prudence
The distribution function  Distribution function involves making disbursements of income or principal
to the beneficiaries in accordance with the terms of the trust, which may be mandatory or discretionary
 Mandatory trustee must make specified distributions to an identified beneficiary.
o If O transfers property to X in trust to distribute all the income quarterly to A, X has no
discretion over when, to whom or in what amounts to make a distribution. It would be a
breach of trust for X not to distribute all income quarterly to A.
 Discretionary trustee has discretion over when, to whom or in what amounts to make a
distribution. If o transfers property to X in trust to distribute all the income to such of A, A’s
spouse and A’s descendants in such amounts as the trustee determines, X must distribute all
income currently but has some discretion over to whom and in what amounts.
Discretionary Distributions
Marsman v. Nasca
 Facts: Sara M died, James Farr (her dad) was her lawyer. Trust provided “reasonable
maintenance: of Cappy – only paid $300 over 10 years, he experience financial duty. Farr exempt
from liability no intent to abuse
 Holding: Yes, wills that give trustees power to pay principal have a duty to inquire into the
financial resources of the beneficiary.
 Notes:

Extended Discretion Exculpatory Clause Mandatory Arbitration

- Trustee discretion is “sole
“absolute” or
“uncontrolled”
- In spite of extended
discretion, trustee is still
- trustee is excused from
liability for breach of
trust
- If trustee is draftsman,
trustee must show
- Claims for breach of trust
must be resolved by
arbitration
- Whether such a clause is
enforceable is unsettled;
44

subject to judicial review disclosure of clause and authority is scarce and

- Trustee must not act
arbitrarily or capriciously
or abuse its discretion,
and must act in good
faith.
its meaning to settlor contradictory.
- Cannot excuse liability
for bead faith, reckless
indifference or
intentional or willful
neglect

643
Permissive retention
Mandatory Retention and Deviation
Scholarly debate and legislative change
Revocable trusts and beneficiary authorization

The Custodial and Administrative Functions

 Duty to Collect and Protect Trust Property
o Trustee must collect and protect property without unnecessary delay
 Duty to Earmark Trust Property
o Trustee must designate property as trust property rather than the trustee’s own
 Duty not to mingle trust funds with the trustee’s own
o Trustee must not commingle trust funds with his own, even if trustee does not use the trust
funds for his own purposes
 Duty to keep adequate records of administration
o Trustee must document important decisions and actions and the reason for those decisions
and actions
 Duty to bring and defend claims
o Trustee must take reasonable steps to enforce and defend claims relating to the trust.

Trustee selection and divided trusteeship

 Choosing a trustee
o Settlor asks friend or relative to serve (individual trustee)
o Settlor names a bank or trust company (company trustee)
 Delegation by a trustee
o Trustee may delegate the investment function but must exercise reasonable care, skill and
caution in selecting, instructing and monitoring the agent.
 Division by settlor
o Co trustees
o Power of appointment
o Directed trust and trust protectors
o
 Private trust company
o Lightly regulated private trust companies meant to serve as trustee of one or more trusts
within a single family

UPC §807 – Delegation by Trustee (2000)

Notes
 Duty to delegate
 Duty of cost sensitivity
45

 Liability of trustee and agent

Division by a settlor
(1) co-trustees
(2) power of appointment
(3) directed trusts and trust protectors

Trusts: Alienation and Modification

Alienability of Interest in Trust 687-717
Alienation of the beneficial interest
 Discretionary trust The settlor intends for the enjoyment of the trust property to be delayed
enough to get the trust property at all times. Just to be safe you probably want to put that in there.
UTC §504
o Pure discretionary trust
 Trustee has absolute discretion over distributions to the beneficiary
 Creditor of a beneficiary has no recourse against beneficiary’s interest in trust
o Support Trust
 Trustee required to make distributions as necessary for beneficiary’s need
 Insulates the trust property from some but not all of the beneficiary’s creditors
(child, spouses and suppliers of necessities)
o Discretionary Support Trust
 Common for a trust to combine absolute discretion with a distribution standard.
 A spendthrift trust  beneficiary of a spendthrift trust cannot voluntarily alienate her interest in
the trust. This is true even if the beneficiary is entitled to mandatory distributions form the trust.
Creditors cannot attach interest. Created for the benefit of a person (often unable to control his
own spending) that gives an independent trustee full authority to make decisions as to how the
trust may be spent UTC 502.
o Created by imposing a disabling restraint on alienation of the beneficial interest
 Ex. O conveys property to X in trust to pay the income to or for the benefit of A for
life and on A’s death to distribute the property to A’s then-surviving descendants.
Per Stirpes
 Trust instrument provides  “The interests of beneficiaries in principal or
income shall not be subject to the claims of any creditor, or to legal process,
and may mot be voluntarily or involuntarily alienated or encumbered.
 A cannot alienate and her creditors cannot attach her interest in the trust. X is free
to make distributions to or for the benefit of A irrespective of any claims by a
creditor of A

Scheffel v. Krueger
 Facts: Mother, Lorie, filed suit asserting tort claims against the D. She alleged that D sexually
assaulted her minor child, recorded it, and put it on the internet. Ordered him to pay $550k
damages – to satisfy the judgment, sought attachment of the D’s interest in his irrevocable trust
set up by his grandmother. Trial court ruled the spendthrift provision bars from attachment. P
argues legislation didn’t intend a shield from tort creditors especially where there was a criminal
act. Public policy, won’t be able to use the trust anyway because he’ll be in jail.
 Issue: Whether a trust purpose for support and maintenance may still be fulfilled where the
beneficiary faces a criminal sentence for sexual assault. Whether a statute that bars creditors from
claiming an interest in a beneficiary’s trust makes an exception for tort creditors
46

 Holding: No exception for tort victims – the purpose of support and maintenance trust may still
be fulfilled while the beneficiary is incarcerated and after he is released. The statute that bars
creditors from making a claim against a beneficiary’s trust interest does not make an exception for
tort creditors. Where the legislature was made specific exemptions, the law must presume that no
other exceptions were intended.
 Rather, by its plain language the statute applied where a trust's governing instrument provided a
beneficiary was not able to transfer his or her right to future payments of income and principal,
and a creditor of a beneficiary was not be able to subject the beneficiary's interest to the payment
of its claim.
 Notes: Legislature excludes other scenarios from constituting an exception to a rule by listing
specific exceptions. The court may not go against the manifest intent of the legislature just because
the beneficiary is a criminal. Exceptions include for those who provide services necessary: Lawyer,
physicians, grocers.

 A self settled asset protection trust UTC 505 a person cannot shield assets from creditors by
placing them in a trust for their own benefit. EVEN IF the trust is discretionary, spendthrift or
both, the settlor’s creditors can reach the maximum amount that the trustee could under any
circumstances pay to the settlor or apply to the settlor’s benefit.
o Ex. O, a surgeon, transfers property to X in trust to pay so much of the income and principal
to O as X determines in X’s sole and absolute discretion. The trust includes a spendthrift
clause. 5 yrs later, O botches a routine surgery causing grievous injury to the patient, A. A
may enforce a malpractice award of damages against the entire corpus of the trust because
X could, in X’s discretion, pay the entire corpus to O.

UPC trust code §504

Federal Trade Commission v. Affordable Media LLC

 Facts: Defendant’s Denyse and Michael Anderson were the trustees of a trust in the Cook Islands.
The united states district court issued a temporary restraining order to have the funds transferred
to the united states for the purpose of a trial where the defendants were charged with fraud.
 Issue: Whether the party demonstrates categorically and in detail that he is unable to comply with
the repatriation section of a preliminary injuction to transfer to the united states all assets under
their control directly and indirectly because the assets are in trust under a trustee that refuses to
relinquish the proceeds?
 Holding: No. Ds were protectors of the trust and could have forced the trustees to turn over the
proceeds. Furthermore, the defendants showed they were aware of their ability to force the
trustees to transfer the money. After they stated that they could not comply with the order the
commission revealed that the Ds were protectors of the trust. Thereafter Ds attempted to resign as
protectors of the trust.
 Notes: United States courts will penalize trustees of trusts in foreign lands if the trustees are
domiciled or resident of the united states and do not comply with orders in regards to the over
seas funds.

Trusts for the State Supported 

Self Settled Trusts

Modification and termination 717-736; Removal 736-737; Protection from the unintentional
omission 562-577
47

Modification and Termination

 Settlor consents
o Settlor plus all beneficiaries may modify or terminate
 Settlor does not consent
o Claflin Doctrine
 Consent of all the beneficiaries and
 Not contrary to a material purpose of the settlor
o Equitable Deviation Doctrine

Claflin v. Claflin  a trust was established for the testator’s son, with principal to be paid to the some at
age 30. After age 21 the son sued to terminate the trust arguing that he was the sole beneficiary. Invoking
the same court’s earlier decision upholding the spendthrift trust the court refused to permit termination
as it would violate the intent of the testator.

In re Estate of Brown
 Facts: Brown created a trust to be used for the education of the children of his new phone,
WOolson S. Brown. After the accomplishment of the education trust purpose, Brown directed the
income of the trust to be used for the care, maintenance, and welfare of his nephew Woolson
Brown and his wife Rosemary brown so that they would be able to live in the style and manner to
which they were accustomed.
 Issue: Whether a trust is a support trust where the trustee must distribute all the remainder
income to specified beneficiaries after the initial purpose of that rust fulfilled? Whether the
material purpose of a trust was fulfilled are the education of the settlors nephew’s children
 Holding: The trustee must pay the amount of the remainder of the trust income to Woolson and
Rosemary Brown as is as needed for them to live in the style and manner to which they are accustomed
for the remainder of their lives. The material purpose of a trust that provides for the education of a
beneficiary’s children ,and then for the beneficiary and his wife to live in a lifestyle to which they were
accustomed, is not satisfied after the beneficiary’s child’s education is complete. The settlor did not
merely name successive beneficiaries, but expressed intent to provide for the lifelong income of the
beneficiaries. Therefore this the second purpose is material
 Notes: The purpose of a trust will be inferred wherever the settlor has expressed that a distribution
be made for a specific purpose, more than just for specific beneficiaries.

Reform of Claflin Doctrine

UTC §411
- Preserves material purpose
- Weakens requirement of
beneficiaries’ unanimity
o Authorizes termination if
interests of absent beneficiary
will be adequately protected
Restatement §65
- Weakens material purpose
o Authorizes termination of
reason outweighs material
purpose
- Preserves requirement of
beneficiaries unanimity
48

Deviation Under UTC §412

(a) The court may modify the administrative or dispositive terms of a trust or terminate the trust if,
because of circumstances not anticipated by the settlor, modification or termination will further the
purposes of the trust. To the extent practicable, the modification must be made in accordance with the
settlor’s probable intention.
(b) The court may modify the administrative terms of a trust if continuation of the trust on its existing
terms would be impracticable or wasteful or impair the trust’s administration.
(c) Upon termination of a trust under this section, the trustee shall distribute the trust property in a
manner consistent with the purposes of the trust.

Extension to dispositive provisions

In re Riddell
 Facts: The trustee’s parents established trusts for the benefit of the trustee, his wife and the
settlors’ grandchildren. The trust provided that the grandchildren would receive the benefits until
the age of 35 when the trusts would terminate and the trustee would distribute the principal to
the grandchildren. The trustee’s daughter suffered from schizophrenia; she was not expected to
live independently for the remainder of her life. The trustee sought to create a “special needs”
trust on his daughter’s behalf, instead of distributing the trust principal to her. The appellate court
determined that the trial court properly found that it possess the power to modify the trust
pursuant to the trust and dispute resolution act.
 Issue:
 Holding: Special needs trust was created by 3rd party (parent’s of special needs person)
 Notes: Equitable deviation allows the court to modify the administrative or distributive provisions of
a trust if circumstances not anticipated by the settlor mean that modification or deviation will
further the purpose of the trust.

Ladysmith Rescue Squad Inc v. Newlin

 Facts: Cosby died 2004, his will created a charitable trust that named Newlin and Howell as
trustees. Trust named 4 people as beneficiaries who were to receive income payment for their
lifetime. Interests in trust were insulated from creditors by a spendthrift provision and they were
not permitted to withdraw form the trust corpus. After the death of all 4 beneficiaries trust was to
be divided between Fire dept and Ladysmith. In 2009 2 beneficiaries still alive, Fire seeks court
order to divide trust into two trusts, ladysmith and fire dept , then terminate the fire depart trust
and pay out the income beneficiaries and fire dept immediately. Ladysmith said that granting the
motion would frustrate Cosby’s intent.
 Issue: May a court modify or terminate a trust if such actions will not further the purpose of the
trust?
 Holding: No.
 Notes: For wills and trusts the testator’s or settlors intent prevails over the desires of the
beneficiaries; intent is ascertained by the language of the testator or settlor used in creating the will
or trust.
 TAKE AWAYS:
 The beneficiaries other than ladysmith want immediate gratification – this isn’t an
unanticipated circumstance and doesn’t warrant termination under the common
law approach or the UTC.
49

 SURPRISINGLY courts routinely allow termination when the trustee requests it and
all beneficiaries agree.

Trustee Removal
 Typically viewed as a remedy for breach of trust.
 Modern law, trustee removal is more freely granted, effectively as a modification of the trust
 Professionally drafted drugs commonly include a provision that overrides default law of trustee
removal by authorizing the beneficiaries to remove the trustee and appoint as successor an
independent corporate trustee.
o Power to remove and replace the trustee can also be retained by the settlor or given to a
third party.
 UPC §706

562-577
Protection Against Unintentional Omission
Spouse Omitted from Premarital Will
UPC §2-301
 Statutes that correct for testator’s assumed mistake in neglect to update a premarital will by
looking to intestacy for what a typical married person would want to pass to a surviving spouse.

In re Estate of Prestie
 Facts: Maries and W.R were married, divorced and he was diagnosed with disease. He executed a
CA pour over will, which gave entirely to heir son. They married again. His sight worsened she
took care of him. He amended trust to give her the condo in vega. After he died she petitioned for
½ intestate succession as their remarriage revoked the will. Probate court found his will to be
revoked for Maria’s omission. Son argues she was being provided for by being given the condo
 Holding: An amendment to an inter vivos trust (condo) cannot rebut the revocation of a will upon
remarriage to an unintentionally omitted spouse. Affirmed.
 Under Nevada law where a will does not provide for a surviving spouse who married the
testator after his will was executed, the presumption of revocation may only be rebutted by
evidence of a marriage contract or a provision of the will that either provides for the
surviving spouse or indicates an intention not to provide for the spouse

 Notes: An amendment to an inter vivos trust in favor of a spouse is insufficient to rebut the
presumption that marriage revokes prior will; pour over will

Unintentional Disinheritance of a child

 Permitted heir statutes – designed to prevent the unintentional disinheritance of a child
o Many permitted heir statutes apply only to children born AFTER the execution of a will, but
some protect children alive when the will was executed as well as after born children.

UPC 2-302  If a testator fails to provide in his will for any of his children after the execution of the will, the
omitted child receives a share in the estate as follows: i) if the testator had no children- will receive a share qual
in value to that which they would have recovered if the testator died intestate, ii) if there were children living-
entitled to a share limited to devises made to the then-living children (may have to abate), iii) doesn't apply if
the omission was intentional or if the child was provided for in another way.

Gray v. Gray
50

 Facts: Decedent made a will giving his estate to his spouse, omitting children from prior marriage.
He had another child with a spouse, and didn’t give to son. Probate court found son, Jack, was
entitled to distribute from the pretermitted child statute (wasn’t alive when will executed)
 Holding: State supreme court held that an omitted child is not entitled to share if the testator had
other children and devised all of his estate to the other parent instead of the omitted children.
Exception applied, Jack couldn’t review.
 Notes: A child born after the execution of a will may not claim a share of the estate if the will left
substantially all of the estate to the surviving parent and the testator had another child when the will
was drafted who was omitted form the will

Blanket Disinheritance
 most states the permitted heir statue can be avoided by providing for descendants with
representation.
 Courts have been strict in requiring the testator to indicate clearly an intention to disinherit a
child, either by express words or by necessary implication
o In re state of Robbins  “Except as otherwise expressly provided by this will… I
intentionally make no provision for the benefit of any other heir of mine.” The court held
the langue did not disinherit a natural and an adopted child.

In re Estate of Jackson
 Issue: Whether the assets of revocable inter vivos trust are subject to the pretermitted heir
statute?
 Holding: Pretermitted heir statute does not extent to a revocable inter vivos trust.
 Notes: The permitted heir statute applies only to wills and not to revocable trusts

Power of appointments 795-816

Trusts: Power of Appointment

 A settlor may give someone other than the trustee a nonfiduciary power to distribute trust
property – this power is known as power of appointment
o Build flexibility into an estate plan
o Commonly used for tax planning and asset protection
 Power of Appointment gives the done the power to override the distributive terms of the trust
and to direct the trustee to distribute some or ALL of the trust property outright to the appointees
51

Benefits of Power of Appointment

 Changes in circumstances
o Postpone and delegate decisions about who will receive future distributions of trust
property
 Tax avoidance
o Can be structured to avoid estate or gift tax when exercised
 Asset Protection
o Can be structured to avoid claims by creditors of the power holders.

Terminology and relationships

Parties
 Donors the party who creates the power of appointment
 Donnee the party who holds and has the right to exercise the power of Appointment.
 Appointees the individuals to whom the property is actually appointed; the individuals in
whose favor the power is actually exercised.
 Objects or permissible appointees the class of individuals to whom the property may be
appointed; the group of eligible appointees in whose favor the power may be exercised
 Takers in default appointment or takers in default the individuals who are identified in the
instrument creating the power who are to take the property is the donee fails to exercise the
power
 Appointive property the property that is subject to a power of appointment; the property that
the donee may appoint.
Creation
 To create power of appointment:
o Donor must manifest the intent to do so, either expressly or by implication
 Do not need to use the words “power of appointment” or “appointee”
 No technical words are necessary , only intent to create a discretionary power.
 Precatory words [words that express a mere wish or desire] do not constitute the
intent to create a power absent additional evidence of such an intent.
o Power of appointment confers discretion on the donee – the donee may chose to exercise
the power or not.
 Ex. Aunt executes a will in 2013 giving her tangible property “to my niece Wendy, to
dispose of in accordance with a letter addressed to Wendy dated Jan. 4 th 2012, which
is in my safe deposit box” Wendy is a trustee who has fiduciary duty to follow Aunt’s
instruction. Wendy does NOT have a power of appointment
General and Nongeneral powers
 General Power one that may be exercised in favor of the donee, donne’s estate, creditors of the
donee or creditors of the donee’s estate.
o Ex T devises property to X in trust to distribute the income and principal to such of A’s
creditors as A shall appoint by deed.
 Non-general power (aka Special power)  one that the donee can exercise in favor of anyone
except the donee, the donee’s estate, creditors of the donee, or creditors of the donee’s estate.
o Ex. T devises property to X in trust to pay the income and principal to any person whom B
appoints by will except that B may not appoint to herself, her estate, her creditors or the
creditors of her estate
Time and Manner of Exercise
 Inter vivos power (or lifetime power)  must be exercised, if at all, by a writing or deed executed
by the donee inter vivos
52

 Testamentary power one that must be exercised, if at all, by the donee at death, typically in his
or her will.
MANNER OF EXERCISE TIME OF EXERCISE
Deed (lifetime power) During life
Will (testamentary power At death
Deed or will During life or at death

To exercise Power of Appointment

5. a donee must manifest an intent to exercise the power
6. the manner of expression must satisfy any formal requirements imposed by the donor
7. the appointment must be a permissible exercise of the power
Estate Tax considerations
 General Power
o Donee is treated as owner of appointive property and taxed accordingly
 Nongeneral Power
o Donee is not treated as owner of appointive property for tax purposes
 Exceptions
o A power subject to an ascertainable standard is treated in a non general power for tax
purposes
o A lapse of power is not taxed to the extent of $5,000 or 5% of the trust corpus five-or-five
Flexibility without estate tax liability

Creditor rights
 General rule is that a creditor may reach a debtor’s property, if necessary to satisfy a debt. A
power of appointment is generally considered a personal right and NOT aproperty interest.
Creditors cannot reach the power.
 Creditors of a donee MAY however be able to reach the appointive property if the power is
exercised.
o Creditors right & Nongeneral power (special power) Creditors of a donee of a s[ecial
power of appointment have no right to reach the appointive property, either before it is
appointed or after it has been appointed.
 Donee is merely an agent for the donor with the power to appoint the property for
the benefit of others.
o Creditor’s right and general powerMODERN STATUTORY TREND – creditors of a donee
of a general inter vivos power of appointment can reach the appointive property even
absent an exercise of the power by the donee.
 RATIONALE is that holding a general power of appointment is tantamount to
ownership over the assets thereby subjecting them to the creditors claim.

Irwin Union Bank & trust Co. v. Long

 Facts: As result of a divorce judgment Philip Long owed Victoria Long $15k. V sued the trustee of a
trust in which P had an interest in an attempt to satisfy her judgment. The trust granted P the right
to withdraw up to 4% of the principal per year. P had never exercised the right to withdraw
principal.
 Issue: May a creditor reach assets that are subject to a general power of appointment if the holder
of the power of appointment has never exercised his right to reach those assets? No.
 Holding: Court ruled that the right to withdraw was a general power of appointment over 4% of
the trust res per year. Court applied traditional view that a donee of general power of
53

appointment had no property interest in the appointive property unless and until the power is
exercised. Because P did not exercise the power, Victoria had no right to reach any of the property
 Notes:

Exercise of a power of appointment

To exercise a power of appointment:
(1) the donee must manifest an intent to exercise the power;
(2) the manner of expression must satisfy any formal requirements imposed by the donor; and
(3) the appointment must be a permissible exercise of the power …
Whether or not the donee has manifested an intent to exercise a power of appointment is a question of
construction.
Restatement (Third) of Property: Wills and Other Donative Transfers,
§19.1 (2011)

Manifestation of intent
Beals v. State Street Bank & Trust Co.
 Facts: Dexter was the beneficiary of a trust created by her father where she received a certain
portion of the income during her lifetime. Dexter had the power to pay and dispose of the property
as she may direct and appoint by her last will and testament in favor of persons who would be
entitled to such estate under the laws then governing the distribution of intestate estates. During
her lifetime, Dexter requested that the trustees make principal payments by transferring almost
all of her share to her husband’s family. In her will Dexter disposed her property to the issue of her
sister Margaret who predeceased her. At death Dexter owned some assets outright while $88,000
was still in trust.
 Issue: Whether a testator exercises a power of appointment over a trust in her will if she does not
express nor implies intent to excise that power?
 Holding: Yes. The testator exercised her power of appointment even though she did not express a
specific intent to exercise the power because the power was general. The holder of a general
power of appointment is not expected to distinguish between the property subject to the power
and her own property. The testator’s power was general because she treated the trust property as
her own during her lifetime. She had the use and enjoyment of the appointive property that was
initially places in her trust share. Also she relinquished the right to add the trust property to her
estate and gave way part of her power.
 Notes: Where a beneficiary of a trust is deemed to have been given a general power of
appointment , they are not required to distinguish between the trust property and their own
property in to order to exercise the power.

Residuary Clause  courts are split over whether a standard residuary clause in the donee’s will that
does not make any reference to power of appointment exercises a testamentary power of appointment.

Majority Rules Minority Rules

- Residuary clause does not presumptively - residuary clause exercises a general power
exercise a general or non general power of of appointment unless a contrary intent
appointment affirmatively appears
- Variation on whether contrary intent may - a few jurisdictions also apply presumption
54

be shown with extrinsic evidence or only to non general power of appointment if the
by reference of face of the will residuary devisees are objects of the
power.

Restatement (Third) of Property §19.4 (2011):

A residuary clause in the donee’s will or revocable trust does not manifest an intent to exercise any of the
donee’s power(s) of appointment, unless the power in question is a general power and the donor did not
provide for takers in default or the gift-in-default clause is ineffective.

Formal Requirements Imposed by the Donor

- Even if a donee manifests an intent to exercise a power of appointment, the manner of expression
must satisfy any formal requirements of exercise imposed by the donor.
o Two issues arise under this requirement
 The nature of the instrument required for exercise
 Whether the donee must make a specific reference to the power.
Specific reference requirements
UPC §2-704 If a governing instrument creating a power of appointment expressly requires that the
power be exercised by a reference, an express reference, or a specific reference, to the power or its
source, it is presumed that the donor’s intention, in requiring that the donee exercise the power by
making reference to the particular power or to the creating instrument, was to prevent an inadvertent
exercise of the power.

816-832
Permissible exercise of the power
Appointment to an object  impermissible exercise of a power. One that purports to benefit someone
who is NOT an object of the power, such an appointment is invalid.

Timmons v. Ingrahm
 Holding: because settlor’s intent is the main concern, when a settlor employs a technical term,
that term should be used in accordance with its legal definition unless the settlor obviously uses
the term in a different sense. Here lineal descendant legally refers to a person in one’s descending
line and includes adopted children . Even though the settlor expanded the definition of children to
include his step children the fact that he didn’t expressly expand the definition of lineal
descendants demonstrates that he intended to have “lineal descendants” interpreted according to
legal definition.
 Notes: In determining the intent of the settlor, a technical term in a trust instrument will be
accorded its legal definition, unless it is obvious that the settlor used the term in a different sense.
Ordinary legal meaning.

Appointment in Further Trust

Brown v. Miller
 Holding: A transfer made to a revocable trust controlled by one individual constitutes a transfer
made to the individual himself. The transfer to the bill miller trust was appropriate under the
terms of the trust language. The fact that the transfer was made to bill miller trust rather than to
bill himself does not invalidate the transfer.
 Bill miller trust is a revocable trust entirely controlled by Bill. Bill had the power to revoke
the trust at any time to gain ownership of the trust property .
55

 Since bill had the right to withdraw all the trust property he did not act in bad faith.
 Notes: Transfers of assets to a revocable living trusts are the same as transfers of assets outright to
the person owning the trust. -- a transfer made to a revocable trust controlled by one individual
himself.

Exclusive and nonexclusive powers

Whether a power is exclusive or non exclusive depends on the intention of the donor as revealed by
the governing instrument
 exclusive  the donee can appoint all the property to one or more objects excluding the other
objects
o “to any” “to such of”
 non exclusivethe donee must appoint some amount to each object
o “to all and every one”; “to each and every one”

Salvage doctrines: Allocation and capture  when a donee intends to exercise power of appointment,
but the exercise is ineffective for some reason, it may be possible to carry out the donee’s intent through
the doctrines of allocation and capture
(1) Allocation  if the donee of a special power of appointment expresses the intent to exercise the
power of appointments, but inappropriately attempts to mix the appointive property with the
donee’s own property in the distributive clause (typically in a blended residuary clause) the
doctrine of allocation “unblends” the property to ensure that only eligible objects receive the
appointive property
(2) Capture  If a donee of general power of appointment (1) expresses the intent to exercise the
power of appointment and (2) blends the exercise with the distributive provisions of his or her
own will (typically in a blended residuary clause) if any of the appointment gifts fails for any
reason, the donee is held to have appointed the failed gifts to him or herself (“captured the
appointive properly” and the failed appointive property is distributed as a part of the donee’s
general assets.
a. Applies only to general powers and only if an attempted exercise of such a power is
ineffective of incomplete

Disclaimer, Release and Contract

Failure to exercise a power of appointment

General Power
Non general power
56

Loring v. Marshall
 Facts: Hovey created a testamentary trust granting powers of appointment over the trust income
to his nephews to exercise in favor of their wives under limited circumstances. If her nephews
failed to make such an appointment, the trust property was to be transferred to the Boston
museum of fine arts and other charities. Hovery nephew Cabot Jackson Morse, left the remainder
of his estate to Anna Morse. Morse never exercised his right in regards to the trust principal to the
trust created by Hovey. When she passed, the trustees were uncertain how to distribute the
principal of the trust.
 Issue: whether a gift may go to the remainderman of a trust where a donee fails to exercise his
power of appointment
 Holding: No if a donee fails to exercise his power of appointment a gift must go to any potential
appointees, not the remainderman of the trust. The testator did not intend that the property do to
the charities but only to the descendants of his nephew who was a donee under her will . The
testator left her property to her sister and brother and her nephews. She did not include any other
persons. The property must be transferred to one of her stated nephews and not to the heirs at
law. By the other terms used in her will, the testator knew how to refer to a disposition in default
of appointmne.t
 Notes: The terms of the will showed the testator intended to leave property to her nephews. None
of the terms showed that she intended to include any of her heirs of law who were not related to
her nephews.

Another difference between a will and a trust is that a will passes through probate. That
means a court oversees the administration of the will and ensures the will is valid and the
property gets distributed the way the deceased wanted. A trust passes outside of probate,
so a court does not need to oversee the process, which can save time and money. Unlike
a will, which becomes part of the public record, a trust can remain private.